Debates of Oct. 1st, 1998

Committees Of The House

[Some hon. members]

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-43, an act to establish the Canada customs and revenue agency and to amend and repeal other acts as a consequence, be read the second time and referred to a committee; and of the amendment.

Canada Customs And Revenue Agency Act

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, I too wish to say a few words on the bill that is before the House today.

It is a bill to establish a taxation agency. In other words, it takes the function that Revenue Canada now has away from Revenue Canada and establishes a taxation agency which would have sweeping powers to administer not just income tax at the federal level and to collect that tax, but to collect income tax at the provincial level, to collect the federal GST, to collect provincial sales taxes, to collect liquor taxes, gasoline taxes and eventually down the road to collect taxes from municipalities. That is the purpose of the bill before the House today.

It is a very important and fundamental change in the administration of taxes in this country. It is a bill that deserves a lot of attention by members of this House in terms of whether or not we want to go in this direction as a country.

The minister spoke this morning. He told us that there are a couple of important reasons for proposing this legislation. I want to review those very briefly. He said it is important that we have a federal-provincial tax agency that the provinces and federal government subscribe to in terms of collecting taxes. He said that this agency would be more efficient, would save money and so on. I raise a few concerns about this because of what I see happening in the country.

On the question of provincial-federal co-operation, if that were the case it would be an excellent theory. As I read the country around me, I find there is very adamant opposition to this by the provinces of Quebec and Ontario. Right there, two provinces representing around two-thirds of the population of the country are opposing this bill. Saskatchewan and British Columbia are certainly not convinced that this is good legislation.

My understanding is that there is not a single province to date, unless I am out of touch here, that has officially signed on to this agency or has even signed a letter of intent. Maybe the minister will get up and correct that.

That seems to me to be a very bad start when the provinces are in opposition to a bill that is supposed to be there to collect taxes for the provinces and the federal government. The provinces see this as an intrusion into their field of jurisdiction. I think that is a serious matter in terms of federal-provincial relations. It is a serious matter of the lack of co-operative federalism in a country where we need more co-operative federalism and governments working together in concert with each other. I know the minister agrees with that but it has not happened so far.

The minister tells us to be patient. We can be patient but in the long run we are all dead. How long does he want us to be patient? He tells us to trust him. Well a lot of people in politics have said “Trust me and things will work out”. The minister is a pretty honest and straightforward guy but he cannot by himself get the Ontario or Quebec governments or any other province to come onside.

There is also the issue of Quebec. I worry about some of the national unity consequences of this in terms of the timing. The Quebec government certainly sees this as an intrusion into provincial jurisdiction. Quebec is not talking about ceding more power to a federal agency. In fact most Quebecers, including the provincial Liberal Party, talk about a greater devolution of power to the province of Quebec. Whether it is a greater devolution to all the provinces or asymmetrical federalism, they would like a greater devolution.

This bill is now coming within months of the writs being dropped for a provincial election in Quebec. It is a very crucial election in terms of that province and the future of our country, which may or may not result in another referendum about the future of Canada.

Again I worry about the timing of this bill in terms of the federal-provincial consequences and the consequences in the province of Quebec. I question the wisdom of this. If we want to make this country work, we need co-operative federalism.

A long time ago we had leaders in this House of Commons who talked a lot about co-operative federalism: Lester Pearson when he was prime minister of the country; Bob Stanfield, the leader of the Conservative Party; Tommy Douglas, the leader of the New Democratic Party. This country was making great progress in terms of national unity, in bringing this country together, in the sharing of powers and in co-operation.

Now it seems that we have a bill here that is going in the opposite direction. If there were a federal-provincial agreement on this and agreement from the provinces, it would be a different case, but that is not the case in the bill before us today. That is a major concern I wanted to raise in the House.

I also want to raise the concern about the diminishing power of government itself. This is really the most major privatization this government has carried out. It is quasi-privatization. It is taking away 40,000 public servants from the Department of National Revenue, which is about 20% of the public servants. It is slicing away about $2 billion from the estimates of this country to establish an agency that will be run according to the business practices that will be arm's length from the Parliament of Canada and from the minister himself.

The minister assures us that the powers are still there and that he is still responsible because that is the way the legislation is written. Even the auditor general was concerned about this in his report in December 1997. He was concerned about the public interest and about the arm's length of this agency in terms of accountability. As was mentioned by a member of the Reform Party, there is a growing lack of accountability of government agencies and government bodies.

I am also concerned about the diminishing role of government and of the public sector which has certainly been expedited since the Liberal Party took office. The Liberal Party used to complain when the Brian Mulroney government privatized something or diminished the role of government, yet that has been expedited since the 1993 election.

There has been a lot of talk about uniting the right. I think the right is pretty much united. It sits across the way. It is the Liberal Government of Canada.

[An hon. member]

That is a lot of rubbish.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

They say it is rubbish but look what has happened. There has been privatization of the CNR, privatization of a lot of companies, the gutting of employment insurance, the health plan, all of these things. Going back to EI, there are many people who cannot even qualify because of the changes to employment insurance which were done not by Brian Mulroney and the Tories, but by the Liberal government across the way.

This bill is another example of that drift to the right. That party over there when in opposition tried to be very progressive in the way it talked. Now that it is in government it is extremely conservative. That is the historical position of the Liberal Party of Canada. I am concerned about that as well.

I also wanted to mention some of the concerns about business itself. This is supposed to make it more cost efficient and easier for business to comply with and so on. As has already been referred to, a study was commissioned by Revenue Canada itself from the Public Policy Forum. What were the results of that study? It said 68% of the people who were questioned thought that there would either be an increase in the costs of compliance or there would be no impact whatsoever in terms of the costs of compliance.

