Debates of June 17th, 1996

Nelson House First Nation Flooded Land Act

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I said earlier that I would talk some more about the dissension created by the Northern Flood Agreement.

My hon. colleague just explained in English all the positive aspects of this agreement, but as the official opposition, we often have to point out some facts that are more or less accepted by the people involved.

I had begun by making some cautionary remarks and I have to continue, even if we are, in fact, supporting Bills C-39 and C-40. There are still some inexplicable steps in this process. I was addressing the environmental issues earlier on and I could have gone on and on, because they apply to York Factory as well as to Nelson House. So, I will focus on Nelson House, but everyone should understand that my comments apply to all five nations concerned here.

Throughout the flooding, various committees had their hands full with what I call crisis management. Every time a specific environmental problem was noted, either by the government or the first nations, joint, tripartite or bilateral committees were set up, but these people never got adequate financial support. They did their work only to realize that there was no follow-up. That was decried by the auditor general and led directly to an arbitration procedure, because no consensus could be reached. So, the problems kept resurfacing and always led to arbitration, which was a time-consuming, very slow and frustrating process.

Some of the studies even referred to the submission of annual reports to each band. And on that specific issue, the auditor general indicated that no annual reports were ever submitted. Even worse, for the Nelson-Churchill diversion project I mentioned, there was no global environmental impact assessment. Thus, crisis after crisis had to be managed. They decided to divert first and then see what the impact on the environment would be. Since then, commit-

tees have been created and abolished at the end of their mandate, resulting in arbitration and the resulting red tape.

My colleague also talked of the water supply system. Indeed, the whole thing disrupted the water consumption habits, and there was almost no drinking water any more. Thus, the government had to help these communities, at a cost of $88 million, as the hon. member also mentioned. He may not have said that the bill that was supposed to be paid by the province of Manitoba was not and that there may be still discussions or even court proceedings to get Manitoba to pay its dues to Canada.

It must be understood that the system is composed of a drinking water system and a water distribution system. Approximately 1,500 dwelling units are served. Then it is not surprising that the whole project cost around $90 million for the five communities, which are rather far from each other. So the water distribution system that was built to compensate the loss of drinking water resulting from this project was extremely costly.

I have also briefly talked of the land exchange and I want to come back to this issue. It had been agreed that for each acre of damaged or flooded land, governments shall make compensation of four acres of land. So far, and maybe my colleague did not point it out strongly enough, only 10 per cent of the land has been given. Therefore, there are problems here also.

The initial agreement provided for a 1:4 compensation, and not even 10 per cent have been given yet. Even though an agreement still has to be negotiated with two more bands, I do not think we will reach this famous 1:4 compensation and it is a pity for aboriginal people because-and I do not want to talk about it again as I explained it when I spoke about York Factory-the land submerged was extremely well-stocked in game and were important for the traditional way of life of the aboriginal people. I do not think they will get equivalent land.

The initial agreement also contained community development plans, since people probably had to move because of the flooding of their land, which somewhat disrupted their way of life. Some community development plans must have been devised to help the people restructure their life and their traditional way of life. The environment in which they had lived for centuries was completely shattered. Therefore, a certain amount of support was needed. Community development plans were drawn up. Unfortunately, there was no follow-up to these plans. Even the auditor general condemned it in no uncertain terms in the documents that I have here. The auditor general said that the governments did not respect all of their commitments, since they were to draw up community development plans and ensure a continuous follow-up to make sure that the dislocation could be controlled by the community as a whole.

Nobody mentioned the price to pay, but I estimated the costs of the measure, not the costs already incurred, but the total cost of the agreement. I added up the costs of the Nelson House agreement and the York Factory agreement. They are not negligible. The federal government will contribute to help clean up this ecological disaster and compensate for the displacement of native communities. Its share of the compensation package will amount to $21 million. Manitoba's share will be about $19 million and Manitoba Hydro will pay $2.5 million, but will also give $54 million worth of Manitoba Hydro bonds, payable according to a schedule the details of which I will spare you. It seemed important to mention the costs of the operation.

