Debates of April 2nd, 1998

Income Tax Amendments Act, 1997

[Monte Solberg, Reform, Medicine Hat, AB]

“I wonder why”, says my friend in the back. It is not a mystery to me. Staggering levels of taxation, staggering levels of debt and spending that is unfocused and not priorized are the reasons why.

We must get back to a situation where we shore up the foundation that is crumbling and cracking, and we can do that in a number of ways. First, we start the process of priorizing our spending. We do not waste those precious dollars given to us by taxpayers. We dedicate that money to the things that are important to Canadians.

I can say with all honesty what people in my riding say. Mr. Weston came in the other day and said “we don't want to spend a whole bunch more money but let us focus on the things that are important like health care and higher education”. The government has failed to do that. It is quick to point out with Bill C-28 that it will not cut as much as it initially said it would in areas like health care and higher education. Instead of cutting seven and a half billion dollars it will cut only six billion dollars. I guess we should be thankful for that.

If our friends across the way are doing those things, if they are cutting dramatically in health care, how do they justify increasing spending on things like a television production fund? Is that a priority for Canadians? I do not think so. How do we justify the change of the health minister with respect to tobacco and the hundred million dollars it will cost taxpayers? That sort of money should be used to help people who cannot help themselves.

We do not believe in taking the shotgun approach. We say focus that spending where it does the most good. We think those priorities should be things like health care, higher education, research and development. We think we should have lower taxes. We advocate sweeping tax relief. We believe we should take half of all the surpluses we run after we freeze spending at the current level of $103.5 billion and dedicate it to lowering taxes which will help all Canadians. It will lift 1.3 million low income Canadians right off the income tax rolls. They would not have to pay income tax anymore. I think that is the correct approach.

We believe there must be a program for debt repayment. The government has no program. It says that if there is a little money left over, it will dedicate a little money to paying down the debt. That is not an approach or a plan, it is a whim, a wish. We need a plan. The Reform Party has presented a plan that would pay down the debt substantially over the next 20 years. It would take the debt to GDP ratio down from 70% to 20% and would save $20 billion a year in interest payments. We do have a plan. We have an approach to dealing with this situation.

Reformers believe the private sector does a tremendous amount to produce the wealth in this country. The private sector produces the golden eggs that we see the government scoop up in ever increasing numbers only to turn around and have them bronzed. It has bronzed the golden eggs. It has used them very inefficiently. It takes that money which is better left in the hands of taxpayers and the wealth producers and it uses that money very inefficiently. We say leave that money in the hands of taxpayers. They will do a far better job than politicians and bureaucrats.

For all those reasons I urge my colleagues to vote in favour of this amendment and also to vote against Bill C-28.

[Eleni Bakopanos, Liberal, Parliamentary Secretary to Minister of Justice and Attorney General of Canada]

Mr. Speaker, I do not know whether the chicken or the egg came first but in any case I thank the hon. member for Medicine Hat. He spoke to the integrity of the Minister of Finance. His views on this issue speak well of the integrity the minister enjoys in this House and among Canadians. One of his colleagues, the member for Battlefords—Lloydminster, said: “Personally I don't believe so. I think Mr. Martin is a man of integrity. I really do”.

The member noted in his speech that we are not doing enough about the debt. Where has he been during the whole debate we had on the budget? Does he not know we will be lowering the debt in terms of the percentage of GNP and in absolute terms? Is that not how we dealt with the deficit? We have taken measures in the budget to address the issue of the debt. Why does he feel we have not addressed that issue?

[The Acting Speaker (Mr. McClelland)]

I advise the House that we do not use members' names, not in a positive or a negative sense. We do not use them at all in the House. We refer to each other by either ministry or riding.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is fairly evident who the member will be supporting in the leadership race of the Liberal Party in the near future.

I want to say simply that my quarrel is not with the finance minister's integrity. I do not question that at all but I think members would acknowledge that the finance department did make a mistake in not following the procedures, the tradition I guess, of not putting the finance minister in a potential conflict of interest position which is sadly what happened when this legislation was introduced.

The member said the debt would be reduced in terms of the percentage of GDP. While that may look good on paper, it does nothing to help people who are paying $6,000 in taxes just for their share of the interest on the debt. Reducing the debt as a percentage of GDP will not lighten their tax burden.

The finance committee is dominated by the Liberal Party. The recommendations the Liberals made on the finance committee were to set some absolute targets in terms of debt to GDP ratios for the government, something it failed to do when it brought down the budget.

There needs to be a very aggressive program to start to pay down debt. I would simply point out that in recent days the Business Council on National Issues came forward and said it was ridiculous, we need to have a much more aggressive plan than the government currently has for paying down the debt.

If we do not, we leave all Canadians vulnerable in the event of not only international shocks like the Asian crisis but also the impact of a possible cessation crisis that we could face from Quebec.

[Eleni Bakopanos, Liberal, Ahuntsic, QC]

Mr. Speaker, I rise on a point of order. I do not remember making reference to a member's name.

[The Acting Speaker (Mr. McClelland)]

It is no problem. We passed it. We will go on to questions and comments.

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

Mr. Speaker, I am pleased that I have developed a communication tool with my constituents. I am extremely pleased that now what seems to be happening is not only are the parents and adults responding with comments but also young people are.

I want to share with the House and with my hon. colleague from Medicine Hat some comments by a young man, a grade 12 student, who attended the forum for young Canadians in Ottawa in March.

“As for the millennium fund, I believe it is a good idea but it reaches so few young Canadians. That money should be put toward eliminating the national debt. The government should not undertake any new major projects, the millennium fund, until the financial situation is resolved. This means that until Canada's debt is gone, no new major projects should be started”. This is from a young man who is going to be faced with taxes. I thought this was unique.

Another point was put before me by another young person, 17 years old. This person would like an answer even though they are not of voting age: “How come the millennium scholarship fund will only help out 6% of post-secondary students and with only $3,000 per year?”

I would like to ask my hon. colleague if he is also experiencing this concern by young people when they look at the debt that our generation and the generation before us are leaving them.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I appreciate the question. It is something I failed to touch on during my speech.

Indeed I have heard from young people who are very concerned about the structure of the millennium scholarship fund because it does not treat all students equally. It does not seem to recognize that many students will come out of school with staggering levels of debt, some of them $25,000 a year.

We have seen debt levels go ever upward in the last several years. I think the young man is very level headed when he says that money should be used toward paying down debt. I think that is an excellent suggestion, recognizing that perhaps the real fiscal dividend will be the interest saving when we do actually start the process of paying down debt. That is the real fiscal dividend.

One of the things the government does not address in terms of education is that when people benefit from a program like a millennium scholarship fund, so many of them just disappear to the United States. We have a situation where the millennium scholarship fund turns out to be a subsidy for companies like Microsoft that come along and scoop up a third of the graduating class at Waterloo University. So we have to do something about that side of it. We need to ensure there are jobs in this country, that they are well paying jobs and that they are ones where taxes are not so high that they drive away the brightest and the best.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, I commend my colleague from Medicine Hat on the excellent address he has given on the bill.

He referred to the $45 billion we are paying each year on this huge debt that has been amassed. When we have emergencies like the ice storm, floods and other emergencies, of course those people suffering should be able to turn to the rest of Canada for the assistance that the charitable people of this country are always ready with and standing by to give.

I want the member to respond to the latest crisis we are seeing with regard to the many people who are sick and dying as a result of hepatitis C. It seems we do not have funding available to help those people when they need help while we are spending $45 billion to pay the interest on a debt. Will he relate the whole history of the accumulation of the debt and the demand on the revenue dollar to pay the interest to our ability to respond to emergencies such as the hepatitis C emergency facing us today?

