Debates of May 30th, 1994

Point Of Order

[The Speaker]

Order, please.

Has the hon. Minister of Transport something to say?

[Douglas Young, Liberal, Minister of Transport]

Mr. Speaker, you will understand that I find it extremely difficult to sit here and listen to the minister, or rather the MP, who was a minister under the former Conservative government before becoming the Leader of the Opposition.

Mr. Speaker, on December 11, in this House-

[The Speaker]

Order! So, my dear colleagues, this is a very simple matter. I will ask the hon. Minister of Transport-I had not done so before but I will now-whether he used the word "liar" in this House. Obviously, this is unacceptable and I would ask him, if he has used such words, to withdraw them right away.

[Douglas Young, Liberal, Acadie—Bathurst, NB]

Mr. Speaker, of course, the respect I have for this House forces me to recognize that the phrase "to tell lies" or the term "liar" are unacceptable in this House. So I withdraw the word "liar".

[Some hon. members]

Hear, hear.

[The Speaker]

I accept that statement.

Order In Council Appointments

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I have the honour to table today in the House, in both official languages, a number of order in council appointments which were recently made by the government.

Pursuant to Standing Order 110(1), these are deemed referred to the appropriate standing committees, a list of which is attached.

Committees Of The House

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, it is my duty and indeed my pleasure to present today in conformity with Standing Order 109 of the House of Commons to table the first report of the committee of the environment and sustainable development.

In doing so, I would like to take the opportunity to thank the government for this most interesting assignment; the members of the committee for their work, advice, input and very thoughtful support; the clerk, researchers and support staff for their dedication, advice, guidance and the benefit of their experience.

I would also in a particular way like to thank all the witnesses and those who in large numbers advocated the thrust of this report, making most valuable recommendations on how the proposed commissioner of the environment and sustainable development is to operate.

We have looked at the future well beyond the next election. We have produced a report which, if adopted, would serve Canada well into the next century. What we are proposing, if adopted, would take Canada to the forefront in the global community both in anticipating and preventing depletions in our ecological and natural resource capital and in integrating economic with environmental goals so that once and for all we get out of the dangerous balancing act we find ourselves in as a society.

In adopting the committee's recommendations, the Government of Canada will be giving substance to its commitment to an environmentally sustainable future and will assume its rightful place as a leader in the world community.

Motion To Extend The Consideration Of Votes

[Lucien Bouchard, Bloc, Leader of the Opposition]

moved:

That, pursuant to Standing Order 81(4)( a ), consideration of Public Works and Government Services Votes 1, 5, 10, 15, 20, 25, 30, 35 and 40 of the Main Estimates for the fiscal year ending March 31, 1995, by the Standing Committee on Government Operations, be extended beyond May 31, 1994.

(Motion agreed to.)

Petitions

[Warren Allmand, Liberal, Notre-Dame-De-Grâce, QC]

Mr. Speaker, I have a petition signed by over 800 residents of Quebec requesting effective political action to stop the violence and genocide in Bosnia.

The petitioners point out that despite numerous UN resolutions and ceasefires, there are still excessive cases of atrocity and violence against Bosnian civilians: rape, murder and ethnic cleansing.

The petitioners ask Parliament to support measures to stop this inhumane conflict and bring justice and peace to the Bosnian people.

[Ronald J. Duhamel, Liberal, St. Boniface, MB]

Mr. Speaker, I have a petition from men and women in my constituency of Islamic faith of several different backgrounds and nationalities who would like to have the concept of guardianship considered as an alternative form of adoption.

These people of the Islamic faith believe that guardianship would have equal legal and moral obligations as does adoption. Therefore I urge the government to consider this particular request of these Canadian citizens.

Questions On The Order Paper

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, Question No. 37 will be answered today.

Question No. 37-

[Bob Mills, Reform, Red Deer, AB]

With respect to the electoral observer's trip to the Ukraine on March 24, 1994, sponsored by the foreign affairs department, (a) who attended, (b) what was the cost by person and (c) what was the total cost?

