Bill C-50 (Historical)

Budget Implementation Act, 2008

An Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget

Part 1 enacts a number of income tax measures proposed in the February 26, 2008 Budget. In particular, it
(a) introduces the new Tax-Free Savings Account, effective for the 2009 and subsequent taxation years;
(b) extends by 10 years the maximum number of years during which a Registered Education Savings Plan may be open and accept contributions and provides a six-month grace period for making educational assistance payments, generally effective for the 2008 and subsequent taxation years;
(c) increases the amount of the Northern Residents Deduction, effective for the 2008 and subsequent taxation years;
(d) extends the application of the Medical Expense Tax Credit to certain devices and expenses and better targets the requirement that eligible medications must require a prescription by an eligible medical practitioner, generally effective for the 2008 and subsequent taxation years;
(e) amends the provisions relating to Registered Disability Savings Plans so that the rule forcing the mandatory collapse of a plan be invoked only where the beneficiary’s condition has factually improved to the extent that the beneficiary no longer qualifies for the disability tax credit, effective for the 2008 and subsequent taxation years;
(f) extends by one year the Mineral Exploration Tax Credit;
(g) extends the capital gains tax exemption for certain gifts of listed securities to also apply in respect of certain exchangeable shares and partnership interests, effective for gifts made on or after February 26, 2008;
(h) adjusts the rate of the Dividend Tax Credit to reflect corporate income tax rate reductions, beginning in 2010;
(i) increases the benefits available under the Scientific Research and Experimental Development Program, generally effective for taxation years that end on or after February 26, 2008;
(j) amends the penalty for failures to remit source deductions when due in order to better reflect the degree to which the remittances are late, and excuses early remittances from the mandatory financial institution remittance rules, effective for remittances due on or after February 26, 2008;
(k) reduces the paper burden associated with dispositions by non-residents of certain treaty-protected property, effective for dispositions that occur after 2008;
(l) ensures that the enhanced tax incentive for Donations of Medicines is properly targeted, effective for gifts made after June, 2008; and
(m) modifies the provincial component of the SIFT tax to better reflect actual provincial tax rates, effective for the 2009 and subsequent taxation years.
Part 1 also implements income tax measures to preserve the fiscal plan as set out in the February 26, 2008 Budget.
Part 2 amends the Excise Act, the Excise Act, 2001 and the Customs Tariff to implement measures aimed at improving tobacco tax enforcement and compliance, adjusting excise duties on tobacco sticks and on tobacco for duty-free markets and equalizing the excise treatment of imitation spirits and other spirits.
Part 3 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed or referenced in the February 26, 2008 Budget. It amends the Excise Tax Act to expand the list of zero-rated medical and assistive devices and to ensure that all supplies of drugs sold to final consumers under prescription are zero-rated. It also amends that Act to exempt all nursing services rendered within a nurse-patient relationship, prescribed health care services ordered by an authorized registered nurse and, if certain conditions are met, a service of training that is specially designed to assist individuals in coping with the effects of their disorder or disability. It further amends that Act to ensure that a variety of professional health services maintain their GST/HST exempt status if those services are rendered by a health professional through a corporation. Additional amendments to that Act clarify the GST/HST treatment of long-term residential care facilities. Those amendments are intended to ensure that the GST New Residential Rental Property Rebate is available, and the GST/HST exempt treatment for residential leases and sales of used residential rental buildings applies, to long-term residential care facilities on a prospective basis and on past transactions if certain circumstances exist. This Part also makes amendments to relieve the GST/HST on most lease payments for land on which wind or solar power equipment used to generate electricity is situated.
Part 4 dissolves the Canada Millennium Scholarship Foundation, provides for the Foundation to fulfill certain obligations and deposit its remaining assets in the Consolidated Revenue Fund, and repeals Part 1 of the Budget Implementation Act, 1998. It also makes consequential amendments to other Acts.
Part 5 amends the Canada Student Financial Assistance Act and the Canada Student Loans Act to implement measures concerning financial assistance for students, including the following:
(a) authorizing the establishment and operation, by regulation, of electronic systems to allow on-line services to be offered to students;
(b) providing for the establishment and operation, by regulation, of a program to provide for the repayment of student loans for classes of borrowers who are encountering financial difficulties;
(c) allowing part-time students to defer their student loan payments for as long as they continue to be students, and providing, by regulation, for other circumstances in which student loan payments may be deferred; and
(d) allowing the Minister of Human Resources and Skills Development to take remedial action if any error is made in the administration of the two Acts and in certain cases, to waive requirements imposed on students to avoid undue hardship to them.
Part 6 amends the Immigration and Refugee Protection Act to authorize the Minister of Citizenship and Immigration to give instructions with respect to the processing of certain applications and requests in order to support the attainment of the immigration goals established by the Government of Canada.
Part 7 enacts the Canada Employment Insurance Financing Board Act. The mandate of the Board is to set the Employment Insurance premium rate and to manage a financial reserve. That Part also amends the Employment Insurance Act and makes consequential amendments to other Acts.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the recruitment of front line police officers, capital investment in public transit infrastructure and carbon capture and storage. It also authorizes Canada Social Transfer transition protection payments.
Part 9 authorizes payments to be made out of the Consolidated Revenue Fund to Genome Canada, the Mental Health Commission of Canada, The Gairdner Foundation and the University of Calgary.
Part 10 amends various Acts.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Chairman, initially you said there is already a motion that the entire Bill C-50 be done by the end of the day. Perhaps you can first tell us who moved that motion and when that was done.

Secondly, I want to speak against the motion in front of us. The reason I want to do so is that I believe closure even before we start the debate, in giving only five minutes per clause on such an important bill, is grossly unfair. The NDP had earlier put a motion to ask that this committee do joint travel to look at this bill and hear from people across the country. That was voted down.

We believe that in just one clause alone, for example, for part 6, clause 116, you cannot express within five minutes the kinds of amendments and the impact they would have. As you know, the New Democrats have only one member. That means our entire party would have five minutes at this committee to debate a clause that is of great significance.

If you're going to call a vote on this motion, I'm asking that this be a recorded vote.

[The Chair, Conservative, Rob Merrifield]

I will call the meeting to order.

I want to start by explaining that we're here pursuant to the order of reference of Thursday, April 10, 2008, Bill C-50, an Act to implement certain provisions of the budget tabled in Parliament on February 26, 2008 and to enact provisions to preserve the fiscal plan set out in that budget. That's what we're here to do. We're going to go clause-by-clause today.

I remind the committee that we will be completing this today as per a motion of this committee that it be completed by midnight tonight. I remind the committee of that.

Mr. Dykstra.

[Monte Solberg, Conservative, Minister of Human Resources and Social Development]

Thank you very much, Mr. Chair.

I'm pleased to have with me today Mr. Paul Thompson, associate ADM for skills and employment at HRSDC.

Thank you for the opportunity to appear before this committee regarding the proposed Canada Employment Insurance Financing Board, or CEIFB.

The governance and management of the EI account has been an issue for several years. In 2005 the standing committee heard from stakeholders through the study, and subsequently reported its findings in “Restoring Financial Governance and Accessibility in the Employment Insurance Program”. Views have also been expressed regarding EI financing through annual sessions on rate-setting.

Bill C-50 addresses concerns expressed by a wide range of stakeholders representing workers, employers, experts, and elected officials regarding how the EI account should be managed.

As a small crown corporation working at arm's length from the government, the CEIFB will ensure that EI financing decisions are taken independently and separate from the government's responsibilities regarding benefit determination and payout.

