Debates of Oct. 21st, 1998

Canada Customs And Revenue Agency Act

[René Canuel, Bloc, Matapédia—Matane, QC]

Mr. Speaker, I listened carefully to my colleague and I realize that, when there is a real problem, the government comes up with an agency or committees. It always puts the problem off.

In my opinion, governing means having the courage to introduce effective things and not to try to double or triple certain organizations.

On the subject of the agency. I would ask my colleague how it could do better and how it should be set up so that it will be really effective, not for the government, but for our fellow citizens.

[Jim Abbott, Reform, Kootenay—Columbia, BC]

Mr. Speaker, I suggest within the legislation as it is presently written there is the possibility for improvements on what is presently going on with respect to the fact that we have such a giant bureaucracy and it comes under the public service rules and so on and so forth.

We see some light in this legislation. The legislation is not all dark. But the difficulty is that if we are going to go ahead and proceed to pass this legislation, as I am sure the government will, we have not done away with the threat, and I use that word advisedly, to ordinary citizens and ordinary law abiding taxpayers who feel threatened by Revenue Canada. These citizens are going to feel equally if not more threatened by this agency because the government has not corrected the problem.

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

Mr. Speaker, I am pleased to rise to speak to Bill C-43 at second reading. This bill creates the Canada customs and revenue agency. What is this bill all about?

The Minister of Revenue is proposing to change the existing structure of the Department of Revenue and make Revenue Canada an agency that is quasi independent of the government. It would have the job of collecting taxes, and not only for the federal government. The government is also proposing that this new customs and revenue agency negotiate agreements to collect taxes of all sorts, including sales and real estate taxes, with the provinces and even the municipalities, which, it must be pointed out, come under the provincial governments.

The government wants to create—Revenue Canada is already an imposing structure—a bureaucratic monster whose tentacles will extend as far as municipalities. It does not, first of all, make any sense to create this sort of bureaucratic world. It is worthy of the fertile imagination of senior Revenue Canada officials, who want to keep, and not only keep, but increase their power at the expense of a minister, who is malleable and weak and who allows senior officials to do his job and make his decisions for him.

The creation of this agency is also an act against the unions and the workers of Revenue Canada. The transfer of Revenue Canada's responsibilities to a quasi independent agency would displace 40,000 workers, or some 20% of the public service. These workers would no longer be protected by the Public Service Employment Act. And so, within two years, these workers could be the victims of the senior officials.

These senior government officials have already been awarded wage increases of 19% while public service employees had their salaries frozen for several years. Wage cuts were even imposed in some cases.

With this agency, 14,000 workers are excluded from the Public Service Employment Act, while Revenue Canada tycoons—that is the senior officials, as the minister has hardly any say left in the matter—are given the power to treat these workers as they see fit.

Do you have any idea of the huge amount of confidential information that will be processed by this agency operating almost at arm's length from the government if such a bureaucratic monster is established to collect all the taxes it wants from the provinces and municipalities? Knowing that the confidentiality of information, an issue to which Canadians are very sensitive, is jeopardized by the fact that various databanks change hands to accommodate the changing needs of companies, one can wonder what will become of data confidentiality with an agency like this one, which will be less accountable to Parliament and to the minister than Revenue Canada currently is.

The Canada Customs and Revenue Agency is a flagrant example of senior officials' thirst for power. As I recall, less than three years ago, the auditor general revealed a scandal that we in the Bloc Quebecois had denounced in the 1993 election campaign: the family trust scandal.

About three years ago, the auditor general indicated that, on December 23, 1991, around midnight, without consulting their ministers or even being accountable—no need to establish an agency for that purpose—senior officials from Revenue Canada, Finance Canada and Justice Canada decided to transfer $2 billion in family trusts to the United States without collecting a penny in tax.

If the senior bureaucrats at Revenue Canada, at the Department of Finance and at the Department of Justice were able to do that under the existing framework, you can imagine what would happen with this Canada customs and revenue agency, with a quasi-independent body that would not be accountable to parliament. Members should ask how many such cases would go unnoticed, without parliament being informed of these scandals and of these decisions by senior bureaucrats, who would then control the collection of taxes and all the data bases containing confidential information on Quebeckers and Canadians. It makes no sense at all to delegate so much power to bureaucrats.

Where is the support for this agency? The government should table, along with the bill, the agreements signed with provinces and municipalities. No such agreements have yet been signed. The government is creating a bureaucratic monster. There are no agreements to implement, but hundreds of public servants have already been assigned to work on the new agency and design the new system that the Minister of Revenue wants to impose on us.

This legislation has no support. Quebec and Ontario have opposed the bill. Even the western provinces which, at first, seemed lukewarm to the idea, are now opposed to the establishment of the agency. Where is the support?

It is the same thing in the private sector. The Canadian Federation of Independent Business opposed the creation of a quasi-independent Canada customs and revenue agency. The Canadian Federation of Independent Business indicated that 40% of the businesses that participated in a study sponsored by Revenue Canada and conducted by the Public Policy Forum see no point in having this agency, while over two thirds of these businesses feel that, with such an agency, the costs relating to their dealings with the department would be higher than they are under the existing structure, or similar. In other words, things would not change, except perhaps for the worse. The bill also provides for the establishment of a board of management.

It would be in addition to the existing structure of Revenue Canada. It would be transferred to the agency. An additional level of administration is thus being created. It also gives the Revenue Canada mandarins the freedom to pay themselves salaries comparable to those in the private sector.

They are given this latitude by clause 30.(1), which reads as follows:

1. (1) The Agency has authority over all matters relating to:

(a) general administrative policy in the Agency;

(b) the organization of the Agency;

(c) Agency real property [—]

(d) personnel management, including the determination of the terms and conditions of employment of persons employed by the Agency.

Without consulting the Minister of Revenue, they will be free to determine the terms and conditions of employment of the 40,000 workers who will be exempted from the Public Service Employment Act. They will also be able to pay themselves astronomical salaries comparable to those in the private sector. What fun they will have, our mandarins. They will increase their powers for the personal satisfaction of having complete control. Clause 30.(1) also leaves them free to give themselves salary increases. This is ridiculous.

In addition, by creating a quasi-independent agency, the government is increasing the chances of fraud and the risk that confidential information will be sold. There is a lucrative market for such information right now in the private sector.

There are no benefits to creating such an agency. We do not understand why the Minister of Revenue and the Liberal government are so bent on going ahead with this plan.

In conclusion, we will continue to oppose the creation of this agency, because it makes no sense. It offers nothing, but may well carry a very high cost for taxpayers, especially when it deprives them of their democratic right to have a minister accountable to Parliament.

When there are problems, as there often are in our ridings—my Bloc Quebecois colleagues have encountered them, as have I in my own riding—problems having to do with the administration of taxes, or incorrect rulings on the part of Revenue Canada, we will no longer be able to question the minister. He will reply that the agency is calling the shots, that it is quasi-independent. He will no longer have any say, and democracy will suffer.

Service to Quebeckers and Canadians will be weakened by a puppet minister, one with no powers and no backbone, trying to stand up to the Revenue Canada mandarins. They want the power, the money and the power that that money brings.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I am glad to have the opportunity to speak to Bill C-43, a bill which I believe will have profound effects of my community of Dartmouth.

This bill will convert Revenue Canada, a government department accountable to parliament through a minister, to a separate agency with authority which for most other departments and agencies is vested in Treasury Board and the Public Service Commission.

This to me is another example of this government's determination to privatize public services. We have seen the Department of Transport privatize airport services, we have seen the privatization of ports, of services in our military, of training, of postal services. The government now wants to privatize the collection of our taxes.

Generally speaking I reject the notion that the private sector is somehow better than the public sector. There is no proof to that contention and it just does not make much sense to me.

Recently I had the opportunity to meet with representatives of the workers currently in Revenue Canada who represent the union of taxation workers. They were in my office in Dartmouth last week. They presented me with some material which was quite disturbing and very educating on this issue. I am a firm believer that many of my best ideas I hear from my constituents and I would like to put some of this background material on the record:

When the notion of the Canada customs and revenue agency was first mentioned in the 1996 Speech from the Throne, it was presented as a cost effective, more efficient vehicle for improving service to the public. With the primary mandate to assume tax administration and collection functions from provincial and municipal governments, it was also touted as a means of strengthening the Canadian federation and contributing to national unity.

We submit that the events have overtaken the agency concept to the point that it fails to meet its stated objectives. The agency cannot now be justified on the basis of either bureaucratic efficiency or cost effectiveness. Its original business plan is in tatters. Its supporting arguments are riddled with contradictions, misstatements of fact and flimsy rationalization. The concept of the Canada customs and revenue agency is bad policy and should be stopped before it starts.

Their document continues to discuss how the original idea for the agency was to implement the HST across Canada.

I know about the public attitude to the HST, which people in Dartmouth still call the BST with a heavy emphasis on the BS. The size of the 1998 Nova Scotia Liberal caucus shows strongly how Nova Scotians feel about this tax.

However, the fact that there is no mood for expansion of this tax in this country, nor is there a single agreement with any other province for the implementation of this mother of all taxation agencies, shows how far the government has misread the country on the question surrounding Bill C-43.

Why is the government doing it? I think it just likes to privatize. It thinks it pleases its business friends. However, in this case even that call seems to be the wrong one.

