Bill C-28 (Historical)

Budget Implementation Act, 2006, No. 2

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

Part 1 implements the following income tax measures proposed or referenced in Budget 2006:
–       the new Canada Employment Credit;
–       the new Textbook Tax Credit;
–       the new tax credit for public transit passes;
–       the new deduction for tradespeople’s tool expenses;
–       a complete exemption for scholarship income received in connection with enrolment at an institution which qualifies the student for the education tax credit;
–       the new Children’s Fitness Tax Credit;
–       a doubling, to $2,000 from $1,000, of the amount on which the pension income credit is calculated;
–       an extension of the $500,000 lifetime capital gains exemption, and various intergenerational rollovers, to fishers;
–       the new Apprenticeship Job Creation Tax Credit;
–       a reduction of the current 12 per cent small business tax rate to 11.5 per cent for 2008 and to 11 per cent thereafter;
–       an increase, to $400,000 from $300,000, of the amount that a small business can earn at the small business tax rate, effective January 1, 2007; and
–       a reduction of the minimum tax on financial institutions.
Part 2 implements the proposal in Budget 2006 to lower the income tax rate on large corporation dividends received by Canadians.
Part 3 implements the proposal in Budget 2006 to reduce excise duties for Canadian vintners and brewers.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

First of all, to be clear, the reason I'm not in favour of that is I think it leads to the very thing you're afraid of, which is the repetition of conversations. In order to have the vote, then we'll have the discussion, and if we've already had the discussion in subcommittee....

The ideal was how the thing worked before, which was the casting out of a calendar, looking at the issues that had come to us all as MPs and deciding which ones were to be proposed forward. Remember that we went through that on the Bill C-30 committee and on Bill C-28. Whenever we're looking at something specific.... We'll do the same for Bill C-377, which is in front of committee, I imagine.

To then put it into the prescription that we have to then take everything back to a vote.... Is it voting on each of the witnesses? Is it voting on the order? I think the best way to do this, as people have described tangentially, is to avoid the issue of voting. As the government has admitted, if the opposition chooses to just use that in concert, then the voting system doesn't work for their favour.

The reason I had originally posed my motion was to allow a government member on the table. The reason I had prescribed not a parliamentary secretary was to avoid what we'd seen last time, which was not the only factor but I believe was a contributing factor to the partisanship.

I think we should just vote on this motion as is. I appreciate you trying to achieve some consensus, but I think we have what we have and we need to try this and look at the Bali conference and the Bill C-377 legislation, which will likely be the first two areas of concentration. Try this at least until Christmas.

Income Tax Amendments Act, 2006

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, to begin with, I would like to congratulate my colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup. His presentation was extremely clear. I will probably have the opportunity, in my own presentation, to substantiate even more what he just said. As he pointed out, the Bloc Québécois is in favour of Bill C-33, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act. It corrects a number of things.

Again, this is somewhat like when I spoke to the changes to the excise tax. Sometimes, we debate in the House of rather casual subjects. This is far from Tintin in the Congo or Tintin in Tibet and even farther from The Crab with the Golden Claws or, for example, The Castafiore Emerald . This is not very sexy for a debate, but it is a necessary debate, just as the one on the excise tax. Bill C-33 corrects various provisions of the Income Tax Act which made it easy to circumvent tax rules and allowed tax evasion.

The bill responds to the shortcomings identified by the Auditor General in her November 2005 report. This bill will require disclosure of additional information about non-resident trusts, which will allow a more rigorous analysis of the figures submitted to the Canada Revenue Agency, in accordance with the recommendations of the Auditor General.

As my colleague has mentioned, tax evasion goes against the basic principles of horizontal and vertical fairness in the way we treat individuals. We must never forget that fairness is of paramount importance if we want people to have any trust in the tax system. This means fairness not only between individuals, but also between the different categories of individuals.

When the tax system is viewed as being unfair, there is also, unfortunately, a certain nonchalance in the public opinion about everything that relates to tax evasion. Working for pay under the table is a case in point. We absolutely need a tax system that not only is extremely fair, but that also has the appearance of being fair. Every time we can close a loophole and prevent people from believing that there is a double standard that benefits those who can afford those mechanisms, we have to do so. We were talking earlier about tax havens and about specialists and experts who can teach people how to avoid their collective responsibility.

It seems to me that we have to try and close those loopholes, and that is what this bill is doing. As I mentioned before, the Bloc Québécois will support Bill C-33.

Both the absence of fairness and the perceived absence thereof create a sense of laxity within the affected society. They also cause taxpayers to feel that they are being treated unfairly. As I said, practices that do not quite comply with the legislation are becoming more and more accepted and commonplace. Moreover, the government is losing revenue that, as my colleague said, must be made up for by higher taxes elsewhere, especially for the middle class, or by cuts to necessary public services.

As I said, we will support this bill even though it lacks that something special. It is definitely relevant, and as such, I think it deserves our attention even though it is not exactly a fun read.

I will provide a little background. In Canada, taxable revenue on trusts is calculated for individuals, not families. Here, income can be split among family members, resulting in major tax advantages. In fact, this is a common financial planning tactic among higher-income taxpayers.

They use family trusts to split income among as many family members as possible to take advantage of those family members' tax brackets. Obviously, when the income is split among many, some members of the family may have lower tax rates than if just one or two family members declare the income.

Canada's income tax system is based on a progressive tax rate structure. As such, individuals who have low or medium income pay less tax than high-income earners. As I just said, splitting income is one way to save taxes within a family or household.

To take advantage of this method, one must have a family trust. In addition to allowing income splitting, the trust can protect assets against the beneficiaries' creditors or ensure the use of an asset by a spouse until death before transferring the property rights to the children. The trust can also ensure that children have sufficient capital to cover the cost of tuition or living expenses while studying.

Even though trusts may seem to be an attractive way of avoiding tax, annual management fees can run to several thousand dollars. Once again, often it is the wealthy who are able to invest and who have enough money so that the advantages and disadvantages balance out and these trusts become attractive investment vehicles. Therefore, trusts are clearly investment vehicles that are available primarily to wealthy taxpayers.

In my opinion, on the whole, taxpayers do not appreciate income splitting, because it goes against one of the main principles of taxation policy: fairness. I mentioned this earlier. To comply with the principle of tax fairness, government gradually regulated the use of trusts and tried in various ways to reduce the benefits of income splitting.

The use of offshore trusts as investment vehicles has many advantages in terms of tax avoidance. Offshore trusts enable Canadian taxpayers to shelter assets from the tax system. Since Canadian tax authorities can have a very hard time obtaining information on investments in such vehicles, this opens the door to tax avoidance.

I remember that in a report—I think it was on the show Enjeux—journalists went to Barbados to locate companies such as the ones owned by the sons of the former Prime Minister, the member for LaSalle—Émard. The journalists were astonished to find that the headquarters of CSL International was not only a law office with four employees, but also the headquarters of about 100 other companies. Unfortunately, this information was not known previously, because it is not always easy to travel to conduct the necessary investigations. That is why it is important to have an easier way to obtain the necessary information.

In January 2000, the federal finance department introduced legislation to prohibit splitting with minors. People may not use children under 18 years of age, who are usually not yet working and therefore have no income of their own.

Under the attribution rules, capital gains on shares in the trust can be split, enabling the trustees to save on tax. Contrary to the attribution rules, this provision taxes the recipient of the split income at the top marginal rate, instead of reattributing the income to the transferor or lender.

However, the lack of clear legislation pertaining to foreign trusts created loopholes allowing the use of trusts established in foreign countries in order to continue to profit from the various advantages of income splitting. Moreover, the problems with information gathering—and I gave an example of that earlier—to establish the market value of assets of offshore trusts has facilitated tax evasion. In my opinion, it is important to remember that.

We also need to remember what the market value of assets is, that is, the highest price that would be agreed upon in a completely open and unrestricted market between fully-informed, knowledgeable and willing parties dealing at arm's length without constraint. This is the definition of fair market value. As I said earlier, it is a provision that was put in in that regard.

It was hard to establish the fair market value of offshore trusts. This value could be underestimated or the owners could find ways to ensure that the people at the Canada Revenue Agency had the impression that the value was lower.

Consequently, in a section of her 2005 report the Auditor General looked at the various loopholes found in the application of the Income Tax Act. She made a number of recommendations to close these loopholes with respect to the treatment of foreign investment trusts.

Of course, a ways and means motion was introduced on November 9, 2006. The Minister of Finance included this motion in Bill C-37 and its purpose is indeed to amend various rules concerning income tax. This ways and means motion had three main components.

First, the bill amends the Income Tax Act in order to clarify and specify the tax rules for non-resident trusts and foreign investment entities. Those provisions will allow the government to better regulate the use of those offshore investment vehicles by clearly establishing the foreign investment entities that may be exempt from taxation, the rules for ensuring that the foreign trust will be deemed to be resident in Canada and the investment vehicles to be taxed. The provisions will also specify how the attribution rules will apply when a foreign trust is deemed to be resident.

On that subject, I would remind the House that California, for instance, amended its legislation two or three years ago to ensure that, in the case of a company established in California and whose head office is in California, but that does business all over the world, revenue generated by that company must be included in the revenue of the head office. People saw this as strong action against tax avoidance and against tax havens. In fact, this has existed in Canada for a number of years. As a rule, a company whose head office is in Canada must pay taxes on all its revenue, regardless of whether it is generated in Canada or abroad, as long as there is no tax treaty, of course. If a tax treaty exists—we have such treaties with several countries—it is a matter of not taxing the same entity twice for the same revenue. This is completely understandable.

The problem I want to underline, and maybe I will be able to come back to it, is that when we have a tax convention like the one we have with Barbados, where the tax rate varies between 2.5% and 1%, this is a regressive tax instead of a progressive tax. The tax rate goes down as revenues go up. Of course these are only symbolic tax rates. Canada considers that revenues have been taxed a first time in Barbados and does not tax them a second time in Canada. When the tax rate of the foreign country is reasonable and comparable to the rates we have in Canada, tax conventions are totally acceptable. Unfortunately, when we deal with a country that does not have a real and transparent tax system but a system that is used only to allow taxpayers to avoid paying income tax in Canada, we do have a serious problem.

The second aspect relates to a number of general provisions in the Income Tax Act. I am still referring to the ways and means motion of November 9, 2006. First, it changes some general provisions of the act to ensure an efficient enforcement of the measures contained in the first part. The bill proposes a few changes to the Income Tax Act to include different measures in Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. That is to say that the bill is modifying a previous bill that had already been introduced in this House. Some of the changes were suggested by the Canada Revenue Agency to clarify or facilitate the enforcement of measures included in the Income Tax Act.

The third and final component deals with the bijural aspect of the proposed amendments.

In other words, this last part adds or modifies expressions in the English and French versions in order to respect the semantics of civil law and common law. As we know, both apply in Quebec. This is inherent to the unique nature of the Quebec nation.

Let us now examine the individual parts of the bill resulting from the means and ways motion. The first part refers to changes to the rules that apply to non-resident trusts and foreign investment entities. A certain number of amendments and clarifications to section 94 establish the rules for taxation of non-resident trusts.

This part of the bill establishes and clarifies the rules regarding taxation of non-resident trusts. These clarifications and changes are made by amending article 94 of the Income Tax Act, as I already mentioned, which sets the tax rates for non-resident trusts.

As a general rule, a trust is subject to the Income Tax Act if it has received the transfer or loan of assets from an association, a joint venture, a trust, a fund, an organization, a natural person, a partnership or a financial syndicate resident in Canada. The non-resident trust must pay tax on income to the Government of Canada. If it does not, the beneficiaries are held responsible and must pay the amounts due. However, beneficiaries only pay their share of the tax on the trust. Additional relief is provided for beneficiaries who make a minimal contribution compared to other contributions to the trust.

The various changes proposed in this section of the bill amend the rules that apply to repatriation of moneys to Canada. More specifically, these rules define additional criteria for calculating the fair market value of assets. I have already mentioned the definition of fair market value for assets held by a non-resident trust.

Second, again in part 1, there are definitions of foreign trusts exempt from the Income Tax Act. This part of the bill specifies which type of trusts are eligible for tax exemption under the Income Tax Act. These measures will ensure that only trusts truly eligible for tax extensions could use this tax benefit. This will result in fairer tax treatment for everyone. Without going into too much detail, the following list indicates which trusts can be exempt and which trusts must pay tax.

Among the trusts eligible for exemption under the Income Tax Act, the exempt non-resident trusts, are trusts for beneficiaries with a mental infirmity who are not residents of Canada, and whose contributions to the trust are made to provide for the beneficiary's needs. This goes without saying.

Also exempt are trusts established after the breakdown of a marriage to provide for the children from the marriage who are under 21 years of age or under 31 years of age if they are enrolled full time at an educational institute, as well as charitable trusts, of course.

As far as the first exemption is concerned, I believe it is entirely consistent with what the Minister of Finance announced in his budget in February on the possibility of parents amassing, through a specific plan, money to provide for the needs of their severely handicapped children.

Resident trusts eligible for tax exemption are trusts for administering or providing pension benefits to employees, as well as charitable trusts.

Finally, the changes made to the Income Tax Act essentially mean that we have to ensure, quite simply, that the legislation as a whole is consistent.

In closing, Bill C-33 will ensure better application of the Income Tax Act.

The Bloc supports this bill to restrict the use of non-resident trusts as tax loopholes. This will allow us to maintain tax fairness—or improve it since it is not fair enough yet—and also show taxpayers in general that parliamentarians are interested in this and are concerned about their perception of fairness in the system. This will bring in a little more money for the good government.

[The Speaker, Liberal, Peter Milliken]

I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

February 21, 2007

Mr. Speaker:

I have the honour to inform you that the Right Honourable Michaëlle Jean, Governor General of Canada, signified royal assent by written declaration to the bills listed in the Schedule to this letter on the 21st day of February, 2007, at 11:05 a.m.

Yours sincerely,

Sheila-Marie Cook

Secretary to the Governor General

The schedule indicates the bills assented to were Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, and Bill S-1001, An Act respecting Scouts Canada.

[The Chair, Conservative, Laurie Hawn]

Great, that was easy.

We also have some CDs available, as we had discussed, with all the testimony from Bill C-288, the environment committee and so on. That will be handed out for your reading pleasure.

The clerk will explain how it's formatted, for those of us who are Luddites.

Budget Implementation Act, 2006, No. 2

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to speak to Bill C-28, which is the second bill to implement certain budget provisions.

What concerns me is the government is not speaking to its own bill. A budget is important to Canadians and there are many important provisions in the legislation. A lot of work has gone into it. It is as if there is no need for the government to explain to Canadians what happened as it went through committee, when various witnesses were heard. Surely, some witnesses must have had some input into the various provisions.

Let me remind hon. members about some of the proposals in this second bill to implement certain provisions of the budget.

One of the proposals is the new Canada employment credit. I wonder if there was any questions about whether anybody would slip through the cracks. All of a sudden we have an income tax system which has some principle and some balance to it. It is a progressive tax system where the ability to pay is taken into account. We understand that some Canadians do not even make enough money to pay any income tax.

Another proposal in the legislation is the textbook tax credit. I do not know whether there will be any input with respect to this.

With regard to the transit pass tax credit, I have to wonder if there was any input on this. This credit is linked to the whole issue of our environmental policy with respect to greenhouse gases, smog emissions and the like and to get people to be more cognizant of their options to make a contribution. Individuals have a contribution to make. The Conservatives have not risen to reinforce why they think this proposal is one of the best ways to go and what it adds in terms of the whole scheme of our environmental policy.

What about the new deduction of tool expenses for tradespeople? Who is left out with respect to this deduction? I know some people have been left out because they do not qualify under the definitions. Did they go before committee?

How can we make an informed decision and vote on a bill if members do not defend it and show how the budget and the budget bill address the needs of the most number of Canadians possible?

There is also the exemption for scholarship income received in connection with enrolment in an institution, which qualifies a student for the education tax credit. How many people qualify for that exemption? What else has been done to ensure that those who cannot afford to go to university get to go? I understand it is important to promote excellence, but have we also balanced the need to promote access and affordability?

Another proposal in the legislation is the children's fitness tax credit. I do not know very much about it. It is a modest amount. I am not sure whether there were some concerns about it.

With respect to the pension income credit, the government has subsequently come up with a scheme of pension splitting. This will help certain Canadians. Canadians with a pension income in excess of about $35,600 will be able to split with a partner or a spouse who has less income. However, it does nothing for people with a pension income of less than $35,600. This does nothing for people who do not have a partner.

We are shifting the burden of taxation here and I am not sure of the objective of the government. I have not heard from any Conservatives. They have not spoken to the bill. They have not explained why these things are happening. They have not told Canadians their vision. How do the Conservatives see this unfolding? I cannot explain it.

Another proposal in the bill is the extension of the $500,000 lifetime capital gains exemption and various intergenerational rollovers to fishers. I certainly understand this proposal with respect to the fishery because it is a very important area. I would have hoped somebody from the Conservatives would have spoken about why this was necessary, why the extension of the exemption, and how it translated into meeting the objectives of the Government of Canada on behalf of Canadians, particularly in this sector.

We also have the apprenticeship job creation tax credit. Apprenticeship training has been a priority of every government since I have been here. It is extremely important, but I do not know whether we have done enough on the apprenticeship side. I would have hoped somebody from the Conservative government would have made the case on behalf of those who were seeking to build on their skills so they could be contributing members to society. We did not hear any of that, and I am not sure why.

We have the reduction in the current 12% small business tax rate from 11.5% for 2008 to 11% thereafter. I am not sure whether Canadians understand what a small business is compared to another type of business. However, we do know one thing. Historically, small businesses have contributed to employment growth at a much greater rate than non-small businesses. How will this translate? Are there benchmarks and targets and what does it do for small business either in reinvestment or in further expansion and job creation? Those are important issues to Canadians. Not one Conservative stood and talked about why this was important, how it translated in terms of the vision for Canadians for economic growth, sustainable development and other issues. No interest whatsoever was expressed by Conservative members, and I do not understand it.

We also have the increase to $400,000 from $300,000 of the amount that a small business can earn at a small business tax rate effective January 1, 2007. As a chartered accountant, I know the $300,000 was there a long time ago. We have the magnitude of dollars, the expansion of businesses and start-up costs for businesses. The ability to get a sustainable business going is important.

I am concerned about what is not in this budget bill nor the first one, and that is new dollars for the health care wait times guarantee. It was one of the five promises in the throne speech of the government. In today's media Canadians will be able to read how the minister said that we were operating in a vacuum, that they had no idea how it worked and how to get there, but they would study it and maybe figure it out. How can they make a promise during the election campaign to do something about which they have no idea?That is totally irresponsible.

It is about time some Conservative members stood in this place, spoke about the budget and stood the test of scrutiny of questioning by hon. members of other parties to ensure they know what they are talking about. There is no evidence of that right now.

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

Mr. Speaker, I really appreciate the question because when it comes to Bill C-28 and the federal Conservative budget of May 2006, this budget misses the mark totally when it comes to addressing the needs of children and youth.

In fact, under this budget that we are now wrapping up here today, child care wait lists will go up and more parents who are trying to juggle work and family responsibilities will be left with a very untenable situation by putting their children into unregulated child care environments. Nothing the Conservatives have done will address this very serious issue and we are only creating huge problems down the road by neglecting this urgent situation right now.

It is important to note that many in the House really do believe that we have to invest in child care spaces in a program that ensures quality of care for our children, our most precious resource. It is not good enough to simply say we are giving a little bit of money to parents with children under the age of six because that money does not buy the spaces that they need and want. It does not ensure that they will be able to put their kids in a safe protected environment with good quality care.

Most people in this country want to do their best, want to make a contribution. We have talented people willing to work to grow our economy, but they really need to know that our government cares as much about children as it does about paying off the fiscal debt or giving tax cuts to corporations. The government really needs to get a signal that children are the most valuable part of our whole society.

First of all, we would continue to work with the child care community to get an appropriate number of spaces every year. Second, the government should stop the cutbacks that just happened in terms of the youth career placement program. It is through that avenue that we are able to help students and young people get the experience and exposure they need to go on to pursue education and jobs that benefit all of us in the long run.

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

Mr. Speaker, the bill is replete with numerous tax credits all of which probably offer a little benefit to some people and certainly they are not to be dismissed as insignificant. However, the member makes a good point in terms of whether or not the appropriate work was done to ensure the proper formulation of this program.

I want to remind the member though that all us in the House on numerous occasions have debated, discussed and approved the idea of a credit for using public transportation. We certainly support the idea.

We have real concerns with a government that focuses only on these kinds of tax credits and does not really look at the bigger picture. My colleague who just spoke before me was quite right when he asked how anybody could think that this measure was going solve the problems of Kyoto or climate change. We need a much broader approach and that is something that the Conservatives are unwilling to do.

Let me say one more thing on this issue. There is always a need to ensure that whatever tax breaks are given a solid analysis is done and the decisions are made on a cost benefit basis. We have found on numerous occasions that it never seems to apply when we are talking about wealthy Canadians or large corporations.

During the process at finance committee around Bill C-28 and before that around the prebudget consultations, we tried very hard to get a cost benefit analysis done of all tax breaks to gas companies and oil companies who are involved in the non-renewable area. We could not get the government to agree to that. Nor could we get the Liberals to support that initiative.

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

My colleague the member for Burlington said that is correct.

It is more important than ever for us to tell Canadians what the Conservatives want us to pass today. They want Bill C-28 to get through the House, into the Senate, and then to receive royal assent so all is finished and done.

Today we are deciding on whether or not the Conservative budget should be given any kind of support and treated with any sense of credibility and integrity.

I remind members and all Canadians who are watching that we are dealing with a budget that was an absolute missed opportunity for the vast majority of Canadians who are struggling to make a living. Canadians want to provide for themselves and their families. They want to contribute to this great country. They have much to offer by way of talent, energy and expertise but are being denied from doing so because of the regressive and repressive policies of the current government, and the governments before it, that keep working families down, that do not lift them up and encourage them to contribute.

This holiday season it is more apparent than ever what kind of a Canada the Conservatives and the Liberals together are creating. It is important for us to remind Canadians that there is an alternative, that there is hope, that there are other ways to approach the way budgets are done and the way this country is ruled and regulated.

The New Democratic Party has always said when it comes to budgets that they are a road map. They are an indication of where a government wants the country to go. We look at this budget in terms of how it would build a better future for everyone in our society.

We have always said it must be a balanced approach. We are not here to suggest all extra revenues should go into spending programs. We are not here to suggest there should never ever be a tax cut to anyone in our society. Nor are we here to suggest that no money should go against the debt. We are here to say that a good budget, one which we were hoping the Conservatives would have brought in, would actually balance those competing demands and would ensure that all areas were recognized and treated responsibly. That means addressing the shortfall in those programs that actually help people make a difference. It means redressing the 13 years of the tightfisted, budget cutting, meanspirited ways of the Liberals.

A good budget would ensure that a portion of any surplus, not all of it, not the whole kit and caboodle, but a portion of it went against the debt.

A good budget would look at the income distribution in this country, at which groups are trying to make ends meet, and ensure that where possible some tax relief went in the direction of people who need it the most.

What did we get with Bill C-28? A budget that basically ignored all of the needs of Canadians in terms of health care, child care, housing and the environment. It gave more tax breaks to the wealthy and big corporations, and in the aftermath of the budget the government put every penny that was left in terms of surplus against the debt.

Canadians did not get the balance they were looking for. They did not get the good government they thought they were getting when the Conservatives were lucky enough to form the government of this country. Much as Canadians are very skeptical about Conservatives, after 13 years of Liberal rule, they were certainly looking forward to some sort of change and had some optimism about the future, but they were sorely disappointed. We have to continue to find ways to address those concerns.

Let me also say that since this budget, as I mentioned at the outset, a lot of water has flowed under the bridge, lots and lots of water. Included in the list of things that have flowed under the bridge is $1 billion worth of cutbacks that have hurt Canadians in very many ways. It is something that has to be addressed in this context because we are talking about a budget and we are talking about the future.

When the Conservatives had a chance to redress some of the wrongs of the Liberals, to right things and to bring balance, they chose to follow the Liberal path of letting the surplus build up, not announcing it and dealing with it before the final days of the end of the fiscal year. Consequently they put $13 billion against the debt and at the same time cut $1 billion out of programs and important areas for Canadians. I want to reference a couple of them, because we need to go back and persuade the Conservatives to right a few wrongs.

The first has to do with literacy. As I have said over and over again, how could a government, if it is concerned about giving people the tools they need to contribute to this economy, cut the very ground out from under those people? How could it destroy the very things Canadians need in order to gain the skills to participate fully in this world?

Time and time again, the Conservatives have suggested that the cutbacks to literacy were all administrative.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I will reiterate what I said earlier. We supported the budget because of the promise to correct the fiscal imbalance. Through that correction, we will be able to support not only education and health care, but also Quebec's child care network. I would remind the House that it is not a public child care network. It consists of social economy enterprises often created by parents, and jointly managed by both the workers, primarily female workers, and parents. Out of the $3.9 billion—the amount needed to correct the fiscal imbalance, according to the Bloc Québécois—$270 million would serve as compensation for the Conservative government's unilateral decision to end the national child care program. We are also working on this.

As for loans and grants, and transfer payments for post-secondary education and social programs, I would remind the hon. member that we have a loans and grants system in Quebec. This means that our student debt problem is not as serious as it is in the rest of Canada. In that regard, what is important to us is that the fiscal imbalance be corrected in the next budget, which is why the Bloc Québécois supported the budget as a whole.

Now, a number of measures within Bill C-28 are a step in the right direction, but, unfortunately, as I said, this bill does not go far enough. For example, we called for all books to be exempt from the GST, as is the case in Quebec. There is no sales tax on books, because we want to promote Quebec culture and facilitate access to the documentation needed to really develop a knowledge based economy. We are therefore being entirely consistent. I am anxious to see if the NDP will display the same consistency over the coming months.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am very pleased to speak to Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. As we all know, the Bloc Québécois supported that budget.

I am especially pleased to speak to Bill C-28 here today because several measures in this bill are quite similar to measures that the Bloc Québécois has been proposing for many years. Consider, for example, the tax credit for public transit passes. I seem to recall that one of our colleagues already proposed in this House a private member's bill that was very similar. Another example is the textbook tax credit. For some time, the Bloc Québécois has been calling for the elimination of taxes on all products and services related to books. This has been done in Quebec. This encourages access, not just to textbooks, but to all literature, regardless of target audience, since we must start somewhere.

Finally, the tax break for microbreweries—in fact, the government has extended it to all breweries—is completely in line with what the Bloc Québécois has been proposing. The Standing Committee on Finance also looked at this issue several times. Bill C-28 finally contains this provision, which we have wanted for quite a while now.

There are also provisions to help the next generation. This has been a major concern of the Bloc for quite some time. We even organized a symposium together with the Union des producteurs agricoles on the next generation of farmers. It is important, therefore, to have provisions in the act that facilitate the intergenerational transfer of businesses, although I will have a chance later, of course, to say that much more could have been done in this regard and in other regards as well.

In addition, there are provisions to help apprentices and tradespeople acquire the tools they need. Other provisions help out family fishing firms. Finally, a whole series of tax measures help to strengthen small business, which is the real economic backbone of Quebec. The Bloc Québécois will obviously, therefore, support these measures.

In general, much still needs to be done, but we have a few steps here in the right direction and the Bloc Québécois will vote in favour of Bill C-28.

I would like, first, to describe the bill because it contains a host of provisions. It is important for the people listening to us to understand the full scope of what is in this bill. Basically, there are five main groups of provisions.

The first is a whole series of tax provisions for individuals. Here we find the tax credit for apprentices and tradespeople, an increase in the non-refundable credit for people receiving a pension, the establishment of a public transit tax credit, and an increase in the refundable credit for medical expenses. This first group is aimed, therefore, at individuals.

The second group extends benefits already given to farms to fishing firms as well. The fishing sector is in serious difficulty at the present time. These benefits are therefore very important to us, especially in regions such as the Gaspé, the Lower St. Lawrence and the North Shore. So as I was saying, the second group extends certain provisions previously available to farms to fishing firms as well.

There are various measures dealing with capital gains, the transfer of a business to other members of the family and agribusiness tax benefits.

A third main group of provisions in Bill C-28 has to do with various tax measures for businesses including, among others, the abolition of the surtax on the revenue of Canadian corporations and an increase in the amount a small or medium-sized business can earn if it wants to benefit from a tax credit.

