Bill C-47 (Historical)

Excise Act, 2001

An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores

Pest Control Products Act

[The Speaker]

I have the honour to inform the House that when the House went up to the Senate chamber, the Deputy Governor General was pleased to give, in Her Majesty's name, the royal assent to the following bills:

Bill C-43, an act to amend certain acts and instruments and to repeal the Fisheries Prices Support Act—Chapter 17.

Bill C-10, an act respecting the national marine conservation areas of Canada—Chapter 18.

Bill C-50, an act to amend certain acts as a result of the accession of the People's Republic of China to the Agreement Establishing the World Trade Organization—Chapter 19.

Bill S-41, an act to re-enact legislative instruments enacted in only one official language—Chapter 20.

Bill C-27, an act respecting the long-term management of nuclear fuel waste—Chapter 22.

Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores—Chapter 22.

Bill C-59, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 2003—Chapter 21.

Assisted Human Reproduction Act

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I had the opportunity to speak to the previous amendment, which the House voted on a few minutes ago, but I would like to take this opportunity to speak in the debate at second reading in order to clarify certain notions I raised in that speech and to set them out now in greater detail.

Back then to the bill on assisted reproduction. We are now at the second reading stage, which addresses mainly the use of embryonic stem cells.

I repeat, stem cells are cells that have not attained maturity and therefore have the capacity to either specialize and form a variety of human tissues or organs or to renew themselves.

According to the Canadian Institutes of Health Research, they offer an enormous potential for a better understanding of human development and treatment of degenerative diseases such as Parkinson's, Alzheimer's and MS. These stem cells can come from a variety of sources: embryos at a very early stage, fetal reproductive organs and pluripotent cells, that is, those with a number of possibilities for development.

As far as this bill is concerned, the Bloc Quebecois has focussed its energies on getting this issue put into legislation. We still feel that it should, despite the great complexity of this subject. In my opinion, it involves the personal values of each member, which is why I believe there ought to be a free vote.

Since June 1996, the Bloc Quebecois has devoted a great deal of energy to developing the necessary legislation. In October 1997, the member for Drummond introduced a bill to make human cloning illegal. That bill was identical to the clause concerning cloning in government Bill C-47. Unfortunately, it died on the order paper when the election was called. This has not prevented ideas from continuing to evolve since then, and today we find ourselves with this bill.

As I have already said, I will be carrying out consultations on this within my riding. I feel it is important for all elements of this society who may wish to share their point of view with us on as sensitive a subject as assisted reproduction to have the opportunity to do so.

So, I will consult with, among others, church people, women's groups and scientists, who can help me, as a member of parliament, understand the impact of the terms used and the need to legislate. It is often in the details that we see whether the spirit of a bill was respected or not. I will also consult my fellow citizens, who can give me their opinion like anyone else, because this is an issue that concerns us all. People who are my age read, in the so-called literature of the future written at the beginning of century, about things that have now become reality. The same kind of progress will continue in the future.

Along with these individual consultations, I also intend to hold a roundtable to allow these people to exchange ideas, on a voluntary basis of course, to see if positions which, at first glance, may seem irreconcilable can be brought together, to explain the bill to all these people without getting into too many details, to provide an opportunity to my fellow citizens to express their views and help me in my consideration of this issue, so that when we vote at the various stages of the process, my position will be based on the input provided by my constituents.

This is not an ordinary bill involving party lines or partisan positions that have been developed over the years. Assisted human reproduction is an area that does not in any way relate to partisan notions, but to choices that will have to be made on scientific progress in the coming years, on how we will be able to make these choices and on the legislation that will govern this area. This is probably the main issue at second reading.

Whether or not anyone supports this bill, for me there is only position which is not acceptable and that is not wanting legislation. I think that there must be legislation. We can take the time to get it right. We can take the time to hold public hearings. We must ensure that we have all the information necessary, and that members of the public can express their views.

It is a challenge to get ordinary citizens to express their opinions on these matters, in their words, using their own vocabulary, so that we will have a bill reflecting what our society wants. Such a bill would set out the broad outline of what we wanted as a society with respect to these things. Health comes up daily in our debates. The progress made in the treatment of certain diseases, particularly those which are age-related, is a very important factor.

We must ask ourselves the following. What support do we want in order to fight these diseases? How do we want to develop the tools? How can we be sure of developing the necessary tools? How can we be sure that this will not become an opportunity for unacceptable business transactions? Are there moral behaviours which would be unacceptable? We must ask ourselves all these questions and ensure that the legislation answers them.

Once the bill has gone through second reading, the committee will be able to study it in detail, to see the different elements that we have spoken about and all of the inherent complexity. This deals with the use of embryos for research and how that would be done. These are important and very complex elements. They also represent a vision of the future.

We are leaving our children with a legacy of considering these issues in terms of morals vis-à-vis the evolution of science. We must learn from the past and consider the debate that took place then, whether it be in the 18th century, the 19th century or the beginning of the 20th century. Ideas were put forward that might have appeared to be heresy at the time when they were proposed. However, some years later, we may have realized that some very good or very bad choices were made to allow this to develop. When it comes to this issue, it would be best if we knew all of the facts when making decisions. The repercussions will not only be scientific in nature. There will also be repercussions on how people will act in the future and on the importance of assisted reproduction and the impact it will can have on our society.

Given all of these situations, I hope that the consultations I will be holding will allow me to vote according to my conscience, but also knowing the opinions of those who want to share with me their perceptions of this situation. I may be able to contribute something, by making amendments and suggestions regarding the regulations, by ensuring that the guidelines included in the bill by lawmakers cannot be interpreted differently by those who enforce the law, so that we can achieve the desired results.

These are the consultations that I want to have so that the legislation, once passed, will serve as a solid cornerstone of the direction that we want research and assisted reproduction to take.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I am pleased to continue the speech that I began a couple of days ago on Bill C-56, an act respecting assisted human reproduction.

This is legislation of great import to couples who want to have children and particularly to women who, as it is obvious, are always on the frontline when it comes to human reproduction.

The objects of Bill C-56 are threefold: to protect Canadians who are using assisted human reproduction to help them build their families; second, to prohibit certain practices such as human cloning; and third, to open the door to research provided within what the government deems a regulated environment.

As my colleague from Winnipeg North Centre said in the House earlier this week when the bill was first up, New Democrats have been calling on the government for years to provide legislation giving women access to safe and non-commercial reproductive health services. Canada is the last major industrialized country in the world without legislation in this area.

In 1993 a royal commission reported on assisted human reproductive technology and urged the federal government to act quickly.

It is an exploding area of science, as we all know, and much has happened since that 1993 Dr. Baird royal commission report. We know about Dolly the sheep. We now hear talk about designer babies. Nine years ago the commission said that it was only a matter of time and that it was urgent that government laws and regulations catch up to this burgeoning science.

Despite this caution, here we are some nine years after that royal commission reported and five years after Bill C-47 died on the order paper.

As is becoming habitual with this government, we have waited until just a few weeks before the House is scheduled to stand down for the summer to introduce such a momentous piece of legislation.

True to form, the government has mostly ignored many of the excellent recommendations made by the health committee regarding the topic of human reproduction. Yet it has ignored other good recommendations made by the New Democratic Party in a minority report attached to the health committee's report.

Allow me to provide one example of the good advice ignored by the government. Bill C-56 would establish the assisted human reproduction agency of Canada to administer and enforce the acts and regulations. Among other things, the agency can authorize embryonic research but this is a contentious area. In our caucus we have serious concerns with the government's off loading of many policy issues, such as stem cell research, to this agency. We were and remain opposed to the responsibility on fundamental areas of policy being sent to such an agency when members of parliament are elected, we maintain, to make these decisions.

Bill C-56 prohibits human cloning for either reproductive or therapeutic purposes. It prohibits creating embryos for research or other non-reproductive purposes. It prohibits maintaining active embryos outside a woman's body past 14 days' development. It prohibits gender selection procedures. It also prohibits the altering of genetic material to affect subsequent generations and it prohibits the mixing of human genetic material with non-human life forms for reproductive purposes.

The list of what must be prohibited is lengthy and it must be in an area where science, if unregulated, could easily overrun ethical considerations.

Let me talk about some of the areas in the legislation that trouble us. In any legislation regarding questions of human reproduction, our primary concern must be of the health and well-being of women because it is, after all, women who are responsible for reproduction in our society and it is women who too often have been in the past the guinea pigs for experiments in ways to deal with reproductive problems.

We are also talking about couples who want to have children and they have to deal with these new technologies. Our caucus insists that we must never lose sight of the fact that women's health and well-being must be first and foremost, and fundamental to the legislation. The federal government has a responsibility to ensure that reproductive technologies are proven safe before they are made available.The government must ensure that the risks and benefits of any treatment for women are disclosed fully and that the moneys needed to achieve these objectives are made available

What we are really talking about is that the precautionary principle must be explicitly set out in the legislation. In its final report the health committee urged such an approach but it was, unfortunately, rejected.

Also rejected was any direction or move in the area of patent protection. The health committee called on the government to prohibit human patenting but the government has chosen to ignore this important advice, putting its emphasis instead on corporate property rights.

For example, companies are already lined up to benefit from the stem cell research that holds such promise for Canadians suffering from various diseases. New Democrats believe that the federal government should be playing a leading role to keep trade agreements from overriding the health interests of Canadians.

In summary, it is noteworthy that we have finally introduced a bill respecting assisted human reproduction. It is well past time. However it is deficient legislation for the reasons that my colleague, our health critic, the member for Winnipeg North Centre, mentioned previously and which I have stated this morning; most notably, the lack of protection around women's health and our concerns about commercialization.

We are also concerned about key elements that parliament will not be asked to debate because the government has chosen to leave those to regulation or to foist them on to the new regulatory agency for a decision.

In conclusion, it will be difficult for me and other members of our caucus to support the bill unless significant changes are made to it.

Excise Act, 2001

[The Acting Speaker (Mr. Bélair)]

The House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-47.

Assisted Human Reproduction Act

[James Lunney, Canadian Alliance, Nanaimo—Alberni, BC]

Mr. Speaker, I am pleased to participate in the debate on this issue.

As a member of the Standing Committee on Health, I identify with the comments of the hon. member from Winnipeg who just spoke. Members of the committee wrestled with many of the issues surrounding human reproductive technology and came up with the proposals for the draft legislation which has come back in the form of Bill C-56.

Bill C-56 states it may be cited as the assisted human reproduction act. I would like to state for the record that I believe we need much more research on the causes of infertility, particularly in the western world on delayed child bearing. We need more scrutiny on the various practices that defer pregnancy including the birth control pill; the use of abortion and the effect it has on fertility; the accumulation of pesticides in the environment and the effect it may have on human reproduction; and recently, concerns about estrogens accumulating in the water supply which are affecting human fertility.

A lot more research is needed on what is actually causing this epidemic of infertility. Rather than trying to find other ways to produce babies, we should be looking at how we can accommodate successful human fertility in a natural way.

Looking at the bill, the opposition has been calling for legislation since 1993 when the royal commission on new reproductive technologies reported. The government introduced Bill C-47 eventually in June 1996 and it died on the order paper.

This subject has been debated for a long time. In this the 37th parliament the Standing Committee on Health received draft legislation on May 3, 2001, a little more than a year ago. We spent months deliberating and hearing from witnesses from all aspects of Canadian society who are concerned about the complex and varied issues associated with the bill. Finally the committee submitted its report in December to the minister. It is one year later and the bill has finally come to the House for consideration. It has been a long time coming.

There are many controversial aspects and complex issues related to the bill. Probably the most significant one is the issue of stem cell research. To enter into that subject, it was stressed at committee that we need to think of ourselves as cellular beings. An adult human being is some 80 trillion to 100 trillion cells; we are cellular beings.

We are talking about embryonic stem cells versus adult stem cells. We hear in discussions that embryonic stem cells are better because they can produce the entire array of tissue found in an adult human being, which is true. The early cells in an embryo are on their way to producing an 80 trillion to 100 trillion cell adult which will take some 20 years to accomplish. The embryonic cells can produce a whole human being; that is their destiny in the ordinary sense.

Recent research has found what early researchers used to suggest, that adult cells are no longer able to do that. However in the last year and a half we have seen tremendous breakthroughs in adult stem cell research.

It should not have been such a surprise to us. The blueprint for each one of us, including all of the 200 cell types that we have in our body, is found in each and every cell of the human body, except for the red blood cells which do not have a nucleus. Each of us has in each of our 80 trillion to 100 trillion cells a complete set of chromosomes with a complete blueprint to reproduce a whole human being.

Therefore the dialogue saying that the embryonic cells are better for this reason simply does not hold up with the current research. We are finding tremendous breakthroughs some of which have been cited already today.

We heard from researchers in committee, and even in the months since we concluded our report there has been further research reporting results with Parkinson's disease using adult stem cells. Also with multiple sclerosis, adult stem cells from the donor's body were introduced back into the same body with tremendous results.

From what we heard in the standing committee and in the past year, there have been tremendous gains in adult stem cell research in humans. We heard that after many years of embryo stem cell research with animal models the results have not provided the expected advances. Therefore, it was the conclusion of the standing committee to encourage research funding in the area of adult stem cells.

There are many problems with trying to introduce embryonic cells into another human being not the least of which is each one of our cells has a blueprint, our own genetic marker. An intact immune system checks licence plates. The immune system will reject foreign cells. If embryonic cells are used to produce a new cell source for a human being to try to solve a health problem those cells will be subject to rejection by the immune system of the receiving body unless the patient takes anti-rejection drugs for the rest of his or her life. That is a very significant problem in trying to use embryonic stem cells in another human being. It is a problem that is avoided entirely by the use of autologous cells, or cells from one's own body.

To quote a couple of other advances, recently University of Minnesota Stem Cell Institute researchers showed that adult bone marrow stem cells can become blood vessels. Duke University Medical Center researchers turned adult stem cells from knee fat into cartilage, bone and fat cells. When the research of Dr. Freda Miller from our own McGill University was announced just a few months ago, the newspaper article said that the researchers had found gold with skin cells able to turn into neurons or muscle cells.

We should have known there were stem cells found in bone marrow because bone marrow regenerates itself. The average human being is replacing 25% of his or her blood every month. Skin cells replace themselves regularly. Therefore stem cells are found. Also we are finding that skin cells not only produce skin but they can be coaxed into forming other tissues, as Dr. Miller found, such as neurons or muscle cells.

If adult cells have the promise to produce tissue, why are researchers reluctant to go there? I posed that question to Dr. Alan Bernstein, the head of the CIHR, when he was at committee and I pose the question again to my colleagues in the House. If we can produce cells from our own bodies that would replace tissue, avoiding the need for anti-rejection drugs for life, if we could take stem cells from our own bodies, grow them in a Petri dish and reintroduce them to our bodies to repair damaged tissue, would that not in fact be superior? That is autologous.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Mr. Speaker, it is with a mixture of relief and apprehension that I stand today to join the debate on Bill C-56, an act respecting assisted human reproduction. As others have mentioned, this is truly a day that many of us have been waiting for since the royal commission on assisted human reproductive technology, in a 1993 report, recommended urgent federal government action to regulate this burgeoning new area. It is a day we have been awaiting since the government let its first effort, Bill C-47, die on the order paper with its 1997 election call, and here we are today, five years after parliament saw that piece of government legislation on this area that is of vital concern to women, to families and to many people in our society who are dependent on the discoveries and developments occurring daily in this area.

We listened very carefully to the health minister's speech as she introduced the bill and it is certainly clear that she has been more than generous in her self-congratulatory words in introducing the bill. New Democrats, who for years have been calling on the government to introduce legislation to give women access to safe, non-commercial reproductive health services, should be forgiven if we are reluctant to join in what is at best a celebration of Liberal indifference or at worst the latest chapter in the government's history of neglect. After all, we are far from having an act in place. Indeed, Canada is the last major industrialized country in the world without legislation in this area.

Reproductive technology is not a static field of science, far from it. While the government has been inactive on this legislative file for all these years, the nature or the bio-nature of reproductive technology has been changing rapidly. Let us go through some of those developments. Dolly the sheep and animal cloning are not new news. An Italian doctor claims to be well on the way to producing a cloned human being. The term “designer babies” is now in common usage as parents begin selecting the biological traits of their children. Internet sites compete in the trade of celebrity reproductive materials while countless others profit from those Canadians who are more than willing to buy access to any healthy eggs or sperm that might assist in their drive to have children. Gender selection has become topical, with all sorts of new rationales being put forward in its defence.

As well, we have witnessed the development of human stem cell research. Eugenics has assumed increased acceptability as scientific capabilities have expanded even though we have had no public debate. So too the patenting of higher life forms, including human genetic material, has become part of our daily lives without public discussion or input. The list goes on.

One can see why we are relieved that finally, as New Democrats have been urging for years, the government has deigned to bring this piece of legislation before parliament. Our initial relief, though, was rather short-lived as we became familiar with the bill's contents or lack of contents. I now want to focus on some of our apprehensions, and they are considerable.

I begin by registering our disappointment that the government has chosen in several instances to override the recommendations of the Standing Committee on Health set out in its “Building Families” report of last December.

It was a rare moment in the life of this parliament, moments which are few and far between. Committee members from all political parties took the government's request to review its draft proposal on assisted reproductive technologies very seriously. We devoted months of committee time to studying submissions and hearing witnesses from the full spectrum of views on this whole area, and a very controversial topic it is.

Instead of shying away from contentious areas we debated them and in many cases reached sustainable positions that we offered in our report. We presented the government with 36 recommendations in the main report as well as additional recommendations in the NDP's minority report.

In what is quickly becoming the norm for the government, it has chosen yet again in Bill C-56 to override several of the committee's recommendations with no consultation or explanation to the committee. We have seen over and over again parliamentary committees that run the danger of becoming mere window dressings for the government's legislative agenda instead of the dynamic honing tools to enhance legislation as it proceeds through parliament. Many of us in the House feel that this results in legislation that is less reflective of the will of Canadians and which will be less effective in the long run as a result.

I also have serious concerns with the government's decision to offload many policy issues, some of them very contentious, like stem cell research, to the regulations or to the soon to be created assisted human reproductive agency.

Canadians elected us to the House to deal with tough issues. They elected us to be accountable for how we deal with them, not to pass them on to an unelected, unaccountable organization or group of officials to determine. That is a concern and we will continue to raise our opposition to the off loading of responsibility in fundamental areas of policy that should be decided by this place, by members of parliament elected to do just that.

I will turn now to the substance of the legislation we have before us. The primary consideration for all of us in dealing with the bill or dealing with any legislation governing reproduction must surely be the health and well-being of women. That is a matter which should be self-evident yet it is a matter that has to be said.

After the bill was introduced I was in a debate with members of the other parties. The health critic for the Alliance Party actually said that the bill was not a woman's issue. The last time I checked, women were responsible for reproduction in our society today. Women are often the guinea pigs for experiments in terms of ways to deal with reproductive problems. It is women who in fact are on the front lines in terms of developments in this area.

Let us be clear, this is a woman's issue and the bill must at least address the fundamental issues of protecting and ensuring the health and well-being of women. Of course we are talking about families and their need to deal with new technologies in the desire to have children, but let us make sure we do not miss the fundamental issue of women's health and well-being which is so central to the bill and so much a part of the history of the bill.

The federal government should ensure that reproductive technologies are proven to be safe before being permitted, that the risks and benefits of any treatment for women are disclosed fully and that the funds needed to achieve these objectives are made available. The bill we are debating should be the means for accomplishing these ends but it is not.

The most effective way of dealing with the legislation is to ensure that the precautionary principle is entrenched in any bill dealing with assisted reproductive technology. That is why in our minority report New Democrats recommended that the precautionary principle be explicitly set out in legislation as a prerequisite for the approval of all standards and procedures. In its final report, the health committee agreed that a precautionary approach was needed.

Instead of finding the precautionary principle among the governing provisions of the bill, it is nowhere to be found. The precautionary principle, which is really putting safety first, can put a damper on the unfettered pursuit of profitable new products and procedures. The choice not to include the precautionary principle reflects the government's affection for the biotech industry, an industry that has benefited tremendously from being able to establish itself in assisted reproductive technology unencumbered by regulation during these many years without an act.

Bill C-56 is also missing a strong mandate to ensure that the most up to date safety information is available to women through counselling. Back in 1990, the New Democrat women's critic, Dawn Black, called for the inclusion of counselling as part of every reproductive technology program. It was her number one recommendation to the Baird commission.

It was said then and is still said today that the quality of the counselling and information must be high and it must be mandated to be readily available. Women also need information on infertility prevention to help them avoid the intrusive and painful procedures that may be part of an infertility treatment.

In response to the draft bill, the NDP minority report recommended that prevention be a central aspect of any reproductive technology policy and a key part of any new regulatory authority.

However Bill C-56 is soft on prevention. The government has failed to provide the type of proactive prevention mandate that is necessary to make real inroads into reducing the factors that lead to infertility.

One way the government could have addressed this important area and ensured that women's concerns remained a high priority, at least with respect to the make-up of the new agency to be called the assisted human reproductive agency, would have been to require gender parity. To give credit to the health committee that was recognized.

It was assumed that because we were dealing with women's health and with reproduction, with a bill that would have a significant impact on women, that the agency would be made up of at least 50% women. Does that appear anywhere in the draft bill or did we hear any of that in the commentary made by the minister? No. A fundamental issue, which would have made a significant difference for outcomes when the bill is finally implemented and up and running, is missing.

That is not something new to us on this side of the House. We have tried many times to get the government to understand the basic notion of gender parity on all boards and commissions. We thought there was a case to be made when the government established the Canadian Institutes of Health Research. Since we are dealing with a new research body that would set the stage for innovative research for years to come one would think it would at least have gender parity. We know that women's health concerns and their interests in research and development are critical and important. The government refused to address that fundamental issue at that time.

We felt that when it came to reproductive technology it would be a given that women would be involved. How could the government not do that? Once again not only has the government decided to ignore this fundamental recommendation but it has backed off its own stated principles and policies around achieving gender parity and ensuring a gender based analysis of all government bills and programs.

The government has chosen to let the chips fall where they may instead of clearly supporting women whose health rides on the agency as the enforcer of the act.

By the same token, the bill does not require the agency to establish any formal mechanism for direct input from experts in the field, from the centres of excellence for women's health or even its own women's health bureau within Health Canada, both of which could contribute substantially to the agency's worth in the interests of women through the work they perform.

While I am on the bill's shortcomings in relation to the agency's board, let me add that there is no protection against conflict of interest to prevent the agency being unduly influenced by the biotechnology industry or private clinics. This is an important omission that we believe must be addressed.

Another issue that is very important to many of us in the House is the bill's unacceptable weakness in terms of focusing on the commercialization potential and developments in this whole area of assisted reproductive technologies. Nowhere is it more apparent than when it comes to addressing the fundamental issue of patenting of life forms, a topic of great concern today as the supreme court begins its deliberations on the patenting of the Harvard mouse.

We had thought, given the words from the government around stopping the commercialization in this area, that it would at least act in terms of stating its objective to prohibit the patenting of human genetic material. That was part of the health committee's report. It was a consensus position. The health minister did not say a word about that when she introduced Bill C-56. She made no mention of the government's intentions to move quickly and forcefully with respect to patent protection. It is very important because knowledge of the genetic building blocks of life forms part of our common human legacy and the public good. It cannot be forfeited to the private reserve of giant life science and drug corporations.

We have called on the government to amend the Patent Act to prohibit human patenting. As I said, so has the health committee. However the government chose to ignore the consensus and instead has put its emphasis on corporate property rights before our access to health care. It could have stipulated a consequent amendment to the Patent Act had it so desired but it chose not to do so.

The implications of the patenting of life forms for our health care system are already becoming apparent. Women's access to a genetically developed test for breast cancer has been impeded by the patent process. Now the same company is applying for a patent on a prostate cancer gene.

A line is already forming at the patent office to slap patents on the beginnings of the stem cell research that holds such promise for Canadians suffering from debilitating diseases. Instead of bending over backward to respond to the wishes of the biotechnology industry, New Democrats believe that the federal government should be playing a leading role internationally to advocate keeping trade agreements from overriding the health interests of Canadians.

We believe all Canadians should benefit equally from improvements in this area. All Canadians should benefit equally from improvements to infertility treatment. This is far from the case now where public coverage of infertility conditions is practically non-existent and private insurance often excludes fertility drugs or imposes severe limits on reimbursement.

We have called on the federal government to work in conjunction with the provincial l and territorial governments to bring reproductive technology within the public non-profit sector. We have offered the model of the Manitoba provincial government that recently and successfully reclaimed a for profit clinic to the public health care system and gives a perfect example to the government about how it can act in the best interests of Canadians according to Canadians' deep desire for a non-profit system to ensure that basic health services are not up for grabs in the marketplace.

There are many more issues of concern that I wanted to raise and I will have a chance to pursue those points in further debates and in questions that follow.

For example, we have to look at the whole issue of genetic testing and the absence in the bill of any reference to people with disabilities. With the potential for eugenics cleansing, we are creating enormous problems for our society today. We are putting a cloud over those who live daily with disabilities. Because of developments in this field and the lack of action from the federal government, they now feel their lives are worth less. Our society is not enriched as we all assume it to be.

We have before us a bill that has serious gaps in women's health protection. It fails to effectively take on the commercial side of assisted reproductive technologies. It has ignored basic issues such as genetic testing and has overridden health committee recommendations in several areas.

The government has come to us after all this time asking for approval for a very important bill. However it misses several significant policy proposals and has relegated regulations to an agency yet to be defined.

We are left in the frustrating position of being--

Excise Act, 2001

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Mr. Speaker, before getting into the heart of the matter, let me congratulate those who won during random draw this morning.

I also want to thank the member for Saint-Hyacinthe--Bagot for the excellent work he did on Bill C-47, a bill about taxation and particularly the excise tax. The member for Saint-Hyacinthe--Bagot and I are friends. Over the years, we have worked together, mutually respecting each other's jurisdiction.

The member for Saint-Hyacinthe--Bagot is an enlightened person. He knows that if he had not been quite alert at committee, they would have pulled a fast one on us. For our visitors in the gallery and for the people watching us, I would like to explain precisely the purpose of this debate.

I learned about the excise tax in my economics classes in cegep. I think you and I belong to the same generation, Mr. Speaker, except that you may be a couple of years older than I am. In cegep, the member for Joliette was one of my teachers. He taught me that the excise tax is paid by the consumer on a number of products.

In the early 1980s, the member for Joliette used a metaphor for his students. He used to say that the excise tax was a tax on sin because it dealt with alcoholic beverages and cigarettes, which are all associated in one way or another with luxury.

The member for Saint-Hyacinthe--Bagot, who has been on the Standing Committee on Finance for about 10 years, is an experienced member of parliament in spite of his youth. On several occasions he explained in committee that we are not against a general review of taxation. We understand that processing has changed in industry. We realize that the reality of import-export has evolved.

I would like to digress for a moment to say that Quebecers are genuine free traders who believe in international and interprovincial trade. As a matter of fact, the premier of Quebec, the member for Verchères, who, as everyone knows, will remain premier of Quebec because he is giving Quebecers a very good government, was the creator of the department of international trade in Quebec. He also gave Quebec its first international trade policy.

He pointed out that Premier Lévesque had invited him to his office and told him, “You will be responsible for international trade”. He had a very small budget then. Unless I am mistaken, it was about $9 million. This was not much to put Quebec on the map in terms of international trade.

When we had the free trade debate in Canada and Quebec in the early 1980s, Quebecers were genuine free traders. They believed that increasing trade was a sure way to promote economic growth. Even if one believes in the virtues of trade, even if one is convinced that taxation has to be reviewed and that trade is an inescapable fact of life for all nations--the member for Kamouraska--Rivière-du-Loup--Témiscouata--Les Basques, who is a fervent advocate of regional development, knows this--mechanisms to protect culture are needed.

As far as protection of culture is concerned, we understand each other, Mr. Speaker. You were on the heritage committee for a long time. You are well aware that nations must protect their culture.

Globalization is unavoidable, but sovereignty is essential. Sovereignty allows trade on an equal footing, and allows specific mechanisms to protect culture.

Do not think that there is no link between the excise tax and culture, because you would be wrong. I will explain this link.

It is a known fact that the excise tax is a tax on consumer products, which the consumer pays on a certain number of goods, such as, of course, tobacco, spirits, wine and beer.

I repeat that the hon. member for Saint-Hyacinthe—Bagot was absolutely in favour of a general review of the act. We were surprised—and when I say surprised, I mean appalled, and when I say appalled, I mean outraged, and when I say outraged, it is because, deep down, we were hurt—to see what the government did. Why did the government want to exclude the microbrewery sector from this general review?

Mr. Speaker, you will allow me to stay within the limits of parliamentary language, but I think I am beginning to smell patronage here.

We understand that members who sit on a parliamentary committee have the right to be married, to have a marital relations, to have privacy. Privacy is a right protected in major charters, both the Canadian Charter of Rights and Freedoms and the Quebec charter.

However when someone is the chair of the finance committee, it is quite different. Indeed, it seems that the chair of the finance committee was elected after a hard fought battle and has foiled Liberal strategists. This chair, who is quite a very nice person—no one questions this—is married to an influential director of one of the biggest breweries in Canada, who himself sits on the Brewers Association of Canada.

One might wonder about this. I thank the member for Saint-Hyacinthe—Bagot for his vigilance. I would like to make a link with regional development. Of course we understand that my colleague and friend, the hon. member for Jonquière, has defended regional development here on several occasions, every time she has had the opportunity to do so.

This is the situation. Of course we recognize that the big breweries, like Molson and the others, represent a relatively concentrated market. Some of them dominate the market and are trying to sink the microbreweries. If I am not mistaken, there have been more than 40 such cases already. Some of the microbreweries had to close down because of the unfair tax system and because of the rate that is applicable in the United States.

However, we have to understand that a number of microbreweries are located in regions and that they create employment. The location of an industry is an important factor. When a brewery or a microbrewery decides to set up in a region, it contributes to the development of the economic fabric of the region.

I regret to have to inform the House and all our viewers that in the area of regional development, the government's record is abysmal. I do not know how a Liberal can actually say the words regional development.

Let me give members an example. During the last election campaign—I could give members the example of the member for Beauharnois--Salaberry—the Liberal Party promised to spend $1.9 billion on the highway system. This is not peanuts. It is, however, rather unbelievable that the strategic highway improvement program only amounts to $108 million over a four year period.

It is therefore obvious that the issues of microbreweries, of culture, of regional development and of privileges in the House are all related.

In conclusion, on all these issues, Quebecers can count on the Bloc Quebecois to be looking out for the interests of Quebec to the best of its knowledge and energy.

[Bernard Bigras, Bloc, Rosemont—Petite-Patrie, QC]

Mr. Speaker, I am pleased to take part today in this debate on Bill C-47. As it has been often mentioned, the purpose of the bill is to modernize the Excise Act. We are in a situation where all the provisions contained in the Excise Act, which Bill C-47 is supposed to replace, are included in this bill, except anything that has to do with beer.

This is important for what I will call the microbrewery industry. Microbreweries are the pride of several regions in Quebec. As my colleagues pointed out, these beers often have a different taste that has a regional character. These industries employ men and women from every region in Canada, but also from every region in Quebec.

Microbreweries are often symbols of the regions of Quebec. They are employers, they are a driving force for economic development and they are the symbol of a region. They offer consumers a product that is different from those offered by the big Canadian brewers.

The situation in which we find ourselves leads us to the conclusion that a market is developing, resulting in these microbreweries being subjected to unfair competition by other brewers. I will explain.

The beer produced by microbreweries often has to compete against so-called imported beers. Under the current taxation system, the big breweries, like Labatt, enjoy preferential treatment, a preferential tax rate, compared to the microbreweries.

The preferential rate is based on the tax rate. In Canada, there is a charge of 28¢ on Canadian beer. The rate in the U.S. is about the same, except that they have a preferential rate for microbreweries. They consider that a small business does not have the same organizational or financial structure as the big breweries. So, the preferential rate in the U.S. is only 9¢ a bottle, compared to 28¢ in Canada.

Since the tax rate for microbreweries in the U.S. is 19¢ lower than it is in Canada, it is clear that our microbreweries are the victims of unfair competition. Not only is the difference between the tax rate unfair, but microbreweries are far from being defined the same way in Canada and in the U.S.

For instance, to be considered as microbreweries, Canadian breweries have to produce 300,000 hectolitres, compared to almost 1 million hectolitres for U.S. breweries. So, the definition in itself paves the way for the unfair competition Quebec and Canadian microbreweries are victims of.

I have just mentioned the tax rate on one bottle of beer, but if we do the math, we see that for 24 bottles sold in a grocery store, the Canadian government gets $4.09, and the U.S. get $1.12, for a huge difference of $2.90 on a case of 24, which would explain why several of our microbreweries had to close their doors in the last few months and years.

Several regions in Quebec have been hurt by the loss of these small companies that can be competitive if they are given a bit of a tax break, something this bill is not doing.

In the riding of the hon. member for Saint-Hyacinthe—Bagot alone, two microbreweries have had to shut down since 1997. We have also lost microbreweries in Saint-Eustache, Baie-Saint-Paul, Montreal and Cap-Chat. Microbreweries, which have, in recent years, become ambassadors abroad for various regions of Quebec and Canada, promote regional development, in terms of growth and symbol. Therefore, these closures were major losses.

We are speaking on behalf of microbrewers, but I want to stress that the Bloc Quebecois did not fight this battle in recent weeks and months only for Quebec microbrewers. We were pleased to see that, just last week, the Canadian Alliance joined forces with the Bloc Quebecois to condemn the current federal preferential system.

We saw Canadian Alliance members ask questions in the House of Commons. It is not because the situation necessarily affects Quebec microbrewers; it is because they realized that microbreweries were in trouble in other Canadian provinces.

Here are some figures. Seven microbreweries have shut down in British Columbia, five in Alberta, one in Manitoba and one in Nova Scotia, for a grand total of more than 38 microbreweries that had to stop operating in Quebec and in the rest of Canada, in part because of the current system.

This means there are only some 40 microbreweries left in Canada. Close to half of the microbrewers had to shut down in recent years, thus leaving the market to the big breweries, such as Labatt. The result is that Quebec and Canadian consumers have only two choices: they can either drink Canadian beer brewed by a big brewery, or imported beer.

Knowing consumers, they will often choose beer from a microbrewery over imported beer, because they like local products.

We hope that the government will listen and will propose provisions to boost these driving forces of the Quebec and Canadian economy.

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, it is now my turn to speak to Bill C-47, the Excise Act, 2001 respecting the taxation of spirits, wine and tobacco.

What is rather surprising about that bill is that for the first time, brewery products were completely excluded from it. My colleague, the member for Saint-Hyacinthe--Bagot moved amendments which were rejected. These amendments concerned microbreweries. More and more, in Quebec as elsewhere in Canada, brewery products are becoming regional products, products with a regional colour and flavour. As I said, these are products reflecting regional culture.

In the last number of years, microbreweries have enjoyed rapid growth, and several regions have developed beers of better quality, with a regional colour and flavour. Besides, those initiatives have generated jobs in the regions.

These small breweries should be encouraged and have a great future. They help develop our regions in terms of culture of flavours. However, they have started to compete with large breweries like Molson and Labatt in particular. Why are breweries excluded from the bill? Because it became obvious that small breweries held a market share that large breweries want to take over. There was intense lobbying, and representations were made to the chair of the committee looking into the issue. The result was the exclusion of breweries from the bill. In the long run, they will disappear.

Microbreweries give regional colour and they create jobs in the regions. Some want to eliminate them. With 4% of the market share, microbreweries automatically deprive the larger breweries of profits. I find it appalling that the government caved in to the lobby, arguing that we will come back to the issue later. We will, once all the microbreweries have disappeared.

For example, in 1997, there were more than 90 microbreweries in Canada. Today, because of these policies, there are only 30 left. In the riding of Portneuf, which is next to mine, there was a fine microbrewery that was a delight for the region and was putting the region on the map, so to speak. It is among those that have disappeared. Having known the owners personally, I found it hard to see it go, as it was creating jobs, especially as this worked out to the advantage of the biggest breweries.

Why did the government not want to deal with the taxes collected from microbreweries? It is simple. It is because it wants to replace them with American microbreweries.

For example, in the United States, the tax on microbrewery products is 9 cents a hectolitre, while it is 28 cents a hectolitre in Canada. Thus, the big breweries, Molson and Labatt, acquire the American finished product and compete on the Quebec and Canadian market, using American microbrewery products and kill our microbreweries.

It is an aberration when the government caves in to the big business lobby, which leads to the elimination of our small businesses. It is a known fact that every time microbreweries lose 1% of the market to the big breweries, the big breweries gain a further $17 million in profits.

Members will understand that, when microbreweries have 4% or 5% of the market, big breweries are worried. So they have found a way to swallow the small ones by ensuring they are no longer competitive.

This means that the 4% of the beer market that belongs to microbreweries is worth about $68 million in profits. This represents many jobs on the regional market, which is, once again, being taken over by Molson or Labatt.

We are here to make laws that will ensure greater justice. We are also here to make laws that will give regions a chance to develop. The Liberal Party, which is in power, is using its majority to crush the opposition and to pursue its agenda by having legislation passed. This is the same party that claims it represents the regions. If it were really representing the regions, it would have understood that the big breweries' lobbying was a threat to some very promising businesses at the regional level.

Not only did the government not see what was happening, but if it did, it did not care. If it realized what was happening, it helped to destroy the market for microbreweries. It excluded beer from the Excise Act and the Excise Tax Act under pressure from Labatt, which had free access to the government, in spite of our irepresentations and of the importance of this issue at the regional level.

Responding to the pressure, the government saw to it that more and more microbreweries would disappear. We have already gone from 90 breweries to 30. It is expected that with the competition by the big breweries, which are selling American products taxed at one quarter of the rate here, the beers produced in the regions by the microbreweries in Quebec and in Canada, will disappear.

It is rather depressing to see how little the government cares about small businesses. It is depressing to see the big businesses, major contributors to the Liberal Party's campaign fund, getting their greedy hands on the market share of the microbreweries in Quebec and in Canada.

We will of course be voting against this bill, but we want to condemn it with the utmost vigour.

Business of the House

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, first, I would like to congratulate the House on the progress that was made earlier today with respect to one very important piece of legislation, Bill C-55. I hope that progress can continue through all stages of that legislation when the House returns to it.

This afternoon and tomorrow, we will continue with Bill C-47, the excise bill, Bill S-40, respecting clearing houses, and Bill C-15B, the criminal code amendments.

Next week is a scheduled constituency week and I am sure the Leader of the Opposition knows the rather elaborate procedure that must be gone through to change that process. It is not an easy thing to do. However next week members will be at work in their constituencies.

When we return on May 21, I would expect then to return to Bill C-47, if it is not already completed. We then would turn our consideration to the very important legislation introduced earlier today with respect to reproductive technologies, that bill introduced by the Minister of Health. I would also in that week that we are back hope to make further and better progress on Bill C-5 concerning species at risk.

I would confirm the earlier commitment that I made to the Leader of the Opposition that Thursday, May 23 will be an allotted day.

Excise Act, 2001

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, it is a pleasure to take part in this debate on Bill C-47 at third reading stage. I spoke to this bill at second reading stage and said there was collusion. I was never in favour of collusion.

In this case, there is collusion between two groups, the government and the big breweries. For the Bloc Quebecois, this does not come as a surprise. We often stand up for a majority of people who do are not in high finance, while the Liberal members—and we see how confused they are now—are still working with the small minority of those who control or try to control our economy.

One only has to look at contributions. The seven big oil companies, the big breweries and the big banks are probably the ones that contribute most to the Liberal Party. They have the government's ear.

I listen to what my colleagues from the Canadian Alliance are saying. They are no better because they want to change place with these people. They tell us, “It will bother us greatly to support this bill. There are provisions that we do not like in this bill regarding the microbreweries”.

In fact, like the Liberal Party, they do not have the courage to say, “We will stand up for the ordinary people, we will stand up for those who do not belong to the minority controlling the economy”. This is the diabolical plan that we are facing. It is the great hypocrisy of the big breweries, who have been saying all along that they would like the excise tax to be reduced to the level applied in the U.S. This is what they have been saying.

And then a bill is introduced, but beer is no longer included. Why? Why do the Americans pay 9 cents a litre in taxes while Canadians pay 28 cents a liter?

You will say that the big breweries and the microbreweries alike have to pay the 28 cents. It is true, but the microbreweries cannot withstand that. The big breweries know that very well, and they just sit there waiting for the microbreweries to close down. This is absolutely outrageous. The big breweries already control 95% of the market, and they want it all.

This is a byproduct of globalization. The government wants everyone to be identical. We will have only one beer in Canada, called John Labatt or Molson. The two will merge and get rid of all the microbreweries, which are making exceptionally good products, not only in Quebec, but everywhere else in Canada.

The Alliance must understand that, in voting for this bill, its members are voting against their own microbreweries. They are voting for John Labatt and the big breweries and against microbreweries in their ridings.

Before you interrupt me, Mr. Speaker, because we will soon proceed to statements by members, I will say that this is what is at issue. We will defend the microbreweries, the folks at home, those who would not have a voice if the Bloc Quebecois were not in the House of Commons. These people cannot rely on the Liberal Party or the Canadian Alliance. I will conclude my speech after question period.

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Speaker, I thank you for giving me the opportunity to speak to Bill C-47, which deals with the taxation of spirits, wine, tobacco and beer.

I hesitate to say “and beer” because it is not mentioned in the title. However, the bill defines what beer is, what a brewery is, what this and that is with regard to beer.

It makes me wonder. Why would there be a definition of beer when beer is mentioned nowhere else in the bill? I have the feeling that, as a result of pressures from large breweries, the government decided to exclude beer from this bill.

Why exclude beer? When we talk about beer, we obviously have to talk about microbreweries. We know that microbrewery products are becoming increasingly popular in Quebec.

Unfortunately, if the beer market continues in the same direction and if the government does not decide to be fair to these microbreweries, there will not be a single one left five or ten years from now. For those who need proof, in 1997, there were about 90 microbreweries in Canada, but that number has now dwindled down to less than 30.

I am speaking from experience. In my beautiful and charming riding of Rivière-des-Mille-Îles, which I am proud to represent and which includes the cities of Sainte-Marthe-sur-le-Lac, Deux-Montagnes, Saint-Eustache, Boisbriand and Sainte-Thérèse, we lost, in Saint-Eustache, a microbrewery that employed some twenty workers. These workers, who were beer experts, could not find another job. I think that, unfortunately, when they stopped drawing EI benefits, they became social welfare recipients, which means that the Government of Quebec has to support them.

Why are these microbreweries, of which the two most popular in Quebec are the Brasseurs du Nord which brews Boréale, and Unibroue which brews Blanche de Chambly, U, etc., in dire financial straits? Simply because microbreweries pay excise taxes that are way too high.

They pay a 28 cent excise tax per hectolitre, while their competitors, microbrewers from United States, France, Germany and Belgium, pay 9 cents a litre. Once they are established on the Canadian market, they have difficulty to remain competitive.

There is something even more degrading and malicious about the bill. I want to talk about Brassal, a microbrewery in LaSalle. It had to compete with Labatt, which is also located in LaSalle. It also had to compete with foreign microbrewers who were exporting their products to Canada through Labatt.

The big Canadian brewers, Labatt, Molson—about Molson, allow me, Mr. Speaker, to congratulate your son Brad for the remarkable work he is doing with the Montreal Canadiens. As I was saying, Molson and Labatt import American beers onto the Canadian market to compete against small Canadian brewers with a homemade product.

So they take the gun, if I can put it that way, and shoot our small Canadian brewers by using imports against them. That is the way they show their pride in being Canadian and Quebecers: by killing the competition in a roundabout way. This is unacceptable.

We learned that the chair of the Standing Committee on Finance unfortunately rejected an amendment moved by my colleague from Saint-Hyacinthe--Bagot, which would have included beer in the bill. I think that beer was previously included in the bill, since it had definitions for beer and brewery. Why include definitions when one does not want to talk about what they refer to? Why define beer when one does not want to refer to it in the bill?

Were government members subjected to undue influence? Did the government do the bidding of the big breweries by withdrawing the beer from Bill C-47? This stinks. It reminds us the Gagliano case. We will have to open new embassies in distant lands for some ministers.

On a more serious note, when the bill is referred to the Standing Committee on Finance, we will have to sit down, get serious and really be mindful of the needs of microbreweries. Beer and most of all microbreweries will have to be part of Bill C-47 again.

[Rahim Jaffer, Canadian Alliance, Edmonton Strathcona, AB]

Mr. Speaker, it is a pleasure to address Bill C-47 which amends the Excise Tax Act. In my remarks today I will address a few short points.

The Canadian Alliance will be supporting Bill C-47, however it is qualified support. We believe that the interests of major Canadian industrial producers of wine and spirits will benefit from the bill and we recognize that the affected stakeholders were consulted throughout the drafting of Bill C-47. That is where our support for Bill C-47 ends. We are troubled by other factors in the bill: the increase of cigarette taxes; the failure of the government to address crippling tax levels on Canada's microbreweries; and the cloud of questionable ethics that once again surrounds the government.

The committee stage of the bill was quite ugly. Members of the opposition, in particular the member for Calgary Southeast and the member for Saint-Hyacinthe--Bagot, tried to move amendments that would immediately address the plight of Canada's microbreweries that are being driven out of business by onerous excise taxes. Rather than address the issue with a discussion, the committee chair in her abrasive manner ruled the amendments out of order and shut down debate.

These adversarial and arrogant actions led to members challenging her ruling and raising the question of a conflict of interest. The chair had a letter ready in hand from the dubious ethics counsellor clearing her of any conflicts. A note from the ethics counsellor is like a note in high school that reads “Please excuse Johnny from gym class, signed by Johnny's mother”.

The ethics of the committee chair would never have been brought into question if she had not trumped legitimate debate in such a dismissive and autocratic manner. This is yet another example of the members opposite using the tyranny of the majority to settle issues that deserve meaningful debate and co-operation. The government's short-sightedness, arrogant scheming and constant cover-ups cause the opposition and Canadians to assume the worst.

In the end the government got its way and yet another bill went through committee without amendment, fulfilling the facade of democracy. The plight of microbreweries has yet to be addressed. We will not let this issue go. I have a list of every member of parliament who has a microbrewery in his or her riding. I expect each of these MPs to push the finance minister to give microbreweries the tax relief they need to survive.

Back to the bill at hand, I and my Alliance colleagues have been contacted by several people on the west coast regarding clauses 422 to 432 of Bill C-47 which deal with the ships' stores act. Ships' stores relief is intended for ships engaged in international trade or facing international competition. B.C. Ferry Corporation complained about departures from this policy that favoured ships operating in the Great Lakes and lower St. Lawrence and sought remedy through the courts.

On May 10, 2001 the federal court of appeal ruled that the ships' stores act went beyond the scope of the enabling authority and would cease to have effect on October 1, 2001. The court ruling would have allowed all ships' stores in Canada to be entitled to duty and tax relief on their purchases of fuel with an annual loss of federal revenue between $30 million and $35 million. On September 27, 2001 the federal government announced the changes contained in this bill and amendments to the ships' stores act, which reverse the regulatory changes dating back to November 10, 1986.

As a result of Bill C-47, the only vessels which qualify for relief under the ships' stores regulations are tugs, ferries and passenger ships operating on the Great Lakes and lower St. Lawrence River that are engaged in international trade. The government went to great lengths to fight regulations which favoured central Canadian vessels over coastal vessels. B.C. Ferry Corporation won an appeal to finally strike down these discriminatory regulations.

The bill puts in place a phase-out period to aid the central Canadian vessels through that transition. The stated purpose is to allow these vessels to honour existing contracts and pricing. I wonder why.