Going back to the same document, I quote:

The business community was supposed to be the biggest beneficiary of the new Agency. However, doubtless to the dismay of the Agency's bureaucratic backers, the response has been ambivalent. Small business organizations—such as the Canadian Federation of Independent Business—are particularly leery of the massive, centralized power the Agency would possess.

A full 40 per cent of business respondents to a Public Policy Forum study, commissioned by Revenue Canada, saw no advantage to the Agency. More than two-thirds thought it would either increase or maintain their costs of dealing with the Department as currently structured!

The administration of tax, an ancient right which has historically led to events such as the Magna Carta and the American revolution, will be hidden away in a separate agency which a minister will be responsible for sort of. After all, he does not run the agency and does not manage it on a day to day basis, so his accountability will be indirect.

It is bad enough to have witnessed the solicitor general recently covering for the Prime Minister about APEC, but if Bill C-43 passes we will see the Minister of National Revenue covering for an agency which is run by a board of directors that he does not even select.

Parliamentary democracy is based on ministerial accountability to parliament. However, with the Liberals' obsession to grab more power another principle is expendable. If this bill is passed it will be five years before this House will look at it again. A lot can go wrong in five years.

The people of Nova Scotia rejected the government in a rather absolute fashion in the last election and one of their main concerns was the HST. The fact that the government would bring in this bill, partly based on the theory that the HST will become a reality in all provinces, suggests that this bill is fatally flawed from its conception.

There are other very sneaky parts to this bill which must be mentioned and must be put into context with other power-grabbing Liberal policies.

This new agency will have the power—in fact one could see this as a responsibility—to impose user fees on Canadians who use tax services. They could start charging us a user fee to obey the law and pay our taxes. This is a ridiculous notion. It is also a mean notion.

This Liberal government did away with our universal safety net when it abolished the Canada assistance act. As a result of this action and the deliberate underfunding of health, post-secondary education and social assistance transfers to the provincial governments, means testing has become an increasing fact of life for the increasing multitude of poor in our country. To be eligible for many provincial programs, catastrophic prescription drug programs, student bursaries and some welfare services, the applicant must produce their tax records from the previous year.

It may come as a shock to the cabinet, which seems to see the world through corporate eyes, but poor people do not have accountants. One of the few things Canadians can still get from their federal government without charge is their tax assessment from the previous year. They just go into the office, show their SIN card and great public service employees give them great service. They then can go to their underfunded provincial programs to receive basic services.

I believe that under the new agency proposed in Bill C-43 poor Canadians will be asked to pay for their tax records, a charge some will be unable to pay. This will place their access to other programs at risk and make life even more difficult for them and their families.

The reality of the Liberal government is that it believes Canadians are best served by quiet cabinet orders, by a contracted out public service with no regard to actual service to the public. That is what Bill C-43 is all about.

The overall power grab is further seen by yanking the chain on independent and well-loved agencies like the CBC and the NFB, placing them under direct cabinet control as proposed in Bill C-44.

I will candidly say that Bill C-43 is flawed, as the overall thrust of this government is flawed. On behalf of the thousands of citizens and their families in my riding who work for Revenue Canada I will oppose this bill. I believe it is a wrong-headed bill. I would like to see it defeated.

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Mr. Speaker, it is a pleasure today to speak in the House not necessarily about some of the provisions that are in in Bill C-43, but rather the lack of provisions.

Bill C-43 would establish the Canada Customs and Revenue Agency and would amend and repeal other acts as a consequence.

There is a myriad of things that could be done to improve the taxation system in Canada. Every member has a list of grievances from constituents as long as their arm. They stretch from some of the more mundane things, such as HST taxation in Nova Scotia, which is very important to those constituents, or the GST, all the way over to tax free electronic transmissions which amount to trillions of dollars per day throughout the world.

Perhaps this bill should not be thrown out entirely, but there are huge pieces that should be rejected because of what it does not do. I am not proposing that we throw the baby out with the bathwater; I am proposing that we take a look at really doing something with taxation in this country that would benefit individuals, the men and the women who elect us to represent them in this House of Parliament of Canada.

I would like to speak directly to one issue mentioned earlier by the hon. member for Kootenay—Columbia. That issue brought a little relevance to this discussion. It is the issue of capital gains.

I rose earlier in this House and reported to members that capital gains is a very unfair tax because we are taxed on income that we have worked all our lives for and we have already paid tax on. I find capital gains to be despicable. That is the only word I can use to fully explain it.

There is a lack of direction. We have put questions in the House to the Minister of Finance on capital gains taxation on private woodlots in Canada. Those questions were simply put aside as if they were of no importance. They are of importance to the more than 450,000 private woodlot owners in Canada.

Private woodlot taxation has never been looked at as any type of issue in Canada. It has never been looked at in a realistic way to, first, improve revenue on woodlots for the people who own them and, second, to actually generate, in the long term, more revenue by producing more jobs, thus producing more revenue for the Government of Canada.

We have a real problem with capital gains taxation on private woodlots which take 40, 50 or 60 years to grow. It is beyond the realm of this government and many governments before it to imagine the scope of it. Unfortunately, most politicians think from election to election and do not look at the future. We try to encompass that once in awhile. Sometimes we are partially successful in doing it. But we do not do a good enough job at it. Capital gains taxation on private woodlots is one way we could come to grips with some of the issues.

If it takes 40, 50 or 60 years to grow a woodlot in this country, in many instances there is no income derived from that woodlot for 40 years.

All of a sudden the woodlot owner finds himself or herself with a windfall gain against which they do not have the opportunity to claim any, or very little expense.

Unless they are a farmer they do not have the option of taking the $500,000 capital gains exemption. They have the same capital gains exemption of $100,000 that every ordinary citizen in Canada has. It is inadequate. It does not cover the cost of fibre on the woodlot today, which has increased dramatically.

A private woodlot of approximately 125 acres, or 50 hectares, 20 years ago might have generated $80,000 or $90,000 worth of stumpage. Today that might generate $500,000 worth of stumpage. There is no comparison. The government may as well wake up now and find a way to accommodate that in our taxation laws.

There should be a method, there should be some utilization of that income, where it can be put back into the ground, the forest, the farm, the woodlot and the expenses that will be incurred over a period of perhaps 20 years after harvest will be incorporated into that tax gain over time.

That has not been approached. I have certainly discussed it directly with the minister. There has been no attempt to accommodate anything like that. The Canadian Private Woodlot Owners Association and certainly the private woodlot owners association in the Atlantic provinces have lobbied the minister very diligently to do something positive about it.

We are facing all kinds of crises in our forests. We have WTO obligations that we have to live up to. We have unfair trade practices going on in the U.S. and discrimination against softwood lumber products. We have ISO 14000 certification. We have the stewardship of forests in Canada certification.

All of these things are being put on the shoulders of private woodlot owners and forest companies in Canada and the government is refusing to allow any kind of a tax break to deal with them. It is refusing to back down on its capital gains for private woodlot owners.

In order to certify a property and have sustainable forest management, how can that be done as a woodlot owner in any province of Canada? If the woodlot was inherited or purchased 30, 40 or 50 years ago and now has a harvest of timber that will probably be valued in the hundreds of thousands of dollars, there is no way to claim that. There is no incentive for the owner to put anything back into the forest. That man or woman is facing a discriminatory tax regime against progressive forest management.

It is like a cat or a dog chasing its tail. It goes around and around and around. Somehow, some way, we have to get the message through to the government that it needs to deal with the issues of the day, the issues that are important to all Canadians, the issues that create jobs in the country and not simply go off on some tangent and revise the entire financial act or the entire Revenue Canada act. There are other ways to do it.

I am not proposing for a moment that the system we have is the best system we could have, but these changes do not incorporate the very real changes that are needed in order to produce income, especially for private woodlot families, farm families and individual investors in this country, so that they could put money back into their woodlots and have a sustainable forest to meet the ISO 14000 guidelines, to meet the forest stewardship of Canada guidelines and to continue to export lumber as we have done for 500 years.

I wish for just a brief moment that the government would look at some of the possibilities that are in front of it instead of going off and trying to write the map from scratch. It is not dealing with the issues.

[Paul Mercier, Bloc, Terrebonne—Blainville, QC]

Mr. Speaker, the Canada Customs and Revenue Agency is not the first agency the federal government has set up to take over its responsibilities. There have been a number of others, and we end up wondering why exactly Ottawa created these agencies.

To get to the bottom of the matter, I would like to cite a number of other recently created organizations Ottawa has delegated its responsibilities to, and by trying to find out what these creations have in common we may perhaps discover the profound reasons for the government's creating them.

One of them is Aéroports de Montréal. ADM, we will recall, decided to move international flights from Mirabel to Dorval, thus shelving a public investment of $2 billion and throwing the regional economy into chaos. The status of ADM is such that it has never had to publicly justify its decision.

I asked the minister about this, and he said, in substance, although not in these terms, naturally, “I wash my hands of the matter”. This is the Pontius Pilate type response so perfectly offered by the Prime Minister when he said “We can drop one of the two airports, this is not going to cause me to lose any sleep”. Obviously, had ADM not been created, the Minister of Transport would not have been able to treat the matter so offhandedly.

Nav Canada, another creation by Ottawa, is another private organization, which manages aids to navigation. Nav Canada does not have to justify its decisions either. If, some day, Nav Canada decided to remove the control tower at an airport, it would not have to justify its decision, even though public interest would be involved.

