Debates of March 23rd, 1998

Income Tax Amendments Act, 1997

[The Acting Speaker (Ms. Thibeault)]

I am sorry to interrupt the hon. member, but it is my duty, pursuant to Standing Order 38, to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Portneuf, Asbestos.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, I would like to essentially clarify a number of things that were said this afternoon.

Let me start by saying that the motion would remove a clause that clarifies the rule on the deemed residence of foreign incorporated shipping companies. It has nothing to do with tax policy, shipping policy or any other policy. It has everything to do with political rhetoric, nothing more than that.

Let me go back and talk a bit about the clause itself. To look at the clause we have to go back over 70 years. In the 1920s Canada decided that non-resident shipping companies should not pay Canadian tax on their income from international shipping as long as companies' home countries gave Canadians the same treatment. The reciprocal agreement greatly simplified a complex double tax problem.

Around 1990 some foreign shippers, especially in Asia, wanted to open offices in Canada that would create jobs and economic activity. If we look at Vancouver, that was exactly the impact this policy had.

These foreign shippers were concerned that the 1920s tax rule was not clear enough. To benefit from the rule a foreign shipper had to be a non-resident.

The Asian companies were concerned that if they opened Canadian offices they would fall under this definition and be found to be resident in Canada. They would not benefit from the rule and would be subject to tax on all their international shipping income.

Therefore shippers along with a British Columbia government agency called International Marine Centre Vancouver persuaded the government of the time in 1991 to clarify the rule in the Income Tax Act.

The clarifying rule was enacted in 1991. It gives foreign shipping companies the assurances that they are not resident in Canada provided their principal business is international shipping and that is where substantially all their revenue comes from.

When the rule says international shipping, it specifically excludes Great Lakes and St. Lawrence shipping between Canada and the United States.

In 1994 IMC Vancouver suggested some fine tuning of the 1991 rule. In April 1995 the government responded by announcing the technical change that is now in this clause.

The change says that in counting a foreign shipper's revenue and in deciding what its business is, we can look through to the revenue and business of its wholly owned subsidiary. Why? The shipping companies are organized in different ways. It would hardly be fair to treat foreign shippers differently, depending on whether they hold their ships directly or in a subsidiary.

The clause that we are debating is not new policy. It goes back to 1920. It is not even a new rule. The rule was enacted in 1991. It is just a minor improvement of an existing provision, the sort of improvement that makes the tax system work better.

We heard a lot about that, but for several weeks allegations have been made in this House and repeated both in this House and elsewhere about the origins and the effects of this clause.

In the beginning, it was stated categorically by certain opposition members that this clause would help Canadian companies beat what are known as the foreign accrual property income or FAPI rules. That was complete nonsense.

It was not enough to be wrong once. These members, in effect, accuse the Minister of Finance of being in a conflict of interest. That, too, was utterly discredited. The fact is that the minister was kept entirely apart from this issue at all times.

The original inquiry from IMC, Vancouver and all subsequent discussions along with the decisions made on this issue were made and handled by the secretary of state. Then the allegations shifted.

We are told by these members that the minister could somehow benefit from this technical amendment. Exactly how was never explained. Why? He cannot benefit. The allegations persisted even after it was made amply clear that this clause, indeed, the whole policy that has been in place since 1920 has to do with foreign incorporated companies, not Canadian companies.

Now we get this motion. I might be a little emotional about this because I had the unfortunate experience of having to sit in this House all afternoon and listen to this political rhetoric that had absolutely nothing to do with what was before us.

Therefore, having totally misunderstood the amendment, having failed to show the slightest impropriety on the part of the government, having ignored all the information it has been given, the Bloc Quebecois wants to remove the clause from the bill.

This is not policy. It is politics. It is an attempt to discredit a respected minister with innuendo by repeating unfounded charges in the hope that they could cast him in a bad light. It is an attempt to taint with suspicion a man of honour who happened to have a successful business career before entering public life.

