Debates of Dec. 1st, 1995

Constitutional Amendments Act

[An. hon. member]

Oh, oh.

[Sheila Finestone, Liberal, Mount Royal, QC]

Listen, do you guys want to have a fight?

We will demonstrate that we are determined to keep faith with both the heritage and the potential of our wonderful country.

We recognize that Quebec is a province with a legal system that is not based on common law, but on the civil code. It is the home of a diverse population of anglophones, allophones, and a majority who are French speaking Canadians who are also diverse. We will not just talk about good intentions. We are building trust by acting on those good intentions. This measure before Parliament is based on the reality of Canada.

Unfortunately, as all Canadians know, anything proposed by the Government of Canada will never go far enough to satisfy the Parti Quebecois or for that matter the Bloc Quebecois. Equally unfortunate, anything proposed by the Government of Canada will never go far enough to satisfy the Reform Party. Those people will never be satisfied.

Thank goodness this debate is not about keeping those people happy. This debate is about keeping Canada together. This debate is about satisfying the people inside and outside of Quebec who understand that the me generation has passed and the we generation has arrived. It is no longer about cutting the best deal for yourself. It is about reaching the best solution for the future of our country. It is about building the new Canada. It is about standing proud and tall for the maple leaf. Canadians from coast to coast to coast must rise above their differences and realize that there is so much more that unites than that which divides us.

We have experienced many problems throughout our history but have always found a way to resolve them, for we understand that compassion is far more humane than conflict.

We understand that tolerance is far superior to intransigence. We understand that allowing our fellow citizens to reach their full potential does nothing to diminish us. Canadians know that we cannot build a big country on small minds.

Canadians know that we cannot build a big country on little minds.

Canadians are not expecting miracles, nor are they looking for heaven here on earth. But they are entitled to expect that the Parliament of Canada will do its utmost, will take the right actions, will adopt the appropriate principles, in order to recognize the modern reality of Canada and to show its true commitment to strengthening the ties among the members of Canada's diversified population.

I hope that Quebecers and non-Quebecers alike will urge members of Parliament from all parties to keep the big picture in mind. I hope they will urge members of Parliament to take meaningful and realistic steps toward progress.

Canadians are people of moderation and modesty. From time to time we are also a people of passion. We try always to be people of principle, of fairness and of optimism. Throughout their history Canadians have overcome their differences and succeeded beyond the wildest dreams of the founders of this nation. We did it in the end after much reflection by appealing to the better side of our nature as human beings and by acting on the better side of our nature as citizens.

Recognizing Quebec as a distinct society, providing a new constitutional veto and bringing government closer to the people are the vital and important issues. Those are the proposals which the government is moving to turn into reality. What is at stake is keeping our word, keeping faith with the dreams of Canadians, re-energizing our national unity and revitalizing the very best country in the world.

When political discourse becomes invective, when rhetoric over reality becomes overheated, it begets intolerance, instability and fear. When political leaders target identifiable groups-and we have had more than enough of that-when they blame specific communities, they are offensive and they fuel exclusion, anger and resentment. They are a blot on the good name, the goodwill and the respect we have built for our society both here in Canada and

around the world. When bigots like Pierre Bourgault and his ilk spew their invective, they show that they have no place in our caring society.

I know that the vast majority of Quebecers reject those exclusionary, racist remarks and recognize that we as Quebecers-and that includes some of you on the other side-are all welcome, we are all included and we are all equal, with equal rights, and that our vote will be respected. We too have contributed beyond measure to the growth, development and well-being of all Quebecers.

I want this understanding of the fair sharing in Quebec to be appreciated. I am a Quebecer. I am proud of my difference. I am not better, I am not worse, I am just different. That is what makes me distinct and that is what makes all of us distinct in Quebec. The environment has formed us in many ways.

I call on all Canadians to join with us in recognizing that despite our diverse geography from the Atlantic to the Rocky Mountains, our many cultures and the aboriginal peoples of our two official languages, we are one country. It is by extending our hands of welcome to one another, by rejoicing and appreciating our differences and our diversity that we grow and prosper. It is through our civility and the unity of all Canadians that we ensure a bright future for our children, for our community and for our country.

[Réal Ménard, Bloc, Hochelaga—Maisonneuve, QC]

Mr. Speaker, I would like to begin my speech-in the hope that the member for Bonaventure-Îles-de-la-Madeleine, who is my deskmate, will do me the honour of going along with my line of reasoning-by proposing that we try to imagine what it would be like if we had André Laurendeau, Lionel Groulx, Hubert Aquin, Robert Bourassa and Claude Ryan sitting in opposition.

I named these people, because each and every one of them, at some time or other, has been involved in the process of constitutional review, in different ways of course. I, myself, have been very interested in the process of constitutional review. It has enabled me to pursue my studies. The process of constitutional review arose from the 1960s idea that the Constitution had to be reviewed.

I would say that, for Quebec, the process of constitutional review between the 1960s and now has had two main thrusts. The first, I believe, applies to the entire Quebec family. Both the provincial Liberals and the slightly more nationalist folks acknowledge that reviewing sections 91 and 92 on the devolution of power is what counts in the constitutional review.

This is particularly true, because, as you will remember, in the early 1960s, with Jean Lesage, there was a movement in English Canada to patriate the Constitution and give it an amending formula, because the 33 Fathers of Confederation had not thought of giving it one. Jean Lesage and Jacques-Yvan Morin, and others after them, felt sections 91 and 92 had to be reviewed first, before the question of patriating the Constitution was dealt with. This then is the first thrust, which remains extremely important today, and, obviously, we can see we are a long way from it with Bill C-110.

The second and possibly the most important thrust-and that is why I referred to the man who, in a way, is like the father of the Bloc Quebecois, namely André Laurendeau, who, you may recall, was elected to the National Assembly in 1944. André Laurendeau took up Prime Minister Pearson's challenge-to whom some people do not hesitate to liken our current Prime Minister-and quit Le Devoir in the early 1960s to co-chair the Laurendeau-Dunton commission.

This royal commission is no doubt the true testament to Quebec nationalism. For the first time in a constitutional document-and I am referring here to the preliminary report tabled in 1965, commonly called the white paper-André Laurendeau and his fellow members of the commission urged English Canada to recognize the co-existence of two nations in Canada. There is a sentence in the white paper that is a important as it is short, on which I wrote my graduate thesis, and I would like to quote it today. André Laurendeau was truly a visionary when he said: "Out of disappointment will come the irreparable".