Again, in that particular case, if the federal government had retained its powers, it would not be so flippant in its answers and it would have to justify its decision.

Another good example is the millennium scholarship fund. As we all know, the federal government reduced its transfers to the provinces, including those for education, and it used the money saved to establish this millennium scholarship fund, obviously for political visibility. Here again, the body that will manage the $2 billion in public money will not have to justify any of its decisions.

These three initiatives are similar in that the federal government can act like Pontius Pilate, not provide any explanations and avoid the obligations it had in the past.

The customs agency seems to be structured along the same lines. It will not be accountable, even though we are told the minister will remain in charge, or that he will at least have the right to question its management.

The fact is that, by creating this agency, the federal government is avoiding responsibilities that it would otherwise have, as evidenced by clause 8 of the bill. Under this provision, public servants will not be governed by framework legislation such as the Public Service Employment Act. This means that 40,000 public servants, or 20% of the federal public service, will be at the mercy of the agency's board of management. The directors of the agency will certainly earn more than the department's senior bureaucrats currently do, but who will pay for this? It is the support staff, the record processing workers and others, in fact the majority of employees. The government is privatizing part of the public service.

When the minister is asked about this, he will say “I wash my hands of this. It's the agency, not me”. It is all very well for the minister to say he will retain a degree of control over the agency, but the same bill also states that the minister may authorize the commissioner or any other person employed or engaged by the agency to exercise or perform on the minister's behalf any power, duty or function of the minister under any act of parliament, with the exception of making regulations. In other words, this is an agency within the hands of a super-bureaucrat who is neither elected nor accountable.

We cannot really see what the public stands to gain from the creation of this agency. We do, however, see what those in power hope to gain from it. Once again, an opportunity to wash their hands of something. Once again, an opportunity to slough off any obligations for transparency they would have otherwise.

Once again, as well, an opportunity to play their favourite game of finding jobs for cronies, because clauses 15, 22 and 25 create a 15-member board of management. These, with the exception of the chair, the commissioner, a deputy commissioner, are appointed for three years from a list of recommendations. The chair, commissioner and deputy commissioner are appointed by the governor in council for a term of five years. Great jobs for political staff.

There are no longer any limits to the Liberals' arrogance. They are side-stepping obligations which any normal government assumes and preserves, since they are almost royal in nature. This federal government, however, is side-stepping them for the reasons I have given.

To be objective, however, I must state that there is one advantage to this bill. That advantage is that it will be even more help than ever in convincing Quebeckers that the only solution for getting out of such a rotten regime is sovereignty.

[Gordon Earle, NDP, Halifax West, NS]

Mr. Speaker, I am pleased to rise this afternoon to speak on Bill C-43, an act to establish the Canada customs and revenue agency and to amend and repeal other acts as a consequence.

Just to set the tone for my remarks, I want to read from a letter which was sent to me by one of my constituents:

“Dear Mr. Earle:

I am a public servant with Revenue Canada. I am writing to you to voice my concern with the proposed Canada customs revenue agency. As an employee of Revenue Canada, I have a vested interest in the department as it exists today and may be greatly affected if the intended changes to the agency status are implemented.

“If Bill C-43 is passed, I feel that the new agency will be less efficient than the status quo. The agency would also threaten the personal privacy of taxpayers. Finally, I feel that the agency would not deliver promised cost savings and may even lend to the imposition of user fees by both business and the general public for the privilege of paying taxes.

“In closing I ask that you review in depth the proposal for the Canada customs revenue agency. I do not feel the changes will be in the best interests of myself, the provinces and the people”.

That is one letter of many that I received from people in my constituency. All the letters I received had the same kinds of concerns expressed. Some have gone even further to indicate: “The fact that my position will be guaranteed for only two years after the agency commences as well as a threat to my negotiated benefits greatly disturbs me. I also find it difficult to trust an employer who has allowed our collective agreement to expire over a year ago”.

Although I have many points that I could speak on, I want to speak briefly on a few that have been raised by people within my constituency, concerns that have been expressed about this new creation that will take place.

The first is that the agency will become a mega taxman, and the term mega is being used a lot nowadays. We hear about it in terms of the proposed bank mergers, megabanks, and for some reason people, the government in particular, seem to feel bigger is better. But I am reminded of an expression that my mother taught me many years ago which was that good things come in small packages. We all must appreciate that small things are very important and have their place. For example, a big vehicle can come to a stop because of a very small micro computer chip or a very small part in its engine. So bigger is not always better.

There is concern that this new agency will become a very large agency. We realize there are over 40,000 employees with Revenue Canada and $2.2 billion in revenue will be transferred to this agency. It proposes to administer everything from provincial sales taxes to gasoline taxes to liquor taxes. The vision would see a mega taxman who would offer even services to the municipalities. Do we really want Ottawa involved in our property taxes and things like that? Do we really want to put this much power in the hands of a government agency?

A second concern that has been expressed is that the agency will reduce accountability to the public and to parliament. This has been expressed by my colleague who spoke earlier and by others. We know that Revenue Canada as it presently exists is accountable through a minister, but with the creation of a new kind of arm's length agency there will be less and less accountability. As envisaged, this agency's enabling legislation will permit a full parliamentary review only five years after it has begun operation. We know a lot can happen in five years. That has been stated already. A lot can go wrong in that period of time. We do need to be concerned about the accountability function that will be sorely lacking if this new bill is passed.

Another important concern is the agency could jeopardize personal privacy. The aspect of personal privacy was one of the themes that rang throughout the many letters that came to my office in the constituency. We know we live in an electronic world today where there is more and more information about ourselves and our families being quite often sold by various companies, by private sector organizations all the way from credit card companies to charities to consumer goods and companies. We realize that our personal privacy is a very important feature today. We can see what is happening when we look at the APEC inquiry and the concern that is coming forth as we see documents being tabled which show that there have been security investigations and for whatever reason people's names being placed on lists without their knowledge.

This is the kind of society we live in today. There is a great concern about this new agency becoming a big brother where there will be a great deal of financial and other information about citizens available through this agency.

Even internal memos in Revenue Canada have acknowledged: “There are privacy concerns among some stakeholders related to the creation of a big brother. Everyone should share these concerns”.

I will mention another concern that was raised which was spoken of earlier. It is the effect of harmonization of the GST and the provincial sales tax beyond the maritimes. This was something as we know that started out with the government's intention of doing this right across the country. Originally this idea was to make sure that all provinces had a harmonized tax system but it only went as far as the maritimes. People in the maritimes have spoken loud and clear about how displeased they are with that effort in their area.

Some people might say there is an advantage to a combined administration. You will not have to deal with two taxes. You will have to deal with only one. But we know that one tax extends further and further into the lives of ordinary citizens causing them to pay tax on things they normally would not have to pay tax on and creating a great deal of hardship for lower and middle income people.

This concept of the blended sales tax is something we should be very careful of and the intent of this new agency will probably carry it beyond what we see even today.

Rather than go on at some length about the many disadvantages of this new agency that will be created, I conclude with a few remarks in a letter from another constituent. These remarks hit the nail on the head about the kinds of things we should be concerned about with respect to this bill: “How will the agency be accountable to us? By our MPs at present, when the organization is no longer a government department? If the government is looking for something to spend millions of dollars on, here is an idea, our health care system”.

That constituent makes a very real and important point that we should get our priorities straight and in order. She says “As a voter and taxpayer I am taking this moment to let you, my representative in parliament, know that I want this tax monster stopped and that we the taxpayers are tired of the government wasting tax dollars on things that are redundant and not necessary”.

I think that says it all. With those remarks I would say that we are opposed to the bill. We trust the people of Canada will express their concern and that members of the House will express the same concern and not support the bill.

[Réjean Lefebvre, Bloc, Champlain, QC]

Mr. Speaker, it is a pleasure to rise today to speak on Bill C-43, to establish the Canada customs and revenue agency.

The purpose of the agency is, first, to provide programs and services in a more efficient and cost-effective manner, through greater autonomy and flexibility; second, to improve services and reduce the cost of administering revenues and enforcement by working with the provinces to eliminate duplication and overlap; third, to strengthen the effectiveness of the Canadian federation and foster national unity by making the agency responsible for providing federal, provincial and even municipal services to Canadians.

The third objective mysteriously disappeared when the second progress report was tabled. None of the provinces has agreed to enter into an agreement. The provinces, with the exception of Manitoba, remain unenthusiastic about the establishment of such an agency.

In the face of this opposition, Revenue Canada's spokesperson, Michel Cléroux, explained that the provinces had not said no. That is not a very good explanation.

The agency will not produce the promised savings. Its promoters recognized from the start that the greatest savings would come from harmonizing taxation.

However, we all know that the extension of the harmonized or blended sales tax flew like a lead balloon. In addition, the proposed agency will not require the provinces to pay for tax collection and treatment when the provincial program is fully harmonized with a federal taxation program. This free service does not represent a cost reduction but a cost increase for the agency.

The agency's status will also enable its executives to pay themselves salaries comparable to those of business leaders in the private sector.

Regardless of the position one adopts on this matter, one must recognize that it constitutes a new item of expenditure.

Coming at a time when the morale of public servants who are not in executive positions is suffering seriously after a six-year freeze, it must not be lost sight of that, since April 1, the present government has awarded its executives raises of up to 19%.

