Debates of Feb. 4th, 1998

Request For Emergency Debate

[The Speaker]

I do not want the House to become too embroiled in a debate. I think if the House is given a little bit of time, it can resolve this matter.

There is no unanimous agreement to let the other leaders speak in this matter right now, so that matter is settled. My decision is that I will take some time to reflect on this matter. I will come back to the House before this sitting day is over. This matter will stay rested for now.

The House resumed from February 3 consideration of the motion that Bill C-28, an act to amend the Income Tax Act, the Income Tax Application Rules, the Bankruptcy and Insolvency Act, the Canada Pension Plan, the Children's Special Allowances Act, the Companies' Creditors Arrangement Act, the Cultural Property Export and Import Act, the Customs Act, the Customs Tariff, the Employment Insurance Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Conventions Interpretation Act, the Old Age Security Act, the Tax Court of Canada Act, the Tax Rebate Discounting Act, the Unemployment Insurance Act, the Western Grain Transition Payments Act and certain acts related to the Income Tax Act, be read the second time and referred to a committee.

Income Tax Amendments Act, 1997

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-28. Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 69

[The Speaker]

My colleagues, before I declare the motion either way, I am talking to the people of Canada on your behalf. From time to time we break in a new clerk who calls all the names of our parliamentarians. Our new clerk, Marc Bosc, did it for the first time today.

I declare the motion carried.

(Bill read the second time and referred to a committee)

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. I think you would find unanimous consent for something that has been discussed among House leaders, that we immediately proceed to private members' hour, as the government does not intend to call business for today, and at one hour from now we commence the adjournment debate.

[The Speaker]

Is there unanimous consent?

[Some hon. members]

Agreed.

The House resumed from November 17, 1997, consideration of the motion that Bill C-223, an act to amend the Income Tax Act (deduction of interest on mortgage loans), be read the second time and referred to a committee.

Income Tax Act

[Grant McNally, Reform, Dewdney—Alouette, BC]

Mr. Speaker, yesterday in the House we debated Bill C-28, on which we have actually just voted. We discussed the ideas of Liberals on tax reform. They propose to tinker here and tinker there, but in the end we get a more complicated tax system with even higher taxes.

Bill C-223, which was moved by my colleague, the hon. member for Portage—Lisgar, proposes a substantial tax break that will not only benefit first time homeowners but the Canadian economy as well.

The purchase of a first home is one of the biggest undertakings in a person's life. It is a stressful time for a young couple. I remember a few short years ago when my wife Wendy and I bought our first home in 1989. I remember how hard it was to save up enough money for a downpayment and after that point going to visit dad to borrow a little extra. We all know what happens when we borrow money from dad. Dad never forgets.

Mortgage rates at that time were quite high at 11.75%. We were a single income family. I was working as a teacher. We were working on a tight budget. It was very difficult. We lived on a tight budget for many years just to be able to afford the house.

Some would say that as a teacher I was making a very good wage. I would not disagree that teachers make a fair wage. But how many more young people are working for less wages? They have a harder time buying a house for the first time, to save enough money for a downpayment to purchase a home.

Young people also have second mortgages before they even begin, that being their share of the $600 billion federal debt which on average is about $77,000.

Large amounts of debt have been racked up. Young people are having to face that as well as all other obligations they are encountering. This means the future of the next several generations will be mortgaged. A percentage of every cent that young people earn will be spent to pay for the irresponsible spending habits of past governments.

I hope we will not squabble about a once in a lifetime tax break for people who are just starting out. They are forming the foundation for the next generation in this great country of Canada.

The homebuyers plan is an option for first time homebuyers. However they have to be able to invest in RRSPs. For many people that is a luxury which is unattainable after they have paid for rent, food, car insurance, heat, hydro and clothing, not to mention that half of their salaries goes to taxes.

The CMHC program helps first time homeowners to pay for their downpayments. That is a big help. However the service costs several thousand dollars. The tax break called for in the bill would help to offset that cost.

In reading some of the opposition to the bill it was quite interesting to note that some people have questioned the motives of the Reform Party for bringing the bill forward. The government indicated the cost of the bill and the loss of tax revenue.

We could argue that the benefits of putting this money back into the pockets of individuals would be an enormous benefit to all Canadians. Young Canadians would have a break when starting out. They would have a tax deduction which would give them more disposable income to put back into their local economy. It is a common sense idea. It makes sense.

Young families that are just starting out would have more money for big ticket items they might not be able to afford now, such as appliances, furniture, electronics, or a new or used car. Tax revenues from these purchases would offset the tax breaks, not to mention the positive impact on the economy.

Many people commented on the bill when my hon. colleague introduced it in the House. The Canadian Manufactured Housing Institute has given it full support as it would generate greater investment in the housing area. It would create spinoffs in industry. It would help to stimulate the economy. It has received favourable response from many others.

I would hope we could lay aside any partisanship to take a look at this idea as being a common sense way to give young Canadians who will form the future generations of the country an opportunity to establish a home, a place, an environment where they can raise their families. As we know, this provides the social fabric of society.

We should look at the idea contained in the bill as an opportunity to have government policy reflect the values that Canadians hold. Let our actions speak louder than our words.

I conclude by urging all members to give the bill serious consideration. It is an opportunity to build Canada and to give the young people across the nation an opportunity to get a good start and to create a good foundation for future generations of our great country.

