Mr. Speaker, I was very pleased to hear the Reform Party member who spoke last acknowledge that Canadians are responsible for the very positive gains that have been made in terms of putting the economy of the country on a sound footing.
That is something that members of our caucus, our cabinet ministers, recognize very strongly. The Prime Minister has spoken about it. The finance minister has spoken about it.
They are the considerable sacrifices that Canadians have been asked to make and the understanding we have had to seek from them for some of the program cuts made over the last few years to bring our deficit, finally, from over $42 billion down to under $20 billion, heading to under $10 billion for next year.
The member spoke about growth in the economy and somehow seemed to think it a sin that with growth in the economy the government would be collecting more taxes. It is quite obvious that if there are a larger number of Canadians who are working, and there are close to a million more Canadians working now than were working three and a half years ago, more people earning, clearly
there will be more people contributing to the cost of running the country and delivering the programs that Canadians value.
The member should also ask himself why we have enjoyed the growth in the economy that he has acknowledged. He talked as though lower interest rates are something the government should apologize for. We do not.
Those lower interest rates have contributed tremendously to the growth in the economy that the nation is enjoying. It is because of the good fiscal management that this country has had for the last three years since the October 1993 election.
I want to acknowledge that the Reform Party did, in the last speech, speak about the growth in the economy. We appreciate those comments about low interest rates.
One of the items in the bill before the House today is the taxation treatment of child support. This bill changes the taxation of child support. The change is part of a larger package of reforms to deal with child support. The reforms include measures to try to address the problems of inconsistent child support payments, inadequate child support payments, support payments that often are not paid at all, intermittently or inadequately.
The three reforms include the introduction of the federal child support guidelines to establish fair and consistent support awards in divorce cases. In addition, there is the enhancement of federal and provincial enforcement measures so that those awards decided by the courts would be paid. Finally, the item this bill deals with primarily, there is a change in the way that child support awards are taxed.
Let me take a few minutes to explain how we have changed the rules and why. Traditionally support awards have been tax deductible to the paying parent and taxable as income for the parent receiving the payment, i.e., the custodial parent who also has the responsibility for the day to day care of the children.
The 1996 budget announced that this system would be replaced with a system of no deduction, no inclusion. Perhaps some members need to be reminded that this is in line with the court decision delivered not that long ago that the practice of allowing the parent paying child support payments to deduct the payments before paying income tax and having the parent receiving it pay the tax on that amount was unconstitutional and contrary to the charter of rights and freedoms.
To suggest that the government should not somehow be dealing with that and correct a provision in tax law that is contrary to the charter and to the Constitution of this country goes a bit beyond the ridiculous.
That is what we are trying to do. The court simply said that if we have two parents, both of whom are supporting their children, if one is still married to the other parent, they pay tax on that money, but if one is divorced from the other parent, they pay no tax on that money. That is discriminatory between parents who are married and parents who are not married. Quite simply that is the issue we are trying to address here.
In theory the old system could deliver a tax benefit that would make more money available to the children. That is because the paying parent usually had a higher income than the recipient or custodial parent and therefore was taxed at a higher marginal rate. If the paying parent saved money, that saving could in theory be passed along to the children.
In practice that is not what happened. The system failed to deliver this benefit and actually made it harder to set fair and realistic awards in the courts. The system was fraught with a host of frustrations that were reflected in the well known case of Suzanne Thibaudeau, which I have just referred to.
For one thing, the tax benefit was not targeted to reach children who needed it most, and complex tax calculations made it more difficult for parents to negotiate a realistic level of support that they both saw as fair. Many parents also found that waiting until year's end to receive a refund or to make lump sum payments created serious cash flow problems for both parents.
This package of reforms we have made including the tax measures in this bill is the result of a supreme court decision but also the result of cross-country consultations held under the auspices of my colleague, the member for Mount Royal, in which we heard the real life experiences of families that had broken up, what was happening to children, what was happening to their parents and the real poverty created by the existing system.
The Vanier Institute's last report found that two-thirds of women whose marriage breaks up walk out of the marriage and into poverty. That means their children walk with them. That is part of what we are trying to address by these reforms. It is part of the reason for this change in tax policy with respect to taxation of child support payments. It is a measure that is legally necessary but it is also necessary in justice and in fairness and putting the concerns of our children and their well-being first.