Of course, the irreparable is Quebec's sovereignty. Around 1965, sovereignty was in a latent, embryonic state in Quebec. Now, 30 years later, 30 years after André Laurendeau tabled his white paper, we are debating a bill introduced by a Liberal government who will not even recognize Quebec as a nation. That is what is so tragic in all this. No constitutional talks can take place without first recognizing that, in this country, we have two nations, which are equal in fact and in law. We must work to ensure that these two nations can start talking.

For those who belong the same school of thought as me, the best way to open a dialogue is, of course, sovereignty or a sovereignty-partnership formula. Those from another school of thought, which I respect and who won the October referendum, think that something can be worked out within the federal system. There is something that I cannot figure out about federal strategists. We cannot begrudge the current Minister of Justice. He is a rather nice man, a distinguished mind, a rising star in the Liberal camp. We cannot hold a grudge against him for not fully grasping the finer nuances of the constitutional debate.

How can the Prime Minister, who has been a member of this House since 1967-long before you, Mr. Speaker, became a member, if I am not mistaken-who has been a key player and a key witness in this constitutional review process, think that some Quebecers will be satisfied with an administrative bill that will not,

of course, be entrenched in the Constitution, and that only offers a possible right of veto.

A veto is, of course, important. We used it when Jean Lesage was tempted to accept the Fulton-Favreau formula requiring the unanimous consent of the provinces, and when Robert Bourassa was also tempted to accept the 1971 Victoria Charter, which is different from what we have before us today and which is sometimes compared with what is being offered today. As you may recall, Victoria would have given back to Quebec all of its powers over language, as the Pepin-Robarts Commission did a little later.

How can anyone on the side of the government majority think that any Quebecer-whether on the Daniel Johnson team, on the Jacques Parizeau team, or with any lobby in Quebec-will say yes to a proposal like this one?

The government has put itself in a very awkward and unenlightened position, in my opinion, by forcing the loyal opposition, one of the best oppositions this government has ever known, to say no. I know that the hon. member for Glengarry-Prescott-Russell will understand that the minimum requirements for reviewing the Constitution cannot be any less than what was proposed in the Meech Lake accord.

As you know, the Meech Lake accord contained five minimum requirements. Personally, I would never have voted for the Meech Lake accord, because even though it was a bare minimum, it did not provide the essential, namely Quebec's recognition as a nation and, more importantly, it did not provide any additional power to Quebec, while also being tragically silent on the language issue.

But let us presume that everyone is acting in good faith and is trying to engage in a dialogue. How can the Prime Minister and his team possibly think that Bill C-110 is adequate, considering that the five conditions included in Meech were an absolute minimum?

Meech also sought to ensure that the Supreme Court played a role in a balanced Canadian federation, and therefore, to restore that balance, Quebec must be represented by judges who reflect its civil law tradition.

There was also the idea, which is probably the most important one for us but is also important for English Canada, that the federal spending power had to be clearly defined, since a number of experts agree that there is a direct link between the use of that spending power by the federal government and the current deficit.

I respectfully submit, out of respect for the past, that if those whom I named were here now, including Claude Ryan-and I do not know how he is perceived by this government-none of them, who all sought to protect Quebec's interests and future, would agree with Bill C-110. I hope the government reviews its position and comes up with something more substantial, so as to launch a true dialogue.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

I am pleased to speak this afternoon on this three part initiative of the Prime Minister.

The first is to provide a regional veto to the four regions of the country, which is of course in addition to the veto the provinces already have. This initiative will also acknowledge Quebec as a distinct society and will, of course, be in line with the government's indication of its intent to step up efforts to reduce duplication. Today we have seen the Minister of Human Resources Development take the first step in that direction since the Prime Minister's announcement.

Of course, long before the Prime Minister's announcement, our government had already begun these initiatives and, since we became the government, a number of administrative agreements have been signed with all of the provinces, Quebec included, but of course there have been very few of those since the separatists came into power in Quebec.

I would like to start by stating my position for you within this debate at this time. As a number of hon. members are aware, I am a Quebecer by birth who represents an Ontario riding. I have served at the municipal, provincial and federal levels, and have been in office at one level or another for over 19 years now. I am one of those who voted for the Meech Lake accord and the Charlottetown accord. I will vote for Bill C-110 and the recognition of Quebec as a distinct society, which is fully justified.

We heard certain separatist members complain that the Meech Lake accord had not been adopted and denounce the fact. Yet, some of them-in particular their House leader-had voted against the Meech Lake accord and the Charlottetown accord. Other separatists say they have resigned themselves to making do without it, often forgetting that they had campaigned and voted against the Charlottetown accord.

In a few days, if I may make a prediction, if these people do not understand more than they do today, they will vote against Bill C-110, against distinct society, confirming in so doing they are not interested in progress and do not want Quebecers to improve their situation. They want no such thing, they simply want to build up an empire for themselves and act as emperors, but they will never succeed in doing so.

Members opposite, the Bloc members and to some extent, I am sad to say, certain Reform members-I repeat to some extent

because they do all think like this-seem to be wanting to put an end to our country as we know it.

Why is that? We live in a country that, four years out of five, was described as the best in the world by the United Nations. Members opposite are shaking their head, saying it is not enough. I personally heard the opposition leader saying Canada was a kind of experiment which had failed from his point of view. According to whom? While even the United Nations cannot find a better place in the world, members opposite want us to emulate another country. Which country will we imitate? Even the UN has not been able to find it yet. But the members opposite claim that this is all worthless. They say they have a better solution.

As I said, I live in Ontario, I am a Franco-Ontarian by adoption, even though I was born in Quebec. I am still a French Canadian. I must tell you that the way the members opposite refer to the rest of Canada which they call "English Canada"-I heard the member for Maisonneuve use this phrase today in his speech-is a real insult to my constituents. I have told you repeatedly, this expression is insulting.

When francophones outside Quebec showed up for a demonstration they had dubbed "Poof, the francophones!", mimicking the member for Rimouski-Témiscouata, it was in part to denounce the fact that we, the one million francophones, such as the member for Nickel-Belt, myself and all the others who live elsewhere in Canada, were called English Canadians.

