Bill C-13 (Historical)

Budget Implementation Act, 2006

An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

Part 1 amends the Excise Tax Act to implement, effective July 1, 2006, the reduction in the Goods and Services Tax (GST) and the federal component of the Harmonized Sales Tax (HST) from 7 to 6 per cent. It also amends the Act to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the July 1, 2006, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after July 1, 2006, pursuant to a written agreement entered into on or before May 2, 2006. The Excise Act, 2001 and the Excise Act are amended to increase the excise duties on tobacco and alcohol products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of July 1, 2006.
Part 2 implements income tax measures proposed or referenced in Budget 2006 to
(a) reduce personal income taxes;
(b) increase the child disability benefit;
(c) increase the refundable medical expense tax credit;
(d) eliminate capital gains tax on charitable donations of publicly-listed securities and ecologically-sensitive land;
(e) reintroduce the mineral exploration tax credit for new flow-through share agreements entered into before April 2007;
(f) expand the eligibility criteria for the disability tax credit;
(g) expand the list of expenses eligible for the disability supports deduction;
(h) expand the list of expenses eligible for the medical expenses tax credit;
(i) clarify the eligibility of home renovation and construction expenses for the medical expenses tax credit;
(j) double the amount of disability-related and medical expenses that can be claimed by a caregiver;
(k) introduce a tax credit in respect of adoption expenses;
(l) introduce a tax deferral for shareholders of agricultural co-ops;
(m) reduce corporate income taxes;
(n) eliminate the federal capital tax; and
(o) extend the carry-over period for non-capital losses and investment tax credits.
Part 3 amends Schedule I to the Excise Tax Act to repeal the excise tax on clocks, items made from semi-precious stones and items commonly known as jewellery, effective May 2, 2006.
Part 4 amends the First Nations Goods and Services Tax Act to facilitate the establishment of taxation arrangements between the government of specified provinces and interested Indian Bands situated in those specified provinces. It also amends the Yukon First Nations Self-Government Act to provide transitional income tax measures consistent with negotiated agreements.
Part 5 amends the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and the Income Tax Act to harmonize various accounting, interest, penalty and related administrative and enforcement provisions. These amendments will apply based on an implementation date that is the later of April 1, 2007, and Royal Assent. It also amends the Excise Tax Act to confirm that debt collection services that are generally provided by collection agents to financial institutions are not financial services for GST/HST purposes and are therefore taxable for GST/HST purposes.
Part 6 enacts the Universal Child Care Benefit Act to assist families by supporting their child care choices through direct financial support to a maximum of $1,200 per year in respect of each of their children who has not attained the age of six years. It also makes consequential and related amendments to the Income Tax Act, the Employment Insurance Act, the Children’s Special Allowances Act and the Old Age Security Act.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to determine the amount of the fiscal equalization payments to the provinces and the territorial formula financing payments to each of the territories for the fiscal years beginning after March 31, 2006 and to authorize the Minister of Finance to make an additional fiscal equalization payment to British Columbia and Newfoundland and Labrador, and to make an additional territorial formula financing payment to Yukon and Nunavut, for the fiscal year beginning on April 1, 2006.
Part 8 provides for a total payment of $650,000,000 to the provinces and territories for the fiscal year 2006-2007 in respect of early learning and child care. It provides for payments to the territories for the fiscal year 2006-2007.
Part 9 authorizes the Minister of Finance to enter into an agreement to provide protection to mortgagees in respect of mortgage insurance policies that are provided by a mortgage insurer that is approved by the Superintendent of Financial Institutions to sell mortgage insurance in Canada. It also fixes the maximum amount of such protection and determines how that amount can be changed.
Part 10 extends the sunset provisions of financial institutions statutes by six months from October 24, 2006 to April 24, 2007.
Part 11 amends the Canadian Forces Superannuation Act, Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act to change the existing formula by which adjustments are made to a contributor’s annuity.
Part 12 enacts the Mackenzie Gas Project Impacts Act, the purpose of which is to create the Corporation for the Mitigation of Mackenzie Gas Project Impacts. The corporation will provide contributions to regional organizations that will fund projects that mitigate the existing or anticipated socio-economic impacts on communities in the Northwest Territories arising from the Mackenzie gas project. The Part also provides that a payment of $500,000,000 may be made to the corporation and adds the name of the corporation to the schedule of certain federal Acts.
Part 13 amends the European Bank for Reconstruction and Development Agreement Act to permit the European Bank for Reconstruction and Development to carry out its purpose in Mongolia and to allow the Governor in Council to amend, by order, the schedule to that Act. It amends the Freshwater Fish Marketing Act to increase the Freshwater Fish Marketing Corporation’s legislative borrowing limit from thirty million dollars to fifty million dollars. It also amends the Public Sector Pension Investment Board Act to create share capital for the Public Sector Pension Investment Board