A fourth series of legislative changes pertains to lowering the tax rate on capital gains of Canadian banks.

The last series of measures aims to lower the excise tax on the first 75,000 hectolitres of beer brewed in Canada in order to stimulate the growth of this sector and microbreweries in particular. This is an emerging sector that has had significant growth in recent years.

This sector has been growing in the regions also. For example, in the Joliette region, the Alchimiste microbrewery was experiencing difficulties because taxation by some of our European and American trading partners benefited their microbreweries. In the Canadian tax system, no distinction is made between a major brewery—such as Molson or Labatt—and microbreweries.

We will see that the minister has somewhat changed his tune from his initial announcement. It is interesting to note. We will all have the opportunity to comment on the reasons that led the minister to apply this measure not just to microbreweries but to breweries in general, as requested by the Standing Committee on Finance. The lower excise tax will also apply to major breweries as well.

I would now like to come back to the first series of measures: tax measures for individuals. The first measure for individuals introduced in this notice of ways and means and in Bill C-28 implements a mechanism allowing apprentices and tradespeople to deduct expenses for certain tools. Deductible expenses may not exceed $1,000 or 5% of the apprentice's annual income, whichever is greater. It also allows tradespeople to deduct up to $500 of the cost of certain tools.

Next, the bill implements indexation of the tax credit for apprentices and tradespeople. The maximum non-refundable credit for some people receiving pension income will double from $1,000 to $2,000. It also creates a $1,000 non-refundable tax credit for employment income starting at $250 for 2006 and increasing to $1,000 in 2007.

It creates a non-refundable tax credit for public transit. To be eligible for the credit, taxpayers must supply a receipt or proof of purchase of a long-term public transit pass. Obviously, this does not apply to daily or weekly passes because we want to promote the use of public transit and relieve congestion on our roads. We could also have talked about meeting the Kyoto protocol targets or helping meet them, but because that word has become taboo for this government, we thought it best not to mention it.

This bill also creates a tax credit for textbooks of $65 per month of full-time study and $20 per month of part-time study. The refundable medical expense supplement will be increased from $767 to $1,000 and continue to be indexed to the cost of living. In addition, the bill will reduce the threshold for deducting medical expenses to the 2005 level. It will then continue to be indexed.

This first series of measures for individuals, some of which are better than others, aligns with what the Bloc Québécois has been proposing over the past few years.

The second group of provisions extends the same tax benefits currently enjoyed by fishing businesses to agricultural businesses as well. Thus, tax measures such as forward averaging when transferring a family business that includes agricultural capital property will also apply to fishing businesses.

The third group of provisions has to do with corporate taxation. The business limit under which Canadian and Quebec small and medium-sized businesses can seek a reduced income tax rate is being increased from $300,000 to $400,000. This will reduce the tax rate for small and medium-sized business from 12% in 2007 to 11.5% in 2008 and 11% in 2009. This measure will allow small and medium sized businesses to generate the liquidity they need for future investments.

This bill will eliminate the 1.2% surtax targeted for Canadian controlled private corporations in 2008, with a subsequent reduction of 0.5% planned for corporate income tax in 2009 and 1% in 2010. As a result, this will translate into a corporate income tax reduction from 22.2% in 2006 to 19% in 2010. These measures should encourage investments, although a generalized tax reduction such as this does not automatically lead to increased investment, as we have learned in recent years.

The corporate tax rate was some 28% in the early 1990s, but has fallen to 22.2%. Despite that, the rate of investment last year was not as high as expected, and Canada has moved down in the ranks in terms of productivity. We are currently ranked 15th or 16th, although we ranked much higher just a few years ago.

These measures are necessary, but are not enough to ensure that the Canadian and Quebec economies regain their former productivity. This is important, as we all know, especially considering our aging population and the knowledge-based economy.

The fourth group of provisions amends the tax rate for banking institutions. A single tax rate will now be applied on the taxable capital surplus of financial institutions, and the threshold at which financial institutions start paying tax is being increased. Previously, banks were taxed according to a sliding scale. For example, corporations did not have to pay tax on surplus capital of $0 to $2 million. Between $2 million and $300 million, the tax rate was 1% and for higher amounts it was 1.25%.

The new legislation amends the tax scale whereby a 1.25% rate will apply when taxable capital exceeds $1 billion. In future, we will have a uniform tax rate at a tax level that is quite interesting, especially for small and medium-sized banks, as I was saying.

The last group of provisions has to do with reducing excise duties on beer brewed in volumes up to 75,000 hectolitres. This new measure amends the Excise Tax Act and the Excise Act, 2001, by implementing a sliding scale based on the number of hectolitres brewed.

As I mentioned earlier, prior to this amendment all breweries, no matter the amount brewed, paid a fixed duty according to the volume of beer brewed. This new measure is favourable to microbreweries. In addition, and this is rather surprising, major breweries will also benefit from the reduction in excise tax payable on the first 75,000 hectolitres produced. I am almost certain that some of these major breweries exerted pressure on the government to have this measure apply across the board. Nevertheless, what is important to us it that it will benefit microbreweries and allow them to compete with American and European microbreweries in particular.

I would now like to comment on our position on these provisions. With regard to the first group, concerning taxation of individuals, as I mentioned, we have been calling for a tax credit for tradespeople's tools for some time. These workers often have to pay for their tools out of their own pockets even if employed by a garage or shop. It is quite a significant expense for them. In our opinion, this tax credit will be a tremendous help, particularly for apprentices who not only have to upgrade their tools but also purchase a basic set of tools.

The second measure pertains to public transit. I mentioned that a non-refundable tax credit is being proposed by the government. I have two comments in this regard. We would have preferred a refundable credit because quite often, people who use the bus, subway or public transit are not well off, do not pay income tax and thus cannot benefit from this measure. Consequently, we feel they could have gone one step further by providing a refundable tax credit.

Naturally, we do not believe that the overall number of users of public transit in Canada and Quebec will increase solely because of this measure. We need much more, particularly in light of the fiscal imbalance, to ensure that municipalities and transit commissions to have the necessary means to provide good service at affordable prices. Once again we support this measure in view of attaining the Kyoto targets.

What about the elderly and other segments of the population such as individuals receiving disability pensions, for whom these benefits represent their main source of income?

We in the Bloc Québécois have always maintained that older people should receive special treatment. Obviously, we would like to go much farther than that. Specifically, we are calling on the government, as we have done for a number of years, to ensure that all older people who qualify for the guaranteed income supplement receive it. A few years ago, we noticed that tens of thousands of people who were entitled to the supplement were not claiming it, because they did not know the program existed. Unfortunately, this is still true. At the time, Marcel Gagnon, the member for Champlain, travelled across Quebec. We were able to locate many people who did not think they qualified for this program. Unfortunately, many people still are unaware that they qualify.

As for the tax credit for textbooks, I repeat that we are not opposed to this measure, but we would have thought a refundable tax credit would be preferable, because students, especially full-time students, usually work only during the summer and therefore do not pay income tax, because they do not have sufficient income. They will therefore not benefit from this measure. I know that students can carry this credit forward, but they are purchasing books now. It therefore would have been preferable to have it now.

I know that the Minister of Finance was interested in the suggestion my colleague from Jeanne-Le Ber made at a meeting of the Standing Committee on Finance to look into this. In my view, it should go further.

As well, we are calling for the abolition of the GST on books. Once again, this is vital for us, especially when we are talking about a knowledge-based economy.

Now, if we look into the second main group of provisions—new measures for fishing businesses—as I have mentioned, we are in favour of the new measure aimed at introducing the same types of forward tax averaging in the fishing industry as for farm businesses. However, we think that this benefit could have been more widely accessible. The measure proposed by the government applies to transfers between people in the same family. We think that the government could have gone further and extended the measure to intergenerational transfers outside the family.

As to the third series of provisions, corporate taxation, as I was saying, we fully support increasing the amount of revenue that would allow small and medium-sized businesses to have access to a lower tax rate. In fact, that was part of our 2000 election platform. The Bloc Québécois will stand up for measures that strengthen our SMEs, especially in Quebec, where the economy is made up of small and medium enterprises.

We are aware that competition exists among different countries and jurisdictions with respect to taxation. We must therefore also reduce the corporate surtax.

However, in the case of oil, there is no danger of relocation because companies cannot transfer the oil supply to China or Mexico. Therefore, we think it makes sense to maintain a surtax for oil companies and to abolish rapid amortization in the oil sands, where all investments can be written off in one year, instead of 25% per year, as is the case for conventional oil and gas. We think that is abusive.

I mentioned the fourth group of provisions, which has to do with taxation of banks. Obviously, the proposed measure benefits all banks, but it could also have an impact on the smaller banking institutions. I would like to remind the House that, as we have said in relation to Bill C-37, we have been trying for many years to increase competition in the banking sector, which is extremely concentrated. Five big banks control nearly all of the activity and do not really offer consumers any choice. The proposed measure will most likely have a positive impact in this respect. Let us hope it does.

I would like to conclude by saying that we are very pleased with the measure to reduce the excise tax for microbreweries. I am certain that the entire microbrewery sector, particularly in Quebec, will benefit from this new measure. Might I remind the House that we have been asking—

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure to speak on Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

When looking at a budget, the challenge of any government is to balance a budget that is going to ensure economic productivity and competitiveness and ensure people have money in their pockets. It should try to find a balance, that yin and yang between being able to have a productive dynamic economy and having the resources to provide the social programs we enjoy. As well, ensuring that individual Canadians have the maximum amount of money in their pockets and that governments do not waste money is the challenge of any budget.

The fundamental question of this budget is whether it meets that test. Does it enable our country to have a productive, dynamic economy and also provide the resources to allow us invest in the infrastructure we require in order to have a productive economy? Does it enable us to have the resources to provide for the social programs that all Canadians enjoy? I would argue that this budget fails on all of those counts. I will go through the reasons.

If we look at the global context, we can see in the future a greater amount of competitiveness in the world from giants such as India and China. They are on an economic juggernaut that will increase as time passes. It is up to us to change, modify, improvise and become more dynamic in order to stay ahead of those countries. If we fail to do so, we will suffer.

Right now Canada stands at eighth or ninth in the world in terms of economic productivity. That is okay, but we can do better. I am going to outline ways in which this budget fails as well as solutions for how our country can improve its productivity, for the reasons I mentioned.

This bill deals with a number of income tax measures. I am going to go through them in a second. I also want to say that the fundamental aspects of a balanced budget that will be useful are that the budget is indeed balanced, that there is responsible spending, there is debt reduction and there are tax reductions so that we will have a competitive international tax rate. I have mentioned the reasons why we ought to do that.

I also want to mention one of the profoundly disappointing aspects of this budget. Canadians would be very interested and very disappointed, I think, to know that this budget by the present government actually increases the taxes on the most vulnerable in society, the poor and the lower middle class.

How does it do that? The government increased the lowest tax rate that exists in our country. It also reduced the basic personal exemption. The government argues that the balance to that is the dropping of the GST, a consumption tax, but does a consumption tax really benefit the middle class and the poor? Dropping a consumption tax like the GST benefits primarily the rich, because in order to benefit from that, one has to spend. The more one spends, the more one benefits.

The people who are struggling to survive do not spend that much; ergo, they do not benefit as much. When government takes money out of the pockets of Canadians, it hurts Canadians selectively. Therefore, the wisest thing the government could have done in terms of productivity and of fairness, I would argue, would have been to drop the lowest income tax rates and increase the basic personal exemption. That puts real money in the hands of Canadians.

There is a reason why this budget is so peculiar and particular in certain areas, why it cherry picks certain benefits and does not deal with global tax reductions for individuals, particularly the poor and middle class. The reason is that this is a cynical budget. It is a budget that is designed to curry favour with the electorate. Naturally all political parties want to do that, but to do that by cynically parking one's brains at the door and not implementing solutions based on fact, reason and science is irresponsible.

Instead, the government and this budget are engaging in irresponsible behaviour because the solutions are based on cynically trying to curry favour with the public and putting forth woolly-headed solutions that sound good on the one hand but are not very effective. I gave the example of the GST cut. On the surface it sounds very exciting and good, but unless one spends a whole lot of money, which means one is rich, it is not really going to benefit the rest of Canadians. The fact is that Canadians with low or modest incomes are struggling hard these days. The increased tax burden on them is irresponsible.

One of the tax benefits the government has introduced in this bill is something called the Canadian employment tax credit. On the surface, that sounds wonderful. It is $1,000, but in reality, if we read carefully, we see that it is a tax credit for those who are working. Those who are unemployed and those who are really struggling, the most vulnerable, cannot access this. In fact, those who are working and making minimum wage or close to it do not pay very much in the way of taxes, so this kind of tax credit is not of as much benefit to the most vulnerable in our society at all. It does not help them at all.

What would be smarter? Earlier this year, I introduced something called the Canadian low income supplement, for which I have a private member's bill that will be introduced in the House in the next little while, a bill saying that a person who makes $20,000 or less will receive a cheque for $2,000, tax free. That number will decline to zero in a linear fashion, down to $40,000.

Why? Because this is real money in the hands of those who need it the most. A tax credit for those who do not make much money is utterly immaterial, because either they do not pay tax or the tax is so small that it does not really amount to much. When we so-called help those who are of modest means, we give them $50 a year.

Also, my bill does not apply only to people who work. It applies to people who do not work and who are on fixed incomes. For example, all of us here know seniors in our ridings who are living on fixed incomes. They have given their lives to our country and are living on a very tiny amount of money. The amount of money in my bill, the $2,000, is real money, tax free, in their hands. It will enable them to live and put food on the table. If people are younger, this will enable their children to have various benefits. If people are older and retired, it will enable them to pay for medications that are not covered, as well as a host of other challenges our seniors face day in and day out.

The Canadian low income tax supplement that I introduced earlier this year is something that the government ought to adopt. I hope Canadians who are listening will put pressure on the government, because this would mean real money in the hands of the most vulnerable in our society. It is fair, equitable and humane. It will help those in our society who are most impoverished.

Let us look at another couple of tax measures that are in this bill. One is the Canadian textbook credit of $500 annually, a credit for textbooks for students. On the surface it sounds good, but how does it actually materialize and get into the hands of a student? The tax credit is multiplied by the lowest income tax bracket. Therefore, this tax benefit is actually worth only $77.50. That is right. This $500 tax credit is worth only $77.50 in the hands of students. That, as we know, will not pay for even one single textbook for most courses in post-secondary education.

The next issue is the transit tax to reduce greenhouse gas emissions. We know that the government's so-called clean air act has been an absolute bust full of hot air. What would be a series of solutions that would actually reduce greenhouse gas emissions? I will give members a few.

If we take a look at greenhouse gas emission reduction, we will see that it is tied to our burning of fossil fuels, so the question is, how do we reduce fossil fuel consumption? I have a few suggestions.

Perhaps the simplest way of doing that is tied to how we build our homes. We lose an incredible amount of energy in our homes. We know that the technology exists today to build our homes more efficiently and substantially reduce our consumption of fossil fuels. China is making buildings that produce 70% less greenhouse gas emissions than buildings of a similar size in North America.

What the government can do is go back to adopting the EnerGuide program that it so callously cut because it was so-called Liberal. It may be something that we introduced, but the reality is that the EnerGuide is a good program. It enables people to have the tools, resources and know-how to provide and implement those changes in their homes that will reduce the consumption of fossil fuels and, therefore, the production of greenhouse gas emissions.

I have another couple of suggestions. As we know, cars made before 1986 produce 37 times the number of greenhouse gas emissions produced by a car made after 1996. That is absolutely staggering. By removing from the road one car built prior to 1986, we are actually reducing by the equivalent of removing 37 cars made after 1996.

The government should provide a tax break or eliminate the GST for anybody who takes a 1986 car off the road and buys a car made after 1996. It would be simple and easy to do. In effect, this is an example of tax shifting. The Minister of Finance should take a look at it. Frankly, it ought to be in this bill. It would enable us to shift the tax and encourage people to adopt actions that are more energy sensitive and environmentally sensitive.

Another issue is the Canadian children's fitness tax credit. This is a $500 tax credit for a parent, but again, it is only worth $77.50 because it is multiplied by the lowest tax rate. A parent would actually receive $77.50, not $500. The purpose behind this tax credit was noble: helping parents get their kids to become more active. We know that childhood obesity is at epidemic proportions in our country. How do we deal with this issue?

It would be smart to do two things. First, as I have argued repeatedly in the House, and in fact we passed it in this House in 1998, would be a headstart program for children. It could be adopted in the following way. The Minister of Health should call together all the ministers of health and the ministers of education from across Canada and tell them they should be providing this program for all children up to and including grade 3. Parents would be allowed to go into the class once every two weeks for two hours, if they wanted to, and they would deal with issues such as physical education, literacy and nutrition. Parents would be working with their kids on these three important things.

Literacy and physical education would be used, along with proper discipline, proper care and nutrition. This would have a profound impact on the lives of these children. The pillars and benchmarks would be laid for a solid individual in the future. Prior to the age of 8, neurons in a child's brain are actually quite malleable. They change. What a child experiences at that time could have a positive or negative impact on their future. It would be a smart move if the Minister of Health worked with his counterparts across the country to implement a headstart program.

The other thing that could be done is the implementation of a mandatory physical education program in schools, up to and including grade 11. Mandatory physical education would be very helpful in getting kids physically active during the course of the day.

As I said, it is very important that a budget such as this deal with productivity. I am going to outline a few solutions we could implement that would dramatically improve our productivity and enable us to be really competitive with those giants at our heels right now, particularly India and China.

First, we could reduce the basic personal exemption. Second, we could reduce the lowest tax rate. Third, we have to make sure that we reduce the tax rates on businesses so they are competitive across our country. Ensuring that we have a competitive business tax regime is extremely important.

With respect to surpluses, we should implement the one-third, one-third, one-third rule. One-third would be debt reduction; one-third would be spending on critical areas, which I will mention in a second; and one-third would be tax reductions for businesses and individuals.

With respect to investment, it is very disappointing that the government did not continue the research and development investments that my party made over the last five years. Rx and D is an absolutely integral part of our ability to be competitive. Therefore, I have no idea why the Conservative government chose to dramatically decrease research and development investment. This is one of the pillars of a vibrant and productive economy. Some of that money ought to be going to universities and colleges. Some of it should be used to encourage the private sector to reinvest profits into businesses.

The government should work with the provinces to harmonize the PST and GST to ensure that provincial sales taxes are not applied to business inputs but into their businesses.

The PST in some provinces is exempt from business inputs and in others it is not. The federal government could work with the provinces to ensure there is no PST or GST on business inputs, which would enable companies to make the investments they require.

On education, let us enable our students to get the higher education they require. With costs escalating, I find it reprehensible that individuals in our society are barred from accessing higher education because of the amount of money in their pockets. A fundamental tenet of our country is that everyone has the equal opportunity for success, not equal outcomes but an equal opportunity to be the best that they can become.

The fact that tuition fees have escalated so high and, quite frankly, have become a barrier for some people to access the education they require, is something the government should put its full effort into with its provincial counterparts.

In infrastructure, the government should be adopting the cities agenda that we started. The cities agenda is extremely valuable in ensuring that investments and monies that we have at the federal level will be driven at the municipal level for the needs of local communities. We did that. The agreements were hammered out with the provinces and municipalities and the Federation of Canadian Municipalities was very happy with that. I implore the government to continue with the program.

As the House knows, there are greater barriers to trade east-west than there are north-south. My province of British Columbia has signed a landmark deal with the province of Alberta to dramatically reduce and almost remove the barriers to trade between British Columbia and Alberta. There is no reason that the federal government cannot take a leadership role with the provinces to do this.

How would it work? The Minister of Finance, the Minister of National Revenue and the Minister of Industry should work with their provincial counterparts to call a trade council together where we put forward the trade barriers, eliminate those that are unnecessary and useless and we move on. It is a major restriction.

I will give one example, which is labour. The fact that somebody who is trained in Ontario cannot work in British Columbia or that somebody trained in B.C. cannot work in Newfoundland is ridiculous. The fact that we are all trained in the same country and yet our skills are provincial specific is an absurd situation. It is a major restriction to labour mobility and a major drain on the ability of our country to be economically competitive. I encourage the government to work with its provincial counterparts to do that.

When we were in government we started the smart regulation initiative, which took a ruthless look at the regulations. We started hacking away at and removing all those regulations that were unnecessary. The groundwork is there. The minister should take a look at this, continue with the smart regulation initiative and reduce those barriers to trade.

My last point is on the issue of immigration. With our changing demographics we know that the ratio between the retired population to worker population is increasing. We can do two things. First, retire the mandatory age of retirement. If the 65 of today is the new 50, why on earth do we not allow people who are 65 and above to work? It is absurd given the demographic changes that we require. These are smart, productive, willing people who want to work. They would be a boon to our economy.

Second, with respect to immigrants, many of the immigrants in our country are working on the margins because they may be here illegally. However, to ensure we honour the law but also enable these people to become integrated into our society and not live at the margins, we should give these people an opportunity to come in from the cold, apply for a worker's permits, give them a two year permit and renew it a couple of times. If they are law-abiding, pay their taxes and are employed, we then give them the chance to become Canadian citizens.

I have provided the government with a series of solutions and opportunities that it can take which would enable our country to be more productive. I am sure the government will find widespread support from across Parliament to give effective solutions to the benefit of our great people.

[The Acting Speaker, Conservative, Royal Galipeau]

When we last considered Bill C-28, the hon. member for Western Arctic had seven and a half minutes left for his comments. He has the floor.

The House resumed from December 8 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the third time and passed.

[The Acting Speaker, Conservative, Royal Galipeau]

It is with regret that I interrupt the hon. member. When we return to the study of Bill C-28, there will be seven and a half minutes left to the hon. member for Western Arctic.

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

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

Mr. Speaker, I am pleased to speak today about this notice of ways and means on the budget. Although the Bloc Québécois has always had serious reservations about this budget, we have decided to support it, as we believe it contains a number of gains that the Bloc Québécois has long been calling for. Moreover, today, during question period, I was glad to hear the Minister of Transport, Infrastructure and Communities remind this House that he needed the support of the Bloc Québécois. I think that clearly shows how useful and relevant the Bloc Québécois is.

Here are some of the gains and long-standing requests that we have successfully obtained from the government. The first is tax exemption on bursaries. We believe that if one level of government gives money to students for their studies, no part of that money should be taken away from them in the form of taxes. We also obtained tax improvements for micro-breweries. This is of particular concern to me, because the McAuslan brewery is in my riding. If time allows, I may discuss this further a little later. In any case, we had been calling for this for quite some time. A tax credit for public transit users, something that the Bloc Québécois requested on several occasions, was part of our platform. We are pleased to have obtained this. We had also long been asking for removal of the excise tax on jewellery, a tax credit for tools—the government even extended this to apprentices—and a 50% reduction in the right of landing fee.

As the Minister of Transport, Infrastructure and Communities stated this morning, the government needs the support of the Bloc Québécois in order to advance its issues. We are also working on another large file. We are hoping, as the parliamentary secretary said this morning, to be very pleasantly surprised and see the government finally fulfill its promise to correct the fiscal imbalance in the next budget.

However, I must confess that we are skeptical about this, to say the least, because, since tabling the last budget, all signs from the government seem to minimize the seriousness of the problem. We were even seriously told in this House and in committee that the GST reduction was helping to resolve the problem. This illustrates the government's failure to understand the problem of the fiscal imbalance. We are told that the problem is being resolved, although meanwhile, Ottawa cancelled a child care agreement with the Quebec government, thus adding to the fiscal imbalance.

Some say that the Bloc Québécois' requests are far-fetched, although the minister, Mr. Séguin, made the same requests in the National Assembly on behalf of Quebeckers. The number is the same. No matter how you try to calculate it, the answer is always $3.9 billion.

So, for us this is essential and it will be critical in the next budget. If the Minister of Transport, Infrastructure and Communities was serious this morning when he said that he needs the support of the Bloc Québécois, he will take note that this is our main demand. This is why Quebeckers put their trust in the Bloc Québécois. They know that we always follow up on our commitments, including resolving the fiscal imbalance issue. Quebec must receive $3.9 billion annually, through transfers or through the equalization program. In the short or the middle term, the government will also have to consider a true tax room transfer. Indeed, the middle or long term solution that is needed to solve the fiscal imbalance issue can only be achieved through a tax transfer.

No one in Quebec wants to be subjected to the risks that result from having various governments in Ottawa, various parties that change the programs, that abolish them, or that suddenly reduce federal transfers, like the Liberals did in 1995. We want to be able to manage our own financial resources, since it is our taxes that we are sending to Ottawa. This is a top priority for the Bloc Québécois.

In his economic statement, the Minister of Finance also talked about the government's intention to limit the federal government's spending power.

We are not opposed to that. On the contrary, this is interesting but, once again, we are very skeptical.

I asked the minister, when he appeared before the committee, to elaborate a little more on this, but he said very little. Now that this House has recognized that Quebeckers form a nation, it would be nice to include, in the next budget, real and concrete measures to limit the federal government's spending power.

What does this mean? When we talk about restricting the federal government's spending power, it is clear, at least in Quebec, that we are talking about the right to opt out with full financial compensation from any program put in place by the federal government in a Quebec or provincial jurisdiction. This measure will also have to be retroactive, so that the governments of Quebec and the provinces can say, “There is currently a program in my jurisdiction. We are asking for the right to opt out with full compensation, to be able to set up our own programs”.

This could be the case, for example, with the child care program. The approach used by the government in this area is totally different from the one selected by Quebec, which is to establish a public child care program shared by all.

If the government is really serious about limiting the use of its spending power, it has to expect that the Government of Quebec might say, for instance, “We are withdrawing from this program, taking the money currently provided by the federal government for child care and investing it in our own program”.

In its next budget, the government will have to correct errors and problems with taxation which penalize Quebeckers. I touched on that earlier this morning. The biggest problem was the impact of the child care program and cuts to Quebec in terms of the tax credit for child care, among other things.

In the rest of Canada, parents claiming tax credits for child care may claim $25, $30 or $40 a day, while in Quebec, parents who have access to public day care can claim only $7 a day. They still have to pay the difference through their taxes in Quebec, but they cannot claim more than $7 a day on their federal income tax. This makes for substantial savings for the federal treasury, while Quebeckers lose control over that money.

I questioned the parliamentary secretary this morning. As part of the Conservative government's alleged commitment to flexible federalism, will her government announce that it will respect the choice made by Quebeckers? Will it give back to the Quebec government the money saved each year on tax credits unclaimed by Quebec parents, so that this money can be invested in Quebec's own child care services? The parliamentary secretary would not commit to do so. It is very sad to see that this commitment to flexible federalism has remained little more than lip service. Flexible federalism really has to be taken to mean, “We are prepared to make an effort whenever it is no trouble and it serves us. Otherwise, it's your problem. We will not go out of our way for you”.

Quebeckers have to come to the realization that the only real choice left is to become our own country, to be able to make our own decisions and our own choices without having to ask permission of other levels of government. In the meantime, the Bloc Québécois will be here to try to limit the damage.

Moreover, there is absolutely nothing about Kyoto in this budget, which is very sad. Not only is there nothing on Kyoto, but the Minister of the Environment told us earlier this year that she would not give the $320 million that Quebec needs to implement its Kyoto plan.

In this regard, there is a similarity between the Conservatives and the Liberals. Neither of these parties acted on the Kyoto protocol. Yes, the Liberals ratified the protocol. The leader of the official opposition held a nice conference in Montreal and said a lot of nice things, but that does not change the fact that, under the previous government, Canada's record with regard to greenhouse gas emissions was nothing less than catastrophic.

For years the Liberals told us that it was important to meet our targets, but they did nothing. As for the Conservatives, they told us that it was impossible to meet our targets, so they did nothing. The Conservatives know they are incompetent and unable to deal with this problem, whereas the Liberals pretended they did not know. I think it is the only difference between those two parties. We hope that the next budget will include funds for the environment and for the Kyoto protocol and that the Government of Quebec will at least receive the money it has requested to fund its plan.

There is something else missing in this budget. It is a shame because what is missing would not cost much. I am talking about funding to set up an appeal tribunal for refugees, in accordance with the legislation. The regulatory and legislative framework already exists. The government just needs to fund this tribunal so that refugee status claimants can fully affirm their rights. They are currently dealing with commissioners who are often appointed for partisan purposes.

