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.

Budget Implementation Act, 2007

[Jim Prentice, Conservative, Calgary Centre-North, AB]

moved that Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, be read the third time and passed.

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

Mr. Speaker, I welcome the opportunity to introduce Bill C-52 at third reading. Once passed, the proposed legislation will implement key measures from budget 2007 along with other tax initiatives that were announced prior to the budget.

Our goal is to help Canada and Canadians unleash an extraordinary potential. We are a successful, independent nation that believes in tolerance, justice and providing a helping hand to the less fortunate.

As the world changes, Canadians need to work together to make Canada even more prosperous and strong. We have a plan, “Advantage Canada”, that will take us there, and the measures in Bill C-52 are an integral part of that plan.

To that end, Bill C-52 proposes to invest an additional $39 billion over the next seven years to help the provinces and territories deliver the quality services that Canadians have come to expect from a country as great as ours.

It is difficult to visualize just how many dollars there are in $1 billion, so I will like to put it in a different perspective. A billion dollars is a thousand million and $39 billion would be 39 thousand million.

A billion hours ago, our ancestors were living in the stone age. A stack of one billion dollar bills will reach from the ground to 120 kilometres upward. If one sat down to count a billion dollar bills, and I would like that chore, and could count them at the rate of one per second, every second of every day, it would take more than 30 years to finish counting that one billion dollars.

If you earned $1,000 a day, Mr. Speaker, and I am sure you are worth that, you would take 2,740 years to earn $1 billion. If you had $1 billion and you spent $3,000 of it every day, and I am sure some of us would be able to do that, it would take 1,000 years to spend the whole $1 billion.

When I say that our government is putting $39 billion additional new money into the hands of provinces and territories to provide good services for Canadians, that is a lot of money, 39 billion new dollars. That will provide Canadians with health care, post-secondary education, new child care spaces, a clean environment and infrastructure like roads, bridges and public transit.

In addition, Bill C-52 contains a number of tax reduction measures that will improve the standard of living for Canadians. I am talking about the working family tax plan that will make it easier for working families to get ahead and stay ahead.

This plan includes a new $2,000 child tax credit that will provide up to $310 of tax relief for each child under 18 to more than three million Canadian families. The plan also increases the spousal and other amounts to the same level as the basic personal amount. This will provide up to $209 of tax relief to two parent families with one parent who earns little income.

Single parents and family members caring for dependants will also benefit. The working family tax plan helps families saving for their children's education by eliminating the $4,000 limit on annual contributions for registered education savings plans and increasing the lifetime contribution limit to $50,000 from $42,000. It also increases the maximum annual Canada education savings grants amount to $500 from $400.

As for our pensioners and seniors, the plan increases the age limit to 71 from 69 for registered retirement savings plans and registered pensions.

Bill C-52 also proposes to enact the tax fairness plan. This plan will provide tax assistance to our seniors by increasing the amount eligible for the age credit by $1,000, putting it up to $5,066. The plan will also help our seniors by allowing couples, for the very first time, to split their pension income. This represents tax savings of over $1 billion annually for Canadian pensioners and seniors.

Going forward, the government is committed to providing additional tax relief for individuals to improve the rewards from working, saving and investing.

Canada's new government has built on its commitment to implement the 10 year plan to strengthen health care, a plan that provides $41.3 billion in new federal funding over 10 years to provinces and territories.

In budget 2007 we built on that commitment. For example, the budget proposes an investment of $400 million for Canada Health Infoway, an organization that is making significant progress in working with provinces and territories to implement electronic health records. This initiative will help reduce wait times, reduce the risk of medical errors and lead to better health outcomes.

Furthermore, Bill C-52 proposes funding of up to $612 million to support all provinces and territories as they move forward with their commitment to implement patient wait times guarantees.

