Budget and Economic Statement Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007

This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.

Sponsor

Jim Flaherty  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to

(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;

(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;

(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and

(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.

Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.

Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it

(a) introduces a new Working Income Tax Benefit;

(b) eliminates income tax on elementary and secondary school scholarships;

(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;

(d) enhances the child fitness tax credit;

(e) expands the scope of the public transit tax credit;

(f) increases the lifetime capital gains exemption to $750,000;

(g) increases the deductible percentage of meal expenses for long-haul truck drivers;

(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;

(i) allows for phased-retirement options for pension plans;

(j) extends the mineral exploration tax credit;

(k) enhances tax benefits for donations of medicine to the developing world;

(l) streamlines the process for prescribed stock exchanges;

(m) introduces an investment tax credit for child care spaces;

(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;

(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);

(p) eases tax remittance and filing requirements for small business;

(q) introduces a mechanism to accommodate functional currency reporting;

(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and

(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.

Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.

Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.

Part 6 enacts the Bank for International Settlements (Immunity) Act.

Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.

Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.

Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.

Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.

Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.

Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.

Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.

Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it

(a) reduces the general corporate income tax rate;

(b) accelerates the tax reduction for small businesses;

(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and

(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.

Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of January 1, 2008.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

Dec. 13, 2007 Passed That the Bill be now read a third time and do pass.
Dec. 10, 2007 Passed That Bill C-28, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007, be concurred in at report stage.
Dec. 10, 2007 Failed That Bill C-28 be amended by deleting Clause 181.
Dec. 4, 2007 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.

Budget Economic Statement Implementation Act, 2007Government Orders

December 10th, 2007 / 1:40 p.m.
See context

NDP

Thomas Mulcair NDP Outremont, QC

Mr. Speaker, the motion that is before us today seeks to provide a simple amendment to Bill C-28. It would remove a clause that the Conservatives intend to use to reduce the corporate tax rate.

I have been listening to several of the interventions from some of the Conservative members in the House. It has been very interesting. The argument goes something like this: we have to become more competitive with what exists elsewhere in the world.

One of the problems we have in Canada right now is that we have built, over the past century, a very balanced economy that includes a very strong resource sector. Of course, mining and forestry have always been the backbone of the Canadian economy, but we also have, especially since the second world war, built a very strong industrial base, especially in the central and eastern parts of Canada.

Because of the increase in the Canadian dollar's value, especially in the past year, the Canadian manufacturing sector has been under a lot of stress and strain. The same thing applies in particular to the forestry sector. Whether it be in Ontario or Quebec, we have seen a lot of companies closing. We see companies like Baronet, which is a wonderful Quebec company that has been manufacturing furniture since the 1940s, simply unable to compete with the current value of the Canadian dollar.

Instead of recognizing that in a country the size and the breadth of Canada that the government has to play a role in shaping the economy and maintaining it when there are these types of ups and downs that we have been going through, what have we got from the Conservatives? They have thrown themselves headlong into a race to see how quickly they could reduce the corporate tax rate.

What is the result of that? It is quite simple. In the forestry sector, companies have not made any profit in the past year simply because the Canadian dollar is so high and exports have become that more difficult for those companies. As a result, those companies will not benefit in any way, shape or form from this purported help that the Conservatives are providing. It is the same thing in the manufacturing sector, where very few companies have actually made a profit in the last year.

Who will get the $14 billion that the Tories are putting on the table and that they keep snapping their suspenders about? The companies that have made the biggest profits and that have been throwing the economy out of kilter, precisely the oil and gas sector, especially in the west, in Alberta to name it, where the companies have made huge profits in the past year.

Several companies will get cheques back from the government for $50 million, $60 million or $70 million because of the fact that we are reducing the corporate tax rate. It will benefit those companies that have made the most profit and therefore they should be paying the most taxes.

The banks are also in for a windfall. We all had the benefit of watching our current Finance Minister go cap in hand to the banks last year and ask them to do something about reducing the fees at ATMs, the automated teller machines. What happened? They told him to take a hike. He thinks they are his boss. He does not realize that he is in charge of regulating the banks in the public interest. They told him to get lost and he did. He came back to Ottawa, reported duly to the House, and said, “Sorry, they will not move”, and that is where it stayed.

It was the same thing earlier this year when he talked to the retail sector and asked them if they really found that it was fair that a product had two prices on it, one in Canadian dollars and one in U.S. dollars, and that the Canadian price was 35% higher than the U.S. price, given the fact that generally speaking in the past year our dollars have been pretty close to par. There was no problem there either. The retail sector told him he did not understand anything about inventories and sent him packing.

What is interesting is that when we look at the oil sector, no one ever argues that the existing inventories were bought at a lower rate. The minute there is an increase in the per barrel price of oil around the world, somehow the company that is pumping the oil into the tank in our basement, if we have oil-fired hot air at home, increases the rate overnight to go along with that worldwide increase. Anyhow, the argument of the companies works sometimes and not at other times.

The amendment before us would remove the tax cuts proposed by the Conservatives in their so-called mini-budget.

It is worth noting the following for everyone watching today: the Liberal Party of Canada is supporting the Conservative Party on these cuts for companies, for big corporations, such as the oil and gas companies and the banks. This is interesting, since the economy in Quebec is destabilized because of the massive increase in the production of oil and gas, which has caused the economy in the west to overheat. Instead of trying to alleviate the negative impact of this overheating in the west, what do the Conservatives propose? They would like to issue $50 or $60 million cheques in tax refunds to the oil companies.

What does that do for the manufacturers in Quebec and Ontario? What does that do for forestry companies in Quebec and Ontario that are in the process of shutting down, putting hundreds or thousands of families out on the street without a job? The Conservatives are doing absolutely nothing because they strongly believe that it is a mistake for the government to take care of the economy. They do not think that the government, even in a country as large as Canada, has a role to play. It means nothing to the Conservatives that this manufacturing sector has been built up over 60 years a mari usque ad mare. They are prepared to destroy this sector.

It is interesting to note that the Liberals tend to preach in major cities such as Toronto and to speak in favour of food banks. We forget that it would be worthwhile asking, when speaking to the managers of food banks and those working in this sector, what was the Liberal Party of Canada doing when the Conservatives were handing over a nice gift to the big oil companies? I will tell you what the Liberals were doing. They were sitting on their hands, as they have been doing since the beginning of this parliamentary session. Why are they doing nothing? Because they believe in nothing. They do not believe, not for one second, in the people who need help in our society. They do not at all believe that the government has a role to play in a modern and diversified economy such as that of Canada. The Liberal Party of Canada has a great deal of explaining to do.

Right now, the only political party that has the courage to stand up in this House, and to tell the public that we must help the manufacturing and the forestry sectors, is the New Democratic Party. The only political party with representation from British Columbia to Nova Scotia and a real chance to form the next government is the NDP. The people of Quebec and Ontario who believe that the government must play a more active role will vote for the New Democratic Party in the next election.

Budget Economic Statement Implementation Act, 2007Government Orders

December 10th, 2007 / 1:10 p.m.
See context

NDP

Catherine Bell NDP Vancouver Island North, BC

Mr. Speaker, I listened to the question asked of my colleague from Acadie—Bathurst with regard to future debt and how ordinary workers would have to pay for that debt if we did not accept the budget as is. Ordinary Canadians are already paying that debt as a result of lost services. I will talk about some of the things ordinary folks, the people who really need those services, do not get and the reasons why.

