House of Commons Hansard #81 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was finance.


Income Tax Amendments Act, 1997Government Orders

4:35 p.m.


Suzanne Tremblay Bloc Rimouski—Mitis, QC

Mr. Speaker, if the Liberal government were really aware of the situation and well informed, it would know that we urgently need a marine policy in Canada.

Some 70% or 80% of the ships in the world need repairing or rebuilding because they are too old. We need a marine policy to create jobs throughout eastern Canada, in western Canada, in Ontario, and even in Quebec. It is vital.

My colleague was referring to the suggestion by Ms. Verreault, who has a growing shipyard in Les Méchins and who met each of the premiers involved in shipyards to try to convince them of this need. She managed to convince them all. There is only one obstacle in Canada, the president of Canada Steamship Lines. What he is after is reductions in taxes so he can have his ships built outside Canada, because that arrangement suits him better.

Here again, they put personal interests before those of the nation.

Income Tax Amendments Act, 1997Government Orders

4:35 p.m.


Gordon Earle NDP Halifax West, NS

Mr. Speaker, I would like to commend the hon. member for her remarks on the shipbuilding policy because we too in Atlantic Canada feel there is a strong need for a national shipbuilding policy, something that will enable all workers who are out of work in the maritimes to get busy, be productive in the shipbuilding industry and not have to compete with foreign shipbuilders and compete with the United States which has its workers protected by legislation. We feel there is a need for the government to take a lead in the shipbuilding industry and to put people in Atlantic Canada and right across this country back to work.

Income Tax Amendments Act, 1997Government Orders

4:35 p.m.


Suzanne Tremblay Bloc Rimouski—Mitis, QC

Mr. Speaker, I am delighted with the remarks by my colleague from Halifax West.

I am sure that if we had more time for discussions, my colleagues from the west would say the same thing. They need shipyards in the West too. We need a government that will show leadership and put Canadians and Quebeckers to work. For that to happen, we need, among other things, good shipyards with the right objectives.

Income Tax Amendments Act, 1997Government Orders

4:35 p.m.


Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, I really appreciate the privilege today to speak on Bill C-28.

I would like to specifically address the issue of film credits and the way film credits under these amendments are going to be affected, in particular in the area of the cable production fund and other subsidies the government is presently doing to the industry.

The tremendous complexity of the Income Tax Act has been one of the Reform Party's concerns from square one. It is very thick and because of the counterbalancing references within the act, the administrators of the act in Revenue Canada will frequently change their minds after people have filed their returns. This can be a retroactive process. The process is so complex that many ordinary Canadian citizens have to patronize H&R Block or other tax preparers to the tune of between $50 and $150 just for the simplest income tax returns.

I mention that at the outset because if we can put people on the moon, we should be able to create a tax system that will not interfere with people's lives and that will not interfere with the way people make money. To this point in the history of Canada, neither the Liberals nor the Conservatives have been able to create that.

Frequently when people like me are in the process of speech preparation, we go to clippings. We extract small portions from newspaper clippings. Every now and then we run into an article that is so descriptive that it would be better to simply read it into the record. That is what I will do. This article by Tony Atherton was printed in the Ottawa Citizen this past week. It is entitled “Tax on federal fund could cramp style of TV producers”:

TV producers who rejoiced last month when the federal government renewed a $100 million a year programming fund now are worried that some of that money might be clawed back through a new tax measure.

A clause buried in the avalanche of housekeeping documents that accompanied the budget this month could leave producers scrambling to make up hundreds of thousands of dollars in program financing on the verge of a new production season.

It will be at least 10 days before the departments of revenue and finance can clarify whether TV shows which receive money from one arm of the government-sponsored Canada Television and Cable Production Fund (CTCPF) are subject to a new measure which would reduce the federal and provincial tax credits, says fund president Gary Toth.

“Speed is of the essence, and both revenue and finance are very sensitive to that,” Toth said. The CTCPF will begin accepting funding applications from producers in mid-April, and by then producers will need to know whether the change will affect their program budgets.

[The Liberal MP for Parkdale—High Park] says the potential effect of the new tax clause was identified by the TV industry shortly after the budget papers were tabled. The new initiative reduces tax credits available to taxpayers who receive not only direct government subsidies, but also indirect subsidies. The concern is that the money distributed by the production fund as a way of topping up a broadcaster's licence fee for a TV program could be viewed as an indirect subsidy.

If so, says Toth, producers could see their production tax credits erode by as much as four per cent of overall production budget. That would amount to a shortfall of several hundred thousand dollars on a major prime-time series.

“We want to make sure that was not the intention of that section,” says [the member for Parkdale—High Park], a member of the parliamentary heritage committee.

Before I complete reading sections from this article, I will say it is so typical of the way things happen with the Liberals. The heritage minister comes forward with the topping up of the cable production fund while the finance minister and his ministry are doing things that would potentially take money back from that cable production fund. It shows that the right hand does not know what the left hand is doing. More important, for ordinary Canadians, for the people in coffee shops who will have tax bills and complete their returns for April 30, this is yet another example of how unnecessarily complex the tax regulations in Canada are.

Returning to the issue of tax status, the uncertainty about tax status is one of the concerns that has been dogging the $200 million a year production fund since the heritage minister announced in February that the government would continue contributing its half of the pot through to the year 2001. The other half of the fund's resources would come from the cable industry and Telefilm Canada. New subjective guidelines for the fund aimed at encouraging more distinctively Canadian programming were introduced this month to the dismay of some producers.

This is where we get to the very substantive difference between the Reform Party and the Liberal Party. The Liberals will do their social engineering through their tax law. For example, they reduced the option of choice for parents as to who will stay home, if anyone will be staying home, to look after children.

The Liberals with their tax policy simply eliminate that choice. They force people to make decisions on the basis of taxes that are having effects on families that are outside the control of families. That is wrong. Taxation policy should not be aimed at social engineering. Clearly that is what the Liberals are doing.

In this case we are looking at what I call cultural engineering, the attempt of the heritage minister to manufacture Canadianism through whatever means she is doing and then running into direct conflict with the taxman, with Revenue Canada. The Liberals have a bad enough history in social engineering. I hate to see what they are doing in the area of cultural engineering.

