Bill S-2 (Historical)

An Act to amend the Canada-United States Tax Convention Act, 1984

This enactment amends the Canada-United States Tax Convention Act, 1984 to implement a Protocol that amends the Convention between Canada and the United States of America with Respect to Taxes on Income and on Capital and adds Annexes A and B to it. The major change contained in the Protocol is the elimination of all withholding tax on cross-border payments of interest. The elimination is immediate for arm’s length payments of interest and phased in over three years for non-arm’s length payments. Other changes to the Convention include new rules for the treatment of “limited liability companies” (LLCs), pensions, stock options, corporate continuances and taxpayers who change residence from one country to the other. Annex A to the Convention clarifies the interpretation of a number of provisions of the Convention. Annex B to the Convention provides for a binding arbitration procedure.

Canada-United States Tax Convention Act, 1984

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I did not ask a question because I knew that I would have the opportunity to reply to my colleague from the Standing Committee on Finance. I am pleased to see that he wishes this committee to examine this issue once again. An agreement will be reached readily given that the government has already stated that it supports continuing with the review already begun by the Standing Committee on Finance.

I now know that the Liberal Party also supports proceeding and I have no doubt at all that the NDP would also like to examine the issue of companies that use tax havens such as Barbados, the most well known example, to avoid paying their fair share of tax.

I would like to spend most of my time on this subject. The tax agreement with the United States covered by the bill under consideration is not a problem. We all know that the United States is not a tax haven. The bill gives cross-border workers the same tax benefits as resident workers. It will institute a bipartite tribunal or board to settle tax disputes and to tighten rules for certain types of companies, making it more difficult to use various tax loopholes.

The bill eliminates certain provisions pertaining to double taxation of capital gains. We support this and I believe it has a great deal of support from parliamentarians. I do not wish to go into too much detail about this matter.

However, it is surprising that the government has time for such matters. That is fine, we are not criticizing them, but we are questioning their unwillingness to shut down tax havens.

I would like to backtrack a bit to have a better understanding of what is at issue. There is a general rule among various countries that sign tax agreements. If tax is paid in one country, it is not paid a second time on the same income when the money is repatriated to the country of origin. According to this principle, the same income is not taxed twice.

That said, in order to know whether companies have paid taxes in their country of origin, Canada negotiates tax treaties with other countries. Among other things, these treaties provide for the exchange of information about taxes paid in another country, so that Canada knows whether or not the money should be taxed when it is brought back here. If there is no tax treaty or exchange of information, Canada assumes that taxes were not paid and claims the corresponding taxes when the money is brought back.

In the past, in the Liberal days, a bill was introduced by the finance minister at the time, the member for LaSalle—Émard, to establish a tax treaty with Barbados, telling our companies that do business in Barbados and pay taxes there that they should not also pay taxes in Canada. At issue was a famous example of a company doing business in Barbados, Canada Steamship Lines International, which was of course owned by the family of the member for LaSalle—Émard.

Up to this point, everything is fine and seems to make sense. The problem is that the tax rate for international companies in Barbados is 2%. Obviously, it is rather ridiculous to say that these companies paid taxes in Barbados, since they paid 2%. Really, it was getting a gift. Then, companies such as Canada Steamship Lines are allowed to bring back to Canada the money they had earned from having their head office in Barbados, without having to pay taxes here.

There is another loophole in this mechanism that the Liberals themselves introduced. Obviously, the act requires there to be a real place of business in Barbados. It also states that the revenues must genuinely be earned in Barbados, and that they must not simply be a financing scheme to avoid paying taxes.

Members will probably remember the very telling report that aired in Quebec, aptly called Les évasions barbares, or The Barbarian Evasions.

A journalist went to Barbados, to the building that is home to the head offices of hundreds of companies that supposedly do business there. The journalist found that the building has about a hundred tiny rooms just big enough to accommodate a secretary and two filing cabinets. Obviously, the journalist demonstrated by this very fact that it would be impossible for a company that generates millions of dollars to really have a head office there, in such a small partitioned office with only a desk, a typist, a computer and two filing cabinets.