This is the way the members opposite want to portray Canada: an entirely francophone Quebec and the rest of Canada completely anglophone. This is the way they look at it and its is wrong.

The member for Argenteuil-Papineau, who is in front of me, knows full well that when we go to the shopping centre in Hawkesbury, the people we can hear speaking English probably come from his riding. In our area, anglophones are by definition Quebecers from the Harrington and Lost River areas who come to shop, and francophones are Ontarians.

That is our reality. Does the Bloc tell us about that million of Quebecers whose first language is not French? Does it tell us about Franco-Ontarians and francophones outside Quebec? Bloc members say that we have disappeared. They said: "Poof, the francophones outside Quebec!" No, the Bloc members will not make us disappear. They will not.

The worst insult I heard in all my career in this House was the day when the leader of the Bloc Quebecois went to Acadia to tell Acadians that he would build schools for them when Quebec would be a different country. What an insult for Acadians who have survived and grown for 200 years in this country. And how pretentious of the Leader of the Opposition, who thought he could go to Acadia to tell Acadians a thing or two. Well, they fixed him. They told him to go back home. That is what some Acadians said, rightly so, and the members opposite know it. And Franco-Ontarians told the member for Rimouski-Témiscouata and the others: You do not want to have anything to do with us francophones outside Quebec and your dialogue proves it.

Why is it that the United States has twice as many people of francophone origin than Canada and virtually none of them speak it any more? Why is that?

Could it be that Canada has been a country where the French language has been able to develop quite well and that the reverse was true in the United States? Could it be as well that we as francophones living outside Quebec, and I am one of them, have been able to have our language develop because there is a critical mass of francophones in my country known as Quebec? Yes, that is the reason.

And today, if we were in Louisiana and we were 60 years old and more, we would be speaking French to each other. If we were in Louisiana and we were 40 years old, we would say a few words in French. And if we were 20 years old and someone would talk to us in French, we would say: "What?"

That is what happened in Louisiana; the French language survived for 200 years only to disappear with the television era. But that did not happen in Canada. I still speak French to my children and they will speak French to their children. Why? Because we stayed in a tolerant country, a country where both languages and both cultures were able to develop and a country-

[The Deputy Speaker]

Order. It being 1.15 p.m., pursuant to the order made earlier this day, it is my duty pursuant to our Standing Orders to interrupt the proceedings and put forthwith all questions necessary to dispose of second reading of the bill now before the House.

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

Pursuant to Standing Order 45, a recorded division stands deferred until Monday, December 4, at the ordinary hour of daily adjournment.

Shall we call it 1.30 p.m.?

[Some hon. members]

Agreed.

[The Deputy Speaker]

It being 1.30 p.m. the House will now proceed to Private Members' Business as listed on today's Order Paper.

[English]

Income Tax Act

[Beryl Gaffney, Liberal, Nepean, ON]

moved that Bill C-241, an act to amend the Income Tax Act (child support payments), be read the second time and referred to a committee.

Mr. Speaker, I am very pleased to stand in the House today to speak to my private member's Bill C-241, an act to amend the Income Tax Act so that child support payments are not taxable as income for the recipient. As well, it includes child support payments within the meaning of earned income for the purposes of child support deductions.

It is important to ensure that a tax free child support payment to the custodial parent is initiated and that a more appropriate and limited tax credit is equitably distributed to child support payers. I do not suggest what the specific credit should be. I believe it more appropriately falls within the purview of the Minister of Finance.

Bill C-241 is an issue which is very important to me and one with which I have been associated for a number of years. It became clear to me that the taxation of child support payments was a significant concern to many people in the riding of Nepean and to individuals across the country. I continue to receive letters from many people who are experiencing great difficulty as a result of the existing tax laws.

On February 23, 1994 my Motion No. 14 was placed on the Order Paper, deemed votable, debated and adopted on May 30, 1994. The motion at that time read:

That, in the opinion of this House, the government should amend the Income Tax Act so that child support payments are no longer considered taxable income for recipients.

However, the government of the day has still not responded to the motion.

The 1994 budget recognized perceived inequalities in the tax treatment of child support and committed itself to exploring ways to improve the system to ensure, first and foremost, that the needs of children are met. However, as of this date, as I said, the government has still not moved on it.

The Minister of Justice indicated his intention to address the issue of child support guidelines and enforcement. I will be looking forward to hearing from him. Bill C-241 only asks for changes to the treatment of income tax for child support which falls under the purview of the Minister of Finance.

The current tax treatment of child support payments makes a very complicated issue out of one that should be as straightforward and as simple as possible. It is most important that it is children who now bear the immediate consequence because the current system is not providing the effect it was designed to produce. If the current policy is not changed it is the children who will go on paying the consequences every day, not just in some cases and not by accident but deliberately because of our failure to redesign an outdated tax mechanism.

This is not just a tax issue but one of wider social justice that affects the well-being of Canada's children and of Canada's future.

The tax treatment of child support payments allows a payer to deduct the full amount of the payment from his income while the recipient must include the full amount in hers. The policy has been criticized as discriminatory to women because it places an unfair tax burden on the custodial parent, and the custodial parent is usually the woman and the one who is responsible for the children.

How this situation evolved can be partially explained by historical changes in the patterns of the lives of men and women in Canada over the past half century. The current tax treatment of child support was initiated in the 1940s, probably just after World War II, and reflects the social realities of that time.

There are historical reasons for the bill. From 1940 to 1992 there have been significant changes in society and government policy which lead to the question of whether or not this tax policy also requires revision.

When the current policy was developed it was designed to provide relief to the taxpayer burdened with both a post-war increase in taxes and the obligation of spousal and child support. The father was typically the sole wage earner and the primary taxpayer in the separated family. It was logical at that time that tax relief be targeted to him.

In the current reality both parents are considered individual within our tax structure today. Even those who do not pay taxes file their own tax returns to have access to benefits delivered through the income tax system. Most lone parents also have paid work and pay taxes on their own earned income whether or not they receive support.

The labour force participation of all women has been steadily increasing, including women with children. In 1988, 62.2 per cent of women with partners and a child under five years of age were in the labour force and 73 per cent for those with children aged six to fifteen years. With lower fertility rates and a later age of first birth, women are spending more time in the paid labour force. This allows women to establish some earning power before interruption for child birth and care.

