Bill C-28 (Historical)

Budget Implementation Act, 2003

An Act to implement certain provisions of the budget tabled in Parliament on February 18, 2003

Budget Implementation Act, 2003

[Cheryl Gallant, Canadian Alliance, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, it gives me great pleasure to rise and speak to Bill C-28, the budget implementation act. This debate allows for the official opposition to voice its concerns in our critical roles as protectors of the public interest.

As the member of Parliament for the great riding of Renfrew—Nipissing—Pembroke in the province of Ontario, my voice and that of the member for Lanark—Carleton adds legitimacy to this debate. Too often the Liberal backbench MPs are expected to be cheerleaders for government legislation when the need for sober second thought is required before legislation reaches the other place.

I was shocked by the comments from the Solicitor General, the member for Malpeque, when responding to a question from the member for Yorkton—Melville over his enthusiastic support for the gun registry, from when he was a backbench MP and condemned Bill C-68. This is a clear example of the muzzling of government MPs and how the members of the official opposition are able to truly represent constituents in debate.

It is my intention to focus my comments on part 8 of the legislation where changes are planned for the GST. It is ironic that here we have a government that campaigned, and there are some who believe was elected, on the promise to eliminate the GST. The Prime Minister and his party were very clear in that election. “Just elect us and we will eliminate the GST”, the Liberals promised. Once elected, just like so many other election promises, like the one where there would be an independent ethics commissioner, it was quickly discarded.

In the case of the former finance minister, the GST became his tax and he greedily sought out ways to increase the take. I am surprised the heritage minister has not reminded the former finance minister that she resigned over the issue. At least the heritage minister understood the promise, which is more than anyone can say about her colleagues in the party.

Canadians, therefore, are not surprised that the federal government is back at the trough looking for new ways to increase the take from the GST. The decision to grant only a partial GST exemption of 68% to school boards for the supply of transportation services has meant that school boards have had to pay millions of dollars in GST payments to the federal government instead of applying the funds to important educational requirements.

In the case of the Renfrew County District School Board it has meant a loss of over $700,000 from the school transportation budget. As a consequence, the school board has been placed in the unfortunate situation of having to run a deficit in the amount allowed for safe transport of its students to school. This has meant the school board has had to look at making cuts to that budget to pay for the GST.

As there is a legal requirement to get children to school safely, the Renfrew County District School Board made the difficult decision to eliminate crossing guards to overcome the deficit in the school transportation budget. The amount of the GST claimed, which is not returned to the school board, is slightly more than the cost to provide crossing guards at dangerous intersections.

The following letter was sent to me from a concerned parent in Renfrew, though I can assure the House the concerns expressed in this letter have been repeated to me from across the county. It states:

I write to you for help.

I am a parent of three little guys that walk to school. I push them out the door to head to school so I can get to my job on time.

I do this because I know they have only one street to cross and most importantly there is an adult waiting to make sure they make it across unharmed.

I attended a school council meeting at my children's school this week and was appalled to learn that the treasurer of the school board could sit there and tell the roomful of parents that they are running such a deficit with the high cost of busing children all over this large county, ...and have decided to stop funding adult crossing guards.

So you can imagine how vulnerable we feel as parents of small children with the board saying anything we do will fall on deaf ears.

As our member of Parliament, I beseech you to help us--we need a voice to be heard...soon it will seem education is a privilege and not a right...surely the safety of our children should be first.

I wonder what the legal ramifications would be if a child dies.

Please be our voice.

That letter was from Sherry in Renfrew.

It is not only the Renfrew county district school board that is being penalized by the GST. The Renfrew county Catholic district school board is out almost $450,000 in GST to the federal government.

When the federal government started to collect the GST for school transportation costs it was taken to court and it lost. Now in order to get around the rulings of the court, this budget legislation is introducing retroactive law to overturn a decision of the courts that ruled in favour of the school boards. It is bad enough that the government has become such a strong supporter of the GST, a tax it said it would eliminate, and now it is resorting to retroactive tax legislation to make sure it squeezes as much GST from taxpayers as possible.

As a result of the original 29 school boards from the province of Quebec that made the initial decision to challenge the federal government over its decision to collect GST on school transportation, many more school boards have received favourable judgments. Bill C-28 will overturn these decisions by bringing in a retroactive amendment to tax legislation.

We cannot plan for the past. In addition to the Renfrew county public and separate school boards, Avon Maitland school board, Hamilton--Wentworth school board, Timmins district public and separate school boards, now the district school board of Ontario North-East and the Conseil scolaire de district catholique Grandes-Rivières, Haliburton county and Muskoka district school boards, the now Trillium Lakelands district school board, Simcoe--Muskoka Catholic district school board, Superior--Greenstone district school board, Limestone district school board, Upper Canada district school board, Upper Grand district school board, Kawartha Pine Ridge district school board, Grand Erie district school board and the Thunder Bay Catholic district school board have all had judgments rendered in their favour.

The following boards are waiting for consents to judgments on recovering the GST: Bluewater, Grand Erie, Greater Essex, Kawartha Pine Ridge, Near North, Niagara, Rainbow, Thames Valley, Trillium Lakelands and Toronto district school boards.

The total amount represents $11.675 million for school boards in the province of Ontario alone. School boards in the province of Quebec are owed $8.032 million.

By identifying the school boards from across the province of Ontario that are opposed to this measure in the federal budget, I hope the Liberal Party will understand just how unfair and unpopular this decision is.

In closing, I acknowledge the contribution of my colleagues in the official opposition and thank the House for this opportunity to speak on behalf of the people of Ontario.

[Geoff Regan, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to rise in debate on Bill C-28, the budget implementation act, and to have the opportunity to speak about some elements of the budget that I was unable to discuss in my first opportunity to talk about the budget after it was tabled.

One area of this budget which is very important for the country is the increase to the national child benefit supplement of the Canada child tax credit of $965, an increase of nearly $1 billion. This will be in place by 2007 and will bring the maximum annual benefit for a first child, through the Canada child tax benefit, to $3,243. This is a very important measure. We have come a long way to get to this point.

I recall back in the years between 1993 and 1995, leading up to the 1995 budget, when I was part of a working group in our caucus on child poverty that advanced the issue of finding new measures to combat child poverty. It was led by the member who is now the Secretary of State for Central and Eastern Europe and Middle East. He did an outstanding job of chairing that committee and leading our work toward a measure in the 1995 budget.

Of course we remember that the 1994 budget was a difficult budget. Cuts had to be made to get the accounts of the country in balance. We knew the next budget would also be difficult because more measures were needed. However we felt it was very important that the government take action to try to combat child poverty. Because it was a matter of federal jurisdiction, we focused on the working income supplement that went to low income working families. As I said, because the federal government had jurisdiction in the area of work, it meant the federal government could make an impact particularly with modest and low income families with children. To see that then change and become the national child benefit as part of the Canada child tax credit was gratifying.

We have seen that development over the past number of years. We saw it come into effect in the 1995 budget, and there have been changes since then. We have seen the increases year after year to that. As I said a moment ago, for a first child in a low income family, the parents now receive over $3,000 and lesser amounts for each child after that. Those are absolutely vital measures to help people get out of poverty, to help low income families and poor children in Canada face the difficulties we see today.

I know members on all sides are concerned about this issue and are concerned that we continue to work on the issue of child poverty across Canada. They would also want to recognize the good work that has been done in creating the national child benefit and increasing it year after year. No doubt that is important.

I am glad my hon. colleague across the way is talking about the clawback because I think it is unfortunate that the provinces have decided to do that in some cases. I am glad we have now reached a point where, with the latest increases, we will see an amount that they will be unable to claw back.

I have always been disappointed that the provinces would want to take the money we have given low income families and poor children, claw it back and use it in other areas. To me that is the wrong way to go. We need to see them move more in the way of allowing these families to access the money and keep it to put bread on the table, to clothe their kids properly and to provide what they need to succeed in our society.

Another measure that I thought was important in the budget was the $935 million over five years to help provinces, territories and first nations provide greater access to quality child care and early learning opportunities. We have heard a lot about the importance of getting kids off to a good head start in those early years, between birth and five years of age.

As I look at my NDP colleagues across the way, it reminds me of the fact that I was defeated in 1997. The funny thing is there was a silver lining to that for me. At the time I did not see it. I had a son who was born in 1996. When I was defeated, he was about eight months old. It meant that in the ensuing number of formative years, between one and five, I could be there much more because I was not in the House.