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I appreciate the question from the hon. member for Crowfoot.

Today we have a debt of $583.2 billion and as I mentioned in my address it is one of the largest debts in the entire world today in terms of per capita indebtedness, second only to Italy among industrialized countries.

The result is that we do not have the money often necessary to put toward programs that are vitally important. A third of every tax dollar today goes to pay just the interest on the debt.

Imagine if we did not have to pay the debt. We would be able to lower personal income taxes by 71%. Or could dedicate the money to things that are vitally important like helping people who, through no fault of their own, have been victimized by a federally regulated blood system.

We need $4 billion to help out all those people who have been victimized. We could do that today if the government would take the approach that the priorities are to start to pay down debt, focus spending on things that are most important and start the process of lowering taxes. That is the approach that will help all Canadians.

[The Acting Speaker (Mr. McClelland)]

Pursuant to Standing Order 74 we are now in that period of the debate which is 10 minutes per intervention with no questions and comments.

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, it is with great pleasure that I rise today to speak on Bill C-28. Nothing would make me happier than to stand here today and announce to the House how pleased my PC colleagues and I are with the implementation bill. However, due to the many serious shortfalls in Bill C-28 I am unable to do that.

The Liberal government has shown its true colours with both the budget and Bill C-28. This is not a government concerned with the needs and pains of all Canadians. Instead, this is a government that believes in crisis management, big government intervention politics and damage control.

At times it appears that the government has the delusion of adequacy. What we know for certain is that this is a government without a vision.

I would suggest that all members of this House pick up a copy of Bill C-28 and glance over it. Then they would ask themselves: Is this document from a government with a plan or is this a document of hope? Does this bill provide leadership that Canadians so desperately crave? When we are honest with ourselves the answer is emphatically no.

Instead we have a piecemeal reactionary bill that reflects the desires of the Liberals' favourite collective, the collective of special interest groups that represent only the needs of a fraction of Canadians.

“Four more years”. This used to be the rallying cry of parties seeking re-election, but not this Liberal government. To the Liberals it is the time span between announcements of proposals and their implementation. This clearly contradicts the Liberals' 1993 promise to end the credibility-stretching tradition of not passing tax changes until months after they are announced, which is another broken red book commitment. One is left to believe that the Liberals have had their gag reflexes surgically removed.

When I rose in the House on Monday to speak to Bill C-223 I made a point which pertains equally to Bill C-28. Canada needs a comprehensive national tax relief plan today. If the finance minister will table such a plan with objectives for all Canadians it will have the support of our party.

There is no monopoly on good economic ideas. The GST needed to be implemented and Canada has a balanced budget because of it. The NAFTA remains an integral tool for economic growth. Just as my party has always been willing to share its good ideas, we do so again today. Tax relief is essential to our future prosperity and the PC Party does not mind if the Liberals want to borrow this plank from our platform as well.

The Minister of Finance should know that the model in Bill C-28 would never achieve sustainable growth. Meeting with lobbyists and coming up with their pet initiatives might assist leadership bids, but it certainly does not help the general public.

We have heard a lot about brain drain. It devastates Canada's sustainability as a technology leader. It deprives Canadian industries of the ability to remain competitive. Above all, and what we can never forget, is that brain drain rips the heart and soul out of Canada and its families.

I am well aware that on this issue the industry minister has agreed with me, because his own departmental study entitled “Canada in an Integrated North America” shows this to be the case. This study points to high taxation as the major cause of brain drain. The study goes on to say that a married taxpayer working in Toronto with a salary of $100,000 could add over $20,000 to after tax income, an increase of close to 40%, if he or she were to earn the same income in New York or Chicago. It is no wonder that our best and our brightest are leaving for the U.S.

This same visionary leadership that Canada needs on tax relief is also required on education. This bill has taken the same lackadaisical approach to education that it takes to taxes. There are four targeted education components to Bill C-28. As with tax relief, specific targeting will not be the answer. The approach must be one of fairness for all, greater efficiency toward benchmark goals, and above all else it must be comprehensive in nature.

So much of Canada's future hinges on our national education agenda. It is time to stop paying lip service to our citizens as Canada's greatest natural resources. Instead we must begin backing this up with our actions.

It is very simple. It is just like the Dutch boy with his finger in the dike. Stopgap measures might make you popular, but you need the engineer who came up with the permanent solution. Guess what? Where is that engineer? The engineer is in the United States because he is getting a better tax break and, unfortunately, making $10,000 more a year and retaining 40% more of those wages after tax.

By enacting over 15 favourable changes to the tax code for selected groups the Minister of Finance has shown he knows there is a problem. The hon. member for Medicine Hat mentioned that the finance minister has found out what the problem is because he has taken his assets and put them in a blind trust offshore. Why did he do that? Because he pays no taxes or very little taxes.

If the finance minister wants to become Prime Minister of this country he should realize that we have to be competitive on a tax basis with the United Stated or we are going to continue to lose our best and brightest to the United States.

It is time for the finance minister to go all the way by implementing broad based tax relief for all Canadians. For example, an increase in personal income tax exemptions to $10,000 would immediately remove two million low income Canadians from the tax rolls and reward all hard working Canadians. Even though it is a Progressive Conservative idea we do not mind lending it to the minister for the good of our fellow Canadians.

In conclusion, let us undertake a national education plan which ensures that we will produce the highest skilled individuals our industry requires. Once we have the high skilled workforce, let us make sure they choose to remain in Canada by reducing the crushing tax burden. Industry will be supportive of such a move, taxpayers will welcome this and families that do not have to export their children to the United States will be overjoyed. When the PC Party is presented with such an implementation bill we will resoundingly endorse it. That day is not here. Bill C-28 is not such a bill and the PC Party will be voting no.

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

Mr. Speaker, I appreciate the opportunity to speak to Bill C-28, the catch all bill. It is in fact a humungous volume of 464 pages covering so many subjects that it is easy to play a game of hide and seek with and slip in unnoticed amendments that could benefit certain individuals or groups of individuals.

What had to happen happened. The vigilance of my colleague from Saint-Hyacinthe—Bagot led to the discovery on page 414, at the end of the volume, which everyone skips over, clause 241 amending paragraphs 250(6)( a ) and ( b ) of the Income Tax Act.

What does this clause concern? It concerns shipping, exclusively. The amendment, if passed, would permit international shipping companies to enjoy certain tax advantages. We all know that the Minister of Finance of Canada is sponsoring Bill C-28 and that he is also the sole owner of Canada Steamship Lines Inc., a shipping company.

We have the following questions. Is the Minister of Finance in an apparent or a real conflict of interest? In the light of his position, why is the Minister of Finance sponsoring this bill? Why, in his own words, is he unable to speak on the matter so as to avoid a conflict of interest?

Since February 5, 1998, my colleague from Saint-Hyacinthe—Bagot and colleagues from all the opposition parties have been trying to get the facts on this bill and asking questions in this House, without success. The Prime Minister and the Deputy Prime Minister direct the member and the opposition critics to the Standing Committee on Finance. As we know, the committee is under Liberal control. They do not want to hear the experts, witnesses who are likely to help the committee to get to the bottom of clause of 241 of Bill C-28, sponsored, I repeat, by the Minister of Finance.

This tactic helped me understand a lot of things. Yes, the finance minister was too busy with Bill C-28 to prepare a more realistic budget. He was more preoccupied with the tax benefits his company would get under this bill. Instead of indexing tax tables, helping small and medium size businesses to create jobs, reducing EI premiums and adjusting transfers to the provinces, our dear minister was busy with Bill C-28. Of course, his budget contained a proposal to promote Canadian unity, namely the millennium scholarship fund.

