Bill C-253 (Historical)

An Act to amend the Income Tax Act (deductibility of RESP contributions)

Income Tax Act

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

moved that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), be read the second time and referred to a committee.

[The Acting Speaker, Andrew Scheer]

The hon. government House leader is rising on a point of order.

[Rob Nicholson, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I rise on a point of order concerning Bill C-253, an act to amend the Income Tax Act (deductibility of RESP contributions) standing in the name of the member for Pickering—Ajax--Uxbridge. While the intent of the bill is to alleviate the tax burden for individuals who contribute to registered education savings plans, it is my submission that Bill C-253 contains specific provisions that would effectively increase the amount of tax payable by the taxpayer.

If I am correct, the bill should have been preceded by the adoption of a ways and means motion and is therefore improperly before the House.

Two of the amendments proposed in the bill are amendments to section 146.1 of the Income Tax Act, which sets out RESP payments that are to be included in computing a taxpayer's income for a taxation year.

Subclause 2(5) of the bill would add a paragraph (c) to subsection 146.1(7.1) that would require refunds of payments made in respect of any contribution paid by a taxpayer to be included in computing a taxpayer income per taxation year. Subclause 2(6) of the bill would repeal subsection 146.1(7.2) of the Income Tax Act, which excludes certain amounts received under RESPs as income for a taxation year.

Taken together with paragraph 56(1)(q) of the Income Tax Act, which identifies amounts to be included as taxable income under section 3 of the act, these amendments would effectively increase the amount of tax payable by the taxpayer.

Citation 980 of the sixth edition of Beauchesne's states:

A Ways and Means motion is a necessary preliminary to the imposition of a new tax, the continuation of an expiring tax, an increase in the rate of an existing tax, or an extension of the incidence of a tax so as to include persons not already [tax] payers.

In other words, any measure that would have the effect of increasing the tax burden on an individual should be first preceded by a ways and means motion.

Although the general purpose of these bills is to reduce the tax burden on individuals, this legislation should not evade the requirements of a ways and means motion.

The 21st edition of Erskine May states at page 730:

To escape the rules of financial procedure, a scheme for the alleviation of taxation must not include any incidental increase of the burden upon any taxpayer, however indirect or relatively insignificant that increase may be.

I therefore submit to you, Mr. Speaker, that Bill C-253 is improperly before the House, and if you agree, I ask that the bill be stricken from the order paper.

[The Acting Speaker, Andrew Scheer]

The hon. member for Pickering—Scarborough East.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I thank the hon. member for getting the name of my riding right and also for preceding the Chair in pre-empting his comments as to the receivability of the bill.

I have had perhaps as much experience as any member in the House on private members' business. When a bill is presented, it must satisfy two tests, such that your own legislative counsel has been involved with this, Mr. Speaker. Number one is the constitutionality of the bill, on which clearly the bill qualified, and number two, of course, is to ensure that the legislation itself does not require a royal recommendation.

Based on this and the ruling that you made in respect to May 31, 2006, I am going to read this into the record:

Where it seems likely that a bill may need a royal recommendation, the member who has requested to have it drafted will be informed of that fact by the legislative counsel responsible for drafting the bill. A table officer will also send a letter to advise the member that the bill may require a royal recommendation.

Should the member decide to proceed with the bill and select it for inclusion....

Members may then make submissions regarding the royal recommendation and, if necessary, the Chair will return with a definitive ruling later in the legislative process.

Mr. Speaker, you said:

There are a number of bills on the order of precedence which cause the Chair some concern. At first glance, certain provisions of these bills raise questions about the need for a royal recommendation.

I will not exhaust the list, but they are limited to Bill C-292, Bill C-257, Bill C-293, Bill C-286, Bill C-269, Bill C-284, Bill C-278, Bill C-295, Bill C-303 and Bill C-279.

Nowhere in that have the table officers or the legislative counsel been concerned about this bill inviting a question of royal recommendation. What the bill in fact does is provide ample opportunity to reduce for most people the burden of student loans. As a result of that, it is faithful to the existing Income Tax Act.

I point out that if there is any question with respect to taxation, it is already contained within the Income Tax Act as it relates to a withdrawal by a subscriber or a refund in payments; it is subject to a 20% penalty in addition to the regular tax payable. This proposed legislation does nothing to change that and therefore does not invite a question of a royal recommendation.

What is important is precedents, Mr. Speaker, not only by your ruling very recently, but if the hon. member wishes to go back to October 16, 1995, I would ask the hon. member to listen to this very carefully. When Bill S-9 came before the House it was ruled by you, Mr. Speaker, on that date that the bill did not appropriate tax revenue but rather exempted or reduced taxes otherwise payable. I will read this into the record:

The parliamentary secretary to the government House leader noted in his intervention that Bill S-9 is not a bill for appropriating any part of the public revenue or for any tax or impost and therefore does not require a royal recommendation. There will be no expenditure of public funds--

Which of course is contemplated in this bill.

--though money already collected from Canadian citizens pursuant to the tax laws of Canada may be refunded.

As the parliamentary secretary pointed out, the repayment of tax revenues already received is not an appropriation of public money.

Mr. Speaker, I turn your attention to Marleau and Montpetit, at page 711, under the financial procedures section:

A royal recommendation not only fixes the allowable charge, but also its objects, purposes, conditions and qualifications. An amendment which either increases the amount of an appropriation, or extends its objects, purposes, conditions and qualifications is inadmissible on the grounds that it infringes on the Crown’s financial initiative. However, a royal recommendation is not required for an amendment whose effect is to reduce taxes otherwise payable.

Given that ruling by your Chair and your more recent ruling, Mr. Speaker, with respect to the bills that caused difficulty, and notwithstanding the opinion of the House leader of the Conservative Party, who has referred to this not only to myself but seems to have done it with the hon. member for Bourassa last week on his bill with respect to Kyoto, i seems to be a tried and true measure to try to avoid important legislation that can be derived from private members' business.

I would suspect that given previous rulings and the wisdom of your legislative counsel, Mr. Speaker, the bill is very much in order, and I do wish to proceed, with your help, in getting the bill on its way to help students in this country.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, last Friday we had a similar situation on Bill C-288, in which the government House leader rose and made argument with regard to the necessity for a royal recommendation. Today we have another intervention by the government House leader laying out some arguments on Bill C-253, which will be debated shortly.

In both cases, the Speaker, in his earlier statement, identified for the House and flagged 10 of the 30 bills on the order of precedence as likely requiring royal recommendation. That provides an opportunity for members who are in that situation to determine whether there is a way to remedy that requirement, whether it be at committee stage or at report stage, to ultimately get a royal recommendation, which is one of the reasons that the Speaker also indicated that he would not make a final determination until the point at which a vote on third reading will be called.

Under the circumstances, where the government House leader is dealing with bills that have not been flagged already, pursuant to the procedure that has been outlined by the Speaker's office, I would appreciate it if direction could be given and that there can be assurances that should the Speaker's office find that there was some error with regard to the flagging that should have been done but was not done, that the members would be appropriately notified of the basis for that, and that members of the House be given an opportunity to make further representations with regard to the argument that has been made by the government House leader once we can see the details of the arguments that have been made.

[Rob Nicholson, Conservative, Niagara Falls, ON]

Mr. Speaker, first, I apologize to the mover of the bill. The name of his riding is in fact Pickering--Scarborough East. I just want to correct the record on that.

I think I have made it very clear, and I am sure the blues will back me up on this, that this is not a question of royal recommendation. It is the need for a ways and means motion. It is on that basis that I intervened.

Most of the comments were directed with respect to royal recommendations but I made it very clear that the bill needed a ways and means motion to proceed and that therefore it should be struck on that basis.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, it is very clear where the hon. member is going. If he had taken the time to read the bill, as the legislative counsel has done, I want to make it abundantly clear to him that the tax payable is negated by the initial tax credit.

Mr. Speaker, your legislative counsel looked at this and examined all of the concerns, whether it be a ways and means or whether it be a question of royal recommendation. I merely wanted to point out to the hon. member and to the Chair above all that I am governed by the wisdom of the Chair and I stand by the wisdom of the chair, which is why the bill is in fact receivable. I would like to proceed with debate.

[The Acting Speaker, Royal Galipeau]

The Speaker has already indicated that a definite ruling on the procedural admissibility of this bill will be made before the question is put at third reading.

Since today's debate is on the second reading of the bill, the matter can proceed.

The House will now proceed to the debate on private members' business.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I thank you for allowing that and being consistent in your ruling. I realize this will not be an easy bill but behind the bill comes the challenges, not only for the Department of Finance but, I suspect, for the entire economy.

Bill C-253 is an act to amend the Income Tax Act which will deal with the amendment to the Income Tax Act to allow contributions to registered education savings plans to be tax deductible. It would come as a surprise to many Canadians it currently is not the situation.

Is it any wonder today that students face the kind of debt situation that they are now seeing at a time when manufacturers and others around the world are demanding that Canada do better in order to provide a more skilled workforce and more vibrant economy to meet the challenges of a modernizing economy against a highly competitive world.

The bill provides a regulatory regime similar to that of RRSPs and it also has built in penalties and guidelines to prevent the RESP from being used as a tax shelter, as some will indicate, instead of its sole purpose of generating funds to be used to pay education costs.

I would like to speak about the rationale of this bill. Nothing is more important for the future prosperity of our great nation than having a highly educated workforce. However, the reality is that contrasted against the backdrop, with soaring tuition costs at universities and colleges, these are creating concern that post-secondary education may soon only become the purview of the wealthy.

