Bill C-37 (Historical)

An Act to amend the law governing financial institutions and to provide for related and consequential matters

This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act aimed at achieving three key objectives:
(i) enhancing the interests of consumers,
(ii) increasing legislative and regulatory efficiency, and
(iii) adapting those Acts to new developments;
(b) amendments to the Bills of Exchange Act to provide for the introduction of electronic cheque imaging; and
(c) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Bills of Exchange Act, the Canada Business Corporations Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Financial Consumer Agency of Canada Act, the Green Shield Canada Act, the Investment Canada Act, the National Housing Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act.

Financial System Review Act

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Speaker, I am thankful for this opportunity, albeit brief, here today.

I had a chance to go through the legislative summary for Bill S-5, and I must say that I am always very impressed by the lot over at the Library of Parliament. I want to thank them for their research and mention, for the record, Mark Mahabir and Adriane Yong who are both from the International Affairs, Trade and Finance Division, Parliamentary Information and Research Service. We do not always give them the credit they are due, and I hope this goes in just a small way toward acknowledging the work they do for us here in the House of Commons and the Senate as well.

The committee reported Bill S-5, an act to amend the law governing financial institutions and to provide for related and consequential matters from the Senate on December 15, 2011. There were no major amendments made in the Senate, but certainly it came with, as described here, observations.

The bill amends four primary statutes under which federally regulated financial institutions are governed. They would be the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act. There are also major amendments to other provisions regarding the financial institutions of our country.

Bill S-5 contains various measures to update the law governing financial institutions, as I have mentioned. The shares of a Canadian financial institution being held by foreign financial institutions controlled by foreign governments is one of those and it is certainly a timely matter given the world of finance we are in. We experienced this several years ago when we slid into a recession initially sparked by some financial tools in the United States in many cases. Of course, that wreaked havoc around the globe for all financial institutions such as in Asia and the European Union, which is now suffering through this, and austerity measures have followed suit as a result of that.

This illustrates to us and the entire country that we are certainly intertwined with the rest of the world as far as financial institutions are concerned. When something causes headaches for people in one part of the world, those headaches will reverberate around every corner of the world, given the financial institutions and the technology we use to trade currently. It gives us an idea of how important this is when it comes to international institutions.

On the acquisition of foreign entities by Canadian financial institutions, as a matter of fact, we are now seeing financial institutions in this country, banks, for example, with bigger investments around the globe. We certainly see it in the United States currently with institutions such as Toronto Dominion and others, as well as in Europe and Asia. In a country the size of ours, it gives us an idea of how good we are and how large our financial institutions are, as we are able to be a major player around the globe.

On the widely held ownership threshold for banks, it was always a contentious issue. It certainly was contentious when I first came here in 2004-05 and it continues to be.

The authority of the Superintendent of Financial Institutions over certain types of transactions, the administration of unclaimed insurance deposit accounts by the CDIC and the Bank of Canada, the insolvency of financial institutions and the liability of the CDIC when acting as a receiver during receivership of insolvent financial institutions are also very important at this point. There is also the restructuring of insurance companies and the liability of officials and employees of the Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada.

When we look back, this bill really got its roots from Bill C-37, which was back in June 2006. There was a paper entitled “Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”. The legislative changes included greater disclosure for consumers in relation to investment products, very important, and complaint procedures, the introduction of electronic cheque imaging and clearing, and an increase in the widely held threshold for large banks from $5 billion to $8 billion in equity.

This reminds me of the legislation we dealt with not too long ago when we talked about copyright. We are seeing the proliferation of technology right now that allows us to transact around the world instantaneously. As a result, the legislation has to keep up with the changing technologies around the world in, as I mentioned, copyright, banking and financial institutions. It shows not only the speed and brevity by which financial transactions are able to go around the world, but it also gives us an idea that the scope has become much larger, as well as the depth of the banking institutions. Therefore, we have to look at this and update legislation, as we did with the copyright bill. It is somewhat of a new concept when we have to review it after four or five years. Nonetheless, it is a concept that is certainly necessary.

We are seeing that now with the sunset provision. The Bank Act, the Cooperative Credit Associations Act, the insurance companies and trust and loan companies contain a statutory sunset date set out some time ago. The legislative changes will include greater disclosure for consumers in relation to investment products and complaint procedures. We went through the updating measures that were contained in Bill C-37, which was introduced in the House on November 27, 2006. In order to have sufficient time, we went through this review, which went from the October 24, 2006 to April 24, 2007, to accommodate that.

That puts us in the place we are now as we go through the review once again, as it was introduced in the Senate as Bill S-5. It went through the three readings and the committee procedure and came back with some of those observations.

Clauses 53(2) and 53(3) require a Canadian bank to obtain approval from the Minister of Finance prior to acquiring control of a foreign entity, and this is important, if the bank has equity of $2 billion or more and the value of the foreign entity's consolidated assets in combination with the value of the consolidated assets of the bank's other foreign control acquisitions in the past 12 months exceed 10% of the value of the bank's consolidated assets prior to the preceding 12-month period. I hope everyone got that because there will be a test at the end of the speech, though probably not, as I excite the masses talking about financial institutions.

