Bill C-52 (Historical)

Budget Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007

Part 1 implements income tax measures proposed or referenced in Budget 2007 to
(a) introduce a tax on distributions from certain publicly traded income trusts and limited partnerships, effective beginning with the 2007 taxation year;
(b) reduce the general corporate income tax rate by one half of a percentage point, effective January 1, 2011;
(c) increase the age credit amount by $1,000 from $4,066 to $5,066, effective January 1, 2006;
(d) permit income splitting for pensioners, effective beginning in 2007;
(e) introduce a new child tax credit of $2,000 multiplied by the appropriate percentage for a taxation year, effective beginning in 2007;
(f) increase the spousal and other amounts to equal the basic personal amount, effective beginning in 2007;
(g) increase the age limit for maturing registered retirement savings plans, registered pension plans and deferred profit sharing plans to 71 years of age, effective beginning in 2007;
(h) expand the types of investments eligible for registered retirement savings plans and other deferred income plans, effective March 19, 2007; and
(i) increase the contribution limits for registered education savings plans and expand eligible payments for part-time studies, effective beginning in 2007.
Part 1 also amends the Canada Education Savings Act to increase the maximum annual grant payable on contributions made to a registered education savings plan after 2006.
Part 2 amends the Excise Tax Act to clarify the legislative authority that allows the Canada Revenue Agency to pay refunds of excise tax directly to end-users, where fuel subject to excise has been used in tax-exempt circumstances. It also amends that Act to repeal the excise tax on heavy vehicles and to implement the Green Levy on vehicles with fuel consumption of 13 litres or more per 100 kilometres. It also provides an authority for the Canada Revenue Agency to pay a refund of the Green Levy for vans equipped for wheelchair access.
Part 3 implements goods and services tax/harmonized sales tax (GST/HST) measures proposed or referenced in Budget 2007. It amends the Excise Tax Act to exempt midwifery services from the GST/HST and to zero-rate certain supplies of intangible personal property made to non-GST/HST registered non-residents. It also amends that Act to repeal the GST/HST Visitor Rebate Program and to implement a new Foreign Convention and Tour Incentive Program, which provides rebates of tax in respect of certain property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents, and establishes new information requirements in the case where rebates are credited by the vendor.
Part 4 implements other measures relating to taxation. It amends the Customs Tariff to increase the duty-free exemption for returning Canadian residents, from $200 to $400, for absences from Canada of not less than 48 hours. It amends the Federal-Provincial Fiscal Arrangements Act to clarify that when a federal corporation listed in Schedule I to that Act pays provincial taxes or fees, wholly-owned subsidiaries of that corporation also pay provincial taxes or fees. It also authorizes the Minister of Finance to make payments totaling $400 million out of the Consolidated Revenue Fund to the Province of Ontario to assist the province in the transition to a single corporate tax administration. This last measure is consequential to the October 6, 2006 Canada-Ontario Memorandum of Agreement Concerning a Single Administration of Ontario Corporate Tax.
Part 5 enacts the Tax-back Guarantee Act, which legislates the Government’s commitment to dedicate all effective interest savings from federal debt reduction each year to ongoing personal income tax reductions. That Part also commits the Minister of Finance to report publicly at least once a year on personal income tax relief provided under the Guarantee to Canadians.
Part 6 amends the Federal-Provincial Fiscal Arrangements Act to set out the amounts of the fiscal equalization payments to the provinces and the territorial formula financing payments to the territories for the fiscal year beginning on April 1, 2007 and to provide for the method by which those amounts will be calculated for subsequent fiscal years. It also authorizes certain deductions from those amounts that would otherwise be payable under that Act. In addition, it makes consequential amendments to other Acts.
Part 6 also amends that Act to provide increased funding for the Canada Social Transfer beginning on April 1, 2007, and to provide for the method by which the Canada Social Transfer and the Canada Health Transfer amounts will be calculated for subsequent fiscal years, including per capita cash allocations. It also provides for transition protection.
Part 7 amends the Financial Administration Act to modernize Crown borrowing authorities.
Part 8 amends the Canada Mortgage and Housing Corporation Act to permit the Minister of Finance to lend money to the Canada Mortgage and Housing Corporation.
Part 9 amends the Bankruptcy and Insolvency Act, the Canada Deposit Insurance Corporation Act, the Companies’ Creditors Arrangement Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act to allow the Governor in Council to prescribe the meaning of “eligible financial contract”. Those Acts are also amended to provide that, after an insolvency event occurs, a party to an eligible financial contract can deal with supporting collateral in accordance with the terms of the contract despite any stay of proceedings or court order to the contrary. This Part also includes amendments to the Bankruptcy and Insolvency Act and the Winding-up and Restructuring Act to provide that collateral transactions executed in accordance with the terms of an eligible financial contract are not void only because they occurred in the prescribed pre-insolvency or winding-up period.
Part 10 authorizes payments to provinces and territories.
Part 11 authorizes payments to certain entities.
Part 12 extends the sunset provisions of financial institutions statutes by six months from April 24, 2007 to October 24, 2007.
Part 13 amends the Department of Public Works and Government Services Act to provide the Minister of Public Works and Government Services with the power to authorize another minister, to whom he or she has delegated powers under that Act, to subdelegate those powers to the chief executive of the relevant department. That Act is also amended with respect to the application of section 9 to certain departments.
Part 14 amends the Financial Consumer Agency of Canada Act to allow the Minister of Finance to provide funding to the Agency for activities related to financial education.

Suspension of Certain Standing Orders--Bill C-52

[Jay Hill, Conservative, Secretary of State and Chief Government Whip]

Mr. Speaker, I rise on a point of order. Given we ran out of time today to complete the debate on Bill C-52 and given that the failure to adopt Bill C-52 by both houses before we adjourn for the summer will result in the loss of some $4.3 billion in 2006-07 year-end measures, pursuant to Standing Order 53.(1) I move:

That the House continue to sit beyond the ordinary hour of adjournment today to consider Bill C-52.

Business of Supply

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, I rise in the House in response to the motion by the member for Labrador regarding the government's commitment to Nova Scotia's offshore accord and the treatment of natural resources in the equalization formula. The member doubts that the government has honoured its commitments. I can assure the House that nothing could be further from the truth.

Budget 2007 provides important benefits to the people of Nova Scotia as part of the Government of Canada's commitment to fair and equitable financial support for provincial and territorial health care, post-secondary education, child care, social programs and infrastructure.

Budget 2007 does even more. Nova Scotia will continue to receive 100% of offshore resource revenues, including royalties, as if these resources were on land. This fundamental aspect of Nova Scotia's relationship with its offshore resources, its ability to manage the resource, to tax and collect the royalties remains the same. This will help Nova Scotia to develop its economic potential and ensure its future prosperity.

Let me remind the House that it was a Conservative government that signed the 1986 Canada-Nova Scotia offshore petroleum resources accord, which facilitated the development of the oil and gas reserves off the coast of Nova Scotia.

In specific terms, budget 2007 will allow the governments of Nova Scotia and Newfoundland and Labrador to continue to enjoy the benefits of their 2005 offshore accords. Again, I remind the House that it was a Conservative opposition that forced the previous government to sign these agreements. The accords are unique in Canada in recognition of the provinces' unique economic and fiscal circumstances.

Budget 2007 offers Nova Scotia a positive choice for the future. It can operate under the existing equalization formula, or it can choose to opt into the new equalization formula based on the O'Brien report, if and when the province determines this as being most advantageous. By having this additional choice, Nova Scotia potentially stands to receive even higher benefits than under the existing formula while retaining its right to offset payments under the accords.

Of course, if the Nova Scotia government chooses the new equalization formula, it is only fair that the whole package would apply, including the fiscal capacity cap that is an integral part of the new equalization formula. It would not be fair to other provinces if only Nova Scotia were allowed to choose those parts of the new equalization program that benefit the province.

Finally, Nova Scotia has been given additional flexibility beyond what was set out in budget 2007. Bill C-52 would allow Nova Scotia to benefit from the new O'Brien formula for 2007-08 and provides more time to assess whether it wants to permanently opt into the new equalization formula. This option has given Nova Scotia an additional $95 million, for total benefits of $1.5 billion in 2007-08. Under this arrangement Nova Scotia will receive its full offset payments under the offshore accords.

One can begin to see the difference where it matters. In April 2007 Nova Scotia's labour force participation rate of 64% was close to a 30 year high and full time jobs have increased by 2.5% over a year ago. The economy is strong in Nova Scotia.