I am not looking forward to any more of those silver linings for a while. I am not anxious to look for those kind of clouds of silver lining, and neither is my son I am sure. However the point is we all recognize the importance to young children of getting a good start in life, of getting a chance to have an early education and a boost in education. That is why it is so important that this money go to where it is needed and for that purpose, and included of course in this is money for first nations.

We know the grave challenges in many first nations communities. I think particularly of the issues in Manitoba where the first nations population is growing dramatically and is becoming a much greater percentage of the population of Manitoba. They are facing grave challenges as young people are looking for opportunities and often not finding them. Funding education for those young people to help them have a good chance and a good start in life is absolutely vital and could not be better placed.

The budget also contains a new child disability benefit, with funding of $50 million per year. This is a brand new initiative and one I think that was applauded by members from all sides of the House. As I recall, it was recognized as a very important measure and one of great value for children with disabilities who really needed assistance. This will provide up to $1,600 per year to low and modest income families with a disabled child.

We can all imagine what it is like for a family who is trying to help a disabled child get ready for life, to help that child grow and to nurture that child. Families are faced with economic costs such as having to pay for maybe a lift in their house, or a wheelchair or many of the other costs. It makes good sense, as we try to ensure our society includes all these people, to have this tax credit for those children with disabilities, to help them take part in our society in a very full way, which is so important I think to all of us.

Another important area is homelessness. It is a concern across the country. I know it is a concern in my city of Halifax. It is a concern certainly in Toronto and in many other places. As members know, the government is working to combat homelessness in Canada's cities with an investment of $135 million each year, for three years. That is not peanuts. This important money will do important work.

As well, the government will address the housing issue, with $320 million over five years to enhance existing affordable housing agreements with the provinces and territories. This is not just to provide new funding, it is additional funding.

It is important to enhance those agreements. We will recall that the responsibility for housing was transferred to the provinces a few years ago. This is an important addition to help the provinces carry that load. I know it is important for my province, with its enormous debt. Unfortunately, the debt is growing still because the provincial government of Nova Scotia has not stopped the growth of it. It talks about having a balanced budget. Unfortunately I cannot see how it can call it balanced if it adds to the debt every year, as it has for the past four years, and I do not see when that will stop.

An area for me which has been important is cities and urban infrastructure. I was pleased the budget included an announcement of $3 billion more for urban infrastructure over the next 10 years. I hope we will see in future budgets significant additional dollars going to that cause.

My riding is probably the fastest growing area east of Ottawa and east of Montreal, although until recently Montreal has not grown that fast. However Halifax West has tremendous growth and we are facing lots of challenges because of that. I am pleased to see money going into that, into environmental matters and into other important measures.

I see my time has come to an end, and I appreciate the opportunity to rise in this debate.

[Robert Lanctôt, Bloc, Châteauguay, QC]

Mr. Speaker, as you see, all things come to those who wait. I am pleased to speak today, albeit a little later than I expected, to share my opinion on Bill C-28, on implementation of certain provisions in the budget.

I could summarize my speech by saying that the federal government has a lot of money at its disposal, compared to what it needs. That is shocking, but also and particularly, unacceptable. Financially, the federal government has a lot of room to maneuver; $18.2 billion over two years, according to the present Minister of Finance, and $25.8 billion over two years, according to our calculations.

What is more, despite the fact that there is an 11% rise in expenditures, which is enormous, the Bloc Quebecois is of the opinion that the federal Liberal government is going to have a surplus of $14.7 over the next two years. This clearly illustrates the extent of the fiscal imbalance and clearly points to what I have already said in my summary.

I could also summarize what I have to say as this: the federal government is responding more to the needs of a Prime Minister in waiting than to the true needs of the public. It is doing nothing to correct fiscal imbalance, nothing to help the victims of the softwood lumber crisis, nothing to put an end to the pillaging of the EI fund.

The regions, which are dependent on the softwood lumber industry, the self-employed workers, whose existence is not recognized by the federal government, the aboriginal people, the unemployed, the workers paying EI premiums, are all part of the great forgotten as far as this budget is concerned. Middle-income taxpayers are totally forgotten as well.

Unions and employers are frustrated by the diversion of the EI fund, and are demanding an independent fund to stop the federal government from pillaging it, as well as for the contribution rate to be set by the contributors. This, of course, is what the Bloc Quebecois has been demanding for years now. We had even hoped that the federal government would create a stand-alone fund before the former finance minster becomes the future Prime Minister.

In addition to failing to create a stand-alone employment insurance fund, the budget announced a delay of nearly two years in the implementation of a new mechanism for calculating premium rates. However, employment insurance could generate a $3 billion surplus over the next fiscal year, according to our estimates, while the current Minister of Finance is promising, in the future, to strike a balance between employment insurance premiums and program expenditures. What a balance: $3 billion.

With regard to infrastructure projects, we had asked that the appropriate funds be released so essential projects could get underway in Quebec. We had asked for substantial long-term commitments. However the increase in infrastructure expenditures is insufficient, and the government is delaying in allocating the needed funds. I will repeat here that the federal budget meets the needs of an outgoing Prime Minister and a future Prime Minister better than the real needs of the people.

The budget provides for additional investments of $3 billion over 10 years. These investments have resulted in an additional $2 billion for the strategic infrastructure fund. This fund is increasing from $2 billion to $4 billion. Although we demanded massive investments in infrastructure, only $100 million, of the additional $3 billion announced in this budget, has been allocated in fiscal 2003-04. This nowhere near meets the needs.

This amount is clearly inadequate, given all the needs. We might have expected, at the very least, that a fair part of this investment, or $300 million, would be allocated in fiscal 2004-05. However, after the next two fiscal years, only $250 million of the $3 billion will be provided. This is disappointing, but I said this at the beginning of my speech: the federal government has a lot of money at its disposal, compared to what it needs. The simple conclusion is, therefore, that the federal Liberal government is not taking infrastructure needs seriously.

We have indicated that the Government of Quebec must remain in charge of the projects and allocating funds. However, the budget indicates the projects related to climate change will be eligible for funding through these infrastructure initiatives. Yet, it is very clear from the funding criteria for the Canadian strategic infrastructure fund that it is the Government of Quebec or the provincial and territorial governments that are responsible. Let us hope that the fund, bolstered by an additional $2 billion, will continue to operate in this way.

Another disturbing fact is that the budget mentions that $1 billion will go to municipal infrastructure. It is important to note that the federal government cannot provide money directly to municipalities. The Government of Canada must keep in mind that it must deal with the Government of Quebec, and not municipalities. Obviously, in counting on this $1 billion, Quebec will be able to better plan and coordinate spending on its own.

Even the Coalition pour le renouvellement des infrastructures du Québec was disappointed by this budget. According to the coalition:

It is unfortunate to note that, despite the intentions laid out in the Speech from the Throne, the priority given to repairing our infrastructure for roads, sewers and water is dangerously low. What is the point of investing in health if we are going to have less and less confidence in the drinking water infrastructure and roads? We are putting off repairs to basic infrastructure and what is worse, we are compromising quality of life for citizens and competitivity for business.

It is also important to mention the reaction from the office of the mayor of Montreal and the executive committee of the City of Montreal, which feel that the 2003 budget brought down by the government is disappointing. The chair of the executive committee said that the Liberal federal government's proposal was clearly insufficient, considering the needs of the City of Montreal to renew its infrastructure. The same is true for all municipalities in Quebec.

Once again, I submit that the federal government has a lot of money at its disposal, compared ito its needs. The Bloc Quebecois is not the only one to say so, it is being said by many stakeholders every day.

Another cause for concern is that there is no mention in the budget of any form of assistance for self-employed workers. From day one, they have been the forgotten ones in connection with the EI fund, since they are uninsurable under the act. Yet self-employed workers account for 16% of the active labour force. The Liberal federal government should have taken advantage of this budget to establish a framework to extend the application of the EI system, with respect to both regular and special benefits, to self-employed workers. Once again, this clearly shows that the objectives of this budget do not reflect the needs of the people of Quebec and Canada.

We must not forget the latest health negotiations. An agreement was reached whereby $800 million was transferred to Quebec. After this amount was reinvested by the previous PQ government, the media, hospitals, and the health care community in general, are already reporting noticeable improvement with this $800 million received. This amount is only about half the $2 billion originally requested. Now imagine what could have been done with $2 billion, as confirmed by the report on health care; it would not be so difficult to make ends meet and Quebeckers and Canadians would have the kind of health care system they need.

It is wrong to blame the problem on a government, be it in Quebec or elsewhere.