The minister, in contemplating the acquisition, can take into account all matters considered relevant in the circumstances, including the stability and best interests of Canada's financial system. We go back to Canada's financial system and the emphasis that we put on this to ensure it is suited for Canadians. We know that in the past we have faced this primarily from breakdowns in financial institutions around the globe. If one finds trouble or turbulent waters, that ripples throughout the global system. Therefore, we have to ensure our system is able to withstand some of the shocks that occur around the globe. The sunset clause is to renew the acts, as I mentioned earlier.

Let us take a look at Bill S-5. It does not represent a significant change in policy, per se. It is crucial that the existing sunset clauses are extended so Canada's statutes for financial institutions do not expire, which is around April 20. Bill S-5 is not what I would call an ambitious bill. It does not significantly change Canada's banking policy or address Canada's record levels of household debt. However, Canada's banking laws are set to expire.

There is one thing I can point out about the government. The Conservatives called on the previous Liberals to follow the U.S. example and deregulate the Canadian banking sector. I remember at the time there was quite a debate and there were certain stands that all members of the House took in 2003 to 2005. I am sure they wish they had them back in light of what has happened around the globe when financial institution measures such as these become critical and very important for us to consider.

Liberals will support Bill S-5 at report stage and third reading because of this. Again, I revert to what I said earlier. Given the intertwine nature of the financial institutions around the globe, it certainly falls upon us in the House to have this debate so we can ensure the regulations are updated in light of certain troubles around the world and certainly with the advent and proliferation of technology that allows us to pass our money around the world and invest.

Motion in Amendment

[Greg Rickford, Conservative, Parliamentary Secretary to the Minister of Aboriginal Affairs and Northern Development]

Mr. Speaker, I want to take this opportunity to thank the constituents of the great Kenora riding for giving me the opportunity to speak on their behalf with respect to Bill S-5.

This is an obligatory and largely routine piece of legislation, but it is essential for the continued strength and security of Canada's financial system that our constituents rely on every day, be it to cash a cheque, to apply for a mortgage or to buy that first home.

As background for all Canadians, legislation governing federally regulated financial institutions is reviewed every five years by the government to ensure the stability of the Canadian financial system. The last legislative review was completed in 2007 through Bill C-37 in the 39th Parliament. In 2001, a similar review was completed with Bill C-8 in the 37th Parliament.

I should also let the House and our constituents know that it is crucial that today's act be passed by April 20, 2012. This is the legislated sunset date, and passage must be achieved by then to allow the Canadian financial system to function in the manner that it has been doing.

In September 2010, the present five-year review began. This was kicked-off with an open and public consultation process. The Minister of Finance invited all Canadians to give their views on how to improve the financial system. Throughout that consultation, many Canadians gave their ideas and suggestions on how to further reinforce and strengthen our financial system. Indeed, much of that comment is reflected within the financial system review act that we are debating today. To be sure, today's act takes into consideration the feedback from industry groups, consumer groups and other Canadians to make measured, technical adjustments to strengthen Canada's regulatory framework.

I would also draw the attention of Canadians to the fact that today's act has already been reviewed and approved by the Senate banking, trade and commerce committee as well as the House of Commons finance committee and the great work of those members. Both committees undertook a comprehensive and efficient review of this act. It included talking to organizations like the Financial Consumer Agency of Canada, the Credit Union Central of Canada, the Office of the Superintendent of Financial Institutions Canada, the Canadian Life and Health Insurance Association, the Canadian Bankers Association and the Canadian Payments Association. This was an impressive catchment of stakeholders.

I want to thank each of the witnesses who spoke on the financial system review act in front of both committees for providing their important input. I will note that witnesses, while acknowledging the act's technical nature, were very supportive of it overall. For example, the Canadian Life and Health Insurance Association declared, “Bill S-5 represents a welcome fine-tuning of the various financial institution statutes”.

At this time I will quickly review some of the initiatives taken in today's act.

Once more, even though the majority of these initiatives are largely technical, they are indispensable for the security of Canada's financial system. That is why today's act would make the following alterations: modernizing legislation to uphold financial stability and guarantee that Canada's financial institutions continue to operate in a competitive, efficient, effective and stable environment; improving the consumer protection framework, including expanding powers for the Financial Consumer Agency of Canada to better protect consumers; and reducing the red tape and regulatory burden on financial institutions.

Other measures contained in today's act include the following: clarifying that all Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada; removing duplicative disclosure requirements for federally regulated insurance companies; offering adjustable policies in foreign jurisdictions, thus cutting their red tape burden; encouraging competition and innovation by allowing co-operative credit associations to provide technology services to a broader market; and improving the capacity of regulators to efficiently share information with international counterparts while respecting the privacy of clients.