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

Mr. Speaker, it is with great pleasure that I address the House today on Bill C-223.

The Progressive Conservative Party feels strongly about encouraging the opportunities for Canadians to purchase their homes. Our party introduced a home buyers plan where Canadians could borrow up to $20,000 from their RRSPs for their first home and first home loan insurance program through CMHC.

These initiatives have successfully assisted thousands of Canadian families to buy their first homes. Thus the PC Party has demonstrated unequivocally its commitment through action to allowing ordinary Canadians to reach the goal of purchasing their first home.

In 1998 we continue to believe that home ownership should be an attainable goal for Canadians. The Liberal government policies have made home ownership less attainable than it has ever been before.

Excessively invasive government policies such as high income tax rates, the highest in the G-7; payroll taxes which prevent the growth of employment and frankly represent the single greatest impediment to the growth of employment in Canada; and interprovincial trade barriers, excessive regulations, have contributed to a 6% drop in personal disposable income in recent years. It is certainly an abysmal performance relative to that of the United States.

High unemployment and lack of job security are the scourges that affect the Canadian public at this time. Interest rates are of little importance if there is little job security or if jobs cannot be found when one is determining whether or not to purchase a home. The biggest obstacle that stands between Canadians and the attainment of their goals is the Liberal government.

Clearly the best way to assist Canadians to achieve their goals is for government to provide a plan for growth. We need to reduce payroll taxes. We need to reduce income taxes. Our party is calling for a broadly based income tax reduction which will benefit all Canadians.

We trust Canadians. We believe putting more money in their pockets will help them attain and achieve their goals. Lower tax rates will contribute to higher job growth. Working Canadians with higher disposable incomes will have more money to purchase items they want to purchase such as homes and to pay for the education of their children. This will better their lives and the lives of future generations of their families.

Our plan for growth will work for Canadians and will put more Canadians back to work. We need meaningful tax reform and we need a holistic approach to tax reform. Taxes are designed to pay for services provided by government. Effective tax policy should be neutral. It should be non-directional. It should be basically focused on the initial goal of raising funds for the operation of government.

Why do people in Canada need to hire accountants or lawyers to deal with their own government? It is fundamentally wrong. Governments have overtaxed Canadians and then have manipulated Canadians through egregious and excessive loopholes. These are what I refer to as people control mechanisms which the government utilizes to push people in a particular direction. Its Pavlovian, paternalistic tax policy tries to control Canadians and their behaviour.

The tax code is meant to raise revenue. It is not meant to be directional in terms of affecting the spending habits of Canadians.

Yesterday I listened at length to Reform members pontificate about Bill C-28. I believe that they too espoused a simpler, flatter tax code.

Yesterday the member for Prince George—Bulkley Valley said that the Liberals, instead of wanting to fix the tax code, were simply making changes to make it more confusing for Canadians. The member for St. Albert said:

Is it any wonder that Canadians are losing faith with their tax system and the complexity of the Income Tax Act?

What a difference a day makes. I guess hypocrisy is only half a mortal sin. It strikes me that Bill C-223 provides a subsidy for a particular activity and to a considerable extent complicates further a tax code that is already far too complex.

Will Reform table the costing of the bill? When Canadians need a simpler tax code the Reform Party wants a more complex one. Tax changes have to be holistic and are not developed in a vacuum or in isolation. We cannot forget the most fundamental rule of public policy, that is unintended consequences of public policy, especially when considering tax policy. We have to be very careful.

Targeted subsidies are a slippery slope. I thought the Reform Party was opposed to subsidies. This is in effect a subsidy for a particular group of Canadians and serves in some ways to discriminate against many Canadians, the poorest of Canadians who may not be in a position to buy a home but who would benefit from broadly based tax cuts and from an increase in personal deductions to about $10,000, which is part of our platform.

The Reform Party would like us to endorse bigger and more invasive government. The Reform Party has suddenly decided to side with the government. It is on the side of fiscal interventionists. Why not provide a tax break to all Canadians?

The PC Party dropped taxes as a percentage of GDP from 14% to 13% from 1989 to 1993. That is what we did with personal income tax. The Liberals have increased it since by 1% back up to 14%.

Reformers like to talk about a flat tax but while they talk the talk of flat tax they walk the walk of fiscal interventionists.

Let us face it. A targeted tax break is better than no tax relief at all. Let us take a serious look at the effectiveness of mortgage interest deductibility and the risks, for instance, in the U.S. example. I realize the Reform Party imports wholesale a significant part of its platform from the U.S. Republicans, but it would be better off to listen to Jack Kemp than Jesse Helms on many of its policies.

The fact is that people like Jack Kemp and other advocates for flatter tax codes would like to see the removal of things like the mortgage deductibility of interest, which is essentially diametrically opposed to the whole concept of flatter tax. I assumed Reformers were flat tax people based on their platform but that they may have changed as of late. Some of their other policies have evolved as well. We can only hope their members join in these policies.

If we compare ownership rates, Canada and Japan with no interest deductibility have essentially the same ownership rate as the U.S. with interest deductibility. The question is has it affected the purchasing patterns of Americans significantly. France and the Netherlands have lower ownership rates than Canada with interest deductibility.