In reality, the decisions made by those companies are made in Canada or elsewhere around the world. Their activities take place in Canada or elsewhere around the world, but their financing is such that all revenue is artificially declared in Barbados and is subject to a ridiculously low tax rate, only 2%. They then send the money back to Canada, maintaining that they have already paid taxes in Barbados and therefore should not have to pay taxes in Canada.

This scheme is possible because of the negligence of the Liberal government at the time and we hope that the Conservative government will be proactive in this file, as it claims it will. At the time, the Liberal government was negligent and even had the audacity to adopt retroactive measures with respect to the tax treaty with Barbados. In fact, when the bill was adopted, the provisions were that the treaty would apply retroactively to 1995. By a curious coincidence, that was the same year that Canada Steamship Lines was established in Barbados. That was a rather interesting situation, especially since, when it comes to retroactivity, both the Liberals and the Conservatives seem to adopt a double standard.

Obviously, the guaranteed income supplement is a perfect example. For years, the Bloc Québécois has been fighting for the seniors who have been swindled out of the guaranteed income supplement. They are owed money because they were misinformed and were unable to claim the money at the appropriate time. They must be given full retroactivity, that is, they must be given the money that is owing to them. It is not a gift; they are entitled to this money. Yet, this is not being done.

Naturally, when people have to pay taxes because they have forgotten to declare income over the past five or ten years, retroactivity applies. Those at fault cannot tell the tax man that he caught them too late, so they should only have to pay for the past 11 months. If they get caught, they have to pay taxes for the past five or ten years.

The same goes for Barbados. New legislation was retroactive. No big deal, it provided tax shelters to companies so they could get off without having to pay any taxes. No big deal, retroactivity applied. In contrast, when it comes to reimbursing seniors, when it is time to give them the money they are entitled to, the government says too bad, it cannot be done.

The Liberals did not want to budge when people were asking them to. We challenged them on the fact that they were offering full retroactivity in terms of tax breaks for the richest companies, but were not doing the same for seniors. During the election campaign, the Conservatives said that they would grant seniors full retroactivity. Now they are refusing to do it because they say they are in charge and things have changed.

What does it mean for politics when a member or a minister says that now that he is in government, things have changed? Does it mean that he said whatever he wanted beforehand? Does it mean that the government has the right to withhold the truth and mislead the public? That is a very strange way to operate.

I really want to take this opportunity to emphasize something to all parties in this House. Even though the Bloc Québécois supports the bill before us concerning the tax convention with the United States, we want to re-examine issues related to other tax conventions between Canada and other countries, conventions that are designed not to help workers, but to enable companies to pay next to no tax in Canada and opt out of their fair contribution.

We will continue this work after the holidays. If the Liberals want to work with us, so much the better. I hope that the Conservative government will act as quickly as it says it will.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I would like to comment on what the member for Jeanne-Le Ber said. He said some things that are incorrect, in my opinion.

First, when the member for LaSalle—Émard was the finance minister and then the prime minister, the Bloc Québécois members tried to tarnish his reputation because it was in their political interest to do that, and they are still trying to do it.

I will highlight a few facts for the member.

First, the former finance minister would have recused himself from any discussion around shipping that would have come before him from the Department of Finance or in cabinet. This was a very clear requirement and he followed that rigorously.

Second, all his assets were in a blind trust at that time, so he did not know what was transpiring with respect to Canada Steamship Lines.

Finally, any reasonable person, who understands the world of shipping, would understand that an international shipping company is always set up in a place where there are flags of convenience and where there are tax havens. All these companies operate in that way. If they do not operate that way, they will not be in international shipping for very long. It is a total legal transaction and it is done by everyone.

When is the member for Jeanne-Le Ber going to read the information, get the facts and stop trying to tarnish the reputation of the member for LaSalle—Émard?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, the omnibus bill that contained the clauses on the tax convention with Barbados and was retroactive to 1995 was introduced by the member for LaSalle—Émard. Now, I am being told that he had never discussed it with finance department officials. How is it that he introduced a bill in this House containing clauses that were allegedly never discussed and whose legal implications he allegedly never considered?