I do not want people to misunderstand our position with regard to the millennium scholarship fund. We, in the Bloc Quebecois, support the millennium scholarship fund as long as Quebec can withdraw from that program and is fully compensated so it can administer its own scholarship program.

In closing, I fail to understand why this government and the Standing Committee on Finance persist in refusing to hear witnesses. Do they have anything to hide? What kind of tricks do government members have up their sleeves? We want clear and precise answers to these and a lot of other questions.

This situation must be clarified for the sake of our integrity as members of this House, and that is why I am asking my colleagues to join me in supporting the motion brought forward by the member for Saint-Hyacinthe—Bagot.

[Art Hanger, Reform, Calgary Northeast, AB]

Mr. Speaker, I am pleased to rise today to address my serious concerns regarding Bill C-28. Just as a refresher, this bill amends at least 18 separate pieces of legislation, all pertaining to the income tax measures announced in the February 1998 budget.

Specifically, the bill would amend provisions dealing with charitable donations, tax shelters, registered education savings plans, film and video production services, tax credits, the tax status of corporations, treatment of RRIFs, family farm corporations and many, many others.

Let me be very clear. The Reform Party opposes the use of tax concessions as an instrument for manipulating investment behaviour and the industrial structure. These amendments add to the already convoluted, overly complicated and confusing tax code, a tax code which already contradicts our commitment to a fair and visible simple tax system.

In addition, these amendments do nothing to deal with the real problem of excessive spending, high taxes and escalating debt.

This bill is typical of a Liberal-Tory approach to fiscal policy. The Tories are as much to blame as the Liberals because we have experienced tax increases under both of these regimes and there is very little difference in the policies they have adopted over the years. This bill offers no tax relief to cash strapped Canadians.

As the defence critic for my party I noted with interest that the military received a pay increase. It was well documented. A press release issued by the government indicated that the lower ranks would be getting somewhere in the neighbourhood of a 3.2% increase. How does that translate into the dollars and cents that will go into the pockets of those military personnel? There are many who fall within the same earning range in this country.

For instance, the master corporal was so elated to have a $100 pay increase. That is the gross amount. After taxes, after EI premiums, after CPP deductions which will be the biggest hit he will have to accommodate in that increase, this man will end up with $53 clear a month.

The Department of National Defence decided that was not satisfactory. It decided that it would also boost his rent by $30 more a month. Without even taking into consideration whether the master corporal is going to be in another tax bracket and subject to tax bracket creep as an additional hit on his wage, he realizes a net increase of somewhere in the neighbourhood of $23 a month. That is a crying shame.

There is no question that he has moved up from one tax bracket into another given the fact that he had very minor increases the previous year. Here he sits in another tax bracket and he is going to be literally whacked. If he realizes an increase of $20 a month out of that $100 gross, he will be lucky. Many Canadians fall into that same category. They are barely making ends meet.

This bill does nothing to help him, nothing whatsoever. In fact, it gives him a greater burden and certainly not a sense of security. It did not take him long to figure out that he was not much further ahead than he was before. He will not be able to accommodate any emergency that creeps into his home and his life with any form of benefit from the wage increase he received. That is one aspect.

I feel for him. I feel for many other families who are subject to the same heavy tax burden. This government has failed to live up to its responsibility to those people.

I also reflect back to some of the points that Reform has stated it would like to see. Under the Liberal tax bill, that gentleman will obviously fall into a category somewhere around $2,000 to $3,000. If we look at our last election platform, that master corporal and his family would only pay $520 as opposed to $2,189. That is quite a substantial difference. It is almost $1,600 back into his pocket. I am sure he would be able to find ample opportunity to spend that on other areas which would benefit him and his family.

This bill does nothing to address the enormous public debt which the government and the Tory government before it are responsible for. Some of these social costs are nothing but staggering. The total interest-bearing debt sits at around $600 billion. Of that, $120 billion is held by foreign entities, non-residents. One-third of that 25% is American held. The remainder is divided between Europe, Asia and elsewhere. Undoubtedly it will have some effect if the markets are as uneasy as they are in Asia. That matter is far from settled. It could definitely have an effect here.

Are we prepared with the massive debt and the interest payments? We still have to go outside this country. There is not enough money to pay and hold that debt by investors in this country. We have to go outside to borrow the money. Why should we as an industrialized country be in that position? It would be nice to be independent but unfortunately that is not the case.

That is one point dealing with the debt. The government also owes $3.7 billion to the Canada pension plan and $114 billion to the public sector pension plans. Again this further complicates our debt picture and the burden on Canadian taxpayers.

Debt interest is $45 billion. What would it be equal to if we had the capability of spending that $45 billion on things other than the interest on the debt?

It would be two full years of Canada pension or Quebec pension plan benefits. It would amount to two and a half years of GST revenues. It would amount to 71% of all PIT revenues.

It would amount to the entire annual budgets of the four western provinces, which is a substantial amount of money. It would amount to the entire annual budgets of Quebec, Prince Edward Island and Newfoundland. It would amount to the entire net debts of all of the provinces combined, excluding B.C., Ontario and Quebec.

This probably more than anything would be of greater impact: it would be enough to pay for all Canadian hospitals, physicians and drug costs for an entire year. Our health care problem could easily be resolved if it was not for the interest that we are paying on our massive debt.

It would be enough to cut taxes an average of $3,200 a year for the average taxpayer. Just think of what they could do with that money if it were in their pockets. In 1997 the average Canadian taxpayer paid $3,285 a year in taxes just to pay the interest on that debt. This works out to $275 a month or just over $9 each and every day.

Reform has a much better plan. We will cut personal income taxes by $12 billion or $2,000 per family by the year 2000.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I am pleased to address once again Bill C-28, which is sponsored by the Minister of Finance.

We could examine several provisions, since this is an omnibus bill, but I am primarily concerned with clause 241. The reason is that the situation is not at all clear. Before me, several Bloc Quebecois members asked again that this issue, which leaves the impression there may be an apparent or real conflict of interest, be resolved, since it tarnishes somewhat the government's credibility when it comes to finance.

It is not normal to leave the impression that the Minister of Finance may be sponsoring a bill that could benefit a shipping company he fully owns, namely Canada Steamship Lines.

I represent the riding of Lévis, where we have a big shipyard.

As the member of Parliament for Lévis, I, like all my constituents, want to have the largest possible number of ships come through Lévis and the St. Lawrence Seaway. This is very important. Why? Because the more ships go through, the greater the chances for our shipyard to build ships. In fact, it would only be normal if Quebec's largest shipyard could build ships.

However, one of these international shipping companies happens to belong to the Minister of Finance. Of course, the minister asked someone else to manage his interests, which are currently held in trust. However, there is cause for concern when we see that even if he himself does not make speeches, and does not answer questions in the House on shipping, he is sponsoring this bill, and clause 241 is part and parcel of this bill.

The Bloc Quebecois would like to have this bill referred back to the finance standing committee so that the whole matter can be cleared up, because our questions have not yet been given clear answers. Of course, the ethics counsellor of the Prime Minister has appeared before the committee, but his testimony has been quite vague, and everything went very fast.

We heard the Prime Minister's response yesterday. He is satisfied with answers such as this “Everything has been cleared up, and there is no problem whatsoever since I, the Prime Minister of Canada, have full confidence in my finance minister. The matter is closed”. We do no think it is that simple. That is too easy a way out. We should be hearing arguments, we should be dealing with substance and examining all aspects of this clause. We should check the legal implications and see who is getting tax breaks and under what conditions.