Let us be clear. The hon. member for Medicine Hat sits there and ridicules. I had to sit here and listen to his rhetoric. He cannot stand the facts. He has to sit there and ridicule. Let us be clear. The Minister of Finance has always exceeded the requirements for disclosure for members of Parliament and cabinet in 1998 and 1993. When he became a member of cabinet he voluntarily disclosed all his business assets, his personal holdings and registered them with the Clerk of the House. They are available to the public, including the media and members of the opposition. That is not a requirement of a member of Parliament.

The ethics counsellor has totally rejected, unequivocally, the Bloc's claims entirely. I will say this ever so slowly because this is what I have had to listen to all afternoon. He said no conflict of interest exists and therefore no appearance of conflict exists.

The member for Drummond said today that the ethics commissioner actually said this clause should be put in the annex of a bill. He never said that. I do not know where they get this information. He said there is no conflict of interest and therefore no appearance of conflict of interest exists.

It was quite a sad day today to sit here and listen to these people in opposition go on and on attacking a member of this House, attacking the finance minister who is very well respected in this country, who did more for this country and whose family did quite a bit for this country. I tried to remain calm. I am a little excited now but I think for a very good cause.

If there was ever any doubt that the opposition party charges are about politics at its worst, that was clearly demonstrated by the member for Battlefords—Lloydminster who told the Ottawa Sun when asked if he thought the minister behaved unethically, and I quote because I think this really puts it in context: “Personally I don't believe so. I think Mr. Martin is a man of integrity. I really do”. Those are not my words. Those are the words of a member of the opposition.

I only hope that the members opposite would listen to that member so they understand in effect that what these members in the House today did was essentially to go on a political witch hunt after this minister for their political gain. I do not believe for one second that there is a Canadian who believes the Minister of Finance has nothing but the best interests of Canadians in mind first and foremost. He has demonstrated it since 1988, since he was elected to this House. He will continue to do so.

I hope we will see this clause defeated. I also hope these members at some point throughout this mandate will stand up and apologize for the kind of behaviour we saw today in this House.

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

Madam Speaker, it is not infrequent in the House that we have a lot of sound and fury signifying not much. Unfortunately that is exactly what we just had from the member. There is an issue here of the integrity of the minister which is not in question by me. It was certainly not in question by the member for Calgary Southeast.

We are talking about the issue of how appropriate it was for the legislation to be introduced by the minister who has interests in shipping. The issue is that simple.

The irony is that the finance minister who gets to set the affairs of Canada, in particular the affairs related to taxation, is a good businessman who takes full advantage of all rules and decides to put assets offshore so he will not have to pay taxes like everyone else. The irony of the finance minister arranging his affairs in this way is not lost on the viewers of this program or on the readers of this transcript. The irony of the finance minister being able to do that with impunity speaks to the issue of the government's policies and indeed his policies.

I reject the assertions of the parliamentary secretary that the conflict of interest commissioner said that because there was no conflict there was no appearance of conflict. We remember that this commissioner was supposed to be the watchdog that would answer to parliament. The Prime Minister and the Liberal red book very clearly and unequivocally stated that the conflict of interest commissioner would be answerable to parliament, as he should be. However it is yet another Liberal broken promise because the conflict of interest commissioner is answerable to the Prime Minister. The watchdog becomes the lap dog of parliament. Therefore I am sorry but I take no—

[An hon. member]

Don't take shots at the commissioner too.

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

Yes, I will take shots at the commissioner too because of the position the government and the Prime Minister have put this very honourable gentleman in. The Prime Minister and the government have created this situation.

The perception about the affairs of the the finance minister is that he can do things offshore legally, completely above board and within the rules. That is an accurate perception. However, what do we do with the fact that he also makes the rules which permit him to do that? At the same time virtually all Canadian taxpayers do not have that option. That is the irony and therein is the appearance. Therefore we will be supporting the motion.

[The Acting Speaker (Ms. Thibeault)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Ms. Thibeault)]

The question is on Motion No. 2. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Ms. Thibeault)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Ms. Thibeault)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Ms. Thibeault)]

In my opinion the nays have it.