The agency has already cost the taxpayer rather dearly. Thousands of departmental employees have been involved in design teams and other internal exercises aimed at turning the dream of senior management into reality. A good part of the focus of Revenue Canada has been turned away from more important and more pressing matters.

I will give an example. You will recall a CBC program which reported that, according to Department of National Revenue documents, over 500 of the 1,500 auditor positions in the Toronto region were vacant. This situation would mean a shortfall for the federal treasury in this region of over $500 million in 1997. We estimate the loss would be over $2 billion for all of Canada.

The agency would be a less effective solution than the status quo. The myth surrounding the agency is that it could provide tax services more cheaply and more effectively. However, the structure proposed for the new agency adds another level of bureaucracy in the form of an appointed board of management, which would have nothing more than a supervisory role. Nevertheless, time, money and staff must be provided for the board and its staff.

At the same time, the Canada Customs and Revenue Agency would report to Treasury Board on administrative matters, such as its activity and human resources plans.

The agency would upset the balance between tax policy and tax collection. There is, at the present time, a healthy balance between the structure and tax policy, which should be left up to the department and the Minister of Finance, and enforcement of this policy, which is the responsibility of the Minister of Revenue and his department, the Department of National Revenue.

The agency's status would upset this balance. The agency's bureaucrats would inevitably launch into a turf war with their Department of Finance counterparts. This would be a costly and unproductive exercise that would serve the interests of no one but the mandarins.

The agency would open the door to bureaucratic patronage and the abuse of power. In practice, the agency would have carte blanche with respect to contracts, and with respect to the management of property, materiel, information and technology. With limited outside scrutiny, the risk of favouritism and abuse of power by bureaucrats is very, very high.

The agency would pose a threat to taxpayers' privacy. If the agency were actually to achieve its objectives, personal information would be concentrated in a large organization not directly overseen directly by Parliament.

Moreover, internal departmental documents indicate that the creation of a “big brother” raises concerns among some of those involved with privacy issues. We share those concerns.

What do the experts and the business sector have to say about this agency? Nothing good. In his report of December 1997, the Auditor General of Canada voiced concerns about the accountability of the proposed agency by asking: “What assurance will the people of Canada and parliamentarians have that the public interest is protected?”

As well, a Public Policy Forum, or PPF, study commissioned by Revenue Canada reported that Canadian business had serious reservations about the creation of this agency. The PPF report referred to the agency's objective of rationalizing and simplifying tax collection.

However, 40% of the businesses the PPF surveyed saw no advantage to a single national collection agency and 68% felt that such an agency would add to their compliance costs, or have no effect whatsoever.

As we have seen, then, the promise of a single tax collection agency did nothing to bring about the harmonization of taxes in all provinces. For all these reasons, the Bloc Quebecois and I will be voting against the bill.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I am pleased to take part in the debate this afternoon and to remind viewers that we are dealing with Bill C-43, which is an attempt by the government to repeal the Department of National Revenue Act to convert Revenue Canada from a fully accountable government department to an autonomous arm's length business oriented agency with broad management authority over national revenue.

We in this caucus will oppose the bill on principle. We are aware that some 40,000 employees in Revenue Canada now make up about 20% of the federal public service. The move would involve the transfer of more than $2 billion in annual parliamentary estimates.

The government is glorifying the role of private sector appointees and seems to think that the public sector can only run on private sector principles. What is at stake here is a move toward an independent agency without the support of major provinces. Nor does it seem to have the support of the majority of workers.

There are at least three provinces firmly opposed. Two other provinces have not endorsed the concept. I think it is fair to say that all provinces generally see the agency as an intrusion into provincial jurisdiction. Not only the provinces and the workers but Canadian businesses have major reservations about the proposed agency.

The public policy forum study commissioned by Revenue Canada found that among the businesses surveyed some 68% believed a single tax collection agency would either increase their compliance cost or have absolutely no impact whatsoever.

The commissioner of customs and revenue instead of a deputy minister would become the chief executive officer of the agency responsible for its day to day operations. According to the proposed bill, the governor in council would appoint the chair of the board, the commissioner and the deputy commissioner for a term of five years. The agency will still be subject to the access to information and privacy acts.

The government is claiming that the agency will provide better, more cost effective service to the public, to business, to the provinces and territories by bringing about tax harmonization with the provinces and therefore huge tax savings resulting from the elimination of such things as duplication and overlaps in tax administration among various levels of government.

A second point it advocates is that it promotes a stronger partnership with the provinces and territories which, the government believes, may then hire directly this new agency for the delivery of programs according to service levels and performance targets specified in the contract.

As an aside, I suggest that the government should consider how the Atlantic provinces of Nova Scotia, New Brunswick and Newfoundland have fared under the ill fated and loathed HST to see whether they think it is something that should be transposed on the rest of Canada.

Another point the government argues is that it creates a leaner and more efficient delivery of tax services to be achieved through the agency's enhanced operational flexibility and autonomy inspired by the business culture.

The government believes the agency will combine the best of both worlds. It will make the organization more accountable to its clients and partners and set high private sector standards while ensuring that the current powers of the Minister of National Revenue and accountability to parliament will be protected.

We oppose the bill, as I indicated, on a number of different grounds. First we oppose it for some philosophical reasons. I have talked about the 40,000 employees, the $2 billion transfer and annual parliamentary estimates that would be at stake. The government glorifies the role of private sector appointees and seems to think the public sector can only run on private sector principles. The government would certainly take credit for slashing expenditures by $2.2 billion.

It is frankly appalling that the control of tax collection, which is a historical prerogative of the state, is about to be abandoned, if the government has its way, almost by stealth to the private sector.

There is a whole history of economists over the last 200 or 300 years who may have been absolutely firm in terms of free enterprise and the like. They firmly believed, nevertheless, that the collection and control of taxes was a prerogative solely of the state, so important that it should remain completely in the hands of the state.

We can think in our own time that even such advocates of free enterprise and the market as the former prime minister of Great Britain, Margaret Thatcher, and the recently deposed chancellor of Germany, Helmut Kohl, never went so far in their drive to privatize as to contract out, in effect, the collection of taxes.

Second, we oppose it for political reasons. We believe the government in its move toward an independent agency is doing so without the support of the provinces. The major stakeholders simply are not buying. They have run this one up the flag pole but few, if any, are saluting.

I have mentioned that the provinces are opposed, specifically Ontario, Quebec and Prince Edward Island. B.C. and Saskatchewan refuse to endorse the concept. Alberta supported the concept probably for ideological reasons but pointed out that members needed to be reminded that Alberta does not have a sales tax and administers its own program. There is fading possibility that it might sign over any day soon the administration of its provincial income tax to this federal agency. I have also mentioned the reservation of Canadian businesses and the study that public policy forum conducted with those businesses.

We think for ethical reasons we should look at what happened in the United States, specifically with the Internal Revenue Service. In the evolvement and development of the IRS there are dangers for us in an non-controlled agency.

The IRS is a government department and not a fully independent agency. It has extensive powers and operates under stringent private sector performance standards similar to those that would be entrusted to the agency by Bill C-43.

Historically the powers conferred to the IRS resulted from pressures from the Federal Bureau of Investigation on Congress for the creation of an independent agency to fight corruption and organized crime back in the Al Capone days of the twenties and thirties. These powers were then used to arrest some of the most dangerous leaders at that time, including Mr. Capone.

On one hand the Liberal government affirms that the controls of the agency will be the same as the controls over any other government department. On the other hand, it would then turn around and stress the need for independence. If the controls of the agency will be the same as the controls over Revenue Canada or any other government department why bother? Why transform a government department into an agency which is not independent?

The agency will have more power because it will be more at arm's length from parliament. Using corporate performance standards will undoubtedly lead the agency to set up a system of tax assessment quotas, performance and pay bonuses. These standards have precisely led the aforementioned IRS to abuse its power over taxpayers and at times use harsh and excessive collection methods. The likely misuse of new powers and standards would therefore turn the agency into a taxpayer predator.

According to the auditor general, the Liberal government lost a potential $2.5 billion and $3 billion in revenues since 1995 simply because it refused to pay adequate salaries to attract highly trained professionals required to perform complex audits. These auditors are necessary to ensure compliance by foreign multinational corporations operating in this country.

I think the problem the auditor general has been flagging is that Revenue Canada acknowledges that it has been unable to hire staff up to the limits authorized by parliament simply because qualified auditors working in the private sector are not interested in taking a 50% pay cut for Revenue Canada.

I think those are the types of things this government should clean up and hire the number of auditors necessary to do the proper job rather than contracting out this agency.

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I am pleased to rise in this House today. Since this is my first speech here, I would like to thank the residents of Sherbrooke for the confidence they put in me on September 14, when they elected me to represent their riding.

I wish to reiterate my firm resolve to represent all the citizens of the riding of Sherbrooke in my daily work, whether in Sherbrooke or in Ottawa. I intend to work hard, along with my staff, to improve the situation regarding employment, community life, the employment insurance program, older workers and pay equity.

I read Bill C-43 carefully, and also the speech made by the Minister of Revenue on October 1, 1998.

I was struck by this urgency to take action, so as to achieve certain objectives, namely to ensure quality services at a lower cost, fair administration, confidential service, modern and effective management and, above all, parliamentary accountability.

I was also struck by how easily the minister is prepared to abdicate his political responsibility and let an independent agency assume all the responsibilities that a government has. I realize the minister must redefine methods and procedures in order to achieve the objectives that I just mentioned.