The labour force participation of women who are lone parents is also increasing. In 1988 the rate was 51 per cent for those with children under five and 72.3 per cent for those with children six to fifteen.

While women are increasingly participating in the labour force they are still concentrated in lower paying and less secure forms of employment. The wage gap is narrowing extremely slowly. Canada is not narrowing the gap as quickly as many other industrialized nations. For example, women's relative wage in Canada in 1990 was 67.6 per cent of men's, compared with Australia at 87.9 per cent and France at 81.8 per cent.

Due to changing economic conditions most families now require the labour force participation of women. Even for two-parent families two incomes are needed to maintain a single household. Upon divorce family resources are often inadequate to continue to meet children's needs as two households must be maintained.

Most lone parents continue to be solely or primarily responsible for the financial needs of children. One of the key reasons for this phenomenon is the high rate of default on child support awards, estimated in the province of Ontario to be disgracefully around the 75 per cent level.

There have been numerous policy changes since 1940 which have had a significant impact on the situation of women, families with children and lone parent families in particular. In 1970 the report of the Royal Commission on the Status of Women documented women's economic and social disadvantage in Canada for the first time. Since 1976 there has been a federal policy commitment to examine the impact of programs and policies on women. This was reinforced when the charter of rights and freedoms came into force.

Better research and data collection as a result of this work continues to identify and describe the feminization of poverty and its direct relation to the unpaid work involved in raising children and other tasks related to human maintenance.

There has been decreasing support for families with children through the tax transfer system over the past two decades. For example, the value of deductions and credits for children as a proportion of income has been steadily reduced. The reduction of the number of tax brackets to three and other changes to deduction and credits have all had an impact on families and on the tax treatment of child support.

Divorce law has evolved from a system based on fault to a no-fault system. Under the no-fault system there is an increasing tendency for support orders to focus on the children with the expectation that women, even those who are not in the labour force, will become self-supporting in an unreasonably short period of time.

There is growing political support for the plight of lone parents. Provincial governments are trying to crack down on non-custodial parents, usually fathers, who are not making their support payments to their children. Growing welfare rolls have spurred the search for alternatives and particularly the need to make fathers responsible for their children.

The women's movement, in combination with economic and policy changes, has reinforced women's need for and right to both paid work and a sharing of family responsibilities. My previous comments highlighted several significant changes in Canadian society from the forties to the nineties. Individuals and families are in very different situations today than in the forties. Given these changes it is timely to ask whether our tax policy on child support is still meeting the original goals of providing tax relief to the tax burdened and encouraging the payment of child support.

My bill is intended to bring the tax treatment of child support payments into the context of the world we live in today. I am cognizant of the increasing levels of child poverty. Any and all changes considered must focus on this fact as the guiding principle.

The general consensus is that the non-custodial parent benefits from the current tax policy, not the children. Presently the total child support award rarely specifies the total needs of the child and the specific amounts needed to compensate for the tax owing on this amount.

Actual evidence on the current levels of child support demonstrates that average support payments are low and would rise considerably with the introduction of guidelines based on actual expenditures on children. If the support award is not high enough to meet the children's needs, it cannot compensate for the tax owing. In practice the tax system further reduces the already inadequate amount available for the children.

Even if a support award is adequate to meet the children's needs calculating the gross up, which is the amount set aside for tax purposes, and deciding how to split any tax saving are extraordinarily complex.

In the Thibaudeau case the Federal Court of Appeal ruled invalid under the charter of rights and freedoms the requirement that the parent who has custody of a child include child support payments as income. Since the decision did not deal with the deductibility of child support by the payer, it left in question how the tax will be

paid on income directed to child support. Following the finding of a Federal Court of Appeal, the attorney general asked that the Thibaudeau decision be suspended while an expedited appeal was brought before the Supreme Court of Canada. On May 25, the supreme court handed down its decision and supported the existing provisions.

The result of the appeal, the court ruled five to two, was that it is not unconstitutional to require the custodial parent who receives child support payments to pay the taxes on that money. However the question of taxation of child support was not totally resolved by the supreme court decision.

Madam Justice Beverly McLachlin of the supreme court was one of the two dissenting judges in that decision. She wrote in her dissenting opinion:

The impugned taxation scheme imposes a burden on separated or divorced custodial parents which it does not impose on separated or divorced non-custodial parents.

The custodial parent must include child support payments from which she gains no personal benefit. The non-custodial parent may deduct support payments from his taxable revenue.

The inequality between the custodial and non-custodial spouse is exacerbated by the fact that the latter enjoys an automatic and absolute right of deduction of support payments from personal income, while the former's ability to offset the increase in her taxes by obtaining an adjustment of support is unpredictable.

Not only must the custodial parent request any adjustment from the court but it is not always certain that the court will correctly assess the tax impact or will award a sufficient amount to enable the recipient to discharge her additional burden.

The logic of a deduction inclusion scheme is further called into question by the fact that our society strongly encourages women to obtain financial self-sufficiency and, in pursuit of that essential objective, to increase their income. The higher the income of the custodial parent, the greater will be her tax rate and the more she will be penalized by the requirement of including the amount of child support in computing her own taxable income.

One of the premises on which the logic of the deduction inclusion scheme rests, that custodial parents are generally subject to a lower tax rate than those who pay the child support, is less and less in accord with present reality and undermines the importance our society places on women attaining financial self-sufficiency.

I might add that if we take families where the husband, the wife and the children remain as the family unit, when the husband gives money to the wife to support the children she is not taxed on it. Nor is he given a deduction. The way it is set up is unfair to the whole family unit.

Following the Thibaudeau decision the government stated its intention to announce a comprehensive approach to reforming the child support system including guidelines to determine the amounts, the tax treatment of payments and the enforcement of child support orders.

Let me refer to why the current system is not working. According to research done by Karen Cooper and Ellen Zweibel on the current system of deduction inclusion, there is a gap between tax theory and family experience. The deduction inclusion as designed is expected to produce an overall tax savings for the ultimate benefit of the children in divorced and separated families. Custodial mothers have made it clear the current system undermines their ability to support their children and increases their vulnerability to poverty.

Fathers from the highest income group obtain the most tax savings when paying support to custodial mothers who have not yet fully entered the job market. Little or no overall tax savings accrue when separated parents are either both low income earners or are both moderate income earners. In a minority of cases, the provisions can even have an opposite effect.