This is what the changes may mean. The changes mean that only programs to which the industry refers as super Canadian shows, programs with little or no foreign investment, distinctively Canadian themes and creative personnel, can expect to get as much money from the fund as they did last year. Some programs deemed not sufficiently Canadian will not be able to apply for it at all, for instance a drama or children's program based on a game or toy that is ineligible for funding unless the toy or game was created and developed by a Canadian.

That stipulation has Vancouver's innovative computer animation company Mainframe Entertainment in a lather. Its Saturday morning cartoon Beasties , developed and produced in Canada but based on a toy developed by U.S. toy manufacturer Hasbro, was set to begin shooting a third $8 million 13-episode season this spring. New guidelines rendered the series ineligible for funding and about $2 billion short of its budget.

Producer Linda Schuyler, president of the Canadian Film and Television Producers Association, says that while the changes will hurt some producers this year, especially those in animation, they are reasonable. She says that their cartoon series associated with a brand name U.S. toy is arguably more likely to recoup its cost on international sales and should have less need for the fund. In terms of the general philosophy of the fund, she really stands behind it. If they have to make the fund's modest amount of money go a long way, to take a pro-Canadian stance is absolutely correct, she says.

This is exactly the kind of cultural micro engineering I am talking about. When we end up in clear conflict with the social and cultural micro engineering of the Canadian heritage minister, we run into direct conflict with what she is doing under the fund in attempting to micro manage the creative side of Canadian companies and artists, our Canadian creative community. She is attempting to micro manage and push them in particular directions only to find that there is a conflict under the provisions contained in Bill C-28.

There is no conflict between two parties. There is no conflict between the opposition and the government. This being Canada, when the government is a majority government and in power it has the right to propose legislation. With all the closure and stifling of debate in this place, it not only has the right to propose but it takes upon itself the right to dispose of legislation.

Here we have a government that has total control over its own affairs. Yet, how ridiculous, how ludicrous it is that we end up with the heritage minister and her proposal for her Canadian television production fund in direct conflict with the finance minister and his provisions. It is nonsensical.

One thing I have learned in the time I have been in Ottawa is that usually if I have a simple answer it is because I did not understand the question. In other words, often we do not realize the complexity of issues until we first get into them. Surely the heritage minister and the heritage ministry with its thousands of employees must have been able to understand or be aware of what was happening in the finance department.

What is really scandalous is that Canadian production companies are now put at the disadvantage at the very start of their production period of not knowing what their bottom line will be. Why? It is because the heritage minister does not talk to the finance minister, or at least their departments certainly do not talk to each other.

I come back to the key issue. We can talk about the very laughable situation of two departments getting all muddled up. We can talk about the fact that the companies that are dependent on this are now in a big quandary as to what they will do as they go into their production year. That is not laughable to them.

The core issue is why in the world we have the complexities of the delivery of programs that are put forward consistently by this government and governments before it. Why can they not apply their creative talent, their genius that creates all sorts of ways of grabbing more and more money out of our wallets, to simplifying the tax system so that everyone in Canada will have an opportunity to understand the tax form.

One tax form which I think was applicable to the Liberals was a very simple two line form. It said to list the amount of money earned this year and the next line was to send it to Ottawa. That is really the direction these people seem to be going in.

The proposed amendments add to the layering, the complexity and the confusion we all have in Canada over taxation. That in itself stifles us as creators of wealth and as earners of income. It stifles our ability to buy running shoes for our children. It stifles our ability to have enough money to pay our mortgage.

The overlaying of rules and regulations within the tax department to which this bill adds is one of the major causes of frustration for people involved in small business.

To give members an idea of the complexity of the tax system, I will talk about a situation I had in my constituency a few years ago. A number of my constituents who own ranches were in a position a few years ago with a downturn in cattle prices to be able to sell trees off their ranches that could be turned into lumber. The reason those two things happened to dovetail together was the rather boneheaded policies of the NDP in British Columbia relative to tree harvesting licences and all the rest of it. The mills were facing a real shortage of wood.

The ranch owners went to their accountants. Let us note that they did not all go to the same accountant. Some went to CAs and some went to CGAs; it was all over the map. Some of the public accountants contacted the Penticton taxation office and asked for advice. “How should the income from these trees be treated by these ranchers?” The answer was that it was a capital gain.

Perhaps, Mr. Speaker, with your being a businessman you would know the terminology better than I do. It was based on the fact that it was a capital gain as opposed to income from the ranch. That was the way they filed their taxes, independent of each other.

Many of my constituents are people in their sunset years. They are 70 and 80 year old people who are trying to hang on to their piece of property. They did not know at the time that Revenue Canada would come back and retroactively say that it had lost too much money and was going to reassess them not on capital income but on a form of income to their ranches. It made a difference in many cases of $15000, $30,000 and even $70,000 of taxes owing.

My constituents are honest, law-abiding, taxpaying Canadian citizens. Because of the overlaying of the complexity which currently exists within tax law, Revenue Canada retroactively taxed these people. In many cases they were faced with the harsh reality they just might be taxed off their land in spite of the fact that they complied with all of the rules of Revenue Canada at the time they paid their taxes.

This cannot stand. This must be changed. I am having meetings with the revenue minister over this issue because it is not fair, right or moral to tax people retroactively.

I cite in my capacity as heritage critic this example of the confusion that exists within our tax laws between the heritage department and the Minister of Finance which must be cleaned up immediately.

Income Tax Amendments Act, 1997Government Orders

4:55 p.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, I appreciate the comments of the hon. member across the way with respect to the film tax credits and the situation he described.

I also want to point out to the hon. member that there is an underlying principle that says one cannot do indirectly what one can not do directly. Therefore, if one cannot do something directly, one should not be able to get around it some way and do it indirectly. That is an underlying principle with which I am sure the hon. member would agree.

With respect to the cable television and cable production fund, I had the opportunity to meet with representatives from this group. They have submitted information for the department to look at so that any of the moneys they would receive from the fund would be treated as licence top up fees rather than subsidies.