The minister reminds me of someone who is having mechanical problems with his car and thinks that changing driver or doing some bodywork on the car will make it run better. Well, it will not. What the car needs is a good tune-up.

Quebeckers and Canadians have the right to expect the minister to put his head under the hood, to replace defective parts and to make the necessary adjustments so he can get back on the road safely and reach the efficiency goals that the public expects in terms of service delivery.

On September 29, the auditor general tabled his report. As a member of the public accounts committee, I had the opportunity to read Chapter 15, which deals with integrity at Revenue Canada and where it is revealed that 285 incidents of theft, fraud, abuse of power and conflict of interest were reported over a period of 18 months. The auditor general said, and I quote:

Bearing in mind that Revenue Canada has approximately 40,000 employees, 285 incidents in 18 months may not seem like a particularly high number. At the same time, academic studies of other segments of society strongly suggest that the number of incidents of misconduct that are reported is much lower than the number of incidents that actually occur. The nature of Revenue Canada's operations makes it more vulnerable than many other departments.

Because Revenue Canada is vulnerable, as proven by the incidents that occurred in 1997, the department must remain vigilant. One of the minister's five principles is that people want the government to be accountable to them. In that regard, he said, and I quote:

Questions are often asked in the House of the minister. The power of the minister to inquire into these matters and respond to the House will be maintained under the new agency.

Members will recall that, on September 30, I did ask a question of the minister in this House. This was the question:

The auditor general reports that the government is already having a hard time assuring security and integrity within the department of revenue, with all the bribes, leaks, abuses of power and everything else.

What should we think about a government that is now contemplating giving tax collection over to an independent agency, which would have even less accountability than Revenue Canada?

Hon. members will remember the answer I was given; it was sheer nonsense. The minister told me that if I really wanted to look at problems in revenue, I should look at Revenue Quebec, where the real problems were.

In order to hide from the public his inability to get his house in order and hide the real reasons why he wanted to set up this independent agency, he referred to the mote in his Quebec neighbour's eye, but did not say a word about the beam in his own.

The minister thinks that setting up an independent agency will make it easier for him to reach the goals I have already mentioned. I do not believe it, and several people agree with me. But there is more.

For more than two years now, the minister has been working on this agency. Instead, he should have worked on the restructuring and the re-engineering of his own department. We would already have better services, a fairer administration, modern and efficient management practices, but mostly a structure more accountable to parliament and taxpayers through a modern and efficient department of revenue.

However, that has nothing to do with the real reasons why this independent agency is being established. The real reason is because the minister does not want to be held accountable. It will act as a bulwark against having to account for tax collection.

Through its centralizing vision, the government wants to stretch its influence and control to provincial, municipal and local governments. It wants to have 15 extra positions to which friends and defeated candidates can be appointed. It also wants to exclude more than 20% of its officials from the application of the Public Service Employment Act.

In this whole enactment, there is one important objective I support, and that is to avoid duplication, and I agree with the need to improve and simplify the administration of tax legislation.

Quebec collects all provincial income and sales taxes. It would be no problem to consolidate all provincial and federal tax collection activities in Quebec. In fact, Quebec is prepared to do it.

To conclude, the Bloc Quebecois is opposed to the establishment of the Canada customs and revenue agency and urges the members of this House to support the motion moved on October 1 and seconded by me.

Another perhaps less obvious reason to oppose the establishment of the agency is what I consider to be some kind of plan B. It is well known that the government is trying to stretch its tentacles to the municipal and local level. Luckily for municipalities, they fall under provincial jurisdiction, and I do not think the federal government will be able to get them to do business with the agency, even with the lure of substantial savings.

There would be a problem. The same way that a private business partitions services within its operations and contracts out, there are cities in Quebec considering partitioning, and a tax relationship could be established between municipalities and the federal government through the agency. I view this whole tax agency business as part of a plan B.

The Bloc Quebecois and I are against the agency.

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, I am pleased to rise in this House to speak to Bill C-43, introduced by the Minister of Revenue, which aims at nothing less than the creation of a coast to coast Canada customs and revenue agency.

Although the Bloc Quebecois recognizes the need to improve the administration of tax laws and to simplify their application, we find fault with four points of the government's vision in trying to have this legislation passed.

First, we find fault with the bill's centralizing vision in creating this agency. We also criticize the delegation of the minister's responsibilities, which are his under the terms of Revenue Canada measures. We must also criticize his weakness with respect to senior Revenue Canada officials and the anti union attitude taken in creating this agency.

First off, we should explain to our viewers what the Canada customs and revenue agency constitutes.

On June 4, 1998, a week before the long summer recess, the Minister of Revenue tabled Bill C-43 in this House. It concerned the establishment of a Canada customs and revenue agency. When we look more closely at it, we see the bill was mentioned in the February 1996 speech from the throne, when the Liberal government announced its intention to set up a national revenue recovery agency.

In reality, this monster will be nothing less than the transformation of the present Department of Revenue into an agency independent of the government, which will have a mandate to negotiate an arrangement with the provinces and the municipalities so interested for the collection of taxes in Canada. According to the minister, the creation of this agency will change absolutely nothing, but we are not so sure about that.

According to the minister, departmental responsibility and parliamentary control will be maintained in their entirety and the Minister of Revenue will remain entirely responsible for administering legislation relating to taxes, customs tariffs and trade exchanges. He also says that the Public Service Staff Relations Act, the Access to Information Act and so on and so forth, will still continue to apply.

What the minister says is that nothing will be any different after this agency is created. The Auditor General of Canada will continue to examine the agency's operations and report on them to parliament.

We say that this is wrong, It is a sneaky manoeuvre, and nothing could be further from reality than the minister's predictions that this nothing will change.

We have to be realistic. If the minister were being truthful, one would have to wonder why he was putting so much effort into converting an entire department which employs one-fifth of the employees in the public service into an agency. Why, when it comes down to it, expend so much effort if nothing is changed? Why not leave things as they are?

The answer is clear, and comes right from the mouth of the President of Treasury Board: “Creation of the Canada Customs and Revenue Agency is an essential component of the government's commitment to modernize the federal public service”.

Now we can see, the cat is out of the bag. While claiming its purpose is to modernize the public service, the government's real intent is to privatize it. The Liberal government is claiming to promote a modern public service, but it is in fact trying to have public servants excluded from the scope of framework laws such as the Public Service Employment Act. Such is the minister's objective, such is the goal being pursued in creating this agency.

The Canada customs and revenue agency will hire 40,000 public servants. This means that 20% of the federal public service will then be at the mercy of the agency's board of management. The agency's directors will certainly earn more than the department's senior officials currently do, but it will be at the expense of support staff, file processing clerks, and in fact most of the employees, because they will not be protected.

The concerns that we just raised are based on a number of reasons. Let me point out some of the numerous inconsistencies found in Bill C-43.

The agency is under the authority of the Minister of Revenue. However, under clause 8, the minister may authorize the commissioner or any other person employed or engaged by the agency to exercise of perform on the minister's behalf any power, duty or function of the minister under any act of parliament.

In short, this means that the agency will be in the hands of a super-bureaucrat who will be neither elected nor accountable to parliament.

I want to make a comparison with the millennium scholarship foundation. As members know, Bell Canada's chief executive officer, Mr. Monty, was appointed as head the foundation. He will manage a budget of $2.5 billion, to be distributed to students in the form of scholarships and loans, and he will not be accountable to the House as to how the money will be managed. The government is trying to pull the same stunt again by creating this agency.

The agency has authority with respect to general administrative policy, organization, real property and determination of the terms and conditions of employment. It is clear where the problem arises and this is where money will be saved; on the backs of front line workers in order to pay the higher ups.

The agency must develop a program governing staffing, including the appointment of, and recourse for, employees, but no collective agreement may deal with matters governed by the staffing program.

This is the fate the federal government has in mind for one fifth of its current employees. Obviously the agency is nothing more than an attempt to crush unions.

I am having trouble making myself heard and I hope that those listening at home can hear me.

While it is true that the bill promises a certain flexibility in subsequent clauses, once the harm is done and duly done, the government will wash its hands of the whole affair. Who will be responsible?

We are looking at a government that refuses to assume its responsibilities. We are also looking at a minister whose complacency is equalled only by his government's lack of responsibility. We are looking at a government that is striking an unprecedented blow to unions. We are dealing with a government driven and blinded by a centralizing vision which has not been seen since the worst years of the intellectual mentor of the current prime minister, namely Pierre Elliott Trudeau.

For all the reasons I mentioned, the Bloc Quebecois will not support Bill C-43. We have no amendment to suggest. Rather we demand that the bill be withdrawn or that every clause be struck out. Quebec has always opposed the federal government's desire to centralize all activities linked to tax collection within one Canadian agency.

We have our own revenue ministry which collects all provincial taxes in the province, on top of looking after the federal GST since 1992.

Therefore we suggest that all activities related to tax collection in Quebec, either federal or provincial, be transferred to the Quebec Ministry of Revenue.

I remember our first electoral campaign. We were fighting against overlap, duplication and federal centralization and we won.

We say no to this bill.

[Yvan Bernier, Bloc, Bonaventure—Gaspé—Îles-De-La-Madeleine—Pabok, QC]

Mr. Speaker, first of all, we must excuse the members who may have been a little bit too loud during the good speech made by my colleague from Quebec. Maybe it was because they found that speech most inspiring. We know how it is to work in this House. Sometimes members do get carried away.