And more than five members having risen:

[The Acting Speaker (Ms. Thibeault)]

The recorded division on the motion stands deferred.

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

moved:

Motion No. 3

That Bill C-28, in Clause 285.1, be amended by adding after line 13 on page 454 the following:

“(3) Section 15 of the Federal Provincial Fiscal Arrangements Act is amended by adding the following after subsection (3):

(3.1) The Minister of Health shall table in the House of Commons, in September of each year commencing in the year 1998 and ending in the year 2003, a report assessing the adequacy of the cash portion of the total entitlement referred to in subsection (3) to sustain the principles of the Canada Health Act, and where the House of Commons is not sitting in September of that year, the Minister of Health shall table the report in the month in which the House next sits.”

Madam Speaker, I believe you would find unanimous consent for the following amendment to the motion. I move:

That the words “of health” be inserted after the words “the minister” wherever those appear in Motion No. 3 of Bill C-28.

[The Acting Speaker (Ms. Thibeault)]

Is there unanimous consent?

[Some hon. members]

Agreed.

(Amendment agreed to)

[Judy Wasylycia-Leis, NDP, Winnipeg North Centre, MB]

Madam Speaker, we are proposing a motion this afternoon which we believe warrants the serious attention of the House and makes a very serious proposition to all members for support consistent with the statement of the Minister of Health and consistent with the call of government Liberal members who at their recent convention made a very strong plea for the government to put in place a mechanism to assess the adequacies of cash transfer payments for health care systems.

Today we offer a motion in the spirit of constructive suggestion. It is a motion that is made in the spirit of co-operation and which deserves the support of each and every one in the House.

It is interesting that the amendment coincides in spirit and in intent with the resolutions adopted at the previous Liberal convention. I make a plea to members across the way to assess very carefully the motion before them and to look at it as something that will be absolutely consistent with the wishes of the members of their party.

The motion is very clear. It calls on the government to report on an official basis annually to parliament about the adequacy of the way in which we finance health care.

It provides a way for parliamentarians and all Canadians to have a say in the future of medicare and to have the means by which they can assess the effectiveness of government programs which uphold this most important national program, our most treasured national institution.

I do not need to tell the House that health care has been a matter of very heated and intense debate in the Chamber. The discussion in the House has evolved from the concerns about the extent of the health care crisis in Canada. It has flowed from questions about the appropriate level of federal support. It has arisen from concerns about the degree to which our health care system is being privatized. It has emerged from a deep commitment by all involved Canadians everywhere to medicare. It is not simply an issue of partisan debate. Concerns being raised cross party lines in the Chamber and as we saw on the weekend are very much alive and well in the Liberal Party of Canada.

Concerns have been raised by members on the Liberal side of the House. By all accounts we know there is a battle within the government, that there is a division within cabinet, around the best approach for supporting health care.

The health minister's recent public plea for support to back up his efforts at the cabinet table for more dollars for health care has to be one of the most significant developments in parliament over the past six months. It is certainly an unusual position to be taken by a member of government. It speaks to the seriousness of the issues at hand.

The clear debate that is going on among members of the Liberal government, the appeal from members at the recent Liberal convention and the call for action from many in the House arise from several very critical developments.

First, and I need remind no one in the Chamber about these developments, there has been a growing body of incidents about hardship, suffering and even death directly related to the level of funding of our health care systems. Those incidents have given us all a sense of urgency to act now before it is too late.

Second, it is very clear from the outpourings of Canadians and from the polls that have been taken of public opinion that Canadians remain committed to a single payer, universally accessible, publicly administered health care system. They understand clearly the need for federal funding, for national standards and for government leadership. Canadians when probed through public polling techniques agreed that any federal budgetary surplus should go first and foremost to federal cash transfer payments for health care. This shows a tremendous level of sophistication and an unwavering commitment to medicare.

