Procedure and House Affairs Committee on March 17th, 2011

[Scott Brison, Liberal, Kings—Hants, NS]

On a point of order, Mr. Chair, you reminded me that what I was saying was not consistent with the matter at hand in the Speaker's ruling. I would expect you would make the same interpretation with Mr. Young's--

[The Chair, Conservative, Joe Preston]

I would, because I believe he started off by talking about business tax rates and business tax reductions, which are mentioned in this question of privilege.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, the discussion was about projections and my intervention was about projections. So why would you rule against me and not rule against Mr. Young, or are you being partisan?

[The Chair, Conservative, Joe Preston]

I'm attempting to be neither partisan nor rude, but we seem to be having an abundance of points of order today.

I would suggest that if this is about corporate tax reductions, as already mentioned in your own questions and in the opening statement of Minister Menzies, I will allow the question on corporate tax reductions.

[Terence Young, Conservative, Oakville, ON]

Thank you, Chair.

I'm trying to understand why Mr. Brison is trying to silence the government.

Should I repeat the question?

[Ted Menzies, Conservative, Macleod, AB]

Chair, I would like to comment on that, simply because I had a conversation about this, and we are talking about corporate tax reductions. So I would suggest to you, Chair, as I'm sure you're well aware, that it is what I was invited to speak about today. The motion that was put forward was to discuss and find out the actual costs and benefits of those reductions.

I would like to put on the record here what the Canadian Federation of Independent Business has actually said about tax reductions and the benefits to the 107,000 members of that federation. I quote:

For the record, independent businesses do support the series of general corporate tax cuts that will be completed next year.... The Tories were right to say that their decision to bring the rate down to 16.5% this year and 15% in 2012 had the support of CFIB and small business.

The Liberals were also right to say a cut in the general corporate tax rate was not CFIB's top priority for 2012. In addition to the fact that we operated from the assumption the corporate tax cut was already in place....

I would remind honourable members that there was a miscommunication in question period one day, where Mr. Brison suggested otherwise, and he was kindly reminded that CFIB actually does support the reduction of costs to businesses. I'm not sure if he has had a chance to phone Catherine yet and apologize

I think she's still waiting, Mr. Brison.

[Terence Young, Conservative, Oakville, ON]

Thank you, Minister.

Minister, after reviewing the information on the business tax revenue that the Department of Finance provided Parliament, we all noticed a very interesting trend. For instance, I'd like to look at two years. In 2000-01, when the business tax rate was 29.12%, corporate profits were $136 billion and the federal government collected $28.3 billion in business tax revenues. Let's look a few years later and a few tax reductions later. In 2006-07, when the tax rate was about 22%, or more than 7% lower, corporate profits rose to $197 billion and the federal government collected $37.3 billion in business tax revenues.

It would appear from the numbers that as business taxes were lowered, business became stronger and the federal government ended up collecting more revenue, not less revenue, from business. Can you please comment on that trend?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Chair, this is the fundamental premise on reducing taxes, whether it's reducing taxes to individuals, small business, or corporations.

To put it into perspective, many of us here have run corporations, and be they two people or three people, they employ Canadians. The taxes are an important cost to them. If you reduce those costs, they can increase their business, they can increase their employment, their number of employees, and they can compete internationally. That's the positive impact that we've seen to this economy.

I talked about the 480,000 net new jobs. Many of those employers, many of those businesses, when asked, will say that part of the reason they have more employees is because this government has reduced their cost of taxes.

The Canadian Manufacturers and Exporters represent many of those businesses you refer to, and I'll read a quote from them:

Corporate tax cuts deliver a net fiscal benefit to the government sector—more revenues are generated across all levels of government in Canada than lost as a result of tax rate reductions. The net fiscal cost to the government that implements a tax cut is lower than the amount of corporate tax revenues it forgoes.

It's a basic premise: if we leave more money in the pockets of job creators, they will create more jobs. It's plain and simple.

[Terence Young, Conservative, Oakville, ON]

There have been a lot of references in the media recently, by the opposition as well other groups, on the Department of Finance report concerning the impact of stimulus on the Canadian economy. Specifically, some commenters claimed this report proved that business tax cuts have a lower multiplier effect in terms of generating economic growth. Can you please clarify what the report in question actually was about and what it actually said?

[Ted Menzies, Conservative, Macleod, AB]

In response to that, there actually was a report, and I'm glad you referenced that report. It actually dealt with measuring short-term stimulus impact of the potential stimulus measures. So it was looking at near-term action and reaction, if you will. This dealt with immediate and short term. However, this same report, which wasn't quoted so widely, said that over the longer term business tax reductions had, and I quote,

...among the highest multiplier effects in the long run. This is because they increase the incentive to invest and accumulate capital, which leads to a higher capacity to produce goods and services.

As I say, it's plain and simple if they have more in the long term.

Certainly in the short term, we knew that the stimulus spending was going to cost. At the beginning of tax reductions, those businesses were just starting to recover from the recession. In the long term, they're reinvesting.

[The Chair, Conservative, Joe Preston]

Thank you, Mr. Young, for your round.

Madame DeBellefeuille, seven minutes for you, please.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you, Mr. Chair. Welcome, Mr. Minister.

All of us here around this table have had to leave our ridings in the middle of the parliamentary recess. Like you, we have surely had to cancel important representational activities to be able to make an urgent decision in a few days about whether the government complied with an order of the House, as the Speaker asked us to do. He also asked us to report on our observations, recommendations and suggestions, which we will do later this afternoon. We have listened to a series of witnesses and ministers before you. They feel and trust that they have given us everything we need to understand. We disagree with them completely.