I would like to add my voice to that of my colleague from Quebec who concluded her speech by reminding everyone that, since it came to this House, the Bloc Quebecois has worked to help Canada move forward. It has worked to send the message that duplication must be avoided.

My colleague from Quebec mentioned that we worked hard in the area of manpower training. We were the first provincial government—I say we because I come from Quebec and I have a lot of sympathy and affection for the Quebec government, the Parti Quebecois government. It was a sovereignist government in Quebec that succeeded in concluding a historic agreement with the federal government to harmonize the collection of the GST, the infamous tax that forced the former deputy prime minister to seek re-election.

I say all that because the new Liberal leader in Quebec, Mr. Jean Charest, is claiming that Quebec would be better protected and would be able to reach all kinds of agreements if he were at the helm. There are still three areas where it is the Bloc Quebecois in Ottawa that helped things move forward, which allowed for a certain degree of harmonization.

Let us come back to the bill before us, Bill C-43, which creates a super agency that will allow Revenue Canada and customs services, whose staff represents about 20% of the entire Canadian public service, not to be governed by the rules of the public service.

When I reread the bill, when I try to understand what it is all about, I see that this is one of its only functions, one of the only things that this agency will achieve, besides being able to create cozy, well paid jobs, to which the minister will be able to appoint friends of the government, of the members opposite.

It is interesting that each time the government tries to hide or to avoid answering questions from the public, it creates a commission, a super agency. This happens frequently right now.

When it does not want to answer questions from people who want to express themselves publicly—which is the right to free speech—I am talking about the infamous “peppergate”, what happens? It refers the issue to a commission. Yes, we are told the commission has been in existence for a long time, at least 10 years. However, it forgets to give some tools to people who must use this commission to get information. It forgets to give them some tools, for example, lawyers who also are well paid to defend them.

I say well paid. I will not argue about the definition of well paid or about who should be and who should not. I am in favour of people being paid for the fair value of their work. The government should at least give these students the means to defend themselves against the big machine.

A small group of students were sprayed with pepper, while the minister is trying to estaablish—

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, I rise on a point of order.

I hesitate to interrupt my colleague, but I would ask we keep to the business of Bill C-43. I am wondering about the relevance of his remarks. I expected he would ultimately bring his speech around to the subject of Bill C-43. But, it is a question of relevance.

[The Acting Speaker (Mr. McClelland)]

The government whip is right. Perhaps the member for Bonaventure—Gaspé—Îles-de-la-Madeleine—Pabok could address the bill currently before the House.

[Yvan Bernier, Bloc, Bonaventure—Gaspé—Îles-De-La-Madeleine—Pabok, QC]

Mr. Speaker, excuse my outburst, but when one is trying to get the government's attention, one has to spice it up a little.

[Some hon. members]

Hear, hear.

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

With salt and pepper, like your hair.

[Yvan Bernier, Bloc, Bonaventure—Gaspé—Îles-De-La-Madeleine—Pabok, QC]

Quite right, but I notice that the hairline of the gentleman who made the remark starts a little further back than mine.

I was trying to draw a comparison between Peppergate and the creation of a super agency; in the opinion of the Bloc Quebecois, the agency will break the direct link between what the public is entitled to know and Parliament's oversight of government. This link will be broken.

How will the public be able to control this new super agency? I want to get the attention of the public and of the government so that a second monster is not created and we are not pepper-sprayed again.

If the agency's purpose is truly to generate savings, to avoid duplication, there is no need to create a monster agency with 15 mega-commissioners at the helm. It is a simple matter of getting 10 premiers around a table and making a proposal. Quebec will be able to administer its share of federal taxes within its jurisdiction.

[The Acting Speaker (Mr. McClelland)]

It being 5.30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Canadian Wheat Board Act

[Jake Hoeppner, Reform, Portage—Lisgar, MB]

moved that Bill C-283, an act to amend the Canadian Wheat Board Act (audit), be read the second time and referred to a committee.

Mr. Speaker, it is pleasure to rise in the House on my private member's Bill C-283, an act to amend the Canadian Wheat Board Act. It would allow the auditor general to audit the books of the Canadian Wheat Board.

We will have a new board of directors of the Canadian Wheat Board. It would be a tremendous asset if these directors had some guidelines to follow to know that the CEO of the board was performing his job properly or whether amendments could be made.

To have an independent audit of a board that is a monopoly is a tremendous asset. Up to now private auditors have done the audit. They probably have done a good job, but no one really knows because there has not been an independent look at the books to see whether they are in order.

Over the past couple of months the auditor general has come out vividly in favour of having some auditing done. He agrees that it is time because the government guarantees that he should have a look at the board's books to see whether there are good internal operations of the board.

Deloitte & Touche did an independent assessment of the board in 1992. That internal audit was never released to the public or to farmers. We do not have an idea of how critical the report was. The facts released after the audit were critical of how the board operated. They did not criticize the way the board marketed grain, but they criticized its business plan, how it operated and other mechanics of the board.

I became interested in how the Canadian Wheat Board operates when farmers came to me with concerns in 1994, shortly after I was elected. In 1992 Saskatchewan farmers suffered from the effects of a huge frost. In 1993 Manitoba farmers suffered from the fusarium outbreak because of excess moisture in wheat. Because the board in 1993-94 put out a notice that it would not be purchasing any of the fusarium wheat that had more than 5% fusarium it was unmarketable. Some farmers burnt their crops because there was no market for them.

The majority of farmers felt that if they harvested their crop they could somehow clean it up and use it as feed or in some other way. Some farmers were using it as fuel in their furnaces. Then some innovative farmers found a market in the United States for it. They had found a way of cleaning up that grain and were quite willing to accept it.

Some farmers along the border started exporting this grain and found out they needed an export licence. They went through legal procedures to get export licences for grain that was not marketable, which was not a big concern to farmers. They thought they should have had the right to sell the grain at the price they could get and keep the money in their own pockets.

The board created a buy-back program so the farmers had to pay the board first. They had to sell the grain to the board, buy it back at a higher price, and then market it themselves. Farmers were not even opposed to that idea because they had a pooling system. If everybody was treated equally the moneys they were charged would go into the pooling system and they would then share in those funds.

Lo and behold, about six months after the crop year ended and the pooling price had been paid out, some of the farmers started getting bills for storage of grain that had sat in their bins until they exported it to the U.S. This grain had never entered an elevator. Because they had signed a contract to export it and the U.S. elevators were full, it could not be delivered at the time and they were charged storage for having the grain in their bins.

When they came to me with these documents I discovered they had been charged storage, freight, elevation and cleaning to Thunder Bay, and the wheat had been in their bins all the time. I then started to investigate further and found out when they bought the gain back the grain companies or the wheat board charged the farmers as much as $1 a bushel more than they sold it to the grain companies that exported the grain. They were getting hammered double and that is where the M-Jay Farms class action suit started.

The board had no way out. It could not defend itself. Its only defence was to say that it had no mandate to sell their grain for the best price possible. The only mandate the board had was to sell the grain in an orderly fashion.

We have sold grain in an orderly fashion for 45 years. In western Canada today we see that the orderly fashion is fast disappearing because farmers cannot survive any longer. This is why I have been pushing for the last three or four years to get an accountable board that will work for the farmers, not for the corporation itself.

To show why it is so important, Mr. Beswick, one of the chief commissioners of the board, resigned in 1994-95 over the issue of feed barley being sold below cost price or below what the price should be. He came out in public and said “We have cost farmers this last year probably $180 million by underselling that feed grain”.

In western Canada $180 million is a lot of bucks to farmers. Not only is it a lot of bucks to western Canadian farmers, but they are lost tax dollars to the government or to the taxpayer. Whatever the loss is in terms of the taxes farmers would have paid on the grain, it has to be picked up by the ordinary taxpayer and somebody loses. It is important that we have a wheat board which extracts the maximum amount of grain, not just for the benefit of farmers but for the economy and taxpayers.

I will give just a few examples because I want to share as much time as I can with my colleagues on this issue. In March 1993-94 when the first farmers started shipping some of their 1992 crop year grain which had been impacted by frost in some areas, U.S. No. 1 wheat sold for $3.99 a bushel. The Canadian export price for No. 1 feed wheat was $109 a tonne. During the summer the prices of wheat in the United States increased by $1 a bushel. By September the wheat was worth $4.93 cash at Minneapolis.

The wheat board raised the export price of No. 1 feed wheat to $116, a difference of $9 or 25 cents a bushel when the wheat was worth at least $1 U.S. more in the United States. That meant farmers were losing at least $1 a bushel because of the failure of the wheat board to raise the export price.

That was not the end of the story. By December the price of wheat increased another $1 a bushel and we had American milling wheat selling in Minneapolis for $5.73. Does anyone know what the Canadian Wheat Board did? It lowered the export price for No. 1 wheat to $104 a tonne from $116 a tonne. Did that make any sense? We knew that because of the fusarium our feed wheat that year had protein of 14.5% to 15%, some of the highest protein wheat that we had ever grown, and the Americans cleaned it up and used it for milling wheat. The loss to our farmers was huge.

