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.

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

It's hard to imagine how one document, Bill C-52, could offend more people. Literally, a mari usque ad mare usque ad mare, from sea to sea to sea, to the industrial heartland of the nation out to Alberta, where, if you will, it's part of our new economy.

But I wanted to focus on Mr. Dielwart in my brief time. We had a presentation here yesterday and the presenter talked about the unintended negative consequences of this move with respect to the income trust fiasco. I don't generally go to paranoia, but I'm just wondering whether it was unintended or if this was a move intended to destroy the sector, because some of the consequences of the decision were blindingly obvious.

It would be blindingly obvious that this would give a boost to the growth of MLPs in the U.S. It would be blindingly obvious with experience in hand that it had potential to destroy billions of dollars worth of investment. It was blindingly obvious that it would tilt the playing field in favour of private equity, etc., and we see that rolling out literally in waves.

I know your group was talking to the previous government about energy trusts as a unique entity needing to be left alone, if you will, and it would be blindingly obvious that there are going to be a bunch of takeovers.

So I disagree with yesterday's presenter that it is unintended; these consequences were readily predictable and possibly even intended. So I want you, Mr. Dielwart, to tell this committee what's unique about energy trusts that they need a carve-out.

[Professor Paul Hobson, Department of Economics, Acadia University, As an Individual]

Thank you, Mr. Chair.

Let met briefly introduce myself. I've been a professor of economics for 29 years. For 25 of those years, I have studied equalization and associated aspects of federal-provincial fiscal relations. I have been working on this particular file ever since the budget came down. I've done some very detailed analysis of what is being proposed here. I'm still revising my results as I better understand what is proposed in Bill C-52.

My presentation today will focus solely on fiscal equalization payments to the provinces and associated changes to the offshore accords. The bill also makes important changes to the determination of territorial formula financing payments, as well as to the growth and distribution of the Canada social transfer and the eventual distribution of the Canada health transfer. These matters would require a separate presentation.

The bulk of Bill C-52 lays out, in terms of the text, the terms of the new equalization program applicable to the provinces. Associated changes to the Federal-Provincial Fiscal Arrangements Act are in clause 64, pages 64 to 83. In addition, clauses 80 to 86, pages 93 to 103, lay out the associated changes to the Canada-Newfoundland Atlantic Accord Implementation Act and the Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act. My point is, getting your head around all this is a huge undertaking.

Proposed section 3.1—this is in clause 80--specifies amounts for fiscal equalization payments to the provinces for 2007-08. What people need to understand is that these amounts are derived from application of the formula described in the subsequent proposed section 3.2. There are, in fact, three formulae at work in generating those numbers. One involves the O'Brien formula coming out of the expert panel. One involves a variant on that formula, with zero inclusion of natural resource revenues, and the third involves effectively a continuation of the status quo on option to Newfoundland and Labrador and to Nova Scotia.

If you go into the details of these—that's where the numbers come from—in particular how these numbers will be generated in future years, that's proposed section 3.2. Paragraph 3.2(1)(a) is the O'Brien formula. Paragraph 3.2(1)(b) is the zero inclusion of natural resources formula. And that is only part of what is being undertaken.

Proposed section 3.3 makes important transitional provisions for British Columbia with regard to the calculation of revenues derived from property taxes. There has been very little study of what the implications of those provisions are.

Proposed section 3.4 introduces the new cap on equalization, the so-called fiscal capacity cap, designed to ensure that equalization payments do not raise a province's total fiscal capacity above that of any non-receiving province. Where that does occur, equalization will be reduced. Indeed, it can be eliminated as a result of exceeding the cap.

Proposed section 3.5 provides definitions of terms and bases. There is a lot of important material in there that people are still getting their heads around. It explains the process, the three-year moving average lag of two years that will generate the data on equalization, but also the changes in how bases are being measured for purposes of determining equalization. Very little study has been made of that aspect either.