This, in my view and I think in the view of most Canadians, indeed the constituents in my riding and ridings across Canada, is simply unacceptable as it would place Canada at a considerable economic disadvantage, both domestically and in the international marketplace.

It is very clear that it is not just students who know this and businesses. I would like to refer to some of the comments that were made today coming out of the industry committee's report which it tabled earlier today. It reflects on how manufacturers are responding to this.

According to a survey conducted by the Canadian Manufacturers and Exporters in 2003, more than 40% of manufacturers say that skill shortages are seriously constraining their ability to improve business performance and grow. About 17% of those surveyed indicated that skill shortages pose a major constraint on their ability to develop and commercialize new products. Finally, slightly more than 25% report that a lack of skilled and experienced personnel is a challenge that will fundamentally change the nature of their business over the next five to ten years.

It is clear that Canada must do more to motivate younger people and to provide Canadians with an opportunity where they can best meet that. We can talk about assistance for students who are at the very low end of the economic scale, through no fault of their own, who can get access to higher education to better themselves. We can talk about wealthy students for whom any education anywhere they want to go is no object.

We are dealing with a fairly large middle class in this country with a hodge-podge of programs that simply cannot make the grade. Many of them choose not to go to university or college, or to get a diploma, a certificate or a degree. As a result of that, the singular loss of an 18 or 19 year old and his or her r ability to get access to higher education is not just a loss for that individual but it is indeed a loss for our country. Our ability to attract investments and, most important, yes, for the finance department and the bean counters to generate revenue for the next 30 or 40 years, we want to look at it from a selfish point of view.

As I said earlier, this issue is not confined. It is simply a question of whether the finance department thinks it is a good idea or a bad idea and whether it is concerned about the loss of revenue. If we are going to navel gaze and look at today, I suggest that if we cannot plan 10 years from now and give our students an opportunity to get access to higher education and allow universities to bring people in to pay the kind of resources, to pay for the kind of personnel and to pay for the kind of expertise that will make our universities and colleges and our certificate granting institutions the best in the country, then this country will fail the next generation.

In the absence of a hodge-podge of programs that exist, this bill simply provides the best step forward with resources that are already available to all Canadians who pay taxes and who may want to direct to a loved one, a family member or their sons and daughters the opportunity to gain access to a better job through access to higher education.

To contrast the difficulty we currently have, 27% of Canadian families have an RESP to help pay for their children's education. One major reason for this relatively low percentage is the financial burden placed on families to maintain an RESP.

Regardless of the long term benefit, RESP contributions require after tax monthly family income. Some families are simply unable to afford the minimum monthly contribution, usually $100.

Making contributions tax deductible, as the bill proposes, offers families incentives and financial assistance to create and manage an RESP. In addition, making contributions tax deductible not only provides a means to help address educational costs, it will impact on lessening post-graduation debt which often is a debilitating financial drain on the graduate.

There is no doubt that the need for higher learning cannot be gainsaid. According to Statistics Canada, in today's labour market two out of three jobs require more than a high school education. Post-secondary graduates, according to the same institution, have a high employment rate, are less vulnerable to economic downturns and they receive higher incomes which, for the Department of Finance, which I am sure is listening today, also means generating more revenue.

I want to talk about measures for preventing the RESP from being a tax shelter. It has been raised by my hon. colleagues and I am sure others that this might somehow see itself as a shelter. Let me read into the record what the bill would do.

When contributions to an RESP are withdrawn either by the subscriber or the beneficiary, this is referred to as a “refund of payments”. Payments of investment income made out of an RESP to a student beneficiary are referred to as “education assistance payments”, EAPs. Payments of investment income made out of the RESP to the subscriber, in the event that a student does not, or is unable to, attend the post-secondary education are referred to as “accumulated income payments”.

At present, and this is a point that I made to the hon. House leader, EAPs and AIPs are taxed under section 146.1(7) and (7.1) of the Income Tax Act, but a refund of payments is not taxable under section 146.1 since contributions are made from after tax income.

The bill inserts a refund of payments into one section, 146.1, and repeals 146 (7.2) which would l make a refund taxable when withdrawn. After Bill C-253, the EAPs and AIPs will continue to be taxable when withdrawn.

To ensure that the RESP is not used as a tax deferral vehicle, the AIPs are subject to part X.5 penalty tax under section 204.94 of the Income Tax Act. If the AIP is withdrawn by a subscriber in the event that the child does not attend the educational institution, the accumulated income payment will be subjected to a 20% tax in addition to the regular tax payable.

There is a lot here as to whether or not one can reasonably conclude this would be a tax deferral. In fact, it is an opportunity with some fairly strict guidelines and a substantial firewall.

The high cost of education, and again I will use Statistics Canada as a source, average undergraduate degrees almost doubled, from $2,023 in 1993-94 to $4,000 in 2003-04 and is expected to hit nearly $8,000 by 2012.

Increases in tuition fees are partly responsible for increases in student debt. The average amount owed to student loan programs by university graduates increased 76% between 1990 and 2000.

One-third of students who left before graduating in 2002 did so for financial reasons. That is the gap. That tells us exactly what is occurring right now because young people, students cannot make the grade. This financial barrier, notwithstanding all the programs that are there, federal and provincial, simply does not meet the test of ensuring that those who want an education and who have the means of obtaining a higher education cannot do it because there are financial impediments. It is important for us to understand this.

It is projected that by 2010 a four year degree could cost in excess of $100,000, in residence. In 2002, with only 50% of children under 19 having an average of $8,600 put aside for them by their parents for their entire education, this represents a significant savings shortfall. According to Statistics Canada, parents who expected their child to receive grants for post-secondary education based on financial need saved significantly less.

The interesting part of this is that almost one-third of all children who are 19 had parents who expected them to receive such assistance even though it is likely that many will not. With respect to saving for a child's education by others, grandparents and other relatives, few actually do so.

Under the existing program, notwithstanding the generosity of the 20% top up, in 2002 only 14% of children had savings plans established by persons other than parents.

Where does that leave us? It leaves us with a large question on student debt. These loads are rising. According to Statistics Canada, bachelor graduates in 2000, with student loans owed on average 76% more than their 1990 counterparts after adjusting for inflation. A similar increase in student debt over the same period was found for college graduates. I can go over the list of people. Only one out of five graduates, who owed money, was debt free two years after graduation. On average, of graduates still owing money, only 25% of their debt had been repaid.

We have talked a bit about the question of royal prerogative, and I will not debate that point. It was made abundantly clear by yourself, Mr. Speaker, that this matter was never signalled or flagged for that reason. What it does is it responds effectively to a number of foreign organizations that are concerned about the current status of education.

My province of Ontario has decided to lift the freeze on tuition fees. Students are going to find it very difficult, earning $8 or $9 an hour, to earn enough money to pay a $7,000 or $8,000 tuition base for five credits per year over four years, and that is if they are lucky enough to find a job for a three month period. They may have to live in residence and have other incidental costs. Notwithstanding the government's budget, which allocated a small credit for books, there will be a substantial shortfall.

Others have suggested that we need to do more, and that includes the Governor of the Bank of Canada. At Humber College on March 30, 2005, David Dodge suggested that we needed a system of incentives for continuous learning and upgrading of skills and an infrastructure that delivers the training. This has always been important, but as I mentioned earlier, it will be particularly important in the next two decades as the labour force growth in Canada slows.

We are on the precipice of a significant and dramatic change in our demographics, and this is clear. Right now about one in eight Canadians is aged 65 years or older and therefore drawing a pension. By 2026, in 20 short years or less, this ratio will be one in five.

We have a challenge ahead of ourselves and it must be met with a robust attempt by Parliament and, I hope, the government. I suspect it will not support this, if not for the fact that it is concerned about the short term loss of expenditure.

The Governor of the Bank of Canada went on to say, “The first step to improving skills is to build an excellent infrastructure for early childhood development, feeding into a school system that effectively teaches basic skills”. He went on to point out that Canada's concerns must be founded on three global trends: technological change, globalization and demographic shifts.

Contrast this with what manufacturers are saying and with the heavy debts that students are currently incurring, it appears to me, and I think to most reasonable onlookers, that the existing situation is not tenable.

To ask our students to take on a burden and to ask government to cover the costs of those burdens in terms of loans, when an existing facility exists right now through the income tax system, seems to me, and I think to most reasonable people, an opportunity not for the government to go out and spend money, but to review the programs it has and channel much of that effort toward depriving itself of a bit of revenue in order to achieve a long term objective. If we look at where we are going with this legislation, it provides us with ample opportunity to ensure that Canadians have what many others around the world seem to get.

Long before manufacturers decide to hop on a plane and make their future investments in China, or in Brazil or in India, because of the quality and level of education, it is incumbent for our future programs, for the prosperity that we have in this nation, that we at least give students a fighting chance. In the absence of no existing programs in our country to address the fundamental needs of so many students with a large level of debt, this is an important step toward ensuring that Canada has a vital, vibrant skilled workforce. To do that, let us give Canadians and their families the tools to do it. Let us support the bill.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I listened with great interest to the member's speech. He is very passionate about this issue. I can tell he cares a great deal about our students, and that is important.

The member seems to indicate in the absence of programs. The RESP program already exists and there are incentives in the it. In fact, we have seen this program grow by sevenfold since 1997, so people are using it.

In its budget, the government provided significantly more availability to student loans. It has provided tax credits, invested in infrastructure at universities, and we are moving toward assisting the provinces in other ways.