What has happened is that the finance department has agreed to take this information under consideration and provide transitional support for this group so that any principal photography commenced before August 31, 1998 would not be affected.

I really appreciate the fact that the hon. member brought this matter to the attention of the House because it is a very important issue. I want to reassure him that the government is very much committed to the production and entertainment industry. It certainly affects his province specifically.

Income Tax Amendments Act, 1997Government Orders

5 p.m.


Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, I also appreciate the comments of my Liberal colleague but it does not really do away with the point of my speech.

The point of my speech is that tax law in Canada is so overlayered, overburdened and unfair. We have a heritage minister who does not know what is going on with the finance minister and vice versa. It does not really do away with that point.

I do respect the fact that the finance department is taking this under advisement. However if I were a business person in the film and television production business, I would take only small comfort. I would want to know what my bottom line was going to be. Would I potentially be treated in exactly the same way that the ranchers in Kootenay—Columbia have been treated where something is going to be done retroactively?

We must straighten up the tax law. We must simplify the tax law. I do not see any action or direction to simplify the tax law by the Liberal government.

Income Tax Amendments Act, 1997Government Orders

5 p.m.


Jay Hill Reform Prince George—Peace River, BC

Mr. Speaker, it is a pleasure for me to rise this afternoon to address Bill C-28, the income tax amendments act.

The proposed legislation relates to income tax measures announced in the February 1997 budget and other income tax and related measures. Many of the proposed provisions are technical in nature and pertain to the numerous tax code amendments.

This is a housekeeping bill which amends at least 18 different pieces of legislation. Some hon. colleagues on both sides of the House have referred to all of those pieces of legislation which the bill amends. In that sense it is an all-encompassing bill. I am sure it is hard for the people at home viewing this debate to relate to it.

To use the term of the hon. Liberal member across the way, we need to look at the underlying principle. The underlying principle, to assist people who are watching to have a better understanding of the debate, is taxes. There is nothing that raises the ire of the Canadian citizen more than the issue of taxes. Having recently gone through an election campaign and all of us in this place having participated in all-candidates forums leading up to the June 2 election we are well aware of how important this issue is to Canadians from coast to coast to coast.

Never before in the history of our nation have Canadians been so concerned about this single issue of taxation. That is why it is very appropriate that members are given the opportunity to speak on the issue today and to lay out as clearly as possible what they hear in their ridings and the views of their constituents. After all that is fundamentally why we are in this place. We try to represent the views of our constituents and participate in open debate debate on these issues to bring forward different points of view and hopefully end up with legislation that is in the best interests of all Canadians.

Income Tax Amendments Act, 1997Government Orders

5 p.m.

An hon. member

If they would listen to the voice of reason.

Income Tax Amendments Act, 1997Government Orders

5 p.m.


Jay Hill Reform Prince George—Peace River, BC

That is right. If the government would listen to the voice of reason from all sides of the House, even in some cases from the government's own backbenchers when they are trying to represent the interests of their constituents. Perhaps then the government and the cabinet would put forward better legislation from the various departments which would have genuine grassroots support across the nation.

One of the interesting issues I heard loud and clear during the last election campaign, in consultation with constituents and in letters, e-mails and faxes that come to all of us as members of Parliament, which really angered the general public is the whole issue of payroll taxes. When we talk about taxes we cannot just talk about income tax in isolation.

The GST is another tax which has angered many people ever since the Mulroney government brought it in a number of years ago. We have debated as to whether there was a commitment made by the Liberal government in the 35th Parliament to actually end that tax, to abolish, scrap, get rid of the GST. We have had that debate. Very clearly the average Canadian understood that there was a commitment. Yet the GST is still in place even though we have now achieved a balanced budget.

Canadians are desperately seeking genuine tax relief and they are told once again by the government to wait a little longer and perhaps they will have some tax relief. Once again we see broken commitments, broken promises.

Look at the Canada pension plan and the huge increase Canadians are facing. There will be a 73% increase over the next five years in their Canada pension plan premiums. We see this government stand up and brag about what we feel and the average Canadian feels are relatively minor cuts to the EI, the employment insurance premiums. The Liberals say it will create more jobs and it is their way of offering some genuine tax relief to overtaxed Canadians. That is going to be more than made up for by the increase in the Canada pension plan premiums.

The government is not fooling anyone. In travelling throughout the riding of Prince George—Peace River and in talking to my colleagues as they continuously consult with their constituents on this and other issues, I can say that average Canadians are not fooled by this. The wool has not been pulled over their eyes on the issue of taxation. They know full well what they can expect in the future, which is more of the same. Canadians are fed up with being taxed to the extent that they are.

There is a huge social cost to the whole issue of the debt and taxes which by and large this government for whatever reason is missing. It is missing the social cost.

The Liberal Party and the Liberal Government of Canada constantly hold themselves up as the defenders of the downtrodden. They have tried to perpetuate this Liberal image that they are there for the poor, they are there for the handicapped, they are always there defending the rights of the less fortunate in society. In actual fact the exact opposite is true.

It is this government's overspending that has threatened the very fabric of the nation. There is a huge social cost. Even as we speak today we really do not understand all the ramifications of this policy of continually raising taxes and until this year continually increasing the national debt and the interest we pay out every year on that debt. There is the inability of this government to make a firm commitment in this year's budget to put forward a concerted plan on how to deal with the debt.

We heard the finance minister and the Prime Minister make statements about the $3 billion contingency fund which as I pointed out a number of years ago during the last Parliament in communications with my constituents is simply a slush fund. It is a $3 billion fund set aside for the use of the finance minister. If the interest rate rises unexpectedly or something goes wrong, or there is an act of God and commitments have to be made, the finance minister has this $3 billion set aside. During the budget debate the government quite generously said that if it does not need the $3 billion, it is going to put it toward the debt.

Most Canadians are capable of doing the arithmetic. This country is almost $600 billion in debt. When I talk about billions of dollars, I always try to bring it back to what most of us can understand. A billion is such a huge number. We throw it around all the time in this place, a billion dollars here, a billion dollars there, a $3 billion contingency fund. What does it mean? For us to really understand that, we have to remember that a billion dollars is a thousand million dollars.