I will reiterate that a tax break in absence of an overall holistic tax reform is better than no tax break at all. We cannot argue with the intention of the bill to allow more Canadians to purchase their first home. That is a very positive goal for any legislation. However, we must not forget that the most important goal for the House should be to simplify Canada's tax code and reduce the tax burden for all Canadians.

In closing, we cannot forget the first law of public policy is the law of unintended consequences. As many economists predict, we are about to enter a level of unprecedented deflation. In a deflationary environment, if we create government policy incentives for individual Canadians to assume larger debt than they would otherwise assume, potentially we might create a situation that would actually punish many Canadians for wanting to do the right thing.

A tax break is better than no tax reform at all, but let us keep our eye on the ball and focused on what Canadians really need: broad based tax reductions, tax reform and tax simplification.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I congratulate the member for Portage—Lisgar for his initiative in proposing this bill. I am sure he is well intentioned. He would like to give Canadians a tax break, he would like to stimulate housing construction in Canada and he would like to re-emphasize the importance of the home, the family, et cetera.

I am sure that none of us in this House would disagree with those objectives, but the bill proposes that interest paid by a taxpayer on the first $100,000 of a mortgage loan secured by that first qualifying home acquired by a taxpayer would be allowed as a deduction for tax purposes. I am afraid the bill falls short of meeting the objectives proposed by the member when he introduced this bill.

The bill raises a number of important questions but fails to answer them. I am sure they are begging for answers but I am not sure the bill really answers them. For example, is it appropriate to give a tax break to a citizen who does not own a home but who rents or who does not pay rent or own a home at all? Why give a tax break to someone who owns a home versus someone who does not own a home?

Why should first time buyers of a home receive a tax break versus people who already a home? Does that make any sense? I submit that it does not make any sense at all. Should our tax system reward borrowing and penalize saving? I am not sure that is the kind of incentive we want to build into our tax system.

If the mortgage interest were deductible clearly taxpayers would be motivated to have the highest mortgage possible. They would have more interest and more interest to deduct. Clearly we would be encouraging Canadians to borrow more and save less. I am not sure that is something we want our tax system to encourage. These are some serious questions that really beg answers. Maybe the member opposite will have a chance to address them but the answers are not contained in his private member's bill.

It is unfortunate that there are more questions that beg answers. Currently in Canada the capital gain on a sale of a principal residence is not taxable. If we allowed the interest to be deductible then surely the capital gain on the sale of a principal residence should be taxable. The reason a capital gain on a principal residence is not taxable in Canada now is that we do not consider an investment in a principal residence as an investment. It is the ownership of a private home. You cannot have your cake and eat it too. You cannot be tax free in terms of capital gains and have interest that is tax deductible.

There is the serious question of the cost of implementing this proposal. If this proposal were implemented the annual cost to the treasury would eventually be approximately $3 billion a year. If the tax rolls were broadened to be at least within the context of the member's proposal to be more equitable in terms of not just first time home buyers but all homeowners, the annual cost to the treasury could rise to $6 billion at a time when we are looking at fiscal priorities. I could think of a myriad of other good ways to give Canadians a tax break or to repay the debt or to invest in some much needed social and economic programs. First time home buyers already get some tax assistance under the home buyers plan.

What the bill fundamentally proposes comes from a misunderstanding of what Canadians want in their tax system. They want a progressive tax system. That is the whole essence of our tax system in Canada. Under this proposal individuals with higher incomes would get a bigger tax break. That is really contrary to the whole philosophy and the principles behind the tax system in Canada, and I think quite rightly.

I am sure the member opposite gets a lot of his ideas from what goes on in the United States. Yes, it is true that mortgage interest is deductible for tax purposes in the United States, but again capital gains in excess of $500,000 on a principal residence are typically taxed. In addition, most Americans do not really take advantage of the deductibility of mortgage interest because they prefer to take the standard deduction without any questions. Our personal income tax system in Canada is far more progressive than the U.S. income tax system.

While I and a lot of my colleagues I am sure would like to reduce the general burden of personal income taxes in Canada, and we are working very hard toward that end, I am quite convinced that this proposal is really not a very equitable or a very efficient way to give tax relief to Canadians.

If we look at the United States and just to sort of emphasize the lack of progressiveness in its income tax system, Americans hit the highest marginal income tax rate when they get to incomes of $300,000 plus. By way of contrast, in Canada when we hit incomes of $150,000 or thereabouts we start to hit the top marginal tax rate. That is by design. That is the way our tax system works. We say that those people earning the bigger incomes are able to share their wealth to some extent to help those who are in less advantageous positions. That is the whole philosophy behind the income tax system.

This measure is really not a very progressive step at all. I am sure it is really counter to what Canadians expect from their income tax system. For that reason I urge members of this House to vote against this bill.

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

Mr. Speaker, I am pleased to rise in this House this afternoon to speak on Bill C-223, an act to amend the Income Tax Act providing for the deduction of interest on mortgage loans, introduced by my colleague from the Reform Party, the hon. member for Portage—Lisgar.

On the face of it, this bill looks like a good bill, in the sense that it could indeed help boost housing starts. And as the old saying has it “When home construction goes well, so goes the economy”.

The economy is going well because forestry workers are working in the forest again, providing lumber mill workers with wood to cut. Construction workers also have work. Everyone is working. This activity also brings in revenue for the government. With fewer people on EI, costs go down and, with more people paying taxes, revenues grow.