SCOPE, which is an Ottawa based support group for custodial mothers, in its report to the parliamentary task force examining the current system of taxation of child support payments, described how the current system is impacting on the lives of custodial parents. I will quote from the submission:

How they have had to apply for bank loans, borrow money from friends and family, cash in RRSPs, or have been subject to collection proceedings from unpaid taxes.

However, if the non-custodial parent doesn't make full child support payments, the custodial mother must still pay a portion of the partial payment in income tax-Although she cannot meet all the children's budgeted-for expenses from the partial support payment, what she does receive shrinks even further because of the income tax burden. How, after struggling for months and years to get by without full support payments, when they do manage to collect the support arrears, the tax owed on those arrears is often greater than they would have been if the amount had been paid on time.

The Canadian Advisory Council on the Status of Women in its submission to the same task force stated:

In summary, the government's main policy justification fails custodial mothers and their children. Rather than providing greater resources for children, the current tax policy puts greater pressure on the custodial mother. First, she must bargain with the non-custodial father and/or his lawyer for an income tax "gross-up". There is no guarantee the income tax "gross-up" will be included: in some cases he does not have enough tax savings to pay a "gross-up"; in other cases, he may not agree to it or the judge may order a lower amount.

Whenever the custodial mother is unsuccessful in getting a fully tax-augmented child support award, she must stretch her already limited budget to cover the income taxes. When the non-custodial father makes only a partial payment, the custodial mother is left without enough funds to meet the children's budgeted needs and yet the already insufficient amount she received is still further reduced by income taxes. For those important reasons, the Canadian Advisory

Council on the Status of Women strongly recommends repeal of the current inclusion/deduction provisions.

In summary, the movement to reform the income tax treatment of child support has been ongoing since the 1970s. It received significant attention in the 1990s for a number of reasons. The work of the federal-provincial-territorial family law committee which over a period of almost four years oversaw original research on child support in Canada, reviewed the research results and consulted widely with Canadians representing custodial and non-custodial parents and with experts in the child support area.

My previous motion that I mentioned earlier in the House of Commons has essentially raised the visibility of the issue. The Thibaudeau case has further brought attention to this matter.

The parliamentary task force was headed by the Secretary of State for the Status of Women who is in the House today. I wish to comment on the good work that she and two of our colleagues on the task force did in their travels across the country, holding round table discussions. The input they received was heart rending, emotional and traumatic. This has further raised the profile and the importance of the need for change.

It is my hope that the debate in the House of Commons today will once again move this issue to the forefront. To quote C. Brock Chisholm from a speech in Washington, C.D. in 1945:

The most important thing in the world today is the bringing up of children.

Designing fairer, simpler systems of providing tax relief is essential in order to respond to the needs of children whose parents live apart. We must remember this as we draft the laws which impact on our children. Their welfare must determine our priorities.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I am pleased to participate in this debate on Bill C-241 on behalf of the official opposition and I would like to start by congratulating the hon. member for putting this bill forward for this House to consider. I might add that it is unfortunate that it cannot be voted on.

Such is the will of the members. Her intentions were commendable, but at the same time, this goes to show how the government, by refusing to make this bill a votable item, is really only paying lip service to the idea behind it. The hon. member ought to be commended for her good intentions, but this goes to show at the same time that this government does not care too much for her initiative.

Bill C-241 is, in my opinion, very positive from the point of view of its title: an act to amend the Income Tax Act (child support payments).

Interestingly enough, of all the forms of child support, the one that immediately comes to mind is, of course, alimony. There has been a debate on this issue, as we know.

In Quebec, I can think of Mrs. Thibaudeau's case. This lady took her case all the way to the Supreme Court of Canada to try to make the point that the parent, generally the mother, who has custody of the children after a divorce, should not have to declare a portion of the amount received for child support on his or her income tax return, because, for the non custodial parent paying support, this amount is exempt from tax, it is deductible.

The fact of the matter is that there are more women than men in this situation, since, as we know, 85 per cent of single parents facing this kind of situation are women.

We must also remember something else. In spite of the debates in this House on child poverty, as well as the laudable initiatives of members from all parties to make life more comfortable for children, one out of every five children in Canada lives in poverty. This is a serious problem.

The government often boasts about our country being the best in the world. Yet, one Canadian child in five lives in poverty. As you know, children are not the only ones living in poverty. If they are poor, it is because their parents, their mother or their father are poor. Poor children are not all orphans. Their families are in very dire straits.

The measure proposed by the hon. member is interesting, because the person who has custody would not have to declare the money received for support, thus making it tax exempt. We, the official opposition, are in favour of that.

However, when we listen and talk to people, and when we have debates in this House, we realize that we have to be careful. That initiative must be part of a comprehensive strategy, because, taken separately, it might incite judges to take into account the fact that the spouse who pays for support can no longer deduct that amount for tax purposes, and thus lower the level of that support. We must ensure that the person receiving support payments is not penalized by getting considerably less money.

This proposal must be part of a comprehensive policy. We must avoid any boomerang effect and ensure that we do not end up penalizing the person in charge of the family. That would defeat the purpose.

In Canada, we used to have family allowances. Now we have child tax benefits. I find it deplorable that people who work, unlike in Quebec, cannot benefit from tax deductions for children.

Many parents in Quebec believe that, and rightly so. They want some incentives to have children. They are looking at the government for measures to help them take good care of their families, while we are in a situation, as everyone knows, where the population is aging, the birth rate is dropping, a larger segment of the population is becoming more impoverished and the social inequities are growing because of various economic considerations which I do not have time to list in the ten minutes I have. Last, we have very few measures which encourage young Canadians to have a family.

Also, we are considering this motion the very same day the Minister of Human Resources Development is introducing changes to the Unemployment Insurance Act in order to further restrict eligibility to UI benefits for new claimants or people who have not been working for a very long time, without taking many measures to really create jobs. Everywhere we look, there seems to be an impending threat, not only a perceived threat, but in some areas, a real one.

In Ontario, the government is thinking of increasing tuition fees and of decreasing education subsidies. So, we see in the end that the young people in particular-and I remind the House that I am the BQ critic for training and youth-feel like they are continually caught in a stranglehold. Under such circumstances, how can we blame the young people who choose to wait to have children, since their economic situation is becoming increasingly difficult?