There are more, but I want to emphasize that the significance of this act provides for a safe and secure financial system.

It is a system that has endured for Canadians during the recent global economic crisis that saw the failure of some of the best known banks around the world. Indeed, in recent years Canadians have recognized just how important a sound financial banking system really is for our country's economy.

Undeniably our system has been a model for countries around the globe. Canada proudly did not have to bail out, nationalize or buy equity stakes in its banks, in stark contrast to the U.S., the United Kingdom and countries in Europe. In fact the World Economic Forum has ranked Canada's financial system as the soundest in the world for four straight years. Our safe and secure financial system is envied the world over.

It was remarked in the well-known publication Forbes, “With no bailouts, it is the soundest system in the world, marked by steady and responsible continuation of lending and profits”.

Constantine Passaris, a University of New Brunswick economics professor, adds:

The financial tsunami of 2008 swept around the world with devastating economic consequences. Banks proved to be particularly vulnerable to the credit crunch that followed....

There is no denying that our Canadian banks proved significantly resilient....

The Canadian way is to record our national achievements in a low-key and understated manner. There is one economic achievement however, that has made the world stand up and notice. Indeed, in this case, we cannot hide from the international spotlight and we can proudly accept the global applause....

We appreciate these comments. Indeed, many of the financial sector solutions now promoted internationally are modelled on our Canadian system. With today's bill, Canada's financial system will remain secure and serve as a fundamental source of strength for Canada's economy moving forward.

The financial system is one of the most important aspects of Canada's economy and jobs, totalling approximately 7% of Canada's economy. What is more, it provides employment, good, well-paying jobs for more than 750,000 Canadians. Our financial sector also provides financing to the housing markets and other markets that rely on borrowing, and in that respect the financial services sector is a significant presence in the day-to-day lives of all Canadians.

The Financial System Review Act will help support a proven framework that benefits all Canadians who use or are impacted by the financial services sector.

The long established practice of regularly reviewing the financial institution regulatory framework is also a distinctive and positive practice that sets Canada apart from the world. Indeed, it has been vital to ensuring the stability of the sector. All Canadians would acknowledge the significance of frequently examining how we can better ensure our financial system's safety and soundness for the benefit of all Canadians. Today's bill accomplishes just that.

I encourage members to support today's bill and ensure it passes in a timely manner. I appreciate having the occasion to support this important piece of legislation.

Financial System Review Act

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, I am pleased to have the chance to address the House in support of Bill S-5, the financial system review act. For the information of Canadians and members of the House, the financial system review act is a mandatory and routine piece of legislation.

To ensure the stability of the financial sector in Canada, the statutes that govern federally regulated financial institutions must be reviewed every five years, a long-standing practice that has carried over from previous governments. As I mentioned previously, it deals with federally regulated financial institutions and, for clarity, those include domestic and foreign banks, trust and loan companies, insurance companies and co-operative credit associations.

The last similar legislative review was completed through Bill C-37 in the 39th Parliament. Prior to that, a similar review was completed in 2001 through Bill C-8 in the 37th Parliament. As with the previous five year reviews, there is a timeline for the process to be completed, as the sunset date for the financial institutions statutes is April 20, 2012. The present five year review, which has led to today's bill, commenced in September 2010 when the finance minister launched an open and public consultation process that asked all Canadians to submit their thoughts and ideas on how we could best improve Canada's financial system to make it even more stable and secure.

During the consultation process, I understand that many Canadians provided their feedback and much of that is seen in today's bill. Moreover, the public consultation process itself has been praised. For example, the Canadian Life and Health Insurance Association told the Senate banking, trade and commerce committee during its study of the bill, “The consultation process was very positive and reflected the technical nature of this review”.

The financial system review act, while largely technical, would take important steps to help guarantee that Canada's fiscal system is securely regulated and remains strong and stable for the sake of our economy. Among the bill's highlights are measures to: First, bring up to date financial institutions' legislation to support financial stability and ensure that Canada's financial institutions continue to operate in a competitive, well-regulated and secure environment; second, better protected consumers with an improved protection framework, including reinforcing the powers of the Financial Consumer Agency of Canada; and third, improve effectiveness by reducing unnecessary administrative red tape on financial institutions and adding prudently regulated flexibility.

Again, today's bill is tremendously important in supporting the continued strength of our economy, the main priority of our Conservative government and an area where we are getting results. Indeed, while there are challenges ahead, Canada's performance during the recent global downturn has been strong when compared to other industrialized countries. First and foremost, since our government introduced the economic action plan to respond to the global recession, Canada has recovered more than all of the output and all of the jobs lost during the recession. Some 610,000 more Canadians are working today than when the recession ended, resulting in the strongest rate of employment growth by far among all G7 countries.

Furthermore, about 9 out of 10 positions that have been created since July 2009 have been full time and more than three-quarters of the jobs created over this period have been in the private sector. Fortunately, Canada has fared far better than the U.S. in this regard. Indeed, Canada's unemployment rate has been lower than that of the U.S. since October 2008, a phenomenon not seen in nearly three decades.