The proposed Canada Employment Insurance Financing Board will be responsible for implementing an improved EI premium rate setting mechanism that will ensure EI revenues and expenditures break even over time; managing a new bank account, separate from the government's general revenues, where any excess EI premiums from a given year will be held and invested until they are used to reduce premium rates in subsequent years; and maintaining a $2 billion cash reserve as a contingency fund that will support relative premium rate stability.

In addition, the EI premium rate-setting mechanism will be improved so that any surplus premiums and income from investments from one year will be taken into account when setting the subsequent year's rate. This measure will ensure that premiums collected over time will not exceed benefits paid.

To contribute to the relative stability of employment insurance premium rates, the board will be limited to the extent to which it can change the rate by a maximum of 15¢ per year.

It is important to note the Government of Canada's contribution of $2 billion to establish a real cash reserve. This money, coming from existing government revenues, will provide a contingency fund in support of relative premium rate stability. If, in a given year, the EI premiums does not collect enough money to cover the cost of EI benefits to be paid that year, then the money in the reserve will be used to offset premium shortfalls that could arise as a result of the 15¢ limit in premium rate increases.

It is important to recognize that the $15 billion reserve figure mentioned in 2000 by the chief actuary was characterized as the amount required to avoid raising premium rates throughout a severe economic downturn, similar to that experienced in the 1980s. This is not a figure that is consistent with the government's approach, which aims to match program revenues and expenditures each year. Nor does this figure take into account changes to the EI program structure, size, and clientele, or today's significantly improved economic conditions.

With respect to the $54 billion notional cumulative surplus prior to 2009, this is simply a bookkeeping entry reflecting the difference in prior credits and debits in the account. We are improving the system going forward by creating a separate account with a real cash reserve. The Canada Employment Insurance Financing Board will be run by seven part-time directors who have the necessary skills and expertise to effectively carry out the organization's mandate.

Qualified members will be selected, following recommendations made by a nominating committee that would include the commissioner for workers and the commissioner for employers, and will be appointed through governor in council.

Through this process, business and labour can be assured that the most qualified individuals are selected to manage decision-making on the financing of the employment insurance program.

It will be up to the board of directors to develop a corporate plan and a budget for consideration of the Treasury Board, and Parliament as part of the estimates process. The incremental costs of operation for the new activities and responsibilities of the CEIFB are expected to represent only a fraction of the additional returns on investment not previously realized under the old system.

I wish to emphasize that the CEIFB will have responsibilities related only to EI financing. HRSDC will continue to have policy responsibility--related to EI benefits and through Service Canada for program delivery--to ensure that the program remains responsive to the needs of Canadians and is delivered efficiently and effectively.

Our plan is one that looks to the future and ensures independent decision-making regarding the management of EI funds and making sure that these funds are used only to pay for EI benefits;

that premium rates reflect actual program costs and take into account investment returns so that Canadians pay the right premium rates, just sufficient to cover the cost of benefits received;

and ensures that the program is on a firm financial footing going forward, well positioned to withstand changing economic conditions.

Mr. Thompson and I will be pleased to address the committee's questions.

Thank you. Merci.

Price of Petroleum Products

[David Anderson, Conservative, Parliamentary Secretary to the Minister of Natural Resources and for the Canadian Wheat Board]

Mr. Speaker, I have heard the story in the past of someone who was told, when they were going in to give a speech, “Give them hell”. His response was, “I just tell them the truth. Liberals think that is hell”. Tonight, that is what we will do once again.

I am pleased to be here as part of this debate. Tonight we have heard the Liberals avoid, at all costs, a discussion of their carbon tax. I will talk first about what this government is doing, what it has done and what it will do in the future for Canadians. I will then talk a bit about the alternatives with which Canadians are faced.

One of the most important alternatives that this government has come up with and has taken has been to invest in transportation alternatives and in taxation options and alternatives. I will talk a bit about that tonight.

This government has clearly made significant investments. It has made investments from gas tax revenues into infrastructure. The Liberals who are here tonight do not want to talk about their future plans and, I suspect, do not want to talk about their past actions either but we have made some changes that people were waiting for and were happy to see.

In the words of the mayor of Brampton, Susan Fennell, “The Conservative government has done more for municipalities in the last two years than the old government did in the last 13 years”. I think that says something about what we are doing in terms of taxation and what we are doing in terms of things that will begin to affect the cost of fuel across this country as well.

In the 2008 budget, for example, the Minister of Finance announced that we would make the gas tax permanent. Canadian municipalities have been asking for that for years but again something which the Liberals failed to deliver. We delivered on the 5¢ of the excise tax that is collected on fuel and now municipalities have the long term, sustainable funding for infrastructure that they have requested for so long. Mayors from across the country have praised this announcement and said that they appreciate the opportunity to use that small amount of taxation money on fuel in order to fund the projects that are so important.

The government also introduced an infrastructure plan called the building Canada plan. It is a historic $33 billion investment, the largest infrastructure investment by any government in the last 50 years. Building Canada is meant to provide funding for cleaner water, better highways, more efficient border crossings and public transit. At least two of those things will directly impact fuel prices and fuel usage, and that is our highway system and the public transit options and alternatives.

The largest amount of funding under the building Canada plan is not only for the funding of public transit. After 13 years of lots of talk and no action by the Liberals, this government has made several important investments. For example, budget 2006 included the public transit pass tax credit. Tonight we hear the Liberals talking about the fact that they do not think anything has been done. Clearly this change in the budget has rewarded Canadians who use public transit regularly and who buy monthly passes.

Budget 2006 also included $1.3 billion in support of public transit capital investments. Amazingly, the Liberals and the NDP voted against this important public tax credit. They are here tonight saying that they have some sort of plan but when we come out with things that will support the public, particularly in terms of public transit, they oppose it.

In March 2007, the Prime Minister announced up to $962 million in a partnership with the province of Ontario and five municipalities to generate a combined investment of close to $4.5 billion in public transit and highway infrastructure projects in the greater Toronto area. That is something that will work toward reducing gridlock, improving the environment and increasing economic growth in the GTA.

There is more. Bill C-50, the budget implementation act, includes a $500 million public transit trust and nearly $250 million in carbon capture and storage projects, which will be spent in Saskatchewan and in Nova Scotia. That was a great boost for the economy and for the opportunities in my own home province of Saskatchewan.

This government also made a decision to put almost $500 million into alternative biofuels in order to reduce fuel costs. That is something that has been praised by the other parties as being necessary. We are glad to be leading the way in those kinds of alternatives that give people other options and that will contribute to lowering the cost of fuel.

Canadians understand that this government's investments in public transit are significant. Those are some of the things that we have done and that we are doing.

I would like to take a little bit of time tonight to talk about the alternative stats. It is necessary to do that because we have been moving ahead with a number of tax initiatives. I will talk a bit more about some more of them in a few minutes but I want to talk about the alternative that is being presented for Canadians.

The Liberals have said they do not want to talk about any phantom plans or anything but I just heard the member who spoke talk about the fact that they coming out with a plan. By everything that I understood, he was talking about the carbon tax plan that they and the media have been discussing over the last month.

The Liberals' carbon tax plan seems to be something where they are trying to trick Canadians into thinking that there will not be a cost to Canadians. There would be an increased cost. There would be an increased cost on gas, for example, which will certainly hurt public transit users because it would become more costly to run the buses.