There are huge surpluses which contribute to the fiscal imbalance. All the provinces in Canada agree on this, starting with Quebec, which is spearheading the demonstration that a fiscal imbalance exists, and all the provinces agree with the Séguin report. Moreover, every opposition party in this House also agrees.

In addition, I am convinced that many on the government side are aware of the existence of a fiscal imbalance. But we know how it is: the executive claims that there is no such thing, and everyone remains silent. These were my comments.

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

Mr. Speaker, I certainly did not want to jump ahead of one of my colleagues from the opposite side who I know have been following this legislation very closely and who I think have been contributing mightily to this debate.

I did want to involve myself on two points, Mr. Speaker, first and foremost, Motions Nos. 14 and 15 that deal with the disability tax credit. What the government was trying to do by sections 74 and 75 of the act was to clarify the eligibility for the disability tax credit in the context of individuals being able to feed and clothe themselves.

One of the things that was very noticeable when the government moved on restricting access to the disability tax credit was that quite a few people came into my constituency office and reacted negatively to it. There are two categories of these individuals. The first is that category of individuals who I could see really were unfairly affected by the tightening down of the definition of what constitutes eligibility for the disability tax credit.

For example, I remember vividly one lady who came into my office. She was arthritic and quite crippled. Her hands were completely twisted around. She had a lot of difficulty just moving, but this was an individual who had tremendous joie de vivre. She did not let this crippling illness prevent her from doing as much as she possibly could, but because she was perceived by the bureaucracy as being mobile and able to move around, she was declared ineligible for the disability tax credit. The reality was that because of the very twisted condition of her hands in particular, she genuinely had a real difficulty in feeding herself and she had to have assistance. So it was very important for her to be brought under the disability tax credit even though in every other sense she was mobile in society, or as mobile as she could be.

On the other hand, there were people who came in and complained that they were eliminated from the disability tax credit because they had a food allergy. This food allergy caused them to spend all kinds of time searching for the right foods, as a matter of fact, so much time that they could not effectively work or hold down a job and this kind of thing. Not wanting to categorize all of those people, there was a reality. One gets this sense when one is a member of Parliament in one's constituency office and deals with a lot of people. There was a sense that this category of individual was willing to surrender to their disability rather than fight it.

In comparison to the lady with the severe arthritis, these people seemed to be, to all appearances, very capable of moving about and contributing to society and contributing to their own care and looking after themselves. But there was a Federal Court ruling pertaining to the disability tax credit which basically suggested that people who spend an inordinate amount of time trying to look for the foods that they need in order to satisfy their allergies should be brought under the disability tax credit.

The government, in amending the legislation we see before us now in clauses 74 and 75, attempts to distinguish between these two realities, one a disability that genuinely does make it impossible to feed and dress oneself. I can assure members that it is very difficult, and I know this from experience, to do the most elementary things when one's hands are crippled.

Just briefly as an aside, I should say that I have some passing knowledge of this because on my 21st birthday my friend and I jumped the neighbour's hedge and I came down on my hands on a concrete sidewalk. While neither of my hands were fractured, all the ligaments on either side were strained. For about six weeks I could not use either hand, so I can sympathize with people who might have severe arthritis about how this makes it very difficult to do simplest things like feeding and dressing oneself.

While the original amendments in this section make this distinction, and they are good amendments, unfortunately the motions that are proposed would scrap both clauses 74 and 75 eliminating, in my view, this very necessary distinction between being physically crippled to do something that is essential and being what I suppose one could call emotionally disadvantaged or even emotionally crippled. Sometimes it is not wise to use the government's ability to assist people financially to address issues that are basically emotional. Sometimes it is better if these people delve into their own resources to find their own ways of dealing with these emotional disabilities.

I will leave that for a moment and take advantage of the few minutes that I have to comment on something else in the bill which I have not had an opportunity to comment on before. That is the introduction in this legislation of a first nations goods and services tax.

It is ironic because of course the goods and services tax is one of the most hated taxes in Canada. Although it is not being debated very much these days, I guess after almost 12 years in which it has been in place, people have given up on it and it is no longer the source of negative comment that it once was. However it is a very important method of raising revenue for the federal government.

Bill C-28 brings the goods and services tax into native self-government. It is a very positive step in that the government has been attempting, as a matter of policy, over the past five or six years, to bring in aboriginal self-government and make aboriginal communities as independent as possible. One of the ways to do that is rather than aboriginal governments, Indian governments and band councils being totally reliant on money coming from the federal government, they should be able to raise money by themselves within their own communities. This legislation introduces the ability among first nations to raise money through a goods and services tax within their own communities.

What is so relevant and so timely about that is the government has before Parliament, as we speak, a complementary bill called Bill C-7, which brings in self-government, provisions of transparency, accountability and standards of governance to some 600 Indian bands and communities across the nation. This legislation has been somewhat controversial because I realize some of the opposition parties are opposed to it. However most of the country, most aboriginals and anyone who has any familiarity with the problems that exist on our Indian reserves will appreciate this is extremely important legislation.

I point out that if one is to enable Indian bands and communities to raise money on their own, one has to have a coherent scheme of transparency, accountability and standards of governance in those band councils. It is all part of a package, Bill C-28 and Bill C-7. These are two very positive things on the part of this government.

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

Mr. Speaker, it is a pleasure to rise and speak to the report stage of Bill C-28, the budget implementation act. I have had the opportunity to speak to this budget bill over the last few stages as it has been going through the House. Today we are dealing with a few motions, Motions Nos. 13, 14, 15, 17, 18 and 19, and I will try to do my best to address them as I continue with my speech, but I want to try to address a few of the things I talked about just quickly in the previous stages and how this particular budget has failed Canadians.

We hear over and over again from the government that it has reduced taxes. In some areas I will have to admit it has, but overall personal taxes for Canadians are still far too high and they leave us out of the loop when it comes to being able to compete effectively, let alone leaving more money in the hands of Canadians at the end of the day. That is something more and more Canadians are getting frustrated about, especially when they see the amount of personal taxes they pay on their paycheques. It is still something that they really would like to see the government move on.

Because personal taxes are too high, let us look at certain areas where the government could have done more to help Canadians directly. The government could have looked, as we proposed, at reducing the GST. It is a tax that the government actually said it would kill, abolish and scrap before it came to power. Now it seems that the Liberals have not met a tax they do not like, because they surely have not done that. Reducing it would have been great. It would have helped Canadians, even in light of the fact that we have had rampant problems with GST fraud. We have dealt with that in the House and talked about it. We know that Canadians would like to see some of that money left in their own pockets, not the government's.

In the area of payroll taxes, the government has said that it has reduced its overall payroll taxes. Even though we have seen some reductions in EI, unfortunately those reductions have been completely offset by the increases in CPP. At the end of the day Canadians are finding that payroll taxes tend to kill jobs. At a time when we need to support the economy and do more to stimulate growth, clearly payroll taxes would be an area in which we could reduce the overall cost to businesses and employers.

We know that at the end of the day there is a huge surplus in the EI fund. It would have been great to have been able to leave some of that money in the hands of the workers who deserve to keep that money, and not, unfortunately, spend it on programs where the government has thrown it away, like the gun registry, sponsorship, and a number of other things where there has just been a complete management bungling on the other side of the House.

Also we have heard it proposed that RRSP limits be increased, although not as high as we would have liked. In the finance committee the suggestion was to raise it to $19,000 but in fact the government over the course of the next four or five years is slowly going to be raising it to $18,000. Clearly that is something we need to address in the future. It is unfortunate that the government has not done more for Canadians to be able to address that.

The last time I addressed the budget, I talked a little about the customs agents, about the problems that have affected some of our customs agents and officers and the challenges they are facing on a daily basis. I know that the minister disagrees with me and we often get into heated debate, but she has not treated customs agents the way that they deserve to be treated. It is almost shameful. We have had comments in this place where the minister actually has referred to them, and I know she denies this, as bank tellers; she has done that in the past. She has even said that if they were armed there would be 3,000 accidents waiting to happen. She has used that here in this place and she has even gone so far as to refer to me as Charlton Heston.

I do not mind being compared to Moses, and quite frankly, sometimes when I look across the aisle I do think we live in the world of Planet of the Apes , but her slurs continue. It is unfortunate that she does not step up to the plate, try to take care of the problems at customs and resource those customs agents the way they deserve to be resourced given the fantastic job they are going and being stretched to the limit.

I talked about that in great detail the last time so I will not go back down that road right now, but we still have problems at customs. We have not dealt with the 40% of border crossings that still do not have the proper resources for computers and that are unable to stop and detain people entering Canada who may be dangerous, and obviously there is the issue of firearms, with which we know the minister does not agree at all.