I am pleased my colleague from Ottawa Centre moved the amendment that would take away corporate tax cuts. The budget was not balanced. It favours large corporations with enormous tax breaks. Everyone else may get a few tax credits, and that is good, but ordinary Canadians have to spend that money first to get it back. A lot of people cannot afford to do that, so there will be no tax credit or savings for them. If we allow Bill C-28 to pass unamended, it would make everything in our ridings harder to achieve.

People in my riding who are responsible for administering a lot of services tell me that the greatest need is housing. I live in a rural area and we do not see people on the street like we would see in greater centres. They do not congregate on the streets as they do in big cities. They live in campsites and in their cars. People do not realize this because our homeless do not live downtown where everyone can see them. We only realize this when we look to the service providers and find out that people are in dire need. These are not unemployed people. A lot of them are underemployed or they work part time. Some are young families with children.

We are doing everything we can to help them in our communities, but we are doing it with scarce dollars. This could have been addressed in the budget. Some money should have been put into a national housing program like the one called for by the NDP for many years. The program was eliminated, but we would like to see it resurrected so people can get into affordable housing.

The situation with respect to housing on reserves is very sad. Sometimes 18 to 24 people live in a house that was only designed for a family of four. They are living in very crowded conditions. Because the houses were not built to a very good standard, they are mouldy, or leaking or falling apart.

Money needs to be invested in these communities to ensure aboriginal people have the housing they deserve, which would give them the ability to live in dignity. It is quite shameful that we are forcing first nations to live in Third World conditions on reserves. I cannot say in strong enough words how shameful it is on Canada's part.

The $14 billion going toward large corporate tax cuts could have been invested in a child care program. Hopefully, my colleague's amendment will pass in the House and we will have a national child care program in the country very soon. All parents have been calling for a child care program. It is sorely needed and it would help ease the debt burden for a lot of working families. I fully support that. I look forward to the day when parents do not need to have bake sales to raise money to fund child care centres. It is important for all our communities.

There are other things that we do not see in my riding, especially where I live on coast. A lot of our communities used to be dependent on fishing resources. We have lost a lot of that. What we have lost is habitat protection and part of that is because there is not enough money in the system. We need huge dollars invested in our habitat protection on the coast so we can ensure we have a viable fishery for the future, but we have not seen that. It is sad. There seems to be enough money for so many things, especially for corporate tax cuts. We would like to see some of that money flow to our communities to protect our streams, rivers and lakes. We would like people there to protect those areas so we can have fish in the future.

My colleague from Acadie—Bathurst also talked about forestry, which is another area of concern in my riding. Because of the softwood lumber sellout, we now see the increase of raw log exports from all our forestry communities across the country. That is causing mills to close. I know the government has said that it will make some investment into mills and resources in Quebec, but I did not hear anything about the west.

I remember the finance minister saying in his budget speech that his Canada was from the Atlantic to the Rockies. I live on the other side of those Rockies. I remind him there is a whole province out there with a huge forest industry, which is in big trouble. We need an investment in our value added manufacturing. We want to see our communities stay alive. Instead we are seeing all our raw logs being shipped out of the country and being processed elsewhere. It is having a devastating impact on our communities and something has to be done about it. The government had an opportunity with billions of dollars in surplus to do that.

At the beginning of my remarks I mentioned that workers were paying for the debt. They pay for that by a lack of jobs. We have seen a loss of jobs in our forest sector and our fishing industry. There is the lack of child care and housing. People pay huge amounts of money out of their own pockets to the detriment of being able to pay rent, or mortgages or even living decently in a community. That money is being stolen out of their pockets and their tax dollars with nothing given back to them. It is shameful.

Education and training is another area where the government could have made a real difference for our young people. It could have invested in our colleges, universities and other institutions. It could have ensured that education was more affordable for our young people so they would not have to pay such high tuition fees to get an education, to further their skill building and to get a better career. A few million dollars into the education sector could have gone a long way to help young people reduce their debts, which would help them start their working lives on a more even footing, not having to start off with thousands and thousands of dollars of debt. Some of that debt is probably why they have to live in their cars and campsites rather than in a home. It is another shame on the part of the government.

One group I have not talked about is seniors. A seniors charter was passed in the House, but has never been enacted. The government could have invested in some of the things in that such as home care program and long term care for our seniors who really need it. This would help them and the system save money because they would not end up in hospital. They could stay home and be looked after with dignity. It think we would all like to see that for our aging parents.

Prescription drugs should have been made much more affordable, if not free for seniors, as well as dental care. These things were in the seniors charter, which has never been enacted by the government. Again, that is a shame

For all these reasons, I support my colleague's amendment to Bill C-28.

Budget Economic Statement Implementation Act, 2007Government Orders

December 10th, 2007 / 12:55 p.m.
See context

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Mr. Speaker, I am pleased to speak about the proposed amendment—to delete clause 181—to Bill C-28, on the budget.

We listen to the Conservatives as they try to tell us that the only way for a business to survive is for it to receive a tax cut, failing which it will go bankrupt.

I wonder where the governments were in the last five years, during the softwood lumber crisis, for example. What causes these companies to go bankrupt? It is a lack of support from the governments—and that applies as much to the previous Liberal government—during the softwood lumber crisis—as to the current government. The industry needed help in the form of money and programs then, and not now, when the businesses in that sector have shut down.

It is all well and good to say that there will be a tax cut, but who benefits? The companies that are already successful and that are friends with the Conservatives, such as the big oil companies. They are the ones who benefit from tax cuts.

What has the government done for companies that have recently shut down? Did it make an effort to look for some way to help keep these businesses open?

I can provide examples. The UPM Miramichi mill shut down for nine to twelve months. All the people of Miramichi were scared that the mill would not reopen.

The Smurfit-Stone plant in Bathurst closed two years ago, after the arrival of this U.S. company. What is the government doing ahead of time to determine whether these companies should be allowed to set up here? That U.S. company comes here, buys a Canadian company, Consolidated-Bathurst, and then all of a sudden it turns around and closes its doors. This is a paper plant and its owners plan to sell it only to a non-competitor. Now there is no chance of this plant reopening in Bathurst, in northeastern New Brunswick, after being bought by just any old buyer. That plant was a major employer.

Two weeks ago, AbitibiBowater announced it was closing its pulp and paper mill in Restigouche, which employed 450 people. Those were well paying jobs that created many indirect jobs. That plant is closing its doors and the government has not said a word about it.

The government announced a $14 billion tax reduction for the rich oil companies or large companies that are making money. Those who are not making money should get a deductible. They are not benefiting from this tax reduction because they are not paying taxes.

Almost a month ago, the Fils Fins Atlantique Inc. plants in Atholville and Pokemouche, which employed some 300 people, closed their doors.

The government is saying that jobs in Canada have reached a record number and that there are a ton of jobs. However, often—I think many people can identify with this—people have to take on two or three jobs just to get by.

Instead of giving this $14 billion to big companies that are already making money—since, as I was saying, those who are not making money will not benefit from the tax reduction since they are not paying taxes—why not invest this money in municipal infrastructure? The municipalities are struggling with a deficit caused by federal government cuts. Those cuts started at the federal level and trickled down through the provinces to the municipalities.

The Federation of Canadian Municipalities was here two weeks ago asking the federal government to invest in infrastructure. The government says that it will invest some money. It is all well and good to establish programs where the federal and provincial governments invest one third of the money each; however, if the municipality does not have money, it cannot participate in the program. Municipalities need money for water and sewer systems. In some regions, they need an airport to ensure economic development.

There is the issue of public transit, which is so important today to cities for environmental reasons. Rather than investing money in this area, they decided to give it to their Bay Street friends. Things will be better now because almost all the action will be on Bay Street given that the Toronto Stock Exchange has now combined with the Montreal Stock Exchange. They will give money to their friends to ensure they are happy when they go to the bank at night.