I want to congratulate the hon. member for Nepean for a very praiseworthy motion. However, I cannot help but notice that the government, especially this past week, has been considering motions, resolutions and even a bill on such issues as the distinct society, the veto, and so on. I can see that the hon. member opposite is serious and well-intentioned. But, in reality, I deplore the fact that this Parliament seems to become more and more a place for lofty speeches, for rhetoric-and I contribute to that by making one myself today-a place where the government seems less and less willing to do anything but look for ways to cut its spending, more often than not on the back of the disadvantaged. Who are the disadvantaged? Often they are single parents, women, who represent a large percentage of the population, as well as children, since one in five children lives in poverty. I do not see anything in this motion that will correct this situation. It is a good measure, but we can see that there is a lack of willingness to do something on the part of the government.

I hope that the government will soon leave the rhetoric aside and start looking at positive ways of encouraging young people and others to start a family. In spite of that, I do not want to be seen as being too strongly in favour of pro-natalist measures because women have the right to decide for themselves if they want children or not and how many. I do not question this fundamental right, but it is a question we must ask ourselves from a social viewpoint. We must take the necessary measures and soon.

I am a baby boomer, I am 48 years old, and here is what might happen to some of us.

If there are not enough young people entering the labour force, paying taxes and contributing to private pension plans, the people coming after us may not receive a pension. This may even happen to us, as we see that old age pensions, for those who are now under 65, are among the measures being considered. If we do not have enough children and if these children do not start life in a secure environment so that they have an incentive to continue improving our society, I fear the worst.

[Sharon Hayes, Reform, Port Moody—Coquitlam, BC]

Mr. Speaker, I rise today to speak on Bill C-241, an act to amend the Income Tax Act with respect to child support payments.

I wish to commend the member for Nepean for her persistence and her efforts in support of this bill we are debating today. The issue of child support payments and taxation has been festering for many years without an adequate response from either this government or its predecessor.

One parent families are a result of a breakdown in marriage in a family. To put this into perspective, in 1991 300,000 Canadian parents received child support. The total bill was some $1.65 billion. It involved some 35,000 children in support and custody cases. Further, statistics indicate that 95 per cent of the custodial and single parents are mothers.

The Reform Party has recognized the need to fundamentally address this issue. Our family task force, which I chair, carefully considered and developed our position on child support payments and taxation in addition to addressing some other related issues.

Our motivation for developing a position on this issue is the function of our concern about the family and recognizing the need for strengthening it for this generation and future generations of Canadians. We believe the family is the fundamental building block of our society. The family is the fundamental institution that transfers and protects our values and culture. The family provides our society with the necessary stability needed for our prosperity and measured progress.

Parents and children are the basis for the family. Children can in no way be considered apart from or distinct from their parents. Children exist through and thrive on the relationship that exists between a mother and father. Thus the well-being of a child is directly related to the continued shared responsibility. I believe this broader picture of the responsibility of both parents for their children must be considered if a positive solution is to be found to child support payments and family relationships are to be strengthened.

As I mentioned before, the Reform Party has developed a rather comprehensive position on this issue. We addressed the issue of taxation, the level of support through guidelines, and enforcement and compliance with maintenance orders.

On the issue of taxation, child support payments should not be considered earned income subject to taxation. The current tax regime in paragraph 56(1)(b) of the Income Tax Act does exactly that. I ask, where else in the tax system does such an approach exist? Child support payments are the fulfilment of an obligation of parents to their children regardless of family status. It is money directed from a parent for the well-being of his or her child. The money that is received for child support is not earned income. The federal government should therefore not tax these payments as though they were income.

This can be illustrated by contrasting child support payments and alimony. Child support payments are intended specifically for the children and not the mother. Alimony payments, on the other hand, are payments received as income for support of the divorced spouse. This distinction is a crucial one, one that must be recognized.

The effect of the tax system is compounded by the deficiency in the court system. The levels in support awards do not adequately reflect and meet the needs of the custodial parent and children, or perhaps the non-custodial parent.

With these considerations in mind, the Reform position, like Bill C-241, calls for revision of paragraph 56(1)(b) of the Income Tax Act that would strike payments received for child support from being considered as earned income and therefore eligible for taxation.

The Reform proposal would also redirect revenues collected from the taxation of the non-custodial parent to those single-parent families and dual parent families and the children most in need through a complementary increase in the federal child tax benefit, which is to say it is directed to those in need.

These positive and proactive measures will strengthen the circumstances and conditions of single parent families. They will also address the inequity the current tax regime promotes in the tax treatment of intact and separated families.

There is a broader issue of the current level of taxation that all Canadian families face. The reality is that the current tax burden upon the Canadian family is unjustifiably excessive and onerous. A 1994 study on families and taxation found that the average family composed of two or more persons paid 46 per cent of their cash income to various levels of government.

Families cannot now survive on a single income. In 1967, 58 per cent of families were supported by a single income. In 1994 that figure has been forced to an historic low of 19 per cent, and it is not by choice. In a 1994 survey of family attitudes, 52 per cent of respondents agreed with the statement that it is not possible to support a family on one income any more. The same survey stated that 40 per cent of parents agreed that if they could afford to they would stay home with the kids, that they work because they need the money.

Recognizing the needs of families and the pressures they face, Reform has developed another positive and proactive measure that will address the broader issue of taxation faced by Canadian families. The simplified tax proposal will provide some tax relief for Canadians, simplify the taxation system through the elimination of deductions, exemptions, and tax incentives, and in general promote more economic freedom for families. In particular, our proposal will provide a generous tax exemption for children to account for expenses parents incur in raising children. Such a provision will be particularly important for low income earners and single parent families.

A second important issue related to child support payments in addition to taxation deals with a process for administering the issue of child support payments. Families and marriages often break down under acrimonious and adversarial circumstances. Many parents then resort to an adversarial court system. The current system essentially pits one parent against the other. This is not in the best interests of the parents and it is certainly not in the best interests of the children involved.

Changes to the current system are urgently needed. The Reform proposal addresses this issue. We advocate the implementation of unified family courts. An important part of this proposal is the front end process of mediation and conflict resolution. The unified family court would also resolve the blended jurisdiction of family law, such as child support, custody, and access. Presently, jurisdiction for family issues is divided between levels of court at both federal and provincial levels. The development and implementation of the unified family court would better facilitate all aspects of family law by incorporating them under one roof.

