Barry Campbell

[Income Tax Act, April 10th, 1997]

Mr. Speaker, thank you for resolving it in that fashion. I want to indicate to my hon. colleague we will proceed as a result of what you said but I want to be assured that did not stand as any precedent whatsoever.

[Income Tax Act, April 10th, 1997]

Mr. Speaker, I have a couple of points. It was evident in the hesitation in my earlier remarks that I am troubled to

be rising to object to this bill's being receivable and debatable here because of the hard work of my hon. colleague which many of us do in trying to get private members' bills before this House.

I do not want to interfere with that process. However, it is always up to you to decide whether something is in order that we are debating in this House.

Notwithstanding the procedure that has been followed, it is clear that the sorts of bills that call for this kind of action by the government must be preceded by a ways and means motion which can be tabled only by a minister of the government.

Mr. Speaker, should you rule in favour of proceeding with this debate, we will proceed and debate this motion. I want to make it clear and have it on the record that the bill, in the government's view, is not properly receivable by this House because of the nature of the bill. I am sorry that is the outcome.

[Income Tax Act, April 10th, 1997]

Mr. Speaker, I rise on a point of order.

In light of the great co-operation that has been evident in the House this afternoon I am sorry to rise now just before my hon. colleague is about to speak, but I must rise on a point of order with respect to private member's bill C-324.

I must sadly say, and I would ask you, Mr. Speaker, to rule on this, that the bill is not in order on the grounds that the intent of Bill C-324 is to increase taxes and would therefore require the tabling of a ways and means motion.

I remind my hon. colleagues that such legislation requires the tabling of a ways and means motion which can only be tabled by a minister of the government. On these grounds, I would ask,Mr. Speaker, that you rule this bill out of order. I would like to add that I am sorry to have to rise and do this but as a matter of the order of the House I felt it essential to do so lest we have a breakdown in the way in which those sorts of bills are brought forward.

Mr. Speaker, I would ask you to take a position on that.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 10th, 1997]

Mr. Speaker, in the absence of the parliamentary secretary to the government House leader, I was present in the House and I believe you may have been in the chair, Mr. Speaker, when the motion was discussed. If you refer to the text of the motion, it is clear in its terms.

I think you have proceeded quite properly and that at 5.30 p.m. today all questions are deemed deferred until Tuesday and all stages of the bill which is before us, Bill C-82, will be dealt with at that time.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 10th, 1997]

Mr. Speaker, I thank the hon. member opposite for his work on the bill. He has been tireless in his efforts at the finance committee. Once again he is trying to bring forward amendments in the House which I am sure he thinks will improve the bill.

We have taken a very long time to look at the needs of the financial services sector and to respond. Major amendments were introduced in 1992. Up to that time it had been traditional to amend the Bank Act and related statutes in the sector every 10 years. Because of the nature of the changes introduced in 1992 it was decided to review those changes in five years, in 1997.

Consultations were conducted. A white paper was issued. Discussions were held on the white paper. Hearings were held by the finance committee of the House of Commons and by the Senate banking committee. The government took time to reflect on the consultations and legislation issued. It has been debated in the House. It was again debated at committee. We now find ourselves at this stage very close to moving forward with what is essentially a bill that does some minor tinkering with financial services statutes because of the major overhaul that was done. The conclusion the government came to was that many of the changes put in place in 1992 were still being absorbed by the sector. It would be unfair to Canadians and unfair to the sector to once again make major changes. The bill before us today deals with a host of issues responsive to needs to make the sector more efficient, more accountable and more responsive to the concerns consumers have addressed.

I digress for a moment to say the government announced the creation of a task force on financial services to look ahead to the 21st century and to ask some fundamental questions about the shape of the sector for the next century. How will it continue to serve the interests of Canadians while continuing to grow and prosper? How will it help enhance the opportunities for jobs and growth? What powers are required? What realities will the industry face?

We cannot sit back and simply say what we have will always be good enough. The world changes whether we like it or not. Competitive factors are there whether we like it or not. Our financial services sector, a major engine of employment and investment, requires that the government take the time-and through the task force it is doing so-to ensure the sector is poised to deal with the challenges of the next century.