Today we are dealing with Motion No. 13, the issue of GST on school buses, Motions Nos. 14 and 15 that deal with the disability tax credit issue and Motions Nos. 17 and 19 that deal with some overall tax changes. I wanted to talk a little about the GST on school buses issue, especially seeing that Motion No. 13 calls for Bill C-28 to be amended by deleting clause 64. We are going to be taking a position against the motion, but I wanted to talk about this particular issue seeing that we had to deal with it most recently in committee. Some of my colleagues in the House today will remember that.

We on this side of the House are concerned about this. Obviously we do not want to have a bias against contracting out to private services, especially if it means more efficiency, especially if it helps school boards to transport and do a better job for the students using the services, but obviously we need a system that works when it comes to the GST rebate system for public service bodies such as school boards.

The courts cannot decide Canadian tax policy. We should get that straight. That is the prerogative of the government and the House of Commons. Unfortunately we are seeing more and more that the government defers to the courts when it should actually be dealing with the issues right here and we should be making changing to the tax codes in the House rather than tying up the courts in determining what in fact should be fair and what should not be.

As I said, the issue came up in committee. The amendment to the Excise Tax Act is basically an amendment that would clarify the amount of GST input rebate that school boards would be entitled to with respect to school transportation. The amendment was made in response to a 2001 Federal Court of Appeal decision that school boards or provincial governments that contracted out school bus services to private companies were entitled to a 100% rebate of their GST costs rather than the 68% they are entitled to under the legislation.

The purpose of the 68% GST rebate is to match the tax rate under the old manufacturers' sales tax. The federal amendment in Bill C-28 would ensure that a school authority's supply of transport to and from school for students is exempt regardless of how the supply may be funded or provided. This is a prudent move. If we had left the court decision to stand, it unfortunately would have discriminated against school boards that supply their own student transportation rather than contracting out and would have opened the floodgates for other public service bodies to claim 100% rebate on the GST they spend. There could be an unfortunate snowballing effect and that was raised at the committee.

Exempt supplies are supplies on which there is no liability for the GST and therefore the tax is not charged to the end user or collected from the supplier. However, the tax on the portion of a public service body's total expenses used in exempt activities would qualify for a partial GST rebate. There are different percentages that vary depending on the services that are being provided. I know that for hospitals it is 83%, for schools, as was mentioned, it is 68%, municipalities 57%, and the list goes on. There are different levels. We know that municipalities are currently trying to win in getting that 100% rebate on their GST as well. We know that there have been huge costs associated with municipalities even when it comes to their transportation systems. I know that in the end the Toronto Transit Commission pays, even after the rebate, close to $50 million in GST, I think, since the amalgamation in 1998.

These are the kinds of things the government could do more in trying to help, especially for the challenges the municipalities are facing when it comes to infrastructure. We have seen such a drop in investment on that side of things. If they can actually claim back these rebates and reuse them, then I think there is no doubt it would help deal with some of the challenges municipalities have.

On the other amendments, I will say quickly that I believe we will be opposing almost all of them that we are debating even though there are positive merits in some of them, such as specifically the motion trying to ease the definition of the disability tax credit from feeding and dressing to feeding or dressing. We do support a portion of that, but ultimately there still are concerns about how much that would open up and what sort of negative effect it could have.

To wind up, I want to mention the issue of capital tax. The government has moved on this particular issue and will be reducing capital tax. We on this side of the House have always believed that if more money is left in the hands of the economy it will do more good. We would like to be able to eliminate the capital tax completely. That would give support to a lot of businesses and people who invest and get the economy going. I think it has been proven that in the long run governments actually benefit from that because more economic activity results in more government revenue. That is something we wish the government would have moved on also; we know that it is reducing this over a five year period, but it would have been great to see that reduction right now, helping businesses, individuals and society to be more productive.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the report stage debate on Bill C-28, the budget implementation act.

When I was elected in 1993, Canadians were faced with a fiscal house that was not in order. Canadians will remember that there was a $42 billion deficit for that fiscal year during which the government took office. One can imagine how difficult it was for the government to implement new programs and provide for the needs of Canadians at a time when it was dealing with such a large deficit. The thing that makes me most proud as a member of Parliament and a member of the government is that we were able to get our fiscal house in order and work toward bringing forward a budget, as was the case just recently.

The government presented a balanced budget for this year, the sixth consecutive balanced budget, and for the next two fiscal years as well. Canadians will be very comforted by that fact. The budget would restore the full annual contingency reserve and economic prudence factors which have been part of our budgeting process since the government took office.

The government recognizes the critical link between social and economic policy. I remember the finance minister of the day appearing before the finance committee in which he made a statement which stuck with me for some time. He said that good fiscal policy makes good social policy, and good social policy makes good fiscal policy. There is an important relationship there which we must continue to strive for.

However, governments must also understand that they cannot be all things to all people at all times. Governing is about making choices. It is about making sure that the significant priorities of the day are addressed first. I have often wondered whether governments could ever be totally popular throughout the country if they simply dealt with the significant priorities to the exclusion of others which might be important. For example, for years I have advocated an additional investment in public education regarding health matters such as fetal alcohol syndrome. We have done some work there. I wish we could do more, but I understand that when there are limited resources and the priorities of Canadians have been made known, it is important that we proceed with those because it is in the best interests of all Canadians.

This budget plays a critical role in building a Canada that Canadians want. It does so according to three themes. The government recognizes the critical link between social and economic policy and continues its balanced approach to managing our finances.

This approach plays a critical role in building the Canada that we all want. First, by building a society Canadians value through investments in individual Canadians, their families and communities. Second, by building an economy that Canadians need by promoting productivity and innovation while staying fiscally prudent, which Canadians have also asked for. Finally, achieving the objectives of the budget by building the accountability that Canadians deserve by making government spending a more transparent and accountable process.

There are many provisions in the budget that I would like to comment on. The government recognizes that skills development and lifelong learning are critical to the country's economic prosperity. Between 1993 and 2001 the Canada student loans program assisted more than one and a half million full and part time students, an investment of approximately $11.4 billion. In the 2000-2001 fiscal year the Canada student loans program provided $1.57 billion in full and part time student loans at an average of $4,554 per full time student.

The $60 million measures in the 2003 budget are expected to be implemented by August of this year. They include, first, putting more money in the hands of students by allowing them to keep a greater share of their income earned during their studies. The exemptions for income earned while in school would be increased to $1,700 annually, being a maximum of $50 a week, from the previous level of only $600 annually.

Second, extending access to interest relief, debt reduction and repayment measures would help student borrowers experiencing hardship in their repayments. As a result of these measures, borrowers in difficult financial circumstances could have their student loan debt reduced by up to $20,000 over three years.

I know how expensive it is for post-secondary education. I have three children. One has completed university, one is just finishing a master's program and the other one is in the middle of university studies. It is very important to understand that these programs do not necessarily give assistance to those whose family income is above certain levels. Those students will not qualify for student loans. However it is important that every person who wants to go to post-secondary and who has the ability to go to post-secondary should be there. The proof is clear: post-secondary education is an imperative, not an option for all those who have the ability.

I will complete my time by making a couple of comments with regard to health. Health and the well-being of Canadians has been the number one priority of Canadians. They have made that very clear. I think it is important for us to recollect that budget 2003 confirms $34.8 billion in increased funding over five years to meet the goals outlined in the health accord. Bill C-28 would implement these measures.

First, in terms of increased support through transfers, the budget builds on the significant federal support for health care already provided to the provinces and territories through the Canada health and social transfer.

Following the September 2000 agreements on health and early childhood development, the federal government provided provinces and territories with a predictable and growing five year funding framework to 2005-06 through the CHST. This established funding will be further increased by $1.8 billion and extended for an additional two years. As a result, the total yearly cash transfers to the provinces will rise to $21.6 billion in 2006-07 and $22.2 billion in 2007-08. Let me again emphasize that this is over $22 billion for that one year.

An immediate $2.5 billion supplement to the CHST will help relieve existing pressures on our health care system. This funding will be on a per capita basis to the provinces and territories to give them the flexibility that they require.

However the sustained renewal of Canada's health care system needs positive structural change as well as further financing. I think that goes for many government programs for which we constantly have to look at the accountability and sustainability of what we are doing.