Third, the debate before us today needs to be dealt with on an urgent basis because each and every province has called with one voice for the federal government to begin a process of reinvestment in health cash transfers. Each and every province is trying to adjust almost overnight to massive reductions in federal transfers, to the biggest bite in the history of medicare taken out of health care financing by the federal Liberal government. They are attempting with all their remaining funds and creative abilities to reform their health care systems to achieve savings commensurate with the federal cuts.

It is the contention of every province and the two territories and certainly the belief of many in the House that federal cash transfers have dropped to unacceptably low levels. There is a vacuum of leadership at the federal level. It rings hollow for the federal government to claim that the cancelled cut of $1.5 billion is new money.

There is a clear understanding about the dramatic shift in federal support from the days of 50:50 cost sharing to the present day where federal support using full tax points and cash transfers is down to 20% at the most. If one looked only at the cash element of the financing system, federal participation is down to between 10% and 15%.

All Canadians, provincial governments included, recognize the need to shift our health care system from one that is institutional based and illness focused to one that is based on prevention, wellness and which is community delivered.

That is our goal. That is why we are here today. We are here to find a way to help this government ensure that we can preserve medicare, reform it in terms of making it better and not just achieving a fiscal bottom line and to provide a measure of accountability involving Canadians in the whole process.

The motion before this House is to help the health minister, to help the Liberal government, come to grips with this debate and these concerns before everyone, to make decisions based on the facts. This motion gives the government a tool to assess the adequacy of federal transfers. It gives the Minister of Health a mechanism to achieve his plea for support from Canadians. It gives Parliament a meaningful role and it gives the public a say in this whole process.

In conclusion, I would ask all members to consider this motion as something constructive and positive in the debate and I hope it is adopted.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, I would just like to respond to this motion and restate this government remains firmly committed to the Canada Health Act.

Bill C-28 strengthens the federal government's ability to enforce the Canada Health Act. This legislation guarantees that the cash portion of the Canada health and social transfer will never fall below $12.5 billion in each and every year over the next five years. That is an increase of $1.5 billion over the previous cash floor of $11 billion.

In other words, the bill before the House means there will be more cash to uphold the principles of the Canada Health Act. It responds directly to the recommendations by the national forum on health that CHST cash be set at $12.5 billion to sustain the principles of the Canada Health Act.

The member's motion recommends yet another annual report to examine the adequacy of the CHST cash and upholding the CHA. I would like to remind her that the Minister of Health is already required under the Canada Health Act to table an annual report on the administration of the act and provincial compliance with its conditions.

Quite frankly I think the last thing Canadians need is another report. Canadians asked us to take action and we have. We have taken real concrete action. Bill C-28 ensures that there is more cash to uphold the principles of this act, $1.5 billion each and every year. The first thing this government did was put back $1.5 billion as the fiscal environment changed, and we are well on our way as the Minister of Finance said back in February. We will continue to balance the books, we will continue to invest in Canadian priorities and we will continue to uphold the Canada Health Act.

I want to assure the hon. member that I certainly look forward to her interventions to help us ensure that Canadians receive the kind of health care they want within the fiscal means we have set and the conditions we have set forward. I am sure Canadians all across this country will continue to support this government as we continue to provide for them as we move into the next century.

[Monte Solberg, Reform, Medicine Hat, AB]

Madam Speaker, I appreciate the intent of the motion but regrettably I cannot support it. I would like to take a moment to explain why.

Essentially the motion is calling for the Minister of Health to table a report assessing the adequacy of the cash transfer portion of the Canada health and social transfer.

I wonder why we have any confidence that the federal government will be a great protector of health care. Given the past history of the federal government, why in the world would we have even a shred of confidence in the government to protect health care?

I remind members once again what the Prime Minister said when he was in the 1993 leadership debate. This is exactly what transpired in that debate. The leader of the Reform Party said: “What specifically is your commitment to the level of federal transfer payments for health care? Would you keep them at the current level?” The Prime Minister responded: “I said yesterday in reply to Mr. Bouchard that I promised that they will not go down and I hope that we will be able to increase them”. I guess that did not happen, did it?