Two-thirds of the business community said it would not matter one way or the other in terms of costs or else their costs would go up. What is the government's reply to that? This is to be done to keep down costs, to make things more efficient. The business community does not seem to agree and the study seems to verify that so why go ahead with it?

That is my third concern. The first one is the provincial opposition, the second one the whole idea of privatization that diminishes the role of the public sector in Canada. The third one is that the business community itself, small businesses and large businesses, are concerned that their costs will either remain the same or increase with this new agency.

The fourth thing I am concerned about is the whole question to which I already referred, that of accountability. Right now we have a government department and a minister who is accountable for Revenue Canada. That has been the practice in this country.

Once we establish a new agency that is at arm's length, that will have a management board, that will draw up a business plan and then report that business plan through a CEO to the Minister of National Revenue, I think there will be less accountability in terms of the Government of Canada to the people of this country. We will have more and more people from the private sector sitting on that board, recommended and nominated by the provinces and so on. It will be more of a private sector orientation.

I also wonder about this new layer of bureaucracy that will be established in terms of the management board. What about the salaries of the CEO and senior executives? Will they reflect the salaries in private corporations instead of the salaries of senior government officials? Senior officials have always received an increase in salaries but their salaries are nowhere near what the CEOs and senior executives in the private sector receive.

This agency would employ 40,000 people and would be one of the largest corporations in the country, a bit smaller than Canada Post at 50,000, but would still be very, very large, and the senior management team received compensation comparable to what we see in the private sector. This will be an additional cost.

I wonder about all these things in terms of accountability. We are getting less and less accountability in our so-called democratic parliamentary system as more and more decision making is taken away. In fact we have had in many ways the privatization of decision making as more decisions are made outside parliament.

Accountability has gone away from this place. We have government backbenchers and MPs all around who have very little say over the public policy direction of the country. This is now another example of some power that is being taken away from the Parliament of Canada.

I am concerned about the size of the agency itself. What we have here is a vision of a super tax collection agency if it evolves. It is being given the power to evolve so we should look at what might happen in 10 or 15 years. It will collect not just federal taxes but will also collect provincial taxes, the gas tax, the liquor tax. It may also collect municipal taxes, property taxes, school taxes and so on. It would be like a mega tax man, like a Frankenstein.

People are concerned about that. They are concerned about evolving into the kind of agency that we see in the United States with the IRS, the Internal Revenue Service, in terms of how that agency is out of control and is arm's length from the Government of the United States.

The IRS, by the way, is still a government department in the United States. The IRS is not an agency in the United States. It operates in a very independent and aggressive fashion. I do not know if we want the kind of tax agency they have in the United States in this country, with the Canadian background and tradition we have of trying to work things out between the provinces, the municipalities and the federal government. The vision of the agency is that of a huge taxation agency which collects all taxes.

I have another concern. One of the purposes—and the minister does not talk about it any more—of establishing the agency was to try to blend the GST with the provincial sales tax, the BST or the HST, the harmonized sales tax.

I remember very well the campaign in 1993. I remember the promise made by the prime minister that if the Liberal Party were elected it would get rid of the GST. Do members remember that one? There is a member on the backbench hanging his head in shame; he is crying. At least the member from Hamilton had the honesty and the integrity to say “yes, that is a promise we made”; to resign her seat; and to face her people in a byelection campaign. However the GST is still there. Why has the GST not disappeared? It is a promise the Liberals made and it is still there.

One purpose of the agency was to get around that campaign promise by abolishing the GST, rolling it into the provincial sales taxes across the country and calling it a harmonized sales tax. They floated the idea with the provinces and the only provinces that agreed were the three Liberal provinces in Atlantic Canada: Mr. Tobin in Newfoundland, Nova Scotia—

[An hon. member]

And Quebec.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

The sales tax situation in Quebec changed a long time before the Liberal Party took office. It was a totally different regime. It was initiated by the Government of Quebec and a deal was made a long time before the Liberals took power. The only people that agreed to the harmonized sales tax were in Newfoundland, New Brunswick and Nova Scotia.

One raison d'être of the agency is to push the idea of harmonizing sales taxes. I can say from my trips to Atlantic Canada that the blended sales tax, the HST, is very unpopular. It almost led to the defeat of the Liberal government in the Nova Scotia election just a few months ago. It did defeat the government in Prince Edward Island.

Another concern I have about the bill before the House today is that once the agency is established the pressure will be there. They will put pressure on the provinces to agree to harmonize the tax. Even my friend from Souris—Moose Mountain in Saskatchewan would not agree with the BST. He would not agree with a blended sales tax, and he is a member of the Reform Party.

We have a number of reasons for questioning the bill and I want to summarize them again very briefly. The first is provincial opposition. The provinces do not like an agency that will collect federal and provincial taxes. Ontario has said no. Quebec has said no. The other provinces have not signed on. Saskatchewan and British Columbia are unlikely to sign on. Why would we have this agency, which is supposed to be a federal-provincial agency?

On the question of national unity, with the Quebec election coming up, this is an agency that is supposed to take power away from the provinces rather than give power to them. That is a concern to most members of the House.

Second is the very size of the agency in terms of it developing into an agency like the Internal Revenue Service in the United States.

Third is the whole question of privatization, diminishing the role of government and downsizing the public service. The Reform Party may agree with that. It does not really like government. It does not really like the public sector. That is not the Canadian way. That is not the Canadian tradition. That is one reason the Reform Party is going nowhere. It is taking a stand against Canadian tradition that the public sector is extremely important, a very important part of what makes the country tick. Another reason I want to mention is the lack of accountability. Accountability just will not be there once it becomes an arm's length agency.