[André Ouellet, Liberal, Minister of Foreign Affairs]

(a) Participants list is included. (b) The costs which are noted reflect budgeted costs. The actual expenditures have yet to be calculated since claims for all of the participants are not yet in. Our preliminary assessment is that the actual costs will be, for the most part, under budget.

Parliamentarians-$9,892.00 X 6. Ukraine specialists- $10,600 (Including travel to Ottawa for a briefing) X 7. Monitors (42 days)-$25,700 (Including travel to Ottawa for a briefing and professional fees) X 2.

(c) Total costs $184,952.00.

Canadian observers for legislative elections in Ukraine

March 27, 1994

Following observers were in Ukraine for the period March 21-31:

1. Mr. Jesse Flis, Parliamentary Secretary to the Minister for Foreign Affairs, (LIB)-Mission Head

2. Ms. Carolyn Parrish (LIB)

3. Mr. André Caron (BQ)

4. Mr. John Loney (LIB)

5. Mr. Walter Lastewka (LIB)

6. Senator Marcel Prud'homme (IND)

7. Mr. Oleh Romaniew, President of the Ukraine-Canadian Congress

8. Ms. Alexandra Chycozij (Toronto, Ontario)

9. Mr. Myroslav Tracz (Winnipeg, Manitoba)

10. Mr. Victor Nachoneshny (Edmonton, Alberta)

11. Mr. Andrew Hluchowecky, Information Section, Ukraine-Canadian Congress (Ottawa, Ontario)

12. Ms. Patricia Sembaliuk, (Winnipeg, Manitoba)

13. Mr. Orest Dubas, Editor Ukraine-Canada Policy and Trade Monitor (Montreal, Quebec)

Following monitors were in Ukraine for the period from March 6 to April 16:

1. Mr. Bill Mukanik, federal Returning Officer

2. Mr. Don Slobodzian, former provincial Returning Officer (Alberta)

[The Deputy Speaker]

The question as enumerated by the parliamentary secretary has been answered.

[Peter Milliken, Liberal, Kingston and the Islands, ON]

I ask, Mr. Speaker, that the remaining questions be allowed to stand.

[The Deputy Speaker]

Shall the remaining questions stand?

[Some hon. members]

Agreed.

The House resumed consideration of the motion.

Tax Conventions

[The Deputy Speaker]

The hon. member for Saint-Hyacinthe-Bagot has about 24 minutes left.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Speaker, for the accuracy in your time assessment. I had calculated 23 minutes and 49 seconds myself, but I accept your time of 24 minutes.

So we were considering at third reading Bill S-2, which renews a tax agreement between Canada and five other countries, namely Hungary, Nigeria, Zimbabwe, Argentina and the Netherlands. It is never very enjoyable to be interrupted in the middle of a speech, so I will repeat some of the points I covered in detail in the first part of my speech.

The first point is that the Bloc Quebecois has nothing against the countries that have signed the tax agreements mentioned in Bill S-2. The Bloc Quebecois, like all Quebec sovereignists, has shown in the past that it is open to the world, has a deep-rooted tradition in the international cooperation and development area and supports mainly North American but also international agreements of all kinds.

You will recall how we supported the Free Trade Agreement with the United States and Mexico, as well as the GATT agreements signed last December. After long and laborious negotiations, we came to support these conventions, these international agreements.

The same thing applies to tax conventions. When they meet the original needs and the criteria that have been set, we have nothing against such conventions. First and foremost, these tax conventions are used to avoid taxing twice a company which has foreign affiliates.

These are indeed very worthy conventions, but for them to meet their main goal, there has to be reciprocity between Canada and the countries with which we have signed these conventions. There must be reciprocity as well as commensurate tax treatment for profits made by the companies, capital profits and a similar series of exemptions for private corporations.

But, these last few years, the Auditor General of Canada as well as some Liberal members, then in opposition, denounced in no uncertain terms some of these conventions which were signed and are still being renewed between Canada and countries considered as tax havens for hundreds of millions of federal government tax dollars.