I heard the parliamentary secretary say a moment ago that the government has increased transfers for health care by $1.5 billion. He forgot to mention that the government cut transfers for health care and higher education by $7.5 billion, the largest cut to health care in the history of the country. The Liberal government closed more hospitals, shut down more hospital beds than all the provincial governments combined. Why in the world would we think for a moment that somehow the federal government will be some great protector of health care in this country?

We know that when the provincial ministers brought down their budgets this spring in each and every case they increased spending for health care.

I point out to my colleagues in the New Democratic Party that the NDP government in Saskatchewan increased spending for health care. All provincial governments did that because they are closer to the people. They know that if they make bad decisions about health care, people will be protesting on their lawn, not on the lawn of Parliament Hill, which incidentally is probably where they should have been protesting when the government blatantly broke its 1993 election promise not to cut transfers for health care and higher education.

The provinces know that people will be on their lawn protesting. They know that when there is a newspaper story about people having to wait in hallways to get treatment for health care it will be the provincial health ministers who feel the heat first and most.

That is why I cannot agree with this motion. I think it is ridiculous to ask the very people who took the broad axe to health care to be the protectors of health care, to somehow give them some new power and to give people a false sense of security that somehow the federal government has the best interests of Canadians in mind. It simply does not, it did not and we know the record is very clear that given the opportunity the first thing it does when there is a crunch is cut health care and higher education. Then when the budget was brought down, government members said “we are not going to cut it as deeply as we said we were, so now we should be honoured and deserve applause from people”. It is absolutely ridiculous.

I want to repeat the Prime Minister's quote. He said during the 1993 leaders debate: “I said yesterday in reply to Mr. Bouchard that I promised they will not go down and I hope that we will be able to increase them”. That is what he said about the Canada health and social transfer. What a joke. Just another one of a dozen important election promises that the government has absolutely broken, and I guess it does so with impunity.

I do hope that my friends in the NDP and in other political parties will not be drawn in to believe that somehow the Minister of Health will be a great protector of health care when he has proved over and over again that he cannot be counted on to do that.

I also encourage my friends in the NDP to remember that they too have colleagues at the provincial level who have added money into budgets for health care precisely because the level of government that is closest to the people is much better able to gauge public sentiment.

I encourage my friends to rethink this motion. Remember that the real protectors of health care in Canada are the people at the lower levels of government, primarily in the provinces.

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

Madam Speaker, like my colleague from the Reform Party, I did not plan to speak on the motion put forward by the New Democratic Party, but what I have heard the secretary of state and member for Stoney Creek say just made my hair, or what is left of it, stand on end.

I have heard things that verge on misleading statements. I have heard things that totally contradicted—I hope it was by ignorance, not by maliciousness or to be dishonest either—the facts and figures that have been presented to us since 1995 in the successive budgets brought down by the Minister of Finance.

My colleague from the Reform Party touched on the issue. I would like to go into it in a little more detail.

In 1995, when the Minister of Finance brought down his budget, it provided for cuts to be made systematically every year until 2003 in what came to be known as the Canada social transfer. This Canada social transfer was designed to fund provincial initiatives in higher education, social assistance and health.

In 1995, the Minister of Finance pressed the start button for systematic cuts to be made year after year until 2003, cuts totalling $6 billion each year in higher education, social assistance and health.

Now they come up with this Bill C-28. What does Bill C-28 say? It says, and I agree with my colleague from the New Democratic Party on this, that instead of cutting a total amount of $48 billion between now and the year 2003, cutting $48 billion in higher education, social assistance and health, the government will only be cutting $42 billion. And we are supposed to applaud! I find it totally abhorrent to present things in such a way, to use them to trick the public, because that is what is being done right now.

It is not true that there is $6 billion more for health care. It is not true that there will be $1.5 billion more in the coming years for health care. There will, instead, be $6 billion in cuts for every year between now and 2003, and a sizeable amount of that will be in health care. That is reality.

At the same time as health care is being slashed, we are being told that $1.5 billion is being added yearly for the next three years. The truth is that they are cutting $6 billion per year in social programs and health. Let them stop trying to fill the public's heads with nonsense, let them stop expecting the public to swallow any old thing they present it with.