Either the member is mistaken and the former finance minister, the member for LaSalle—Émard, did address that issue and did examine the implications of these clauses, contrary to what the member just said, or the member for LaSalle—Émard, who was the finance minister at the time, never considered the impacts of these clauses and was completely unaware of how clauses in a bill he introduced in this House could affect his family company. I have some trouble imagining that. Either way, he acted irresponsibly.

It is a well-known fact that he did not run the day-to-day operations of Canada Steamship Lines. However, if someone owns a company, he need not be involved directly in its management to know that if it moved to Barbados in 1995 it might be interesting to make the tax agreement retroactive to 1995.

The last item has to do with the competitiveness of these corporations. Let us be frank. If it were really true, why would there not be a special tax treatment for these corporations in Canada? At least the 2% to 5% in tax that could be collected would be paid in Canada. At present, we lose everything. Are we prepared to accept for all time that the existence of tax havens and corporations without infrastructure to support—these shipping companies use our infrastructure and our ports and the consumer goods are destined for our markets or are being shipped by our producers via these ships—justifies the burden being shouldered by Canadian taxpayers alone?

We have to find means of ensuring, among other things, that everyone pays their fair share. The member has just confirmed the Liberal Party's true methods. These companies must be profitable; therefore there is no other option but to be based in a tax haven such as Barbados.

I could make the following argument as I mentioned earlier. Two months ago I became the father of a baby girl. I could say that in order to pay my rent I have no choice but to pay less tax and I will work under the table. It does not work like that. I cannot say that because I need to pay less I have to find a way of not paying my taxes. Everyone has to pay taxes, citizens and corporations alike.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I will make a couple of points.

First, under Canadian tax law, if the direction and control of a company emanates from Canada, then its profits are taxable in Canada. If the member would check the records, he would understand that Canada Steamship Lines at that time had international and domestic operations. The international operations were based outside of Canada. If Revenue Canada ever believed that the direction and control of the international operations emanated from Canada Steamship Lines in Montreal, it could have assessed income tax. There was nothing to preclude that.

Second, the member says that the former finance minister must have known what was in the bill. I do not know on what grounds he makes that statement. Again, if he would check the record, he would understand that when the member for LaSalle—Émard was finance minister, there was also a secretary of state for finance. That is how these matters were handled under the Liberal government. The secretary of state for finance would deal with any matters that touched on international shipping, and the finance minister was absolutely scrupulous about that.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I am not sure how many Canadian taxpayers are going to believe that.

If the then minister of finance had no idea what impact this bill would have on his family business, if he did not use his influence, then he is unbelievably lucky. Things just happened to work out for him? I have my doubts.

If the former finance minister and member for LaSalle—Émard is truly as innocent as the hon. member claims, then he is a very lucky man because the bill truly worked out quite well for his family business.

As for where the international division of Canada Steamship Lines International operates from—I mentioned this in my speech—that was one of the things that was questioned by a Quebec journalist who went to Barbados. He knocked on the door of the Canada Steamship Lines International office, but no one answered. There was just a small sign on the door that said: Canada Steamship Lines International.

Since the hon. member is so determined to defend the integrity of his colleague from LaSalle—Émard, then I invite him to go on a little mission. Let him invite us to see the Canada Steamship Lines International offices in Barbados. It would be my pleasure to go there and I am sure a number of my colleagues here in this House would be happy to do so as well. A trip like that would leave us with a lot of free time because visiting the offices of Canada Steamship Lines International would take only 30 to 40 seconds since there practically are no offices.

And if the headquarters are truly in Barbados, with hundreds of employees working there and keeping this company in operation, then, when we return from our trip that the hon. member is going to invite us to take, I will say in this House that I was wrong.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to rise to speak to Bill S-2, which is an act to amend the Canada-U.S. tax treaty.