The costs will be transferred to Canadians who are taking public transit. Canadians right away will begin to find themselves between a rock and a hard place. Taking a car will become more expensive but so will public transit. It is just another example of how the Liberal opposition has not thought out the program that it is trying to bring forward.

Canadians know that the Liberals will be coming up with some sort of a massive punitive gas tax on Canadians which will force them to pay more for just about everything from heating their homes to groceries.

I was a little frustrated with the NDP because it is trying to delay the passage of Bill C-50 and we are trying to provide significant funding through that for the environment and public transit. The Bloc, I guess, as witnessed by the emergency debate tonight, seems to more interested in playing political on this issue than anything else and is trying to score some cheap political points rather than provide actual solutions. However, I would imagine that comes out of its frustration from understanding that it will never be able to make a difference here in Ottawa, that they will never be anything but a protest party here in the House of Commons.

The government has taken a number of other initiatives. I would like to talk about those because it is important that we really set the framework for what we have done. We have clearly been ahead of the game. The finance minister and the Prime Minister have done a tremendous job of moving ahead of what is happening in our economy and to react to it in order to keep our economy strong.

I want to talk about a few of the things that have happened. We have brought a lot of personal tax help to Canadians over the last two years. I do not think I need to mention that we have cut the GST by 2%. We made a decision to make a bigger tax cut in the GST than the one we had indicated earlier . We removed 1% and then another 1% on the GST.

I found it interesting to be reading some material tonight that indicated the Liberals would reverse that tax reduction.The finance critic for the Liberals said that “hiking the GST is an option. All I can say is that i consistent with our approach”. He said that about a year ago. The leader said the Liberals would consider raising the GST. He said that it may need to be raised back to 7% and perhaps higher than that.

This government has also reduced personal income taxes. We felt that it was important that Canadians get income tax relief so we have consistently worked to lower the income tax for Canadians.

One of the most important things we have done is raise the personal exemption so Canadians have a higher personal exemption and, as a result of that, they pay less taxes as well.

Those are things that Canadians may not realize how much difference it has made for them. I was talking to a couple of people in my riding in the last two months who wanted to thank me for the changes the government has made. One of them said that he did not make a lot of money, that he had four young children, but he said that the differences in the taxation from two years ago until now for his family was about $2,000 a year.

I had somebody else tell me that his family was saving close to $4,000 this year on income tax because of the changes that the government has made in terms of income tax. People can say that it does not amount to much but for the average Canadian it is a huge difference.

I hear one of my colleagues over here muttering to herself. I guess she is probably annoyed and angered by the fact that we have been so effective in lowering taxes across the country that Canadians are now beginning to understand how important and how much that difference has made in their lives. For most people, taking home $2,000 or $4,000 extra a year is very significant.

I want to contrast that again with what we heard the member from the Liberals talk about a bit ago where he used the words “tax shift”. I think Canadians need to start paying attention. Right from the beginning when they hear the words “tax shift”, they should understand that is not going to end well for them.

The Liberals want to leave the impression, first, that they do not really have any tax plan. However, when their critic starts talking about the fact that they are going to be shifting taxes, we need to take a look at what that means. Their proposal, as they say, is that they are going to move taxes from one area to another, but overall it is going to stay about the same. We know that is wrong, for a couple of reasons.

First, the Liberals have made about $60 billion in additional spending promises. So we know they cannot lower taxes. We know they can only raise them.

Second, they say that they are going to, I guess, put a carbon tax on somewhere, but they claim it is not going to affect the price of fuel. Well, we know that it will.

So, as they are moving their taxation money around, we know they are not going to lower income taxes. We know that they are not going to lower the GST because they have already said that they think they would like to hike it. We know full well that they are going to be putting a carbon tax on, so that taxes are going to go up. That is not a tax shift; that is a tax increase.

There is no such thing as revenue neutral on these taxes. I want to just point out one way that it cannot be revenue neutral even if, in their fantasy, they were not to raise the overall taxation because what it does is it shifts taxation from one person to another. If they think that they are going to lower income taxes, who does that impact the most? It will impact high income earners. If they lower the income taxes for them, somewhere else there is another taxation going on. I can tell members where it is going to be. It is going to be in the rural areas. It is going to be for seniors. It is going to be for low income families who do not pay a lot of income tax.

So, for someone who is making a lot of money, paying income tax, the Liberals say they will reduce it, but we know that they are going to shift that. Even if it is neutral, they are going to shift that to poor people who are not paying income tax, those who have to try to pay electrical bills and home heating bills.

As we heard the member for Yukon say earlier, things like transportation and home heating is a big issue for people in his rural riding. Even getting food into his area is a huge issue if the prices continue to rise.

I live in a rural area and I face those same challenges. I do not think that people, when they begin to look at this carbon tax proposal that the Liberals have, are going to find that it is acceptable in any way, shape or form.

It is funny because the Liberals say they want to put on a carbon tax, but tonight they do not want to talk about it. Every time we have mentioned their proposal, they say that we are attacking them and being critical of them. However, we want to know what they are talking about. We think it is important. We think it is good that we talk about this.

It seems to me that there are a couple of things wrong with this carbon tax. First of all, it is a bad idea. However, for the Liberals, there is another reason why it is not a good idea. They have a pile of their people who do not even support it. Their party is completely split on the issue of what looks like is going to be their main campaign platform.

Let me quote a few of those people because I think it is important that Canadians understand that not only are the Conservatives against this, not only are thinking Canadians opposed to this, not only is the NDP opposed to this, but a number of Liberals are opposed to it as well.

Liberal strategist Warren Kinsella has stated that a carbon tax is unfair to people on fixed incomes, such as the elderly and the poor, who have to heat their homes and buy their food as well.

The Liberal member for Beauséjour has declared that artificially manipulating fuel prices is environmentally irresponsible. Certainly, the goal of a carbon tax is to artificially manipulate prices.

The Liberal member for Kings—Hants has stated that he is, “--strongly against energy taxes”. He said: “I would never propose that Canada needs higher taxes in any area”.

The member for Vaughan has said that a carbon tax is certainly not an option for him, and former leadership contender and Liberal candidate Gerard Kennedy is of the opinion that a carbon tax is the clumsiest of the options they have so far.

I would think that the Liberal leader would listen to some of these people and understand that he does not need to be in a situation where he is picking out any more clumsy options. If he is listening tonight, I would certainly ask him to reconsider this poorly thought out idea that he has of imposing a carbon tax on Canadians.

There are some former high ranking Liberal leaders who are scratching their heads when it comes to this new Liberal plan for a carbon tax. Bill Graham, who was a long time member in the House, said, “Certainly, when we were in government, we clearly did not advocate a carbon tax”. It just seems that there are so many people who are opposed to this.

The strangest thing of all is that one of the people who has been most opposed to a carbon tax is the Liberal leader himself, the one who is now suggesting that we need to have a carbon tax and several times he has stated that he is adamantly opposed to a carbon tax. However, in true Liberal form, we expect the Liberals to flip flop and completely change their position. He said one thing, now he is doing something that is completely contrary to that. That just points out to Canadians that this is not a group of people we should trust with government.

What has happened to him between the time when he said he opposed the carbon tax and now when he says that we really need one in Canada? I would think that perhaps he remembered that Liberals love tax dollars. They have no qualms about trying to find ways to tax and certainly will come up with new ideas all the time to do that. They love to get deeper and deeper into the pockets of hard-working Canadians. We have seen that time and again, and they like to spend that money as though it is their own money.