We are dealing with companies operating in international shipping. Canada Steamship Lines is one of these companies. Some will say this is quite normal, since we are dealing here with shipping and transportation. Ships do travel, just like planes do. That reminds me of Mr. Trudeau who said that fish should be under federal jurisdiction because they do swim from one place to another.

So ships do in fact travel, and the problem is not international shipping. The issue we ware raising is that the finance minister, who owns a fleet of ships, although his assets are in trust while his is in office, stands to benefit not only now but once he no longer is in office. This is a very important issue, and the people have a right to know.

I would like to touch on another aspect. I have tried repeatedly to put shipbuilding on the government agenda again. When the current Minister of Finance was responsible for the Federal Office of Regional Development for Quebec, he systematically refused to answer any question either from myself or from any other member having anything to do with providing assistance to the shipyard in Lévis. His response was always that he had business interests in shipping. So, he does admit to having interests, but argues that they are held in trust.

The Minister of Finance is one of the most prominent ministers in government, but he hides behind his business interests in this area, claiming a conflict of interest, not to act in support of the shipbuilding and shipping industries, which are in serious difficulty today.

We should have a debate on this too, but one that would be, as suggested by the Liberals in 1993, a real summit on the future of shipyards in Canada. We could, for instance, update the study conducted more than ten years ago on the condition of the fleet at the international level to take a closer look at the financial assistance policies most nations have for their shipyards.

Our neighbour to the south is one of the leading shipbuilding and shipping countries in the world. The United States want nothing to do with OECD agreements regarding subsidies to shipyards. In Canada, we will not consider such a policy, because it appears we have reached an agreement with the other countries of the OECD.

However, the other members of the OECD are not following Canada's example and, as they see that the Americans are not accepting this agreement to no longer subsidize shipyards, they are going about it in other ways. Some European countries are doing like the Americans, waiting until everybody signs the agreement. In Canada, we are—if you will excuse the expression—the butt end of the joke, since, because we wanted to appear virtuous in the matter, we end up with a pretext to do nothing.

So, I will use this question to point that out, because with every opportunity I have, as the member for Lévis and to contribute to the future of shipping and shipbuilding, I always advocate a real shipping policy.

I will conclude by saying that we must—and quickly so—get all the facts on clause 241 and the consequences of it, because in the interim the effect is to mortgage what might be done to further advance the cause of shipping and shipbuilding in Canada.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, it is a pleasure to speak at third reading of Bill C-28, an act to amend a whole bunch of other acts with respect to tax measures. It is a massive bill containing over 1,000 pages including accompanying notes. I wonder how many members of Parliament have read those 1,000 pages and know what we are getting into. We do not need greater fiscal and social engineering by the government in any bill but that is exactly what we are getting.

I will give a broad perspective in my critique of this bill and of the approach being taken. The Liberals and the Tories, the two parties that have been responsible for managing our economic affairs over the past several decades, have brought us to this point. We have a legacy of massive overspending, a legacy of 30 years of never balancing our books which has led to a legacy of a $600 billion mortgage on our children and a legacy of regular and unremitting tax increases. Because of all this the federal debt is nearly 70% of GDP.

The GDP is the gross domestic product, the value of all the goods and services produced in our country over a year. Seventy per cent of everything we produce over a year is offset by this massive federal debt. If we add provincial debts, that percentage approaches 100% of GDP. In other words, we owe everything we make in a year to our huge national debt. If we were to apply it all to the national debt, that would just about pay it off. Obviously we cannot because people have to live.

What it does mean for people and for the average family of four is a share of the national debt of a whopping $77,700. Every family has been put in the hole by past governments to the tune of $77,000 plus. This same average family paid $6,000 this year just to meet the interest on that debt. If there were no debt presumably each of these families would have an extra $6,000 to work with. Most families could feel the relief if that were the case, but of course it is not.

Also our income tax burden as a result of this abysmal record of fiscal mismanagement is the highest in the G-7 nations. Of the developed nations our income tax burden is the highest. The latest figures available show that between 1989 and 1995 the average Canadian family suffered a decline in real income after taxes of $2,540. One of the reasons for the decline in real income is the incredible tax burden being placed on regular Canadians.

I have a letter from a regular Canadian that illustrates all too clearly the ridiculous lengths to which this tax system punishes Canadians:

My son attended Notre Dame school in Saskatchewan on a scholarship this past year. Last week, he received a T41A in the mail in the amount of $9,500. The scholarship represents his only income for the year (he does not even have a social Insurance number). He now owes income tax in the amount of $450 (and of course, our tax burden increases because he was removed as a dependant).

I have several questions:

1. How can the Liberals claim that they want to support youth education when there is a tax on scholarships?;

2. Where does the government draw the line in taking money from its citizens? If $9,500 is not below the poverty line, then what is? $5,000, or perhaps $2,500;

3. Is not the future of our nation, its educated youth, worthy of the same tax free allowances as MPs or MLAs?;

4. Just what kind of joke is the millennium fund going to be given the government's penchant for having its hands in our pockets?

My wife and I are lucky in that the tax owed by my son is something we can afford. But, I can easily imagine families and situations where this would not be the case. Please, if it is possible in opposition, point out this ludicrous situation to the Liberals and continue your efforts to remove the tax burden from those who can least afford it—in this case our students.

This is the kind of real life tax grab that our income tax regime imposes on regular Canadians, the youngest, the hardest working Canadians. This bill does absolutely nothing to address that kind of situation.

For the first time in 30 years the chief financial officer of this corporation we call Canada has finally managed to balance the books.

Far from apologizing for the fact that this is the first year of doing something every Canadian and every financial institution must do routinely, we have a finance minister who acts like this is the beginning of easy street for every Canadian. Of course, this is nonsense. We are not out of the woods by any means as Canadians and Canadian families.

It is important to note that this one balanced budget has been achieved almost 70% through increased tax revenues. Here we have a bill of over 1,000 pages that does not do one thing to reduce that horrendous tax burden on Canadians. Yet that is what allows the one balanced budget we have had.

An additional 16.5% of the measures that balanced our budget were through cuts in support to key social services such as health and education. Less than 1% was from actual decreases in other government spending.

Government is good at piling the tax load high on everyone but very poor at restraining its own appetite for spending those same tax dollars.

In addition, the government has adopted some suspect accounting policies that allowed it to manipulate budget figures with an eye to maximizing a surplus closer to the next federal election. This manipulation was so unusual and so blatant that, as members know, the Auditor General of Canada felt it necessary to challenge the government in a very pointed and public way.

It is critical that we not only refuse to put additional charges on the Canadian credit card but that we have a solid financial plan to start paying down the huge debit balance and make the kind of prudent budget and lifestyle choices that will ensure our future fiscal well-being.

Unfortunately the government has not taken that kind of big picture approach. A detailed study this month by the chief economist of Scotiabank says: “Aiming for balanced budgets and relying on an unprecedented stretch of solid growth and low interest rates to reduce the debt burden is a high risk strategy for a debt heavy government”.

I see the time has expired and so in closing I would like to say we cannot support this tax tinkering by the Liberals.

[Ghislain Fournier, Bloc, Manicouagan, QC]

Mr. Speaker, I rise today to speak to Bill C-28 and, more specifically, to clause 241, which I consider warrants all our attention. Since February 5, everything leads us to believe, as the expression puts it so well, that there is something fishy here.

We all know very well how this matter might be of personal interest to the Minister of Finance, who, it seems, would have every advantage as the sole owner of Canada Steamship Lines if the bill were passed.