I was pointing to the flaws of the tax convention system and explaining why we have so many reservations about a measure like Bill S-2, as we have long been asking for a review of each of these arrangements between Canada and various countries to discover which countries do not deserve reciprocity agreements or tax treaties such as the one under review this afternoon.

We were not the only ones who denounced these conventions. Several others have already done so. For example, in December 1992, the sitting hon. member for Ottawa-Vanier, himself a Liberal, criticized loopholes in tax conventions with countries considered as tax havens, by declaring the following: "We are really worried because the Department of Finance has done nothing to eliminate most of these schemes"-he was talking about schemes concerning tax conventions with countries considered as being tax havens-"used by foreign subsidiaries to avoid taxation. In my opinion, this problem is not new and we are confronting it again this year".

Indeed, the problem is not new. I would say that, since 1987 or approximately 1987, the Department of Finance has been "dealing with" the problems of tax loopholes associated with tax treaties. Indeed, in 1987, the Department of Finance announced that it would study the taxing of foreign affiliates. These studies were never tabled. Imagine! The Department of Finance of Canada has been aware of the problems for seven years, and has let them deteriorate for seven years. It has let these problems deteriorate while the Conservatives were in office, and it is letting them deteriorate under the Liberals.

I am extremely disappointed that the Minister of Finance and the Liberal government did not respond to our numerous calls for a serious and comprehensive analysis of those tax conventions that are causing the loss of hundreds of millions of dollars to the federal treasury in a period where, for some time already, we can no longer afford to deliberately lose hundreds of millions of dollars. This government continues to be inactive in the examination of those tax conventions. Even worse, it is proposing us to extend those conventions before analyzing their provisions as a whole.

This government perpetuates the injustices detected in some tax conventions, the sieves for Canadian corporations that do not carry out their duty as good corporate citizens in terms of contributing to the elimination of the deficit and debt problem of the federal government. I would tell you that the Liberal government, the Liberals, the members of the Liberal Party of Canada are only sensitive to two words: "lobby" and "friends".

As was the case for all taxation decisions that have been made since the evening of October 25, since the last election, and in particular since February 22 or 23, when the Liberal government tabled its first budget, these two words have become commonplace within the Liberal Party.

All taxation decisions have been made on this basis, on the basis of lobbyists and friends of the party. Perhaps I should have mentioned a third word: lobbyists, friends of the party. Friends who have been handsomely paid for their support since the Liberal Party came to power.

Friends who, for several years, have made generous contributions to the Liberal Party of Canada. Friends who are also stakeholders in tax loopholes such as those provided for in income tax treaties, family trusts and different leaks in the Canadian tax system.

With regard to the funding of political parties, is it normal that big Canadian corporations contribute such huge amounts to the Liberal Party of Canada in the same way they contributed and may still be contributing huge amounts to the Conservative Party of Canada, as they did last year?

Is it democratic, in a country that prides itself on being democratic, for a government to have both hands tied and not to be able to run the country freely because those people, from the Liberal Party of Canada, have to please those who contributed generously to the fund of their party? They have to be careful not to disappoint them. The Liberal Party has to go on. Like any other great federalist party, the Liberal Party must have some continuity. So, when these people come to power, the first thing they have to do is to please the friends of their party.

When someone wants to change a tax convention, for example, and when a Canadian business that made donations to the fund of the Liberal Party of Canada for many years comes under fire for its ability to evade taxation in Canada, it is quite usual, for this government, not to take its responsibilities and bring about sound reforms.

When we learn that the National Trust Company contributed $12,454.70 to the Liberal Party in 1993 and the Royal Bank of Canada gave $45,000 to the same party, we are not surprised to see that this government refuses to put in place measures that could affect it, nor can we fail to notice a certain complicity between a federalist message and the annual report of the Royal Bank or any other analysis of the constitutional impact of a certain decision that the Quebec population could make.