The government has frequently passed bills that will retroactively penalize Canadian industry. Do we think it has anything to do with the fact that Canada Steamship Lines is the largest carrier in the region? Probably not, just like the way Halifax and Vancouver have to pay ice-breaking fees in harbours that do not freeze just to subsidize the same region preferred in the bill.

In closing I want to reiterate my opposition to the government's increase in excise tax on tobacco products. Bill C-47 seeks to increase the federal excise taxes on tobacco products and to re-establish a uniform federal excise tax for cigarettes across the country of $6.85 per carton. The stated purpose of the tax increase is to improve the health of Canadians by discouraging tobacco consumption.

The federal excise taxes on cigarettes will increase $2 per carton in Quebec, $1.60 per carton in Ontario and $1.50 per carton in the rest of Canada. This will bring the total federal excise burden on cigarettes to $12.35 per carton. Federal revenues will increase by approximately $240 million per annum through this tax hike.

We all want Canadians to live healthier lives, especially our youth. The reduction of smoking is a big part of that. My problem with this legislation is philosophical and based on the process. The past decade has proven that high levels of excise tax on cigarettes do not reduce consumption but only increase or create an underground market.

The role of government is to provide the information for consumers to ensure that citizens have an informed choice. Make no mistake, it is the right of an individual to choose whether or not to smoke. It is my belief that the government is increasing the tax levels simply to increase revenues. It is the only politically correct tax increase at its disposal. The finance minister has never found a tax that he does not like.

The truth is that while the federal excise revenues have increased, transfers to provinces for health care have decreased. What are Canadians going to get in return for this blatant tax grab? I challenged the government opposite to detail what its plan is for the revenue and no stats have yet been brought forward.

The Liberals have once again piggybacked meaningful legislation and political opportunism. Today they are hiking taxes under the guise of tax fairness and that is unethical.

Once again my colleagues and I will hold our noses and support the bill which just is not good enough for Canadians.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Mr. Speaker, I am pleased to rise to speak to Bill C-47. The Bloc Quebecois could have supported this bill, but I would like to explain why we have not done so.

We would have liked the amendments put forward to include beer, namely the reduction of excise duty on beer produced by microbreweries, to be considered in order.

In the current Excise Act, wine, spirits, beer, tobacco and distillery products are all mentioned. Bill C-47, which is supposed to bring that Excise Act up to date, also deals with absolutely everything, except beer. It is pretty unthinkable.

I would like to tell the House why I am personally against this bill. In my riding of Terrebonne--Blainville, we have the microbrewery which produces the Boréale. I want to take this opportunity to acknowledge the managers and the 75 employees of that microbrewery.

They expect their MP to stand up for them and put forward their viewpoint and their concerns. They also expect the government to take into account that this substantial tax—which is a surtax in some way—is eroding their profits and stifling the growth of their company.

This microbrewery was established in 1987. It is recognized worldwide for its five different types of beer. I say worldwide because people come from around the world to learn about their brewing methods, and also because of exports. There are 75 employee plus the managers who put their hearts into their work. They give their best for this small business' operations. It is a dynamic and strong company, and management is determined, despite everything, to keep their market share.

This business is 100% Quebec owned and operated. It is the second largest microbrewery in Quebec; it has $12 billion in annual sales, selling more than 45,000 hectolitres, which is very impressive for a microbrewery. As I said, its brewhouse is the most technologically advanced in the entire microbrewery industry in Canada. It has a fleet of 12 trucks, which adds to the indirect jobs it creates. Its distribution is based in North Montreal and in the Eastern Townships and extends all the way to remote areas. In order to ensure incredibly personalized service, its sales reps operate like travelling salesmen, again, creating more jobs.

This microbrewery has to cope with a surtax of 28 cents on each litre of beer, for all of the different beers that it sells. If it were in the United States, it would only pay 9 cents per litre.

How can we explain that here in Canada, we cannot protect our microbreweries against the American microbreweries? The Bloc Quebecois has looked into the matter, and has found out that the Brewers Association of Canada, which claimed to be fighting for the microbreweries, was in fact in collusion to throttle the microbreweries by having them pay the full excise tax.

Which are our big Canadian breweries? Molson and Labatt. When we look at the situation closely, we realize that there is collusion and chumminess between the big Canadian breweries and the chair of the finance committee. Yet she is supposed to be there to find other ways to help the microbreweries.

More than 2,000 employees are directly dependent upon the microbreweries. I proved earlier that the microbrewery located in my riding, the Boréale, also generates a lot of indirect jobs. If 2,000 direct jobs depend on Quebec's microbreweries, how many indirect jobs depend upon Canadian microbreweries?

I think that the government should really pay attention to what it is doing. It is throttling these microbreweries, which are small and medium size businesses that contribute to the Canadian financial policy. There are a good number of them. The big companies are not the only ones we have. There are also people working in small businesses, often family businesses, where women are penalized by the employment insurance system. What will happen to these people if the microbreweries close down? Many people will lose their job. These are people who depend on us, as parliamentarians, and on the government for decision making. These microbreweries will close down and these people will lose their jobs.

As I only have a few moments left, I would ask the government and the Standing Committee on Finance to take into consideration all the people working for the small and medium size businesses. These are the people who are being done in by senseless and foolish policies. They want to make a decent living.

[Michel Guimond, Bloc, Beauport—Montmorency—Côte-De- Beaupré—Île-D'Orléans, QC]

Mr. Speaker, I am happy to rise today to speak to Bill C-47. The House will remember that there are some worthwhile provisions in this bill, which essentially changes the excise tax.

The Bloc Quebecois believes that the main problem with this bill is not in what it provides for, but in what it does not. We realize that, once again, abiding by the principle that one does not bite the hand that feeds him, the government has bowed down to the big breweries' lobby.

I am not an expert on the beer market, since I only drink a little beer once in a while, but we all know that, in Canada, the beer market is split between two large producers, Labatt and Molson.

A few years ago, maybe less than ten, a new phenomena appeared in Canada: microbreweries. Previously, as members will recall, we used to say that beer was the champagne of the poor. Since then, people have discovered the gastronomical and culinary qualities of beer.

Two years ago, in my riding, we had the Journées de la bière, in Beauport, which is fairly similar to the Festibière in Chambly. Unfortunately, it was not very well attended because of bad weather. We had the opportunity to sample new products made with new processes or with different grains. We all know that beer is the result of the fermentation of various grains.

We realize that the microbreweries' share of the market is expanding steadily in Canada and Quebec. In the last ten years, many microbreweries have sprung up. In our beer festival in Beauport, we even had workshops on fine cuisine to learn how to combine dishes using beer as an ingredient and how to prepare sauces or side dishes made with beer. People are getting more sophisticated. We now have different kinds of beer with fruit. We are finding out more about the potential of beer. And so, the entirely new microbrewery industry has developed, alongside the two major breweries.

Unfortunately, some of these microbreweries had to close because their production was inadequate for their survival, especially with the fierce competition of the two major breweries. Many microbreweries had to close.

Usually, those that survived in Quebec are to be found in the regions. They are not necessarily in an urban setting. In the east end of Montreal, for example, near the Jacques-Cartier bridge, we have the huge Molson brewery. In the west, in Ville Lasalle, we have a Labatt brewery.

To add some regional cachet, some regional flavour, these microbreweries are located outside of major centres, and as a result they can be found in many ridings.

My colleagues who spoke before me on this bill had the opportunity to mention it. The member for Chicoutimi—Le Fjord knows quite well that there is a microbrewery in his riding, in Anse-Saint-Jean. I find his silence disappointing. I hope that workers at the microbrewery located in Anse-Saint-Jean will remind the member for Chicoutimi—Le Fjord of his position, or lack thereof, his laissez-faire attitude regarding Bill C-47. This bill contains no provision to help microbreweries, which deserve help.

As I said earlier, they are a tourist attraction in the regions. It is possible to add an economuseum to a microbrewery, visit the premises, and witness the fermentation and manufacturing processes, from raw materials all the way to the bottling stage.

Regionally a microbrewery is first and foremost a tool for economic development and to promote tourism. Considering the position of the member for Chicoutimi—Le Fjord, we think we will have to remind him of it.

He likes to show off here, trying to torpedo the Bloc, ridicule the work Bloc Quebecois members do. He is constantly predicting the demise of the Bloc Quebecois. However, he should be reminded that in 1993, when he was still the turn-coat member for Chicoutimi—Le Fjord, in those days he was still a tory, a former PQ member, he ran for the Conservative Party and was defeated by a Bloc member, Gilbert Filion. He should be reminded of that.

Sadly once again the government is doing nothing to listen to regions and those who do not have a monopoly or money to lobby. As I said earlier, you do not bite the hand that feeds you.

If you look at the Elections Canada site, you can see how much money the two major breweries give the Liberal Party. Incidentally, they give approximately the same to the Canadian Alliance and the Conservative Party. It pays politically.

Go and look at the Elections Canada site. You will notice that the major breweries did not give $300,000 or $400,000 to the Bloc Quebecois. We prefer public financing coming from ordinary people who contribute $5, $10 or $20 to our election campaigns.

Thus, after the election, we owe nothing to large breweries. We owe our election to ordinary people who trusted us and who also had confidence that the members of the Bloc Quebecois would defend Quebec's interests.

The Bloc Quebecois has been working very hard on this issue. I also want to recognize my colleague from Saint-Hyacinthe—Bagot, as well as my colleague from Drummond, for their contribution to the proceedings of the Standing Committee on Finance; they both attended lengthy meetings that lasted for whole days and whole evenings. They were only doing their job. They were only doing what the people of Saint-Hyacinthe—Bagot and Drummond elected them to do, that is defend them and speak on their behalf in Ottawa.

That is the difference between a member of the Bloc Quebecois and a member of the Liberal majority, such as the members opposite, who only go to their riding to sell Ottawa's ideas and not the opposite.

Both our colleagues on the Standing Committee on Finance deserve to be congratulated. They were quickly isolated. We noticed that. It is sad to talk about the other opposition parties. It is sad to criticize the other opposition parties, because every time the opposition is divided on an issue, it suits the government.

However, when the opposition does not behave correctly, adequately or properly, we must condemn the situation. We must also condemn the flip flop of the Canadian Alliance on this issue of microbreweries. Apparently, it had told at the outset to my colleague of Saint-Hyacinthe—Bagot, the Bloc's finance critic, that it would approve the Bloc's position on microbreweries. After a while, the Canadian Alliance probably realized that it was receiving cheques, or the telephone started ringing; it caved in to the lobby of the major breweries.

The Bloc cannot accept Bill C-47 as introduced by the government.

Microbreweries

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, we are listening. It is the opposition that is not listening. In fact, the beer industry asked us to move forward on Bill C-47. We are taking very clear steps in reviewing the information we received and we will respond accordingly.

The member across the way would have us respond in an inappropriate manner and not do the right thing. We will do the right thing. We will do the right thing for the microbreweries and we will do it soon.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, as the hon. member knows, Bill C-47 does not deal with beer. It deals with wine, spirits, tobacco and ships' stores.

The member should know that right now the government is reviewing proposals from the microbreweries and the beer industry generally. We will act prudently and appropriately in dealing with this very important issue for all Canadians.

Business of the House

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, today and tomorrow we will continue with Bill C-55, dealing with public safety. If that is completed, we would turn to Bill C-47, dealing with excise.

Next week we will have the unusual pleasure of three days, Monday, Tuesday and Thursday, as allotted days for opposition debate. On Wednesday we will return to business unfinished this week, including Bill C-5, species at risk.

I would like to designate Tuesday evening of next week as the first evening for consideration, in committee of the whole, of estimates, pursuant to Standing Order 81.4(a). I would also advise that consultations are ongoing with regard to holding certain take note debates on Wednesday evening of next week.

Excise Tax, 2001

[The Speaker]

It being 3 p.m., the House will now proceed to the taking of the deferred recorded division on the amendment to the motion for third reading of Bill C-47.

Call in the members.

(The House divided on the amendment, which was negatived on the following division:)

Excise Act, 2001

[Pierre Brien, Bloc, Témiscamingue, QC]

In addition, I am told that for a year and a half, the finance minister has refused to even meet with them. Clearly the big breweries seem to be worried by the arrival of new players in the market. However, we should not be fooled, essentially Molson and Labatt are the ones holding huge shares of the market.

Our role is not to represent only these major businesses who have their own interests. I can understand why they would be lobbying. However, the government has to stand up to them. Small businesses are trying to develop and could become extremely interesting players. They could create jobs.

In the past few years, big breweries have experienced some problems. Time and again in Montreal, there were closures and job cuts. This was to be expected with more foreign competition. However while local players are struggling to develop, the government does not help them, claiming it has to support the major players that are left. This makes no sense.

It should send a clear message. At the very least, the government could have acknowledged that we are right, and promised a new bill before the summer recess. We could co-operate, and the bill could go through very quickly. There is no problem if the government wants to rapidly pass a bill to help microbreweries. But that was not to be. They will pass Bill C-47, and that will be the end of it.

In committee, when the Bloc raised the issue, its amendments were ruled out of order. This raises major questions about the ability of the committee to work properly. Moreover, we have an extremely important ethical problem here because the chair of the committee is the spouse of a man who is involved in lobbying for Labatt. It is beyond me.

The chair of the committee is hiding behind the fact that she had an opinion telling her that everything was fine, but she kept it to herself during all the committee proceedings. She never told the committee from the outset that if the microbreweries were discussed, she might be in a conflict of interest. Had she done so, the committee could have decided what was to be done.

What kind of message does this send to people watching this? They say to themselves “Things were rigged from the start. The large breweries had lobbied. They had done whatever was necessary to ensure the debate would not go any further, that the tax for microbreweries would not be included in the bill and that nobody could add it afterwards”.

Now the end of the session is near. We will soon be leaving for the summer and next fall we will work on something else. However, these people from the microbrewery industry need support right now.

At one point, when they came here a few years ago, I was under the impression that the government would automatically listen. What was being asked was only common sense compared to what was being done elsewhere. Now, a few years later, we have not moved forward a single bit.

Hopefully the members on the other side will show some sense in the last hours of this debate and bring forward amendments to this bill. It is not difficult. We only need to pass an amendment or table a new bill that says, “Here, we will amend the regime”. We would be pleased to co-operate on such an initiative. In any event, the legislative agenda is not exactly overloaded. We have the capacity to do it. So let us do it and the committee will have all the time to perform its work correctly if it has to hold a few hearings on the subject. Ultimately, I think we could even dispense with that stage.

We now have to decide if we are going to help the microbreweries or not and, judging by their silence, I think the Liberals have already made up their minds. They will favour the large breweries over the microbreweries. We will not, however, be able to support the government in this instance.

[Pierre Brien, Bloc, Témiscamingue, QC]

Mr. Speaker, it is my turn to speak to Bill C-47, which is a missed opportunity for the government to introduce measures to help microbreweries in this bill.

Like several of my colleagues, there is in my region a microbrewery that sells a commercial beer under the appellation 8. The administrative region of Abitibi--Témiscamingue being region 08, that is the name the investors gave their beer.

These investors came from Belgium are now well established in our community and in our region and they chose—which is not always easy—to invest in a product that appeared to be very promising, with an image of the region that could perhaps be sold everywhere in Quebec, of course, but also outside Quebec, and which would at the same time be an instrument of commercial development for them and of regional development for us, to promote our region.

However, there are a lot of barriers to lower to enter on this market. Obviously, everybody knows the power of the big brewers; I am speak only of their competitiveness for the time being. I am not speaking of their lobbying power; I will come back to that later.

It is therefore not easy because of course when only small quantities are produced, it is a real challenge to keep prices competitive when distributing a product. Businesses have to find niches in various ways. It is obvious that the distribution costs are much higher when small quantities are produced and the product is not sold in large stores.

This also raised the whole issue of the capacity to produce small quantities, at the beginning, while maintaining the quality of the product, because consumers demand quality, and rightly so. This is a real challenge. These people have successfully dealt with it for a long time, but they have had problems. There were some temporary work stoppages, during which they had to close down.

This is why every little bit counts. In this sense, I remember that a few years ago already, other microbreweries that had united had come here to Ottawa. I met them with my colleague from Saint-Hyacinthe--Bagot. There is nothing new here. These concerns have been known for a long time. We all know that the taxation system penalizes them in many ways and that it impedes their development.

In a very simple way, it would not have been complicated to include in a bill like this one some changes to the tax system that could have given a bit of a boost to these microbreweries. I have mentioned the been known as 8 in my area, but there are others, in some other very well known areas, that have succeeded in breaking into the market and filling a need among customers interested in this type of beer. We have the choice between helping our own businesses or letting imported beers take over the whole market in that niche. For some other countries have chosen to support their microbreweries.

Earlier, I was reading in one of my colleagues' speech that in the United States, for example, the size of a microbrewery's production is defined as one million hectolitres. In the U.S., under the tax system microbreweries are subjected to, the sale of 24 bottles yields $1.12 in taxes whereas here the tax amounts to $4.09 and even more when the beer is sold in a licensed beverage establishment such as a bar; in this case, the tax can amount to $6.12.

As we can see, the tax ratio imposed on our products is four to one and even six to one, compared with what is done in the U.S. which has chosen to support this industry.

There are plenty of interesting statistics in the previous speech. It was clearly demonstrated, however, that our taxation system does not suit the present situation.

Yet, it appears that, on the other side of the House there is considerable silence. I am pretty surprised today to see the hon. member for Abitibi--Baie-James--Nunavuk silent. Surprised because the brewery I referred to, which produces La 8 beer, is in that riding, not in the riding of Témiscamingue. It is, nevertheless, a pleasure for me to stand up for the entire region. The brewery is, to be specific, located in Amos.

I would have liked to hear from the hon. member, or at least for him to show some interest at other stages, but I never heard a peep from him, either in the region or here in the House of Commons, or in committee, to bring forth the point of view of the people who work there and would appreciate some support.

Where are the other members from Quebec? I remember a few years back—at political conventions, one can sit in as an observer—I went with one of my Bloc Quebecois colleagues to a convention of the Liberal Party of Canada. In an effort to promote the products, the delegation had organized a tasting of Quebec beers from microbreweries. That is all very fine and well, but when they are here in parliament, where they have been sent by their constituents and where they have the power to do something, where are they all of a sudden? There is more involved than just organizing tasting sessions. They must also support these people if they want to be able to organize more such sessions in the future, because the product still exists and will have been able to develop. It is all very fine and well to make nice gestures, but they now have an opportunity to do something tangible.

It is too easy to say “No, that was not the initial purpose of Bill C-47”. If it was not that, what else is there on the table? Why is there no other government initiative on the table? The Minister of Finance tells us that they are taking this seriously. He is taking it so seriously that no other legislative measure has been indicated. He did not even indicate anywhere that he was prepared to hold a debate.

[Serge Cardin, Bloc, Sherbrooke, QC]

He is the former mayor and also a former Conservative member. He is known for changing his mind quite often.

When he was mayor, he protected the interests of that microbrewery located in his community. He worked hard to protect it, to get the licences it needed, to ensure it could expand, because the microbrewery was located right next to his pub. So distribution was not a problem. The beer was sent directly to the pub next door.

The Liberal member for Compton—Stanstead is not rising to protect the interests of a microbrewery located in his riding. What is he doing? I think he is a fellow citizen of mine. If he had problems, I would probably come to his aid. Yet, if the microbrewery located in his riding has problems, he does not care. He relies on the Bloc Quebecois member for the riding of Sherbrooke to protect the interests of the microbrewery that is located in his town, even though he is the member representing that riding.

So, this is a person who can change his mind. We saw it, he changes his mind about parties and about values. He will probably also change his mind about the beer that he drinks and switch from the beer produced by that microbrewery to beer produced by Labatt or Molson probably.

I believe it is essential that Liberal members take a stand. A number of them have microbreweries in their riding. They must take a stand, because this is the thing to do. Of course, the Excise Act brings in large amounts of money for the government, but the primary objective should be to help the industry. We must help industry develop. It should be the government's duty to do so, instead of working against it to ensure that only two large breweries reap all the benefits.

The beer produced by microbreweries is a quality product in my opinion. The people who work in the sector are competitive and they work hard. I will repeat what I mentioned earlier, when I said that distribution is very difficult. The microbreweries have to compete with the big breweries, which import beer with very low excise taxes. So it is not an even playing field.

One of the objectives of the Excise Tax Act is to manage industry, whether it be microbreweries or another sector, such as wineries. However, I think it is important that the government review its position and ensure that Bill C-47 includes beer and microbreweries.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, first I want to congratulate my colleague from Saint-Hyacinthe—Bagot, as well as my colleague from Drummond, a riding that is very close to mine.

Today's debate is intoxicating in many respects. The microbrewery industry is quite important for Quebec and there is fair number of jobs at stake. Regarding Bill C-47 and the Excise Tax Act, the purpose of that act is to enable a government to levy taxes and to collect rather large sums of money. It is also used to manage and give direction to our economy.

In this case, we can see that it is the first element that guided Liberal members on the finance committee, including the chair. First, when we talk about modernizing the Excise Tax Act, which covers a multitude of products, we want to see to it that the economy and the industries related to these various products are as thriving as can be.

In this case, when 28¢ a litre of beer are charged to microbreweries, and we know what their situation is, while American microbrewery beers are taxed only 9¢ a litre, there are questions to be asked since we know that Labatt and Molson, the big Canadian breweries, basically control the distribution of imported beers.

When we examine the situation a bit more closely, we find that there is some collusion where, it must be said, the two main breweries control more than 90% of the beer market, and that includes of course imported beers that are taxed only 9¢ a litre. We realize at this point that there is a big problem in that regard. However, the government does not seem interested in helping microbreweries save their 2,000 jobs.

People must fight at every level. As for distribution, products must be of good quality. More and more, we find that microbreweries operating in Quebec and Canada have developed a quality product comparable to the best products in the world. Indeed, our microbreweries win more and more international prizes.

We find that the government is not there to support the microbrewery industry's development but rather to support mainly two big companies, Labatt and Molson. We cannot help thinking that there appears to be a conflict of interest here. It is crystal clear. It is not surprising that the ratings given by Quebecers and Canadians in public opinion polls to people in power for credibility and honesty are so low. When we see situations such as this, we cannot help but think like that.

Therefore big companies like Labatt and Molson are given preference. Globally, the objective of modernizing the excise tax act has not been reached. In fact, we are going in the opposite direction.

A number of issues could be mentioned, but one is of particular interest. What do Liberal members do when they have microbreweries in their ridings?

I have a microbrewery in my riding, in Lennoxville to be more precise. It is a small brewery called the Lion d'Or. It does not produce 300,000 hectolitres a year; it is really quite small, but it is extremely important and it is located in Lennoxville. Besides that microbrewery, I also have the Liberal member for Compton--Stanstead in my riding. So, he is one of my fellow citizens.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Mr. Speaker, first I would like to thank my colleague from Saint-Hyacinthe—Bagot for giving me the opportunity to discuss Bill C-47, particularly because we have a microbrewery in my riding, Boréale, which serves people from part of North Montreal.

Its employees and its president are doing an excellent job but, because of difficulties with the excise tax, they cannot make a breakthrough with the quality product that they offer.

When we, in the Bloc Quebecois, were told about Bill C-47, I agreed with my colleagues that we could probably support it. However, in the last months, the situation with the bill has worsened.

I remember that I had the opportunity, about a year ago, to replace my colleague from Saint-Hyacinthe—Bagot on the Standing Committee on Finance and to hear about the problems experienced by Canadian and Quebec microbrewers.

I thought that, this time, the government would have had the decency to meet their demands, so they could operate under the same conditions as microbrewers in the United States or in Europe. However, I am very disappointed that the these microbreweries have to pay a lot, 28 ¢ in Canadian currency. This is a lot for a microbrewery that has to compete with other microbreweries. For example, American microbreweries only pay 9 ¢ a litre. How can they be expected to find a place on a market they are entitled to have access to, just like aany other Canadian brewery?

I find it somewhat deplorable that Canadian microbreweries are being forced to be minor players on this market which, as a matter of principle, should be open. I think that everybody should have an opportunity. Unfortunately, these microbreweries and their employees are victims of a tax policy that, by the way, seems more and more to have been dictated by the big brewers, which are good buddies of the current government.

What I also find disappointing is all this collusion between the wealthy and the federal government. Clearly, considering the composition of the committee and the fact that its chair is the hon. member for London West, who happens to be the wife of one the executives of those big breweries, there is something fishy. People are not crazy. I think Canadians realize what is going on.

Two thousand employees depend on the microbreweries, two thousand people who, in order to survive and progress, absolutely need the help of the government. The Canadian brewers who are quite rich do not care about the survival of these microbreweries and their employees.

If these microbreweries disappears at an annual rate of 1%, large brewers earn $17 million more a year. If that money went to microbrewers, regional and local economies could continue to function. I think this situation is shameful and horrible.

There is a conflict of interests on this issue. There obviously is collusion to eliminate Canadian microbreweries. Large Canadian breweries are predators. Molson and John Labatt are predators who are actually preventing our people from making a living.

When we look at the history of Canada and even of Quebec, these are the very people who founded these huge breweries, going against historical trends in Quebec in the process. There is a very large number of microbreweries in Quebec, and I believe that there is a clear intent to take away part of the power that Quebecers have through microbreweries.

In Bill C-47, wine, spirits, tobacco and distillery products are all mentioned. We are asking that beer be included. Why should it not be included? It would be normal and logical.

It is clear that the federal government and the members of the committee are in collusion to do nothing. I understand why only 11% of Canadians trust their politicians. In a situation such as this, I think it is absolutely normal that someone who makes a decent living in microbreweries believes that they want to get rid of it. People do not trust this government nor those who are making the decisions and passing the laws. I think it is absolutely understandable.

We have to modernize our parliamentary system and our laws. ITo do that, we have to dare to condemn what is going on. This is what the Bloc Quebecois is doing, and I believe that it is standing firm in its opposition to this bill.

We say to the population of Quebec that it is inadmissible and unacceptable that the federal government is acting in collusion with large companies, which are making money at the expense of Canadians and Quebecers. I invite the people in my riding, where we have Boréale beer, to remember this at the next election.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

As my colleague from Laval Centre just said, it is because it is totally disingenuous. It is also because if members of the committee had given their unanimous consent for this amendment to be ruled in order, it could have been accepted as such by the committee.

One can bend over backwards to try to justify such a decision. One can invoke all kinds of legal arguments and cite all kinds of precedents when looking for an excuse to avoid doing something.

Obviously, in the case at hand, the government was not interested, far from it, in doing anything whatsoever on this issue.

The Brewers Association of Canada wrote a letter to the chair of the committee, giving its opinion on the inclusion of microbreweries in Bill C-47 with regard to a possible exemption.

In the last paragraph, the Brewers Association of Canada pointed out that it totally supported such an exemption for microbreweries, but it clearly stated that, in light of its prior agreement with the government, it could not support including it in Bill C-47.

We certainly have good reason to be concerned about this type of agreement between the Brewers Association of Canada and the government.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, first, I would like to join with my colleagues in congratulating the member for Châteauguay for the excellent speech he just made here, in the House.

I am also pleased to speak to Bill C-47. As I have said a few times, when I say that I am pleased to take part in a debate, it does not mean that I am pleased with the provisions set out in a bill, Bill C-47 in this case, on the contrary.

I considered very carefully whether I should address this bill. Why? Because I wanted to avoid taking part in a partisan debate that could have a demagogic undertone. However, I happen to have in my riding a small microbrewery called La Seigneuriale, which is in a rather unusual situation, since it was bought by Sleeman, a major brewery, a few years ago.

It is a situation that most microbreweries will have to face pretty soon. They will either have to close down or let their fierce competitors, the large breweries, take over. This competition amongst the large breweries does not exist only at the counter, in the corner stores, the groceries and the liquor stores. It even exists here on the floor of this House. It does because the large breweries go as far as trying to influence the decisions of the lawmakers that we are to put the microbreweries in a more than precarious position.

The amendment moved by my colleague from Drummond is simply an attempt to make the government take a step back from a bill that has obviously been prepared very quickly—I am trying to be polite here. However there are those who would say that it was prepared taking certain interests into account.

If the government believes in our role to preserve the general interest and not the special interests of lobbyists who generously contribute to certain campaign funds, it has to acknowledge the amendment proposed by my colleague from Drummond, put things into perspective, review the whole issue and come back with a formulation that will be much more acceptable, taking into account the general interest.

This bill is fundamentally flawed in that the excise tax provisions excluding for example small wine producers do not apply to small beer producers. We have to wonder why some small scale producers of certain spirits would be excluded but others would not. Why? I believe we have given in the last few days a number of explanations as to why the government has chosen to exclude microbreweries from Bill C-47.

Now, there surely is an explanation. As I was saying, Bill C-47, in its present form, has a major flaw that we tried to correct in the finance committee. My colleagues, the members for Saint-Hyacinthe--Bagot and for Drummond, tried to correct this flaw in good faith, always in the public interest.

With public interest in mind, we came to the committee and said: “We will try to correct this flaw”. The chair of the committee then questioned the admissibility of the amendment. We must first ask why the chair of the Standing Committee on Finance refused the amendment. I will come back to this after question period, but this question about the motivations of the finance committee chair is fundamental.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, I thank you for recognizing me once more in this debate. I will make the link between Bill C-47, microbreweries and the hon. member for Beauharnois--Salaberry.

Why? Because this is another opportunity to point out that there is a microbrewery in his riding, Brasserie Saint-Antoine-Abbé. I hope the hon. member for Beauharnois--Salaberry will stand up, just as we do to defend the people and the small businesses of Quebec, for a microbrewery that needs his help. I explained this morning why it needs help.

In the last two days, the Bloc Quebecois has been demanding that the amendment moved by the hon. member for Saint-Hyacinthe--Bagot be discussed in committee. If I am singling out the hon. member for Beauharnois--Salaberry, it is because there is a microbrewery in his riding. He too is aware of the problems it is struggling with, or he should be. But I hope things are working out nonetheless.

In the last five years, 38 out of 86 microbreweries have gone under. Why did the government refuse to talk about this problem in the context of the excise legislation? It was a golden opportunity to do so. In the last five years, people have been working hard to find a solution. The government said it needed some data to determine whether the taxation should be reduced.

The Brewers Association of Canada mentioned, in a letter to the chair of the Standing Committee on Finance, that it supported a tax reduction, but that this reduction should not be included in the bill.

How can the member for Beauharnois--Salaberry that his government should behave in this way? This is a fine mess. Last week, in my riding of Châteauguay, this same member declared that the Bloc Quebecois was against Bill C-47, while he was talking about highway 30. Imagine how well he knows this issue. Today is the day we are debating Bill C-47.

The member actually wanted to explain why we voted against Bill C-49. He made the headlines, saying that the Bloc Quebecois is opposed to highway 30 and to the Canadian strategic infrastructure fund. How demagogic can one get? The member did not even refer to the right bill, and then he wondered why the Bloc Quebecois voted against Bill C-49, not Bill C-47.

Many reasons justified our position. It was not only the establishment of the fund. There was also the whole issue of the employment insurance fund, all the money not available or not transferred for health. There were also airfares in the regions. So, there were many reasons for the Bloc Quebecois' opposition to Bill C-49.

However, the member would rather keep saying that the Bloc Quebecois is against legislation. I would like him to count the number of times when I, as member for Châteauguay, and the Bloc Quebecois have talked about highway 30, have asked that the project be made a reality and that the necessary amounts be invested in the Canadian strategic infrastructure fund. Then I would like him to count the number of times when he, the member for Beauharnois--Salaberry, dared to ask the House to invest those funds. The result of those calculations will indicate who wants highway 30 the most, the member for Châteauguay or the member for Beauharnois--Salaberry. The answer is obvious.

Once again, I am calling on the member to stand up, but this time I am talking about Bill C-47. The newspapers are talking today about Bill C-47, not Bill C-49. I hope the member will meet the management of the microbrewery in his riding and ask those people “Is it true there are taxation problems?”

I hope he will get some information and find out that, currently, in Quebec and in Canada, microbreweries have to pay a 28 ¢ tax on each litre of beer whereas their foreign competitors, the microbreweries of Europe and the United States, pay a 9 ¢ tax.

Worse still, large Canadian breweries have dared to sign distribution contracts with foreign microbreweries, which therefore compete with our overtaxed microbreweries. Moreover, large breweries are making money by doing this. We can imagine why the government wants to protect these large breweries.

We must not forget where a large brewery such as Labatt is located. It is in the finance minister's riding. In 1997, microbreweries had a 5.5% share of the market. Now, five years later, their share has dropped to 4%.

We see very well what large breweries are up to in delaying a tax reduction for microbreweries. When microbreweries lose 1% of the market , do members know how much more money goes into the pockets of the large breweries' shareholders? An amount of $17 million, for a 1% drop in the share of the market. It means a net increased revenues of $17 million in the pockets of the large breweries' shareholders, those who will donate money to the Liberal Party's coffers. This is the truth of the matter.

We saw what happened in committee. We saw why the Liberals voted against Motion No. 2 that changed the powers of this government and gave greater powers to committee chairs. The chair used these powers. I will not go back to the issue, I talked about it for 20 minutes. The chair's husband, Mr. Barnes, was sitting on the taxation committee of the Brewers Association of Canada. Incidentally the chair did not have the honesty to tell members sitting on the committee: “In these circumstances may I withdraw to allow a discussion on the amendment put forward by my colleague from Saint-Hyacinthe—Bagot?” She did not do so. I do not want to revisit the issue. I have talked enough about it earlier.

I go back instead to the case of the hon. member for Beauharnois—Salaberry. He is an hon. member from Quebec. Quebec microbreweries are not the only ones experiencing losses because of the current situation. In Ontario, 13 microbreweries have closed. In Quebec, we have lost 11. There were also seven in British Columbia, one in Manitoba and another one in Nova Scotia that had to close.

When will the Liberals represent their constituents, people who work in small businesses, instead of once again defending their own interests in order to crush the little people, the small businesses and fill their party's coffers? This is incredible.

I hope the hon. member for Beauharnois—Salaberry will meet the people who work in the microbrewery in his region and ask them if the numbers given today are correct. Is it true that microbreweries are part of the new association, the Canadian Council of Regional Breweries? I would like to know if the people in his riding belong to this association. Why? Because the regional council has asked my colleague from Saint-Hyacinthe—Bagot to put these amendments forward. The government refused to consider this possibility. The Bloc Quebecois was not the only one asking for this. The request came from businesses, people who need to have the tax on their microbrewery reduced to be able to survive. This is incredible.

When I was saying that I was making the link between the member and these microbreweries, it is because he mixed things up in the media. It is today that we are talking about Bill C-47 and it would be time for him to really deal with Bill C-47.

He would realize then why he should be working with us to defend our people, our businesses. I am being told that I do not have much time left, so I will conclude by stressing the fact that the Bloc Quebecois truly disagrees with how Bill C-47 was handled by the Standing Committee on Finance.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

I am sorry, Mr. Speaker, for not using the name of the riding of London West. I should have done that. Again, I apologize.

Still, as chair of the finance committee, she received a letter signed by a Mr. Morrison, who is not a member of this House, so I can say his name. He is the president and CEO of the Brewers Association of Canada.

He made some very important statements in his latter. First, he said:

We will support any measure aimed at attaining this objective--

A reduction in the excise tax for small brewers.

--but in light of our prior agreement with the government--

What prior agreement with the government? Where was that decision made? Was it at a fundraiser for the Liberal Party of Canada? We do not know. He added:

--we cannot support amendments which would include beer in Bill C-47.

No substantive argument was ever made to exclude the tax on microbrewery beer from the bill. We were always told that Bill C-47 is not expected to deal with beer. However, beer is defined in the bill. So, it was supposed to be addressed somewhere.

Then we were told that we had to wait for further studies. In this regard, we have all the necessary elements to correct the situation, particularly since there is a sense of urgency. The member for Berthier—Montcalm demonstrated this earlier. Several microbreweries have disappeared in the last few years, and others will be forced to shut down if changes are not made immediately to allow these beers to have a share of the Quebec, Canadian, American and European markets.

Everywhere else, including in the United States—and we know that the U.S. is the mecca of capitalism—it was determined that there could be a different tax for microbreweries: 9 ¢ a litre for them compared to 28 ¢ a litre for large breweries. We know full well that microbreweries cannot, in terms of production costs, compete with those who are engaged in mass production, but there is room on the market for microbrewery products. It would even be very beneficial for us if we allowed them to be successful.

In my own riding, the Brugel microbrewery, which brews a most original beer, is an asset to the tourism industry in our region. People have also started to produce very original cheeses to attract tourists and encourage them to stay. This microbrewery wants to sell its product on different markets. It is a known fact that competition for space on grocery stores shelves is fierce. Profit margins are important. Some grocers are willing to sell that particular product. However, those who buy beer may be willing to pay a bit more to get an original local product, but not as much as what would result from the position taken by the government on Bill C-47.

I know that the Secretary of State for Rural Development is currently touring the country telling people that the government is concerned about rural development. I would like the government to take real action, one single measure that would allow microbreweries to capture their market, by following up on the amendment that was proposed. There is no rush, nothing to prevent us from taking some time to examine the proposal. Nothing prevents the Standing Committee on Finance from studying this question as a priority. We could come up with a solution very quickly. We could simply lower the excise tax. A change in the excise tax would not turn the whole Excise Tax Act upside down, it would simply allow a product to be more competitive.

Of course, the status quo allows the big breweries to increase their market share. For the average person, having 96% of the market share, rather than 95% may not seem to be so important, but for shareholders and companies that want to make profits, each percentage point of the market share represents $17 million. Yet, this same $17 million does not create many more additional jobs. For microbreweries, however, every time a microbrewery sets up shop in a rural or small community, these one, two , three or four jobs add up to one or two more families in town. This is the type of choice we as a society have to make.

We do not want to prevent competition or to stop anyone from gaining access to the market. Quite the opposite. I think the government's position is similar to that of Mr. Morrison, which I find unacceptable. For a reasonably intelligent man, he is showing a total lack of respect.

On one hand, they agree that the excise tax imposed on small breweries should be lowered, but on the other hand they maintain that Bill C-47 is not the place to do it. They argue that more studies are needed and things have to done. They believe we should wait some more. We always hear the same old song when people are against legislation. They say, “We will set up a committee”. Or “We will develop a position and try to define something, and then we will decide. We will make a decision in six months, a year, two years or five years”. But six months or a year down the road, another five, ten or fifteen microbreweries will have closed their doors. The big brewers will have gained another 1% or 2% of the market. And in the end, we will be very unhappy with the results.

When the Bloc Quebecois stands up for these people, it does so because it feels that it is important to care about our small businesses, about these people who are earning a living in our regions and who try to compete. We try to alleviate the negative impacts of globalization.

The beer industry went from a highly regulated market, where each province was subjected to certain restrictions and could not easily export beer in the other provinces, to a slightly broader market. We made room for large businesses. Why not take the time now to allow microbreweries, as they did everywhere else in the world, to have their share of the market and be able to compete with other businesses?

Yesterday, I heard two Liberal members address this issue when I was here in the House. Afterwards, they came and said “You are right. We do not know why our government is not doing something, but we will still vote with it”. We must make a plea to Liberal members and tell them “Check in your ridings to see whether there are microbreweries. Go and ask them if it would be worth waiting one, two, three and even up to six months to settle the issue of microbreweries, so that by the summer they would know that they will be guaranteed a share of the market and be able to compete with American and European microbreweries”.

This would ensure that the bill and our review of the Excise Act are exhaustive. We will then be in a position to all vote together, after completing the work that was not done.

This is why I am urging all members to support the amendment of the hon. member for Drummond.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to speak to this amendment. Yesterday, I spoke about this bill before the amendment was put forward. The amendment reads as follows:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

“Bill C-47, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be not now read a third time but that it be read a third time this day six months hence.”

This amendment, which was put forward by the member for Drummond, is an excellent one, because it corresponds exactly to the actual stage we are at in consideration of this bill.

We realized that the government deliberately decided to exclude from the review of the Excise Act anything to do with beer, except the definition, which was left in the bill. If the definition has been left in the bill, then somehow we should be allowed to address this issue.

When the Bloc Quebecois' proposed amendments were considered in committee, the committee chair used her authority in an unorthodox way, in response to very obvious influences, and decided not to accept the amendment. It was not defeated in committee, but simply rejected.

Since then, all the microbrewers have come forward and said that there were agreements. For example, they had the support of the federal Minister of Justice, who had said that it was a good idea to have this amendment in the bill, so that taxes would be reduced for our microbreweries. Suddenly, they are realizing that the government has decided to abandon them.

The answer probably lies in the letter Mr. Morrison sent Sue Barnes on April 12, 2002—

[Michel Guimond, Bloc, Beauport—Montmorency—Côte-De- Beaupré—Île-D'Orléans, QC]

Mr. Speaker, I am pleased to speak to this bill, particularly because we must say at the outset that, when we talk about a problem of fairness that might affect microbreweries mainly, small breweries that are almost cottage-type, we are talking about regional economy.

As everyone knows, I come from the Saguenay—Lac-Saint-Jean region, even though I represent and live in a Quebec City area riding. Being from Saguenay—Lac-Saint-Jean, I know very well the impact of microbreweries in very small Quebec communities.

I could talk, among others, of the community of L'Anse-Saint-Jean, in the riding of Chicoutimi—Le Fjord. I am disappointed and surprised to see that the member for Chicoutimi—Le Fjord prefers to go after my colleague from Jonquière who is doing her best to defend the issue of highway 175, that he prefers to play petty politics, to use demagogy, instead of defending the microbrewery in the small village of L'Anse-Saint-Jean.

L'Anse-Saint-Jean is located on the Saguenay, in the fjord of the Saguenay, where the view is magnificent. It attracts many tourists, mainly in the summer, although its infrastructures are quite limited. The microbrewery in L'Anse-Saint-Jean provides jobs. This is what we mean when we say that we must develop fairness between the big breweries, Molson and Labatt for instance, and microbreweries.

In this regard, certain people took exception to the fact when the Bloc Quebecois pointed out the connection between the chair of the Standing Committee on Finance and her husband, Mr. Barnes, who, incidentally, is chair of the taxation committee of the Brewers Association of Canada and also a Labatt executive. This is not to say that a wife must defer to her husband or that she must parrot her husband's opinions. If the case had been exactly the opposite, the situation would not have been any more acceptable.

I could mention, as an example, the Minister of Transport and his wife, Penny Collenette, who holds an important position at Loblaws, a company that owns Weston and who also has a significant interest in the Quebec-based company Provigo. If the Minister of Transport used his position the same way the chair of the finance committee used hers to judge the amendments put forward by my colleagues from Saint-Hyacinthe—Bagot and from Drummond, which were aimed at ensuring a fair deal for microbreweries, it would be unacceptable. She used her position and that is why we are criticizing her.

I will go on with my example. The Minister of Transport, whose wife, Mrs. Penny Collenette, holds an important position at Loblaws, cannot make decisions favouring that particular company knowing that he has privileged information regarding that company. It is also a matter of apparent conflict of interest.

We have here a letter dated April 12 addressed to the chair of the House of Commons Standing Committee on Finance and signed by Mr. Sandy Morrison, Chairman and Chief Executive Officer of the Brewers Association of Canada. Incidentally, Mr. Morrison is a former Air Canada executive, which I know for having met him when he was with that company.

I think it would be relevant to read one particular paragraph from the letter sent by Mr. Morrison to the chair of the finance committee:

Our position remains unchanged: we fully support a reduction in the excise tax for small brewers.

This is what is called wishful thinking. Nobody is against virtue. It is just great. If the letter ended there, we could say that small brewers would have nothing to worry about.

So the Brewers Association of Canada, a large association, says this:

Our position remains unchanged: we fully support a reduction in the excise tax for small brewers. It is a priority of the BAC and we want to point out that small brewers in Canada urgently need such a reduction.

Even though the Brewers Association of Canada recognizes that fact, the government refuses to recognize it. What is happening with regard to the relationship between the chair of the finance committee and the senior officer of the Brewers Association of Canada?

The paragraph does not end there. Here is what the Brewers Association of Canada goes on to say:

We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government, we cannot support amendments which would include beer in Bill C-47.

What does that mean, “in light of our prior agreement with the government”? We can imagine the collusion, secrecy, dealings, secret agreements and sweet deals behind closed doors. We are left to wonder what the real motives of the government are.

We could dig out some information on the contributions of Labatt and Molson to the Liberal election fund, and we would have a nice illustration of what returning a favour means. You scratch my back, and I will scratch yours.

The goal of the Brewers Association of Canada is to eliminate the microbreweries. Microbreweries have taken a fair share of the market. Given the beer consumption in Canada, which is measured in hectolitres, I believe, a tiny 1% increase in the market share represents profits of $17 million.

Even if the word beer is defined in Bill C-47, the government suggests that our amendment to include beer in the bill is out of order. They refuse to accept the amendment moved by the Bloc Quebecois. Our learned colleagues opposite remark that there is nothing in the bill about beer. If that is true, why is the word beer included in the definitions in Bill C-47?

We could go on and on, but I want the Liberal Party to know that the Bloc Quebecois will keep fighting. I hope that those in Quebec who believe in the development and the future of microbreweries will remember where the Liberal government stood on this issue.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, representatives of the Bloc again do not seem to get it. They do not seem to understand what the bill contains. Some misrepresentations were obviously made in the House today by the hon. member. There is no question that we are talking about legislative and administrative changes to the bill.

The member opposite clearly has failed again to understand that these are legislative and administrative changes. The member again has failed to understand that beer is not part of the bill. The rationale was very clear that the issues were very different.

Bill C-47 deals with spirits, wine, tobacco and ships' stores. This has been the case from the beginning when the bill was tabled in December 2001.

The comments made by the member with regard to the chair have already been addressed. We will not go into that. It is utter nonsense and he knows it. Obviously I am not sure what the motivation is on the other side. Clearly the issue at hand is that we as a government are interested in bringing in a new excise act to deal with the taxation of spirits, wine and tobacco products.

It was clear in the 1997 report that we engaged the industry, the provinces and all stakeholders and they gave us very clear messages about moving forward. That is in fact what we have been doing. It is somewhat distressing to hear the sideshow comments which have absolutely nothing to do with the bill at hand which deflect from the fact that the member cannot talk about other aspects of the bill which he obviously must support.

There is no question that we are talking about the issue of ensuring that young people do not engage in smoking by way of increasing taxes. I do not think the member has a problem with that. Clearly, we are talking about making the regime, particularly for the vintners, more realistic in terms of the 21st century, instead of having them mired as they were in the 19th century. This makes ample sense.

It is important that we keep an eye on issues such as smuggling, the illegal production of alcohol, which again the industry asked us to respond, warehousing regimes and deferring the payment of duty. The bill deals with these issues. These are the real issues, not the nonsense that we continually hear from across the way on an issue which has no basis in fact.

I suggest we deal with the real issues and the content of the bill. The bill has the support, has been articulated and is now here before the House. The bill clearly addresses the kind of issues that we want to see as Canadians. Fines for alcohol related offences will be increased substantially. Serious alcohol offences will now be subject to the proceeds of crime provision. These are very important.

Therefore, I hope that a majority of members on both sides of the House will deal with the real issues. The issue of improving the administration and reducing compliance costs for the industries are very important. These are the real issues today. These are the issues we need to talk about and on which we need to focus.

I hope that when the time comes to vote on the legislation we will send a clear message of support to the industry that this needs to move forward. We need to be more effective and efficient, and that is what the bill addresses.

As members know, there are many benefits and I have outlined these in my comments before. Very quickly, a simple and more certain taxation structure, equal treatment for all parties and improved administration and lower compliance costs are important. There has to be greater flexibility for a business to organize its commercial affairs and enhanced protection for excise revenues. These are important. This will bring an act that is mired in the 19th century fully up to date.

