Mr. Speaker, last May the auditor general tabled his report in this House. In that report he included a chapter regarding the family trusts which he believed should be brought to the attention of this House. With hindsight, I think he was absolutely correct in doing so.
Just today for example, the Minister of National Revenue in this House not even an hour ago said that the report by the finance committee on the issue would "ameliorate the deficiencies in her department".
The report by the finance committee was based on the referral of the family trust issue to the committee. The mandate given by the Minister of Finance was not to pass judgment on the work of the auditor general but to look into the matter regarding the taxation of family trusts.
I find it disconcerting that the finance committee would take the mandate that was given to it and go beyond that mandate and pass judgment and comment on the work of the auditor general who is an officer of this House, not an officer of the committee.
If I may quote from the finance committee report, on page 6 it states: "Revenue Canada and the Department of Finance could have more fully documented the decision making process that led to the rulings". That has to be one of the great understatements of this Parliament.
Let me give a quick synopsis of the documentation as the auditor general found it. On December 3, 1991, Revenue Canada advised the Department of Finance of the proposed transactions and that it intended to refuse to grant a favourable ruling.
On December 12 Revenue Canada's rulings review committee decided that a favourable ruling should not be provided. On the same day, Revenue Canada advised finance that it would not rule and requested finance to leave the interpretation of the act to it.
On December 16 the taxpayers' representatives were advised that a favourable ruling would not be provided.
On December 18 Revenue Canada informed the taxpayers' representatives that it could not accept their offer of December 16, 1991.
On December 18, a memorandum was prepared for the assistant deputy minister of Revenue Canada advising the deputy minister that the department was unable to rule favourably.
On December 23 a revised memorandum is prepared for the deputy minister advising that the taxpayers' proposal is not acceptable.
That is a document of the transactions in this case.
On December 23, the very same day the memorandum was prepared saying that it was not acceptable, all records of all meetings ceased. Somehow later that day there was a complete and absolute turnaround in the decision making by the Department of National Revenue admittedly at the urging of the Department of Finance. The ruling was completely and absolutely reversed.
The point the auditor general brought to the attention of this House was that an issue of this magnitude affecting hundreds of millions of dollars of tax revenue, whether the ruling was right or wrong, the process by which they arrived at the decision that was ultimately communicated was absolutely and totally unjustified. There was no documentation whatsoever that the auditor general could find to support the favourable ruling. Every meeting that was documented from the time it was first received until the day a turnaround was done said they could not justify granting a favourable ruling.
It was not whether or not the issue was correct. It was the method by which it was done. As the auditor general has stated, as an officer of this House, as an auditor, when he finds this type of
decision making, what else is he to do but to bring it to the attention of the House?
That he did and that he was absolutely correct in doing. For that, he has been chastized by the finance committee. If I may quote from page 3 of the report: "It would be asking too much however to expect the auditor general also to scrutinize the day to day work of each of the many technical professionals in the public service". Going on: "In short, the auditor general cannot be asked to intervene in the public servants' reasonable exercise of their professional judgment".
Is this reasonable exercise of their professional judgment? Absolutely not. The whole paper trail says that they were going to rule adversely and somehow, somebody in one day turned that absolutely and completely around.
Continuing on, the report says: "Public servants, like other workers cannot be held to an impossible standard of perfection. Provided their actions are reasonable, professionally competent and carried out in good faith, they should be allowed to do their work without fear of being pilloried many years later for those actions". There is no way the actions by Revenue Canada can be considered reasonable, professionally competent and carried out in good faith when there is no documentation to support their decision making.
Another issue I would like to bring up is the report by the finance committee criticizing the auditor general for allowing the breach of the confidentiality rule as far as Revenue Canada is concerned. That is a hypocrisy, if I may say so.
We have before us at this time Bill C-41 and page 16 says: "The information banks that may be searched under this part are the information banks designated by the regulations from among the information banks controlled by the Department of National Health and Welfare, the Department of National Revenue and the Canada Employment and Immigration Commission".
The Divorce Act is being amended to allow the information bank of the Department of National Revenue to be available to be searched. Therefore, this idea that the auditor general has breached the confidentiality of the Income Tax Act is a hypocrisy on behalf of the government.
The finance committee should respect the mandate given to it by the Minister of Finance: to investigate the circumstances surrounding this family trust. Therefore, I would like to move an amendment. I move:
That the motion be amended by deleting all the words after the words "September 18, 1996" and substituting the following:
"be not now concurred in but that it be recommitted to the Standing Committee on Finance with instruction to amend the same to remove all references to the mandate of the auditor general."