The sector is often maligned in the House because it is misunderstood. That is not to say there is not fair criticism. There certainly is. We heard a great deal of it in the committee, which was quite legitimate, as is true of any business sector. It is a major employer, particularly the banks, of millions and millions of Canadians through their RRSPs and their company pensions. Sometimes we forget that.

Motions Nos. 2, 4 and 6 in the second group relate to the issue of tied selling. We heard much about tied selling before the finance committee during the consultation stage when we were considering the white paper. Allegations have been made that certain financial institutions engage in tied selling and that the legislative provisions which currently exist in the financial services laws are insufficient to deal with the problem.

The committee and the government concluded that as yet there is insufficient evidence of the existence of tied selling as it has been described to us by certain parties. Therefore the government took a decision recently to invite the finance committee of the House of Commons to engage in a detailed study of tied selling in the financial services sector. That study will take place over the next year. In the interim while the study is going on, the government has indicated that it expects each participant or each industry group in the financial services sector to develop internal guidelines to deal with tied selling practices in this area. The government certainly hopes that a self-regulatory regime will develop in that sector. We certainly want to give it time to happen.

The hon. member opposite, knowing the party he represents, does not want government to rush in to regulate and not necessarily help the situation. We are giving the industry time because the industry has said: "We can address the problem. Let us address it". We are saying: "We will stand back and let you do that". We will also look at the whole area through the good work of the finance committee in the year ahead.

To facilitate that we have proposed that a new tied selling provision, which had been proposed in the legislation originally tabled before the House, be suspended and not be proclaimed in force until a certain date in the future.

In the interim the existing tied selling provision, whether adequate or inadequate, will remain in place so that we are not left with no provision whatsoever in the Bank Act dealing with tied selling.

The government looks forward to hearing from the finance committee of the House of Commons with respect to its recommendations about the tied selling provision, what should be reflected in regulations under that provision, what activity should be described as acceptable and what activity should be prohibited.

We are mindful of the experience of our neighbours to the south in the United States where there are extensive provisions dealing with tied selling and carve outs of acceptable activity. We do not want to inadvertently take away from consumers the opportunity to

benefit from relationships that can happen in the market by just an outright prohibition at this point.

While we appreciate the member's interest in the area, his concern for consumers and for the efficient functioning of the sector, we think we have the best situation of all. We have proposed the new tied selling provision and suspended it. It will be proclaimed in force. The government at that point will have the benefit of seeing how the self-regulatory regime works and the benefit of extensive study of the subject of tied selling throughout the financial services sector by the finance committee. I am sure the hon. member opposite will co-operate in the work of the finance committee.

On behalf of the government I urge hon. members, as I did with respect to the first group, to reject these motions.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 10th, 1997]

Mr. Speaker, I am pleased to speak to this first group of motions which have been moved by the official opposition. I would like to speak to each of them in order.

Motion No. 1 deals with financial planning and the suggestion that the act be amended to provide that where there is any provincial regulation on the provision of financial planning services, that provincial regulations shall override the Bank Act.

I want to clarify first of all that the amendment is proposed in respect of section 410(3) which deals only with the right to make regulations in respect of new in house services, for instance provision of information processing services and specialized financing services.

The right to make regulations about the provision of financial planning services by banks was introduced in the 1992 Bank Act and is not being changed by Bill C-82. That being said, I think what underlies this motion is the suggestion that the federal government, federal regulators in the Bank Act, have no place whatsoever in the area of financial planning and regulations with respect to financial planning.

It would simply be untenable if the Bank Act and other financial institutions legislation which regulate financially chartered institutions were not to be able to control the scope of powers of those institutions. It is simply unacceptable to carve out certain powers and say you cannot deal with those powers with respect to a federal institution. Clearly concomitant with the right to regulate certain institutions is to regulate the scope of the powers of those institutions.