We have heard comments and we have responded. Bill C-47 addresses the key issues of the day. It is a strong bill. When it comes to issues such as beer, the Department of Finance is reviewing the proposals that have been put forth and we will respond in an effective and timely manner.

However that is outside the purview of the bill. Talking about beer is like talking about jet fighters. They have about as much relevance to Bill C-47 as beer does. I challenge the hon. member on the other side to stick to the issues rather than trying to debase the House with needless comments. If the hon. member has nothing to say he should do what his mother probably told him and not say anything. In this case he would be better off to stick to the facts and the issues.

At the end of the day we seek to bring forth a modern legislative and administrative framework which would be important for the industry. It would be important for the people involved with spirits, wine and tobacco. It would be important for all concerned. It is important to stick to the issues at hand. We must make sure we address what we have heard from the provinces and the industry so we can adopt legislation that would benefit everyone concerned.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I thank my colleagues for their tireless support, especially on an issue which is not one of the easiest ones we have had to deal with since our arrival in the House of Commons.

It is always troubling that Liberal members confuse human feeling and sexism with cases of corruption and utter dishonesty. We have demonstrated this over the past few days. One cannot be both judge and jury in a position as important as that of committee chair.

Had the member for London West been a man, this would have changed nothing. We would still have tried to get to the bottom of the process whereby a bill such as Bill C-47 gets passed.

The amendment we put forward earlier allows us to voice our criticism of the unfairness and irregular proceedings in the Standing Committee on Finance and in the Department of Finance since this review of the Excise Act first began.

We are moving that adoption of this bill at third reading be postponed for six months so that we can get to the bottom of this process, which is unworthy of an institution such as the House of Commons, unworthy of us as MPs and, a fortiori, of anyone holding the position of committee chair.

This is not how Bill C-47 now before us should have looked. Why? Because Bill C-47 amends the Excise Act, a comprehensive measure. We have been studying the Excise Act since 1997. Since becoming a member of the Standing Committee on Finance in 1994 I have followed all the committee's deliberations, despite what a Liberal member may have said earlier. We have been looking at this review since 1997. We cannot have a general excise tax whose provisions cover a range of products including wine, spirits and tobacco, and leave out one of these products without something looking suspicious.

In the case of Bill C-47, that is what has been done. The government has introduced a review of the Excise Tax provisions for all products except beer. Why? Because an amendment to the Excise Act was in order with respect to beer and the way microbreweries were dealt with.

Earlier, I was listening to the parliamentary secretary to the Prime Minister. He does not know a thing about this issue. The only problem that confronts microbreweries is an excise tax that is too high compared to what their American and European competitors have to pay. That is the only problem. Eliminate this problem, ensure adequate, proper and fair competition—does the notion of fairness exist in the heads of Liberal members opposite?—and microbreweries no longer have a problem. From then on, the competition would be based on the quality of the products. Quebec and Canada are not afraid to see the various products of their microbreweries compete with beers from all over the world, because we have good products, good brewers and good workers in that industry. However, the government must provide a level playing field to ensure fair competition.

This is what we are asking of the Canadian government. This is what was supposed to be included in the new bill and in the proposed amendment to the Excise Act. But we are dealing with hypocrites in the brewery sector. Officials from John Labatt and Molson, who are members of the Brewers Association of Canada and who have been saying since 1997 that they want to help microbreweries correct this injustice, shot them in the back and stabbed them during the legislative process. This is what has happened since 1997.

Recently, we learned that there has been an agreement since 1997 between large Canadian breweries, namely John Labatt and Molson, and the Department of Finance not to include beer in the review of the Excise Act. The only product that is not included and that John Labatt and Molson asked not to be included is beer produced by microbreweries. The president of the Brewers Association of Canada, Mr. Morrison, sent a seemingly innocuous letter in which he tells the Chair of the Standing Committee on Finance that reducing the excise tax must be a priority, that it is a matter of survival for Canadian microbreweries.

It is urgent, but at the same time they do not want the excise tax to go down. What a brilliant lobbyist this president of the Brewers Association of Canada is. That was the wake-up call for microbrewers. And the secretary of state had the gall to argue that we do not have the support of microbreweries. I have to be careful here and not use unparliamentary terms.

There is now an association representing Canadian microbreweries on this issue. It is the only one. It is called the Canadian Council of Regional Brewers. We have the support of this organization, since it asked us to move, before the finance committee, the amendments that were rejected for some frivolous reasons by the member for London West, whose husband is one of the seven directors of Labatt Breweries and also the chair of the taxation committee of the Brewers Association of Canada, which urged us not to reduce the excise tax. The president of the council is Bob King, who also happens to be the CEO of a microbrewery in Alberta.

I just have one little message for my Alliance colleagues who supported our amendments on the first day but later changed their minds. They should realize that we are standing up for their own constituents. If the pressure from Labatt and Molson is getting too much, they should transfer their calls to us. We are not afraid to talk to the directors of Labatt and Molson. We were also subjected to pressure from Labatt, but we held firm. They should do the same to defend their own people. When Bob King has to write to us to extend his support, it means that he does not have the support of the Alliance, and that is too bad.

Stop being being pressured by John Labatt, join with us and stand up for your constituents who work in microbreweries, especially as the president of the brewers association is a fellow from Alberta. Bob King is from Alberta. He is not from Quebec, he is not a separatist. However, he has a social conscience. He knows that if there is no microbrewery left in Canada, the big breweries will take over their share of the market and it will result in a smaller number of products, which will be to the detriment of consumers and industry workers.

Why jeopardize the future of breweries in Quebec and Canada by maintaining an unfair tax treatment as compared to the competition? Because of a big brewery, John Labatt, which is lobbying, acting like a cowboy thinking this is the Far West and it can whip us into submission.

We will stand up to John Labatt and Molson and stand up for our own people. We will stand up for microbreweries. I am asking Alliance members to do the same and to stop acting as John Labatt's lap dogs.

Earlier, in his wisdom, the secretary of state said--I hope the Prime Minister will replace him because he is pitiful--“Listen, we cannot help microbreweries through taxation. It is not good. This is not good regional development policy”. But he knows nothing about this issue.

We are not asking to help regional development through microbreweries, they are already competitive, they put out fantastic products. All we are asking of the government is to put them on an equal footing with the foreign microbreweries that are invading our market and competing unfairly because they benefit from a preferential tax system.

We are also asking the government to open its eyes. Mr. Speaker, could you tell your Liberal colleagues to open their eyes wide open. It is not the Holy Spirit who is flooding the Canadian market with beer from U.S. microbreweries, it is the big breweries, John Labatt and Molson. They are buying exclusive distribution rights to distribute and selling beer from American and European microbreweries on the Canadian market to sink Canadian microbreweries, all the while saying that they are standing up for them.

I am asking my Liberal colleagues to stop letting people walk all over them and to open their eyes. They call themselves great Canadian nationalists. My eye! One cannot be a Canadian nationalist and work solely for big businesses at the expense of Quebecers and Canadians who want to feed their families and develop a quality product, and to do so on an equal footing with their foreign competition.

Give us the same fiscal tools. Give microbreweries the same fiscal tools and the same chances. You will see that we can beat foreign microbreweries on the Quebec and the Canadian market. Do you know why we will beat them? Because we have the best product. We have the best variety of products. We have the best tasting beers in the world. And I am not afraid to say so. We also have the best prices. However, we have to live in a fiscally competitive world and the government has to wake up and stop groveling before John Labatt, Mr. Morrison and John Barnes who, by the way, is the boss of the latest lobbyist for John Labatt who lobbied the Standing Committee on Finance and the finance department so that the excise tax would not be reduced.

I did not make this up. On the Internet, under lobbyist, you can find the name Geoffrey Trussman. His reference and boss at John Labatt's is John Barnes, the spouse of the member for London West who is also chair of the Standing Committee on Finance.

[Bernard Bigras, Bloc, Rosemont—Petite-Patrie, QC]

Mr. Speaker, I thank my hon. colleague for practically turning the floor over to me in this debate. It is with great pleasure that I speak to, among other topics, the amendment put forward by the member for Drummond concerning Bill C-47, which reads as follows:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

“Bill C-47, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be not now read a third time but that it be read a third time this day six months hence.”

The reason I am speaking to the bill today is that, in my opinion, it is seriously detrimental to businesses in Quebec, which have always done very well economically and which offer Quebecers a product which meets their expectations and which, to a certain degree, deserves the full attention of this government, with a view to providing the necessary tax incentives to enable Canada's and Quebec's microbreweries to continue to market their products.

Generally speaking, Bill C-47 amends and, of course, introduces a number of technical improvements to the Excise Act. Here is a sampling:

the continued imposition of a production levy on spirits, tobacco products and raw leaf tobacco and the replacement of the existing excise levy on sales of wine with a production levy at an equivalent rate;

the replacement of the excise duty and excise tax on tobacco products other than cigars with a single excise duty;

more comprehensive licensing requirements and new registration requirements for persons carrying on activities in relation to goods subject to duty;

explicit recognition of limited exemptions for certain goods produced by individuals for their personal use;

tight new controls on the possession and distribution of goods on which duty has not been paid;

updated administrative provisions, including new remittance, assessment and appeal provisions that are similar to those under the Goods and Services Tax/Harmonized Sales Tax legislation;

updated enforcement provisions, including new offence, penalty and collection provisions;

Basically, we find it regrettable that the bill contains no provisions to reduce the excise tax on beer and microbreweries. We thought that the bill should naturally include beer and reflect the situation in which the microbrewers of Quebec and Canada find themselves.

I would remind the House that a number of Quebec and Canadian microbreweries are in dire straits. I would also remind the House that several of them have gone bankrupt and have had to close down because in Canada there is a preferential tax rate, clearly enshrined in the legislation, favouring the big breweries. Finally, I will remind the House that 38 out of the 86 microbreweries in Canada have had to close down. These small businesses do not represent a significant part of the Canadian beer market--only 4% to 5%--while the big breweries account for 90% of the market.

It is a growing industry. These dynamic small businesses are offering a product that meets consumers' expectations. It also meets the expectations of people in the regions.

Such a small sector as that of the microbreweries, which accounts for only 4% of the market and is steadily growing, should not be faced with tax measures or a tax system that puts them at disadvantage compared to the big breweries, which already have a huge share of the market.

I say it quite frankly because when we look at the situation in the United States, we realize that the American tax system is quite different from to the one we have here in Canada. For instance, 28 cents a litre is levied on Canadian products while only 9 ¢ a litre is levied on microbrewery products in the United States. Thus, in the United States, the government is collecting 9 cents a litre for beer produced by a microbrewery as compared to 28 cents a litre in Canada on beer produced here.

There is also the whole issue of the definition of microbreweries. In the United States, a microbrewery is a brewery producing less than 1 million hectolitres per year. In Canada, a microbrewery is defined as a brewery producing 300,000 hectolitres of beer. Therefore, in the United States a brewery producing less than 1 million hectolitres is by definition a microbrewery and, as such, is entitled to a more preferential tax rate, 9 cents, whereas in Canada, the threshold and the definition are, to a certain extent, a disadvantage for microbreweries.

Let me give the House a very real example: for every 24 bottle case of microbrewery beer produced in Canada, the federal government gets $4.09 when this beer is sold at a grocery store and $6.12 when it is sold in a bar. In the U.S., the tax on 24 bottles of microbrewery beer produced in the States is $1.12.

What does this all mean? It gives a clear competitive and tax advantage to microbrewery beer produced in the U.S. and sold in Canada, which, in turn, has led to the demise these last few years of a number of microbreweries; 38 out of 86 microbreweries had to close their doors, including seven in British Columbia. That expertise was developed not only in Quebec, but also in British Columbia. Thirteen microbreweries went out of business in Ontario, 11 in Quebec. In regions like Saint-Hyacinthe, Amos, Saint-Eustache, Baie-Saint-Paul, Montreal and Cap-Chat, small local businesses had to close down. Microbrewers themselves blame the tax system for placing them at a severe competitive disadvantage compared to the major brewers.

If the government opposite wants to make regional development one of its priorities, it should realize that its current tax policies have hurt smaller businesses that only have a 4% share of the market. Since the government keeps picking on small businesses, it is not surprising that jobs are being lost and that some of the businesses that had become a symbol for a whole region are no longer able to provide Quebecers and Canadians with top quality beer and even cottage brewery beer.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I am pleased to speak again today on Bill C-47, more particularly on the amendment of my colleague from Drummond.

I would like to commend my colleague for her amendment. She has been insightful. Thus, she is allowing the government to get out of a mess that the committee chair put it in, and that it agreed to.

We know that, in the Standing Committee on Finance, government members suffer from the fish school syndrome. When someone on their side says something, they do not try to know what is happening; they follow, they follow the fish school approach.

I would like to read the amendment to the motion at third reading stage of Bill C-47, which my colleague from Drummond has moved:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

“Bill C-47, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be not now read a third time but that it be read a third time this day six months hence.”

This is working seriously: working to solve problems that have been created since 1997. Those who acted in good faith did not expect this. As the Alliance member said earlier, the excise tax is a major source of revenue for the government. The Excise Tax Act mentions wine, spirits, tobacco, and beer as well. Since 1997, there have been talks about modernizing the excise tax. The Bloc Quebecois was in favour.

My colleague from Drummond said that in clause 2, on line 15 of page 2, beer is mentioned. However, we realized during the debate in committee that beer was not mentioned anywhere else in Bill C-47.

Yesterday, the Parliamentary Secretary to the Minister of Finance told me that this would be discussed later on, that it was not necessary to discuss it now. When a bill deals with a particular issue, we must talk about it. Why take a small part of an act and put it elsewhere saying that it is going to be discussed later? We never know what later means. To reassure everyone, we must do a complete study of everything that is included in a particular piece of legislation.

That is not what the Liberal Party is doing, nor is it what the finance committee and its chair did. As my colleague from Joliette, whom I congratulate on his remarks, was saying earlier, the issue of microbreweries is a regional concern.

In my region—I said it yesterday and I will say it again today because it is very important—we have a microbrewery called Brasserie de l'Anse, which is located in the small community of Anse-Saint-Jean. This small community needs small businesses to survive and to retain its identity. The Brasserie de l'Anse enables that community to do that. It is located in the riding of the member for Chicoutimi.

He rose in the House yesterday. I said to myself “He is finally going to say something to defend the interests of his constituents”. But I was very disappointed. He talked about public funding, about members of the Bloc Quebecois who are lingering in Ottawa and who are not doing anything. I never thought that I was not doing anything here. If he is only a liaison officer for the Liberal Party, then it is not surprising that he should behave this way.

I can say that we are here and that we are working very hard to defend the interests of our constituents. As a member of the Bloc Quebecois from the Saguenay—Lac-Saint-Jean region and as chair of the caucus of Bloc Quebecois members, I look after the riding of Chicoutimi—Le Fjord.

I am very pleased to support the brewers in L'Anse-Saint-Jean, and I take their interests to heart. That is why I support the amendment moved by my colleague. The government should pause and reflect. It has left out of this bill an important part, and it affects the interests of workers and communities as a whole in the regions. It should do its homework once again, and undertake a new examination of this bill.

We are not asking for anything special. We are not asking for something that did not exist before. We simply want to abide by the Excise Tax Act. That is all.

I am very happy that my colleague moved this amendment. If the government is serious, it will rise to the occasion, and we will have a real debate on the microbreweries issue.

Microbreweries are found not only in Quebec, but throughout Canada. Our communities are proud of them. As my colleague from Joliette said earlier, I am very proud of my sense of belonging, and I am very proud of my own identity inside Quebec. I am very proud to say I am from the Saguenay region. A microbrewery is in touch with the identity that has developed within a specific area.

Mr. Speaker, you come from another region. You have another sense of belonging and other tastes, and you are proud to express them. Microbreweries are small or medium size businesses that represent a region and they also play that role.

I want them to keep on doing that. I want the government to remove its blinkers and say “Yes, we will look at the bill again. We will look into this excise tax business, which concerns everything we wanted to deal with at the beginning”. The government should review the matter seriously.

As we were saying, we agreed with Bill C-47 before our colleague from Saint-Hyacinthe--Bagot realized what had happened. We could not let this go through as it stands; it was too important. The Bloc Quebecois members are here to defend their respective communities. This affects my province and other communities throughout Canada.

I am a sovereignist from Quebec, but I have always respected everybody else's sovereignty and identity. We want each and every element to have its proper place in this bill. We want to ensure that each person and each company concerned, whether by the beer or by the tobacco issue, and each association be taken into consideration. We want a serious review of this bill.

Let the government members remove their blinkers, recognize reality and say “Yes, we will do our homework”. The Excise Tax Act has not been reviewed for a long time. Let us update it. There will not be another review for a long time. We have to do our homework carefully. It is true that this is an important source of financing for the government. It is also true that small communities and the microbreweries, which are important in their area, need some help.

The ball is in the government's camp. It is up to the government to do something. I hope that all the members will support the amendment moved by my colleague from Drummond.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, I would like to comment on the amendment standing in the name of the hon. member for Drummond. It represents an adequate response to the problem the Bloc Quebecois raised yesterday, actually, several weeks ago, concerning Bill C-47. This amendment is a six month hoist. We are moving this amendment to give us the time to correct unfair provisions in Bill C-47.

The legislation on excise tax and excise is comprehensive. It deals with wine, spirits, tobacco products, and beer. What is beyond comprehension is that Bill C-47 deals with all these products, except beer. It does not deal with beer, and it does not deal with the excise tax microbreweries have to pay.

How is it that this bill, which improves a general act that dealt with beer, does not mention it now? Even according to the brewers association, the situation is urgent. As I said yesterday, the president of the Brewers Association of Canada pointed out in a letter dated April 12, 2002:

We fully support a reduction in the excise tax for small brewers. It is a priority of the BAC and we want to point out that small brewers in Canada urgently need such reduction. We will support any measure aimed at attaining this objective.

Everyone agrees that it is urgent, for the beer industry and microbreweries, to have measures that would reduce the excise tax. Strangely enough, the only sector where it is urgent to make a decision is the one that has been excluded from Bill C-47.

With the amendment, we would have the opportunity to solve this problem for good within six months. This is urgent, and if we want to have a reasonable solution, it seems to me that the deadline that has been mentioned is really a maximum. I believe this is the spirit of the amendment, that is, to solve the problem as soon as possible, within six months at the latest.

Why must it be solved? This has been said before, but I think we must remind the House because the government side does not seem to be listening. In Canada, brewers, whether they are small, medium or large, pay an excise tax of 28 cents a litre. In the United States, large breweries pay 28 cents a litre and microbreweries pay 9 cents a litre. We immediately see the difference, which is huge. The American authorities collect three times less tax.

Of course, if we add to this the fact that, in Canada, a microbrewery is defined as a brewery that produces less that 300,000 hectolitres annually, while in the United States it is one million hectolitres, we realize that there are businesses three times as large as our Canadian and Quebec microbreweries that also benefit from tax reductions that are three times as great. This explains the catastrophic situation in the microbrewery sector, 38 of which have disappeared in recent years. There are only 48 left, including 19 in Quebec.

To illustrate what the loss of these microbreweries means, it is important to name some of them. I am convinced they will remind our listeners and most members of some brands they have seen or might even have tasted.

There is for instance Brasserie Massawipi, which was quite well known throughout Quebec, Brasserie Portneuvoise, Brasseurs Maskoutains, Beauce-Broue, Brasseurs de la Capitale, Brasse-Monde, microbreweries in the lower St. Lawrence and the Gaspe peninsula, Brasal, a German microbrewery, which was located, I believe, in the finance minister's riding, Aux-quatre-temps and Broue-Chope. These are a few of the microbreweries that have disappeared because of the government's inaction. The Brewers Association of Canada has said it, this is an urgent situation.

As I mentioned earlier, the only thing missing in Bill C-47 is the issue of microbreweries and the whole beer industry. Why? Because the big breweries do not want to talk about it. They decided to oppose it because they want to increase their share of the market. I mentioned it earlier, some microbreweries have disappeared over the last few years, but the others have seen their market share drop by 1.5% to 2%. So the disappearance of these 38 microbreweries benefited either foreign microbreweries or traditional breweries.

But this is not all. Not only are the big breweries hoping to increase their market share, but all of them are distributors for U.S. microbreweries. So they indirectly benefit from a higher excise tax on the production of Canadian microbreweries. They are taking advantage of the disappearance of the microbreweries to take over their share of the market. As we know, things are getting much more complicated in terms of consumption. With their American products, they are taking over the microbreweries' share of the market at the expense of our Canadian and Quebec products.

Despite what the letter sent by the president of the Brewers Association of Canada says, it is not in the interests of the major breweries to solve this problem. The government is helping the larger breweries to get rid of the smaller ones. This is unacceptable.

The microbrewery sector is extremely important in terms of regional development and cultural identity, especially in Quebec. What we drink and what we eat are part of our culture. Our microbreweries make us unique. And we are always delighted to taste products from other countries.

However, if the microbreweries were to disappear, no one would have the opportunity to taste these distinctive beers, for which we are well known all around the world. So, it is extremely important for regional development as well as cultural diversity, which is a clearly stated objective of the federal government as well as of the Government of Quebec and the Bloc Quebecois. The lack of provisions in Bill C-47 to promote the development and survival of Quebec and Canadian microbreweries undermines our cultural diversity. It also goes against the positions of the Liberal government.

Microbreweries are the victims of the collusion between the Liberal government and the major brewers. How did the government manage to avoid any discussion on this matter?

First of all, Bill C-47 just pretends to ignore the problem of beer and microbreweries. It does not address it, but it includes a definition of beer. Therefore, they initially had intended to deal with the problem.

When the government rejected the amendments proposed in committee by the Bloc Quebecois, and in particular by the member for Saint-Hyacinthe--Bagot, it met the expectations of the large breweries. I think many of us suspect that the government was mainly concerned with the Liberal Party fund when it made that decision. It is sad to say.

Yesterday, someone on the government side said that we were no longer interested in public funding. It is not true. The Bloc Quebecois does receive contributions from private businesses, but up to a maximum of $5,000. On the government side, it is like an open bar. In fact, the ethics counsellor had to ask the finance minister to return a $25,000 cheque given to him for his party leadership campaign. We are not talking about funding the party's activities or its election arrangements. We are only talking about a leadership campaign. Astronomical amounts are involved here, which have nothing to do with the kind of money received by the Bloc Quebecois from businesses. Unlike this government, we are truly at arm's length with the lobbies.

Discussions must resume, in the interest of the microbreweries, the regions and cultural diversity. That is why the amendment must be passed, so that the government can rectify the situation and do justice to microbreweries and the regions of Quebec.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Madam Speaker, I want to say a few words on the bill before the House today as well. Bill C-47 is basically a technical bill that applies to duties regarding wine, spirits and tobacco products.

It is a bill we support. It is not a bill of great significance in terms of a lot of change. We support the amendments from the finance committee regarding microbreweries. My friend from the Bloc Quebecois just mentioned the problems of microbreweries and I agree with him wholeheartedly as well.

While we are talking about this important tax bill I want to say that we need a debate about a fair taxation policy that would be fair and just for the ordinary citizens of Canada. It has been a while since we have had that kind of debate. The last time we talked about taxation was during the 2000 election campaign when the Liberal Party made a commitment to a $100 billion tax cut over five years. We had that debate during the campaign but there has been very little in parliament itself in terms of a debate about a taxation policy that might be of benefit to Canadians.

When I think of the bill before us and our taxation system we must look at two or three different changes. I remember talking to people in my riding on the weekend in Indian Head, Saskatchewan. People were talking about three priorities: the need for more investment in the public health care system, the need for greater investment in public education, and the need for an investment to deal with the farm crisis that is extremely dire now right across the prairies and indeed right across the country.

Not many people realize this but according to statistics, 2001 was the driest year in the history of the province of Saskatchewan. The 1930s were very dry years. In particular 1936 and 1937 were extremely dry years. They were the years of the great drought and the great depression across the prairies. However last year was the driest year in recorded history.

These are the priorities of the government. We must talk about a taxation system that is fair enough to meet the public's agenda and priorities and do what is best for the common good. In addition to this we have concerns about the lack of infrastructure in the big cities including rural Canada, the national highways policy, environmental cleanup and ensuring that we have a safe water supply.

These are all issues that require a great deal of public investment, which in the last number of years has been curtailed radically by the federal government. We have to talk about a taxation system that is both fair and provides enough money to ensure we have public investment for the good of all Canadians.

When we look at these we think of the projections the Minister of Finance has made time and time again. Every year he has made projections and underestimated the revenue available to the Government of Canada. We now have surpluses that go strictly into the national debt.

Last year, at the end of the year, the federal government had a surplus of $17 billion. That was applied to the national debt automatically, except for the $101 million the Prime Minister decided to spend on Challenger airplanes on the last day of the fiscal year. The money went entirely to the national debt.

I am suggesting we give ourselves as parliamentarians some flexibility to decide where we spend these unexpected, non-anticipated surpluses that are not budgeted for. In Saskatchewan, and in some other provinces, we have a fiscal stabilization fund. It is a fund that governments pay into during good times and draw money out of in difficult times to balance the budget, to meet public expenditures, public expectations, and to meet a crisis like the farm crisis and so on.

If we were to have a fiscal stabilization fund that the $17 billion would have gone into instead of being applied automatically to the national debt, this parliament could have had a debate as to what to do with the $17 billion surplus. We may have decided to spend it in four or five different ways. Perhaps some of that surplus would have been spent on paying down the national debt.

I am sure in all likelihood the majority of that surplus would have gone into investment, public health care, public education, environmental cleanup, infrastructure, housing and the farm crisis, and other issues that are facing Canadians. After all every parliamentarian that goes back to his or her riding gets people lobbying on behalf of those very important causes. However, today, because we do not have a fiscal stabilization fund, parliament is not just handcuffed it is absolutely impotent in terms of deciding where to spend this unexpected, non-anticipated service.

I appeal to the House that we look at ways and means that will allow parliament to make the decision over the expenditure of taxpayers' money after debate in the House of Commons instead of allowing all of that money to go to the national debt by default. That is what has happened and it will happen again.

Two months ago, the Minister of Finance projected in his budget a $1.5 billion surplus for the fiscal year 2001-2002.

More recent projections by the finance department put the surplus at somewhere between $7 billion and $10 billion. Many members, including Bloc Quebecois members, have said in the House that, if a bill is not passed, all of the surplus will be used to pay down the national debt.

We are not against paying down debts. In fact, the debt to GDP ratio in Canada was much too high in the mid-1990s when the debt represented 70% of our GDP. We were the second highest indebted country in the G-7 next to Italy. Now the debt to GDP ratio is down to about 50%. That is considerable progress. We are roughly in the middle now of the G-7 nations.

Instead of automatically applying all of that money year after year of unexpected surpluses to the national debt, let us set up a mechanism in the House where we can have a debate in parliament to decide where that money will go. This is not a partisan issue as I look across at my friends on the Liberal side of the House.

What role does parliament have that is more important than scrutinizing taxpayers' money and deciding what is best to do with taxpayers' money? There are three things we can do with taxation revenue: first, is to pay down the national debt, second, is to reduce taxes in the case of a surplus, and lastly, is to put more money in terms of public expenditures on issues of concern like health and education.

What has suffered in the last few years since the 1995 budget of the Minister of Finance? Less and less money has been proportionately going toward investment into programs for people.

I have seen many frustrated Liberal backbenchers over the last few months who have expressed a concern, because of the rules of parliament, that the government is now being run by the Prime Minister's Office, a few bureaucrats across the way in the Langevin Block, and the Minister of Finance and some of his people without any input from the ordinary member of parliament. They are so right when they say that.

This is something that parties in the House should unite on and ensure we have a mechanism in parliament such as a fiscal stabilization fund. When we have that unexpected surplus the money would go into the fund and parliament would have a debate as to how the money is to be spent.

Is it a radical idea to call for a public democratic debate and call for transparency in terms of how we spend taxpayers' money? That is my plea in this debate, that we in parliament have a debate over where that surplus would be going for this fiscal year. We should have had a debate over where the surplus went in the last fiscal year when $17 billion was applied to the national debt. These are some of the things that should be done.

During the minute I have left to conclude, I would like to talk about the report the auditor general made public three or four weeks ago.

The auditor general stated in her report that we have $7.1 billion now invested in six or seven different foundations and none of them are subject to an audit by the auditor general. Once again this is an issue of accountability and transparency over how the public's money is spent. The auditor general must have the right to audit all these foundations. I hope the House will agree with me and help me make these representations to the Minister of Finance and others.

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, I rise to speak on Bill C-47 with some degree of regret and bitterness.

Why so? Because the bill deals with excise tax, which by its very definition, gives the full significance of beer, what a beer is, what a brewery is, what a microbrewery is. Whether unwittingly or otherwise, the people over there have neglected to legislate on beer. This is a major omission, particularly where the microbreweries are concerned, when these are virtually all in the process of having to shut down.

I would like to draw my colleagues' attention to a very important point, the taxation of the small breweries, the tiny ones, commonly called microbreweries. When the representatives of the Brewers Association of Canada came before the Standing Committee on Finance last October, they told us about the difficult situation the microbrewery sector is currently going through. They presented solid arguments for the reduction of excise tax for the microbreweries.

In the context of globalization, these small companies have to compete with foreign companies that are less heavily taxed than in Canada. In a market that is becoming increasingly open, the competition does not necessarily come from within the country, but rather from other countries. The foreign competition often benefits from beneficial tax treatment, which allows them to provide a product at a price that is more than competitive. The Canadian parliament must not ignore this situation when passing legislation.

At present, Madam Speaker, France, Germany, Belgium and, most particularly, our U.S. neighbour to the south charge their microbreweries less excise tax. Canada is the only industrialized country that has refused to grant its microbreweries this privilege, or equity, or parity, as far as excise taxes go.

Take, for example, the case of a microbrewery from my region, Les Brasseurs du Nord, which brews the wonderful Boréale, naturally, and its competitor in the United States. Here a brewery producing 6.5 million litres pays a federal excise tax of 28 cents per litre, which comes to $1.8 million.

In the United States, in Boston—and speaking of Boston, I would like to take a moment to congratulate our glorious Canadiens for their win against Boston—the same business would pay $585,000, or 9 cents a litre. The figures speak for themselves. For the same production, there is a $1.2 million difference in taxes.

This is why the Brewers Association of Canada is calling upon the Government of Canada to reduce the excise tax by 60% on the first 75,000 hectolitres produced by Canadian breweries that produce a maximum of 300,000 hectolitres annually. This proposal has received support from the four largest Canadian breweries belonging to the association.

It should be noted that between them, the 53 breweries that pay excise taxes shell out $19 million a year. A 1995 study of Ontario breweries showed that the excise tax is nine times greater than profits in the sector, which are estimated to be $2.1 million.

Microbreweries can be found in just about every region. They are small businesses set up in small communities, which contribute a great deal to their development. They are tourist attractions, which generates employment, and consequently, more financial resources. Unfortunately, this unfair and untenable situation that the industry is up against constitutes a very real threat.

Only three months ago, there were 19 craft style breweries in Quebec. Now there are six, including one in my riding, Broue-Monde in Saint-Eustache, which has disappeared.

The situation demands to be rectified. The government must now make decisions that will help these small entrepreneurs. The question is: given the current state of affairs, why should microbrewers continue to invest in Canada, when there are incredible benefits to setting up shop in the United States? The excise tax represents a very heavy burden for these small Canadian businesses. It is therefore urgent that the excise tax program be amended.

In other sectors of activity, small businesses investing $1 million in land, equipment and facilities are successful. They hire fifteen or so people and have sales of $1.5 million to $2 million. They make a profit and shareholders take a profit. They are successful.

However, for microbreweries, it is a completely different scenario. With sales of $1.5 million to $2 million, they barely break even; no clear profit, but a requirement to pay a little over $200,000 in excise taxes to the federal government. The excise taxes are unrelenting. Let us be clear: in the case of microbreweries, excise taxes are higher than labour costs.

The government must recognize that small breweries are distinct and should be taxed accordingly. Unfortunately, it is the only party that still does not recognize this.

The amendment being requested is minimal compared to the revenues generated by the general tax. The proposed tax break would represent only 2% of what the government collects in excise taxes. Let us be clear that this concerns a small sector which is highly labour-intensive, manufacturing-intensive, requiring major investment, a sector that plays a vital role in small communities in their provinces.

The current taxation system will have to undergo a comprehensive review, something which has not been done since 1964, with the Carter commission.

[Shawn Murphy, Liberal, Hillsborough, PE]

Mr. Speaker, like the other speakers I greatly appreciate the opportunity to speak to third reading of Bill C-47 which would introduce a modern legislative and administrative framework for the taxation of spirits, wine and tobacco products under the new excise act.

As a member of the finance committee I have followed Bill C-47 closely. It has gone through considerable review at committee. We have heard from witnesses. It is good legislation and should be adopted by the House. I urge all members on both sides to support it.

Bill C-47 deals with commodity taxes. As all speakers have indicated today, commodity taxes are an important and vital part of the Canadian taxation system. In the year 2000-01 duties and taxes on alcohol and tobacco products raised approximately $3.4 billion in federal revenues.

The Excise Tax Act is an antiquated piece of legislation. Many of its provisions date back to the 1800s. It cries out for reform. It is cumbersome and burdensome for manufacturers and wholesalers to fill out the forms and all the duplication that is required. That is the basis on which Bill C-47 came forward to the House.

Intertwined with this legislation we have had two wars going on at the same time. First, we have had the ongoing war on tobacco which is not only a federal issue. All provincial governments are engaged in it. A growing number of municipalities across the country including the city of Ottawa have come forward with strict regulations and bylaws on the sale, consumption and use of tobacco. I believe all members are in favour of this.

Second, there is the issue of the illegal importation, sale and distribution of spirits to avoid the Excise Tax Act. This issue is covered to a certain extent in Bill C-47.

Bill C-47 is an example of legislation that did not go through the House quickly. The discussion paper has a five year history in the House. There has been a lot of stakeholder consultation. Because of that the final product is good legislation. As other speakers have alluded to, the bill started with a draft discussion paper circulated by the Department of Finance in 1997. This was followed by draft legislation which was circulated in 1999 and followed by extensive public consultations mainly with the major stakeholders.

Bill C-47 proposes a modern, legislative and administrative framework which would generate stable and secure revenues while at the same time addressing contraband pressures. An important component of the bill is that it could be implemented without imposing unrealistic and unnecessary costs and administrative burdens on the industry.

There has been an issue at the finance committee and in the House with respect to microbreweries. Bill C-47 is not the legislation to deal with that issue. Having said that, I have heard a lot of arguments from members of the House about the excise tax paid by microbreweries. I agree with the arguments. The excise tax ought to be reduced.

The microbrewery industry throughout Canada is under stress and the excise tax should be reduced so that these breweries can become more competitive. It is interesting that the Brewers Association of Canada supports this and has indicated that in writing to the finance committee. I support it but this legislation is not the place to bring forward this initiative.

We have received assurances that the Department of Finance will study the issue, and I hope it will follow through with this. I hope the study is done sooner rather than later and that the Department of Finance will see the competitive pressures that the microbrewery industry is under. I hope the government will see fit to lower the excise tax on beer brewed by microbreweries.

It is interesting that the Brewers Association of Canada, which I assume is controlled to a certain extent by the major brewers, supports the reduction of the excise tax for microbreweries. At the same time, it clearly has indicated to the finance committee, the government and the House that the act is not the place in which to deal with the issue.

The act also deals with the issue of penalties for persons and companies convicted of illegally importing, possessing, distributing and selling spirits which is an important part of the act and which should be dealt with sooner rather than later.

Under the new excise framework, the current excise duty and tax on tobacco products, other than cigars, will be merged into one production levy. According to my reading of the act and to the evidence I heard, this will be very beneficial from the industry point of view because it will reduce compliance costs for the industry.

This is an important part of the whole government strategy on tobacco use. It levels the tax right across Canada. This is not the answer to the problem but it is one additional issue that has to be dealt with and it will help in our ongoing war against tobacco use.

Yesterday I heard the excellent speech on this whole issue by the member for Esquimalt--Juan de Fuca, a medical doctor. He concentrated his talk on the legislation to deal with the whole issue of tobacco use. It was an excellent presentation, and I agree wholeheartedly with what he said.

The act introduces modern collection tools and helps address the government's ongoing concern about the smuggling and possession of alcohol and tobacco use.

I will summarize the benefits. First, it provides a simpler and more certain taxation structure. Second, it provides equal treatment for all parties. Third, it improves and lowers the administrative costs for industry. Fourth, it provides business greater flexibility and enhances the protection of excise revenues. Those are some of the benefits in addition to the whole issue of illegal contraband spirits and the ongoing war on tobacco.

I urge everyone on both sides of the House to give full support to the bill. The new excise tax act introduces a modern administrative framework for the taxation of spirits, wine and tobacco products and addresses a longstanding need of both the industry and the government.

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Madam Speaker, I thank the hon. Bloc member for her question.

I support the amendment. Any time we have legislation which would increase taxation on Canadians and have a negative impact on entrepreneurs, travellers and even beer drinkers it is not a good thing. It does not make any sense to support Bill C-47.

I support the amendment to defer the bill until the government takes a close look at the impact it would have. I raised the point during debate that taxing duty free stores make absolutely no sense at all. If they are to be taxed the name will have to be changed. They could no longer be called duty free stores if the government started taxing them. I therefore support the amendment to the bill.

[Inky Mark, Canadian Alliance, Dauphin—Swan River, MB]

Madam Speaker, I am pleased to rise in debate at third reading of Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores.

Let me begin by saying that Canada continues to lead the G-8 when it comes to taxing its citizens. In fact, has the Liberal government ever seen a tax that it did not like? Canadians are very concerned about the high rate of tax they pay. Certainly working Canadians are concerned about the high rate of tax they pay: All they need to do is look at their pay slips.

The bill would further increase the taxes on tobacco sold in Canada, which would include tobacco sold in Canadian duty free stores. However, because of the special status of duty free stores this legislation will have a disproportionate effect on them. Canada probably would be the first country to impose a tax on products sold in duty free stores, thereby undermining their reason for existence. It does not make any sense that we would tax duty free stores on the spirits and tobacco they sell when in effect their reason for being is to avoid having customers pay tax.

This new tax undermines the fundamental principle on which duty free shops were established in Canada, namely, that customers could shop there free of taxes and customs duties. Once customers' perceptions change, traffic patterns are affected. All provinces have duty free stores for Canadians who leave this country to visit other countries. Sales of all other products would be hurt as a result as a result of this tax, which would undermine the viability of the outlets and their key role in the local economies.

The federal government created and promoted the duty free industry to support small business, job creation and the sale of Canadian made goods. The outlets also provide an essential service for travellers, making vacations in Canada more attractive. The duty free industry has been profitable, allowing it to generate local economic benefits like jobs, purchases from suppliers and rents in commercial buildings and at airports. Most people who leave and return to the country by air shop in these duty free stores.

However, the imposition of a new tax on tobacco products threatens to undermine these economic spinoffs. Imposing this tax on duty free outlets in order to benefit health is symbolic. Duty free stores account for only a very small portion of tobacco sales in Canada. Moreover, applying this tax to duty free tobacco outlets would more than likely shift sales to another retailer rather than stop sales outright, thus the disadvantages of the bill far outweigh the benefits.

I will speak briefly about the business tax policy. Increasing taxes is a Liberal habit that is as harmful to the economy as smoking is to someone's lungs. Business taxes in Canada need to be reduced to the average rate of the OECD countries so that Canadian businesses can be competitive. This would mean a combined provincial and federal tax rate of about 35%. Allowing for various provincial rates of taxation, this means that the federal portion would need to decline to a little over 20%.

We should also target capital taxes, high sales taxes on business inputs and high personal taxes on business owners and their workers. A more progressive step would be for the government to shift from investment and savings taxes to consumption based taxes. This would only be fair to all wage earners in this country. In other words, one's taxes would be based on how one spends.

Canada could adopt a personal expenditure tax and more taxes based on the user pay principle. This would reform business taxes by reducing rates and eliminating distortions that impede the business sector from taking full advantage of the best economic opportunities.

The PC Party is the only party that advocates the complete elimination of the capital gains tax, not only because its elimination would free up capital for investment and make a difference in our actual economic performance but also because it would be a bold and symbolic act that would capture the attention of and send a message to the people around the world who invest. As we know, our country depends on overseas investment.

The bottom line is that there is strong evidence that lower capital gains tax rates induce higher revenues in the longer run, largely as a result of increased economic growth and subsequent payment of more personal and corporate income taxes. A study in the United States demonstrated that completely eliminating the capital gains tax in that country would lead to a $300 billion increase in national output. That amounts to nearly one million new jobs and an addition $46 billion in tax revenue due to economic growth. In other words, the more money the government leaves in the wage earner's pocket, the further it will go. We all know that money needs to go around in cycles in order to make the economy grow.

The United Kingdom, Germany, Norway and Sweden have all adopted more aggressive tax cutting strategies than Canada has. Germany reduced its capital gains tax by 50% and Great Britain by 75%. Norway completely eliminated all forms of double taxation of capital income.

President John F. Kennedy spoke disparagingly about the capital gains tax as early as 1963. That is a long time ago. He stated:

The tax on capital gains directly affects investment decisions, the mobility and the flow of risk capital...the ease or difficulty experienced by new ventures in obtaining capital--

Capital gains tax also creates economic inefficiencies because it encourages a locking in effect, whereby owners of capital hold on to their investments and miss more profitable investment opportunities. The United States has a very accommodating capital gains rate of approximately 20%. Last year Canada reduced the capital gains inclusion rate to 50%, putting us closer to the United States levels, but that parity is fleeting. We will soon be lagging behind again.

A deeper look reveals that even after our tax cuts, the U.S. tax on costs for industries is about 14.2 percentage points below the Canadian tax regime. This means that rather than making us a haven for jobs and investment, we are still at a competitive disadvantage when compared to the United States. The United States is Canada's only significant competitor for investment capital and it is beating the pants off Canada. Despite admittedly impressive growth in venture capital in Canada, the United States enjoyed a 170% increase in 1998-99, from $32 billion to $87 billion. In the first half of 2000, Canadian venture capital was $2.3 billion compared to $80 billion in the United States. That is quite a disparity.

Let us look at that statistic in a different way. New United States venture capital disbursements were 19 times larger than those in Canada in 1998 and 32 times larger in 1999. Although this gap is now starting to reduce, more needs to be done.

In the old economy the purpose of taxes was to redistribute income. In the new economy high taxes redistribute people. Over the last few years we have heard of people moving to the United States to work because the American rate of income tax is lower. When Canada's tax policy dictates that workers earning $100,000 must pay 52% of their income in taxes those highly valued workers will look elsewhere. We know of people who have looked elsewhere and moved elsewhere. This is particularly risky for Canada in the digital economy where valuable intellectual property assets, expertise and energy depart with every professional who crosses the border.

In the United States the highest rate of taxation does not apply until income reaches $400,000. An American earning $100,000 pays a rate of only 26%. That is quite a difference from the Canadian rate of 52%. It takes a considerable act of patriotism to choose Canada. The people who are tempted to leave are those with fewer roots in the country and fewer attachments to our lifestyle advantages like health care. They are often young people the country needs to grow and prosper.

Taxing income discourages people from earning, saving and investing, all of which are crucial to economic growth. If the government took 52% of every dollar people earned many would ask why they should earn any more. According to Jack Mintz, a professor of taxation at the University of Toronto's J.L. Rotman School of Management, the costs in terms of lost output are $15 billion to $140 billion a year, or from $500 to $4,500 per person per year. Replacing income taxes with sales taxes would be a drastic but beneficial move.

As I have illustrated, taxation has many negative effects on the economy, investment and job creation. It would certainly have a negative effect on microbreweries and tax free shopping. There is no doubt the microbrewery in Winnipeg would be negatively impacted by Bill C-47. Besides the fact that it would attack the tobacco industry by increasing taxes, Bill C-47 is another example of the distortionary and harmful effects of myopic Liberal tax policies.

Has the Liberal government ever seen a tax it did not like?

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, I wish to congratulate the hon. member for Drummond on her fine and interesting speech.

Since the beginning of the 1960s, there has been no substantive reform of the Canadian tax system. Does the hon. member think that, instead of a piecemeal approach to fiscal issues like we had with Bill C-28 and now with Bill C-47, it would be important to have substantial changes to the Canadian tax system?

[Pauline Picard, Bloc, Drummond, QC]

I am told that it is the current Minister of Justice. So, they supported microbreweries and they generated hope by saying “Indeed, it does not make sense. You cannot be competitive under such circumstances, considering the excise tax rate imposed on you. Therefore, we promise you that we will update the legislation. You will get what you want”.

Microbreweries are currently experiencing serious problems. They are paying more excise tax than they make profits. They were given reasons to hope. This act comes from the Standing Committee on Finance. It comes from the Department of Finance and it is the Minister of Finance himself, who is currently engaged in the leadership race, who promised to change things, to modernize the act, but instead he is crushing microbreweries with this legislation.

Beer has been deliberately excluded from the bill. The law has not been modernized. Promises have not been kept. Clause 2, line 14 on page 2 of the bill—the interpretation of the Excise Tax Act—provides the following, “'beer' means beer or malt liquor as defined in section 4 of the Excise Act.” They hushed this up thinking that we would let it go.

Resorting to such tactics is an insult to our intelligence and an insult to small brewers who have put their skill, energy, and hard work into building up their businesses. They want to compete on the market. Here is the answer we received in committee, “Wait. Other measures are in the works”.

These promises were made in 1997. We were told, “We will see about this in five years. We must wait another five years, because the act will not be reviewed until then”. This means that in the next five years, if the act is not amended or if no other measures are taken rapidly, there will not be many microbreweries left in Quebec and in Canada.

I cannot understand why my colleagues, whether they are from Ontario or Alberta, or whether they represent constituents who, through their entrepreneurship, have built up their microbreweries in order to sell their products, quality products, would not rise in the House. These members, who were elected to represent the interests of their fellow citizens, remain seated and hang their heads at such terrible legislation for microbreweries. This is a disgrace and I am ashamed for them.

The Canadian government talks a lot about how our businesses must be competitive. We agree. There is much talk about globalization. The government uses the taxes it collects from Quebecers and Canadians to set up programs to support businesses in Quebec and in Canada. That is the right thing to do. That is what our tax money should be used for. But the thing with the microbreweries is that they are not being allowed to compete. They are being squeezed out. Right now, our taxes are being used to support the big breweries.

How is that? Because in Canada, the tax on all beer producers, large and small, is 28 ¢ a litre. In the United States and in Europe, microbreweries pay only nine cents a litre. In Canada, both large and small companies pay 28 ¢ a litre. Large companies agree with paying 28 ¢ a litre. They were also in agreement with the government lowering the excise tax for microbreweries to the same rate as in the United States and Europe so that they could be competitive.

American owners of microbreweries producing so-called regional beer who want to import their products into Canada pay only nine cents a litre. How can our breweries compete on the U.S. market when they are paying 28 cents a litre? There is a huge difference. Either the microbreweries literally get swallowed up by outside markets, such as the United States and Europe, or we allow them to try to compete elsewhere. Everyone also knows that the methods we are using here are just as good as, if not better than those being used elsewhere. Our beer market is recognized world wide. Why not allow the microbreweries access to the international market?

The truth is out. We have here a letter the chair of the Standing Committee of Finance received from the president and CEO of the Brewers Association of Canada. I find it hard to understand that it was only after we put forward our amendments in committee that we found out that the chair of the Standing Committee of Finance, for whom I have a great deal of respect, was the wife of Mr. Barnes, the very one who deals with tax issues and one of the shareholders in John Labatt Ltd., a major brewery.

