Debates of Feb. 16th, 1995

Financial Administration Act

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, I have listened with some interest to the member opposite representing the government and the member representing the Bloc who just finished speaking to the bill.

The intent of the private member's bill is to bring more financial accountability to crown corporations. These are not public corporations; they are crown corporations. It is kind of a hybrid. It is not as though they are using their own money; they are using our money.

How is it that a member of Parliament representing the people of the country, especially the member for Kingston and the Islands, the parliamentary secretary to the government House leader, could possibly say that he cannot support the bill as it is written? What would it take for the government to support the bill?

Perhaps the answer is not to support the bill. Perhaps it would be to privatize it. Mr. Speaker, if this were your money or my money, or the money involved was not public money but personal money out of the pockets of Mr. and Mrs. Taxpayer, would we be looking at our responsibilities as members of Parliament a bit differently?

A crown corporation has the benefit of being supported by public funds. Yet it does not have the downside of having to worry about whether it is going to get funds to manage its daily affairs from the product of its work. When things go wrong in these crown corporations, when they are not efficiently managed, when they do not have a business plan, do they go to their shareholders who are individuals that put up the money? No. They come running to the Government of Canada with their hands out and say: "Top it up".

The problem is that our country is going into the hole at the rate of $110 million a day. What do we have to do to get it to sink into the heads of members opposite that they should start by doing the little things right and eventually, if they do enough of the little things right, the big things will turn out right? A little thing is to support the bill which calls for more accountability in a mere five crown corporations.

In order to get some unanimity in the House, the mover of the bill deliberately left out some of the more contentious crown corporations such as the CBC. If we in the House were to reduce the budget of the CBC by about 50 per cent tomorrow, which would mean that we could spend lots of money on cancer research, lots of money on AIDS research or not borrow money to put more of our children to work, I guarantee it would focus the attention of the CBC on what it really should be doing, what we can afford and what we cannot afford. However the mover of the motion did not include that because it is a very contentious issue.

What do we have here? We have the Canada Council, the Canadian Film Development Corporation, the International Development Research Centre, the Canadian Wheat Board and the National Arts Centre.

What, the National Arts Centre? How did the National Arts Centre creep into this? How on earth did that become a crown corporation? Could it be that it is located in Ottawa and it is one more thing for the people of Canada to subsidize?

It would be an interesting exercise to go to the rest of the arts centres in the country to find out whether they are crown corporations and whether they have their arms in the pockets of Canadians from coast to coast. Somehow I doubt it.

What is it about being in Ottawa that gives people the thought that money is something that sort of grows on trees or that if it is public money it is not accountable for?

Anybody who has been in business knows that the discipline of an audit is not a negative thing or a bad thing. The discipline of an audit will make any company work better. That is why these crown corporations should be saying: "Wait a minute. We want to be overseen. We recognize the fact that we are dealing with public money".

Why should they not want to be involved? Is it because they are not efficient? Is it because they can run like little fiefdoms and do whatever they want any way they want to? Is it because the Canadian Wheat Board is not perhaps so much a wheat board but a co-op? Is it because the Canada Council is a collection of people who are self-interested, get public money and dole public money out to whoever they think should have it?

I am not suggesting for a moment that the Canada Council and the people involved in the Canada Council are doing so somehow maliciously. I am sure they are doing everything that they are doing with their hearts in the right place. However it is not their money; it is our money. Why should we not oversee every nickel they spend?

The Canadian Film Development Corporation has been the subject of some debate in the House in past months. There are people who think it is doing a good job and there are people who think it is not doing such a good job. There are people who say we have to support it because it is Canadian culture. I think most of us like to go to a movie every once in a while to see a movie that speaks about us, to see something familiar. There might be some granting to the Canadian Film Corporation that pays off; it might even make some money from time to time.

It would be interesting if they used their own money and had to compete in a world market on the quality of their product and rather than saying that we have this domestic market which has the tariff wall surrounding it, we are going to make movies that everybody in the world is going to clamour to see because of the quality of the story, the quality of the acting, the quality of the distribution?