How could the Minister of Finance sponsor a bill that includes tax provisions that could benefit his own company, when he is not entitled to speak on this matter in order to avoid a conflict of interest? This state of affairs led to the presentation before the Standing Committee on Finance of five motions that would enable us to get to the bottom of this matter.

First, we asked for testimony from the president of the CSL, representatives of the trust company, the minister himself and Mr. Wilson.

The five motions were important, but the most important one called for the appearance of any other witness who might help the committee understand clause 241. Four of the five motions were rejected.

The only witness allowed was Mr. Wilson, the government's ethics counsellor, who is employed by the Prime Minister, paid by the government and accountable only to the government.

Something unexpected happened in that Mr. Wilson's testimony reinforced our argument when he admitted that the Minister of Finance had not acted properly and that the code of ethics adopted by the government in 1994 had not been respected.

That code of ethics clearly stipulates that public office holders must do everything they can to prevent real, potential or apparent conflicts of interest from arising.

On February 5, 1998, the government's ethics counsellor said on the CBC, and I quote “Canada Steamship Lines has indicated clearly to me that it has no intention of using this provision”.

However, twelve days later, on February 17, this same counsellor stated before the Standing Committee on Finance, and again I quote “Mr. Martin sponsored this bill and questions have been raised by some members that this constitutes an apparent conflict of interest. Had I been informed in advance, before this bill was introduced, there would have been a discussion on how best to handle the introduction of the bill for the Minister of Finance, who is responsible for all tax legislation. However, this prior consideration of our options did not take place as it should have”.

This flagrant lack of impartiality by Mr. Wilson is appalling. And we are not the only ones to express criticism. The Senate is also addressing this issue. In fact, Senator Marjory LeBreton stated in the Upper House that there is an urgent need to establish new guidelines for the ethics counsellor, who should be independent from the government.

This is a matter I could not overlook, and when the Liberal majority on the Standing Committee on Finance denied our request, the three other opposition parties saw, just as we did, that something fishy was going on.

That is why, in a press conference held on February 19, 1998, the four opposition parties requested that the Prime Minister strike a special committee to shed some light on clause 241 of Bill C-28. We are still waiting for an answer.

What is unacceptable is that the Prime Minister is still refusing to clarify this issue for us, and is determined to put obstacles in our path at every turn. It is obvious to us, unfortunately, that everything is co-ordinated from the Prime Minister's office, including the Standing Committee on Finance.

In short, the Liberal government is showing obvious bad faith, and wants to protect its Finance Minister at all costs.

In conclusion, what is important for people to understand is that the Minister of Finance is preparing to get a bill passed which he himself sponsored and from which he very likely will be able to profit. And this is unacceptable.

I also have some serious questions about how available the self-same minister is to look after the financial interests of Quebec when he has demonstrated without a doubt that what is closest to his heart is to have ships plying the waters of the world, instead of concentrating his focus on his work and on keeping our ship with its fleur-de-lis colours afloat financially.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, it is a pleasure for me to rise today to speak on Bill C-28 which is described as an omnibus bill dealing with certain technical amendments covering a wide variety of acts relating to income tax.

Most of the amendments are housekeeping and we will not be focusing our remarks on them. We intend to confine our remarks to the significant reductions in the Canada health and social transfer that we have seen over recent years.

An earlier speaker noted that the bill is very technical and wondered how many people had read it and who had picked up a copy. I think it is fair to say that none of the members currently sitting in the Liberal benches have looked at the bill. I might also say that a member might need two hands to pick up the bill because it runs to over 400 pages. We believe it is absolutely ridiculous that parliament or Canadians should be expected to deal with such a complex bill which uses language that even highly paid tax experts would have difficulty deciphering.

We believe that Bill C-28 is anti-democratic in its format, its language and its content. It is wrong for a government to present legislation steeped in such isolated language and expect Canadians to be informed or to have any idea of what their government is doing.

There is a story making the rounds that a justice department official was removed from the working committee on Bill C-28 because he raised concerns about introducing such complex legislation. He was most upset with the complexity and the incredible volume of amendments contained therein.

It is fair to say that one would need to be a highly paid tax lawyer to even begin to tackle Bill C-28 in its present format. Needless to say, the lawyer's protests were not well received by the finance department and he was removed from working on this particular file.

To turn to the CHST, we noted with some interest that Tom Kent, who was recognized as the godfather of Liberal social policy in the 1960s and 1970s, delivered a lump of coal to the government on December 24 last when he lashed out at the cutbacks that the government imposed on our medicare system in particular.

There are other aspects of the CHST that I will get into in a moment.

Writing for the Caledon Institute of Social Policy, Mr. Kent accused the government of putting the 30 year old social program at a critical crossroads by simply neglecting to fund it properly. He wrote “Medicare has been sustained by the public will”, and “For this medicare, we owe no thanks to the present generation of federal politicians. It survives despite them”. Note the words, “It survives despite them. Though they pose, because of its popularity, as the defenders of medicare, in fact, they have destroyed the financial basis on which their predecessors created it”. That is where we are coming from on this.

There has been a lot of talk this morning from folks to my right, literally and figuratively, about the financial debt and deficit that we face. There is also a social deficit in this country. It is not only health care which is at risk, we have not made much progress in the fight against poverty.

I am referring to another article from the Caledon Institute of Social Policy that was issued in February 1998. The writer notes that the progress against poverty that Canada managed to achieve in the 1960s, the period that Tom Kent talked about, and in the early 1970s has stalled over the last 20 years. Poverty has increased since then. It was at 17.9% in 1996 compared to 14.2% in 1975. That is an increase approaching 3%.

In the past Canada could count on economic growth and healthy labour markets to fight poverty. Rising real gross domestic production reduced the number and percentage of people with low incomes while the faltering economy had the opposite effect.

Poverty is a result not only of the changing labour market which we have witnessed over the past couple of decades in this country. It is also linked to household structure and demographics. Gender is a critical demographic factor in the poverty story of this country.

Women typically have higher poverty rates than men and families led by women are more likely to be poor than those headed by men. The persisting inequality between the sexes is due basically to women's unpaid social and economic roles as homemakers and caregivers to children and aging parents. It is a major factor that women have lower incomes and risk higher poverty.

In addition to gender, marital status is a key factor. Single parent families, most of which are led by women, face a high risk of poverty.

Governments traditionally have played a major role in combating poverty in this country. Income security programs, also known as transfer payments, have supplemented or reduced employment earnings. Major programs such as old age security, the guaranteed income supplement, the spousal allowance and the Canada and Quebec pension plans have been crucial sources of retirement income for most Canadians.

Employment insurance and workers' compensation replace employment earnings lost due to unemployment, illness and accident. We know as well what has happened there. I think especially about employment insurance and the fact that prior to the changes 85% to 95% of people who applied for unemployment insurance, as it was previously known, received benefits. Today those figures hover around 40%. That is the reason there is a growing gap in this country between the very rich and the people at the bottom 20%.

Child poverty as well remains a grave problem in this country, as has been noted by our party in particular. One in five children now live in low income families. Just under 1.5 million children, or 21.1% of all children who live in what members opposite often refer to as the greatest country in the world, are living in poverty. That risk of course goes up if they are in a single parent family, especially one led by a woman.

Still other demographic factors are linked to poverty. Aboriginal Canadians are significantly more likely to be poor than the rest of the population. Canadians with disabilities, as other speakers noted earlier today, are another group at risk of poverty.

The Canada health and social transfer that replaced the Canada assistance plan in 1996 has retained only the non-resident requirement of the Canada Health Act, and the loss of the in-need criteria under CAP has opened the door to a very different welfare system today than the one we have known over the past couple of years.