Is it normal too for the Liberal Party to receive $25,000 from the Royal Trust Company, $42,000 from the Bank of Nova Scotia, $40,000 from the Toronto Dominion Bank and $31,253 from Scotia McLeod and so forth? I could go on, there are many other examples.

In any case, the Liberal Party of Canada gets half of its funds from big business. So, not surprisingly, when the time comes to make decisions in the public interest, decisions which could further restore the public finances, at least in part, and which could somewhat tighten the budgetary policy or close tax loopholes, these measures, the real initiatives that should be taken, are not.

The Liberal Party, a great Canadian party, like the Conservative Party, came to office with its hands tied; they feel uneasy because they have to deal with lobbies and friends of the party.

By the way, we saw over the week-end that if you are not part of a lobby, if you are not a friend of the party, you are at a disadvantage. A newspaper article this week-end said that rich families lobbied the government to keep their tax exemption. The Canadian Press article mentioned family trusts and said: "A lobby representing some of Canada's oldest and wealthiest family businesses talked the former Conservative government out of imposing capital gains tax on sheltered trust funds worth billions".

They managed to do the same with the Liberal government, the present Liberal administration. They succeeded to do the same, because despite pressures from the Bloc Quebecois, from the Reform Party and from people fed up with social injustices, tired of paying for fiscal mismanagement and weary of lack of control on public finances, despite all these pressures, the first budget of the Liberal Party did not abolish the privileges of family trusts and did not plug the loopholes created by tax treaties signed between Canada and countries considered as tax havens.

I will continue with the article, because I found it fascinating and very representative of everything we have denounced about this government, about patronage and party friends. You know that family trusts were instituted by Pierre Elliott Trudeau. I can call him by his name since he is no longer a member of Parliament. It was Trudeau's idea. Trudeau is our phantom of the opera; he haunts this place. Every time you happen upon a bad measure, as it turns out, Trudeau was behind it. And if it is not Trudeau, it is the current Prime Minister of Canada.

Interviewed in Toronto, Mr. Sharwood, the former president of Guaranty Trust, one of the contributors to the Liberal Party fund, indicated that the majority of the members of his association-read lobby or interest group-are family businesses that go back several generations. The association also represents families among the wealthiest. This means that all the wealthiest families are bunched together in the same lobby. These families, the wealthiest in Canada, have contributed to the Liberal Party of Canada election fund. So you can imagine what kind of a welcome is extended to anyone from this lobby when

he or she knocks on the door of the finance minister or of the Prime Minister.

I am not surprised to see how powerful these lobbies are, considering they spend millions, even hundreds of millions-if you put together all the contributions made by large corporations formed into a lobby-on furthering their own interests, not those of the people of Quebec or Canada. I am not surprised to see that they manage, as they often do, to prevent this government from making perfectly legitimate decisions that would certainly be welcome, given all the sacrifices asked of taxpayers in Quebec and Canada, people who are already crushed by the tax system.

I am not surprised when I look at the arrangements, at the family trust issue. I am not surprised, but I was even less surprised when I participated in the debate on the bill tabled by the Minister of Transport concerning Pearson airport. During that debate, which was very similar to this one on tax agreements and family trusts, we discovered that friends of the party had once again shown great strength, forming lobbies to ensure that the Minister of Transport, in his legislation regarding Pearson airport, would retain some discretionary power to, perhaps, compensate them if he deemed appropriate to do so following the cancellation of the contract for the privatization of that airport.

There, as in the case of the two previous issues, and particularly this one on tax agreements, we noticed that friends such as Leo Kolber-he is the senator who organized a small lunch at $1,000 a plate during the elections to finance the Liberal Party of Canada's campaign-played an active role in the privatization of Pearson airport. Leo Kolber had invited friends such as Charles Bronfman. Herb Metcalfe, a lobbyist with the Capital group, was also present, as well as Ramsay Withers, a federal lobbyist with close ties to the current Prime Minister.