While I appreciate the motivations of the bill, I question whether it is useful in any way.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I thank the hon. member for Peterborough for complimenting Liberal initiatives, but I suspect that if the hon. member looks at 1998, 27% take-up is insufficient. That means that 73% of students cannot or do not have the capacity to use the existing RESP system. It has been condemned by students. It has been condemned by the Fraser Institute. He should speak to students in his riding. Whether it is Sir Sandford Fleming College or Trent University, students, like my nephew or others who I know, say there are tremendous impediments in the possibility of going those universities or colleges to get the kinds of degrees and education they need.

If the hon. member took a bit more time to look at the way in which the income programs work, it is not based merely on the income of parents or whomever. The needs test is much more prohibitive. As a result of that, students are not only winding up in debt, but one-third of the students right now cannot finish their education because they cannot afford to continue, notwithstanding available programs.

The Liberal Party may have built the base, but it is now time for Parliament to go one step further to meet the challenges of a globalized economy. Fisher Gauge in his riding is looking for skilled workers and cannot find them. People, with meagre salaries, cannot afford to pay tuition for four or five years. It should be obvious to the hon. member, and in particular to his riding, why the bill is necessary.

Ask the middle class people in his riding what they think about this, those who pay taxes, if they could direct a portion of that to give their young kids an opportunity to higher education.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, I listened with great interest to my hon. friend's remarks. In a previous life, I sold RESPs. I have never heard anybody condemn the RESP program. Would people like more to be done? Absolutely they would.

However, I would like to ask three maybe slightly technical questions. I may have missed it in his earlier remarks. Is the hon. member suggesting we retain the Canada education savings grant, as well as making contributions tax deductible? Are we talking about tax deductibility on a limit of $2,000 that currently qualifies for the CESG or on $4,000 that is allowed to be put in every year? Has the hon. member costed out what this would cost, in terms of revenue to the government?

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I compliment the hon. member for Edmonton Centre on his questions.

The hon. member will know that the current RESP system provides an incentive of up to 20%. Our government proposed 30% and 35%, which passed just before the last federal election. This is to help students who have a much more difficult time of getting in the system. It provides plentiful opportunity for some students to take advantage of this.

However, I want to underline this for the hon. member. The contributions that people make and the incentive that the government gives only comes after they have paid their taxes. This in fact is a deduction from their taxes. Hard-pressed families, who are trying to make ends meet and who want the young ones to do very well, will have an opportunity to do so.

An average family making $45,000, $55,000 a year, paying $10,000 income taxes, may be able to take a portion of that, up to $18,000, although it is not likely they will do that, and over a period of time up to $42,000. It is similar to the system under RRSPs. They can achieve that goal simply by continuing their job. If they pay taxes, they can direct some of those taxes as a tax credit to do something that is not just good for themselves and good for their families, but ostensibly for the well-being sustainability of our future economy.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am pleased to speak to bill, sponsored by the hon. member for Pickering—Scarborough East. I want to applaud his concern and his actions with respect to affordable education.

It is important and I agree with his comments about our need to ensure we continue to have a very strong knowledge based workforce and affordable education. I only wish the member had been as passionate back when his government sharply cut back funding for post-secondary education and started us down the path of high tuition and increasing student debt. Here we are today. We need to examine the provisions of this suggestion and whether this is the right way to go.

The bill proposes major changes to provide a more favourable tax treatment to registered education savings plans, RESPs. More specific, the bill would make RESP contributions deductible, in addition to very low taxation of the growth of the RESP on the other end. It would increase limits on contributions as well to the same level as those applying to RRSPs. We have looked at these measures very carefully. The goal is the same, to have affordable post-secondary education and the lowest possible student debt.

The examinations suggest that these measures are really not the best policy direction at this time, given the assistance that is already in place for this purpose. In fact, there really is no evidence, and the member did not bring forth any evidence, to suggest that existing measures in support of post-secondary education savings are inadequate. In fact, he pointed out that nearly one-third of Canadian parents already were accessing the RESP for the benefit of their children. I think most parents find that very adequate.

I want to explain how the current RESP regime works for Canadians watching this debate. It already provides considerable assistance to parents and grandparents to save for their children and grandchildren's post-secondary education.

Currently, up to $4,000 can be contributed annually to RESPs for each beneficiary. I did not hear the member explain why ordinary families could, under any circumstances, contribute more than $4,000 a year. That is a lot of money to almost every family in the country. The amount of $4,000 can be contributed each year, to a lifetime maximum of $42,000 per beneficiary.

These contributions are not deductible, but there is no tax payable when the contributions are withdrawn for the beneficiary's post-secondary education.

The amounts invested in RESPs grow tax free. As a result, the assets grow much faster than if they had been saved outside an RESP. When the investment is taken out, it is taxed in the student's hands rather than the contributor's hands. This means that savings in an RESP results not only in deferral of tax on the investment income, but when the income is taxed, it will be taxed almost always at a very low rate, since full time students generally pay little or, more common, no income tax.

In addition to this generous tax treatment, the government provides the Canada Education Savings Grant, which is an additional contribution by the taxpayers of Canada to each and every RESP. It makes registered education savings plans even more attractive. Under this grant, the government provides 20% of the grant up to $2,000 of contributions for a child under the age of 18. That grant is annual. There is a lifetime maximum grant of $7,200.

In addition, to help promote more saving by low and middle income families, this grant on the first $500 of savings is 40% for families with incomes below $36,000 and 30% for families with incomes between $36,000 and about $73,000. This gives extra incentive to the broad base of Canadian families for savings in an RESP.

This grant grows tax free within the education savings plan. It is not lost. Even if a family for some reason cannot contribute in a particular year, there is flexibility so that families can catch up on missed contributions but still receive the yearly grant.

Taking into account the tax deferral, the Canada education savings grant and the fact that most students pay little or no tax, saving in an RESP often earns a higher rate of return than saving for retirement in an RRSP.

This tax assistance for education savings plans costs the Government of Canada about $130 million a year in forgone revenue and about half of that amount to the provinces. In addition to the $130 million in forgone revenue, over $440 million is provided for the grants that I spoke about. That was in the year 2005. The federal government already provides over $570 million per year in savings assistance for post-secondary education just through this program alone. There are many other programs as well. There is over half a billion dollars already in this plan.

This bill proposes to make contributions to RESPs tax deductible in the future. The contributions would be taxed in the hands of the contributor when they are withdrawn rather than be tax free to the contributor as is currently the case. The Canada education savings grant would still provide the grants on the first $2,000 in contributions. The contribution limits would be raised to be the same as RRSPs. Under this bill contributions could be up to 18% of earned income or up to $18,000 in 2006.

There are three main concerns with this proposal and I would like to go through each of them. First, there is really no evidence that the current plan is not working well for Canadians. If one reads the bill, one would be tempted to believe that the existing plan is not very generous and that Canadian parents are not saving enough for their children's post-secondary education. It is quite the contrary.

With the current education savings plan's limit, saving $2,000 annually in a child's RESP means that almost $75,000 could be available for that child's post-secondary education by age 18. About $95,000 would be available if a parent contributed the current $4,000 limit annually until the $42,000 lifetime limit was reached. That is a considerable amount of money for each child's education.

To put things in perspective, this is more than the annual cost of a typical undergraduate program today, including tuition, books and living expenses for someone studying away from home. Right now the cost is about $18,000 a year, or $72,000 for a four year program. This means that existing RESP limits are adequate and do not need to be raised.

Are parents saving for their children's post-secondary education? I am happy to confirm to members of the House that contributions to RESPs have tripled since 1998. In 2005 the total contributions to RESPs were roughly $2.4 billion. In fact, total assets held in RESPs have skyrocketed to seven times their value nine years ago. It is very clear that the RESP regime is working.

It is also a concern that parents and grandparents on pension or investment income would no longer be able to make a contribution.

In addition, there are the technical problems that I talked about. Someone who has only one child can save as much as someone with five children. Someone with more children cannot save any more under this plan.

We need to continue with the measures that governments have brought in and that we brought in in the last budget to assist students. There are problems with the member's proposal and I have outlined them. I would ask my colleagues in the House to consider very carefully following the government's lead in not supporting this bill.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I am very pleased to rise here today as deputy finance critic for the Bloc Québécois and as a young critic.

Generally speaking, the Bloc Québécois is in favour of reducing the tax burden on the middle class. It is therefore not against the idea that taxpayers who make contributions to an educational savings plan should receive a tax break.

In my short speech, I will identify a few flaws in the bill; however, we believe that the proposed measure is nonetheless very commendable. The flaws will have to be fixed, however, and clarifications about the bill must be provided before we can confirm our support later on in the legislative process.

It would also be wise to consult experts to get an idea of what such a measure will cost, as well as its social, economic and tax implications.

We see the advantages of this bill, which seeks to target a certain class of taxpayers that is often neglected and that already sacrifices more than its fair share, namely, the middle class. This will no doubt be popular with parents and grandparents who could benefit from lower taxes when they pay into an RESP for their children or grandchildren. I would be willing to bet that, if this bill were passed, more and more people would want to take advantage of this program and that, in the case of people who already have RESPs, they would want to contribute even more generously.

That said, as I mentioned earlier, we have some reservations about this bill. The first is its potential cost—it could become a very expensive proposition. For example, the existing Canada education savings grant program cost the federal government $318 million in 2000-01 when the grant applied to only 20% of the first $2,000 in contributions to an RESP. That means that over $1.5 billion was contributed that year, representing the minimum amount that taxpayers could have deducted from their taxes. Today, this amount is undoubtedly much greater taking into account inflation, the annual ceiling that has risen to $4,000, and the fact that if the terms of the plan are more generous many more people will want to enrol.