In 2006 and 2007, the employment insurance fund had a surplus of $3.3 or $3.6 billion. It is not true that the Conservative government said that it would put money into improving the employment insurance system for needy regions where many seasonal jobs were lost in the fishery and in blueberry or Christmas tree operations. The Conservatives said they would give money to these people. However, what they said was not true. These people are not important to them, they are just voters. They only vote and put them in power. They are not important. The Conservatives prefer to give money to the big oil companies. Why? We are still wondering about that. The Conservatives do not respect taxpayers and the voters who pay every day and who work to build this country.

When it comes to money that could be invested in infrastructure, roads are also an issue. In past years, people started talking about a two-tier hospital system. We have a pretty mixed-up system now because someone wants a service, that individual has to pay for it. Sooner or later, they will say that because they did not invest in highway infrastructure, individual citizens will have to pay for roads. They will set up toll roads. People will keep paying and paying. They cut taxes for big business and then they fool citizens into believing that they are paying less tax and have more money in their pockets. Then, when they go to the hospital, they will have to pay for care themselves. When they want to use the roads, they will have to pay. The citizens will pay, but the government will keep saying that it has put more money in their pockets. For example, the government is now giving people money directly for children and child care, but in the end, there will not be any child care centres.

How much money has been transferred to the provinces? We do not spend enough time in this House talking about people who receive social assistance, people in need. How can a person on welfare live on $500 when that person is disabled? How is that person supposed to live on $500 a month? That person did not ask to be on welfare, to be sick, to have an accident or to be disabled. Nobody asks for that. Every human being on the planet is willing and wants to work and do their part. These people did not ask to end up like this.

Instead of giving $14 billion to large corporations that are already making a ton of money and reducing their taxes, could they not give some money to the citizens who really need it? Why not give to homeless people who are on the street because they have nowhere to live? Why not invest money in building houses and putting a roof over the heads of people forced to live in the streets? Why do something like that and help these people? The budget contains nothing to help them. They were completely ignored . Why not allocate some money for older people who need to buy lots of prescription drugs that cost them an arm and a leg? They have to pay for electricity, the cost of which has gone up, as well as their rent. Why not help our older people, our parents who worked hard and are now retired? Some people do not have retirement savings because not everyone had the opportunity to contribute to a pension fund. Why not help these people? We live in a world with an aging population. Baby boomers are retiring, but there is nothing for them in the fat sum of $14 billion that is going to big business.

That is what the Conservative government is doing. We should be asking ourselves some questions about this. This was not a good budget or a good mini-budget, which is why we will vote against it.

Budget Economic Statement Implementation Act, 2007Government Orders

December 10th, 2007 / 12:30 p.m.
See context

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, I am very pleased to participate in this discussion of Bill C-28, which implements the budget tabled on March 19 by the finance minister. It also implements the provisions of the economic statement tabled in Parliament on October 30, which is what we refer to as a mini-budget.

We know that Bill C-28 is a confidence bill and that if it is defeated we will be into a general election in Canada. I am sure that Canadians do not want to have a general election right now. We do not need one. I certainly do not want one either.

Having said that, I think that this bill, in implementing these measures of the budget and the mini-budget, falls far short of what Canadians deserve. I would like to cite a few examples, first of all on reducing the GST from 6% to 5%. We all know, as economists worldwide and certainly in Canada have commented, that this is bad economic policy. It is better to reduce income taxes or invest in programs and services that Canadians need. Reducing the GST is not a very good economic measure.

I know that the Conservatives committed to this in their platform, wrongly I think, as they realize now, but there is a better use for that money, that $5.5 billion which reducing the GST from 6% to 5% is going to cost annually in perpetuity. We have already lost roughly $5.5 billion per year by reducing the GST from 7% to 6%, so cumulatively this is $11 billion taken out of the federal treasury from now until forever. It is not a very good use of taxpayers' money.

I would rather see an investment in our national infrastructure. Let us take that $5.5 billion and, instead of reducing the GST from 6% to 5%, collaborate with the provinces and the municipalities and start dealing with our national infrastructure deficit. Some have estimated that the infrastructure deficit is in the range of $120 billion to $130 billion, but whatever the number is we know it is significant, and we know anecdotally about some of the pressures on our infrastructure. All we have to do is look at the bridge that collapsed in Montreal. There are many other examples.

If we do not deal with our infrastructure, we will create a number of problems. We are creating safety issues for Canadians. We are also becoming less competitive as a nation. If our roads, bridges, tunnels, airports and harbours are not up to snuff, we are not going to be competitive as a nation, especially in this global economy.

I, for one, would support not cutting the GST from 6% to 5%. I would support taking that $5.5 billion, working with the provinces, leveraging some provincial money, leveraging some municipal money, and starting an infrastructure program, initially a five year to ten year program, maybe, and extending it from there. We would start to make a very big dent in our infrastructure deficit.

There are mayors such as Hazel McCallion, a very respected and reasonable mayor of the City of Mississauga, who is saying that the federal government is being hugely negligent by not investing in infrastructure and, because of that, the municipality of Mississauga is going to have to increase its property taxes. If we had this infrastructure program, I am sure that mayors such as Hazel McCallion would not implement this property tax increase and would use the money to invest in infrastructure. That is just one example.

The budget and the mini-budget are deficient in a number of other ways, particularly in regard to their lack of emphasis on innovation and research and development. Our Liberal government started to reinvest in research and innovation after we started to deal with the deficit and paying down federal debt. We made large investments in the Canadian Institutes of Health Research, in the Canada Foundation for Innovation, in establishing research chairs across Canada, and in putting money forward for research overheads, which are needed to implement these research programs.

As a result, what we have seen in Canada is the brain gain. We had been losing a lot of researchers and scientists who were leaving Canada because of the poor research environment. Because of the measures of our government, we created the brain gain. In fact, I met some of them at the University of Toronto recently. They are U.S. researchers who had come up to Canada as research chairs and spoke very positively about how our government had dealt with this positive research environment.

However, this is now in jeopardy. It is in jeopardy because the Conservative government is not making those investments in the Canadian Institutes of Health Research or the Canada Foundation for Innovation and also has very cumbersome and unwieldy processes.

A lot of those researchers were saying that while the environment is still not bad, it is on a decline. I think it would be a horrible thing to happen to Canada if we reverted to the brain drain, because we had undertaken so much effort to create this very positive research environment.

What does that research environment do? It allows us to be competitive in the global economy. It allows us to develop products and services that add value and that create high value jobs in this country. All we have to do is look around and we can see the impact of our global economy. There is a lot of material to read. I would recommend The World Is Flat: A Brief History of the Twenty-First Century as a starter.

Recently I have been doing some work on the diamond industry. It is well acknowledged that Canada is now the third largest diamond producer in the world, and we have more diamond production coming in from northern Ontario, but guess what? Ninety-nine per cent of the diamonds leave this country in an uncut, unpolished and no value added form.

I have been working with various stakeholders to see what we can do to deal with this. We could perhaps establish a diamond bourse or a diamond exchange here in Canada. From there, the value added activities, the cutting and polishing and other jewellery businesses, would grow. That is the experience worldwide. In fact, we know that it cannot all be done up in the Northwest Territories and in Yukon. We have to centre some of it in some of the major metropolitan centres. Of course, as a member of Parliament from the Toronto area, I am trying to centre some of that activity in Toronto.

