Mr. Speaker, I am pleased to address Bill C-28 at third reading. This is a 464-page omnibus bill which includes various measures to implement the recent budget tabled by the Minister of Finance, along with some tax changes that were announced a few years ago, but died on the Order Paper before the federal election. This is why these provisions are included in the omnibus bill.
On February 23, the Minister of Finance had Bill C-28, of which he is the sponsor, introduced in the House of Commons. In addition to various amendments to our tax legislation, including the Income Tax Act as it applies to corporations and individuals, and to certain measures relating to the minister's recent budget, the bill includes about 14 lines, two small paragraphs, hidden somewhere in these 464 pages, that deal exclusively with international shipping.
As we all know, and as government members have told us again and again, the Minister of Finance is also a shipowner. He owns a fleet of ships abroad, and he is active in the international shipping sector. The minister owns a shipping holding company.
His holding corporation owns shares in companies that are actively involved in international shipping and that are based in Bermuda, Liberia and Barbados, among other countries.
These 14 lines in Bill C-28—which, again, is 464 pages long—are found in clause 241—formerly section 250 of the Income Tax Act and dealing with the tax provisions applying to international shipping companies—and seek to expand the scope of these provisions to corporations that are related to shipping holding companies.
The clause provides that, subject to certain conditions and structures, these international shipping companies will get preferential treatment from Revenue Canada. They will be sheltered from paying any taxes on profits, and now from any taxes on dividends received by the holding companies.
When we look at these 14 lines, the first thing that comes to mind—I repeat this for the benefit of those listening—is how can a finance minister, who is also a shipowner in the international shipping sector, sponsor a bill that could affect his personal interests? That is the first question that springs to mind.
Is he allowed to do that? Did the Minister of Finance act within his authority, in compliance with the government's code of ethics, introduced by the Prime Minister himself and passed in June 1994? Did he act within his authority in introducing a bill, clause 241 of which proposes tax changes that could be advantageous for his offshore shipping companies in Bermuda, Liberia and Barbados?
Answering the first question—because there will be a second—could hardly be easier: we will take a copy of the document called “Conflict of Interest and Post-Employment Code for Public Office Holders”. We will look at the provisions concerning the principles that should guide ministers, senior officials, and chairs of commissions and public and parapublic corporations.
We will take them one by one and try to see whether, in this case, the case of a bill containing these 14 lines, two little paragraphs about international shipping tucked away in a 464-page bill, the Minister of Finance did the right thing in sponsoring this bill.
On page 2 of the ministerial code of ethics, we read the following:
Every public office holder shall conform to the following principles:
This is followed by various headings. The first one is “Ethical Standards”. The passage in question reads as follows:
(1) Public office holders shall act with honesty and uphold the highest ethical standards so that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced.
I would like, if I may, to take a look at this first principle, which is very important. How, from the point of view of the government's integrity, objectivity and impartiality, are we to interpret the fact that, although we have been asking the government for a month and a half now to strike a special committee to look at the scope of clause 241 and the process whereby it was included in Bill C-28, the government has not explained the finance minister's apparent conflict of interest?
Why did the government refuse to reveal all each time we requested it to? At first, we were alone, but then we received the support of the Progressive Conservative Party, the Reform Party and the NDP.
With it systematically refusing to shed any light on this matter, how can we consider the government honest, objective and impartial with nothing to hide? It is already walking all over the first principle of the code of ethics.
The second principle involves public scrutiny. It provides that “Public office holders”—in this case the Minister of Finance—have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law”.
With the minister sponsoring a bill that could apply to his private companies, how can we be expected to consider his action so far beyond reproach as to bear the closest public scrutiny when we know that this concerns only international shipping companies? It does not concern engineering firms, for example. It does not apply to oil exploration companies and it does not apply to just any economic sector. It applies only to the international shipping sector.
Not only that, but clause 241 applies particularly to the holdings of shipping companies operating abroad. The Minister of Finance has a holding of shipping companies operating abroad.
This second principle of the code of ethics talks of “bearing the closest public scrutiny”. This does not. The government's claim that this clause is not a tax amendment made to measure for the Minister of Finance does not bear the closest public scrutiny.
The third basic principle in the code of ethics concerns private interests. It states as follows:
Public office holders shall not have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by government actions in which they participate.
An examination of clause 241 of the bill sponsored by the Minister of Finance indicates that this principle of the conflict of interest code is being ridden roughshod over. The Minister of Finance is a legislator and therefore has definite influence over legislation concerning international shipping, the area in which he is involved. He can influence government activities for the benefit of his shipping companies, and this is what he has done with clause 241 of Bill C-28. Clause 241 will impact upon the financial performance of his companies.
This principle, adopted in June 1994 as part of the government's conflict of interest guidelines, has already gone by the board.