I am talking here about the costs from implementation date, from the day of the signature. The meter is already ticking. But the whole cost to the environment must also be added, including the $88 million water supply system I mentioned earlier. This adventure is costing a lot to the governments of Canada and Manitoba, but probably even more to the native communities whose life has been disturbed.

I think it was appropriate for the opposition to set the record straight. Government members always insist on the positive aspects of a situation and say that everybody is very happy. But when we start looking into it, we see that this not the case. I did not hear anything to this effect from my friends from Churchill and Pontiac-Gatineau-Labelle. I did not hear my colleagues mention the criticism and the complaints expressed by the native people. We did hear criticism and complaints from people who came before the Indian affairs committee, but my colleagues made no mention of that in their speeches. The legislation before us is not entirely positive; there are a lot of negative aspects that I had to point out.

However, as I said earlier, in York Factory as in Nelson House, Split Lake, Norway House and Cross Lake, from the moment these bands were separated from one another and the solidarity that united them was broken, they were forced to negotiate one by one with the government. It was David against Goliath and, in this case, Goliath won.

We cannot object to the fact that agreements were reached and ratified, often through a referendum, by these native communities. So, we feel we really do not have much of a choice but to agree, because we cannot vote against it, and have the negotiation process start all over again. But I do think the communities have been made vulnerable and did not have a choice. Any resistance on their part would have involved years, decades of legal wrangling they could really not afford. They had to sign these agreements, with all the inherent dissatisfaction and bickering.

The Bloc Quebecois will be supporting both Bill C-39 and Bill C-40.

[Bill Gilmour, Reform, Comox—Alberni, BC]

Mr. Speaker, I will be very brief. Bill C-39, which we debated about an hour ago, and Bill C-40, which we are debating at the moment, are mirror images of each other. The only differences are that they deal with two separate bands and the amounts of compensation are different.

As with Bill C-39, the Reform Party will be supporting Bill C-40.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

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

[Some hon. members]

Agreed.

(Motion agreed to, bill read the second time and referred to a committee.)

Income Tax Conventions Implementation Act, 1996

[Jane Stewart, Liberal, for the Minister of Finance]

moved that Bill C-37, an act to implement an agreement between Canada and the Russian Federation, a convention between Canada and the Republic of South Africa, an agreement between Canada and the United Republic of Tanzania, an agreement between Canada and the Republic of India and a convention between Canada and Ukraine, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, be read the second time and referred to a committee.

[Barry Campbell, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am pleased to rise today and urge the House to give speedy approval to this legislation.

The bill I am presenting today culminates some ongoing work of the last many months. It is legislation which does not generally command great public attention. However, it is legislation that does promote fair taxation and good international and trade relations.

The purpose of Bill C-37 is to implement reciprocal tax treaties between Canada and Russia, Canada and Ukraine, Canada and South Africa, Canada and Tanzania, Canada and India. These five tax treaties, each of which is based on the OECD model tax convention, have two main objectives, to eliminate double taxation on income tax and to prevent income tax evasion.

While this bill may not spur great public attention, let us not diminish the importance of tax treaties and their benefits. It is treaties such as the ones I am presenting today that are incorporated in this legislation which encourage certainty and stability between international tax regimes and which enable the expansion of trade and investment.

It is worth making special note of the treaties with Russia and Ukraine. Given the political shifts in that area of the world in the late eighties and nineties, it is more than timely that we abandon the 1985 Canada-U.S.S.R. tax treaty and adjust tax relations with these countries to ensure renewed and important economic relationships.

The tax treaties I speak of today eliminate or alleviate double taxation in instances where international transactions are involved that may give rise to the same income being taxable in the hands of the same person in more than one nation. They also enact measures that counter income tax evasion in international transactions. This ensures those nations rightfully entitled to much needed income tax revenues will receive full compensation.