That is what we should be looking for in our Canada. We can compete with the best in the world in anything, in business, in arts, in film development. If we are going to have crown corporations that have the purview of doling out public money for private purposes, certainly to oversee over these crown corporations is common sense.

I would like to conclude my few moments of discussing this bill, because it is a votable bill, by once again appealing to my hon. colleagues to reconsider the initial response not to support this bill.

The hon. member for Okanagan-Similkameen-Merritt brought this bill to the House with the express intent of ensuring that it was innocuous enough that it could find support on the Liberal benches and with the Bloc as well as a testimony to the fact that on some things, albeit a minor start, the members of Parliament in this House assembled can come together for the right reasons and do the right thing.

It is a tragedy that every time a member gets up to speak, to move a motion or to do something in this House, it is always done on an adversarial position. It need not be that way. Common sense is common sense, whether it originates on the Liberal benches, on the Bloc benches or on the Reform benches.

When we have an opportunity in this House to come together in unity to do the right thing for the right reasons which could have the effect of using taxpayers' money more efficiently, we should seize the opportunity, seize the moment and do the right thing for the right reasons.

[Lyle Vanclief, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-food]

Mr. Speaker, I appreciate the opportunity to speak for a few minutes on this bill that is before the House, Bill C-263.

I want to assure the member who just concluded his remarks that my remarks are not made in an adversarial way but just to simply point out how this bill would address the Canadian Wheat Board. I know it is a crown corporation that is of some interest to the Reform Party and it is of some interest to all of us in this House, particularly those who are involved in the agri-food industry.

I want to point out in the next few minutes why this bill is absolutely unnecessary and actually would be doing much of what the Reform Party has faulted governments in Canada for in the past, repeating something that is already done and doing things twice and spending money that is not necessarily spent.

The Canadian Wheat Board was established in 1935 as a marketing agency for western grain farmers. At the time farmers in western Canada wanted a system that would control price fluctuations, distribute delivery opportunity equitably and move the largest volumes of grain at the best possible prices.

That mandate is still the same. The Canadian Wheat Board remains the same now as it was years ago in the mandate that it has, to earn farmers the best possible returns for their wheat and barley. That is exactly what the board has been doing for that 60 years. It has done an excellent job of selling Canadian grain at the best possible prices and then returning as much money as possible to the users of that board, those users being western Canadian farmers.

Although the Canadian board is a crown corporation, its operations are financed by 130,000 grain farmers in Manitoba, Saskatchewan, Alberta and the grain growing areas of British Columbia.

This in itself makes this crown corporation unlike many of the others. Some crown corporations including the Canadian Wheat Board are exempt from the application of the Financial Administration Act. It is one of the member for Okanagan-Similkameen-Merritt listed this afternoon as being exempt.

With this bill this exemption would be removed and the crown corporations affected by the bill would become subject to a different reporting system with different requirements.

For example, under this bill the Canadian Wheat Board would be required to submit a corporate plan to the Minister of Agriculture and Agri-Food for approval by the governor in council. The board would also have to submit an operating and capital budget annually for approval by Treasury Board. This report would then be included in a review by the parliamentary committee.

Finally, the wheat board would be subject to an audit by an outside auditor and possibly the Auditor General of Canada.

There is no doubt in my mind that the objectives of the bill are well intended. I can assure everyone that the Minister of Agriculture and Agri-Food and the government are in favour of ensuring that the accountability is there. That accountability at the present time is to farmers, the government and to taxpayers.

It is essential to remember that the board's operations are funded by farmers, not by government. Nor does the board operate with a capital base funded by the government. Although some accountability to the government is appropriate the board's first responsibility is to western Canadian wheat and barley producers.

I should also emphasize that the board is already accountable to the government through a variety of provisions in the Canadian Wheat Board Act, a separate act. The safeguards established under that act are virtually the same as those under the Financial Administration Act. Again, why repeat it?