Those are our major concerns as a party. I close by saying to the minister and to government members across the way that if four opposition parties have concerns about the bill in these areas, surely to goodness there must be government backbenchers that have the same concerns. They talk to their constituents. They listen to the people. They hear from the unions involved with Revenue Canada and know the opposition of the majority of the unions such as the Public Service Alliance of Canada. They hear from the workers who will be affected directly. They talk to people. Surely to goodness we can have some independent thinking on the Liberal side of the House. They should get up to express some concern that the bill does not go in the right direction.

It is about time we had a parliamentary system that allowed people to take off the muzzle and speak their minds. Surely to goodness we cannot have all the government thinking one way and the opposition thinking another. No wonder people are questioning the sanity of this place and the relevance of the Parliament of Canada. Yet the whips will be on to those backbenchers who talked to me privately. They questioned the bill and the wisdom of the agency but they will not be allowed to say so in the House. They will not be able to vote that way. Let us have a free vote on this issue so that members of the House can express their feelings and the feelings of their constituents.

This should not be a confidence vote. There is no reason it should be a confidence vote. It does not go to the heart of government policy. It does not go to the heart of a government budget. If we have a free vote on this issue we can speak our minds and ensure that we are doing the right thing for the people. I am glad the Reformers agree with that.

The Liberals have talked about free votes time and time again, but in their five years in the House they have not delivered on the promise of a free vote.

I close by making an appeal to the minister across the way. Let us have a beginning of parliamentary reform, a beginning of a true democracy in this institution, by allowing a free vote on an important bill regarding the collection of Canadian taxes.

It is a very important issue. The collection of taxes is a fundamental issue in democracy. It is the prerogative of the state. The role of the state is to collect taxes. I do not want to see it privatized or evolved away to an agency that will be run according to business practices. I do not want to see it turned over to an agency that will not be accountable to the government like it has been in the past. I do not want to see that happen.

Let us have a free vote. If I could ask the minister whether or not he would agree with that, I would be glad to sit down to hear his answer.

[Herb Dhaliwal, Liberal, Minister of National Revenue]

Mr. Speaker, I listened very intently to the hon. colleagues from all three parties and want to address a couple of issues they brought forward.

Canadians have said that they want governments to work together. Canadians recognize that we are overgoverned. Canadians recognize that a lot of overlap and duplication exists in the country. We have listened to Canadians and we responded.

One thing I want to point out is that the provinces have an option. This does not in any way force the provinces to let us collect more of their taxes. We already collect a lot of their taxes. In fact in some provinces we collect 80% of their revenue; in other provinces we collect 50%. The agency is a vehicle to create new options and new opportunities for provinces, territories and Canadians.

The hon. member for the NDP talked about the auditor general's report. That report was before some of the changes I made to give full accountability to parliament and full accountability to the Minister of National Revenue. The comments the auditor general made were regarding the older model without the changes I have made.

Small businesses know the paper burden they have to go through. They know about overlap and duplication. They are asking the government to respond.

There is only one taxpayer in the country. If we could have one tax administration, a single window, we would be better off. Canadians do not want us to build parallel systems in every province as the member from the Bloc Quebecois wants. His view is that it is good but the provinces must collect all taxes.

Small business people would respond to that because they do not want to be dealing with 10 different jurisdictions across the country. They do not want a different system of tax collection in every province. They want a single window approach. They want to reduce paperwork. They want to make sure there is less burden on the business people. Why? It is because we want them to do what they do best, which is run their businesses. We want an organization that can respond to the new needs.

We have electronic commerce now. Someone can sell a good from Quebec into British Columbia. How are we to respond to that? How are we to respond to changes? We need a national agency that can work with all provinces.

The hon. member talked about co-operative federalism. This is in co-operation with the provinces. The provinces say in some cases we are collecting 80% of their taxes but in some cases they do not have any say. This will provide them with a real say by ensuring they can nominate people to the board of the agency. They do not have that now. In some provinces are collecting 50% or more of their taxes. It is really about creating new options.

The hon. member also said this was another way to harmonize. Absolutely not. We are saying that we can collect taxes for the provinces which are not harmonized. Recently I had a discussion with the minister of finance from British Columbia who said “That is a very good idea. We should look at how we can reduce the burden to small business”.

I have had meetings with ministers of finance across the country. We have officials working right now to identify those areas in which we can work together co-operatively when it is a benefit to the province, to the business community and to Canadians. That is what this vehicle is about. It is about creating options and better service for Canadians. It is about providing better service to our small business people.

We are a trading nation. We need to ensure that we are efficient. If we are efficient we can be more competitive in the new global economy. This is about reaching a new vision. This is about working together. This is about responding to Canadians. We will continue to do that as a government.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, I reply to the minister by saying that if the agency is such a great thing for the provinces, why have the provinces not agreed to come at this stage? Ontario has said no. Quebec has said no. There is no agreement in British Columbia and no agreement in Saskatchewan. If this is such a great thing in terms of co-operative federalism, why has there not been a provincial-federal agreement or letters of intent from at least a majority of the provinces indicating that have signed on at this stage?

I can see why some provinces might not want to agree. It is difficult to get unanimous consent of all provinces. Ontario and Quebec alone represent two-thirds of the population. If this is such a great vehicle of federal-provincial co-operation, why has that not happened?