Canada is a sharing community. Nova Scotia's growing prosperity is in part due to strong federal support and is something to celebrate. With 100% protection of the Atlantic accords and a positive choice for the future, the province can make sustained improvements to its economic and fiscal situation for the benefit of individuals and families throughout Nova Scotia.

Here is what Charles Moore said in the Halifax Daily News:

With the federal budget having passed second reading in the House of Commons, one hopes — wistfully, perhaps — that the histrionics over the [Conservative] government's policy revision of the Atlantic Accord will die down. At least here in Nova Scotia where the new equalization deal the feds are offering amounts to a substantially more advantageous bird-in-the-hand as opposed to the pipe-dream of petro-royalty riches.

It is convenient for the opposition to isolate certain measures in the budget and, of course, with a healthy injection of partisanship, ignore the larger picture. Let us look at the benefits to Nova Scotians that the members opposite are voting against.

Restoring fiscal balance brings federal support for Nova Scotia to $2.4 billion in 2007-08 and it is more than just equalization payments. They oppose the $639 million under the Canada health transfer. They are opposed to $277 million for the Canada social transfer, including additional funding for post-secondary education and child care. The $73 million for infrastructure would be lost. The $24.2 million available to the Nova Scotia government through the patient wait times guarantee trust over the next three fiscal years would be lost. The $8.5 million available to the Nova Scotia government to implement the human papilloma virus immunization program to combat cervical cancer over the next three fiscal years potentially would be lost. The $23.2 million in gas tax funding for municipalities in Nova Scotia in 2007-08 would be potentially lost. The $2 million in corporate income tax relief from changes in capital cost allowances for buildings could be lost. The $7 million in additional corporate income tax relief from the temporary two year writeoff for manufacturing equipment over the next two years is threatened. Nova Scotia will receive $42.5 million from the Canada ecotrust for clean air and climate change.

Of course, if the budget continues to be delayed by the official opposition, many of these millions could be lost or are threatened to be lost.

We are delivering on our commitments to the people of Nova Scotia, more than any of the members opposite ever did when they were in power. They should start supporting Nova Scotians and support the budget.

[Bill Casey, Independent, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, I represent the flat earth party and we have a position on this.

I am pleased today to debate this issue and I will focus most of my remarks on the Atlantic accord aspect of the debate today.

I want to address the comments made by the very distinguished member for Edmonton—Leduc who tried to provide the perspective perhaps from Alberta. However, the part of the debate that I am focused on is not whether equalization is right or wrong or what is best for this province or that province. My focus is on the fact that I think the Government of Canada should honour a signed contract.

I believe that when the Government of Canada signs a contract this should be gold-plated. It should be bulletproof. When the Government of Canada signs its name, with the little red flag, on a piece of paper, whether it is a person in Tokyo, in Moscow, in Halifax or in St. John's, Newfoundland, the person should be able to count on that signature as being solid gold.

The contract we are talking about today, the one that has been amended so much in the budget, Bill C-52, was only signed in 2005. It is a 14-year contract signed by the Government of Canada and the Province of Nova Scotia. We are only two years into the contract and the government has decided it does not like it. Consequently, the government has put 12 amendments in the budget. I want the members opposite to notice, because what they say is not accurate, but under consequential amendments there are 12 paragraphs of amendments to the Atlantic accord.

If we go further, there are six paragraphs of amendments to the offshore revenue agreement that John Hamm signed two years ago in 2005. The government is now taking the contract signed by the Government of Nova Scotia and the Government of Canada and amending it with six fundamental changes to the contract. This is simply right or wrong and I think every Canadian has an interest in this. This is not just in the interest of Nova Scotia or Newfoundland. Every member of Parliament in this House should insist that if the Government of Canada signs a document, no matter if it is a Liberal government, a Conservative government, an NDP government or, heaven forbid, a Bloc government, the Government of Canada should honour the contract, no matter what, for the life of the contract. It is not flexible and it is not amendable. I honestly think the member for Edmonton—Leduc would agree with that.

I was just given a news article containing a comment by the Prime Minister at the G-8 a few minutes ago. He commented about my voting against the budget. He talks about how good the budget is.

I do want to say that it is a good budget and it is good for my riding. Many things in the budget do support and help my rural riding. However, that does not give the government permission to break a contract. Just because the government does some good things, it does not give it permission to break a contract. My opposition to the budget and the reason I voted against it was that I am 100% convinced that the budget does break this contract.

The Prime Minister said that the budget actually gives the Province of Nova Scotia $95 million in equalization over and above the Atlantic accord, but that is not right. He also said: .

That's one of the reasons Mr. Casey voted four times for the budget so obviously I don't think much of him changing his view the fifth time.

In all fairness, he knows better than anybody that we met with him and with the Minister of Finance over and over again. We put proposals on the table and got legal opinions. We raised it in caucus and we raised it in the House. We have done everything we can.

A week ago yesterday I realized that we were not making any headway. I wrote to the Prime Minister and put it right in his hand and said, “We're not making any headway with this by working behind the scenes. I am going to start speaking out publicly”. He took exception to that. I said, “We have to put pressure on it to make it move ahead”. I gave it to him in writing. I did not want to broadside him. I waited two days and then I made my first statement. Again, we made no progress.

On Monday morning, I wrote the Prime Minister a letter and said, “I cannot support this bill because it breaks a contract between the Government of Canada and the Government of Nova Scotia and I will not vote for it”. I made it very clear. I said it in two places in the letter.

The Prime Minister knows exactly why I voted for the budget the first time. We were in negotiations trying to find a solution but they went absolutely nowhere.

The Prime Minister says that Nova Scotia will get $95 million more in equalization, but that is not true. If the Atlantic accord were honoured, it would get the $95 million, plus the benefits of the offset that are not included in this. That is the fundamental part of the problem.

We believe the Atlantic accord could be changed with four or five words. The problem is that the budget and the accord have different wording. I have pointed this out to the Prime Minister and the finance minister several times. The accord says that the calculation of the payment will be based on the equalization formula that exists at the time. Any time the Government of Nova Scotia wants to calculate its offset payment, it would use the equalization formula that exists at the time.

Now, if we change it in 2010, it is that formula. If we change it in 2015, it is that formula. If we change it in 2019, it is that formula. That is what the accord says, which is a signed agreement and agreed to by both sides.

However, if we go to page 115 in the budget, it says that from now on it will be based on the previous formula. Instead of the vision of the accord, which is to follow along as the equalization formula evolves and changes, the budget locks it in at the previous formula. It, therefore, amends and changes the Atlantic accord fundamentally.

I asked the Minister of Finance today if he would stop saying that Nova Scotia has the option of the new formula or the old Atlantic accord, because it does not. He said it a thousand times. Many of the ministers have. I said it myself, because I believed it, until I got into this. However, it is not true. The Province of Nova Scotia and the Province of Newfoundland and Labrador do not have the option of the new formula or the old Atlantic accord. Everybody in this House has heard the Minister of Finance say that a dozen times. It is not true because the budget changes both Atlantic accord agreements. Twelve paragraphs in the accord are changed and amended and six paragraphs on the John Hamm agreement that was negotiated in 2005.

If the government wants to be honest and accurate, it should say that the Province of Nova Scotia has the choice of the new formula or an amended Atlantic accord, but that it does not have access to the old Atlantic accord.

I had hoped the minister would take my advice and be accurate and say that if that is the case. When I asked that question, he pointed out that I said that the budget was good. I did say the budget was good and that it was good for my riding but it does not give anybody the right to break a contract. We all sign contracts and we all honour them. All Canadians honour contracts. The Government of Canada should honour its contracts, no matter who signs them, whether it is the Liberals, the Conservatives, the NDP or whichever party is the government at the time. I feel very strongly about that.

I will go back to this nine paragraph agreement called the Atlantic accord. It was signed and agreed to by John Hamm and the very distinguished minister of fisheries and oceans at the time, the member from Halifax. It is a simple agreement but a very meaningful one to Nova Scotia.

Newfoundland and Labrador has a similar agreement and it means the world to Newfoundland and Labrador, as it does to Nova Scotia.

The member for Edmonton—Leduc took exception to the agreement but every province has exceptions and every province has special deals. This is our special deal and we value it tremendously.

We just signed an agreement with British Columbia to give it hundreds of millions of dollars for the Pacific Gateway. Manitoba did not get a Pacific Gateway fund, neither did Ontario nor did Digby.