I am getting up in age. I am certainly well aware of that today after the hockey game last night. The MPs played against the pages and we were really reminded about how old we are getting. I can remember when $1 million was a lot of money and it does not seem like that long ago. When we talk about a debt of almost $600 billion, that is six-hundred thousand million dollars.

Imagine winning a lottery. The 649 wins are now around $10 million. At one time $1 million generally was the first prize and it seemed like a lot of money. To me $1 million still seems like a lot of money. We used to think about becoming a millionaire. Imagine. Our debt is the equivalent of 600,000 Canadians, and there are not anywhere near that of course, winning $1 million. Then they could pay off our debt. That puts in context the size of the debt, the burden we are soon to hand over to the younger generation, to our children and our grandchildren.

When the government talks about using the $3 billion contingency fund, it is laughable. As I said, just about anybody can do the arithmetic. If the government is serious about that, at that rate it is going to take almost 200 years to pay down the debt. I do not call that much of a plan to attack the huge burden of the national debt. It is a grave disservice and an insult to the upcoming generation that is saddled with the highest taxes, as we are, in the G-7 on personal income tax.

My eldest child is in her second year at university. My two younger children are growing up quite rapidly. I am trying to imagine them looking at the situation in this country and what hope there is for a future for them and for all the thousands of other young people. It is an embarrassment quite frankly for our generation. We should think about that. We should be ashamed of the mess our generation has made of this country.

Look at the country that was handed to us by our fathers who came through the second world war and into the 1950s and 1960s. The opportunities I had when I graduated high school in 1970, almost 30 years ago. The world was at our feet. We had all sorts of opportunities. There were very reasonable levels of taxation for the services that were available. There were all sorts of job opportunities. Anybody who really wanted to get ahead certainly had the opportunity to do so.

Today the future does not look that great for young Canadians. My hat is off to them that they are as optimistic as they are. Talking with the young pages here, their optimism and enthusiasm about the future is incredible when you see the obstacles that we as a generation and governments have placed in their path for the future.

I want to tell a story about my riding of Prince George—Peace River. This story relates to the high burden of taxation not only at the federal level but also at the provincial level. Part of the riding of Prince George—Peace River is the B.C. Peace River area which geographically is east of the Rocky Mountains. It is cut off physically from the remainder of British Columbia. It is kind of an anomaly. I do not know who was responsible. A lot of people think we are from Alberta.

Ironically, there has been a recent initiative, largely because of taxation levels, that the people of the B.C. Peace would like to join Alberta for some obvious reasons. It really highlights this whole issue. People can only be taxed to a certain level, then we are going to have some open rebellion in one form or another.

A dear friend of mine in my riding, Short Tomkins, a good Reformer but also a duly elected regional district director, had put forward a motion to circulate a petition to try to generate a referendum for the people of the B.C. Peace to secede from British Columbia and join Alberta. That northeast corner of the province generates billions of dollars in taxes for the federal government and the provincial government. Yet in many regards it is a forgotten corner of the country.

It is virtually ignored. We hardly have a decent road to drive down in the Peace River district despite the fact that all the oil and gas industry in the entire province of British Columbia is in the B.C. Peace. There is a large forestry sector there, pulp mills, sawmills. We have two very large hydroelectric dams that provide power to the rest of British Columbia. We have natural gas with the gas pipelines providing the heat for the lower mainland of British Columbia. We have two large coal mines at the town of Tumbler Ridge providing coal for export. It is a very resource rich region.

Yet what we see in that area is that the infrastructure is failing because the taxes are being drained out of the area to Ottawa and Victoria and very little is ever put back. We forget about that. It is treated like a colony in the old days where we just take and take and never put anything back.

It is very indicative of a lot of the problems inherent in Canada today. This huge taxation is what is causing a lot of our problems.

I talked early about the social costs. I am reminded that as we address the issue of crime in the country today we often think of it in isolation. We try to think of what the problem is. What are the root causes of criminal activity and some of these horrendous crimes we hear about? Today we are all aware of the recent tragedy down in the States where school children were shot and murdered by two other young people, an 11-year old and a 13-year old.

When we look at the issues of crime, instead of looking at them in isolation, I have often remarked that one of the reasons I believe we see an increase in violent crime is we have a breakdown of the family structure in this country. One of the reasons we have that breakdown in the family structure is directly attributable to the insatiable appetites of governments at all levels for taxes.

The reality is more and more families, regardless of whether one of the parents would like to stay at home to raise the children in the home, find they cannot. If they are going to provide any semblance of a decent standard of living, with our high taxation, both parents must go outside the home to work.

There are exceptions. I am encouraged by the increase in at home businesses. Many parents, in particular women, are developing their own niche markets for certain products so they can work from home and try to balance the responsibilities of parenting and providing a higher standard of living.

The reality is the high taxation policy of this and preceding governments is failing the Canadian people. It is contributing to the horrendous social cost for all of Canadian society. We do not fully understand the price we are paying and the price future generations will be paying for the high tax policy of this and other governments.

Income Tax Amendments Act, 1997Government Orders

5:20 p.m.

The Acting Speaker (Mr. McClelland)

Before we go to questions and comments, I am sure the hon. member for Prince George—Peace River was too polite to mention that the MPs did whip the pages six to five with the heroic goaltending of Mr. Clouthier, the son of one of our members.

Income Tax Amendments Act, 1997Government Orders

5:20 p.m.


Diane Ablonczy Reform Calgary Nose Hill, AB

Mr. Speaker, my colleague talked about payroll taxes. He mentioned that one of the largest payroll taxes is the 73% increase over the next four years in the Canada pension plan contributions. Do the young people in his riding he has talked with about this increase know that in spite of the fact that they will pay 10% of their earnings into the Canada pension plan for their whole lifetimes they will receive less than a 2% return on their lifetime investments? If they are, are they prepared to continue supporting a program that makes them pay a lot for a little?

Income Tax Amendments Act, 1997Government Orders

5:20 p.m.