I also wish to remind the House the treaties enacted by the bill are the latest in a longstanding process of renewing or evolving our tax conventions with newly emerging nations. The major reform of Canada's income tax legislation in 1971 required Canada to expand its network of double taxation conventions with other countries.

Before I review the main elements of these new tax treaties, I wish to put to rest any revenue concerns that may arise as a result of these treaties. Simply put, the concessions contained in the five conventions should not result in any revenue loss for the Government of Canada. On the contrary, Canada should benefit from the reductions in various withholding tax rates and other concessions which have been ceded by the five countries concerned and from increased trade and investment resulting from the successful conclusion of these treaties.

There are some in the House who would at the very mention of tax treaties suggest that what we are talking about is an opportunity for tax evasion. What we are talking about is an opportunity to foster investment and the free movement of capital and people.

Allow me to outline the key features of Bill C-37 which provide equitable solutions to the various problems of taxation between Canada and certain international partners.

The treaties provide generally that dividends may be taxed in the source country at varying maximum rates. In Russia, Ukraine and South Africa this maximum rate will be 15 per cent. In the United Republic of Tanzania the maximum rate will be 25 per cent. For India the 1985 agreement with Canada set maximum rates of 15 per cent on direct dividends on interest and 25 per cent on other dividends. These rates will remain unchanged.

In the case of inter-company dividends the rate is often reduced if the company receiving the dividends holds a certain equity interest in the company paying the dividends. Such a reduced rate has been set at 5 per cent in South Africa and Ukraine, 10 per cent in Russia and 20 per cent in Tanzania.

Part of the main thrust behind the treaties is to ensure companies are unable to lower taxes by merely establishing branches in Canada or other countries. To accomplish this, branch tax rates have been set parallel to the rates for inter-company dividends.

Regarding interest paid by a resident of one country to that of another, the rate set out in the bill is 10 per cent in the case of Russia, Ukraine and South Africa and 15 per cent in the case of Tanzania. There are, however, some exceptions.

Maximum rates on interest paid on a bond or similar obligation by the national government will be reduced to zero in all participating countries. As well, these treaties contain a provision that will extend a zero rate of taxation on interest paid on loans or credits extended, guaranteed or insured by certain state entities in the source country. In Canada that would include the Export Development Corporation.

These treaties also address the taxation of royalty payments. They provide for a general rate of source taxation of 10 per cent in Russia, Ukraine and South Africa and 20 per cent in Tanzania. The rate in India will be reduced within five years to 10 per cent or 15 per cent depending on the types of royalties.

The treaties with Russia, Ukraine and South Africa have gone further to recognize the world's borders are very much impacted by the information highway. South Africa has reduced the withholding tax on royalties for computer software to 6 per cent. Russia and Ukraine have eliminated these completely.

Pensions are also dealt with in these treaties. For example, in the case of Russia, Ukraine and India pensions and other similar payments will be taxable only in the source country. South Africa will deviate slightly by stipulating that pensions will be taxable in the source country with no limitations. In this instance the country in which the recipient resides will provide a credit for the taxes paid in the source country.

In Tanzania pensions and similar payments arising in one country and paid to a resident in another may be taxed by both countries. However, the tax rate of the country of source will generally be reduced to 15 per cent.

In summary, the five tax conventions contained in the bill provide mutually beneficial solutions to many of the taxation stumbling blocks that exist between Canada and our international partners. The countries I have mentioned are preparing to implement the bilateral convention as soon as possible.

I remind hon. members of the important role tax conventions play in fostering investment into Canada and out of Canada into other countries, such as the ones which are the subject of this bill, and also in fostering and promoting the fair treatment of taxpayers and ensuring taxes are collected. I commend the bill to the House and urge its speedy passage.

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

Mr. Speaker, I am always pleased, even at so late an hour as this, to speak on a bill as important as Bill C-37, an act to implement tax treaties signed between Canada and Russia, South Africa, Tanzania, India and the Ukraine.