From the research I have done, on the 2.2 million tonnes that went into the U.S. as feed wheat, not durum or milling wheat, farmers lost at least $150 million. The spread between feed wheat in 1992-93 was $60 a tonne. The spread between feed wheat and milling wheat in the U.S. in 1993 was $130 a tonne. That is about a $4 a bushel spread. It did not make any sense. The wheat board refused to look into the issue when farmers phoned them and told them what the wheat was worth.

This is why it is important for the Canadian government to insist that the auditor general takes over the books, not just audit them to see if the prices are right but to see whether the board is running efficiently and for the benefit of the country and not just for the benefit of the board itself.

Another thing I would like to raise may be just as important as what I was saying on feed wheat. In 1995-96 when American grain prices were the highest in history wheat sold for $7.25 American a bushel. Corn sold for $5.25 to $5.50 a bushel. Our wheat board refused to sell grain into that market. Instead of selling the 1.5 million tonnes allowed by the Americans into their market, it only sold 750,000 tonnes. It cut the sales by half. The board would not allow farmers to export their own grain because it set the buy-back price at $9 and something a bushel just to eliminate the competition. I call that robbery. It was devastating to our farmers in western Canada.

Not only that, the following winter was one of the toughest in western Canada. There were transportation problems. An extra million tonnes of grain was carried over. It was more than in previous years. We refused to sell because of the board policy. It does not make sense. Now when we see we are to get an elected board of directors maybe we will have some changes. That is why it is so important for the auditor general to have control of the books.

We had 11 elected advisory board members for the last 10 to 12 years who were supposed to guide the board along. These advisory board members had the right to look into every portion of the audit and into every detail. They never once told farmers what was happening to their grain.

Six months before the commissioner of the board, Bill Smith, accidentally passed away he told a group of farmers “If I could walk out of this place today and tell you what is happening to your wheat or your grain it would be astounding, but I have two more years to serve before my term has ended and I can retire. I have to follow secrecy. I cannot divulge what is happening in the board”.

When we talked of human rights issues today, when we look at the APEC issue, people do not have the right to protest with signs. People do not have the right in western Canada to sell their grain for the best price.

[John Harvard, Liberal, Charleswood—Assiniboine, MB]

Mr. Speaker, it is my pleasure to speak today on private member's Bill C-283, a bill that would require the accounts and records of the Canadian Wheat Board to be audited annually by the Auditor General of Canada.

As the hon. member is no doubt aware, Bill C-4, an act to amend the Canadian Wheat Board, received royal assent in June of this year. One of the amendments to that legislation, passed by the other place, relates to the financial accountability of the Canadian Wheat Board to the farmers it serves. That amendment, endorsed by the government, the BQ and the Progressive Conservatives in a vote of 197 to 60, allows for the Auditor General of Canada to conduct a one time audit of the accounts and financial transactions of the Canadian Wheat Board and report the findings to the producer controlled board of directors and the minister responsible.

A major thrust of Bill C-4 is to give farmers control of their marketing agency by establishing a 15 member board of directors with 10 of those positions, a full two-thirds majority, to be filled by producer elected directors. The board of directors will be in charge of overseeing Canadian Wheat Board operations. These directors will have access to all information and facts and figures regarding Canadian Wheat Board operations, including selling prices for grain. In other words, Bill C-4 has put producers in the driver's seat.

The legislation the member for Portage—Lisgar is proposing would take the keys away from farmers and give control back to the government. The government believes that with the full knowledge of the inner workings of the Canadian Wheat Board the directors are in the best position to assess what information should be made public and what, for commercial reasons, should remain confidential. They will be in the best position to assess Canadian Wheat Board operations. The recent changes to the Canadian Wheat Board Act will give the producer controlled board of directors the power to make changes to these operations.

The government recognizes that producers are entitled to know how their marketing agency is working for them. The Canadian Wheat Board works for them, not the other way around. Therefore how it conducts its business is their business.

Hon. members must bear in mind, however, that the Canadian Wheat Board is a major competitor in international grain trade. With $6 billion a year in sales, it is Canada's fifth largest exporter. It markets wheat and barley on behalf of western Canadian grain producers to more than 70 countries around the world. In other words, the Canadian Wheat Board is a big player in international markets. Grain trading on this scale is a highly competitive business where information is king and confidentiality is paramount to ensure the highest possible returns to farmers.

Who is selling to whom and for how much is highly guarded commercial intelligence that in the hands of its competitors could jeopardize the wheat board's ability to extract premiums from the marketplace. That in turn would affect the bottom lines of more than 110,000 prairie grain farmers.

Obviously then a balance is needed between transparency and accountability to producers and ensuring that Canadian Wheat Board operations and records are not subject to significantly greater levels of public access and scrutiny than the private sector grain companies it competes against.

That is very important and it is important to understand that.

With that in mind and to enhance the transparency and accountability of the wheat board the government supported the amendment to the legislation to allow a one time audit of the accounts and financial transactions of the Canadian Wheat Board by the auditor general.

Therefore, and this is important to understand, the general intent of this private member's bill is already incorporated in the new law.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Mr. Speaker, as I did in previous discussions on Bill C-4, I have to admit from the outset that, as a Quebecker, it is hard for me to feel deeply concerned about Bill C-283, An Act to amend the Canadian Wheat Board Act (audit), because those affected are mainly the grain producers in western Canada. I will be brief, and all the more so because the remarks of my Reform colleague have set the tone of the debate on his bill.

As my party's critic for agriculture, my concern should be to examine whether most farmers or the agricultural industry as a whole can benefit from the bill before the House. In my humble opinion, the amendments in this bill deserve a good discussion.

The proposed amendment to subsection 8.1 (1) on auditing reads as follows:

8.1 (1) The accounts and records of the Board shall be audited annually by the Auditor General of Canada and a report of the audit shall be made to the Board and the Minister.

This clause modifies an amendment, made by the Senate and passed by the House last June, which is included in Bill C-4. This bill, which has been enacted, provides that “Within two years after the day this section comes into force, the Auditor General of Canada may commence an audit of the accounts and financial transactions of the Corporation for such fiscal years as the Auditor General considers appropriate and a report of the audit shall be made to the Corporation and the Minister.”

There is no need to amend this clause, since such an audit is already being carried out, and the best time to undertake an audit should be left to the discretion of the auditor general. Also, the accounts are audited every year by a well-known independent accounting firm.

Subsection (2) reads as follows:

(2) The Minister shall cause the report made under subsection (1) to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the report is received by the Minister.

This is a common procedure for when such a report is made to the Minister.

The other amendments put forward by the hon. member are well-intentioned. Some people might find it normal for a board financed by farmers and whose initial price and line of credit are guaranteed by the government, to report to the minister responsible.

This ensures transparency. It would look bad if the Liberals in this House were to disagree with that. The proposed amendment would replace paragraph 9(1)( c ) and allow the minister to follow up each month on the board's:

—purchases and sales of all grain during the month and the quantities of grain then held by it, the contracts to take delivery of grain to which it is then a party, all securities then held by it and the financial result of the Board's operations.

However, these good intentions pose a great risk to the Canadian Wheat Board. To provide this information in a written report would be to tell competitors all there is to know about the board, including its sales engineering and contracts.

In today's competitive world, this might condemn to a slow death an institution that should be considered as a business or company that ought to be profitable for its investors, that is the producers and the government, basically everyone in the country. It is likely to take the wind out of its sails during future negotiations. We must bear in mind that the grain market is not an easy market and it is an extremely competitive one.

As for the proposed amendment to paragraph 9(1)( e ), it would allow the minister to get an annual report on the Canadian Wheat Board's activities.

My previous comment still holds. There is risk of disclosing the methods used for the purchase, movement and marketing of grain.

In addition, when it was introduced in November 1997, the auditor general review clause had not yet been added to Bill C-4. The legislation now in force contains this safeguard.

In closing, the Bloc Quebecois agrees, but only in principle, with this bill, as it forces the Canadian Wheat Board to be transparent in reporting its activities to the minister responsible. However, inherent to these amendments are risks that must not be overlooked.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, I too am pleased to speak to Bill C-283, an act to amend the Canadian Wheat Board Act. I listened with interest to the member for Portage—Lisgar as he spoke on the differentiation in prices between American and Canadian grains over the last number of years.

I do not challenge the numbers at all but I wonder if another interpretation can be made rather than one that condemns the Canadian Wheat Board for the apparently lower prices. I wonder if it is not higher subsidies in the United States. Higher subsidies, whether in the U.S. or anywhere else, tend to depress the international market. I say with some regret and a lot of concern that we are seeing more of it in this country. We are seeing more disparity with the Americans having recently passed a huge farm aid package. Yet we seem to be saying that we have NISA and crop insurance and that we are well served. Everybody who lives in western Canada these days knows that is just not correct.

In Bill C-283 the hon. member for Portage—Lisgar is asking that the accounts and records of the Canadian Wheat Board be audited each year by the Auditor General of Canada. He is further requesting that the auditor general make this audit available to the wheat board minister and that the minister table the report in the House of Commons within 15 sitting days of receiving it. These are the main provisions in Bill C-283 although the hon. member makes several other requests as well.

I will not be supporting this bill. I will outline some of the reasons why. I believe the hon. member's requests in Bill C-283 have largely been overtaken by events over the past year. It seems that what he is requesting is already in the process of occurring under the terms of Bill C-4. This bill was first introduced in November 1997, almost a year ago, when the debate on Bill C-4 was perhaps at its highest flashpoint in and around this Chamber. That legislation was subsequently passed last June which means, as has been pointed out, that there will be significant changes in the way the wheat board will operate in the future.