It seems to me that something here is not entirely transparent. Could there be the appearance of a conflict of interests. Ethically, someone who chairs a committee should act like a judge and remain neutral.

Such a person should not take sides but make decisions based on the rules and authority given to the committee by parliament. We have here a situation where our judgment can be skewed, as an opposition party has moved amendments that would include the beer industry in Bill C-47, a situation that makes no sense, according to some legislators. When we modernize an act, we have to modernize it completely. Why deliberately exclude beer?

This was done deliberately. The committee chair received a letter from the Brewers Association of Canada, which states:

—we fully support a reduction in the excise tax for small brewers... we strongly support a reduction of the excise tax for small breweries... We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government—

I am thinking of Quebecers and Canadians who are listening today. When we hear “we fully support a reduction in the excise tax for small brewers, but in light of our prior agreement with the government”, could this actually mean that a very powerful lobby is saying to legislators “We do not willingly accept a reduction of the excise tax on beer because each time we gain a 1% share of the market, it is $17 million more in our pockets”? This is why beer and microbreweries are excluded from the bill.

At this point, I wish to show what is actually happening in the microbreweries sector. The big brewers like John Labatt and Molson currently control 90% of the market. As I pointed out earlier, each time the big brewers get 1% of the market, they make $17 million in net profits. It is easy to understand why the big brewers are so interested in seeing microbreweries disappear.

This is all fine and well. The big brewers say, “We support you”, and then they stab you in the back, saying, “We do not support you”. Each time they take over 90% of the market, they in fact grab 91% of the market, that is, $17 million more. They support the microbreweries, because it makes them look good, then they lobby the government saying, “No, not yet, we are not ready. We may need 98% of the market. There will perhaps remain a couple of microbreweries in Quebec and in Canada. This will please us”. This does not make any sense whatsoever.

My time is up but I would like to move an amendment to the motion at third reading stage of Bill C-47. I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following:

“Bill C-47, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be not now read a third time but that it be read a third time this day six months hence.”

[Pauline Picard, Bloc, Drummond, QC]

Madam Speaker, I am pleased to rise again to speak to Bill C-47, which seems to be very controversial.

Yesterday and this morning, my colleagues explained the origin of the conflict that exists with regard to this bill and that puts several small breweries in jeopardy both in Quebec and elsewhere in Canada.

As regards this bill, there seems to be some kind of collusion between the government and large Canadian brewers, who negotiated and put enough pressure on the government to bring it to exclude beer in a most unacceptable way, by ignoring certain provisions of its own legislation.

Clause 2, the interpretation clause of the bill, proposes a series of definitions. A definition of beer, meaning beer or malt liquor as defined in section 4 of the Excise Act, can be found on page 2, line 14. The problem is that beer has been excluded from Bill C-47. Everybody wonders why. Why would beer be excluded from this bill when the Excise Act is a general act that covers all sorts of things? It is wide in scope and covers all the products that are included in Bill C-47, as well as beer.

In other words, the only product that was not included in Bill C-47 is beer. We talked to people who draft legislation here and elsewhere, and they find it rather strange that Bill C-47, introduced by the government to modernize the Excise Act, covers all the products that were included in the Excise Act, which it is supposed to replace, except beer.

Before this new bill, the legislation included wine, spirits, beer, tobacco and distillery products. The existing act makes reference to breweries and tobacco products. It deals with everything, every single product touched by excise. There are provisions on licensing, rights of accession, offences, collection, record, accounts, required documents, warehousing and remission of duties, or what they call drawbacks in international trade. Bill C-47, which is supposed to bring that Excise Act up to date, also deals with everything, except beer.

How do we explain the fact that beer is not included in this bill? Is it an oversight? I asked that question in committee to the hon. member for Oak Ridges, because I wanted to know what would happen if we had forgotten to include beer in the legislation. After all, it is possible to amend a bill. I did not get any answer. Just a blunt rebuttal. We did not get any advice from the people who surround and support members of parliament in their work in committee, including the parliamentary secretary and public officials. We did not get any interesting advice. I was a little taken aback by the answers that I was given. Things did not make sense.

I had to come to the conclusion that something was going on. This is an act that the government has wanted to modernize since 1997 and everyone agreed—they even made promises to microbreweries—including the Minister for International Trade, the Minister of Finance, secretaries of state who have now become ministers, ministers who live in Quebec, including in Montreal, and they expressed their support to microbreweries. This is because they have one in their region.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, I thank you for giving me the opportunity to speak to Bill C-47.

On the face of it, the Bloc Quebecois believes that the provisions in this bill were really acceptable and even necessary. We know the government is looking at changing the Excise Act and the Excise Tax Act. I believe the time had finally come to look at this change.

There is something rather incongruous however. The government claims that this bill is replacing almost entirely a good part of the Excise Act and the Excise Tax Act. The strange thing is that all the elements already provided for in these acts are in Bill C-47, except for a very important one, that is beer.

The problem is with microbreweries. In this case, the story began during a meeting of the Standing Committee on Finance, when it was asked, following requests from the Canadian council, that a tax reduction be included, which I will explain later.

Because of this nonsense, microbreweries here in Canada are currently paying 28 cents per litre of beer in tax, while in a country such as the United States and even in Europe, the microbrewery industry is protected with a tax of 9 cents a liter.

So it is very strange to see how the government could let this bill be introduced, which says nothing about the beer produced by microbreweries. We got to the Standing Committee on Finance and, through my colleague from Saint-Hyacinthe—Bagot, we asked that this bill be complemented by an amendment to reduce the excise tax, particularly for microbreweries.

Yesterday, government members talked about various conflict of interest problems that could arise and they said that there could be no conflict of interest. Further on, I will refer to what happened with the chair of the Standing Committee on Finance, the member for London West. For the government, there is no conflict of interest because beer and microbreweries are not mentioned anywhere in the bill. There is absolutely no mention of beer whatsoever. Thus the amendment that my colleague from Saint-Hyacinthe--Bagot wanted to submit was rejected by the chair.

Clause 2 of the bill, which takes up several provisions of the Excise Act and Excise Tax Act, includes a definition of beer. However, there is no provision in the bill about beer. Is it an involuntary omission or worse, should the bill have addressed the issue of beer?

Under pressure from major breweries, they perhaps forgot to remove the definition of beer. Why would the legislator talk about something if he does not intend to go any further? Why include a definition of beer if no provision of the bill deals with beer?

More incredible still is the fact that my colleague and the Canadian Council of Regional Brewers are saying that the time has come to act. People have been asking the government to change the Excise Act and Excise Tax Act since 1997. We have been asking for this change for five years and, yesterday, we were told that results, more figures were needed before a decision could be made whether to go ahead or not. It is just unbelievable.

Five years ago, in 1997, there were 89 microbreweries in Canada. Over the last five years, 38 microbreweries have had to close down and many did so because of that huge excise tax. I mentioned 28¢ a litre. Foreign competitors, from the United States and Europe, pay 9¢ a litre, as I said earlier.

At last, this government has the opportunity to move instead of saying: “Yes we will review the issue; we will look at it; we are waiting for figures”. The government has been looking at those figures since 1997! Microbreweries are asking the government to include an amendment so that the Standing Committee on Finance can look at how to lower those taxes. As chance would have it we are not dealing with it. It is easy to understand now why the committee, chaired by the hon. member for London West, is not dealing with it.

That member was been appointed as chair of that committee a short time ago and we wonder why considering what happened. Her spouse, Mr. Barnes, is a member of the Brewers Association of Canada taxation committee. He is also a director of a multinational or a large national brewery.

Those large breweries say that excise taxes have to be lowered in general, but all the more so for microbreweries. However, I find it strange that the committee chair got a letter from the Brewers Association of Canada saying they do not agree, when we know that the chair's spouse not only sits on its taxation committee but is also its chairman.

The Brewers Association of Canada, of which the committee chair's spouse is a member, says it is in favour of a tax reduction, even more so in the case of microbreweries, but sends the committee chair a letter asking that beer not be included in the bill and tax reductions—indirectly—not be included either in the bill. Yet the association says it is in favour of that reduction. It is important to act immediately, but this association is now telling us not to do it.

Between you and me, when the president received such a letter, knowing that her husband is the director of a large national brewery, that he chairs the taxation committee for the Brewers Association of Canada and that she is the president of a House committee, it seems to me she should have said, and should still say, “I think there is an apparent conflict of interest, if not an actual one. I think it would be a good thing to tell each and every member of the committee that I will not be participating in any discussions on those amendments because, not only is my husband, John Barnes, a member of the association, but he is the chair of the taxation committee of that association”.

I think she should at least have told the members of the committee about that situation, but she did not. She only read the letter and played the game of the big Canadian breweries to harm the microbreweries.

Motion No. 2 gives excessive authority to a committee president. We voted against this motion at the beginning of the 37th parliament. It is already being misused, as we are told that the rules on conflicts of interests apply to ministers, to the Prime Minister, to secretaries of state and parliamentary secretaries, but not to a committee president.

Just imagine, the conflict of interest rules not applying to a committee president, and her actually having more authority than a minister. A minister would not even have the power to do what she did. She took upon herself to refuse to accept the amendments. These were not only amendments from the Bloc Quebecois. We are used to our amendments being constantly rejected at committee.

They are always rejected, and we get calls at our offices from people who say they are Liberals. Here is an example. With respect to Bill C-15B, people who support the bill concerning cruelty to animals and the protection of the latter call me at my office. They are aware of the amendments that were presented. I now send my speeches to all the people who write to me. They can then read the amendments proposed by the Bloc. The people who are in favour of the protection of animals tell us that the right position was to accept the amendments to Bill C-15B proposed by the Bloc. They even say “We will change party because of that”. These are people in the animal industry.

I simply wish to send the following message: through its committees, the government rejects all amendments, not only those from the Bloc Quebecois, but also those from any opposition party. It rejects those from the Bloc in particular because they come from Quebecers and are put forward by the Bloc Quebecois. What the Liberals are doing is incredible.

But there is worse still. Coming back to Bill C-47, how can the members of this House accept such important powers that allow a person to reject amendments coming not just from a political party, but from people affected by these rules, the existing taxation rules?

I will give figures. I said earlier that in 1997, when we started to examine this aspect of the taxation and excise duties, there were 89 microbreweries. Five years later, 38 of these have closed down. There are only 46 left. This is serious. Nearly 40% of the microbreweries have closed down. This has affected the diversity, the people and the jobs that are created in the regions.

The big breweries want to see the microbreweries disappear. There are reasons for that. In 1997, the microbreweries had 5.5% of the market. Today, they have only 4% of the Canadian market. This is 1.5% less. Let us look at what this 1% drop in net profits for microbreweries—a drop caused by shutdowns and by the inability to sell the beer—means for the big breweries. It is a net amount. That is a lot of money for the shareholders.

As we know, one of the big breweries, Labatt, just happens to be established in the finance minister's riding of Lasalle-Émard. It is a bit odd, but this is what is happening once again. This was better, because the big breweries make donations to the Liberal Party. The big breweries, whether Molson or Labatt, give a lot of money to the Liberal Party.

We know why. It is even part of the riding of the Minister of Finance. It is bizarre that the Brewers Association of Canada has written us to say: “Yes, we want a tax cut, but we do not want the amendment to be presented. We do not want any reference to beer, do not want any tax reduction on beer”. Nothing complicated about this; a 1% tax reduction gives them $17 million net in their pockets. Now it is at 1.5%. If you do the calculation, you will see how much money the shareholders are making now, simply by doing away with the possibility of including beer and the tex on beer.

This is not only happening in Quebec. For this reason, when the Bloc Quebecois makes its frequent representations to protect the interests of Quebecers, the interests of other breweries in Canada will also be protected.

Out of the 38 that have closed, 11 were in Quebec, 13 in Ontario and seven in B.C. As well, there were five in Alberta, one in Nova Scotia and one in Manitoba.

The government has told us already in its speeches during the debate: “Yes, they are the ones who asked us to wait before looking at the figures”. Five years is not enough. They still need longer. The calculations are not that difficult. In five years, 38 of 89 breweries have disappeared. In another five years, how many microbreweries will be left? How long will it take for this government to react and protect the microbrewery industry, not just in Quebec but everywhere in Canada, in their own interests? It is in the best interest of their party.

Democracy means respecting the will of the House of Commons. What the government wants is to line its pockets in order to get re-elected. Its interest is precisely this, to protect the big national breweries at the expense of the others, because this is in their best interest financially. Not in the best interests of the public, of society, and even less so of the House of Commons. How can we accept such a situation?

I am somewhat disappointed by the Canadian Alliance's position, which accepts a bill such as this. I agree, and the Bloc Quebecois agrees with what the bill contains. What is put down in black and white is good. Yes, the provisions regarding tobacco are good. We also believe that the changes are good. However, the problem that was raised is much more serious.

The member for Esquimalt--Juan de Fuca reacted last week by raising the Mace to demonstrate the government's lack of democracy in the House. He forcefully expressed to Canadians what is happening here. There is another opportunity to demonstrate what has happened, how the chair of the Standing Committee on Finance and member for London West could act in this manner.

We must stop saying that there is no conflict of interest because the word beer is not included in the bill. I already mentioned that is was supposed to be included, even in the definition. Why then is there no provision regarding beer in this bill? This bill contains nothing on beer because of the government. It did not want to accept the amendment introduced by my Bloc Quebecois colleague from Saint-Hyacinthe--Bagot. It is rhetoric to say that there is no conflict of interest simply because the word beer is not written in the bill. The government prevented it from being written and it prevented us from studying this amendment, they prevented us from lowering the tax. It is unbelievable. This is their only argument of defence, to say that there is no appearance of conflict of interest.

To close, let me say that it is time that the code of ethics that applies to ministers, to the Prime Minister and to secretaries of state should also apply to chairs of standing committees.

This is important for democracy and out of respect for the opinions of Canadians.

[Steve Mahoney, Liberal, Parliamentary Secretary to the Deputy Prime Minister and Minister of Infrastructure and Crown Corporations]

Mr. Speaker, it is astounding. If this is a holiday, I think I will pass. It is not exactly what I would call a day at the beach.

I think all members realize that people work diligently and have their own style and interests. I find it interesting to listen to a debate on issues that are not even in the bill we are debating. Obviously the holiday issue is not here. The issue of election donations is nowhere in the wording. Not once was I able to look through any of the documentation and find anything about beer. Maybe there is a relationship between beer, holidays and good times, I do not know, but it does not deal with the issue at hand.

In the short time I have left I will focus on the bill, which would be an unexpected treat I am sure for members opposite. The bill does three things. First, it is designed to provide a modern legislative framework for a simpler and more certain administrative system that recognizes current industry practices. We are talking about the tobacco industry, the spirits industry and the wine industry. We are not talking about beer. I am sorry but it is not here.

For years we have heard people say that the government should respond to current industry practices, whatever they may be, so that we can help people who are fighting against foreign competition and who are dealing with the burden of collecting and remitting taxes. It puts in place a more modern system to allow people to pay the tax at the time they actually sell the product instead of when it goes into a warehouse. That seems to me to be something the industry would want and, as my friend says, that everybody would want, including my colleagues on the other side.

I do not understand. They want to continue casting aspersions against members on this side, throwing out all kinds of nasty comments about political fundraising and making comments that do not relate to Bill C-47.

The second thing the bill does is it facilitates greater efficiency and fairness for all parties. Who is against that? This is an industry that needs to be modernized from the point of view of tax revenue. It is $3.4 billion to the federal treasury. We are not talking about small potatoes. This is a major revenue generator for the Canadian public and for the government so that we can deliver the programs that need to be delivered to the benefit of all Canadians.

This fairness to all parties issue will lead to improved administration. Are the folks on the other side against that? I do not think they are. It will lead to improved administration and reduced compliance costs.

Let us take a look at what happened with the merger of the GST and the PST in the maritimes. We tend to forget. We always say that we have one taxpayer in the country. Would it not be interesting if we only had one tax collector? We have all these different taxes going out by all these different levels of government. It is unfortunate that Ontario and the western provinces refuse to co-operate in terms of tax collection so that we can reduce the administrative burden. The bill would make it easier for companies to comply with the collection of those taxes.

The third thing the bill does is it ensures the continued protection of the $3.4 billion in excise tax revenue. Why not deal with the substance of the bill instead of the allegations and the nonsense? Why not deal with related issues such as who actually will provide the retail facilities?

In my province of Ontario we all hold our breath as we watch the current Ontario government sell off Ontario Hydro. We all suspect that the next item on the list might just be the Liquor Control Board of Ontario.

It is an interesting phenomenon: taking what amounts to a public monopoly and turning it into a private monopoly with the absolute reality that the taxpayers, the people who are the purchasers of the product, will face increased costs. Why not do what the bill does in terms of providing more effective and efficient operations for the industry rather than just selling off pieces of it willy-nilly wherever the government seems to think it may be a good political hit?

It is provincial but there is a relationship. I will use the relationship of the PST and the GST as they are collected on a co-ordinated basis. What we are talking about is more efficiency and more opportunity for the industry and government to work together.

I understand that perhaps members of the Bloc are against that kind of efficiency. They would rather use any opportunity they get to raise a point of order or to speak to issues that have nothing to do with the bill. They would rather use it to perhaps make themselves look a little better back home. Being at 25% or less in the polls in the province of Quebec causes them some concern, and I understand that.

What we are dealing with here is the streamlining of a collection mechanism that generates a substantial amount of revenue. Why not talk about the spin off effects? Why not talk about the taxation effect on smuggling?

We will all recall when we had boats running across the river and people shooting guns in the middle of the night. The police were very concerned about the situation when the smuggling was going on. We all remember those days with great trepidation.

Another issue that I think is very serious in the area of tobacco is the impact on our young people. Would taxation have an impact on whether or not these young people buy single cigarettes in the schoolyard while people actually treat them as contraband and sell them to young people? I did not hear any concerns being expressed on the impact this will have on our young people. We know from targeted experience that young girls are prime candidates to begin smoking because of the peer pressure that exists.

All of this ties in and is related to the tax burden that is involved in this industry.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I listened to my hon. colleague's comments, and as the saying goes we cannot make a silk purse out of a sow's ear. No matter how often we talk about beer, it is not in the bill. However I do want to address some comments that the member made.

What are the concerns of the beer industry? The member did not raise them. They happen to be issues regarding the point of imposition, warehousing, licensing requirements, loss allowances and control on beer exports. What are the facts? Bill C-47 does not deal with the issue of beer and we have already gone through the reasons why it does not. The finance department is reviewing a report on the beer industry with regard to warehousing et cetera.

Excise duty applies to both domestic products and to imports at the same rate. Excise duty does not apply to exports. Canadian small breweries are no less competitive with regard to foreign small breweries when selling in this country.

The government and members on this side of the House are concerned about microbreweries in Canada. That is why the government is looking carefully at this issue. We will not make a change with some magic wand which may turn out to be no improvement at all. We want to ensure we get it right, and we are working in consultation with the industry. That member should know that. If he were that concerned about microbreweries he would want to ensure we get it right the first time. Unfortunately, he seems to have the view that somehow we can go ahead and do something which in fact is not in the bill.

We have already had discussions with the industry and it indicated we were to move ahead with Bill C-47 dealing with the merits of the bill itself, tobacco, spirits and wine.

It has been mentioned many times in the House that this is an administrative bill, and again the Bloc would rather play politics. The Bloc made some odious comments with regard to some linkage between large breweries and the governing party. Shame on that member for raising such nonsense when he knows beer is not in the bill. However he wants to play politics. We want to get it right and do the right thing for microbreweries.

The member across the way is correct, we want a strong microbrewery industry in Canada. I say without hesitation that we will act sooner rather than later. We will do it based on getting the facts right and by responding to specific issues rather than going headstrong off in any direction. We cannot amend something that is not there no matter how often that party wants to say it.

Would the member like to give his views on issues regarding tobacco and smuggling? How does he see the bill addressing the issue regarding small vintners which is of concern to members of that party as well. I wonder if he would like to give his views on how the bill addresses those issues.

[Paul Crête, Bloc, Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to speak to Bill C-47, an act to amend the Excise Act and the Excise Tax Act, but I will be a lot less pleased with the result if this bill is ever passed.

It is appropriate to remind those who are listening to us that this bill is aimed at amending the Excise Act and the Excise Tax Act, everything that has to do with wine, spirits, beer, tobacco and distilleries. All this is in the current legislation. The government has decided to modernize the act and make it more functional. We think it is appropriate because it deals with licensing requirements, rights of accession, offences, collection provisions, records, book-keeping and warehousing. All these issues are linked to the management of the excise tax on all of the above.

Unfortunately, something was forgotten in this bill. As if by amazing coincidence, it was decided not to deal with the issue of beer in this bill. How did we get to this point?

In Quebec and in Canada, the microbreweries are going through changes. They are experiencing a great many problems. Many have shut down in recent years. When we seek the causes of this phenomenon, we realize that one of the main ones is that the market in Quebec and in Canada has been invaded by other microbreweries in the U.S., and likely Europe as well.

These countries set out in good faith to tax their microbreweries at a different rate than the big breweries. Canadian beer is taxed at 28 cents a litre, while the United States charges 9 cents. This is obviously a big difference. When the American beer arrives on the Quebec or Canadian market, it is in an advantageous position as far as price goes, particularly since the major Canadian breweries are the ones distributing it on the Canadian market.

So, it becomes more understandable why the major breweries have lobbied heavily, right up to and including influencing the chair of the Standing Committee on Finance, to get her not to include the amendments relating to beer in the bill revising the Excise Tax Act—really now—and revising the entire situation. This is not going to come again anytime soon. The federal government is not going to be dealing with any other amendments to excise tax in the near future.

Why then not take this opportunity to review the entire issue and let our microbreweries enjoy the same advantages as their American and European competition in the Quebec and Canadian markets? The excise tax issue may not be an exciting one, but it does have major impacts.

Let us recall that the present government brags about helping regional and local development. The secretary of state responsible for rural development is currently touring all the major centres of Canada. This seems a bit of a paradox, being responsible for rural development touring around all the major centres to tell people how important rural communities are.

But when it comes to concrete action, when something relevant should be done, something that would help communities develop local beer, for example, and contribute in that way to tourism development, the government drags its feet. Similar markets are being developed for cheese. We can draw a parallel here.

Concerning raw milk cheese, a formidable lobby has tried to pressure the federal government into adopting requirements that apply to industrial cheese. Once again, a lobby group was involved. Right here, in this House, we had to demonstrate that raw milk cheese is something accepted everywhere. Ultimately, we won that case.

Obviously, it is very difficult for the government to admit that its position was influenced by lobby groups. In the medium term, we are bound to win this case, because logic is on our side. We won the raw milk cheese case, and we will also win the case of microbrewery beer.

Most importantly, citizens should understand that the federal government is hiding behind the fact that this bill does not deal with beer, making the amendment out of order. This is completely unacceptable.

This is a complete revision of the legislation. A number of elements should be dealt with right away, and they should be included in the bill, but they have been left out.

When we have had unanimous consent in this place and determined that a problem ought to be remedied, I have seen bills breeze through the three readings in a single day.

Why should we have to debate Bill C-47 today without amending it? Should the government not take the time to send the bill back to committee and, with the consent of all parties, include the beer industry?

The argument they give us, that it is not in the bill, is totally give unacceptable. The government has all the numbers it needs to correct the situation. There is no reason to put it off. It should make a decision rapidly in order to help microbreweries have a reasonable and adequate access to markets in Quebec, Canada and around the world, with the prospect of being sufficiently competitive.

The situation must be corrected. The Bloc Quebecois, of course, talks a lot about microbreweries in Quebec. But there are microbreweries in many other provinces of Canada. There are seven in British Columbia, five in Alberta. There are some in Manitoba, in Nova Scotia. The problem exists and we must tackle it in order to improve the situation in Quebec and in Canada.

The government has not expressed any substantial argument today. Even the last two Liberal members who spoke in support of the bill said: “We must settle the issue of microbreweries, but we do not think that it should be done in this bill”. Will we have to wait for the disappearance of all the microbreweries before talking about it? That is the reality we will have to live with.

Some were tricked in this regard. Unibroue's president said that the Minister of Justice from Quebec, who was then responsible of regional development, supported such an amendment. Where is the Minister of Justice today? Where are the other Liberal members from Quebec, who are not saying one single word in support of an emerging, developing industry that is creating local jobs not requiring very high qualifications. In a village, it can create two, three, five, ten jobs, and allow a microbrewery to operate. This is very interesting, and it could lead to all kinds of spinoffs.

I am very surprised that the federal government could not find anything to say in support of its basic position. Its members simply said, “The legislation does not say a word about beer, so we stick to what we have got”.

The flexibility required to solve such a problem is not there. I find this totally unacceptable and irresponsible on the part of the federal government. In some ways, there is something suspicious, and politically unethical.

As for the way the work was done, if we could go back in time, I think the appropriate scenario would have been that, right at the beginning of the committee's work, the chair should have said: “I cannot chair the committee because of this issue. My husband is a major lobbyist for a big multinational, for a big national brewery, and I cannot take part in this debate. I ask that the chairmanship be given to someone else”.

Thus, we would not be in the mess we are in with the government trying to defend the indefensible, that is, slowly killing Quebec and Canadian microbreweries. There is no reason for this to happen. The only reason is that, in some regards, the other side is governing according to the funding of the Liberal Party of Canada, instead of according to the interests of Quebec and Canada.

If we continue in this direction, we will find ourselves in a situation where, when the studies are completed, when the government will have made its bed on this issue, the final answer will be: “Of course, there is no point in legislating in this regard, there are no microbreweries left”. The way things are going, this is where we are headed.

What should we do to convince the government to change its attitude? Is there not a way for the government, without losing face, to add an amendment to the bill, perhaps in committee of the whole or at third reading; or with the unanimous consent of the House, the bill could be referred back to the committee so that, quickly, it might be amended to adequately protect microbreweries?

What will it take for the government to decide to budge? What will it take for it to recognize that the lobbying that was done by the big national breweries does not adequately reflect the needs of microbreweries?

If microbreweries had said that they liked the bill as it is, that this issue could be dealt with at a later date, that there was plenty of time and we should just wait, then the government would have something to defend its position.

However, there is absolutely nothing to justify the federal government's position today. The current position of the federal government has the effect of systematically reducing, day after day, year after year, the market share of microbreweries.

For the average person, it is hard to grasp why large breweries that currently have 95% or 96% of the market would absolutely want to have the other 4%. The answer is in the profits that these breweries can make.

Apparently, 1% of the market is worth $17 million in gross profits. Therefore, it is certainly in the interest of shareholders of large breweries that the government maintain its current position. Their profits continue to grow. No problem. Things are going well so they will be a little more generous with the Liberal Party of Canada. They consider that the Liberals' way of doing things is the correct one and that they protect them well. It is a big business government more than anything else.

However we are here to determine what is for the common good. In this particular industry, the way to create employment, to ensure that microbreweries have their place on the market in Quebec, in Canada and in the United States and to see the positive impact that these cottage-type operations can have on tourism is to give microbreweries some room to breathe. This is not being done at this time and, in the end, it will just lead to the disappearance of more and more microbreweries.

In my riding, there is a microbrewery that produces Bruegel beer. The brewery was established a few years ago. It is now positioning itself on the market. We can be sure that it could really use the difference between 9¢ and 18¢ a litre. This is what it takes sometimes to get into the market and allow more reasonable profit margins for retailers, bars and restaurants selling the beer and thus develop a local market without threatening the survival of large national breweries in the least.

Even if their market share were 93% or 94% instead of 95%, none of the large breweries will close because of that. That is not what will bring about closure, but it could lead to the creation of more jobs. Large breweries, with their massive and highly automated production, do not create that many jobs, in the end.

However, microbreweries, with their cottage industry style of production, need a certain number of people to operate their production line. It is to our advantage for them to expand. Until now we have not succeeded in convincing the government to remedy the situation.

I think we could call on all the members of the House to check in their ridings and their regions to see if there would not be any microbrewery. Liberal members should consider whether the stand they will take in the vote on this bill is contrary to the needs of their constituents. This might make them realize a few things that could prompt them to knock at the finance minister's door to tell him something like “I think that we could use a little more time to review this. We have all the documents, all the information and all the analysis that we need. Bill C-47 on the excise tax can be amended. Let us correct the situation”.

There are two possible courses of action. If nothing is done, the number of microbreweries could diminish dramatically. In five years, perhaps one, two, three or even four will have survived. The big national breweries will occupy this whole market and may also have bought a few microbreweries just before or after they shut down, to control that market as well. Thus, we will have been instrumental in slowing down the economy in our regions.

Alternately, if we take our responsibilities and act right now, in a few years, in five years perhaps, there will be 100 and some microbreweries in operation across Canada, contributing in a dynamic and interesting way to their communities.

It all depends on the willingness of the Canadian government to make a decision in the interest of the common good rather than that of those who influence the political parties through financing or the roles they can play. There lays the answer.

The Canadian government should go ahead now and address the situation on the basis of our arguments. Let us resume debate where it should be resumed. Let us appoint a committee chair who will be independent, who will not be or seem to be in a conflict of interest and who will see to it that the beer issue is considered and reported on promptly.

I do not think anybody in this House will object to the committee examining only that aspect of Bill C-47. As far as the other ones are concerned, we agree with what is in the bill. We could quickly review the sole issue of beer, include it in Bill C-47, and ultimately achieve the desired results.

Let us not forget that prices are an important factor on the beer market. People who buy a beer for a tasting session may be ready to pay a bit more. However, the difference in price due to the difference in taxes may prevent a microbrewery from selling its product, because its prices will be higher than those of microbreweries in the United States. Often, it is the look of the bottle, the way it is sold or the type of production that make people buy these beers. However, as far as the price elasticity of the product is concerned, one cannot sell a product that contrasts sharply with other products on the same market and with the same types of products.

So the government has a decision to make. I sincerely hope that, for the sake of our regions and our microbreweries, but also because it is an issue of fairness and almost political ethics, the federal government will reconsider its position and amend Bill C-47 and quickly reconsider amendments on beer. We would then feel that we have really done our job properly and that we were not just listening to those who make the most noise because they have the money and are able to influence the government because of it.

This is the challenge I issue to this house and to all members of parliament. I remind hon. members that when they cast their final vote, they will have made a choice, which will bring economic benefits or disadvantages. Also, they will have made a choice based on the rules of conduct we should abide by in this house but, unfortunately, do not always.

[Tony Valeri, Liberal, Stoney Creek, ON]

Mr. Speaker, I appreciate the opportunity to say a few words this afternoon on this excise tax act in front of us, Bill C-47. Sitting in the House and listening to the debate, I have heard a fair bit of discussion about microbreweries, about the competitiveness of microbreweries with respect to our U.S. counterparts, and also about the need for amendment in this piece of legislation so that we can address our concerns for and with the microbreweries. It should be pointed out that Bill C-47 is not an appropriate vehicle for implementing these types of reductions in the excise duty on beer. The bill does not deal with any of the taxation issues for beer.

That being said, though, I think it is fair for members in the House to have this discussion and put forward their perspectives with respect to microbreweries. It is fair to state, and I think it is a statement that all members of parliament would make, that in no way should we as a government or as opposition members or as members of parliament be putting forward taxation policies to try to prevent the growth of industry or industry sectors or of small business. Certainly the objective of being in parliament is to try to assist, to ensure that small businesses continue to prosper, to ensure that in fact those small businesses become larger businesses and that we are able to attract multinationals to this country so we can provide opportunities for young Canadians to stay and continue to contribute.

I wanted to make that point at the outset because I know that the discussion this afternoon really focused on the issue of microbreweries. I personally do not have a problem with what is being said with respect to microbreweries, but I think the emphasis is misplaced. It certainly should not be an emphasis of Bill C-47.

As I am sure members of parliament are aware, and I know that the Parliamentary Secretary to the Minister of Finance mentioned this last Friday, I think it was, when this debate began, it should also be known that Department of Finance officials are in fact reviewing proposals put forward by the beer industry to address concerns. It is not that this issue is not being given any weight. It is not that the government is not aware that there are some issues that need to be addressed with respect to this sector. It is just that Bill C-47 is not the vehicle whereby we can put forward an amendment and deal with it, since it really is a work in progress. There is obviously a commitment that once the analysis and the consultation are completed we can decide whether excise duty and excise tax reductions are warranted.

However, I think the case needs to be made. I am sure that on both sides of the House we will find both support and, I dare say, some opposition to what is being asked for. That is the purpose of having debate. That is the purpose of conducting these consultations. It is the purpose of completing an analysis.

I would suggest to my hon. colleagues across the way that there is an openness on behalf of the government to deal with this issue, but the analysis and the consultations need to be completed. Then we can certainly have that debate, which I would certainly welcome. I look forward to hearing from my colleagues from the Bloc as they put forward their perspective on this. It is one that we need to certainly take note of as this debate continues. Members from both sides of this House certainly have something to say on this issue.

It is also important to note that Bill C-47 is a direct result of a discussion paper on the Excise Act review, which the Department of Finance and CCRA released back in 1997. In coming from 1997 to where we are today, obviously numerous discussions took place with various sectors that were to be affected. It is also important to mention that the beer industry indicated to the government, as I have been told, to continue with Bill C-47 and set aside its own industry perspective for the moment with assurances that we would be dealing with issues pertinent to the beer industry. Therefore the bill went forward and in fact the report has been provided to the finance department and that consultation and analysis are now being completed. That is my understanding.

Hon. members across the way are calling for an amendment because we need to deal with this right away. I do believe that there is an urgency to this matter, but I think it is unfair to say that the matter is not being considered or not being dealt with through the proper channels. Whether or not it is moving fast enough is always an issue for debate and is probably an issue that we will not resolve here today.

With respect to the beer sector, I think it is important to ensure that those points are made. The concerns of the brewers really centre on issues relating to point of imposition, warehousing, licensing requirements, loss allowances and controls on beer exports. These are complicated issues and before any progress in discussions between the government and the brewing industry can be achieved, I think it is fair to say that we need to do the analysis and that further work is required to assess the impact of these proposals. This type of work would not be readily completed within the timeframe originally contemplated by the Excise Act review. I wanted to make those points because we did hear quite often during the debate about the issue surrounding the brewers' association or the brewers themselves.

In recent years, it became quite obvious to both industry and government that the Excise Act, the excise framework, needed to be modernized. That is why the consultations began back in 1997. Industry certainly has introduced new technology, product marketing, and various distribution initiatives that the existing Excise Act was not equipped to accommodate. This is probably an example of where the government machinery was once again trying to catch up to the innovations in the private sector. It is fair to say, as my hon. colleague from across the way said earlier, that there are good aspects to the bill and there are reasons to support this type of legislation.

It is also important when we talk about the competitiveness of sectors and companies to pay attention to the compliance costs associated with that industry. It is certainly fair to say that pervasive controls in the act impose high compliance costs on the industry and impair the competitiveness of Canadian producers. That is the broader issue of dealing with the command and control structures of regulation versus the best practices approach to regulation. The act moves toward improving the issue of competitiveness of Canadian producers.

Given the increase in foreign competition in Canadian markets for beverage and non-beverage alcohol, the government, through consultation, found that the problem needed to be addressed. As I said earlier, Bill C-47 is a result of the discussion paper on the Excise Act review which was released back in 1997. It was in fact out of that review that we found three guiding principles, three goals that essentially guided the configuration of this piece of legislation.

The modern legislative and administrative framework introduced in the bill will generate stable and secure revenues needed to address the contraband pressures that are certainly out there. It was found that this can be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry. That needs to be the objective of any piece of legislation that comes forward in the House. We must always consider the costs associated with implementing legislation and try to balance the benefits of legislation with costs associated with it when it comes to issues like excise tax.

This piece of legislation certainly seems to strike that type of balance, whereby we do not in fact impose unrealistic and unnecessary costs or administrative burdens. It also helps to address the ongoing concern over the smuggling and illegal production of alcohol. The intent is to certainly ensure that the spirits industry, to name one, is no longer hindered by outdated or onerous controls over premises and equipment and that with these controls removed businesses will have the greater flexibility they require to organize their commercial affairs to respond more quickly to market changes. We all know that in an increasingly globalized economy those pressures to change certainly come faster, companies themselves must have flexibility and government should not encumber that type of flexibility through regulatory burden.

If I can just speak for one moment with respect to distillers, there is certainly an issue that I want to get on record. I want to take the opportunity to thank the Parliamentary Secretary to the Minister of Finance who helped resolve this issue with respect to the concerns of distillers. Now I urge the government to follow through on the commitment and proceed as agreed so that we do not in any way encumber this sector through regulation.

My hon. colleagues have talked about small business and the importance of supporting small business. With respect to vintners, it is also important to mention that the bill does in fact deal with the fact that all vintners must be licensed. It also stipulates that those with sales under $50,000 in the previous 12 months do and will continue to qualify for the small manufacturer's tax exemption. Therefore, for a very small vintner's operation the bill does in fact maintain that exemption.

The bill is really an administrative bill. I think it is important to emphasize that. It is not a bill dealing with tax measures. It is important to mention that the bill does introduce modern collection tools to help address the government's ongoing concerns regarding a number of issues, certainly one of them being the smuggling of alcohol. It certainly enables CCRA to improve its level of service to clients and its overall administration of the excise framework for both alcohol and tobacco.

To go back to that whole debate about regulatory burden, I certainly believe that in today's era of innovation and an innovation agenda, it is incumbent on the government to ensure that the regulatory burden, the making of regulations, is an important part of that innovation agenda. We really need to be able to create a framework whereby our companies are able to innovate, not to be regulated from a command and control perspective but rather one whereby they are able to innovate from a best practices or an evidence based approach to meet standards and requirements that we as a country and certainly as a government would have.

Bill C-47 would move toward reducing the regulatory burden and compliance costs. It is important to mention that. It is also important to mention that under the bill CCRA would improve its overall administration and level of service to its clients.

To sum up, the new excise framework would ensure excise duties on alcohol and tobacco were collected in a more effective and efficient manner, something we always strive for. It would provide for an array of modern administrative and enforcement tools which are important to ensure compliance with the new act.

The new framework for the taxation of spirits, wine and tobacco products would provide greater flexibility for businesses to respond to the challenge of organizing their commercial affairs. This goes back to the pressures companies feel in promoting and creating new markets and the pressures they feel due to globalization and the competitive nature of the industry.

Bill C-47 would provide for enhanced protection of excise revenues. It would provide for improved administration and lower compliance costs. Again, this goes back to the whole regulatory issue. The bill would provide for a more simple and certain taxation structure, something we should all be striving for not only in excise taxes but in personal and corporate tax. I am sure that going forward there will be many an opportunity to debate the issue with members of the House.

I have addressed a number of issues I wanted to put on record with respect to the administrative nature of the legislation. I made the point about brewers because the issue is important. I do not for one moment want to leave Canadians with the impression that brewers would not be dealt with or considered in the larger context of their issues. From 1997 to today there has been an engagement with the brewers who felt their issues could not be dealt with in the timeframe that was set out.

A proposal has been put forward with respect to the sector. The finance department is looking at the issues outlined in the proposal and will provide the analysis. We can then have a debate and discussion about how we might best deal with the issues put forward by the brewers.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I thank you and I thank my colleague from the Bloc Quebecois for his generosity.

It is a pleasure to speak to Bill C-47, an act respecting the taxation of spirits, wine and tobacco. I would like to draw the House's attention to a few bits of misinformation that we have heard in the House today from the government.

Back in 1994 the government was faced with a large problem of tobacco smuggling which was taking place primarily in Ontario and Quebec. At that time the government decided to lower the rate of taxation on cigarettes to address the smuggling issue. That created a huge problem.

Against the advice of the Department of Health and of stakeholders, the government lowered taxation rates which resulted in 225,000 Canadians taking up smoking, particularly teens in the young age group. We know that those people who take up cigarette smoking are primarily in their teenage years or even younger. It took the government some six years to change that mistake by bringing taxation rates up. Unfortunately every year 250,000 new Canadians took up smoking and this will have a devastating effect on all of us.

We know that the biggest thing we could do to decrease the chance of teenagers smoking is to keep the costs high. This is called price elasticity of demand. This means that as the price of cigarettes is increased, it creates a dramatic reduction in consumption, particularly among kids. This dramatic reduction is not only in the number of cigarettes they smoke, but also the age at which they start to smoke. In other words, the more costly it is, the older they are, the less they smoke. The cheaper it is, the younger they are, the more they smoke. Reducing the tax is probably the single most destructive act in public health care policy that we have seen in more than 30 years. We will pay the price in the future.

I compliment the government for increasing the tax rates and harmonizing them across the country. This will do much to decrease cigarette smuggling between the United States and Canada. Cigarettes were going from Canada to the United States and then resold back in Canada. People could make a profit because the price difference between the two countries was so dramatic.

This issue does not address the much larger issue of smuggling in general. Tobacco was just one of the products being sold at that time. We know that smuggling rings were organized crime rings working between the United States and Canada. Yes, they were buying and selling cigarettes but they were also buying and selling weapons, alcohol and drugs and involved in human smuggling.

A massive amount of smuggling is going on north and south, right under the noses of police who have been told not to interfere, in part because a lot of this takes place on aboriginal reserves crossing the boundaries of both countries. It is a serious jurisdictional problem. Many law-abiding aboriginal people living on these reserves are seriously harmed by this situation. The police are unable to intervene because they are understandably scared of an Oka-like crisis.

I ask the government to look at the larger issue of smuggling taking place in these areas. The government has control over the smuggling of tobacco, and it should be complimented for that. It is a good move on the part of the government, not only from a judicial perspective but also from a public health care perspective. For heaven's sake, the government must look at the larger issue of the smuggling of guns, drugs, alcohol and people.

The way to deal with that is not only to enforce the law, but to also implement what are called Rico-like amendments. The United States Rico amendments refer to racketeering, influence, corruption, organization charges. These laws enable law enforcement officers to go after organized crime gangs in a way they have not been able to before.

Good things happen when we can go after the financial struts and pillars that help support organized crime gangs. If the government wants to do one that is very effective, it should implement Rico-like amendments similar to those in the United States and at the same time ask other countries to implement them as well.

If we could do that on a transnational basis, then organized crime gangs would have a very difficult time doing their work that parasitizes so many in our country.

The second issue is alcohol. My province of British Columbia, as in many other provinces, has a large number of microbreweries and vintners, winemakers. Their biggest problem is the barriers that exist is exporting those wines east-west. It should be noted that the barriers east-west are greater than those north-south.

Vintners in my province can sell fairly easily to people in the United States. However it is very difficult for those individuals living in Ontario, Manitoba or Nova Scotia to buy British Columbian wines. A hodgepodge of rules, regulations and obstructions exist for the export of that wine east-west.

I would encourage the government to do something for a product that, in moderation, is good for the health of people, and that is the drinking of red wine and other wines. It would do wonders for the health of Canadians and also for those vintners who produce some of the finest wines in the world.

I would encourage the government to work and listen to the vintners and to remove those east-west barriers to trade. Canadians would then be able to purchase Canadian wines no matter where they lived. This would do much to support these products which are really a Canadian success story. I also suggest removing and lowering the tax rates not only for vintners, but for small businesses as well. My party has pushed for that for a long time.

My colleague from the Liberals mentioned that they wanted to do something for small businesses. If they truly want to do something, then they can lower the tax rates and remove the egregious rules and regulations that choke off the ability of small business to compete. They can also remove the export tax restrictions so they can compete fairly with other countries.

The other thing the government should do is flatten out the tax system and remove the corporate and personal tax structures.

My colleague across the way suggested that we pursue this through private members' business. As we know, 239 private members' bills have been put forth by members from all parties. Absolutely none of them reached committee stage. None from the government ranks have been made votable, which is terrible.

We need to do many things. If the hon. member from the other side truly thinks we should use private members' business to implement some of the fine solutions that have been put forth in the House, then we need to reform private members' business so that every member in the House, regardless of what party they represent, will have one votable private member's bill per parliament and one votable private member's motion.

If we could do that, and we can, then members of the House could have constructive discourse over important issues to Canadians and to our country. There are so few avenues where we can do that. We cannot do that by and large in the House or committees because these venues are primarily talk shops for areas of intellectual interest. They have no real effect on public policy.

I think all members know that there will be a round table on private members' business this week. Members from across party lines will come to it with good ideas. Collectively we can force the government to adopt those good suggestions. By doing that, private members' business would work for the betterment of everybody and ideas such as the ones put forth on this issue today could be employed. This affects all of us.

In closing, we support the bill. I compliment the government for equalizing taxation on tobacco across the country and for raising the tax levels which will do much to decrease smoking, particularly among children.

I would encourage the government not to back down when it hears pleas from the tobacco companies asking for lower taxes. Whatever the government does, it should not lower taxes on cigarettes. If it does, more children will pick up cigarette smoking at a younger age. It would be a devastating public health policy.

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, again I think the problem is that this is not the bill that will deal with the problem. It is a tax problem. However this is a parliament that is dealing with the problem. We have heard some comments about parliament being dysfunctional and not working. I can suggest to all members that this is when parliament is working, when members bring forward an urgent issue.

I just regret that the issue got deflected on the chairman of the finance committee. I do not think that is where the issue really is. The issue is that there is a quality of life problem, a small business problem, and we all share the desire to help small business.

We have raised the issue and the message is clear for the government. Regardless of what happens to Bill C-47, the government needs to move very quickly on this issue. Maybe a private member's bill is the way to go if we can make it votable.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I was very pleased to hear the comments of my hon. colleague. He clearly has read the bill but I would like him to respond to something.

The Bloc members continue to make comments about Bill C-47 in that they want to see the reduction of excise duty on beer. The bill does not deal with the taxation of beer. In fact it does not deal with the substantive rate issues for any products.

The member across the aisle has made a lot of comments about beer. The member knows that first reading on the bill was in December 2001 so clearly there was no conflict of interest by the chair since she did not become chair until February.

I would ask the member to comment on the fact that the Department of Finance is currently reviewing the analysis with regard to proposals put forth by the beer industry and by the wine and cider industry as well, which I know is of interest to members across the aisle from Quebec. What does the member think of this approach in terms of looking at it specifically, since the government was faced with the situation where the industry asked that beer not be put into the bill so that we could analyze it separately, deal with the issue and then move forward?

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I listened carefully to my colleague's speech on Bill C-47. I thought he did a very good job. He should give courses to the secretary of state and the parliamentary secretaries, because they do not often read the bills. He even read part of the bill to us. That was most interesting.

I would simply like to clarify one point and then ask him a question. A distinction must be made between microbreweries and make your own breweries. What the member was talking about earlier were make your own breweries, which allow certain wines to be reproduced, just as some make your own wineries allow certain Beaujolais and so forth to be reproduced, but on a limited scale.

When we talk about microbreweries, we are talking about a production in the neighbourhood of 300,000 hectolitres a year. They are still sizable breweries. They are not brew your own establishments. They produce original beers in Quebec, Ontario and Alberta. Some of these original beers increase diversity in the market and create opportunities for segmentation, while meeting consumers' needs for diversification.

I am sure that the member also has a desire to help the industry, particularly the microbreweries. Since he seems very open-minded and favourable to the microbreweries, and since he recognizes the great diversity and product diversification, especially when it comes to wine, spirits and beer, is he prepared to support a proposal to reduce the excise tax for microbreweries, which is often six times higher than that imposed on American microbreweries?

In asking him this question, I would like to remind him that American microbreweries are making inroads on the Canadian market with this competitive tax advantage. The major problem facing Canadian microbrewers then becomes not being able to compete with this almost unfair competition from the American breweries.

I would also like to remind him, before he gives us his support for reducing the excise tax, that the major Canadian breweries, John Labatt and Molson, have distribution contracts with the American breweries.

It cannot be argued that John Labatt and Molson are defending Canadian microbrewers and, at the same time, taking advantage of the microbreweries' market by selling products from outside Canada. Would the member be prepared to restore justice for Canadian microbrewers?