We recently saw in the media that the Conservatives are blocking some appointments for partisan reasons. By having an appeal division with truly independent judges, a refugee claimant who is the victim of a commissioner's error could appeal the decision and truly obtain justice. In my riding, there is a very real, very concrete example in the case of Abdelkader Belaouni, who is a refugee in sanctuary in a church basement in Pointe-Saint-Charles. This person was clearly wronged by a commissioner. This example is clear and striking because Laurier Thibault, the commissioner who denied Mr. Belaouni's claim, has not approved a single claim in the past two years. This is a commissioner who denies almost 100% of all claims. That cannot be right.

If a true appeal tribunal were set up, we would notice this situation even more. Maybe that is what the government is afraid of. Impartial judges might not have a 100% rejection rate and would see that many claims are justified and legitimate. Furthermore, Abdelkader Belaouni is quite involved in Pointe-Saint-Charles and has the community's support. This man wants to contribute to society and he wants to work. He has been here for 10 years. It is truly sad to see that such situations exist in Canada because the Minister of Finance did not include in his budget a few million dollars to set up this appeal tribunal.

In the meantime, the Minister of Citizenship and Immigration should personally intervene, as far as the law allows him, in order to compensate Abdelkader Belaouni and regularize his situation. Since there was no appeal tribunal in place to prevent this situation, the minister must act to repair the damage done, at least. This would be a good way to make amends.

The ways and means motion before us would implement part of the budget, Bill C-28. As I have said, the Bloc Québécois asked for a number of measures, including a tax credit for public transit, a tax credit for textbooks and tax deductions for microbreweries. We support these measures, as well as measures to assist and reduce the burden on small and medium businesses in Quebec.

It is therefore not surprising that we will support Bill C-28 even though we have serious concerns about this budget overall.

There is one particularly interesting measure that I mentioned before: a different excise tax for micro-breweries. Since the budget was tabled, the measure has been modified somewhat to cover nearly all Canadian breweries. Even so, it will help a lot and we are pleased to have made progress in this area. As I said, I think that this will help local economies like those in my riding where the McAuslan microbrewery is located. It produces a good product, does excellent work, employs people and helps our communities survive. This is an excellent example of how the Bloc Québécois can contribute by encouraging the government to make good decisions for people.

With respect to individual taxation, the tax credit for toolkits purchased by tradespeople is also something we have been asking for for a long time. In many cases, people whose jobs require tools end up spending a lot of money every year. This is how they make their living, so they do not have a choice. They must buy these tools. Therefore, we are very pleased with this measure, which we have been asking for for so long.

As for the transit tax credit, that was in our 2004 election platform and we are pleased to see that the government finally listened to reason and included this measure in its budget. Obviously, this will not solve the problem with greenhouse gas emissions or the problem with public transit in general. The issue of underfunding must be addressed through the elimination of the fiscal imbalance. If the government is really serious about wanting to deal with transit issues, it will have to deal with the fiscal imbalance.

There are also a few measures for the most disadvantaged, including increasing to $1000 the amount deductible from the taxable income for pensioners. This is a good measure. However, it would be hard not to say that this does not even compensate for the billions of dollars still owed to seniors who were cheated out of the guaranteed income supplement. This program was too difficult to understand and too difficult to use for many of them. There are people who, for years, would have been entitled to apply for the GIS but never did. When they became aware of it, it was too late. The government agreed to pay the money back only for the last 11 months. That was under the Liberals. We would have thought that the Conservatives would act differently, but no, they are still refusing to give full retroactivity to those seniors who were cheated out of the guaranteed income supplement.

Yet, I challenge anyone not to pay taxes for four or five years and then tell the government, when it asks for its money, that it will only get the last 11 months worth of taxes, and that it is too bad if it did not notice anything sooner. Of course, that would not work. The person would have to pay the taxes owed for the whole period of time. The Bloc Québécois thinks that the government should refund seniors for the whole period during which they did not get the support that they needed.

Finally, as regards corporate taxation, we are also in favour of increasing the sales figure that allows small and medium size businesses to benefit from a reduced tax rate. We think this is a measure that will help develop the Quebec economy. In fact, we talked about this in our 2000 election platform, when the Bloc proposed a reform of corporate taxation to give more leeway to small and medium size businesses by reducing their tax burden, because this would allow them to better compete on international markets. So, we like this measure.

In conclusion, the next budget will have to include a true support program for older workers, as pledged by the government in its throne speech. That has not been done, but it will have to be done in the next budget.

The House resumed consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the third time and passed.

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

Mr. Speaker, I appreciate this opportunity to speak at third reading of Bill C-28. Once passed, this bill will implement certain tax measures that were not part of last spring's budget implementation bill. That bill received royal assent on June 22, 2006.

Budget 2006 was the first budget for Canada's new government. It was well received by Canadians. However, the House should know that the best is yet to come.

By now, members of the House are well aware of what is contained in the bill before us. I would therefore like to focus my remarks on some of the particular proposals in this bill that will open up opportunities for Canadians, opportunities that will lead to a stronger, more prosperous Canada.

I am sure that any of the members of this House who are parents would want their children to have opportunities that perhaps they did not have. Canada's new government believes in creating those new opportunities for Canadians wherever they live in this great country. That is why budget 2006 took action to help families and individuals, as well as businesses, Canada's job creators, by lowering taxes, rewarding effort and making Canada a better place in which to live and do business.

One of our first actions was to return money to Canadians by reducing the GST. We also provided other significant personal and corporate tax relief and investments in the budget that will create jobs and boost Canada's economy by improving incentives to work, save and invest.

Most recently, we took decisive action by announcing a tax fairness plan that provides $1 billion per year in tax relief for seniors and pensioners. The tax fairness plan significantly enhances the incentives for Canadians to save and invest for family retirement security.

I want to talk today about the proposals in this bill that will set Canada on a firm track for tomorrow by providing opportunity today. I would like to start with the fitness tax credit, because our health and especially the health of our children is a key part of a prosperous future for Canada. After all, without our health, how can we enjoy all the great opportunities that this country has to offer?

There is little doubt that regular exercise improves the quality of life. Encouraging families to help their children get into the habit of being physically active is an important goal and one that is becoming increasingly important. Our new children's fitness tax credit will help families provide that encouragement to their children. In doing so, it will help our children to adopt a healthier lifestyle.

Specifically, Bill C-28 proposes that the credit cover eligible fees up to $500 for enrollment in an eligible program of physical activity effective January 1, 2007. That date is coming up pretty quickly.

The need for this tax credit is underscored by the challenges presented by childhood obesity. In the past two decades, obesity has emerged as one of the biggest health problems facing Canada. The purpose of this credit is to facilitate access by children and youth to eligible programs of physical activity and recreation. This will be an important catalyst to help children maintain regular exercise, balanced growth and, most important, a healthy lifestyle that they can take with them into adulthood.

To help the government decide which programs of physical activity should qualify for the children's fitness tax credit, the Minister of Finance appointed an expert panel, chaired by Dr. Kellie Leitch. The panel recently presented its report. I would like to thank Dr. Leitch and the panel members for their thoughtful insight into this issue.

The government is renewing the panel's recommendations to decide which programs of physical activity should qualify for the new credit. Healthy bodies promote healthy minds, and healthy minds go hand in hand with better learning.

This new government can help. We recognize the importance of education beyond high school in getting a good job with a secure future. Canada's new government wants to do all it can to help Canadians achieve that goal. To do that, Bill C-28 contains proposals from budget 2006 that will help with the costs of post-secondary education. Moreover, once graduates are in the workplace, there are measures from the budget that will help Canadians with some of their work related expenses. Let me briefly outline these important proposals. Let me start with education measures.

Any of us who have helped put our children through university or college know that textbooks are expensive. To help parents and students with these costs, Bill C-28 proposes a new non-refundable tax credit to provide better tax recognition for the cost of textbooks. This measure would be effective for 2006 and subsequent taxation years.

Eligibility rules for this new tax credit will be the same as those for the education tax credit and will provide benefits to almost two million post-secondary students. We know that not all students attend school full time. In recognition of that, the textbook tax credit applies to both full time and part time students. For full time students, the amount will be $65 for each month of full time post-secondary study. For part time students, the amount will be $20 for each month of part time post-secondary study.

What does this mean to the bottom line? To give an example, a full time student enrolled in college or university for eight months would qualify for a textbook tax credit of $520 for the year. This represents a reduction in that student's taxes of about $80. This all adds up for a student. Helping students with the cost of textbooks is one important step that Canada's new government has taken to help post-secondary students with their education related expenses, but we have done even more.

Many hard-working students earn scholarships. To help them meet their tuition expenses, Canada's new government wants to reward them for that dedicated hard work. As members of the House may know, under current legislation only the first $3,000 in scholarship, fellowship or bursary income received by a post-secondary student is not taxed. In other words, any money received in excess of $3,000 is included as income for tax purposes.

The government believes that students should be rewarded, not penalized, for their academic excellence. That is why in budget 2006 we proposed to fully exempt all scholarship, fellowship and bursary income from tax. Once the bill before us is passed by Parliament, this measure will provide tax relief to more than 100,000 deserving post-secondary students.

This government is well aware that in today's knowledge based economy, a more educated and skilled labour force is key to Canada's competitiveness in the world. Government investments in education and training are therefore critical to productivity and economic growth.

As I have just outlined, Bill C-28 proposes measures to help students with their post-secondary education, but we also recognize that there is a need to help Canadians once they are in the workforce. That is why the government, in this bill, has introduced specific measures to help in that regard.

First, the Canada employment credit complements the personal income tax reductions introduced in budget 2006 by recognizing the extra costs to Canadians sometimes associated with joining the workforce. For example, a uniform might be required to work in a particular store or business, or special safety equipment could be needed to work on a construction site. For some Canadians, and particularly low income workers, these expenses can sometimes make the difference between being able to accept a job or not.

In the past, Canadians have raised concerns that if they have their own business or are self-employed, they can get tax deductions for certain expenses, and if they are employed, they do not. We do not think that is fair.

Bill C-28 changes that by proposing the Canada employment tax credit to help Canadians offset the costs of working. A credit of $500 is now available on employment income and that credit will double to $1,000 starting January 1, 2007. Canadians can put this money toward work expenses, like uniforms and safety equipment, and that helps working Canadians.

Of course, finding the right job is not always easy. Some Canadians find themselves stuck in low paying jobs and for one reason or another, often financial, they are not encouraged to consider the trades as a possible career source. However, as we often hear, employers are crying out for people, especially skilled workers, for example, in the construction industry.

Budget 2006 helps by proposing a new apprenticeship job creation tax credit. This credit will encourage employers to hire new apprentices to learn a skilled trade. With the measures contained in Bill C-28, effective May 2, 2006, about six months ago which was budget day, eligible employers will receive a tax credit equal to 10% of the wages paid to qualifying apprentices in the first two years of their contract, to a maximum credit of $2,000 per apprentice per year.

I explained earlier how the Canada employment credit will provide financial relief in recognition of work related expenses incurred by employees. The new government also recognizes that many people employed in the trades must have their own tools as a condition of employment. Budget 2006 provides assistance for these workers with a tax deduction of up to $500 for the cost of tools in excess of $1,000. The Canada employment credit and tools deduction together will provide tax relief to some 700,000 employed tradespeople.

Canada's new government wants to make it easier for new Canadians to pursue their dreams. Certainly reducing taxes is part of our plan. We have done that and we are not finished yet. However, as I have outlined today, helping Canadians realize their dreams is about more than just cutting taxes. It is also about helping families encourage their children to become physically active and have healthier lifestyles. It is about helping students with their education. It is about helping Canadians get and keep good jobs.

With the measures in the bill we are debating today, the new government will help Canadians accomplish those goals. I therefore encourage all members of the House to work together to pass this bill so we can get on with creating even more opportunity and an even stronger more prosperous Canada for today's generation and for those who will follow us.

[John Baird, Conservative, Ottawa West—Nepean, ON]

moved that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the third time and passed.

Business of the House

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

Mr. Speaker, I am pleased to confirm that the holiday season will be beginning in due course. In the meantime, we will continue with Bill C-37, the tax convention; Bill C-12, financial institutions; and Bill C-36, an act to amend the Canada Pension Plan and the Old Age Security Act.

Tomorrow we will begin the third reading of Bill C-28, budget tax measures.

We will continue next week with the business from this week, with the addition of Bill C-40, sales tax; Bill C-32, impaired driving; Bill C-33, technical income tax; Bill C-35, bail reform; and, of course, as is the tradition, as the member would know, it is great to get into a prebudget debate and that usually lasts about two days.

We have a busy agenda and I look forward to the cooperation of the hon. member. I am sure we will have further discussions on this.

Finance

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Mr. Speaker, I have the honour to present, in both official languages, the seventh report of the Standing Committee on Finance, on Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, with amendments.

[The Chair, Conservative, Brian Pallister]

Good morning, committee members. Welcome back.

Officials, thank you for being here.

Pursuant to the order of reference of Monday, October 30, 2006, we will proceed with clause-by-clause consideration of Bill C-28, a second act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

Consideration of clause 1 is postponed.

I call clause 2. You have your package of amendments in front of you. There are no amendments to clause 2.

Yes, Mr. McKay.

(On clause 2)

Business of the House

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

Mr. Speaker, I will do better than just tell the hon. member what will happen next week, I will tell him how we will conclude this week.

This afternoon we will be on the report stage of Bill C-24, the softwood lumber agreement. As you may know, Mr. Speaker, tomorrow and Friday the House will be adjourned for the Liberal leadership convention, and we will all be watching that with interest.

On Monday it is my intention to call ways and means Motion No. 12, a motion to refer Bill C-30, the clean air act, to a legislative committee before second reading. We will continue that week with Bill S-5, on tax conventions, and Bill C-34, on the first nations education agreement.

On Tuesday we will then consider the third reading stage of Bill C-24.

Later on that week it is my hope that we will begin the debate on the marriage motion. I will continue to consult my colleagues with respect to a date for the final vote on that. After that it is my intention to proceed with Bill C-28, the budget tax measures.

I hope that is of help to the hon. member.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Minister, now that you've had the really tough questions, we'll get to the easy ones.

For Mr. Del Mastro's purposes, he should note that Bill C-28 contains the dividend gross-ups that were announced in the November update of 2005, and they do affect income trusts.

I want to direct the minister's attention to this panoply of tax credits that he's put into his budget. Frankly, I think the accountants and CGAs of this world should be erecting monuments to you, because you've certainly increased the Income Tax Act of Canada by several chapters.

Now, on the public transit passes tax credit, can either you or anyone in your department point me to a study that supports the cost-benefit analysis of this particular tax credit?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

The specific provision that's in Bill C-28is the increase of the pension tax credit by $1,000, which is a doubling of the tax credit. That is a commitment we made in the election campaign. Interestingly enough, although I didn't realize it when I first looked at it, it had never been increased since it was brought in at $1,000 more than 20 years ago, as I recall, so it's about time, in fairness to seniors. We're trying to create tax fairness in Canada; in fairness to seniors, that needed to be updated.

Then there is the age change we made for low- and middle-income seniors on October 31. Increasing that limit on the age credit by $1,000 will be significant. In Canada it assists low- and middle-income seniors primarily; there is an income limit on it.

Then the huge change, the massive change, in tax policy in Canada is that we changed the rule on income splitting for pensioners. I don't minimize the significance of that. It's a very significant tax change in Canada. It will benefit pensioners directly in a very real way, starting January 1, 2007.

Regardless of our political party, we all know as members of Parliament that among our constituents we have folks living on one pension. They are Canadians who worked during a time when it was not common for both partners to work outside the home, as it is today. They're living on one pension of, say, $40,000 a year, and they're paying tax on it at $40,000 a year. They'll be able to split it now to $20,000 a year each. That means tax savings of about $2,500 for those two people living together on $40,000. I think most Canadians would say that's fair, that it's the right thing to do.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

You mentioned a number of things. First of all, you indicated that you think Canadians pay too much in taxes. I'll certainly tell you that the people in my riding feel that way. They feel excessively taxed. They appreciate the individual tax savings, important savings that, as you highlighted, are greater than in the last four budgets combined. In addition to the employment tax credit and the tool expenses tax credit, you underlined something else: benefits to people who currently work.

I think the measures we've taken to decrease the tax burden on seniors are really significant. You mentioned that we've removed 85,000 pensioners completely from the tax roll. Can you talk about the measures in Bill C-28, as well as the ones you announced on October 31? What benefit will those be to the 23,000 pensioners in my riding?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

I would like to thank the member for his question.

The effort we made in budget 2006 with respect to the dividend tax credit was designed to try to remedy the income trust challenge. It was insufficient. That became plain as more and more companies in Canada announced that they were going to convert to income trusts this year, including the two large telecommunications companies.

We still want to proceed with that change in taxation of dividends in budget 2006 and in Bill C-28 because we have designed the program going out four years from now so there will be a level playing field by the time we get to 2011, including this dividend change between corporations and income trusts. Then it will make no difference in Canada, from a taxation point of view, whether a corporate entity chooses to do business as a corporation in the traditional sense, or as an income trust.

[The Chair, Conservative, Brian Pallister]

Let me quickly interject.

Committee, we are dealing with Bill C-28 here. The minister has already announced that he'll be coming back in two weeks for the fall fiscal update. If you have questions of a general nature, not pertaining to this particular bill, I would encourage you to bide your time and use the opportunity presented to you in two weeks to deal with these issues.

At this point, of course, I will continue to give the latitude I am accustomed to giving. But I would encourage members to deal with the substance of Bill C-28 as much as possible today. That's what we're here to discuss.

[Jim Flaherty, Conservative, Minister of Finance]

Thank you, Chair.

I express my thanks to the committee for all of the work that has been done on pre-budget consultations. I know that the committee has travelled extensively and done a great deal of work, and I look forward to reviewing the report of the committee as part of budget preparation.

On the point that you mentioned, Mr. Chairman, I'd be honoured to appear before this committee to provide Canadians with the state of our nation's finances on Thursday, November 23. I will deliver the fall economic statement of Canada's new government. As you know, we have established strong economic fundamentals through implementing significant tax relief, debt reduction, and efficient spending, and by focusing on the priorities of Canadian families and businesses, but we must build on our success and seek new ways to unleash our potential. For these reasons, I will also be providing Canadians on that day with our economic plan for Canada. This new economic platform is a strategic long-term plan designed to improve our country's prosperity, both today and in the future. Canada's new government is getting things done for Canadians, and you will see further evidence of that on November 23.

I would like to turn to Bill C-28, Chair, and then in a few minutes, I understand, we'll look at finance estimates.

Once passed, Bill C-28 will implement certain tax relief measures that Canada's new government announced in budget 2006, but that were not included in the initial budget implementation bill last spring. I will say at the outset, Chair, that Canadians pay too much tax, and the tax burden on individuals, families, and businesses is still too great and must be reduced. Our government made significant progress on this front this past May. Budget 2006 provides more tax relief for individuals than did the last four federal budgets combined.

Once passed, Bill C-28 will implement certain tax relief measures that Canada's new government announced in budget 2006, but that were not included in the initial budget implementation bill last spring.

Mr. Chairman, Canadians pay too much tax. The tax burden on individuals, families and businesses is still too great and must be reduced. Our government made significant progress on this front this past May. Budget 2006 provides more tax relief for individuals than did the last four federal budgets combined.

All told, we left some $20 billion more in the pockets of individual Canadians in budget 2006. As the measures in Bill C-28 demonstrate, the tax relief will have widespread benefits.

The question is often asked, Chair, why we've reduced taxes and why we reduced the tax burden on Canadians. It is not simply for the sake of reducing taxes. The actions taken by this government will serve to build a stronger, more competitive and productive Canada, both for today and tomorrow. Our goal is, first of all, to focus on the priorities of Canadians; second, to maintain a balanced budget; third, to reduce debt; and fourth, to spend on programs that are both efficient and effective. We will also create a real tax advantage for Canada that encourages and rewards investment, hard work, and savings.

I won't go into excessive detail on the bill, but allow me, if I may, Chair, to take a few moments to explain how the measures in Bill C-28 contribute to our goal.

First of all, the Canada employment credit recognizes that working Canadians are the foundation of Canada's economic growth. It rewards them by helping to offset work-related expenses that are not covered by the employer, expenses such as uniforms, books, or home computers. The credit will allow each and every working Canadian to claim a credit on up to $500 in employment income in 2006, starting last July 1. This coming January 2007 the amount of income eligible for the credit will double to $1,000.

Together with the new Canada employment credit is a new deduction for tool expenses. This new measure provides for a deduction of up to $500 to tradespeople for the cost of tools in excess of $1,000 that they must acquire as a condition of employment. Mr. Chairman, the tools deduction combined with the Canada employment credit will provide tax relief to about 700,000 employed tradespeople in Canada.

This bill also contains proposals to help meet the demand for skilled workers, particularly in the construction trades. The new apprenticeship job creation tax credit will encourage employers to hire new apprentices to learn a trade. As a result of this proposed measure, eligible employers will be able to receive, to a maximum of $2,000 per apprentice per year, a tax credit equal to 10% of the wages they pay to qualifying apprentices in the first two years of their contract.

In this year's budget, we also proposed a tax credit so that people who use public transit with monthly passes in Canada will have about two months free public transit per year. This initiative will be instrumental in cutting the commute, cleaning the air, and driving our economy.

Similarly, Mr. Chairman, Canadians have been very supportive of our efforts to help upcoming generations secure their futures. In recognition of the expenses involved in putting our children through school, Bill C-28 includes a new non-refundable tax credit to help cover the costs of textbooks for students. Also to help students, Bill C-28 will fully exempt from tax scholarships, fellowships, and bursaries received by a qualifying post-secondary student. Currently, the situation is that only the first $3,000 is exempt. This measure, with respect to scholarships and fellowships and bursaries, will help provide tax relief to more than 100,000 post-secondary students.

As you can see, Canada's new government has taken significant action to help Canadians prepare for their future, but there is more. In budget 2006, we introduced our physical fitness tax credit for up to $500 to assist parents with the costs of programs that require regular physical activity for our children.

We have also delivered significant positive initiatives in support of our pensioners and seniors. In our first budget, Canada's new government proposed to double to $2,000 the maximum amount of eligible pension income that can be claimed under the pension income credit. This is the first time the credit has been increased. Not only will this measure provide greater tax assistance to those who have saved carefully for their retirement, it will remove approximately 85,000 pensioners from the tax rolls completely.

Since then, of course, we have gone further, through the tax fairness plan I announced on October 31, permitting income splitting for pensioners beginning in 2007, and increasing the age credit amount by $1,000, to $5,066, effective January 1, 2006, or this past January.

For businesses, budget 2006 introduced a reduction in the general corporate tax rate to 19% by 2010; the elimination of the corporate surtax for all corporations in 2008; and the end of the federal capital tax in January 2006, two years earlier than had been scheduled. These tax reductions have already been legislated.

We also announced on October 31 a further 0.5% cut in the general corporate income tax rate starting January 1, 2011, under the tax fairness plan, which will reduce that rate a further 0.5%, to 18.5%.

For small businesses, which are 95% of all Canadian businesses, Bill C-28 contains further tax reduction measures from the budget. These proposals will increase the small business income threshold to $400,000 starting next January, and will reduce the small business income tax to 11% by 2009.

There is more on this bill, Mr. Chairman, but I think my remarks so far serve to illustrate the government's course and where we intend to go in future budgets.

I now invite any questions you may have about Bill C-28. With me today are officials from Finance Canada who are here to help address any technical issues members of the committee may want to clarify.

I gather, Chair, later we'll deal with the estimates part?

[The Chair, Conservative, Brian Pallister]

Welcome, Mr. Minister. We're pleased to have you here. Committee members, I know, are pleased to see you as well. I'll read some comments here and give the media a chance to leave here.

Pursuant to the order of reference of Monday, October 30, 2006, BillC-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, the chair calls clause 1.

(On clause 1--Short title)

[The Chair, Conservative, Brian Pallister]

Thank you, Madam Ablonczy. Thank you, all. Thanks to committee members for their attention, despite their chocolate levels here this morning.

We will excuse the panel now, and the cameras will be off momentarily so we can continue our civil discussions this morning.

I think I can deal, actually, with Monsieur St-Cyr's issue in advance. It may save us time, and we'll then move to Madam Wasylycia-Leis's motion. Also, I should notify the committee that we've received notice from Mr. Paquette of his desire to present a motion on Thursday.

I want to quickly give you an overview of the work we have before us. This Thursday we will continue dealing with Bill C-25. I will encourage all committee members, if they have amendments to this bill, to bring them forward in advance of the discussions. It would facilitate discussion of the bill. I would encourage you to give those to the clerk by 5 p.m. tomorrow, knowing, of course, that you can bring amendments during the discussion if you so desire. It would facilitate our discussion at that time.

Also, we have C-28, the budget implementation bill, before us, which we must deal with by.... When? Is there a deadline on that? It should be as soon as possible.

We also have Bill C-294. Supplementary estimates also have to be dealt with by December 5. We have the fall fiscal forecast. And the minister will be appearing, we think, but not until the week after, we hope, the Remembrance Day recess.

We also have, of course, the priorities that I've asked you to identify and forward to us, because we want to get those over to Finance so they can come to speak to those and provide us with further information. That process will begin next Tuesday. So those priorities, I'd remind you.... When did we say we wanted those in by? They should be in by tomorrow at noon. Please do so, because we do want to make sure that Finance officials have a bit of lead time to prepare fully for your questions.

As well, we have private members' bills and the tabling of reports on the pre-budget consultations. We need to prepare that as a result of our weeks of deliberations. That has to be done by December 4. As well, Mr. McCallum has a notice of motion on the record in regard to GST rebates.

We have 10 meetings to do all of that. That being said, Mr. St-Cyr has raised with the chair his concern about--

The House resumed from October 27 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

Budget Implementation Act, 2006, No. 2

[The Acting Speaker, Conservative, Royal Galipeau]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

When we return to the study of Bill C-28 there will be three and a half minutes left in questions and comments for the hon. member for Ottawa Centre.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I am pleased to comment on Bill C-28.

I am a member of the finance committee. The committee recently completed a tour. We went from Whitehorse to Vancouver to Fort McMurray to Saskatoon and Portage la Prairie and then out on the east coast to St. John's, Halifax, Quebec City and Toronto. We wound up yesterday afternoon. I think we heard from over 400 witnesses. After a while we got a flavour of what Canadians seem to think about this budget. I have to say that they do not seem to think too much of this budget. In fact, after a while there were patterns that developed in the testimony.

I would have thought that thee Chamber of Commerce would have been an organization that would instinctively or intuitively support Conservative budgets. That organization had some rather critical things to say about this particular budget. The Chamber of Commerce said:

We note that Budget 2006 introduced piecemeal personal tax credits for a myriad of items. We believe this only serves to complicate the tax system--

And we all know that the Income Tax Act of Canada is a pretty complicated statute to begin with.

and relief should be delivered more broadly through rate reduction on increasing the bracket thresholds where the next tax rate is levied.

We ask whether the 1% reduction in the Goods and Services Tax rate was the “correct” method to effect a decrease in overall personal tax burdens. Generally, consumption taxes are preferable to income taxes, therefore we recommend reductions to personal income taxes rather than consumption taxes.

This was from a group that I would respectfully suggest is one of the key supporters of the Conservative Party.

We turn to the bill before us and we see immediately what it is that these people are talking about.

The first one is the new Canada employment credit. That sounds like a good idea on the face of it. If a person's income is from something other than employment, for example, a pension, investments, or things of that nature, this tax credit is utterly useless to that person. What is the point? Why would the government do that as opposed to bumping up the personal base exemption or reducing rates generally overall? We want to favour this over that. It speaks to the Chamber of Commerce position that the government has introduced a myriad of tax credits that end up complicating the system way beyond where it needs to be.

There is a textbook tax credit. That is just great. That is just wonderful. A student has 80 bucks worth of tax credits and a $5,000 tuition bill. That is a choice one makes. An $80 tax credit for goodness' sake is going to buy one textbook. That is great. The student can buy the textbook, but he or she cannot get into the school.

Witness after witness would say to the committee that this is lunacy. What people need is better access. That request would come generally from the student groups. They had some good ideas, all of which were ignored in the budget. The university side and the college faculty side want better infrastructure.

What they are really panicked about, and they should be, is that the various foundations that were funded over 13 years of Liberal government, those funds are not being replenished. As a consequence, the universities are afraid that the brain gain that we have had in the last few years will reverse itself again and become a brain drain. This could happen because there is no money available for the new applications that researchers put in.