With respect to the second motion with respect to privacy and the proposal from the official opposition that where there is any provincial regulation on privacy it shall override the Bank Act, I also understand that but I think consumers understand that they are better off that this area of privacy and consumer protection is a matter of shared jurisdiction between the provinces and the federal government when it comes to financial institutions and consumers are the better for it.

The last motion that was just brought forward by the official opposition deals with the transfer of blocks of business between insurance companies. The proposal has been made that the act be amended to permit the Minister of Finance to allow transfers of blocks of insurance business from federally regulated companies to provincially regulated companies.

Again, I understand the motivation for the recommendation of this change. Indeed it is something that officials are looking at. Today in question period one of the hon. members from the official opposition asked the Minister of Finance if he could proceed and make this change at this time. The Minister of Finance indicated he was open to considering such a change but that officials still had work to do.

We have several concerns before we would agree to such a change. Among them is the protection of policy holders and the safety, soundness and prudence of the regulatory system. It is a complex matter. Under current law transfers of blocks of insurance policies that are purchased by one company from another are not permitted when one of those companies, the seller, the vendor, is a federally regulated company and the purchaser, for instance, is a provincially regulated company. The reason for that relates, as I said, to the protection of customers and solvency of federally regulated companies. It is essential in a transfer situation that the same supervisor continue monitoring not only the transferring company but the acquiring company.

If financial difficulties were to arise the superintendent would have the information to take effective action by ordering both

companies to take appropriate measures. This may not be able to be done if the acquiring company is not under the supervision of the superintendent.

I want to focus on some of the problems. That is not to say they are insurmountable. Indeed, as I said a moment ago, federal officials are looking at this suggestion and shortly, if the questions that we have about safety, soundness and consumer protection can be addressed, I could foresee a change along these lines being made, but we are not there yet.

I just want to end by saying that Bill C-82, the financial services legislation, contains many important changes for the financial services sector and in particular the insurance sector. We have been responsive to many of the proposals that were brought to this government before the preparation of the white paper and the consultations that took place after the white paper before the finance committee reflected, and these responses are reflected in this bill.

To be fair, this request for the federal Minister of Finance to grant the discretion to allow these transfers between federally regulated and provincially regulated companies was not something that was brought forward by the industry during these consultations as a priority for the changes it wanted to see in this round. It has been brought to our attention at the 11th hour by certain insurers in the industry and it is a valid suggestion that we should look at, but we must take the time to look at it so we can assure ourselves that prudence and consumer protection are addressed. We are going to do that.

[Budget Implementation Act, 1997, April 10th, 1997]

Mr. Speaker, I welcome the chance to launch this debate and to encourage all hon. members to support the motion to refer Bill C-93 to committee before second reading.

This legislation will implement a wide range of measures proposed in February's 1997 budget. Some of these measures are technical, but other proposals relating to support for children, to small businesses' ability to create new jobs and to Canada's ability to innovate and respond to Canadian needs and social interests, fully deserve the speediest possible consideration.

We are not talking here about partisan politics, but about national interests and progress. This is why I think this bill should be referred to a committee at the earliest opportunity, so that the House can, as quickly as possible, implement the constructive measures put forward in the budget.

I do not believe it is necessary today to discuss at length the measures proposed in the 1997 budget, let alone the important achievements that it reflects. In the last two months, I have mentioned on numerous occasions our government's achievements and objectives.

However, I would like once again to stress a vital issue. The 1997 budget is not just a means to put our fiscal house in order, it also a means to promote new investments that are essential for job creation, both in the short term and in the long term.

It includes measures designed to alleviate the terrible burden of poverty on the most vulnerable among us, namely our children. These measures reflect a philosophy which had guided our government in each of its four budgets.

Fiscal recovery is not an end in itself. Rather, it is an essential tool that allows a government to fulfil an ongoing responsibility, which is to build a stronger society, a society that can maintain and enhance the well-being of its citizens.

This takes me directly to the legislation involved in this motion. We all live in a world where scientific knowledge and industrial innovation and the products of research become the driving engines for national growth and economic opportunity. Our long term future as an advanced industrial nation, able to compete abroad and create jobs at home, will depend on our success in this area. That is why C-93 will establish the Canada foundation for innovation. It will provide financial support for modernizing research facilities and equipment at Canadian post-secondary education institutions and research hospitals in the areas of science, engineering, health and environment.