Even though they are there they are slightly modified to take into account the unique nature of the wheat board's business. For example, the board is required to file an annual report with the minister by March 31. This annual report is tabled in Parliament.

The wheat board act requires the board to have an external auditing firm conduct an audit each year and to keep proper books. The Canadian Wheat Board Act also grants borrowing powers subject to the approval of the Minister of Finance. In all of these examples the provisions of the Financial Administration Act are virtually identical.

I could go on but the point is Bill C-263 which has been put before us today is not the way to enhance the accountability of the Canadian Wheat Board. The government's main concern for accountability and the reporting process that ensures it should stem from a need to be aware of possible government expenditures.

There will only be government expenditures if there is a deficit in the pool accounts. A deficit in the pool accounts will only occur if the Canadian Wheat Board's initial payments to farmers are set at or raised to levels that exceed the ultimate levels from the sales of wheat and barley. Since the government must approve the level of the initial payments it already has an effective method of accountability in this area as well.

Another serious concern with the bill is that the nature of the marketing activities of the Canadian Wheat Board requires extreme confidentiality. The reporting relationship between the Canadian Wheat Board and the Minister of Agriculture and Agri-Food is created under the Canadian Wheat Board Act and it is appropriate, given the need to ensure that confidentiality.

We are also concerned about timing. The minister has already announced his intention to begin a process that will rigorously examine all of the facts and issues relating to western grain marketing and the Canadian Wheat Board. It is no secret that opinions on this and these issues are sharply divided on the subjects. There have been meetings, rallies and demonstrations on both sides of these issues.

Before the government makes any decision on the future of the board, farmers have a right to carefully consider the situation and together they must decide what represents the best balanced solution for their industry. Bill C-263 represents a very important decision. Its impacts on the Canadian Wheat Board and on western grain growers are potentially far reaching.

It is our duty to act fairly through a transparent forum and to consult farmers before we make any major decision on the future of the Canadian Wheat Board.

We know what the majority of farmers want. When we are convinced that the procedure to get their views has been fair, impartial and equitable and does represent what the majority wants, then and only then will this government be ready to approve changes to existing legislation.

Until then I urge members of this House to respond to Bill C-263 with a clear and strong message that we are not yet ready to make major changes without understanding the consequences and most important without consulting with its users, the prairie farmers.

There is still a lot of work to be done and there is still much consultation to go through before we can come to a definitive decision on the future of the wheat board.

In conclusion, I would ask the members of this House not to support Bill C-263 as it relates to the Canadian Wheat Board.

[Bob Mills, Reform, Red Deer, AB]

Mr. Speaker, basically what I want to talk about in Bill C-263 is the openness, accountability and transparency that I think these agencies should have. I want to talk specifically about IDRC. That organization is often confused with CIDA. It is wrong that this should happen.

Throughout many of the discussions I have been involved in we have heard what the people of Canada are saying about CIDA. They are saying that there is inefficiency, that they want accountability there. However, they quite often mix IDRC into that same ball of wax. I think that is rather unfair.

This bill asks for accountability. I think that will do nothing but benefit that organization because the Canadian public wants to know it is getting good value for its dollar.

Under the current system IDRC is not getting audited the same way as other government institutions. It does not follow all of the provisions of the Financial Administration Act. Therefore, Canadians have a hard time really knowing whether they are getting value for money.

In a time of serious spending cuts and serious budgetary constraints, we can make an awfully good case for getting some kind of regular, accountable audit procedure. In terms of this, I know this year IDRC has done a budget. I have certainly talked

to the organization. I would say it is a very well run organization. I know a member across who would agree with me on that.

If there were support for this bill we would have to separate IDRC from CIDA. Going through most of my notes, in many cases the people in IDRC I have talked to would totally agree with this. In private conversation they would say that. We have an agency, a crown corporation, that may or may not do an audit. Only because of good management would it do an audit, becoming accountable.