So, there were many friends of the party who, again, formed a lobby to ask that at least some clauses in the bill tabled by the Minister of Transport provide benefits to them. These are friends of the party who formed lobbies. Imagine their power: they exert direct pressure on the Liberal Party to make sure it implements measures which will benefit their own interests.

When I see all this and when I look at what the government's last budget, which was its first one, contains in the way of budget cuts at the expense of the average citizen, I am disgusted, because I have yet to hear a single Liberal, among all those who have been complaining bitterly about such cuts for the past eight years, object to the fact that the government is doing nothing about unfair practices and loopholes in the Canadian tax system, while on the other hand, in order to improve the state of the federal treasury, it introduces measures like cutting $5.5 billion from the unemployment insurance fund, eliminating the age tax credit, and generally, measures that come down hardest on the neediest in our society who are already depressed because they have no work, and are now facing additional constraints.

As in all other areas, it is clear the members of this government are arrogant and cynical in the extreme. I keep repeating this because it is true. Every day I wonder how the Liberals can treat people the way they did, the Liberal members of the finance subcommittee which examined the bill on amendments to the Unemployment Insurance Act. I am really disgusted at the way they behaved.

People came from the Maritimes, all the way from St. John's, Newfoundland, to appear before the committee, which hardly bothered to listen to their grievances about the unemployment insurance cuts. The government did listen to the lobbyists who asked them not to eliminate certain tax conventions with countries that are considered to be tax havens. The government did listen to the richest families in Canada who wanted the government to maintain the outrageous preferential treatment of family trusts.

They came all the way by car, like those who came from the Acadian peninsula, and they were thrown out because they came to express their grievances. They came to say they were ashamed of supporting a government that had promised to put the economy in the Maritimes back on track, but instead had shown it could not care less what happened to them and dozens of communities in the Maritimes.

I get rather emotional whenever I talk about inequity and unfair taxation, because as a newcomer in politics, I sincerely believed that people who for years had been fighting for more tax equity and who made their objections heard every time the Conservatives introduced measures which they themselves condemned, were sincere. I thought that these people were sincere. In spite of our differences of opinion on constitutional matters, I really thought that they were sincere, but I realize now that they are nothing more than good actors. They are excellent, but the play does not last forever.

When I see this kind of measure, when I see the richest Canadians keep their privileges when the poorest members of our society are being asked once again to tighten their belts, this year, next year, and until the end of this government's mandate, I tell myself that, one day, common sense will prevail. People will realize that this government is a puppet government, and that it may be time for Quebec to change the constitutional order of things, to take its future into its own hands, and to implement real measures. It is time for fair taxes, for a Quebec tax system in a sovereign Quebec, based on the principle of equality for all, and taking into account the needs of our poorest citizens.

I have been wishing for and dreaming of such a system. These people are making this dream of a fair tax system even brighter. Let us dispel the nightmare of this unfair federal tax system.

[Ray Speaker, Reform, Lethbridge]

Mr. Speaker, it gives me pleasure today to speak on Bill S-2, the Income Tax Convention Act, which deals with a number of tax conventions. My intention in the next few moments in the debate is, first, to support the principle of the bill; second, to raise some general questions; third, to raise our specific concerns with regard to points in the bill.

As I listened to the debate so far on the bill there is a lot of latitude I could take. I could move all the way from the countries we are dealing with here-Hungary, Nigeria and Zimbabwe-and into the bedrooms of the nations, it seems, in a very easy and facile way in this assembly.

In looking at the bill, as was mentioned by the Parliamentary Secretary to the Minister of Finance it is certainly a housekeeping bill, but there is a very important principle in it. The extent to which we deal with the principle and apply it in relationships with various countries of the world is very important not only to Canadians but to the other countries because today our world is certainly changing as never before.

Technology is allowing us to deal with every country of the world. Whether they are friends or semi-friends, we can deal in a businesslike way with countries. People in this country can sit in their living rooms, their kitchens or small offices in their homes and deal with countries anywhere in the world in terms of our technology and making business arrangements. That is one aspect of it.