When I first became a member of Parliament and a member of the health committee, I remember Health Canada officials coming before us to tell us what was happening within our health system. I will never forget that their suggestion at the time was that 75% of the spending on health care in Canada was for fixing problems after the fact and that only 25% was spent on the preventative side. They told us quite frankly back in 1993 that this was not sustainable. We know that is the case and, through actions such as those in the budget, we are making sure that we are continuing to invest in health care for all Canadians.

After listening to some of the debate by all hon. members, there is no question that Canada is on the right track. The fiscal strategy that we have exercised since 1993 has given us an opportunity to invest in the priorities that Canadians see are there, but we have also been able to deliver a program of $100 billion of tax reductions. We have reduced our debt to GDP ratio from over 50% to below 30%.

We have made very significant improvements, in addition to creating hundreds of thousands of jobs for Canadians because we have an economy that still has not reached its potential. I am sure members and Canadians will agree that this is yet another step toward moving us forward. It is built on those tough decisions we made back in 1993. I believe the government should be congratulated for yet again another responsible budget.

[Gurmant Grewal, Canadian Alliance, Surrey Central, BC]

Mr. Speaker, I am pleased to rise on behalf of the constituents of Surrey Central to participate in the report stage debate on Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003.

The theme of this year's budget is “money for everyone”. In fact it gives every appearance of being an election budget, with its focus on spending and its attempt to please every possible constituency. I call it an “ice cream budget”. There is something for everyone but by the time they taste it, it melts away before their eyes.

The budget announced $14 billion in new spending and a $25 billion increase in program spending by the year 2005. This year's budget increases federal spending by 11.5%, coming on the heels of 7% and 18% increases in the previous two budgets. By the year 2005-06, spending will have increased 46% from 1996-97 levels.

Government spending is growing three times faster than the economy. It can be said that for this government, the days of fiscal prudence are a distant memory.

Adjusting for inflation and population growth, this is the largest single year spending increase since the 1970s. The spending cuts introduced in the 1995 budget have now been entirely reversed.

While visiting Calgary during his prebudget consultations/leadership tour, the finance minister told his audience that Canadians did not want a laundry list of new spending. Canadians certainly did not want a grocery list either.

After all, these are Liberals. How can they ignore the urge to spend? The result is the worst of both worlds, spending too much, while at the same time spreading their money so thin, over so many areas, that it will have little positive impact.

We are now considering Motions Nos. 13 through 19, except Motion No. 16. Motion No. 13 was put forward by the member for Drummond. It seeks to amend Bill C-28 by deleting clause 64. The motion deals with the issue of GST on school buses.

While the Canadian Alliance opposes this bias against contracting out and privatization of services inherent in the GST rebate system for public service bodies such as school boards, the courts should not and cannot decide Canadian tax policy. That is the prerogative of the government and the House of Commons. Therefore I cannot support the motion.

Motions Nos. 14 and 15 are proposed by the member for Dartmouth. Motion No. 14 seeks to amend Bill C-28 by deleting clause 74, while Motion No. 15 seeks to delete clause 75. When speaking of the disabled, we are talking about the most vulnerable people in Canadian society.

It was an embarrassment last year when the government attempted to reduce its spending by removing resources from those most in need. This was yet another example of the misplaced priorities of the Liberals. We believe that 40% of Canadians with disabilities live in poverty and one-third of them are unemployed.

The Department of Finance announced amendments to the Income Tax Act that would make 30,000 Canadians ineligible for the disability tax credit. The Minister of Finance proposed limiting the tax credit to only those who cannot feed themselves. I strongly opposed these changes when I spoke in this place last November. The Canadian Alliance supports easing the definition of disability from feeding and dressing to feeding or dressing.

Motion No. 17 has been put forward by the member for Vancouver East. It proposes the deletion of clause 84. I am opposed to this proposed amendment.

The Canadian Alliance supports increasing the RRSP dollar limit more than the baby steps taken by the weak Liberal government. Increasing the allowable limit for RRSP contributions from $13,500 to $18,000 by 2006 would go a long way to securing the future of countless Canadians.

More and more Canadians are self-employed and do not have a company pension plan. Since they do not have pension plans, it is necessary for them to save for their own retirement. Needless to say, it would be foolish of them to rely on the Canadian pension plan for their retirement.

To understand the need for increasing the RRSP contribution limit, we should think of the situation facing realtors. Realtors are one professional group who rely mainly on RRSPs for their retirement incomes. Realtor incomes typically fluctuate from year to year. RRSP contribution levels are tied to income. If their income is low one year, their contribution level will be geared to that low level the following year. If their income rises substantially, their contribution is capped at $13,500 under the current system. This simply is not fair. I have spoken to many realtors and they tell me it is not fair to them.

The final two motions under consideration, Motions Nos. 18 and 19, are also proposed by the member for Vancouver East. Motion No. 18 seeks to amend Bill C-28 by deleting clause 85, while Motion No. 19 would delete clause 86. I support neither of these proposed changes. The Canadian Alliance wants to eliminate the capital tax. Reducing it does not go far enough, but it is a first step. The Canadian Alliance will oppose these amendments because they will do more harm than good to the bill.

The finance minister claims Canadians do not want lower taxes, so it should come as no surprise that his budget contains little in the way of tax cuts. There is no significant tax relief in the 2003 budget. The costs of the budget's tax cuts represent 12% of the total budget.

A Canadian Alliance government would create an economic climate in which businesses could thrive and grow, and with their success create quality job opportunities for Canadians. The Canadian Alliance would do so by providing deep, broad-based tax relief, ensuring a stable monetary policy, supporting essential national infrastructure in a non-partisan manner, and encouraging medical and scientific research.

The Canadian Alliance would create greater tax fairness for families by eliminating inequities between single and dual income families. The Canadian Alliance would move to more equitable treatment of choices in child care arrangements, including child care at home. We would integrate the tax system and social programs to better meet the needs of low income individuals and families.

We would ensure that taxes which are imposed for a specific purpose would be used for that specific purpose alone and would be removed once no longer required and not be allowed to be put toward general revenue, as in the case of the deficit financing tax of $1.50 per litre on gasoline. Once the deficit is eliminated, that tax should also be gone.

The government laid out its vision in the throne speech and then implemented that vision in the budget. The throne speech suffered from an old, tired vision. The budget suffered from that same flaw. If the vision is not right, naturally the implementation of the budget cannot be fair. The budget is yet further evidence that the government lacks vision and foresight.

The former finance minister, the member for LaSalle—Émard and heir apparent to the Prime Minister, made it clear last week that, as head of the government, he would not implement any bills that he did not like. With that knowledge, it is legitimate to ask whether or not the budget implementation act that we are debating today has the approval of the former finance minister? If it does not, then the government may simply be wasting our time.

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

Mr. Speaker, I would like to address the amendments that have been put forward to the House today.

First, dealing with Motion No. 13. This amendment is being made in response to a recent court decision affecting school boards that has a result contrary to the longstanding and well understood intention of the GST law. The result of the court decision is also contrary to the manner in which school boards themselves have been complying with the GST legislation since 1991.

The government's decision to apply the amendment retroactively took into account the government's established criteria for making changes to the tax law on a retroactive basis. These criteria were enunciated in a 1995 report to the public accounts committee after the committee had declared, not only the appropriateness but indeed the imperative use of retroactivity in certain circumstances.

The government's announcement of December 2001 made it clear that the amendment would apply to all school authorities, with the exception that, in the case of the school boards which had received a court judgment prior to December 2001, those would not apply. This is in accordance with the federal government's practice of not reversing a court decision rendered in a particular case prior to the announcement in the change of tax law.

Those who pursued court cases after the announcement were clearly aware that retroactive legislation would be coming forth and proposed to Parliament. They chose to carry on in spite of that.

An amendment to substantially the same effect presented by the Bloc Quebecois was defeated at the standing committee.

Report stage Motions Nos. 14 and 15 propose to delete clauses 74 and 75.

I would point out that Motion No. 14 would delete clause 74 of the bill. Clause 74 provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding or dressing oneself for the purpose of establishing entitlement to the disability tax credit.

In contrast, existing text of the law provides that a medical doctor or an occupational therapist may certify an individual's impairment with respect to feeding and dressing oneself.

In the absence of this bill, therefore, there is an ambiguity in the law to the potential detriment of Canadians with disabilities. Does one have to be impaired in both feeding and dressing oneself, or does either impairment establish an entitlement on its own?

The Standing Committee on Human Resources Development and the Status of Persons with Disabilities recommended this ambiguity be corrected.

Accordingly, clause 74 clarifies that an individual need not be impaired both in terms of feeding and dressing oneself to have access to the disability tax credit; one or the other will suffice.