Nova Scotia's special deal is the Atlantic accord and we are not flexible on it. We will continue to demand the Atlantic accord. It is only nine paragraphs long but it is a work of art. I did not realize how good it was until we got into this debate and I started to study it. It is really neat. I was moved to call John Hamm, the former premier of the province, because it is magic. I sold cars for 20 years and made a lot of deals but I could not make a deal as good as this one. It is an excellent deal and John Hamm deserves the credit.

John Hamm also agrees that this budget changes the purpose, the intent and the spirit of this agreement. I have great faith in John Hamm and his comments on it. He has helped me a great deal through this as I have learned to understand how it all evolved and how it came to be.

I am again asking the government to not only honour this signed contract, but to honour every contract. When the Government of Canada signed that contract it should have been gold-plated and recognized around the world as Canada.

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 be continuing with the business of supply.

Tomorrow we hope to conclude third reading of Bill C-52. In answer to the question on priorities, I would point out that Bill C-52, the budget implement bill, is the number one priority of this government. We can talk about other priorities after we see an indication that it will be heading for royal assent. If we do not have it, it will result in the loss of $4.3 billion in 2006-07 year end measures which include: $1.5 billion for the Canada ecotrust for the provinces; $600 million for patient wait times guarantees; $400 million for Canada Health Infoway; $200 million for protection of endangered species; $30 million for the Great Bear rain forest; $600 million for labour market agreements for the provinces; $30 million for the Rick Hansen Foundation; $100 million in aid for Afghanistan; $100 million to Genome Canada; and so on. It is a long list of important priorities financing that will be lost if the bill is not passed by the end of this session in June. That is obviously our number one priority.

Next week will be getting things done for all of us week when we consider a number of bills that are in their final stages of the legislative process.

The following bills will be placed under Government Orders for debate: Bill C-11, An Act to amend the Canada Transportation Act and the Railway Safety Act and to make consequential amendments to other Acts, which the Senate reported with amendments and which is now back before the House to receive the approval of the members, and Bill C-23, An Act to amend the Criminal Code (criminal procedure, language of the accused, sentencing and other amendments).

We are awaiting the Senate's report with amendments on Bill C-31, An Act to amend the Canada Elections Act and the Public Service Employment Act.

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, Bill C-42, An Act to amend the Quarantine Act and Bill C-47, An Act respecting the protection of marks related to the Olympic Games and the Paralympic Games and protection against certain misleading business associations and making a related amendment to the Trade-marks Act, will probably be passed by the House at third reading.

Discussions have taken place with the opposition parties, and there may be consent to fast-track some or all of the following bills: Bill C-59, An Act to amend the Criminal Code (unauthorized recording of a movie), Bill S-6, An Act to amend the First Nations Land Management Act and Bill C-51, An Act to give effect to the Nunavik Inuit Land Claims Agreement and to make a consequential amendment to another Act.

There is also a possibility of quick passage of a new bill entitled “An act to amend the Geneva Conventions Act, an act to incorporate the Canadian Red Cross Society and the Trademarks Act”, which appears on today's notice paper.

There are a number of other bills I am still hoping we could get included in getting things done for all of us week, provided that they get reported back from committee, in particular, Bill C-6 aeronautics; Bill C-27 dangerous offenders; Bill C-32 impaired driving; and Bill C-44, the bill to grant first nations people the human rights that every other Canadian enjoys. First nations people expect the House to get things done for them as well, so I urge the aboriginal affairs committee to stop delaying Bill C-44 and report it back to the House early next week. It is a priority for this government.

The Budget

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

Mr. Speaker, the hon. leader of the NDP should take a moment to reflect on what he has been opposing in Bill C-52, the budget implementation bill. If we do not pass it by June 30, here are some things that would be put in jeopardy, almost $3.9 billion in spending measures that would be lost if we do not pass it by June 30, tied to the previous fiscal year: $612 million for the patient wait time guarantee trust would be lost; $1.5 billion for clean air and climate change for the provinces would be lost; $400 million for Canada Health Infoway would be lost; $225 million for the Nature Conservancy of Canada would be lost.

We do not intend to vote against those things. We do not intend to lose things. We do not intend to change those things.

Business of the House

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

Mr. Speaker, with regard to the last point, we have already addressed that.

However, with regard to the balance of Thursday's statement, I am pleased to respond that today and tomorrow we will continue with Bill C-55, the expanded voting opportunities bill; Bill C-14, the adoption bill; Bill C-57, An Act to amend the Immigration and Refugee Protection Act; and Bill C-45, the fisheries act.

In the last Thursday statement, we indicated that we were hoping to have this week as “enhancing the quality of the life of first nations people week” but this was cancelled by the opposition parties when they did not release Bill C-44 from committee, the bill that would give the first nations protection under the Canadian Human Rights Act. Not only is it being held up now but, as early as this morning in this House, the opposition obstructed our efforts to get the bill dealt with forthwith so that first nations people could have the human rights that every other Canadian enjoys. We know that if all parties would agree to proceed with that, as we saw when we sought unanimous consent, it could proceed, but some would prefer to obstruct it.

Next week will be welcome back from committee week, when we welcome business that has been at committee, including some that has been stalled there for some time. We will deal with Bill C-52, the budget implementation bill, which will begin report stage on Monday and, hopefully, we can get third reading wrapped up by Tuesday.

Following the budget bill, we will call for report stage and third reading of Bill C-35, bail reform. After that, we will call Bill C-23, the Criminal Code amendments. I hardly remember when Bill C-23 was sent to the committee by this House. That took place long before I was even House leader 228 days ago.

Thursday, June 7, shall be the last allotted day. There are a number of other bills that we would like to include in our welcome back from committee week. I still hope we can see Bill C-44, the amendments to the Canadian Human Rights Act, to which I just referred; Bill C-6, the amendments to the Aeronautics Act; Bill C-27 dealing with dangerous offenders; Bill C-32 dealing with impaired driving; and Bill C-33 dealing with foreign investment, if the opposition parties will release those from committee.

Finance

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I have the honour to present, in both official languages, the 20th report of the Standing Committee on Finance on Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, as agreed on Wednesday, May 30, 2007.

Business of the House

[Peter Van Loan, Conservative, York—Simcoe, ON]

I would not do that.

Tomorrow is an allotted day.

Next week is constituent consultation week, when the House will be adjourned to allow members to return to their ridings and meet with constituents to share with them the activities of Parliament since the last constituency break.

For the interest of members, I will quickly review our plan for the context of our overall legislative agenda.

As he requested, this is currently strengthening the economy week, where a number of financial bills moved forward. The budget bill was sent to committee and, hopefully, it will be reported back tomorrow, or soon, so we can deal with it at third reading when the House returns after the break.

Bill C-40, an act to amend the Excise Tax Act, was read a third time and sent to the Senate. Bill C-53, an act to implement the convention on the settlement of investment disputes, Bill C-33, the sales tax bill and Bill C-47, the Olympics symbol bill were all sent to committee and we all would like to see those back in the House for report stage and third reading.

In an earlier week, Bill C-36, the bill that makes changes to the Canada pension plan and the Old Age Security Act, was made into law after receiving royal assent.

Strengthening accountability through democratic reform week was a success with the consideration of Bill C-43, Senate consultation. We had three new democratic reform bills introduced that week: Bill C-55, to expand voting opportunities; Bill C-56, an act to amend the Constitution Act, democratic representation; and Bill C-54, a bill that would bring accountability with respect to loans. We hope to continue debate on that particular bill later today.

Bill C-16, fixed dates for elections, was given royal assent and is now law, which I think is the cause of the commotion now in all the committees where Liberals are using procedural tactics. Now they feel they can do it with a free hand.

Two other democratic reform bills are in the Senate, Bill C-31, voter integrity, and Bill S-4, Senate tenure. I really would like to have the term limits bill from the Senate for an upcoming democratic reform week if the opposition House leader can persuade his colleagues in the Senate to finally deal with that bill after 352 days. We may get 352 seconds in a filibuster, but they have had 352 days so far. They have been stalling for a year.

During the consultation week, I will be interested in hearing what our constituents think of the plight of Bill S-4 and the irony of those unaccountable senators delaying it.

We dedicated a good deal of our time focusing on making our streets and communities safer by cracking down on crime. Now that we have had the help of the NDP, we restored the meaningful aspects that the Liberals gutted in committee to Bill C-10, the bill to introduce mandatory penalties for violent and gun crimes. We are continuing to debate that bill today at third reading.