We also have the public saying this agency is the same, it gives out aid or it is something involved with aid, and what are we going to do about that, maybe we should subject it to the same treatment that we subject an organization like CIDA to.

As I pointed out, that is totally wrong. For that reason I would strongly advise members to read the member's bill, to take a look at what it is trying to accomplish and the fact that it is allowing this organization to get its dollars and cents out on the table and to make them open to the public, thus achieving the accountability and transparency that I believe people are demanding.

Obviously I had a lot of other areas I would have liked to have covered, but for the sake of time I will stop at this point. I ask members to reconsider their support of Bill C-263. When it comes to an area like the IDRC they would welcome that as much as any of us would in this House.

[The Acting Speaker (Mr. Kilger)]

The time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 93, the order is dropped to the bottom of the order of precedence on the Order Paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, it is obvious to anyone who is watching the various news programs today, or who has any sort of sensitivity to what is going on in the country, that there is the equivalent of a tax revolt well under way.

People have literally been driven to the wall when it comes to the existing tax system which, to give it undue consideration, would be to call it unfair, unjust, unbalanced and discriminatory. It discriminates against the small business sector relative to the corporate sector. It is biased against the average working person, as opposed to people in the upper income or the very wealthy tax brackets.

This tax revolt has occurred by the economy moving underground. There probably is not a Canadian citizen who is not participating in some way in the underground economy, with the exception of yourself, Mr. Speaker, and some of my colleagues who are presently in the House.

Who does not participate with cash transactions or in a barter system? It is increasing. It is estimated that somewhere between $40 billion and $120 billion of business transactions each year take place in the underground economy. This makes it almost impossible to pay down the debt of the country until we get some confidence back in the system.

Why is that? First of all, if we add up all of the tax exemptions, they come to about $36 billion a year. That was in the press yesterday. Thirty-six billion dollars a year is lost to the treasury because of tax exemptions. Many of these exemptions are legitimate but many must be classed as tax loopholes. I give my friend, the Minister of Finance, full credit for going public in the last few days and saying that the system is filled with tax loopholes that have to be closed. He also said that the poor do not use tax loopholes. It is clear what he means. The rich use tax loopholes.

When we go down to the harbours in some of the port cities of Canada and see the huge yachts, they are by and large tax deductions. I personally know a number of people with boats who write off half of the cost of the boat and call it a business tax deduction for entertainment purposes. The boxes in the big sports stadiums are tax write-offs. We found out from the news today that even escort services can be a tax write-off if the name is changed to a tour guide or a bodyguard.

I suspect a lot of submissions will be made by individuals who are entertaining their clients. A lot of touring will also be going on, or perhaps a lot of bodyguards will be put into place. That will be a legitimate tax write-off.

The reports say that Revenue Canada will soon send out a circular clarifying this issue. As long as the escort service is also a tour guide or a bodyguard, it will qualify for a legitimate tax write-off. I could go on, but I suspect that we are all familiar with the various forms of tax write-offs.

I would like to ask a couple of serious questions. Canada is one of the very few OECD countries that does not have an inheritance tax. Across the way, when my hon. friend inherits $2 million or $3 million, it is not taxed. We are virtually the only country in the western world where an inheritance is not taxed.

Even the United States has an inheritance tax. The United States also considers capital gains to be like any other income. In other words $1 of capital gains is taxed like $1 of regular income. But not in Canada. That $1 of capital gains is only considered to be worth 75 cents for taxation purposes.

Once again we are one of the very few OECD countries that says to people: If your income is from capital gains we are automatically going to give you a 25 per cent tax break before we even start considering it.

Again I have to ask, why the tax break for those who earn their income from capital gains as opposed to someone working in a radio station, a factory or a plant? Why do we distinguish between those two kinds of incomes? Why do we let those people who inherit vast amounts of money off, not to pay any income tax at all on it? Again, we are one of the very few countries in the world that does that.