[John Bryden, Liberal, Ancaster—Dundas—Flamborough—Aldershot, ON]

Mr. Speaker, we have heard a lot about the beer that is not in the bill. I would like to talk a little bit about the wine that is.

One of the purposes of second reading debate is to examine legislation in detail to try to find flaws or make observations about it and bring the contents of the bill before the House. I certainly acknowledge that there has been some very passionate feelings about microbreweries and the fact that beer is not included in the legislation. I wanted to tell the member opposite that there is no reference to beer, but it is true that beer was defined so it would appear that there was an intention at one time to include beer in the legislation. I will come back to that a little further along.

One of the things that really interests me about the bill and I should point out to Canadians at large is that while it does not deal with brewing our own beer, it certainly does deal with the growing industry in Canada involved in making our own wine. This is a phenomenon that got its start, at least in Ontario, in the mid-1980s, basically taking advantage of some loopholes in legislation that existed.

In my own community, several of these little shops developed, first I should say, to brew their own beer and then started developing make your own wine on the premises operations. This was an enormous opportunity for Canadians, at least in Ontario. I acknowledge that in Quebec, because of the French heritage of my Quebec colleagues, there is a far greater sensitivity to wine than there ever has been in English speaking Canada, at least up until the time bottle your own wine businesses developed in the 1980s and then spread. They started as make your own beer, but just looking at the small shop fronts in my own riding, beer is now taking second place to make your own wine.

These are wonderful opportunities because we can do it all on the premises. We can get various grape concentrates from some of the famous vineyards in France. We can also get them from Canada. We can make a Merlot, Chablis, or a Bordeaux and many other types of wine. It is interesting because this started out almost as a cottage industry. As I say, it piggybacked on the brew your own beer.

I was looking at some Statistics Canada figures. It is very difficult to find out because I tried very hard all day to get some idea of how large a sector of the market make your own wine is and I was unable to do so. But looking at some Statistics Canada figures from 1980, it is very, very interesting because starting in 1970 we see an overall decline in spirits consumption. That is all kinds of other alcohol. We see a sort of dip and then a rise in beer and then a flattening out. Parallel to that flattening out is a sudden sharp rise in wine consumption and wine sales.

I would suggest that what is happening there, again possibly mostly in English speaking Canada, is the result of so many Canadians being able to go to a little shop in their community and instead of making beer, they make their own wine. They make it for about a third of the price of a brand wine. Actually, a lot less than that sometimes. It has introduced them to the entire experience of wine drinking.

I would suggest that after a certain length of time making our own wine at these shops we begin to develop a taste for better wine, because the reality is that in these places where we bottle our own wine and ferment our own product, it really does come out as different grades of plonk. After a little while, those of us who struggle along and can finally afford a good bottle really appreciate it. I would suspect that the increase in popularity of make your own wine stores has had a very good effect on all kinds of wine sales in Canada.

That brings me to Bill C-47 because it regularizes the actual production of wine in these establishments. As I was saying earlier, a lot of this was done basically as a result of loopholes in legislation, and mostly provincial legislation. Here we have the government, at long last in my view, attempting to formally regulate the make your own wine establishments and set some rules.

I draw attention to some of the clauses. In section 62, and there are a number of subsections, the bill would make it legal to produce wine and package it for one's own personal use. There are various other aspects of it. It also covers the possession of wine. One has to possess wine for one's own use.

It sets rules for the establishments themselves. If they are holding wine in bulk then they would not be breaking the law. Up until this legislation, or at this moment I would suggest, it is an entirely grey area as to what is happening on those premises. The bill would attempt to give it some system or regulation. I think it will be a benefit to everyone.

However, there are clauses that are kind of interesting and need to be dealt with by the standing committee that will be looking at the legislation after it passes second reading. Clause 63, for example, states:

No person shall sell or put to a commercial use wine that was produced, or produced and packaged, by an individual for their personal use.

I can see a problem here because a lot of charities and non-profit organizations, and perish the thought, even political fundraisers, rely heavily on trying to bring in beverages that are cost effective, shall we say. This clause has to be looked at.

There is provincial legislation that already applies here with respect to spirits on premises for fundraising events but this particular section in Bill C-47 would appear to forbid a charity from using wine made at a make your own wine store as part of a fundraising effort. I would say that should be revisited because the reality of it is that commercial wine, the wine that comes under label for the most part, is much too expensive to be a beverage at a fundraiser. That indeed is one of the reasons that many fundraisers, if they are to have an alcoholic beverage at all, choose beer. I think we have to look at section 63.

There is a similar section, section 64, about the packaging of wine, that it has to be packaged only on their own behalf. That of course raises questions about packaging make your own wine as gifts. Again, I think we have to look at that.

Then there are some other peculiarities. I found one section that was quite amusing. It is wonderful to prowl through a bill, and I suggest to Canadians that they should get onto the Internet when they see bills like this appearing in parliament and do exactly as backbench MPs are supposed to do, and look through it and make their own inferences. There is quite an interesting section, section 2, on the definition of wine. I found that fascinating because we are talking about make your own wine.

In section 2 wine is defined, among other things, as a beverage of normal alcohol content but it is also defined as a beverage that is not fortified in excess of 22.9%. Well, Mr. Speaker, that is some wine.

What the bill basically does, and this might be something else the committee might look at or other people who have some strong thoughts about alcohol consumption in general, is it makes it permissible to make our own sherry and port. It is quite bold because it suggests that we can fortify it. Quite apart from all the sections about the regulating and the denaturing of alcohol, alcohol that is not denatured can obviously be applied in this bill to make our own sherry, which I find somewhat amusing. These are positive aspects of the bill.

I think we need to debate this because one nice thing about making our own wine is that it is very much an ordinary person thing. This is what Canadians have been doing. I think the rise of brew your own beer or make your own wine establishments has been a very positive thing.

In that context I would like to allude to the fact that the bill does not deal with the brew your own beer. I have great sympathy for the complaints from the opposition on this. I am a great fan of the microbreweries in Quebec. I have had the happy occasion to visit St-Jean-sur-Richelieu. There are about five microbreweries in that area and they are all excellent.

However I suspect that the government may have run into a problem that is quite different than the problem that is perceived by the opposition involving the major breweries. I think that problem may be the fact that, at least in Ontario, every brew your own beer franchise is a microbrewery. The difficulty is that in Ontario we can go to these establishments, get a recipe to make an English beer, a wheat beer or a German beer. We can duplicate just about every imaginable beer that can be bought under label from a store. I suspect that one of the problems is how to manage the difference between this type of microbrewery and the type of microbrewery that exists in Quebec.

I will say that I would absolutely support trying to find a way in which to ensure that the microbreweries, not just in Quebec but elsewhere, are retained. I would say in passing that it is not quite the same thing with wine because the beer produced in these brew your own stores is a very close imitation of the very best beer we can buy anywhere, including in the microbreweries, whereas at the make your own wine establishments the best wine we can make will never match a French, Canadian or Australian label.

However, the bill is not just about wine and spirits. I would like to also draw the attention of the House to the fact that the bill also deals with tobacco. I think that is very important because in the early part of the 1990s this country experienced a very severe problem with respect to tobacco smuggling. In my view, a lot of it was the government's fault in the sense that the federal government, the predecessor government to the Liberals if I may say so, elevated taxes on tobacco to such a level that contraband taken from across the border from the United States became very profitable.

I well remember in 1995, I had only been up here two years, that we had a crisis basically along the St. Lawrence Seaway where organized crime and other interests were importing not just hundreds of millions of dollars but a billion dollars worth of tobacco products from the United States. The statistics from that period are quite shocking. The government in the end had to lower taxes and, to a large degree, that addressed the problem.

What remained was the fact that a lot of the tobacco products that were being smuggled in from the United States during that particular period were actually made in Canada.

We had a situation where tobacco products, as it later emerged in investigations in the United States and in our own investigations here in Canada, that enterprises were producing tobacco in Canada and then shipping it to the United States both in an unfinished fashion and as cigarettes. These products were then being smuggled across the border back into Canada. It was a billion dollar industry and none of that money went to government. There were no taxes. It was a very severe problem.

One of the interesting statistics was that in 1993, just to give members an idea, 18 billion finished cigarettes were being exported from Canada to the United States. Whereas four years earlier it was only 4 billion cigarettes. In other words, the contraband market in Canadian cigarettes increased enormously.

What Bill C-47 does, and I think it is a very positive thing, is it introduces some severe penalties with respect to the illicit manufacture and distribution of tobacco products.

I draw the House's attention to clause 214 which provides that if somebody is convicted of manufacturing and selling cigarettes without government authorization, without going through the proper channels, which would include smuggling, the fines on conviction range from $50,000 to $1 million and imprisonment for a term of not more than five years. That is a heavy penalty and I think we all should be pleased to see it there. The one thing we do not want to do is go back to that period when tobacco smuggling was a major industry and, I regret to say, a major industry on our border Indian reserves. I think Canada came to a very near point of lawlessness along our borders as a result.

The key regulations that these penalties apply to are clauses 25, 26 and 29 which basically say that no person, other than a licensee, shall manufacture a tobacco product, and no person shall carry on the activity as a tobacco dealer without the appropriate licence, and so on. I suggest that this is a very positive step forward.

It is good technical legislation. I am very pleased to see that it has sort of addressed the problem of tobacco smuggling in a very substantive way. It has addressed the problem of the illegal manufacture of cigarettes. Cigarettes have been with us for a number of centuries and we are not going to stop people smoking. We might stop a lot of people smoking but it is an addictive product and a lot of people will continue to do so, just as they will continue to drink alcohol.

It is very important that we have the regulations and the legislation in place that administers these two product which do not always do the best for us but two products that people insist they will live with. If I may say so, I could certainly do without tobacco but I think wine and the microbreweries are certainly worth saving.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for Châteauguay for his question. I think we have to realize--and he gave further evidence of this--that we have here a bill that has been cut to benefit private interests at the expense of the microbrewery sector.

The government should not try to make us believe anything else. The member for Châteauguay just gave us further evidence. At the outset, Bill C-47 was designed to amend the existing act, which includes the beer industry. I have no doubt whatsoever in that regard. During the process, specifically at the brewers' request, it was decided to exclude this sector. What I cannot understand is that at the same time, we are told--and the Brewers Association of Canada itself acknowledges this--that the situation is urgent. Still, the association is requesting that the decision be postponed.

I would like to remind the House that there are facts. For each 24 bottle case of beer produced in Canada by microbreweries, the federal government collects $4.09 when it is sold in a grocery store. When it is sold in a bar, however, the government collects $6.12. If it were sold in the United States, the tax would be $1.12 and $4.09. This is almost a plot designed to close down the microbreweries.

If this is what the federal government wants, it should say so and let us debate the issue. Why does it want the microbreweries to disappear? The government might think that the large companies like Labatt and Molson are part of the campaign for national unity, just like the Canadian dollar and the early railroads.

I can see no objective reason for not including the beer industry and the debate on the reduction of the excise tax for the microbreweries. There is none, except maybe for financial reasons that escape me.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, it is an honour to take the floor to debate Bill C-47.

This is a rather special bill in that the debate involves not only an issue affecting the Excise Tax Act, but also an issue of ethics. The exchange of views we have just had strikes me as very clear in this respect. I will therefore need to speak to both of these aspects.

On Friday, the member for Saint-Hyacinthe--Bagot pointed out, and rightly so, that it is strange, to say the least, that we are being presented with Bill C-47, which covers everything but beer and the excise tax on microbreweries.

This is a general bill, and one that is well explained in the presentation, where it is stated that it re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on these products, together with technical improvements, and incorporates a range of new provisions.

This is, therefore, a re-enactment of existing legislation. In the present legislation, everything is addressed: wine, spirits, beer, tobacco. There are provisions on licensing, rights of accession, offences, collection, record. In this bill, everything is there except for beer and excise tax on microbreweries. This is passing strange.

Why? There are two reasons, as has been pointed out by the members of the Bloc Quebecois since the start of this debate, I believe, and by a number of opposition members as well. First, because the government has torpedoed the work of the committee, and second because it preferred to lend an ear to the major breweries rather than the needs of the microbreweries.

When they listen to the major breweries, which must unfortunately be identified as Labatt, Molson and the like, the corporate image of these companies is greatly tarnished in the process. Personally, I find this regrettable, because these are well-established institutions. They have put themselves in the position of being in conflict of interest and this, I feel, will not go over well with the general public.

Let us review the facts regarding breweries, and microbreweries in particular. Across the board in Canada, as is the case in the United States, there is a 28 cent tax per litre of beer. However, in the U.S., the mecca of capitalism, as the member for Saint-Hyacinthe--Bagot reminded us again on Friday, there is a distinction made for microbreweries. The tax is not 28 cents a litre, but nine cents a litre. In the U.S., a microbrewery is defined as a brewery that produces a maximum of one million hectolitres. In Canada, a microbrewery is defined as a brewery producing a maximum of 300,000 hectolitres.

This means that what would be considered a large brewery here is considered a microbrewery in the United States. They are three times the size of our microbreweries, yet they are considered microbreweries and benefit from a preferential tax rate of nine cents per litre of beer, rather than 28 cents per litre.

The result of this situation is clear. Since their taxes are lower, they are able to compete with, and really hurt their Canadian competitors. We have witnessed the result: 38 microbreweries have disappeared. They have not disappeared by some miracle; they disappeared because the circumstances of competition led them to disappear.

Why? There are no doubt a number of factors, but there is one that is easily identified. The 28 cents per litre paid by Canadian microbreweries and the nine cents per litre paid by U.S. microbreweries is definitely one of the main reasons.

If the Government of Canada has at heart the interests and the future of its microbreweries, it should react swiftly by accepting to review Bill C-47, to immediately include the beer industry, particularly the excise tax on beer produced by microbreweries.

Europe has done the same thing. This would not be some Canadian invention. We would be falling in line with what is done everywhere else. There are rules—I say this as the Bloc Quebecois critic on international trade—accepted by the World Trade Organization. When it comes to microbreweries, they are considered in terms of regional diversification, and the member for Jonquière reminded us earlier, in terms of diversification of products.

There are also cultural aspects to the production of these microbreweries, which are often still using traditional methods.

The Government of Canada dismissed out of hand the concerns of the microbreweries and decided simply to listen to the interests of the big breweries, in particular Labatt and Molson, which dominate the Brewers Association of Canada.

I conclude that there is some sort of collusion between what it was decided to include in Bill C-47 and the interests which are not hidden, but admitted. We have the letter. I have seen it. Clearly, the Brewers Association of Canada is asking that anything having to do with the beer industry and the excise tax for microbreweries be excluded from Bill C-47.

So this entire situation is of great concern, all the more so since—and this brings me to the second point—while the member for Saint-Hyacinthe--Bagot tried to correct matters so that Bill C-47 would include the provisions of the earlier legislation amended to reflect the current state of affairs, the committee's work was sabotaged by the fact that the amendments to include the beer provisions were rejected.

Earlier, someone said, “Yes, but it was not in the bill”. A bill is just as important for what it includes as for what it leaves out. It seems to me that we are entirely justified in including beer in a discussion of excise taxes on wine, spirits and tobacco. The public would normally group these products together.

In my view, this argument is completely wrong. It is exactly the same as for bills before the sub-committee or the Standing Committee on Foreign Affairs and International Trade. Each time amendments to crown corporations concerning international trade or foreign affairs are put forward, I always put forward an amendment, but this amendment or this concern is never included in government bills.

I will give an example involving the Export Development Corporation. When it was decided to rename it Export Development Canada, there was a key omission. There was no provision requiring a crown corporation, such as the Export Development Corporation, now Export Development Canada, to respect Canada's international commitments. I put forward an amendment in committee. That amendment was accepted. It was not in the bill.

On the contrary, every time we talk about crown corporations, the government systematically excludes this. We have international commitments. Canada tries to be generous, but only if it is of no practical consequence. Every time it is not in the legislation. Every time I put forward amendments, they were ruled in order by the chair and every time they were defeated by the Liberals. However, I managed to do one thing at least--and I say it every time I have an opportunity to do so--to prove that this government speaks from both sides of it mouth.

This is another case in point. Do not give us this misleading argument that we are not dealing with beer. The current act deals with beer. They should have explained to us why we should not be talking about beer. Everybody agrees, including the Brewers Association of Canada, that the situation of the microbreweries is urgent. Why then is the only sector identified as being threatened by competition the one for which no decision is being made? It is being postponed, put off for a month of Sundays. In the meantime, microbreweries are disappearing one after the other. They have lost another 1% to 2% of the market.

Moreover, the committee chair, the member for London West, used a new procedure introduced during this Parliament with Motion No. 2, which in my view is particularly undemocratic. I remind the House that the government put forward Motion No. 2 after the debate on Bill C-20, which attempted and is still attempting to prevent Quebecers from democratically choosing their collective future. It will not work but this is what the Liberal government attempted to do. There is also the Young Offenders Act which the Bloc Quebecois, and especially my friend the member for Berthier—Montcalm, tried to stand up for the Quebec consensus on this bill.

We moved amendments to correct the bill. To deal with the problem, the Liberals changed the rules of the game. The chair of a committee or sub-committee may now simply decide that an amendment is out of order. This is what happened in the case of the amendment moved by my friend, the hon. member for Saint-Hyacinthe--Bagot.

Democracy is ailing in the Canadian parliament. No wonder Canadians and Quebecers are losing confidence in their parliamentary institutions. Decisions are not taken here but in the Prime Minister's office. This is where it was decided that beer would not be part of Bill C-47. It is the duty of the opposition and it should also be the duty of the members across the way to say, “Bill C-47 should have dealt with the beer industry, especially microbreweries”.

Therefore I cannot accept the argument, which is being constantly repeated, namely that since Bill C-47 did not deal with the beer industry, the amendment had to be out of order. This is totally ludicrous.

Unfortunately, this is what occurred. I will not mention the fact that the spouse of the chair of the committee is a lobbyist for the Brewers Association of Canada. This is probably just a coincidence. The facts, however, are real. This is the truth. I believe that if she were a minister, the committee chair would probably be a very good candidate for a position as ambassador in a Scandinavian country.

It seems to me that if the government were committed to the future of the 2,000 employees of microbreweries who earn their livelihood in this sector, mainly in Quebec--I remind hon. members that proportionally Quebec has more microbreweries than the rest of Canada--and elsewhere in Canada, it would immediately bring forward amendments to Bill C-47 dealing with the beer industry and the excise tax as it relates to microbreweries, which everyone considers necessary.

I remind hon. members that even the Brewers Association of Canada has said so. Allow me to read the letter sent on April 12, 2002 to the chair of the committee and spouse of a lobbyist for the brewers association:

Our position remains unchanged: we fully support a reduction in the excise tax for small brewers. It is a priority of the BAC and we want to point out that small brewers in Canada urgently need such reduction.We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government, we cannot support amendments which would include beer in Bill C-47.

On the one hand, the association says that it is prepared to support any measure to settle a situation that it itself deems urgent, but, on the other hand, it did everything it could to prevent the Bloc Quebecois from moving amendments that would have corrected the situation. This is a rather serious case of manipulation of the public interests.

If the government cared about the future of these 2,000 employees, it would correct the situation. I believe the opposition would unanimously agree to include this clause in Bill C-47.

Unfortunately, this government, perhaps because it has been in office for a number of years, no longer cares about Canadian and Quebec workers. We can see it in the Murdochville and GM cases. I could list all the issues on which the federal government shown indifference. This government only cares about one thing: remaining in office, ensuring that the Liberal Party of Canada has enough money to win the next general election. This is its only concern.

There has been an incredible deterioration. I have witnessed it myself, because I followed politics for a number of years before I entered it, in November 2000. The government is no longer protecting the interests of the federal government, of Canadian federalism. It is protecting the partisan interests of the Liberal Party of Canada. If this means that microbreweries must disappear, then they will disappear for this government, for the party in office, but not for us.

We are going to fight to ensure that what has happened to GM and Murdochville does not happen to the 46 microbreweries left in Canada, 19 of which are located in Quebec. The government will have to wake up and review Bill C-47 to include the beer industry and the excise tax for microbreweries, or this will be yet another example of the federal government's failed economic policies.

Just for fun the other day, even though there was actually nothing very funny about it, I decided to make a list of all the federal government's failed economic policies since Confederation.

The national policy artificially created an east-west market. It deprived Quebec of its natural axis, which is north-south. Fortunately, free trade set things straight and we do more business with the Americans than we do with the rest of Canada.

The Borden line made Quebec and eastern Canada pay more for gasoline than we would have paid if prices had been in line with international prices. And why was that? To develop the oil industry in western Canada. It was a completely respectable choice. How strange that Quebec always has to pay for these policies.

Now, for the St. Lawrence seaway. Certainly it had to be constructed but what compensation was there for Quebec, Montreal in particular, southwest Montreal, east Montreal, when the seaway was built and industry moved to southern Ontario? This is perhaps just another coincidence and probably not premeditated in any way.

There was no question of not putting in the St. Lawrence seaway. There should, however, have been investment in restructuring, in worker retraining, in order to avoid the catastrophe that ensued, in the late 1970s and early 1980s in particular. Fortunately, people were able to pick up the pieces. Things are better in Montreal now, without any help from the federal government.

The federal government's R & D policy systematically penalizes Quebec. It took a 30 year struggle to get back occupational training—and we do not yet have it all back—in order to have a consistent employment policy. That took 30 years. We lost 30 years in federal-provincial squabbles. In the end, the federal government had to bow to the pressure and acknowledge it was wrong. Nevertheless, we wasted 30 years. Quebec wasted 30 years on this battle.

As for GM, federal government policies have systematically favoured development of the auto industry in southern Ontario. However, when it comes to industries with a solid foothold in Quebec, aeronautics or pharmaceuticals for instance, we see that federal government policies favour a shotgun approach, spreading them all over, in all regions of Canada.

I will give one example from my own experience. When Quebec obtained the space agency for Saint-Hubert, immediately afterward the federal government awarded the F-18 maintenance contract to Winnipeg, just to be sure that the goodies were spread around. This, however, can weaken the situation of the aircraft industry in Quebec. The same thing goes for the pharmaceutical industry.

With a record like that, it seems to me that we now have an opportunity presented to us, a symbolic one of course. Yet with this government, I believe we need to start with something symbolic before moving on to something more serious.

Honestly, the government ought to rethink its intention to push Bill C-47 through regardless. It should redo its homework. We are prepared to be involved, as the member for Saint-Hyacinthe--Bagot has said right from the start. The law needs changing, needs modernizing, but there must be equity with all sectors.

I am not promoting wine, spirits and tobacco over beer. I think they should all be treated equally. That is what the Bloc Quebecois is asking for. If Bill C-47 does not meet our expectations, then we will have to fight against it and do everything we can to defeat it.

I will also fight for the microbreweries in the region of Lanaudière, especially one in Joliette, La Broue Pub, l'Alchimiste. It was set up by young entrepreneurs a few years ago and I want this young business to have the opportunity to compete on the North American market and, who knows, maybe even on the world market. But for that to happen, we need to take fairer measures, decrease the excise tax on microbreweries and amend Bill C-47. Otherwise, we will defeat it.

The federal government now has the chance to show that it cares about microbreweries, regional development, especially in Quebec, and more globally the 2,000 people working in this industry across Canada.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, as I pointed out earlier, but I think my colleague was not listening, this particular topic was not covered in the bill. Committee chairs do not make laws. My colleague needs a lesson on how things work with regard to bills.

Usually, a bill comes before a committee on the initiative of the ministers responsible. The chair or members of the committee are not involved in the drafting of the bill.

My colleague is not making a positive contribution to this debate. We are here to debate Bill C-47. Frankly, I expected the members to talk about this bill, but they rise and talk about all sorts of things that have nothing to do with the bill. The member talked about microbreweries in his neighbourhood and in his region. But does he have concrete proposals to make about what this House or a future House could do to deal with these issues? Does he have concrete proposals to make about what can be done? Does he have any ideas?

We must deal with the issues before us. A committee chair does not introduce a bill. It is the result of a concerted effort by the industry, the public and the public administration. It does not emanate from a committee chair.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, our colleague does not seem to know what is in the Excise Act. It contains everything we have in Bill C-47, amending the general excise legislation, except one thing, beer.

Why is that? Because the Brewers Association of Canada, through the chairman of its taxation committee, who happens to be the spouse of the chair of the Standing Committee on Finance, asked her not to include in the bill the beer produced by microbreweries. That is why beer is not included.

In 1986, Justice Parker, who presided over the case of a Conservative minister who was accused of 14 counts of conflict of interest, said that we needed a stronger and legally enforceable code of conduct if we were to prevent public office holders from ending up in this kind of situation. One of his key recommendations involved an examination of the position, assets and economic interests of spouses and dependent children. In this case, it is not a neighbour who is involved, but the spouse.

You did not answer the question of the hon. member for Joliette. As chair of the committee--

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, first, as regards responsibilities, when a committee is reviewing a bill, the first administrative duty of the chair is to examine the issues before it. The committee was reviewing Bill C-47. Therefore, the first and last responsibility of the chair was to examine the issues relating to Bill C-47.

When an opposition or government member proposes a motion on any topic, the chair's responsibility is to take that motion or suggestion and refer it to the clerk of the committee.

This is precisely what the chair did in this case. The clerk of the committee said that this topic was not covered in Bill C-47. Therefore, the chair agreed that the committee would not look into it. I do not see how we could say that this puts the chair in a conflict of interest position. As we say, this is a slippery slope.

If we start saying that a member of parliament is responsible for what his spouse, mother, father, brother, cousin or any other relative or neighbour does, it will never end.

We need to realize that, for some time now, integrity issues have been important not only for government members, but also for opposition members. When issues like that are raised, they have to be based on clear objectives and a just foundation.

In this case, however, our colleagues are raising an issue that is devoid of any substance. These are very personal issues that reflect badly not only on my colleague, but on the House of Commons and on all Canadians.

We are to blame if the public does not trust us, because we are responsible for what is being broadcast over the speakers in the House of Commons. We are somehow responsible for casting a negative light upon our Canadian parliamentary institutions. All because the opposition parties are making unsubstantiated allegations.

I challenge the hon. member to make these same allegations outside the House of Commons and see what the Canadian courts make of them. If the member can prove these allegations in any way, shape or form, he should make them outside the House of Commons.

This bill addresses all the topics, except for the breweries. The hon. member should stand up and apologize to my hon. colleague from London West.

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I would like to take this opportunity to first pay tribute to the chair of the finance committee, the member for London West, a person with integrity, a commitment to public office, an understanding of the issues and an unequivocal sincerity and who has been putting in endless hours, days, months and years trying to serve her constituents and the people who have elected her. To hear some of my colleagues trying to remotely question the appearance, or the lack of, or whatever they are trying to put before the House, I find totally unacceptable and it certainly does not represent the views of anyone outside of the one or two members who have raised this question.

I also would like to pay tribute to my colleague, the Parliamentary Secretary to the Minister of Finance, the member for Oak Ridges, for his hard work on this legislation and his diligence, as well as his commitment to ensure that Canadian laws are meeting the objectives that they were set out for. I also would like to congratulate him for being so open to consultation, suggestions and ideas, and I also want to commend him for the way he has carried the bill through the committee and through all the different processes that bills have to go through.

Just for the record, so that my colleague will realize that she and my colleague from the Bloc Quebecois who asked the question were wrong when they made the statement that microbreweries are in fact part of the bill, the reality of it is that the bill does not make any mention in any way, shape or form of microbreweries or nanobreweries. In fact, they are simply not part of the bill. What this legislation does is look at the overall federal framework for taxation of alcohol and tobacco products. It tries to bring that up to date and to put in place a mechanism that reflects the reality of the day. As well, it tries to address some of the issues that need to be addressed.

Specifically, I want to quote from the bill some of the things that the legislation deals with. First, one of the key features of this legislation deals with:

(a) the continued imposition of a production levy on spirits, tobacco products and raw leaf tobacco and the replacement of the existing excise levy on sales of wine with a production levy at an equivalent rate;--

In this part of the bill there is absolutely no mention whatsoever of microbreweries or breweries in general.

The second aspect of it deals with:

(b) the replacement of the excise duty and excise tax on tobacco products other than cigars with a single excise duty;--

at the equivalent of the existing combined rate. Here again there is absolutely no mention of breweries, micro or otherwise.

The third aspect of this legislation deals with:

(c) the introduction of excise warehouses to allow for the deferral of the payment of the production levy on domestic and imported spirits and wine to the time of sale to the retailer;--

Once again there is absolutely no mention of brewers in this section of the legislation.

Another section of the legislation deals with:

(d) more comprehensive licensing requirements and new registration requirements for persons carrying on activities in relation to goods subject to duty;--

There is absolutely no mention of breweries in this section.

The legislation also deals with:

(e) explicit recognition of limited exemptions for certain goods produced by individuals for their personal use;--

There is absolutely no mention in this section of breweries.

A section of the legislation deals with introducing:

(f) tight new controls on the possession and distribution of goods on which duties have not been paid;--

Once again, for my colleagues from the Bloc, there is absolutely no mention in this section of the legislation of anything to do with breweries, micro or otherwise.

The legislation also contains:

(g) modern provisions concerning the use of spirits and wine for non-beverage purposes and the use of specially denatured alcohol;--

Again, in this section of Bill C-47 there is absolutely no mention whatsoever of breweries, micro or otherwise. Also in this legislation there are provisions in order to ensure:

(h) updated administrative provisions, including new remittance, assessment and appeal provisions that are similar to those under the Goods and Services Tax/Harmonized Sales Tax legislation;--

Again microbreweries are not mentioned in this section of the legislation. Also there are elements that deal with:

(i) updated enforcement provisions, including new offence, penalty and collection provisions;--

Again, in this section of Bill C-47 there is no mention of breweries, micro or otherwise.

There are other provisions included in this legislation, such as the following:

the replacement of the existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on spirits, wine and tobacco necessitates consequential amendments to those Acts as well as other acts, including the Budget Implementation Act, 2000, the Canada Customs and Revenue Agency Act, the Criminal Code...the Customs Tariff, the Export Act, the Importation of Intoxicating Liquors Act, the Special Economic Measures Act and the Tax Court of Canada Act.

The legislation states:

This enactment also implements changes to the ships' stores provisions, which were announced by the government on September 27, 2001. These changes broaden the enabling legislation for ships' stores regulations and implement a temporary fuel tax rebate program for certain ships that, as a result of the amendments to the Ships' Stores Regulations effective June 1, 2002, will no longer qualify for ships' stores relief.

In addition:

...this enactment implements the tobacco tax increases announced by the government on November 1, 2001.

All these comments are to state to the House, for the record and for Canadians who are watching or who have watched over the past few days the incredibly unfounded allegations of my colleagues in the Bloc, that the breweries are not included in the legislation. Therefore, the attack on the chair is unwarranted and unnecessary. Frankly, it is high time for my colleagues to stand and apologize to the member for London West for the undue stress they imposed on the member, who is incredibly sincere and has an incredible level of intelligence and commitment to serve her constituency.

The legislation would do two things. It would create a provision which would ensure that the laws of Canada are enforced in a manner that is up to par with other legislation in Canada. At the same time, the legislation would create a provision for people growing tobacco or making wine in their homes and would give them the ability to use that tobacco, alcohol or wine for their own personal use without being penalized by the law. As well the legislation would bring some of the other legislation into line so that the government can continue to fulfil its commitment to the people in the industry who are trying to produce products and create jobs, therefore responding to the needs of Canadians.

Some of my colleagues might wonder whether the bill would harm in any way, shape or form those who are in different sectors. Let us take for example the people who work in the tobacco sector. There are in excess of 1,200 tobacco producers across Ontario creating over 17,000 jobs. Bill C-47 would not affect them in any way, shape or form. It would not touch them.

The legislation would not affect people in the wine and spirit producing sectors in a negative way per se. Rather, it would deal with the issue of people who operate without licences and try to sell their product on the market without proper certification. The element of enforcement exists in the legislation for that purpose.

We cannot look at Bill C-47 in isolation. It is part of the government's overall agenda of revisiting every law on the books to ensure our laws continue to respond to the needs of Canadians. When the Prime Minister was elected in 1993 one of the pledges he made to the House and to Canadians was that we would look at the way we do our job as a government. He said we would look at our mandate which is to respond to the needs of Canadians.

As we have seen, the government has done just that. First, we addressed the incredible amount of debt and deficit that existed when we came to power. It was at an all time high of over $42 billion. In no time at all the government was able to turn the corner and bring us into a surplus situation that has enabled us to not only pay down the debt but to support the programs Canadians feel strongly about such as health care, education and other issues that affect them.

Bill C-47 is part of the overall government agenda of trying to bring our laws into the 21st century so our industries can do well. My colleagues in the opposition consistently attack the government about where we are on the international scene. I have in my hand a report published in January, 2002 by KPMG, a well respected international organization. The report deals with competitiveness on the international scene. The report is available to my colleagues on the opposition side. It is my hope they will obtain a copy of it and have a look at what the government has done over the years. I will not read through it but according to KPMG Canada has been identified as the best country in the world in which to do business. Canada is way ahead of the United States, the United Kingdom and many other countries in the industrialized world. We continue to strive in that area.

I will read for hon. members what it says about an area in which Canada has been the pride of all Canadians: labour costs and taxation. Canada is still one of the best countries in the world in terms of taxation. I will come to that in a minute.

My colleagues on the other side often quiz the government on the issue of competitiveness and labour costs. Hon. members will be happy to know that when it comes to wages and salaries, statutory plans and employer sponsored benefits Canada ranks first. That is ahead of the United Kingdom, the Netherlands, Italy, Germany, France, Austria, the United States and Japan.

I will come back to the issue of taxation and what we are talking about in the bill. When it comes to levels of corporate taxation Canada has been ranked a close second to the United Kingdom but well ahead of all other G-7 countries.

This is all to say that what we have seen from the government over the past nine years is an unequivocal commitment to respond to the need of Canadians and ensure Canada continues to be the best country in the world in which to live and do business. Bill C-47 fits exactly into the government's agenda and where we are going.

I sometimes see my colleagues on the other side taking cheap shots at the chair of the finance committee or the parliamentary secretary. We have seen reports in the press over the past few days indicating 70% of Canadians do not have trust in their elected officials. It is my duty and obligation as a member of parliament to stand and say it is these kinds of unfounded allegations that are eroding the trust of the public in public institutions.

When members of this institution attack the integrity of other members we start to see an erosion of public confidence in our institutions. It is the responsibility of each member of this institution to stand and be counted. We must state the facts, not use innuendos or unfounded allegations. Members must not make comments if at the end of the day they cannot walk outside the House and make the same comments. Such members know they will be sued if they do because their statements are totally false and without foundation. Members of the House must be in a shameful state of mind to stand and attack the integrity of other members without proper foundation, without any legs to stand on, without any brain to guide them and without any soul to go back to.

In that spirit I want the House to know Bill C-47 has nothing to do with breweries. If there is a social or a business problem with the issue of breweries it is our responsibility as parliamentarians to address it in the context of something else, not in the context of what is before us and the House today. To turn around and make an allegation about the chair of the committee puts her in an awkward position. If the issue is not in the bill and she or the clerk have ruled that the issue cannot be dealt with by the committee, it puts the committee chair in a conflict.

What a shameful and baseless allegation. It is my hope that the same member who stood to attack the member will stand right now, as my colleague would say, and apologize not only to the member but to all Canadians because Bill C-47 is supported by the industry. It is supported by the people. It is supported by the same institution the hon. member is trying to protect. He is doing no service whatsoever to his constituents by making these kinds of unfounded allegations.

It is my hope that the House will approve Bill C-47 without any delay.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

He is the Parliamentary Secretary to the Minister of Finance.

Personally, I have always been very honest and I will not allow this individual to question my honesty or the honesty of the hon. member for Saint-Hyacinthe--Bagot.

Initially, in 1997, when it was decided to review the Excise Tax Act, the beer sector was part of the review. However, following a letter of the Brewers Association of Canada asking the chair of the Standing Finance Committee not to include beer, this is precisely what happened. I am not imagining things. This is the truth. If there is another truth it is not part of Bill C-47. Beer was supposed to be covered by Bill C-47 but it is not.

The parliamentary secretary should go back to square one and tell the government to include beer in Bill C-47. This would satisfy us and allow us to hold a dispassionate debate.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, the attitude of the parliamentary secretary is truly deplorable and very mean. Initially, the beer sector was covered by the bill and by the excise tax. The Brewers Association of Canada wrote to the chair of the Standing Committee on Finance to suggest that the beer issue be set aside, which is what was done.

I do not know under which minister's authority this parliamentary secretary is working, but I hope it is not the Minister of Finance. If this is the case, I see that he does not understand anything and this is because he probably does not follow what is going on in the Standing Committee on Finance.

My colleague from Saint-Hyacinthe--Bagot does good work. He carefully analyzes everything that concerns finance. My colleague wanted everything to be transparent. He was right to ask for transparency but the Liberals did not want it.

The member should not say that the issue will be discussed elsewhere. On the contrary, it should have been and must be discussed during consideration of Bill C-47.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I must say that I was a bit surprised to hear the comments of the member opposite about the issue of conflict of interest with beer when in fact in Bill C-47 the words beer or brewery do not appear at all.

For the member's information, in February 1997 when the discussion paper was originally released, the suggestion was made at that time that we would not include beer because of specific concerns that the brewing industry had. The brewing industry in fact indicated to the government that we should move ahead with Bill C-47 and that, for the record, we look at beer separately. That is currently what the department is doing and the department will come back with specific recommendations which may then come in the form of legislation.

Unfortunately, my friends from the Bloc did not listen when we presented this to the committee originally, they did not listen during committee and they are still not listening. In fact, they are not listening because it does not fit what they want to say. There is no conflict because beer is not in the bill. Therefore, it is very difficult to amend legislation about something which is not there.

I would ask the member to explain to us how we can amend legislation about a commodity which is in fact not even in the legislation.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, it is always a pleasure to have you turn the floor over to me in a major debate.

I have a question for my eminent colleague from Jonquière, who adroitly and boldly pointed out the shortcomings in Bill C-47, which is still before us. How did things end up like this and how could this situation be avoided in the future?

We put forward amendments at the Standing Committee on Finance in order to change Bill C-47 in a manner truly in line with the spirit and the letter of the bill. What was not in line was what the Liberals did, which was to remove one of the items in the excise bill.

How could this be avoided? In a departure from the past, the chair of the Standing Committee on Finance, like all committee chairs since Motion No. 2 was put forward by the government, now has the extraordinary power to reject our amendments. This may well be the end of the road because we have no other recourse at report or third reading stage.

First, should the ethics code for holders of public office not be reinforced and, second, committee chairs included in this amended code? Third, should the occupations of spouses and even dependants not also be considered in a conflict of interest case such as the one before us concerning the microbrewery amendments rejected by the member for London West, who is also the wife of one of the seven directors of John Labatt Ltd.? Should this code of ethics not be reinforced and committee chairs considered holders of public office?

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I am glad to continue with my speech on Bill C-47. As I said last Thursday, when I began my speech, I would like to give the House an overview of the situation. This bill deals with the taxation of spirits, wine and tobacco and the treatment of ships' stores.

The bill was also supposed to deal with beer. Unfortunately, when my hon. colleague from Saint-Hyacinthe--Bagot looked into it, he realized that the government had excluded beer from this legislation. He put forward amendments in committee so that the issue of beer and microbreweries could be considered.

We all know what happened then; everyone has heard about it. It created quite an uproar in the House of Commons. The chair of the Standing Committee on Finance, the hon. member for London West, determined that the amendments brought forward by my colleague from Saint-Hyacinthe--Bagot were not in order.

Because of the new criteria set out in Motion No. 2, which was tabled by the Speaker when the House resumed, when amendments are moved in committee, they cannot be brought forward again in the House at report stage or at third reading.

So we can see that the chair of a committee wields a great deal of power, even more than a minister, since a minister cannot accept or reject amendments to a bill in committee.

Everyone knows what happened. The chair received a letter from the Brewers Association of Canada recommending that beer not be included in Bill C-47. Unfortunately, her spouse sits on the taxation committee of the brewers association.

We, in the Bloc Quebecois, have said—and I think it is perfectly normal—that when a person is approached directly by a family member or a close friend regarding an issue that has to do with regional development in particular, because microbreweries are most often found in the regions—that person must use his or her right to withdraw. Therefore, the member for London West, with whom it has always been a pleasure for me to work in the past, should have used her right to withdraw to give her place to someone else so that the committee could analyze the amendments proposed by the Bloc Quebecois. However, she did not do that.

That is why we said that there was the appearance of a conflict of interest and the appearance of collusion.

After taking all these factors into consideration, we, in the Bloc Quebecois, decided that the time had come to modernize this piece of legislation. At this time, we will not be able to vote in favour of Bill C-47. Why? Because microbreweries had to be included.

Microbreweries have enjoyed a nice share of the market these last few years, but it is decreasing. Why? Because they are the victims of unfair competition from large Canadian, American and also European brewers.

The excise tax for large breweries in Canada is 25 cents per hectolitre in Canadian currency, whereas it is 28 cents per hectolitre for microbreweries. In the United States, it is 24 cents.

Microbreweries there pay only 9 cents per hectolitre. We can see how unfair competition is and how it is killing our microbreweries.

As I said last week, in my area, in the Saguenay, we have a microbrewery located in Anse-Saint-Jean. Called Brasserie de l'Anse, it produces three different brands of beers: Illégal, Folie Douce and Royale. The current excise tax is extremely discriminatory for this small business in the Saguenay. As a matter of fact, seven years ago it was producing seven different brands. We can see how, through the years, because of how much money it must give the government, it has become less and less able to face the situation it is in because of the excise tax.

The amendments put forward by my colleague from Saint-Hyacinthe—Bagot at the Standing Committee on Finance would have at least made sure there was fair competition between Canadian, American and European importers. The Standing Committee on Finance chaired by the member for London West turned them down. It is deplorable.

As we know, microbreweries make an extremely important economic contribution to regions such as mine. For the most part, it is in the regions that microbreweries have developed. This has expanded a new niche, which helps the regions develop.

With Bill C-47, we are seeing in the House of Commons something I find unfair for an industry that should have been taken into account, as my colleague, the member for Saint-Hyacinthe—Bagot, said last week.

It is rather deplorable to hear the member for Chicoutimi—Le Fjord, in whose riding the brewery is located, claim to be concerned about the region's development, yet approve the decision by the member for London West and the absence of tax advantages for microbreweries. If the excise tax was lowered, as requested by the Bloc, it would help the Brasserie de l'Anse.

This is unfortunate, and I am truly disappointed by what is happening in this House. We are told to go to committee and put forward amendments. We do the work. We do it honestly. We review the bills. We try to improve them. However, I do not know what is the matter with this Liberal government. It thinks it knows is all. No matter how much we say how important something is, when the time comes to vote on the amendments, a score of Liberal members gang up and turn them down.

The government no longer shows any open-mindedness. What is going on now is beyond me. I can understand the frustration of some opposition members with the government. Enough is enough. Our role is to stand up for the interests of ordinary citizens, not those of the big shots, who have lawyers, associations and friends to help them out. We are here for the ordinary citizens. My role is to stand up for the people in L'Anse-Saint-Jean. They are the ones who create jobs for workers in the regions and who develop new expertise.

I do not know what we will have to do to bring this government to its senses. Our colleague from Saint-Hyacinthe--Bagot explained the situation last week. He painted the whole picture of what happened. The Standing Committee on Finance is the most important committee of the House, the one with the most power. This blunder happened in the Standing Committee on Finance, which should have the greatest sense of fairness. Such an incident cannot be ignored.

If there were not something fishy, the Prime Minister would not have reacted the way he did when my colleague and my leader exposed during the question period last week what happened in the Standing Committee on Finance. I can accuse some people of being sexist, but I am not, and I do not think my colleagues are. This was not a gender issue, but a fairness issue.

It was in order to be able to say that we had done a good job.

Today, the government has not done a good job on Bill C-47. The opposition parties, my colleague in particular, wanted to do a good job because it was important. Since 1997, we have been thinking that there would finally be changes to this excise tax.

Yet, in the most important area—and the Brewers Association of Canada said they represented microbreweries, these small businesses for whom we need to show a little compassion, and who need to be taken into consideration—this very association recommended to the chair of the Standing Committee on Finance not to include the excise tax on beer in Bill C-47.

As far as I am concerned, enough is enough. The government will have to withdraw the bill, go back to square one as my colleague asked, and include an industry that is extremely important for Quebec and for all of Canada.

Thirty-eight microbreweries in Quebec, Ontario, British Columbia, Alberta and Manitoba have closed their doors. They created employment. In the past, the regions depended on big business to survive. Today, it is not the biggest businesses that are creating employment; it is small and medium size businesses that are creating employment; it is small and medium size businesses that are fuelling growth in our regions. Shutting these employment generating companies down is an affront to the regions, to the people who live there, to the people who want to take charge of the economic survival of their communities, which are important to them.

As my colleague from Saint-Hyacinthe--Bagot said, Bill C-47 contained some good provisions. Unfortunately, it did not have the essential elements it needed. When we fail to do the essential in everything we do in our life, we need to step back and ask ourselves, “What have I done that is not right?”

I urge this government to withdraw this bill and redraft it, so that people can benefit from what this bill really should contain, support for microbreweries.

[Philip Mayfield, Canadian Alliance, Cariboo—Chilcotin, BC]

Madam Speaker, I am pleased to speak on behalf of the people of Cariboo--Chilcotin as we address Bill C-47, a bill amending the Excise Tax Act.

The Canadian Alliance is dedicated to reducing the size and scope of the federal government in order to deliver meaningful tax relief to hardworking Canadians.

Canadians face many difficulties inherent in complying with regulations and remittance schedules, often without keeping in mind the peace, order and prosperity of our citizens. Yet millions of Canadian small and medium size businesses prosper in spite of the federal government's insatiable appetite for tax revenues. We are severely overtaxed so I welcome the opportunity to participate in the debate today.

The official opposition supports the legislation. It has been endorsed by industry stakeholders. It modernizes the framework of excise taxation in wine, spirits and beer. This support is rare for the Canadian Alliance as we are opposed to the government's intervention into Canadians' freedom of choice by enforcing such a heavy burden of taxation. However, these proposals aim to replace existing old and antiquated administrative and enforcement structures governing alcohol and tobacco products with a modern regime reflecting current practice.

The bill does not address tax rate and base matters other than to ensure equitable treatment between domestic and imported products.

We have been talking about the various benefits of wine, beer and spirits. I appreciate what the hon. member had to say about the benefit of a glass of wine and perhaps the same can be said for beer.

I remember reading an article not too long ago in a magazine or a newspaper, I am not sure which, in which it stated that moderate drinkers have a higher income than abstainers or non-drinkers and immoderate drinkers have even higher incomes than moderate drinkers. I am not sure if that was an indication that people are not drinking enough. However, I do have to say that I worked on the streets of east Vancouver in my younger days and I saw some very heavy drinkers who were extremely poor. Therefore I am not sure of the benefits of alcohol consumption except as perhaps a doctor would prescribe.

The proposed act shifts compliance and point of taxation from sales levy to production levy for the production of wine, and this is already the case for distillers.

The changes introduced for spirits and wine are regulatory in nature and tax neutral. The prime purpose of these changes is to modernize how these products are taxed in order to allow distillers and vintners the greatest flexibility in their production practices and to ensure an internationally competitive tax regime .

From an industry perspective, the proposed legislation also provides for an appeal and assessment process. Previously industry had no recourse against government impositions if they felt unjustly treated.

The motion also contains significant enforcement tools to crack down on contraband products. This is a major feature of the proposed legislation and is welcomed by the industry.