Through an up front investment by the federal government of $800 million, the foundation will be able to provide about $180 million annually for research infrastructure over five years.

However, this investment will go further through partnerships with public research institutions, the business community, the voluntary sector, individuals and, we hope, provinces. The foundation has a potential to trigger about $2 billion for research infrastructure across Canada.

I do not believe that any hon. member has substantive doubts about this initiative. As the Globe and Mail stated in an editorial just days ago: ``The Canadian Foundation for Innovation shows the hallmarks of a forward looking and responsive policy''.

Therefore, it will be to the credit of us all if we move promptly to get the foundation off the drawing boards and into reality so that it can begin its task of enhancing Canada's research facilities.

In the 1997 budget, we did not just propose ways to promote long term growth and improve job opportunities. Our government knows very well that for too many Canadians the prospect of better jobs in the future is not enough. What they want, and what they need, is jobs right now.

Here again, Bill C-93 proposes concrete measures. Last November, our government announced the program to hire new workers, the creation of which was confirmed in the 1997 budget.

This program provides for reduced EI premiums for small businesses that create jobs this year and in 1998.

Under this bill eligible firms, those with less than $60,000 in EI premiums in 1996, will pay virtually no employer premiums for new employees hired this year. They will benefit from a 25 per cent reduction in premiums for new employees in the year to come. This action will help some 900,000 eligible small businesses make the

transition to the new EI system and provide a bottom line incentive for them to create jobs.

An economic analysis suggests that this new hires program, as it is called, combined with the general 1997 EI premium rate reductions, could generate as many as 20,000 new jobs. Again, there is clearly firm and fair reason to implement this proposal as speedily as possible. The price of unnecessary delay is one that Canadians should not accept.

I have focused on measures in Bill C-93 that deal with creating opportunities for meaningful work, a foundation for individual well-being. But the ultimate foundation for nations and for individuals lies in the conditions of childhood. For too many Canadian children whose families lack the means that so many of us take for granted, that foundation is at risk. That is why the federal, provincial and territorial governments have been examining ways to improve assistance to children in low income families.

In the 1997 budget, we propose a national child benefit system under which the federal government would introduce an improved Canadian child tax benefit. For their part, the provinces and territories could reassign part of their resources to improve the services and benefits available to low income families.

The 1997 budget proposes a two stage improvement in the present $5.1 million Canadian child tax benefit so as to create a new child tax benefit of $6 billion by July 1998.

Bill C-93 represents a key component of this program. It will mean that effective this July the working income supplement will be enriched by $195 million, which is $70 million more than was proposed last year. Benefits will be provided for each child instead of per family. The maximum working income supplement will be increased from $500 per family to $605 for the first child, $405 for the second and $330 for each subsequent child. The benefits will be phased in on family earned income over $3,750 and will be reduced as family income exceeds $20,920.

The second step will occur in July 1998 when the working income supplement will be combined with an enriched child tax benefit to form the Canada child tax benefit. The maximum benefit for low income families will be $1,625 to one child families, $3,050 to two child families, increasing by $1,425 for each additional child.

Overall more than 1.4 million Canadian families with2.5 million children will see an increase in federal child benefits by July 1998. Again I find it hard to believe that any hon. member will have substantive objections to such an initiative. Let us make sure it is passed as quickly as possible.

I have highlighted the elements of this legislation that combine wide reaching effects and the need for timely action. Bill C-93 also includes a range of other measures and each has constituencies or stakeholders who would also argue in favour of timely action. Let me summarize these very quickly.

At the request of the Cowichan Tribes of Indians and the Westbank First Nation the legislation includes provisions to enable them to impose sales taxes on tobacco products. This initiative will enable these First Nations to achieve a greater degree of self-reliance and self-government. It will also provide a tangible example of the government's commitment to reaching practical taxation agreements with First Nations that indicate an interest in exercising taxation powers. I should add that the costs of this initiative are minimal, probably less than $200,000 a year in foregone revenue.