Those folks are highly mobile people. They can do their research in California as well as they can do it in Toronto. They can do their research in New York as well as they can do it in Halifax. If we do not keep these foundations well funded with the ability to provide grants to do the leading edge research which has made Canada the number one publicly funded research country in the world, then these folks will find other places in which to do their research. What did the Conservative Party offer? An $80 book credit.

Then we come to public transit passes. That sounds great, but it is going to cost something in the order of about $900 million. It will cost $900 million to, in theory, increase ridership by 5%. That is a pretty expensive increase in ridership, $900 million on an annual basis. That does not build one kilometre of subway in my riding, not one kilometre. It does not even build a station. It does not replace any of the TTC buses in my riding, in the city of Toronto or in the GTA. It does none of that.

That is great; I have my tax credit. I am now going to get a tax deduction after I file my tax return, which has become so complicated that I now have to hire somebody to prepare my return. I am going to hand it in but I am not going to take the bus because the bus has flat tires all the time. These are utterly brilliant choices.

Then there is a credit for trades tool expenses. I kind of like that. What is wrong with that? Folks should be able to deduct their tool expenses. If one really thought about it for more than two minutes, one would say that a deduction for employment expenses should be broadly based because most people do not make their living in the trades. Most people make their living in services. We are becoming a services oriented country, so this particular credit is useless to most people.

The children's fitness tax credit is another one. I play hockey. My kid is a swimmer. I paid literally thousands of dollars annually for my daughter to swim. She is a nationally rated swimmer and now swims with McMaster University. I am going to get that credit. I kind of like that idea. I am happy about that, but my other daughter who dances is not going to get a credit. If any of my other children were participating in artistic endeavours, the credit would not be there.

Witness after witness after witness said that dance should be included, painting should be included and all kinds of other activities should be included. No one is ever going to make everybody happy. That is why it is crazy to try to do this.

I do not know whether you caught this, Mr. Speaker. The report to the Minister of Finance on how to handle this was released. The “Report of the Expert Panel for the Children's Fitness Tax Credit” states:

Fees for camps that emphasize physical activity theme.

That sounds simple.

To qualify, the camp program would need to last at least five consecutive days--

--not four--

--during which at least 50% of the activity during the program hours of each day would involve physical activity.

I do not know about you, Mr. Speaker, but I send my kids to camp and I am not sure my kids would qualify. The counsellors run the kids from dawn to dusk and make them do all kinds of things, but the activities are not always physical. Sometimes there are activities for painting, sometimes there are activities for learning about the woods and nature and things such as that. Those camps will not qualify.

This is going to be administratively ridiculous. No one is going to be able to keep track. It will place an administrative burden on all of these camps and then there will have to be a huge audit scheme to find out whether in fact a particular camp at a particular time had a five day program which involved physical fitness and physical fitness only.

In conclusion, the way to go is the way the Liberals set out in our November update, which was to raise the basic personal exemption and lower tax rates across the board if we want to do something in the area of tax relief for Canadians. This hodgepodge, mishmash, myriad of tax credits is administratively ridiculous and simply adds to Canadians' burdens rather than detracts from them.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to have an opportunity to rise in the House today to speak to Bill C-28, the budget implementation bill.

First of all, I would just like to respond to the comments made by the Liberal members across the way. It really astounds us every time we hear Liberals get up and blame the NDP for their own downfall. They conveniently forget that we had an election and it was the people of Canada, it was the voters in this country, who voted them out because of their arrogance, their corruption, and this sense of entitlement that they have, that they are somehow entitled to power no matter what happens.

It is unbelievable and even after an election, even after the Canadian people have spoken, we still hear this kind of rhetoric coming out of Liberal members. I guess they just do not get it. As the member for Winnipeg Centre says, I guess they just do not get it and they should be in therapy. It will be a long therapy session, but they have some lessons to learn.

The House resumed consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, as my hon. colleague from Winnipeg said earlier, we in the NDP, and I am sure it is no surprise to my Conservative counterparts, will not support Bill C-28.

It is very simple to understand where the Conservative ideology comes from and that of the New Democratic Party.

The government earlier reported a $13.2 billion surplus, which was applied to a particular item called the debt. We can argue if that is a good thing or a bad thing. The fact is that was done. We now hear from media reports that the government has an additional $6 billion in the first five months of the year. Those are estimates. We have not see it. We are talking about almost $19 billion of extra money.

I have flipped through Bill C-28. I did not go word by word, but I gave it a pretty good glance. I do not see anything in it document that helps veterans and their families in any way, shape or form.

I will give an example. My colleague brought up a letter that was written on October 4, 2005, by the then leader of the official opposition, the now Prime Minister. I will read it word for word and then I will table the document later. I have raised this in the House before as has my hon. colleague from Cape Breton—Canso, but I am going to raise it again. The letter is to Joyce Carter of St. Peter's, Nova Scotia on Cape Breton. She is in her eighties. The letter states:

Dear Mrs. Carter:

On behalf of [the hon. member] thank you for your letter received on September 19. I am pleased to have this opportunity to respond.

You will be pleased to know that a Conservative government would immediately extend Veterans Independence Program services to the widows of all Second World War and Korean veterans regardless of when the Veteran died or how long they had been receiving the benefit before they passed away.

We thank you again for writing and want to assure you that we are committed to improving the quality of life for Canadian seniors and veterans.

Here is the letter from Ms. Carter back to me and other MPs. She says:

Dear [member for Sackville—Eastern Shore]:

Enclosed are copies of the letters, one written to me on behalf of the hon. [Prime Minister]...

As you will see in the Williams Lake Tribune [the hon. Minister of veterans affairs]--

This is when he was up in July of this year. She goes on to say:

--noted that the VIP program actually saves the department money.... Otherwise they would have to go into a home or institutional care.

That is what happens to these widows. If they cannot be in their home, they have to go into institutionalized care which costs everyone a lot of money. She goes on to ask me to do everything in my power to work with other members of Parliament to ensure the Prime Minister kept his word.

We now have Bill C-28 on October 27 of this year. There is nothing in the document to maintain the promise that was made to a woman in her eighties to look after a veteran before he passed away.

I remind my hon. colleagues in the Conservative Party that the Liberals did not do anything on this issue. The Conservatives now have an opportunity. We all wear the poppy with pride and distinction and so we should. It is in honour of our veterans and those who served to give us peace, freedom and democracy.

As I said in a statement the other day, what happens after November 12 when the poppy comes off? These veterans and their families need assistance from the government in their old age. If the government is not going to provide the assistance when it is swimming in money, when is it going to do it? When will the Conservative Party actually put this program in the budget? There are many programs that should be instituted for veterans and their families, but this one program was promised.

The government cannot stand up and tell us to support our troops and our veterans and not institute the policies that assist them when they need help the most.

I remind the Conservative government, and many of my Conservative colleagues, who I consider my good friends, know this to be a fact, that our veterans are Canada's greatest volunteers. They sacrificed their youth so we can stand in this place and argue points of principle in a democratic fashion. It is great to live in a country where politicians can retire and they are not executed. The fact is we can only do that because of the sacrifice of Canadian veterans and their families.

Just a few days prior to Remembrance Day, these veterans and their widows are asking for these programs, which the government admits itself would save it money, yet it refuses to put them in the document.

What are we supposed to tell Joyce Carter and the thousands of women across the country? Do we tell them that the Conservatives are heartless, that they just write letters that are meaningless, that they are taking advantage of the elderly? Of course not. I do not believe the Conservatives are those types of individuals. However, a letter was written on behalf of their leader, now the Prime Minister, promising to do it immediately. Nine months later there is not a single word in the documents.

We in the NDP cannot stand up and allow this to continue. I am hoping either the veterans affairs minister, or the parliamentary secretary or even the Prime Minister will stand up in the House very soon, in fact it should be done today, and announce that the VIP program, as was promised, will be extended immediately, without reservation, for those, mostly women in their late seventies and eighties, who cared for our veterans and who are very proud individuals. It is unconscionable that the government would not do that.

I am offering the Conservatives the olive branch. If they do that, we will support their efforts in the VIP program.

We can go on and on regarding the budget. However, there is another item I want to bring forward. I cannot let it go by because I know my colleagues who sit next to me would question me as to my studiousness on it, and this is there is nothing in the budget on shipbuilding.

In 2001 the then minister, Mr. Tobin, called a meeting of the industry, labour and communities. They put together a policy called “Breaking Through: Canadian Shipbuilding Industry”. It has been sitting on the desk of the Minister of Industry since 2001.

We heard from the previous Liberal member who spoke that the Minister of International Trade, who was then a Liberal, said, “We're doing consultations”. Those consultations happened in 2001. The policy is a very thin read. It is only about 10 pages. They asked the previous Liberal government and the Liberals did absolutely nothing.

Now the Conservatives are here. I want to remind my Conservative colleagues that there is a potential of $22 billion worth of economic activity that would keep the five major shipyards in our country alive for a long time. Just maybe a lot of those Atlantic Canadians, who are working out west, can come back home and work.

The reason why we have so many Atlantic Canadians working in Ontario and out west is, as we jokingly say, we got all the work done back home and we are just helping the rest of the country out. If the government instituted a shipbuilding policy, the yards in Marystown, Halifax, Levis, Quebec, Port Welland and Vancouver would be humming along for many years. The government knows this.

The Coast Guard, the military, the ferries and the laker fleet need replacements. There are $22 billion of opportunity. What is the government hinting at? Free trade deals with EFTA and Korea, which would put the death knell on our industry. I encourage the government to very quickly announce the shipbuilding policy on replacements for our fleets so our families and our workers across the country can go back to work.

Again, budgetary times are times of opportunities. As I said on the VIP and the veterans program, the government missed out on that opportunity. It has missed out on the shipbuilding policy. These are lost opportunities.

I do not know why for the life of me the government would want to proceed with a budgetary process that allows oil and gas companies, some of the most profitable companies on the planet, swimming in excess profits, further tax breaks while seniors, students, new immigrants, people with disabilities, the environment, all take a back seat. I do not understand it.

I simply do not understand the thinking of the Conservative government. I speak to the individual members of the Conservative Party. I do know that most of them really do care about what they do. The fact is that their government is heading in the wrong direction. I ask them to steer that ship back, to get it on the right track.

We are here representing constituents, not the special interests in the large corporate world. Those are some of the reasons we in the NDP simply cannot at this time support the budgetary process.

I must say how disappointed I am in the Bloc Québécois. Many members of the Bloc are very decent hard-working people but within five minutes of the tabling of the budget documents, their leader went out and said, “No problem, we will support it”. He completely gave away the opportunity to negotiate and horse trade with the government. We did that with the Liberals which resulted in previous Bill C-48. I was very disappointed with the Bloc and I would hope that the Bloc would reconsider that position so that we can actually negotiate this thing, change it before it goes anywhere and maybe include some of the concerns that I and my hon. colleague from Winnipeg mentioned.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to speak to Bill C-28, a bill that implements certain provisions of budget 2006.

The Conservative government's first budget, however, fails to address the real needs of Canadians and Canadian families and it unfortunately fails to move the country forward. About the only positive aspect of this budget is that it builds on the eight consecutive budgetary surpluses delivered by our Liberal government. This budget promises another budgetary surplus and I hope the Conservatives deliver on that.

Given the strong fiscal record the Conservatives inherited from our former Liberal government, it is outrageous that the government is raising income taxes, slashing spending by $1 billion a year and excluding any real vision for the future of Canada's prosperity. Let me go through some examples of why this budget fails.

It fails to provide real tax relief for low income and middle income Canadians. Eliminating Liberal income tax cuts in favour of a 1% GST cut has been panned by every serious economist in this country as a plan that will benefit higher income Canadians at the expense of the more needy.

The Conservatives are hiking income taxes, which means that many people who got a refund for the 2005 tax year will end up paying in 2006. The Conservatives are increasing the basic personal amount by $200 and increasing to 15.5% the lowest tax bracket.

This budget fails to address the issue of climate change. The Conservative government has eliminated climate change programs and is abandoning the Kyoto accord. Its transit tax credit is costly and ineffective. It will cost about $400 million over two years and only increase transit use by 5%. This translates to a cost of $2,000 for each tonne of carbon dioxide saved, 10 to 100 times the cost per tonne under our Liberal government green plan.

Furthermore, the Conservatives are planning to finance this measure and their climate change plan, which they are still working on, by eliminating $2 billion worth of existing climate change programs.

Two of these programs are the EnerGuide for houses retrofit program and the wind power production incentive program.

EnerGuide worked. It was helping thousands of Canadian households achieve energy efficiency increases in the range of 30% and doing it in a way that was cost effective. The Conservative government should do the right thing, stand up for the environment and for Canadian consumers, and bring EnerGuide back. Our Liberal government's EnerGuide program supported the retrofitting of more than 100,000 homes for more efficient use of energy before the Conservative government cancelled it.

Wind power is another important component of Canada's response to the challenges of energy conservation and global warming. The wind power industry is responsible for thousands of direct and indirect jobs across the country, and our government's wind power production incentive program, or WPPI, as it is affectionately referred to, is essential to attracting investment and ensuring the viability of this industry.

The Conservative government has been exposed on this. We know that these programs were working and were cost effective. I am today calling for the government to immediately reinstate the EnerGuide program and the wind power production incentive program. The Standing Committee on Natural Resources recently adopted motions that also called for the reinstatement of these important programs.

Budget 2006 fails to provide a real child care choice for parents. As if $20 a week for child care is not bad enough, low income parents will be losing the young child supplement of the Canada child tax benefit. The Conservatives are cutting $1 billion from the Canada child tax benefit, a program that the Liberal government brought in and which was supposed to reach $10 billion this year.

Budget 2006 fails to establish a real plan to create child care spaces. Rather than honouring the Liberal child care agreements, something that the majority of provinces, parents and advocacy groups had demanded, the government insists on forging ahead with a nebulous plan which will mean that provinces will lose the stable funding agreed to by the previous government.

The budget offers nothing to meet the urgent needs of Canada's aboriginal peoples.

Rather than honour the historic Kelowna accord signed last November—which would have brought about great improvements in the lives of our first nations—the Conservative government chose to leave them behind and reduce planned funding by 80% from $5.3 million to just over $1 million.

Budget 2006 fails to make any significant investments in education and innovation. The Liberal government had a concrete vision that would have helped put us at the forefront of competitiveness and innovation. This lacklustre and visionless budget contains virtually nothing in this regard.

For example, our last fiscal update provided $2.5 billion for university research. The Conservative budget provides $200 million, less than one-tenth of our commitment. For student aid, our plan would have provided up to $6,000 per student for tuition over a four year program. The Conservative plan provides $80 for textbooks.

University students would like to see a portion of the Canada health and social transfer, the vehicle the federal government uses for transferring funds to the provinces and territories for social programs, dedicated to post-secondary education. This request I believe has some merit, provided accountability measures and performance benchmarks can be attached to these transfers along the lines of the 2004 health accord so that Canadians can evaluate how their province or territory is spending their money on post-secondary education and citizens can make comparisons with other jurisdictions. This makes some sense and is an example of a visionary initiative that is totally absent from budget 2006. Eighty dollars for students for textbooks just does not do it.

Budget 2006 fails because it cuts programs that help to build a highly trained and competitive workforce, programs like the training centre infrastructure fund. This fund was an important source for unions and management for the building of training centres. Union training centres are formed through partnerships among unions, management and government. They provide workers with the necessary information and on the job training to continuously improve their skills and remain at the top of their field.

The objectives of this partnership include developing and facilitating training programs that not only improve the vocational and safety skills of the industry but also enhance the employability of the students and meet changing and evolving market demands. In order to maintain this standard, training centres must upgrade their equipment and facilities to provide their students with the most innovative technology. The training centre infrastructure fund provided the necessary financial support to allow these centres to equip their facilities.

Recently, I attended the grand opening of a training centre operated by Local 285 of the Sheet Metal Worker's International Association in my riding. The local had been receiving funding from the training centre infrastructure fund until the Conservative government cut the program. The funding enabled the association to include in its training centre a state of the art welding laboratory and other equipment to ensure students receive the best training available.

The centre provides essential training to students entering the field and to professionals who have been working in the field for years but need to upgrade their skills to remain employable. It also plans to set up a training program to encourage more young people to get into welding. Unfortunately, the training centre infrastructure fund was cut, which means it will not have enough money to offer these programs now.

Budget 2006 also fails because it abandons Canada's forest industry and forest communities by caving in to the American lumber producers and the U.S. government and negotiating a bad softwood lumber deal that robs Canada of forest policy sovereignty. The U.S. will now dictate what forest policies we will have in Canada. The deals leaves $1 billion on the table in wrongly collected duties and it is in the hands of the U.S. government and U.S. producers.

The budget also stands by as our natural resource companies, companies like Inco and Falconbridge, are gobbled up by foreign companies. Are companies like Noranda and Husky Oil next? The government, with its laissez-faire attitude, does not care. I will be introducing legislation that will deal with this question and I am sure this House will have a good debate.

This budget really falls short. In 2007, or whenever the next budget is, the government will have a chance to rectify it. I look forward to that debate.

[Pat Martin, NDP, Winnipeg Centre, MB]

Barbados is the one they left remaining, exactly where the former prime minister, the current member for LaSalle—Émard, has nine of his dummy shell companies shielded from paying Canadian taxes in that particular tax haven. That is offensive to me. One would think a prime minister of Canada would be proud to pay his taxes in this country. I am not going to dwell on that because that is the past.

We now have a new Conservative government. Surely, it sees what is wrong when tax fugitives can use this blatant tax avoidance by setting up dummy companies. Some estimates say that the lost revenue is $7 billion a year. Why would the government nickel and dime all the little social programs that are important and critical to communities when it leaves $7 billion on the table? Who is it worried about offending?

The interesting thing about the changes to the election financing act is that big business can no longer buy elections or buy politicians. Who are we worried about offending by slamming the door shut on this last outrageous loophole? Big business cannot hurt anyone any more would be my message. We do not have to be afraid of Bay Street any more. We have been liberated. Why do we not stand up on our own hind legs and say that there will be no more freeloading and that companies can no longer be tax fugitives.

I got my information from this book that I will be happy to table. Pigs at the Trough: How Corporate Greed and Political Corruption Are Undermining America is the name of the book. I agree. Corporate greed, run rampant, is undermining democracy and certainly undermining the ability of elected officials like us to implement plans, programs and strategies because it is starving us of resources.

I cannot understand why this budget did not deal with the outrageous issue of this tax loophole of tax havens. In the textbooks at Revenue Canada it is called “tax motivated expatriation”. That is the nice title for what we call sleazy, tax cheating loopholes. We demand that they be plugged and we will not let up until we close that last tax haven loophole.

I have another thing I want to raise. I cannot understand how the government failed to make the connection between two of its strategic goals and that is that it missed the opportunity to address job creation through energy conservation, or these burgeoning new economic opportunities coming from the necessary reality that we need to conserve energy in order to save the planet.

There is a connection to be made there and progressive countries and political parties around the world are recognizing that saving the planet through energy conservation is not a negative and not an economic job killer. The job creation potential is enormous. The technological development potential is enormous.

I argue that there should have been some kind of policy statement through this budget from the government that Canada should lay claim to this new burgeoning technology. We should become a centre of excellence of energy conservation technology to show the world. It frustrates me. We have a cold, northern, winter climate and we could demonstrate to the world how we do not have to freeze in the dark to conserve energy. There is an appetite in the country that our R and D could lead the way to saving the planet from global warming. Why we did not make that connection with the opportunity of this budget frustrates me to no end.

I will close where I started by saying that regrettably the NDP cannot support Bill C-28, the budget implementation bill.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I rise today on behalf of the NDP caucus to serve notice that we will not support the budget implementation act, Bill C-28.

My time does not permit me to outline the many shortcomings of the budget but let me at least say that I am disappointed that we did not get an opportunity to manoeuvre or negotiate any benefits through the budget because five minutes after the budget was tabled in the House of Commons, the leader of the Bloc Québécois walked outside into the scrum area and told all and sundry that it sounded good to him and that he would take it.

All the Conservatives needed was a dance partner and they got their dance partner first off, which is when all negotiations stopped. Normally in a minority Parliament there are opportunities for the opposition parties to do a little bit of horse trading. We were denied that opportunity because one party cashed in all its chips before the bargaining even started.

I will simply preface my remarks by saying how disappointed I am as an opposition member of one of the opposition parties that this minority Parliament was not even allowed to function the way minority Parliaments are supposed to operate because of the self-interest and selfish action on the part of the Bloc Québécois.

Let me touch on two reasons why we are disappointed in the budget because time does not permit any more detail than that. I come from the riding of Winnipeg Centre that used to be represented by Stanley Knowles. Stanley Knowles has a reputation as one of the founders, the father perhaps, of the Canadian pension system. I can safely say that Stanley Knowles would be doing flip-flops in his grave today if he knew that after nine years of surplus budgets by two senior parties in the country, old age security paycheques for low income seniors are actually going down as a result of the budget.

It sounds shocking. Some would challenge me perhaps to the veracity of those facts. I had to do a lot of research to plough through our arcane and complicated tax system but here are the facts. In actual fact, seniors have walked into my office with their July OAS cheque and their September OAS cheque. It is $10 a month lower. The government actually lowered the basic personal exemption for OAS and GIS senior pensioners. In other words, pensioners are paying tax on $400 a year more than they were last year, which, at a rate of 15.25%, is $60 per year or $5 per month. However, because it is for this six months, it was doubled to average it out over the year. It is $10 a month for this six month period.

This only applies to seniors who, because they have such a low income and no other source of revenue, they qualify for the guaranteed income supplement. There is an offsetting pension credit in another category for private pension plans. However, if the person is one of those many low income seniors in my riding who are trying to survive on just his or her old age security and CPP, the person will get less this month than he or she did last month.

Maybe it is a byproduct or maybe it was an unforeseen consequence, I do not know. I am not accusing anybody of trying to starve low income seniors but that was the result and I cannot support it. I cannot do anything but condemn that result and consequence. The Conservatives should really rethink this. Surely, in a time of prosperity and record surpluses, we could do something for our low income seniors.

I talked with some anti-poverty groups and they said that the $10 a month probably represents four or even five days of a grocery budget for a low income senior. It is not quite one full week but what they have left over to spend for food, $10 a month is a significant drop. At the very least, it is a quality of life issue. It is one less thing that they will be able to do with their income.

That is one of the reasons I cannot support the budget. The other reason is perhaps what is not in the budget. I cannot understand for the life of me why in the first Conservative budget of a newly formed government, the Conservatives would not have done something to plug the outrageous tax loophole that allows Canadian companies to set up dummy companies offshore to avoid paying their taxes in Canada.

The House resumed from October 26 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I am very pleased to speak to Bill C-28.

The Conservative government is the most meanspirited retrograde government I have ever seen in the entire time that I have been in Parliament. It uses policies for politics, not for good governance. Let me give an example.

The Conservatives financed a cut in the GST by increasing income taxes. Good fiscal policy demands that there be a variety of tax sources. Most jurisdictions in the world have a consumption tax. The beauty of having a mix of taxes is that we are not victims in our fisc of economic circumstances. We can weather storms. This is the reason every single expert, economist, teacher, practitioner said that cutting the GST instead of personal income taxes was wrong.

When we cut personal income taxes, we are giving people options. They can spend the savings, as they can with the GST cut, but they can also have more money to invest and more money to save. That is why the income tax cuts that the Conservatives reversed on us were so important for the ongoing performance of our economy, to give us that money to reinvest in our capacity to compete in a global economy.

What did the Conservatives do with child care? We had meaningful child care spaces for parents in this country, as demanded by all of the groups. What did they do? They went back to something cut long ago, the baby bonus. Anyone with a child gets $100 a month. What does that do?

[Mario Silva, Liberal, Davenport, ON]

Mr. Speaker, I wish I could say that I am pleased to rise and speak to Bill C-28, but one has only to look at the content to realize that there is very little indeed to be pleased with in the first Conservative budget since the election.

Before making any comments on Bill C-28, let us go back to October 25, 1993 when the people of Canada chose the Liberal Party to form a government in the wake of nine years of Conservative rule. During those nine years we witnessed astounding short-sighted fiscal policies that left our country, one of the most prosperous in the world, with an enormous operating deficit and an ever increasing national debt.

Under the excellent stewardship of the new Liberal government that succeeded the Conservatives in 1993, we worked hard over the course of three mandates as our house was put into order. The operating deficit disappeared, the deficit was reduced, and Canadians received the services they both needed and deserved.

Imagine, upon taking office in 1993 the Government of Canada was operating with $40 billion annual deficits. Within four years the deficit was gone and Canadians had a balanced budget. The country's triple “A” credit rating was restored. The world could see what we had already come to know as a Liberal government put Canada's house in order.

I make mention of the fact that it was a Liberal government because from 1997 Canadians have to go back all the way to 1912 to find a Conservative balanced budget.

It was from this prudent fiscal management that the Liberal government was then able to move forward again with progressive policies that have made Canada the envy of the world.

In order to understand the differences in approach, we need only to look at the last Liberal budget in 2005 and the subsequent fiscal outlook also in 2005, both presented with great and deserved pride by the member for Wascana, our previous minister of finance.

What did we find in budget 2005? We found a robust economy, secure social foundations, a sustainable environment, and a sound fiscal framework. This sounds to me like the ingredients of a great fiscal policy that included responsibility, compassion for who needed our assistance, and a sound vision for the future.

In fact, the Liberal budget of 2005 recognized that the fiscal policy of the Liberal government had created the fastest rate of increase in living standards among the then G-7 countries since the budget was balanced in 1997.

What did we find in budget 2005? For one thing, we found a solid and measurable commitment to universal accessible policies and publicly funded health care for Canadians. This was not only talk, but action.

The Liberal budget of 2005 reaffirmed the government's commitment of $41.3 billion over 10 years to improve access and reduce wait times for Canadians.

This enormous commitment to health care highlighted in budget 2005 included investments in health based human resources, healthy living and chronic disease, pandemic preparedness, drug safety and environmental health.

These are the kinds of investments that we could make as a result of the sound fiscal management of the Liberal government since taking office in 1993.

Recognizing the unique challenges facing Canadians with disabilities, we changed tax policies to assist them and their caregivers.

The previous Liberal government increased the guaranteed income supplement over five years by $2.7 billion. Liberals understood the needs of senior citizens in this country and they acted.

Canadians with children also faced significant fiscal pressures and the Liberal government committed $5 billion over five years for our early learning and child care initiative.

The agreements and those being negotiated with the provinces would have created real and sustainable child care spaces. The Conservative government, of course, chose to cancel these significant steps forward and that is regrettable indeed.

In terms of the environment, the Liberal budget of 2005 included a $5 billion commitment to ensuring a sustainable environment.

The Liberal government was committed to the Kyoto accord which would have realized real and measurable action on greenhouse gas emissions. Once again, the Conservatives have chosen to join with the United States and abandon the Kyoto agreement in favour of an ineffective long term policy that has more to do with optics and political expediency than with any results on environmental protection.

What about our cities? The former Liberal government was delivering needed support to them with a share of the federal gas tax. This was a Liberal policy. It was innovative and it was welcome news in municipalities across the country. The total commitment was $5 billion over five years from gas tax revenues.

Canada has long been recognized as a leader in terms of assistance to developing countries across the world. The Liberal budget of 2005 increased our international assistance by $3.4 billion over five years. This was a sound and measurable commitment to those nations most in need.

These solid commitments, among many others, were reinstated in November 2005 when the Liberal government produced its final fiscal update. This plan outlined $2.2 billion over five years to improve financial assistance and to ensure that post-secondary education was within reach for lower and middle income Canadians.

Liberals believe that everyone deserves a chance to reach their maximum potential and that the country benefits when we all have the opportunity to achieve our goals.

There was $550 million over five years to extend Canada's access grants to all lower income students in post-secondary education. This was an incredible step forward that many students welcomed.

There were also tax benefits for low income Canadians contained in the fiscal update, as well as infrastructure commitments.

All of this was proposed while maintaining a sound fiscal footing within the context of a balanced budget. As all members of the House will know, the progressive commitments contained in the fiscal update were cast aside when members of the New Democratic Party joined with their associates, the Conservatives and the Bloc Québécois to defeat the government in late November 2005. It was an election that nobody wanted and was completely unnecessary.

Members of the New Democratic Party will certainly need to reflect on the wisdom of their action now when casting an eye on Bill C-28. Gone are the major commitments in the 2005 fiscal update. Gone are the great strides forward in child care service in the country. Gone is the Kyoto agreement. The list goes on and on.