Another aspect is that we want people in our country to use their skills, abilities, knowledge and technology to work with the people of other countries. They can exchange the same attributes we have so that they can be of benefit not only to other countries but also to persons who work within the confines of other government jurisdictions.

As was mentioned, the purpose of the bill is to prevent income tax evasion, double taxation or unfair taxation of people who work between one country and another. That principle is certainly important.

The countries we are dealing with at this point in time are Hungary, Nigeria, Zimbabwe, Argentina and the Netherlands. If there are other areas of the world we should deal with, we should do so to make sure there is consistency. This is a good first step.

What are some of the general questions I would like to raise for the parliamentary secretary or the Minister of Finance to consider in their response at a later period in the debate?

First, why are we only signing on with the limited number of countries listed and not some of the emerging markets we will be trading with in the future?

Second, is the reason for these conventions that tax evasion exists in Canada due to our comparatively high level of taxation? Or, is it that the government is not willing to prevent the problem from occurring by bringing our tax level in line with those of other countries? Is the problem we are facing a tax question rather than the consistency question that has been raised here?

Third, is it realistic to expect these conventions to be workable when Canada's tax system is considerably more complicated than that those of the countries with which we are signing these conventions?

Fourth, is our high taxation level responsible for people leaving to go to these countries and is that the reason we need these conventions?

There are some specific concerns I wish to raise with regard to Bill S-2. First, article 21 on page 43 of the bill allows for Canadian professors teaching in Nigeria to be tax exempt from both the Nigerian government and the Canadian government. Is the government allowing tax loopholes to exist that we should deal with in terms of our tax policy?

The second concern I raise is with regard to article 10, paragraph 2(b), at page 60 which allows Canada to tax dividends emulating from Zimbabwe funds invested in Canada at 15 per cent but Canadian dividends from investments in Zimbabwe can be taxed at 20 per cent. Is this contrary to the concept of reciprocity?

The third question I raise is with regard to article ll, paragraph 3(a), at page 61 concerning interest arising from Canadian bonds held by Zimbabwe investors that can only be taxed in Zimbabwe. In this case the converse is also true. This is a questionable article because it is unlikely that very many Canadians will invest in Zimbabwe government securities. This is interest that will leave Canada and probably will not return.

Those are some of the general questions I have with regard to the bill and some of my specific concerns. I would appreciate it if the parliamentary secretary, or one of the government members who has investigated the bill further, could respond to those questions.

On behalf of the Reform caucus I would like to say that in a specific sense with regard to the principle we support Bill S-2 and will do so on the floor of this assembly.

[David Walker, Liberal, Winnipeg North Centre, MB]

Mr. Speaker, I have already spoken at this stage of the bill. I just want to indicate that the comments of the Reform Party spokesperson were heard and that a response will be made.

(Motion agreed to, bill read the third time and passed.)

Canadian Film Development Corporation Act

[David Anderson, Liberal, for the Minister of Canadian Heritage]

moved that Bill C-31, an act to amend the Canadian Film Development Corporation Act, be read the second time and referred to a committee.

[Albina Guarnieri, Liberal, Parliamentary Secretary to Minister of Canadian Heritage]

Mr. Speaker, the government of Canada is pleased today to propose to the members of this House amendments to the present Canadian Film Development Corporation Act, in order to create a loan guarantee program that will give companies in the Canadian film and video industry easier access to sources of private funding.

This program, which is the outcome of a very detailed analysis of the needs of the Canadian film and video industry, will allow better management of public funds without involving the federal government in any additional expenditure. It will be managed by one of our major national cultural institutions, Telefilm Canada, and will guarantee loans totalling $25 million annually.

The program, in fact, will be an invaluable financial incentive contributing to the growth of the Canadian film and video industry. Its objective is clear and its scope considerable: to encourage our financial institutions to become better acquainted with this industry and devote more of their resources to funding Canadian production and distribution companies. For it must be said that the financial institutions have always been reluctant to participate in funding companies of this type, because they were unfamiliar with the cultural sector and considered intellectual property as inadequate security from a financial perspective.