In conclusion, this caucus is opposed to Bill C-28. We reject the Canada health and social transfer which has resulted in steep reductions in funding to health and education. There has been a 40% reduction in funding to post-secondary. We are advised that when the millennium fund kicks in in the year 2000 this government will be spending a full $3 billion per year less on post-secondary education.

The provinces are struggling to provide social services. They too have seen their budget allocations slashed from $18.7 billion in 1993-94, the last year of CAP, to the projection of just under $12.5 billion in 1998-99, the current fiscal year that we are debating. Therefore, this caucus will be opposing Bill C-28.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, I feel obliged to speak on Bill C-28 for a number of reasons, the main one being that its sponsor, the Minister of Finance, is placing himself in a position to benefit from it. His interests in civilian live, outside politics, can benefit from this bill.

There are more than 400 clauses in Bill C-28. It is complex, and multi-facetted. The clause on shipping companies with foreign holdings takes up a half-page, and could easily have gone unnoticed as the pace of the House speeds up.

This clause puts the finance minister, the sponsor of the bill, in an apparent conflict of interest. It is sad and incomprehensible that the finance minister himself, or the Prime Minister, did not try to put people's minds at rest.

Politicians have questions. All opposition parties unanimously requested that the government shed light on the matter. Through their MPs, citizens also are involved. They need to know that their finance minister is in no way, shape or form in an apparent conflict of interest.

Let us not forget how proud the finance minister is to have eliminated the deficit. One of the main ways he was able to reduce the deficit was to cut not federal spending but transfers to the provinces, the Canada social transfer, which replaced the former grants for heath, education and social assistance.

Payments were drastically cut back. The cuts are not over yet, they are ongoing. They are cruelly evident in the health care problems experienced by every province. They are just as cruelly felt in education and social assistance.

It is this same minister who was at the origin of the first major reform of employment insurance, reducing the duration of benefits, benefit levels and accessibility in a major way. In fact it is this first reform which is at the origin of the spring gap which affects many families, especially those who depend on seasonal work. They do not have enough insurable weeks to bridge the gap until they can work again in the spring; it is not for lack of wanting to work, but there simply is no work to be found where they live.

If they own a house or have some savings, they have to spend the money they saved, and depending on the value of their house, they may not be entitled to any help at all. They are not eligible for social assistance. Several families have nothing to live on until work starts again. This spring gap has its origin in the 1994 reform.

The finance minister needs to be above all suspicion. It is difficult for opposition parties to understand why the Minister of Finance would not meet this basic requirement, which is to demonstrate that he is not in a conflict of interest, not even in an apparent conflict of interest.

Given the minister's reputation, why does he not agree to have a special committee struck to shed light on the whole issue? Why does he not find another solution of his choice to protect himself, once and for all, from such suspicions? It is hard to understand.

It is hard to understand why the Prime Minister, whose interest should be to defend the integrity of his finance minister, only does so by repeating statements that have not convinced any member of the opposition.

Anyone taking a look at the issue can only conclude “but he is in an apparent conflict of interest”.

When the person looking after the minister's company says he does not intend to avail himself of the opportunity, it implies that he could actually do so. If this is not the case, then we should be told about it, because so far we have not received such confirmation. Again, the opportunity was provided by the same minister, whose reputation had not been tarnished.

The Minister of Finance has been hard on ordinary Canadians regarding health, education and social assistance. He has been hard on the unemployed. Now, he must shed light on this issue. It is not too late. As far as I know, the bill will not be passed before April 21. The Minister of Finance must, for his own sake, for the sake of all politicians and for the sake of the public, shed light on this issue.

Bill C-28 will remain a sad episode. There are other clauses in this legislation that remind us of policies against which we fought hard in the past. It is one thing to have dissenting opinions on economic and social policies, but it is another thing to see the Minister of Finance in an apparent conflict of interest and refusing to shed light on the issue.

As a member of parliament, I would have much preferred not to have to say these things but, given the facts, I have no choice. I would not be carrying out my responsibilities if I did not speak out. The Minister of Finance has a duty, which is to shed light on the whole issue, for his own sake, but also for the sake of the public and for the sake of politics.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I am pleased to have the opportunity this afternoon to speak to Bill C-28, an act to amend the Income Tax Act.

Taxes are important. Everyone pays them, or at least everyone should. Of course, no one has to pay more than the law requires but, at the same time, the law should require that everyone make a just and reasonable effort.

Bill C-28 is a complex bill. It contains hundreds of clauses. It affects all sorts of provisions. It is a bill that, by and large, is in the public interest.

Unfortunately, it contains one clause, just one, that we have a problem with and that is clause 241. Others before me have pointed this out, and I am going to look at it as well. Between you and me, we are not going to pull any punches.

The situation is this: in accordance with his role and responsibility, the Minister of Finance introduced this bill. He sponsored it. The Minister of Finance must be above all suspicion. There should never be a situation in which anyone could think that the Minister of Finance was trying to use legislation to derive personal benefit.

And I most certainly want to believe that the Minister of Finance is above any suspicion, and is not trying to derive any such benefit.

But there is a problem with clause 241. The Minister of Finance owns Canada Steamship Lines. This is a large company, and the Minister of Finance is fortunate indeed to be the sole owner of this major company.

He put the company into a trust so as not to be able to intervene directly in its affairs and derive any benefit. That is all very well. It is indeed the normal and expected procedure to follow.

However, the Minister of Finance knows full well that the trustee of the Canada Steamship Lines, the company he owns, has not sold the shares to buy some woodlot. He did not sell the shares to buy a bus company. The Minister of Finance knows very well that he is still, through the trustee, the owner of his shipping company.

Companies with ships registered offshore stand to benefit financially from section 241, through a tax reduction. The Minister of Finance, through his trustee, is very much aware of the fact that his fleet is partially or totally registered offshore. The minister or his trustee used to his advantage some of the provisions already in the legislation, under which ships registered offshore somehow have less tax payable here in Canada.

I still find it a little strange that the Minister of Finance, who is in charge of taxing all Quebeckers and all Canadians, corporations and citizens, would shelter his company through existing fiscal provisions. It may be ludicrous, but it is legal.

Where the plot thickens is when section 241 is amended to allow shipping companies that meet specific criteria, just as that of the Minister of Finance does—to enjoy additional tax benefits.

Mind you, there are not that many shipping companies in Canada. If section 241 was giving some tax benefit to convenience stores and if the finance minister happened to own one, through a trust company, I would say that he will indeed get some benefit, but that so many store owners will get it too that he has certainly not done this just for his own sake.

I am not suggesting here that the finance minister has done this just for himself. But it does look kind of odd, and even more so because since the beginning of February, the Bloc Quebecois has been asking the finance minister, in a respectful way, with courtesy but also with determination, to clear up all manner of doubt on the risk of conflict of interest as far as section 241 is concerned.

We never got an answer from him. The Prime Minister himself jumped to his feet to tell us he trusts his finance minister. I should hope so. We should not expect anything less.

But you have to agree with me that this is not good enough to make Canadians believe everything is just fine. If the rules in our code of ethics provided that a minister should avoid all conflict of interest situations or that he should have the confidence of the Prime Minister, it would be all right because that is what the rules say.

But the real code of ethics does not say that. It says that a minister should avoid not only actual but also apparent conflicts of interest. That is the rule. What does the Prime Minister's confidence in his finance minister have to do with this? It is all very fine for him to trust his minister, but it would be much better if everybody could trust him.

Why does the finance minister refuse to shed light on this? Why does he not give us all the facts? Why does he hide behind the Prime Minister? Why does he not give all the information to the House and the media?