Instead of waiting a few short months, members of the New Democratic Party joined with the Conservatives and Bloc Québécois for the purpose of political expediency to force an election. They also caused some of the most progressive policies this country has seen in years to vanish with the cold wind of Conservatism that has swept through the esteemed corners of Parliament.

I am sure many of those who have in the past supported the New Democratic Party will now be asking themselves why their party would have joined with the Conservatives in voting against the Liberal government on that November day causing all of these commitments to vanish in a single vote. I am sure they will also have much to say about what took place in the House on October 24 when members of the New Democratic Party voted with the Conservative government against a Liberal motion which stated:

That, in the opinion of the House, the government inherited the best economic and fiscal position of any incoming federal government and has not demonstrated the need, value or wisdom of its announced expenditure cuts which unfairly disadvantage the most vulnerable groups in the Canadian society.

What possibly could the members of the New Democratic Party have found so offensive about this resolution that they would once again vote with the Conservative Party? The truth is that so much has been lost to so many Canadians as evidenced in the Conservatives' first budget.

For example, where would we find in the budget the great accomplishment that was the Kelowna accord? The answer is that we do not because it is not there.

The Kelowna accord budgeted $5 billion over five years to our native people in the country. It was negotiated with provincial premiers and aboriginal leaders. The Kelowna accord was described at the time as an unprecedented step forward. I believe this to be true. I believe the decision by the Conservative government to abandon the agreement is quite frankly an unprecedented step backward.

The reality is that there is little in the budget speech for ordinary Canadians. Even those things that have been heralded by the Conservatives as significant really amount to very little.

Take the so-called tax plan for public transit users. The Minister of Finance, and indeed the Prime Minister, make much of this part of the budget. However, when actually calculating the amount, it is about $12 a month for transit users, hardly anything to really cheer about it.

Ken Georgetti of the Canadian Labour Congress described the budget this way, “The arithmetic does not work for ordinary working Canadians”. This is true because at the end of the day there is very little in the budget for ordinary Canadians.

We can only look in disbelief and regret when we glance through the budget for the financial commitments that give substance to real action on the environment file. Stephen Hazell of the Green Budget Coalition stated after the budget was announced that there is virtually nothing in the budget to make good on the government's throne speech commitments to tangible reduction in pollution and greenhouse gases. He is right because there is nothing there.

Bill C-28, the budget bill, is really a confirmation that the government is not moving forward in a manner that reflects the real values of Canadians. We have only to compare the sparse commitments in this budget to those made by the previous Liberal government, both in budget 2005 and the fiscal update, to see the reality of the Conservative government.

Canadians are compassionate, hard-working and progressive people. Budgets are statements that reflect the priorities of the government. I cannot imagine any administration in recent memory more out of touch with the people of this country.

Canadians believe in the priorities outlined in the Liberals' fiscal plans, including the environment, seniors, public transit, cities, students and persons with disabilities.

We do not find much in Bill C-28. Clearly the government is very much out of touch with the people it is supposed to be governing. I trust all members will keep this in mind when it comes to cast a vote on Bill C-28, the Conservative budget.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, it is a pleasure to speak today in the debate on Bill C-28, the budget implementation act, which deals with some of the tax measures that are necessary to implement the government's budget.

I want to begin by saying that when it comes to budgeting I want to outline the NDP's strong commitment to balanced budgeting. That is a very important commitment in this corner of the House. It is a commitment that we are very proud of on that issue. It is very important in these days to have that kind of responsible approach to the finances of the nation and the provinces and territories. I want to emphasize that the NDP has a very strong record in that area.

Often we get comments from other corners of the House on this issue, but the reality is found in a federal government study, a Department of Finance study. It is not an NDP study and is not done by some organization that might be sympathetic to the NDP. It is a federal government Department of Finance study from September 2006 that looks at the records of various provincial, territorial and federal governments between 1984 and 2006. It shows that 49% of the time the NDP had balanced budgets, 39% of the time Conservative governments had balanced budgets, and only 23% of the time did Liberal governments have balanced budgets.

I want to emphasize that record of the NDP and that NDP commitment to financial responsibility from this corner of the House. I also want to say that we believe in paying down the debt. We know that is a terrible burden on the country right now. The interest payments are huge and it is a burden for future generations in Canada. Therefore, we also have a commitment to responsible management of our finances and to paying down Canada's debt, a debt that was run up by previous Conservative and Liberal governments, I might add, not by NDP federal governments, at least not federal governments yet. We are going to have that chance someday and we are going to do it responsibly, but we do believe in paying down the debt as well.

I wanted to establish that context about our basic commitments on financial and budgetary matters because I think it is very important and informs the criticisms that we make of both this government and the previous Liberal government as well.

I want to talk about the huge budget surpluses that we have seen in recent years, absolutely huge budget surpluses, and surprise budget surpluses, or at least governments pretend they are surprises.

The Liberals did it and now the Conservatives have done it with massive billion dollar budget surpluses that were not planned for. They crop up and suddenly there is a big announcement and everyone in those corners of the House seems to celebrate the fact that they were way off budget by billions and billions of dollars and that there is a huge surplus of money that the government took in over what it spent. It is a little mind boggling that the government can be that far off in its budgeting, that far off in the process of trying to responsibly manage the government, and a little mind boggling that the government sees it as a reason for celebration.

Just weeks ago, we saw the current Conservative government announce a $13.2 billion budget surplus, another surprise. Here we have $13.2 billion that we did not expect to have and what did the government do? It put it all toward the debt. It ignored all of the other programming issues. The government ignored the social deficit that occurs in Canada every single day and put it all into reducing the debt. Frankly, on the same day, it announced budget cuts of a billion dollars to other federal government programs.

It is amazing that we can have this sort of surprise occasion of a massive surplus of $13.2 billion. How can that be part of a responsible budgeting process on the part of any government to be out by that much and to not allow that amount of money to figure in the planning process of the government when it is looking at the programs that are necessary for Canada and the operations of government? To be out by that much I think is a very serious problem.

It did not stop with that $13.2 billion announcement. Just yesterday we heard that in this fiscal year the government is already way beyond its budget projections in terms of what the surplus would be. The forecast was for a $3.6 billion surplus and already in the first five or six months of this fiscal year it is up to $6.7 billion. It looks like we are on our way to another surprise $13 billion budget surplus again this year.

It boggles the mind that governments could constantly be so off in their planning and that this amount of money can fall outside of any appropriate planning process around the spending of the government. It is irresponsible, frankly, and it is not like other organizations do not get it right. Other organizations in Canada estimated the budget surplus far more accurately than the Liberal and Conservatives governments did.

The Canadian Centre for Policy Alternatives, the alternative budget people, have been on target with the expected budget surpluses. If those folks can do it, I have a feeling the government can do it too. When the Conservatives were in opposition, the always accused the Liberals of lowballing the surplus projections so they could have these surprise announcements and celebrate how well they were doing in managing the financing. It seems like the shoe is on the other foot now. We still have the same problem of this being such an inaccurate process in government.

It has real implications. A couple of weeks ago, when the Conservatives announced the $13.2 billion surplus, the very same day, which the juxtaposition of the two I find troubling, they announced cutbacks of $1 billion in many programs. They cut student employment programs, literacy programs, the Status of Women and women's equality programs, the court challenges program, which allowed ordinary Canadians to take the government to court on particular human rights and charter issues. They cut the Law Commission of Canada. They cut out money to prepare a new Citizenship Act. At the same time they are talking about a review of certain citizenship issues. They cut money to museums. They cut the aboriginal non-smoking program. They cut money to volunteer programs, all incomprehensible in their own way.

These programs are very important because people in my riding of Burnaby—Douglas benefit greatly and depend on them in many ways. At the same time we have this huge surplus, these kinds of cuts are being made, which only serve to increase the social deficit in Canada and the programming needs of Canadians.

For instance, Conservatives cut student employment in my riding. It is a very serious issue. The summer career placement program has been a key component of summer employment prospects for university and high school students in my riding. These folks depend on the summer career placement program for excellent jobs in areas related to their chosen career path, and many agencies in Burnaby have provided that.

When the Minister of Human Resources was asked about that cut, she said that too many big corporations were benefiting from the wage subsidy that this program offered. In Burnaby—Douglas that could not be further from the truth as 86% of the projects approved last year were projects in the non-profit sector and the educational sector. Almost every one of the others were in small or medium sized business. It was not big corporations that were benefiting from subsidies, at least in Burnaby—Douglas. I know that is true of many other ridings across the country. This money was going to community agencies to do community programming. The number of day camps for children that will be affected by this cut is significant. It is going to mean that there are significantly fewer programs for children in Burnaby this coming summer if this cut is maintained. We are working hard to see it reversed.

The whole community economic development sector is dramatically affected. An organization like the Heights Merchants Association, which does important economic development work in Burnaby—Douglas, has always benefited in recent years from the summer career placement program. Its work is going to be dramatically affected by the loss and the cuts to this program.

Just one example on that long list of issues in the $1 billion cuts announced by the government is crucial to so many ridings, and to my riding in particular, to young people and to community programing. The cuts to museums and the court challenges program also affect Burnaby—Douglas.

How many people in Canada have depended on the court challenges program to allow them to assert their human rights and charter rights in Canada? We have seen it in language rights and in minority rights. It is important to the gay and lesbian community.

In fact, almost the very day of the announcement of these cuts, an important case was brought by the son of a former Canadian serviceman in World War II and a British war bride. A man in Victoria, named Joe Taylor, had won his case to assert his Canadian citizenship, which had been denied for various bureaucratic and other reasons over the years. He is a Canadian citizen, I firmly believe that. He won his case in federal court. Sadly, the government has chosen to appeal that. I encourage the government not to that because it is a very important decision and has great meaning for Canadian citizens like Mr. Taylor who want nothing more than to fully participate in Canada as a full citizen.

However, Mr. Taylor now will likely be unable to pursue his case, one that he has put significant resources of his own into, I think $40,000 now and counting, of having his Canadian citizenship recognized because he does not have the financial resources to go up against the government one more time. The court challenges program offered him real hope that this would be possible.

To have that option snatched away from him, right when he had this important victory, to have to face the appeal and then to have the potential funding source for pursuing the case is hugely disappointing to him and I think to all of us who care about people. In our belief, they are fully Canadian citizens, yet they still have to fight the government for that. The court challenges program offered them that opportunity. Seeing the demise of that program is significant. It is a real dark day for human rights in Canada to see that go down the drain.

It also mentioned earlier the money that was allocated to develop a new citizenship act, something we have recognized in this place for many years now as necessary. The current Citizenship Act dates from 1977 and there are some serious problems with it.

The Standing Committee on Citizenship and Immigration held hearings in 14 cities across the country last year. It heard about many of those problems. The former government tried to amend or introduce a new citizenship act three times over the past number of years, each time unsuccessfully. It never managed to get it through, often I think because the government did not give it priority on its parliamentary agenda. It is just an indication that it was very important to address these issues around citizenship.

Then this summer we had a situation where many people questioned the loyalty of dual citizens when we had the crisis in Lebanon. The war broke out in Lebanon and a lot of Canadian citizens needed our help to flee the violence and the death of that war. In fact Canadians did die in that situation. There was an appropriate response from the government to evacuate those Canadians, but it raised questions about the loyalty of dual citizens, and I think inappropriately. The government announced it would be doing a study of dual citizenship. Now I wonder how serious it is about making any change in the area of citizenship when it has cut the money that would have allowed the development of new legislation around citizenship.

It goes on. The juxtaposition of the $1 billion in cuts on the same day that a $13 billion surplus was announced, $13 billion that went in its entirety to debt reduction, is a very serious thing.

Generally there are all kinds of social issues that need to be addressed in Canada and addressed appropriately with the assistance of the federal government. Homelessness and affordable housing are incredibly serious issues in many communities, practically every community across the country. There is still nothing. There is no federal government programming around affordable housing.

We have heard that there are possible serious cuts coming down the pipe to the SCPI program, which helped many initiatives around homelessness. From over $130 million in the projections in the government's own estimates are down to $2 million in the coming two planning years. That is just a huge cut when there is such an incredible need on that score in so many communities.

We have seen the need to do other anti-poverty measures across the country. We see the crisis in post-secondary education where so many students cannot afford to get an education. Those who do get into university run up huge debts now in order to graduate. There is a crisis in post-secondary education. It is upsetting all of the progress that was made in making post-secondary education more acceptable. It is all going down the drain with the rising cost of post-secondary education, and that is a place that could certainly use some attention to drive down the cost of tuition.

We have seen the infrastructure deficit in Canada. So much of our infrastructure in communities is crumbling, and that is a serious problem. Surely, if we know we will be in a surplus position, if we only forecasted that accurately and with some integrity, we might be able to develop programs that would address some of these program issues and social deficits that exist across Canada. We might be able to ensure progress on child poverty. We might be able to ensure seniors had the kind of long term care and pharmacare that they so desperately need. We might be able to ensure our veterans had the kinds of programs that would support them appropriately. When we ignore, underestimate or lowball the surplus figures, we do not do the kind of planning and program development that we should and we do not take our responsibilities to Canadians seriously in that sense.

It is kind of like winning a lottery. These announcements about the budget surplus are almost like a lottery announcement. All of a sudden the winner is flush with cash. Sometimes when we win the big lottery prize, we do not spend it on things that it might be best spent on. We might buy the flashy car or the big house, but in the long run they might not have been the most appropriate places to spend our money.

It is kind of like that when we announce these big budget surpluses, the surprise surplus. The Liberals would often announce a program, but from where did that come? Through which process did it arrive when it was a last minute response to a so-called surprise budgetary surplus? There could be a much better planning process around all of that. We would hope the Conservative government would undertake a commitment to ensuring we do not have these continued so-called surprises.

I want to address a couple of specific issues in the legislation. I know the bill includes a tax credit for public transit passes. On the face of it, that is an important thing to do. We want to encourage people to use public transit. I am encouraged that some of the money the NDP managed to get in the last Parliament, under Bill C-48 for public transit, will go to support the building of new public transit infrastructure in Canada. That money has been maintained and will be spent on that important project.

On the issue of a tax credit for public transit passes, many of us have heard from people in our ridings who, as part of their collective bargaining process, managed to have public transit passes provided as a benefit of their employment. In my riding workers who are employed by the public transit companies, Coast Mountain transit and B.C. transit, negotiated that as part of their collective agreement, for both themselves and their families. Recently, after an audit, it was announced that the families of these people would have to see that as a taxable benefit. It seems to fly in the face of wanting to encourage the use of public transit to have these people claim this as a taxable benefit on their income tax. We heard from many people in my constituency about that.

I received a letter today from the minister, after having written to her, that it is under review at the moment and that there may be no action taken in this taxation year, with a decision still to come.

It seems to fly in the face of wanting to actually do something positive about encouraging people to get on to public transit and out of their own personal vehicles. I think that when groups of workers manage to succeed in getting this as part of their collective agreement, we would want to encourage that and ensure that it is of real benefit to them.

There is much more to be said on this bill, but I see that my time is up, so I look forward to questions and comments from members.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I will begin my speech by putting this budget we are debating today into context.

Much to everyone's astonishment, in the throne speech this year it contained only five items. It seemed like the Governor General had only begun to read it and before we knew it she rose and left. Everyone asked where the throne speech was. A quarter of a million employees work in the federal government and yet the Conservatives could only come up with five new things it felt needed to be done. We have over 40 federal agencies and departments. Did the government think 35 of them had no problems or no priorities? I am sure each of those organizations had a strategic plan. I am sure they did not say that nothing needed to be done. It was shocking. I was a bit disappointed by the fact that the Conservatives were not taken to task at the time. The previous Liberal plan had 77 priorities, and the Conservatives only had 5. Ninety-five per cent of Canada was left out of the budget.

Let me discuss wait times, which are now getting worse. A journalist caught the Prime Minister in a speech trying to put another priority in rather than his priority of wait times. He did not get away with it. The Prime Minister tried to say that it was not one of his government's five priorities because he realized he could not accomplish his goals with respect to wait times.

He said that Canada's place in the world would be his fifth priority but in the recent budget cuts he cut Canada's place in the world. He cut money to foreign embassies and he cut the student exchange program. Even the fifth priority that he added has now been downgraded.

I cannot remember exactly what the five priorities were. One might have been the GST cut. That was roundly criticized by all the major economists and analysts in Canada. They felt it would be more beneficial, more productive and more effective to give an income tax cut to Canadians.

One of the other priorities might have been defence. How many Canadians feel safer today than they did at the time that statement came out? A promise was made to provide three icebreakers for the north. Whether or not they believe in icebreakers, they should not have convinced northerners to vote for them and then break their promise and not go ahead with it. If we had increased our defence abilities, then we would be continuing Canada's place in the world in our traditional peacekeeping duties.

What have we done with this increased defence given the emerging situations in the world? Have we done anything in the Congo, in Zimbabwe, in Darfur or in Somalia? There is certainly nothing to show for that priority.

The government wants to get hard on crime. As was mentioned today in question period, we announced a smart crime proposal and plan. The government would not even expedite certain crime bills that we offered today.

However, the government's first major bill, Bill C-9, would not have made Canada much safer as witnesses stated before committee. Those witnesses convinced all parliamentarians except Conservative members that Canadians would be less safe. Major modifications had to be made to the bill to make Canada safer. For example, a committee member was told by a witness at the committee that prisoners had 47 days on average for treatment and rehabilitation in order to make them safe for society. Instead, with home arrest and the programs that go with that, they would have received 700 days of treatment. The 47 days would not make society safer because these offenders would have less chance of being rehabilitated or they would get a summary conviction or probation. That was a failure.

What is more important than its failure on the five priorities is that the government missed 95% of Canada in both the budget and throne speech. There was nothing for the most vulnerable, women, the poor and the elderly.

If governments have problems with their budgets it is usually that they cannot or do not implement them and they do not set aside money for all the things in the throne speech. However, I cannot say that the present government had that problem because if there is nothing in a throne speech it is pretty easy to fund it.

Let us look at the budget that we are talking about today. I am a positive person by nature but the government has made it very hard for me to be true to myself during the past year but I will mention some good things in the part of the budget addressed by Bill C-28.

In particular, there are two items in the budget that were former Liberal proposals. We are very happy to see the tax reduction on dividends and the $500,000 in capital gains being transferred to fishers.

Another thing that was good for my riding and something on which I lobbied for a long time was the excise tax reduction for brewers. We have a great micro brewery in Yukon that makes Yukon Gold and Arctic Red and it will certainly appreciate that particular cut.

I do not have any objections to other tax cuts for Canadians and businesses other than the fact that they were not applied equally. When the government has lots of money and it is in the best fiscal position in the history of surpluses with room to manoeuvre, why would it not extend the tax cuts equally to the most vulnerable?

The one example of that is the new textbook tax credit, which works out to $77. I talked to our college bookstore and I was told that a student could barely buy one book with that money. The Liberals were offering $3,000 toward the first year and $3,000 toward the last year of tuition, and for poor students that amount was for every year. What is the alternative choice? It is $77. The government really cannot be serious.

I will not go into the transit pass deduction except to say, as the member from the Bloc just pointed out, that all the experts in the government, the environment officials and the public servants, had respectfully recommended to the government that there were far more effective ways. They said that this deduction would primarily be a subsidy to people who were already using transit. There could have been all sorts of ways to get far more reductions in greenhouse gases and pollution than offering the credit.

Let us talk about the doubling of the pension income credit. It is great. I do not have an objection with that but when I asked the government the question earlier today about the seniors who do not get that income tax credit and who do not have the pension income to get the credit, there was no answer. In fact, for those seniors the government has increased income taxes. Why would it pick on seniors and increase their taxes from 12% to 12.5% unless they are very wealthy? Why would it reduce the basic exemption for everyone which means an increase in taxes for all Canadians?

I would not have a problem with the tax decreases had they been applied equally for everyone. Wealthy Canadians, by and large, are very generous. They donate to many social causes and do a lot of good work. They are not the type of people who would have asked for tax cuts and then said that we should not give it to the poorest in society, not give it to the single mother trying to feed her family and not increase her tax from 12% to 12.5% or reduce her basic exemption.

There would have been no problem in just giving everyone a tax cut. There is enough room in the budget to do that. The government has heard about it incessantly, especially because there were no items in the budget for those vulnerable groups as I outlined at the beginning of my speech.

If the member wants to put this in the context of the previous government, in the Liberal government's throne speeches and budgets there were all sorts of programs for aboriginal people, the disabled and students, and programs in regard to homelessness, which we were talking about today.

I will take the President of the Treasury Board at his word when he says the government will not cut the SCPI program. SCPI is a tremendous program that is very well used in my riding. There have been all sorts of successful projects. My party will fight to the end to make sure the program is maintained. I am delighted that the President of the Treasury Board said he would maintain that very important program. It is one of the many initiatives of the former government.

In foreign trade, we have seen the emerging economies of China, India and Brazil and an increased foreign presence in the world for Canada. In fact, in regard to the “responsibility to protect”, a year ago September I was very proud of the United Nations when Canada got that through. Yet now we have a government that recently cut the foreign presence in Canada.

Earlier in the House members talked about climate change and the initiatives the Liberals put in place. I will grant one thing to everyone: we were terrible about explaining what we had done. It was disastrous, because Canadians did not know about all the initiatives taken by the former government, although there is always more to be done.

Canadians did not know about our initiatives related to renewable energies, reducing fossil fuels, wind and solar energy, clean coal, carbon sequestration, ethanol and, as the Bloc member mentioned, of course there was our tremendous EnerGuide program. Thousands of Canadians across this country were using the EnerGuide program to reduce pollution and greenhouse gases. The Conservative government has allowed the program to expire.

And what did we get from the government? We got a plan that could reduce the legal authority of Canada to prevent pollution. The plan asks for four more years of talk, but all that talking has been done for the last four years. The plan was put in place. This is a real insult to the excellent public servants of Canada, who did that talking for the last four years and came up with plans. Some of those experts in the biocap areas that we were supporting are world renowned. I do not think the government should be challenging them and telling them to go back and talk for another four years while our children continue to breathe smog.

In the north, where we find the most devastating impact of greenhouse gas, where the species are changing and the infrastructure is crumbling, where traditional lives are affected so dramatically, are we just going to talk for another four years? In fact, the government will put in targets that will be accomplished when I am 100 years old. I am not really worried about that, but what about our children today?

The programs initiated by the Liberal government were not perfect and may not have been enough, but certainly there were some kicking in that would have been tremendous. The deal the Liberal government had with the auto companies is one of the best in the world, unlike the government's plan. We cannot agree with the Conservatives. Because our deal was voluntary and because the auto industry complied with all the other voluntary initiatives, of course there would be a lot more buy-in and a lot more enthusiasm. That is a lot more effective than trying to force it, as the opposition parties are suggesting.

Of course in the Liberal budgets there were items for the north. For the north, what is in these budgets that the Liberal government has not already announced? As for the northern strategy money for the north, there is nothing new and nothing at all for my area of the country and, as northern critic, I would say there is nothing new for the other parts of the country, except of course the promise on the icebreakers that was reneged on.

The forestry industry is suffering from the softwood lumber deal, on which it is going to lose a billion dollars . We had a plan to help the communities, a plan worth close to a billion dollars, I believe, or at least over half a billion. We had a plan to help the communities and the workers. None of that was in this particular budget.

Of course all the infrastructure programs from the past government were new additions and were constantly increased in size.

There was also the new horizons program for seniors, which was well used in my area. And what about the pension increases?

In spite of all this, the Liberal government still had the largest tax break in Canadian history to that time, and we had two tremendous national deals. One was a deal on equalization, with tremendous increases for the provinces and territories of this country. Another was on health care, with huge increases for that by the last two prime ministers.

To get all the provinces and territories to sign on to those agreements and the early childhood agreement is an historic accomplishment. Everyone knows what it is like to try to get the federal government and 11 provinces and territories to agree. These deals were a tremendous accomplishment in those times.

How does that compare to the five items in the last throne speech that were funded in a budget? Even they were not successful.

Let us look at the historic Kelowna agreement. Since Confederation, trying to increase the quality of life of one segment of the Canadian population so it is at least equal to that of the rest of Canadians has been a sore spot in Canada. It can only be done with them, thinking of the solutions, being part of the solutions and in agreement with the solutions, and with the provinces.

It was a historic agreement. It is unimaginable that it even happened. The premiers, the first nations leaders and the federal government got together and came up with a plan,and with the largest amount of money in history for aboriginal people, but more important was the buy-in, which was almost impossible. Where are all these funds in the budget we are debating? Gone. Gone for something else and I am not sure what.

As I said, I was a bit disappointed that these points did not get wider condemnation earlier on as these two things came out, but perhaps people were giving the new government the benefit of the doubt. However, I think the government showed its true colours a couple of weeks ago with the cuts, the cuts that have resounded across the country and have groups up in arms.

We have had two emergency debates on the cuts. In each debate I did not have time to finish reading the input just from my riding, 1/1000th of Canada, and the farthest away from Ottawa, where people would not hear about their complaints. People were surprised, shocked and disappointed that on the day a $13 billion surplus was announced, $1 billion for the most vulnerable in society was be cut.

They were surprised that the court challenges program was cut. It has been used many times to ensure the integrity of our laws so they match our Constitution. As we are a constitutional government, what parliamentarian would not want that integrity for our country?

There was also the cut to the Law Commission, which has done excellent work, also in the area of the law. Parliamentarians are law makers. What parliamentarian would not want outside expertise in doing projects such as the one that was done on historical aboriginal law?I believe first nations people in my riding were part of that.

What about tourism? Maybe I have to speak louder than everyone else because I have the one riding in a province or territory where tourism is the biggest private sector employer. Tourism helps Canadians all across the country. How could the government cut marketing money from the Canadian Tourism Commission, especially when a province like Queensland in Australia probably already spends more than the entire country of Canada spends? Why would marketing money be cut when we need to sell Canada to the world in an ever more difficult time for tourism because of high gas prices and terrorism, et cetera? Not only did the government cut marketing, it cut the GST rebate, which makes it about 6% more difficult for tour operators to entice conventions to come to Canada.

Why would the government cut summer students? The tourism industry and museums use summer students. The museums in this country, which are so poorly funded, were apoplectic with all the cuts, including the summer students they lost, the heritage building program they lost, and the huge cut to MAP, the museum assistance program, one of their few programs.

I am almost out of time so in one minute I will briefly mention the other cuts. I was going to talk about the cuts to the Status of Women budget, cuts to volunteers, for goodness' sake, and cuts to youth employment and youth strategy. Why would funds be cut for youth? Why would there be cuts to CMHC? Why would there be cuts for aboriginal people on the aboriginal smoking strategy?

The very worst of all, which caused an outcry all across the country, is the cut to literacy. One constituent wrote to me and said he probably would be dead without literacy money. I read the letter for the House of Commons last time I spoke.

This is not a direction that we can go in. This is not the direction that Canadians believe in. This is not the kind of Canada that we want to support.

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

Mr. Speaker, I want to remind the member that we are not debating the clean air act, but rather Bill C-28. I can tell him, however, why we oppose the clean air bill. We oppose it precisely because this government has refused to listen to the arguments put forward by the opposition, a majority of which, last spring, demanded in this House that the government table a climate change plan incorporating the Kyoto objectives.

We have in front of us a parliamentary secretary who is trying to shift onto the opposition the blame for an approach that Canadians and Quebeckers do not subscribe to. The reality is that we would not have to oppose the clean air bill, had the government stood behind the motion passed by Parliament, voted by a majority in this House. The reality is that the government is the one that decided to be at odds with Parliament. I can make a prediction about that: the Conservatives will have a high price to pay come the next election.

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

Mr. Speaker, I am very pleased to speak today to Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. This bill is over 130 pages long.

In this bill, the budget that the Minister of Finance tabled last spring is divided into five broad areas. It addresses a number of issues and sets out tax measures affecting individuals.

This bill also proposes to extend tax benefits given to farming and fishing businesses; it deals with corporate taxes; it amends the tax rate for banking institutions; and it reduces the excise tax on volumes of beer under 75,000 hectolitres.

In the 20 minutes allotted to me to talk about Bill C-28 today, I would like to address the aspect relating to tax measures affecting individuals, but more specifically the 15.5% non-refundable tax credit for public transit that was announced in the budget. In order to be eligible for the credit, taxpayers must supply a receipt or proof of purchase of a long-term public transit pass.