We have a great opportunity with retail diamonds in Canada. They can be and are being differentiated in the marketplace and are a great attraction, but one of the bottlenecks I am running into is that the cutting and polishing of diamonds is increasingly happening in India and China.

We could repeat that scenario over many different sectors. We cannot fight that. It is the new reality, but if we are going to compete in this world economy, we have to seek the higher value added initiatives. We have to be innovative. We have to invest in research and in adding value to our products.

I could go on in regard to the manufacturing sector. Another colleague commented about it. Our businesses need to invest in new technologies now to increase our productivity. That is why the accelerated capital cost allowance measures that the Conservative government brought in need to be extended, but we need to give business a longer planning horizon. Businesses do not make decisions like these over two years. They need to have the accelerated capital cost allowances extended for five to 10 years.

We have job shortages looming. What was in the budget about that?

What was in the budget about investing in carbon capture and sequestration and in technologies that will help us recycle water in areas like the oil sands?

What was in the budget about dealing with intellectual property rights or fighting counterfeit goods? I did not see a thing.

What was in the budget about protecting small investors? What was in there about the brokers who are using investors' money and churning their accounts? There is no accountability. There is no responsibility. The integrated market enforcement teams, which are supposed to deal with this type of fraud, are not effective. They are ineffectual. What was in the budget to deal with that?

What was in the budget to deal with backlogs in immigration processing?

What was in the budget for literacy or for women's programs?

I could go on, but I am going to end here. I will probably vote for this because I do not want an election, like most people in this House, but I think this is seriously flawed.

Budget Economic Statement Implementation Act, 2007Government Orders

December 10th, 2007 / 12:15 p.m.
See context

NDP

Joe Comartin NDP Windsor—Tecumseh, ON

Mr. Speaker, what is before us today is not just Bill C-28, but specifically, a motion to amend Bill C-28 and to delete clause 181, the enormous tax giveaways to large corporations in this country. We are attempting to put some rationality into our budgetary process.

This year, as last year and so many years before, because of poor planning and because of the abandonment of our responsibility to a number of sectors of our society, there are substantial surpluses in the budget. If people are on the right wing ideological bent, they would think that Canadians are being over-taxed because of all the money left over at the end of the year. That was a constant complaint from the Conservatives when they were the official opposition.

In spite of their rhetoric, when they became government, they showed substantial surpluses for two years in a row. They have also done the same things as the Liberals and over-taxed Canadians. From our perspective, it is a question of not properly allocating the revenues that are derived from taxpayers across this country and from other revenue in the form of fees and services.

We are looking this year again at a very substantial surplus primarily because of how well the resource industry is doing and even more specifically, how well the oil and gas industry is doing in exporting its product, mainly to the United States but generally around the globe.

We have a very large surplus which reflects, on a smaller scale, very large profit levels in a number of sectors of the economy, primarily in the financial services sector and the oil and gas sector, and to a lesser degree in the mining and natural resources sector as well.

Clause 181 in the present legislation substantially lowers the corporate tax rate. In fact, a double lowering because in the budget earlier in 2007, the corporate tax rate would be lowered from 22% to 18% by 2011. In clause 181 of this piece of legislation, the corporate tax rate would be lowered even more to 15% by 2012. In both cases, these tax breaks would provide a substantial benefit to large corporations, particularly the banking sector, the finance sector in general, and the oil and gas sector.

These sectors were given a substantial break earlier this year with the budget and now that break is coupling with an even more substantial tax break. Something in the range of 50% or 60% of these tax breaks will end up in the pockets of large banks, large financial corporations, and the oil and gas industry.

Does this make sense? Is this a good budgeting process? Is this good public policy? The NDP says it is not. What would the alternative be if we did not have this? The surplus would be larger if this tax break were not given. That surplus could be used to simply pay down our national debt. The tax breaks in clause 181, if Bill C-28 is passed in the House, could be used in this year's budget for any number of social programs. I would argue today that in fact it should be used in the sector of the economy that is in crisis and that is the manufacturing sector.

I come from Windsor, Ontario. The unemployment rates came out on Friday. In spite of the fact that the unemployment rate went down marginally in Windsor, we continue to lead the country with the highest unemployment rate of any substantial city of our size, which is over 50,000 people. That is because my community, both the city and the county that surrounds it, is primarily based on the automotive sector as the engine that drives our share of the economy and to a great extent drives the economy across the country, particularly in Ontario and Quebec.

Therefore, we continue to have the highest unemployment rate. As an aside, because I did a lot of work on this over my career in trying to help deal with unemployment circumstances during the major recessions we had back in the early eighties and again a minor one in the early nineties. On each occasion, and it has happened again now, the unemployment rate calculation substantially underestimates the real unemployment rate.

Because of the methodology that StatsCan uses to calculate the unemployment rate, the real unemployment rate in Windsor is probably approaching 15% at this point. The trauma that families and individuals are going through reflects that reality.

We have heard that these corporate tax rates are going to benefit the economy. As I have said earlier, that is true only to the extent of parts of the economy, in particular the financial sector, the oil and gas sector and natural resources sector.

These corporate tax breaks will do absolutely nothing to assist the manufacturing sector. There are all sorts of manufacturers, not just in the auto sector but in any number of other sectors, that have no profit. In fact, they are in a situation where they are suffering losses. They are suffering deficits on their balance sheets this year and in a number of cases for several years before that.

To give them a corporate tax break is absolutely useless in terms of it having any impact on helping them deal with the crisis that we are faced with in the manufacturing sector.

If the government were really serious about aiding that sector of the economy, it would be looking at other programs. In particular, we have seen both the provincial governments of Ontario and Quebec step forward to provide direct assistance to not just the auto but the manufacturing sector generally.

They both established large fairly substantial funds, pools of money, to provide a methodology where the manufacturers who need to update their equipment, update technological endeavours within their sector, would have the ability to tap into these pools of funds from the governments and make them more competitive. Hopefully, as they are doing that, we would see unemployment rates begin to drop and people get back to work in that sector. Both of those two provinces have provide those pools of funds.

They have also called on the federal government to play its part, to get involved, and to establish a similar pool. If we were to actually do the calculations on the tax break for just those two sectors, finance and natural resources, oil and gas in particular, if the government were to not grant that tax break in this bill and made enough funds available to establish that pool of money, it would cost anywhere from $.5 billion to $1 billion which is what is needed for our manufacturing sector to get back on its feet.

Budget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 12:45 p.m.
See context

NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Mr. Speaker, an interesting occurrence happened about an hour ago. I made a call to a friend in Hamilton and he asked me why my party was literally hammering the Conservatives on this budget update. He had not been watching the headlines closely, but he had seen from time to time various members of the NDP caucus on their feet, particularly from Hamilton and today from Ottawa, who talked about our major concerns with the economic update.

Simply put, and as I expressed to my friend, the update is taking us in the wrong direction. It is not balanced. We have an unprecedented opportunity to make some changes for the good of our country.

As we know, we have a manufacturing crisis. More people are living in poverty than ever before. As a result of that, looking at the update statement, Bill C-28, it is abundantly clear that there is nothing for ordinary, hard-working Canadians, nothing at all.

The Conservatives have been following a well set pattern, a pattern set by the Liberal Party, of corporate welfare giveaways. We all know that in 2005 the leader of the NDP Party, the member for Toronto—Danforth, was able to get the Liberal Party to set aside some corporate tax cuts, but we are still in a position where there is almost a fond reverence for offering tax cuts to corporations by both sides in this place. These breaks will reduce our budget by over $12 billion, and those are moneys crucial to Canada.

