Evidence of meeting #35 for International Trade in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was julian.
A recording is available from Parliament.
Procedural Clerk
What I can do, if you like, is make up a list of where there are these line conflicts. Then the committee can deal with the ones that are subject to the line conflicts first, and then we can follow, if the committee wishes, Ms. Guergis' proposal.
That would satisfy everybody, hopefully, and would be fair to everybody.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Thank you, Mr. Chairman,
Rather than losing ourselves in the Standing Orders as we attempt to determine exactly what should apply, and given the possibility of our misleading ourselves that exists, why not consider each clause in sequence? Let us deal, one by one, with each one of the clauses Ms. Guergis wishes to amend. If the changes are accepted and if other changes are then made, we will simply have to add them as we go through each one of the clauses as already amended.
Conservative
Conservative
Helena Guergis Conservative Simcoe—Grey, ON
I'm not going to beat my head against the wall all day long. No one's interested, so....
Conservative
Conservative
The Chair Conservative Leon Benoit
It does seem, yes, that there's not agreement.
Members, pursuant to Standing Order 75(1), consideration of clause 1 is postponed.
(On clause 2--Definitions)
Shall clause 2 carry? Agreed...?
Mr. Julian.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Mr. Chair, I don't want to have to intervene each time, but if you prefer that I do so, I will. I did request that we have a recorded vote on each of these clauses. I think it's important to be on the record in each case.
As you know, according to Marleau and Montpetit, any member of the committee can request that we have a recorded vote. I indeed request it.
Conservative
Helena Guergis Conservative Simcoe—Grey, ON
Mr. Chair, I do want to point out that a number of clauses don't have amendments, or they're not contentious. Obviously this is another stall tactic by my colleague, to delay as much time as possible around the table.
Perhaps we could all agree that for those clauses we don't have amendments for, we're not required to have a recorded vote. Let's get them out of the way and then get into debate and discussion around the clauses with amendments.
Conservative
The Chair Conservative Leon Benoit
Thank you, Ms. Guergis.
Mr. Julian, you've heard the proposal. On clauses where there are no amendments, do you still want a recorded vote?
NDP
Peter Julian NDP Burnaby—New Westminster, BC
As you know, Mr. Chair, according to Marleau and Montpetit—
Conservative
The Chair Conservative Leon Benoit
You have a right to request that. I'm not denying that or doubting you.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
—any member of a committee can request a recorded vote. It's not subject to a committee's decision.
Conservative
The Chair Conservative Leon Benoit
Then let's go to a recorded vote on clause 2.
Mr. Julian, would you agree, since there is no amendment to clause 3 either, that we do clauses 2 and 3 together?
Conservative
The Chair Conservative Leon Benoit
Let's go to a recorded vote on clause 2.
Shall clause 2 carry?
(Clause 2 agreed to [See Minutes of Proceedings])
Conservative
The Chair Conservative Leon Benoit
Shall clause 3 carry?
(Clause 3 agreed to [See Minutes of Proceedings])
(On clause 4--Interest to be paid)
Conservative
The Chair Conservative Leon Benoit
We will now go to clause 4. The first amendment is NDP-1.
Go ahead, Mr. Julian.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Thank you very much, Mr. Chair.
Moving to amendment NDP-1, as was expressed in the brief hearings we had on Tuesday on Bill C-24, the concern here is the overall impact on the softwood industry. What we have in the current Bill C-24 is a case where moneys that are owed effectively to the Government of Canada are subject to a rate calculated through the Government of Canada treasury bills sold at auctions of Government of Canada treasury bills during the first month of the calendar quarter and 4%. Essentially, in this clause as it's currently crafted, Mr. Chair, what we're doing is imposing an additional penalty on softwood companies.
As witnesses on Tuesday attested, we know this is a pretty draconian bill. There are a series of penalties that we'll be discussing in the course of the next few days. But the reality is that a lot of these penalties are penalties that should not be imposed on the softwood industry. They've already suffered enough, and they're certainly suffering from the softwood sellout itself.