Clarifications are required about the intent of the bill. It seems to be modeled after the registered retirement savings plan in that unused deductions under the RESP can be carried forward and applied to future income tax returns. However, an RRSP is not a contract like an RESP. The taxpayer is not bound to put aside money for an RRSP; there is only the opportunity to do so up to a fixed amount based on previous income and a fixed ceiling. However, with an RESP contract, contributions must be made, generally on a monthly basis.

Thus, is difficult to understand how a taxpayer could have unused deductions unless he can claim the contributions in the fiscal year of his choice, which the current bill does not seem to allow.

It is also difficult to understand the purpose of and the reasoning behind the mathematical formula used to calculate unused deductions. This formula adds the RESP ceiling amount to unused deductions and excludes contributions to the RESP. It is difficult to understand the logic of this calculation, unless it is an attempt to go beyond the ceiling or to artificially increase it for the purpose of deducting contributions.

Under the present legislation, any excess contribution made into the plan in respect of a beneficiary is taxable, except in certain cases of transfers from one RESP to another. This could result in the imposition of a tax penalty on all subscribers as long as they do not withdraw that amount. Since the bill does not repeal the sections that impose these penalties in cases of excess amounts, there is a contradiction between the current legislation which imposes penalties on the one hand, and this bill which would permit tax deductibility on the other.

There is another thing we have a lot of difficulty understanding. That is the connection the bill makes in clause 4, which permits the tax deduction, between the excess amount of the contributions an individual has made over a fiscal year or in the first 60 days of the following year, and the portion of his contribution that he deducted from his income tax for a preceding taxation year.

This bill seems to assume that the portion in question is an excess amount, which might not be the case.

With regard to the definitions in this bill, it says that a taxpayer may deduct the lesser of the following amounts: the amount, if any, of the contributions made in 2007 and in the first 60 days of 2008, or the deduction limit.

Next, it defines the excess amount as the lesser of the following amounts: the sum of the payments exceeding the deduction limit, or the excess amount accumulated in preceding years.

On the one hand, the excess amount is defined as the excess contributions for the current year plus 60 days of the following year. On the other, it is defined as the excess of the amounts accumulated in preceding years. I grant that this is rather technical, but I am not mistaken: there seems to be a contradiction here in the bill, which will certainly require some work in committee.

In paragraph 146.1(1), the bill also repeals the definition, in monetary terms, of the annual limit of the registered education savings plan, but does not replace it with another limit. It does not say that the minister will be able to set this limit, which leads us to believe that the present limit will apply. In that case, there is no explanation of why the bill proposes to repeal the paragraph that currently sets the limit.

One may also question the equality of opportunity available under this bill to families with higher and lower levels of income. Because of the weight of that 18%, we will find ourselves in a situation where farmers with low incomes will not be able to benefit from the deduction limit, while those with a higher income will. Finally, 18% seems to us an arbitrary percentage under the circumstances. It would be interesting to see in committee where this percentage comes from.

In socio-economic terms, and particularly for Quebec which has opted to make higher learning accessible by keeping tuition fees below the Canadian average, the enthusiasm of Quebec households for the RESP may be not as great as it is elsewhere. It will certainly be necessary to take account of the societal choices that Quebeckers have made, as they are already paying a good deal for their children’s education, more through income tax than through personal contributions.

The Bloc has a number of improvements to propose to this bill. It will be necessary to clarify the more technical aspects I referred to earlier. We also propose a non-refundable tax credit instead of a tax deduction. That would surely be less generous and hence less expensive for the federal government than the deduction now being proposed, the costs of which are unknown.

The bill could also establish an income cap beyond which a taxpayer might not benefit from the measure. That cap could fluctuate according to the number of beneficiaries, that is, children, in a family within the same RESP.

Finally, since married and common-law couples are almost four times more likely to contribute to an RESP than single parents, a special provision could be made for those couples.

To conclude, in all cases, even though the principle of the bill is interesting, it deserves to be clarified and improved. The Bloc Québécois will be working in that direction.

[Denise Savoie, NDP, Victoria, BC]

Mr. Speaker, I am happy to speak to this bill. I think all members in the House certainly concur that we must make access easier to post-secondary education and skills training for our young people and that government has an important role to play.

Recently, an OECD study of countries stated that one of the most effective things that governments could do to facilitate this access was to concentrate first of all on families of low income revenues. This would begin to help address a very serious skill shortage in many countries including Canada.

Recently, in British Columbia a survey done throughout the province has shown that for the first time the private sector has indicated that skill shortage takes precedence over tax cuts by government as an action that needs to be taken. This is something that we should all consider in these questions.

However, I have concerns and questions about the bill. Some of them were raised earlier by members opposite about the effectiveness of the bill. There were also some technical questions and the cost that it would represent.

As I said, we must facilitate access for students in underrepresented groups, students with disabilities, aboriginal students, students of low income families and from rural areas. We know that they are not accessing post-secondary education and training as easily as others.

We also know that the RESP has been effective in attracting families who earn over $80,000. However, as for the other underrepresented groups a recent study has said that the RESPs, including the Canada education savings grants, while providing enhanced incentives to lower income families to increase their contributions to RESPs, they do not appear to solve the more fundamental problem of insufficient family income which prevents some families from contributing to RESPs and taking advantage of the CESG program.

Approximately six in ten future saver and non-saver parents in the 2002 survey gave no disposable income or insufficient money as a reason for not yet or never saving.

Therefore, this is a very serious problem in considering this particular bill. It seems like a little bit of tinkering rather than the major overhaul of the learner assistance program that we would need to consider.

The Conservatives, in their recent budget as a solution to the problem of increasing student debt, have offered to raise the ceiling that students can borrow. That is their solution. I believe they even offered $80 for a book.

The Liberals, while they were in government, cut transfers to education and that sent tuition fees spiralling upward and with that student debt.

The Liberal post-secondary education critic yesterday called on the government to invest in students and not tinker with the tax system. I am wondering if this bill is a little bit of tinkering. The bill by the member from the same caucus seems to do just that instead of ensuring genuine investment in lower tuition fees, lower debt, and needs-based grants for students.

Liberals talked about investing in students when they were in opposition and that was great to hear. Yesterday I heard the post-secondary education critic claim credit for a $1.5 billion investment in lower tuitions from Bill C-48 which I think we are all clear was the NDP money that was conceded after negotiations with the Liberal government. This was basically money that the Liberals were forced to put into post-secondary education after years of cutbacks.

In considering this bill, I looked at what the various stakeholders were saying about the existing system of loans and various types of assistance for students.

La Fédération étudiante universitaire du Québec said that the federal government must completely review its national registered education savings plan and Canada education savings grant which amounted to $125 million and almost $500 million respectively. It felt that instead of eliminating financial barriers, the system has become so complex and convoluted that it is very difficult for students to access it.

Similarly, the Canadian Federation of Students said:

We therefore recommend that the federal government transfer the money now spent on the RESP program and other tax credits to the low-income grant. We estimate this transfer alone, a revenue-neutral transfer, would reduce student debt by 41%.

These are just some of the comments from stakeholders who are themselves paying for tuition. They are advising us on solutions that they feel would begin to address the problems they are facing.

The NDP has never opposed the RESP. We think it is part of a solution, but as students associations and federations have indicated, the system requires a major overhaul, not just tinkering. We feel there is a need for a comprehensive learner assistance program that would create a clearer, simple path for students, one that would be more flexible and more transparent.

In the last election we clearly indicated to everybody that we believed there was a need for the re-establishment of a single transparent transfer to provinces to re-establish adequate levels of funding for post-secondary education and training. The previous Liberal government failed to do that. We are still waiting to see how the present government will respond to this situation.

We are still considering many of the concerns that I have raised about this bill. We will see how it evolves through the House.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am very pleased to have the opportunity to speak on the bill that has been wisely put forward by my colleague from Pickering—Scarborough East.

The old issue of post-secondary education is one that has been very important to me before I came to this place, but particularly since I have come to this place.

I had the privilege last year to be the chair of the government caucus on post-secondary education which afforded me the opportunity to travel the country to talk to students from CFS; CASA; and other students; university presidents; CAUT, the professors who teach our students; alumni; and a lot of different people involved in university.

For me there is no more compelling or important issue in Canada than the issue of post-secondary education. How do we maximize the human potential of Canadians?

For a long time, Canada has done very well in the world for reasons that are more by accident than design. We live in a place that does not have world wars occurring in it. We have natural resources that are great. We have been very fortunate, but the nature of the world is changing. It has become so globally competitive with the rise of China, India and Brazil, and the resurgence in Russia. Other nations are investing in post-education and we must ensure we do the same.

To set the stage, there are several components to post-secondary education. One of them is the whole issue of how we are preparing for a new world. Not only have we, as a nation, been successful financially, but in the last number of years we have invested massively in post-secondary education, research, innovation, technology transfer, and things like that. Members do not have to take my word for it. The blue Conservative budget book says:

Since the deficit was eliminated, the federal government has increased its support for post-secondary education research, with nearly $11 billion in incremental funding. These investments have assisted Canadian universities in strengthening their research capacity and building a global reputation for excellence, which has helped reverse the “brain drain” and attract leading researchers to Canada.

Canada now ranks first in the G-7, and second in the OECD (behind only Sweden) in terms of research and development--

I am sure everybody will join me in a round of applause for former Prime Minister Chrétien and finance minister Manley and particularly the member for LaSalle—Émard who was a leader in this, as well as the finance minister last year, the member for Wascana.

We have done well in that area, but it became clear to me, as an individual and a member of the Liberal caucus on post-secondary education, that the ground has shifted toward the whole issue of access for students. I am not just talking about universities. I am talking about community colleges. I am talking about skills upgrading and a whole host of other issues.