Budget Implementation Act, 2006

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Speaker, I will certainly speak to Bill C-13, the 2006 budget implementation act.

I am pleased to speak immediately after the hon. member for Winnipeg North. I think she did a good job highlighting the entire issue we must consider in order to pass judgment on this budget.

In no way do I doubt the convictions of the hon. member for Winnipeg North, having heard her speak about the less fortunate a number of times now. I think she does this well with conviction and fairness.

However, as far as the budget is concerned, we do not share the same conclusions. At the end of her speech she mentioned a certain number of reasons why we do not share her conclusions in terms of the Canadian government's policies of withdrawal from the social safety net for the people she was referring to, namely the poorest in society.

Hon. members will recall the Canadian government's withdrawal from social housing, which is called affordable housing in Canada, when the Liberals were formed the government. This withdrawal occurred almost throughout their entire time in power. Nothing was invested in social housing. It was only in 2001 that the Liberal government gradually started putting money back into social housing. However, it was too late, the damage had been done. The current serious shortage in social housing is putting even greater pressure on the poor.

The same phenomenon occurred in employment insurance with the Canadian government's withdrawal and cuts to the programs. This puts a great deal of pressure on the poorest families, especially people who have the misfortune of losing their employment.

I will come back to that, but I wanted first to put this in perspective to show that in the current context I believe there is no guarantee the Liberals would do better than the Conservatives right now if they were in power. On the contrary, they showed us they were capable of the worst.

Now it is time to see whether the Conservatives are also capable of the worst. In that perspective, we have looked at whether the budget we want to implement with Bill C-13 provides us with anything positive.

We must consider it in terms of the mandate given to us by the Quebec electorate. This mandate is to defend, to the best of our ability, the interests of Quebeckers. All the better if the interests of all Canadians are defended at the same time.

The issue of fiscal imbalance is decidedly a major issue for Quebec. I believe it is a major issue for the rest of Canada, but we will speak for Quebec. Why? Because it is an issue that the Liberals refused to recognize in order to maintain their policy of disengagement with respect to the provinces and to Quebec. It was a case of maintaining this quite deplorable situation whereby the Canadian government recorded the surpluses and the provinces assumed the responsibilities.

We have before us a government that says it is prepared to examine the fiscal imbalance within ten months, or by February 2007. It says it is prepared to do whatever is necessary with the provinces to solve the problem. That is an interesting commitment.

Now let us look at the difficulties faced by farmers. How farmers have struggled these last few years, first to obtain recognition for the fact that they experience tremendous difficulties just to be able to survive, and then to feed their families and to keep their farms afloat. We know how quickly the rate of farm failures is rising.

Many farmers did not even have enough money to plant their crops this spring.

Now, a breath of fresh air is blowing across the land. It is not an ideal solution, granted, but it is welcome relief for farmers. The Bloc Québécois had a large hand this initiative, especially my colleague from Richmond—Arthabaska, who worked hard to convince the Conservative government that it had to do something. As a result, the budget contains $1.5 billion in new money to support farm producers who are going through hard times.