Contrary to what my colleague said earlier, it is inaccurate to say that most opposition members are opposed to the signing of tax treaties. On the contrary, we encourage the signing of tax treaties between Canada and the United States. Why? Because it is in our interest to see Quebec and Canadian businesses pay tax only once, and not twice. This is how double taxation is avoided, by signing tax treaties setting out rules for the treatment of the income of businesses, and even of individuals and of Canadian diplomats versus foreign diplomats. It is to Canada's credit that it signs these treaties.

Where it does not work, and we have always been clear on this, is when tax treaties are signed or when there is an attempt to avoid adopting rules with countries with much lower rates of taxation than Canada's. This no longer works, because by various subterfuges, by various ruses, companies with branch plants in so-called tax havens can apply the lower rates of taxation in these countries to the detriment of the taxes they would normally pay to the federal government.

As it happens, in the case of the treaties in this bill, none of the five countries has tax rates appreciably different from Canada's with respect to business profits.

Let us take the example of Russia. The Russian Federation taxes profits at around the 13 per cent level, while the federated states have rates ranging from 9 to 25 per cent. In other words, the combined rates of the federated states and the federation total between 22 and 35 per cent, which is more or less comparable to the Canadian range of 32 to 40 per cent.

Looking at South Africa, we have no recent information for business taxes, that is to say for 1996, but in 1995-as of March 31 1995, to be more precise-the corporate tax rate was 35 per cent in South Africa.

The same thing goes for India. The Indian corporate tax rate is 40 per cent, with a 15 per cent surtax if the taxable income exceeds 75,000 rupees, or $3,200. Not only is the Indian taxation rate not lower than Canada's, it is in fact higher.

Looking at Tanzania, the standard level of taxation on profits is around 30 or 35 per cent.

Finally, with respect to the tax convention signed between Canada and the Ukraine, until 1992, the last year for which figures were available, the tax on business profits in the Ukraine was 35 per cent. There has been a recent revision downward to between 20 and 28 per cent, a bit less than in Canada, but still far from the differences that sometimes occur between countries that are considered tax havens-with a rate between 2 and 3 per cent-and Canada, with a theoretical level of 40 per cent.

There is no problem in this area, then, but there is in some others. I take the opportunity provided by this analysis of Bill C-37 to remind the government that it signed in the past tax treaties with countries that are considered real tax havens and that each year hundreds of millions, if not billions of dollars go through these countries and are lost to Revenue Canada because of the ridiculously low tax rates in effect there. Furthermore, since these businesses are taxed only once on their incomes under these tax treaties, they obviously use various means to have their profits taxed at a ridiculously low rate.

They bring these profits back to Canada tax free and in so doing, save between 35 and 38 per cent on their taxes every year. Despite all the efforts made by the federal government in previous years, there are still eleven countries having signed tax treaties with Canada that are considered tax havens. The main ones are Barbados, Cyprus, Malta and even Switzerland.

Eleven other countries provide exemptions that considerably reduce their level of taxation in order to achieve certain economic and commercial objectives. With these countries, which include Barbados, Ireland, Malta and the Netherlands, Canada has to bang its fist and make it clear that, where conventions exist, they must be honoured. For conventions to be honoured, rates of taxation must continue to be comparable and not variable according to the whim of the countries signing these conventions.

The difference is considerable, and it seems to me that being in a country like ours, which is facing financial difficulties, we cannot turn our nose up at the hundreds of millions of dollars in additional tax revenues that might be created if the federal government corrected the discrepancies in the tax conventions and other agreements it has with other countries which have extremely low rates of taxation.

Let us look at three countries. First, Barbados. It taxes business profits at the rate of 2.5 per cent. This is some 36 percentage points less than the rate in Canada.