Motion No. 14 would reinstate the ambiguity to the detriment of Canadians with disabilities and therefore cannot be supported.

Motion No. 15 would delete clause 75 of the bill. Clause 75 clarifies the eligibility criteria for the disability tax credit.

In March 2002 the Federal Court of Appeal rendered a decision that has been interpreted as expanding the eligibility for the disability tax credits to individuals who, because of food allergies or other similar conditions, must spend an inordinate amount of time to shop for and prepare suitable food.

Such expansion of eligibility goes far beyond the intent of the DTC and could increase the fiscal costs significantly, and certainly the New Democratic Party is well aware of that.

Following the consultations on draft amendments to clarify the DTC eligibility criteria that were released on August 30, 2002, the 2003 budget proposed to rework the language of the proposed amendments to clarify that the activity of “feeding oneself” does not include any of the activities of identifying, finding, shopping for or otherwise procuring food, or activities associated with preparing food that would not have been necessary in the absence of dietary restriction or regime.

This aspect of the legislation is important. It means that individuals who are markedly restricted in their ability to prepare a meal for reasons other than dietary restriction, such as severe arthritis, will continue to be eligible for the DTC.

Clause 75 also clarifies that the activity of dressing oneself does not include the activities of finding, shopping for and otherwise procuring clothes.

It should also be noted that the amendments were developed only after consultations with the affected groups. These amendments reflect those consultations.

Further, the 2003 budget proposed, and this bill includes, an extension of the medical expense tax credit for incremental costs of gluten free foods for persons who suffer from celiac disease and must follow a gluten free diet. In fact, we are expanding, not reducing, as some members might suggest, eligibility.

Motion No. 15 proposes amendments that would reverse the effect of the bill by explicitly extending eligibility for the disability tax credit to the activities sought to be excluded. As such, the motion goes far beyond the intended policy of the disability tax credit and does so in a manner that could significantly increase the fiscal cost of the credit. Therefore the government will not support Motion No. 15.

Motion No. 17 proposes to amend the provisions of Bill C-28 relating to retirement savings. Similarly, Bill C-28, in this case, includes clause 84 amendments to the definition “money purchase limit” , to increase the limit of $15,500 for 2003 to $16,500 for 2004 and $18,000 for 2005 and subsequent taxation years.

Setting appropriate limits on tax assisted retirement savings in RPPs, RRSPs and DPSPs is an important means of encouraging and assisting Canadians to save for retirement, reducing the tax burden on savings and allowing employers to attract and retain key personnel.

The proposed motions would not only eliminate these improvements to the system for tax assisted retirement savings, but would reverse the increases that were scheduled to take effect next year under the existing income tax law and on which Canadians depend. Clearly we cannot support that.

Motions Nos. 18 and 19 deal with the federal capital tax and are linked in substance. I will speak to both of them.

Unlike income taxes, which are paid when a corporation has taxable income, capital taxes must be paid even where a corporation has not been profitable. Capital taxes have been identified as a significant impediment to investment in Canada.

The federal capital tax was introduced in 1989 as Part I.3 of the Income Tax Act. The tax is levied annually at a rate of 0.225% of a corporation's taxable capital employed in Canada in excess of $10 million capital deduction. A corporation is taxable capital is generally described as the total of its shareholders' equity, surpluses and reserves, as well as loans and advances to the corporation, less certain types of investments in other corporations. A corporation's federal income surtax, which is 1.12% of taxable income, is deductible against the corporation's capital tax liability.

In order to promote investment, the 2003 budget proposed to eliminate this federal capital tax over the next few years starting on January 1, 2004.

Clauses 85 and 86 of the bill would implement this proposal by increasing the threshold for application of the federal capital tax from $10 million to $50 million of capital for taxation years ending after 2003, and by reducing the rate of tax over the period 2004 to 2010.

Under the bill, the federal capital tax liability will be eliminated for almost 5,000 medium size corporations in 2004. The federal capital tax will be completely eliminated in 2010, over the next seven years.

Motions Nos. 18 and 19, if adopted, would deny these benefits and clearly the government cannot support them.

I urge hon. members to defeat these amendments, which were defeated in committee, because they clearly do not reflect the fact of a very progressive budget moving on a number of areas including, as I say, capital taxes, as well as the disability tax credit to improve the lives of individual Canadians. I say, let us get on with it.

[Charlie Penson, Canadian Alliance, Peace River, AB]

Mr. Speaker, I am pleased to take part in the debate today on the budget implementation act, Bill C-28. There are a lot of things we would like to see in the act but they are not in place. We would certainly like a vote of confidence from the Canadian public to give us the opportunity to see some meaningful tax relief in the country. Unfortunately we have to put up with what is in the act today. We see a lot of shortcomings in it, but I want to deal specifically with a few things covered by the motions introduced by the various members today, which have been grouped together.

I would like to start with the GST issue, specifically the GST on school buses which was brought to our attention by the Bloc through its amendment. We see a lot of things wrong with the GST, a GST that was going to be scrapped by the government when it came to power in 1993. At that time, it was generating about $15 billion of revenue for the government. Ten years later it was generating $25 billion. In this current year it looks like it is going to exceed $30 billion. It has become quite a cash cow for government. Over $4 billion dollars per percentage point is what it is generating for government.

The concern introduced in the amendment lies in the unfairness of the GST issue in terms of rebates for school boards. We are concerned that there is a problem. There is a problem in treating the private sector the same as municipalities or government; we think there should be a fairness there. The difficulty with this particular amendment, though, is that when this issue was taken over through the GST from the old manufacturers' sales tax, it meant that the school boards would have the equivalent effect of the manufacturers' sales tax when that was in effect for the purchase of school buses and all of the costs for having school bus service for schoolchildren. That equivalent at the time came to 68% of the GST.

Some school boards have found ways around this by contracting out their school bus service and therefore have asked for 100% of that contracted service to be rebated. The court found that this should be the case, but we believe that it is really up to Parliament to decide what the issue is here. Essentially what the court decision does is put the boards on a different footing depending on whether they contract out the service or provide it themselves. School boards tell me that if this court ruling were to stand they would have to move to a contracting system themselves because they would gain a considerable amount of money.

The government, through Bill C-28, has moved to close off this abrogation of what was happening to put it back to its original intent of essentially 68%. We support that, but we do see a lot of things wrong with the GST. We think it needs a general overhaul. In fact we would start by reducing the amount that the GST takes in per year for the government, partly because we think that the government does not need this extra income. As I said, it is raising $15 billion more now than it raised in 1990 when it first came into effect.

If it were just that the government needed the income, that might be a good argument for keeping it as such and not having to reduce the rate, but we see the government wasting a lot of taxpayers' money day in and day out in the House. My colleague from St. Albert had the waste report out the other day and gave a lot of examples of how that has happened. We think that giving business subsidies to huge corporations in Canada should not be what the Government of Canada is all about. In fact, if individual Canadians want to invest in Bombardier or Pratt & Whitney or General Electric, Canadians have the opportunity to buy stocks. They have that opportunity through their mutual funds. Why should the Government of Canada do it for them? The government is giving hundreds of millions and in fact billions of dollars to those corporations every year and mismanaging or wasting a tremendous amount of money.

Therefore, we think there does need to be an overhaul of the GST. We would start by reducing the amount that is brought into the government. One per cent equates to about $4.5 billion.

A couple of other issues have been identified in the amendments. I notice that the NDP would like to delete any changes to the capital tax. We want to get rid of the capital tax altogether, but the NDP sees it as another source of revenue for government.

When we travelled across the country with the finance committee we were told repeatedly that the capital tax was one of the most damaging taxes in order to attract investment to Canada. The reason is that it is a tax on a business. I would compare it in some ways to a property tax. Essentially, that tax is there whether the business makes any profit or not.

That does not make any sense to me. Canada has lagged behind pretty badly in investment. We have fallen off as a source of direct foreign investment for others to invest in Canada as a percentage of world investment over 30 years. That is a discussion for another day. Suffice it to say that public policy, largely by this Liberal government, accomplished all that in about 30 years. However we think the capital tax should be reduced and we would like to reduce it over two years, not over five years, as the government has suggested.

There are couple of other things we are dealing with today in the amendments that are before us. There are a couple of amendments on the disability tax credit for those people who have disabilities. We certainly have received a lot of mail on this issue. The government seemed to be sort of the grinch who stole Christmas in the way it treated people with disabilities. I notice that the Liberals have responded to some of that pressure and will be changing the wording to try to deal with that issue.