Bill C-48, the bill dealing with the United Nations convention on corruption, was adopted at all stages.

Bill C-26, the bill to amend the Criminal Code with respect to interest rates, was given royal assent.

Bill C-22, the age of protection, was given final reading and sent to the Senate, although it did spend close to, if not in excess of, 200 days in committee where the Liberals were obstructing and delaying its passage.

We made progress on Bill C-27, the dangerous offenders legislation. We would like to see that back in the House.

Bill C-9, An Act to amend the Criminal Code (conditional sentence of imprisonment) and a host of other justice bills are working their way through the system.

Members can advise their constituents that when we return, we will be reviving two themes, back by popular demand. Beginning May 28, we will begin again with strengthening accountability through democratic reform with: Bill C-54, political loans; Bill C-55, additional opportunities for voting; and Bill C-56, democratic representation.

Up next is a second go-round on strengthening the economy week with Bill C-52, the budget implementation bill, which will be called as soon as it is reported back from committee.

In the near future, we will have the improvement of aboriginal people quality of life week with Bill C-44. This bill will grant first nations residing on Indian reserves access to the Canadian charter of human rights. They have been denied this right for 30 years. Unfortunately, Bill C-44 is being delayed by the opposition. This is another bill being delayed by the opposition in committee.

After Bill C-44, I intend to debate Bill C-51. The agreement establishes the use and ownership of land and resources and will foster economic development. This bill illustrates Canada's commitment to the North and to settling land claims.

I wish all members a productive constituent consultation week and look forward to more progress on the government's legislative agenda when the House returns on May 28.

Equalization

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, tonight the House will vote on Bill C-52, the budget bill that breaks the promise to Nova Scotia and Newfoundland and Labrador on the Atlantic accords.

Will the Conservative MPs from those two provinces do the right thing, do what they were sent to Ottawa to do, and support their constituents by voting against this broken promise?

Will the Chief Government Whip permit Atlantic Conservative members to vote in support of their constituents and against this flip-flopping funding fiasco?

Income Tax Amendments Act, 2006

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for his question. Indeed, Bill C-33 contains interesting aspects regarding the reduction of tax evasion. However, it is still just a band-aid on a cancer. We think there are other priorities. I spoke about the tax treaty with Barbados. If the Minister of Finance and the Conservative government really want to reduce tax evasion, they will have to amend that treaty and the law in order to turn off the tap. Until now, we have not seen the minister show any such commitment.

There has been a lot of talk about interest deductibility for Canadian companies investing abroad. The minister backed off and said that he was doing this to prevent tax evasion in tax havens. This is also a measure which could be interesting in some regards, but it is throwing the baby out with the bath water. So, it is good to see the minister backing off from his initial plan, but even if he maintains the non-deductibility of interest charges for Canadian companies investing abroad, this is still a small measure in the big picture. It is somewhat the same for income trusts.

During the proceedings of the Standing Committee on Finance, I was very surprised to see that the Minister of Finance was not able to demonstrate to us that existing income trusts were generating a tax loss that is extremely harmful to the Government of Canada's financial position.

Minister Audet told me that, in the case of Quebec, these trusts were responsible for a shortfall of about $40 million. That is significant, particularly since the Prime Minister made a promise regarding this issue during the election campaign. It seems to me that the government could have found a solution that is more respectful of the two and a half million Canadians who contributed to income trusts and who, among other things, probably believed the Prime Minister during the election campaign, when he promised that he would not touch these trusts.

That said, my greatest concern with income trusts was their effect, in the longer term, on Canada's economic development. For example, BCE, a corporation, was to become an income trust, because of the pressure exerted by one competitor, TELUS, and not because of its own corporate interests. In my opinion, this was more important than the issue of revenue losses for the federal or the Quebec government.

The hon. member is right when he says that this is creating a perverse effect, particularly regarding the value of the Canadian dollar. Many of these businesses represent a minor investment for foreigners, particularly Americans. So, we found out that there was a very real risk.

I have learned one lesson from all this. As with interest deductibility, as with income trusts, and as with many other issues, the Minister of Finance has good intentions, but he takes measures that seem improvised and whose consequences have not, in my opinion, been properly examined.

In conclusion, this will not prevent the Bloc Québécois from supporting Bill C-52. However, it could mean that, in the coming years, all parliamentarians, and the members of the Standing Committee on Finance, may have to look at this issue again, in order to suggest to the government, regardless of which party may be in office at that time, ways that are more effective on an economic, fiscal and financial level.

Opposition Motion—Finance

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

Mr. Speaker, first I would like to congratulate my colleague, the member for Jeanne-Le Ber, for his speech. Like him, I rise today to speak to the motion tabled by the Liberal Party with regard to income trusts.

As pointed out by my Bloc Québécois colleagues, we supported both the ways and means motion and the 2007-08 federal budget. The latter changes the taxation of existing income trusts, which will receive the same tax treatment as corporations at the end of a four-year transition period. Furthermore, it will no longer be possible to establish new income trusts.

There are reasons for our support. First, we must realize why corporations register as income trusts. In the March 2007-08 federal budget, the Minister of Finance indicated that, year in and year out, the different levels of government lost $400 million in revenue because of income trusts. And this was before companies such as Bell and Telus announced that they would convert to income trusts which, in and of itself, would have inflated tax losses to about $1 billion annually. This measure, which has allowed corporations to avoid paying significant amounts of tax, had to be eliminated.

Furthermore, the income trust structure practically forces a company to pay 100% of its profits to its shareholders at the end of the year. Although the shareholders are the main beneficiaries of this measure, it has a negative impact on the economy. If the company retains part of the profits for an investment project, for instance, it must pay the maximum amount of taxes on that non-distributed revenue. This is why, in addition to the tax losses associated with the conversion of a growing number of income trusts for reasons that are strictly tax motivated, we must also look at the potential loss of productivity in our businesses, in the context of a serious productivity crisis in the manufacturing sector of Quebec and Canada. Between 2005 and 2006, Canada dropped from seventh place to tenth place in the world, according to the World Competitiveness Yearbook 2007.

Over the past few months, thousands of investors have been pressuring members of Parliament to reverse this decision. I am sure we have all met citizens who have come to us to tell their stories. In my riding, some of my constituents told me that the drop in the stock market cost them thousands of dollars. During the last election campaign, the Conservative Party promised not to touch income trusts. Investors trusted that party, trusted the government, and either kept such investments or acquired more, which meant that those investments became even more attractive and we saw an artificial inflation of the price. The Conservative government is therefore partially responsible, because it deceived thousands of investors during the last election campaign.

The Bloc Québécois supports this decision, but deplores the Conservatives' lack of honesty during the last election.

It goes without saying that steps had to be taken to eliminate the corporate practice of converting to income trusts in order to avoid paying taxes. Until now, only shareholders were taxed on dividends, not the trust itself.

I also want to mention the importance of keeping campaign promises to voters. A promise made to the people is sacred and must be respected. During the election campaign, the Conservatives had two options. They could easily have said that they would make changes once in power, or they could have avoided creating false hope by saying nothing about it. In other words, they should have stuck to what was in place and made a decision at the right time.

In 2006, companies that decided to convert to income trusts accounted for $70 billion worth of market capitalization, and that is not including telecommunications giants BCE and Telus, which also planned to convert.

Canada has about 250 income trusts worth about $200 billion in sectors ranging from real estate, oil and gas and telecommunications to food processing and manufacturing. The income trust craze was getting so big that it was endangering the national economy.

Again yesterday, the Bloc Québécois issued a news release demanding the elimination of tax havens. My colleague talked briefly about tax havens earlier. It would have been nice to see some steps taken against these tax havens, which are causing Canada to lose billions of dollars.

Given that some companies are taking advantage of interest deductibility to deduct interest charges in a number of jurisdictions, which is a form of tax evasion, and given that the Bloc Québécois is strongly opposed to tax evasion and the use of tax havens, we cannot support this motion. We will vote against the Liberal Party's motion.

Let us not forget that the bill concerning interest deductibility will be studied in committee, and that the Standing Committee on Finance will have an opportunity to submit its recommendations. Everyone will have the opportunity to suggest solutions to this problem during committee meetings.

The Bloc Québécois is very concerned about the increase in tax evasion in Canada. Canadian investments in tax havens between 1990 and 2003 soared, reached unprecedented levels, increased considerably. Canadian corporations invested large and growing amounts in countries recognized as offshore financial centres, particularly in the Caribbean. Assets held by the financial sector have practically increased tenfold, rising from $8 billion in 1990 to $72 billion in 2003. Barbados, where Canadian corporations operate 1,700 subsidiaries, is ranked the third most popular destination for Canadian capital abroad, after the United States and Great Britain.