As we know, in July 2006 Canada's new government approved the use of a vaccine that provides protection for young girls and women against two types of human papillomavirus, or HPV. These viruses are responsible for approximately 70% of cancers of the cervix in Canada. This is the second most common cancer in women aged 20 to 44 after breast cancer, and that is a very disturbing statistic. That is why a measure from budget 2007 contained in the bill proposes to provide $300 million in per capita funding for provinces and territories to fight HPV.

Canada's new government has a comprehensive and results oriented plan to clean our air, help address climate change and create a healthier environment for Canadians. With that goal in mind, budget 2007 proposes to invest $4.5 billion toward a cleaner, healthier environment. Bill C-52 takes an important first step in that direction by proposing to provide more than $1.5 billion to a trust fund for initiatives undertaken by provinces and territories in support of clean air and climate change projects.

In addition, building on the initiatives taken in budget 2006, our government will strengthen conservation of sensitive land and species and preservation of our cultural and natural heritage. One such measure in Bill C-52 proposes $225 million for the Nature Conservancy of Canada to conserve ecologically sensitive land in southern Canada.

The bill also proposes $30 million in funding to support an innovative model of sustainable land and resource management development in the Great Bear Rain Forest on the central coast of British Columbia.

As members know, Genome Canada is a not for profit corporation that supports Canadian research leadership in genomics, a powerful emerging field, with the potential for significant advances in health care, sustainable development and in the environment. Since its creation, Genome Canada has been very successful at strengthening the genomics research environment in Canada, not only by attracting leading scientists but putting in place the advanced technology needed for genomics work.

Bill C-52 proposes to provide Genome Canada with an additional $100 million in 2006-07 to sustain funding to support, among other things, Canada's participation in strategic international research collaborations.

Bill C-52 contains a number of other important measures, none more important perhaps as the proposal to provide additional funding to help in the reconstruction of Afghanistan.

Canadians, as we all know, have played a significant role in supporting that country's efforts to build a free, democratic and peaceful country. That is why the bill proposes to provide $200 million in additional support for reconstruction and development of Afghanistan, with initiatives that create new opportunities for women, strengthen governments, enhance security and address the challenge of combatting illegal drugs.

We can see that Bill C-52 is a comprehensive bill, encompassing a broad range of initiatives to help Canadian succeed, to enhance important social services and to support our global contribution.

That is why timely passage of the bill is important. A number of measures in the bill will be lost if the bill does not receive royal assent by August 31, which for our purposes means by the time both the House and the other House rise in June. There are immediate and grave consequences which cannot be resolved in September. The money will be gone and the Liberals need to be aware of this, as well as all Canadians.

Let me explain this. Should the budget implementation act not receive royal assent before the government's financial statements are finalized in August, it will not be possible to account for these measures in 2006-07.

If the budget is not passed until the fall or later, the money for the measures, which I will mention, would have to be booked in 2007-08 from new money and to do so would have to compete with new demands.

The money from 2006-07 would by law have to go into the 2006-07 surplus and then be applied to the debt and not to program funding. Therefore, a number of measures would not go forward if the bill is not passed in a timely fashion.

Measures that would not go forward are: $1.5 billion for a Canada trust foundation for clean air and climate change; over half a billion dollars for patient wait time guarantees trust; $0.4 billion for the Canada Health Infoway; $0.1 billion for CANARIE; $0.2 billion for the Nature Conservancy of Canada; $0.3 billion for the Great Bear Rainforest; $0.6 billion for labour market agreements; $0.3 billion for the Rick Hansen Foundation; $0.1 billion in aid to Afghanistan; $100 million to Genome Canada; and $50 million to the Perimeter Institute for Theoretical Physics.

I mention all of this because there have been some bumps in the road, and some possible future bumps in the road, in both Houses of Parliament in ensuring that this important bill, which has been before us for some time, is passed in a timely manner. I do not think Canadians want to see these important measures I have just listed lost because parliamentarians cannot work together constructively for good things for Canada and Canadians.

