Madam Speaker, as I sat here and listened to the intervention from the member for Medicine Hat, I could not help but come up with a one-word description and that is hypocrisy.
I cannot believe he actually stood up and talked about the fact that he wanted to now support infrastructure at the local level when it was the Reform Party that stood up in this House day after day saying the federal government should not put forward an infrastructure program for the municipalities that was partnered by the federal level, the provincial level and the local level. Those projects that took place at the local level took place because the local municipalities provided input and direction as to where the money should flow, bottom up.
As he stood there I was amazed that he actually had the nerve to talk about the bill doing nothing more than providing tax increases. What about the $1.5 billion increase in transfer payment going to health, going to a different level of government? What they do not understand is that if you remove something it is a decrease. If you put something back it is in fact an increase in the eyes of those who are receiving it.
Then he goes on to talk about tax increases and that is what this is all about. Then he made reference to the Canada pension plan. I think he only once had a point to make with respect to the motion. Other than that he talked about the broader issue. He brought up CPP so I thought it would be important to comment on that. And he made reference to the fact that CPP was a tax increase.
Once again I just want to be perfectly clear, and I will speak slowly so the member can understand, that a tax increase occurs when in effect revenues flow to the consolidated account, to government revenue. CPP premiums flow to a separate CPP fund and that fund will be managed to provide rates of return in the best interests of Canadians.
I know they have great difficulty understanding that. Let us talk about another, what they often refer to as a payroll tax, the employment insurance premiums. Let us talk about the $7 billion reduction which has taken place since we came into office.
There are a number of points I find quite surprising that the hon. member would make and then go on to defend in this motion and this intervention. Let us talk about the motion for one moment.
We now have Reformers saying they want the municipalities to compete with the private sector. That is essentially what they are saying. They are saying let us take taxes that are collected by the municipality, collected in the form of property taxes, and set up a corporation which will compete with other private sector organizations. Now they want municipalities to compete in private business. They stand up here and argue that they are the big defenders of businesses. Now they want municipalities to actually go out and compete with those corporations.
What in fact the government is doing with Bill C-28 is ensuring there is a level of service provided to local taxpayers by municipalities while at the same time allowing those taxpayers in the municipality to engage in activities outside their specific municipalities while at the same time ensuring that private business is allowed to compete on a level playing field.
The 10% factor came into play. If 10% of a municipality's income is derived from activities outside its jurisdiction, it remains tax exempt. If its income is derived by more than 10% outside its jurisdiction, the municipality loses the tax exempt status.
I can give an example of where one municipality is providing hydro to another municipality through an intergovernmental agreement. The municipality providing the hydro will still remain tax exempt. We are saying in an activity where a municipality is deriving income greater than 10% perhaps as a result of these intergovernmental activities it should not lose that tax exempt status because it is still providing a service to municipalities.
We can talk about areas where the government did receive interventions along those lines and I point to the examples of Edmonton and Calgary where those municipalities came forward and provided that scenario. The government responded by allowing them to maintain that tax exempt status.
The Department of Finance has received a number of interventions. One of the amendments passed in committee of which the hon. member is a member was to provide for a deferral of one year from 1998 to 1999 of the application of the proposed amendments to tax treatments of municipal corporations. This will allow for a detailed review of all the comments and recommendations forwarded to the government's attention on this issue.
The government's intent is not, as the opposition party attempted to paint, to tax another level of government. What is intended is to provide a fair and equitable way for municipalities to maintain their tax exempt status while providing services to their local municipality and their local residents while at the same time ensuring that private businesses and Canadians who are involved in businesses are able to compete on a fair and equitable basis.
The Reform Party puts forward this motion that would allow a municipality to enter any jurisdiction and compete by setting up a corporation with taxpayer dollars collected through property taxes and compete with other private sector organizations. It is absolutely incredible that it would make that type of recommendation.
We are not competing with the private sector. The role of the private sector is very clear. Businesses should be allowed to compete among themselves and should not use taxpayer dollars in the form of local municipal corporations, as the Reform Party is suggesting, to compete with. It is absolutely incredible the Reform Party would actually say that.
On a more technical note, the motion is deficient in that while it intends to remove the 10% income test in paragraph 149.1(d)(5), it leaves in that paragraph the reference to subsection 1.2 which becomes meaningless in the absence of the 10% income test. The actual motion presented to this House does not reflect what I believe the Reform Party was intending to do to begin with.
The motion as it is presently put forward is flawed. The basis on which the hon. member makes the argument that this government is intending to tax another level of government by putting forward this motion is completely false. Reformers go on to argue that the purpose of this federal government is to put in place tax increases to Canadians, which is completely incorrect.
The budget provided targeted tax relief and reinvestment not only in transfers to the provinces but directly to Canadian students in allowing them to access education and compete in the global economy.
The bill is providing a framework for municipalities to provide services to their local communities in an effective, tax exempt manner. When those municipalities decide they want to derive more than 10% of their income from their activities outside their local jurisdiction they will be treated just like any private business and they will be taxed.
Put in that context to any councillor at the local level it would be a surprise if they stood in opposition to this. The government has already taken measures to respond to continued interventions and we will do so over the next coming year.