It is interesting to listen to my Liberal colleagues' defence of the member for LaSalle—Émard and his tax avoidance scheme in the Barbados. It is kind of like listening to the captain of the Titanic describe how well things went. It is unbelievable not to address the fundamental problems of reflagging and so forth.

I do want to segue a little into this tax treaty bill. It is tempting to spend half an hour or 20 minutes of our time on reflagging ships and also on the consequences to workers and so forth in the avoidance of taxation, but I do want to focus on Bill S-2 in particular.

There are some concerns in this process and in this actual tax treaty that do not resolve significant issues for my riding of Windsor West as well as Essex County and, greater than that, for individuals living in Quebec, New Brunswick and other places, where significant numbers of pensioners collecting U.S. social security and making contributions in the United States had the tax treaty changed on them.

This process still leaves them in limbo and is actually still counter to the private member's bill of the government's own member, the member for Essex. The government has made sure that the bill is basically squirreled away at the finance committee. It has not resurfaced, despite it having one hearing in the last session of Parliament, in which I participated. It has not seen the light of day. Jimmy Hoffa has probably seen more light of day than this bill in the last number of years.

It is very disturbing, because some seniors are being taxed extra. That is different to what they expected. They have had their lives put on hold. They have suffered significant consequences. In fact, some of them are dying. This is very shameful. We should be addressing it. However, this bill will only add an arbitration element for those particular victims of poor taxation policy. The shift happened and they got whacked twice. The private member's bill would rectify that by allowing the taxation system to be for only 50%. Without getting into technical details, it would have provided some equity.

I do want to touch on process, because I think it is important. I know that right now probably only a handful of Canadians are watching this as opposed to the Mulroney-Schreiber affair and the meeting going on right now, but this does affect people. It is important to set out for the record the concerns that we in the New Democratic Party have about why the Liberals and the Conservatives have rammed this through so quickly.

First of all, it is important to recognize that the bill originated in the unelected Senate. Senators are not elected. They are appointed by the Prime Minister, and in fact were by the former prime minister, who is having to explain right now how many bags of cash he took and why. If members recall, he actually loaded up the Senate at one particular point to force through the GST. The party that created the GST needed the Senate to push it forward. It is ironic that he is here today.

However, we have this bill today coming from an unelected house. Our side of the House, the New Democratic Party, has a concern about that.

What happened subsequently is really troubling. When the bill went to the international trade committee, the member for Burnaby—New Westminster, who represents our caucus, asked for witnesses to be brought forth and for some type of study related to the bill, which is normally what would happen on most committees.

I have been part of a number of different committees where we have moved quickly through clause by clause and so forth when there was a will and the support to do so, but when we have witnesses requested, we almost always have that consultation. That never happened. The Liberals joined with the Conservatives to block that.

The government does have some issues with regard to the tax treaty and we do want to have some of those things improved here, but there are some major unknowns and questions out there. I want to read from a communication I received. It was sent in confidence to me, so I cannot say from which legal firm it came, but it is a reputable Canadian legal firm that is giving its opinion on the tax treaty. I want to read what it has provided me in terms of the new protocol:

On September 21, 2007, a new protocol to the Treaty was signed between the federal governments of Canada and the United States and is expected to be ratified by both countries in 2008. The protocol adds a new provision under Article V of the Treaty (the “permanent establishment” article described above) to implement rules with respect to service income. Once ratified, under the protocol a Canadian company may create a permanent establishment if it provides services within the United States and meets certain thresholds. Thus, business profits associated with service activities could be subject to taxation--

[The Deputy Speaker, Bill Blaikie]

Order. I am sorry to interrupt the hon. member. The hon. parliamentary secretary to the government House leader is rising on a point of order.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, in regard to that presentation, I believe, unless I heard incorrectly, that my hon. colleague said he was reading from a document from a law firm. I wonder if he would care to table that.