The final principle is public interest. It states the following:
On appointment to office, and thereafter, public office holders shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising—the conflict shall be resolved in favour of the public interest.
Not only do we believe that there is, at the very least, an apparent conflict of interest, which is serious according to the code, because it speaks not only of real or potential conflict of interest, but also of apparent conflict of interest. We are not the only ones to believe there is, at the very least, an apparent conflict of interest. Even the person responsible for ethics, Mr. Wilson, the governmental ethics adviser, ministerial even, one might say because, in our opinion, his evaluations are somewhat biased—he is paid by the people he has to defend—has appeared before the finance committee, has even prepared and submitted a report, and admits there could be an apparent conflict of interest.
He has said that, had he been consulted as ethics adviser, the bill would have been introduced differently than it was by the Minister of Finance. The Prime Minister, the Deputy Prime Minister, the Minister of Finance, all the government members, have told us “Go consult Mr. Wilson, and he will tell you there is no problem”. Yet even Mr. Wilson says “There was, at the very least, an apparent conflict of interest. The process was flawed and things ought not to have been done that way”. This has happened more than once, moreover.
The Prime Minister boasted that he had seen nothing two years ago. Sometimes the Prime Minister is really funny. He sometimes has a really funny way of reasoning.
Two years ago, a bill was introduced, which contained a provision similar to clause 241, but it eventually died on the Order Paper when the election was called. We did not notice it at the time, probably because nobody felt like reading through the 464 pages of an omnibus bill, but the second time around, we did.
The Prime Minister bragged about it on two separate occasions. First, he said there was no ambiguity because the bill was introduced by the Minister of Finance himself. Not only did he sponsor it, he introduced it. And, again the other day, the Prime Minister said they had done the same thing two years ago and “the opposition did not even notice it”. Great philosophy, great moral and political ethics.
So, coming back to the ethics counsellor, in his evidence before the Standing Committee on Finance, Mr. Wilson told us there was indeed an apparent conflict of interest. What happens when four out of the five principles supposed to govern the Conflict of Interest and Post-Employment Code for Public Office Holders are trampled on as I have just demonstrated? One must refer to page 16 of the code.
What does it say on page 16? It states that “Where a public office holder does not comply with Part II, the office holder is subject to such appropriate measures as may be determined by the Prime Minister, including, where applicable, discharge or termination of appointment”. None of this has ever happened.
We are not asking for the minister's resignation, at least not yet. But we are running out of patience. It is really hard to hold back. The government's refusal to shed light on these very important questions and the Prime Minister's hypocritical suggestion in the House that we should seek an answer from the Standing Committee on Finance, where we are being gagged, are starting to get to us.
We are asking the government to shed light on this matter. We have just demonstrated, by quoting directly from the code of conduct without any interpretation, that four out of five principles have been trampled by the finance minister's sponsoring of Bill C-28 and that clause 241 might give an unfair advantage to the shipping companies he owns.
Howard Wilson has recognized, at least once in writing, that there was a problem, an apparent conflict of interest. He may not have said it again, but as we have seen in the past, he is more of an elastic counsellor than an ethics counsellor. He gives a very broad and very flexible interpretation of the code of ethics when his boss, the Prime Minister, asks him to save the neck of one of his ministers.
There are precedents. We found a few. There are precedents where a public office holder, a finance minister or other public office holder, was forced to resign over a lesser matter than this, over situations that were less obvious and less worrisome from a conflict of interest point of view.
In 1985, a case was raised by the Prime Minister, then the member for Shawinigan, who was then in opposition. He asked the Prime Minister of the day, Mr. Mulroney, for the head of the Minister of Finance, Michael Wilson, who he said was in conflict of interest, one of his brothers-in-law having been awarded a $240,000 contract, something that was ultimately never proved.
He cited the example of an Ontario finance minister who, in the 1980s, had resigned immediately after revelations that he had allegedly relaxed the normal rules in granting a permit for a company owned by his family. And the minister had never seen this permit. He had never had anything to do with granting this permit.
But, as this finance minister, Darcy McKeough, had recognized, a finance minister's performance is subject to criteria of very high integrity—not just integrity, but very high integrity—because of the nature of his duties. He had therefore preferred to hand in his resignation immediately to avoid any further doubts about his government's and his own integrity.
I will describe the case again. It was something very simple and not serious in itself. A company owned by an Ontario Minister of Finance was issued a permit. The minister had never seen the file, nor was he the one to sign the permit. The Minister, not wishing to place anyone in his government in an awkward position, and not wishing any doubt to be cast on his integrity, immediately resigned.
There is a more recent case, this time in defence. Everyone will recall that the Minister of Defence was obliged to step down in March 1996, not because he was a bad minister—although at the time we felt he was and we were calling for his head—but because he had written to the Immigration and Refugee Board—