We recognize there is only one place that government money comes from and that is Canadian taxpayers. That is why the Conservative Party has worked so hard to try to leave that tax money in the pockets of Canadians rather than taking it from them.

There are a number of reasons why people should oppose a carbon tax. The most obvious one is that it imposes a tax punishment on Canadians. It does not matter how carbon tax is organized or how it is arranged, it will punish Canadians. It will have to increase the price of gas at the pumps because that is the purpose of it. It will have to increase the price of home heating fuel, which will be affected by the carbon tax as well. It will increase the price of natural gas for people to heat their homes and it will increase the price of electricity.

It will lead to an increase in the price of everyday goods. Higher gas prices will obviously result in increased shipping costs as well. I would suggest that the Liberal leader needs to rethink this because heating our homes and eating food are not bad habits that a Liberal government would need to discourage. Yet, that is exactly what a gas tax would do. It would force Canadians to cut back on necessities and try to figure out what they will spend their money on.

As I have already mentioned, the gas tax will have the biggest impact on low income Canadians, particularly seniors.

Another reason to oppose this tax is because it will not reach its intended goal. A number of people have said, and David Coon, the policy director of the Conservation Council of New Brunswick is one of them, that a revenue neutral carbon tax will not help the environment or reduce carbon emissions. Neutrality is ridiculous.

I know I have to wrap up here but I just want to say that Canadians will not be fooled by the Liberal leader. If this looks like a massive tax grab and sounds like a massive tax grab, it is a massive tax grab.

Our government has lowered income taxes. It has lowered the GST. It has raised the personal exemption. It has brought in child tax credits so that Canadians can keep their money and spend it as they choose. When it comes to sound management of the economy, the choice is clear. The Liberals want to increase taxes, and punish Canadian workers for their own out of control spending and lack of priorities.

In contrast, we are delivering balanced budgets and lowering taxes in order to keep Canada growing and keep it strong.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

I certainly appreciate the testimony of those who came forward. Thank you very much for coming in and contributing to our final panel for Bill C-50.

For the committee's information, we will be going to clause-by-clause tomorrow morning at 10 o'clock and will be completing it before midnight, as per our motion.

Thank you very much for coming in.

We'll take a recess while we say goodbye to our witnesses, and then we'll deal with our motion.

[Erin Weir]

I think a great deal of emphasis should be put on training. I think the employment insurance program can be an appropriate vehicle to do that. There would be a lot more resources to do that if we recognized there was an accumulated surplus of $54 billion in the employment insurance fund, rather than saying we've only got the $2 billion to work with, potentially going into a recession. I think a major problem with Bill C-50 is that by putting so little money into the account there may not be the resources available to conduct the types of training we both agree are very important.

[Erin Weir]

I certainly agree with the question. Essentially what the government has proposed to do is to create a separate fund for employment insurance, but to take all the money out of it. The $2 billion is far less than the accumulated surplus of $54 billion in the employment insurance account. As you said, it's also far less than the $10 billion or $15 billion that the actuaries say is needed to maintain the program in a recession without premium increases.

In response to that, Mr. Whyte suggested in part that at least what's being proposed is no worse than the status quo. But I would quibble with that a little bit. The former government's position when employment insurance was part of general revenues was that if there ever were a deficit in the fund, it would be backstopped with general revenues. My concern is that now that it's being hived off from general revenues into this completely separate entity, the government may be abandoning its commitment to backstop the fund and to make sure that benefits continue without premium increases during a recession. So things could actually be getting worse as a result of the changes in Bill C-50.

I'd like to see, at the very least, the bill amended to ensure that the government continues to maintain its commitment to providing employment insurance benefits in the event of a downturn without raising premiums.

[Garth Whyte, Executive Vice-President, Canadian Federation of Independent Business]

Thank you, Mr. Chairman.

On behalf of the Canadian Federation of Independent Business and the 105,000 business owners we represent from every sector and every region of the country, I want to thank the committee for inviting us to provide comments on Bill C-50.

Small and medium-sized businesses play a major role in Canada's economic growth and job creation, accounting for almost 50% of the GDP and 60% of total employment. I ask committee members to refer to the first graph in the document we've provided. The first graph tracks the GDP to CFIB's business barometer, based on small business owners' expectations for their own business. This is used by the Bank of Canada on a regular basis and by the Department of Finance. As you can see, our members are cautiously optimistic concerning the economic downturn.

And some good news can be seen with the graph on page 2. Thirty percent of the small and medium-sized enterprises said they plan to increase employment in 2008, compared to 8% who plan to decrease employment. This is good news when considering future unemployment rates, EI premiums, and EI surplus.

We have included several surveys based on thousands of responses from business owners. I may not have time to go through the entire presentation. However, I thought it important for the committee to have this information. Perhaps we can discuss it with the questions afterwards. But if you look on page 3—this is about 10,000 responses—it identifies the high priorities for small and medium-sized enterprises, and you can see that Bill C-50 touches the top six.

Our immediate reaction to the budget is summarized in the report card we attached, which you also have in front of you. We'd be happy to answer the questions you might have on any of these issues, but I want to focus the rest of our presentation on the establishment of the Canada Employment Insurance Financing Board.

The overall message we are delivering today is that EI is a major concern for small and medium-sized enterprises, as you can see on page 3. They feel the EI system needs to be fixed because the rate-setting process is flawed; the EI surplus continues to grow; and the EI program does not address today's labour market needs. This concern is so high that we currently have over 20,000 of these action alerts signed by business owners sitting in our office right now. We'll be delivering them to HRSDC Minister Solberg in a couple of weeks and we'll deliver them to each MP in a little while too.

As you can see on page 4, of all the various taxes a business must pay, business owners identify payroll taxes like EI affecting the growth of their businesses the most. The graph on page 5 shows that reducing taxes and EI premiums allows business owners to increase wages, hire additional employees, and provide more training. Page 6 shows that our members, 74%, feel a good first step to fixing EI is to move the account from general government revenues to a separate fund. They also think there's a need to improve the management and governance of the EI account. Currently, only one-third of our members are satisfied with the federal government's approach to managing EI, as you can see on page 7. They believe EI premiums should be used exclusively for EI purposes.

Having said that, CFIB supports the creation of the Canada Employment Insurance Financing Board. The rate-setting mechanism has been improved, while still retaining some of the positive aspects, such as a fixed date, November 14, to publicly announce the new premium rate, and limits to ensure rates do not fluctuate wildly from year to year.

We are very pleased that the EI operational surplus will no longer flow back to general revenues. The new reporting mechanism should ensure accountability and transparency. However, we do have some concerns and issues that should be addressed. For example, will there be significant operating costs that employers' and employees' premiums must cover? Will this be a truly arm's-length board, or will it be a partisan board, with members changing as political parties are newly elected? Will this board be able to address the issues of hundreds of millions of dollars paid by employers with EI over-contributions, an issue that's a high priority for our members, as you can see on page 8?

We are also concerned that the new system will create pressure to increase rates rather than to decrease rates because of the administrative costs and the limited EI surplus provided on top of the annual increase in the maximum weekly insurable earnings.

Finally, we're concerned that employers and employees must bear the risk of paying for economic downturns after having built up a $54-billion surplus. It's shameful and unfair. At the very least, the federal government should cover off any future shortfall on the EI account, if the need arises. However, it is a good first step to fixing EI.

We agree that the Canada Employment Insurance Financing Board should not be involved in EI policy and programs, but that is where there's a dire need to fix EI. The EI system is failing. It does not address employers' needs.