In fact, I want to thank the member for Ottawa Centre for the amendment he has proposed today, which would completely remove clause 181 from the agreement. We hear from Canadians across our country. They are very concerned with the loss of fiscal capacity contained in the budgets brought forward with huge corporate tax breaks in quick succession.

Different members in the House have on many occasions expressed there concerns about the huge infrastructure problems facing Canada. Representatives of the Canadian Federation of Municipalities were in town recently. The report they released, which has been referred to repeatedly here, and justifiably so, tells us there is a shortfall of $123 billion, putting our fiscal capacity at risk. They have said that those moneys need to be invested now and if they are not, then the situation will clearly worsen.

Within that document, there were $40 billion for communities and recreation. Being the sports critic, I have a particular awareness of that part of the report. Communities like Hamilton, where I am from and am pleased to represent, have been forced year after year to turn to the province of Ontario for assistance with their municipal budgets. They usually face a shortfall in the area of $20 million and that is just to contend with day to day operations.

A lot of that came about in the 1990s when the Liberal government of the day started offloading responsibilities to the provinces, along with tax collection. Under Mike Harris, the who does what committee, if I recall the name appropriately, said that his government should keep social services and leave education funding within the mandate of municipalities. What did it do? It reversed that.

Education is predictable and allows us to plan ahead. We know how many children are born and when they are born. When it comes to social concerns and downturns, we do not know how many people will lose their jobs. In fact, 11,000 jobs were lost last year in Hamilton. Everyone will hear me say that later. Because of that unpredictability, it made those moves to protect itself at the provincial level.

There was another more insidious thing at work, which was offloading from income, where people could afford to pay property taxes and many on fixed incomes could not afford the adjustments necessary to deal with such things. The province of Ontario has also made it clear to Hamilton that it cannot sustain the $20 million transfer and it will have to go back to the province regularly.

I also expect, from what I am hearing, that many major cities across the country have significant infrastructure problems similar to Hamilton.

Hamilton has to renew its sewer system soon. This is one of the older cities in Canada and every year a significant number of water mains break and other failures of infrastructure are very evident. We have unique challenges in Hamilton.

As the House knows new immigrants who come to this country travel to Vancouver first, or Toronto or Montreal. They find, after being there a short period of time, that they are unable to afford the cost of living. Many of them choose Hamilton as their second destination, but federal dollars go to those first communities where the immigrants arrive. So, there is a particular burden that befalls our city and I am sure other ones across Canada as well as a result of the fact that federal dollars are not spread as evenly as they could be.

Clearly, much could have been done by the Conservative government in its update before cutting taxes. I spoke in the House about the fact that Canadians are a people with a lot of common sense. I have also advised the House of the significant concerns I am hearing back in my riding of Hamilton East—Stoney Creek.

My constituents are quick to point out to me their surprise that a government with the massive surplus in the tens of billions of dollars does not seem, in their eyes anyway, to be approaching its fiscal management with the same common sense that ordinary Canadians apply in their day to day living.

Canadians are quick to say that they know when one is doing well, it is time to invest. They will invest their money in repairs and upgrades to their homes. Canada needs to repair its home, its infrastructure.

Canadians will also put a little money aside for an eventual downturn which we well know follows in quick succession. I would argue that is happening at the present time and if we have surplus monies this is the time to address those needs.

Also, when ordinary Canadians do have good times, they do not head off to the bank to pay off their mortgage. They would not do that because they understand that keeping a reasonable debt is fiscally responsible in order to sustain their cashflow.

Canadians know that if their house foundation is rotten, that soon that house will fall. The foundations of Canadian cities are literally rotting across this country.

The other evening when I spoke about this fiscal update, I pointed to the fact that in conversations with my constituents at our local Timmy's, and that is our gathering point, there is a lot of sage advice given in those places.

I also found in the last couple of visits that the seniors who were there were very angry. They have come to know that due to an error by the federal government that they were underpaid some $500 a year in their old age security. They are patiently waiting for the taxman to send them their money. I should add their patience is wearing thin.

I strongly advise the Conservative government to get on with the job and send Canadians the monies that they are owed.

The seniors are busily swapping opinions on the matter and most are quick to point to their personal experience. They have had experiences with the taxman over the years where they have owed some money and guess what, the letter comes with the demand for money or at times there might even be someone knocking on their door.

The House has heard from Hamilton members over and over of the terrible situation in our manufacturing sector. That is another area where we have to have a strategic plan. We have to invest. It is not just corporate taxes and not just a trickle down that is going to fix that problem.

The House has heard from the Hamilton members as well as the rest of our caucus that Hamilton is one of the hardest hit in the manufacturing crisis that is happening. I use that word “crisis” very clearly.

As I have said before repeatedly, 11,000 of my friends and neighbours have lost their jobs in Hamilton in the last year. Those taxpayers who have lost their jobs should rightfully expect changes to EI to help them adjust to their loss.

Turning to a damaged EI system, gutted by the former Liberal government, is not going to be that helpful when in fact the national average for accessing EI is only 40% and in urban areas 22% to 30%, which would include Hamilton.

In the eyes of many Canadians the EI fund, instead of being an insurance against job layoffs, has become nothing but a pool for the government. I would say to the government that it should choose Canadians over corporate Canada. It has chosen corporate Canada over Canadians in crisis. That is something that we all regret.

Budget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 12:40 p.m.
See context

Conservative

Patricia Davidson Conservative Sarnia—Lambton, ON

Mr. Speaker, I have a question for the member opposite. I know he has done a lot of work and supported disability issues in the past. He says that he cannot support Bill C-28.

I want to ensure that the member is aware of the registered disability savings plan in Bill C-28. It is a new plan. It will allow funds to be invested tax free until withdrawal. It is intended to help parents and others to save for the long term financial security of a child with a disability.

The plan's structure is similar to a registered education savings plan. Contributions to it will be eligible for the new Canada disability savings grant and there is also a new Canada disability savings bond for individuals with lower family net incomes.

There are all these things for the disability plan, but we have also had some very positive quotes from people who work in the industry. The Canadian Association for Community Living:

—congratulates the Government of Canada on introducing a Registered Disability Savings Plan...to provide families greater opportunity to save for the future financial security of a child with a severe disability.

The Vancouver Province in an editorial said:

—the [finance] minister is to be congratulated for adopting a plan that is comparatively uncomplicated and...accessible at all income levels....the great good it will do is beyond calculation in mere dollars and cents.

Given the fact that the member opposite has done so much great work in the past on this issue, how can he not support Bill C-28?

Budget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 12:30 p.m.
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Liberal

Andy Scott Liberal Fredericton, NB

Mr. Speaker, I would like to take this opportunity to point out during the debate on Bill C-28 some of the failings of the budget, failings that were not corrected in the fall financial update. Given the tone of the throne speech, I do not see that there is much intention to correct those failings going forward.

Ultimately, the general overarching problem that I have with the direction of the government in this regard is that, having been given the opportunity to significantly affect a variety of areas and challenges that face Canada, it has chosen instead to basically withdraw. The government is talking about withdrawing in its relationship with provincial governments, withdrawing in its relationship with municipalities.

Given the magnitude of the surplus, the opportunity was presented to the government to deal with universities. The reality is that since 1993 as soon as the fiscal situation was improved, the first thing the former Liberal government did as a national government was to invest heavily in research. The research chairs program, the Canadian Foundation for Innovation and the indirect costs program, all of these things were investments by the Government of Canada in Canada, in Canadians to generate prosperity, because prosperity going forward is going to find its way where there is investment in knowledge.

That is just one example of the opportunity that was squandered by the Conservative government as it has chosen rather to simply make itself smaller, driven by an ideological agenda that simply does not believe that government can be an instrument for good. I do not hold that view.