The rate in Switzerland is less than 10 per cent. We have tax conventions with both these countries. Their rate of taxation is not comparable to ours, and that is where the rub lies in tax conventions. This is not the principle of tax conventions, which is a good one. Tax treaties are both desirable and necessary.

However, they must be concluded with countries whose tax rates are comparable, otherwise a correction factor is necessary when profits are brought back after being taxed in those countries at reduced rates.

In a third country, the Bahamas, the ideal tax haven, the cream of the cream, tax rate on profits is 0 per cent. In other words, a Canadian business with subsidiaries in the Bahamas could make profits, not be taxed whatsoever there, and bring those profits back to Canada totally free of taxes.

I am still referring to a Canadian business, a business controlled by Canadian residents who normally should pay what is owing to Revenue Canada. But instead we are losing money because of the difference in tax rates between Canada and countries considered as tax havens. We are losing money and the fault is ours, in other words. For two years and a half, we have been asking the government to do something. Why did they not do it? One wonders.

Tax havens are becoming so popular that some very well known companies in Canada are taking advantage of these loopholes. Take the six major Canadian banks, for instance. Do you know that the subsidiaries of the six major Canadian banks-half the 119 subsidiaries they have outside Canada-are located in the Caribbean? Fifty-seven subsidiaries of the six major Canadian banks are located in the Caribbean, which is not known for its high population density.

It is strange that Canadian charter banks have half their subsidiaries in the Caribbean. There must be a reason. It happens that the countries considered to be the most generous tax havens in the world are in the Caribbean.

The same thing applies in the Cayman Islands, a famous tax haven: there are 28,000 businesses there, 28,000 corporations, most of them branches of Canadian, American or Japanese firms-28,000 firms for 30,000 inhabitants. It is permitted to imagine reasons for that. The 30,000 people in the Islands certainly do not hold all the shares of these 28,000 firms.

The 16,000 corporations established in Turk and Caicos Islands are also said to be held by Canadian interests.

There is a reason for that and it is the fact that Canada is signing tax conventions with various countries. It does not care about taxation levels and, when there is no convention as such, there is nothing else. Consequently, when Canadian corporations make profits in these countries, they make up for the difference between

their absurdly low taxation level and the level in Canada which is about 40 per cent.

This is quite something. People think only little amounts are involved and that this is why the government does not bother to remedy the situation, but the government knows perfectly well that these are huge amounts, tremendous amounts. But the government keeps on turning a deaf ear to our cries.

In 1990 alone, investments outside Canada amounted to $92 billion. I do mean $92 billion. These corporations, which are investing abroad, received $4.2 billion in dividends from foreign subsidiaries.

Some of this $92 billion found its way into countries considered as real tax havens. For instance, according to the auditor general, $5.2 billion was invested in Barbados at a maximum tax rate of 2.5 per cent, as I mentioned before. Barbados corporations paid Canadian corporations $400 million in dividends, probably tax exempt. We are not talking about peanuts here.

Moreover, the Auditor General points out another case, where $10.9 billion was invested in Cyprus, Ireland, Liberia, the Netherlands and Switzerland, countries which are all considered to be tax havens. Over $200 million in dividends was paid out to Canadian corporations by corporations in those countries, probably without paying anywhere close to the taxes they should have if we had had proper tax conventions with those countries.

When we brought this to the government's attention, about two and a half years ago, they said that we had to be careful because if we were too strict, too restrictive, we would be less competitive internationally. With the globalization of markets, the opening of borders, the disappearance of barriers, our planet has become a great big village and soon we will be conquering the universe. Every time we raised this issue, the government said that we had to be cautious because if we were too strict, these assets would leave Canada. If our tax conventions were too rigid or if we came to other arrangements with countries considered to be tax havens, it would be detrimental to the international competitiveness of Canada, its capacity to attract foreign investments, to keep them and to ensure there would always be direct foreign investment in plant construction and job creation in Canada. In other words, our millionaires would go elsewhere.