As I mentioned earlier, $800 million will go to social housing. In 2001, the Liberals allocated $260 million. Today, $800 million in new funding is being invested in social housing. This is a positive step.

The additional infrastructure funding, the tax exemption for bursaries, the reduction in the excise tax for microbreweries and the $1 billion for post-secondary education are some other positive aspects of the budget. The Bloc Québécois feels that, in the current context, the budget does enough for the people we represent so that we can support it. Does it address every issue? No.

Mr. Speaker, I know that you take a special interest in the plight of the unemployed and the poor. Our colleague referred to this earlier. We must recognize that a number of huge commitments are missing from the budget. In the coming months, that is what we must focus on in order to correct this situation.

Let us talk about the unemployed. The Conservative Party made a promise to set up an independent fund so that the Canadian government would stop playing around with the fund to divert money—which the Liberals did. Over the past 12 years, $48 billion was misappropriated from the employment insurance fund.

Elsewhere, this behaviour would be described as theft. I will not say that, as it is not parliamentary. However, it is dramatic. On whose backs was this done? It was done on the backs of people whose employment insurance benefits were cut. This is one of the measures that made families poorer, as our colleague mentioned earlier. Who does this money belong to? It belongs to the workers and employers.

I say it often in this House and I will continue to say it until this injustice is corrected. It is scandalous. It is misappropriation of funds, in no uncertain terms. This money belongs to two groups, the workers and the employers. In addition, this money could have gone to help families.

This was the first measure the Conservative government made a commitment on. It has done nothing yet. We will have to hound it. It will have to deliver the goods to provide an independent fund.

The situation is the same with the income support program for older workers. At the moment, the collapse of our industries' infrastructure because of the entry of foreign goods has led to layoffs. Most importantly, the people hit by the layoffs are 55 and older. In the past, the Conservatives made a commitment in this regard. It must deliver the goods.

The Bloc Québécois has introduced Bill C-269 to improve the entire employment insurance program. When the time comes, I invite my colleagues in the House to support this bill. Why? Because it is the minimum in terms of responsibility and recognition we owe workers in order to come to their assistance. It is also a matter of justice for them.

My time is up, so I will stop here. I am prepared to respond in the time for questions.

[Michael Chong, Conservative, President of the Queen's Privy Council for Canada]

Mr. Speaker, I would like to thank the Bloc member for his comments on the budget. He said that the budget proposes measures for social housing, agriculture, infrastructure and microbreweries.

I agree with him about the budget.

Nothing is ever perfect. The budget is no exception to this rule, but it is a balanced budget. It is a focused budget in terms of its spending and it offers money for debt repayment. It is a good overall package.

As my colleague across the aisle has mentioned, there are measures in the budget for secondary education, new money for aboriginal Canadians and families with children and a new approach to environmental issues. We have seen a significant increase of 35% in emissions in Canada over the last 15 years, a record far worse than many of our fellow OECD countries. We need to tackle this.

Could my colleague comment on the budget with respect to measures that we have put in place for greater resources for provinces to deliver core services, such as the $3.3 billion in new money allocated for post-secondary education, social housing and public transit?

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Speaker, I thank the minister for his question.

I have already expressed my views on this and a number of other subjects. I would like to talk specifically about public transit because it also relates to measures designed to eliminate greenhouse gases. The minister and his party should reconsider their position on this issue. It is dangerous for two reasons. First, being so evasive about such an important issue sows seeds of doubt among Canadians that slow down our progress toward meeting our obligations to adopt measures that will eliminate greenhouse gases. I see nothing concrete in this budget that really promotes public transit, yet this is one of the measures we should adopt to encourage people to use more economical multi-passenger means of transportation.