We support easing the definition of disability from “feeding and dressing oneself” to “feeding or dressing oneself”, which could make a considerable amount of difference for those who qualify. We would also support that the government stop harassing disabled people who have been receiving disability tax credits for a number of years only to find themselves reassessed and no longer receiving them.

I made the case in the House on previous occasions about a constituent who contacted me. He has lost a leg and has to wear a prosthesis to get around. He is a proud individual. He works in the oil patch. It is a problem for him to have to use a prosthesis in a very tough environment. However he wants to work and does not want to be sitting there on welfare. The disability tax credit allows him a little measure of comfort in being able to claim some of the extra costs involved to rig his van so he can drive and so on. The government took that away from him, as it did from many other Canadians.

I hope the government has learned its lesson and that some of the changes made to the tax act today will address that.

The other area the amendments deal with is the RRSP. I see the NDP would also like to cancel changes to the RRSP limit. We believe it is important for Canadians to have the ability to save for themselves and raising the RRSP limit is a measure that we would support. We would support it because it looks like Canadians will have to rely more and more on themselves for their own retirement income. They will not be able to rely on government, especially the Canada pension plan which has seen some fairly substantial losses in the investment sector over the last year. Be that as it may, we think the plan continues to be in trouble, partly because the former finance minister, the member for LaSalle—Émard, would not listen to the chief actuary of the Canada pension plan when he said that rates would have to be even higher than the 9.9% that it has risen to in the last couple of years. He also said that It was not sustainable. As the Canadian birth rate continues to decline, unless something changes, there will be a small amount of people working to support the system down the road.

While we agree with a lot of the measures being implemented in the act, in most cases they are half measures, such as the capital tax only going part way. We see no personal tax relief. Canada is falling generally well behind the United States in corporate tax rates again as a $600 billion tax package is working its way through congress at the moment.

Our productivity and our competitiveness will be affected once again and, with the rising dollar, I suggest that a lot of these chickens will be coming home to roost pretty quickly because the government has not made the changes on the side of reducing taxes in order to compensate for the rising dollar. This will continue to be a bigger issue well into the future.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-28, the budget implementation act. Mind you, it is not with pleasure that I review the substance of the bill, because the budget is a return to the 1970s Liberal free-spending habits that have imperilled Canada's economic prosperity.

Instead of having a vision for the future, the government is wandering aimlessly with no vision whatsoever. The last time Canada witnessed program spending growth like we have today in this budget, the current Prime Minister was the minister of finance. This budget, and by extension the budget implementation act, can be characterized by one phrase: an irresponsible increase and commensurate growth in program spending.

The fact is that since 1998 we have seen growth in program spending that did not always reflect the priorities of Canadians, but this is the first year in which we have seen such a dramatic increase in program spending.

That said, some increases are badly required and desperately needed. Nobody disagrees with the notion that we want to see a greater level of investment in health care and in the military. Nobody would disagree with that. Health care and the military clearly represent the priorities of Canadians, but if we look at the budget implementation act and take the health care reinvestment portion and the military reinvestment portion out of the increase in spending, the fact is that there is a 7.3% increase in government program spending in the budget net of health care and the military.

The Prime Minister should have warned the Minister of Finance not to make the same mistakes he made when he was finance minister back in the 1970s: to simply say no to this kind of Liberal waste. But then again, we have to ask why the Prime Minister would worry about leaving the cupboard bare, because he is leaving soon so he does not really care all that much about it.

Why would the Prime Minister worry about being fiscally responsible when his government has been party to so many financial mismanagement scandals and deliberate cover-ups in this country? Let us look at them for a moment: Shawinigate, the sponsorship boondoggle and the HRDC fiasco, and they go on and on.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I have to say I was speaking really fast. When I saw you give the one minute warning I felt as if I had only been speaking for about three minutes. Then I started to increase the speed, but I will now slow down a little to get in the rest of my comments.

I was addressing the increase in RRSP contributions the government will allow in Bill C-28 if it is approved. This will cost about $295 million. As I said earlier, it will be used by people who earn more than $75,000 a year, which is about 5% of Canadians. This has to concern us because if we looked at an overall assessment of taxation and income, we would see that there is a widening gap between people who are very wealthy and people who are very poor in Canadian society.

A study released by the Canadian Council on Social Development last November found that the wealth of the poorest 20% of couples with children under 18 went down by 51.4% between 1984 and 1999, whereas that of the wealthiest 20% of couples at the highest end increased by 42.7%. There are other studies by the Canadian Centre for Policy Alternatives that bear out those findings. They point out that between 1970 and 1999 the wealth of the richest 10% of family units in Canada rose by a whopping 122%.

I want to contrast that kind of statistic and the proposal in this budget to allow a fairly major increase in RRSP contributions to seniors who are locked into fixed income support programs after retirement. They are the people who feel the worst effect of rising costs in our society. Many of those retirees spent their whole lives in the workforce helping Canada to be a prosperous and productive nation. They are now being forced back to work after retirement just to survive from day to day.

This is unacceptable and is not something we should accept as the status quo. It is not something we should accept as inevitable because it brings us right back to the structures of the budget and our taxation system.

There is a very strong argument to be made that over the last few decades there has been a massive shift in taxation from corporations to individuals. There has been a massive shift in taxation to provide more and more breaks for people who are wealthy and placing a greater burden on people who are at the lower end of the economic scale. Again I would argue this is not something that is inevitable; it is a matter of public policy that is determined by the Liberal government.

In the case of the RRSPs and the increase that is being allowed, obviously a lot of lobbying was done by various organizations on that basis. Our feeling in the NDP is that the government should have resisted that kind of pressure and those kinds of rewards that will benefit people who are actually doing very well and are very well off.

About one-third of Canada's seniors have such low incomes that they actually receive the guaranteed income supplement. What is astounding about that fact which we raised in the House just the other day is that the seniors who get the GIS--and there are a few hundred thousand seniors who do not get the GIS because they do not even know about it even though they may qualify--but the astounding thing is if seniors on GIS receive a little extra income over and above that for whatever reason, they are taxed at a rate of 75%, which would be the highest tax bracket in this country.

When we contrast that with this issue of an increase in RRSP contributions and the cuts being made for businesses for the capital tax, we begin to see the very stark reality of a government that clearly is making decisions based upon rewards and favours for people who already have huge benefits, and that is to the detriment of and certainly will have an incredible impact on people who have disabilities, as my colleague from Dartmouth spoke about earlier. That is where the hurt will really be.

These amendments try to redress that problem by eliminating these clauses in Bill C-28. I hope that members will consider these amendments. If we believe in the principle of equity in our tax system, they should be approved.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am very happy to follow my colleague, the member for Dartmouth, in speaking to report stage of Bill C-28. The bill implements the last federal budget. It is a very important debate because the bill lays out the priorities of the government in terms of where it is spending money and where it is also giving tax cuts. That is the issue at hand today.

From the NDP's perspective I will be speaking to Motions Nos. 17, 18 and 19. Two of the motions have to do with the elimination of the capital tax as outlined in the budget. One of them has to do with clause 84 regarding an increase in allowable contributions to RRSPs.

Clauses 85 and 86 on the capital tax are amendments that were brought forward by the government in the budget which would allow a huge tax break under the capital tax to Canadian businesses and corporations. The elimination of this tax would cost $695 million over three years.

We have to look at this in the context of the rest of the budget. We have to recognize that $1.2 billion was spent in new tax cuts in this budget over and above the $100 billion that was announced in the 2000 budget. This is yet another massive tax cut that is being awarded by the government to the country's corporate elite.

What this means if we want to look at this in terms of priorities of where our real needs are, it will be low income and middle income Canadians who will really feel the brunt of this. They will not receive any benefits from the tax cuts in this budget.

On the other side of the coin, we can see that the Liberal government's budget bill will spend five times as much scrapping the capital tax for businesses than it invested, for example, in affordable housing. I am the housing critic for our party and I have been one person in this house with a few friends, but not very many, who have been championing the critical need for a national affordable housing strategy.

We have been talking about the 1% solution for housing. We need to invest a further 1% in the provision of affordable, not for profit social housing. The government has put a paltry few hundred million dollars into the so-called national housing strategy. There is always the suggestion that is all it can afford. When we stack up the housing need against the tax cut of $1.2 billion just in this budget coupled with a $100 million, we begin to see there is a very different priority emerging.

We also are not in support of the government's plans to increase the RRSP limit from $13,500 to $18,000 by 2005. This will clearly favour about 5% of Canadians who are wealthy. It will again be to the detriment of low and middle income Canadians, particularly seniors who, in receiving the GIS, if they earn anything over the GIS supplement are taxed at a rate of 75%. Again, we can compare that in terms of who this budget is helping and who it is not helping.