This is important to understand. I have heard, particularly from colleagues in the NDP including my friend from Burnaby—Douglas, who I respect a great deal, that we did not do anything for students. Again, I refer to the Conservatives, who are not particular friends of ours, who indicate in these books that in 1995-96 approximately $2 billion in direct support measures for post-secondary education were provided. By 2004-05 this direct support had grown to approximately $5 billion. It says:

Federal direct support to post-secondary education students totals about $3.5 billion annually, including Canada Student Loans to some 330,000 students; non-repayable student financial assistance through the Canada Study Grants and Canada Access Grants; and measures to help students and families save for future education--

The fact remains that access is still an issue. My hon. colleague from the New Democratic Party mentioned that. She is very sincere about that need.

In fact, it is not just the tax system. I believe, as she does and as members of our party and many other members believe, that we must do more in direct assistance to students. We did that last year. She mentioned Bill C-48 as well.

She should take note that I asked the Minister of Finance a month ago, when he appeared before the finance committee, where is the Bill C-48 money of $1.5 billion?. The Minister of Finance said he thought it was $1 billion. I said it was $1.5 billion. It was checked and it is only $1 billion, and it is not going to access. It is going to infrastructure.

We need infrastructure. We need research. We need to keep the pressure on research and we need infrastructure, but we need direct support for students. The Minister of Finance indicated that infrastructure is access. I would say infrastructure is not access. Infrastructure is important, but access is important for the very reasons that the member mentioned: low income families, aboriginal Canadians, and persons with disabilities.

Last fall we introduced our fall economic update in the House which contained the following measures: $2.2 billion over five years to improve student financial assistance for low and middle income Canadians; $550 million to expand the Canada access grants for four years to the lowest income families; $3.5 billion over this year and the next five years to increase workplace training; $1 billion for the innovation fund; $265 million for five years to assist Canadians with disabilities to participate in the workforce; and $1.3 billion over five years to improve settlement and integration services.

We made that commitment to the lowest income Canadians, the Canadians most marginalized, those people whose skills we are not taking advantage of.

Since I have been elected I have had students with Down's Syndrome and cerebral palsy come to see me. Some of them have been sitting at home for two years after finishing high school with a real sense of momentum. They are falling off a cliff in terms of what is available to them.

The measures in our economic update would have helped those people and it would have helped the lowest income Canadians to go to community college or university and get a post-secondary education. Our economic update could have been passed in this House. If the NDP had been sincere in supporting it, we could have given students a break, aboriginal Canadians a break and the environment a break. We could have given all Canadians a Christmas break if we would have had our election six weeks later. I do not like to keep bringing this up, but those are the facts. We could do better.

I agree that tinkering with the tax system is not the only solution. When tuition at Acadie is around $8,000 and at Dalhousie $6,000 for a first year arts and science degree, giving a student $80 for books is irrelevant. It does not help those who need help the most.

This is a way of using the tax system to make a substantial improvement in access for students. We have all had students come into our office who tell us that they cannot get any student assistance even though their family is not rich. They need some kind of support. Making RESPs tax deductible would be a significant investment in the future of Canada.

I have RESPs for my children, and I think they are a great way to go, but a lot of Canadians cannot afford to invest in RESPs. If we make them tax deductible, if we follow the plan from the member for Pickering--Scarborough East, we will get a lot farther than we otherwise would.

Anything we do for students is good but what we have seen from the government since the election has been nothing for students except some tax changes that affect scholarships and books. Those changes are not significant but this bill is.

In Maritime Canada, average student debt skyrocketed 33% in five years from 1999 to 2004. In five years it went up by one-third. The average student debt of somebody coming out of a Maritime university is now $28,000. The study found that 73% of all students had to borrow to finance their degrees. This bill would help with that.

Not only is skyrocketing student debt leaving our students after they graduate from university with a mortgage but no house, it is affecting their decision-making. I met with a medical student from around the Amherst area in Nova Scotia who wants to go back and become a family doctor in her community. She had that as her goal ever since she was a little girl. She is now some years into a medical degree with a student debt of $150,000. She has decided that she has to specialize in order to pay off her loans. If we do not make significant, serious investments in post-secondary education, people will make decisions that are not good for them, not good for their community and, I would suggest, not good for the country.

I think we have all spoken to students. As the chair of our caucus I have had the chance to travel the country. I have discussed this with the Canadian Federation of Students, with CASA and with universities. What I hear is that we have done a lot in research. We have sustained the universities in the last five to six years in the investments that I talked about. It is a good thing for universities. Infrastructure is a good thing for universities. The government put $1 billion into the budget for infrastructure, which matches what we had put in our economic update. The government's investments in research are one-tenth of what we put in the economic update. That is not enough. There is absolutely nothing for student access or to help a broad range of students and their families prepare for post-secondary education.

If the country wants to compete and to continue to do as well as we have, fortunately, through good government in the last decade or so, we need to invest in our students, those who need help the most and those who cannot afford to go university because of high tuitions. We can do it. The bill is part of that and I commend my colleague. There is more that the government should do but this is what we can do to have a positive impact so we can take advantage of the human capital that exists in Canada and continue Canada's success in the world.

[The Deputy Speaker, Bill Blaikie]

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

The House resumed from June 21 consideration of the motion that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions), be read the second time and referred to a committee.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, it is a privilege to engage in debate today with my fellow colleagues on Bill C-253, sponsored by the hon. member for Pickering—Scarborough East.

The bill proposes two major changes to registered education savings plans, or RESPs, that would affect contributions made in 2006 and future tax years.

We all agree that post-secondary education is important for the future of our children and for the future of this country. A well-educated workforce is a critical factor to improving Canada's productivity and raising our standard of living. In a knowledge based economy, our young people must have the skills to compete successfully in an increasingly sophisticated labour market.

More than half of the new jobs created today require post-secondary education. We can only expect education requirements to increase over time. We want our children to have access to post-secondary education and we want that education to be second to none.

The bill before the House today proposes an increase in support for post-secondary education by providing additional tax preferences for RESP savings. However, I believe this bill is not the best way to promote post-secondary education.

First, I will give a brief overview of the considerable support the Government of Canada provides for post-secondary education; second, I will explain the significant support that is already provided for education saving; and third, I will explain why measures proposed in the bill presented by the hon. member for Pickering—Scarborough East would not be cost effective ways to support post-secondary education.

The Government of Canada provides significant support for post-secondary education. In addition to transfers to the provinces, the Government of Canada provides over $5 billion annually in direct support to post-secondary education. Of this amount, $1.7 billion is provided to educational institutions for research to help ensure our brightest researchers stay in Canada and contribute to maintaining Canada's edge in innovation. Also, $1.8 billion is provided in grants, scholarships and loans to improve access to post-secondary education for low income students and rewarding those who attain academic excellence. We also provide $1.7 billion in tax relief to students and their families in recognition of the cost of post-secondary education through measures such as the tuition tax credit and the education tax credit.

This government's commitment to post-secondary education was evidenced in the 2006 budget presented in the House on May 2, 2006. The budget follows through on our platform commitments by proposing to create a textbook tax credit. The credit will be provided of $65 per month for full time study or $20 per month for part time study.

This government also recognizes that post-secondary students need to be supported in their hard work in the pursuit of academic excellence.

[Dan McTeague]

It is a pittance. It is one textbook.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

I am glad to hear that the member opposite agrees with me.

Budget 2006 discards the previous $3,000 partial exemption and proposes to make all scholarships and bursaries received by students enrolled in post-secondary studies completely exempt from tax.

Budget 2006 also proposes to improve access to student loans by reducing the parental contribution required for students from middle income families for the purpose of student loans. It is estimated that this change will enable 30,000 students to gain access to assistance and 25,000 to have access to increased loans.

The government will also provide a one-time payment of $1 billion into the post-secondary education infrastructure trust, providing that the 2005-06 surplus is in excess of $2 billion. The trust will support critical and urgent infrastructure and equipment in colleges and universities.

Budget 2006 also included funding for research and development and measures in support of apprenticeships and trades.

Let me turn to the assistance that is already provided for education saving. RESPs are given preferential tax treatment to help parents save for their children's post-secondary education. Up to $4,000 can be contributed to an RESP in a year for each beneficiary to a lifetime maximum of $42,000 per beneficiary. Funds invested in the plan grow tax free until they are withdrawn. Contributions are not deductible, but can be withdrawn tax free. Investment income earned in the plan is taxed in the hands of the students when withdrawn for post-secondary education. In short, the tax benefits in an RESP come from two sources: the deferral of the tax would be investment income and the fact that this income is taxed at a low rate because students generally pay little or no tax.

In addition to the tax preferences I just described, RESP savings qualify for the Canada education savings grant, or CESG, which makes saving in an RESP even more attractive. Under this program, which is aimed at encouraging saving for post-secondary education, the government provides a 20% grant on the first $2,000 in RESP savings for each beneficiary in a year.

To illustrate how this works, assume a parent contributes $2,000 to an RESP for his or her child, the contribution would earn $400 in CESG and the income on both the contribution and the CESG would grow tax free until the funds were withdrawn to cover the cost of the child attending college or university.

Further, because it is more difficult for low and middle income families to save for a child's post-secondary education, the Canada education savings grant provides a higher grant rate on the first $500 in contributions by these families. Depending on family income, the grant rate could be as high as 40%.

In addition, since 2004, the Canada learning bond kick-starts education savings for children born after 2003 and who are in families entitled to the national child benefit supplement. Up to $2,000 in total Canada learning bond grants could be paid in a child's RESP by age 16. These measures were adopted with our support.

In fact, the current RESP limit, saving $2,000 annually into a child's RESP, means that almost $75,000 could be available for that child's post-secondary education by age 18, and about $95,000 would be available if the parent contributed $4,000 annually until the $42,000 lifetime limit was reached.