We have a problem. We asked that clause 241 be withdrawn from the bill, which would have allowed us to pass the rest of the bill with much less reluctance and then to deal with clause 241 on its merits. But this was all put in the same package. The Liberals put in the whole cake something that looks like a rotten fruit. Do they think I will eat this cake? Do they think that the Bloc Quebecois will eat this cake?

We will have to vote against the whole bill because of these few lines that let the worst suspicions hang over the finance minister. Perhaps he has a good explanation. The Prime Minister may be right to have confidence in his finance minister, but why not give us the evidence to support this confidence? In the absence of such evidence, all bets are off, not only for the members of the Bloc Quebecois, not only for the opposition members, but also for the members opposite, and especially for the people of Quebec and Canada.

As we all know, this kind of thing erodes people's confidence in the government machinery, in Parliament itself. Why are the Prime Minister and the finance minister not taking the opportunity today in this House to clarify the situation and restore confidence?

I will not be able to vote in favour of the bill before us because of the potentially rotten fruit in this cake poisoned by clause 241. I will not be able to vote in support of this bill, but I strongly hope that the finance minister will shed some light on the issue.

If he does not, the confidence that the people have in Parliament will be eroded and it will be the finance minister's fault.

[Hélène Alarie, Bloc, Louis-Hébert, QC]

Mr. Speaker, I am happy to speak in this House on Bill C-28, which is sponsored by the finance minister.

I will not read the bill, since it is so thick that it discourages most people from conducting a thorough analysis. And yet, this did not prevent the Bloc Quebecois from noticing clause 241 and its two small paragraphs which will amend subsection 250(6) of the Income Tax Act. The possible benefits for the finance minister, who is the sole owner of Canada Steamship Lines, an international shipping company, are obvious and yet do not represent even two pages of this 464-page bill.

This raises several questions about the government's and the minister of Finance's real interest in supporting this bill.

While Quebeckers and Canadians pay for the cuts that the Liberal government has been making since 1993, while everyone is tightening their belts, while this government continues slashing federal transfers to the provinces, thus directly affecting people, while the finance minister is boasting about having eliminated the deficit in his last budget without saying that he did it on the backs of the provinces, the finance ministre, in spite of an apparent conflict of interest, is sponsoring a bill that will give him some fiscal advantages.

The whole population should know that some members of the government are very generous to themselves. It is inconceivable for a minister to propose a bill which contains tax provisions favourable to his company. This is an apparent conflict of interest.

The Minister of Finance keeps using several arguments to prove his supposed non-involvement in Bill C-28. He argued in this House that his company has been in a blind trust ever since his appointment to cabinet, and that he would not profit in any way from this bill.

This may be true, but it only applies to the present. As soon as the minister leaves his position, the trust arrangement will cease. Not intending to use a privilege is not the same as not having the right to do so.

Obviously, we do not know enough about section 241 of this bill. The motions introduced in the finance committee by Bloc Quebecois members were all defeated by the Liberal majority, except one allowing the ethics counsellor to appear before the committee. This counsellor is an employee of the Prime Minister, paid by the government and accountable only to his employer.

Yet, the testimony of this witness only served to reinforce our arguments since he acknowledged that he was not an expert in international tax laws and was therefore unable to answer several of our questions. He went as far as saying that there might be an apparent conflict of interest and that, had he been made aware of the implications of section 241, he might have acted differently.

Therefore, it is clear to the Bloc Quebecois and the whole population that the Minister of Finance did not abide by the code of ethics approved by his government in 1994, which says that anyone holding public office should avoid being in a real, potential or apparent conflict of interest. In this case, there is an apparent conflict of interest and this is why I ask, in good faith, that the Minister of Finance withdraw section 241 of Bill C-28 while there is still time left.

As parliamentarians, we have a duty to our fellow citizens to improve their quality of life and collective well-being, not the right to use our power to our own benefit. Surveys show that members of Parliament are not well perceived by the public. After seeing such ways of doing things, it is easy to understand why.

The finance minister says he is innocent of any intention. However, in 1996, he introduced a bill in the House containing the same provisions as clause 241; however, that bill died on the Order Paper. In 1998, the minister came back and sponsored Bill C-28. How could he not be aware, as he would have us believe? How can a minister introduce a bill without knowing its content?

How could Paul Martin be allowed to sponsor a bill containing tax provisions that could be beneficial to his own company, considering he is not allowed to speak on the matter so as not to be in a situation of conflict of interest? In fact, there is appearance of conflict of interest and considering the importance of his position and the integrity with which he should manage the finances of the country, the finance minister should be clear of any suspicion.

This is a warning to the government. We asked the finance minister to delete clause 241 of Bill C-28 until the matter can be cleared up. He should do so as quickly as possible if he wants to preserve the credibility he has left in Quebec and in Canada.

My colleague from Saint-Hyacinthe—Bagot has introduced another amendment proposing to refer Bill C-28 to the finance committee so witnesses can be questioned and the situation clarified. The amendment says that the motion be amended by deleting all the words after the word “that” and substituting the following: “Bill C-28, an act to amend the Income Tax Act, be not now read a third time but be referred back to the Standing Committee on Finance for the purpose of reconsidering clause 241.”

I support the amendment proposed by my colleague from Saint-Hyacinthe—Bagot because, in my humble opinion, it answers the numerous issues that the opposition has been raising for more than a month.

[René Laurin, Bloc, Joliette, QC]

Mr. Speaker, since we are at the end of the debate, I would like to try to illustrate the main reasons the Bloc will be voting against Bill C-28.

Through this bill, the Minister of Finance is trying to pass legislation that, in all likelihood, could provide certain tax advantages to his company, Canada Steamship Lines, of which he is the sole owner.

Clause 241 of Bill C-28 would amend section 250 of the Income Tax Act. In this 464 page omnibus bill, clause 241 contains only two paragraphs and it concerns shipping exclusively. The bill is sponsored by the Minister of Finance himself. These two facts constitute the appearance of a conflict of interest, which contravenes the government's code of ethics and that is what we have been seeking explanations for since February 5.

How can the Minister of Finance sponsor a bill containing tax provisions that could benefit his own company, when he is not entitled to speak on the matter in order to avoid a conflict of interest? There is the appearance of a conflict of interest and, given the importance of his position and the requirement that he manage government finances honestly, this great Minister of Finance must be above suspicion.

Even if the minister offers the defence that his company has been in a blind trust since he became minister, he will not always be a minister and may perhaps draw benefit from this tax amendment. The minister and the representatives of his company insist that Canada Steamship Lines does not intend to take advantage of the measures included in clause 241. They do not intend to, but that does not mean they are not entitled to. This is the point we would like to see clarified by the Standing Committee on Finance.

From the start we have demanded that light be cast on this in the finance committee. The Prime Minister tells us: “I have complete confidence in my Minister of Finance. He is not involved, the legislation cannot provide him with any advantages, and if you have any questions, ask them where they should be asked, in the finance committee”. But when we get to the Standing Committee on Finance with its Liberal majority, the majority response is that they want to hear no more witnesses.

In other words, the Prime Minister is saying “You may ask questions, but you will get no answers”. We are entitled to ask questions, but the committee members, most of whom are Liberals, turn around and tell us that they do not want to hear the answers, that their confidence in the finance minister is all they require to be assured that the bill will not bring him any advantages.

I have three main reasons for doubting the confidence inspired by the Minister of Finance. If we remember back to when the Minister of Finance was negotiating the harmonization of the provincial sales taxes in the maritime provinces with the federal sales tax, the Minister of Finance included $1 billion in his financial statements a year before that amount was paid to the maritime provinces.