That aspect of the bill seems quite interesting. Another interesting aspect is the opportunity for our young people, who are just starting off in life, to get a nudge in the right direction from people with grey hair like mine so they will be off to a good start. That does sound good.

What I have more of a problem with is equity. Let us take a look at equity in this legislation. Take for example a $200,000 house, on which, as I understand it, the first $100,000 in mortagage would be deductible. How much would this $200,000 house built in Montreal be worth?

Because of supply and demand, the same house would not be worth $200,000 if it were built in Sept-Îles, Sherbrooke or remote areas like Abitibi.

And how would we manage to get equity for interest on this first $100,000 deductible. That means the houses would not have the same value. This needs looking into.

The tax deduction is the point of most concern to me. It concerns me because again there would be two rates, one for the better off and one for the less well off. Let me give an example to explain what I mean.

A person with an income under $30,000 could get a tax deduction of $140 per $1,000, while someone two houses further down the street who earned $60,000 annually could, for the same $1,000 deductible, get $290 in assistance. Why that difference of $120?

We in the Bloc are in favour of a refundable tax credit. This refundable tax credit, at a fixed rate, could be far fairer for everyone. That is why we have certain reservations, and will not be supporting this bill, barring amendments in the tax provisions.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, it gives me great pleasure to enter the debate on Bill C-223. I would also like to thank the member for Portage—Lisgar for bringing this matter to the floor.

This is not the first time that this has been debated in the House of Commons. The ill fated government of Joe Clark and Mr. Crosbie made it part of its budget projections which eventually saw it defeated. Subsequently not many people have sought to reintroduce it.

I understand the member is interested in helping young families get a start in life, a very admirable position to have. I do not think it is going to attain the objectives he is interested in for a number of reasons.

First, this would increase the complexity of the existing income tax system. The thing that people mention to me is they want to see a simpler and fairer taxation system. We will have one group of taxpayers eligible for deductions and another group not.

I want to specifically talk about some of the problems of the American system which allows the deductibility of mortgage interest. I am certain the administrative people in the United States would dearly love to get rid of the mortgage deductibility. The tendency of the government there has been to eliminate consumer deductibility for other forms of debt such as car loans and credit card interest, which have already been eliminated. The American system is tending to go away from the concept of mortgage deductibility.

What this does is encourage people to be in debt. I have some American friends who are quite amazed that Canadians eventually pay their houses off through a process of saving. Canadians have one of the highest percentages of home ownership probably in the western world because of that. I know the member is talking about first time home buyers, but it has been the tendency for Americans that every five years when their mortgage comes up for renewal they increase their mortgage. They increase it based on the inflated value of their real estate because there is a tax incentive to do so.

As a consequence few people actually try to pay off their mortgages and they live with debt risk. If there is a downturn in the economy, these people, the very people the member is interested in assisting, will end up losing their homes because they are too highly leveraged and the incentive to save has not been there.

Let us look at the experience in the United States. We have talked about the difference between the wealthy benefiting from this package as opposed to those who are not so inclined. Of course it benefits people who own homes as opposed to those who rent.

In the United States currently only 8% of new homeowners recently polled cited the tax break as a reason for purchasing their homes. In the United States only 6.2% of household earnings between $10,000 and $20,000 per year claim the deduction compared to 78.1% of filers who declared more than $100,000 of taxable income.

We can see very clearly that the American experience is that the high income earners are the ones taking advantage of this and not those with low incomes. It is a regressive tax in the sense that it favours higher income groups at the detriment of lower income earners.

Previous speakers have mentioned that to some extent capital gains on personal residences are taxed in the United States. Of course Canada does not do that. If we introduce a process whereby people are allowed to deduct the interest they pay on their mortgages, it follows that we should also tax capital gains. I believe we would find there would be a lot of reticence if we moved in that direction.

This would be what we call a retrogressive tax. It would increase the complexity of the tax system. It is a reward for spending as opposed to saving. These all seem to run counter to the things which government should be promoting in our country.

The Americans like this because they have a consumer driven society. Basically we will find in the United States that their savings rates are significantly lower than those of Canadians. That creates a great deal of uncertainty in their lives. Indeed many people live from paycheque to paycheque. I suppose we could argue that this happens in Canada as well, but it is more evident in the United States.

When the hon. member first opened debate on this issue he talked about who would benefit. I am surprised at the reference he made. He said that he had been informed by the banking industry that it would be in favour of this. Why would it not be? After all, if the banks are going to increase their mortgage business, why would it not be a great business to have?

I suggest to the hon. member that the people he is trying to defend, the first time homebuyers, are the very people the banks want to get into their clutches. The banks will tell them not to pay down their mortgages or save because the banks will lend them the money. We know who will become wealthy from that. It will not be the first time homebuyers, it will be the financial institutions which will benefit.

In conclusion, while I am aware of the good intentions of the member, I encourage my colleagues to vote against this bill.

[Inky Mark, Reform, Dauphin—Swan River, MB]

Mr. Speaker, I am pleased to support Private Member's Bill C-223, an act to amend the Income Tax Act by introducing a deduction for interest paid on mortgage loans.

From listening to the former speakers, I believe they have really missed the boat. This bill is about putting money in people's pockets. When they have money in their pockets they spend it. When people spend their money we have increased economic activity. That is how the world operates.