Bill C-52 which is presently being studied by the House, amends the tax treatment of income trusts in order to eliminate the advantage of this entity over a corporation.

The Bloc Québécois has been giving thought to the issue of income trusts for a few years. We do not want income trusts to be abolished. One solution might be to introduce a minimum tax on income trust profits rather than preventing corporations from establishing themselves as income trusts.

With this bill, the government will impose a 21% tax for 2007 and will add 13% in subsequent years.

In closing, we will vote against the Liberal Party motion.

Business of the House

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

Mr. Speaker, as you are aware, this week is strengthening accountability through democratic reform week. It has been a busy week for the democratic reform family of bills.

We sent out invitations for the first birthday of Bill S-4, the Senate tenure bill, which Liberal senators have been delaying for almost a year now.

While we are disappointed with the behaviour of Bill S-4's caregivers, we did have some good news this week with the successful delivery of two new members of the family: Bill C-54, a bill to bring accountability with respect to loans; and Bill C-55, a bill to expand voting opportunities.

There is more good news. We are expecting.

Tomorrow, I will be introducing an act to amend the Constitution Act, 1867, on democratic representation, which is on today's notice paper.

Bill C-16, fixed dates for elections, was finally allowed by the clingy Liberal-dominated Senate to leave the nest when it was given royal assent last week.

With respect to the schedule of debate, we will continue today with the opposition motion.

Friday, we conclude strengthening accountability through democratic reform week with debate on the loans bill, possibly the Senate consultation bill and, hopefully, Bill C-52, the budget implementation bill.

Next week will be strengthening the economy week, when we will focus on helping individuals, families and businesses get ahead.

Beginning Monday, and continuing through the week, the House will consider: Bill C-52, the budget implementation bill; Bill C-33 to improve our income tax system; Bill C-40, to improve the sales tax system; Bill C-53, relating to investment disputes; and Bill C-47, the Olympics bill, which help us have a successful Olympics. Hopefully, we can get to Bill C-41, the Competition Act.

If time permits, we will also call for third and final reading Bill C-10, the minimum mandatory sentencing bill.

Thursday, May 17 shall be an allotted day.

Wednesday, May 16, shall be the day appointed, pursuant to Standing Order 81(4)(a), for the purpose of consideration in committee of the whole of all votes under Canadian Heritage of the main estimates for the fiscal year ending March 31, 2008.

Thursday, May 17, shall be the day appointed for the purpose of consideration in committee of the whole of all votes under National Defence of the main estimates for the fiscal year ending March 31, 2008.

Finally, there is an agreement with respect to the debate tomorrow on the 13th report of the Standing Committee on Public Accounts. I believe you would find unanimous consent for the following motion.

I move:

That, notwithstanding any Standing Order or usual practice of the House, the debate pursuant to Standing Order 66 scheduled for tomorrow be deemed to have taken place and all questions necessary to dispose of the motion to concur in the 13th Report of the Standing Committee on Public Accounts be deemed put and a recorded division be deemed requested and deferred to Wednesday, May 16, 2007, at the expiry of the time provided for Government Orders.

Business of Supply

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, the Liberal party has chosen to introduce an opposition motion today that raises a good number of points for which we are far from having ideal solutions. Having said that, this motion demonstrates how the approach of the Conservatives lacks attention to detail. They have not really found a way to solve the problems. However, the motion offers solutions that I find inadequate. Therefore, the Bloc Québécois will vote against this motion, as it is presented.

The government has not properly dealt with some problems. For example, GST rebates for tourists comes to mind.

An announcement was made but it was recognized, after the fact, that there were problems in terms of organized tours, as well as outfitters and duty-free shops. They have corrected part of that, but not everything has been settled. Since there was some improvisation, the result was that major changes had to be made later.

It is the same for income trusts, except that it is even more serious.

During the election campaign, the government said that it did not want to change the rules of the game.

Some of my fellow Quebecers, who are not necessarily supporters of the Bloc Québécois, have told me that they put their savings into these entities. They thought that the rules of the game were clear, but they were changed without notice. They want to know whether a solution can be found to this problem.

We have listened to them. We have to abide by the principle that companies and trusts pay their share of income tax. On the other hand, is there no solution that would counteract the negative effects this is having, particularly for individual investors? We have to put a little more thought into finding a solution. This is another example of the government’s ad hocery.

On the question of deductibility, that remains to be seen, because the bill that will allow this part of the budget to be implemented has to be tabled first. Everyone has to know the rules of the game.

Next Monday, it seems, the Minister of Finance will make a speech to clarify the situation. However, it is obvious that the government has been very inept, and has more or less thrown the baby out with the bathwater. It sent a very ambiguous message: that the interest will no longer be deductible when investments are made for the good of our economy, even though a number of countries in the world apply that rule. On the other hand, not enough attention was drawn to the fact that this was going to eliminate tax avoidance. More work will be needed on that subject.

The Liberals have introduced a very partisan motion. When considering economic issues like these, it is a little dangerous to try to go too fast. Strangely, they seem to be reacting that way because the Conservatives went too fast themselves.

On the question of interest non-deductibility, in order to do the job, the measure must obviously target only the abuse, very precisely. We must ensure that we achieve that result. It will not be easy, because these are very complex questions. It would be wise to think about it very carefully.

The Liberal critic is talking about a working group to discuss it, and the Minister talked about the need to fine-tune things. Maybe they could get together.

It is important that a clear and moderate message be sent to the economic community and the public as a whole. I think we could agree on that.

The government says that it wants to tackle tax havens. In fact, the Standing Committee on Finance is meeting to consider the questions raised in a motion by the Bloc Québécois. The ultimate tax haven, the one the government should be taking on, is Barbados. Canadian companies that invest money there, knowing that the interest rate there is very low, can bring those profits back here without being taxed. That is not the general rule in tax treaties. Ordinarily, they provide that when money is invested in another country, it is taxed when it returns to Canada, if the two tax systems are not equivalent. But under the Liberal government, a little paragraph was added—in section 5907—exempting that money from taxation, with the result, according to the Auditor General’s 1990 estimates and the extrapolation by Statistics Canada, that this income amounts to $4 billion annually. It comes in from Barbados and it is not taxed.

I believe, at a rough estimate, that we end up losing some $800 million in income tax revenues. Obviously this money that businesses do not pay—because they take advantage of this tax haven—is money that others pay, middle class people and all taxpayers who do their part. This also means less money that could be allocated in part to social programs. On one hand there are companies that can bring home profits without being taxed, and on the other there are people who are paying too much in taxes because of this.

That is a considerable amount of money. There is a way of settling this problem, namely by quite simply getting rid of section 5907. This very concrete and practical measure could be implemented. It would immediately have a very significant effect and it would send the following message to all taxpayers: we are trying to make the situation a bit fairer; we do not tolerate this sort of situation. This is a tax loophole with the ability to disappear clearly and neatly, if the practical solution is applied. However, as far as interest deductibility is concerned, it is not easy to know what the solution is.

So there is a problem. The Liberals are dealing with it in one way in the motion, but in our opinion a lot of things are getting all mixed up at once. This issue is being associated with the fact that there are a lot of foreign takeovers of companies. This may be one element, a variable that is taken into account, but it is also the result of several years of operation in Canada, during which people were told that this is a free market and we would see, in the end, whether we were winners.

A detailed analysis of this question is needed. It is true that many Canadian companies are buying foreign companies. The net result, though, even if there are more that buy foreign companies, as far as the size of investments goes, we are clearly in the red. This matter must be examined. The solutions, however, are systemic, and a much broader policy will be needed than the one found in the motion we are discussing today.

The first aspect in the motion is the issue of non-deductibility. The second aspect is the issue of trusts.

There is a big problem with income trusts because people have to pay their taxes. It became clear that the mechanism that was created for a certain kind of capital was being used by companies in sectors that clearly did not need it. A trend was developing, especially in telecommunications. It became a way to get a tax break without producing wealth.

I think that the underlying principle was unacceptable. That being said, the way they did it was also unacceptable because they pulled the rug out from under investors without warning after having told them that the rules of the game would not change. People who had saved up $50,000 or $100,000 or $200,000—their life savings or at least a substantial portion thereof—were deprived of income that, in many cases, they had worked for their whole lives. I can well understand why people who have been affected by this issue are angry.