I could also ask about the family trust provision. Here is the mother of all loopholes. I believe there is now universal agreement that if there is a tax provision that has to go in this budget, it has to be this family trust business. The tax experts told us this provision was brought in to protect only the very wealthiest families of Canada. Must we have a special tax provision that costs us many hundreds of millions of dollars to make life easier for the very wealthy in Canada? I think the reaction to that is no.

We will be watching very closely to see what the Minister of Finance does when he brings in his budget in a few days and whether or not he says: "We are going to take this loophole of loopholes, the mother or father of all loopholes out of the system". If he does that, then I think we can legitimately say that yes, there is some balance to the budget.

For example, he should tax the inheritances people receive, let us say, over $1 million or $2 million. I am not talking about people who inherit the family farm or the person who inherits a small business or the family home or whatever. I am talking about people who inherit $2 million, $3 million, $5 million or $10 million. Why should they not pay tax on that? They would if they were in virtually every other western industrialized nation, but not in Canada.

A whole set of questions must be asked about the loopholes in the system. I am very happy to see that the Minister of Finance has now acknowledged this. We will be watching carefully as he attempts to close off some of these loopholes in an effort to make the tax system a bit fairer.

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

Mr. Speaker, I am pleased to try to respond to the very windy comments of the hon. member for Kamloops. With his typical hyperbole he went on to grossly exaggerate the deficiencies of the Canadian tax system, I am sure for the benefit of his viewers in Kamloops.

He sounded a little like the premier of Ontario did when he was in opposition, and we have all noticed how he has changed his tune since he came into government. Of course he has made the worst mess we have ever seen of any government in any province. I suspect the hon. member for Kamloops would agree with me if he lived in Ontario. He does not, so he has missed out on some of the worst aspects of NDP rule in our province.

The NDP is involved in the tax system in Ontario and the Ontario taxpayers are complaining about high taxes. What they have not fully realized in every case is how many of those taxes are charged by their provincial government. It has really slapped it to Ontarians in a big, big way, in spite of having a massive deficit and total incompetence in its government and running the economy of that province.

I agree with him that the fundamental basis of a sound tax system is that everyone pays his or her share. When a minority of taxpayers are able to avoid paying their fair share, the legitimacy of the whole system suffers.

Like the hon. member for Kamloops, the Minister of Finance and indeed every member of this caucus is committed to trying to restore an element of fairness to our tax system. But the government in fact has already taken steps to do that. It did it in the last budget.

I did not see the hon. member for Kamloops applauding the minister on budget day last year. I am sorry he did not, but I can safely tell you, Mr. Speaker, and I know you will agree, that none of us have ever seen the hon. member for Kamloops applaud a budget in this House.

There is a good reason for that. None of them has been an NDP budget. If there had been one, no doubt he would applaud it. But as long as the budget is presented by any other party, no matter how fair it is, he will say it is not fair enough for him. He does not talk about Bob Rae's budgets. If he did, I think he would be complaining about the lack of fairness. I am sorry we are not able to hear his thoughts on that tonight.

I want to point out examples of some of the things the Minister of Finance did last year in his budget.

He eliminated the $100,000 lifetime capital gains exemption that had been put in by the previous government that benefited high income individuals almost exclusively. The deduction for business meals and entertainment expenses was reduced from 80 per cent to 50 per cent, another item that benefited substantial taxpayers. Large Canadian controlled private corporations are no longer eligible for the small business deductions which benefit small business and which the hon. member for Kamloops ignored in his remarks. I think that is important.

The need for increased equity and simplicity in the tax system is recognized. The finance minister has made it clear on a number of occasions that his budget will be fair and will try to reduce inequities in our tax system.

I am sure the member for Kamloops will applaud the minister on budget day and thank him for the great service he is doing for Canadians.

[The Acting Speaker (Mr. Kilger)]

Pursuant to Standing Order 38, the motion to adjourn the House is now deemed to have been adopted.

Accordingly, this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6.40 p.m.)