I applaud the hon. member for Portage—Lisgar for introducing the bill. It would provide for the deduction of interest paid by a taxpayer on the first $100,000 of a mortgage loan, secured by the first qualifying home acquired by that taxpayer. In other words, that is the ceiling.

If I can simplify this, for a mortgage amount of $100,000 amortized over 20 years at an interest rate of 7%, and the government should take note that interest rates are unfortunately going up today, with that mortgage a buyer will pay an estimated amount of $84,632 in interest.

To simplify this for those members who do not like math, let us divide $84,632 by 20 years. We come up with about $4,231.50. That is potentially $4,231.50 more per year that a first time homebuyer would have to spend on their children, on the purchase of a car, on an RRSP, on things like dental care, on furnishings and on the upkeep of their home. That is potentially $4,231.50 depending on the terms of the mortgage, a homebuyer could put toward paying down a mortgage early, saving even more money.

No matter how we slice it, that is $84,632 more in the pockets of the first time homebuyer. In other words, that is the interest.

What is the philosophy behind this bill? It is simple but profound. As I said in my earlier remarks, a dollar left in the hands of a taxpayer, a consumer, a parent, a citizen, is better used and more beneficial to the economy and all Canadians than that same dollar put in the hands of the tax collector, a minister or a bureaucrat.

Believe it. With a few more dollars in the hands of first time homebuyers this bill will achieve the following. It moves Canadians from renters to homebuyers. Instead of giving money to a landlord, more Canadians would have the opportunity to invest in themselves, their families and their futures.

In Winnipeg, the largest city in my province of Manitoba, 60% of the homes sold from January to September 1997 were purchased by first time homebuyers. According to an article reported in the Winnipeg Sun on October 27, 1997, Terry Kozak, a Canada Mortgage and Housing Corporation spokesman said: “A record high of 25,000 Winnipeg renters could afford to purchase a home. The added incentive of tax deductible interest would encourage renters to take the plunge”.

The second point I want to make is that in 1995 under the Liberal government, housing starts in Manitoba were down by 38.6%. Since then housing starts have seen very modest gains. According to CMHC single family housing starts are up in Manitoba by 10.7% compared to gains of more than 37% in Alberta for 1997. But as I already mentioned, interest rates are headed up. That is not good news for homebuyers. If the government is really interested in sustaining the growth in housing starts, it should pass Bill C-223.

The government should use this tax break for mortgage interest to counteract mortgage interest rates going up. That is good public policy. It is real compassion for families and other potential first time buyers just getting started in life. If all of us can think back 30 or 40 years, we will remember what it was like when we did not have two nickels to pinch.

Even the columnist who is not a fan of the Reform Party, Brian Mulroney's former chief of staff, Hugh Segal, agrees with the objective of this bill. I quote from his column of September 13, 1997. “Middle income Canadians would experience an increase in disposable and discretionary income, there would be an easier transition from renting to owning and the family home would for once be the beneficiary of enlightened tax policy as opposed to a victim”. He goes on to say, “It was right when finance minister Crosby tried to introduce it almost 20 years ago”, as the former speaker alluded to, “and it is even more right today”.

My colleague has enunciated how there are many other benefits with the economic spin-offs that this tax break would create. There is no doubt we would see an increase in job creation, certainly jobs created for carpenters, plumbers, electricians. There would also be a big demand for the manufacturing sector to fill these homes.

Money spent locally in communities usually turns around about seven times. Every dollar that is spent locally spins around seven times.

Real jobs are created when governments put more money into the hands of the consumer. The expenditure of money is what makes the economy go around. The people of Canada are waiting for tax relief. I remind the House that we are the highest taxed people in all of the G-7 countries.

I close by saying that it is time we passed this bill. It would help first time homebuyers create their own homes and enhance the quality of life for their families.

[Steve Mahoney, Liberal, Mississauga West, ON]

Mr. Speaker, I am please to comment on this private member's bill.

First let me tell members in this House, some of whom may represent rural or agricultural ridings, that the agricultural product in my city of Mississauga happens to be homes.

When people ask what the population is of Mississauga, I generally respond by asking “What time is it”. In times of recession in this country we have experienced growth in our community in the neighbourhood of 20,000 people a year. We currently have approximately 600,000 people. Our ultimate population will be 750,000 according to our official plan. Many of those will be people moving into homes and we would call them first time homebuyers.

Frankly, anything that is done that would legitimately assist a first time homebuyer in the city of Mississauga, in the community I represent, you would think would be something we would want to support. What is really interesting when we examine this bill in particular coming as a private member's bill from a Reform Party member is that this is a spending bill. If we analyse it, it is not a tax cut at all.

[Some hon. members]

Oh, oh.

[Steve Mahoney, Liberal, Mississauga West, ON]

Members think this is funny. Let me share this with them and show them why the taxpayers of Canada would see this as a spending bill.

Anything that provides a tax cut means there is a cost to the federal treasury. The indications are that the cost of this at the minimum, at the floor level, would be $150 million. To maturity the cost could be as high as $3 billion. If we were to go to the next step, which would be to take it further than just first time homebuyers and expand it to include all homebuyers, the cost could be as high as $6 billion to the federal treasury.

What the member is really asking for is to go to what fundamentally is an American system. This does not surprise me because all I hear when I hear Reform Party members stand up in this place is the defence of the great U.S.A. and its tax system, its safety system and social system. All they ever talk about is how great the United States of America is.