Changes in the act make it easier to enforce existing laws and provide stiffer penalties for conviction. For example, under the proposed legislation the maximum fine for producing contraband alcohol would be fines up to $1 million and up to five years in jail for indictable offences. These are industry led changes and it is proposed there would be no losers because of the legislation, with the exception of those who produce contraband products.

Considering tobacco, the second aspect of Bill C-47 does have problems. The bill seeks to increase federal excise taxes on tobacco products and to re-establish a uniform federal excise tax for cigarettes across the country of $6.85 per carton. The stated purpose of this tax increase is to improve the health of Canadians by discouraging tobacco consumption.

The government proposes that the federal excise taxes on cigarettes will increase $2 a carton in Quebec, $1.60 a carton in Ontario and $1.50 a carton in the rest of Canada. This would bring the total federal excise burden on cigarettes to $12.35 a carton.

Never to leave itself out whenever there is the remotest possibility of collecting further taxes, federal revenues will increase by approximately $240 million a year through the tax hike. Just a few minutes ago my colleague whipped out his calculator and averaged this out to a $657,000 per day increase in revenue for the government.

What about reducing smoking? This apparently is the reason for the tax hikes. Like everyone else, I want Canadians to live a healthier lifestyle. I want this especially for our youth who really do not know what they are doing when they get involved with smoking.

Reducing teenage smoking is a worthwhile goal. I am pleased when I see a government ad on television once in awhile encouraging young people not to smoke. Some of those ads look pretty effective to me but I am not sure they have had much influence on the decisions of young people to smoke or not to smoke.

I believe that the increase in revenues should be more dedicated to the decreasing of smoking in a way that would be more effective than simply raising the taxes. The past decade has proven that high levels of excise tax on cigarettes do not reduce consumption. What it does do is create an underground economy.

A better role for the government would be to provide information for consumers to ensure that citizens have an informed choice and to offer generous assistance to those struggling to break this cruel but legal addiction. We hope the government spreads the word about the life threatening aspects of tobacco use and does whatever a government institution can do to encourage, persuade and limit the use of tobacco products that are so harmful, not only to youth but to everyone, even to those who do not use tobacco products who are perhaps allergic to tobacco smoke, as I am, and find it not only offensive but hurtful physically.

Time and again we have seen the increases in the prices of cigarettes not working for the purpose of reducing the number of Canadians who smoke. It is interesting that while the bill is heralded by the government as trying to decrease tobacco consumption by issuing a tax grab on smokers, it does not attempt to influence alcohol consumption through tax policy.

The problem with this aspect of the bill is that the government, by increasing these tax levels, is simply increasing its revenues. This cold-hearted government will do anything to increase its revenues. Increasing taxes on alcohol and cigarettes is probably the last great vista of politically correct tax increases still at its disposal.

We know the finance minister has never encountered a tax he could not raise. Canadians know that excise taxes are not dedicated to specific spending. They are not dedicated taxes, to use the jargon.

For example, the government does not use gasoline taxes to fix our highways. Aircraft fuel taxes are no longer applied to navigation services as they were intended when first applied. Pilots now pay navigation fees to Nav Canada, but with no reduction in the Nav fuel taxes that they pay when they put the fuel in their aircraft. Neither are tax revenues on cigarettes and alcohol spent on health care, at least in the amounts that would be effective in controlling, reducing and helping those who do smoke.

The funds raised by taxes are sent to the general revenue fund and used for bigger and bigger government paid for with higher and higher taxes. These cigarette taxes are just the latest tax increase. If anyone wants to bet that this is the last tax increase, I might just take that bet even though I am not much of a gambling man.

These tax dollars buy a fountain in the Prime Minister's riding, or are given to Wal-Mart to set up a store in Ontario, or buy jets from Bombardier for the Prime Minister and his cabinet. Just last week we learned that billions of dollars are spent on foundations without the approval of the House.

There is no way to scrutinize how this money is spent. Yet while federal excise revenues have increased, transfers to the provinces for health care have decreased. They have been reduced.

The Liberal government is not telling us the plans it has for using the new revenues the bill will raise. The Liberals are using this legislation, supported by the stakeholders in the industry affected by the bill, to raise more money but for still undetermined purposes. It is no wonder the Canadian dollar is sinking out of sight with such poor management. It is no wonder even while we talk about the wonderful standard of living in Canada we are watching a standard of living that has been declining.

With Bill C-47 the government is hiking taxes under the guise of tax fairness. It leaves no stone unturned in the search for more money. Everything, even increasing fairness in the way we are taxed, can be and is turned into another way to gouge the taxpayer.

Once again I acknowledge that we will support this legislation, but only because it does some small bit to afford some equality in the markets of the affected businesses.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Madam Speaker, it is a pleasure to speak to Bill C-47.

I do not think anybody in the House would disagree with the general notion that we ought to do as much as we can in this place and in the provincial legislatures to reduce the incidence of smoking in Canada and particularly smoking by young people.

I commend my colleagues in the provincial government in Nova Scotia who today introduced some of the toughest anti-smoking legislation that any province has ever introduced in the past. It is focused on reducing the incidence of smoking by young people. My province of Nova Scotia has a very high incidence of smoking.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, what I thought I very clearly heard the member say was that all taxes were bad and if we could keep them in the hands of entrepreneurs and others, the world and especially this country would be a better place.

I do not disagree at all with what the member said in terms of the questionable expenditures on the two jets, particularly when our helicopters are so antiquated and in need of replacement.

A perfect example of what he is talking about is the employment insurance grab. In that case all the surpluses in recent years were as a result of the windfall which occurred in the EI fund. The fact is benefits have been reduced but the money which has rolled in has paid down the deficit and continues to be the bulk, if not all, of the surplus.

I think this gets to the heart of the point that I was endeavouring to make which was we do not have a terribly fair tax system. If we look at unemployment insurance in itself, it is paid into by students who have no intention or no ability to collect it in the coming year because they are returning to school. It impacts on seasonal agricultural workers who come into this country from Mexico, Jamaica and other places to work on our farms and in our agricultural processing industry. They pay unemployment insurance and they do not have a prayer in terms of collecting any of that money.

These are some of the things that the government needs to take into account. As I understand it, they do not actually come under Bill C-47, the excise tax, but it does get to the heart of some things that are wrong with our tax system at the moment.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I too am pleased to discuss Bill C-47, an excise tax act. This is a technical bill as has been pointed out by all of the previous speakers. It would impose a levy on spirits, wines and tobacco products but not on beer as the member for Saint--Hyacinthe--Bagot has so eloquently concluded in his lengthy speech. It would defer payment of duties on spirits and wines to the wholesale level, place domestic and imported products on an equal footing, impose tight controls on possession of non duty paid products, et cetera. It is a technical bill, as I say, that would implement some tax changes.

We are talking about changes with respect to spirits, wines, tobacco and ships' stores. In part we are talking about how the government prosecutes and collects taxes on illegal products, contraband tobacco and spirits and how we impact on the smuggling of alcohol when it is ferreted out. The government says the CCRA will improve the service and we certainly hope so. We know the taxpayers at large have concerns. We hope that the improvements to the service will not just be on the government side of things but will impact those who pay the taxes as well because we often do not see that in our constituency work.

We are told that administrative penalties and excise duties will be collected more effectively and efficiently. There is a new framework, added measures and changes to ships' stores. Because of a recent court of appeal decision the ships on the Great Lakes will be eligible for a fuel tax rebate beginning this summer and extending into 2004, which amounts to a transition period. There will be a uniform tax on cigarettes, which I will come back to in a moment, in co-ordination with the provinces and territories, and is restored to the pre-1994 level. Obviously one of the goals, among others, is to reduce tobacco consumption. We are told it is a new, modern legislative framework that addresses the concerns of industry and government.

On the issue of the tobacco tax we know what happened. Earlier the member for Elk Island talked about the taxes going up in 1994, coming down in 1995 and they are now going back up again in this area. There was a reason for it and I think the member would acknowledge that.

At that time there was a major problem in western Canada with contraband tobacco. There was a difference in the price of tobacco products. They were higher in western Canada and lower in Quebec and Ontario. As a result, there was a lucrative market for people who were willing to smuggle products from province to province.

There was a significant problem with the tax levels in western Canada. As a result the excise tax was reduced in 1995 after having been raised in 1994. The problem seems to have abated in recent years and we are now at a uniform tax level. That is commendable.

The member for Elk Island also talked about taxes being a drain on our economy, that the money should be kept in the hands of entrepreneurs and that redistribution does not help and in most cases is detrimental. Our country has a pretty high standard of living, a fairly good quality of life that is recognized, with some exceptions, by the United Nations. It is because of the redistributive effect in Canada. In the past we have tried to make things more equal to make sure there is a basic standard of living that is relatively fair to people in all parts of Canada wherever they may reside and work. It does not work as well as some of us would like to see it work, but over the years it has proved to be successful.

I certainly would disassociate myself from the remarks of the member for Elk Island. However I will not disassociate myself with him when he talks about the use of tobacco and its effects because I think he is spot on there. Although I would note that we restrict advertising on the use of tobacco products, unlike some other jurisdictions. We certainly have a very active program in terms of curtailing youth from taking up smoking. Frankly, raising the price of tobacco products is one way to reducing that and trying to stamp it out.

On the tax level itself, we seem to have in recent decades a preponderance of taxes that are aimed at the personal income tax level. When I was much younger, the money collected annually on corporate taxes amounted to about half of all the money the government collected and spent in a year and the other 50% came from personal income tax. That has shifted very dramatically. Now somewhere in the neighbourhood of 85% of all revenues collected by the federal government comes from the personal income tax and only 15% comes from the corporate tax.

If we had a fairer tax system, some of these increases that we have come to know, expect, anticipate and that hit out in the sin taxes, wine, spirits and tobacco, would not have to be raised to the level they have been. However they are required because a good enough job has not done in ensuring that corporations pay their fair share of taxes as well.

I very much enjoyed the lengthy dissertation from the member for Saint-Hyacinthe--Bagot. As a member of the finance committee, he understands and has followed this issue extremely closely, particularly the fact that beer is the only product in this spirit and alcohol portion of Bill C-47 that is not covered. He went through that in meticulous detail and explained exactly what had transpired.

We saw that being played out in the debate in the House this week. It is regrettable that the chair of the finance committee did not indicate the position she was in, not only the connection in terms of her spouse and where he is employed, but the fact that she has received a fairly generous political donation from the company her husband is employed with in London, namely the John Labatt breweries. That would have been the right and honourable thing for the member for London West to have done, and it is unfortunate that that did not transpire in this instance.

Although we indicated our caucus would be supporting the changes to the bill, we may very well want to reconsider our position in light of what has transpired over the last and recent days.

I do not intend to take very much time this afternoon, but in some of the cases such as tobacco it is important we have that high level of taxation to discourage children and young people from taking up a habit that is costing lives and billions of dollars to our health care system. We need to encourage healthier, happier lifestyles. We would all be better off, smokers and non-smokers alike, if there were far fewer smokers puffing on a regular basis

We will be reconsidering and thinking through our position on the bill very carefully in light of what has transpired and what has come to light in recent days.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I thank you for this opportunity to speak to Bill C-47.

We have a situation that has almost never arisen in the ten years I have been a parliamentarian. We have, on occasion, supported or rejected government bills. The situation was clear at the outset and equally clear at the conclusion.

But with Bill C-47, the situation became complicated during consideration in committee, when we suggested that the Bloc Quebecois could support the bill. When a mockery was made of the committee consideration process all the way to report stage at third reading, we backed off, because the bill before us is not the bill that should have made it to this stage.

The bill that should have been before us was a bill for which votable amendments to include the issue of beers and the reduction of the excise tax on microbrewery beers would have been allowed.

Let me summarize briefly the background of Bill C-47. “It re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on these products, together with technical improvements, and incorporates a range of new provisions”.

What is a bit unseemly and could even look bizarre at first glance is the fact that the Excise Act is general legislation of broad application affecting all products mentioned in Bill C-47, as well as beer.

In other words, the only part that was omitted in Bill C-47 is the part on beer. When we speak to legal drafting people from here and elsewhere, they all find it unseemly that we modernize the Excise Act with Bill C-47 and that we find ourselves in a position where all products and all provisions of the previous act, allegedly to be replaced by Bill C-47, are all in the new bill, except one.

In the current Excise Act, before it is replaced by Bill C-47, wine, spirits, beer, tobacco and distillery products are all mentioned. There is reference to breweries and tobacco products. The act deals with everything, every single product touched by excise. There are provisions on licensing, rights of accession, offences, collection, record, accounts, required documents, warehousing and remission of duties or what they call drawbacks in international trade. It touches on absolutely every point. Bill C-47, which is supposed to bring that Excise Act up to date, also deals with absolutely everything, except beer. That is the bizarre aspect of this bill.

Let me explain what happened since 1997 for us to be presented with the proposal for the amendment and modernization of the Excise Act contained in Bill C-47.

Since 1997, there have been discussions between the Department of Finance and various stakeholders with a view to modernizing the excise system to reflect the new realities that were covered by the current Excise Act, for example ship's stores on vessels travelling from Canadian ports to foreign ones. Part of these stores are used to provide the crew with food and drink, whereas the rest needs to be considered export products or products on which there are transactions.

Then there is the tax system, which did not take into account modern warehousing methods. Now the excise tax that was to be charged on sales is charged at the time of production, with consideration of prior revenue. In short, a number of aspects had to be modernized.

Since 1997, many people have been involved in drafting the new excise scheme, particularly the Brewers Association of Canada. The majority of Canadian breweries are members of this association, but it is dominated by the two major breweries, John Labatt and Molson.

Since 1997, the Brewers Association of Canada has been saying “It is a good idea to change the excise régime in the general Excise Act, which Bill C-47 claims to replace, in order to reflect the fact that the small breweries, with a production of less than 300,000 hectolitres annually, may benefit from the same excise scheme as their American and European competitors”. The difference is not insignificant, when we compare the excise tax the Canadian government charges Canadian breweries and what is done in the U.S. and in Europe. I will give a few figures.

Whereas, generally speaking, there is a charge of 28 cents Canadian per litre of beer for all Canadian beers, the rate in the U.S. is about the same for the major breweries, the counterparts of Molson or Labatt but, in that kingdom of capitalism, the charge is only 9 cents per litre for microbreweries. The United States definition of a microbrewery is one producing less than one million hectolitres annually. This is far higher than the Canadian figure of 300,000 hectolitres.

If you are an American microbrewery, or in other words produce under one million hectolitres of beer a year, you benefit from a preferential excise charge that comes to around 9 cents a litre.

For our microbreweries, defined as breweries producing up to 300,000 hectolitres, there is no preferential rate, because they pay exactly the same excise tax, as set out in the Excise Act, as the big breweries. Which means that microbrewery beers from the U.S. that enter on the Canadian market have an unfair competitive advantage, because they have a lower excise tax than our Canadian and Quebec microbrewery beers.

It is the same thing with Europe. They have the exact same preferential tax rate, which is accepted under the WTO rules. These rules make exceptions in specific cases—for example in cases related to the need to diversify the economy, or for the purpose of regional development or for originality to counter the standardization that comes with globalization—where there can be preferential excise tax measures for small businesses, which is the subject of Bill C-47.

Allow me to provide a few examples with figures. For 24 bottles of microbrewery beer produced in Canada, the federal government gets $4.09, when this beer is sold at a grocery store. When it is sold in an establishment such as a bar, the government gets $6.12 per 24 case of microbrewery beer. Are members aware of what the excise tax paid in the United States is? Bill C-47 includes a review of the excise tax, a review from which the microbreweries were excluded. In the U.S., the excise tax on 24 bottles is $1.12. Compare that to the $4.09 and $6.12 charged in Canada.

How do we expect the microbreweries in Quebec, Ontario, western Canada, British Columbia and the maritimes to compete with these beers? It makes no sense.

That is why the Brewers Association of Canada has claimed to be defending the microbreweries since 1997. Publicly, they have said, “There needs to be a lower excise tax rate for microbreweries. We, the big breweries, like Molson and John Labatt, we can afford the full excise tax. We are strong enough to pay it. And the WTO would not accept it with us, as they would for microbreweries”.

This was done for microbreweries in the United States and in Europe. It is accepted, generally accepted, but not for the big breweries.

From 1997 until very recently, we thought the Brewers Association of Canada was standing up for microbreweries. That is until Bill C-47 came up. Then we realized that even though it was a bill aimed at reviewing the whole excise system, the Brewers Association of Canada was recommending that the finance department not include in Bill C-47 the beer produced by microbreweries and an excise tax reduction.

They were proposing to exclude them. It was not because that was not in accordance with the system we wanted to amend. Quite the contrary, as I showed earlier. The current Excise Act affects all products, including beer; all products are subject to Bill C-47, except beer. The finance department bought the arguments by John Labatt and Molson. It agreed with their arguments. Through the review that started in 1997, it took out from the current act, which includes the brewery industry, the microbrewery sector and possibility of reducing the excise tax.

Therefore, there is collusion, which is normally reprehensible under the Competition Act. If we were in the United States, I am not sure things would be working as nicely as they have been since 1997, with the cronyism existing between the government and the big national breweries as well as the cronyism and the collusion between Labatt and Molson against the microbreweries to kill them.

Since 1997, we thought that the big breweries were advocating a preferential rate for microbreweries, with regard to excise tax. That was until Sandy Morrison, Chairman and Chief Executive Officer of the Brewers Association of Canada, with a majority representation from John Labatt and Molson, sent a letter to the hon. member for London West who also chairs the Standing Committee on Finance.

I would like to quote some excerpts from this letter on Bill C-47 and show the point of view of the Brewers Association of Canada. Mr. Morrison said:

On behalf of its 28 members, big and small—

He insists a lot on “small” throughout his letter.

—the brewers association has pressed for a reduction of the excise tax as an essential measure for the immediate and future health of this sector of our industry—

He was referring to microbreweries.

We explained our views during meetings with the Minister of Finance, senior officials from his department, the finance committee and hon. members. However, the industry does not agree that such a change should be done through an amendment to Bill C-47.

I would like to point out something. One wonders why beer should be excluded from a general review of the excise act, which currently applies to beer, wine, spirits and tobacco. If representations that take into account the particular needs of microbreweries and ask for a reduction of the excise tax should be welcomed with regard to such a bill, we wonder why those who claim to protect microbreweries, and who say that a reduction of the excise tax is essential to their survival, would not take an opportunity such as the general excise review under Bill C-47 to immediately demand a reduction of the excise tax.

I continue with the letter:

However, the industry does not agree that such a change should be done through an amendment to Bill C-47, which is currently before the House and which proposes a new excise framework for producers of spirits and wine in Canada. Following extensive consultations on the proposed changes to the Excise Act, brewers concluded, with the Minister of Finance, that there is a lot to do to develop an appropriate program for the beer industry.

Again, I want to point out something. The letter says that there is a lot to do. Either these people are lazy or else they lack imagination when they make such a comment. All it takes is three paragraphs. One that defines microbreweries, one that talks about the excise tax on beer, and one that ensures that Canadian and Quebec microbreweries benefit from a 60% reduction of the excise tax. This is all it takes.

I cannot believe that, from 1997 to 2002, they found it complicated to include beer. Yet, everything is in Bill C-47. Any product found in the current Excise Act is still there, except the beer produced by microbreweries. This is rather surprising.

Mr. Morrison, of the Brewers Association of Canada, goes on as follows:

Instead of delaying matters of interest to the other sectors, it was decided to exclude brewers from this legislative measure and to deal with the industry separately once parliament has passed the amendments concerning the other sectors. This measure has the approval of members of our association, big and small alike.

Small keeps coming up. He has a thing about small.

I have a small piece of news for them. We learned that the Brewers Association of Canada, dominated by John Labatt and Molson, were not defending the microbrewers. It was being hypocritical for, although it said it supported them, when it came time to take action, it said, “No, now is not the time. We would rather see the other sectors benefit, not us”.

These are major lobbyists. They defend their members' interests. It is time to amend the excise regime, it is time for a reduction in the excise tax for microbreweries, and the representatives who say they are defending the microbreweries with the Brewers Association of Canada say, “No, no, do it for the others; we are altruistic; we want things to go well for the others, but not for us. We will wait till a little bit later”.

Do you know what the major Canadian brewers are waiting for? Since 1997, almost half of the Canadian microbreweries have disappeared from the map. If the member for Rimouski-Neigette-et-la Mitis were here, she would say, “Pouf”.

Since 1997, 38 Canadian microbreweries have disappeared from the map. Why? Because of the excise regime which should have been amended by Bill C-47, because it is part of the general amendments to the Excise Act the government is seeking. Thirty-eight of 86 microbreweries have disappeared. They have disappeared everywhere, not just in Quebec. Do not think that because the Bloc Quebecois defends Quebec in particular we are not able to walk and chew gum at the same time, to defend Canada as well, when our interests are the same.

In this case, we must fight against the big breweries, which are hypocritically claiming to defend the microbreweries and regional development. We must make sure that the microbreweries of Quebec and of Canada receive the same fair treatment as those in the United States and Europe. This is something the Bloc Quebecois is fighting for, and it is a cause that all members of this parliament should take up.

These brewers enjoy 90% of the market and they are still not happy. They have adopted predatory practices, and hypocritical ones at that.

Thirteen microbreweries have disappeared in Ontario in the last five years. Eleven have closed in Quebec, in various areas including Quebec City and LaSalle, in the Minister of Finance's own riding. I imagine that he was happy to see the Brasal microbrewery disappear, because it was beginning to compete with John Labatt, which is also located the minister's riding.

In Saint-Hyacinthe, two microbreweries have disappeared since 1997. Others have closed in Saint-Eustache, Baie-Saint-Paul, Amos, Montreal et Cap-Chat. The regional development of microbreweries, the diversity, the wealth, the originality of a product, all that counts too. Seven microbreweries have disappeared in British Columbia, five in Alberta, one in Manitoba and one in Nova Scotia, for a total of 38. There are about 40 left; I unfortunately do not have the exact figures.

This is what the major Canadian brewers are expecting. This is what Mr. Morrison's letter means. It says “Do not include this in the Bill C-47, even though it is a general review of the excise system. Do not include it now. Wait one year, two years, three years, four years, five years”.

According to my numbers, if we were able to make 38 microbreweries disappeared in five years, we will probably be able to make the other 40 or so disappear in six years. So let us wait. Some people will say “ If they already have 90% of the market, this must not be important. Microbreweries currently have 4% of the market”. They had almost 5.5% of the market five years ago. However, because the excise system has been maintained, as it is today, they have disappeared. This is the main reason for their disappearance.

Every time the major Canadians brewers recover 1% of the market left by bankrupt microbreweries, this 1% represents dividends to shareholders of $17 million in net profits, $17 million for each slice of 1%. Killing the microbreweries is therefore a good idea.

This is why, a few years ago, microbrewers, smart people like you and me, decided to create, for this particular issue, the Canadian Council of Regional Brewers, which really represents microbrewers.

The president is Bob King, the President of Big Rock Brewery, an Alberta beer producer. The vice-president is André Dion, of Unibroue, in Quebec. The general manager, who was criticized by Mr. Morrison in his letter as representing no one, is Pierre Paquin, who is doing excellent work. With Mr. King and Mr. Dion, he is really fighting for the interests of microbreweries not only of Quebec, but of the rest of Canada. They are real fighters.

They created the Canadian Council of Regional Brewers, and they have had it with the collusion between the big Canadian breweries and the Department of Finance. They have had it with the collusion and the conspiracy organized them by the big brewers such as John Labatt and Molson, against the microbrewers, with the complicity of the Liberal government. They have had enough. That is the message they conveyed to the Standing Committee of Finance, two weeks ago, when they appeared before it. That is the message they expressed again these last few days, particularly with what happened in the Standing Committee on Finance, when the amendments moved by the Bloc Quebecois were discussed.

To complete the description of Canada's microbreweries sector, I will say that, since 1997, we know that the microbreweries have lost between 1.2 and 1.5% of the market. And this is because of the disappearance of 38 microbreweries, which, of course, was caused by the continued existence of an excise system that makes no sense at all, that is totally unjust and unfair and that, on a commercial point of view, tolerates, on the part of this government, unfair competition by American and European microbrewers on our own market. These great Canadian nationalists cannot even put in place an excise system that is competitive with its main competitors. These competitors are hurting our microbrewers, who are losing their share of the market. And this is being done in collusion with our big brewers. What a mess.

It is not surprising that 70% of the people believe that politicians are corrupt. When we see this sort of thing, that is collusion between the two big Canadian breweries and the federal government, particularly the finance minister, I am not surprised to see that so many people believe that politicians are corrupt.

Not only are we not changing the excise system to help the microbreweries but the Canadian major brewers get beer supply contracts for imported beer from microbreweries. They then sell the microbrewery products and specialty beers on the Canadian market.

Not only do the American and European microbreweries themselves supply the market, the major brewers take exclusive contracts to supply the Canadian market with microbreweries products and specialty beers. That is the case with Corona, Sol and others.

These contracts have already increased 175% since 1997. This increase benefits the major brewers, which also claimed to support the microbreweries in Canada and in Quebec and to agree with a lower excise tax. The cat is out of the bag now that the general excise system is changed by Bill C-47.

As I said, each 1% slice of the market allows the major brewers to get $17 million in net profits for their shareholders. This is what happens each time they gain 1 of the market at the expense of the microbreweries. That is a lot of money.

That means that if they killed all the microbreweries, in today's dollars, taking into account the actual consumption and sale structure, they would pocket $68 million in net profits. And then they say, “We stand for the microbreweries”. We can understand these big companies. Sixty-eight billion dollars for their shareholders, that is a lot of money. The exclusive contracts they have with the foreign microbreweries whose products they sell on our markets are also profitable. There has been an increase of 175% since 1997.

There is a lot of money involved. There is a lot of money to be made. There is also a lot of hypocrisy and collusion. As I was saying earlier, the competition legislation in the United States is very strict. Even Bill Gates had a taste of it. He was forced to divide his operations in two because one operation could not look at the other without compromising consumer interests.

Here we have a situation where not only there is collusion between Labatt and Molson to prevent a reduction in the excise tax—that alone would be unacceptable in the United States; I would be curious to see that—but there is complicity on the part of the government.

Even Mr. Morrison says in his letter “Our position remains unchanged”. When I read that, I was touched. The letter goes on to say:

Our position remains unchanged: we fully support a reduction in the excise tax for small brewers. It is a priority of the BAC—

If it were a priority, it seems to me that they would have wanted it to be done immediately; when we say that something is a priority, we do it right away; for them, it does not matter if it happens four or five years from now.

And he adds:

—and we want to point out that small brewers in Canada urgently need such reduction.

I am trying to understand. Words are pretty powerful things. A priority is something that must be done right away, and urgency is even stronger than that. It is worse than a priority. A priority is an administrative thing; an urgency, an emergency, is about self-preservation. If it is an administrative priority, and if it is about self-preservation as well, than it is a matter of urgency, so how could the letter continue in this vein?

We will support any measure aimed at attaining this objective, but in light of our prior agreement with the government—

Here we have another strong word, an agreement, “our agreement”. This is a way of saying that “with a gentleman's handshake, we are going to do them in, those microbreweries. They are going to get it in the neck, no excise tax reduction for them.” That is what the reference to an agreement means. Continuing with the letter:

—in light of our prior agreement with the government, we cannot support amendments which would include beer in Bill C-47.

The Brewers Association of Canada is a powerful lobby. It exists to defend the interests of all its members, big and small. But when the time comes to do so, they say, “We cannot support amendments which would include beer in Bill C-47.”

If I were a member of the Brewers Association of Canada, I would have left it ages ago. There would only be the two giants left. At least things would be clear. John Labatt and Molson do not want to see the small companies survive. But this way, it is not so clear. It is a good thing that the Canadian and Quebec microbreweries have reacted by forming their own association.

This is not the end of the matter. If it were, the situation would be bad enough, but it does not stop here. When we moved the amendments to Bill C-47, to bring it back to the spirit of the original excise legislation, which they claim to wish to amend and indeed totally rework, we told ourselves that beer had to be included in it.

In the present Excise Act, there is not only wine, spirits, tobacco and ship's stores, as is the case for Bill C-47, but also the beer the Brewers Association of Canada wanted to see excluded, even if this is the appropriate time and place for a reform of the excise tax on beer.

I then said, “Let us move amendments with the support of small brewers”. The amendments were moved, and refused because they were out of order.

Since Government Motion M-2 was moved, a committee chair is very powerful and has the right to refuse or accept amendments. The process ends there, because we cannot bring forward amendments to Bill C-47 at report and third reading stages. This is different from what we were accustomed to in the past.

A committee chair is now the holder of a powerful public office. That person wields more power than a secretary of state or a parliamentary secretary. At times, he or she even wields more power than a minister. Even a minister cannot refuse amendments like this. If those amendments were moved here, the minister would have to rely on the members' votes to have them rejected.

However, the chair can now refuse amendments just like that, and nothing can be done about it. We have no recourse, no appeal procedure that would give us a chance to express our point of view. This is tremendous power.

As I said, the Brewers Association of Canada sent a letter to the member for London-West and chair of the Standing Committee on Finance, indicating that the excise tax on beer should not be included in Bill C-47. It is not because it could not be there, it is rather because they did not want it there.

The Brewers Association of Canada, an organization dominated by John Labatt and Molson, has a committee known as the taxation committee. After analyzing Bill C-47, its recommendation was that beer be excluded. The President of the Brewers Association of Canada taxation committee is the husband of the member for London-West, John Barnes.

Now back to Bill C-47. It should have included everything in the current Excise Act to amend the provisions. The Brewers Association of Canada said, “Yes, include everything, and it is not in violation of the previous Excise Act, except for beer”. This main recommendation comes from the taxation committee, which is chaired by one of the seven directors of John Labatt, who is also the husband of the chair of the Standing Committee on Finance.

We were told that since the chair of the Standing Committee on Finance was not a minister or a parliamentary secretary, she was not subject to the code of conduct. This is a serious admission. As I mentioned, since Motion M-2 moved by the government committee chairs have tremendous powers in the legislative process. They can accept or reject amendments that are proposed. In a tie vote between opposition and government members, chairs can rule, in other words, vote either way, and do not have to say why they voted for or against the amendment. These are considerable powers.

Even here in the House, ministers must commit, they must explain themselves. Even here, ministers could not rise and say, “This is not admissible as an amendment”. They would not be able to say this if we could still introduce them in the House of Commons. There should be a vote in the House on opposition amendments, with members from all political parties.

Under the code of conduct, the responsibility of the chairperson of the Standing Committee on Finance is not that of a public office. However, I recall the case of Sinclair Stevens in 1986. Mr. Justice Parker, who presided over Mr. Stevens' case when he was accused of 14 counts of conflict of interest, said the following:

The code of conduct must be strengthened. It must become law.

Information regarding spouses and dependent children must also be made public for all those in public office.

In 1994 there was a review of the code of conduct. It was not expanded, but the Liberal party said that in cases where there is an issue of conflict of interest, such as the current situation with the chair of the Standing Committee on Finance, the occupation and all of the information regarding spouses and dependent children became relevant.

This has no teeth. The code of conduct is so weak. It was really stupid on the part of the ethics counsellor to present such a thing. However, there is an indication that information on the spouse and dependent children of a member of parliament who holds public office becomes relevant in the case of a conflict of interest analysis.

The hon. member for London West could have been a man. It would have made no difference if she had been a man and John Barns were her brother, father or son. The code of conduct of the government is so weak that the situation of the spouse would be considered as important.

We have a situation where there is at least an apparent conflict of interest. I will now come back to the summary of Bill C-47.

It re-enacts existing provisions in the Excise Act and the Excise Tax Act relating to the excise levies on those products, together with technical improvements—

At present, the general excise legislation contains provisions on wine, spirits and tobacco and numerous provisions on permits, licenses, etc., but also various provisions about the brewing industry and beer.

It would be absolutely incongruous to exclude such an item at the request of the Brewers Association of Canada, since that request was based on an analysis by the taxation committee of the association, whose president is John Barnes, the spouse of the chair of the Standing Committee on Finance.

I repeat, since Motion M-2 put forward by the government, a committee chair has extraordinary power in the legislative process. We no longer have any right of appeal or recourse once amendments put forward by opposition members or a government member are rejected by the committee chair. This is now an incredibly powerful public office in the democratic process.

Even though, under the existing code of ethics, which is very flexible to say the least, a holder of public office includes a minister, a deputy minister, senior officials, secretaries of state and parliamentary secretaries, it should include a committee chair whose responsibilities were increased by Motion M-2.

Conflict of interest, and the appearance of conflict of interest, is not just a matter of a code, and certainly not a flexible one. This is how she can present us with any old legal opinion. It is a matter of judgment, of honesty, of integrity, of transparency, and of intelligence.

Never, anywhere, has the chair of the Standing Committee on Finance told us, since consideration of Bill C-47 first began, that she was related to one of the seven directors of John Labatt, to a director of the Brewers Association of Canada and, to top it all, to the chair of the taxation committee for that same Brewers Association of Canada, which was not favourably disposed to an excise tax reduction for microbreweries. Never has this been mentioned.

And when did she flash her famous legal opinion? When I caught her red-handed rejecting my amendments and told her: “You are no longer entitled to make any decisions about Bill C-47 because you are clearly in conflict of interest, because your husband is the chair of the taxation committee of the Brewers Association of Canada, which recommended that the microbreweries be killed off over the next few years, having already killed off 38 of them”.

If that is not a conflict of interest that the government wanted to give a different spin to yesterday by dragging a legitimate debate on the place of women in society into a debate about integrity, about conspiracies against the microbreweries, about influence peddling, complicity and collusion, we have quite a problem.

The Minister of Finance got caught in the act recently, and the Minister of Canadian Heritage too, with contracts being given left and right to the organizers of their leadership campaign. After such a blatant case, is it so surprising that 70% of the population is fed up with politics and thinks politicians are corrupt?

Had the hon. member for London West been a man, with his brother chairing the taxation committee, it would have been the same thing. They are distorting this debate.

What kind of doormat members do we have opposite, that they should allow such an establishment, and the collusion to go on between this government, which is standing up for the interests of the majority, of the big breweries, at the expense of the microbreweries?

There is one way to turn things around. The government should immediately begin drafting a bill it would introduce before the end of this session, in order to do justice to the microbreweries.

It is imperative that the microbreweries, with their 2,000 jobs, can survive and prosper. We should put an end to this collusion between the big breweries, the government, and the chairperson of the finance committee, who happens to be the wife of the chairman of the taxation committee of the Brewers Association of Canada.

That is what we are asking the government. Because of this hypocrisy, collusion, conspiracy and lack of honesty, we will oppose Bill C-47. It certainly contains good provisions, but—

[Ken Epp, Canadian Alliance, Elk Island, AB]

As my hon. colleague says, the government has stolen the money from them. There is no recourse. People in insurable employment must pay whether they like it or not. The government seems to take great delight in doing this. It has overcharged in premiums and cut benefits. It ought to hang its head in shame.

The government has reached into the pockets of federal civil servants and taken $30 billion out of their pension fund. Total assets in the fund had grown beyond expectation and it is not unreasonable to say the moneys should be taken back by the employer. However it should only have been the portion the employer paid in. The government totally ignored the fact that the pension fund surplus was a combination of the contributions of employees and employers who are the taxpayers of Canada via the government.

Yes, taxpayers are entitled to get some of the money back. I do not argue with that. However the government took it all. Federal civil servants who contributed to their pension fund had their money taken away from them by a government in a majority vote with no regard to what it was doing. Over and over we have seen the government's insatiable appetite for separating Canadians from their hard earned dollars. This must end.

While I support Bill C-47 in broad principle I do so reluctantly. I do not buy into the philosophy that says the end justifies the means. I have considerable hesitation in supporting a bill that would presume to reduce smoking by increasing taxes. The outcome, as good as it may be, should not be used to justify increasing the taxes of Canadian citizens.

In conclusion, I appreciate the opportunity to again speak to Bill C-47. The government will probably continue its policy of tax grabs and wild, unaccountable spending. I would rather exert my efforts in replacing them on that side of the House. Let us get rid of the Liberals and put into their place a responsible government that treats the taxpayer with a careful and fully accountable trust.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I am pleased to speak in defence of Canadian taxpayers. Bill C-47 is another one of those infamous tax bills. I do not know how the Liberal government has in its head that it simply cannot find enough sources of taxes. It taxes everything two, three, four and five times. One of the things we are addressing in the bill is an increase in the amount of taxation.

As the parliamentary secretary has said, the bill addresses a number of different areas of taxation. One of them is the taxation of cigarettes. I have said this before in the House and I do not know how often I must repeat it until somebody actually hears and understands what I am saying.

Every dollar that is taken by government out of the hands of the people who earn it is a drain on our economy. I have often said as have others in my party, and in fact our founding leader of the Reform Party stated it as one of his themes, that every dollar left in the hands of a taxpayer, an investor or an entrepreneur does way more to help our economy than that same dollar sent into the centrifuge of taxation, the bottomless pit in Ottawa.

When governments take money out of the economy and redistribute it, they do not do anything directly for the people of Canada in terms of improving their ability to get jobs and look after themselves. In most instances it is detrimental. We cannot seem to get this into the head of the Liberal government opposite. In this particular case we have a government tax grab for people who happen to be addicted to smoking. The government wants to increase the taxes that it is applying to that.

We need to look at this very carefully. It is quite interesting that the government has been able, with respect to smoking, to pass legislation that says we cannot advertise it. That is intriguing. Being a person who feels that the rules of society ought to be applied equally, it seems to me that as long as cigarettes are a legal substance then those who manufacture and sell them should not be forbidden to talk about them.

I am one who is vociferously against smoking. I have told stories in the House before about how one time I smoked a part of a cigarette and decided at that time that I would not do this. It was an intellectual decision. Why would one spend money, which in my youth was difficult to come by, in order to buy things that one simply burns up? Add to that the fact that as we burn them, we take them through our lungs which damages them. That does not make sense.

Furthermore it has long term health consequences. I know several people who have died an early death because of their use of tobacco products. Let not anyone say that since I am opposed to increasing taxes on cigarettes that I am somehow willing to promote the use of cigarettes, especially by youth. The answer to that is a resounding no, I am not in favour of that.

I wonder about a government that takes it upon itself to use tax policy to substantially affect social outcomes. I will go out on a limb but personally I would have liked the government to have declared long ago that tobacco ingested into the body either through chewing or through cigarettes was a dangerous substance. This is not party policy so I do not want to be misquoted. Tobacco, for example, is no less dangerous than the small amount of ill effects we get from certain chemicals used to control weeds on our lawns. The government is willing to declare those dangerous substances.

Sir Walter Raleigh said to wrap a bunch of weeds in a piece of paper, put it in one's mouth, set it on fire, and then suck in the results of that burning. I believe that is a dangerous use of a dangerous substance. If the government were to do that, then it would have the moral authority to ban advertising and its use could not be promoted among young people and so on. However the government has not done that.

Tobacco is not only a legal substance but also a substance supported in its growth and development by various agencies of government. We are sending a mixed message to Canadians with respect to whether or not they should be smoking.

Millions of dollars are spent on government ads telling people of the bad effects of smoking and urging them not to do it. At the same time millions of dollars are spent promoting tobacco farmers and helping them ply their trade. This does not make any sense to me. This is like hooking a horse to the front of a wagon and hooking another horse to the back of the wagon and having them pull in opposite directions. The government ought to start thinking about how it is conducting its affairs. We should all be pulling in the same direction.

Bill C-47 would increase the amount of taxes young people and others would be required to pay when they smoke cigarettes. The price would be increased by $2 per carton in Quebec, $1.60 per carton in Ontario and $1.50 per carton in the rest of Canada. The justification the government gives for this is that in order to stop the smuggling of illegal cigarettes some years ago taxes were increased substantially in Ontario and Quebec, the provinces with the largest problem, and less substantially in other provinces. This would bring prices down so taxes would be equal across the country, which I agree with in principle. We ought not to tax one province more heavily than another because of its geographical location.

To say that increasing taxes is a way of reducing consumption is a little disingenuous on the part of the government since it is generating a large amount of income for itself. What will the government do with that income? Who knows what kind of new hotels it will finance with this money. Maybe it will finance some new musical fountains. Perhaps it will think of some other wonderful ways of spending taxpayers' money. We will not know until it happens and then the government will deny it. All attempts to get the facts will be stymied by the government which ran on a platform of openness and accountability. Unfortunately we do not see a great deal of that.

Incredibly, the tax hike on cigarettes would give the government approximately $250 million per year. I am not good at math in my head on a Friday afternoon so I must do a little calculation here.

The government would get an increased revenue of some $657,000 a day. It would be taken from people who are addicted to cigarettes. Maybe some of them will quit; many of them will not. Many people who are addicted to cigarettes are not well off partially because they must expend a great amount of their income in order to feed their habit. Here we have the government taking money from people who are generally poor at the rate of $657,000 every day.

The government thinks that is the right thing to do. I guess it will go ahead and do it. I hope this increased tax would persuade some young people from not taking up the habit. I hope there would be some who would say that it is an optional tax that they do not have to pay.

I encourage Canadians right across the country not to smoke. I know there are up to three people right now watching CPAC and paying close attention to this. Here is an optional tax that one does not have to pay. I know it will be tough. It is difficult to break one of the most addictive substance uses and that is cigarettes. I know this from observing a number of my friends who have gone through the throes of quitting the habit. It is very difficult. Here is a chance for all the people out there in CPAC land to say to the finance minister that here is some money he will not get. We will keep it. We will not pay this tax. In that sense I am mildly in favour of the outcome, however I do not know whether I am in favour of the way this is being done.

I would also like to point out another thing about cigarette smoking. I know we cannot talk about this without sounding as though we are moralizing. We are told we cannot impose our morals on others. Absolutely. There was a saying “a man convinced against his will is of the same opinion still”. No, we cannot impose a morality on a person. I guess I am not trying to do that. However, I said that I smoked a part of a cigarette one time when I was young. I found a pack that was not totally used up and smoked a part of a cigarette and decided that it was not for me.

People should be encouraged to not start something that ends up controlling them. I recall one speaker on this topic say a reason why he had never taken up the habit of smoking was that he had never in his life had a person over the age of 30 who had smoked for more than five years recommend to him that he start. That is a powerful testimonial.

I would say the same thing. I have a number of friends who smoke and, frankly, some of them say they cannot quit because they need it, they like it, or they enjoy it. They all have various reasons and justifications. Yet I have never had one of them say to me that I am getting on in years and I am missing one of the joys of life and that I take up smoking. I have not had a single one do that. If no one who smokes is ready to recommend smoking, then we ought to listen to that. That is a powerful argument.

We are talking about Bill C-47, a tax bill. I have talked about the increase in taxes to the government. I would briefly like to talk about the change in prices in the use of alcohol. Here again I feel unqualified to speak on this topic from a personal point of view. I have avoided paying the alcohol taxes in this country. I grew up in a home where alcohol was not part of the furniture. We did not use it. For my parents I believe it was partially a religious belief thing.

I did not espouse my parents' beliefs when I was young, but I also made a conscious intellectual decision that I would not use alcoholic beverages. I did this based on the observation of some of my friends who claimed they were having a great time but unfortunately did not know they were having it. I always thought it did not make any sense to take part of one's nervous system and shut it down by whatever means. Most of us can use all the intellectual capacity we can manage to muster up, so as a very young person I made that decision.

I should perhaps not tell the House this because people will say I am a weird guy. Maybe I am. However we were very poor when I was young and my source of income, believe it or not, was to go up and down the ditches out in the country, pick up cast away beer bottles and sell them. If I remember correctly I received 20¢ a dozen for them which was big money. All I had to do was get five dozen of them and I had a dollar, and a dollar was big money to a young kid my age at the time. That is how I made some money.

Frankly, one of the reasons I never took up drinking was because I could not stand the smell of the stuff. Later one of my friends explained to me that there was a huge difference between a nice cold beer out of the fridge and a beer that has been sitting in the hot sun in a Saskatchewan prairie ditch for a week or so. I guess I did not have a fair sample of the product, but I decided I was not interested in it and would not use it. Over the years I have avoided paying a whole bunch of taxes on liquor products.

I have not suffered. I have not put other people at risk on the road, which is one of the hazards. It is a huge hazard. Many people get injured and killed every year because of drunkenness on the road. I know we are not talking specifically about that. However like many other things, drinking alcoholic beverages when taken to excess becomes an evil instead of a good.

I have no problem with people who like to have a nice wine with a meal and so on even though I personally do not. I say let them if they want to. Let them pay the taxes. It is a voluntary tax. I say let them pay the taxes to the government, as Bill C-47 provides for, and enjoy it with their meals if they wish.

However I have also said I do not believe in drunkenness. I do not care if people drink but I think drunkenness is wrong. The only way a person can avoid drunkenness is by saying no to a drink. Being a person who is somewhat weak I decided it was easier to say no to the first one than to any subsequent ones. That is how I came to that conclusion.

I will say something about the whole issue of taxation on alcoholic beverages and cigarettes. One of the reasons we have taxes on these products is because we think we can somehow reduce overconsumption of them. It is to achieve a social outcome. We would probably be surprised if we thought about this and its long term ramifications.

I read not long ago that approximately 100 people every day in Canada lose their lives due to the effects of smoking cigarettes. I am talking about heart disease and lung cancer that is directly attributable to the use of cigarettes. Around 35,000 to 40,000 people a year in Canada lose their lives prematurely because of the use of that product.

I have often thought of it this way. We members from the west are required to get on an airplane pretty well every week to head out to our ridings. Most of the time the airplanes have about 100 people on them. If one of those airplanes were to go down every day I would be going by train. I would decide the probability was not in my favour. If 100 people in Canada every day were losing their lives on a particular kind of airplane I would not go on that kind of airplane. I would find another means.

Yet people across the country are quite willing to smoke cigarettes recognizing that 100 people every day in Canada lose their lives because of that choice. It is a strange thing. The same is true for the overuse of alcoholic beverages. Every year literally thousands of people are injured and killed because of the abuse of alcohol.

This is an appropriate time for us to say to Canadians that there is no excuse for drinking and driving. It should be an automatic that if one drinks one should make other arrangements for transportation. It is not right to risk other people's lives, health, safety and property.

I will get back to the taxation issue. We have had a bit of controversy with respect to taxation of alcoholic beverages. I did a few calculations which are rather interesting. Bill C-47 would continue to tax breweries in Canada according to a formula. I am not sure whether it would increase or reduce the amount for small breweries. However in the notes someone gave me it says there are speciality brewers in the United States who get a 60% reduction on a certain amount of production every year to account for those who are small operators.

We recognize and use that principal in Canada when it comes to personal income taxes. People here are quite willing to say persons with low incomes will earn a certain amount of income before they pay any tax at all, persons at the next level will be taxed at a low rate, and persons past a certain threshold will pay an increased rate. We have what is called a progressive tax system. I will not diverge today into the merits of a tax system where the rates are closer together, but we accept this system for individuals yet we do not want to accept it when it comes to small businesses.

The numbers are quite astounding. It says in my notes that small brewers produce less than 300,000 hectolitres per year. I do not know whether many Canadians are yet into the hectolitre form of measurement. I did a little calculation to bring it down to where we can recognize it. I found that 300,000 hectolitres per year works out to roughly 82,000 litres per day. A small operator is one whose production accounts for less than 82,000 litres per day. There are people who think it would be justifiable to give those in the small business bracket a lower rate of taxation or even a total exemption.

We should go beyond simply being competitive with our American neighbours in this regard. We should make sure industry and all sectors have an advantage by being in Canada. We should be better than our big American trading neighbours. People should be eager to do business in Canada and stay here. They should not want to go afield and take their business out of the country to the United States, Mexico or wherever else.