I end by urging all members of both this House and the other place to give Bill C-52 their support in a timely manner, so the benefits can start to flow to Canadians as they should.

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

Mr. Speaker, I want to ask my colleague a question. I will preface my comments by indicating that I served on the finance committee most of last year and worked with the member as the Parliamentary Secretary to the Minister of Finance. To my shock, I came to have some high regard for her personally and enjoyed her company. We travelled Canada and we spent some time working together. I came to know that she is a very engaging person and I have enjoyed that.

However, I disagree with her on some very fundamental points. I want to talk about the Atlantic accord. I have asked the member this question before. She has indicated that in her view the Atlantic accord was a “gerrymandered”, and she used that word, and ad hoc agreement. I disagree with her and I think I have made that clear.

I want to talk to her specifically about what the Atlantic accord is. There is a lot of confusion but it is very simple. At its essence, the Atlantic accord assured Nova Scotia and Newfoundland and Labrador that they would be the full beneficiaries of offshore, over and above whatever equalization program was in place at the time. Thus, if equalization changed, as it did under the previous administration, Nova Scotia would get the benefit of the new equalization plus the Atlantic accord.

The Minister of Finance mocks Atlantic Canada and insults Atlantic Canada when he stands in this chamber and says we have the choice of the new equalization or the old deal and the Atlantic accord. The Atlantic accord specifically said that whatever the new equalization is, Nova Scotia and Newfoundland and Labrador would get the benefit of that, plus the offshore. It was not one or the other. It was both.

In Nova Scotia, as in Newfoundland and Labrador, everyone knows that this budget torched the Atlantic accord. Academics, economists, Conservative premiers and an all party resolution of the House of Assembly of Nova Scotia, including the minister married to the Conservative member for South Shore—St. Margaret's, all said that we have to honour the accord, that it has been broken. Mr. John Crosbie today was quoted in a secret memo from before now as saying that this breaks the Atlantic accord and that the choice they are forced to make “does not fulfill the 2005 agreement”.

There is no question that the Atlantic accord has been shunned and has been pushed aside. I want to ask my colleague, very seriously and simply, does she believe the Atlantic accord was honoured in this budget or does she agree with the member for Cumberland—Colchester—Musquodoboit Valley, who made the principled decision yesterday that it did not and he cannot live with that?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, it is no secret, of course, that there are some differences of opinion surrounding this issue, but I would like to point out a few things to my hon. friend.

First of all, the only reason the province of Nova Scotia has any rights to its own resources offshore is because of a Conservative government. He knows that. The Liberals were going to give his province nothing.

In fact, it was Conservatives who started fighting for offshore rights for Nova Scotia while in opposition and then followed through when they were in government by actually giving those rights to Nova Scotia in 1986. It was Conservatives who fought to push the former Liberal prime minister, who was not going to keep his promise to enter into the accords, into doing so. He did that because of pressure from Conservatives. Otherwise, he was not going to do that.

We also had a situation where there was a fiscal imbalance, where there were not enough transfers to the provinces for them to provide services to their citizens. Again the Liberals denied that there were any problems and said there was no fiscal imbalance. The current leader of the Liberal Party says there is no such thing as a fiscal imbalance, but again it was Conservatives who transferred huge amounts of money to the provinces, including the province that the member comes from.

As I just mentioned, there is $39 billion in new money from this Conservative government to the provinces and territories of this country to fix the fiscal imbalance. Again, nothing like that would have come from the Liberals.

The province of Nova Scotia specifically is $97 million better off today because of Conservative initiatives. If there are differences of opinion, as the member alludes to, then they will be worked out in good faith by this government because we want fairness in this country. We want fairness for every province, including the province of Nova Scotia.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I want to address the gaps in the budget with regard to first nations.

We know that there has been a 2% funding cap in place since 1996. The Department of Indian Affairs and Northern Development's own documents have done an analysis on the impact of the 2% cap on education and housing and any number of programs.