I would like to come back to a few points. Today is March 17. I would like to give a little background to understand what exactly is happening. We'll recall that, on November 24, the government sent the committee a memo saying that the projections of corporate profits before taxes and effective corporate income tax rates are basically cabinet confidence documents and that the government was unable to provide those documents to the Standing Committee on Finance, as requested by the committee.

A month later, on December 1, we received the same answer to another request. We were told that the information requested was subject to cabinet confidence. On February 7, Member of Parliament Scott Brison raised a question of privilege following two refusals by the government to provide this information. On February 17, under pressure—that's my personal interpretation—the government submitted a three-page document containing a table detailing certain amounts relating to bills.

On February 17, the government decided that certain documents that it had previously deemed confidential could now be provided. Today is March 17. Yesterday, March 16, we received another packet of documents dealing basically with the same information received on February 17.

I'm wondering why your government, which prides itself on being so transparent, had to wait until there was pressure by parliamentarians to finally say that what was confidential no longer is and to think that the table from February 17 was would satisfy the parliamentarians' information requests.

You are an experienced MP. You are now a minister. Can you explain to me why a document that was deemed confidential on November 24 and confirmed to be confidential on December 1 can all of a sudden be deemed non-confidential? Cabinet confidence is being lifted and some data is being given to parliamentarians.

[Ted Menzies, Conservative, Macleod, AB]

Thank you for your question.

I was very busy yesterday, but I had the opportunity to watch a bit of the proceedings on television. You had some very learned experts here--a former clerk of the Privy Council, as well as the Law Clerk of the House of Commons--who actually answered that question probably more eloquently than I could. They explained that a document, and the entirety of a document at one point, certainly is cabinet confidence. But I'm not going to talk about what you.... You've already had two ministers here for two days talking about what's within their jurisdictions. I am here to answer questions about the questions that were asked by the finance committee of the finance department, to answer what are the costs and what are the benefits to corporate tax reductions. I'm not going to re-plow ground that the two ministers obviously covered in two days of appearances in front of this committee.

I think the explanation was given that in answering and in trying to be as transparent as we could be, we extracted what were not necessarily the specifics, to answer the question. As I said, we have actually provided more. Mr. Brison's original motion was very vague. We answered what at the time we thought the committee was looking for. Obviously he protested that and said that he didn't think it was enough.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. Menzies, it's hard for me to accept your answer. You are one witness among many. Even if two ministers have appeared before you, I want your answer. Wouldn't it have been easier and more democratic to have given parliamentarians what they needed on November 24, because here we are, on March 17, debating the issue, and we are now entitled to some information that had been requested on November 24? You are a minister and you know how the machine works. Can you explain why you voluntarily held back information relating to your sector that has now been provided to parliamentarians? Why not on November 24?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Chair, with all due respect, it's hard for us to assume what more the finance committee might have been looking for. We answered the questions that we legally could.

Mr. Brison has been a privy councillor. He's been sworn in to the Privy Council. He's well aware of what he can and cannot divulge in public. He's well aware that other privy councillors have sworn the same oath.

We provided what we felt was legally.... It wasn't my decision; we had legal advice on that. You had two very learned individuals who told you specifically what can and cannot be divulged to the public. There are bounds within what our Privy Council Office allows us to do. We provided those answers and more.

[The Chair, Conservative, Joe Preston]

Thank you.

Monsieur Godin, seven minutes for you.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Thank you, Mr. Chair. I am going to share my time with Mr. Martin.

Welcome to the committee, Mr. Menzies.

You're saying that you sent the documents in accordance with the legal advice you received and that you provided what the cabinet could provide, right?

[Ted Menzies, Conservative, Macleod, AB]

Yes--what we felt was.... It was not the entire documents. I think that was what the former clerk of the Privy Council was explaining, that not the entirety of a document can be divulged. So we gave what was legally.... And as I said, it was more than was actually asked for.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

It was legal. Are there things relating to costs that are legally protected by cabinet and that were not given, or has all the information now been disclosed?

[Ted Menzies, Conservative, Macleod, AB]

What information was requested.... As I said, we can't pre-judge what is not in the question. We provided answers to the questions that were allowable.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

You said earlier, Mr. Menzies, that your government created the position of Parliamentary Budget Officer, which has been held by Mr. Kevin Page since 2008, and that your government is transparent. Do you really believe that, even though the rest of Canada does not?

[Ted Menzies, Conservative, Macleod, AB]

Well, I have to take exception to that sort of comment. You may think that, sir, and that's your privilege, but not all Canadians think that.

The Parliamentary Budget Officer was never even contemplated before this government. There are lots of governments.... There has been a majority government in this country for a lot of years. There were requests to put in place this sort of oversight. Did any previous government do it? I would say no.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Well, but the Parliamentary Budget Officer was here yesterday and said that the government was not taking part.

I'm getting to that and you will be included.

[The Chair, Conservative, Joe Preston]

Through the Chair, please, rather than with each other.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

The Parliamentary Budget Officer was very clear when he told us yesterday that he had trouble getting information from your government. Mr. Chair, how can the government claim that it is transparent when we are seeing nothing but the opposite? A document was submitted to Parliament on February 17. We had to address Parliament, and a request was made. A decision had to be made by the Speaker of the House so that we could receive the pile of documents at yesterday's meeting. But today we're being told that the government is transparent. Mr. Chair, I don't believe it, and Canadians don't believe it either. I think, Mr. Minister, that the government is in a little bubble here, in Ottawa, and that it doesn't know what Canadians are saying, because transparency does not exist in your government.