[Herb Dhaliwal, Liberal, Vancouver South—Burnaby, BC]

Mr. Speaker, the provinces particularly in western Canada have asked me for such an agency. They have been saying they want to play a role in the agency. When I met with the ministers from Saskatchewan and Manitoba they asked for such an agency, and we are responding to them.

When the HST was signed in the maritimes one of the requests those provinces made was to have an agency in which they would have a say. We are responding to the provinces. Of course we do not have an agency until we pass the legislation. They want to see what the final wording is. They want to make sure they know exactly what they are getting.

I have had very good meetings with ministers of finance across the country. They have said it is the right direction because they understand the needs of the business community. They understand the needs of Canadians. They know we have to respond to the changes in Canada. We have to respond to the new realities, and that is what the agency is all about.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, if that is the case, I wonder whether the minister can table in the House some letters from the provinces where they certainly will indicate that in principle they agree with the agency, some letters of intent.

We have the bill before the House today. We have a fair number of details. The legislation is there. It has been talked about. We have the bill here in the House at second reading. My experience in this place is that if it is a federal-provincial agency or program, we know exactly where the provinces stand.

I wonder if the minister can table in the House some proof that the provinces are enthused by this, that they like the principle of this, that their intention is to sign on, providing the details live up to their expectations.

This is what he is saying to the House. I wonder if he can table some information to document that fact.

[Herb Dhaliwal, Liberal, Vancouver South—Burnaby, BC]

Mr. Speaker, Manitoba finance minister Eric Stefanson on May 22, 1998, talking about the agency, said western provinces have long advocated a national agency. He supports the concept.

Let me also quote Mr. Ed Blanchard, minister of finance for New Brunswick: “Where there are efficiencies to be gained, I am open to alternatives. There may be areas that, yes, some of our current taxes can be collected in an efficient way by this agency and I have not shut the door on any possibility”.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, these are quotes in the media and we have all seen the media. We have media scanners and so on. What I am concerned about is where is the beef. Where are these letters of intent? Where are the documents that show these provinces are going to sign on, that they like this principle and that they will sign on providing all the details and regulations are okay?

They have seen the bill. They have seen the principles of the bill. They have seen the details of the law. All that is missing are the regulations or any amendments that might be made by the Parliament of Canada.

Even in the constitutional debates we had in the House back in 1980 we knew exactly where the provinces stood in terms of letters of intent. They would be in communication with us. Prime Minister Trudeau could get up and say Ontario supports him and Manitoba does not.

Where is the beef? Where are these letters? Where is all the support the minister is talking about, outside of press clippings?

[The Deputy Speaker]

I am afraid the time for questions and comments has expired.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, first of all I would like to comment on the new entente that seems to exist on that side of the House. Now that Reformers and New Democrats are seated together, they seem to be developing a certain comfort and a certain respect for the principles of each of their parties. Perhaps in the future we might see a unite the light movement in this House in the efforts of co-operative opposition.

It is with great pleasure that I rise to speak on Bill C-43. While the minister speaks of the provinces having greater opportunities to affect control and to have control over the levers of this very important agency than they have now with Revenue Canada, I would posit that the provinces' opposition or at least their lack of approval and their concern with this new agency is an indication that they do not believe that greater power and greater authority will be had by the provinces of the levers of this new agency, this new, if you will, King John Inc. the government is proposing today.

The government offloads responsibilities to the provinces by making draconian cuts to health care, for instance, $7 billion in the last term. The minister said there is only one taxpayer. The provinces and the municipalities have been faced with an ever increasing tax burden as a result of the government's failure to lead and the government's failure to take responsibility for national matters, including issues like health care funding.

If the minister is going to be true to his phrase that there is only one taxpayer, he should recognize the near toxic levels of hypocrisy of his government in effectively reducing spending and offloading responsibility to the provinces. You can offload a lot of things but you cannot really offload leadership. That is what this government has tried to do.

The government proposal to transform Revenue Canada from a government department into an agency raises some very serious questions. Revenue Canada is the largest government department.

At various times of the year it has between 40,000 and 46,000 employees. Revenue Canada has many responsibilities including, of course, primarily the collecting of federal taxes and various fees, harmonized sales tax in three provinces, personal income tax on behalf of nine provinces and corporate taxes on behalf of seven provinces.

The new agency is to assume all these responsibilities and the new agency is supposed to be as efficient as the department was without any increased cost to the taxpayer.

I suggest that unless the provinces buy in, unless the provinces support this direction and this new agency, any claims by the government that this agency will lead to greater efficiencies and save the taxpayer money are specious at best.

The government is saying that we could save between $97 million and $162 million per year if all the provinces participate. That is a very big if at this juncture. Currently the provinces have not demonstrated a significant interest in having Ottawa collect and have more authority in effect over taxes beyond what Revenue Canada does currently.

Ontario is looking to attain greater authority over its tax levers. It cannot simply be said to the provinces that someone is going to have more authority over their spending without providing them with more direct authority over tax policies. Some of the provinces feel this agency may ultimately lead to less. If the provinces are not interested, obviously the agency will not save money or lead to greater efficiencies. The board of management may be yet another bureaucratic layer that will simply lead to increased costs.

Another issue is privacy. Too much information on individuals will be concentrated with one agency which will, as a private agency, be looking to contract out services for auditing and collection and ultimately the tax system may become less confidential than it is now.

We believe very strongly in the ability for private agencies and/or privatization to provide efficiencies but that has to be balanced against the very important delivery of service, particularly the confidentiality of this, the most important area of government in terms of its direct contact with people and the level of authority that an agency, currently Revenue Canada, has on people.