The Reform proposal also addresses the issue of guidelines to determine the level of support awarded. When a family and marriage break down, courts are left to determine what the level of payments for child support should be. However, the problem has been, as my colleague has said, the inconsistency and sometimes unfairness of the level of support awarded. Such inconsistency is unfair to all concerned. To address this inconsistency, our proposal is based on well established legal principles of demonstrated need and ability to pay.

In practical terms, Reform advocates the establishment of nationwide guidelines that will take into consideration the income, taxation, and parenting cost implications for both custodial and non-custodial parents. Nationwide guidelines would have the effect of standardizing the level of support awarded. In doing so they will do much more to ensure fairness for those in the situation.

Finally, there is the issue of enforcement and compliance with maintenance orders. The present circumstances are abysmal. For example, in Quebec 25 per cent of non-custodial parents default in paying child support. The phenomenon of default is in part a function of the adversarial system I discussed earlier. A system that perpetuates acrimony and anger is a system that will fail.

Reform's proposal addresses the issue of enforcement across provincial boundaries. We propose the use of the national registry. We will pursue studies to see if this could be co-ordinated through the income tax system. A registry of this type would improve the access to information and effective response desperately needed to improve compliance and enforcement of maintenance orders.

In conclusion, the principle and concept of Bill C-241 is well founded, but more needs to be done to concretely tackle the root causes surrounding issues of child support. Although this bill addresses the issue of taxation, it does not consider this issue of the level of support and the crucial aspect of enforcement and compliance.

The time for action has come. To foster the stability and prosperity for the next generation of parents, children and families, we need to start by reinforcing and strengthening decisions made in this present generation.

[Sheila Finestone, Liberal, Secretary of State (Multiculturalism) (Status of Women)]

Mr. Speaker, first let me applaud the time, effort and extensive research that has been focused on women, on their families and particularly on the children of our country by the very important work that has been done by our colleague, the member for Nepean, in keeping the government focused on the true needs of Canada's children.

I have listened with a great deal of interest to the two speeches by the opposition parties. It gives me a great sense of hope that we will make the kind of enlightened decision that we have been working very hard for over the last number of months. We hope that when the changes are brought forward we will receive the kind of support for the interest and time that we have spent to find the right solutions.

With respect to my friend from Nepean, I think the children of this land can thank her and I personally wish to thank her for bringing this really important and timely issue to our attention today.

I share the concerns of the member for Nepean that Canada's child support system must be improved. In the spring of 1994, following the decision in the Thibaudeau case, which I think came down in May, our task force was organized, on the road and listening to groups by the end of June or the beginning of July. The government named this small task force to hear the views around this very complex and emotional question.

My colleagues, the member for Winnipeg Centre and the member for Saskatoon-Humboldt, and I can tell the House that we spent hundreds and hundreds of hours in a very emotional setting hearing the views of parents, both men and women, grandparents, divorced fathers, divorced mothers, leaders of the legal profession, the accounting profession and those who were impacted, such as those in the social services and health network.

The stories of these single parents, the child support payers and those parents in the intact families were so heart rending that one was moved to wonder how the family had been able to cope with the well-being of the child in many cases.

We saw over 550 people. We received over 500 briefs. The information and views that were expressed shaped the report which I brought to cabinet from this task force on child support. I know, my cabinet colleagues know, and in particular the ministers concerned know that we need to present reforms.

However, this is not an easy country to govern. It is vital that we have co-operation and collaboration. We have been working on that. I can guarantee that we will have that commitment to change for the support system. We have been working very hard, constructively and co-operatively over these many months. We have practically completed crafting the right and fair balance in the final analysis for the well-being of the children of this country.

While the government has been very pleased to receive my colleagues' suggestions for improvements to the taxation of child support payments, we must also remember that a system of child support involves a number of elements. We must recognize the necessity of reforming the system as a whole, not just piecemeal. That means considering much needed changes to the amount

awarded for child support and the method used to enforce those support orders. Some of these issues fall, as members well know, under provincial jurisdiction.

In addition to fair taxation for child support payments, the parents need a more equitable and simplified system for determining those child support awards. Under such a system, awards could generally be higher through more realistic guidelines to the courts based on the real cost of child rearing and the shared ability of both parents to pay. The variation in award levels in similar family circumstances could therefore be greatly reduced. Frankly, many of the inequities could also be eliminated.

Compliance with court ordered support payments also needs to be improved. It is a sad fact that approximately 60 per cent of support orders are not obeyed. I find that totally abhorrent in the interests of the children and also because it is an abuse of our legal system. That means many single mothers in Canada receive no support payments at all for their children. The cost to society is unfair as many of the families have to resort to welfare. That is unfair for the rest of country.

Our government is committed to bringing forward a comprehensive policy solution which will address each aspect of the child support equation: awards, enforcement, and the taxation of child support payments. We recognize that the taxation of child support payments is perceived as unfair. The rules give a tax deduction to the payer, usually the father, while the custodial parent, usually the mother, pays taxes on the payments and he or she, as the case may be, also bears the partial cost of those supports.

This whole issue is seen as accentuating the problem of poverty particularly among single mothers and is seen as unfair to intact families. We also recognize that some changes are necessary in the complete package.

This government is close to completing its work on child support reforms. We propose to introduce guidelines to increase the award levels. We will put forward a program to improve the enforcement of support orders. We are also completing our review of the tax treatment of child support payments. Our objective is to reform the system for child support so that it is fair, consistent across the land and reflects the best interests of the children wherever they live.

The second facet of Bill C-241 consists of amending the Income Tax Act so that it includes child support payments within the meaning of "earned income" for the purposes of the child care expense deduction.

Allow me to explain the rationale behind the provisions of the Income Tax Act with respect to the child care side of the issue, particularly with regard to child care expenses. The purpose of the child care expense deduction is to recognize for tax purposes the child care expenses that taxpayers must incur in order to earn income, to attend a recognized educational institution full time, or to take a vocational training course.

This deduction is a way for the tax system to acknowledge that these taxpayers have a lower capacity to pay taxes than other taxpayers who have identical incomes but do not have child care expenses. With the changing definition of family and because there are families of a variety of shapes, notwithstanding that we must have that fairness principle in there and recognize that the family is the basis of society.