The combination of the generous tax treatment of the RESP and the CESG that tops up private savings has provided powerful incentives for parents to save for their children's post-secondary education. At the of 2005, these plans held almost $18 billion in savings for future post-secondary education, seven times their value nine years ago.

Since 1998, $2.7 billion in Canada's education saving grants have provided for over 2.2 million children. Over $440 million in grants was paid into RESPs under the program in 2005. In addition, the tax deferral provided by RESPs represents about $130 million per year in forgone revenue for the Government of Canada and about half that amount to the provinces.

In total, the Government of Canada devotes over $570 million annually to tax relief and grants to help parents save for their children's post-secondary education. I believe nobody would dispute that the current RESP regime has been extremely successful at promoting savings for post-secondary education.

Let us consider the impact of the measures under Bill C-253.

First, the bill proposes to provide a deduction for contributions to RESPs made in 2006 and future tax years, with contributions withdrawn being taxed in the contributors hands rather than tax free as is currently the case.

Second, contribution limits would be raised to be the same as those applying for registered retirement savings plans, or RRSPs, that is 18% of the earned income up to $18,000 for 2006.

The bill is supposed to encourage parents to save more for their children's post-secondary education, but I suggest that the measure proposed in the bill would be ineffective and would be expensive.

For these reasons and many others, I am unable to support the bill and invite my colleagues to do the same.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, I am pleased to rise and speak to a subject of ever-increasing concern here in Ottawa and in the eyes of the population. Post-secondary education, and particularly its accessibility, is a very topical issue.

The Bloc Québécois is in favour of the principle of this bill because it is an improvement over the current provisions of the Income Tax Act, which governs the registered education savings plan—RESP—program.

To summarize the bill briefly, a registered education savings plan is created from contributions out of after-tax income. Such contributions do not entitle contributors to a tax deduction, as is the case for contributions to a registered retirement savings plan or RRSP, but the investment income that is earned on the contributions accumulates in the RESP and is tax-free. The investment income is taxed only when it is withdrawn from the RESP. If the savings are withdrawn to finance the beneficiary’s post-secondary education, the investment income will end up in the hands of this beneficiary.

The problem is that not everyone can afford to make contributions to a registered education savings plan, since a substantial income is necessary in order to do so. People prefer to contribute to an RRSP rather than an RESP.

This bill, if passed, will make it possible for parents and families to benefit from a tax deduction, as they do with an RRSP.

Putting such a measure in place would come with a cost, of course, but it would foster the growth of our society and have an undeniably positive impact on its development.

Bill C-253 has numerous shortcomings. It nevertheless remains that it is an improvement as far as the RESP program is concerned.

During the first reading of this bill, my colleague from Jeanne-Le Ber identified the bill’s chief shortcomings in his speech. I would like to do a quick review of the RESP program and the advantages for society of passing such a bill.

Although the registered education savings plan program has been around for 30 years, the federal government has given it special attention of late. In 1998, the federal government created the Canada Education Savings Grant, the CESG. This is a grant of a maximum of 20% of the contribution made, which provides the beneficiary with an extra $400. This means that, when a parent or grandparent contributes $2000, $400 will be added to the RESP of a child under the age of 18.

Bill C-253 is a continuation of the improvements that began a few years ago. According to the statistics for 2002, the participation rate for the registered education savings plan was only 6% in Quebec; that is right, I said 6%, while it was about 10% in Ontario and in British Columbia.

At present, a large number of parents and grandparents do not contribute to a registered education savings plan because it does not constitute a deduction from an individual’s taxable income. In addition, some people do not have the financial resources to do so.

Therefore, people prefer to put their money into registered retirement savings plans. However, it is a good bet that more people would like to benefit from a RESP if there were an income tax deduction similar to the deduction for RRSPs.

What the bill seeks to do is to target an often-neglected group of taxpayers, who are already asked to make more than their share of sacrifices in our society. I am talking about the middle class; the class that includes the largest number of Canadian citizens. What this bill offers is greater accessibility to post-secondary education.

The education of our children and our grandchildren is often a cause for worry and concern not only for parents, but also for the expanded family, the grandparents, aunts and uncles. Many of them fear that they will not be able to pay the increasingly higher costs of post-secondary education. The introduction of an incentive for the contributor and the beneficiary represents an investment by the government in today’s young people and gives hope to a great many young parents, young families and grandparents.

On the other hand, if the beneficiary does not pursue post-secondary studies and no other beneficiary is designated, the contributor can receive the income from the investment under certain conditions. The funds could be transferred to a registered retirement savings plan without penalty, up to a maximum of $50,000 if the individual’s RRSP contribution ceiling allows. Otherwise, a 20% income tax deduction would be made on the withdrawal and the amount that could not be transferred to an RRSP would have to be added to the individual’s income for the year. We are talking here about only the accumulated investment income within a registered education savings plan because the capital is not subject to income tax.

It is certain that the adoption of such a bill could be very costly for taxpayers because, at present, those who contribute to a registered education savings plan are not able to deduct that contribution from their income. Therefore, those households with higher incomes will benefit even more from such a measure and low-income families will see little or no advantage. However, no program is perfect and Bill C-253 represents an excellent incentive to parents and families.

In summary, I would say that this bill would enable an individual making a contribution to an RESP to deduct that contribution from income, which is almost identical to the practice for an RRSP. In closing, I want to congratulate the member for his bill and thank him for his interest in the education of our children and our grandchildren.

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

Mr. Speaker, I am pleased to have the opportunity to join in this debate on Bill C-253, a private member's bill put forward by the member for Pickering—Scarborough East to adapt and change the RESP contribution program.

Unlike my colleagues from the Bloc and my colleague from the Conservative Party who has spoken, I am going to put on the record remarks of deep concern about this particular private member's bill. I am sure it will come as no surprise to the member for Pickering—Scarborough East that while we appreciate his work in this area, we feel that his efforts are misplaced and the focus of the bill is misplaced. Through this bill we will not necessarily accomplish what I believe he wants and what we all want, which is greater access to post-secondary education for our young people. That is clearly a burning desire from all of us.

We hear daily from constituents and from young people across this land how much they want to go to university or college to pursue their educational dreams and aspirations only to learn that the obstacles sometimes are so great as to prevent them from fulfilling those dreams. Here are the questions we have to ask today. Does this bill advance the public agenda in that regard? Does it make it easier for our young people to access post-secondary education? Do the costs outweigh the benefits or not?

That is why I rise today with deep concerns about this particular bill. We have just finished a whole series of pre-budget consultations. We heard from numerous groups involved in education, students, teachers, researchers and administrators. In each and every case the demand from the education community, and from families who are concerned about opportunities for their children, was for increased responsibility and roles on the part of the federal government in the post-secondary education system.

Each and every one of those representatives called upon the government to redress the serious problems that befell our system when the Liberals cut the heck out of education back in 1995 with their infamous federal budget. They basically set us back an entire decade with their regressive and extreme views in terms of dealing with the fiscal challenges of the day. We are still trying to recover from that period. It is not helpful to have another patchwork approach to a very serious systemic issue.

All we have had over the last decade is one band-aid after another. That has been the Liberal approach to education in this country. First the Liberals cut the heck out of the system, then they promised when they had a surplus, they would deal with it and put the money back. What did they do instead? They gave huge tax breaks to corporations and put all the surplus available against the debt. Nothing was done in terms of dealing with the systemic problems facing access to post-secondary education.

This bill is another band-aid on top of a band-aid. This is like trying to fix up a patch that is already on a system that is bleeding and hurting. This is not serving the country.

I do not need to tell the House how difficult it is these days for students to access university given the rising costs of tuition. The evidence is all around us.

Mr. Speaker, it would certainly help if you could bring some order to this chamber. It is very hard to hear oneself think when there is that kind of nattering going on in the Liberal benches.

[The Acting Speaker, Andrew Scheer]

Order, please. I think the member for Winnipeg North makes a good point. It is often difficult to hear members, especially those who sit down at that end of the chamber. It is difficult for the Chair to hear her comments when so many people are carrying on side conversations. If anybody needs to converse, please take advantage of the lobbies on either side of the chamber.

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

Thank you Mr. Speaker, I was having trouble hearing myself think. I know I was saying a few things that are agitating the Liberals, but I hope they might appreciate that there are different views on this issue. We are not speaking against the RESP per se, except that it is a time of limited resources and I will concede that point.

We heard from the Liberal finance critic many times about limited choices and limited resources. Therefore, there are choices that we have to make and I will concede that we have to make some hard choices.

I want to ensure that the dollars we spend go the furthest. I want to ensure that whatever we do is opening the doors wider for students from all backgrounds. I know from this proposal that we are going to see a huge loss of public revenue that could be spent elsewhere.

In fact, right now we spend about $135 million as a result of foregone revenue with the RESPs. With this proposal, we will lose much more than that, at least $460 million in the first year. That is a lot of money that serves a very small group of people and is confined to not middle income earners, as my colleague from the Bloc has suggested, but is restricted to benefiting largely those at the high end of the income scale.

It would probably be useful for the House to know what a couple of the organizations told us during our pre-budget consultations with respect to the general matter of education tax measures.

I would like to quote from a reputable organization, the Canadian Association of Student Financial Aid Administrators. These are people who deal daily with the problems students are facing. They deal daily with trying to find ways to ensure that access is there for students of all backgrounds for post-secondary education. They concur with all of us when we say that probably the most important thing we can do as parliamentarians in a competitive world is develop a skilled and educated workforce and a post-secondary education is the primary means of achieving this objective. This organization tells us:

Since 1998 the federal government has spent increasingly on student assistance through fiscal measures introduced to the tax system...scholarship and bursary exemptions, credits for tuition fees and an allowance for each month of full time enrolment, as well as contributions to Registered Education Savings Plans.