On top of Canada's solid performance on jobs, the real gross domestic product is now significantly above pre-recession levels, the best performance among the G7 nations. It is clear that Canada has weathered the economic storm relatively well. It is also clear that this resilient performance in a climate of global uncertainty has not gone unnoticed.

Both the International Monetary Fund and the Organisation for Economic Co-operation and Development forecast that we will be among the strongest economic growth in the G7 over this year and next. Forbes magazine has ranked Canada number one in its annual review of the best countries in which to do business. Three credit agencies, Moody's, Fitch, and Standard & Poor's, have reaffirmed their top ranking for Canada. Most significant, for the fourth year in a row, the World Economic Forum rated Canada's banking system as the soundest in the world. That is something we would reinforce with today's bill.

Clearly, this is a solid performance in volatile times and it will serve this country well. Indeed, in the recent words of Scotia Bank's chief economist, Warren Jestin, “When you look at what exists in Canada, this is still the best country in the world to be in.

To truly understand the strength behind this performance, we need to consider the hard work that took place through the actions that our Conservative government took to pay down debt, lower taxes, reduce red tape, promote free trade and innovation and ensure a stable financial system.

To start with, our government paid down significant amounts of debt when times were good and kept our debt to GDP ratio well below our G7 counterparts. As a result, when trouble hit, we had the ability to respond.

The International Monetary Fund projects that Canada's net debt to GDP ratio for the last year will come in at just under 35%. A net debt to GDP ratio of under 35% is excellent considering that these rates for other G7 nations are much higher. In contrast, Germany is projected to be over 57%, the United States and the United Kingdom at over 72%, France at 81%, Italy at 100% and Japan just over 130%.

Along with this strong fiscal performance, we introduced the tax relief required to create jobs and growth in all economic conditions. In 2007, prior to the impact of the financial crisis, Canada passed a bold low tax plan that helped to brand Canada as a low tax destination for business investment. This low tax plan, along with our sound and safe financial system, plays and will continue to play a crucial role in supporting economic growth and jobs.

Our Conservative government is under no illusions that our work is finished. Major challenges remain both here and around the world. As we know, the global economic outlook remains highly uncertain and the situation in Europe is still very fragile. The changes facing our global economy are far from over and Canada will not be immune.

Despite solid job creation since July 2009, too many Canadians remain unemployed. That is why our Conservative government's main focus will be the continued implementation of the next phase of Canada's economic action plan to support jobs and growth as we prepare for budget 2012. That includes today's bill, which would help to ensure the continued strength and security of our financial systems.

Once more, we will continue to focus on improving the well-being of Canadians by sustaining the economic recovery, eliminating the deficit and making investments that will fuel long-time growth. I strongly urge all members to support and vote in favour of this important legislation and help it progress in a timely manner to passage.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Mr. Speaker, thank you for the opportunity to contribute at second reading of Bill S-5, the Financial System Review Act.

This bill is important because it seeks to regulate one of the most important sectors in the country: financial services.

Today's act is significant because it regulates one of the most important sectors of the Canadian economy, financial services. In fact, this sector is a key foundation our economy depends on. It is also a cornerstone of the economy of the city I represent in Parliament, Toronto.

The act would also help ensure that Canada's financial system remains strong and secure, a system that has been made a model for countries all over the world in a period of global economic turmoil. In fact, for four consecutive years Canadian banks have been ranked the soundest in the world by the independent World Economic Forum. This has been further acknowledged by other independent observers, both in Canada and internationally.

Here is what a few are saying. Noted Toronto Sun columnist Peter Worthington has said:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

The influential Economist magazine has proclaimed:

CANADA has had an easier time than most during the recent global recession, in part because of a conservative and well-regulated banking system.

Finally, U.K. Prime Minister, David Cameron, has praised our system in this very House:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis. Canada got to grips with its deficit and was running surpluses and paying down the debt before the recession, fixing the roof while the sun was still shining. Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

On a broader scale, the financial services sector plays a significant part in the daily lives of Canadians, from a child making his or her first deposit in a bank account to a young family taking on a mortgage to buy their first house. Businesses in my riding of Etobicoke--Lakeshore rely on the liquidity of Canada's banking system to finance their day to day operations and their expansion plans.

Beyond relying on the financial services industry for everyday products and services, its businesses are an important economic driver. As my colleague mentioned earlier, it employs over 750,000 Canadians in well-paying jobs. Moreover, the sector represents about 7% of Canada's overall GDP.

Finally, Canada's banks are playing an increasingly large role on the world stage via their expansion in the United States, Central and South America, and in other emerging markets.

Accordingly, there is no doubt about the importance of ensuring that the legislative governance of this critical sector is effective and current.

Accordingly, today's act supports the ongoing stability of Canada's financial sector, fine-tunes consumer protection provisions and adjusts the regulatory framework to better reflect new economic developments.