The current budget actually does not address those funding gaps specifically. In fact, there has been some detailed analysis done. One in four first nations children living on reserve live in poverty. There is a 22% gap in funding for children in care on reserve. That has resulted in a human rights complaint being filed by the Assembly of First Nations because children on reserve have access to a far lower level of service than children off reserve. In fact, I have introduced a motion in the House called Jordan's principle, which talks about funding adequately and getting by jurisdictional disputes and putting children first.

I wonder if the parliamentary secretary would indicate how the government plans to address that vital 2% funding gap and ensuring that first nations in Canada have access to a standard of living that other Canadians expect.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, I certainly agree with my hon. friend that in this situation the conditions under which some of our first nations people live in this country are absolutely appalling. They are unacceptable and must be changed.

I would suggest to the hon. member that to some degree, and perhaps to a large degree, it is not just lack of money that is the problem. I would suggest that there are some systemic problems, including a lack of basic human rights on the first nations reserves, that are part of this problem, and she will know that our government has a number of initiatives to address this, including giving first nations people the human rights that other Canadians enjoy under the Human Rights Act.

I think we need to look at these issues as a package, but one thing that we cannot do is expect the status quo to work. I would urge the member to work with the government on some of the changes that need to be made in the systemic problems. Also, of course, as she knows, both our previous budget and this budget do put significant new money toward first nations initiatives and we will continue to do that.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I listened carefully to the remarks of the parliamentary secretary. I certainly applaud the initiatives of the budget and specifically of Bill C-52.

The tax cuts for families are very well received in my riding. The improved financial security from the measures for seniors, such as pension splitting and RRSP regulation changes, is also very important.

However, I want to refer specifically to a comment that she made in regard to the investment of $50 million for research and development to the Perimeter Institute.

I have had the privilege of visiting the Perimeter Institute and the Institute for Quantum Computing. I want to confirm that she said if Bill C-52 is not passed that $50 million could be in jeopardy, because if that is true, there are many residents of the KW area who will be very concerned. In fact, this would impact the future research capabilities of this great institution.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, I appreciate my colleague's comments. It is certainly our hope that all members of Parliament will want initiatives such as the Perimeter Institute to get funding in a timely fashion as it has been promised. I am pretty confident that this will happen.

I simply mention these concerns so that Canadians will be aware that there have been, as I said, and I want to be careful with this, some bumps in the road and some suggestions from the other place that there may be attempts to hold up these measures. I do not think that is going to be helpful to Canadians.

I think if there are differences of opinion between parties they should be worked out between the parties. Canadians and Canadian initiatives like the Perimeter Institute should not be held hostage for that purpose.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I did not get a chance to ask my hon. colleague a question, but I will use up part of my time to do so.

When she talked about how important it was not to waste time in passing the budget, I would just point out that the government itself wasted three and a half weeks in the month of April when it withdrew its own budget from the legislative process. It is difficult to know, if she thinks it is so terribly important, why the government itself caused an unnecessary three and a half week delay. I want to put that on the record.

In terms of my own speech, I would like to focus on two themes regarding this budget: incompetence and dishonesty. It is an incompetent budget in the sense that the minister is out of his depth, and it is a dishonest budget in a number of senses, including not merely broken promises but the denial that those promises were in fact broken, and in some cases the denial of the undeniable, not to mention as well the repeated statements of things that clearly are not true, like saying that the government has cut income tax when everybody knows that it has raised income tax.

I would like to pursue these two themes. In doing so, I realize that there are other things one could say about the budget. One could say that it is a meanspirited budget in its treatment of aboriginal people or children or students or all of the above. I also realize that these themes of incompetence and dishonesty could be applied to other aspects of the behaviour of this government, like the environment or Afghanistan, but in the time allotted to me I would like to focus exclusively on the budget and exclusively on these two particular themes.