Jay Hill Reform Prince George—Peace River, BC

Mr. Speaker, I thank my hon. colleague for her comments. They are appropriate as we are discussing the budget and tax issues. The hon. member is right on the mark with her comment. The intergenerational transfer of the burden of maintaining the Canada pension plan is one of the most horrendous things we are dealing with in this Parliament in relation to payroll taxes.

During the election campaign and since we have become the official opposition the Reform Party has laid out very specific alternatives. These alternatives are continually gaining more and more support, in particular from young people. The hon. member is quite correct. The word is leaking out among young people that they will no longer be fooled by the Liberal government that tries to say we will protect you. We are going to wrap you in this cloak of security, we are going to look after you in your old age.

As the member says, in reality they will be getting somewhere in the neighbourhood of a fifth out of the program. That is supposing the program can be sustained without future increases, which is not all that clear despite the assurances of the finance minister and others.

The reality is young people are becoming more knowledgeable of these issues. They are coming to understand there has to be a better way than constantly increasing the premiums of the Canada pension plan and forcing them to bear the heaviest load of maintaining that program. They are coming to understand that they will have to bear the load of the horrendously high levels of taxation because of past mistakes of successive governments with government overspending that has taken place in the past.

They are also going to have to face the reality of paying out billions of dollars, about $45 billion a year currently in interest charges on the debt that previous generations have built up.

When we add it all up it is not a pretty picture. I think the young people of Canada today clearly understand the issue and there is going to be rising resentment toward this government for these types of actions.

Income Tax Amendments Act, 1997Government Orders

5:25 p.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, the discussion about CPP is all about values. You either believe in the CPP or you do not. This government does and the Reform Party does not.

I wonder if the hon. member agrees with her colleague from Calgary—Nose Hill who said the system is unfunded, there is nothing there so we have to decide how we are going to pay. We need to look at things such as increasing the age at which benefits are payable. We need to look at some of this unfunded liability coming out of general tax revenues.

I wonder if the hon. member agrees with his colleague who is out there promoting the fact that we should be increasing taxes, personal income taxes and corporate income taxes, increase taxes in order to deal with this particular issue. This government decided to consult with Canadians and provinces and we came up with a program to sustain the CPP. It is a staged increase in premiums to ensure Canadians have the sustainability of the plan.

The hon. members across the way seem to be indicating they want to increase taxes. I wonder if the hon. member would like to comment on that.

Income Tax Amendments Act, 1997Government Orders

5:25 p.m.


Jay Hill Reform Prince George—Peace River, BC

Mr. Speaker, that is the unfortunate part of some of the debate that takes place in this Chamber. We have to face ridiculous allegations like that.

The hon. member knows full well that this party, the official opposition, has been constant in our demand to reduce taxation. For him to suggest in any way, shape or form that we are suggesting Canadians are prepared or that we are prepared to advocate an increase in taxes in any form is absolutely ridiculous.

I think what my hon. colleague from Calgary—Nose Hill, our critic on those issues, was referring to was that there would be perhaps some support from the Canadian people for allocating some of the surplus, as we move past the balanced budget, toward bringing down the roughly $485 billion unfunded liability that is currently in the Canada pension plan.

We are not saying we have to raise taxes. What we are saying is that we should spend our money more wisely. We have been advocating this ever since Reformers in substantial numbers came to this place following the 1993 election. We have been saying we have to set some clear priorities. Instead of spending $1.1 billion annually on regional development programs, which in many cases are just payoffs to political friends, we have to allocate our limited resources in a very prudent manner. We do not see that from this government. We saw that very case leading up to this budget. All of a sudden magically this government says it has $2.5 billion to spend on a millennium fund.

Where did that money come from? We have through our constant questioning during question period been able to get the Prime Minister to admit that the auditor general is right, that the $2.5 billion would have been a surplus.

In reality we as a nation collectively could have made a decision as to what the best way was to spend that $2.5 billion. In defence of the government perhaps the official opposition would have been wrong. The wisdom of the Canadian people would have been to take 100,000 students out of 1.7 million post-secondary students and develop a fund for them, a millennium fund for scholarships for them. I do not think it would have. Perhaps they would have said that $2.5 billion should have gone to paying down some of the Canada pension plan unfunded liability. I think that is the type of thing my hon. colleague is suggesting.

Business Of The HouseGovernment Orders

March 26th, 1998 / 5:30 p.m.

The Acting Speaker (Mr. McClelland)

The member for Hochelaga—Maisonneuve advised me in writing that he was unable to introduce his motion during the hour provided for consideration of Private Members' Business on Friday, March 27, 1998.

As it was not possible to change positions on the list of priorities, I ask the clerk to drop this motion to the bottom of the list. The hour provided for consideration of Private Members' Business will, therefore, be suspended and the House will continue to examine the matters before it at that time.

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

The House resumed from February 5 consideration of the motion and of the amendment.

Child BenefitPrivate Members' Business

5:30 p.m.


Val Meredith Reform South Surrey—White Rock—Langley, BC

Mr. Speaker, it is with pleasure that I rise to speak to Motion No. 198, which is a motion to amend the child benefit. I am pleased to have the opportunity to join any debate where I can denounce the Liberal government for its high tax policies and increased use of stealth taxes.

That is what we are debating here, another stealth tax that this Liberal government is using to fill its tax coffers.

A person needs to review the history of the child benefit to fully comprehend what is happening.

In 1985 Tory finance minister Michael Wilson set out to reduce the children's tax exemption and to increase the refundable child tax credit for lower income families. In the 1985 budget he introduced a 3% threshold for full indexing. The benefit would only increase if inflation exceeded 3% in any given year. That was not a concern in the 1980s, as the lowest rate of inflation in that decade was in 1985 when it was 3.9%.

In 1988 the children's tax exemption was replaced by a non-refundable credit. In 1991 Canada was in the midst of a recession. By 1992 the inflation rate had dropped below 3%.

In 1993, the last year of the Tory government, the three major child benefit programs were replaced, which were the family allowance, the non-refundable child tax credit and the refundable child tax credit.

That government replaced them with a single income tested child tax benefit that is similar to the old refundable child tax credit. It meant that the maximum benefit would go to families with a net income under $25,921.