Specifically, today's act includes measures to update legislation to promote financial stability and ensure that Canada's financial institutions continue to operate in a competitive, efficient and stable environment; adjust the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada; and improve efficiency by reducing the administrative burden on financial institutions and by adding regulatory flexibility.

Furthermore, the act will improve the ability of regulators to share information efficiently with their international counterparts; change the priority status of segregated fund policies in insolvency situations to facilitate timely transfer; clarify that Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promote competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; and reduce the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

I will quickly expand on a few of these points.

Effective and competitive financial institutions are essential for creating an environment favouring savings and investments in Canada and for improving our standard of living.

The regular review of the financial sector statutes allows the government to amend the framework as necessary so that financial sector legislation and regulations continue to be effective and efficient. Indeed, today's act is mandatory legislation. The government has a long established practice of reviewing the statutes governing federally regulated financial institutions every five years to maintain the safety and soundness of the sector for Canadians.

For the information of the House, the latest legislative review and subsequent legislation were completed in the 39th Parliament through Bill C-37. The present five-year review began in September 2010 when the finance minister launched an open consultation process with Canadians on how to improve our financial system. The financial system review act addresses a number of key areas that were identified in the review and consultation process to achieve increased legislative and regulatory efficiency.

Currently, financial institution statutes have a built-in sunset clause that causes them to lapse five years after they come into force. The proposed common sense amendments in Bill S-5 modify the statutes to lengthen the automatic extension period of the sunset date, triggered by the dissolution of Parliament, from three months to six months. This will allow greater flexibility and more security for consumers and Canadian institutions.

We all know that consumers have the ability to manage their finances. In properly managing financial affairs, we know that knowledge is critical. That is why the government is moving forward to implement the recommendations of the task force on financial literacy aimed at improving financial literacy for all Canadians.

At the same time, the government is responding to concerns about the terms and conditions associated with network branded pre-paid cards by developing measures to enhance the consumer protection framework.

Changes in today's legislation fine-tune the consumer protection framework and enhances the supervisory power of the Financial Consumer Agency of Canada by confirming that all Canadians are able to cash government cheques in amounts of less than $1,500 free of charge at any bank in Canada; and increasing the maximum penalty for violation of a consumer provision, consistent with penalties for other violations under financial institution statutes. These are all important measures that will protect consumers when dealing with financial institutions.

As members know, the rate of change in the financial services sector has only increased in recent years. Another objective of today's act is to allow financial institutions to respond to change by allowing them to better adapt to new developments in the industry. In other words, financial institutions must be able to effectively respond to developing trends such as globalization, convergence, consolidation and technological innovation.

To summarize, the measures proposed in the financial system review act would reinforce stability in the financial sector, fine-tune the consumer protection framework and adjust the regulatory framework to new developments.

Renewing Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned with and more responsive to developments in the financial markets and the broader economy. Today's act provides framework that would benefit all participants in the financial services sector, financial institutions as well as all Canadians. It maintains the longstanding practice of ensuring regular reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Therefore, I urge all members to support the proposed financial system review act.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, I was trying to save time. I thought I had received unanimous consent.

On the surface, this bill does not seem to have any major points of contention, as I have already said, but we cannot assume that everyone sees it that way. Financial institutions are a pillar of our economy and have to be treated with more respect. Allowing the Minister of Finance to have veto power over the acquisition of foreign entities by Canadian banks is something that should be analyzed further. The government tells us that this is to allow us to prevent crises like the one in 2008, but is this really necessary? No Canadian bank had problems similar to the ones experienced by the American or European banks and there is nothing to suggest that this could happen in the near future.

Why are the Conservatives imposing this condition in the bill? Do they have a hidden agenda? We do not know. Do they have any studies to support the fact that this necessary? Why do they not leave this responsibility to the real professionals? Representatives from the Office of the Superintendent of Financial Institutions, who have always done excellent work, would be better qualified for this responsibility. Perhaps we are giving this veto power to the minister simply because the Prime Minister, as we all know, always likes to be in control of everything.

All these questions make us realize one thing: the Conservatives do not like studies. They believe they have the answers to all the problems and they pass legislation without any consultation or debate. In 1995, former finance minister Paul Martin introduced the Bank Act and saw it passed. That legislation was not sloppy or passed at the last minute. We spent a year preparing it before passing it. The Liberal government at the time held many consultations and put a committee in charge of the matter. Public consultations were held, and the Liberals listened to expert advice in order to ensure that the legislation was drafted properly.

The Liberal government of the day had a majority, as the Conservatives do today. Yet it did not impose legislation at the last minute or limit debate; instead, it listened to what parliamentarians and all Canadians had to say. This Liberal legislation saved our banks from the financial collapse of 2008. Now, we have barely two months to pass this bill. The problem is that parliamentarians are not necessarily experts in banking. We use banking services, but we are not experts. Consultations with people in the industry are needed, for instance, with people who receive and provide services, managers and others. And that takes time.