Having said that, I also wish to say that I was very disappointed in the spring and most recently that the government still has not honoured the vote that it cast in favour of a motion calling for a national autism strategy, including a financial component. The government had the opportunity to do that and it did not.

Today what I would like to bring to the attention of the House and to Canadians is the nature of the change in the formula as it relates to transfers to the provinces for post-secondary education, social services and health.

In the 1960s and early 1970s the provinces were lobbying the national government, quite justifiably I think, for the government to adjust the taxation system because the provinces were carrying much of the costs of the most recent cost drivers, such as, education, health and social services. The tax system reflected an earlier time when most of these costs were federal.

In 1977 the Government of Canada responded to that request by offering the provinces 13.5% of personal income tax and 1% of corporate tax. It was attempting to do the right thing, but the problem with that remedy is that 1% of personal income tax per capita is not the same across the provinces. The problem is that in a rich province 1% of personal income tax per capita is worth significantly more than 1% of personal income tax per capita in a poorer province.

In an effort at the time by the Government of Canada to mitigate the fact that it was about to make a decision that would bring less equity to the country, which certainly was not in anyone's interest, it included a cash component in the transfer, which was worth at the time $2.7 billion. Last year it was worth $20.5 billion, so it is no small amount of money.

At the time the federal government then introduced a cash component that it would transfer to the provinces. Inside the cash component was an equity seeking provision which allowed that there would be mitigation for the damage that was done to the equilibrium in the country when it used taxes as a way of giving more money to the provinces. In other words, if the tax changes benefited Alberta significantly more than Newfoundland and Labrador, which they did, then the amount that would go to cash would reflect that and Newfoundland and Labrador would get more.

That was the way the decision was taken in 1977. This remedy, to a structural problem in Canada, which everybody recognized, would not hurt the smaller, poorer provinces. In one fell swoop, with that 1977 decision to mitigate the inequality, perpetrated on Canada by the Government of Canada, was eliminated.

As a result, from this year to next, the post-secondary education and social services transfer will increase in Alberta by $102 a person, in Ontario by $40 a person and in my province of New Brunswick by $7 a person. That will have incredible impacts on the provinces receiving equalization. I think it was a decision that was taken by the government without a clear understanding. The way it was referenced was equalization through the back door. Nothing could be further from the truth.

The reality is it was not done to equalize Canada. It was done to ensure that the tax point transfer did not make Canada less equal. That was the purpose. It was recognized as such. Members can go back to Hansard and read the debates in the seventies and eighties around this.

The truth is the effect of this decision has impacted the smaller provinces in the areas of post-secondary education and social services, areas where we are struggling constantly to keep up. I accept that we receive equalization in our provinces. However, if we do not invest in universities, in knowledge and in research, and the provincial governments will have a hard time doing this given how much less money the small provinces have relative to the rich provinces as a result of this decision, then consequently the future holds more equalization.

In our province Premier Graham has boldly set out on self-sufficiency agenda so we will not find ourselves at the whim of these kinds of decisions. I have not decided whether I think that this was done deliberately or just unknowingly, but the bottom line is this. Try to explain to me and to Canadians where the justice is in increasing the amount of money available to the province of Alberta for post-secondary education and social services by $102 a person and the amount of money available in Newfoundland and Labrador or New Brunswick to $7 a person. How can that be just?

If that is not bad enough, by 2014, when the health accord expires because it is a 10 year agreement that was reached in September 2004, they will apply exactly the same forward to that. All the transfers that come to our provinces, the provinces that would suffer from this decision, all those provinces will be in a lesser position to provide those fundamental services in the area of health, in this case, and social services, but also the kinds of investments that would allow us to be more self-sufficient, to use Premier Graham's term. It will make it very difficult. It makes it all the more imperative to do this.

At the end of the day it is obvious, when we are as dependent on these transfers as we are, that we are at the whim of political decisions, whether taken out of malice or simply lack of forethought, and the effect on our province and our entire region will be disastrous.

It has not had a lot of attention. Members can check. It is on page 369 in the budget document and it is very clear. The increase in Alberta will be $102 a person. The increase in New Brunswick will be $7 a person. How can that be fair? How can that be just? How can we expect to build the Atlantic region when we are treated in a way that simply will not allow us to make the same kinds of investments that are made in provinces that have more of their own resources to invest?

Budget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 12:20 p.m.
See context

NDP

Jean Crowder NDP Nanaimo—Cowichan, BC

Mr. Speaker, I am pleased to rise in the House today to speak to the amendment proposed by the member for Ottawa Centre to delete a portion of part 17 specifically dealing with corporate taxes.

In the recent economic statement and the throne speech, and in view of the substantial surpluses it has, the Conservative government had an opportunity to correct the direction it has been taking. Instead, it has continued in the wrong direction. It has continued to ignore the very serious prosperity gap that is growing in Canada for many of our working and middle class families. The government has failed to target tax relief to people that it would help the most.

The Canadian Labour Congress made a submission to the House of Commons finance committee during its prebudget consultations. The paper is dated August 2007 and contains an analysis on corporate income tax. It talks about the fact that despite increasing cuts to corporate income tax, what we have seen is an unprecedented lack of investment in companies, in the bricks and mortar, in training and re-education within companies, things that would actually make a difference to working and middle class families. The following is a quote from that paper:

Pre-tax profits have soared to record heights and after-tax profits have grown even faster. There has been no comparable increase in corporate investment. Simply adding $15 billion to the 2000 investment level would have increased total investment to nearly 13% of GDP in 2006.

Further on it states:

Business leaders are using this huge surplus to become net lenders to households, stockpile liquid assets, acquire other enterprises, and buy back stock. While these actions may be viable business strategies, it is not clear why the public should subsidize them through further corporate-tax cuts.

That is a very good analysis in terms of why we would support business decisions on where they are going to put their profits.

I mentioned in a question to a Liberal member that in the economic statement the Conservative government acknowledged the difficult times that manufacturing and forestry are in for a number of reasons, yet it simply failed to follow up on what it acknowledged is a very serious problem.

In the riding of Nanaimo—Cowichan, sawmills are laying off shifts of workers. A pulp and paper mill has filed for bankruptcy protection. There simply is not the national leadership around the forestry sector.

I have argued in this House previously and I will reiterate that forestry in British Columbia is not a sunset industry. It is a viable part of who we are as a province. We have the resources. We need to demonstrate national leadership around reinvestment in the industry, retooling where necessary and providing education and training for workers who need to transition into other jobs within the forestry sector.

The government had an opportunity in the economic statement and Bill C-28 to demonstrate that, but the government failed to do it.

There is a crisis in British Columbia caused by pine beetles. Although some money has been allocated, where is the long term, strategic planning for what will happen to those communities in five to ten years when all of the dead wood has been cut? Those communities are facing serious transitions and yet the government is failing to demonstrate the leadership that is required to make sure that those communities maintain their viability.

In addition to the challenges in our forestry and manufacturing sectors, we also are seeing the growing prosperity gap. Working and middle class families continue to struggle to make ends meet.

Many of us have been activists in our communities for a number of years. When food banks opened well over 20 years ago, many of us thought they were a temporary measure and that as our economy recovered, the food banks would close because they would no longer be needed. It is a very sad fact that there are more food banks rather than fewer.