Now, if we look at Bill C-24, we have clauses that are additional penalties—additional punishments, if you like—on how these companies are treated. When there is interest to be paid at a specified rate—and we've already acknowledged that because of the decision of the Court of International Trade on October 13, these taxes and these penalties do not need to be paid—the way the bill is currently configured, what we end up with not only penalizes the companies having to pay these taxes that they shouldn't have to pay because we won in the Court of International Trade, but we're also very clearly including a 4% penalty on top of
(a) the rate that is the simple arithmetic mean, expressed as a percentage per year and rounded to the next higher whole percentage where the mean is not a whole percentage, of all amounts each of which is the average equivalent yield, expressed as a percentage per year, of Government of Canada Treasury Bills that mature approximately three months after their date of issue and that are sold at auctions of Government of Canada Treasury Bills during the first month of the calendar quarter preceding the particular calendar quarter, and
(b) 4%.
That's the way the bill is currently worded.
Assuming that the Government of Canada treasury bills are above the inflation rate plus the 4%, we have companies paying taxes that they should not have to pay, because, as I mentioned, the Court of International Trade said we don't have to have these self-imposed taxes. In addition, in clause 4, we have this quite egregious penalty.
As a result of that, what we have offered up is an amendment that would simply allow the rate of the interest penalty to be paid by softwood companies. These are small softwood companies right across the country. These are folks who are already going to suffer from many aspects of the bill unless we clean it up. To have them pay the treasury bill rate plus 4%, as opposed to what our amendment proposes—which is the rate that is the Bank of Canada core measure of inflation calculated in respect of that....
In other words, what we do by incorporating this amendment is, in some way, to soften the blow of the double penalties that these companies are going to have to pay. We're talking about an onerous administrative burden. We're talking about onerous financial burdens, as we've heard—and hopefully we'll have the time and due diligence to go through clause 18 to eliminate the double taxation that occurs.
It seems to me quite straightforward and quite simple that we don't want to penalize and doubly penalize companies that have been operating in good faith, companies across the country that have paid the price of this agreement.
Mr. Chairman, what we are proposing is very simple. We are proposing to replace the suggested wording, in other words, the rate that is the simple arithmetic mean of Government of Canada Treasury Bonds. I have read the text in English, and there is no need for me to repeat it in French.
We are proposing an interest rate that would be the average return on Government of Canada Treasury Bonds, plus 4%. Very clearly, the effect of the bill would be to penalize, to attack, to harm these companies, who are already paying double: first of all, they are getting less money than their rightful share, money that was illegally collected by the government of the United States. Secondly...
Conservative
The Chair Conservative Leon Benoit
Mr. Julian, there is no need to go through the same debate in English and French separately. There is translation here. So certainly if you've done it in one language, the translation would have it be understood in the other language. I encourage you not to repeat.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
Well, Mr. Chair....
Thank you very much, but I deem it important to make my arguments in both official languages. This is certainly the right of any Canadian citizen. I believe it is important to present certain arguments in a detailed way. If these companies--I am talking of companies that could be in the Abitibi region, in Saguenay—Lac-Saint-Jean, on the North Shore...
Conservative
The Chair Conservative Leon Benoit
Mr. Julian, repetition is against the rules of debate, and I will cut that repetition off. Certainly, members of this committee can be heard in either official language, and we are always happy to accommodate that, of course. That's a right. But I will not allow you to go through, in both official languages, the same debate. It's still the same debate.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
What I am trying to say, Mr. Chairman, is that I do not agree when you say that this is the same debate. I am speaking here--and I did not do so in English--about companies that are situated in the Abitibi-Témiscamingue region, in Saguenay—Lac-Saint-Jean and on the North Shore. I am very familiar with the Saguenay—Lac-Saint-Jean region, having lived there for three years.
If we retain the provisions of the bill as they now stand, these companies will indeed wind up paying double, and this is not normal. If we really take their interests to heart, we will not want to impose upon them a penalty, in other words the rate of return of Treasury Bonds, plus 4%. What we are suggesting is much more reasonable: simply following the rate of inflation. It is a reference which to my mind is appropriate. The rate is set by the Bank of Canada. It is not set in a haphazard way, but by the Bank of Canada itself. This is done regularly, based upon solid statistics, which is why the rate is reliable.