In other words, he pulled out $1 billion with which to inflate his deficit for that year. In order to avoid what? In order to avoid having to calm down the people who were clamouring for a bit of a break from taxes and budget cuts. It was to the Minister of Finance's advantage to have a higher deficit showing than there actually was, because this took the heat off him, stopped people from demanding more, and from begging “Spare us, we cannot bear the tax burden any longer”.

The minister used a strategy that has been denounced by the auditor general. According to the auditor general, “The Minister of Finance, in keeping with the accounting principles generally recognized for governments, must not proceed in this way. He must allocate to each year the amount of expenditures that occur in that year”. The Minister of Finance did not do so. He cannot be trusted.

Second example. The Minister of Finance decided to establish a Canada Foundation for Innovation with an investment of $800 million. What did the minister do? He budgeted $800 million last year, knowing that not a single cheque would be issued to the foundation until the following year.

Furthermore, the minister allocated $800 million to the foundation in his budget, while it had not yet been officially established. The auditor general told the Minister of Finance he could not do that. He said “There must be transparency and continuity in accounting, and under the rule of continuity books must be kept the same way year after year so that people know where they are going. You cannot do it that way”.

The finance minister's answer was “I am in charge here, and I will do as I please”. He made sure to inflate expenditures by $800 million to avoid, once again, achieving zero deficit too quickly. This way, he could keep penalizing the unemployed, maintain employment insurance premiums and not give a penny more to help children living in poverty. This way, he could keep cruising at his own pace to eventually show a surplus.

In spite of the fact that he was told by the auditor general that he cannot do that, the minister keeps doing as he pleases.

The third example is the millennium fund. The minister is investing $2.5 billion in this fund to grant scholarships to students, but the first cheques will not be issued until the year 2000. Yet he budgeted this amount in the budget for the year that just ended two days ago, on March 31. Not one penny has yet been expended by the government, since the first cheques will be issued in the year 2000.

The Minister of Finance recorded this amount in the budget for fiscal year 1997-98. Why? Because, had he not, he would have had to report a surplus of nearly $3 billion. He did not want to show a surplus, just a zero deficit. Had he reported a surplus, he would have had to use this money in accordance with the people's wishes. So he did not, preferring to keep doing as he pleases.

What did the Bloc Quebecois do? We went before the public accounts committee. Wet denounced this attitude and supported the auditor general's recommendations. But the Liberals, who have a majority also on this committee, showed up in full strength. They came to say that the finance minister was right to behave the way he was behaving, and to do his accounting the way he wants and if, in another year, it suited his purpose to do otherwise, he would do so.

This means that the finance minister, whom the Prime Minister trusts, does what he wants with numbers, even if it lacks transparency, and gives a distorted picture of reality, making people believe things that are not true.

Can we trust a finance minister who behaves in such a way? We say we cannot. So when the minister tells us his company is not involved and will not profit from these benefits, can we trust him?

If the minister can behave the way he has with financial statements, could he not do the same when it comes to two little subclauses on tax relief which could possibly benefit his company? Can we believe him? Judging by his previous behaviour I am not sure we can trust him.

What we are asking him is this, and we are not accusing him of being dishonest. But we are saying “There appears to be something that might benefit you. Could you put our minds at ease and allow the committee to call tax experts who will come and tell us categorically that these two subclauses are unlikely to give any tax advantage to your shipping companies which are registered in Panama?”

This is what we want to know and what the Liberal government has so far refused to tell us. For these reasons, we will not be able to support Bill C-28.

It is still not too late, and we are still hoping the government will wait to put its bill to a vote, withdraw these two subclauses, and come back with it once the committee has prepared a decent report after a comprehensive review.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, originally I was not going to speak to the bill. However I would like to inject a bit of information that Canadians should be aware of.

The gist of the Bloc's arguments is appearance, as the member just stated. Canadians will know that when members of Parliament are asked to join cabinet there is a requirement that they put all their assets into a blind trust. There is a requirement that they also adhere to the provisions of conflict of interest under the auspices of the ethics commissioner.

The issue that the members have raised has been talked about quite a bit in this place and was before the finance committee. The ethics commissioner appeared before the finance committee and tabled a report on all the holdings of the finance minister, on all matters that had to be put into the blind trust.

I have looked at the report and all the information filed as required by the laws of Canada. I have concluded that very little could occur in the country that would not impact on the finance minister with regard to his investments or holdings. If interest rates go up, the finance minister will win. If interest rates go down, the finance minister will probably win. It is the same for any change with respect real property, rental property or other investments that happens in the House.

Should we say that anything the finance minister or any other cabinet minister has any direct or indirect relationship with should be exempt from any legislation that ever occurs in the House? Clearly the answer is no. That is why there is a blind trust and why others take care of the affairs of a minister who has responsibilities.

The members brought forth information and made indictments of the finance minister. They have suggested, for instance, that the bill was tabled by him when they know that is not the case. It is was the Secretary of State for Financial Institutions. They said that he brought forward these provisions. In fact that is not true. Those provisions were actually brought forward by the B.C. association responsible for shipping. The advocacy on its behalf was basically to stimulate the shipping industry in Canada. It was the association's advocacy; it was not the finance minister, as the members would like to suggest. As a matter of fact it has even put on the record that Canada Steamship Lines could not get any advantage presently from this provision.

However, if a few things were changed and a few other things were done there may be some tax advantages. It is a business and business will not be changed simply because of some changes. Business decisions are made on much more. This is not applicable only to this company. It is applicable to the entire shipping industry and those who would like to be involved in the shipping industry to try to promote shipping within Canada.

I wanted to raise this point because Canadians should know that information is being presented in an eschewed fashion. It is being presented in a way which questions the integrity of the finance minister. The members even suggested that it was contrary to the code of ethics. That is not so. The ethics commissioner came before the finance committee and ruled that it was not a conflict of interest. He had checked it out.

The opposition then decided to do even more work on it. There is no prohibition for members of Parliament or any committee or anybody else to do any further work that they might deem necessary, but this basically constituted allegations that were unsubstantiated. There was really nothing to prove.

The members want to say there is an appearance or an allegation, but I can bet they will not say that outside the door here. In here they have parliamentary immunity. They will not go outside the door and accuse the finance minister of bringing in provisions for his own benefit. That would be a slanderous statement. They would be sued.

I reaffirm for Canadians that the rules of this place require that all of the affairs of a minister be placed in a blind trust. The ethics commissioner has made a detailed ruling with regard to this matter. He has answered all questions from all members of all parties. The committee as a whole decided that there was no further business to deal with on this issue. The committee is not empowered to deal with witch-hunting or fishing expeditions. There was business before the committee and that is exactly what was done.

I suggest to the members and, perhaps more important, to Canadians that the question before the House is with regard to an omnibus bill relating to the budget of 1997. There are some important issues in it, the most important of which is that fiscal responsibility has always been demonstrated by the government since it took office in 1993.

The government has moved the country away from a $42 billion deficit and is now delivering in a fair and responsible fashion the balanced budget that Canadians asked for. It did not do it in a meanspirited way. It was the Liberal way to make sure that we dealt first with those who had needs, those with low and middle incomes. This was also reflected in the 1998 budget that we have already debated in the House. Provisions were focused and targeted to make sure that Canadians received the benefit of the hard work all of them had done to ensure that we got our fiscal house in order.

We all benefit from the financial health of Canada, from low interest rates, from growth in the economy and from growth in employment in Canada which will continue. The commitment of the government to be fiscally responsible continues. The leadership of the finance minister has been very prevalent. He has had to make some tough choices, but I believe those choices have been fair and in the best interest of all Canadians.

[The Acting Speaker (Mr. McClelland)]

Is the House ready for the question?

[Some hon. members]

Question.