I certainly do not intend in this speech to dispute the measure proposed by the government in the last budget; rather, I would like to demonstrate that this one measure alone, the 15.5% non-refundable tax credit, is insufficient to reduce greenhouse gas emissions. In fact the government committed itself in its budget to presenting us with a climate change plan, which we are still waiting for. The only environmental measure that the government is proposing is the non-refundable tax credit for public transit.

We believe, however, that this is not sufficient to reduce greenhouse gas emissions and to meet Canada’s commitment to reducing greenhouse gas emissions by 6% from 1990 levels during the period between 2008 and 2012.

Why is it not sufficient? Because a 15.5% non-refundable tax credit is not a sufficient incentive for people to use public transit. If the government genuinely wants to reduce greenhouse gas emissions and promote public transit, it will have to ensure that this measure is accompanied by adequate funding for public transit infrastructures, particularly in municipalities.

In fact it bothers me that the government is presenting this measure to us today, because the Department of Finance submitted a report to its minister showing that this measure alone would be ineffective in reducing greenhouse gas emissions even before he tabled this budget.

The minister had available to him a report showing that this measure alone would lead to a reduction in greenhouse gas emissions of only 0.01%, when Canada has to reduce those emissions by 300 million tonnes. Plainly this measure alone will lead to a reduction of only 13,000 tonnes in Canada.

The government, which sometimes says it believes in climate change and sometimes says it does not, is presenting us today with this tax credit that is the only environmental measure it proposed. Obviously that measure alone will contribute to reducing greenhouse gas emissions by only 0.01%.

This is not enough. We have a government that is refusing to honour the commitments Canada made in the fight against climate change and that, in its budget, is promising to table a climate change plan in the future. Where are we at today? We have a government that is refusing to honour the commitments Canada made in Kyoto, that had promised in the budget to table a climate change plan and that said it would use tax measures in the fight against climate change. What do we have now? A government that is not honouring its international commitments, that has not tabled a climate change plan and that is tabling tax measures and environmental measures that will enable us to reduce greenhouse gas emissions by a mere 0.01%.

How can the minister tell us today that this one measure will help reduce greenhouse gas emissions? According to his own department, the finance department, this measure will increase transit ridership in Canada by only 2.5% to 3.3%, even though this government feels that we must fight climate change.

The minister is well aware that there were at least five options on the table, and he chose the worst one, the one least effective in reducing greenhouse gas emissions. According to the Department of Finance and the report that department officials submitted to the minister before the budget was tabled, the reduction in greenhouse gas emissions will be minimal. The government and the department had clearly indicated that this measure would not be effective in reducing greenhouse gas emissions and that, in addition, it was extremely costly. Officials estimated that it would cost $200 million annually to implement such a measure. What does that represent in terms of the cost of every tonne of greenhouse gas emissions that is eliminated? It represents $2,000.

So when the government tells us that we cannot achieve the Kyoto protocol targets and that it would cost a huge amount to do so, the government should look at the measure it has introduced. According to its own officials, this measure will cost the department $200 million a year, or $2,000 for every tonne of greenhouse gas emissions that is eliminated.

Far be it from me to criticize this measure, as I said earlier. I think that this measure can be effective only if the government decides to make the financial means available to the provinces to strengthen and improve the public transit network.

The government probably sees what I am getting at. The Government of Quebec wants $325 million to fund its plan to fight climate change. It clearly showed its hand to the government in Ottawa by saying it would use Ottawa's $325 million to strengthen its transportation network. That is the missing link that would make the measure announced in the budget—the 15.5% non-refundable tax credit for individuals who purchase public transit passes—really effective for Quebec.

I would like to quote an environmental economics professor at the Université de Sherbrooke, Alain Webster. He said, and I quote:

Ottawa's measure rewards people who are already doing the right things.

There is no clear evidence that the 15.5% credit will convince a lot of people to switch from cars to buses. On its own, such a measure is deceptive and totally inadequate.

This measure will not boost ridership. Yes, public transit ridership in Canada will increase, but according to the Department of Finance's own analyses, ridership will increase only from 2.5% to 3.3%. So what should we do? This is the only measure the government announced in its last budget to fight climate change.

What would we have liked to have seen? We would have liked the government to confirm Canada's support for Kyoto by committing to reducing greenhouse gas emissions to 6% below 1990 levels between 2008 and 2012.

We would also have liked the government to indicate that Ottawa intends to transfer to Quebec the $328 million committed by the federal government. That commitment was made not only by the previous government but also by the new government. We have some evidence of that. It has been confirmed not only by Bloc members but also by the Government of Quebec which, today, as part of a partnership, stated that it wants the Kyoto protocol commitments to be met in their entirety. Several individuals involved reacted by estimating that it would also take at least, and I insist on that, at least $328 million in order to ensure that Quebec reaches its targets.

We should point out that the government decided to continue with plans laid out by previous governments to give tax incentives of about $250 million to the Canadian oil industry—even though, since 1970, this industry has received more than $66 billion. That is quite a contrast with federal investments in renewable energy.

Why should we continue to fund the oil industry when we have a government, the Government of Quebec, that has submitted an action plan to reduce greenhouse gas emissions, to respect the Kyoto protocol, and which is asking Ottawa for $328 million, or 20% of the action plan on climate change. Something does not add up.

What we believe is that if the government wants this measure to be effective, it must be accompanied by concrete agreements with the provinces. Concrete agreements that can result in improvements to infrastructure.

Some have said, and I will again quote an individual involved, “Such a measure was evaluated”. These are quotes and comments from federal public servants in the Department of Finance who made a recommendation to the minister regarding the measure included in the budget and who stated that such a measure had been evaluated. It could be implemented without fiscal implications.

What officials are saying is that we cannot consider this measure alone. Why did the government not announce a tax credit for more fuel efficient vehicles when it tabled the budget? Such a measure would have been more effective. According to the Department of Finance figures, this type of tax incentive for citizens who decide to purchase more fuel efficient vehicles would have resulted in a 0.3 million tonne reduction in greenhouse gases in 2010 and a 1 million tonne reduction in 2020.

We have always believed in this House that, in terms of fighting climate change, we must use both tools at our disposal: legislation and regulations, which must play in important role. Furthermore, upon analysis of the approach introduced by the government last week, what is it? It is an approach that aims only to go back to consultation with the provinces and discussion with industry. It is no more and no less than an approach in three phases, which might—and I stress might—lead to regulations in 2010.

I have been a member of this House since 1997 and I remember very well the previous government's commitments. In 2000, after ratifying and signing the Kyoto protocol, that government began extensive consultations with the provinces and with industry in order to implement the Kyoto protocol in Canada.

The government before us today has decided to throw away nearly six years of negotiations with the industrial sectors and begin all over again, although negotiations had already been undertaken by the Department of Natural Resources, among others.

I remember very well the Assistant Deputy Minister, Howard Brown, who had begun negotiations with the industrial sectors and was making progress in those negotiations. Of course, in certain cases, they led to only voluntary agreements. We would have liked to see stricter regulations, but this government decided not to take into account the negotiations with the various industrial sectors and to start all over again.

Consider, for instance, the automotive industry. It signed a voluntary agreement with the federal government in which it promised to reduce greenhouse gas emissions by five megatonnes within the automotive sector. What have we learned and what do we know about the viewpoint of the government sitting opposite, regarding that agreement? We are told that they are going to let that voluntary agreement run until 2010 and we will harmonize our automobile manufacturing standards with those of the United States, more particularly with the Environmental Protection Agency. While we were hoping that the government would harmonize our automobile manufacturing standards with more rigorous, model standards, such as those adopted by the state of California, our government decided to let the industry continue on its course, although, incidentally, that industry has yet to present any reports on how it is respecting that voluntary agreement.

I would say that the Commissioner of the Environment and Sustainable Development informs and guides us on the evaluation of this agreement. She says there is no independent mechanism—independent being the operative word—to ensure that the automobile industry will respect its commitments on the five megatonne reduction in the voluntary agreement. There is no independent compliance mechanism and no guarantee that the industry will respect its commitments. By the way, the industry can withdraw from this agreement at any time.

In closing, this measure could be interesting provided that it comes with a significant transfer, for Quebec in particular, of $328 million to allow us to consolidate and broaden our public transportation network.

Alone, this measure will not result in significant reductions in greenhouse gas emissions; its impact is small. Furthermore, the government had five other options and it chose the least effective one as far as greenhouse gas emissions are concerned.

We hope the government now understands that Quebec wants this $328 million to allow us to meet our commitments to reduce greenhouse gas emissions in accordance with the Kyoto protocol.

The House resumed consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

Business of the House

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

Mr. Speaker, today we will continue with Bill C-28, the bill to implement the 2006 budget tax measures. This would be followed, time permitting, with Bill S-2, hazardous materials, and Bill C-6, the aeronautics amendments.

Tomorrow we will continue with the business from today with the possibility as well of completing the third reading stage of Bill C-16. I will talk to the opposition House leader about that after this.

Next week we hope to begin debate on some of the government's justice bills. The first one will be on the age of consent, Bill C-22. If we could get unanimous consent to pass that at all stages that would be very much appreciated.

We will go then to Bill C-27, our dangerous offenders bill and any cooperation we can get to move that along would be appreciated, I think, by the people of this country.

I am looking forward to sitting down with the official opposition and other parties to discuss the speedy passage of the many popular bills that the government has introduced and I am looking forward to their cooperation on that.

Pursuant to Standing Order 66(2), I would like to designate Tuesday, October 31, as the day to continue debate on the second report of the Standing Committee on Agriculture and Agri-Food.

In response to the member's questions, consideration in committee of the whole of the votes under the Department of Human Resources and Skills Development on the main estimates for the fiscal year ending March 31, 2007, shall take place on Wednesday, November 1, 2006, pursuant to the Standing Orders. The second day for consideration of committee of the whole will be November 7, 2006.

As well, I should indicate that Thursday, November 2, 2006, shall be an allotted day.

With respect to the member's questions with respect to the same sex marriage, we will fulfill our campaign promise on that and we will be proceeding with it this fall.

Budget Implementation Act, 2006, No. 2

[The Acting Speaker, Conservative, Royal Galipeau]

It is with regret that I interrupt the member but we will now go to statements by members. When we return to the study of Bill C-28, there will be sixteen and a half minutes left in her time.

[Maria Minna, Liberal, Beaches—East York, ON]

Mr. Speaker, I am happy to speak against the government's Bill C-28. I do this because it is part of the budget of 2006, which we on this side of the House are completely against.

Although there are provisions in the bill that we do support, as they are Liberal proposals from our budget in 2005, we do not support the agenda of the minority Conservative government at this time. Speaking of its agenda, it is important to note that, as we campaigned on, the Conservatives are showing their true right wing hidden agenda now that they are in government.

When the Conservatives introduced the budget, they announced massive spending cuts within it, even though they were handed a $13 billion surplus from previous Liberal governments. Why would they do such a thing when we have so much richness in this country that was left to them by our government? They did it because they had to appease their ideological, right wing Conservative base.

What did the Conservatives do with those cuts and where did they cut? They eliminated the early learning and child care program agreement across this country. It seems that the signature of the Crown means absolutely nothing. The fact that the Government of Canada and the provinces signed an agreement means nothing. By the way, that also happened with the Kelowna accord. Everybody had signed the agreement but again those signatures meant nothing.

I will not go through all the draconian cuts to Status of Women Canada of $5 million, plus changing all the criteria, which means that equality seeking groups can no longer get funding. Justice seeking groups can no longer get funding. It seems that the minister responsible for Status of Women said that women were equal in this country anyway because it says so in the charter. The fact that we need programs and advocacy organizations to ensure that actually happens means nothing to them.

They made cuts to the literacy program. I do not know what the Conservatives have against people learning to read and write in order to improve their skills so they can get better jobs. Productivity in this country is a major issue. The government says that it is interested in productivity and yet it is cutting literacy education which is where it is most needed.

Cuts to affordable housing affect the most vulnerable in our society but the Conservatives do not care. They have their narrow voter base to support and that is as far as they will go. They pick and choose income tax measures that satisfy the minority voters who support the Conservative Party. They believe it does not matter if it is bad for the economy as long as it helps them to get a majority government. Even their own right wing think tank has said to them that cutting the GST is a bad move because it does nothing to increase productivity in this country, but they did it anyway.

The NDP is no better. It used its own agenda to force an election and now it must deal with the consequences of a Conservative government.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I am pleased to rise today and speak to Bill C-28 and express many of the concerns raised in the Hamilton community around the budget.

This spring's budget saw the Conservative government essentially continue the Liberal income tax cut. The government added cuts to the GST and business taxes. It simply left what I would argue would be the most important social responsibilities to the province.

On the spending side, the government has all but turned its back on the Kelowna accord with aboriginal people, with only modest funding for housing. The government's decision to go beyond the GST cut and to proceed with further personal and corporate tax cuts is troubling. This will cause a significant shrinkage in government's fiscal capacity to invest in the aspirations of ordinary Canadians. It betrays their hopes in many ways.

The Prime Minister has talked at length about being inclusive. He has all but ignored the call by the provinces for substantially increased federal funding for post-secondary education. Post-secondary education in Canada has been subjected to public cuts in funding for over 20 years. This has led to higher tuition fees and higher student debt.

The government has substituted tax incentives and individual credit measures and has taken away funding for direct programs. This is unconscionable when the government is sitting on a budget surplus of $13 billion. Much of that $13 billion was hijacked from the EI fund as far as I am concerned. It has chosen instead to throw away a chance to give real relief to our post-secondary students and to their parents.

On May 2 of this year, George Soule, national chairperson of the Canadian Federation of Students, responded to the spring's budget announcement and said:

Tinkering around the edges of the tax system is not going to increase access to college and university. This government should be restoring the billions of dollars that were cut from post-secondary education transfers during the past decade so that tuition fees can be reduced.

In my opinion the budget bills of 2006 very much follow the failed Liberal legacy of building on ineffectual patchworks of short term band-aid solutions, with no long term plan to enhance access to quality, lifelong training and learning opportunities. A lifelong learning strategy would finally reinvest in our colleges and universities and it would increase accessibility. I said earlier that there is a student debt crisis in our country which is unconscionable.

Tax credits are no substitute for restoring core funding to post-secondary education. Tuition has almost tripled since 1992. It is becoming increasingly out of reach for even middle class Canadian families, much less ordinary hard-working Canadians. The student debt crisis averages over $21,000 per student. In some cases it reaches $50,000. Imagine trying to enter the workforce carrying that burden. Instead of reinvesting in core funding and tackling the student debt crisis, as the NDP did in Bill C-48 in 2005, the Conservatives simply tinker with taxes.

Tax credits in budget 2006 will cost $185 million a year to help those students who already have $3,000 a year in scholarships. That money could have been used to pay the full tuition for 38,000 students, those students in greatest need. Budget 2006 will increase the amount of debt by allowing more students to borrow more money. That only helps the banks. It is absolutely terrible.

Another area of concern in the budget is housing and homelessness. Day in and day out in the House we hear question after question on SCPI and they are deflected by the minister. What is in the budget? The Conservative money in the budget was money that was already committed to be spent in the NDP budget, Bill C-48 from last spring. The Conservative money actually falls $200 million short of Bill C-48.

Accountability? There is no mention in the budget of who will oversee the funding and ensure the money is spent by the provinces on much needed affordable housing.

Previous Liberal governments allocated a substantial amount of money to the provinces and territories, around $474 million, but this money was not spent. It was not spent because of the failure of the Liberal government to gain a consensus with the provinces on how to do that. That is one of the major failures of the last 15 years in regard to social housing in this country. There is no mention in the budget of a national housing plan that would ensure that affordable housing is available in the long term.

Speaking more to my riding, in particular the city of Hamilton, there was a study done called “On Any Given Night”. On any given night, 399 men, women and children stay in emergency shelters in Hamilton. There are over 4,200 active applications for social housing in our community. Over 2,400 women and children stayed in a violence against women shelter during 2004 and 2005. Twenty-one point nine per cent of renter households spend more than 50% of their income on housing. It is only thanks to SCPI, which we fear is in jeopardy, that the infusion of funding for shelter beds in Hamilton was meeting the needs of single men for the very first time.

I would like to refer to a report from the social services committee of the city of Hamilton. Again, speaking to the committee's concerns around SCPI, it said:

Whereas, having a safe, secure home is a basic human right; and

Whereas, children and families are the fastest growing segment of Canada's homeless population eroding efforts by municipalities and others to nurture healthy, stable communities; and

Whereas the City of Saint John's, the Federation of Canadian Municipalities (FCM) and other organizations across the nation have recognized that homelessness and the lack of affordable housing is a national concern requiring long term solutions; and

Whereas, the National Homelessness Initiative was established by the federal government in 1999, investing $1.2 billion over the past six years in local solutions that address homelessness; and

Whereas, the National Homelessness Initiative is strongly supported by local organizations and the Government of Ontario and is recognized as an international best practice by the United Nations; and

Whereas, the National Homelessness Initiative will expire on March 31, 2007 unless the new federal government acts soon to renew the program;

THEREFORE, BE IT RESOLVED THAT the City of Hamilton urges the Government of Canada to renew and expand the National Homelessness Initiative, and calls upon municipalities and provincial and territorial governments across Canada to add their voices in support of this important program.

The concern for SCPI, the concern for our homeless, our families in jeopardy is at the forefront of the concerns of municipalities and municipal governments across this country. It is the concern of representatives in this House, but it does not seem to me to be the concern of the federal government. I cannot understand for the life of my how it can turn its back on homeless Canadians.

In closing, these are concerns that have been expressed to me by the constituents of Hamilton East—Stoney Creek and I am pleased to put them before the House this day.

[Shawn Murphy, Liberal, Charlottetown, PE]

Mr. Speaker, I rise today to participate in the debate on Bill C-28. I will confine my remarks during the early minutes in my limited time on the $1 billion in cuts that were made mainly to social programming here in Canada that were all part and parcel of the budget.

Most Canadians share my view that these cuts were directed at the most vulnerable people, groups and organizations in Canada, and the most vulnerable regions in this country. The cuts were based very much on ideology. Today's editorial in the Vancouver Sun accurately describes the nature of these cuts and the direction of the minority Conservative government. In actual fact, Barbara Yaffe introduced a new term into the lexicon of this assembly. I agree with her proposition that the government is suffering from a rare disorder called “ideology restrictus”. That is the problem here and I am not sure there is a known cure for ideology restrictus.

I agree with the thesis of the article that normally, when a minority government is elected, it is elected on a certain base. Once it gets into power, it attempts to broaden that base and reach out to other groups, individuals, organizations, so that the government can be the government of all Canadians in all regions of the country. With this particular minority Conservative government, that in fact did not happen. In fact, it is becoming narrower and narrower.

The Conservatives are narrow casting to their own group. Canadians have seen that very clearly from the $1 billion in cuts to social programs that were recently announced by the minority government. I want to speak about these cuts and how they affect these groups, individuals and organizations in this country and how devastating and cruel these cuts will be and the very unpleasant effects that will result. Before I do that, I want to put the cuts into context.

I agree that sometimes a government has to reorganize its priorities. There are certain times when tough decisions have to be made. Simply because a program was funded 10 years ago does not necessarily mean that the program has to be funded in perpetuity. I agree with that. A government should on a daily basis be looking at and prioritizing its agenda, programs and initiatives. However, I want to put this into context because it is very important.

In 1993 when the Conservative government under prime minister Mulroney lost after nine years in office, this country was in devastating financial circumstances. Interest rates were close to 12%. Unemployment was in excess of 11%. The annual deficit of Canada was $43.1 billion, and I said billion, not million. The debt to GDP ratio was at 73%, its highest level ever. Unemployment was increasing. The World Bank had basically given up on this country. I believe that Canada was headed for bankruptcy.

In that case there were some tough decisions. There were cutbacks that were necessary. Through good government and with the necessary control of the fiscal monetary levers available to the government, Canada's success has been startling. We all know the results.

Canada has had eight consecutive surpluses. Interest rates are at an all time low. Three million jobs have been created over the last five or six years. Whatever context we want to use, whatever we want to compare it to, whether it is debt to GDP ratio, jobs created, interest rates, et cetera, the country, when compared to the G-8 or any other countries in the OECD, has been ranked one, two or three and it has certainly been very successful.

That was the context back in 1993. In 2006 when this Conservative minority government came it power, it inherited a surplus of $13.2 billion. That was just a little contextual background leading up to these devastating cuts that were made to certain vulnerable Canadians and announced last month.

The first one I want to talk about, in the whole scheme of our $210 billion budget, perhaps does not amount to a significant amount of money, I found very cruel and devastating. It is the $5 million cut to the budget of the Status of Women. Coupled with that was the pronouncement of the government that it would no longer consider any applications for funding to any women's groups that advocated equality. In my riding, and I believe the riding of every member from across Canada, it will have a devastating effect because that is what a lot of these groups do, and they do it successfully. Their job is not done.

I want to quote from a release from Kirstin Lund who is the chairperson of the Prince Edward Island Advisory Council on the Status of Women. She says:

If Canadian women are equal, how is that they made just 62% of men's incomes in 2003, even though they made up 47% of the workforce? If Canadian women are equal, why is it that 43% of all children living in poverty live with a single mother? If Canadian women are equal why are there over six times as many female victims of sexual assault as male victims? Why are female victims of spousal violence more than three times as likely than male victims to fear for their lives? And why do women make up 84% of all victims of spousal homicide?

This question has been asked of the Minister of Canadian Heritage in the House a number of times and people are very upset. This group is upset. Groups right across Canada in all 308 ridings are very upset. The answer I have heard over and over again from the minister was that the government considers women to be equal and it was not necessary. Again, I find that totally unsatisfactory. I do hope that as we go forward this particular cut, more important, this particular restriction, will be lifted and we can go back to the way it was funded in the past.

The second area I want to talk about goes back to my original premise that these cuts are focused. It is like a rifle. They are targeted at certain groups. They are targeted at the illiterate, women, aboriginals, youth, poor people and environmentalists, as well as certain groups within society that this particular minority government, for one reason or another, just does not like and does not feel that it represents.

The second cut that was announced by the finance minister was the $17.7 million from the budget under the literacy skills program. As everyone in the House and most Canadians are aware, this is a very serious issue. Most studies indicate that over 30% of all adults have certain literacy and numeracy deficiencies and until some form of remedial action is taken, they cannot participate in the knowledge economy. In the province I come from, Prince Edward Island, under this program the provincial government received approximately $325,000 of annual funding for a literacy program. There was another voluntary alliance, the Prince Edward Island Literacy Alliance, which received approximately $100,000.

It was not a great amount of money, but it was to be used to coordinate a lot of volunteer organizations that were working in the communities each and every day dealing with this literacy issue. They were doing very good work. That is gone now. This money was leveraged to the volunteer sector and the government's response was that the sector was not doing its job and was not successful. The government needs to tell that to the groups and volunteers who were involved and to the people who benefited from those programs.

I want to quote from the executive director of the Prince Edward Island Literacy Alliance, Catherine O'Bryan, who said:

Why isn’t our government concerned with the betterment of all Canadians? This cut comes at a great expense to the very people who struggle to participate fully in the community--the message from this federal government is clear: People with low literacy skills don’t matter.

I would like to quote a statement in the Globe and Mail of October 5 made by the President of the Treasury Board in response to those people who have friends and relatives who have some degree of literacy problem and are concerned about these groups, individuals and organizations. He said:

I think if we're spending $20 million and we have one out of seven folks in the country that are functionally illiterate, we've got to fix the ground-floor problem and not be trying to do repair work after the fact.

That was a quote from the government. That was the response to those groups, individuals and organizations that are so concerned about this important problem.

Another cut was made which I do not believe has sunk in yet. It is going to affect the tourism industry which has been struggling over the last couple of years. A whole host of factors have been working against it: the price of gas has gone up, the Canadian dollar has risen significantly over the past six or seven years, security issues restrict a certain number of visitors crossing the border into Canada, and the lack of international marketing.

A whole ménage of factors have driven down the number of tourists, especially international tourists. I am talking about the $78 million cut from the visitor GST rebate program. This program allowed international visitors to get a rebate on the GST they paid on goods purchased here in Canada. This is going to make us much less competitive on an international basis.

Two particularly important segments of this industry that are going to be affected are the bus tour business and the international convention business because this rebate is built right into their budgets. If a bus tour is coming up from New York City and it is going to spend seven days touring Quebec, Atlantic Canada, and Ontario, the GST rebate is built into its budget. When it loses that rebate, that basically makes our product 6% less competitive than it was before this cutback was announced.

It is my position that this cut was not well thought out. The Canadian Tourism Commission, all the provincial industries, and all the tourism groups, are dead against this cut. I do not think this was actually thought out and it is going to make us less competitive. This is just one more nail in the industry's coffin.

I understand the finance committee has voted to review this particular cut because it is very concerned about it too. I hope that after the finance committee has done a thorough review on the issue and hears from members of our tourist industry from all provinces, the government will reconsider this particular cut.

Another cut that was made and I do not know why this was made, it was a small amount of money, but there was a cut made to the museums assistance program. It was not big bucks but this small amount of money was leveraged through the volunteer sector and a lot was accomplished with a very few dollars.

In my province seven museums received between $20,000 and $24,000. From a Government of Canada context, that is not a lot of money. However, they were able to take this money and most museums were also able to access one student under the youth employment strategy which I am going to speak about in a few minutes because that was another cut we have seen.

They were able to leverage those two programs and keep open their very small community museum. It is not a lot of money, but the effects of the cut will be devastating on these seven communities that had community museums. Hopefully, they will continue to open, but it is going to be a real struggle. We, representing all Canadians, have to ask the question and that is, why? Silence. Why would the government do it?

The court challenges program was ideologically based. This was a program that allowed certain groups and organizations to challenge a particular law, especially with the enactment of the Canadian Charter of Rights and Freedoms. We did not have any judicial interpretations, how it would be interpreted by our courts. There were certain groups and organizations that took advantage of it. It changed certain laws. It changed the way it responded.

An example from the east coast of Canada was the whole Marshall initiative dealing with native rights in the fishery. A lot of the Acadian groups made certain challenges to determine what was their right under the Canadian Charter of Rights and Freedoms to access schooling for their children, what cluster had to reached and what criteria had to be formed. This was tremendous for these groups and organizations, but again, that is gone, out the window totally.

The youth employment strategy was also cut. Again this was a small program that communities, groups, and non-governmental organizations were allowed to access and that they could lever. Every member of Parliament is fully aware of this program. Probably 70 or 80 students from each riding on average were able to access the youth employment strategy. It was a very low budget program.

If it were a non-governmental organization like a community museum, like the Canadian Cancer Society, or the heart foundation, they would be able to access students, not for the full summer but I believe the maximum was 8 weeks or 12 weeks. They were only paid a limited amount of money, around $7.50 an hour and an NGO would get 100% financing and private enterprise would get 50% financing. There has been a 60% cut in that program.

Again, I just have to shake my head. I ask why, what are we doing here? We had a $13.2 billion surplus. In most instances this was a young student's first entry into the workforce. It was so important for these young people and again, for no reason, just thrown out the door and everyone here is shaking their head.

There were other programs like the Canadian volunteer initiative. When we look at all these cuts, they were made to the most vulnerable people living in Canada. What scares me the most is that the finance minister announced there are another billion dollars of cuts coming next year. There have been accusations over the past that the Prime Minister has a hidden agenda. I disagree with that proposition. The agenda is clear, the agenda is obvious, and the agenda is very disturbing.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I rise on a point of order. As you know, earlier this morning I had the pleasure of addressing Bill C-28 in the House. I have reviewed the bleues and I noted that as I was speaking to Bill C-28 I mentioned that our tax initiatives regarding seniors would remove 85,000 pensioners from the tax rolls.

I was then asked a question by the hon. member for Yukon and inadvertently responded that it would remove 850,000 pensioners from the tax rolls. I would like to correct the record as it pertains to my response in that our tax measures for seniors and pensioners will remove 85,000 pensioners from the tax roll.

[Pierre Paquette, Bloc, Joliette, QC]

Marcel Gagnon. I can mention his name because he is no longer a member here. He really sounded the alarm about the fact that thousands, if not hundreds of thousands, of older people were not receiving the guaranteed income supplement and that the federal government was dragging its feet in promoting awareness of this program. Several thousands of them were able to correct the situation, but there are still tens of thousands of people who have not been informed of their rights.