The United States is our main competitor in North America. The Americans implemented a tax measure a long time ago. Since they could not control inflows and outflows, as is the case in Canada, they decided to impose an American tax rate on all profits made by American corporations abroad. They chose to literally tax these profits. But they looked at the taxes these same American corporations were paying to other countries, for profits made abroad, and granted a tax exemption for these taxes.

In other words, the Americans make sure that U.S. corporations pay taxes on their profits, they check on a case-by-case basis what amount each corporation has already paid to another country and then subtract one from the other. It all seems very logical to me. As we say, you do not have to be a rocket scientist to understand these principles. You pay 2 per cent somewhere when the rate here is 40 per cent. When you bring back your profits, you will have to pay the difference, that is to say 38 per cent, because you will be allowed a 2 per cent deduction for what you paid in the other place. Therefore, you will end up paying the same as every national business.

It seems to me that it makes sense. And that is what the United States is doing. We cannot say that Americans are socialists. You cannot say that Americans treat their businesses and corporations casually. You cannot say that the United States is not a paradise for private business. We have high officials here who can influence decision makers because, on the Liberal side, they are easily influenced, by telling them that they have to watch out not to mistreat businesses because if they do, they are going to move away. Well, let us be serious. When we are in a situation like the one we are experiencing in Canada now, it seems to me that we should take advantage of every opportunity to close loopholes, and these are big loopholes.

The other way to collect what we should normally collect is to revise the tax conventions with the countries I was mentioning earlier. We know these conventions. We know that they are signed with countries which have a much lower tax rate than ours. We have to revise these conventions. It is easy. You just pick up the phone, call the representative in that country, redefine the provisions and tell him that it is not because we do not like his country, but because it is not normal, that otherwise we would have a capital drain due to the ridiculous taxation level in countries like his. Either you revise by tearing up the tax convention or you revise through a compensation mechanism which would make profits go from that country to Canada where they would be suitably assessed and where tax money would come into the government coffers.

As I was mentioning, Bill C-37 deals with income tax conventions that have been signed between Canada, Russia, South Africa, Tanzania, India and Ukraine. This is finally an example of what should be used as criteria of comparison. These are income tax conventions that have already been signed between Canada and certain countries that are considered as tax havens. Taxation rates are fairly similar or, at least there is not a major difference, as in countries such as the Bahamas, for example. The conventions, or the tax treatment given by Canada and by these countries, seem fair, unless we did not do our work well.

Finally, the offical opposition will support Bill C-37, but in hoping, as I was mentioning to you earlier, that the federal

government will review, as we have been asking it to do for two and a half years, the eleven income tax conventions that have been signed with countries that are considered as tax havens. Second, the government should think about our proposal to establish a mechanism like the one that exists in the U.S., which would allow us to compensate for future losses, like the current tax losses, because the differences among the countries that do business with Canada are too great.

As I was saying, the U.S. has done a great job on this. It taxes at the American rate and manages to give deductions to the businesses that have already paid 2 or 3 per cent in the Bahamas, Cyprus, Malta or elsewhere in the world.

This is one option we could seriously consider because, as I say on a regular basis, Canada trails behind several industrialized countries in this respect. Canada also lags behind other countries' innovative, original business tax practices. I think the time has come for the government to wake up.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, Bill C-37 is designed to implement income tax conventions that have already been signed with Russia, South Africa, Tanzania, India and Ukraine.

Tax treaties such as these have two main objectives: first, the avoidance of double taxation; and second, the prevention of tax evasion or avoidance. Since they contain taxation rules that are different from the provisions of the Income Tax Act they only become effective if an act giving them precedence over domestic legislation is passed by Parliament.

The conventions and protocols in the act are patterned on the model double taxation convention prepared by the OECD. This act sets out a system of taxation protocols and conventions with nations that previously had no such conventions with Canada.

The act is designed to eliminate double taxation whereby an individual is taxed on income in his home country as well as in another country, and to restrict the ability to evade taxes by shifting income into other localities. The act reproduces tax conventions already signed with Russia, South Africa, Tanzania, India and Ukraine.