In 2006, only 44% of EI premiums were spent on regular benefits, as you can see on page 11. The vast majority of the over 9,000 business respondents to the survey--on page 12--were unaware of, or did not use, EI programs such as the labour market partnerships, self-employment assistance, job creation partnerships, and employment assistance services.

It's not fair that business, especially small business owners, continue to pay 60% of the EI premiums. The rate should be gradually moved to a 50-50 split, or 40-40-20 split for premiums, where government pays 20%.

Finally, the EI system needs to be fixed because it does not address today's labour market needs. With the aging population, many companies are begging for employees. The graph on page 14 clearly shows that as the unemployment rate decreased over the past decade our members' concern with the shortage of qualified labour has increased dramatically. This is not a coincidence. Both are linked to a demographic trend caused by an aging workforce.

The shortfall of qualified labour has steadily increased, and it is expected to increase over many years to come. In March of this year, CFIB released its “Help Wanted” report. The report looked at the long-term vacancy rate. As you can see on page 15, the long-term vacancy rate has almost doubled since we first did the study in 2004. Our study found that a 4.4% long-term vacancy rate meant there would be an estimated 309,000 long-term vacancies last year. Page 16 shows that there were long-term vacancies in every province, and page 17 shows that, not surprisingly, our members have told us it's getting harder and harder to find employees for the future.

Canada needs a long-term comprehensive strategy to deal with the labour shortage challenge. CFIB has been working with the provincial and federal governments in several areas to deal with this critical issue, such as education and training, apprenticeship programs, co-op education, business succession, and immigration strategies. However, EI policy is one area where little has been done.

EI policy can play a significant role in either alleviating or exacerbating the labour shortage issue. We are concerned that the current EI program is hindering rather than helping employers and employees deal with the labour shortage issue. As you can see on page 18, one out of five employers stated they had difficulty hiring people because some people would rather stay on EI benefits. In some provinces the people who would rather stay on EI are close to 40%.

We need to fix EI so it better meets the needs of employees and employers. It's too important a program to leave in its current state for another 15 years. The creation of the Canada Employment Insurance Financing Board is a good first step, but more needs to be done in the near future.

Thank you, Mr. Chair.

[Ian Russell, President and Chief Executive Officer, Investment Industry Association of Canada]

Good afternoon, Mr. Chair.

Ladies and gentlemen, I'm Ian Russell. I've come before the committee many times, but this is the first time I've been here in my capacity as president and chief executive officer of the Investment Industry Association of Canada to talk to you on the singular subject of tax-free savings accounts, or TFSAs. With me today is my colleague Barbara Amsden, who will be helpful to me in responding to a number of the questions that may come from the committee.

The IIAC is one of Canada's oldest and youngest associations. It was founded in 1916 as the Investment Dealers Association, which began as a trade association that over the next 90 years became increasingly a self-regulatory body. From 1996 to 2006, the IDA grew rapidly as a regulator, tripling in size. In April 2006 the organization separated its dual mandate, creating a single self-regulatory organization and a trade association.

The Investment Industry Association is the trade association for the Canadian securities industry. In that capacity we've been able to lobby effectively or advocate on behalf of our members, some 210 firms in the Canadian investment industry, for improvements in regulatory and tax policy to strengthen the capital markets in the Canadian economy and to meet the government's objective of productivity improvements. We've been better able to publicize what our industry does to promote the savings investment process and encourage capital formation.

As I said, we have 210 members. They range from very large, national, full-service investment dealers to small boutique operations, which operate as an institution with an institutional focus, and also as a regional focus, in all parts of the country.

The role of the Investment Industry Association of Canada is to promote the growth and development of the Canadian investment sector. The IIAC represents a strong and proactive voice that seeks to represent the interests of the investment sector and all market participants. Our corporate members range from regional companies employing few persons to major corporations that employ thousands of Canadians. Our members assist Canadian investors in building and protecting their capital to ensure their financial future and that of their families.

For our members to successfully begin offering TFSAs and to promote further savings by Canadians, we believe it is in the best interests of investors, governments, and TFSA providers that TFSAs be made as simple as possible to introduce and manage, and to this end that they be as similar as possible to and able to leverage the current RRSP framework.

A great deal of work needs to be done by our members between now and the January 1, 2009 start-up date. Technology changes don't just occur at the push of a button. We hope to have your help with legislative changes, as well as the help of the Department of Finance and the CRA on regulatory and administrative matters, to ensure a smooth launch and an excellent good-news story for the front pages of the first newspaper editions of the new year.

With your permission, I won't read the rest of my remarks, but I will touch on four problems and amendments that we suggest.

First, Bill C-50 limits TFSA offerings to a trust annuity contract or deposit, and excludes securities accounts. Interest and annuity rates have dropped since the early nineties, and more and more Canadians now rely on investments, rather than just term deposits and annuities, to finance their retirement. Requiring that brokers still resort to the trust structure of using third-party trustees to offer TFSAs adds costs and inefficiencies, and we believe it is really unnecessary.

Second, the CRA proposes more frequent reporting than for RRSPs, but based on the RRSP example, we believe this is not cost-justified, as material over-contributions to RRSPs are proportionately small, excess amounts are usually low, and penalties can be imposed to dissuade over-contributions. As for RRSPs, an annual report with contributions and withdrawals will enable the CRA to identify over-contributions, even if those are withdrawn in the same year in an effort to unfairly take advantage of the tax system.

Third, the treatment of TFSAs upon the death of the TFSA holder differs from that of RRSPs. Income or capital gains on the TFSA become immediately taxable at the time the holder dies, in contrast to RRSPs, where there is an exempt or transitional period after death, which allows for a period to learn of the holder's death and a process for deeming the disposition of assets and for resetting costs at fair market value, and various other points. As we know, the death of a family member means a difficult time for everyone, and treating RRSPs and TFSAs differently will lead to additional complications and frustrations at a time when complexity and administrative complications are particularly difficult for the bereaved.

Fourth, on implementation, Bill C-50 provides that qualifying TFSA arrangements must be entered into after 2008. This would prevent the opening of accounts with a zero balance earlier and would lead to a rush following the new year. Our members are already getting calls about opening TFSAs. This risks negative publicity for TFSA providers and the government, if there is congestion at the beginning of the year.

So we are requesting four legislative changes.

First, we recommend amending the legislation to allow brokers to offer TFSAs directly under an account agreement, and not just as a trust.

Second, for efficiency and cost-effectiveness—while leaving CRA's ability to manage the integrity of the tax base undiminished—we ask or recommend that you amend the legislation to require annual transaction-related reporting by TFSA providers to the CRA without a requirement for reporting transfers between the accounts of the same TFSA holder. This government is committed to reducing the regulatory burden and not adding to it. We believe that more frequent reporting will in fact cause more problems for investors and intermediaries than necessary.

Third, for simplicity, and given little risk to the tax base, we propose an amendment to standardize and simplify processing on the death of the holder, treating TFSAs like RRSPs, or in the same manner.

Fourth, for smooth implementation, we recommend that you allow TFSA providers to open accounts before the new year while still preventing contributions or transfers until January 1.

So those are the recommendations that we have before you, Mr. Chairman.

[Joyce Reynolds, Executive Vice-President, Government Affairs, Canadian Restaurant and Foodservices Association]

Thank you, Mr. Chairman.