The cause of the present sorry state of the health system is not Minister Rochon in Quebec, nor the other provincial health ministers. The main responsibility lies with the federal government. The little band-aid solution offered during the last election campaign in response to the heavy pressures for something to be done, that $1.5 billion was just a drop in the bucket, barely remedying an iota of the pillage the government had wrought in the health field. That is the reality.

[Louise Hardy, NDP, Yukon, YT]

Madam Speaker, the reason we need this amendment is we cannot trust the Liberals to look after our health care system.

We used to have a Canada assistance plan that reflected the needs of the regions. It would match health care. It would match education. It would match social assistance. That is no longer in place. We have a Canada health transfer that is a chunk of money which the provinces can do with whatever they like. A sympathetic provincial government will make sure there is health care.

Systematically Liberal decisions and policies have undermined health care and now we are in a position where we are forced to debate whether or not we will have health care in our country. At their convention the Liberals passed a resolution that Canada would ensure a national standard of health care for all Canadians.

We are chipping away at the foundation instead of putting in the windows and doors of our health care system. We are not providing pharmacare. We are not providing home care. Health care in rural and remote areas is not a given. There may be a health station in these areas which is what is in Old Crow. It is an incredibly expensive flight to get out. You may see a doctor once a month or you may not. We have a situation where the Canadian Medical Association says that for Canadians the CHST has meant and continues to mean less federal government commitment to our health care system and has compromised the federal government's ability to preserve and enhance national standards.

It went on to say that the accumulated reductions now total $18.9 billion, that the government is giving back 1.5% of the total reductions in cash payments to the provinces, and that this is supposed to fix the mess that has been made. Another comment was that the CHST cash payments need to factor in other things than just the economy, such as the age of the population.

Our elderly parents and elders in our communities are not going to go away. We know that elderly people need more health care. Sick children are not going to go away. Mothers and fathers are still going to have to stay home to look after those children. When they do that, it is a cost to our economy and to our society.

We need a mechanism that will hold the Liberal government to account so that it does not continue cutting and sneaking its cuts in through the back door. Canadians everywhere want a health care system they can count on. If the government cannot go at it by direct cuts—and it was forced to stop cutting and not putting anything back—it is going to go at it another way around.

The recommendation of the Canadian Medical Association is to increase the amount. The government should take in a combination of factors such as technology, economic growth, population growth and demographics. The government should establish national targets, what our health care will be, where we will go with it and what we will do with it.

Obviously we cannot give the government a free hand because we know what it does with it. It tears our medical system apart. We want a mechanism to hold it accountable, whatever government is in place, to a standard of medical care that we can all be proud of. Then we can rest at night knowing that no one will die in a corridor or on the street because we did not care enough to make sure the money was there to look after them.

[André Bachand, Progressive Conservative, Richmond—Arthabaska, QC]

Madam Speaker, I would like to speak very briefly to the motion introduced by one of our colleagues in the New Democratic Party.

Unfortunately, the first thing I would say is that it is a bit weak. I am not convinced that they have really addressed the problem of whether the transfer payment system is adequately funded. Why? Quite simply because I do not believe that a report by the Minister of Health will speed up the recovery time of people in hospitals throughout the country.

I am not convinced that the Minister of Health or even his officials have the time to go and see what is happening in the regions. I think that all members know what is happening there. The provinces, health care groups and community groups are also well aware of what is happening. Unfortunately, although the stated purpose, which is to inform the House whether health is being adequately funded, is important per se, I am not sure that we will achieve our goals at this time.

Of course, there were the massive cuts in health, post-secondary education and social services. The hon. member for Saint-Hyacinthe—Bagot made this point very well. I can perhaps make a small correction. The federal government is not the only one making cuts. The provinces are doing so too. They have difficult choices to make. Let us say that Ottawa set the ball in motion.

There are certainly things being done in Quebec City that impact on municipalities, among others. The provincial government has difficult choices to make.