There is another part of this legislation that also deals with tobacco. Bill C-93 proposes amendments that implement changes announced last November and December. These changes include an increased excise tax rate for tobacco products, an extension of the surtax on tobacco manufacturers, changes to the excise tax on exported tobacco products and reductions in amounts of tobacco products that may be brought into Canada on a duty and tax free basis.

I realize the tax increases involved are more modest than some might favour, but we believe disciplined, gradual increases undertaken in conjunction with the provinces is the most appropriate method of restoring tobacco tax rates while minimizing the risk of renewed contraband activity.

Bill C-93 would also implement the government's proposal to rebate excise tax paid on aviation fuel, a measure available to airlines that is conditional on the companies involved giving up the right to use some accumulated tax losses.

Also the legislation proposes a further fuel related measure. Currently the Excise Tax Act does not stipulate the method used to measure the volume of fuel for the purpose of accounting for excise tax. The legislation will clear that up.

Finally, Bill C-93 will formalize the procedures for the government's participation in bridge loans, those co-ordinated by the BIS or Bank for International Settlements to countries receiving assistance from the IMF and the World Bank.

Let me emphasize that the amendment will in no way alter the efforts made to ensure that such loans are quickly repaid from the IMF or World Bank through its disbursements to the borrowing country.

The time for this debate is short and I had to cover considerable ground in just a few moments. I have explained the reason for moving quickly to implement these important changes. I feel the summary indicates that the House should proceed immediately with-

[Income Tax Budget Amendments Act, 1996, April 10th, 1997]

Mr. Speaker, on a point of order. I am sorry to interrupt the hon. member. I know it is disconcerting to have that happen. I believe the Speaker has ruled on this issue and the hon. member in the context of his comments in debate on the motion has returned to a matter on which the Speaker has just ruled, against the position the member is advancing.

[Income Tax Budget Amendments Act, 1996, April 10th, 1997]

Mr. Speaker, I am pleased to be able to start off the second reading debate on Bill C-92, the Income Tax Budget Amendments Act, 1996.

The Minister of Finance has asked the House to approve this procedure so that it can be passed quickly, while allowing members to examine the bill in detail.

We cannot emphasize enough how important it is for this bill to be passed quickly. It includes a whole series of important measures for increasing the fairness and effectiveness of the Canadian tax system. The measures were initially unveiled in the 1996 budget, a

budget that received the support of the Canadian public and of this House.

Since that time a large number of Canadians have planned their affairs on the basis of these measures, many of which are of a relieving nature.

The introduction of this bill was delayed for an important reason. Most of my colleagues will recall that the 1966 budget included provisions to enhance the working income supplement of the child tax benefit, the so-called WIS.

In the period following the 1996 budget it became clear to the government that it had the opportunity and the obligation to do more to advance the well-being of Canadian children. This meant, among other things, revisiting the proposed changes to the working income supplement set out in the 1996 budget.

After extensive discussions with the provinces and territories, the federal government decided to propose in the 1997 budget the Canada child tax benefit. This new benefit would eventually combine the working income supplement with an enriched child tax benefit. This proposal represented a major step toward a national child benefit system. As a result, the changes to the WIS that would have otherwise been contained in the bill have not been included.

The bill was available to taxpayers in draft form late in 1996. Since that time, in keeping with the government's usual practice, taxpayers have had the opportunity to comment on the legislation and consult with the Department of Finance.

Let me now review briefly some of the measures included in the bill before us. As the legislation deals with taxation, probably the most important point to note is that it does not raise taxes, not corporate, not excise, not personal. Indeed, as my hon. colleagues know, the government has never raised personal income tax rates in any of the four budgets it has brought before the House. This is no small achievement, given the magnitude of the fiscal problem we inherited. Moreover, the Minister of Finance has made it clear we will lower taxes once we can afford to do so and once we know that it is permanent.