The Canadian Restaurant and Foodservices Association appreciates the opportunity to present the views of the nation's restaurant and food service operators on part 7 of Bill C-50. I'm here today on behalf of Canada's largest hospitality association, which has 33,000 members right across the country. We represent a $59-billion industry with more than a million employees.

I have been before this committee many times on the subject of employment insurance. Because of the labour-intensive nature of our business, where $3 out of every $10 in sales goes to payroll, restaurant operators pay a disproportionate amount of taxes as payroll taxes.

Recognizing the burden artificially high employment insurance rates place on labour-intensive industries, CRFA is on record as objecting to the setting of EI premiums at excessively high levels and has argued against the use of EI funds for purposes unrelated to EI.

CRFA, long ago, concluded that the only way to ensure employment insurance premium rates were set on a break-even basis was to establish a dedicated trust fund that is separate from Canada's public accounts and operated at arm's length from government.

Over the last 10 to 12 years, EI premiums have been set at rates that consistently far exceeded program costs, resulting in the accumulation of a $54-billion surplus in the EI account. This has resulted in an enormous financial obligation to the employers and employees who exclusively fund the program.

In principle, building up a surplus during times of economic growth makes sense, so that premium assessments do not have to increase during a prolonged recession. In practice, the intention behind establishing surpluses has not been respected.

As far back as 1994, in a submission to the Standing Committee on Human Resources, CRFA expressed concerns about this approach. We said at that time:

Unfortunately, our experience has been that surpluses have been too irresistible for government, and have been diverted to other initiatives. CRFA cannot support the anti-cyclical financing approach unless there is a statutory guarantee that the surplus would be accumulated for an economic downturn only.

Our fears back in 1994 were obviously well-founded. Governments quickly became dependent on the funds in the EI account.

The 1986 directive of the Auditor General to integrate the employment insurance program into the overall finances of the government has been used as an excuse to justify the diversion of EI funds. It has been clarified many times by the Auditor General that it was never the intent of the Auditor General to have EI revenues as part of the government's general tax revenue stream, nor was it the intent to have them used for purposes unrelated to EI. The only reason for the directive was that back in 1986 the EI account was in a deficit and contributed to Canada's overall deficit, which in turn impacted the overall borrowing requirement of the country. As we all know, there has been an enormous improvement in federal government finances since then.

We also know there will always be pressure on any government to increase spending on a multitude of programs and activities and to lower taxes in a host of areas. As a result, we are very pleased that part 7 of Bill C-50 will no longer allow the EI program to be treated as a cash cow. Payroll taxes are profit-insensitive and regressive, and should never have been part of the government's general tax base.

A counter-cyclical approach to rate-setting was pointless, as long as the EI account was consolidated with general revenue, because government's accounting principles do not allow surpluses to be carried forward from year to year. Employers and employees were always vulnerable to premium rate increases when the unemployment rate went up, regardless of the reserve in the EI account.

CRFA recognizes that the $54-billion EI surplus is a notional account and, given fiscal realities, cannot easily or immediately be turned over to the proposed Canada employment insurance financing board. We could debate whether the $2-billion reserve to be provided to the new crown corporation is adequate. The long-term economic outlook suggests low unemployment levels and intensified labour shortages. This is in stark contrast to the double-digit unemployment rates during the 1981-82 and 1991-92 recessions, which significantly reduces EI reserve requirements.

In the case of a prolonged or severe recession resulting in a significant increase in EI expenses, CRFA would certainly expect the federal government to make up for the revenue shortfall. Given the $54-billion surplus, the federal government would be expected to respect its obligations to employers and employees even if it meant raising other taxes or cutting spending.

To conclude, CRFA supports the establishment of the Canada employment insurance financing board and a stand-alone EI fund to be administered at arm's length from government. This is the only fair and responsible way EI premiums can be set on a counter-cyclical basis. It also allows the program to be maintained on a sound financial footing without temptations for government.

CRFA believes that part 7 of Bill C-50 provides necessary statutory protection for employers and employees by removing the option of having their hard-earned premiums used for other purposes.

Thank you.

[Erin Weir, Economist, United Steelworkers]

Thank you very much. I really appreciate the opportunity to appear before this committee.

I'd like to talk a little bit about the general direction of the budget being implemented by Bill C-50 and then make some more specific points about the changes to employment insurance proposed in the bill.

Budget 2008 was formulated in the midst of some very serious national challenges. The manufacturing sector is in crisis. We've lost about 378,000 jobs since November 2002. That's about one in six of all the manufacturing jobs that existed in Canada in November 2002. The recently released census confirmed that employment earnings have been essentially flat over the past quarter century, and that the gap between the rich and the rest of us is growing ever wider. Canada's greenhouse gas emissions continue to increase, our public infrastructure is crumbling, and the list goes on.

Given these pressing needs for government action, I found it quite surprising that the government chose to unveil a budget with the least new public spending of any federal budget in more than a decade.

This severe lack of public funds for important purposes is a direct result of very deep tax cuts that will disproportionately benefit wealthy individuals and profitable corporations. When the tax cuts implemented by this government are fully in effect by 2012-13, the cost will be $14.8 billion of lost corporate income tax revenue, $14.2 billion of lost GST revenue, and $11.2 billion of lost personal income tax revenue. These numbers come to a grand total of $40.2 billion.

Interestingly, this exceeds the $40.1 billion the federal government expects to spend on the Canada health transfer and the Canada social transfer combined, in 2012-13. In other words, if the government had not implemented these destructive tax cuts, it could have afforded to double federal transfers in support of health care, education, and welfare.

My principal objection to Bill C-50 is that it implements a budget that does not address these pressing national challenges and that deprives future governments of the fiscal capacity to do so.

Moving on to employment insurance, Bill C-50 proposes to put that program into a separate fund. Over the past 15 years, when the Canadian economy was growing, unemployment was falling, and employment insurance premiums consistently exceeded employment insurance benefits, the federal government was quite happy to treat employment insurance as part of general revenues. Now we're in a situation where the Canadian economy is slowing down, unemployment is trending upward, and there's the possibility of employment insurance premiums falling short of employment insurance benefits, so now the federal government is saying that employment insurance needs to be in a separate fund, apart from its general revenues.

Philosophically we agree that employment insurance should be administered through a separate fund. Our concern, though, is that the government is proposing to put only $2 billion into that fund. That falls far short of the $54 billion accumulated surplus of premiums over benefits in the employment insurance fund. It also falls far short of the $10 billion to $15 billion needed to maintain employment insurance benefits without increasing premiums during a recession, according to the former chief actuary of the employment insurance fund.

If a recession occurs, the regime proposed by Bill C-50 could require either increases in employment insurance premiums or reductions in employment insurance benefits, which would be the worst possible response to a recession. I think it's very important to maintain employment insurance as an automatic stabilizer for the Canadian economy by providing adequate funds to maintain benefits during a recession without an increase in premiums.

A related concern is that Bill C-50 rules out improvements to employment insurance benefits. It's well known that the proportion of unemployed workers eligible for employment insurance benefits has declined dramatically. The $54 billion surplus is more than enough money to expand those benefits to cover almost all unemployed workers, but Bill C-50 takes this surplus off the table.

In addition to that, Bill C-50 proposes a new rule for the administration of employment insurance that would require new surpluses in the separate fund be used to finance premium cuts as opposed to improve benefits.

To summarize, the concern I have with the changes Bill C-50 makes to employment insurance is that this new fund will not provide adequate employment insurance benefits to Canadian workers who become unemployed.

Thanks very much for your time.