I suggest there is also a significant risk in terms of its use of power for this agency. Currently we have a very direct ministerial responsibility with Revenue Canada. That is a good check and balance. This House is a good check and balance on this government department of Revenue Canada.

There have been studies done on the impact to somebody of receiving a letter from a tax agency saying they are being audited. A tax audit letter evokes about the same level of emotion and fear as—

[An hon. member]

Gallbladder.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

I hear a member opposite speaking of a gallbladder attack. I am not certain whether it has that level of medical effect but it evokes the same level of emotion that a letter of a death of a close relative would. That is the level of impact.

When one receives a letter from Revenue Canada there is the whole idea that as an individual citizen or as the owner of a small business they will be taking on this huge omnipotent force which ultimately has all the levers. It is extremely frightening to Canadians.

There is a fear that this agency will become Godzilla the tax collector and that it will have greater force and less political accountability, which is quite frightening.

As a small business person I received one of those letters a few years ago. I spent about a year and a half defending myself against my own government. Ultimately the government said I was right and it was wrong. However, during that period I spent thousands of dollars on a tax accountant to defend myself. When I consider that, the type of situation which exists with small businesses and individuals across Canada, I fear that this agency could make it worse because we do not have the political accountability of members of this House and the minister who can effectively act as a watchdog over that type of activity and behaviour.

I would argue that while we are dealing with the agency of delivery of tax collection in Canada, we should be dealing in a more holistic way with the whole nature of taxes in Canada. I applaud the Mintz report on corporate taxation which came out two months ago and which I think has some very beneficial and constructive public policy positions that can if implemented help simplify, ultimately flatten and reduce the bureaucratic nightmare that Canadian businesses are subject to in dealing with their own government.

In terms of personal taxes we also need to similarly simplify and flatten to a certain extent tax policy in Canada because currently our tax code is too complicated. There is something fundamentally wrong with the whole concept that Canadians need to hire a tax accountant or in some cases a tax lawyer to simply deal with their own government.

I do not see this agency going a long way to achieving any of these ends. I see it as a symbolic or band-aid approach that arguably will not accomplish a whole lot. It is based on the premise that public servants cannot necessarily provide the same level of competency that a private agency might.

If we create incentives within all our public agencies or departments, incentives that recognize and reward excellence as opposed to encouraging mediocrity, i.e. if we introduce market incentives within the existing agencies, we can achieve economies without necessarily creating new agencies.

This new agency may be an indication of the government's trying to pander to this whole public sentiment that the public service does not do a good job or the public service cannot do a good job. I think that is very unfortunate.

One of the tragedies or one of the losses that we have seen in recent years is that politicians have made gratuitous attacks on public servants without really considering the ramifications of those attacks. One of the damages sustained by those types of attacks has been the low level of morale we have within our public service now. Our public service I suggest is at an all time low in terms of morale. We simply cannot accept that there are not people who want to work within government departments and to succeed, to excel, to be proud of what they do and to provide the levels of service to their country that are important and which in the past have been encouraged. We can make many of the changes necessary within the existing department without creating this new agency.

The provinces are not really interested in having a new agency.

Ontario is looking at increased powers for collecting its own taxes.

The board of management will be just another bureaucratic layer which will add additional costs. We see too much power concentrated in one agency which will have less accountability to parliament and to the minister. The power of authority or information on individual Canadians is going to be extremely concentrated. Again, this agency will be less accountable to parliament than a department and the minister will not be involved in any day to day functioning of the department.

We see current employees who will lose existing rights, including job security and the right to bargain on staffing matters. Keep in mind that there will only be a two year job guarantee and we are effectively dealing with, I understand, about 25% of the public service.

We have to take a look at whether or not this agency would in fact not be more flexible than Revenue Canada, but less flexible in working with other government departments, including the finance department, and the provinces. Because of the need that we have in this country for holistic tax reform, perhaps this is simply not the time we should be creating a separate agency. In fact we need more federal-provincial co-operation, not just on tax enforcement, but on overall tax policy. We need more co-operation between the Department of Finance and Revenue Canada and the provinces.

To take away the political element of that I think would be a huge mistake at a time when we have an unprecedented need for forward thinking tax reform.

Again, I think the government is focusing on reforming tax enforcement. Yes, there are reforms that are necessary. Those reforms need to provide greater accountability, not less accountability. In our opinion, this legislation and this new agency would provide less accountability. Therefore it may be arguably a step in the wrong direction.

Secondly, it may actually increase the barriers to co-operation between the provinces and the federal government and the Department of Finance to effect change and develop a holistic approach to tax policy which will result in a fairer, flatter tax policy which will be more conducive to economic growth and the success of Canadians in the global market.

It was with great pleasure that I heard my hon. colleague from the Reform Party today speaking of a declaration of taxpayer rights or a taxpayer bill of rights. I thought for a moment it was Trent Lott speaking or Newt Gingrich with darker hair. I believe that the hon. member is happy with that comparison.

But the hon. member does strike a chord in terms of the importance of our tax policy in Canada and our tax enforcement practices being less intrusive and more respectful of Canadians.

I was one of those Canadians who did receive one of those tax audit letters one day. My only crime at the age of 22 was operating a small business that employed young Canadians. Ultimately the government agreed with me, but it took me almost two years and thousands of dollars to a tax accountant to defend myself against my own government.

I agree with my hon. colleague from the Reform Party. I would bring to his attention the declaration of taxpayer rights which was part of the work done by a former member of this House and former cabinet minister, Perrin Beatty, who is a forward thinking member of the Progressive Conservative Party. He also saw the need and in fact had some results in improving the level of accountability.