What the government has done in the meantime, and what was done in the 1996 budget, was to propose a number of measures to enhance the fairness of the tax system and ensure that it operates as effectively as possible. These measures included changes affecting registered pensions plans, RPPs and registered retirement savings plans. Those changes will help to ensure the sustainability of those programs while better targeting assistance to modest and middle income Canadians.

For instance, the bill proposes the elimination of the seven-year limit on carrying forward any unused portion of a maximum allowable RRSP contribution. This will make it easier for many Canadians who find it hard to make full RRSP contributions in their younger years to eventually benefit from the RRSP system when they can afford to do so. This is a very important change.

The bill also proposes to increase tax assistance to students and their families.

First, in the area of registered education savings plans or RESPs, the bill proposes to increase the annual contribution limit from $1,500 to $2,000 per beneficiary. It would increase the lifetime limit from $31,500 to $42,000. The 1997 budget proposed to enhance tax assistance delivered through RESPs further still. The bill also proposes to increase the amount in which the education tax credit is calculated from $80 to $100. Once again this is an amount the 1997 budget has proposed to increase still further.

The bill will also increase from $4,000 to $5,000 per year the limit on the unused tuition fees and education amounts that students may transfer to spouses or parents. This measure will also be further enhanced by the proposals in the 1997 budget.

Today's bill will also improve access to training and retraining for many Canadians who have young families to care for. Specifically, it proposes to broaden eligibility for the child care expense deduction by allowing parents who are full time students to claim the deduction against all types of income.

The bill will also raise the age limit for children for whom child care expenses may be claimed from 14 to 16, thereby providing increased tax savings for families with older children. A further measure in the bill that will benefit taxpayers caring for children is the change to the rules governing child support. The bill provides that child support paid under a court order or written agreement made after April 1997 not be deductible by the payer nor included in the recipient's income. This change reflects the widely held view that the old system of deduction inclusion was not working for the benefit of children.

This tax measure is one in a series of measures affecting child support payments that were recently approved by the House. In addition to the tax changes in the bill, this series of measures includes guidelines for the fair and uniform awarding of child support, as well as new measures for enforcing related orders.

Not only does the bill increase support for education and assistance to children, but it also increases tax assistance to the charitable organization sector. The bill reflects the government's policy of giving charitable organizations the tools they need to do their work.

For that reason the 1996 budget increased from 20 per cent to50 per cent the annual limit on the amount of a taxpayer's net income eligible for tax assisted charitable donations. Once again this is an area in which the 1997 budget has further substantially increased tax assistance.

I will skim very quickly over some other major measures in the bill. I begin with labour sponsored venture capital corporations. Generous federal and provincial tax credits have helped these funds, sponsored by labour organizations, attract large amounts of venture capital for investment in small and medium size businesses. By the time of the 1996 budget they had more than a three-year supply of capital. In view of the substantial level of capital accumulation, the bill includes a range of measures that will help keep the level of special tax assistance to these funds in line with current fiscal realities.

The bill also includes some important measures for the energy and resource sectors. For the oil, gas and mining industries, the bill would modify rules relating to the resource allowance, thereby resulting in a more stable and consistent tax structure. As for the oil, gas and mining industries the bill proposes significant improvements to the flow through share regime, improvements that will make the system less restrictive and will remove existing incentives to economically inefficient corporate decisions.

The bill also includes measures designed to promote sustainable development of energy resources by providing an essentially level playing field between certain renewable and non-renewable energy investments.

The measures I have outlined will make the tax system fairer and more efficient. They were announced as part of a budget that has been debated and approved by the House and favourably received by Canadians. Sending the bill to committee before second reading will expedite its passage while it enhances the ability of this House to review the bill intelligently. With these considerations in mind I have no hesitation in urging my hon. colleagues to approve today's motion.

[Excise Tax Act, March 20th, 1997]

Mr. Speaker, I wanted to clarify that we had concurred earlier at the time the debate was wrapping up that the hon. member for Calgary Centre had four more minutes. He was quite insistent in debate on several occasions that he had been done out of that time.

We are very happy to yield to him those four minutes that remain in his debate and then to carry on with the government side.