So how should we react to the Liberals' motion? Apparently, according to the Liberals' proposal for income trusts, people should be taxed according to the alternative solution the Liberals proposed, which was summarized in the 14th report of the Standing Committee on Finance.

Let us not forget that this report was the product of a consensus indicating that solutions had to be examined. The Bloc Québécois proposed a simple solution: extending the moratorium, the transfer period, from four to 10 years. The Liberals suggested another proposal that we consider unacceptable. As such, that part of the Liberals' motion is totally unacceptable to the Bloc Québécois because they are trying, in a roundabout way, to make it all non-taxable. I think that that aspect of the motion has no future.

The bottom line is that there is now a perception among electors and the general population that some people are more equal than others when it comes to taxation. Because of the complexity of the systems, because of what has been developed over the years, because of the expertise that some companies may have access to, there are some people who maximize their tax benefits, to the limit and to the extreme. Hence the reaction of wanting to do away with the tax advantage.

We must take the time to think and look at how these things are determined to ensure that at the end of the day, the reaction is sensible and rational. Sometimes, the possibility of tax savings should be available, because it has positive impacts on the economy. But we must find ways to stop abuse from happening.

The Liberal motion also refers to the fact that the government's two measures are the cause of foreign takeovers. I do not think that a direct causal link can be made in this way, but the fact remains that we must address the phenomenon of foreign takeovers of Canadian and Quebec companies.

In Quebec, we are obviously now carefully assessing what the impact of Alcoa's takeover of Alcan would be. All the consequences of such a takeover must be reviewed, because based on the information I have seen, this transaction would mean that 37% of all of this new giant's aluminum production would come from Quebec.

Are there not in fact benefits to be gained from this kind of transaction? We must have a closer look at this and ensure that the existing legal mechanisms concerning foreign investment review are fully utilized. In that respect, we must ensure that our legislation is consistent with the new, current economic reality of globalization. Ultimately, when a transaction is being assessed for its relevance to the Canadian economy, important social factors must also be considered, such as the impact on employment in certain regions, for instance, and the repercussions of such a transaction on older workers. Not only will this serve to correct some purely economic aspects, but it will also take into account other types of impact we can expect to see.

This motion is a bit of a hodgepodge of a number of conditions. In my opinion, its current wording is a little outdated, considering our current reality. On one hand, with respect to interest deductibility, the minister announced that he will make a statement next Monday that will make his position clear. On the other hand, yesterday, the day before the debate on this motion, the Liberal finance critic himself suggested that an expert panel should examine this issue.

Perhaps we need to head more in this direction, in order to ensure that the Standing Committee on Finance, which is currently working on these issues, can complete its work, reach some conclusions and make some recommendations, especially since we can sense the government's desire to achieve some real results and outcomes. I thank the government for its support of the Bloc Québécois motion to study the issue of tax havens. This proves that they want to have a closer look at these issues. However, we must be prepared to study all situations. Certain aspects have to do with interest deductibility. There is also the matter of the treaty with Barbados, which, in my view, is a key factor.

I hope that the Standing Committee on Finance can produce a report on which there is as much agreement as possible, with recommendations that will have an impact as soon as possible. Maybe we can set as our deadline the fall economic statement or, at the latest, next year's budget. Clearly, if the work of the Standing Committee on Finance should result in a recommendation to abolish section 5907, which enables companies to bring $4 billion in profits from Barbados back to Canada without paying taxes, that would send a message to Canadians that their elected representatives have identified a fundamental inequity that must be corrected. I think that would be a key recommendation.

In my opinion, the committee should take a thorough look at interest deductibility. This week, we met with experts from the Canada Revenue Agency, who are very cautious about these and other issues.

It is not easy to get figures. The government needs to be more transparent.

The message that should be sent to people at the finance department or the revenue agency or to other government experts is that we need information in order to make the right recommendations.

We need to stop playing hide and seek with money, or else we will encourage the current perception that there can be inequity in the tax system, but it cannot be addressed because it is protected by people behind the scenes.

We have a wonderful opportunity to move forward and correct this situation in the Standing Committee on Finance. Personally, I hope that this will be the best way of ensuring that, at the end of the day, we can make recommendations to address these issues.

Regarding income trusts, Bill C-52 is already before us. The budget has been adopted and now must be implemented. What we must do is keep listening.

We have to listen to people who have suffered serious losses, those in a position to provide arguments on this issue. Maybe we should hold a debate in the fall, and, in a future budget, determine what is feasible. Nonetheless, we must always respect the principle of tax fairness and strive to make changes that will improve the situation, allow more fairness in taxation and take into account any potential impact on the economy.

We can learn from this motion and keep the following in mind. When the government makes announcements on economic investments—primarily in the budget and on other occasions—it should make sure that it has considered every possibility and not present half-baked initiatives. Otherwise, we are sending economic stakeholders a mixed message. That is what the government has to be aware of now in the matter of deductibility of interest expenses. There needs to be a clearer message.

Consider the example I gave on the GST rebate for tourists. Again, there is still some work to complete. Often it is not just a matter of small details, but things that have a major economic impact. These days, we must always consider the big picture in the context of globalization.

Like everyone else, the representatives of the multinationals in Canada—whose head office may be in the United States or elsewhere—are well aware of the conditions on investments. We should not have to kneel down to these companies. We should make sure the representatives from Quebec or Canada within these multinationals have what they need to get authority from their head offices in order to capitalize on factors that would attract the companies and create the right conditions to move forward.

We thought the Conservative government would have been particularly sensitive about the importance of these issues, but we are seeing the opposite and it is quite surprising. The government, which says it defends business interests, has introduced a number of initiatives that lack polish, that need fine tuning, especially on aspects that could have been planned or have already been studied. These initiatives could have been introduced and implemented in a very clear manner.

I am not saying that decisions can always be made that work for everyone. Sometimes we must make decisions even if some people will be penalized. However, in the end, the criteria to be considered are transparency and respect for what has been proposed. If ever there is a need to reverse a decision or way of doing things because a party, having come into power, realizes that it was mistaken, then a way must be found to penalize the fewest possible people.

Promises made during an election campaign—such as the one pertaining to income trusts—are in some ways moral commitments, contracts entered into with the voter. In this case, the Conservatives have broken this moral contract. Therefore, we are right to bring forward our proposals. However, the way in which the Liberal Party is proposing to move forward in this motion, today, is unacceptable. With regard to the proposed solutions, the motion does not reflect comments made about interest deductibility. With regard to income trusts, it is even worse, because the proposal does not resolve the basic issue of the need for tax equity.

Senate Appointment Consultations Act

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, taking part in this debate on Bill C-43, is a little like going to the dentist. Personally, it is the last thing I want to be doing, but what can I say, sometimes we need to go to the dentist. However, we never need to go to the tooth puller.

I truly think the bill before us is of absolute no relevance. It addresses a very secondary matter to the detriment of more pressing priorities than the proposed reform, and that the Conservative government should be concerned about.

Bill C-43 provides for the consultation of electors in a province with respect to their preferences for the appointment of senators to represent the province.

Part 1 provides for the administration of a consultation, which is exercised under the general direction and supervision of the Chief Electoral Officer.

Part 2 provides for the holding of a consultation, initiated by an order of the governor in council.

Part 3 provides for a process whereby prospective nominees may confirm their nominations with the Chief Electoral Officer.

Part 4 addresses voting by electors in a consultation.

Part 5 sets out the rules for the counting of votes pursuant to a preferential system, which takes into account the first and subsequent preferences of electors as indicated on their ballots.

Parts 6 and 7 deal with communications and third party advertising in relation to consultations.

Part 8 addresses financial administration by nominees.

Part 9 provides for the enforcement of the enactment, including the establishment of offences and punishments for contraventions of certain provisions.

Part 10 contains transitional provisions, consequential amendments to the Canada Elections Act and the Income Tax Act, coordinating amendments and commencement provisions.

As I mentioned from the outset, the bill is irrelevant. First, it is quite clear to us that the government, the House of Commons, cannot unilaterally change the Senate without the Constitution being changed. Since the Constitution is a federal constitution, all the stakeholders, in other words, all the provinces, Quebec, the federal government, the parliaments of these different jurisdictions, have to take part in the reform process.