Proposed section 3.6 is very important. It makes special provision for Nova Scotia and for Newfoundland and Labrador, allowing them the option of continuing under the fixed framework indefinitely and, indeed, specifying an annual 3.5% growth rate in the aggregate equalization pot. Either province can, at its option at any time in the future, including during this year if it wishes, opt into the new program. That is specified in proposed section 3.7.

Beyond 2007-08, Nova Scotia and Newfoundland and Labrador will have to make choices. For 2007-08, the choices are obvious, and what choices are made in this particular year are not irrevocable. However, they will be irrevocable in subsequent years if either province opts into the new program. I would simply make the point that the analysis I've been involved in would suggest, from Nova Scotia's point of view, that remaining within the fixed framework indefinitely into the future would likely be its most preferred option, notwithstanding the fact that it might involve taking slightly reduced benefits in the 2008-09 fiscal year.

[The Chair, Conservative, Brian Pallister]

Pursuant to the order of reference of Tuesday, May 15, 2007, we are studying Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007.

Good morning to our witnesses. Thank you for being here this morning as we continue our discussions on the budget bill, Bill C-52.

You've been asked to keep your presentations to five minutes to allow time for questions from committee members.

We will commence with the Coalition of Canadian Energy Trusts. John Dielwart is here.

Five minutes to you, John.

[The Chair, Conservative, Brian Pallister]

Mr. Del Mastro, you have about 45 seconds left, so keep it to Bill C-52, if you can.

[Erin Weir]

Yes, of course.

I recognize that this committee has relatively little ability to change amounts of money in the budget, and I recognize that the Bloc is committed to supporting this particular budget. And I suppose that's why I've tried to focus my presentation on issues that can be dealt with by this committee and that can be dealt with after the budget. The first thing is to get this tax-back guarantee out of Bill C-52. That aspect of the bill really purports to tie the hands of future Parliaments and really reduces the ability of elected representatives to make decisions about how to allocate resources in the future. So that's one concrete thing I would ask for--some amendments in that area.

The other concrete thing is--

[George Kesteven, President, Canadian Association of Income Funds]

Good afternoon.

Thank you very much, Mr. Chairman and members of this committee, for giving me this opportunity to speak to you today on behalf of the Canadian Association of Income Funds.

The Minister of Finance's stated intention last October 31, with the introduction of the so-called tax fairness plan, was to level the playing field, stop future conversions to income trusts, and stop tax leakage, no matter how small. What the government has done does not amount to tax fairness, but rather the wholesale destruction of a valuable structure in the Canadian economy.

To date, the unintended negative consequences of this move have been the following:

First, to give a boost to the U.S. growth of master limited partnerships, MLPs--the U.S. equivalent of Canadian income trusts--by eliminating any competition.

Second, to destroy billions of dollars of investor value. Many of these investors invested based on a promise made and subsequently broken by Prime Minister Harper.

Third, to tilt the playing field in favour of private equity, foreign equity, and pension funds, none of which pay taxes to governments, federal or provincial.

Fourth, to make it difficult for Canadian trusts, especially resource trusts, to access capital. This makes them prime targets for takeover.

Fifth, to facilitate the takeover of close to 15 trusts in the last six months, with more than 20 announcing that they are currently on the block at fire sale prices.

Mr. Chairman, as Premier Calvert said earlier today, it is not tax fairness to break a promise made to millions of Canadian investors. It is also not tax fairness to impose a 31.5% tax when corporations effectively pay only 5% to 10%.

The playing field has not been levelled when the income trust sector has been severely disadvantaged, compared to the situation of corporations, by the elimination of non-resident investors and through the double-taxing of pension funds and RRSP holders. It is not tax fairness when Canadian investors have been disadvantaged and cut off from an investment vehicle that provides them with cashflow needed for retirement.

As far as the issue of tax leakage is concerned, it is our contention that federal and provincial tax revenues will not be increased in any way under this bill. Many governments will actually experience reduced revenues in the end.