In “HungerCount 2007” put out by the Canadian Association of Food Banks, there are a couple of startling figures. It says that the number of people assisted by a food bank in March 2007 was 720,231. There have been changes in food bank use. There is 91% more usage of food banks since 1989. There are 673 food banks in Canada with 2,867 affiliated agencies. The number of provinces and territories without a food bank is zero. It has been 26 years since Canada's first food bank opened in Edmonton. Seventy-three per cent of Canadians believe that hunger is a problem in Canada. Fifty-seven per cent believe that the government should take responsibility for solving the problems.

There are some very stark figures in that report which speak to the fact that there are men, women and children in this country who simply do not have enough to eat. I want to end the part on the food banks by saying that of the food bank clients, 38.7% are children. The percentage of households containing at least one child was 50.6% . It has been 18 years since the federal government promised to eliminate child poverty.

That leads me to the Campaign 2000 report that just came out entitled, “It Takes a Nation to Raise a Generation: Time for a National Poverty Reduction Strategy”. In 1989 the House unanimously passed Ed Broadbent's motion to end child poverty by the year 2000. Here we are in 2007 and it has not happened. Still there are children and their families, because of course there are no poor children without poor families, who continue to be the poorest of the poor in this country. The child poverty rate of 11.7% is exactly the same as it was in 1989. Forty-one per cent of children living in poverty live in families with at least one income earner working full time all year.

In my own province, despite a growing economy, British Columbia continues to report the highest provincial child poverty rate, which is 15.2%. In aboriginal and immigrant communities, the story is even worse. In aboriginal communities one in four children is poor, which means their families are poor. Aboriginal children and their families are living in substandard housing unable to access adequate drinking water, unable to access adequate medical care.

I recently put forward a private member's bill called Jordan's principle which talks about putting children first. It is a very good example that children on reserve often do not have access to adequate medical care. In Jordan's case his family had to surrender him to the province, put him in foster care in order for him to get the care he needed. Consequently, the federal and provincial governments fought over which one should pay for his care. The child ended up in hospital for four years. In the last two years of his life he could have been in a special foster home, but neither the federal government nor the provincial government would step up to the plate and pay for his care. He died in hospital instead of going to a foster home. That is a stain on Canada's reputation as being a caring and compassionate country.

Lest we only talk about problems, I want to talk about solutions because there are solutions. The winter 2007 report of the National Council of Welfare states that there are some real things that can be done. The report talks about childhood development care, access to education and training for adults so that they can better participate in the labour market, better jobs, income, social security for people who are not in the labour force, access to health care and other services, and affordable housing. The report states that in the absence of any leadership from the Conservative government on a national anti-poverty strategy, some of the provinces are taking some leadership around that, notably Newfoundland and Labrador and Quebec. Those provinces are developing action plans. In Newfoundland and Labrador there is a cross-ministry initiative to develop an action plan with some real meaningful targets.

In this wealthy country of ours, the surplus was an opportunity to invest in Canadians. People talk about the rising tide lifting all boats, but it is not happening. We should have taken this opportunity to invest in child education, housing and other initiatives that would make a difference to families and which would close the very serious prosperity gap.

Budget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 12:05 p.m.
See context

Liberal

Navdeep Bains Liberal Mississauga—Brampton South, ON

Mr. Speaker, on behalf of my constituents of Mississauga—Brampton South, it is a pleasure to speak to Bill C-28.

I do have some fundamental problems and concerns with the bill because it revolves around the economic policies and concerns that I have with the Conservative government.

When I recollect last year during the budget discussion, I was reminded by many of my constituents, who I know very closely watched the debate, of how shocked they were to hear one of the worst tax policies to come out of Ottawa in 35 years, which was the interest deductibility measure. That is just one example.

I want to speak to two key themes today regarding the bill. One is that it is a reflection of the government's lack of understanding of creating a plan, of setting forth an agenda that looks at promoting prosperity and productivity. The government's ideas, strategies and policies are driven by polls and, as we have seen, it has spent a lot of money on polls.

The second issue I will be discussing is missed opportunities and what this particular bill misses and the opportunity on which it could have capitalized.

First, before I get into the specifics, if we look at where we are today as a country and look at our fiscal capacity at the federal level, it is a reflection of sound Liberal management over the course of many years, as they recite, over 13 years of hard work to turn around this country's fiscal position. We were in huge deficits, which created huge debts and put a tremendous burden on our future generations.

However, through sound Liberal management, sound government policy and the hard work of many Canadians, we were able to eliminate the deficit and ultimately start to reduce our debt.

Today we have surpluses, as we have had for many years now, and that is a reflection of hard work and good management. It is so important that we recognize how we want to spend this money.

It is unfortunate for the government, for example, when it comes to two particular issues in the bill.

First, I want to thank the Conservatives for reinstating the personal income tax reduction that we put in place when we were in government and that they reversed. I also want to applaud them for their efforts of copying our corporate tax policy. Those are two specific examples that stand out.

However, if we look at the bill we see that it pits province against province. We have seen what the Conservatives have done with the Atlantic accord. Just recently, if we take into account what they have done with respect to Bill C-22, they attacked the Premier of Ontario by calling him the small man of Confederation. They insulted not only premiers and put provinces against one another, but they also attacked mayors. We do not run a country by calling our mayors grumpy.

My mayor has served proudly for many years and is one of the most well respected mayors, not only in Canada, but across the world. She has received numerous awards for achievements, hard work, fiscal management and running a good city.

The bill also reminds us of a legacy of a government of broken promises. The one that stands out, which was mentioned in a petition just a few minutes ago, is the income trusts.

Many hard-working Canadians, many seniors who have worked really hard, invested their money in income trusts because they were led to believe by the current government, in a commitment it made in its platform, that it would not change the rules to income trusts. What did the Conservatives do when they came to power? They broke that promise. That cost seniors and many other Canadians millions, if not billions, of dollars of investment opportunities and it has really hurt their fiscal and financial situation.

As I said before, I do have concerns with regard to the prosperity and productivity agenda laid out by the government. The GST example is a clear indication of where it is driven by polls and by gimmicks as opposed to trying to promote this prosperity and productivity agenda.

If we look, for example, at my constituency of Mississauga—Brampton South, it has many manufacturing jobs. We have the Pearson International Airport, which has become a hub of economic activity, but we need to ensure we remain competitive and, in order to do that, we need the government to show leadership and put in place a regime, an environment and policies that will ensure we are not only competitive in Canada, but we can also compete with the world. That is something this particular bill lacks.

I want to speak to missed opportunities, which is something I can speak to from my personal experience of living in my constituency of Mississauga—Brampton South. My constituency has a $123 billion infrastructure deficit, which is a substantial amount. The mayors and the Federation of Canadian Municipalities have mentioned this on numerous occasions. They had a protest here and mentioned that their deficits needed to be addressed.

What bothers me is that in March, the Prime Minister and his entourage came to the GTA and made an announcement about rapid transit funding for not only my constituency, but for surrounding regions as well. The announcement was made in March and yet we have not received the cheque. The province has put forward the money and the mayor and our councillors have the money there, but the federal government has not written a cheque.

That is something that is profoundly disturbing because these announcements are made and it is a missed opportunity. The longer the delay in this funding, the more gridlock continues to grow in that region.

I was very fortunate to become the father of a baby girl about eight weeks ago and I understand now, as a new father, the importance of spending time with one's family. However, if individuals are driving to and from work and are spending an additional 20, 30, 40 or 50 minutes in traffic because of gridlock, that is less time with their families.

If the government professes to care about families, why is it not giving us a cheque for our city? Why is it not helping us with our huge deficit? It is not the fact that it is not contributing more money. It is the money that was committed in the past that it is not honouring.