We are talking about issues of privacy and confidentiality, impartiality, courtesy and consideration, the presumption of innocence, and impartial hearings before payment; all of those types of issues.

We have made progress in the past and we have to continue working to make progress in the future on these types of issues.

I do not see Bill C-43 and this new agency as necessarily being conducive to this process. We need to ensure that we do not separate the political will that is necessary to effect change in this very important matter from a logistical body that enforces tax policy in Canada. There is a very dangerous separation that may result in less ability for elected members of the House or the minister to effect change, to control and to have the ability to govern things like abuse of power by Revenue Canada agents and that sort of thing.

It is great to hear the support of members opposite for consumption taxes. We wish they had been more vocal in their support of consumption taxes in 1993 when the Conservative government replaced the counter-productive manufacturers sales tax with the GST, which ultimately was the right tax at that time. It has demonstrated to be a fairer tax than many of the income taxes and other taxes that this government seems comfortable with.

I should not criticize the government for having adopted sound Conservative polices. The only thing worse than it having shamelessly taken those policies from the previous government would have been if it had implemented its own. The consequences of those would have been far more egregious and detrimental to Canadians. I am making a muted criticism of the government for taking our policies, but I want to commend it on its judgment for having done so. It took this government longer to learn and absorb the benefits of sound economic policy. Perhaps it did not catch on at the time of the 1993 election. However, it has since accepted those measures, including free trade and the GST.

I ask the minister to work very hard to implement many of the recommendations of the Mintz report on business taxation. On the personal tax side we need similar reforms that simplify and flatten our tax code. I hope we devote our energies to that type of approach and to those types of very important public policy initiatives and less time on bureaucratic window dressing changes that ultimately will result in King John Inc., but will not necessarily make any difference in the way tax policies are enforced or implemented, which may result in even larger problems in the future.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I gather that the Minister of Revenue has decided not to engage my colleague from Kings—Hants in his comments on the minister's bill, which is unfortunate.

The hon. member spoke about the need for tax reform. I share his concern, as I expressed at the conclusion of my remarks, that this government seems to be more concerned about figuring out how it can most effectively pluck the goose—that is to say, the taxpayer—rather than how it can provide real tax reform to create real incentives for people to work, to save, to invest and to compete.

Could the hon. member enlighten us as to how he would, in broad terms, reform the tax code which right now imposes such an enormous burden on Canadian taxpayers?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, how many hours do I have for this response?

I thank the hon. member for his question.

I have a problem with a number of the Pavlovian tax policies of this government; the whole idea that government, by picking winners and losers, and by encouraging one type of activity and discouraging others, will in fact make decisions which cause or channel energies and economic focuses in one direction or another.

I think, frankly, that individuals participating in a free market can make those decisions best and that government intervention in making some activities more profitable, or some activities less profitable through a tax code, is in fact evidence of government trying to effectively control populations and individuals. I do not have an awful lot of faith in politicians when it comes to economic policies.

I would suggest that we make personal taxes in Canada more neutral in terms of their treatment of activities, that we treat the tax code as a means to raise revenue, not as a means to control Canadians, and that we also look seriously at reducing the disincentives that exist currently with the tax brackets which actually punish success.

While we should be trying to encourage success, we actually have punitive measures built into our tax code to punish success. That is perverse in a country where we are competing globally. We should be encouraging our Canadian citizens not only to compete, but to succeed globally.

We have a tax code in this country that causes people to be less competitive, less focused on success and, frankly, more frightened of their own government.

In terms of tax complexity, doing your taxes is the only do-it-yourself project that exists where if you do it properly you could still end up in jail. There is an inherent unfairness, not just on the enforcement side of it, but in terms of the whole nature of the tax code. I call it the Pavlovian nature of the tax code.

It is very important to let businesses and individuals make their own decisions. I think that would be a step in the right direction. I also believe that consumption taxes are less destructive.

I just criticized the Pavlovian tax policy, but there are some public policy initiatives whereby we can ensure that the cost of some behaviours are accounted for at the time, in terms of internalizing the externalities of people's behaviour. We can use a tax code to do that.

There are a number of areas that need to be discussed, but the Mintz tax report actually does a lot of it. The recommendations are fairly sound on a business level. If we were to apply some of those principles to the personal side, I think we would go a long way to effecting change and to introducing a greater level of fairness, equity and incentive for success for Canadians in the Canadian tax code.

[Beth Phinney, Liberal, Parliamentary Secretary to Minister of National Revenue]

Mr. Speaker, this is my first speech since being named parliamentary secretary to the Minister of National Revenue and it is a pleasure to speak on an issue so fundamental to improving service and fairness for Canadian taxpayers.

It is a pleasure to speak on a bill which seeks to uphold Canadian values while meeting the realities and opportunities of the modern era.

We live in a world of major economic and technological change. We live in a world where citizens rightly expect more creativity, accountability and efficiency from their governments.

In this world, businesses and individuals must constantly strive to find new ways to make even good things better and so must governments.

That is the real reason behind the creation of the Canada customs and revenue agency. We want to preserve the traditions of the past but we also want to develop an innovative environment that will allow us to be the best for many years to come.

Taxation, customs and the administration of trade policies represent complex areas dependent upon a great many people who do many things and do them well.

We are going to improve how we do things, even the things we already do well.

As the minister indicated so clearly in his speech, this bill is about fairness. It is about partnerships. It is about accountability. It is about saving money for taxpayers and is about modernizing our approach to meet the expectations and aspirations of Canadians.