As I said at the beginning, we do not think this bill is appropriate because what we really need is something that includes a review of the Constitution. In the late 1970s, the Supreme Court of Canada studied Parliament's ability to unilaterally amend the constitutional provisions concerning the Senate and, in a 1980 decision concerning Parliament's jurisdiction over the upper chamber, decided Parliament could not unilaterally make decisions about major changes to the essential character of the Senate.

It is likely this legislation will encounter opposition from the provinces, including Quebec. Quebec is not the only province that does not support this government's approach in tabling this bill. The government is heading down a path that leads to the reform of an institution whose relevance is in doubt. Even so, the proposed reform is a minor one.

Do they seriously think that a constitutional negotiation process—which would be necessary, as I said—makes sense right now when the government and Parliament should focus their attention on far more important issues? Just consider reintegrating Quebec into the Constitution that Pierre Elliott Trudeau unilaterally patriated.

All of Quebec's governments, regardless of whether they were Liberal or Parti Québécois, have refused to sign the Constitution as it was patriated in the early 1980s. I would note that there is a three-party consensus on this in the National Assembly among the Liberal Party of Quebec, the Parti Québécois and the Action Démocratique du Québéc.

It is clear to us that neither the powers of the Senate, nor the senator selection method, nor the number of senators for each province, nor the residency requirements for senators can be changed without going through the usual amendment procedure set out in section 38 of the Constitution Act, 1982, which requires the consent of the Senate, the House of Commons, and the legislative assemblies of at least two thirds of the provinces, that is, seven provinces, making up at least 50% of Canada's population.

This is the famous 7/50 formula.

We can see that this bill is irrelevant and could even be harmful, setting in motion a round of constitutional negotiations on a relatively minor issue, as I said. On September 21, 2006, Quebec's intergovernmental affairs minister, Benoît Pelletier—who was recently reappointed—testified before the Special Senate Committee on Senate Reform, where he stated:

—from the Quebec government perspective, clearly any future transformation of the Senate into an elected chamber would be an issue that should be dealt with through constitutional negotiations and not simply through unilateral federal action.

He added:

If the Senate becomes a chamber of elected representatives, its original purpose would be changed. Whether this is achieved directly or indirectly, it becomes an extremely important change which must be debated within the framework of constitutional discussions.

So as I mentioned, Quebec's intergovernmental affairs minister, Benoît Pelletier, simply reiterated Quebec's traditional position to the senate committee by saying two things: first, that the federal government cannot reform the Senate unilaterally, and second, that the federal government cannot achieve indirectly what it cannot achieve directly. Clearly, introducing this bill is a way of doing indirectly what the government does not want to do directly.

As I said earlier, Quebec is not alone in its opposition to electing senators. The premiers of Saskatchewan and Manitoba have called on the government to abolish the Senate instead of trying to reform it. Even the premier of Ontario has expressed serious doubts, saying that electing senators would exacerbate inequalities, under the Senate's current mandate.

Electing senators indirectly would change the relationship between the House of Commons and the Senate and create confusion. I will come back to this. These changes cannot be made unilaterally without the consent of Quebec and the provinces, as Quebec is now recognized as a nation by the House of Commons. Everyone will appreciate that such a reform would be most unwelcome and would not be in keeping with the spirit of either the Constitution or what has been passed in this House.

I said that the first reason this bill is irrelevant is that it will inevitably lead to a round of constitutional negotiations, which do not make a great deal of sense, whether they concern the Senate or just the election of senators. Therefore, once again, if the government goes ahead, it will come up against this constitutional problem.

The second thing that, to me, makes this bill irrelevant, is that, even reformed by Bill C-43, the Senate is still an useless institution. Originally, the Senate was supposed to be a chamber of sober second thought. It was also supposed to protect regional interests. But when we look at the current makeup of the Senate, we see that the appointments were clearly partisan, which has distorted the nature or mandate of the Senate.

Introducing the election of senators will not resolve the issue, because senators will sooner or later have to affiliate themselves with a political party in order to have the necessary resources for the elections. So the Senate will become more partisan and we will depart even further from its original purpose, which, in my opinion, is no longer relevant in the 21st century.

As I was saying, the indirect election of senators would not improve this situation. On the contrary, the electoral process will tend to increase the role of political parties and indirectly elected senators could become concerned with things that now fall under the authority of the House of Commons. This would create a duplication, or, at the very least, confusion, at a cost of $77 million a year. We think this is an extremely high cost for an institution that is not only useless, but that , in the case of the proposed reform, would create confusion and a significant duplication of legitimacy.

It is important to note that because of the evolution of the democratic process in Canada, in the provinces and in Quebec, no province has had an upper house since 1968.

It is interesting to note that members of several provincial upper houses—unlike the Senate of Canada—once had to earn their election, for example, Prince Edward Island. Such upper houses have disappeared over the years, however. Quebec abolished its legislative council in 1968. That was nearly 40 years ago.

Furthermore, I feel it is important to point out another factor. Bill C-43 is irrelevant. Despite the amendments proposed by the bill, the Senate would not be truly democratic. The indirect election by Canadians would give the Senate a superficial democratic credibility. In many respects, the Senate would remain a democratic aberration.

First of all, public consultation is not binding. The bill provides for public consultation, but does not talk about an election, per se, in order to select senators. The Prime Minister maintains the authority to appoint or not appoint the senators chosen by the public and could therefore decide not to appoint a candidate selected in the election process. In one of the background papers provided by the government concerning this bill, it states:

The Prime Minister can take into account the results of the consultation when making recommendations to the Governor General regarding future representatives of a province or territory in the Senate.

Furthermore, how can we trust this Prime Minister, who did not hesitate to appoint Michael Fortier to the Senate, even though he himself criticized the Liberals' partisan appointments? We therefore see that this new Conservative government—which is no longer new, since it has been in power for 15 or 16 months—simply copied the Liberal method of appointing senators.

Also, I recall very well that, during the election campaign, the Prime Minister promised to appoint only elected members to the cabinet. With that Senate appointment, he broke the promise he had made to voters during the campaign. During the next election, voters will be able to judge for themselves how well the Conservatives can keep their promises.

One more factor is very worrisome. Voters will not be represented equally in the Senate. For instance, in the case of Prince Edward Island, one senator will represent some 27,000 voters, while in other areas of Canada—particularly in Quebec—that proportion will be much higher.

There will be virtually no way to remove senators.

The bill provides for the consultation of the population for the appointment of senators, although it is not binding, as we have just seen. They will be appointed for one term. I realize that some say that the bill provides for a maximum term of eight years for senators, which could solve the problem. But it seems to me that presenting oneself to the electorate only once in eight years is far from a guarantee that these so-called “elected” senators will reflect the concerns of citizens of Quebec or Canada.

In addition, the Senate is an institution that was created a very long time ago, and I find it ridiculous that certain restrictions on presenting oneself as a candidate for the position of senator have been retained. At present, you must be at least 30 years old and own real property worth at least $4,000 in the province and the riding that the individual is appointed to represent. Hence, all those under 30 are excluded. I find that very discriminatory. The rule about assets penalizes a part of our population that might seek to be candidates for such elections. This additional factor demonstrates that the proposal before us does not address the root cause of the problem and that it even seeks to rehabilitate an institution that has lost credibility in the eyes of a good number of Canadians and Quebeckers.

Indirectly, the elected Senate would even undermine the parliamentary system. I will come back to that. As you know, in the British parliamentary system, the executive defends the confidence conferred on it by the House of Commons, which is also elected. Thus, the election of the Senate alone would undermine the preeminence of the House of Commons and would create confusion. The election of two Houses would complicate the issue of preponderance and consequently would weaken the parliamentary system.

The Bloc thinks that this is an ill-conceived and irrelevant bill. Moreover, there is no set spending limit for the candidates. The government says that the individual contribution limits and the transfer limits imposed on parties will be sufficient to limit spending. However, since there is an unlimited number of potential candidates and election spending is subject to partial reimbursement out of public funds, it seems unreasonable not to limit individual spending. Lastly, some seats could be vacant for four years, unless there is a reserve. If a senator left their seat for health reasons, if they died or left for some other reason, we would have to wait four years for a new senator. As I said, unless a reserve is created, the bill is ill-conceived from this perspective.

For all these reasons, we would have preferred debating another subject today. As I said earlier, I feel as though I am at the tooth puller instead of being at the dentist. I do not want to alienate my dentist or dentists in general. It is good to go to the dentist, it is even recommended. But it is not recommended to go to a tooth puller.