It would be a real treat to hear a member of the Reform Party stand in the House of Commons and talk about how great Canada is. But we do not hear that. We hear, “Let us get the Star Spangled Banner up there and tell everybody boy oh boy, the way to run things is the way they run it south of the border”.

I happen to think they are wrong, as they chirp away, not only wrong but a dangerous policy.

There are ways to help first time home buyers. One very obvious way that the members opposite neglect to recognize is the interest rate in this country. Just think about the difficulty that a first time home buyer would have in buying a home in my community. The low end would be somewhere around $130,000 for a townhouse up to $200,000 for a fairly modest three bedroom home in a subdivision in my city. They would need a down payment of approximately $30,000. They have to save that money. If they were buying a semi-detached or single home with a maximum CMHC insured mortgage, they would end up with a mortgage payment, if the interest rates were at 10%, as high as $1,500 a month. That is a lot of money for a first time home buyer to assume.

If they were to buy the smaller home then they would be able to cut that down but it is still going to be $1,000 or more per month. What people tend to forget when they are buying a townhouse is that they have to add on common area maintenance fees to the mortgage. Even for a townhouse at the lowest end of the market in big city Canada, we are talking about $1,200 to $1,500 a month in mortgage payments if the interest rates are as high as 10%.

What has happened since this government took office in 1993? By putting confidence back into the marketplace, by eliminating the $42 billion inherited—

[Some hon. members]

Oh, oh.

[Steve Mahoney, Liberal, Mississauga West, ON]

The Tories do not like to hear about this. They wave it off. They do not want to hear us constantly remind the Canadian public about the legacy of Brian Mulroney. However, the facts are that in 1993 this government started out with a huge deficit which hurt us internationally. It hurt us in the money markets and in the marketplace. People said you cannot even manage your own household, don't talk to us about other households.

We have managed this household. We have put this country on the road to fiscal responsibility and have balanced the books. From time to time the Leader of the Opposition stands up and admits that but then says, like the poor hungry boy in Oliver, please sir, I want more. That is all we hear. I have never heard such whining and snivelling coming out of the parties representing the west, primarily and the Reform Party, as we hear every day in this place. Please sir, I want more.

What they are proposing with this bill is that they want more. In what I can only hope is a noble attempt to try to do something for first time home buyers, I am prepared to concede that at least their intention is good.

[Some hon. members]

Hear, hear.

[Steve Mahoney, Liberal, Mississauga West, ON]

Yes, go ahead and applaud yourselves, trained seals all. In any event, I am assuming they are trying to do something for first time home buyers but they are doing it in the most ridiculous way because they are asking all the taxpayers in Canada to foot the bill. They are asking this government, if we were to adopt this private member's bill, to assume the potential liability that could be as high as $6 billion if we were to take it to its ultimate extremes. We are not prepared to do that. That is not the stated goal of this government.

When I first looked at this I thought it would be great to be able to deduct the interest on my mortgage. It is a laudable idea. Anyone looking at it would think it was wonderful. However, we do not pay taxes on capital gains when we sell our principal residences. That might have to change if that situation were to occur. There is a bit of a quid pro quo there.

The other aspect is when I look at the potential damage and the cost and the fact that we would be asking non-first time home buyers, renters, seniors, people who owned their homes for a number of years, to subsidize this. It is wrong headed.

What makes more sense is keeping our inflation rate low and non-existent, keeping our interest rates as low as they are because that benefits all of us, whether we are buying a first time home, an automobile, whether we are taking a vacation, whatever it is. It allows us to get the true benefit of revenue and money staying in our pocket because we keep interest rates down.

If Reformers would understand that, they would understand that this private member's bill, contrary to what they would say, is nothing more than a spending program they are asking this government to do, which I could not support.

[Jim Pankiw, Reform, Saskatoon—Humboldt, SK]

Mr. Speaker, the hon. member for Mississauga West referred to the proposed bill as a spending program.

He said it was not really providing a tax deduction that does not currently exist but a spending increase because anything that provides a tax cut is a cost to the federal treasury. Therefore providing a tax deduction that does not currently exist to him is a spending program. It is twisted, perverse logic. It is bizarre logic. It is Liberal logic. There is really no logic there.

I would like to congratulate the hon. member for Portage—Lisgar for introducing this private member's bill. I would like to speak about the fairness of it and his attempt to bring fairness to younger Canadians who this would actually impact on.

Before I do, I am not quite done in my comments about the discussion the hon. member for Mississauga West was engaged in. He was singing praise for the fiscal management of the Liberal government, but the truth is that in the past four years, under this Liberal government, the national debt of our country has increased $100 billion. Those are the cold, hard facts. There it is. It is as simple as that.

Then he referred to not only the member for Portage—Lisgar but to all Reformers as whiners and snivellers for trying to exercise the representation of our constituents here and speak on their behalf in an attempt to gain some tax relief for them.

They are burdened, as are all Canadians, by the level of taxation in this country. We are trying to put forward measures which would provide some relief of the over burdensome government levels of tax, but the Liberals are referring to us as whiners and snivellers.

In other words, they are saying that despite the fact that we are among the highest taxed citizens in the world, we are whiners and snivellers for complaining about it.

Earlier in discussion the hon. member from Kings—Hants, a Conservative member, suggested it was not a good idea to provide this tax cut for first time home buyers because it would increase the complexity of the tax code.