I would like to remind the minister that we consider this an interim budget. We will judge this government according to such elements, including the Kyoto protocol targets. Our vote on the next budget will depend on these issues.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am sure my colleague from the Bloc has heard many members point out the shortcomings in the budget. Even those who were complimentary about some aspects were critical of the glaring oversights within it.

I point out to him that negotiations on how to make that budget better ended the very moment the leader of the Bloc Québécois walked out of this chamber and into the camera scrum area and said, “I support this budget”. All of a sudden all negotiations died right on the table. There were no more improvements to be made because the deal had been done.

Why did the Bloc roll over so easily? At least when the NDP traded its support in a minority Parliament, we got $4.8 billion worth of tangible benefits for Canadians. The Bloc got nothing, a big goose egg. I think my colleague from the Bloc is agreeing with me, that the Bloc got a big fat goose egg in exchange for its loyalty.

It is mystifies me. It is like Jack and the Beanstalk, I suppose, when one trades the family cow for three beans and none of those beans sprout. What was it about the budget that the Bloc would give up all of its political leverage and ability to influence?

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Speaker, I am glad he thinks he got something, even though he agreed to cutting $2.5 billion from employment insurance. He got nothing.

[Some hon. members]

Oh, oh!

[Yves Lessard, Bloc, Chambly—Borduas, QC]

I want to point out that I let the hon. member speak earlier. I want to remind hon. members of something. Let us look at what the NDP got: they got measures that were applicable later.

[An hon. member]

If there was money.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Yes, if there was more money. It was conditional. Well, now there is nothing: zero, less than nothing.

Furthermore, let us look at pages 278 to 280. In this budget that the NDP supported, there is the matter of a measure for cutting $2.5 billion from the employment insurance budget. The NDP voted in favour of that cut. Not just that, it fought the misappropriation of $48 billion, but supported a cut of $2.5 billion.

Before addressing this matter, I would like my colleague to double check what he voted in favour of. If he does not know, I cannot help it. Nonetheless, that is truly what happened. It absolutely happened that way.

Why did we not negotiate? Because we do not get involved in those types of negotiations. We are honest with our electors. We tell them whether things are good or bad and we tell them so right away.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am happy to stand today and talk about the budget and the implications it will have on Canadians. It is quite interesting also to listen to the discussion and debate that goes on by different members in the House on who sold out who and so on. The reason we all here is that we want to build a great Canada. That is the reason I asked to make a few comments today in the budget implementation debate.

I would like to begin my remarks by reminding Canadians that the Conservatives inherited from the Liberals the strongest economy and the best fiscal situation that any newly elected government in the history of Canada has ever been fortunate enough to receive. I wonder what will happen over the next period of time, whoever forms the government, and whether they will ever have an opportunity to inherit such a rich surplus as the Conservatives had in contrast to what was left to us by the Conservatives in 1993, which was one huge mess.

Under that last Conservative government, the Canadian economy was in serious trouble. Conservative spending was wildly out of control. Annual deficits had skyrocketed to close to $40 billion. Overall federal debt had ballooned to nearly 70% of the gross domestic product. Interest rates were very high. All of us felt those. The federal government itself had become a heavy burden on money markets, thus driving up borrowing costs for provincial and municipal governments as well as businesses, consumers and our constituents.

There was no real economic growth or job creation happening. Unemployment rose into the double digits. Consumer and business confidence was very low. That was a very difficult time for Canada. With the encouragement and the steady support of thousands of Canadians, the Liberals set out in 1993-94 to turn things around, and that is exactly what we did.

We cleaned up the nation's finances. We re-established the federal government's ability to invest properly in Canadians' leading social and economic priorities, while balancing the books, and we succeeded in that. We balanced the books in 1997 and brought down eight consecutive surplus budgets following that. We reduced the federal debt in absolute terms by more than $63 billion and as a proportion of the total economy by 45%. The debt is now on a steady downward track, scheduled to decline to 25% of the GDP by 2015 and then to no more than 20% of the GDP by 2020. At least that was our plan.