Before I go into detail, let me say something about language. I have been in the business of reading budgets and commenting on budgets for quite a few years, long before I went into politics, and I have noticed that those commenting on the budget, the economic analysts and specialists, generally use language that is respectful and even deferential. They use very moderate words.

When I went through the commentary applied to this budget over the last several weeks, I made a collection of some of the adjectives that these normally very sober analysts have used to describe the budget. Some of these words are the following: unbelievable, worst in 35 years, nut job, stupid, clueless, insane, and idiotic.

I have been at this kind of thing for more years than I would care to think about and never in my life have I heard words of that nature applied to the budget of a Government of Canada. I would suggest that this is indirect evidence that the extremity of the language of people unaccustomed to such language is matched by the extremity of the incompetence that would provoke such language from people unaccustomed to using such words, unless, that is, for some unexplained reason, there was a sudden contagious outburst of rudeness from economic analysts and economists.

I would like to give six examples of areas in which we see this combination of incompetence and dishonesty.

For the first of those, one has to go back in history a bit to when the Minister of Finance was a very senior member of the Ontario government. The Conservatives were running an election on a balanced budget. After they lost the election and the auditors came in, it turned out that there was a $5.8 billion deficit. Here we have that combination displayed nicely, because to run a $5.8 billion deficit is in itself incompetent, but it is dishonest to pretend that it is a balanced budget when in fact one knows it is a deficit. That is dishonesty. That was the first revelation, if members like, of that combination.

The second example I would use is the government's decision to raise income taxes in order to pay for a GST cut. That is incompetent in the sense that there is not an economist on the planet who would say that is a sensible thing to do. I think there are very few Canadians who would rather have a penny off the price of a cup of coffee than more money in their wallets through an income tax cut.

It also reflects the dishonesty theme. While everyone in the country knew that their income tax had been raised, the government persisted in saying that it had been cut even though all the tax return forms that Canadians fill out clearly stated the opposite.

Perhaps we could even say I am naive to be shocked by this but when the government of the day persists, not just once but time after time in making a statement that is self-evidently false, it is damaging to the political class, all of us in this Chamber. In some sense, Canadians will say that it is normal for politicians to say things that they know to be wrong. I do not think that is how politicians generally or ought to behave. Therefore, I do take offence when a government takes what is obviously a tax increase and repeatedly claims that it is a tax cut.

The third example I would mention is the federal-provincial relations and the whole situation of equalization which we heard about in some detail today. I would like to give a particularly interesting quote from the Minister of Finance in his budget. He said:

The long, tiring, unproductive era of bickering between the provincial and federal governments is over.

That is a very definitive statement. We would not have known that from question period today. People say that a successful budget is out of the news cycle in three days. I think we are on about day 80 and it was certainly in the question period cycle. It displays an extraordinary naïveté to think that any amount of money paid to the provinces would, in some magical sense, bring to a permanent end the long, tiring, unproductive era of bickering.

However, and perhaps more to the point, we have three clearly broken promises. We have three commitments made by the government to three provincial governments, Newfoundland and Labrador, Nova Scotia and Saskatchewan, and those commitments were clearly broken. What we see, and we have seen it for a number of weeks, is that the government persists in denying that it broke those agreements.

We would not have had an hon. member taking the huge step of voting against his own government and being kicked out of his own caucus if there were any doubt as to whether that agreement had been broken. We have a double set of dishonesty in breaking the promises and then in denying that those promises were broken.

There is another kind of dishonesty here. This is what we might call playing with numbers. We hear the finance minister quote these hundreds of millions of dollars that will go to this province or that province. However, we in the finance committee had the pleasure of listening to Premier Calvert of Saskatchewan last week or the week before. He went through in some detail how these numbers were just meaningless, a mish-mash. He said that the moneys would have gone to Saskatchewan anyway. He said that they were measured over five or ten years and that they were just concocted in whatever way was convenient for the government to come up with a number that sounds big.