The Minister of National Revenue will be responsible for the agency to parliament. He will continue to be responsible for administering and enforcing program legislation such as the Income Tax Act and the Customs Act. The minister will have the authority to inquire into issues raised by members of parliament on behalf of our constituents.

The minister outlined before this House the structure and duties of the board of management. Having private sector people nominated by the provinces and territories will change the system for the better. It will guarantee even more opportunities for federal-provincial co-operation. That is what Canadians expect from governments. That is what Canadians expect from elected officials.

The true measure of success for the new agency will be in its operations. We want, as the minister said, an organization with a state of mind that is state of the art. The real change will be in our approach to doing business and our approach to serving Canadians and providing them with tax and trade administration services that are second to none.

The agency we are proposing is built upon the guiding principles of service and fairness. Canadians have told us what they want. They want to deal with a more client oriented tax and customs administration. They want more personal contact and less passing the buck. They want consistent answers. They want to deal with an organization that is flexible, one that can accommodate a range of human situations.

Canadians want us to make their lives a lot simpler, from bulletins issued in plain language to business hours dealing with modern realities of working families. Agency status will allow us to improve service to Canadians by affording more flexibility in the way we manage resources.

Our generation is one that often embraces technology as a panacea for any operational challenge. In truth, technology has been a great partner in improving the way Revenue Canada does business. From electronic filing, to virtual customs approvals, to Canpass, the pre-approved pass for frequent travellers, we have used technology to improve service and to reduce costs. For every technological change though, there are far more important and real human values and principles at work.

The most important of these principles and values are trust and honesty. It is also important that complete and transparent information be provided to those we serve.

Those values and principles require that we show fairness in application and of course they require that we show consistency, accuracy and efficiency in every single transaction.

The bottom line is that human resources in the new agency will determine whether it will be leading edge and world class or just another shuffle of organizational charts. That is why we have made the management of human resources a central focus for modernization and progress.

The minister has consulted widely with Revenue Canada's employees. Since April 1997 over 10,000 of them have been actively involved in telling him how to create a new human resources framework. These hardworking public servants are decent taxpaying citizens like the rest of us. They have stressed the need for human resources management based upon values and principles, not complex rules and processes. They see the importance of simplicity and flexibility. And they want their own worth to be recognized, appreciated and respected.

It is no surprise that what our employees want, values, principles, simplicity, flexibility, recognition and respect, are what all Canadians want. Acting on these human expectations will be the true breakthrough for the new agency.

The bill before us proposes that the bulk of the human resources management functions be assumed by the board of management of the new agency. Under the legislation before the House today it will be the board of management of the agency that approves the negotiating mandates and collective bargaining agreements with unions, not the federal Treasury Board. It is the agency that will negotiate directly with its unions.

Why should the agency not negotiate with its unions? Employees will be able to tell their representatives what they want, what they think is good for them, their futures and their careers. By negotiating face to face with employee representatives, the agency's managers will hear firsthand the wishes and concerns of their people. They will be able to act firsthand on those wishes and concerns.

It is also the board of management that will establish agency staffing procedures, not the Public Service Commission. The agency will have the flexibility to design a staffing system that directly meets the needs and rightful expectations of taxpayers and the needs and rightful expectations of the employees. This is a vital advance. A simple example will show why.

As many in the House will appreciate, the employment market for computer systems and data management expertise is highly competitive. Currently it takes Revenue Canada between six and 12 months to complete a staffing action and make an offer of employment. Under the agency it will be possible to develop new staffing systems as well as a classification system and salary rates that can compete with the private sector for the professionals we need.

I will point out something else that is very important. Revenue Canada will not be privatized. The agency will continue to be an integral part of the Government of Canada's responsibilities. Employees will continue as public servants. The agency will be accountable to parliament for how it treats its overall responsibility to employees.

Five human resources design teams made up of managers, employees and union participants have completed their work on the details of important areas of the people part of the new agency: staffing and classification, recourse, training and development and employment equity. Each of these important issues is on the table for discussion. It is still too early to report to the House on what is essentially a work in progress.

However, as a result of the work of the design teams, I can tell you what Revenue Canada employees want. They want a staffing system with fewer rules. They want a gender neutral classification system. They want fewer occupational groups and levels. They want the human resource system and the work environment to encourage diversity and reflect the Canadian public they serve. They want greater emphasis placed on transferable skills and past performance. They want a simple, quick and fair system of recourse.

The agency structure that we propose will allow us to accommodate these demands. We have to co-ordinate and simplify our human resources processes so that the right person is in the right place at the right time. That is not only a matter of staffing. It is also a matter of training and development, of improving the way we work, for example, more flexible hours or flexible places of work, including work at home. It means finding ways to attract people to the jobs that need doing.

I can assure you that all Revenue Canada employees will be offered a job in the agency. They will remain public servants during and after the transition. Collective agreements in force at the time of the start-up of the agency will be carried over until they are renegotiated.

I can assure the House that all Revenue Canada employees will be offered a job in the agency. They will remain public servants during and after the transition.

Because my French is not too good I will repeat that in English because it is very important and a point that has been brought to me quite often by constituents. Agency employees will retain the same access to jobs within the public service that they now enjoy through deployment, appointment and competition.

From a human resources standpoint, the operative word is opportunity. The Canada customs and revenue agency will create a whole new set of opportunities, new types of programs and services, new working relationships and new ways of doing work. All of this means better jobs for current employees, jobs that will be more responsive to what our clients want, jobs with substance, jobs with a future.

This is not an effort to downsize the department. This is not the intention and has never been the intention. Rather, our aim is to provide Canadians with better service, the type of service they should expect from government, the type of service their hard earned tax dollars give them the right to expect.