In a sense the child care expense deduction is a recognition of the contribution to our own future as a society through our children. Under this deduction the income used to pay for child care expenses is not taxable.

Including child support payments in the definition of earned income for the purpose of a child care expense deduction would be a precedent that would make it difficult to deny the same treatment to persons in receipt of income from other sources.

All of this information regarding the current tax system is to say that we need to examine changes to the taxation of child support in a comprehensive way. We need to look at not only the tax side, but also review the issue of enforcement and award levels. Any changes must be done in concert one with the other.

Our challenge is to produce a package of changes in the tax rules, in the setting of awards and in the enforcement of support orders, as I have said, that is fair to all concerned and reflects what is best for our children. The government is acting to meet this challenge. We expect to announce specific changes very shortly. While I admire the intent of the member for Nepean and I agree with her wholeheartedly on the need for these changes, I simply remind this House that we need complete change and that we must get it right.

Most important, when we are pursuing options to change the tax treatment of child support, we must consider only those options that go to the root of the problem. Unfortunately, the member's bill also includes additional changes to the taxation of child support which regretfully make it impossible for the government to support her bill without reservations at this time.

[Larry McCormick, Liberal, Hastings—Frontenac—Lennox And Addington, ON]

Mr. Speaker, I am very pleased to stand in the House today and speak to Bill C-241 brought forward by the hon. member representing the riding of Nepean.

I was disappointed to hear the previous member speak on behalf of our government. She was speaking of the great intent of the finance department and saying that we must get it right, that we have to take time. Today in this House new legislation for employment was tabled. Sometimes we have to redo legislation. It is very important that we move on this and I do not want to see us

delay. We need to move quickly to amend the Income Tax Act so that support payments for children are no longer considered taxable income for the recipients.

Children are our most valuable resource, the most precious asset of our country. I am in favour of investing in their future. All people must realize that by investing in our children we are investing in our own future. Failure to do so will cost us dearly.

Very often the causes of child poverty have been linked to family breakdown. Whatever the causes of child poverty it must be addressed. Principle 2 of the UN Declaration on the Rights of the Child states:

The child shall enjoy special protection, and shall be given opportunities and facilities, by law and by other means, to enable him to develop physically, mentally, morally, spiritually and socially in a healthy and normal manner and in conditions of freedom and dignity. In the enactment of laws for this purpose, the best interests of the child shall be the paramount consideration.

Child poverty in Canada is disgracefully high. More than one million children in our country live in poverty. These poor children have many unfair obstacles in the path of their lives. Many children of poverty will suffer more illness than other children. They will require more emergency food assistance and they are more likely to become drop-outs from our schools. These unfortunate children through no fault of their own can expect to have a shorter life span. These facts are unbelievable, sad, disgraceful and, I am sorry to say, true.

I call on our Prime Minister, our cabinet and all members of the House to focus on one of the greatest tragedies in this country and one of the greatest tragedies of this century: the neglect of our greatest resource for the future, the children of Canada.

Mr. Speaker, I ask you and my hon. colleagues to look deeply into the hurting faces of some of our young children living in poverty and recognize their hurt. While I do call on all members of the House to focus more on child poverty in this country, I gratefully acknowledge that progress is being made in some areas.

Today the Minister of Human Resources Development introduced a new employment system for Canadians. A family income supplement provides basic protection for low income families. Employment insurance claimants with children and a family income under $26,000 will be eligible for insurance benefits that top up and reflect their family circumstances. The family supplement will be better targeted to low income families and will deliver a larger benefit for those families who are most in need. This is a real step in the right direction.

In most cases Canadian tax laws have created inequities between the payers and the recipients of child support. What other country treats the taxation of child support in this way? The husband contributes money toward the welfare of his children while he is married and the wife is not penalized by additional tax burdens during this period. Therefore, why is there a difference between a parent paying for household necessities while living with their spouse and a parent who is living separate from their spouse who is still paying for the same household necessities? Child support payments are simply a continuation of a father's obligation to support his children when he is divorced. They certainly should not be taxed.

The motion gives us an opportunity to make a significant difference in a meaningful way which will affect the lives of many children in Canada. The average child support order covers less than half of the cost of raising a child. Therefore, it is not fair or just to tax back a large percentage of support payments which are meant to clothe and feed our children. We as legislators in the House of Commons must stand up to introduce further measures of justice and fairness in our tax system, particularly as they relate to the future of our children.

Loving parents will take desperate measures to care and provide for their children. Sacrifices are continually made by mothers. These desperate measures can be very costly to the mothers, to the children and to our country in the long run. Scars can be left on the parents for a long time. Scars of many kinds are left on the children.

I again congratulate and thank the hon. member for Nepean for a commitment to this very important bill. I ask all members of the House to support the bill. It is a bill upon which we should move quickly.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, I recognize there are only a few minutes left in the debate. I have spoken previously on this matter. I do not want to repeat what I said at that time, but I do want to reinforce what my hon. colleague has just said.

The poverty of children costs us. As we look for ways to contain the cost of our medical system without reducing the quality and access to care, we have to remember that poor children are four times as likely to become seriously ill and to die. As we seek to keep children in school to improve our ability to compete on the international stage, we have to remember that poor children are four times as likely to drop out of school.

Poverty costs us all. That is why I want to make this point. I have no question that we are going to implement the measure proposed in the bill, to not make child support payments taxable in the hands of the custodial parent. I simply urge the government to recognize that this measure will generate substantial amounts of revenue for the Government of Canada. We have to make the commitment to direct that money explicitly to alleviating the poverty of children.

In 1991 the House adopted a unanimous resolution to eliminate child poverty by the year 2000. We are halfway to that target. In fact, the rate of child poverty in Canada has increased rather than

decreased. It is now 1.4 million children in Canada who are living in poverty, compared to one million when the House adopted the resolution.

I rise today only to say to the government that when we generate more revenue from taxing child support payments, as they should be taxed in the hands of the income earner and not the custodial parent, that money should go nowhere but to the children of Canada.

[The Deputy Speaker]

Dear colleagues, the hour provided for the consideration of Private Members' Business has now expired. Pursuant to our Standing Orders, this item is dropped from the Order Paper. Accordingly, the House stands adjourned until next Monday at 11 a.m.

(The House adjourned at 2.17 p.m.)