There was a similar experience with the Canada-Ontario agreement where the government concocted numbers in a meaningless way to pretend that it was paying a lot of money to the Province of Ontario.

Perhaps it is because I am an economist, but I like to get numbers from the Department of Finance of the Government of Canada that I can trust. The way the government concocts its numbers just to serve whatever purpose it has in mind at any given moment, takes away that confidence in those numbers.

Related to that was the net debt gimmick. Some may remember that. Suddenly the government came out with the statement, “We are going to wipe out, abolish the net debt. Canada will be net debt free”, as if we were supposed to all jump up and applaud. It is some arcane thing that it dragged up from the OECD.

We have noticed that the government never talks about it anymore. It never talks about it anymore because it was so ridiculed that it had to put that back into the cupboard. All it was doing was manipulating statistics to pretend to Canadians that something was different when in fact nothing had changed.

The government is playing with numbers, whether it is manipulating Saskatchewan numbers, manipulating Canada-Ontario agreement numbers or taking the arcane concept of net debt and pretending it is doing something new and different. It is a gimmick. This is the kind of behaviour that I object to.

My fourth point involves interest deductibility, which is where we have a real disaster for the government. A statement that is in the budget could not be more crystal clear. It states that as of a certain date companies would no longer be allowed to deduct for tax purposes interest on money they borrowed to invest abroad.

Since the whole financial world came tumbling down on the minister, it became apparent to the minister that he had done something really stupid. He had neglected to point out that all other major countries allow their companies to deduct interest and, therefore, if Canada alone did not allow that to happen, our companies would be put at a huge competitive disadvantage and become more susceptible to takeover. He would then be creating disadvantaged Canada instead of advantage Canada, and the minister caved.

Do members know how the minister caved? I now come to honesty. He did not say that he was sorry that he had made a mistake. He said that everybody misinterpreted his budget. He said that everybody except himself had read the budget wrong. He said that none of us understood the budget except him. We know the effect of that. All of those thousands of tax experts who were down the minister's throat for doing something so stupid in the budget, as this interest deductibility measure, were all angry at him because he said that they had misread the budget. He could not admit that he was changing something. These analysts are all angry at the minister, which is not a very good position for a minister to put himself in and it is not very smart.

My main point is that this is another example of the sneaky dishonesty that we see again and again from the Conservative government.

My last point on interest deductibility is that having incompetently introduced a measure, which he had to withdraw but did not have the courage to say that he was withdrawing, the minister then withdrew it in an incompetent manner. There are two issues here: something called debt dumping and something called double-dipping.

I think the minister likes the sound of double-dipping because it sounds somehow evil and immoral so he wants to attack double-dipping. The problem is that every expert across the country says that the abuse does not come from double-dipping but from debt dumping. If the minister knew what he was doing, which he did not, he would have attacked debt dumping.

Debt dumping means that a foreign subsidiary can come into Canada, borrow huge amounts of money, deduct the interest from the debt so as to reduce its Canadian tax and then invest that money in some third country. This is a way to escape Canadian taxes inappropriately. There are some abuses there and we should crack down on them.

However, the way the minister is attacking double-dipping, the net effect will likely be an increase in the revenues of the Government of the United Kingdom or the Government of the United States. It is as if the minister's goal is to increase the revenues of foreign governments at the expense of Canadian companies, which makes no sense whatsoever.

Interest deductibility is a very good example. First, it shows that the minister is out of his depth in introducing the measure in the first place. Second, the manner in which he withdrew it, pretending that he was not withdrawing it and pretending that everyone else in the country misread the budget in the first place, shows a lack of straightforwardness in his behaviour. Third, when he attacks the wrong target, attacks double-dipping when he should be attacking debt dumping, that shows a second level of incompetence.

The fifth problem I would like to focus on is the extraordinarily incompetent design of the feebate program. It is rare that an industry, when given a tax break or a subsidy, would be up in arms against it, but that is exactly what happened. The auto industry did not complain so much about the extra costs imposed on gas guzzlers. It was up in arms at the rebate the government gave to the energy efficient cars because 75% of that money was focused on one model ,which was not very different, environmentally speaking, from the next model.