I want to talk about the threshold effect. Since inflation has not topped 3% since 1991 that means that neither the amount families receive for the child benefit nor the income tax level at which people can collect the maximum benefit have been adjusted for inflation, yet inflation has risen by a cumulative amount of 10% since 1991. That means that the real value of the child benefit has been reduced by 10%.

The non-indexing of the threshold level to receive benefits means that many families whose income has just kept up with inflation are now receiving lower benefits. This is the true legacy of this government: stealth tax.

By not allowing full indexing, this government saves money by allowing the real value of the benefit it pays out to decline. By not indexing the income threshold, it means that more families are collecting lower benefits and paying more taxes.

This is not the only place this government is using stealth tax technology. I mentioned it the other day when I was talking about bracket creep. I would like to make a comparison using that. Bracket creep occurs when an individual's pay rises to the point where they enter a higher tax bracket. While salaries have inched up over the past six years, the tax brackets have not. Like the child benefit payments and income thresholds, tax brackets are only adjusted when the consumer price index rises by 3% or more in any given year. Thus, individuals whose salaries have just kept up with inflation often find themselves in a higher tax bracket.

It looks like we have developed a pattern here. However, what is even worse than allowing this to happen is the fact that this Liberal government is doing it deliberately.

In his budget speech the finance minister made it clear that this is a deliberate move and that he intends to continue with this practice. He stated “Upon coming into office, the government and the Bank of Canada agreed to hold inflation inside a range of 1% to 3% to the end of 1998. That policy has worked. That is why we are announcing today that we will extend the current agreement with the Bank of Canada for a further three years”.

Thus, this government has made it perfectly clear that it intends to keep gouging the Canadian taxpayer in this fashion. Where is this government's commitment to child poverty?

It would appear that the Liberals only believe in fully indexing pensions when it comes to their own gold plated MP pensions and those of their political cronies in the Senate. They think that someone like former Senator Andrew Thompson, who showed up for work only 12 times in the past 8 years, deserves full indexing of his pension. They think it is fine for someone like Thompson, who received $600,000 in taxpayers' money over the last eight years, or $50,000 for every time he appeared in the Senate, to receive an indexed pension. They have no problems that a man who rarely ever showed up for work should now be receiving $48,000 a year in a fully indexed pension. That is almost twice what the average Canadian wage earner receives.

The Liberals eagerly support full indexing for Andrew Thompson, but when it comes to single mothers or low income families they are against full indexing. Members on the government side of this House should be ashamed of themselves.

That brings us to the motion currently before the House, M-198, and the attached amendment. The original motion read:

That, in the opinion of this House, the government should review the level at which the child benefit is indexed.

Unfortunately, I think the Liberals have already reviewed the level at which the child benefit is indexed and they like it just fine. Full indexing would cost this government millions of dollars in tax revenue and that could lead them to actually having to make cuts. They might even have to lay off a few of the political hacks they have appointed to patronage positions or they might have to take away the full indexing of Andrew Thompson's Senate pension.

The amended version of the motion reads:

That, in the opinion of this House, the government should review the possibility of fully indexing the child benefit.

I am sure this government has reviewed the possibility of fully indexing the child benefit. If I were a betting person, I would say that the possibilities of the government agreeing to it are slim or none.

I congratulate the member for Shefford for her motion and her efforts to make the child benefit fairer. I assure her of my support and hopefully the support of my colleagues. But unless a few government members find their consciences and live up to their commitment to battle child poverty I do not see this government rushing to create a fair tax system.

Child BenefitPrivate Members' Business

5:40 p.m.


Suzanne Tremblay Bloc Rimouski—Mitis, QC

Mr. Speaker, I rise today to speak to Motion M-198, moved by my colleague, the Progressive Conservative member for Shefford.

The motion reads as follows:

That, in the opinion of this House, the government should review the level at which the child benefit is indexed.

I thank the member for Shefford for giving us an opportunity to discuss the important problem of child poverty and to ask the government to devote more resources to it.

What is ironic, however, is that it was her own party, the Progressive Conservative Party, which decided, when it formed the government, to index the child tax benefit only when inflation exceeded 3%. The Liberals, who so vigorously opposed this measure when they were in opposition, maintained it when they won office, and have stuck with it since.

The result of this Conservative and Liberal policy is that, since 1992, the child tax benefit has not been indexed. During this time, inflation is driving up the cost of living of families, who see their buying power being slowly eroded. Collectively, families have lost over $800 million. They are distinctly worse off.

My colleague, the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, moved an amendment to this motion asking the government to review the possibility of fully indexing the child benefit. I am in complete agreement with my colleague.

Right now, the poverty of children and families is serious. It is obvious that the child benefit must be fully indexed. Large amounts should also be reinvested quickly, not just to increase the tax benefit, but also to reinvest in social programs.

Let us look at a few statistics, which will give us an idea of what poverty means in this country. According to Campaign 2000, the changes that have occurred since the federal government's commitment in 1989 to eliminate poverty among children are as follows: the number of poor children has increased by 46%; poverty in two-parent households has increased by 39%; the number of single-parent families has increased by 58%; the number of children living in families where unemployment is chronic has risen by 44%; the number of children in families receiving social assistance has increased by 6%; finally, the number of children living in unaffordable accommodation has increased by 60%. These figures speak for themselves. The problem is extremely serious. Poor children today number 1.5 million, one child in five.

Over the past 20 years, the number of double-income couples, the number of working mothers with young children and the number of single-parent families have increased relentlessly. The parents of young families are better educated, but their jobs are not stable and are often part time. Most of the time they do not provide benefits. In 1990, in 70% of couples with school age children, both parents work, whereas the figure was 30% in 1950.

In recent years, the average family income has stagnated, and in low income families, it has even dropped. In its December 1997 report, Statistics Canada indicated that low income families, which make up 20% of the population, had seen their family income decrease by 3% because of the drop in incomes, but especially because of the drop in government transfers, which account for 59% of their income. Under the Liberals, the poor have become poorer.

We have to face the facts: Canada's performance in providing support for families and children is pretty weak, in the words of the Canadian Council on Social Development.