I think we should be addressing real problems and real issues, such as the fiscal imbalance. In the budget—we continue to support Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007—there is a partial financial correction to the fiscal imbalance, but the crux of it is not corrected. The federal government has too much revenue in relation to its responsibilities. Its transfers related to matters under provincial jurisdiction continue to keep Quebec and the other provinces at the mercy of unilateral decisions made here in Ottawa, even though those jurisdictions belong to the provinces. The Bloc feels that the tax base corresponding to the transfers for health, social programs and post-secondary education should, quite simply, be transferred to the provinces as tax points, whether through the GST or income tax.

Still with the fiscal imbalance, the ability to control or even limit the federal government's spending power should be a priority. The Minister of Finance and the Prime Minister have repeatedly promised legislation to limit federal spending power. We are still waiting for this legislation. Such legislation would allow a province, such as Quebec for example, to withdraw from a program implemented, in a shared or unilateral manner, by the federal government in the jurisdictions of the provinces and Quebec. Quebec could opt out with full compensation and without condition. This is important for the people of Quebec and people who need a good health care system, a good education system and social programs that provide an adequate social safety net. For those people, the Senate is of little or no concern in their daily lives.

I would now like to talk about the environment. It seems to me that, ever since the plan was introduced by the Minister of the Environment, criticism has not stopped flooding in from all sides, including from scientists, environmentalists and industrialists alike. We just learned this morning about a poll conducted in Alberta that reveals that 92% of Albertans believe that the oil companies should make a greater effort to reduce their greenhouse gas emissions. Even more interesting, 70%—I am not sure about this percentage—of Albertans said that these reductions should be in absolute targets, and not intensity targets. What people want in the next few years is a reduction in greenhouse gas emissions compared to what we have seen in recent years. They do not want to see merely a slower increase, which would still mean more in the end, even if we produce less per tonne. It is not only Quebeckers and the general population of Canada that are concerned about this. These are also the concerns of Albertans, who, as we all know, are closely tied to the oil and gas industry.

I would like to talk about foreign policy. This should have been a concern. We do not have a foreign policy statement. The Liberal government, before the election that brought its defeat, had introduced a foreign policy statement dealing with defence and international trade.

No one seems to know where we are headed with this, but we are still spending. The government has just announced the purchase of more tanks, but they were purchased on the sly. International cooperation, however, has not seen much development.

Lastly, employment insurance, assistance programs for festivals and exhibitions, the Saint-Hubert airport, these all deserved greater attention, but that attention has been diverted to Bill C-43.

Bill C-52--Budget Implementation Act, 2007--Speaker's Ruling

[The Speaker, Peter Milliken]

I am now prepared to rule on the point of order raised by the hon. member for Scarborough—Rouge River on April 17, 2007, concerning the procedural admissibility of Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007.

I would like to thank the hon. member Scarborough—Rouge River for having raised this issue as well as the hon. Leader of the Government in the House of Commons for his submission.

In raising this point of order, the member for Scarborough—Rouge River appealed to the Chair to find that Bill C-52 is improperly before the House by virtue of the provision included in subclause 13(1) of the bill, which amends paragraph 122.1(2)(b) of the Income Tax Act.

This provision, if enacted, would regulate the taxation of existing income trusts during a transitional period by providing for interim taxation rates based on the “Normal Growth Guidelines” issued by the Department of Finance on December 15, 2006.

The hon. member drew the attention of the Chair to the absence of a corresponding measure from a ways and means motion tabled on October 31, 2006, Ways and Means Motion No. 9.

In reviewing the hon. member's submission, it became apparent to the Chair that the hon. member for Scarborough—Rouge River must have been referring to Ways and Means Motion No. 10, tabled on November 2 and concurred in on November 7, 2006, since Ways and Means Motion No. 9 is still on the order paper and has not been concurred in.

That being said, the member is quite correct in pointing out that while the motion to which he refers does provide for a transitional exemption applicable to existing income trusts, it does not include the protocol based on the “Normal Growth Guidelines” which later appeared in subclause 13(1) of the bill.

Describing these “Normal Growth Guidelines” as “no more than a press release”, the hon. member characterized the effect of the provision in question as “a delegation of subordinate law, not by regulation nor by ministerial directive, but by press release”.

He expressed concern about the possibility alluded to in the minister's press release that criteria not included in the bill might be invoked after its coming into effect to rescind the taxation deferral with respect to specific income trusts and he declared that this would amount to the imposition of an unlegislated supplementary tax burden.

The hon. member went on to cite a number of authorities, including the Statutory Instruments Act, in support of his contention that subclause 13(1) of the bill attempts to exempt from parliamentary scrutiny by the Standing Joint Committee on the Scrutiny of Regulations a measure that is, in all but name, delegated legislation.

Finally, the hon. member stated that subclause 13(1) of the bill fails to conform to the government's own drafting guidelines, in particular to its standards for the making of proper subordinate law as expressed in the Guide to Making Federal Acts and Regulations promulgated by the Privy Council Office. He concluded with an appeal to the Chair to rule subclause 13(1) of Bill C-52 null and void.

The hon. government House leader responded to the point of order on April 19. On the issue of the prior inclusion of the provision of subclause 13(1) in a previously adopted ways and means motion, he drew the attention of the Chair to Ways and Means Motion No. 20, adopted by the House on March 28, affirming that the latter motion did indeed include the provision in question.

With respect to the argument that subclause 13(1) of the bill provides for the inappropriate delegation of the right to make subordinate law, he declared that the provision in question violates no procedural prohibition recognized by this House and is therefore a matter for debate. He added that the same principle applies to the issue of the conformity of the bill to the government's drafting guidelines.

The hon. Government House Leader also noted that it is not at all uncommon for bills to establish forms of delegated legislation not subject to the Statutory Instruments Act.

I have examined this matter with care in view of the complexity of the issues raised. As I have done on many occasions in the past, I must remind the House that my role here is restricted to ensuring that our rules of procedure and our practice are respected. Potential questions or difficulties with respect to the interpretation and future implementation of bills currently before the House are matters of law and are not for the Speaker to answer or resolve.

The legal status of the “Normal Growth Guidelines” issued by the finance department on December 15, 2006 and referred to in subclause 13(1) of the bill and the authority of the minister to issue such guidelines are likewise beyond the purview of the Chair. What does or does not fall within the definition of “statutory instrument” is a legal question and not one of procedure.

In our practice, the Standing Joint Committee on the Scrutiny of Regulations has the duty of examining whether the government is employing “the appropriate principles and practices...in the drafting powers enabling delegates of Parliament to make subordinate laws”. That quote comes from page 689 of House of Commons Procedure and Practice.

It is not, however, for the Speaker to rule on such questions or to evaluate the government's compliance with its own rules for drafting legislation. There is, furthermore, no procedural objection to making reference in legislation to documents which are not subject to review by the House or its committees. Whether provisions which do so should be adopted, amended or rejected is a decision for the House to make.

With regard to the issue of the link between ways and means motions and legislation based upon them, it is perhaps useful to quote a passage from House of Commons Procedure and Practice at page 760. It states:

Ways and Means motions can be expressed in general terms, or be very specific, as in the form of draft legislation. In either case, they establish limits on the scope--specifically tax rates and their applicability--of the legislative measures they propose.

This principle is reflected in Standing Order 83(4), which states in part:

The adoption of any Ways and Means motion shall be an order to bring in a bill or bills based on the provisions of any such motion—

Having carefully examined the ways and means motions relevant to this question, the Chair agrees that the contested provision in subclause 13(1) of Bill C-52 does not appear in Ways and Means Motion No. 10, to which the hon. member for Scarborough—Rouge River refers, which was tabled on November 2 and adopted on November 7, 2006.

However, as the government House leader has indicated, the provision does appear in Ways and Means Motion No. 20 tabled on March 27 and adopted on March 28, 2007. Bill C-52 is based on Ways and Means Motion No. 20. Since the wording of the bill accurately reflects that of the motion, the Chair must conclude that the bill is fully in compliance with the requirements of Standing Order 83(4).

The other issues raised in the point of order of the hon. member for Scarborough—Rouge River, while interesting and cogently argued, are related to the substance of the bill and to legal issues arising therefrom and not to procedural considerations. While they may well be of interest to members as they consider this legislative proposal, they are beyond the purview of the Chair.

In conclusion, the Chair has not found any procedural irregularities in this matter. Subclause 13(1) of the bill and Bill C-52 as a whole are in order and the bill can proceed in its current form.

I would like to once again thank the hon. member for Scarborough—Rouge River for his vigilance in drawing these matters to the attention of the House.