As I said earlier, is it really necessary to give the finance minister more power? Would another person or institution have been in a better position to make these decisions? Is there really a problem?

Since we are taking the time to tackle the question of banks, are there other aspects that we should also focus on, as we heard this morning? Is this the best solution for the problem? These are some of the basic questions that could have been answered with an in-depth study. The last time we reviewed the legislation on financial institutions, in 2006 and 2007, I was chair of the Standing Committee on Finance and we examined Bill C-37. Thanks to the hard work of the Liberal members on the committee, we led consultations that lasted over three months. That diligent work allowed us to find several flaws in the Conservative bill. It is hard to do the same work today.

As I said earlier, the main problem with this bill is not so much its content as the uncertainty surrounding its review, given that the government does not intend to consult the players involved. This problem could have easily been avoided had the government introduced this bill in October rather than in February since, I repeat, the bill must be passed before April 20. The House of Commons simply does not have the time to seriously consider this bill. Even in the Senate, Senator Hervieux-Payette stated that they simply did not have time to thoroughly examine the issue.

What were the Conservatives thinking when they introduced this bill in the Senate on November 23, 2011? The bill was read for the second time on December 6, 2011, just before the long Christmas break. Today, it is February 3 and the government is only now presenting the bill for second reading. Rather than wasting their time abolishing the firearms registry and rushing to pass regressive legislation to imprison our youth, why did the Conservatives not begin seriously reviewing the Bank Act? This is an urgent situation that needs to be resolved because, as I mentioned, the act must be revised before April 20. This should have been a priority but the Conservatives would rather invent threats than take care of real problems.

Another problematic aspect of this bill is the fact that the changes to this legislation would allow a foreign government to own shares in a Canadian bank and thus have voting rights. How does this help Canadian banks? We do not know. Taxpayers who have pension plans with banks do not even have the right to vote, so why should a foreign government? What will the effects of this be? I doubt that we will have an answer before this reformed legislation is passed because we do not have enough time to consider the consequences.

In summary, I am not against this bill but there are still some unresolved issues because this government took its time and did not adequately plan for this review of the Bank Act. A competent government, like the one that existed when the Liberals were in power, would have conducted many studies and allowed parliamentarians to carefully consider this bill. Now, there is not enough time and we will not know all the effects this bill will have until after it is passed.

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.

Message from the Senate

[The Speaker, Peter Milliken]

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bill:

Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue the debate on the Liberal opposition motion.

Tomorrow morning we will begin debate on the procedural motion relating to the back to work legislation, to which the opposition House leader was referring. Also, we will have Bill C-45, the Fisheries Act, following question period.

On Monday, we would like to conclude the debate on the statutory order regarding the Anti-terrorism Act, which is very important for Canadians for public security reasons. We are also getting down to the deadline when certain provisions of the Anti-terrorism Act will sunset.

I have consulted with the other parties and I will propose a related motion at the end of my business statement.

Next week we will consider the following bills: Bill C-37, financial institutions; Bill C-41, competition; Bill C-11, transport; Bill S-3, defence; Bill C-42, the Quarantine Act; Bill C-36, Canada pension plan and old age security; Bill C-10, mandatory minimum penalties; and depending on developments regarding the railway strike, we may call the procedural motion relating to the back to work legislation.

Thursday, March 1 shall be an allotted day.

As I mentioned earlier, following discussions with the House leaders of the other parties, Mr. Speaker, I believe if you seek it, you would find unanimous consent of the House to adopt the following motion. I move:

Motion

That, notwithstanding any Standing Order or usual practices of the House, once the Statutory Order regarding the Anti-terrorism Act is called on Monday, February 26, and when no member rises to speak on debate or at the expiry of the time provided for Government Orders, all questions necessary to dispose of the Statutory Order regarding the Anti-terrorism Act be deemed put, a recorded division deemed demanded and deferred until Tuesday, February 27, at 5:30 p.m.

Finance

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I have the honour to present in both official languages, the Thirteenth Report of the Standing Committee on Finance in relation to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, with amendments.

I would like to thank all the members for handling the bill expeditiously and allowing me to chair the committee once again.

Budget Implementation Act, 2006, No. 2

[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—

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.

Opposition Motion—Health Care

[Jean-Claude D'Amours, Liberal, Madawaska—Restigouche, NB]

Mr. Speaker, thank you for giving me a few minutes to debate a very important motion that is before this House today. I have the honour of being the health critic for the Liberal Party of Canada. The motion before us today has a direct bearing on the work I do as a parliamentarian for the people in my riding, Madawaska—Restigouche.

Today, we are debating a very important motion, introduced by my colleague, the hon. member for Brampton—Springdale. I would like to read the motion so that everyone can understand its importance to all Canadians. The motion reads as follows:

That, in the opinion of the House, the Conservative government has broken its promise to reduce medical wait times and to provide the necessary funding and resources to achieve the goals of the First Ministers’ Accord on Health Care Renewal.