I point out to the hon. member that the complexity of the tax code doubled in the nine years the Conservatives governed this country. I think it is a little hypocritical to suggest what he did.

The most important thing I have to say about this bill is the fairness of it. What I am getting at is that yes, the Liberal government has increased our national debt $100 billion and yes, the Conservative government prior in nine years increased our national debt by $300 billion, and the Liberal government before that, a further $200 billion.

Now we are saddled with this $600 billion national debt that is placed on the backs of our future generations. It is younger Canadians who are going to have to bear that burden, being saddled with high taxes for the rest of their lives to pay off the mismanagement of past Conservative and Liberal governments.

Furthermore these same governments have mismanaged our Canada pension plan so it now has an unfunded liability of $600 billion, for which the younger generation is also going to have to bear the burden.

If the hon. member from Portage—Lisgar is able to introduce a bill that would at least provide a bit of tax relief to the generation now burdened with the mismanagement of past Liberal and Conservative governments, the onus is on us to support that.

[The Acting Speaker (Mr. McClelland)]

The time provided for the consideration of Private Members' Business has now expired. The order is dropped to the bottom of the order of precedence on the Order Paper.

Request For Emergency Debate

[The Speaker]

Colleagues, at 2.15 p.m. today I received a letter from the hon. member for Sherbrooke asking for an emergency debate. Subsequently I gave the floor to the member for Sherbrooke. He encapsulated what was in the letter.

I have given very serious thought to this request for an emergency debate today. It is my decision that it does not meet all the contingencies for an emergency debate at this time.

The motion to adjourn the House is now deemed to have been moved pursuant to order made Monday, February 2, 1998.

Ice Storm 1998

[Jean Chrétien, Liberal, Prime Minister]

Mr. Speaker, I am very pleased that the leaders of all of the parties, especially the Leader of the Opposition, asked for or agreed to a debate at this point to discuss the totally unprecedented events in eastern Ontario, Quebec and the maritimes in early January.

As you know there are times when nature reminds us who is really the boss on our planet. Despite our advanced technology and knowledge, we can one day find ourselves at the mercy of forces beyond our control. It is a great lesson in humility. For several million people in eastern Ontario, Quebec, New Brunswick, Wolfe Island and Saint-Jean-sur-Richelieu, the ice storm brutally reminded us how vulnerable we are in the face of nature's fury.

There are times when we realize that our status as Canadians goes far beyond our geography, our citizenship and our common history. To be Canadian is to be a member of a living and active community. Wherever we live in this great country, be we rich or poor and whatever our political bent, we are all citizens. As such, when things go wrong, we help each other, we work together and we band together. As in the case of the floods in the Saguenay and in Manitoba, the ice storm of 1998 triggered this natural reflex in us.

A few weeks ago, no one would have believed that a continuous rain around the freezing point would put so many cities and villages in the cold and in the dark, for days in certain cases, and for weeks in others. No one would have believed that complex hydro networks which took years to build would be destroyed in a matter of hours, that giant pylons would bend in no time flat under the weight of the ice.

Most members of Parliament, including myself—either by personally visiting the affected areas or by watching the situation unfold on television—were able to witness the damage, as did all Canadians. Canadians quickly got over their shock and displayed a profound desire to help the victims of that storm. When this winter disaster struck, families, neighbours and, for that matter, all Canadians came to the rescue.

Faced with untold misery and uncertainty, communities came together. People reached out to one another. They lent a hand, they cooked meals, they opened their homes. As the extent of the crisis became clear, local and provincial governments quickly marshalled their resources to assess damage, to organize emergency food shelters, to co-ordinate volunteers, to provide people with information concerning where to go for help and to warn of the dangers.

Everybody wanted to help. There was no partisan politics involved.

I met with the premiers of Quebec and Ontario. During the first hours the premiers were all calling. The premier of Newfoundland offered to send his line men. The same offer was made by the premiers of Nova Scotia and New Brunswick. The premiers of Manitoba, Saskatchewan, Alberta and British Columbia called to ask what they could do. They told us that they had all sorts of equipment available. Everybody wanted to come to the aid of the people who were having difficulties. I would like to thank them for that. It was a great sign of solidarity.

Locally the mayors and the aldermen started to work.

Mayors followed the situation very closely, as did municipal officials. They spent days if not weeks with hardly any sleep, to provide assistance to those in need.

It was quite obvious that an exceptional effort was required, because this was a truly exceptional storm. Very quickly, the crisis took on national proportions and demanded a national response. It required the resources of the entire Canadian government.

When the governments of Quebec and Ontario called for help, all the resources of the Canadian government were mobilized. We were prepared to co-operate with provincial and local governments to speed up the relief effort. We had to look after people's safety and build co-operation.

We focussed on helping individuals, families, small businesses and farmers. The Canadian Armed Forces spearheaded the Canadian government's effort.

At the peak of Operation Recuperation, over 15,000 regular and reserve soldiers were deployed in all the regions devastated by the storm. They helped the hydro teams restore power. They cleared debris. They helped people get to shelters. They provided food and beds, and blankets for those who needed them. They visited all families that had not left their homes to make sure they were safe. They provided assistance to everyone.

I was able to see that their mandate was to do what needed to be done and ask questions later because this was a national emergency. They did an outstanding job at helping local authorities and all the victims.