[The Chair, Conservative, Rob Merrifield]

We have enough members at their desks to be able to hear witnesses. We have our witnesses at the end of the table.

We want to start the meeting. This is our last meeting with witnesses with regard toBill C-50. Tomorrow we'll be going clause by clause, starting and finishing it tomorrow. We just want to let the committee know that.

We'll start in order. I'll yield you the floor as I introduce you.

We'll start with the United Steelworkers. We have Erin Weir, economist. Erin, the floor is yours for seven minutes.

Citizenship and Immigration

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

Mr. Speaker, I am pleased to respond to this and the point raised by the member for Scarborough—Agincourt earlier today. While not the same, it is obviously related to the exact same question.

The first point I would like to raise is that the member did not raise the question of privilege at the earliest opportunity. This is one of the requirements for a question of privilege of this type. I refer the Speaker, to Marleau and Montpetit at page 122 where it reads as follows:

A complaint on a matter of privilege must satisfy two conditions before it can be accorded precedence...First, the Speaker must be convinced that a prima facie case of breach of privilege has been made and, second, the matter must be raised at the earliest opportunity.

Page 124 states:

The matter of privilege to be raised in the House must have recently arisen and must call for the immediate action of the House. Therefore, Members must satisfy the Speaker that the matter has been raised at the earliest opportunity. When a Member does not fulfil this important requirement, the Speaker has rule that the matter is not a prima facie question of privilege.

Mr. Speaker, the advertisements in question began running on April 15. We are now about a month later. We have had, since the advertisements began running, 17 sitting days. I would think that on that basis alone, you should dismiss this question of privilege.

I would further add that in terms of the member raising the question, the member for Trinity—Spadina who just spoke, that she is in fact quoted in the media commenting on the issue in question. Some time ago, after the advertisements began running, there was a story by Andrew Mayeda of the Southam group on April 21, which was four days after it began running. Therefore, that, again, is many weeks ago. Ample opportunity has existed and the member has failed to meet that minimum obligation of raising the issue at the earliest possible opportunity.

I would like to comment on something the member forScarborough—Agincourt raised this morning. He argued that the money being used for the ads flowed from Bill C-50, the budget implementation bill. Since Bill C-50 has not yet passed into law, he argued, that the government was in contempt.

There is absolutely no basis or evidence for the argument he raised, although that did not stop him from raising it. However, as you are well aware, Mr. Speaker, the money being used for the ads has nothing to do with the passage of C-50. The money was approved in March when the House, with the support of his party, the Liberal Party I might add, adopted interim supply.

With respect to the advertisements themselves, I would invite the Speaker to review the advertisements, which I will be pleased to table in the House. You will note that the ads are very respectful to the House and the legislative process. The authors of the advertisements took into consideration Speaker Fraser's ruling from 1991, from which the member for Trinity—Spadina quoted from extensively, when they were drafting these advertisements. As you will see, they were careful not to be dismissive in any way of the legislative process, which was the subject matter of the question of privilege that led to Speaker Fraser's ruling.

Let us recall what the core finding of that ruling was and the core message. The core principle of it was that advertising undertaken by the government should not presume or suggest that a decision had been made already when it had not been taken by the House of Commons or by Parliament. It is the taking of a decision by Parliament that represents the privilege that should not be prejudiced. Advertisements that imply or suggest that a decision has already been taken when it has not would be not in order, would be inappropriate and would give rise to a case of privilege. However, if the advertising does respect the fact that Parliament has yet to make a decision, then it will not have in any way prejudiced the privileges of Parliament.

I will, for the benefit of you, Mr. Speaker, and for those in the House, read the content of one of these advertisements, and they are all essentially the same, although in many languages. I will read one that appears in English:

Reducing Canada's Immigration Backlog

Newcomers to Canada have helped build our country from the beginning.

The Government of Canada believes in immigration: we want more newcomers to join us, families to be re-unified faster and labour market demands to be met.

Currently, the immigration backlog sits at 925,000 applications. This means that the wait time for an application can be as long as six years.

That's why the Government of Canada is proposing measures to cut the wait.

These important measures, once in effect, include:

More resources: An additional $109 million to speed up the application process.

Faster Processing Times: The ability to fast-track new applications.

Better Employment Opportunities: Matching skills with our economic needs.

Complete Processing. All applications currently in the backlog will be processed.

Then, the next sentence is critical. It says:

These measures are currently before Parliament.

The advertisement continues:

All of these changes respect the Canadian Charter of Rights and Freedoms and the Immigration and Refugee Protection Act.

Canada needs an immigration system that is flexible, fast and fair for everyone—that's why we're reducing the immigration backlog.

It proceeds to provide a number of contact phone numbers and a website to which people could go.

As I have said, the principal question that has to be determined is whether the advertisement in any way apprises, or suggests or presumes that Parliament has already taken a decision, that there is a fait accompli.

What things are spoken of in the past tense? There is something spoken of in the past tense and that is newcomers to Canada have helped to build our great country from the beginning. Perhaps the member suggests this is a fait accompli that has not happened. We believe it has happened and, therefore, I do not think that gives rise to a concern.

However, as for the substantive policy measures in question, all of them are spoken of as proposed measures, once in effect, and being matters that are currently before Parliament.

As I have said, the advertisement was crafted with that critical decision of Speaker Fraser, relating back to the GST advertisement case, in mind and they respect that principle so as to respect the privileges of every member of this House of Commons.

This is very much in contrast, I might add, to what we saw from the former Liberal government, which went out of its way to dismiss the role of Parliament and parliamentarians. This was highlighted by former prime minister Chrétien's reference to his backbench as terracotta soldiers.

Compare our ad to the former Liberal government's ads, announcements and activities and it will be concluded that it is not side of the House that needs a lecture on respecting the legislative process.

For example, the Liberal minister of international trade, on March 30, 1998, sent out a press release entitled “Marchi Meets With Chinese Leaders in Beijing and Announces Canada-China Interparliamentary Group”. At that time, there was no Canada-China interparliamentary group.

The Liberal government appointed the head of the Canadian millennium scholarship foundation before there was legislation setting up the foundation

The Liberal government sent out a news release, on October 23, 1997, announcing that provincial and federal governments had constituted a nominating committee to nominate candidates for the new Canada pension plan investment board. The nominating committee is provided for under subclause 10(2) of Bill C-2, which had not yet been adopted at that time by the House.

On January 21, 1998, the Liberal agriculture minister met in Regina to discuss the rules for the election of directors to the Canadian Wheat Board's board of directors, as proposed in Bill C-4, An Act to Amend the Canadian Wheat Board Act. Substantial amendments to Bill C-4, tabled at report stage by opposition members, had yet to be debated in the House. While the House was still debating how many directors should be farmer elected versus government appointees, the minister was holding meetings as though his bill was already law.

How can we forget what took place in the last Parliament, when the opposition defeated two bills that would reorganize the Department of Foreign Affairs and International Trade. After the defeat of these bills, the Liberal minister responsible said that the government would go ahead and reorganize the departments anyway.

I point out that the Speaker did not consider any of these actions to be an affront to the House. That being the case, and in comparison to the respectful tone of this government's advertisement, I submit it cannot be viewed as dismissive of the legislative process or the role of members of Parliament. We on this side of the House do not think our caucus members are nobodies. We respect the institution and the members who serve it.

The advertisement is very clear in stating that the measures are currently before Parliament, and that is certainly the minimal test.