I want to quote one individual, a well-known expert on the auto sector, Dennis DesRosiers, who is normally one of those experts who uses very moderate language. He said:

(Honda) felt so slighted by this stupid ‘feebate’ that they have ... come out guns ablazing”.... “The feds now not only have a policy in place that does not work, they have also turned the company most willing to work ... to address the auto issues of the day into an advertising juggernaut criticizing the federal government's policies.”

The government has created enemies of all the tax analysts by telling them that they did not know how to read the budget, and now it is creating enemies in the auto industry in trying to give it rebates. Talk about incompetence.

Finally, last but not least, I come to the subject of income trusts. This is the mother of all broken promises but, as I said at the beginning, the government not only breaks promises but, once it breaks a promise, it denies it broke the promise. It denies the undeniable.

I had forgotten this but in the early days of the income trust debate, the government denied that it had broken a promise. That did not last very long because it was obvious that the Prime Minister had said it clearly in the election many times. In the early days, I have a quote from the Prime Minister responding on November 1, the day after Halloween when the policy was announced. The Prime Minister said:

The commitment of this party was not that we would have no taxes for Telus. It was a commitment to protect the income of seniors.

The Minister of Finance has brought in an age credit. He has brought in pension splitting. He is imposing fair taxes on the corporate community. I challenge the Liberal Party to support those things.

I had thought earlier today that was one promise that he could not deny but he tried. He tried for a day or two by saying that it was all about tax fairness. He then gave up because it was so impossible. He did acknowledge that he broken the promise on income trusts. However, my colleague has probably forgotten that in the early days he actually denied that he had broken the promise on income trusts.

I only have two minutes but I think I have spoken enough over the last several weeks on the subject of income trusts that I am able to summarize it fairly easily. This was not only a broken promise but it was a nuclear bomb dropped on the industry, when the Liberal plan, which was a more surgical plan, would have done the job correctly and which still will do the job correctly once the Liberals come to power.

It was a comedy of unintended consequences. Advantage Canada became disadvantage Canada. Tax fairness became tax unfairness. An attempt to get more revenue for the government, because of its incompetence, turned into less revenue for the government. The income trust issue was not only an example of broken promises and, in that sense, dishonesty, it is perhaps exhibit A in terms of a government that is out of its depth.

We have not abandoned our struggle for the appropriate policy on income trusts and, because of this combination of gross incompetence and gross dishonesty, the Liberals, one and all, will be very proud to vote against this budget.

[The Acting Speaker, Royal Galipeau]

It is my duty pursuant to Standing Order 38 to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Western Arctic, Taxation.

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

Mr. Speaker, I take the comments that the member makes on income trusts very lightly. He mentioned that his party had one plan.

The member for Markham—Unionville sits on the finance committee. He will have to do a little work in terms of addition. So far we have heard at least four so-called plans with respect to income trusts from his party. I do not think he can go too far and talk about right and wrong, BlackBerry emails and all that kind of thing when we have a party on the other side of the House that understands and is very unwilling to deal with the issue of income trusts.

I will focus a little more on the his comments with respect to the fiscal imbalance. It is nice to hear the member talk today about a fiscal imbalance, something his party was not interested in doing for the last 13 years. He perhaps has not acknowledged that there is a fiscal imbalance and that the government has worked at fixing that problem, but he has talked about a fiscal imbalance today.

I also find it odd that the Liberal member would vote against the budget based on the fiscal imbalance. It brings $12.8 billion in federal support just for Ontario. Maybe he should consult with his provincial Liberal colleagues before he votes against the budget.