Equipment was airlifted from Vancouver and Victoria, and stops were made in every provincial capital along the way to pick up the equipment local authorities were making available to the storm victims: generators, equipment provided by power companies in every province. Planes even had to be chartered abroad for this purpose.

The American army was called in under the terms of an agreement we have with them. I want to stress that the American army responded immediately to assist the Canadian army in carrying out its duties. In my opinion, this turned out to be a major source of help for the Canadian army, which has so often been called upon to help abroad.

When they had the occasion to serve the Canadian people, I met them and I know how anxious they were to do the right thing, a spirit they have developed over the years travelling abroad in difficult circumstances. They were very happy to help the citizens of Canada who were in trouble at that time.

I talked with the soldiers who came from all over Canada. They were in the local communities helping people. They came from British Columbia, Newfoundland, Nova Scotia, Alberta and Manitoba. Many of them were in Quebec and they could not speak a word of French, but they communicated in their own way with the people to help them restore order and gain comfort.

It was a great moment for them. All members of Parliament should be very proud of what the Canadian forces did in those troubled communities.

They did it with a sense of pride. It was a call to duty. Now they have been re-deployed. Some are still there because the problems have not been completely solved. They will stay there as long as they are needed.

When they arrived in the villages and in the towns, the sense of security, the sense of solidarity was felt by all the citizens.

Sometimes we have tended to criticize them, but it was good to see that when they were needed, they did a fantastic job.

In operation “recuperation”, the federal government did all it could to help at the time. To date we have spent some $250 million to help people in difficulty as the result of the catastrophe. We have advanced $50 million to the Government of Quebec and $25 million to the Government of Ontario to help them with the difficulties they face.

Obviously, we have not yet seen the final bill. It will be enormous, unfortunately. However, Canadian solidarity will be expressed once again, because up to 90% of the expenses incurred by the provincial governments will be reimbursed by the federal government. That is what Canadian solidarity is all about. We help each other out in difficult times.

The Minister of Human Resources Development made a fund of $45 million available to municipalities to help them do the necessary clean up and repair work.

The Department of Public Works put all federal government equipment at the disposal of the victims. The minister sent the mayors—it was very urgent, he paid in advance—tax payments or payments in lieu of taxes so that the municipalities would have cash on hand to meet the unexpected obligations they must face.

Revenue Canada allowed all those importing generators and other equipment from the United States to cross the border quickly and will ask questions later to ensure that the laws have been complied with.

The Department of Health, with emergency systems located across the country, immediately gave the order to ship the available beds, bedding and medicines to the devastated regions as promptly as possible.

I believe the government did everything possible under the circumstances, and when our fellow citizens are in difficulty, it is our duty to spare no efforts to make their lives easier.

Canadians from across the land showed their solidarity. They sent blankets, food and money. There were all sorts of donations. The Red Cross has received $6 million in relief so far. The donations came from everywhere, big and small. The NHL gave half a million dollars.

On the plane when I was travelling with Team Canada the businessmen raised $150,000. One of them got up and said that there was a problem and everyone started signing cheques, despite having had to pay at least $15,000 to be part of the team. Those businessmen pitched in $150,000. There were all sorts of good examples.

I would like to give particular mention to Kai-ya Belfry and Linnea Clow, two 11th grade students from Prince Edward Island, who were in Quebec when the ice storm struck and who gave their friends back in P.E.I. the idea of collecting money for the disaster victims, and to two New Brunswick children, two little boys named Joshua and Christopher Ogden, who sent in part of their weekly allowances. They sent in $2, a sizeable sum to them, and they sent it in.

Six rail cars containing some 360 cords of firewood were collected in Halifax, Windsor and Sydney, Nova Scotia. The member for Renfrew—Nipissing—Pembroke sent 12 trucks of his own firewood from a business he has with his brother. There were members of Parliament calling other members of Parliament offering help. There was equipment coming from everywhere. The member for Provencher collected generators to be sent to Quebec and Ontario because of the situation, because they were needed. The army was collecting and delivering them.

Imagine how the farmer who had not been in a position to milk his cows felt when he saw Canadian soldiers arriving with a generator to help him do his job. Imagine him standing at his barn door and receiving help from Manitoba, Saskatchewan or other parts of Ontario.

Members of Parliament called members in affected areas to offer help. That is something of which we can be very proud. Also I should mention Ashley Franzon, a grade four student at James Bolton Public School near Toronto, who organized a drive to collect emergency supplies.

A francophone club from Windsor, Ontario, called Place Concorde, organized a fund-raising event called “Brise-glace”. The Grand Forks high school, in British Columbia, got in touch with the students of Saint-Jean-sur-Richelieu to offer them assistance and even to invite them to come to British Columbia during the storm, to share their facilities. The CHMB radio station, in Vancouver, collected over $15,000. Such a show of solidarity, support and friendship is simply unprecedented.

That is why, my dear friends, even though the situation is not completely back to normal yet, we say thanks to all Canadians on behalf of those who benefited from their support.

I have always believed that while times may change, fundamental values remain the same.

This extraordinary reaction on the part of Canadians, whether they live next door or at the other of the country, reinforced my belief. I will never forget all that was done. More importantly, the victims of the ice storm will never forget it either.

This showed once again how lucky we are to be Canadians. In this great country of ours, one thing is now very clear: the word solidarity is not just a word, it is a reality.