I might add, with regard to some other questions that were raised, much of what the member for Trinity—Spadina raised goes to the debate of the bill itself and the merits of it, some contentions about whether it would succeed in having some of the desired outcomes that were sought. Those are very much matters for debate. They are appropriate for debate, but they are not questions that go to the issue of the privileges of this Parliament, as people can have different views. The government is very confident in its views on this matter.

I might also add, with regard to Speaker Sauvé's 1980 ruling, she stated the following:

The fact that certain members feel they are disadvantaged by not having the same funds to advertise as does the government, which could possibly be a point of debate, as a matter of impropriety or under any other heading, does not constitute a prima facie case of privilege...

I understand she wished there was nobody making the case on the other side of this debate. However, the government reserves the right to make that case and it is doing so actively, but doing so in a fashion that respects the previous rulings in the House, the leading ruling of Speaker Fraser, which is the critical one to which we must have regard.

The advertisements were done in such a fashion, all of them in different languages, that they fully respected Parliament's jurisdiction, its ability to make this decision and communicated fairly to Canadians that the decision was yet to be made and it was something for which they should watch how Parliament determines, by saying that the measures were currently before Parliament and that they were, indeed, that the Government of Canada was proposing.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I rise on a question of privilege for which I have given you notice.

I believe that a breach of the rights and privileges of all members has occurred and that this constitutes contempt of Parliament.

For the last number of weeks, the government has run advertisements in newspapers across the country promoting unpopular amendments to the Immigration and Refugee Protection Act through Bill C-50, the budget implementation bill.

These advertisements amount to contempt of the House of Commons. These ads have both obstructed and prejudiced the proceedings of the House and its committees with dishonest and misleading information.

Furthermore, the use of public funds to promote legislation that is currently before the Standing Committee on Finance is flagrant interference by the government with the deliberations of members of Parliament and is defined by former Speaker Sauvé as a prima facie case of contempt.

On the first point, the advertisements that appeared in ethnic and mainstream news media, a copy of which I will table here today, are misleading for several reasons.

The headline of the ad reads, “Reducing Canada's Immigration Backlog”. The ad goes on to state that the Government of Canada is proposing measures to cut the wait times of the 925,000 applications in the immigration backlog.

Since the legislative changes will only affect applications submitted after February 27, 2008 and since they will have no impact on the backlog of the 925,000 applicants in the system before that time, this is a clear case of misleading government advertisements.

The word “backlog” is defined as “a quantity of unfinished business or work that has built up over a period of time and must be dealt with before progress can be made”. The definition is clear, but there is nothing in the legislative changes in Bill C-50 that deals with the “unfinished business” of the 925,000 applicants currently waiting to come to Canada.

The ad also states that there is an additional $109 million to speed up the application process.

What it does not tell the public is that there has been a cut of 49% in the spending of the immigration program at the department between 2006 and 2008. The actual spending in 2006 was $244.8 million and in 2008 it is $164.86 million. That is a cut of $80 million.

On my first point that the ads constitute contempt of Parliament due to their misleading nature, let me quote the definition of “contempt” as outlined in the 20th edition of Erskine May's Parliamentary Practice, chapter 10, at page 143:

It may be stated generally that any act or omission which obstructs or impedes either House of Parliament in the performance of its functions, or which obstructs or impedes any Member or officer of such House in the discharge of his duty, or which has a tendency, directly or indirectly, to produce such results may be treated as a contempt even though there is no precedent of the offence.

It is clear. The government advertisements are both an act and an omission. The government deliberately made misleading comments on the effects of the proposed legislation, and it deliberately omitted other information about the effects of the proposed legislation.

In attempting to shift the public debate through massive spending of public dollars on a partisan position of the government, it impeded the work of members to perform our duties and it is disrespectful of the role of the House of Commons.

Former Speaker Sauvé further ruled on October 17, 1980, which can be found on page 3781 of Hansard, that advertisements would constitute contempt of the House if there appeared to be “some evidence that they represent a publication of false, perverted, partial or injurious reports of the proceedings of the House of Commons”.

We know through the legislation before the House that the proposed changes have nothing to do with the backlog and that these ads appeared in the public even before the House of Commons finance and citizenship and immigration committees had a chance to study the issue.

Therefore, the intention of these ads is to mislead the public and mislead and disrespect the role of Parliament. These actions of the Conservative government were deliberate and should be considered a contempt of the House.

It is further considered an act of contempt against all hon. members when the government interferes with parliamentary deliberations by the spending of public funds. Madame Sauvé said on October 17, 1980:

--when a person or a government attempts to interfere with our deliberations through spending public money, or otherwise, directly or indirectly...such action would constitute a prima facie case.

The government is clearly interfering in the debate before the House and the Standing Committee on Finance through the spending of public money. According to the 2008 budget estimates, it is spending $2.4 million in public funds. Already $1.1 million has been spent, even while Parliament is considering this bill. More spending on advertisements is to come.

The sad truth is that there is a long history of governments attempting to insult the dignity of Parliament with advertising.

In 1989 the Progressive Conservatives placed misleading ads with respect to the GST prior to a vote in Parliament. In 1980 the Liberal government of the day placed ads across Canada promoting constitutional reform before it was approved by Parliament.

Former NDP leader Ed Broadbent said on September 25, 1989:

We believed that advertising that advocated a certain policy before it was approved by the Parliament of Canada...should not be supported by the spending of public funds. We said it in 1980; we repeat it now.

Sadly, I am repeating it again in 2008.

In conclusion, the very tenets of our parliamentary democracy are at risk if actions like these are not reprimanded and stopped.

On October 10, 1989, former Speaker Fraser ruled on similar actions taken by the then Conservative government in its promotion of the GST. He said:

--I want the House to understand very clearly that if your Speaker ever has to consider a situation like this again, the Chair will not be as generous. This is a case which, in my opinion, should never recur. I expect the Department of Finance and other departments to study this ruling carefully and remind everyone within the Public Service that we are a parliamentary democracy, not a so-called executive democracy, nor a so-called administrative democracy.

He went on to call the advertising campaign “ill conceived” and said that “it does a great disservice to the great traditions of this place”. Former Speaker Fraser continued:

If we do not preserve these great traditions, our freedoms are at peril and our conventions become a mockery. I insist, and I believe I am supported by the majority of moderate and responsible members on both sides of the House, that this ad is objectionable and should never be repeated.

Mr. Speaker, in your deliberations, I am sure you know that your decisions will affect future actions of the government. We cannot allow the floodgates to open to extreme partisan advertising paid for by the public purse. We must put a stop to this practice here and now.

I thank you for this time, Mr. Speaker, and I look forward to your ruling.

[Jim Karygiannis, Liberal, Scarborough—Agincourt, ON]

Mr. Speaker, under the stewardship of the Minister of Citizenship and Immigration, her department has engaged in placing advertising in numerous newspapers praising the virtues of the changes to the Immigration and Refugee Protection Act.

Unfortunately, the changes the ads are praising are contained in part 6 of Bill C-50, which is presently being studied in the Standing Committees on Finance and Citizenship and Immigration. Bill C-50 has not yet passed this House.

Another problem is that the moneys being used to pay for these ads have not been approved by the House. The moneys are contained in Bill C-50.

This blatant disregard of parliamentary procedure shows the complete contempt for this House on the part of the Minister of Citizenship and Immigration.

Mr. Speaker, I am asking you to rule on this matter and, should you rule in my favour, I am willing to move a motion to have the matter referred to the Standing Committee on Procedure and House Affairs.