Inflation declined, interest rates came down and have remained low and stable. Federal taxes have been reduced by more than $100 billion since 2000 and another six-year $50 billion tax cut plan was initiated in 2005. Unfortunately, it was abandoned by the new Conservative government.

The Canadian economy has generated more than 3.5 million new jobs since 1993. Participation in the labour market is at near record high levels while unemployment has plummetted to a 32-year low, which we all can enjoy in this country. Canada enjoyed 12 straight years of unprecedented economic growth under the careful management and the fiscally responsible Liberal government.

The Liberals are very proud of our fiscal record. In fact we boast the best fiscal performance in all the G-7 group of world leading economies and the best fiscal record of any Canadian government since 1867. When my colleagues across the various parties throw jibes and words and all kinds of comments around, they should realize that all of us worked hard, all of us as Canadians, to get where we are today.

This brings me to my many concerns about the Conservative budget that we are going to deal with today. This budget clearly lacks any vision for Canada to take us into the future. It is a simple case of some short term gain and long term pain for a great country that we have all worked so hard to build over the last 13 years.

The government inherited the best fiscal situation in Canadian history and is failing Canadians by neglecting the future challenges and moving us forward.

The budget fails to address climate change and, clearly, is cancelling Kyoto and our commitments to Kyoto. It fails to provide a real child care choice for parents or a plan to create child care spaces, yet it has money to build more jails. It fails to maintain fiscal responsibility by not investing carefully in innovation. It fails to provide tax relief for low and middle income Canadians. In fact, it increases taxes for low and middle income Canadians. More important, it fails to exhibit any vision for Canada's future prosperity, with no significant investments in education or innovation, nothing to lead us forward.

Unfortunately, the budget neglects to make any significant investments in those areas. The Liberal government had a concrete vision that would have helped put us at the forefront of competitiveness and innovation.

This lacklustre and visionless budget contains virtually nothing in this regard. For example, for university research our last fiscal update provided $2.5 billion. The Conservative budget provides $200 million.

For student aid, our plan, which we were able to offer because our fiscal house was in order, provided $6,000 per student for tuition over a four year program. That was a huge help for students to encourage many coming from low income families to go to school. The Conservative plan provides $80 for textbooks.

Under the Liberal government, the best and brightest flocked to Canada due to our sound investment in research and development. How will Canada compete on the world stage in the future with a visionless budget and a visionless country? How can Canada continue to nation build when it is stuck with a government and a budget that cares more about politics than sound fiscal management?

The fiscal irresponsibility of the budget is completely unacceptable. The government is throwing fiscal prudence out the window and spending savings from program cuts before it even has the money in the bank. This approach will bring Canada dangerously close to a deficit position again.

The budget also puts ideology before economics and policy and fails to provide a sound economic vision for the future.

The budget also fails to provide real tax relief for low and middle income Canadians. Eliminating Liberal income tax cuts in favour of a 1% GST cut has been panned by every serious economist in the country as a plan that will benefit higher income Canadians at the expense of those who need it most.

The Conservatives are actually increasing income taxes, which means many people who received a refund in the 2005 year will probably end up paying more in 2006. The budget actually raises income tax rates in the lowest tax bracket. Despite the government claiming to be helping Canadian families, it has raised the tax rate from 15% to 15.5% for the lowest income Canadians and then denied it did it. Low income families need our support, yet the government is quietly raising its taxes. Did it think no one would notice?

The Conservative government has also quietly cancelled the program which helped low income households cope with high energy prices and cut greenhouse gas emissions. The EnerGuide program for low income households, a five year program initiated by the Liberals in November and endorsed by all parties in this House, was making a real difference for low income families in my riding of York West, and I am sure in many other ridings across this country.

Worse yet, the government chose to hide the cancellation of this program. I found out when a constituent called. When my assistant phoned, we were told the program had been cancelled. At least the government should have had the courage to tell us upfront what it was doing when it was cancelling it.