The council explains that, in a comparison between Canada and nine similar countries, Canada ranks second behind the United States in child poverty, according to market income, and third in total income, behind the United States and Australia.

Faced with such figures, what have the Liberals done since they became the government? Instead of vigorously attacking the problem of worsening poverty, they have reduced transfers to the provinces for social assistance and are proposing that families be given the bare minimum for survival.

It is going so far as to suggest that they seek charity. Yet, in the first Liberal red book, in 1993, Jean Chrétien wrote “Government must be judged by its effectiveness in promoting human dignity, justice, fairness and opportunity”.

According to his own criteria, then, the Prime Minister's government is not a good one, for it allows millions of children to languish in poverty, jeopardizing their health and development, to the great despair of their parents.

Instead of equipping themselves with a true social development policy, the Liberals are settling for managing poverty by throwing a few crumbs from time to time so that people can keep their heads above water and to make the government look good.

In the 1997 budget, the Minister of Finance suddenly discovered the serious problem of child poverty in Canada. He described it as the most urgent problem.

This year's budget announces a $425 million increase in the child tax credit effective July 1999, with another $425 million to follow in July 2000. For July 1998 there is nothing more than has been announced ad nauseam for the past two years.

The Bloc Quebecois campaign platform called for an extra $1.15 billion to be invested immediately in the child tax credit. The minister had the necessary financial leeway to do so, since he shows no reticence about invading as sacrosanct an area of provincial jurisdiction as education with his millennium scholarships, to the tune of $2.5 billion.

It is not, therefore, any lack of money that is keeping the Liberal government from fighting poverty, because when visibility is at stake, it can easily find $2.5 billion in its coffers. The real problem with this government is its lack of political choices. Poor children do not vote, but university students do.

I have to say that child poverty is not an isolated phenomenon and any fight against it must provide support for families through employment, social security and community support programs.

The Canadian Institute of Child Health last year considered that the best way to improve the standard of living of children was to establish a national job creation strategy for adults with family responsibilities.

The Minister of Finance claims to be helping poor families by increasing the maximum deduction for child care from $5,000 to $7,000 or from $3,000 to $4,000, according to the age of the child. This measure is totally unfair, because, for the same $1,000 of child care, a high income family gets a lot more than does a low income one. Poor families whose income is so low that they do not pay any taxes do not benefit in any way from this change.

Last year, the Bloc Quebecois proposed that the child care deduction be replaced by a refundable tax credit, which would have resulted in poor families receiving a cash payment.

The Liberal government may be able to keep on ignoring the public's suffering, and refusing to reinvest in social programs to improve the lot of the most disadvantaged, but it could at least agree to full indexation of the child tax benefit so that they do not sink even deeper into poverty.

Child BenefitPrivate Members' Business

5:50 p.m.


Libby Davies NDP Vancouver East, BC

Mr. Speaker, I am very pleased to speak today in support of the motion of the hon. member for Shefford which reads:

That, in the opinion of this House, the government should review the level at which the child benefit is indexed.

The NDP has already gone on the record in speaking to the motion as fully supporting it. We also support the amendment put forward by the Bloc Quebecois.

I begin my remarks by saying the year 2000 is very close. I begin in that way because the year 2000 has very special significance in the House of Commons, not just because it is a new millennium but because back in 1989 members of the House unanimously passed a motion sponsored by Mr. Ed Broadbent, the then leader of the New Democratic Party, that by the year 2000 child poverty would be eliminated in this country. It is now 1998, nine years later, and the situation has not only not improved. It is appallingly worse than it was nine years ago.

I am very happy the motion is before us because it addresses in a very small way one thing that could be done to ensure the child tax benefit, put forward and agreed to by the provinces, would be fully indexed. Campaign 2000, a non-governmental organization made up of many supporting groups, has vigorously campaigned on the issue of child poverty and holding the House of Commons accountable for the motion that was passed in 1989. Much work has been done.

Here we are today still talking, not about fully eliminating child poverty but about one very small piece of it. In fact the child tax benefit is only partially indexed. What that says to all of us is that we have not come very far.

I looked in Hansard to find out what government members had to say about the motion during its first and second hours of debate. Frankly I assumed that government members would support something so modest that would bring us a bit closer to making sure the benefit was accessible and meaningful to low income and poor families. Regrettably that is not the case.

One of the Liberal members who spoke to the motion in the first round of debate said “Let us not forget that with an inflation rate of 1.6% per year restoring full indexation of the child tax benefit would cost the government about $160 million per year”. He went on to say that such revenue losses could threaten the government's programs to restore fiscal balance.

What about the threat to Canada's poor children? What about the threat to poor families suffering from the impact of years and years of slash and burn approach by this government? What about the threat to kids who are still living in a world where they cannot access programs, where they do not have adequate housing and where government programs are being cut back? Now we are living in an environment of increasing poor bashing. What does the government member have to say to those kids, the 1.4 million children in Canada who are living in poverty?

It is astounding because this is the same government that claims it wants to stop poverty for children and deal with poverty in Canada. This is the same government where the Minister of Human Resources Development said in a committee meeting late last year that the child tax benefit was the greatest social policy since the 1960s. If that is true, why cannot government members find a measly $170 million to protect poor families from inflation by fully indexing this benefit?

I will read further from Hansard the comments of other government members who spoke to the issue and who were trying to explain and rationalize why they could not deal with it.

On February 5, 1998 one member said “Second, there is a trigger. The Income Tax Act states that the child tax benefit will be indexed each year by the amount which the annual change in the consumer price index exceeds 3%. This policy of partial indexation is consistent with the treatment of most other parameters of the personal tax system and is respectful of the fiscal problems which are facing the federal government.”

Here we have another government member who is trying to defend what is really an appalling record by saying that the kids of Canada and poor families have to be respectful of the problems the government created.

The people of Canada, groups like Campaign 2000 and other anti-poverty groups like the National Anti-Poverty Organization are simply appalled at the government's record. The kids of Canada and their parents who are facing unemployment and massive EI cutbacks will be delighted to hear that they need to be respectful of the government's problems.