Mr. Speaker, how much time do I have left?

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, it is with anger that I rise today and am forced to move the amendments asking for the deletion of clauses 74 and 75 of Bill C-28 which deal with the proposed restrictions to the disability tax credit. These clauses show contempt for the House. On November 19 the House unanimously passed the following motion:

That this House call upon the government to develop a comprehensive program to level the playing field for Canadians with disabilities, by acting on the unanimous recommendations of the committee report “Getting It Right for Canadians: The Disability Tax Credit“; in particular the recommendations calling for changes to the eligibility requirements of the disability tax credit so that they will incorporate in a more humane and compassionate manner the real life circumstances of persons with disabilities, and withdraw the proposed changes to the disability tax credit released on August 30, 2002.

The government reluctantly withdrew the amendments released on August 30 but injected them back into the ways and means bill in the February budget which was followed by clauses 74 and 75 of Bill C-28, the budget implementation bill.

Those clauses of the bill show that the finance department, the finance minister and the government as a whole cannot understand that Parliament is supreme. Parliament said on November 19 that the tax credit being dealt with should be reformed in a compassionate and humane manner reflecting the real life circumstances of persons with disabilities. What clauses 74 and 75 propose as changes to the eligibility criteria for the disability tax credit is to further restrict eligibility for this credit. That is contemptible.

The disability tax credit is already so restrictive that officials of the department admitted to the committee that Terry Fox would not be considered as having a disability under its draconian interpretations of the law. All of us should consider that for a minute. Terry Fox was a fighter and continues to live on in everybody's dreams for a better, healthier society where we all work on behalf of persons with disabilities and fight for people struggling with cancer. All of this is because of Terry Fox who lost a leg to cancer. At this point in time he would not be considered to be disabled under the laws of our government.

By proposing these changes the finance department is saying that people who have a hard time eating, those who are challenged every day because most of the food available to Canadians will kill them, should not be considered as having a disability. Finance department officials are also saying that just because some people have no arms and cannot dress themselves or need special clothes, they should not be considered as having a disability. Through these clauses the finance minister is saying that the amendments in the unanimous report of the HRDC committee are wrong and should be ignored.

Last week the finance minister clearly showed that he has no respect for the democratic process or for this chamber. He did this by reissuing an almost identical response to the committee's report that the House condemned in November. The committee and the House asked to have the system fixed and make the credit refundable. We have asked for the system to be co-ordinated and to make eligibility conditions reflect the real life conditions of people with disabilities. Here we see that the disability tax credit is still not refundable so that the vast majority of those who are most vulnerable, those with no income or a low taxable income, still get nothing.

I am proud to have led the fight to change this bad tax credit. I congratulate my colleagues on all sides of the House who have stood up against the Minister of Finance's proposal to further restrict who would receive this small tax credit.

Thousands of letters have been received from people across Canada. My friend from the Bloc received over 6,000 names on a petition. Every member of the House, with the exception of the Minister of Finance, stood up and asked that those restrictions be withdrawn.

I call on members from all sides of the House to once again show the finance department who runs the country and join with me to eliminate these clauses. Let us show the minister, the deputy and the department that they are not above the will of the House. What finance officials lost on the floor of this place last November, they are trying to sneak back in through those clauses in Bill C-28.

I do not believe the House will stand for that. I know that Canadians with disabilities are watching very closely to see how people on all sides of the House behave at this point in time with these critical amendments which will have a critical impact on the lives of persons with disabilities.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, the Bloc Quebecois' amendment reads as follows:

That Bill C-28 be amended by deleting Clause 64.

The amendment that I am moving in the House would delete this clause from Bill C-28, the Budget Implementation Act. More specifically, what we would like to remove is the element of retroactivity.

In his budget, the Minister of Finance announced his intention to retroactively amend provisions of the Excise Tax Act related to school buses. By doing so, the minister could establish a new rate for all school boards, despite judgments rendered by the courts since December 21, 2001.

The government is simply planning to override judgments that recognized that school boards were right on the issue of the refunding the GST paid for school transportation. This retroactive measure is a very serious departure from the rule of law and from the authority of a final judgment. This could be precedent setting in Canadian parliamentary practice.

In order to give members some context on this and to help them understand the scope of this situation, allow me to sketch a brief history of this issue and the actions the Liberal federal government has taken against the school boards.

From 1996 to 2001, Quebec and Ontario school boards submitted GST claims for the transportation of students. On November 17, 2001, the federal appeal court brought down a unanimous decision in favour of the first 29 Quebec school boards. I have the judgment relating to a board in my riding, Commission scolaire des Chênes.

Normally, school boards with cases pending at the time of the judgment ought to have been paid.

On December 21, 2001, the Minister of Finance announced his intention of making a retroactive amendment to the Excise Tax Act, which included pending cases. This measure is legal, but unfair. The school boards, and their federations, opposed it.

More than a year later, the school boards of Quebec and Ontario have obtained favourable final judgments that represent eight and ten million dollars respectively.

On February 18, 2003, when the Minister of Finance brought down his budget, he proposed a retroactive amendment that would go still further than the proposal of December 21, 2001, since it goes against the judgment obtained by the school boards of Quebec and Ontario.

School boards want the rights they had before December 21, 2001, which they protected by filing theirs claims with the Tax Court of Canada before that date and for which they received a successful final decision before the February 2003 budget, to be restored and respected.

What is it important to remember? Through clause 64 of Bill C-28, the federal government is preparing to disregard a court decision. Informed of this plan, the Barreau du Québec and the Canadian Bar Association responded quickly, describing the finance minister's plan as a dangerous approach that could undermine the public's confidence in the courts. It would seem that both associations wrote the Minister of Finance and the Minister of Justice, saying that they opposed the legislative change proposed in the last budget.

Here is what President of the Bar in Quebec, Claude G. Leduc, had to say about the federal government's approach:

It does not respect any of these decisions or commitments, which, in our view, seriously erodes the principle of the authority of a final judgment and is contrary to the sound management of justice. Such a legislative approach discredits the judicial process and is likely to undermine taxpayers' confidence in the courts.

Along the same line, Simon Potter, of the Canadian Bar Association, stated, and I quote:

—we are persuaded that the policy behind any such retroactivity is deeply flawed and dangerous.

In October 2001, 29 school boards in Quebec, including the Commission scolaire Des Chênes, in my riding, won their case before the Federal Court, the court recognizing that school bus services were indeed a commercial activity within the meaning of the act, which entitled them to recover all the GST paid. The federal government must therefore refund the overpayment on the GST. We are talking about approximately $18 million.

The case was next heard by the Tax Court of Canada last January. The case appeared to be over because the federal government agreed in a settlement to abide by the judgment of the lower court, on condition that the school boards withdraw their demand for an appeal before the Federal Court of Appeal.

To the astonishment of the school boards, the federal government did an about-face, pointedly ignored its obligations and, in the recent budget, introduced a clause that would completely change all its promises. At the Standing Committee on Finance, the present secretary of state did his utmost to try to remind us of what the federal government had published in a press release on this subject, but was unable to adequately defend the government in view of the letters from representatives of the bar.

The government's decision may not be unconstitutional, but the government should realize how dangerous such actions are to parliamentary democracy and the judicial system. The Minister of Finance should recognize that he made a mistake and give his support to our amendment which states:

That Bill C-28 be amended by deleting clause 64.

If the government takes a hard line, it will have to live with the consequences. This clause will do nothing less than weaken one of the pillars of democracy, which is the authority of a final judgment.

It has always been the case that school boards pay the GST. The government should rebate the tax because it is part of the commercial purpose of school transportation. But in this case, without warning the school boards, they withheld the GST and said, “The rules of the game have changed. And in addition, we are going to hold on to the four or five months you have already paid in advance”. That is what is known as retroactivity.

The school boards went before the courts and won their case because they are entitled to GST rebates. But in this case, the government, in addition to no longer providing rebates, is making this a retroactive measure.

There have been two decisions by the Court of Appeal, and the government is creating a precedent. This has never before been seen in the history of Canada. That is why we ask that clause 64 be deleted.

[Libby Davies, NDP, Vancouver East, BC]

moved:

Motion No. 17

That Bill C-28 be amended by deleting clause 84.

Motion No. 18

That Bill C-28 be amended by deleting clause 85.

Motion No. 19

That Bill C-28 be amended by deleting clause 86.