This motion says it all. It expresses exactly how the Conservative government has fallen short of the mark, exactly what promise it has broken. It made that promise to Canadians during the last federal election campaign and, today, it has broken that promise.

If we listen more closely to the parliamentarians on the government side, we will certainly notice something: it is always someone else’s fault if the government fails to act. The government’s inaction is always someone else’s fault. This is real cause for concern. People have started to react, for example yesterday in the riding of London North Centre. We saw very clearly how the people of Canada are reacting to the inaction of the Conservative government.

Health care numbers among the treasures that we have acquired here in Canada over the years, and that is certainly not thanks to the Conservative government. It has not contributed anything. The current government is clearly trying to dissociate itself from former Conservative governments. I know, though, that this Conservative government is the most extremist that we have seen in this country for decades, maybe even centuries.

In 1957, we instituted health insurance in Canada. It was certainly not a government like the current one that did that. It was a Liberal government which believed in the supreme importance of giving Canadians what they needed to be treated within a reasonable amount of time.

Let us look further at the history of health insurance in Canada. As I just said, it was first established in 1957. The Parliament of the time passed the Hospital Insurance and Diagnostic Services Act. Therefore, it is not just since yesterday that we have been talking about health care and trying to improve the lives of Canadians. The current government, though, just made promises that it still has not kept.

The 1957 act provided for free short-term hospital care and radiological and laboratory diagnostic services. The word “free” is the key word here. However, there is more to it. Being free does not mean that the services should take an eternity. They are free because Canadians decided to pay for a health care system that would provide treatment, whether for their children, themselves, their parents, their families, or their brothers and sisters. It was Canadian citizens who decided to provide these services. We must also take the development of the system into account. The major step taken in 1957 was a revolution in health care.

However, there was more. In 1966, the Medical Care Act was passed. It provided for free medical services. That too was incredible, and it is good to see that it was a Liberal government that worked for this.

Thus, I know the future will be rosy for the citizens of this country in a short while, when the Liberal Party is able to resume power in Ottawa and bring back the things that are important to Canadians, including health care.

I would remind the House of the $41.2 billion that the Liberal government—my government, during my first term—handed over in 2004, in the context of the health care accord. The $41.2 billion project was important to ensuring that all the provinces and territories would have the money they needed to provide health care services.

This does not mean passing the buck to the provinces—as the government did in this case—and telling them to do as they are told, without providing the funds they need to do so.

Let us recall what happened in 2004. In September, a few months after my first election, the Liberal government signed a health care accord with the provinces and territories. That accord is better known as the 10 year plan to strengthen health care. Strengthen has many meanings. It means creating a solid foundation and ensuring the future of health care for Canadians. The 10 year plan also set a deadline of December 31, 2005 for establishing a benchmark for medical interventions.

Even though the Conservative Party decided to defeat the government in November 2005, we are proud that the priorities that were supposed to be set by December 31 were set on December 12, 2005. Those priorities are cancer treatment, cardiac treatment, sight restoration, joint replacement and diagnostic imaging.

The first item I mentioned was cancer treatment. Today, cancer affects many citizens. Is there anyone in this House who has not had a family member diagnosed with cancer? Is there anyone in this House who does not know someone, a friend or relative, who has had to endure cancer treatments? This is a common reality that I have experienced several times over. It is certainly not easy, and it is even more difficult to endure when there are long wait times for diagnosis and care.

I remember one personal experience when a friend's doctor said that treatment was one thing but that morale was far more important. When it takes months and months to get the diagnosis and the necessary services, of course morale will suffer.

If we want to help patients keep their morale up, we have to guarantee reasonable wait times for services. Reasonable wait time does not mean six months or a year. Reasonable wait time is soon after diagnosis.

We are spending a lot of time talking about emergency wait times today because in some places in Canada, not far from here or from my riding, even right in my riding sometimes, emergency room wait times are almost unacceptable, if not completely unacceptable.

Sometimes it seems to me that we are playing with Canadians' quality of life. But the reality is even worse: we are playing with their health.

I repeat what I said earlier: Canadians have paid for a health care system with the taxes they pay every year. They paid for it today, yesterday, 10 years ago, even 20 years ago. And Canadians will keep on paying, because they believe that Canada must have proper health care. But is it acceptable to wait eight hours in an emergency room—and that is a real example—before finding out what is wrong? No, it is not. It is not acceptable, because in eight hours, something very bad could happen. Wait times must not be so long that people get sicker or die because they are not diagnosed or do not receive the necessary treatment. In an emergency, wait times must be reasonable.

Here is the best way to handle things. When I was a city councillor and when I was serving my first and second terms as a federal MP, I always believed that it was best to promise things that you think you can deliver. If you do not think you can do something as an MP or a politician, do not promise to do it.

It is always easier to promise something. We can promise the earth, but that is not what Canadians want. They want us to promise them things that we think we can achieve.