[The Deputy Speaker, Bill Blaikie]

The tabling convention applies to ministers, not members, so the point of order is laid to rest, so to speak. The hon. member for Windsor West can resume his speech.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, if the government wants to appoint me as minister and if it would actually table its documents, maybe I would reciprocate. That is part of the privilege of the House: to keep democracy going in this process. I am going to finish reading the document. The end of the quotation is very important:

Thus, business profits associated with service activities could be subject to taxation for many Canadian companies. These rules are currently set to take effect January 1, 2010 if ratification occurs during 2008.

Therefore, what we have here is the situation of a service industry that could have new taxation added to it through this process. We know that right now there are some concerns with the service sector and the economy and we do not have a full economic analysis of it. That is what is troubling about this bill being brought forth in this manner.

There could be some very valuable elements to the treaty. I think there are. There are some general things that are very good, but at the same time, why do we not have those answers? I find that very difficult to accept, especially given that this is an opportunity to correct historically significant problems.

I also want to touch on the issue of social security and Canadians who have paid in the U.S., are doing so now and face extra taxation. I am going to read another very important letter that talks about the history of this change.

Once again, this bill is not going to address the issue of those Canadians who had the tax treaty altered on them. The government is going to send them to some arbitration process, which is not even described. It could take literally years. We have no idea. And that is if they win, let alone having to go through that and relive the whole situation. That is a real concern, because the government has a private member's bill from its own member for Essex, who has been pushing that issue, and the government has not even listened to him.

Why the government is not adjusting that specifically in the bill, I do not know. Why it is turning its back on many residents of Ontario, Quebec and New Brunswick, I cannot understand. I want to read the letter for members because it describes, for the record, what has been happening to these ordinary Canadians. It describes what took place with the tax treaty and how it affects them and their lives. The letter comes from Mr. Craig Ridsdale and is entitled “Unfair Tax Laws Burden Seniors”. It states:

Many Canadian seniors across Canada have been sitting on their hands since 1997 waiting for the Liberal government to move forward on a pledge made to them to rectify a system of taxation that threatens to leave many of them, particularly low income seniors, in a very difficult financial situation.

In 1984, the Canada-U.S. Tax Convention Act was implemented, primarily to protect the citizens of both countries from being taxed twice on their pensions, be they Social Security in the States or the Canada (and Quebec) Pension Plan here in Canada. However, differences in our taxation systems (Canadians pay taxes when collecting benefits while Americans pay the taxes on their contributions) has meant that Canadians receiving Social Security benefits were being taxed twice.

A series of protocols to amend this bill have made matters even worse for many retirees. Specifically, the third protocol, implemented in 1995 and applicable for the 1996 fiscal year allowed the United States government to charge what amounted to a more than 25% withholding tax on Canadians' pensions. Previously, the second protocol to this treaty allowed only the country of residence to tax social security benefits. For many retired Canadians who paid into the American system over the span of their working lives, what this meant was that over one quarter of their income essentially disappeared overnight.

The fourth protocol, implemented after the disastrous third protocol, allows the Canadian government to tax 85 per cent of Social Security, an increase from the 50 per cent agreed upon in the 1984 act. It also provided the government with the latitude to reduce the 85 per cent limit which it has refused to do.

Since 2001, Canadians Asking for Social Security Equity (CASSE) have been lobbying the federal government to either restore the Second Protocol or at the least grandfather its provisions to include all seniors who were negatively affected by the Third Protocol. To this date nothing has been done.

It is also important that the current Secretary of State for Multiculturalism had a private member's bill on this back in 1998, so what is really troubling about this is that we have a pattern between the Liberals and Conservatives, who all have said that they want to fix the tax treaty.

Once again we are talking about pensioners, seniors, who are living in Canada. They worked abroad, they paid their taxes there and they paid their taxes at home, but when they actually got their social security benefits things changed and they now get taxed even more on those benefits. That is why the private member's bill to correct this would have been a more equitable situation. Why the government has not done that is unacceptable. This is a real hardship for many people.