As I indicated, it was a missed opportunity, not only when it comes to the cities agenda, but manufacturing is a key area for the constituents of my riding, for my province of Ontario and for my neighbouring provinces. This is the economic hub that drives our country's economic wealth. It is unfortunate that high value jobs are being lost.

I can cite a quick example from a question I was asking in question period with regard to the forestry sector. The jobs in the forestry sector in northern Ontario and even the spin-off jobs in my riding are directly impacted by the fact that the government cannot do anything because it signed a flawed softwood lumber agreement that prevents it from actually playing a role with industry. I am talking about provincial governments because, in the absence of federal leadership, the provincial governments had to play a role. However, any time the federal or provincial governments play a role, they will be sued by the United States because of the flawed softwood lumber agreement signed by the federal Conservative government.

That is an example of how there is not only a lack of initial investments when it comes to this bill that has prevented assistance for manufacturing, but it further compounds it by preventing other levels of government to play a meaningful role.

We saw the latest census a few days ago and it showed a tremendous amount of immigration to this country in the past five or six years. Immigration is another key area where we need to find a way of integrating new Canadians and allow them to utilize their skills to ensure they are able to perform and reach their potential that not only benefits them, but it benefits our communities and our economies. Again, the government has made no substantive investment there, which is another missed opportunity.

The leader of the Liberal Party has demonstrated our position on poverty. When we look at the poisonous debate on reasonable accommodation in Quebec, it is a reflection of the fact that people's fears are perpetuated by fear and ignorance and they assume that certain ghettos are created. Those ghettos or those concentrations of people is a reflection of communities being segregated because of lack of opportunity, low income earners and people who lack opportunity. We need a strong poverty agenda to ensure all Canadians have equal opportunities to succeed and we need to stop segregating people based on income.

Another concern in my riding is health wait times. We could have invested much more money in this area. We could have invested money to reduce wait times. Every day I hear of instances in waiting rooms and the problems it is causing.

Going back to the first point I made on prosperity and productivity, education is another lost opportunity. If we want to build a productive society and a society that is prosperous, we need to invest in education.

I have fundamental problems with the government's economic policies. These are lost opportunities, wasted opportunities and missed opportunities. With such a large surplus, the Conservatives could have done so much more.

December 7th, 2007 / 11:10 a.m.
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Munir Suleman Vice-President, Canadian Affairs, Tax Executives Institute, Inc.

Thank you, Mr. Chairman.

Good morning to all. My name is Munir Suleman. I am the senior vice-president, Scotiabank, but I'm here today on behalf of Tax Executives Institute in my capacity as TEI's vice-president for Canadian affairs.

TEI is the pre-eminent association of business tax professionals. We have 7,000 members who work for 3,200 of the largest companies in Canada, the United States, Europe, and Asia. Our Canadian members contend daily with the provisions of the Income and Excise Tax Act, and with chapters in Montreal, Toronto, Calgary, and Vancouver, make up approximately 10% of TEI's membership. Although my comments today reflect the views of the institute as a whole, those views are guided by TEI's Canadian members and other members whose firms have significant operations in the U.S. and in Canada.

TEI has several recommendations for the committee's consideration for tax policy and administrative changes that will foster economic growth and job creation.

The budget package introduced November 21 built upon the trend of incrementally reducing the corporate income tax rate and eliminating burdensome tax rates such as the federal capital tax and corporate surtax. TEI agrees with Minister Flaherty's corporate tax reduction proposal to strengthen the Canadian economy and promote job creation. We urge the government to stay the course or even accelerate proposed corporate income tax reductions. By 2012 Canada's corporate income tax rate will be the lowest among major industrialized nations. The standing committee should ensure that other countries do not leapfrog the Canadian timetable.

The federal government has undertaken initiatives to encourage provinces to promote Canada's competitiveness and improve the administrative efficiency of the provincial tax systems. We commend the federal government for doing so. We also commend the recent agreement whereby Ontario will conform its corporate income tax base to the federal base, eliminate its capital tax, and the federal government will administer Ontario's corporate income tax system. To maintain the momentum of provincial changes, we urge the standing committee to consider providing additional incentives to the provinces in order to eliminate or accelerate the elimination of capital taxes.

TEI is also supporting harmonization of provincial-federal sales tax systems. Substituting a value-added tax system for the current provincial retail tax systems would eliminate the cascading effect of retail sales taxes on most business inputs and promote a neutral and competitive business environment. In order to be fully effective, harmonization of the federal and provincial sales tax systems would require that financial services and services provided for financial services be treated as zero-rated supplies by the provinces, just as they are treated under the Quebec sales tax regime. To achieve harmonization, TEI would be pleased to consult further with the committee, the Department of Finance, and the provincial governments about crafting a workable system.

Bill C-28, the Budget and Economic Statement Implementation Act, will eliminate withholding tax on all outbound interest payments on arm's-length debt, effective January 1, 2008. In addition, a recently announced protocol to the Canada-U.S. Income Tax Treaty will reduce withholding tax on non-arm's-length interest payments to nil over the next three years. Again, TEI applauds the measures undertaken by the government. Elimination of withholding taxes on interest paid on arm's-length and non-arm's-length debt will ensure that Canadian businesses have access to global capital debt markets at the lowest possible cost. We recommend, however, that the goal be to eliminate all withholding taxes, especially on the payment of dividends to related group companies.

Since 2003, the United States has negotiated a nil withholding tax rate for dividends to group companies with a number of other countries. TEI believes steps should be taken to accord Canadian residents benefits similar to those enjoyed by residents of other U.S. treaty partners, so they can effectively compete for increased capital investments, exports, and jobs.

In line with the government's intention of having the lowest effective tax rate among the G7 group, we urge the committee to recommend to the Department of Finance to consider negotiating the elimination of withholding taxes on dividends to related group companies equal to a most beneficial rate negotiated with other major trading partners.

Bill C-28 incorporates draft provisions to restrict interest deductibility on certain outbound investments for periods after 2011. The bill will make significant revisions to foreign affiliate regimes and functional currency rules. TEI commends the government for acknowledging the excessive breadth of the March 2007 proposal curbing the deductibility of interest for investment in foreign affiliates. Regrettably, Bill C-28 resurrects many features of the March proposal and afforded taxpayers and their advisers very little time to comment on the draft legislation. The significance of these provisions to Canadian business and their far-reaching effects warrant more than the circumscribed three-week consultation period. As important, the current rules governing treatment of interest expense and earnings of foreign affiliates have been the cornerstone of the Canadian system for many years and have been crucial in promoting the global expansion and competitiveness of Canadian companies.

Any proposal to restrict the deduction of interest must be narrowly crafted to target the perceived abuse or unfairness. We urge the committee to recommend that interest deductibility proposals be removed and considered separately, to give taxpayers more time to study its effects and to give the government an opportunity to weigh taxpayer concerns about the proposed rules.

In conclusion, TEI commends the committee for holding pre-budget consultations again this year. On behalf of TEI, we thank you for the opportunity to participate.

I would be pleased to respond to any questions you may have during question period.

Thank you.

Motions in AmendmentBudget and Economic Statement Implementation Act, 2007Government Orders

December 7th, 2007 / 10:55 a.m.
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Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, I repeat and I will continue repeating that he must take off his rose coloured glasses. He is like the Conservatives, who show no sensitivity. The member would have us believe that Bill C-28 would be fine if the tax reductions were removed. Bill C-28 is a bad bill all around. The economic statement is not good. Furthermore, how the NDP views this is not good, either. We must resolve the crisis.

With respect to tax reductions, I am very happy for any businesses that are turning a profit, but the Conservatives should have been able to support refundable tax credits to help the industry directly.