Bill C-4 as amended and proclaimed allows the auditor general to scrutinize the books of the CWB. The wheat board legislation received intense scrutiny. It was referred to the agriculture committee in the first week of the 36th parliament. It was debated fully in this House and the Senate agriculture committee held public hearings across western Canada last spring. Following those public hearings the Senate agriculture committee recommended that the board's books be opened to the auditor general on request. The wheat board minister accepted this recommendation word for word and it has become section 8.1 of the amended bill.

The Senate committee's report took note of the fact that the wheat board would be holding elections for a board of directors. Those elections are occurring through a mail preferential ballot as we speak and will be finishing next month. It is worth noting what the committee actually said about its recommendations regarding the auditor general's reviewing the books of the Canadian Wheat Board. I quote briefly from that report of last May:

“All directors of the proposed board would have access to all Canadian Wheat Board facts and figures, including the fully audited financial statements. The minister has suggested that, with this full knowledge of the CWB and its competition, the directors would be in the best position to assess which information should be made public and which should remain confidential for commercial reasons”.

As has been pointed out by the member for Charleswood St. James—Assiniboia, international grain trade is a very competitive business. The wheat board is a $6 billion a year operation with customers around the globe. Not surprisingly, the board's clients are sensitive about the release of information that might apply to them.

I believe fully that the board has to strike a balance between openness and confidentiality in the commercial information that it releases and I believe that, by and large, it has been successful in striking that balance.

In any event, my first point is that much of what the member is requesting will become reality when the new board of directors is in place in 1999.

I am sure the amended Bill C-4 which contains the recommendations referred to regarding the auditor general will not be enough to appease the hon. member or his party. We know that the Reform Party and the National Citizens' Coalition have been unremittingly hostile to the existence of the Canadian Wheat Board. Their allegation, which is repeated regularly and constantly, is that the board is a dark, dank and secretive organization.

We talked a lot about that in committee. We spoke about it during the debate on Bill C-4. I think it is important that we separate the wheat from the chaff on this issue. I believe that the board is, by and large, a remarkably transparent organization compared with its competitors in the international grain trade.

As has been acknowledged even by the member for Portage—Lisgar, the board's books have been audited for years by the well known Canadian firm of Deloitte & Touche. The most salient points of the audit are included in the wheat board's annual report which is public information and available to anyone who wants to read it.

In addition, there is a synopsis for those who prefer to read the short version as opposed to the full report. As well, the board regularly holds public meetings throughout the countryside to discuss its operations with Canadian grain farmers. This kind of openness and information sharing is hardly the trademark of a secretive, dark organization.

I would suggest that the Canadian Wheat Board probably provides at least as much, and likely more, information as other Canadian grain companies involved in the grain trade, including the United Grain Growers and the various prairie pools.

The wheat board's international competitors, companies like Cargill, which are privately held, do not provide nearly as much information as the wheat board.

Let us lay to rest, once and for all, this mantra because there is no foundation to say that the Canadian Wheat Board is not an open organization.

In conclusion, for the reasons outlined, I will be voting against Bill C-283.

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Mr. Speaker, I rise today to speak on behalf of the Progressive Conservative Party and our wheat board critic, the hon. member for Brandon—Souris, in support of private member's Bill C-283.

I must begin by saying that the bill put forward by the member for Portage—Lisgar addresses some of the most paramount concerns farmers have with the Canadian Wheat Board, which are transparency and accountability. As in any crown corporation or mixed corporation Canadians expect no less.

The Canadian Wheat Board was incorporated by the Canadian Wheat Board Act in 1935 to market interprovincially and to export Canadian wheat and barley for producers.

The wheat board is a monopoly system. If a producer wants to sell wheat or barley outside the CWB he must apply for an export permit. This means he sells his product back to the CWB, obtains the permit, buys the wheat back from the CWB and then sells it on the open export market.

He has to go through the wheat board. He cannot market his wheat without going through the wheat board, a wheat board that generates sales of wheat and barley in excess of approximately $6 billion annually.

The point I am getting at is that farmers do not have a choice but to market through the wheat board and there is a lot of money at stake for the producers. Therefore, why should the Canadian Wheat Board not be accountable and transparent to those very producers?

There have been a lot of changes to the Canadian Wheat Board over the years. It was originally intended by the Right Hon. R. B. Bennett's Progressive Conservative government that the Canadian Wheat Board be a voluntary institution with a mandate to operate in the best interests of producers.

It is unfortunate that the wheat board no longer operates in the way it was originally intended. It eventually became a monopoly and a means of controlling wheat prices for the federal government during World War II.

Its main aim was to limit grain price increases so as to safeguard the government's wage and price controls and control the cost of mutual aid to the allies during the war.

In 1967 the Liberal government of the day made the Canadian Wheat Board's monopoly permanent, a truly sad day for the majority of farmers who today want a voluntary wheat board. Furthermore, when Bill C-4 was passed last June further changes were made.

For the first time in history 10 out of the 15 board of directors were going to be elected by producers. The elections are being held this fall. Hopefully the newly elected board of directors will have some say in the future of the Canadian Wheat Board and will be able to make the necessary changes to ensure that the board truly evolves in the 21st century.

That being said, somewhere along the way the farmers started to mistrust the agency that was supposed to represent their best interests. They started to question its monopoly and their returns compared to a fair market value, and rightly so. They saw farmers south of the border getting more per bushel of wheat than they were receiving for the same grade through the wheat board. In some cases the farmers' suspicions were not unfounded.

That being said, most farmers in western Canada do not want to eliminate the wheat board, they just want the wheat board to be more accountable.

It is no different than the constituents that each individual member of parliament in this House represents. Canadians expect accountability. The last time I checked they expected a lot of accountability and I would suggest that members on the other side of the House take a long hard look at accountability.

I can tell members on the other side of the House who want to enter this debate that accountability will stick to them like scum on a pond and it will not be easy to get off. Canadians expect accountability.

I firmly believe that the bill before us today will only add to the accountability through the transparency of an annual audit by the auditor general.

I must also say that this is an issue that is not new to farmers in western Canada or to this House. During the debates and the committee hearings on the bill previously known as Bill C-4, which eventually passed last June, members of this House questioned the government as to why it was not willing to put forward legislation that would make the Canadian Wheat Board more open and more transparent. In fact, my colleague, the member for Brandon—Souris, put forward similar amendments at the committee level during the study of Bill C-4 that would have given the auditor general the power to audit the Canadian Wheat Board. Unfortunately the Liberal majority of the committee did not recognize these concerns and the amendments were subsequently voted down.

However, the member for Brandon—Souris did not stop there. He pushed for more amendments with his Senate colleagues and eventually the Senate put forward several reasonable amendments, one of which allowed the auditor general to audit the Canadian Wheat Board's books within the first two years after the bill takes effect.

The audit is provided to the board of directors and to the minister. This amendment, along with other Senate amendments, including the elimination of the contentious inclusion clause, were eventually passed when the bill received royal assent June 11, 1998.

This adds further transparency to the Canadian Wheat Board, but there is still an opportunity for more transparency, and I believe we have that opportunity with Bill C-283.

Members on the government side will argue that due to international market sensitivities the government should not reveal the wheat board's secrets. My gracious. That is quite a statement.

The government will also say that there is an annual audit. When the Canadian Wheat Board releases its annual audit, if members opposite actually look at the annual report, they will realize that it has as much depth as the government's vision of Canada.

The government will also say that the professional accounting team of Deloitte & Touche currently audits the wheat board. Yet when my colleague, the hon. member for Brandon—Souris, requested a 1992 managerial audit by the same company he was told it could not be released. He was told it was confidential. That answer is just not good enough for Canadians. They want transparency in their publicly funded institutions and they expect no less.

That being said, the U.S. government formally requested an audit of the wheat board over six months ago. In fact, the Toronto Star reported on January 14, 1998 the federal agriculture minister warning “The U.S. government is poised to demand an audit of the Canadian Wheat Board because American grain growers fear they are victims of unfair trade practices”.

If other foreign governments can request audits of the wheat board it would only make sense that the people of Canada, the farmers whom the wheat board is supposed to represent, are afforded the same rights. The unfortunate thing is that common sense does not always prevail in the benches opposite.

It was probably put best in a January 1998 Globe and Mail article that said “Farmers have no way of knowing whether the wheat board is doing its job, because it operates in secret. And they have no other recourse, such as a mediator or an ombudsman, against apparently incompetent, abusive and fraudulent actions”.

Once again it would only stand to reason that the Canadian Wheat Board be accountable to the farmers it is supposed to represent. It would only stand to reason that an annual audit be allowed to ensure that the Canadian Wheat Board is indeed accountable and transparent to the farmers it is supposed to represent.

The Progressive Conservative Party will support this bill and looks forward to reviewing it when it is sent to the Standing Committee on Agriculture and Agri-Food.

[The Acting Speaker (Mr. McClelland)]

As hon. members know, the last five minutes of the debate goes back to the mover of the bill. But we have three members in the House who have advised the Chair that they would like to speak. That would give each member about four minutes.

Is there a consensus to divide the remaining time between the three members: the member for Selkirk—Interlake, the Parliamentary Secretary to the Minister of Fisheries and Oceans, and the member for Yorkton—Melville?