For our part, we would have preferred that this measure be accompanied by a real campaign to make this program known to older people who are entitled to the benefit. At the same time, we would have liked to have seen a retroactivity rule so that those people who had not received the supplement because they did not know about it could obtain the payments of which they had been deprived. Once again, these people have had to face the bureaucratic indifference of the federal government.

Still dealing with individuals, they have created a non-refundable $1,000 tax credit for employment income. For 2006, the amount will be $250; it will be increased to $1,000 for 2007. A non-refundable public transit tax credit has also been established. I spoke about that previously, and I will refer to it again later because this is an extremely important measure in the campaign against greenhouse gases.

The Bloc Québécois would have preferred a refundable tax credit, because we know that people who use public transit—not all of them, but many—do not have their own cars, have low incomes and therefore do not pay taxes. This is a first step, but we should improve this measure in a future budget by making the tax credit refundable.

A tax credit has also been introduced for textbooks, as I mentioned. This credit will be up to $65 a month for full-time students and $20 a month for part-time students. Considering the cost of textbooks, I think everyone will agree that this is an extremely beneficial measure for students. It will also help to reduce student debt—though obviously not as much as might be liked.

All in all, this is a positive measure and in the future, other measures should be added, in order to improve the situation of students, who, particularly in the Canadian provinces, may incur a lot of debt. As we know, Quebec has a system of loans and bursaries needing improvement, because the government in place, led by Mr. Charest, skewed it by transferring to loans a whole series of items formerly covered by bursaries. Some corrections will be made in this respect, I am sure, once the Parti québécois resumes power in the coming months.

And that goes for student debt, too. Very clearly a substantial transfer for social programs and post-secondary education will be required in the next budget. The Bloc Québécois imposed this condition, prior to lending its support for the upcoming budget.

With the Standing Committee on Finance, I have been able to travel all across Canada. Yesterday we were in Quebec City. Everyone acknowledges that a transfer of $4.9 billion is needed, including $1.2 billion for Quebec and some $550 million for universities and CEGEPs in this province. This measure is aimed at individuals, but it does not deal with the whole problem of student debt.

Another measure consists of raising from $767 to $1,000 the refundable supplement tied to medical expenses; this was simply indexed. This measure, aimed at people who need special care is positive, all in all. Let us hope, though, that it is not a way of fostering development of the private sector, which already plays a large part in our health system.

As I said earlier, these are the provisions that affect individuals. We feel that the most important of these elements are the tax credits for public transit, textbooks and tools. The Bloc Québécois made all of these suggestions in the past in private members' bills that we introduced but that were never passed. I would emphasize that these are only first attempts that ought to be improved upon in coming budgets.

I mentioned the tax credit for public transit. We must also ensure that tradespeople can benefit from a $1,000 deduction for expenses related to tools. In some trades, tools must be upgraded regularly because of changing technology. Lastly, with respect to the tax credit for textbooks, we think it would be logical for the federal government to abolish the GST on books, which are a cultural product that must be as accessible as possible.

Because of the positive elements in this first area, the Bloc Québécois will support Bill C-28.

With respect to businesses, specifically fishing businesses, as I said before, the Bloc Québécois has always supported Quebec fishers. We are keenly aware that the number of new people going to work in the fisheries sector is dwindling, just as it is in agriculture. This problem will get worse over the coming years. The fishing industry is vital to the survival of several of our regions, especially in coastal areas. The government's proposed measure encourages the intergenerational transfer of fishing businesses. We will support it. However, we will continue to demand greater tax benefits for the transfer of agricultural and fishing businesses to individuals outside the family.

Of course the emphasis should be on transfers within the family, but, as we all know, children of farmers and fishers may very well opt not to follow in their parents' footsteps.

There should also be tax credits for businesses that are transferred outside the family circle in order to keep them going. This is important for the economic vitality of our regions and the occupancy of the land, which is a consideration that deserves greater attention.

It would not make any sense to allow regions to empty out even though they have good potential for economic development if just given a little help to do what needs to be done. It would not make any sense to empty out these regions only to discover that social costs in the large urban centres are going through the roof because of the ensuing rural exodus. We should attend, therefore, to the occupancy of the land, and this is a measure that does so. As I was saying, though, it should be expanded.

Finally, food security is very important to Quebec. Quebec is virtually autonomous in regard to food. Some crops, of course, do not grow very well in Quebec, for example oranges. However, enormous progress has been made with products that can be adapted to the Quebec climate.

For example, in my riding of Joliette, we used to have a flourishing tobacco industry. The reduction in tobacco use—obviously a good thing—and the decisions made by multinational corporations to purchase more from emerging countries like Brazil and China have resulted in nothing less than the closure of this industry over the space of only a few years. Of the 56 farms that existed in 2000, only three still produce tobacco. The others had to be converted to other crops.

The federal government created a $12 million conversion assistance program for Quebec. This is a step in the right direction, but it is not enough. When farmers change to a new kind of crop—for example melons, Chinese cabbage, asparagus or cauliflower—they are not always successful because their land is not necessarily suitable or because certain crops are very difficult.

There may be a period of trial and error therefore. I want to take advantage of this opportunity to say that our tobacco producers in Quebec—although it is true of Ontario as well—need more assistance in converting their land because we do not want to lose these agricultural areas.

As for corporate taxation, I will focus mainly on small and medium sized businesses, because, as I mentioned earlier, they have become, in a sense, the victims of the fiscal imbalance and inequity. We would therefore fully support an increase in the sales figure that would allow small and medium sized businesses to have access to a lower tax rate.

Our 2000 election platform included the following demand:

Corporate taxation should be reformed to ease the tax burden of small and medium-sized companies to help them become more competitive on international markets.

That is exactly what we stated in our party platform in 2000.

Small and medium sized businesses, by their very nature, are often the starting point for new ideas. They are also better adapted to the reality of the regions. Consider the following example.

We know that businesses in the softwood lumber industry are growing larger and larger in terms of production volumes. This is true in western Canada and the United States, and in emerging countries and the Scandinavian countries. Quebec has focused on development in which the regions have their place within the chain, but the only way to guarantee their competitiveness is by ensuring that smaller sawmills have a certain specialty and orders that cannot be filled by the larger businesses. This will therefore require a great deal of work in research and development.

Furthermore, we would have liked to see the government add a surtax on oil industry profits in Bill C-28. Yesterday, we began to see some results. Sky-high profits were taken straight from consumers' pockets because of the absence of competition in this sector.

As a final point, we also called for a reduction in the excise tax on volumes of beer brewed under 75,000 hectolitres. This would allow these businesses to remain competitive within the domestic market and to think about developing external markets.

Accordingly, for all these reasons, and despite the shortcomings I mentioned, the Bloc Québécois will support Bill C-28.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to take part in this debate on Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

As hon. members know, the Bloc Québécois supported this Conservative budget, essentially because the Prime Ministerand his government promised to correct the fiscal imbalance in the next budget, which is expected in February or March 2007 to cover 2007-08. Those were the circumstances in which the Bloc Québécois gave its support.

The budget also contained provisions that addressed issues raised historically by the Bloc Québécois, such as the tax credit for public transit. I remember that a member from the Chicoutimi area—from Jonquière, to be exact—had introduced a private member's bill along those lines. We are glad to see that Bill C-28 includes a tax credit for public transit. There is also a textbook tax credit, something the Bloc Québécois has consistently called for, to give students the easiest possible access to textbooks. In fact, we would like to go ever further. I will come back to this.

Lastly, there is the tax deduction for microbreweries. I would like to pay tribute to the extraordinary work done by my colleague and friend from Saint-Hyacinthe—Bagot—I cannot say his name, but he knows who he is—who led the charge on this issue, which I also helped to promote and which was finally addressed in the last budget. I congratulate him on this work and on this success, which is due primarily to the efforts by the Bloc Québécois to convince the other parties, especially the Conservative Party when it was in opposition, that this request was worthwhile. I will come back to this as well.

Because of these provisions, we are going to support Bill C-28. I will describe the bill very briefly, because the people following this debate at home must sometimes be wondering what it is about. It is extremely technical—always a bad thing—but that is the way budget bills are. Nevertheless, it will affect the daily lives of a huge number of Quebeckers and Canadians.

The bill has five main provisions. The first implements a series of tax measures for individuals. For example, it implements credits for apprentices and tradespersons. I want to point out that this is something the Bloc Québécois has been seeking for a long time. Our member from the North Shore introduced—a number of times—a private bill along those lines. It also increases the non-refundable credit for persons receiving a pension, implements a public transportation credit, which I talked about earlier, and increases the refundable credit for medical fees. This is the first main provision, which affects individuals.

The second main provision is on extending benefits to businesses. For instance, it extends to fishing businesses a number of benefits that already existed for agribusinesses. There are various measures in this second section on businesses, capital gains, the transfer of a business to other members of the family and anything to do with agribusiness tax benefits. That is the second main provision, which affects businesses.

The third main provision in Bill C-28 implements various tax measures for businesses, but on other levels. Among the measures in this bill, we find the abolition of the surtax on the revenue of Canadian corporations and an increase of the amount a small business can earn if it wants to benefit from a tax credit. This last item is particularly interesting. Tax equity has not yet been achieved in the federal tax system. This is true for individuals and businesses alike, as we have realized. The purpose of this last measure in particular is to correct, but not entirely, this unfairness in the tax system for small and medium sized business, which, I would like to remind hon. members, are the lifeblood of the Quebec and Canadian economy.

The fourth main provision or series of legislative changes is on lowering the tax rate on capital property for Canadian banks. I will come back to that another time.

Finally, the fifth main provision is on a series of measures to lower excise tax on the first 75,000 hectolitres of beer brewed in Canada in order to stimulate the growth and emergence of microbreweries.

Members know that this is a very buoyant industry in the regions. This is true of Quebec, but it is also true of the rest of Canada. However, our industry is facing ferocious competition from foreign microbreweries, especially American ones, which are not so much on the micro side. They may not qualify as macrobreweries, but almost. These are breweries producing millions of hectolitres of beer each year, while ours produce less than one million. We called for a reduction in excise tax for these businesses, like the one most of our competition is benefiting from in Europe and the U.S. As I indicated, microbreweries are not the same size over there than they are in Quebec and Canada. It would therefore be important that ours have a comparative advantage.

I will not expand any further on that. I will not be able to address all the measures contained in this bill, which, as hon. members can see, is pretty thick. Nevertheless, I will focus on those measures I saw as the most worthwhile or interesting, which I mentioned at the beginning of my speech.

The first tax measure for individual taxpayers described in this bill is a deduction for tool expenses for apprentices and tradespeople. As I said, the government is allowing expenses to be deducted up to a maximum of $1,000 or the lowest of $1,000 or 5% of the apprentice's income over the year. If 5% of the income comes out to less than $1,000, the deduction will be 5%; if it comes out to more than $1,000, then the maximum deductible amount for tools will be $1,000.

Permitting the deduction of those tools is an important step because, as a rule, these people are self-employed workers who live on incomes that are extremely variable. Some apprentices and tradespeople who work for companies are required to buy their tools at their own expense. For example, in most of the garages where our cars are repaired, the tool kits belong to the tradespeople and mechanics. They have to pay for those and, even if they sometimes are on salary, that represents an extremely significant expense.

The maximum will be $1,000 for apprentices and $500 for established tradespeople. This is a measure that we have been demanding for a long time, as I mentioned. Once again, it is late in coming but at least it is there. Tradespeople will be able to benefit from it in coming years.

This tax measure also increases by $1,000 the maximum non-refundable credit to which pension recipients are entitled. The maximum non-refundable credit will now be $2,000. This is obviously a positive measure but it does nothing to correct the poverty in which many of our older people find themselves. In particular, this does not respond at all to the demand that the Bloc Québécois has made many times. Again, I pay tribute to our former member for Saint-Maurice—Champlain, Marcel—

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, it is always so interesting to participate in these debates and hear how everybody has their own terms and their own thoughts about what are successful programs and what are not. Our whole intent, as elected officials, is to help Canadians and ensure our country continues to be productive. We all have choices to make on what we consider are priorities.

I am pleased to have a chance to speak to Bill C-28 today and to tell members why I cannot and will not ever support the bill before us. Frankly, it is nothing short of being a disgraceful, selective document that panders to the very narrow electoral base of the Conservatives. As such, I believe it is bad for our country.

Yesterday marked the 13th anniversary of the 1993 election, when the Liberal Party won government from the Mulroney Conservatives. Our Liberal government eliminated that deficit of $42 billion and balanced our budget, finally, in 1997, with the help of Canadians and with the leadership shown by the government. We went on to record eight consecutive balanced budgets and restored the nation's AAA credit rating.

I would remind members that we were at a point of almost bankruptcy and were being referred to as a third world country. I also remind members of the amount of work that Canadians had to do to get us out of that debt and to put our country on a balanced footing.

We slashed the federal debt, both as a percentage of the economy and in absolute dollar terms. Canada's debt to GDP ratio dropped by 50% over our government's tenure. We achieved the best fiscal record of all the G-7 group of world-leading economies and the best of any Canadian government since Confederation in 1867. We are very proud of that.

Prior to this past spring, the federal Conservatives last balanced a budget in 1912. We wonder what the future will hold as we go forward.

However, I will go back to the present situation.

The minority Conservative government inherited the best fiscal situation in Canadian history and it is failing Canadians now by neglecting the future challenges in putting forward this visionless budget. It is a simple case of some sort term gain and long term pain for our great country, which we have all worked so very hard to build over the last 13 years.

Budget 2006 has done nothing to bolster Canada's productivity and make it more competitive on the world stage. David Crane and other senior newspaper columnists talk about how important it is to have that productivity agenda moving forward. There is nothing in the budget that relates to that or is going to be investing in those areas.

The budget neglects to make any significant improvement and investments in education and innovation. Our Liberal government had a concrete vision that would have put us at the forefront of competitiveness and innovation. This lacklustre and visionless budget contains virtually nothing in this regard.

Another example is our last fiscal budget update provided $2.5 billion for university research, which is an extremely important area for our country. The Conservative budget provides $200 million, which is less than one-tenth of our commitment. Under the Liberal government, the best and brightest were flocking to Canada, due to our sound investment in research and development.

How will Canada compete on the world stage, in the future, with a visionless budget? How can Canada continue to nation-build when it has a government and its budget that cares more about politics and how to score points than sound fiscal management?

The minority Conservative government is continuing its legacy of failing Canadians through our post-secondary education system, forcing the provinces to go it alone and abandoning our students across the country. I remind hon. members that our students are our future.

Prior to the Conservatives and the NDP forcing the last election, the Liberals had made significant commitments in the November 2005 fiscal update, including $4.1 billion toward post-secondary education.

The Conservatives offer a measly Canada textbook credit, a $500 annual credit for textbooks. One wonders what that really means in dollars. This is worth exactly $77.50 per year for students who spend $500 or more on textbooks.

The Liberal Party had proposed a fifty-fifty plan to pay half of the tuition in the first and last years of post-secondary programs, which would have been worth thousands of dollars per year to students and would have been of enormous benefit to Canada and to Canada's future. Seventy-seven dollars and fifty cents will do nothing to increase access or decrease student debt.

Simply stated, the Conservative government has failed to make post-secondary education a priority.

The Liberals know that we must invest in our students and ensure that they have the tools they need to succeed in life. I am very pleased to remind hon. members that Liberals actually care about Canada's students, and I think our past practice has shown that.

In fact, in our 2006 election platform, we had proposed to expand Canada access grants to cover all four years of study and to develop a fifty-fifty plan, which would have paid for half of the tuition of all Canadian students for both the first and the last year of study. We proposed to conduct a comprehensive review of student assistance, to provide additional funding for Canadian students who study abroad, and to make a 50% increase in funding for graduate scholarships. These were all important initiatives, as I am sure all of my colleagues would agree.

These Liberal initiatives were very popular in my riding of York West, especially York University, which, I am very proud to say, is in my riding. This exceptional school prides itself on the pursuit, preservation and dissemination of knowledge. It provides excellence in research and teaching in pure, applied and professional fields, testing the boundaries and structures of knowledge. This community of faculty, students and staff is committed to academic freedom, social justice, accessible education and collegial self-governance. I am very proud to represent it.

Another failure of the Conservatives is their transit credit, which is another selective tax measure designed to cut greenhouse gas emissions, which we all want to see done, by increasing public transit ridership in the cities. However, a small price decrease in public transit does nothing for ridership. Those who use transit will continue to use it because it is convenient for them. Those who do not use transit will not suddenly run out and buy a transit pass for a $12 a month tax break. I wrote the book on cities and urban transit issues, so I know that this $12 will do nothing to increase ridership.

The Canada employment tax credit is essentially a $1,000 increase in the basic personal exemption, but it applies only to employed taxpayers. I favour an increase in the basic personal exemption for all Canadians, so that seniors and stay at home moms could benefit as well.

But budget 2006, while proposing this selective tax break, decreased the basic personal exemption, effectively hiking income taxes for all Canadians. The minority Conservative government's budget actually raises income tax rates in the lowest tax bracket, which it clearly denied while this was acknowledged by others.

Despite the government's claim to be helping Canadian families, it has raised the tax rate from 15% to 15.5% for the lowest income Canadians. Clearly, the lowest income Canadians are not the priority of the new minority Conservative government. I think it is nothing short of disgraceful. Low income families need our support, yet the government is quietly raising their taxes and giving tax breaks to companies.

The budget fails to provide real tax relief for low income and middle income Canadians. Eliminating Liberal income tax cuts in favour of a 1% GST cut has been panned by every serious economist in the country as a plan that will benefit higher income Canadians at the expense of those who need it most. The Conservatives are actually increasing income taxes, which means that many people who got a refund for 2005 will end up paying in 2006.

The children's fitness credit sounds wonderful but, like the textbook tax credit, it is not actually worth $500 per year. Tax credits are multiplied by the lowest bracket rate, giving this measure a final value of $77 per year. Parents across the country know that it costs a lot more than that to enroll children in much needed sports programs.

The Liberal government's great achievements as a nation builder are also at risk with this flawed budget. Canada remains an exciting and prosperous country, but we must look forward for an agenda with a renewed national purpose. Thanks to the efforts of my previous government, this country can afford a national housing program. It can afford a universal child care program. It can afford investment in research and development to ensure our future priorities.

This budget is unfair and inequitable and increases taxes on the lowest income Canadians while the richest few would benefit. The Conservative government's first budget fails to address the real needs of Canadian families, abandons fiscal responsibility and fails to provide an economic vision for the future. If the government continues down this road, it will undo all of the good work that we did to put Canada at the head of the G-7 and, in the end, only the wealthy will benefit while those most in need will be left behind.

Many of the provisions in Bill C-28 underscore the selective and narrow governing style of the minority Conservative government. It has become frighteningly clear that the government is completely willing to sacrifice our long term economic health for potential political gain. This is clearly unacceptable to Canadians.

I cannot support this budget at this time. It would be wonderful if the government would stand back and try to make some of the changes that clearly need to be done to be more reflective of the Canada we want to see.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, it is a great pleasure to speak to Bill C-28. This budget is full of good news for the people of Canada and the people of Edmonton Centre. I intend to highlight the benefits that it will have in my community.

I am very proud to represent the constituency of Edmonton Centre. This is a time of great economic growth in the province of Alberta, but that growth also comes with great challenges that must be met if we are to enjoy the benefits of growth. The vibrant and diverse people of Edmonton are up to this challenge, and I am pleased to see in this budget that the government is giving them the tools that they need for this task.

First, I would like to talk a little about the constituency of Edmonton Centre. The riding includes the downtown core as well as some of the oldest residential neighbourhoods in the city. It includes part of the scenic river valley, one of the oldest municipal golf courses in Canada, and the oldest municipal airport in Canada, Blatchford Field.

A tour of the riding will show us the Alberta legislative buildings, as well as the Royal Alberta Museum, the Art Gallery of Alberta, the Citadel Theatre, the Francis Winspear Centre for Music and the historic Hotel Macdonald. There are corporate headquarters, along with a thriving small business community and the World Trade Edmonton Centre.

We have two of the busiest hospitals in the city, as well as two of the largest post-secondary institutions in the province. There are new condo developments in historic old houses. There are many shops devoted to antiques, as well as many private galleries showing off the best that western Canadian artists and artisans have to offer.

Edmonton's menu of fine restaurants rivals any city in Canada. There are industrial areas and beautiful parkland. The area is as rich and diverse as Canada itself. There are many seniors' residences alongside condos where young families are moving to bring up the next generation.

There has always been a large immigrant community in Edmonton Centre. Where once Ukrainians came to build better lives for themselves and their children, we see the same thing happening with new Canadians from China, Vietnam, Somalia, Sudan and many other places around the world.

I would like to touch upon the importance of students and the measures that the government has taken for their benefit. At schools, like Grant MacEwan Community College, I am extremely pleased to note that post-secondary students will now have their entire scholarship, fellowship and bursary incomes exempt from income tax. For many of these students, that money represents their entire income and this will free them from having to juggle a part time job while studying for exams. More than 100,000 students will be affected by this measure.

Another institution that is important to Edmonton is the Northern Alberta Institute of Technology. This school is the largest supplier of skilled trades and apprentices in the province and supplies fully 17% of apprentices for the entire country.

Several measures in the budget will apply specifically to students at NAIT. I have been to many forums at NAIT and I have been fortunate to be part of a major funding announcement for new programs and services. I have talked to the students at these events and have listened to their concerns. People accept that tuition fees are part of getting a good quality education, but one of the single biggest costs associated with getting an education and which affects the students' standard of living is the cost of textbooks. It is for that reason that budget 2006 has instituted a new textbook tax credit. This will help students where they need it most, and this credit applies to both full time as well as part time students.

Apprentices are critical to the future of the Alberta economy and, in fact, Canada's economy. There is a surge in demand now and this government is moving to ensure that that demand is sustainable. That is why we have introduced the $2,000 job creation tax credit. Eligible employers will now receive a tax credit equal to 10% of the wages paid to qualifying apprentices in the first two years of their contracts, to a maximum of $2,000 per apprentice per year. This helps maintain a supply of apprentices by ensuring that people look at this training as a stable opportunity for future jobs. It will also encourage employers to grow their businesses with a steady supply of skilled labour.

Once the students leave NAIT, they will also receive a benefit from this budget in the form of a $500 deduction for tradespeople's tool expenses, as has already been mentioned. This measure recognizes the cost of tools beyond the $1,000 that is covered by the new Canada employment credit and provides yet another helping hand exactly when and where it is needed.

Successful students are vital to our future and are represented in the budget by several measures, but I also want to highlight another segment of our population that needs a helping hand.

Our senior citizens have lived and worked through some of the darkest times as well as the brightest. They have raised families. They have fought Canada's wars in the cause of freedom. They have started and run businesses and they have paid a lot of taxes. For too many of them, however, life is a struggle, being caught between the rock and a hard place of a fixed income and a rising cost of living.

It is for this reason that the initiative to raise the maximum amount of pension income, which can be claimed as pension income credit, is so important. Since its inception 30 years ago, the credit has been $1,000. Recently we measurably increased it to $2,000, affecting 2.7 million taxpayers and taking 85,000 taxpayers off of the tax rolls altogether. Those people have worked so hard so we can enjoy our prosperity. It is critical to know that 85,000 pensioners will no longer face the burden of income tax due to this budget, and I am extremely pleased to be able to say that.

Another new credit in the budget will help seniors, but it will also help students and all of us. I am referring to the $500 public transit pass credit. One does not have to spend a lot of time in Edmonton Centre to see how important the public transit system is to that community. Whether it is students making their way to college or school, seniors shopping for groceries or businessmen heading for downtown, the Edmonton transit system covers all parts of the constituency and is relied on by a very large number of people.

This new credit will increase ridership and, thus, also increase the frequency of services. It will also reduce the amount of air pollution that is caused by the large number of cars on the road. This is a tangible measure to conserve our environment and protect the health of Canadians and its value will be felt by those who need it most.

The budget has measures to help out the thriving small business sector in Edmonton. Small and medium enterprises are the real engine of our economy and they need a clean and sustainable supply of fuel on which to run. That fuel is capital and our new government wants to keep their tanks full.

Specifically, the government is reducing the current tax rate of 12% on qualifying small business income to 11.5% in 2008 and to 11% in 2009. In addition, we are increasing the amount of income a small business can earn before it has to pay federal tax from $300,000 to $400,000 as of January 1, 2007.

I take great pride in going back to the riding to tell business owners that we are listening to them, that we understand their concerns and that we are taking steps to help them solve their business problems and develop even more jobs and prosperity. Some of these small businesses are companies that provide tax advice to people who are fighting the high cost of living and the high cost of taxes at the same time. They are the ones who have known for a long time that there is an inherent advantage to being a small business owner when the tax man comes knocking.

There are many more deductions that people can claim and a variety of options for lowering the overall tax burden. Those who receive regular employment income rather than owning a small business have always suffered in comparison, but budget 2006 recognizes that unfairness and treats the problem properly with the Canada employment credit. The new credit covers things like personal computers, stationery, uniforms, clothing and a long list of items that people sometimes are required to purchase for their work. If they were small business owners, this would all be deductible as the cost of doing business.

Now the people who earn employment income will be recognized as well. Every Canadian who receives employment income will get up to $500 for the 2006 calendar year and $1,000 for 2007. This benefit will be felt by all working Canadians, especially the low income earners who face barriers in the form of work related expenses.

This budget makes a difference. It is targeted and focused on helping those who need help while providing much needed tax relief for all Canadians.

The seniors and students in my riding will see a significant difference in their cost of living when these tax measures take effect. Working Canadians will take home more of their money at the end of the day. Small businesses will be able to grow without extra penalties and be able to increase employment. In short, this budget is good news for Canada, good news for the province of Alberta and good news for the riding of Edmonton Centre.

I am privileged and proud to be part of the government that has delivered this budget to the people of Canada and I encourage all opposition parties to help us in making the bill become law as soon as possible.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, there are many different ways to assist seniors and we have taken a very dramatic step in assisting our seniors by doubling the amount of pension income that is non-taxable, that is doubling it from $1,000 to $2,000. We have also taken other measures, for example, lowering the GST, so when they spend money they are actually saving on the GST.

We are helping seniors on other matters. such as health care. One of our priorities is ensuring that health care is more readily accessible to our seniors.

I would like to talk about the surplus. We put $13.2 billion down on the debt, thereby saving Canadians interest charges of $650 million per year. The $650 million per year will be reinvested for the benefit of Canadians. We have other strategies that we will be presenting in the future to further assist our seniors.

I would like to underline that Bill C-28 takes direct action to benefit seniors, especially those on fixed pension incomes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I would like to split my time with my colleague from Edmonton Centre.

I am very pleased to have this opportunity to rise and speak on behalf of Bill C-28, the budget implementation act, which, as the title indicates, is designed to implement certain measures outlined in our budget 2006.

On January 23, Canadians voted for change: a change in government, a change in fiscal accountability, and a change in fiscal management. These are changes to the benefit of all Canadians.

With that change came the direct support for our new government's five priorities. These priorities were outlined in the Speech from the Throne as well as in budget 2006, delivered by the finance minister on May 2.

On June 22, Bill C-13, the first budget implementation act, was given royal assent and many of our fiscal promises were fulfilled. These measures included reducing the GST from 7% to 6% and introducing a $1,200 per year universal child care benefit for parents of children under the age of six.

We introduced other tax cuts as well, tax cuts that Canadians have not seen before. Our first budget cut taxes by an incredible $20 billion over two years. Yes, $20 billion over two years. Our budget offered more in tax cuts than the four previous Liberal budgets combined.

Canadians are very happy with our budget, and I am happy to say that not one of the opposition parties opposed our budget when it came to a final vote, not one. They grumbled at first, but then they studied our budget and saw the great benefit of our government's budget to Canadians. In the end, they did not oppose it, so our budget has the support of Canadians and of the opposition.

I am pleased to be here today supporting the second budget implementation act, Bill C-28. We want to keep rolling out the tax cuts for Canadians and, in doing so, show Canadians that when we make a promise, we keep it.

The action taken with Bill C-28 will cut taxes for pensioners, families, students, users of public transit, and each and every worker in Canada. These measures will make a real difference to Canadians by focusing on their priorities, priorities like lowering taxes for working families, assisting small and medium sized businesses achieve real growth, and helping tradespeople, students, families and seniors.

In short, Bill C-28 delivers on our budget and delivers real tax relief for Canadians. This government recognizes that Canadians pay too much tax. As a colleague of mine previously reported, according to the Fraser Institute, while the average family's income has gone up 1,100% since 1961, its taxes have shot up a whopping 1,600%, outstripping the growth in income.