If the current government could make good on its promise to provide Canadians with better health care, why has it not done so? Canadians certainly will not have more confidence in this government if it does not keep the promise it made during the last federal election. It is already evident that the public has lost confidence in this Conservative minority government.

Health is one thing, and medical wait times are another. We also have to look at other important related issues if we want to improve people's quality of life and ensure that people who are sick can live decently while they are ill.

Last week, we had the last period of debate on Bill C-278 introduced by my Liberal colleague from Sydney—Victoria. We will soon vote on this. It is a private member's bill on employment insurance, which calls for the benefits period to be increased from 15 weeks to 50. What a nice gesture and what a nice thought from a Liberal member. I am extremely proud, first, to be a Liberal and, also, that it was my colleague who introduced this private member's bill.

What disappoints me a little, a lot even, are the unfavourable comments about this bill by the government members. How can they be against an insurance that offers acceptable and decent income to those who need it the most? It is not easy to be sick, but not having money to get over the illness is certainly even more difficult.

There is another aspect that people often forget. Let us think back to September 25. I know that some members of the government do not want us to talk about it. Many of them, if not the entire government, want us to stop talking about it in the hope that Canadians have forgotten about the major cuts announced on September 25. I will not list them because I would not have enough time today during this period to mention them all. However, I will spend some time on one aspect, which, in my opinion, has a direct link to health care. I am talking about literacy.

The government made $18 million in cuts to literacy. This is unacceptable because these cuts affect the least fortunate. Let us look at a concrete example—such an easy example—of an older person. We know there are large number of illiterate people in this country. We may not like it, but such is the reality. And remember that the President of the Treasury Board said that illiterate adults are a lost cause. On the contrary, adults who have difficulty reading and writing need more help.

Let us take the real example of an individual who goes to the hospital or the doctor and needs medication. The patient will have to purchase the medicine at a pharmacy and read the instructions on the package. That has an effect on wait times. Do you think that a person who cannot read very well will want to go to a hospital knowing that they will have to go and get the medication and read the instructions, but cannot do it? Maybe they will only understand some of the instructions. What will happen? Perhaps this person will not use the medication properly or take it at the wrong time, which may have more serious consequences than the illness itself.

We are examining the aspect of wait times, but the whole issue of literacy is also crucial. I am convinced that my Conservative colleagues opposite do not agree with me on this. However, it is a reality that the functionally illiterate have to live with every day. Even though they receive care, when they get their medication they cannot read the proper dosage, when to take the medication and what are the contraindications. All that information is there for a reason, a very specific reason: to ensure that the individual can progress and heal. Imagine if that person is unable to properly read the information. Imagine if that person is already ill. How can they look after themselves properly if they are unable to read the information provided with the medication?

These are direct links, links that we must respect and understand. We must show compassion for the most disadvantaged in our society, even if the current government has a great deal of difficulty with this.

On the subject of wait times, according to the Canadian Medical Association, 38% of Canadians say that they have already experienced unacceptable delays while waiting to see a specialist. Here I am referring only to seeing a specialist. I spoke earlier about the emergency situation. The fault does not lie with the personnel, the nurses or doctors. They do everything they can to provide proper services, but what is lacking is sufficient funding.

We are told that 38% of Canadians have already encountered problems and wait times that are too long, when they need to see a specialist. Now, imagine how long one has to wait in emergency rooms to see a doctor. I gave an example earlier of an eight-hour wait. We have already seen wait times of 12 hours, and on the news they have talked of waiting 24 hours. That is not something unusual. Those are things that we see and hear of regularly.

If we want to eliminate “regularly” and “usual” from this situation, we must be able to provide funding—and also keep our promises—to provide the tools that will ensure that Canadians have access to health care services within a reasonable period of time.

We have heard that 20% of Canadians say that they have had to wait for access to advanced diagnosis. Behind that statement lies a factor that I referred to previously, namely cancer. More than 20% of Canadians say that they have had to wait for access to advanced diagnosis. What are we waiting for? What are we waiting for to provide Canadians with these services?

I certainly hope that what this government is waiting for will not be an even longer wait, because Canadians need these services. In addition to cancer, we also hear about heart problems. Across the country we are seeing an increase in obesity. I understand that heart problems are not related only to obesity but that it is one of the causal factors.

Why does the government not want to act immediately in a concrete way to provide Canadians with the services that they are paying for and that they deserve?

There is worse still when we examine the situation. Wait time guarantees are one thing, but there are other factors. If someone can not be looked after in one location, he or she can look for care in another hospital. That could be a proper solution. In this House, the government has also made comments that Canadians could also seek treatment in other countries. One of the things that concern me today, now, in 2006, is a situation that could develop, where Canadians are told that we are not going to provide services here in Canada—because we do not want to invest the necessary sums of money—but that we are going to send them elsewhere for treatment.

When they say “elsewhere”, I hope they do not mean in the United States. I hope this government is not going in that direction.