--these tax credits are distributed almost entirely without reference to need. Several studies suggest that families from higher income ranges benefit disproportionately...they do little to assist high need students and underrepresented groups, for example, students from low income families, students with disabilities, aboriginal students, adult learners to enter our post-secondary education system.

This organization goes on to say:

We believe that means tested student financial assistance that is accessible through a simplified application process, that delivers funds at the time that expenses are to be incurred represents the most effective use of taxpayers dollars.

I think that is a point that has to be considered in this debate. I would further point to a brief presented to our finance committee by the Canadian Federation of Students which also exemplifies the problems we have in pursuing a tax credit approach to education as opposed to an investment in our post-secondary institutions to ensure greater access. The Canadian Federation of Students brief states:

Since the mid-1990s, the federal government has increasingly looked to tax expenditures as a substitute for directly allocated student financial assistance. In total, federal tax expenditures for post-secondary students have grown from $566 million in 1996 to more than $1.46 billion in 2005. This represents a 213% increase in real dollars and more than the total amount the federal government will spend on upfront grants this year.

It goes on to say that, in fact, this approach has virtually benefited those at the high end of the income scale and contributed to the growing barriers that low income people face in trying to access post-secondary education. The problem is about choices. It is about where do people put their money, how do they get the best bang for their buck.

While this RESP is something that could be part of an overall package, if one has to make choices in the context of a time when we are still recovering from the gutting of our post-secondary education transfer system and down to a federal share of a single digit, we have to do something much more significant and meaningful than tinkering with this band-aid approach.

I would suggest that we put this on hold and get down to the real issue at hand which is access for all students to post-secondary education.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Speaker, I am pleased to speak to this bill tonight and congratulate my colleague from Pickering—Scarborough East for this initiative. I think it is very important. As a former educator I can say how important this is to students across the country.

I heard earlier about the gutting of transfers to the provinces with regard to post-secondary education. I might point out to members in the House that in 1993 the Liberals inherited a $42.5 billion deficit, of which 33% of the money was borrowed. When we were transferring money, we were transferring borrowed money. It was not real money.

So, to suggest that we gutted the system, we in fact got our fiscal house in order, so that we could now do the kind of program that the hon. member who just spoke would like to see. What is the proposal this evening? It is basically to help young people and their families better save for an education.

We know that two out of every three jobs require more than a high school education. Tuition fees have continued to double. Tuition is the responsibility of the provinces not the Government of Canada. We know that it has gone from around $2,000 six years ago and by 2012 we are looking at about $12,000, and never mind the books and residence costs, et cetera. Then we are talking tens of thousands of dollars.

The hon. member for Pickering—Scarborough East has proposed to build on a Liberal initiative, which of course is the issue of the registered education savings plan. At the moment it is not deductible. I am assuming that all members in the House have constituents who pay taxes. When we pay taxes, we would like to see some benefits.

Unlike an RRSP, a registered retirement savings plan, currently under the registered education savings plan, we cannot deduct, there is no tax benefit. Imagine a family that saves $100 to put into a program that the hon. member has put before the House. If one does that 12 times in a year, there would be $1,200 which would be tax deductible. Individuals would get a break and that would be an incentive for the family, whether it is the parents, grandparents or whatever, or the student.

Having worked with students over the years, they do not earn a lot of money at summer jobs. They do their best, but it is not going to cover all of the bills. How do we fix that problem? The hon. member is proposing that we have a tax deduction.

We are not going to solve all the ills or all the problems of a post-secondary education, but we want to be on the leading edge of technology. If we want to be a knowledge based economy, we must have the people in universities and colleges to learn. They cannot learn unless they obviously have the money to go. This is really important.

We hear educators talk about the proposal as an important step in advancing educational opportunity. We hear unions talking about the importance of advancing this for educational opportunities for young people. We are investing in young people and if I have an opportunity to put $100 a month or a $1,000 or whatever it is, and I am going to get a tax break, that is an incentive.

However, it also builds and it does not mean that it is going to be the be-all and end-all. There are going to be other ways that people are obviously going to deal with it, whether they have a summer job or whatever it happens to be, but the important part is that this is going to stimulate people in that regard.

The prosperity of the country is based on knowledge and on higher education. We are very fortunate that we have an excellent post-secondary system across the country. In fact, our college system in the province of Ontario was modelled in Vietnam. The Vietnamese modelled the college system in the province of Ontario because they saw that it was an important level that they did not have. We have a great system here. We need to motivate people.

If we are going to deal with skill shortages, which we do have in this country, one of the things we must do is invest in young people. Again, this program will do that and I think it is very important when we are talking about our competitiveness with other countries around the world. We need a highly skilled, motivated workforce. We want to ensure that we have continued economic prosperity and this bill will assist in efforts to obtain those funds.

I do not think the member for Pickering—Scarborough East said that this would cure all the ills around post-secondary education, but I believe his bill should be before a committee for review in order to have a good discussion about the points that all members have raised. There have been good points from all sides but the bill needs to be studied and to move forward.

At the moment only 27% of Canadians actually have RESPs, only 27%, so 73% of Canadians do not have them. This again is an incentive for people, which is extremely important. Twenty-seven per cent is a very low figure. Making contributions tax deductible, as this bill proposes, would give that initiative to families. It would be another opportunity to move this agenda forward. I know we in the House all believe that the betterment of young people is important and we want to make sure they have the kinds of opportunities and education that the generations before them did not necessarily have.

It is a way of addressing some of the educational costs. Yes, there are other issues in terms of transfer payments to the provinces which I am sure the government looked at, as the Liberal government did. Again we have to make sure when we transfer money to the provinces that the funds are earmarked for the purpose for which they are being sent. If they are sent simply in bulk form to deal with health, post-secondary education, social programs, et cetera, and it is administered by the provinces, there is no guarantee the money will get to where it should have gone.

When this bill comes to a vote, I think all members in the House will look at the situation in their own ridings. I know that other members have been visited in their offices by young people who have talked about the massive debt that often occurs after they leave university. There are some students who cannot even go to university because their families cannot afford it and they wish they had some kind of vehicle to help them. This is what this bill addresses.

Employers are demanding post-secondary graduates. It is not enough to have a bachelor of arts degree these days. Employers are demanding masters of arts degrees and MBAs. If students cannot afford to get a bachelor of arts degree, where are we going to be against the emerging economies in the world? Where are we going to be against Japan? Where are we going to be against the European Union and the Chinas of the world in devoting that kind of energy? We need to make sure.

For me it is a motherhood and apple pie issue. How could people not want to support something which may advance education in this country? At least send the bill to a committee to look at. The hon. member has put a lot of thought and effort into this bill. He sees the same problem that I see, that even though people have the ability, they cannot go to university.

It was the previous Liberal government that brought in the millennium scholarships, which made a huge difference to students in my riding. Unfortunately, certain provinces clawed back. The hon. member knows about the clawback that occurred, including in the province of Ontario, under the previous Conservative government.

[An hon. member]

And the NDP voted against it.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

And the NDP voted against it my friend reminds me.

This is not a cure-all but it is a very important tool in assisting students and we need to look at that. I am sure the government will be looking at other issues with regard to transfers, but at the end of the day I would not want a student to come into my office and say that we had an opportunity to help but we did not do it because of some issue about not solving all the problems of the world. Let us look at it.

When I was on the finance committee as parliamentary secretary these were the kinds of initiatives that were important to look at because they advanced a big agenda. The most important agenda that I think members in the House support is the knowledge agenda.

I again want to thank the member for Pickering—Scarborough East. I urge colleagues to look at this issue very carefully when it comes up for a vote.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Mr. Speaker, I am pleased to speak to Bill C-253, An Act to amend the Income Tax Act sponsored by my colleague, the hon. member for Pickering—Scarborough East. I am also pleased by the Speaker's announcement today that the bill can proceed in its present form in spite of previous concerns that it might have exceeded the jurisdiction of private members' business. The purpose of the bill is to allow contributions to registered education savings plans, RESPs, to be tax deductible similar to the way Canadians already deduct contributions to registered retirement savings plans, RRSPs.

I need to digress a little. Today has been a rather difficult day for Canadian investors. Contrary to what Conservatives told Canadians prior to the last election, the finance minister announced that he has decided to flip-flop on the income trust issue and slap a tax on the distribution. Within two hours of trading today Canadian investors lost $25 billion in retirement savings affecting virtually all sectors of the economy and unfortunately creating a sudden and bleak future for hundreds of thousands of pensioners.

That being said, I wish to return to the proposal brought forth in Bill C-253. I believe this proposed legislation warrants further consideration. I believe it is important to support this bill at second reading so that it can be referred to committee for an in-depth analysis. The reason is simple. We acknowledge that the cost of post-secondary education is becoming extremely expensive for average Canadian families, especially those with more than one child to educate.

Students are graduating with an excessive amount of debt and many say they simply cannot afford an education. This is a troubling situation especially since our future productivity is dependent on the next generation of students. Currently Canada has the highest participation rate in post-secondary education among the OECD countries, but that ranking is in severe jeopardy if the federal government does nothing to change the situation.

Bill C-253 would encourage more parents to participate in the registered education savings plan because they would see the fruits of this program at the end of every tax year. As we heard from my hon. colleague, only 27% of parents participate, so the bill would encourage more participation. This would be beneficial to Canada because we would have a more educated population and hence a more productive population.