I have done a little research. I will mention a few of those. He should consult with Liberal Premier Dalton McGuinty who said, “This budget 2007 represents real progress for Ontarians”. Did he talk to the Liberal finance minister, Greg Sorbara, who said, “There are real positive changes in this Budget 2007?“ Did he speak to the Liberal energy minister, Dwight Duncan, who said, “Budget 2007 was a good step forward and the kind of thing we wanted to see”? Did he consult with the Liberal Mississauga West MPP, Bob Delaney, who praised budget 2007 saying, “There is nothing the federal government could have done more effectively than to address the fiscal gap?”

Was Dalton McGuinty wrong? Was Greg Sorbara wrong? Was Dwight Duncan wrong? Was Bob Delaney wrong?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the member raises three points.

On the first point, and maybe he has not been listening, we only have one plan for income trusts. It consists of a 10% tax that is refundable to all Canadian residents, and a moratorium on the creation of new income trusts. It is very simple. He should be able to absorb that.

Second, on the question of the fiscal imbalance, when does one know that a fiscal imbalance is no longer there? Given the finance minister's referral to the long, tiring, unproductive era of bickering between the federal and provincial governments now being over, maybe a fiscal imbalance no longer exists when everybody is happy.

If that is the government's interpretation of fiscal imbalance, then we are in a greater imbalance today than we have ever been. We have a member of Parliament crossing the floor because of being kicked out of his caucus. We have three extremely angry provinces and five unhappy provinces. Is that the government's definition of balance? I would have said that is a highly unbalanced situation. Are we to say that the fiscal imbalance is solved merely because the finance minister declares it to be so?

None of this makes any sense unless the government members have some definition of fiscal imbalance and what it means, and whether this thing exists or does not exist.

On the subject of Ontario, the member is in no place to speak for Ontario, when the government ripped hundreds of millions from Ontario in the Canada-Ontario agreement and when the Ontario government had slammed the government for its environment policy and for its redistribution policy of creating new seats. Selective quotes will not do the job.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I want to touch on something the member talked about in terms of concocted numbers. I argue that this budget goes far beyond concocted numbers and into concocted rhetoric.

In response to my question about a 2% cap on funding for first nations communities, the parliamentary secretary did not name the act, but said if we repealed section 67 of the Canadian Human Rights Act and had human rights on reserve, everything would be fine. In fact, we know that with this 2% cap in place, first nations do not have the resources to remedy, for example, complaints on housing.

Earlier the Minister of Indian Affairs and Northern Development denied the fact that an agreement called the Kelowna accord actually existed.

We all know that 18 months of consultation led up to a commitment by the then Liberal government and various ministers and premiers across the country to institute funding that would address some critical issues in first nations communities.

Would the member comment on the kind of notions that have come forward, which completely disregard the very real needs in first nations, Inuit and Métis communities across the country?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, at least on this issue it seems the hon. member and I are in virtual total agreement. I agree the challenges of first nations are extremely important. It is a shameful situation for Canada. The government has ripped aside the Kelowna agreement and done virtually nothing for first nations. All I can say is we agree.

At the beginning, I also said that I believed this was a very meanspirited government with respect to its treatment of aboriginal people, poor people and students, but I would not dwell on that today. However, I certainly agree with the point she has made.

[Brenda Chamberlain, Liberal, Guelph, ON]

Mr. Speaker, I thought the hon. member made some excellent points. Interest deductibility is a very big issue.

One of the things the member for Yukon has circulated today is the fact that income tax has increased under the new government. Calling it a new government is kind of a joke. It has now been in power for a year and a half. I wonder how long it can call itself new and improved. It is quite comical.

The government ran in the last election and promised it would help Canadians, particularly lower and middle income Canadians. Now, for Heaven's sake, it has increased income tax. It is shocking that the government, which promised during its campaigned that it would not do such a thing, has done that. It is again another broken promise.

I want to draw attention also, as the hon. member did, to the fiscal imbalance. The Premier of Newfoundland is now running an ABC program, which is to vote anything but Conservative.

Could the member comment on those two points?