If the Bank of Canada provides us with the reference level, in other words, the rate of inflation, then that holds a lot of weight. To my mind, this is what the reference point for this clause, clause 4, should be. We cannot impose a penalty such that the Government of Canada might well profit from the difficulties of softwood lumber companies. It is to my mind completely inappropriate to impose upon these companies an additional 4%, given that they have already had their share of setbacks.
What we are proposing is simple, important, and based upon a reliable rate, as I have already stated. The Bank of Canada is an organization we can place our trust in. It sets its rates based upon goods and services-related statistics Canada-wide. The rate of inflation gives the average picture of the performance of goods and services overall.
If, for example, the cost of fuel goes up, that would be reflected in the rate set by the Bank of Canada. There are other criteria as well, for example the cost of a food basket, an average basket of food that all Canadian families could purchase. This rate is based upon various factors affecting Canadian families. All of these elements are taken into account.
There is also the cost of fuel and the cost of heating one's home. All of this comes into play in calculating the rate of inflation. An estimate is done of the cost of a food basket including items such as juices, cereals, meats and fish, in other words all of the products that a Canadian family would normally purchase. Also included in the calculation are all of the other fixed or variable costs resulting from Canadian family lifestyles.
Every month, the Bank of Canada does a review of all goods and services. It takes everything into account and does its calculations. Then, from month to month, it calculates the overall cost of these goods and services, which are important and essential. These are not luxury items. The cost of a limousine does not come into play in the calculation of the cost of goods and services. The Bank of Canada does its calculations and compares the result obtained at the end of the previous month with that of the following month.
Based upon these calculations, it is able to establish over the year the variations from month to month. It also calculates the annual inflation rate. These numbers change from one month to the next, of course, but they really give us a good idea of the monthly evolution of the cost of living for Canadians.
This is why I say that, in my opinion, the inflation rate is extremely reliable, extremely valid and extremely important for a business having to pay interest because of Bill C-24. It is based on something that only represents the cost of the differences incurred that month by the Government of Canada. In other words, if there is money that is owed because of the passage of Bill C-24, because of these interest payments to be made, the only thing this represents for the Government of Canada is the shortfall while it awaits these payments.
Given that we have these calculations of the Bank of Canada, we know that this in no way whatsoever represents a loss for those who have not paid all of these taxes resulting from Bill C-24. Therefore, it cannot be said that the government is losing something by having to wait one, two or six months, but in making these changes to clause 4, we would be going back to a situation where nothing would be lost but where the company would not be unfairly penalized. It would not be on the receiving end of a punishment which, in a sense, would amount to a double or triple penalty.
This is why the measure I am proposing should indeed be taken into consideration.
At present, there are those who are starting to prepare contrary arguments. They will be critical of the rate of inflation. They will, for example, say that this rate does not take into account all data or that it is not exact, given that the results come one month later. It is a fact that all of these calculations cover the previous month. Therefore, given that they correspond to the previous month, the rate cannot be exact, and certain calculations would need to be adjusted.
If there is a drop in the price of fuel in a given region of the country, for example, what happens? Given that we average the prices charged across the whole country, it is quite possible that the inflation rate not be exactly representative of each region of the country. In other words, there clearly are variables.
In British Columbia, there might be a given objective or some kind of representation. If the cost of fuel slid down in British Columbia, this would not necessarily be reflected in the national rate. And if the price of fuel were to drop in Quebec, for example, that change would not necessarily find itself reflected in the overall data.
I believe that those who make these criticisms are mistaken with regard to one thing: the inflation rate cannot be the same from one end of the country to the other. It cannot be the same in Prince George and in Iqaluit. The cost of a grocery basket will clearly vary. The price of fresh fruit, for example, will obviously be much higher in Iqaluit relative to the cost of fuel in other regions.