Permit me to highlight for you the federal government's own documents of October 31, in which it forecasted zero tax revenue through 2011 from this tax. Copies of this have been provided to the clerk. It makes all the more curious the fact that the finance department has promised a new joint committee with the provinces to share in the revenue stream when none is expected over the four-year transition, and little if any is expected into the new regime as the sector is bought out or converts to corporate status.

With respect to Bill C-52 itself, we urge this committee to address clear gaps in the current drafting:

First, how will income trust be treated in legislative terms during the transition period? Currently these rules appear only in guidelines that are, in essence, a news release that can be changed at the whim of the government.

Second, there needs to be a legislative framework in Bill C-52 to facilitate conversion to corporate status on a tax-deferred basis, similar to the existing subsection 85(1) of the Income Tax Act, as well as the ability to eliminate the remaining trust vehicle in a tax-efficient manner.

We respectfully submit that the finance committee follow its own advice to the government of earlier this year in its report on income trusts by producing a separate piece of legislation that is comprehensive and that includes the guidelines and conversion rules, and is not so broad as to have application to partnerships that are not listed on the public exchange. Only then would all parliamentarians and Canadians have a clear opportunity to see this issue on its own merits, and properly address the income trust issues in this bill.

We continue to be committed to working consultatively and collaboratively with all levels of government to achieve a tax system that is fair for all.

Thank you.

[Chris Conway, Manager, Government Relations, Real Property Association of Canada]

Thank you, Mr. Chair.

My name is Chris Conway. I am the director of government relations for REALpac, the Real Property Association of Canada.

We represent most of the TSX-listed real estate companies, including real estate investment trusts, otherwise known as REITs.

Our members own approximately $150 billion in real estate across Canada, and we see ourselves as both the property market's lobby group and the capital markets group from real estate.

We also have several different vehicle types in our membership: real estate corporations, pension funds, life companies, banks, and large private owners.

Today I'll be speaking exclusively about REITs and the changes to the REIT rules contained in Bill C-52. I would like in particular to comment on the written technical submission we have sent to the committee for consideration.

By way of background, REITs have been specifically enabled in Canada since 1994 and have existed in the U.S. since 1960. REITs are becoming a global phenomenon, as many Asian and European countries now have REITs. Throughout the world, REITs are a very common and growing phenomenon for investors. This is because they allow small investors to access passive rental income from big-ticket real estate assets.

We continue to be grateful for the existence of the REIT exemption and the work the government and the Department of Finance have done to address initial Canadian REIT industry concerns arising out of the October 31 announcement and the draft language released in December 2006. Most of these issues were addressed in the budget motion prior to the introduction of the bill.

Our purpose in suggesting further minor items is to make sure the technical language contained therein allows the majority of existing Canadian REITs to continue operating and competing in the Canadian marketplace without regulatory uncertainty or accidental restrictions. As it is, the wording creates several operational problems. Wording changes are suggested to enable the budget bill language to better achieve what we believe to have been intended all along.

In preparing this submission, REALpac undertook significant consultations on behalf of Canada's REITs. We've reviewed many of the national law firms' and national accounting firms' public analyses of the REIT legislation. We've convened a meeting of REALpac REIT members and several of their advisers to analyze the technical language. We have drafted and circulated many successive drafts of possible changes to selected tax lawyers and tax accountants in national firms.

The result has been our written submission to the committee and suggested wording changes to the bill. Our intention is to seek these changes on a consensual basis prior to the bill's becoming law. We would be pleased to work with all stakeholders on these changes.

In addition to our technical concerns, there are two policy issues raised in our submission. The first is the foreign property ownership limits. The second is the lack of inclusion of hotels and nursing homes in the new REIT rules.