We have had testimony at the House finance committee by individuals affected by this. They have come forward and talked about people in their circle who have been fighting this and who have died and about how others have had to sell their homes and how others are having a hard time getting back to the quality of life they thought they were going to enjoy when they retired. That is important, because the human dignity aspect has been lost with regard to this taxation bill.

We were talking earlier about the member for LaSalle—Émard and his issues related to his steamships, to his company and the flag and so forth. This issue is so important. I remember that in Windsor when the member for LaSalle—Émard, as finance minister, was attending the Caboto club, one of the most memorable moments was the fact that he had to slip into the kitchen to avoid the demonstrations out front. He used the back door and walked through the kitchen to go to the event as opposed to meeting with the individuals who were affected by this taxation policy that had been changed.

There have been many statements made by Liberals and Conservatives both, who are fighting over this. Members of the NDP have been consistent on it. What is unfortunate is that it has not led to any changes. I cannot understand that. I cannot understand who in their right mind would want to create an arbitration process for seniors at a time when they need their issue addressed now.

The member for Burnaby—New Westminster was right to ask the government and its officials how much this tax treaty is going to cost. What they estimate is half a billion dollars over three years. That is what is going to be lost in terms of government revenue.

We do not know whether the banks are going to enjoy that money. We do not know who is going to be the real net beneficiary of that arrangement. What we do know is that to fix this historic problem related to seniors who had double taxation, and who were caught in this crossfire of tax treaty analysis and neglect through the United States negotiations, it would cost around $60 million.

Thus, we have $1 billion for that sector, which we do not even have a prescribed analysis from. The department said it would come back with more information. At the same time, it would cost around $60 million if we did not tax at an increased rate seniors who paid their social security in the United States.

That is bizarre, because we know from the evidence presented to us that those individuals are going to spend that money in this country. They are going to use it to get by. They are going to continue to renovate homes and to be in our communities more, and they are going to be able to pay off some of their debts. That is important, because that economic push comes to that collective group.

I cannot understand this. Maybe it has been the hostility. I went on a national campaign for a seniors' charter of rights, which passed in the House of Commons. The member for Hamilton Mountain did a terrific job and pushed the issue through, but we have not had full implementation of the charter. The House and the government have ignored seniors in many respects.

I do not know why they are motivated to move in this direction. In conclusion, I find it really frustrating that the Liberals have joined with the Conservatives on this issue to prevent debate, analysis and full due diligence.

We do want to see our tax treaties updated. We are not opposed to that. They are very beneficial in many respects. Living on the Canada-U.S. border as I do, I have spoken at length in the House of Commons about the Windsor-Detroit border and its importance. We are not opposed to going forward on this, but why, for heaven's sake, are we not doing it properly? Why is it so convenient to let this group of seniors be basically thrust to the side, forgotten and left out of the whole picture? Why is that being contemplated? Why is that being allowed?

Why have the Liberals joined with the Conservatives to prevent the debate about this to even take place? I do not understand that logic. I do not understand why they could not at least have some hearings to get to the root of this structure or maybe move an amendment to fix the situation.

It really shows the lack of influence, I think, of the member for Chatham-Kent—Essex and the whole area around there and of the Conservatives in southern Ontario. When they have a tax treaty this significant and an issue that has been a thorn in the side of the Liberals because they broke promise after promise on it, an issue that has been politically manipulated over the years, they have chosen not to do anything on it in this bill. That is remarkable in itself. It speaks to why the ineffective Conservative caucus of southern Ontario is basically being swallowed up by the oil companies, because the petroleum club is served only by the government.

The Conservatives could not even get a minor tax treaty agreement passed to protect seniors as they had promised in their campaign. This shows disinterest. It also shows arrogance, which they have quickly adopted from the previous government. They are going to have to explain to people why they have to go through arbitration to get this fixed. This is going to be very traumatic.