Nothing is more important to Canadians than our children and our grandchildren. We must lay the foundation for our country's future prosperity and success. As members will know, the Liberal government successfully negotiated agreements with all the 10 provinces last year. Through these agreements, the federal government would transfer almost $5 billion over five years to the provinces and territories, based on the principles quality, universal inclusiveness and accessibility.

We will notice that in the five priorities there was no new money to go into the health care system. Where will that money come from when we talk about a guarantee for long term wait times and elimination of those waits?

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, I have a great deal of respect for that member, but she has again repeated a myth that many people are buying, and that is the Liberals somehow left this government in a wonderful financial position. I would like to set the record straight.

If we look at the financial accounts of the country over the years, we will find that the deficits were due totally to high interest payments in those years. We could probably fault the Conservative government of the day for not taking fast short term measures to reduce that debt and hence the interest payments. Instead, it addressed the long term problem and brought in a number of policies that the Liberal government, over the last 12 years, was able to use to reduce those deficits.

The Liberals did bring down the debt. After they let it go up about another $80 billion, they brought it down about the same amount. I believe that is right.

I see some members over there laughing. As I recall, when the Liberals took over in 1993, the debt was very close to $500 billion and it is still $500 billion. It did go up in the first three years of their regime and then it went down after that. It was a Liberal legacy that left us the debt. This government has actually addressed this issue.

To the credit of the Liberals of the day, they--

[The Deputy Speaker, Bill Blaikie]

The hon. member for York West.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I have to wonder what people, who are watching this at home, think about all of us. We are tossing around all of these numbers, but Canadians know what the numbers are. They know that when we became government in 1993, there was a huge deficit. I heard many comments about the fact that at that point Canada was on the verge of bankruptcy. It took all Canadians, led by our prime minister and finance minister, to make a huge amount of cuts to get our finances and our country under control. We have the opportunity now to reinvest in our children, in our housing, in our seniors and, more important, to ensure that we reinvest in our young people.

We talk about the child care issue as if it is some kind of babysitting service. Child care is about investing in early childhood education. If we are going to be competing with Switzerland and all of the other countries, we have to ensure that our children get an early start to education. This is not about babysitting. It is a really important issue.

We had a plan going forward that would have ensured that all children in our country, who wanted an opportunity to learn early, would have that opportunity. They would then be well positioned to compete with others. Giving $25 a week for babysitting, is a pretty big insult to all women. More important, it does not move us forward as a country. We are supposed to be investing in innovation and all of these issues. That means we need to give women the opportunity to give their children early childhood education.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Speaker, I heard the hon. member talk about the former government's grand plan for child care. I recall many elections ago when the same plan was being promoted. Was that plan delivered? No. Not one day care space was created by members opposite.

During the election, we made our plan clear. We were going to give families $1,200 per child, per annum, and that was going to be addressed fairly across all families. We delivered on that promise.

Having had 13 years to implement a day care program in Canada, why did she and her government never deliver on the promises they made repeatedly during election after election?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, if we had gone into government with the kind of surpluses that the Conservative government has been fortunate enough to get, we would have been able to implement it quickly. Instead, it took us four years just to get things balanced again.

Giving a family $100 a month, or $1,200 a year, through a tax change could be done overnight. That is real easy. Getting an agreement with the provinces to deliver early childhood education is not about getting a day care space. It is about setting up a program with all of the provinces as partners.

After the Conservative government has been in office a few more months, I am sure it will find out how difficult it is to reach an agreement with all of the provinces, which have to discuss the plan with their municipalities. We cannot just tell families how it has to happen. We have to work with our partners across the country to get a plan that meets the need. We also need money to do that. As a result of our good fiscal plan, we have only had that kind of money to do it now. The Conservatives are throwing it away by giving people $25 a week. What are they going to do with it? They will not be able to do much.