In addition, the savings that are incurred from this tax deduction could be reinvested into an RESP in order to assist families with the goal of maximizing their annual RESP contribution. At present the maximum annual contribution is $4,000 a year with a lifetime limit of $42,000 per beneficiary. These investments grow tax free until a child needs money for tuition. While it is true that Bill C-253 would shift the tax burden from the parents to the child beneficiary, the annual income of a full time student is quite low and any tax liability would be offset by other tax credits while students are still in school.

Currently students emerge from universities with a huge debt. This bill would ensure that students emerged from their education with a much lower student debt. Consider that by 2010 a four year degree program could cost in excess of $100,000. It becomes quite clear that long term planning is required on the part of the students and parents, but also the federal government. This would ensure that post-secondary education does not become a luxury only those families with money can afford.

It is also quite clear that an RESP worth $42,000 would offset a significant portion of the cost of a proper education.

I note with interest that the author, the MP for Pickering—Scarborough East, has considered measures to prevent RESPs from abuse. Bill C-253 proposes severe tax penalties for those who would attempt to take advantage of an RESP's simple tax shelter without any serious regard for the potential beneficiary. In the event that a beneficiary has no intention of going to school, the accumulated income would be subject to a 20% tax on top of the regular tax normally payable on such investments. That I call accountability.

Roughly 50% of college and university graduates graduate with a debt. The average debt amounts to $20,000, making it very difficult for young people to get a headstart in life.

I ask for the support of all members in this House so that serious thought can be given to helping all Canadians access post-secondary education regardless of their economic circumstances.

[The Acting Speaker, Royal Galipeau]

The last speaker will be the mover of the motion, a five minute rebuttal.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Speaker, I want to thank all colleagues for participating in this debate. I know there are many issues that cannot be resolved in the few minutes that are given to me, but let me provide a very brief outline.

Let me decipher the position of the House leader over the past couple of months. First, thank you for your ruling earlier today, Mr. Speaker, in which you made it abundantly clear that this bill in no way violates or requires a ways and means motion in order to give rise to the vote which will take place, I presume, at some point next week. What is most important is that the roadblock of the ways and means position seems to be the legitimate reason the government opposed this bill. Mr. Speaker, since that roadblock has been clearly taken away by you in your infinite wisdom, I would offer to the government that it incorporate this bill as its own and begin the process to meet the challenge of students who so clearly need the help of this Parliament and to come up with innovative ways to ensure that young people have access to higher education.

It is very clear to all Canadians, any Canadian who pays taxes, any Canadian who is concerned about the future, that the prosperity of this nation very much depends on a skilled and adaptable workforce.

Right now, as opposed to reaching out and giving everybody who wants an education an opportunity to get that education, we hear naysaying from some corners. We heard the member for Winnipeg North who chastised the bill because it is an attempt to try to cover more people who desperately need an opportunity to get that access to higher education. Whether it be a skill in the workforce, whether it be a craft, whether it be taking up a trade, or whether it be to move on to post-secondary education, we know that this cycle of education will continue in years to come. For people to have the opportunity to access education and thereby maintain the health, wealth and prosperity of this nation depends on our ability to provide instruments that are at our hand without denying the government the cash it needs to continue working on the nation's priorities.

To look at the issue of post-secondary education in the abstract, there are a number of programs out there, but we need to do more. When only 27% of students are being provided an education through an RESP, it clearly demonstrates that almost three-quarters of Canadians are not.

I do not think any of us in this House want to take a position here that suggests that today, in the year 2006, education only becomes the purview of the rich.

Students are talking to each one of us as members of Parliament and our provincial colleagues as to the amount of debt they are incurring. Students talk to us about the need to ensure that we rebuild the system, about the need for a piece of legislation that would provide an opportunity for them to continuously access education in a world in which there is increasing competition, not just in terms of trade, but in terms of resources.

It is extremely important. Given all these factors, but above all when we see in my province of Ontario the tuition freeze that has just been lifted, we now have a situation that is unacceptable to all Canadians. We need to look at the rapid rise in the cost of education.

Universities want to compete on an international level. They can only do so with higher tuition fees. The government can move to cap these things, but these are band-aid solutions. We in this chamber have to find the creativity to provide people an opportunity to access education.

In my riding, and I am sure the riding of Winnipeg North and ridings right across this country, every one of us as members of Parliament has an obligation to look deeper so that when someone is paying a tax, they may actually be put in a position where they are able to benefit from it.

This legislation is really calling for Parliament to think bigger. This legislation is asking the finance committee and parliamentarians not to navel gaze about what has happened in the past but to understand what the OECD has said with respect to rising tuition costs for students and to listen to what students are saying. However we decide to make it possible for students to get access to higher education, Parliament has a higher obligation to respond to the need.

This is not by any means the only solution, but it is an important step forward to recognize that the federal government plays an important role in the lives of students in ensuring the viability and the safeguarding of our education system. We must ensure that young people, and all people, have access to education. The instruments are there. The income tax system is probably the easiest way to do this. Most Canadians pay income taxes and they would have a great opportunity to help their children in the future.

As my final words on this, I would encourage the government and all members of Parliament to look beyond the rhetoric and to look to what their constituents need. Clearly, on RESPs, tax deductible is the way to go.

[The Acting Speaker, Royal Galipeau]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Acting Speaker, Royal Galipeau]

The motion is adopted. Accordingly, the bill stands referred to the Standing Committee on Finance.

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

Mr. Speaker, I rise on a point of order. I think you may have gotten ahead of yourself. We were waiting for you to ask for the yeas and nays. You did not get to that stage. You just declared it carried. We were saying no.

[The Acting Speaker, Royal Galipeau]

I appreciate the good advice from the member for Edmonton—Sherwood Park. However, the Speaker did not hear any nos. I did not hear any nos, and then I heard a suggestion, on division.

Let us turn back the clock and read this again.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Royal Galipeau]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Royal Galipeau]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Royal Galipeau]

In my opinion the nays have it.

And five or more members having risen:

Pursuant to Standing Order 93, the recorded division stands deferred until Wednesday, November 8, immediately before the time provided for private members' business.

[Marlene Jennings, Liberal, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, I wonder by what authority do you go back on a decision already made by the house?

In accordance with the Standing Orders, the House made a decision. Now you have cast doubt on this decision.

[The Acting Speaker, Royal Galipeau]

Is the hon. member for Pickering—Scarborough East rising on the same point of order?

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Yes, Mr. Speaker. I appreciate the need to, as it were, return to the issue at hand and to recall the position that you had taken. I say so respectfully, but you clearly enunciated that the bill would in fact proceed on division. Whether or not people said yes or no, it remains that the Speaker did not hear the nos. In fact, the Speaker ruled that he had heard only yes and accepted this on division.

To have then had another vote on this, Mr. Speaker, to reverse your position, is in my view, I humbly submit, an error as far as the regulations and the longstanding procedures of this House. I would therefore recommend, Mr. Speaker, that the original decision stand and that we proceed to your original decision without it being reversed. I understand that members of Parliament may have decided afterward that they wanted to speak a little louder or whatever the case may be, but this is why members of Parliament should be in the House at the time, to make those declarations.

Clearly, this went on division and should be now referred, in accordance with your initial decision, to the Standing Committee on Finance.

[The Acting Speaker, Royal Galipeau]

I can only recognize members who are sitting at their seats. I have already recognized the hon. member for Edmonton—Sherwood Park Park. I will now recognize the hon. member for Edmonton—Mill Woods—Beaumont.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Mr. Speaker, I am not an expert in procedure but I clearly said no. The member, whose riding I am not sure about, was clearly heckling me for saying no, so he definitely heard me say no. I am sorry if you did not hear it, but I clearly said no loud enough for people to hear me on both sides of the House.

[The Acting Speaker, Royal Galipeau]

I have heard the representations of all members. I want to apologize to the House for not hearing properly. This chair occupant has worked in good faith. And in good faith, I called the question in a manner so as to make very sure of the intentions of the House. I was not sure the first time.

I seek the forgiveness of the House if some members believe that I should have heard properly the first time. I will be more attentive on another occasion. I would like now to move to the next item and leave this chair to proceed into committee of the whole.

[An hon. member]

Oh, oh!

[The Acting Speaker, Royal Galipeau]

Is this about the same point of order or another?

[An hon. member]

The same point of order.

[The Acting Speaker, Royal Galipeau]

Unfortunately, I have already rendered my decision. I did not see you at the time.

[An hon. member]

I am here, Mr. Chair.

[The Acting Speaker, Royal Galipeau]

I know you are there, but I have already rendered my decision. I ask for your indulgence. Thank you.

Pursuant to Standing Order 81(4), the House will now resolve itself into committee of the whole to study all votes under Human Resources and Skills Development in the main estimates for the fiscal year ending March 31, 2007.

I do now leave the chair for the House to go into committee of the whole.

The House resumed from November 1 consideration of the motion that Bill C-253, An Act to amend the Income Tax Act (deductibility of RESP contributions) be read the second time and referred to a committee.

[The Acting Speaker, Andrew Scheer]

It being 5:30 p.m., the House will proceed to the taking of the deferred division on the motion at second reading of Bill C-253 under private members' business.

Call in the members.

Before the Clerk announced the results of the vote:

[The Acting Speaker, Andrew Scheer]

Does the hon. member for Moncton—Riverview—Dieppe wish to clarify?

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

I voted for the motion.

(The House divided on the motion, which was agreed to on the following division:)

Vote #60

[The Acting Speaker, Andrew Scheer]

I declare the motion carried. Accordingly, the bill stands referred to the Standing Committee on Finance.

(Bill read the second time and referred to a committee)