It is a shame that we did not do the proper due diligence. The member for Burnaby—New Westminster wanted to bring forth witnesses to vet this so it could be a better bill and give us a better tax treaty. Most important, it would give us the chance to address historical problems that the House has never dealt with before.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, whenever we deal with bills that come to us from the Senate, we feel an extra level of obligation to ensure they pass all the smell tests. There is a serious ethical challenge with the Senate in terms of its own conflict of interest guidelines and its ability to ensure that any of its legislation has not been unduly influenced by people with pecuniary interests.

I am referring to a very fascinating discussion I entered into with Mr. Jean Fournier of the Senate Ethics Office about the fact that the accountability gaps in its offices are so wide one could drive Mack trucks through.

Section 15.(1) of the Senate's own written accountability code says that senators can participate in debate on matters where they have financial interests, provided an oral declaration is made on the record prior to each intervention.

Section 15.(2) says senators can participate in debate on a matter where a family member has an interest, provided a declaration is first made orally on the record. Family members do not have to declare any kind of financial interests unless they have a direct contract with the government. Senators can sit as directors of boards of all major corporations and still participate in debates.

There is another fascinating loophole that senators have written for themselves. They can participate and influence any kind of financial interests as long as they declare it behind closed doors. Unless their cronies disagree, it does not have to be declared to the public. Most Canadians would find that quite shocking.

I was a school board trustee on a small town school board. Our conflict of interest guidelines were much more stringent. For example, it was impossible for any trustee to be part of any debate that had to do with any contract if we had any relative living anywhere in the province of Ontario involved in education, regardless of whether it was post-secondary or kindergarten. That was the standard we met as small town school board trustees.

Our friends in the Senate obviously have a problem writing accountability guidelines for themselves.

If the House wants me to table the letter that I am referring to, I would be more than happy to put it on the public record because people need to see that our friends in the Senate need basic remedial help in reforming themselves. They seem incapable of doing it on their own. The more light we shine on these grievous ethical lapses perhaps the better served we will be as a 21st century democracy.

I would like to ask my hon. colleague, does he believe that any time the Senate gives us a bill that we should give it a bit of extra scrutiny to ensure that it passes the ethical standards test? Obviously, because the ethical bar is abysmally low in the Senate, questions are raised.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, that is an important question because it sheds some light on a charade that is happening here; that is, the Prime Minister's campaign to reform the Senate.

Here we have a bill where the member for Timmins—James Bay did a good job of outlining some of the conflict issues. Yes, we can drive a truck through it. I am familiar with trucks in my riding. There are 10,000 of them per day that go through, and they would all go through in a single day.

I can tell members that it is really important to connect the dots on this one because we have a Prime Minister who seems to be fighting with the Senate, proposing reform and wanting greater accountability. Yet, when we have a bill that comes from the Senate the government immediately adopts it. It does not amend it, and then it blocks witnesses from actually coming forth. That is the really interesting aspect of it.

So, when we apply what has happened in this particular case to Bill S-2 and the rhetoric of the Prime Minister on wanting to actually reform the Senate, it does not match up.

He can have his tirades here in the House all he wants about the Senate, but it does not really apply to actual practical work taking place here. What is really frustrating about this is that we do not have that level of accountability that we should on this tax treaty bill. It does not matter who gets caught in the crossfire; it is just a matter of expediency to get this off the table and to move it forward.

That is what is really unacceptable. We have a small group of citizens in particular who are really getting hammered by this not addressing the social security issue and the double taxation, and sending them to some arbitration system. Many Canadians out there are thinking that it is great. They get to go to some government arbitrations to fight for something that should have been fixed for them. That is actually terrible. On top of that is the fact that these are seniors.

The Conservatives are going to create a whole new system. It is ironic. They are creating a whole new system as opposed to just fixing a simple problem. Why are they doing it? Their motivation is hard to believe. We know the bill is going to cost around $500 million in three years. That is the estimate from the department. We know that to fix a simple problem for seniors would cost $60 million but the government refuses. I do not understand that logic.

[The Deputy Speaker, Bill Blaikie]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker, Bill Blaikie]

The question is on the motion. Is it the pleasure of the House to adopt the motion?