Regarding the foreign property rules, there is no solid policy rationale we're aware of for preventing Canadian REITs from owning more foreign property. All major industrialized countries allow unlimited ownership of foreign property. It appears that this is because allowing REITs to own foreign property brings in more tax revenue. The more a REIT can earn by holding properties abroad, the more it pays out in distributions to unitholders, which in turn are taxable, either domestically or through withholding tax for foreigners.

Hotels and nursing home REITs would not qualify under the new rules. We would like to point out that the U.S. REIT rules, now and for some time, have accommodated hotels and lodging REITs, and under the February, 2007 draft bills, health care and seniors' home REITs are now being included.

We have advocated two potential solutions. The first is either a slight relaxation of the REIT rules to permit hotel and nursing homes to qualify, or a fully taxable subsidiary model, such as exists in the United States. It now appears that Australia is also moving in a similar direction to allow these types of REITs.

REITs allow small investors to participate in large investment-grade real estate by purchasing REIT units. If hotel and nursing home REITs are not allowed to exist, not only are we less competitive with other jurisdictions, but we will remove the small investor from the picture.

Ultimately, it's important to have cross-border synergy in our capital markets. We do not want other countries' REITs being stronger than our own.

In conclusion, REITs allow a greater amount of capital and institutional investment to flow into real estate. We have a strong and stable capitalized public real estate market now with real estate investment trusts. There is a lot of money flowing into hotels, nursing homes, new office buildings, new industrial parks, and new multi-family developments. Making the changes we have requested will help ensure that Canadian REITs remain strong and competitive.

Thank you.

[Erin Weir, Economist, Canadian Labour Congress]

Thank you very much.

The aspect of Bill C-52 that I'd like to speak to today is the tax-back guarantee proposed in budget 2007. The view I'd like to present is that, at best, this measure is a gimmick, and at worst, it places an inappropriate constraint on future federal budgets.

One could start from the premise that the federal government would have reduced income taxes by a given amount in any case, in which case it's really meaningless to say that the income tax reductions are being funded by interest savings from debt repayment rather than from general revenues. If a dollar of interest savings is used to finance tax cuts, that simply frees up a dollar of general revenues for something else. Conversely, if a dollar of general revenues were used to finance the tax cuts, that would leave a dollar of interest savings to finance something else.

So if one assumes that the tax reductions were going to be made in any case, this supposed connection between debt repayment interest savings and the finance into those tax cuts wouldn't have any practical effect. However, when this tax-back guarantee is understood in conjunction with the commitment to repay at least $3 billion of debt annually, the tax-back guarantee effectively mandates a corresponding minimum level of tax reductions in every budget, regardless of changing fiscal circumstances.

Now, it's conceivable that if future revenues ended up being less than projected, this tax-back guarantee would in fact force the federal government to cut spending in order to fulfill its guarantee. We see this as quite problematic, given the pressing needs for investment in public services, public infrastructure, and other priorities.

I suppose that I should just clarify that if this current government were to say that it would have a policy of using interest savings from debt repayment to finance income tax reductions, there wouldn't necessarily be anything wrong with that. What I find really problematic about Bill C-52 is that it purports to enshrine that policy in legislation forever and for always. If we regard the budget-making process as an optimization problem, speaking mathematically, the best possible solution would come about by giving democratically elected representatives maximum latitude to evaluate the resources available, the needs that are out there, and to allocate funds accordingly. The tax-back guarantee places an artificial constraint on that process and reduces the latitude that our elected representatives will have to allocate resources among various priorities.

Essentially, I would suggest that even if the federal government is committed to this notion of using interest savings to finance tax cuts, it's a bad idea to enshrine that policy in Bill C-52, and I would definitely recommend against it.

The other issue I would like to suggest is around this whole notion of the fiscal imbalance and increased federal government transfers to the provinces. That was definitely a major aspect of budget 2007 and Bill C-52.