In recent years, the financial position of the film and video industry has been affected by the continuing decline in resources available from both public and private sectors. Telefilm Canada's annual resources will shrink by some $195 million, or 22 per cent, over the period from 1992-1993 to 1997-1998.

On the one hand, the banks are not co-operating as much as they might and, on the other hand, government funding has consistently fallen. If this trend continues-and there is little chance of a turnaround in the foreseeable future-production will decline and this will inhibit the government's efforts to ensure that Canadian cultural products of quality are available on our own market.

The time for action is now. Change is necessary if Canada's cultural industries are to establish themselves in the new cultural landscape that is now taking shape. They have always had to deal with the proximity of the "American giant" whose vital mass culture assures worldwide success.

Ours is one of the most open cultural markets on earth. While this is certainly enriching for all Canadians, such openness also represents a threat to our own creative artists. We cannot allow our national culture to be marginalized in our own domestic market, or fail to provide it with every opportunity to prosper in foreign markets.

The loan guarantee program is an innovative solution to this problem. As well as demonstrating this government's commitment to protecting our cultural sovereignty, it aims to diversify the funding sources of a fast growing industry and foster good business relations with new financial partners.

The situation is especially pressing in that a study conducted in 1992 reveals that the growth of the Canadian film and video industry is limited by chronic lack of access to sources of interim financing. It is difficult, even impossible, for Canadian film and video companies to obtain from the banks the funding they need for their activities when their only guarantee is a letter of intent from a broadcaster or distributor.

The contract signed on the basis of these guarantees are worth an estimated $70 million to $100 million a year. This shows how important they really are. Once it is in place, the loan guarantee program will rectify what has been a problem to the industry and could generate up to $143 million in activities related to film and video production and create several thousand jobs.

The Canadian film and video industry which barely existed 20 years ago has experienced phenomenal growth and is now a major employer and a producer of high quality entertainment programs.

The figures speak for themselves in this regard. The total revenue of this industry, despite fluctuations from year to year, rose from $122 million in 1980 to more than $835 million in 1992, with the number of direct and indirect jobs totalling more than 50,000 in 1992.

According to Statistics Canada, the revenue from exports of film and broadcast products jumped by $210 million from 1980 to 1989 to reach $230 million. There is no doubt that this is a vital and viable sector of Canada's economy. The loan guarantee program could not come at a better time to stimulate the growth

of a dynamic Canadian industry and to establish a relationship of trust between cultural enterprises and financial institutions.

It is possible to hope for better co-operation between the cultural and financial sectors and over the long term reduce dependency of the cultural sector on public funding. This is the objective of this legislation.

The risk is small. Any potential losses will be covered by a reserve fund established with Telefilm's current parliamentary appropriations and the user fees levied from recipients. Telefilm Canada will subject applications for loan guarantees to close scrutiny using strict criteria to ensure that only promising projects submitted by solvent companies receive such assistance.

This is the first step in that direction. It is not unthinkable that the Government of Canada, if it considered it appropriate, would contemplate extending this program to the publishing and sound recording industries which also suffer from chronic under funding and the same lack of understanding on the part of financial institutions.

The minister has asked the officials in his department to study this possibility. In a way it would be a question of applying the same tried and tested solution to a similar problem. The challenges of the 1990s must be met with the solutions of the 1990s. The importance of the cultural sector, both in terms of strengthening our national identity and the economy, calls for judicial changes to the structures already in place, especially at a time when borders are fading and it has become imperative to preserve everything that makes us unique as a country.

The loan guarantee program partakes of such a vision and attests to the government's commitment, set out in the red book, to promote Canada's cultural development. It is an innovative, effective and economic tool that will contribute to the prosperity of one of our most flourishing cultural industries, enhance the production of quality Canadian cultural products and enable banks to better understand the needs of Canadian cultural enterprises.