The reality is that the child tax benefit is being used as a political shield by the government. The government wants to hide behind the reality of poverty in Canada. The political grandstanding that has gone on in this issue by government members is simply disgusting.

The child tax benefit has now been announced four times. It is obvious the government will not provide adequate funds to index the fund. There was no announcement in the budget we just dealt with.

Earlier today when we were debating Bill C-28, the income tax amendments, there was reference to the so-called increase in the Canada health and social transfer from $11 billion to $12.5 billion. We know that it is not an increase at all. There is not one new dime, not even a penny, going back to the provinces in terms of transfers. It is simply a shell game being conducted by the Liberal government. It is the same kind of shell game that has gone on with the child tax benefit. This so-called new increase is a recycled announcement that the latest cuts will not come into effect.

One thing is clear. Poverty among Canadian children and families will not be eliminated by the kinds of measures that have been put forward by the government. What we need to see is a recommitment to national standards. What we need to see is full indexation of the child tax benefit. What we need to see is an increase in the child tax benefit to poor children living in one parent families so that the benefit will not be lower than what they would have received under the 1996 federal budget.

We need to ensure that all poor families receive the child tax benefit, including families on social assistance. Under the government's program those families, the poorest of the poor, will be excluded.

We also need to pressure the federal government to commit to a new national child care program, an early education plan and 150,000 new child care spaces by the year 2000. What happened to the promise from this Liberal government and the former Liberal government to create a national child care program? That too has evaporated. As my hon. colleague says, the election is over and it is back to the same old dirty business.

We in the NDP are committed to holding the government accountable. We are committed to working with organizations in Canada to ensure that the government is held accountable.

There is real disappointment about the performance on the child tax benefit. In fact government members—and there are the empty rows here today—are not even listening to the debate. The motion was an opportunity for the government to come forward and say that it would ensure full indexation at least on this small basis. Unfortunately that has not been the case. There is real disappointment over this matter.

We will continue to pressure the government to ensure there is full indexation of the child tax benefit. I thank the member for bringing forward the motion. It has been good to hear support from other parties. We have to keep the pressure up on the government to come through and say, if it is truly committed to eliminating child poverty by the year 2000 as members voted in 1989, that it has to take this one very small step. We have to take other steps as well, but this one in a very minimal way that will at least ensure full indexation and that poor families will not be losing pace with inflation.

Child BenefitPrivate Members' Business

6 p.m.

The Deputy Speaker

Is the House ready for the question?

Child BenefitPrivate Members' Business

6 p.m.

Some hon. members


Child BenefitPrivate Members' Business

6 p.m.

The Deputy Speaker

Pursuant to order made Tuesday, March 24, 1998, all questions on the motion are deemed to have been put and a recorded division is deemed demanded and deferred until Tuesday, March 31, 1998 at the expiry of the time provided for Private Members' Business.

Child BenefitPrivate Members' Business

6 p.m.

The Deputy Speaker

Does the House agree to call it 6.30 p.m.?

Child BenefitPrivate Members' Business

6 p.m.

Some hon. members


A motion to adjourn the House under Standing Order 38 deemed to have been moved.

Child BenefitAdjournment Proceedings

6 p.m.


Bev Desjarlais NDP Churchill, MB

Mr. Speaker, on December 11, 1997, I asked a question to the minister of defence concerning the process taken for the rescue of survivors of the Little Grand Rapids tragic crash. I asked the minister to explain why his department had failed to enlist locally available helicopters in this rescue, as was the case with the Red River flood.

The twenty hour wait for a rescue plane endured by the Little Grand Rapids plane crash victims was a result of what I believe is botched decision making by search and rescue operations. Officials had access to helicopters at the Canadian forces flying training school in Portage, la Prairie. However, they chose instead to try to use a plane to rescue survivors.

Those same helicopters were used during the Red River flood. They could have helped this time too. Instead of using those nearby helicopters, the military sent helicopters from Cold Lake, Alberta which never made it to the crash site.

The end of 1997 did not go quietly. Another plane crash occurred in Fredericton, New Brunswick. It was a miracle that no one died in that crash. This incident has made people aware of how cuts and downsizing may be affecting airport safety. But let us go back to the Little Grand Rapids crash.

I have questioned the minister on the process of this rescue but that crash worries me in relation to other issues. There is no question that this fatal plane crash demonstrates the importance of having better landing facilities in isolated areas. When air is the only mode of transportation in and out of a community, it is an absolute must that the landing facilities be in the best conditions possible.

The landing strip in Little Grand Rapids had been described as the worst in northern Manitoba long before the crash. It is well known that its surface is uneven and gives pilots the impression that their angle of approach is too steep. The crash on December 9 was the third fatal plane crash to happen in Little Grand Rapids. The limited services to response measures in remote communities make it even more important to have a safe infrastructure. The plane was carrying one doctor and four social service workers who were travelling north to provide treatment for northern residents.

I was annoyed when the Reform Party suggested that a private helicopter went in to save the injured. It went in for one reason. He was taking in reporters to get a story. Had the intent been to help the injured, medical help should have gone with him, not a reporter. However, once they were there it only made sense to send out the most injured, and he is to be commended on that note.

Why did search and rescue workers not avail themselves of those local resources? Do they not have that flexibility? Lately we have received an alarming report concerning the rescue in Little Grand Rapids. The report states that the hercules rescue plane dumped more than 10,000 gallons of fuel at less than 600 feet within three miles of the runway. I understand the normal procedure is to dump it at no less than 5,000 feet. This is to allow for dispersion of the fuel and to decrease the risk of ignition. The fuel would be less concentrated on the ground or wherever it landed.

The minister mentioned in the House that this was done to save lives and that the weather conditions were not good enough to follow the guidelines. Nevertheless, when the dumping occurred the hercules had gone below the fog. It had cleared somewhat. The crew knew the ceiling had lifted and that the most critically injured had already been flown out. Was the option of taking the time to fly to the height requirement ever considered? Was the community informed that this was not the usual procedure?

The most critically injured were flown out by a private helicopter which landed before the hercules. The helicopters nearby could have landed as well and the injured would not have had to wait 20 hours to be rescued. Was the best option used during this rescue?