The Liberals have shown they not only push and pull at the same time with respect to the tobacco tax. They also seem to be all over the place from time to time. In 1994 they were busy increasing the tax. In 1995 they cut the tax. Here we are again increasing the tax. Maybe it is a grand experiment and we do not know we are part of it. The Liberals love playing with taxes and changing them.

We ought to recognize the fact that the government has an insatiable appetite to reach into the pockets of Canadians be they rich or poor and take as much money as it can. The Liberal government has a bleak record in terms of recognizing and respecting the collective wealth of people in the average or below average income brackets. They are taxed to death.

We can add to that the horror of watching the government take billions of dollars away from the thousands of workers who contribute to the EI program, as they call it, and roll it into general revenue. I do not know if members are aware of this, but the total amount the government has applied to the debt reduction it likes to crow about is no more than the amount it has taken out of the EI fund. The government has said to poor people and members of the working class who must pay into EI that they are the ones who will pay down the debt.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, the spirits industry will no longer be hindered by outdated and onerous controls over premises and equipment. With these controls removed, businesses will have greater flexibility to organize their commercial affairs to respond more quickly to market changes.

The bill would require anyone producing or packaging spirits or wine to have an alcohol licence. While all vintners must be licensed, those with sales under $50,000 in the previous 12 months will continue to qualify for the small manufacturers' tax exemption. Individuals producing wine for personal use will continue to be exempt from having to be licensed and pay duty.

The new warehousing regime introduced in the bill for deferring the payment of duty on packaged alcohol will place domestic and imported packaged alcohol on an equal footing. This measure is also designed to accommodate the privatization initiatives of some provinces for the warehousing of alcohol.

There will also be comprehensive controls on the non-beverage use of spirits and wine to ensure the protection of federal excise revenues derived from beverage alcohol. These controls include the licensing or registration of users of non-beverage alcohol, the approval of product formulations for which spirits and wine may be used without payment of duty, and the specification of denaturing standards.

The bill would eliminate the current nominal rates of duty on certain non-beverage uses of spirits such as spirits used in pharmaceutical products. These nominal duties are inconsistent and onerous in application and disadvantage domestic products manufactured with spirits vis-à-vis similar foreign products entering Canada.

New rules for imported industrial alcohol, such as requiring the alcohol to be sampled and tested to ensure it meets Canadian denaturing standards, will ensure the integrity of the domestic alcohol market and protect federal revenues.

Finally, fines for alcohol related offences will be increased substantially and serious alcohol offences will now be subject to proceeds of crime provisions.

I will now turn to some of the tobacco provisions under Bill C-47. Under the new excise framework, the current excise duty and excise tax on tobacco products, other than cigars, will be merged into a single production levy. This will mean improved administration and reduced compliance costs for the industry.

While these new measures will provide a more streamlined framework for the taxation of tobacco, the fundamental controls over tobacco under the existing excise framework, such as the stamping and marking requirements for tobacco products, will be maintained.

The legislation also includes the current offence provisions relating to the illegal production, possession or sale of contraband tobacco, which have proven to be effective.

At the same time, the new excise framework incorporates the revised tobacco tax structure that parliament passed last spring.

As I mentioned a moment ago, the bill introduces modern collection tools and helps to address the government's ongoing concern over the smuggling of alcohol.

New administrative measures will enable the CCRA to improve its level of service to clients and its overall administration of the excise framework for alcohol and tobacco products.

These measures include a duty remittance and return structure harmonized with commercial accounting periods and the goods and services tax/harmonized sales tax; new assessment and appeal provisions; and a range of modern collection mechanisms, such as certificates of default, garnishment, seizure and sale of goods and directors' liability.

Further, persons dealing with exciseable goods who fail to comply with the act will be subject to a range of administrative penalties.

The new excise framework will ensure that the excise duties on alcohol and tobacco are collected in a more effective and efficient manner. As well, it provides an array of modern administrative and enforcement tools for ensuring compliance with the new act.

In summary, this new framework for the taxation of spirits, wine and tobacco products will provide a simple and more certain taxation structure, equal treatment of all parties, improved administration and lower compliance costs, greater flexibility for business to organize its commercial affairs and enhanced protection of excise revenues.

Before closing, there are three additional measures in the bill that I want to mention to hon. colleagues. The first concern deals with changes to the ships' stores provisions under the customs and excise legislation that grant relief from duties and taxes for goods used aboard ships and aircraft in international service.

These changes respond to a recent decision of the Federal Court of Appeal that the ships' stores regulations went beyond the scope of their enabling legislation. Bill C-47 rectifies this situation by providing the proper legislative authority for these regulations.

Another measure relates to certain ships travelling on the Great Lakes and the St. Lawrence River that are not engaged in international trade and which no longer qualify for ships' stores relief after May 31, 2002. These ships will now be entitled to a temporary fuel tax rebate on fuel produced between June 1, 2002 and December 31, 2004. This rebate will provide the affected operators with adequate time to make the transition to the new ships' stores rules.

The final measure implements the federal tax increases on tobacco products that were announced in November which re-established a uniform federal tax rate for cigarettes across the country. These increases are co-ordinated with provincial tobacco tax increases and are one more step in the process of restoring tobacco tax rates to pre-1994 levels in ways that will minimize the risk of renewed contraband activity. They are also part of the government's comprehensive strategy to reduce tobacco consumption.

I urge my hon. colleagues to give their full support to the bill. As I indicated at the beginning of my remarks, the new excise act introduces a modern, legislative and administrative framework for the taxation of spirits, wine and tobacco products, thereby addressing a longstanding need of both the industry and the government.

With respect to the remaining measures in the bill, it makes sense to rationalize the ships' stores provisions and to approve the tobacco tax increases for reducing tobacco consumption.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to speak at third reading to Bill C-47 which introduces a modern legislative and administrative framework for the taxation of spirits, wine and tobacco products under the Excise Act.

The measures in the bill address a long-standing need of both industry and government for a new excise framework. As many colleagues are aware, the Excise Act is the foundation of the federal commodity taxation system for alcohol and tobacco products. It would impose excise duties on spirits, beer and tobacco products manufactured in Canada. It would include extensive control provisions relating to the production and distribution of these products.

Commodity taxes are an important element of Canada's federal tax system. In 2000-01, for example, duties and taxes on alcohol and tobacco products raised about $3.4 billion in federal revenues. The Excise Act is one of the oldest taxing statutes in Canada. Some of its provisions date back to the 1800s and except for periodic amendments the act has never been thoroughly reviewed and overhauled. In recent years it became obvious to both industry and government that the excise framework needed to be modernized.

Industry, for example, has introduced new technology and product marketing and distribution initiatives that the existing Excise Act is not equipped to accommodate. The base of controls in the act impose high compliance costs on industry and impair the competitiveness of Canadian producers. Given the increased foreign competition in Canadian markets for beverage and non-beverage alcohol this problem needs to be addressed.

From the government's perspective the Excise Act is increasingly difficult to administer and impedes the ability of the Canada Customs and Revenue Agency, CCRA, to fully adopt modern administrative practices. Furthermore, wine which is currently taxed under the Excise Tax Act is not subject to any substantive controls on its production and possession. Tobacco manufactured in Canada is taxed under both the Excise Act and Excise Tax Act. This creates problems both for industry and government.

All of these factors point to the need for a revised excise framework which is a key component of Bill C-47. The new excise framework is a direct result of a discussion paper on the Excise Act review which the Department of Finance and CCRA released in 1997. That paper outlined a proposal to provide legislative and administrative framework for the federal taxation of alcohol and tobacco products.

The government subsequently released draft legislation and regulations in 1999 and held public consultations with all major stakeholders. During the review the government was guided by three goals: first, to provide a modern legislative framework for simpler and more certain administrative systems that recognize current industry practices; second, to facilitate greater efficiency and fairness for all the parties leading to improved administration and reduced compliance costs; and third, to ensure the continued protection of federal excise revenues.

Bill C-47 meets all three objectives. A modern legislative and administrative framework introduced in the bill would generate stable and secure revenues and also address contraband pressures. Moreover, this would be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry.

The measures relating to alcohol would include: maintaining the imposition of duty at the time of production of spirits, replacing existing sales levy on wine with the production levy at an equivalent rate, deferring the payment of duty for spirits and wine to the wholesale level, and introducing modern collection tools. At the same time the bill would help to address the government's ongoing concern over smuggling and the illegal production of alcohol.

I will discuss some of these key measures in more detail. Along with the production levy on spirits and wine that I have just mentioned the legislation would incorporate strict controls on the production, importation, possession and use of non-duty paid alcohol together with significant penalties for breaking the law. The spirits industry would no longer be hindered by outdated and onerous controls over premises and equipment. With these controls removed businesses would have greater flexibility to organize their commercial affairs to respond more quickly to market changes.

Business of the House

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, tomorrow we will continue debate on third reading of Bill C-50, the WTO legislation. When that is concluded we will take up report stage and third reading of Bill C-47 dealing with excise.

On Monday and Tuesday of next week we expect to return to Bill C-5 which deals with species at risk. I would then hope that on Wednesday we could commence debate on the new public safety legislation which I expect to be introduced on Monday.

In response to the Leader of the Opposition on the matter of private members' business, I commend the hon. member for Peterborough who is the chair of the committee on procedure and House affairs. He has taken the initiative to organize under the auspices of the committee a roundtable discussion among members about better alternatives for dealing with private members' business.

As all House leaders know, finding the right way to manage private members' business, particularly the question of votability, is a topic that has bedeviled not just this parliament but previous parliaments. The Leader of the Opposition has suggested everything be votable. That is the rule that applies to government business. If we could come to a consensus about the time that applies to private members' business perhaps we could apply some of the same rules we apply to government business.

As I said during question period, we need creative thinking on the issue. We need a solid co-operative approach. I am perfectly happy to set aside the rhetoric and find ways that will work for all members of parliament.

Microbreweries

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am sure the hon. gentleman knows that such an amendment to Bill C-47, as ruled by the chair of the finance committee, on professional advice, is outside the scope of the bill as tabled in the House. That is not to say that the tax treatment of microbreweries is an unimportant matter. It obviously is, but it would require a separate and distinct piece of legislation.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, considering the economic importance of microbreweries and the difficult situation in which they find themselves because of the unfavourable treatment to which they are subjected, compared to their foreign competitors, should the government not urgently use the opportunity provided by Bill C-47 to ensure microbreweries are extended the same treatment as small wine producers and ignore the intense lobbying by major breweries?

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, what is shameful is pretending not to know that amendments were put forward so that beer could be considered in connection with the review of Bill C-47. But these amendments were rejected by the chair herself. That is what has us worried.

By using this twisted logic, is the government not taking the side of the big breweries to the detriment of microbreweries, when the person representing the former is the husband of the committee chair?

Committees of the House

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I have the honour to present the 14th report of the Standing Committee on Finance regarding its order of reference of Tuesday, April 9 in relation to Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores.

The committee has considered Bill C-47 and reports the bill with amendment.

Microbreweries

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, as the law officers of the House pointed out, Bill C-47 does not in any way deal with the beer industry. Accordingly, there is no possible conflict of interest between the chair of the committee and the beer industry.

As the secretary of state has pointed out, the matter of the excise taxes in relation to beer is being considered in an entirely different forum in which, in fact, the chair of the finance committee is not involved.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, she kept that advice to herself until the process was over without telling a soul.

Now that we know that the husband of the finance committee chair is not only one of the seven directors of the John Labatt Company, but that he also chairs the taxation committee of the Brewers Association of Canada, that he is the one who conspired with his wife and the Minister of Finance to exclude beer from Bill C-47, what does the government intend to do to correct this deplorable situation, support the microbreweries and end the scheming between the large breweries, the Minister of Finance and the member for London West?

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, we got the answer yesterday. The excise tax review under Bill C-47 includes wine, spirits and tobacco, but not beer. Indeed, the government has decided that Quebec and Canadian brewers, large and small, will continue to pay an excise tax of 28 cents on each litre of beer.

Could the Prime Minister explain to us the twisted logic whereby beer is the only product that is excluded from the excise tax review?

Committees of the House

[Rob Merrifield, Canadian Alliance, Yellowhead, AB]

Mr. Speaker, I move that the second report of the Standing Committee on Health, presented on Wednesday, December 12, 2001, be concurred in. It is a privilege for me to speak to the motion.

Almost a year ago the former health minister introduced draft legislation on assisted reproductive technology and related research. Before I get into that piece of legislation that was brought down as draft legislation I would like to give a history as to what brought us to that point because that was not the first attempt at such legislation.

The events leading up to it began in 1991. A royal commission report was tabled in 1993 just to sit on a shelf and accumulate dust. Nothing came of it. However, in 1997 Bill C-47 was put on the order paper only to die on it at the call of an election.

This is the third attempt at such legislation that would allow us to deal with an issue that is becoming more and more important. In fact, our newspapers are filled with reports of cloning and how stem cell research is being developed at the present time.

The former health minister presented a fairly extensive bill last May. Some of the subject matter of the bill dealt with cloning, surrogacy and stem cell research. There were two sides to that piece of legislation. There was a scientific side and a family building side, which is the reproductive side dealing with in vitro fertilization, surrogacy and all of that. It was a thorough two-stage piece of legislation.

There were a number of things that were prohibited in that piece of legislation: reproductive and research cloning, which some people term as therapeutic cloning; and commercial surrogacy. We said there should be no modification in the whole area of gamete donation and surrogacy. The maintaining of an embryo outside of a womb was prohibited and there were many others.

One of the activities that would be allowed under licensing was embryonic stem cell research. However, the most important piece in the legislation was the regulatory body that would oversee the prohibitions and the licensing of the overall department of assisted reproductive technologies and related research. Notably when the minister introduced the bill he said:

There must be a higher notion than science alone…that can guide scientific research and endeavour. Simply because we can do something, does not mean that we should do it.

That bill was sent directly to committee. It was the first piece of legislation that came into this parliament and went directly to committee. It was a novel approach, one that I believe should have been taken up in many pieces of legislation introduced here because it gives us a non-partisan opportunity to deal with an issue before entrenchment, party lines and party division take over a subject.

The committee met over an extensive period of time, nine months, and dealt with several issues and heard from dozens of witnesses. We heard from the scientists who were eager and excited about getting into this subject matter. We heard from the ethicists and faith communities. We heard from parents struggling with infertility and surrogates. We heard from the offspring of assisted reproductive research. We heard from the disabled, legal counsels, legal experts, et cetera. All of these groups were very important.

I mention these groups because when we deal with a subject matter that is on the cutting edge of scientific research we sometimes think it should be driven by science and scientific interests alone. However, when we look at the subject matter it has many different facets to it.

It has much to do with parents and children. It has much to do with legality, with interest groups from the disabled and others. This is why we looked at all of those. There were differing perspectives and sometimes compelling testimonies on the complex subject that had many considerations. We heard compelling and moving evidence.

Meanwhile, development in this area kept rolling around, it did not stand still. Over this last year we have seen some phenomenal things happen. Members will recall some of the reports that came forward this past summer that groups were intent on human cloning. Something significant happened in the United States in August when President Bush announced that funding guidelines for embryonic stem cell research, and notably public funds, would not go into pre-existing embryonic stem cell lines. There would be no more killing of embryos with public money was basically what he was saying.

There is a memorable phrase that is well worth noting. He said that we did not create life in order to destroy it. However, things kept rolling along and we saw another challenge to this whole idea of human cloning in November when headlines proclaimed the first human had been cloned. This came out of an advance cell technology when an American privately funded company announced that it had used the clone technology to grow a cell that could eventually serve as a source of a human cell line. This embryo died in the Petri dish at six days of age.

We can see how this is developing and how things are moving along very quickly. During this same period the Canadian Alliance argued in committee that legislation should be tabled and the bill broken up in order to deal with the issues that we all agreed should not go forward and that we should stop therapeutic and reproductive cloning which are internationally recognized as deplorable acts. We suggested this and brought it to committee only to be turned away.

We continued with hearings throughout the fall and wrapped up in November. In December the committee met in camera to draw its final recommendations to the minister on the new legislation. One thing that was significantly different was in the intent of the legislation when it was introduced in May compared to what we had discovered over the nine month period. We wanted to change the original name to focus on building families because reproduction is all about reproducing cells and growing healthy families as a society. That is what is important as a nation. That is what is important as society goes forward.

We introduced the majority report and minority reports. The majority report included many provisions that the Canadian Alliance supported, such as a greater primacy for the principle of respect for human dignity, individuality and integrity of the embryo. We agreed with the banning of human cloning, whether it be reproductive or therapeutic, of commercial surrogacy or of animal-human hybrids, the combining of animal and human DNA.

We also agreed with having an accountable, regulatory body to deal with this legislation as this science develops into the 21st century. We need a body that will deal with the things we could not have recognized, that we could not have come to terms with or foreseen, but we must have a body that is truly accountable to Canadians and truly accountable to the House if we are to be able to move forward.

Unfortunately the Liberals would not agree with a moratorium on embryonic stem cell research. Their recommendation number 14, on page 16, stated:

Research using embryos be a controlled activity requiring a licence--

As we thought through exactly where we should go on this very important piece of legislation,we came up with a minority report. There were eight things that we wanted to highlight. One was the urgency of the legislation. We cannot afford to wait any longer. We cannot afford to fail with this piece of legislation because of the way science is moving forward, so we said that it should happen by the end of March.

We said that there should be respect for human life. We said that in the conflict between ethics and science, where ethical accountability conflicts with scientific possibility, the ethical should prevail. With regard to regulations on the embryonic stem cell research, we said that we should back off for three years and allow science to work on the adult stem cell side, which is not fraught with ethical dynamics and dilemmas in any of the research being done or anything coming out of the research. We said we should take a breather as science catches up and we should put our energies where they can be most valuably used, where our precious Canadian dollars for research can accomplish the most. We are seeing many things happen even in the last few months with regard to the excitement that adult stem cells are creating and what actually can be accomplished. We are seeing such things as Parkinson's and muscular dystrophy actually being cured through the adult stem cell.

We said that we should respect provincial jurisdictions. With respect to privacy and accessibility to information, we said that when the rights of the donor conflict with the rights of the child, the rights of the child should prevail. We are saying that we must have statutory standing in front of that regulatory body for all interests, not just the scientific interest. As well, we should have a free vote in the House when the legislation comes forward.

Since we tabled our report there have been several developments. I would like to underscore some of them and the need for this legislation in Canada. In January we learned that for years Industry Canada has been issuing patents on human genes. The health committee was under the impression that patents would not be issued for human genes. We recommended against gene patenting. The concept here is no different from that of developing a telescope, looking out into the universe and discovering a star. It is fine to patent the telescope. It is not appropriate to patent the star. Patenting a human gene is no different.

In February, a Kentucky fertility specialist, Dr. Zavos, pledged to begin efforts to clone a human being, in an undisclosed country outside the United States. Everyone has to understand that in the cloning process only .5 of the clones are really ever born healthy enough to grow into a full human being. In the United States, for example, if only .5 of clones, only one out of every 200, are born whole, then we would want to have those born in a society or in a country that socially picks up all of the disasters that come out of that. I would suggest that they are very possibly targeting Canada and we could potentially be seeing this kind of experiment happening on our soil.

Also in February it was announced that a woman with faulty genes would get an embryo without those faulty genes. We are hearing story after story with regard to designer babies. We are talking about deaf parents who wanted to ensure that they had a deaf son so they had another embryo from a surrogate to make sure it would happen. We are seeing designer babies happening before our eyes, particularly in the last six months.

Recently a committee in the United Kingdom's House of Lords recommended that research on the embryonic stem cell would be permitted to continue, that therapeutic cloning would be allowed and that the first embryo bank of stem cell research would also be established. It is interesting to look at the United Kingdom and its experience over the last 10 years. It had a regulatory body that would allow only the destruction of embryos that were left over from in vitro fertilization. Just a month or so ago it changed the rules and now it is allowing embryos to be designed solely for the purpose of research and also allowing them to be developed to take stem cells from them, which would be the same as therapeutic or research cloning.

We can see the slippery slope we would be on as a nation if we were to open the door and go beyond the line, killing life to be able to do research on that life.

In March the Canadian Institutes of Health Research, and this is a Canadian institute, announced guidelines allowing federal research funding to be directed to embryonic stem cell research. It was a complete end run on parliament. There is no regulatory body in place to deal with this, but the CIHR decided it would take it upon itself. It was interesting yesterday when we heard from the president of the CIHR, Dr. Bernstein. We asked him about some of these important issues and why he would bring forward his guidelines at the eleventh hour, after waiting a decade, and pre-empt the work of parliament. His answers were less than convincing.

It is interesting as well to see how his guidelines differ from the standing committee's report, a report that recommends a declaration of human dignity, individuality and integrity. As well, it is important to note that this all party report stated that research on an embryo should take place only if there is no other category of biological material that can be used. We can see that after 20 years of research of embryos being used in animals, we have cured nothing.

The new CIHR rules ignored these recommendations.

Early last week it was reported that the first cloned baby was on its way through the efforts of an Italian fertility specialist, Dr. Antinori. He claims to be in an Arab country and to have cloned a child that is eight weeks along in its mother's womb at the present time. We do not know how many others are happening around the world, but we know this is coming. We know the urgency is there.

Also last week, President Bush denounced all forms of human cloning and announced his support for legislation currently in progress on the banning of human cloning. He said “Life is a creation, not a commodity”. Finally, last week scientists linked to a group in Quebec claimed that they have already implanted cloned embryos in women. If they are experimenting on our soil, there no law to stop them. Science fiction is quickly becoming science fact.

On Friday we asked the government to assure us that the cloning experiments were not taking place in Canada. We received no such assurance. It is imperative that legislation on cloning and research on human embryos be debated in the House as soon as possible. We know that there are groups intent on cloning humans. The CIHR has pre-empted parliament by saying that research on embryos should go ahead.

The minister has pledged to have that legislation by May 10. We have now waited eight years for legislation on these issues. The House of Commons Standing Committee on Health has carefully considered draft legislation and made its report to the House. Parliament is eagerly waiting to receive and debate the legislation on assisted reproduction, promised by the minister within the next month.

The CIHR's announcement has pre-empted that debate and has usurped the authority that rightly belongs to parliament in regard to making fundamental decisions on human life. The minister's acquiescence in this regard is an affront to a long process involving parliamentarians that precedes this announcement. Decisions on issues of such importance and controversy as embryonic stem cell research and human cloning must be made by parliament, not by unelected, unrepresentative, arm's length organizations funded by federal governments. Genome Canada stepped over the line last week, as it has now $11 million, $5.5 million from federal funds, toward embryonic stem cell research.

Canadians deserve to have their voices heard in parliament before a decision is made on these issues. The time for action is now.

Microbreweries

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, it is all well and good for the issue to be under consideration, but the government must act, because the situation is urgent.

Large Canadian breweries such as Molson and Labatt claim to support a reduction of the excise tax for microbreweries but, at the same time, they are putting the brakes on, with the complicity of the Liberals, when the time comes to take action under Bill C-47.

By its inaction on this issue, is the government not confirming that it is in collusion with the major breweries, and therefore responsible for maintaining a situation that has been deteriorating year after year in the microbrewery sector?

Research and Development

[Rob Merrifield, Canadian Alliance, Yellowhead, AB]

Mr. Speaker, we warned the government last fall that this would happen. We called for an immediate ban then but it refused to listen. A royal commission reported back in 1993 and it went nowhere. Bill C-47 died on the order paper in 1997. Meanwhile, human cloning is becoming a reality and in fact may already be too late.

Will the government promise that its long overdue legislation will not die on the order paper this time?

Excise Act, 2001

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I am pleased to rise in debate on Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores. Members of my caucus have already addressed the principal aspects of the bill, which we intend to support, while I note that we have certain very pertinent concerns. My colleague from Edmonton--Strathcona outlined them as they relate to the provisions of the bill dealing with the excise tax on tobacco products, which will increase revenues to the federal treasury by at least $240 million.

It is our concern that this could lead to an increase in the black market in tobacco products and furthermore that the $240 million will find its way into general purposes in the general revenue fund. We believe that any targeted tax increases of this nature, which are designed to achieve a certain social outcome such as the reduction of tobacco use among youth, ought to be offset by a commensurate reduction in general tax rates elsewhere. To do otherwise is to fail to recognize that Canada continues to have an inordinately high tax burden, which disadvantages Canadian industry entrepreneurs and reduces the amount of capital available in the country for investment in job creation. I share those concerns with other members of my caucus.

I would like to take most of my time to join with the member who just spoke in addressing a pertinent issue that did not find its way into the bill, namely, the treatment of microbreweries, which are an important part of Canadian industry. The bill would have been the perfect place in which to address the inequity of taxation of microbreweries. Indeed, the government has received representations from the Brewers Association of Canada, as has the House of Commons finance committee, to rectify the discriminatory application of excise taxation on these very small, entrepreneurial, craft style breweries.

The House of Commons finance committee heard from the Brewers Association of Canada last October, when it recommended in a very compelling submission that the government reduce by 60% the excise taxation for the first 75,000 hectolitres of production for microbreweries, which the association defines as those that have an annual production output of less than 300,000 hectolitres per year.

Currently small breweries pay $19 million a year in excise taxes. Those are the 53 breweries in Canada that produce less than 300,000 hectolitres a year. That $19 million in federal excise tax exceeds by nine times the $2.1 million of collective profits reported by those 53 companies. In other words, the amount the federal government is taking from these struggling entrepreneurs outstrips by nearly a factor of 10 the profits they are able to retain to reinvest in their companies to purchase capital assets that are necessary for these companies to continue. This is a very grave situation for the microbrewery industry in Canada.

Several provinces have addressed this. British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland have all adopted a lower rate of provincial excise tax to be applied to microbreweries. Indeed, this reflects international precedents throughout the world and among our major economic competitors in the United States.

About 21 million hectolitres of beer are sold and consumed annually in Canada. Of that enormous amount only 3.4%, and I admit to having contributed to a small part of the figure, has been produced by small breweries, namely those with a production of less than 300,000 hectolitres per year. This gives us an idea of how small a piece of the overall market they are.

I am a partisan of microbreweries. I am a big fan of what I think is Canada's finest microbrewery and finest brewery, period. It is known as Big Rock and it happens to be in my riding. It produces tremendous products like Traditional Ale, Grasshöpper Wheat Ale, Warthog Cream Ale, and my favourite, McNally's stout. Its products are famous throughout Canada. It is an award winning microbrewery founded by distinguished Calgary lawyer Ed McNally. It has done very well notwithstanding the discriminatory tax regime it finds itself fighting against.

It is interesting. There are only four companies responsible for 93% of the beer sold in Canada, and they support the proposal for the government to adopt a lower rate for smaller breweries. They are not threatened by the small microbreweries. They see microbreweries like Big Rock in my riding and Unibroue in Chambly, Quebec as an opportunity to increase their market share by increasing beer consumption. They are not afraid of this kind of competition. They see that the application of one excise tax to all companies of all sizes is not fair.

Total excise duty revenues to the government for beer currently amount to about $580 million. If the government were to adopt the recommendations of the Brewers Association of Canada, remembering that they produce only 3.5% of the product and pay about $19 million in excise tax a year, the reduction would represent only 2% of the total excise for beer collected by the federal government. A 60% reduction in the excise rate for small brewers on the first 75,000 hectolitres would be a tiny reduction in government revenues. As the brewers association points out, “the impact would be no greater than could be felt from the market effects of poor summer weather”. It would have no significant impact on the federal treasury.

Were we to allow these breweries to generate a small profit and reinvest it we would see them expand their market share and exports. Even at a lower excise rate the federal treasury would see an increase in the total amount paid by the companies. It would likely see total excise tax revenues for microbreweries increase at a lower rate given the incentive it would create for new investment, production and consumption in the industry.

I will illustrate the magnitude of the tax and address the impact it would have on small brewers. Excise is the highest federal tax paid by the brewing industry. It is the highest cost borne by microbrewers. It is currently $27.98 per hectolitre. That means the excise duty equals the average cost of operating a small brewery. The cost is estimated to be about $30 per hectolitre. Direct labour costs are estimated at about $27 per hectolitre. This means the excise tax, which is insensitive to profit and is charged and collected even if a brewery is losing money, equals the total cost of running a small brewery in Canada.

A benchmark study conducted by the brewers association in Ontario in 1995 found that taxes represented the largest category of costs, amounting to the equivalent of total production costs including raw materials. The study said the tax burden was extremely high “particularly considering that microbrewers are effectively small businesses often competing with large companies”.

Most of the companies reviewed in the study lost money. Normal rates of return fell short by $17 per hectolitre. The companies are producing a great product, they are working hard and they are entrepreneurial. Yet they are not able to generate a profit. That is why many of them are going under. There is a high bankruptcy rate in the microbrewery industry in Canada.

The findings suggest the federal excise rate places brewing companies at a significant disadvantage compared to other small business in Canada. The Income Tax Act sets out a preferential lower rate for small businesses as opposed to large businesses. We do not expect family owned corner stores with capitalizations of a few hundred thousand dollars to be able to compete while paying the same fixed level of taxation as a Safeway or Loblaws. It is not possible given their much smaller economies of scale and higher costs. That is why I think all parties in this place support the principle of a lower small business tax rate.

The brewers association is simply asking that the same logic be applied to the brewing industry. This would allow us to recognize that the costs of producing microbrewery products in small operations are much higher than for Labatt or Molson, companies which retain profits and have huge factory operations across the country, enormous economies of scale and great capitalization. They can afford to pay a higher excise tax rate. Indeed, they have endorsed the idea of a differential rate.

Another important factor is international competitiveness. The United States has a much lower federal excise tax rate on microbrewery products. It charges only $9.35 per hectolitre for products sold in the United States while Canada charges $24.06. That is a difference of 146%. When Big Rock Brewery in my constituency, Granville Island Brewery in Vancouver or the brewery in Chambly, Quebec try to export their products into the United States they are at a 146% cost disadvantage because of the difference in federal excise tax rates. That means we will never be able to penetrate the U.S. market with our superior products as we should.

This has been raised at the GATT panel. In 1992 Canada filed a complaint to the panel of the General Agreement on Tariffs and Trade. The panel reported that the U.S. was violating free trade rules by not permitting national treatment in terms of excise tax on microbrewery products sold domestically.

However the United States has not corrected the problem. Most countries in the European Union have adopted separate lower excise tax rates on the output of small breweries notwithstanding trade action that has been taken against the European Union. They have retained the differential as a matter of policy, which makes it difficult for Canadian microbrewers to sell their product in the European Union.

It is interesting. Adopting the proposal of the Brewers Association of Canada would reduce the premium paid by Canadian brewers from $16.30 per hectolitre over like sized U.S. competitors to $1.26 per hectolitre, or 11% as opposed to the 146% I quoted earlier. The suggestion the Canadian Brewers Association is making would not bring us precisely in line with the domestic excise tax rate in the United States. It would simply bring us into the ballpark so Canadian brewers could sell their product in that country at much higher levels without the penalties we impose on them in Canada.

Canada currently receives microbrewery products from about 95 different breweries throughout the world. About 60% of the companies that sell microbrew products in Canada receive favourable excise tax rates in their domestic markets. We are putting our companies at a competitive disadvantage. The trade actions we have taken have not resulted in national treatment for our products in those countries. We have only one policy option left, and that is to do what the Americans and Europeans have done. We must come up with a second, lower rate for small brewers.

I will quote from the submission of the Brewers Association of Canada to the House of Commons finance committee. It said:

Over time, as other countries have failed to introduce trade compliant policies, the industry has concluded that competitor neutrality within the small segment can only be achieved by introducing a tax measure that has come to be accepted internationally as a means of supporting small brewers.

The official opposition calls on the government to take up the matter urgently in the strongest possible terms. There is no sound policy or fiscal reason why the recommendation of the brewers association ought not be accepted with due haste to allow the microbrewing industry in Canada, an important fledgling value added industry, to survive and prosper both here and abroad.

Once more, the recommendation we and the brewers association are making to the government is a 60% reduction in the rate of duty on the first 75,000 hectolitres of production for brewers producing not more than 300,000 hectolitres annually. An excise duty reduction for small brewers in Canada would be consistent with policies adopted by major beer producing nations like the United States, Belgium, Austria, Denmark, Germany and the Czech Republic. The countries providing the benefit account for about a third of worldwide beer production. The reduction's impact on government revenues would be minimal but the benefit to the small brewer segment would be significant.

There is a precise reason the Brewers Association of Canada came up with a figure of 60%. A 1994 study indicated average Canadian small breweries were falling behind in the amount of money they should be reinvesting to purchase new capital assets, by $16.89 per hectolitre. The study said a 60% reduction in excise tax for such breweries would return about $16.80 to the sector.

There is a clear symmetry here. The reduction in excise tax would not be a giveaway to the industry. It would allow small struggling breweries to run just enough of a profit to invest in needed capital assets so they could sustain themselves and grow in the future. It would create thousands of new jobs. It would generate prospectively tens of millions of dollars in revenue to the federal treasury. It would help our country become more export oriented in this important industry.

I hope the government takes heed and soon introduces legislation to adopt the recommendations presented at the finance committee.

[Rahim Jaffer, Canadian Alliance, Edmonton Strathcona, AB]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-47. At the outset, I would like to say that I will be splitting my time with my friend and all around great guy, the member for Medicine Hat.

Bill C-47 attempts to amend the Excise Tax Act. I will begin my remarks by taking this opportunity to first of all thank my leader, Stephen Harper, for entrusting me with the responsibilities of critiquing the government as the senior opposition critic for national revenue.

As we know, the Canadian Alliance is dedicated to reducing the size and scope of the federal government in order to deliver meaningful tax relief to hard-working Canadians. As a small business owner, I have firsthand knowledge and experience in dealing with the difficulties inherent in complying with CCRA regulations and remittance schedules. I look forward to being an advocate on behalf of millions of Canadian small and medium sized businesses that prosper in spite of the federal government's insatiable appetite for tax revenues.

Bill C-47 addresses excise tax. Although I am opposed to the government's intervention into the freedom of choice of Canadians through taxation, I will be supporting the legislation as it has been endorsed by industry stakeholders and modernizes the framework of excise taxation on wine, spirits and beer.

The proposed excise tax 2001 aims to replace the existing old and antiquated administrative and enforcement structure governing alcohol and tobacco products with a modern regime reflecting current practices. It does not address the tax rate and base matters other than to ensure equitable treatment between domestic and imported products.

The proposed act shifts compliance and point of taxation from a sales levy to a production levy for the production of wine. This is already the case for distillers.

The changes introduced for spirits and wine are regulatory in nature and tax neutral. The primary purpose of these changes are to modernize how these products are taxed to allow distillers and vintners the greatest flexibility in their production practices and to ensure an internationally competitive tax regime.

From an industry perspective the proposed legislation also provides for an appeal and assessment process. Previously industry had no recourse against the government if it felt unfairly treated.

The motion also contains significant enforcement tools to crack down on contraband products. This is a major feature of the proposed legislation and is welcomed by industry.

Changes in the act make it easier to enforce existing laws and provide stiffer penalties for conviction. For example, under the proposed legislation the maximum fine for producing contraband alcohol would be up to $1 million and up to five years in jail for indictable offences. These are industry-led, spirits and wine, and supported changes. There are no losers because of this legislation with the exception of contraband producers.

It is the second aspect of Bill C-47 with which I personally have problems. The bill also seeks to increase the federal excise taxes on tobacco products and to re-establish a uniform federal excise tax rate for cigarettes across the country of $6.85 per carton. The stated purpose of this tax increase is to improve the health of Canadians by discouraging tobacco consumption.

The federal excise taxes on cigarettes will increase $2.00 per carton in Quebec, $1.60 per carton in Ontario and $1.50 per carton in the rest of Canada. This will bring the total federal excise burden on cigarettes to $12.35 per carton. Federal revenues will increase by approximately $240 million per annum through this tax hike.

We all want Canadians to live a healthier lifestyle, especially our youth. The reduction of smoking is a big part of that. My problem with this legislation is philosophical and based on the process. The past decade has proven that high levels of excise tax on cigarettes do not reduce consumption. It only creates an underground market. The role of government is to provide information for consumers to ensure that citizens have an informed choice. Make no mistake, it is the right of individuals to choose whether or not they want to smoke.

It is my belief that the government is increasing the tax levels simply to increase revenues. It is the only politically correct tax increase at its disposal, and the finance minister has never found a tax he did not like.

There are many Canadians out there who believe that excise taxes are dedicated to specific spending, that tax revenues on cigarettes and alcohol are spent on health care and that gas tax revenues are spent on roads. The truth is that while federal excise revenues have increased, transfers to provinces for health care have decreased.

What are Canadians going to get in return for this blatant tax grab? I challenge the government opposite to detail what its plan is for the revenues.

Contrary to what the government thinks, Canadians are not stupid. The tax increase is of the same ilk as the airport security tax. The Liberals are manipulating the concerns of Canadians to finance their next election campaign. The government opposite cannot escape its past nor its record. The transitional jobs fund, Shawinigan, Groupaction and everything Alfonso Gagliano ever touched raised doubts in the minds of Canadians regarding Liberal accountability, ethics and fiscal restraint.

The Liberals have once again piggybacked meaningful legislation and political opportunism. The Prime Minister in the past has appointed a qualified Canadian and a Liberal hack to the other place at the same time. When one criticizes a patronage appointment, the Liberals defend it with the credentials of the qualified candidate. Today they are hiking taxes under the guise of tax fairness, and that is unethical. The Liberals are politically savvy and ethically devoid.

I will support the legislation because it is in the best interests of Canada's emerging industries. However through this piece of legislation, the government has added another chapter to the red book of Liberal shame.

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, somehow I could tell he was going to ask me a question by the way he was looking at me.

Increased tobacco taxes could be part of a strategy, but certainly not the only part of the strategy to discourage smoking especially among young people, to decrease the terrible cost to health and health care in Canada in actual dollars. It could be part of the strategy but it has to be a wide strategy of education, restrictions, maybe higher taxes and a variety of other things.

Much of the revenue from Bill C-47 could go toward preventing tobacco smoking and toward encouraging people to quit smoking. Should the revenues be offset by others? I do not think that is necessary at this time. I think the revenues should be dedicated to fighting tobacco addiction.

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, it is a pleasure to speak to Bill C-47. Based on the debate I heard from the member for Regina--Qu'Appelle and others we would not know it was Bill C-47 because they talked about the airport security tax, the Tobin tax and all these things. I will follow his lead and talk about something else myself.

Bill C-47 is a housekeeping bill that would do a lot of things to clean up the act as far as tax collection goes and to define things for people involved in the wine, spirits and tobacco industry. It would do a variety of things including increasing the tobacco tax by $240 million annually, which will be the lead-in to the subject I want to talk about.

I feel obligated to mention a few things about Bill C-47. It would change the framework governing taxes on spirits, wine and tobacco. It would make the duty charged on wine the same as the duty currently charged on spirits.

The bill would bring in licensing registrations and regulations for the transportation industry to prevent trafficking and control of the movement of spirits and wine. It would create new provisions for offences for those breaking the law with regard to wine, spirits and tobacco.

The legislation would merge some already existing taxes which should make it simpler for industry to handle. It would make the federal tax on cigarettes the same all across the country which it should have been all along in any case.

I was watching television the other evening and I saw a Health Canada ad that said 45,000 Canadians die from smoking cigarettes every year. I thought to myself that figure could not be right. That is 10 times the number of people killed in the World Trade Center attack, and according to the ad it happens every year. I thought it must be wrong.

I contacted the Department of Health to clarify the figure and to ensure it was not providing the wrong information to Canadians. The department sent me a report confirming that in Canada 40,000 to 45,000 Canadians die of smoking related diseases. That is the same as having a World Trade Center attack every month. It is absolutely incredible. If we were to think about this, 45,000 Canadians die every year, year in and year out.

The report goes on to say that this impacts on the cost of living in our society of $15 billion a year. It is $2.5 billion directly to our health care system at a time when it is strained to its very edges, and yet we have this extra burden that does not have to be there.

The report from the Office of Tobacco Control, Health Protection Branch, stated:

According to this analysis, smokers cost society about $15 billion while contributing roughly $7.8 billion in taxes.

If it is killing 40,000 to 45,000 people a year it hardly seems like good value. A rough calculation indicates that at 41,000 people dying per year with a $7.8 billion tax revenue, that amounts to $190,000 per person. This is crazy. It is absolutely ridiculous that 45,000 people a year die from tobacco related diseases.

I commend and encourage the health minister to use these ads more that tell us about the dangers of smoking and about the incredible costs incurred. I encourage her to do more of these ads and make them clearer. I want her to point out the number of people who die every year in Canada is the same as 10 World Trade Center attacks. In the U.S. it extrapolated into an unbelievable number, but we are not talking about the U.S. we are talking about Canada.

The Canadian government, the military, everybody in Canada has turned a focus on the horrible terrorism act in New York which killed 4,000 people, but we have 45,000 people dying every year from smoking related diseases. It seems to me a misguided focus. If we are to address this issue the government has to come up with more ways to discourage people.

In the documents provided on Bill C-47 the government says it would increase the taxes on tobacco by $240 million annually. It claims that this would discourage tobacco consumption. I do not think that $240 million will discourage tobacco consumption enough. It does not provide educational material for young people, for smokers and does not help people get off the smoking habit. That is not nearly enough based on the numbers available and based on the study on the costs of smoking in Canada.

The numbers are absolutely incredible. They just go on and on in this report about the damage. It says that in 1991 approximately $2.5 billion in health care costs was attributable to smoking. That was 4% of the total health care budget in Canada.

That is just the beginning. There are extra costs for hospitals, physicians and absenteeism, and all other costs attributed to the smoking habit, which in 1991 was estimated at $15 billion. If we were to think about that, the whole health care budget was only $66 billion and the smoking attributable costs were $15 billion.

While we are talking about Bill C-47 and extra taxes on tobacco I raise the alarm bell and encourage the Minister of Health to increase those ads and put them into perspective for people so they can understand how dramatic the damage is that smoking is doing to our health, especially to young people, based on the charts and information that Health Canada supplied me. I hope we can raise the level of public awareness on this.

I compliment the Minister of Health for placing these ads. I have spoken to her today about how effective they were on me. In fact, they were so effective I thought they were wrong. The numbers are so high, they are hard to believe. I hope the Minister of Health will continue those ads, maybe even broaden them out and put them into perspective for people.

When I say that 45,000 people a year die in Canada people shake their heads and say that it is a lot. However, when I put it into perspective and say that it is 10 times the number of people that were killed in the World Trade Center they are flabbergasted. That is almost a World Trade Center catastrophe every month in Canada.

We should not accept this. We should not stand for it. We should do everything we can to bring this awful disease or addiction or whatever we want to call it to a minimum level at all costs because the real cost in money and in lives is incredible, especially at a time when much of the time we spend in the House is talking about health care.

Here we are spending $3, $4 or $5 billion on health care costs which could be controlled or reduced. I hope we do that in this case. I want to say those numbers again. That is $3 or $4 billion in health care costs because of smoking related and smoking attributable ailments.

When the government is talking about raising an extra $240 million in taxes as opposed to the cost directly attributable to our health care system of $4 billion, it is incredible. We should all be aware of this and the government should be doing more to raise public awareness of the situation and push for a correction.

I will now go back to Bill C-47 which is what the bill is about, although the bill does mention tobacco. It has several clauses with respect to tobacco, tobacco controls and tobacco taxes. I would like to see much more of that restriction. I would like to see a more concentrated, focused and increased effort on controlling tobacco and helping people get off the tobacco addiction.

Does Bill C-47 have some positives? We think it does. Bill C-47 would merge taxes which already exist to make it simpler for businesses to handle. It would make the taxes on tobacco the same right across the country, which is what it should have been all along. It would change the form of penalties resulting from excise tax, and we support the move in that direction. The increase in the export duties should discourage smuggling Canadian cigarettes back into the country which has been a problem in the past although it is reduced now.

On the down side, Bill C-47 increases the taxes but again does not specify where the taxes will go. Will it go toward helping people to understand their addiction to tobacco and the terrific price it costs in human lives, sickness, dollars and the strain on our health care system? Will that be where the money goes or will it go into general revenue like the EI fund? It is absolutely wrong for the $40 billion surplus in the EI fund to be going into general revenue. I consider that to be fraud. Every employee in Canada who gets a paycheque pays an EI premium but it is not an EI premium. It is an extra tax. If the government wants to take this money and put it into general revenue as a tax it should be marked extra Liberal tax, but it is not. It should be designated as a Liberal tax and not an employment insurance premium.

I appreciate the chance to speak to Bill C-47. We will be supporting Bill C-47 but I do hope my comments have not fallen on deaf ears. I hope the Minister of Health understands that I appreciate what she has done in the direction of raising public awareness of the damage smoking does to health and the costs to our health care system but I hope she will enhance that. I hope she will put more money into that budget and maybe take some of this money and put it into a budget to increase public awareness and help people get off the addiction to tobacco.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

That would be extremely unwise. However here we bring in an airport tax without an economic impact study to see what the impact of that tax will be on communities, on the country and on the travel industry. I do not think it makes any sense.

The last point I want to make concerns a new vision of taxation in the country or in the world. I refer to the whole area of the Tobin tax. The Tobin tax was an idea suggested by Professor James Tobin who passed away about four or five weeks ago. He suggested a very small tax on the trade of currency in the world. Today in the world we have about $1.5 trillion to $2 trillion a day of currency being traded and exchanged. About 90% of the currency trading that is going on is strictly for speculation and mostly done by the large investment banks.

What Professor Tobin had suggested was a very small tax of 0.1%, 0.2%, 0.25% which would slow down some of the speculation in currency that creates havoc in currency around the world. It was done with the Mexican peso and the Japanese yen and many other currencies of the world over the years.

As these investment banks play around with people's currencies they in effect play around with people's lives, throw people out of work and cause all kinds of poverty and despair in the world.

If we had some kind of small international tax it would not affect the ordinary people of this country at all. We could have an exemption on that of $10,000, $20,000, $50,000 or whatever we wanted. If we had a tax of 0.1% it would only be $1 out of $1,000. We would slow down some of the speculation and create a bit more order in the financial markets.

A consequence of this kind of tax would be to create a huge international development fund of several hundred billion dollars to fight world poverty, the AIDS pandemic in Africa and to do environmental cleanups. A lot of that money could go back to the countries that collected the tax to help pay for health care, social services and the fight against cigarettes and smoking that I referred to earlier in my comments.

Three years ago in March I had the honour to introduce a motion in the House of Commons asking parliament to endorse the principle of the Tobin tax or the tax on the speculation of currency in concert with the world community. It passed in the House of Commons by a vote of 164 to 83. We became the first parliament in the world to endorse the idea of a Tobin tax. We had people from all five political parties who actually supported the bill.

Since then we have seen a lot of movement in different parts of the world. The French have actually introduced legislation to participate in a Tobin tax or a currency tax regime once we reach a critical mass in the world community to make this tax effective. Studies are now going on in the European community. The idea of the Tobin tax is being endorsed by many different countries and politicians around the world. There is a growing movement for a global approach toward taxation.

We now have trade deals that are basically charters of rights for international co-operation or charters of rights for investment in the globalized world. These are now very lopsided. What we need is an international global vision where we also would have some rights for the ordinary people in terms of international labour and social standards and goals and objectives, environmental standards and financial institutions that would have the ability and the power to levy a tax against the speculation of currency.

That is the kind of international vision that I think more and more people are supporting, certainly the churches, many of the NGOs and many of the people who live in various parts of the world.

These are some of the things that I believe we should do. We need this new international vision, a new and a modern day global plan to develop many parts of the world that are today suffering from hunger and famine.