Reform supports horizontal and vertical equity, and removing the ability to evade or avoid taxes is in keeping with this philosophy. The act basically simplifies the system of taxation as it applies to resident individuals and corporations in Canada as well as owners of income producing assets in Canada or one of the signatory states. Therefore, I am pleased on behalf of the Reform Party to support this bill.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

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

[Some hon. members]

Agreed

[Some hon. members]

On division.

[The Deputy Speaker]

I declare the motion carried on division. Accordingly, the bill is referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee.)

The House resumed from June 5, 1996, consideration of Bill C-4, an act to amend the Standards Council of Canada Act, as reported without amendment from the committee.

Standards Council Of Canada Act

[Jane Stewart, Liberal, for the Minister of Industry]

moved that Bill C-4 be concurred in at report stage.

[The Deputy Speaker]

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

[Some hon. members]

Agreed.

(Motion agreed to.)

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

Mr. Speaker, I believe you would find unanimous consent to call it 9.30 p.m.

[The Deputy Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

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

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, on June 12, I asked a question to the Minister of Transport regarding railway safety, following CN's decision to close the Joffre shop, in Charny. I am concerned because before this decision, there were three shops that repaired and maintained railroad tracks in Canada.

It was suddenly decided to concentrate these operations in Winnipeg. Since CN was privatized last year, I was concerned about the issue of safety and I told the Minister of Transport that it was asking a lot from a single shop located in Winnipeg to look after all the tracks in Canada, as far as Halifax. The minister said that he had reviewed the situation, that there would be no problem and that it would be safe.

On March 28, 1995, the daily Le Soleil published the findings of a study on the state of railroad tracks in Quebec. In our province there are three to ten times more problems than in other regions of the country.

For example, and I quote from the story published in the daily Le Soleil , ``For trains starting in the Quebec area, including Ottawa, but stopping before the Gaspé Peninsula, railroad inspectors counted 51 defects per 100 miles or 160 kilometres of main railroads owned by CN. They counted 31 per 100 miles of main railroads owned by Canadian Pacific. CN owns more than 80 per cent of the tracks''.

As I was saying, elsewhere it is up to 10 times less. In spite of this, CN decided to set up the only repair shop in Winnipeg.

I take advantage of the fact the minister is here. Now that he has been informed of the situation since last Thursday, I ask him if he can table reports that the railroads had improved over the last year, on which to base his claim that there is no threat to safety in Quebec. I would like the minister to tell us about these reports or, better still, to table within the few next days the reports on which he is basing his claim that railroads in Quebec are in top condition.

[David Anderson, Liberal, Minister of Transport]

Mr. Speaker, it is always a pleasure to answer a question from the hon. member for Levis. I thank him for this opportunity to make a few comments on railway safety.

First, I can assure him that there are figures to prove there is no significant difference between the number of accidents and problems in the railway system of Quebec and in other provinces. I could give him the exact figures but unfortunately I do not have them with me at this moment.

It is most unfortunate that people are losing their jobs in Charny but the House may rest assured that there is no problem linked to safety. The CN decided to centralize the main operations for repairs to track maintenance equipment, but routine maintenance will be done in the field. Finally, CN will step up routine equipment maintenance. Track maintenance, which is essential to ensure safety, will continue to be ensured using equipment in good repair.

Transport Canada works together with railway companies to provide Canadians with the highest standard of rail safety. Railways are required to comply with the Railway Safety Act and it is up to Transport Canada to ensure that safety standards are complied with in accordance with the law.

Transport Canada railway safety officers will oversee railway operations as well as the maintenance of tracks, equipment and railway crossings to ensure railway safety.

The act enables them to limit railway operations when and if they discover unsafe conditions and to impose penalties on the companies in the event of a violation.

The decision made by CN to centralize equipment maintenance is merely a business decision that does not affect safety.