The public servants who work at Revenue Canada are very practical people. They deal with real life situations every day of their working lives. They know what Canadians want.

They know that Canadians want even more effective and efficient service. They know Canadians want more co-operation among governments. They know Canadians want one-stop shopping. They know Canadians want streamlining of administration. They know that Canadians want tax compliance to be easier and less costly. They know that Canadians expect promptness and fairness.

They know that in an era of logarithmic change, governments must change the way they serve our citizens. They know that the public interest must always come first. They know governments must reduce overlap and duplication. And they know that the new agency will save taxpayers tens of millions of dollars.

The principles of the bill before the House have been endorsed by a lot of associations: the Canadian Importers Association, the Tax Executive Institute, the Canadian Institute of Chartered Accountants, the Canadian Society of Customs Brokers, the Alliance of Manufacturers and Exporters, l'Association de planification fiscale et financiére, the Canadian Bar Association, and the Canadian Federation of Independent Business.

Those groups know that the Canada customs and revenue agency can be the vehicle for taking a group of highly skilled, highly motivated people to an even higher level. Those groups know, as our employees know and as all Canadians know, that governments must move to provide better service, fairer service and smarter service to taxpayers.

I urge this House to pass this bill without delay so that all Canadians can benefit from the opportunities and advantages presented by this new agency and the strength of its thousands of hard working employees.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I was interested to hear the hon. member's remarks. She discussed the notion that Bill C-43 and the adoption of the revenue agency would provide the government with greater flexibility in the administration of human resources in Revenue Canada.

During my remarks I presented an opinion from the Library of Parliament. It indicated that such flexibility in human resources administration could be achieved without adopting the agency but simply by making statutory changes to the Public Service Employment Act and other laws governing the Public Service Commission.

I would ask the hon. member two questions. If she is so in favour of such flexibility for the management of Revenue Canada—and I favour such flexibility and do not support the burdensome and bureaucratic regulations of the Treasury Board for employment—does she not support it for all departments? If so, why does the government not amend the Public Service Employment Act and other related statutes to give all government departments and all ministers the same kind of marvellous flexibility in human resources management of which she speaks in the agency?

[Beth Phinney, Liberal, Hamilton Mountain, ON]

Mr. Speaker, I thank the hon. critic of the official opposition. I have a lot of respect for this member. Although he is one of the youngest members we have in the House, he is an acknowledged expert on tax. However he is not the only expert on tax. There are many other experts on tax who agree with the agency.

It is interesting the question the member asked me has to do with other departments and not to do with revenue. I am not sure if that means he has no criticism of the agency and is suggesting that I talk about other departments.

I would like to make more comments about the bill. This morning when the hon. critic of the official opposition was speaking, he suggested, I think somewhat sarcastically, that the minister had taken several years to put the bill together and to get it before the House today.

This suggests that maybe the member does not think we should be consulting Canadians. That several years was time that we took talking to individual Canadian taxpayers. We talked to particular groups concerned about taxation, whether it was accountants or tax collectors, et cetera. We talked to the provinces about how they felt about it. Some of them are using the services right now.

I cannot imagine it, but if the Reform Party were to be in power I am sure it would not just draft a bill, put it out there and never consult with Canadians. This is why we needed the two years.

The bill has changed a lot in the last two years. It is because we listened. The minister has listened. We have changed the set-up of the bill. This is where we are now more accountable. The minister will now be accountable to all Canadians. All members of parliament will still be able to bring their problems to the minister.

[Gilles-A. Perron, Bloc, Saint-Eustache—Sainte-Thérèse, QC]

Mr. Speaker, my hon. colleague opposite said she had spoken to representatives of all provincial governments. If that is true, why can no memorandum of agreement between governments or anything of the sort be produced in the House? Our understanding is that the Government of Manitoba is the only one to think it might be worth looking into.

I would like the hon. member to comment on this and to substantiate the claim that the federal government has entered into agreements with Ontario, the maritimes, Quebec, and so on.

[Beth Phinney, Liberal, Hamilton Mountain, ON]

Mr. Speaker, I think the minister already answered that question today. He mentioned that in a number of provinces we were collecting over 50% of their taxes and that in some provinces we are collecting 80%. This practice is already being used by some provinces.

I think it would be logical to wait until the agency is an agency. Then I think we would see the different areas that want good service in collecting their taxes will be coming to the federal government and asking us to collect their taxes for them.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I appreciate the member's kind words, qualified that they may have been. However, I note that she did not really address the question I asked about why the government had decided to adopt the agency when it could have achieved the same flexibility through statutory changes.

The hon. member made two contradictory statements which have been consistent in the government's promotion of the bill. First, she said that there would be no job losses, that all 40,000-plus Revenue Canada employees would be guaranteed a position. She also spoke at length about efficiencies and cost savings.

Since over 80% of the expenditures of the Department of National Revenue are in payroll, how will the government achieve cost savings and efficiencies without reducing the number of positions?

It could be that I only have experience in the private sector, but I understand that when we reduce payroll it means there are fewer positions and if we do not reduce positions we do not reduce payroll. Perhaps the member could clear that up for me.

The second question I have is with regard to her comment that Revenue Canada is filled with highly skilled and motivated people. No doubt they are, such as the highly skilled and motivated tax collector who decided to drag Janice Collingridge, the low income, non-verbal quadriplegic, into the tax court to shake her down for $5,000 in back payroll taxes that she did not really owe.

How can we be assured that under the structure of the agency these kinds of outrageous abuses on the part of Revenue Canada officials will not happen again?