I suppose the notion of the fiscal imbalance really speaks to the insufficiency of funds to finance public services at the provincial level. Yet what we've seen since the budget is that the Government of Quebec has used a substantial amount of increased transfers to finance tax cuts instead. And if that's what happens in other provinces, then we really won't have made any headway in solving the fiscal imbalance.

My plea today is that in increasing these transfer payments to provincial governments, the federal government consider attaching some conditions to those transfers to ensure they're actually put into the public services that the people of these provinces need and that provincial governments said they needed the money to fund in bringing forth this notion of the fiscal imbalance. In particular, I think it's important, in light of increased Canada health transfers, for the federal government to take a much more active role in trying to enforce the key principles of the Canada Health Act.

With that, thanks very much for allowing me to appear before this committee. I very much appreciate the opportunity.

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.

[The Chair, Conservative, Brian Pallister]

Welcome back, committee members. To some new committee members, hello, and thank you for being here.

Mr. Chong and Mr. Gourde, welcome.

Pursuant to the order of reference of Tuesday, May 15, 2007, we are considering Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007.

We have before us the responsibility of dealing with the budget bill.

Yes, Mr. Del Mastro.

[The Vice-Chair, Liberal, Massimo Pacetti]

I need unanimous consent for a motion to be adopted, and even if we have a motion, there is no way as chairman that I can ask for witnesses not to appear before a bill like Bill C-52.

Let's be reasonable here.

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

In our current tax system, which will be changed by Bill C-52, taxpayers are generally required to convert their RRSPs to RRIFs, registered retirement income funds, and to stop contributing to their RRSPs by the end of the year in which they turn 69. Similarly, registered pension plan payments must generally begin by the end of the year in which the pension plan member turns 69.

As we know, many older Canadians are well and in good health and want to continue working and saving. Under the proposed changes we are increasing the age limit for maturing registered pension plans and RRSPs to 71 from 69. This will increase work and savings incentives for older Canadians, and this will be achieved by permitting additional RRSP contributions and accrual of pension benefits and not requiring any drawdown of tax-deferred savings at ages 70 and 71.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair.

I want to let you know that the lunch was excellent today with the delegation from Pakistan. You pushed hard to have a lot of us there; it's unfortunate that you couldn't make it.

Minister, thank you for coming to see us here at committee.

I'm anxiously awaiting your comments, and obviously the implementation of Bill C-52. While you may be a little closer to this age than I am, I certainly wanted to inquire, get your thoughts, and give you the opportunity to speak to the increase in the RSP age limit from 69 to 71, if you wouldn't mind commenting on that.

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

Thank you, Mr. Chair.

Thanks to the support for the budget provided by Bloc Québécois members of Parliament, we are here today to discuss Bill C-52. This budget allowed a significant part of the fiscal imbalance to be corrected.

Three or four years ago, only Bloc Québécois members were talking about this matter in Parliament. Today, at least one financial aspect is resolved, but the true problem of fiscal imbalance, which is real and which requires the transfer of tax points, or some other kind of permanent transfer, still exists. If we keep this model, we will be depending on the government's financial health for years to come.

Bill C-52 is not perfect, but it will allow a budget to go into effect that provides more money to Quebec. This is what the Bloc Québécois members wanted.

Are you prepared to keep working so that the fiscal imbalance is really corrected, or will things just be as you mentioned in your introductory notes?

[Garth Turner, Conservative, Halton, ON]

Thank you, Mr. Chairman, and welcome, Mr. Flaherty and officials.

Mr. Flaherty, I have a couple questions about the tax fairness plan. First, Bill C-52 and certainly the speeches and pronouncements you have made repeatedly have mentioned pensioners and seniors as benefiting from this, and you have used that same language again this afternoon.

Is that not, however, a little bit misleading, certainly in terms of the pension-splitting provisions? I understand that one has to have income that qualifies for a pension tax credit before one can split income. In other words, if you are a 70-year-old working at Wal-Mart and don't have registered pension income, you can't split your income.

How does this benefit seniors?