As I mentioned, this is a new government with a new respect for our fellow Canadians. We need only look at the measures in Bill C-28 to see exactly how we are putting more money back into the pockets of hard-working taxpayers.

Working Canadians are the foundation of Canada's economic growth. However, choosing to work also means additional costs, costs for everything from uniforms and safety gear to computers and various supplies. For some, particularly low income Canadians, these additional costs can impose a barrier to joining the workforce. For others, work related employment expenses are another factor that limits the rewards of their hard work.

In recognition of this, budget 2006 introduced the Canada employment credit, a new employment expense tax credit for employees' work expenses. A credit on employment income of up to $500 will be provided effective July 1, 2006. The amount of employment income eligible for credit will rise to $1,000 effective January 1, 2007.

Budget 2006 also recognizes that creating an environment for more and better jobs and for strong economic growth depends on having a competitive tax system. The engines of our economy, our wealth creators, are businesses, both small and large, and they should not have to face the heavy burden of overtaxation. The businesses that feel this burden most are small and medium sized businesses. They create jobs and are the backbone of our country's economy.

In my riding of Glengarry—Prescott—Russell, small and medium sized businesses are essential. They are the economic backbone of my riding: farms, farm equipment retailers, manufacturing, industry, pharmacies, grocers, et cetera. Without their success, ridings like mine would struggle. Many of us are employed by them. Small to medium sized business is responsible for the majority of all new jobs created in Canada. Whether we live in an urban riding or a rural riding, all of us turn to small businesses for services, and our future economic growth will depend a great deal on their success.

An important way that Canada's federal income tax system supports the growth of small businesses is through a lower tax rate on the first $300,000 of qualifying income earned by a Canadian-controlled corporation. This helps these small businesses retain more of their earnings for reinvestment and expansion, thereby helping to create jobs and promote economic growth in Canada.

With the passing of Bill C-28, and effective January 1, 2007, the threshold for small businesses will be increased from $300,000 to $400,000. In concert, the 12% rate for eligible small business income will be reduced to 11.5% in 2008 and then down to 11% in 2009. It is estimated that these changes will reduce government taxation on these businesses by $10 million in 2006-07 and $80 million in 2007-08.

There is more.

Hon. members from all ridings know that Canada is facing a serious shortage of tradespeople: carpenters, plumbers, electricians, cooks and others. Our government is taking action to encourage apprenticeships and to support apprentices in their training.

Specifically, we will help companies hire apprentices with a new apprenticeship job creation tax of up to $2,000 per apprentice. We will create a new apprenticeship incentive grant of $1,000 per year for the first two years of a red seal apprenticeship program and other programs.

Through these actions, our Conservative government will be investing more than $500 million over the next two years, which will help approximately 100,000 apprentices.

We will also help apprentices and tradespeople with the heavy burden of buying the tools they need to do their jobs. Our government will invest $155 million over the next two years for a cost of tools deduction, which will help approximately 700,000 tradespeople in Canada.

In regard to our seniors, members will no doubt agree that some seniors struggle to live on a small fixed income. As I travel throughout my riding, I often hear seniors ask, “Why does the government not do something to help seniors, those of us on a fixed income?” I am always pleased to state that this is exactly what we are doing. We are providing real tax relief to seniors.

The most important measure involves a doubling to $2,000 from $1,000 of the amount on which the pension income credit is calculated. A deduction for the first $1,000 was introduced in 1975, but since its introduction the amount has remained unchanged. That is unbelievable.

It took our new Conservative government to do something for our seniors to rectify this problem. We recognize and understand the difficulty faced by seniors on fixed pension incomes. To provide greater tax assistance to those who have saved for their retirement, budget 2006 increased to $2,000 the maximum amount of eligible pension income that can be claimed under the pension income credit, effective for 2006 and subsequent taxation years.

The measure will benefit nearly 2.7 million taxpayers receiving eligible pension income, providing up to $155 per pensioner, but not only that, it will remove approximately 85,000 pensioners from the tax rolls. This is real action to the benefit of our seniors.

In regard to Canadian families, they are the very foundation of our society and they play a vital role in the development of our communities. This is why it is important that we reduce their tax burden as much as possible.

One of the ways we are doing this is with the children's fitness tax credit. The health and fitness of our children is very important. As the government, we want to promote physical fitness among children and we want to do it by supporting families directly.

We take families seriously and we take physical fitness seriously. Budget 2006 provides a children's fitness tax credit effective January 1, 2007. The credit will be provided on up to $500 of eligible fees for programs of physical activity for each child under the age of 16.

I am the father of five children. They are involved in fitness activities such as soccer, basketball and highland and Celtic dance. I am pleased to state that finally we have a government that listens to families, that works together with families and that helps families with their real expenses. This is a great tax credit for families. It encourages and supports physical fitness and it is my sincere hope that the opposition parties will support it.

Lastly, I would like to highlight what we are doing for students. We believe that our post-secondary students need to be supported in their hard work in pursuit of academic excellence. Currently, the first $3,000 in scholarship, fellowship and bursary income received by a post-secondary student is not taxed, but any amounts above $3,000 are taxed. Students do not need this. They do not need to be paying tax on scholarships, fellowships and bursaries. They need to use that money toward their education.

I am very pleased to highlight that our new government understands the financial challenges that post-secondary students face and that we are on their side. We want them to succeed in their studies by alleviating financial pressures, which is why Bill C-28 proposes a complete exemption for scholarship income received by students.

Budget 2006--

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I have Bill C-28 here. As I look through it over and over again, I really do not see how this bill actually deals with, for example, lowering tuition for students.

It does not increase pensions, whether it is the CPP, the GIS or the OAS for seniors.

I also do not see any real investment in public transit. We know that there is serious gridlock in a lot of cities. It has slowed down a lot of the small businesses. Their employees take a long time to go to work. They get stuck in traffic jams. People are crying out for investment in public transit so that we will be able to have better productivity and people will not be wasting their time sitting in traffic jams.

Those are the kinds of things that small businesses, seniors, students and a lot of working families are asking for.

Working families are saying that giving them a tax credit or a small deduction does not help, because, as we know, it takes a lot more than $100 a month to get affordable child care. There is not a chance that they even can get enough money for babysitting by April 2007. Also, this money for the so-called universal child care allowance is taxed back. When I tell working families that they had better put aside some money because the money they are receiving every month will be taxed by April, they say, “Oh, my goodness”.

This budget has nothing for working families that they can count on, especially as it relates to children.

The House resumed from October 25 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, it is an honour to participate in the debate on Bill C-28, especially for me today as this is my anniversary and the anniversary of quite a few other members of the official opposition who were elected to this place back on October 25, 1993. I would like to commend members on both sides of the House who were elected 13 years ago. Lucky 13 I would say.

This anniversary brings me back to the fact that I was a member of the finance committee in my first Parliament from 1993 to 1997. It was the time period when the then prime minister mandated us as a finance committee to assist the government and the House of Commons to find ways to deal with the terrible deficit that we inherited from the previous Conservative administration. It was not just the efforts of members of Parliament, particularly government members, but members on all sides who helped us turn the government books around in a short two year period. This was also done with the assistance of Canadians from coast to coast.

I would like to point out that the finance minister mentioned, in a response to a question by the member for Miramichi, that during the time as the finance minister in Ontario, he had complained about the fact that the federal government was not achieving its goals. His predecessor, minister Eves in the Mike Harris government, actually lauded the then prime minister and finance minister for their efforts in bringing the books of this country under control. The IMF had basically given a stern warning to Canada about the deficit we had inherited from the previous Conservative administration.

That is why we want to be careful as we go forward. This country does not want to get back into a deficit position. Canadians do not want that. In fact, one of the biggest mandates from Canadians in 1993 was for us to deal with the mess that the books were in. The debt was climbing precipitously.

At that time we had to deal with the financial picture of the country. At the same time, while we were making an effort to get to a surplus position, we could not forget the vulnerable. We had to ensure that we continued to make investments in the social safety net of this country, in economic development, and in incentives for small business. We had to be ever-mindful of the most vulnerable among us and start paying down the debt.

Significantly, the ratio of debt to GDP in this country over the last 13 years up until late January dropped from around 70% to around 40%. We made fantastic progress.

This brings me to the present financial paradigm in which we find ourselves as a nation. My colleague from Miramichi also mentioned that the last time a Conservative government reported a surplus was in 1912. I would like to add to his comment by saying that the finance minister at that time inherited a surplus from the previous Laurier government. We have yet to see any Conservative government actually produce a surplus on its own feet. I like to be a positive person along with my colleague from Miramichi, so let us hope that the government can keep us on track as a nation and keep us in a surplus position.

At the same time, it is with grave concern that I remind members of this House, my constituents of Algoma—Manitoulin—Kapuskasing in northern Ontario, and all Canadians, that the $13 billion surplus that the Conservative government inherited, which was reported as part of the budget package last spring, should not have in its entirety been used to pay down the debt.

Over the previous 10 or 11 years, we have put a significant portion of each year's surplus toward the debt. Imagine parents saying to their kids, “We are not going to feed you because we are going to put every spare nickel we have on the mortgage”. No, parents continue to pay down their house mortgage while continuing to feed and clothe their families. There is a balance between the ongoing requirements of a family as there is for a government. There is a requirement that governments be mindful of maintaining programs that in particular the most vulnerable need from their federal government.

I think that was a serious error in judgment on the part of the government. No doubt the finance minister, with whom I have no grief personally, had tremendous pressure from the reform elements in his party. It is the reform element that has this belief of every person for themselves. It is an ideological approach to government that really forgets that we are responsible for others. We are our brothers' and sisters' keepers, and that is the place and the role of government. While managing the state for everybody, ensure that we do not leave people behind. Even the best governments and best countries always have those who cannot keep up, and it is our responsibility to do the best we can to help them keep up.

If I could rewind the tape back to last spring and to some weeks ago when we heard about the cuts, I would hope that a replay of that would see the government maybe use half, even a bit more if it felt it were affordable but no less than half, as we were doing, toward debt reduction and the rest toward investments in the social safety net and economic development. Why instead did we see cuts of $1 billion, and I think $2 billion over two years?

It did not strike me as much as it did on a recent visit to the communities of Chapleau and Wawa in my riding a few days ago. I knew that the cuts were going to have an impact on Canadians, but imagine in two communities, three different groups and individuals came forward to tell me about the impact of the cuts on their groups or on them individually. In 13 years, I do not recall ever having that experience. In the space of six hours, between Chapleau, office hours, travelling to Wawa and office hours there, three different groups and individuals came forward to say that this really hurts, not them personally, and I will explain in a moment, but the groups that they work with which serve others.

One was a group in Chapleau that is involved with the francophone women's association, headquartered in Ottawa. It is an Ontario-wide organization that helps francophone women's groups with their advocacy efforts on behalf of francophone women. I have, in my large northern Ontario riding of 110,000 square kilometres, a large and vibrant francophone community.

I was really touched by the delegation's impassioned plea that some way be found to reverse the impact of cuts to women's programs that ultimately impacted their ability to help each other in Chapleau. I know this is also the case in Kapuskasing, and I could go around the riding and find other women's groups, francophone or not, equally impacted.

Imagine in the same tour, to continue, in Wawa, a delegation of small lodge owners came to see me. They were really concerned about the cut to the GST rebate for visitors. To the uninformed, to the uninitiated, it might seem that this is simply a matter of giving money to tourists who go back after their holidays to the U.S. or to Europe, let us say mostly the U.S. in the case of tourist operators in the northern Ontario, and lodge owners for fishing, hunting, camping and outdoor recreation.

The reality is that tourism is an export industry. I know my colleague, the member for Miramichi, has a large tourist industry in his part of New Brunswick. Tourism is an export industry. When tourists buy something at a store, keep their receipt, at least up until now, cross the border to go back to the U.S. if they are American, they are exporting that item and, as for all exports, the GST is removed. Why are we in fact picking on those who export to the U.S. or elsewhere as tourists?

There was a particular concern to these operators. Since the inception of the GST, which is known as a value added tax in Europe, visitors to Canada could claim the GST on their rooms while they are in Canada.

The lodge business in northern Ontario or the Toronto convention bureau or the Montreal convention bureau or the Vancouver convention bureau know that convention organizers depend on those percentage points of advantage they have to compete against other large cities for international convention business. So, now we have lost a few percentage points in competition with European convention destinations.

This happened to be a delegation made up of all women lodge operators. I was very impressed by the arguments they made and the concern they had for how would they make up, I think it was an average of 3% difference, in the net income to their businesses that they would have to cover because their customers could not get that 3% back at the border. They have lost the ability to promote that aspect in their tour of the trade tourism shows throughout mostly the northern U.S. I would ask the government to reconsider the GST rebate for visitors, as it should reconsider the support of women's programs.

Let me continue to the third example of an entrepreneur in my riding in Wawa. I will keep the confidentiality of his name. He has tremendous expertise in the tree nursery sector, not just knowledge but technology capacity as well. He has worked diligently to make business agreements in several Central American countries. When we talk about the importance of tree planting, reforestation is part of a larger strategy to deal with climate change. He has the potential in an important niche when it comes to greenhouse gas or climate change abatement technologies.

Up until recently, Canada's government believed in the Kyoto protocol and believed that climate change was a reality. Imperfections aside, and I will not say that our government was perfect in its pursuit of finding better ways to deal with climate change, at least we were looking forward, we acknowledged, and we knew better efforts had to be made to deal with climate change. We did not turn our backs on the importance of climate change and the Kyoto protocol. This entrepreneur has now lost some advantage in his ability to export his expertise and technology in terms of reforestation to parts of the world that indeed need this kind of help.

In a period of six hours there were three groups or individuals impacted by these cuts. I know that cuts are separate from the budget, but the foundation of the cuts is in the budget of last spring.

There is a notion that there is a plethora, a whole bunch of tax credits contained in the minister's budget which on the face of it look interesting, but when people find out that a $500 tax credit for the physical fitness tax credit is worth about $70 or $80 to the average family, then it really is not what it appears to be. It would have been clearer for Canadians had the government acknowledged that these tax credits which are $500 in this box on tax returns really meant about $75 or $80 at the end.

I think sports programs are very important. I look forward to the minister tabling his report from his expert panel. Not every family has a child that is capable, either physically or by inclination, to be involved on a hockey team, a basketball team or whatever. Some children are musically inclined and some are artistic. Some children in wheelchairs cannot play hockey. They have other pursuits that they would no doubt be interested in.

I really hope that the minister, who is a bit of an athlete himself, will be persuaded that the view of that tax credit, as modest as it is, should include a large array of artistic, cultural and physical pursuits for children and families. I want to make that very important point.

In my question earlier on to the Minister of Finance I asked about the difference between a wealthy family buying a $100,000 luxury motorboat or sailboat versus a modest family buying a $200 inflatable raft and which of the two families would receive the bigger GST benefit? The minister did not answer the question. He actually did not even skate around it. He did not even carry the puck across the red line in response to my question.

I will answer the question for the minister. If a person were buying a $100,000 boat, the saving would be about $1,000; I think a 1% cut would be $1,000. With that $1,000 cut the family could buy five inflatable boats that the modest income family could only get for $200. The $200 inflatable boat will realize a savings of $20 or is it $2? No, I think it is $20.

[Jim Flaherty, Conservative, Minister of Finance]

moved that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

Mr. Speaker, it is an honour to speak to Bill C-28, which is the fall budget implementation bill. The measures in the bill are positive. They continue with the legislation with respect to implementing budget 2006 which I had the honour to present in the House on May 2.

Broad based tax relief is provided by this budget bill. It is wide-ranging tax relief for Canadians. There are a number of budget items in the bill, including the exemption for small brewers and vintners; the Canada employment credit; the deduction for tradespeople's tool expenses; and the capital gain extension for fishers to $500,000 lifetime which is very important for fishers, particularly in Atlantic Canada and on the west coast. The bill also includes the textbook tax credit which will help students; the exemption for scholarship and bursary income; the children's fitness tax credit; and the tax credit for public transit, which has important environmental benefits. The bill also includes the changes with respect to corporate dividends; doubling the pension income credit from $1,000 to $2,000; the small business increase from $300,000 to $400,000 effective January 1, 2007, assuming the bill passes; and the apprenticeship job creation tax credit. The bill also includes a number of other initiatives that are steps forward in terms of equitable treatment for Canadians in many walks of life.

The original budget implementation bill, which has been passed, served as a launching pad for the development in the coming months of a strong results-focused agenda for a more competitive, productive Canada. Budget 2006 represents the first part of our government's commitment to put government spending back on a sustainable track over time, to restore fiscal balance and to improve Canada's competitiveness.

Budget 2006 lays the groundwork for future budgets, while providing real benefits for all Canadians today.

When the new government was elected in January of this year, it was expected that we would be more accountable as we said we would be and that we would treat Canadians' hard-earned tax dollars with respect.

Canada's new government has kept its word. We said we would introduce legislation to improve accountability and we did. We said we would crack down on crime and we did.

We also said we would cut the GST and we did by a full percentage point effective July 1 this year. We said we would reduce personal income taxes and we did that too. We also cut corporate income taxes for small, medium and large businesses, something other governments, including our predecessor government had promised to do but failed to deliver.

We are leaving more tax dollars in the pockets of Canadians to be used to make the decisions that are right for them and their families. We have ensured that Canada will be a country of opportunity by investing in families and communities, education, security and infrastructure.

We have done this in a way that is fiscally responsible by paying down the debt, including the third largest debt payment in the history of Canada a few weeks ago of $13.2 billion. This will free up about $660 million of money that otherwise would have been paid in interest. Taxpayers' money that would have been used for interest payments now will be available for other spending priorities or for tax reductions from year to year to year and year after year.

We have been containing government expenditures. The President of the Treasury Board led the initiative and made the announcement of $1 billion in expense reductions for this year and for next year. This is part of what will be an ongoing program of expense management control dearly needed by the Government of Canada on an ongoing basis.

We have our goal of delivering the greatest value for taxpayers' dollars, including program review of course. We want to make sure that programs that are ongoing continue to fulfill the mandate for which they were created, and if not, then not to continue those programs.

This bill contains measures that will improve the quality of life for Canadians. It introduces the Canada employment credit. This is an issue with respect to which members hear often, that people who are self-employed have certain advantages in terms of deductions. The Canada employment credit will extend that to take into account the reality that many people who work and who are not self-employed have expenses that might relate to uniforms, safety gear or home computers, the kinds of things that are necessary for their particular work. For some Canadians, particularly lower income Canadians, these additional costs sometimes impose a barrier to joining the workforce.

The Canada employment credit is a new employment expense tax credit for employees' work expenses. This credit has been administered as of July 1. On a full year basis it provides tax relief on employment income of up to $500 in 2006. Since it came into effect mid-year, working Canadians could receive a credit of up to $250 for 2006, that is for the half year. The annual amount of employment income eligible for the credit will double to $1,000 effective January 1, 2007.

Budget 2006 significantly increased the amount of income that employed Canadians can earn without paying federal income tax, together with increases to the basic personal amount. By 2007 that amount will be almost $10,000.

The Canada employment credit will make work more attractive, particularly for lower income workers. It also will put employees on a more equal footing, as I said, with the self-employed in terms of the tax recognition they receive for the expenses they incur to earn income. This measure is expected to reduce the taxes paid by working Canadians by $890 million in 2006-07 and by more than $1.8 billion in 2007-08, a significant part of the $20 billion in tax reductions contained in budget 2006.

With respect to businesses in Canada, including the job creation engine of small business in our nation, Canada's new government recognizes that working Canadians are part of the foundation of Canada's economic growth. Another crucial component of that is the business community. We have taken steps to help ensure that Canadian companies can compete with the world's best.

The budget implementation bill passed before the House rose last summer proposed a plan that would reduce the general corporate income tax rate from 21% to 19% by January 1, 2010. That bill also eliminated the corporate surtax for all corporations in 2008 and totally eliminated the federal capital tax as of January 1, 2006, which is two years ahead of schedule.

Bill C-28 builds on those measures by proposing a reduction of the current 12% small business tax rate to 11.5% for 2008 and to 11% for 2009. It is important to note that this bill also proposes an increase to $400,000 from $300,000 of the amount of income that a small business can have taxed at the small business tax rate effective January 1, 2007.

Bill C-28 improves equity in the tax system by providing capital gains tax relief to fishers, which I briefly mentioned previously, including an extension of the $500,000 lifetime capital gains exemption and an intergenerational rollover for fishing businesses. I certainly heard a great deal about this subject from hon. members in the preparation of the budget, including, of course, my colleague the Minister of Fisheries and Oceans. This initiative will provide this important industry with the same tax treatment of capital gains as is extended to farmers in Canada.

In addition to accelerating the elimination of the federal capital tax in last summer's budget bill, Bill C-28 proposes to modify the minimum tax on financial institutions to reflect the growth of that sector since the tax was introduced. Bill C-28 proposes that effective July 1, 2006 a single tax rate of 1.25% apply on taxable capital employed in Canada over $1 billion rather than the two tier system that is currently in place for financial institutions with taxable capital in excess of $300 million.

Bill C-28 also proposes to eliminate the double taxation of dividends from large corporations at the federal level.

There is an important provision in the bill with respect to pension income. Canada's new government is fully aware of and grateful for the contributions made by our seniors in Canada. A deduction for the first $1,000 in eligible pension income was introduced in 1975. The deduction was converted to a non-refundable credit in the 1987 tax reform.

However, the maximum amount of pension income that could be claimed under this measure has been left unchanged since 1975, at that level of $1,000, which of course is worth much less in 2006 dollars. In the May budget, our government proposed to provide greater tax assistance to those who have saved for their retirement.

Budget 2006 proposes to double to $2,000 the maximum amount of eligible pension income that can be claimed under the pension income credit. This is effective for 2006 and subsequent taxation years. This measure will benefit nearly three million taxpayers receiving eligible pension income and will remove approximately 85,000 pensioners from the federal tax rolls completely.

I would like to say a few words about the textbook tax credit, which is important to our students in Canada.

We of course want to encourage education and training efforts by students. This bill, Bill C-28, proposes a new non-refundable tax credit to provide better tax recognition for the costs of textbooks for students. This will be put in place effective for 2006 and subsequent taxation years.

The textbook tax credit amount will be $65 for each month of full time post-secondary study and $20 for each month of part time post-secondary study. For example, a full time student enrolled for eight months would qualify for a textbook tax credit on an amount of $520 in that year, which would be a tax reduction of about $80. This benefit, we estimate, will extend to almost two million post-secondary students in Canada.

There is also the exemption with respect to post-secondary education scholarships and bursaries. In our platform in the last election, as I recall, we had a provision that we would exempt bursaries and scholarships up to $10,000.

In fact, in the budget, we announced that the exemption would be complete and that we would not have a monetary limit of $10,000, on the basis that we want to encourage students to work hard and do well. When they work hard and do well and get scholarships and bursaries, it seems counterproductive for the government to then tax them for reaching for the top and for working hard and doing well in their studies.

Budget 2006 proposes to fully exempt these sources of income from tax, effective for this year, 2006, and subsequent taxation years. This has a significant consequence, particularly when we start looking at the need we have in Canada for more graduate students in the sciences, in engineering and in the life sciences, and at our desire to encourage graduate study.

Let us take the example of a full time student, perhaps at the University of Saskatchewan, completing a Ph.D., who received a $15,000 scholarship and also earned an additional $10,000 in 2007 by working as a teaching assistant, which would not be unusual for a graduate student. As a result of the full exemption on scholarship and bursary income and the introduction of the new textbook tax credit, that student would save $675 in federal income tax.

This measure will help foster academic excellence by providing tax relief to more than 100,000 post-secondary students in Canada.

There is also a tax credit with respect to apprenticeships to encourage apprenticeship job creation. The lack of skilled trades in Canada, as we well know, is becoming an impediment to economic growth. This is particularly true in some regions of our country. Meanwhile, many young Canadians find themselves stuck in low-paying jobs and either are not encouraged to consider the trades or are unable to do so because of financial barriers.

To encourage employers to hire new apprentices to learn a trade, the budget proposed a new apprenticeship job creation tax credit. As a result of this initiative, which is contained in Bill C-28, and which is effective as of May 2, 2006, the budget date, eligible employers will receive a tax credit equal to 10% of the wages paid to qualifying apprentices in the first two years of the contract, to a maximum credit of $2,000 per apprentice per year.

To encourage people to enter the skilled trades, there is also a deduction for tool expenses for tradespeople. Many members have heard from constituents over the years about how expensive it is for people starting off in the trades to pay for tools, particularly in some of the situations that involve very expensive tools, such as auto mechanics. Bill C-28 proposes a new deduction of up to $500 to tradespeople for the cost of tools in excess of $1,000, tools that they must acquire in order to proceed with their apprenticeship.

The tools deduction and the Canada employment credit together will provide tax relief to about 700,000 employed tradespeople in Canada.

Here is how it would work. For example, a tradesperson earning $60,000, with $1,500 in tool expenses in 2007, will be able to claim the new Canada employment credit on $1,000 and deduct $500 under the new tools deduction. The two measures will reduce federal income taxes by $265.

Also, apprentice vehicle mechanics will continue to be eligible to deduct their extraordinary tool expenses.

Another important credit in the bill relates to the use of public transit by commuters and the environmental benefits of more commuters using public transit and leaving their cars at home or at commuter stations. It is important to encourage Canadians to use public transit. Increasing public transit use not only will ease traffic congestion in our urban areas, it will also improve the environment.

Bill C-28 proposes the tax credit on the purchase cost of monthly public transit passes or passes for a duration of longer than a month. This measure, effective July 1, 2006, will provide benefits to approximately two million Canadians who make a sustained commitment to use this environmentally friendly mode of transportation.

For example, an individual who purchases passes costing $80 per month throughout the year will receive a benefit of up to about $150 in federal tax relief for the year. All transit users, including commuters, students and seniors, will qualify for this tax credit. What it amounts to is about two months of free public transit per year for commuters who have monthly passes or passes that are for longer than one month.

Another important tax credit is particularly relevant in Canada today given our concerns with obesity in children, about which much has been said and written in recent years and months. Studies show that regular physical activity has many positive effects on children, including healthier growth and development and improved physical fitness.

There is no doubt that all of us have seen some escalation in the costs of organized activities, making it difficult for many Canadian families to afford these activities for their children.

To promote physical fitness among children, Bill C-28 proposes to introduce the children's fitness tax credit, effective January 1, 2007 and designed to provide a tax credit based on up to $500 of eligible fees for programs of physical activity for each child under the age of 16.

As one would expect, the words “physical activity” can be interpreted more or less broadly and in different ways. Indeed, they are being interpreted in different ways. As I set out in the budget, I asked a panel of experts to consider the views of Canadians on this subject and on the design of the tax credit.

The three experts on the panel have done their work. I thank them for that. I expect to receive their report tomorrow. They have done this work as good Canadians. Despite their expertise and the remuneration to which they would be entitled in their normal occupations, they have done it for $1 each. The grand cost to the people of Canada will be $3 for this expert report that will provide advice on a working definition of the criteria for the tax credit.

I look forward to having an opportunity to share that report with hon. members and to have what I am sure will be a fulsome discussion about the design of that tax credit for young people.

In conclusion, the government's first budget is about focusing on priorities. This bill completes that budget implementation process.

This is about taking action to make a real difference in the lives of Canadians. It is about creating real results for Canadians. And it is about doing all of this in a way that is fiscally responsible, by making sure that we have balanced budgets, by making sure that we have expenditure control on an ongoing basis, and by making sure that we watch the hard-earned Canadian tax dollars the Government of Canada receives.

I encourage all hon. members to give the bill the swift passage that I would submit it deserves.

Business of the House

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue the debate on an opposition motion which gives the government an opportunity to talk about keeping its promise to review our programs to ensure every taxpayer dollar spent is well spent and by reducing the debt by $13.2 billion.

Tomorrow we will begin debate on Bill C-25 , proceeds of crime, followed by Bill C-26, payday lending.

Next week, we will continue with the business from Friday with the addition of Bill C-27, dangerous offenders, Bill S-2, hazardous materials, Bill C-6 aeronautics, and Bill C-28, a second act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

With respect to my hon. colleague's question on supply day, just like a child waiting for Christmas, he will have to wait a little bit longer. We will get back to him next week.

Budget Implementation Act, 2006, No. 2

[Jim Flaherty, Conservative, Minister of Finance]

moved for leave to introduce Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

(Motions deemed adopted, bill read the first time and printed)