Sadly speaking, hundreds and hundreds of people have died of starvation in the last 15 minutes. I think about 20,000 people a day in the world die of starvation. Every hour of the day, hundreds and hundreds of people die of starvation, yet we have this great disparity of wealth around the world. We have the ability through a currency speculation tax to build up an international fund where people of the world could be fed, where there could be the development of agriculture, food production and processing around the world. The technology is there to feed the people of the world, to develop the world and to clean up the environment. We have those abilities. What we lack is the vision and the political will to make it happen.

When we debate a bill like Bill C-47, when we support a bill like Bill C-47, which I do, which I certainly do, we should also look at other parts of taxation such as the unfairness of the levy of employment insurance, the EI fund, which is sitting now with a $43 billion surplus of ordinary people's money. All the time fewer people qualify from the fund. Some 64% of the people who now do not qualified for the fund earn less than $20,000 a year, yet they have to pay premiums.

We should be looking at the unfairness of the airport security tax, this new GST that has been imposed on us and that the government now is using as a tax grab on ordinary citizens. We should look at some new vision in the future in terms of international stability and funding of international programs. The idea here, which is getting momentum around the world, is that of a small tax on the speculation of currency which is causing havoc in so many countries of the world.

[Lorne Nystrom, NDP, Regina—Qu'Appelle, SK]

Mr. Speaker, I will say a few words about the bill before the House today as well.

Bill C-47 it is a technical bill. It is a bill we in the House support. It would impose a levy on spirits, wines and tobacco products. It would defer payment of duties on spirits and wines to the wholesale level, place domestic and imported products on equal footing, impose tight controls on possession of non-duty paid products and so on. It is a technical bill that would implement some tax changes. There has been a review of the bill. We in my party have no real problems with its technical proposals.

I will comment on a couple of things in the bill. One is the tax on tobacco. I agree that there should be a higher tax on tobacco products in Canada. The biggest health care expenditures we have in Canada are a result of smoking and all the ailments and health problems it causes.

There has been an unofficial agreement between the provinces to raise the tobacco tax. It has happened in Alberta. It happened in the Saskatchewan budget two weeks ago. I suspect the same thing will happen in Manitoba shortly and in other provinces across the country where the price of cigarettes is in roughly the $9 range. The revenues could be used to promote a non-smoking campaign to show the hazards of smoking, particularly for young people. In most cases high cigarette prices are a deterrent for young people to start smoking.

There is a problem on the other side of the issue. A lot of people who smoke are lower income people. When the price of cigarettes gets high it becomes a hardship on them because they are addicted to cigarettes and tobacco products. We get caught in a difficult situation. We are doing the right thing in terms of health and principle, yet at the same time we are catching people who are already addicted to tobacco.

It is a long term process. People need to be educated about the hazards of tobacco. We must make every effort to get people off cigarettes. This involves federal and provincial government campaigns through schools and the like. This is one of the things Bill C-47 talks about.

I will mention two or three things that are not in the bill but which are important when it comes to taxation policy. We have had a government over the last while that has decided to make lowering taxes a huge priority. Before the last election campaign in the fall of 2000 it brought in a budget that would lower taxes over five years by some $100 billion. That was an attractive thing for a lot of Canadian people.

On the other side of the ledger we have seen a tremendous rip-off of employers and employees through employment insurance premiums being much too high. We have seen increased restrictions on who qualifies for employment insurance benefits. The eligibility period has been reduced for those who do have benefits. We now have a surplus of about $43 billion in the EI program. The surplus is predicted to hit $50 billion sometime in the calendar year of 2003.

We are debating a tax bill today but at the same time we are turning a blind eye as a parliament to a great injustice. Workers are being taxed excessively for their employment. The $43 billion EI surplus goes into the Consolidated Revenue Fund. The surplus is there to provide a balanced budget for the Minister of Finance. It is there to provide money for other programs. It is there to pay down the national debt.

Last year $17 billion was put toward the national debt. The $17 billion came directly from workers because of the excessive payments they made into the employment insurance fund. That is very unfair and actually should be a national scandal. The insurance fund should be roughly balanced at all times. I do not mind seeing a surplus of a few billion dollars because at a time when unemployment is low, we can build up a bit of a surplus and when the unemployment rate increases, without increasing the premiums or increasing them only marginally, we can have a deficit running for a while and come out balanced over a five or ten year period.

That was the whole purpose behind EI in terms of funding. Today about two-thirds of the surplus in the employment insurance fund is being generated by low income Canadians not by Canadians who make a lot of money. We tax the poor and people of modest incomes. That is not fair or just.

Many people have lost access to the EI fund because of the tighter qualifying restrictions brought in by the federal government. About one million families have lost access to the fund since 1993 when the Liberal government took office. About 41% of the people who have lost access to the benefits make less than $15,000 a year. Another 23% who have lost access to EI benefits make between $15,000 and $20,000. That is 64% of the people who have lost access to these benefits make less than $20,000 a year. Although they have lost access to the benefits, they still pay into the EI fund. They have provided the federal government with almost a $43 billion surplus today and will provide $50 billion over the next calendar year. It is a very unfair tax from a government that calls itself liberal. That is of course something that is not referred to in the bill that we are debating today.

I want to talk now about the airport security tax which was debated in the House and went into effect on April 1. It was no April fool's joke. It is a tax that will not fly in this country. It is a flat tax of $24 on a return ticket. People will pay $24 tax whether they fly from Saskatchewan to Prince Albert, Regina to Saskatoon, Edmonton to Grande Prairie, Edmonton to Calgary or Toronto to Ottawa. The tax is the same if one flies from Regina to London, Paris or New Delhi. There is no relationship whatsoever to the price of the ticket.

The tax will hurt small communities and short haul flights. It will harm the small airlines such as Athabasca Air in Saskatchewan which has short haul flights between Regina and Saskatoon. The $24 on a $100 or $150 ticket is a huge percentage on a short haul flight. That is another example of a very unfair and unjust tax.

The tax will apply to everybody from the age of two and up. Infants up to the age of two who travelled with an adult could fly free and children between the ages of two and 12 received a large discount but not today. The $24 tax applies equally to every Canadian citizen from the age of two and up. I see that as an example of an unfair tax.

Another reason the tax is unfair is that it was supposed to be implemented to pay for enhanced security at airports. No one in the House would oppose the idea of increased security at airports after September 11 but the tax will collect $1 billion or $2 billion more than is needed to provide for security at airports. In some cases the tax will collect as much as it costs to run the airport. In Saskatoon the city and airport authorities who studied this security tax estimated that Saskatoon will raise some $5 million a year from passengers who fly through the Saskatoon airport. Meanwhile, it costs $5 million a year to run the entire airport, which includes the costs of heating, cleaning and everything else.

Regina will raise $4.5 million through the security tax paid by people leaving Regina. The cost of running the airport in Regina is about $4.8 million. The money coming in from the security tax is enough to run the entire airport but it is supposed to cover security. No wonder people get cynical of politicians and governments when we have this kind of a regime and this kind of tax.

The security tax was implemented without an economic impact study being tabled by the Minister of Finance or the Minister of Transport. The most fundamental thing we do in parliament is taxation. The whole philosophy of parliament is representation. We do not have taxation without representation. We have representation in the House of Commons from all the people of the country yet we have a bunch of puppets in the House of Commons who get up and say yeah to the Minister of Finance for implementing a new tax without tabling a study or a document in the House showing the impact it will have on the Canadian people.

It is like having a benevolent dictator sitting over there. Sometimes he is being very benevolent when he brings in the bill without a study.

What do we teach kids? Normally we teach them to do their research and their homework when they go to school. They need to have some data and facts on which to base an argument or write a term paper. However here in the House of Commons we bring in an airport security tax without an economic impact study. That does not make any sense. It would be like the member for Edmonton North going off and riding her motorcycle without learning how to ride a motorcycle.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to take part in this second reading debate on Bill C-47. I will say in advance that the Bloc Quebecois is going to support this bill. We have two reservations, however, and, over the coming weeks, we are going to try to convince the government that we are right about two particular aspects of this bill.

Why are we supporting this bill? Because it simplifies matters in connection with wines, spirits and tobacco, specifically by harmonizing sales taxes, excise taxes with the general taxation system, and by creating compatibility among the commercial accounting periods. This is a clear improvement from a tax administration point of view. However, through you, Mr. Speaker, I wish to draw the government's attention to two problems related to this bill.

The first has to do with the beer sector, microbreweries in particular. The second has to do with small vineyards, which have been appearing in increasing numbers in recent years, such that in Quebec and in Canada, this has become a very flourishing industry which is winning international product quality awards.

In the case of beer, there is a major problem, a problem of fairness, as it were, internationally. In other countries, such as France, Belgium and even the United States, microbreweries are exempt from excise tax. Internationally, this is accepted under WTO rules. There is a special exemption for microbreweries so that they can perform, develop and support numerous regional communities, most of them small, as well as compete with large national breweries.

This is the case everywhere else, but not here. It is unfortunate that, in Bill C-47, the government has not taken into consideration the fact that microbreweries in Quebec and in Canada generate some 3,500 direct and indirect jobs; I would say that three-quarters of them are direct jobs and approximately 1,000 are indirect jobs. It is unfortunate that the government has not taken into consideration this important contribution by microbreweries. As opposed to the United States, for example, where the excise tax is 9 cents a hectolitre, in Canadian dollars, here there is still a tax of 28 cents a hectolitre.

Clearly, advocates of economic liberalism, even in the United States, are looking out for microbreweries and recognizing their contribution. Such is not the case here. But it is the case in France, in Germany, in Belgium, and in the United States. In Canada, however, microbreweries are treated the same as the big breweries that have much greater financial and technological resources to provide stiff competition for microbreweries.

Is this government able to understand that affirmative discrimination, permitted under trade rules, permitted in a world that is moving toward globalization, and permitted within the framework of globalization, could help microbreweries expand and provide fair competition for large breweries from virtually every country around the world? Would it not be a good idea for the government to get in line with all of the major industrialized countries and help its microbreweries?

We will be presenting an amendment to provide microbreweries with a partial excise exemption for the first 75,000 hectolitres, this is approximately the same level of taxation applied to microbrewery beer in the U.S. This would amount to a 60% reduction in the excise tax for the first 75,000 hectolitres produced by microbreweries, whether it be Unibroue or other microbreweries in Quebec and Canada.

This would be of great help to them and would constitute fair treatment. As I said, Unibroue's competitors benefit from this exemption, moreover. It is recognized and allowed under international rules.

So, as I said earlier, we are going to introduce an amendment to this bill at report stage, in hopes that the federal government, with its sizeable surplus accumulated over the past five years, could contribute some $15 million annually. This is not something that would cost the government all that much.

I would remind hon. members that the microbreweries contribute about twice as much in terms of taxes to the various levels of government, a little more than half of this to the federal level. Even with application of such a measure, the federal government would still come out on top. It would still be receiving net taxes from the microbreweries and would help maintain, even increase, employment in a sector that has undergone phenomenal expansion over the past 15 years. This measure would cost between $10 million and $15 million. That is not much to ensure that the existing 3,500 microbrewery sector jobs continue to exist, and even that this sector could become a promising and dynamic one in the years to come as far as job creation is concerned.

There are certain problems in this bill, including one concerning small wineries. As hon. members are no doubt aware—and some Liberal colleagues are involved in wine making, moreover—there has been a considerable expansion as far as small wineries are concerned in Quebec and in Canada over the past 25 years. When I was an economist for the Union des producteurs agricoles, I witnessed the birth of some of the great Quebec wineries. Back in 1986, investment in this sector was just beginning, for instance in l'Orpailleur, in Montérégie.

I was there in the early days of this sector, which has developed from its early, more amateur days to the respectability it enjoys today because of the award-winning, quality products to which I referred at the beginning of my speech. Quebec and Canadian small vineyards have been raking in the medals in recent years on the international scene for the quality of their vintages

Small vineyards are subject to a tax of 51 cents per litre. This is significantly more than elsewhere, including in France, Belgium, Italy and even in the United States. Again, we are asking that small vineyards be treated fairly.

Let us take the example of a vineyard that produces 200,000 bottles. This is not much, considering that, at the international level, large vineyards' production is 10 and 20 times larger on average, including in the United States. What the government could do—and we will again propose an amendment to this effect—is an provide exemption from this 51 cent tax per litre on the first 200,000 bottles.

Again, this exemption would be acceptable from a trade point of view and it would meet all the requirements of international treaties, including the one with the World Trade Organization. Such an exemption would also meet the requirements and provisions of the North American Free Trade Agreement, and it would help small vineyards give additional momentum to their performance.

The cost of this exemption to the federal government would be ridiculously low, but it would really help small vineyards. It would cost the government less than half a million dollars per year, $350,000 in fact. This is very little, but for small vineyards in Quebec and in Canada, it would mean a lot. It would help them tremendously. Why? Because the competition is very fierce for small vineyards. It is very fierce with large international vineyards, and also with exports from small vineyards in the United States and elsewhere in the world.

Once again, we are going to bring forward an amendment so that small vineyards with sales under approximately $2 million annually could be exempt from this tax.

Small vineyards are now working hard on quality and the development of complex varieties of vine. They are making incredible efforts to break into the international market. The quality of wine in Quebec and in Canada is therefore good, and there has been incredible improvement in recent years.

In my view, even more could be done. I am thinking of l'Orpailleur; I mentioned l'Orpailleur, in Montérégie, earlier. I am also thinking of Clos Saint-Denis, in Saint-Denis-sur-Richelieu. These are two small vineyards whose owners I know which have been making amazing progress, year after year, in research and development to improve the quality of their products. They enter all the international competitions and win awards.

It would be worth improving Bill C-47 by incorporating these two amendments. It would not cost the government very much, but it would give a tremendous boost to two flourishing industries of which we are proud. Throughout Quebec and Canada, people are very proud of the efforts being made by the microbreweries, of the quality of their products, and the same goes for small vineyards.

Again, we will be supporting Bill C-47. However, we hope that, at the various stages, the government will understand that it is to the advantage of all Quebecers and all Canadians to approve the two amendments put forward.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am continuing an interrupted speech. The speech was interrupted about two weeks ago when 1.30 p.m. rolled around on a Friday afternoon in the middle of my riveting presentation.

I do not know whether I hold the record on the interruption of speeches but I do remember one in which my speech was interrupted in early December. I do not remember which year but I completed the speech the following year in November. I remember that because it was an 11 month interruption of a speech.

The bill we are debating today is a bill on taxation. I am sure all members present have taken the time to read Hansard from two weeks ago Friday and have re-read the first part of my speech so they have the continuity. In case some have not I will reiterate again that the theme of my speech is the insatiable appetite of the government for tax dollars. Bill C-47 is about taxation.

I talked about the three different ways in which the government can tax individuals and corporations. There are actually four different ways in which the government can earn revenue, directly and by taxation. The three different ways of taxation are: first, taking a portion of everything that a person owns, property taxes for instance; second, taking a portion of everything that we earn through income tax; and third, taking a portion of everything we spend, the much loved GST is an example of that. Many provinces have provincial sales taxes as well.

I live in a province in which there is no provincial sales tax. To my knowledge we have never had a sales tax in Alberta. Until that hated GST came in it was actually wonderful to go to a store. If someone bought something that had a price of $5.99 and gave $6.00 in payment, a penny was given back. There was no computation of a tax. There was no sales tax. I would propose that perhaps the lack of a sales tax was one of the things that helped to make Alberta so strong that it is now one of only two provinces that is a net payer into the scheme of equalization.

I went to school in Portland, Oregon for a year and was interested to find that at least at that time Oregon was one of only two states that had no sales tax. Somehow I am attracted to governments that do not have sales tax.

Economists tell us that sales taxes are a better form of taxation than income tax and that reducing income tax actually has a greater positive effect on the economy than the reduction of sales taxes. However, there is a huge psychological difference to that. When one earns money, especially if the income tax is deducted at source, one never notices it in a way because one just does not ever get to see it. If we pay too much tax at the end of the year at filing time, we find that there is a bit of a rebate and everyone is happy that they got money back.

I do not know how many people stop to think that it is money the government has taken away from them. It is part of their earnings. The government took more than it was entitled to and is now giving it back. We should be happy that it gives it back in the same sense that we would be happy if someone robbed us and gave us back the money.

It is our own money and it is important for us to never forget that when it comes to taxes the money belongs to the person who earns it. Governments who take part of that money away, either through income taxes or sales taxes, need to always be cognizant of the fact that they are trustees of the money, spending it on behalf of the public for the public good.

I am very incensed when I find the present government taking taxpayers' money and way too often spending it for the government's good and not for the public good. I will give the House an example of that. The Minister of Industry happened to be in my riding about a week ago, where he made a great speech and held a meeting at one of the new hotels. All the local dignitaries were there. Everybody was very impressed way out there in rural Alberta in the community of Sherwood Park, which is Canada's largest hamlet with a population of around 45,000. It is still considered a hamlet because it has never been registered.

At the meeting he made some announcements about federal government spending. What was curious was that these were not new announcements. They were announcements that had already been made in the budget. The government is great at announcing and announcing. It seems as if the government multiplies the use of these announcements for political reasons.

The minister basically said “Are we not wonderful?” because the federal government was giving out some money to be used for research. He said that this would be a great boon to our economy, our competitiveness, our creativity and our productivity. He used all the nice buzzwords. He gets a lot of mileage out of announcing $150 million. It takes just the snap of a finger for a Liberal to announce $150 million. A couple of Challengers and all sorts of other things can be bought with $150 million.

There he was announcing it, but I contend simply this: If that money is to be spent for the public good, why does he not just send a cheque? If the money is to go to the university, a cheque should be sent to the university along with instructions on how to use the money and how to report on its accountability. Instead we find the minister making a big announcement.

In another example, I remember the Prime Minister announcing the opening of a call centre in, I believe, Prince Edward Island. The government, through HRDC, helped to fund the introduction of this call centre. The reason I mention this is that we are talking of taxpayers and using their money in trust on behalf of the citizens of this great country of ours. There was the Prime Minister announcing to the people of Prince Edward Island that a grant would enable them to have a new call centre and would provide employment in their community.

On the surface that sounded pretty good, but the reason I remember it is that the response was incredible. I heard about it on the car radio when I was driving. The person who was given this money, and I cannot remember if it was the local mayor or the entrepreneur of the business, told the Prime Minister that he had come through for them when they needed him and they in turn would show the Prime Minister they would be there for him in the next election. That was the gist of the statement.

It ought not to work that way. If the money is needed, it should be spent. If it is not needed, it should not be spent. It is not right to tie it together with the expectation of votes in return. I think the Prime Minister would have been right on if he had told that individual that giving him the money had nothing to do with votes. This was taxpayers' money and for some reason it was taken away from people who earned it and brought there so others could earn some money. I know there is an argument there. We could say it created a new business and jobs for those people who then would generate revenue and pay income tax. They would be paying into the system instead of drawing out of the system.

I know we can make those arguments. Maybe some of them are even justified, but I object strenuously when taxpayers' dollars are used for political purposes, as in my riding with the Minister of Industry making an announcement that had nothing to do with Liberal politics or like the Prime Minister in Prince Edward Island making that announcement.

Here we are talking about increased taxation. Make no mistake about it. Bill C-47 increases the revenue of the federal government by about a quarter of a billion dollars. That is what this is about. It is about increased taxation. It is a rationalization of some taxation. In the case of cigarettes, for example, in different provinces the rates are increasing incrementally. As I said in the previous part of my speech, based on the amount by which those taxes were decreased previously, they are now being restored.

I think I have made my case very strongly. I am sure that all the members here, having listened to my argument, will now have a new resolve in their hearts to never, ever misuse the money that has been given to the government in trust by the taxpayers of Canada to be used for the public good. I hope that is true.

It may surprise the House to know that my present inclination is actually to vote in favour of the bill, a bill that would increase government revenue and taxation. My primary reason for voting in favour of it is that it will increase the price of and thereby hopefully reduce the consumption of cigarettes. I have given speeches on this topic in various contexts before. Whether it is my colleagues in the House, my friends back home or one of my staffers who may be watching this speech right now and who is currently on a quit smoking program, I encourage them to carry through with quitting smoking. Perhaps this tax helped that staffer to make that decision, although I have not actually discussed that detail with him. I would like to encourage him to carry through with that resolve for health reasons and for economic reasons. The best thing we can do is to discourage young people from smoking, thereby ruining their health.

There are also the costs of smoking. I have related before how when I taught mathematics I encouraged my students, as part of the work they did in learning to use their calculators and computers, to compute how much they would have in the bank if instead of smoking they were to put that money into an RRSP over their lifetimes. I used to have them evaluate the mathematical formulas, math and finance exponentials and things like that.

After they evaluated that, which came to around $1.3 million as I recall, I asked whether they knew what they had computed. I went through it and showed them that the 45 meant 45 years from the age of 20 when one started working until 65 when one retired. The .1 at that time was 10% the rate of return that one could get on an RRSP and the $1.3 million was the balance in the RRSP on retirement. They could retire with $1.3 million in the bank if in their lifetimes they would put their smokes money into an RRSP instead of blowing it up in smoke, so the economic argument was strong. I am proud to say that I had a number of students who actually quit on that account. That is my primary reason for voting in favour of Bill C-47. I regret that my time has now elapsed, but I hope that the Liberals will hear my message and act on it.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I think you look very good in the chair. Perhaps you aspire to making that a permanent position down the road. Learn your French and you will be okay.

I would like to address Bill C-47, an act which has to do with taxation. If members ever listen to any of my speeches they would know that taxes and I do not mix. I recognize and acknowledge that for our different levels of government to do their work a certain amount of taxation is required.

However, let us stop to think about how heavily we are taxed, whether we purchase gasoline, wine and spirits, cigarettes or food in the form of restaurant meals, vehicles, furniture, clothing or even when we give money away.

As a leader in my community, I get, as I am sure all members of parliament do, a fair number of solicitations to contribute to fundraisers. I was solicited not long ago by a group trying to get hockey tickets for a number of young people who did not have both parents. It asked me to contribute to some hockey tickets so that these young people could enjoy the Edmonton Oilers beating someone else hockey game.

I told the group I would contribute and I pledged $50 which I think provided two tickets for these young people. Members can imagine my surprise when I received a statement from the group showing the $50 I had pledged but also showing a charge of $3.50 for GST. I was being billed a tax on my charitable donation.

The federal government, even when its citizens are giving their money away to help others, wants a cut of it. It seems to have an insatiable appetite to take away the earnings of Canadians.

Over and over again we see taxes increase. Once in a while we get a little announcement of a temporary decrease. Even now we hear much crowing from the Liberal side about the reduction in taxes. However when I spoke to people who had received their cheques in January and February, they said that their take home pay did not seem to be that much different. They wanted to know what happened to all the tax cuts they were supposed to get?

We also must remember that our taxes, when it comes to the kind of taxes we are talking about in Bill C-47, the excise taxes and the GST, those taxes are all being paid with money that has already been taxed.

I was thinking about something the other day. Given that governments need some money to run their operations, where can they get the money from? First, they can do something to earn it and, in some cases, they do that.

I worked in the mathematics department at the Northern Alberta Institute of Technology. The institute had three major divisions: the technology division where I worked as a mathematics instructor, the business division and the so-called industrial division. The industrial division, among other things, trained mechanics, carpenters and many others in the hand skill trades which are so necessary in our society.

One of the things the institute did in order for their students to have hands on experience was invite citizens to bring in their vehicles. They would only be charged for the parts because the labour was provided by the students under the supervision of their instructors. I used to bring my own vehicles in there from time to time, although in those years I did most of the mechanical work on my vehicles myself.

I remember going to the institute's barber school which trained people to be hair dressers and barbers. One could go there and get a haircut for 50¢. It was a nominal charge but at least they got some revenue and the students learned how to cut hair.

Governments could raise revenues by doing things that would actually bring in money. Occasionally governments will build roads and then charge tolls on them. In a sense that is also a way of bringing in revenue. There are many other ways but I will not give an exhaustive list of how it can actually earn money directly.

The other way governments could earn money would be through taxation, that is, by separating the citizens from part of their earnings. As I see it there are basically three main classifications. They can tax people as a proportion of what they own. The municipalities do that with property tax. If one owns a house worth $100,000 the tax assessment every year would be $2,000 to $3,000.

I have not done my calculations recently but, having lived in the same house for over 25 years, I think I have paid more in property taxes than I paid for the house. In other words, the money I paid the government in property tax is greater than the money I paid to the guys who built the house. It is absolutely crazy.

Meanwhile I paid all those taxes with money on which I had already paid income tax. Most of that money was at the marginal rate of around 50%. I earned $6,000 of which $3,000 went to the province and feds and $3,000 went to the municipal government. That means that every year when I write my local municipality a cheque for my property taxes, if I write the cheque for $3,000, there goes $6,000 of my earnings. It was $6,000 of my earnings in taxes and yet all it shows is that I paid $3,000 in municipal taxes.

All hon. members here will be very pleased to know that I have introduced a private member's bill that would at least take the first step toward providing an exemption from taxable income for money that people earn to pay their property taxes. My principle is that Canadians should not have to pay taxes on money they earn for the sole purpose of paying taxes.

I am very unlucky because my private member's bill has never been drawn. My bill has been languishing in the bottom of the barrel. I would just love to have it debated and made votable. I would love to hear the members on the other side say that was a huge injustice.

If I included the amount of money I paid in property taxes with the amount of income tax I paid in order to make the money to pay those property taxes, I would have paid twice as much in taxes as I paid for the house. Of course we still have the house but it is very decrepit because I cannot afford to do upkeep due to all the taxes I have paid.

I am talking about Bill C-47, a bill that would change some tax rules. What the parliamentary secretary was very careful to keep a secret was that it would also increase taxes. I listened carefully to his entire speech and I do not remember hearing him say that as a result of these changes we will be able to suck out of Canadian taxpayers another quarter of a billion dollars, because that is what it is.

Our estimate is that this measure will result in increased tax revenues to the federal government of around $250 million. That is $250 million that will not be available to homeowners. It will not be available to moms and dads who are trying to provide for their families. It will not be available to good Canadian citizens who would love to give to charity but cannot because after they their tax bills most families hardly have enough money left to allow them to be truly charitable.

As an aside, the Liberals have a flawed reasoning when it comes to their taxation system. They claim they are justified in taxing people and then giving back to others who need it, people who make films, people who build airplanes, people who hire factory workers in Mexico to build buses that go to Kentucky and things like that. Liberals think they are justified in taking money away from all of us because we are inherently a generous people. There is a flaw in that argument.

I grew up in a family where that was practised. I have tried to be generous myself and I have tried to teach my children to be generous and charitable. If the Liberals really believed it and if the socialists really believed it, then they would not need to tax the dickens out of us because as generous people we would in fact help those people in need. We always did that.

I grew up in Saskatchewan in the rough years. Neighbours were always helping one another. It did not matter if it meant half a day of one's time. Sometimes someone would give a neighbour a ride to visit somebody who was ill in the hospital because that neighbour's vehicle did not work. My dad would pick people up and take them to the hospital. Things like that were always done.

Lo and behold, along come the socialists, the Liberals, who do not really think Canadians are generous. They take our money, whether we want to give it or not, and redistribute it. Meanwhile, they manage it in such a way so as to provide enough good slush funds in different areas to get re-elected in those ridings. I find that very offensive and so do most Canadians when they stop to think about it.

One form of taxation is property taxes. This involves taking every year from citizens a portion of what they own. In the business field there is the capital tax. That tax affects businesses, corporations and banks. Every year they have to pay into the public coffers a proportion of their capital inventory. No wonder businesses want to move to Mexico to build buses. No wonder they want to move to Ireland to invest there.

In Canada, businesses pay like crazy through the nose. Even when they buy equipment and once it is owned, they still have to pay the federal government an annual capital tax on it. That tax is in addition to any machinery tax that the provincial government may want. It is in addition to any tax that a municipality may level based on property value.

We have all these taxes that very frankly are a tremendous drain on our economy. They are a tremendous disincentive both to individuals and to businesses. We should be looking at ways to reduce that tax burden. Would it not be wonderful if Canadians could keep 90% of their earnings. If they earned $1 they would get to keep 90¢ of it. That would be great.

Before I got into politics, I was an ordinary person on a professional income. With my two degrees, I worked as an instructor. My wife and I made the decision that she would be a full time mom when our kids were small. We were struggling continuously to balance the budget.

I found it very distressing that I could not make ends meet. One day I figured out why. I earned $10,000 approximately five or six years into my career. The federal and provincial governments took about half of it, which left me with $5,000. We were told that we should put approximately 10% of our earnings away for future retirement.

My wife was not gainfully employed. She did not get paid for her labour although she worked in many instances as hard or harder than I did. She was not able to contribute to any pension plans or anything like that so I put some money away for our retirement. If we take the 10% away it reduces the $5,000 to $4,000.

I have always believed in charitable organizations and charitable contributions. For many years I used the rule of thumb of donating at least 10%. I would do that as an obligation.

It struck me one day that the reason we were having trouble making ends meet was that we were trying to live on 30% of my income. Some 50% was taken by different levels of government and the remaining part was taken through choice. We need to ease the tax burden on Canadians.

I have made allusion to other ways in which governments separate taxpayers from their money. Either they are taxed on a proportion of what they own, taxed on their income, or taxed on what they spend. Incredibly the federal, provincial and municipal governments are in collusion to make sure that all of us are burdened, stooped under a load of excessive taxes. We are taxed at all three locations. They tax us when we earn our money. They make us pay taxes on our properties. Business owners pay capital taxes. Then when we spend money to buy our kids some new clothes, we pay the GST and in most cases a provincial sales tax.

No wonder our families have problems. I read in a book that the greatest stress on marriage is inevitably financial. That is most often what leads to conflict and stress among married couples. With our taxation level and regime it is amazing that any of our families are surviving.

I was elected in 1993. Among other things my mandate was to work for lower taxes, and it still is. I believe very strongly that as individual members of parliament we need to do everything we can to reduce the tax load to leave more of the earnings in the pockets of the people who earned it so they can provide for themselves and their families. That is very important.

I want to say something specifically about the measures before us. I appreciated the speech given by the parliamentary secretary. He did a reasonably good job of going through the details of the bill and outlining its various measures. I will not bother repeating the details but I would like to bring a few issues to our attention.

It is interesting that work is being done to streamline the production of wines and spirits, the work of the vintners and distillers who produce alcoholic beverages. They want to make it more efficient. I have to applaud that. We know that our standard of living is inextricably linked to productivity in our country. Our productivity is greatly held down by all the administrative and regulatory regimes and taxes of the governments. I used the word in plural there because it is true at all three levels.

It is an admirable goal to streamline all these measures and bring them together. Presently there is an Excise Act and the Excise Tax Act. This is the first step, as I understand it, to bring those measures into one act which will be called the Excise Act, 2001. It happens to be 2002 but so be it. That will be its label.

I agree with some of the regulatory measures that are being taken. The parliamentary secretary mentioned the need for distillers to have at their expense government inspectors on site all the time. That is a regulatory expense which possibly should be changed to make us all more efficient.

As for colouring pipes certain colours I think they do this in most chemical operations. In a way producing alcoholic beverages is a chemical operation. I think it is a biochemical operation. We should let them do it if they want to do it, but we should not require by government that their pipes have to be a certain colour. That needs to be fixed. It needs to be modernized by all means.

When it comes to these taxes on alcoholic beverages, wines and tobacco I follow my father's footsteps in one regard. When a tax is levied we have a choice. We can choose not to pay it.

My father and mother taught us that drinking alcoholic beverages was not necessary and had inherent dangers if taken to excess. Neither of my parents ever drank or smoked and for some reason I picked that up as being a pretty smart thing to do.

I sometimes look back now still amazed at how insightful I was as a teenager when many of my friends were succumbing to group pressure. Some of them have since died because of either their addiction to alcohol, in some cases due to accidents caused by alcohol, or due to cancer caused by smoking cigarettes.

I have other problems. However my parents said this was a tax they would not have to pay so they did not bother buying that stuff. They not only saved the expense of the original purchase but also the taxes on it.

My dad did the same when the Mulroney government brought in the much hated GST. It is remarkable that sales tax, the GST, still resonates with people. A couple of weeks ago I saw an ad in the newspaper indicating no GST. The ad could just as easily have said 7% off everything, but they get way more attention because people say they hate the GST and will go to that store on the weekend to buy something if they do not have to pay the GST. I could use a word that would be unparliamentary which I normally do not use anyway, but other people sometimes use it when they talk about the GST.

When the GST came into effect my dad who used to trade in his car every three or four years said that was one tax he would not have to pay. He kept his car. I wonder how much that was replicated across the country when people made a decision not to make a purchase because the tax was a disincentive. We need to recognize that those taxes are a great disincentive.

Throughout our lives my family and I have not really become directly involved in the taxes we are talking about today because we buy neither alcoholic beverages nor cigarettes. However it does apply to many Canadians.

We should be aware of the fact that in this case the government will be increasing the taxes on cigarettes. As I mentioned earlier, the tax measures in the bill are to provide the government with an additional $240 million to $250 million.

Cigarette taxes in Quebec are to go up by $2 per carton, $1.60 in Ontario and $1.50 in the rest of the rest of the country. One may say that it does not seem to be fair and that the government is picking on Quebec. Why is it increasing the taxes in Quebec so much more? It is simply bringing Quebec into line because members will recall that back in 1994 or 1995 there was a big push to try to reduce smuggling. The government of the day decided it would reduce the smuggling of cigarettes by reducing taxes. If it reduced the taxes it would be able to--

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to present Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, for second reading today.

Bill C-47 introduces a modern, legislative and administrative framework for the taxation of spirits, wine and tobacco products under a new Excise Act. This new framework does not address substantive tax rate or base matters for alcohol and tobacco products. Bill C-47 also implements other excise measures, specifically the changes to ships' stores provisions that were announced on September 27, 2001, and the tobacco tax increases announced on November 1, 2001.

Before elaborating on the details of the new Excise Act, I want to take a moment and provide hon. members with some background that will help put these new measures in context. The Excise Act is the foundation of the federal commodity taxation system for alcohol and tobacco products. It imposes excise duties on spirits, beer and tobacco products manufactured in Canada. It includes extensive control provisions relating to the production and the distribution of these products. Duties equivalent to the excise duties on domestically produced goods are levied on imported spirits, beer and tobacco products under the customs tariff. As well, excise taxes are imposed on domestic and imported wine and tobacco products under the Excise Tax Act.

Historically, commodity taxes on specific goods have been an important element of Canada's federal tax system. In the first half of the 1900s they accounted for as much as 25% of federal revenues. While their relative importance has declined in recent years, these levies are still significant. In 2000-01, duties on alcohol and tobacco products raised about $3.4 billion in federal revenues.

Why, then, is this bill needed? Quite simply because the current Excise Act is archaic. It is one of the oldest taxing statutes in Canada, existing in previous configurations before Confederation with parts of the present act flowing from the consolidated inland revenue act enacted in the 1800s. While periodically amendments have dealt with specific issues, the Excise Act has never before been the subject of an indepth review and revision.

Let me provide a few illustrations of the archaic provisions in the existing Excise Act. The existing act allows excise officers to enter premises at any time and break up or remove parts of the premises such as the walls, ceilings and doors. Taxpayers who suffer losses as a result of the actions of excise officers are only entitled to damages of 20¢. Any person found guilty of possessing or selling alcohol in contravention of the Excise Act could face up to 12 months of hard labour.

Licensed producers are prohibited from operating at night without prior authorization from the Canada Customs and Revenue Agency, CCRA, and must comply with the requirement to have an excise officer present at the licensee's expense. Licensees who intend to make any alterations to their premises are required to provide the CCRA with a detailed description of the proposed alterations and, following the completion of the work, with plans of the work. Pipes that are used in a distillery to convey spirits are required to be coloured blue and those used for beer are to be coloured green. Licensed producers are prohibited from erasing any words or figures from their books and records. The only way changes to a licensee's books may be made is by crossing out words or figures with ink in such a way as to ensure that they remain legible.

These are but a few examples of how outdated the current Excise Act is.

In recent years, both industry and government became increasingly aware of the need for a substantive review and modernization of the excise framework. In particular, industry has undertaken significant development with respect to new technology, product marketing and distribution initiatives which the existing Excise Act does not accommodate adequately.

Other factors also pointed to the need for review of the framework. For example, there is now greater foreign competition in the Canadian markets for beverage and non-beverage alcohol. However, the pervasive controls mandated by the Excise Act impose high compliance costs on industry and impair the competitiveness of Canadian producers. The Excise Act also has become increasingly difficult to administer and impedes CCRA's ability to fully adopt modern administrative practices. In addition, there was a need to address recent wine contraband pressures that have arisen in part because wine, which currently is taxed under the Excise Tax Act, has no substantive controls placed over its production and possession.

Finally, there are complexities and inefficiencies to both government and industry because tobacco manufactured in Canada currently is taxed under both the Excise Act and the Excise Tax Act. As a result, the government recognized that a revised excise framework was in everyone's best interests. A modern framework would generate stable and secure revenues and also address contraband pressures. Moreover, this could be achieved without imposing unrealistic or unnecessary costs and administrative burdens on industry participants.

Prompted by the need to update the Excise Act, the Department of Finance and the Canada Customs and Revenue Agency jointly released a discussion paper on the Excise Act review in 1997. This paper outlined a proposal for a revised legislative and administrative federal framework for the taxation of alcohol and tobacco products.

The review was guided by the following three objectives: first, to promote a modern legislative framework for a simpler and more certain administrative system that recognizes current industry practices; second, to facilitate greater efficiency and fairness for all parties, leading to an improved administration and reduced compliance cost; and third, to ensure the continued protection of federal excise revenues.

Building on this discussion paper proposal, the government followed up in 1999 with the release of draft legislation and regulations. Public consultations, an important element in any federal policy initiative of this kind, formed an integral part of the review. With the discussion paper and the draft legislation regulations as a basis, extensive consultations were conducted with affected industry groups and businesses, provincial governments, liquor boards, various federal departments, the Royal Canadian Mounted Police and other enforcement agencies. Refinements were made to the original review proposals with the result that Bill C-47 has been given broad support among the spirits, wine and tobacco sectors, the provincial liquor boards and the law enforcement agencies.

Before discussing the new legislative framework, I should mention that the bill does not address beer, which, with the concurrence of the brewing industry, will remain under the existing Excise Act for the time being.

While time unfortunately precludes me from reviewing all the measures in Bill C-47, I would like to provide the House with a brief overview of some of the key components. Bill C-47 introduces core elements of the framework outlined in the discussion paper issued by the government in 1997, including: maintaining the imposition of duty at the time of production for spirits; the replacement of an excise levy at the time of sale for wine with a production levy at an equivalent rate; the deferral of the payment of duties for spirits and wine to the wholesale level; and the introduction of modern collection tools. At the same time, Bill C-47 helps to address the government's ongoing concern about the smuggling of alcohol.

Let me be more specific. A key element of the framework is the maintenance of the production levy, which as I mentioned, is extended to wine in the bill. The production levy incorporates strict controls on the production, importation, possession and use of non duty paid alcohol and significant penalties for breaking the law.

At the same time the bill removes the current outdated and onerous controls on premises and equipment which have hindered the spirits industry operating under the Excise Act. This means that businesses will now have greater flexibility to organize their commercial affairs to respond more quickly to market changes. Anyone producing or packaging spirits or wine will be required to have a spirits or wine licence.

Although vintners must be licensed under the new framework, the current small manufacturers tax exemption will be maintained for wine produced by very small vintners, especially vintners with sales of wine not exceeding $50,000 in the previous 12 months. As well, individuals who produce wine for their personal use will continue to be exempt from having to be licensed and pay duty.

Bill C-47 also proposes a new warehousing regime for deferring duty on packaged alcohol that will place domestic and imported packaged alcohol on an equal footing. As well it will accommodate the privatization initiatives of some provinces for the warehousing of liquor.

As under the existing Excise Act, comprehensive controls will exist on non-beverage uses of spirits and wine to protect federal excise revenues derived from beverage alcohol. These controls include the licensing or registration of users, the approval of product formulations for which spirits and wine may be used without the payment of duty, and the specification of denaturing standards.

The bill also eliminates the current nominal rates of duty that apply to certain non-beverage uses of spirits, such as spirits used in the manufacture of pharmaceutical goods. These nominal duties are inconsistent and erroneous in application and disadvantage domestic products manufactured with spirits vis-à-vis similar foreign products entering Canada.

While the fundamental controls over non-beverage alcohol remain unchanged from the existing excise framework, Bill C-47 contains new measures on imported industrial alcohol to ensure the integrity of the domestic alcohol market and the production of federal revenues. In particular there will be a requirement for imported denatured industrial alcohol to be sampled and tested to ensure it meets Canadian denaturing standards.

The comprehensive controls on the possession, distribution and use of non duty paid spirits and wine will also significantly improve the offence structure and enforcement function in regard to alcohol.

Finally, fines for alcohol related offences will be substantially increased. Proceeds of crime provisions will now cover serious alcohol offences.

Turning now to some of the tobacco provisions in the bill, the new legislative framework in Bill C-47 merges the current excise duty and excise tax on tobacco products, other than cigars, in a single production levy. This will result in improved administration and reduced compliance costs for the industry.

The new legislative framework incorporates the revised tobacco tax structure introduced in April 2001 and previously enacted, which formed part of the government's comprehensive strategy to reduce tobacco consumption.

My hon. colleagues will recall that the tobacco tax structure now includes: an excise tax on imported manufactured tobacco sold in duty free shops; a customs duty on manufactured tobacco imported by returning residents under the terms of the travellers allowance; and a revised excise tax and duty structure for exported domestic manufactured tobacco.

While the measures in Bill C-47 will provide a more streamlined framework for the taxation of tobacco, I want to assure the House that the fundamental controls over tobacco under the existing excise framework will be maintained. In particular, the current stamping and marketing requirements for tobacco products will continue to apply and will play a key role in the enforcement of tobacco provisions in the bill.

In addition, the legislation incorporates the current offence provisions relating to the illegal production, possession or sale of contraband tobacco which have proven to be effective.

The new excise framework also contains a number of administrative measures that will enable the Canada Customs and Revenue Agency to improve its level of service to clients and its overall administration of the excise framework for alcohol and tobacco products.

These measures, which are consistent with CCRA's integrated accounting initiative, include: a duty remittance and return structure harmonized with commercial accounting periods and the goods and services tax and harmonized sales tax, GST/HST, legislation; new assessment and appeal provisions similar to those under the GST/HST legislation; and a range of modern collection mechanisms, such as certificates of default, garnishment, seizure and the sale of goods and director liability.

In addition, the bill provides for a range of administrative penalties that will be imposed on licensees, registrants and others dealing with excisable goods who fail to comply with particular requirements under the law.

The new legislative framework will ensure that the excise duties on alcohol and tobacco are collected in a more effective and efficient manner. As well, it provides an array of modern administrative and enforcement tools for ensuring compliance with the proposed statute.

In summary, the new legislative and administrative framework for taxation of spirits, wine and tobacco products will provide: a simple and more certain taxation structure; equal treatment for all parties; improved administration and lower compliance costs; greater flexibility for businesses to organize their commercial affairs; and enhanced protection of excise revenues.

In the few remaining minutes, I will briefly discuss three additional measures in Bill C-47.

The first concerns changes to the ships' stores provisions under the customs and excise legislation. As my hon. colleagues know, ships' stores provisions grant relief from duties and taxes for goods used on board ships and aircraft in international service.

These changes, which were announced on September 27, 2001, respond to a recent Federal Court of Appeal decision that ships' stores regulations went beyond the scope of their enabling legislation. Bill C-47 provides the proper legislative authority for these regulations. The changes will take effect on the date the provisions identified by the court were incorporated into the regulations.

A second measure implements a temporary fuel tax rebate program for certain ships that will no longer qualify for ships' stores relief as a result of the proposed amendments to ships' stores regulations effective June 1, 2002.

Ships that would be entitled to this rebate are commercial tugs, ferries and passenger ships travelling on the Great Lakes and the lower St. Lawrence River that are not engaged in international trade. This rebate will apply on fuel purchased between June 1, 2002 and December 31, 2004. It is intended to provide affected operators with adequate time to make the transition to the new ships' stores rules.

The third measure implements the federal tax increases on tobacco products that were announced on November 1, 2001. Like the April 2001 measures I referred to earlier, this tobacco tax increase is part of the government's comprehensive strategy to improve the health of Canadians by discouraging tobacco consumption.

These increases re-establish a uniform federal tax rate for cigarettes across the country and amount to $2 per carton of cigarettes for sale in Quebec, $1.60 in Ontario and $1.50 in the rest of Canada. The increases are co-ordinated with provincial tobacco tax increases.

The government has always said that it would continue to work toward restoring tobacco taxes to pre-1994 levels as quickly as possible. The measures in Bill C-47 are one more step in the process of restoring tobacco tax rates in ways that will minimize the risk of renewed contraband activity.

In closing, let me say that the three elements of the bill all deserve to be passed without delay. It makes sense to implement a new Excise Act for addressing a longstanding need of both industry and government to rationalize the ships' stores provisions and to approve the tobacco tax increases for reducing tobacco consumption.

I urge all hon. members to support the passage of the legislation without delay.

[Stéphane Dion, Liberal, for the Minister of National Revenue]

moved that Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, be read the second time and referred to a committee.

Business of the House

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am very pleased to respond in the affirmative. The government's agenda is of course a fruitful one.

This afternoon, we will continue with report stage of the species at risk legislation, Bill C-5.

Tomorrow, we will return to debate on Bill C-50 respecting the WTO. If this is concluded, we will call Bill C-47, the excise amendments.

The two weeks following this one constitute the Easter adjournment. When we return on April 8 we will resume debate on criminal code amendments, Bill C-15B, and commence consideration of the pest control legislation that the Minister of Health has introduced today.

In addition there is a very lengthy agenda of important business for Canadians. I look forward to the ample co-operation of all members of the House of Commons to move forward in an expeditious manner.

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, tomorrow, we will conclude the third reading stage of Bill C-49, the Budget Implementation Act, 2001.

Monday and Tuesday shall be allotted days.

Next Wednesday we will consider report stage of Bill C-15, certain amendments to the criminal code. On Thursday, March 21, I expect to return to report stage of Bill C-5, the species at risk legislation or perhaps other unfinished business. On Friday, March 23, we will again consider Bill C-50 respecting the WTO followed by Bill C-47, the excise tax amendments.

With respect to the specific legislation that the House leader for the official opposition has referred to I will pursue that matter with the solicitor general to determine what plans he may have.

Reproductive Technologies

[Rob Merrifield, Canadian Alliance, Yellowhead, AB]

Mr. Speaker, recent developments underscore the urgent need for reproductive technologies legislation.

Two weeks ago a Kentucky fertility specialist pledged to clone a human being. His team was to begin this work last week outside the United States, in an undisclosed country. He says he has 10 couples willing to participate. If he were to bring this experiment to Canada, there would be no law to stop him.

In January we learned that Industry Canada has been issuing patents on human genes for years. The health committee was under the impression this was not happening and recommended against gene patenting.

Last week in the health committee the minister pledged to introduce legislation by May 10. We hope that she will keep her word. We hope that such legislation will not be introduced only to die with the prorogation of this House. We have seen that game before, with Bill C-47.

Canadians are waiting.

Excise Act, 2001

[Pierre Pettigrew, Liberal, for the Minister of National Revenue]

moved for leave to introduce Bill C-47, an act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores.

(Motions deemed adopted, bill read the first time and printed)

Science and Technology

[Rob Merrifield, Canadian Alliance, Yellowhead, AB]

Mr. Speaker, the cloning of a human embryo in the United States only highlights the lack of legislation in Canada. The government has been dragging its feet on this issue since the royal commission in 1993. It allowed Bill C-47 to die on the order paper. What do we get in the current legislation? More delay.

Will the minister commit today to an immediate ban on human cloning?