House of Commons Hansard #112 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was benefits.


Charitable ContributionsPrivate Members' Business

11:05 a.m.


Chuck Strahl Reform Fraser Valley, BC


That, in the opinion of this House, the government should bring in legislation making the tax deduction for contributions to charitable organizations no less than the tax deduction for contributions to political parties.

Madam Speaker, on the weekend as I was sitting on the couch doing as little as possible trying to recover from my cold, for a few moments I watched a telethon on television. It was the Children's Miracle Network telethon. It was raising money across North America for a whole series of charitable works that it does to help to provide hospitals for children, hospice care, counselling and so on.

As I was watching television I noticed at the bottom of the screen the names and the donations of the people who were putting forward their widow's mite, so to speak, to help out the cause.

Of course there are millions of dollars required to make this thing function properly but, as the dollars and names were going across the bottom of the screen, I noticed an obvious trend. There was a name such as John Adams, $100; Sarah Smith, $50; and on it went down the list.

Consistently people were very generously giving to a charitable cause because they wanted to do what was right and they wanted to do a good thing. Most of the donations were very small. They were in the order of $20, $50, $100, and there was the odd large donation. But, in essence, they were all trying to do a good thing. They will get a tax credit for doing that. That is good. We support that in our tax system.

Unfortunately, what is not going to happen is that they are not going to get the same kind of tax credit as they would if they gave that same money to a political party. That is not right.

That is why this motion reads:

That, in the opinion of this House, the government should bring in legislation making the tax deduction for contributions to charitable organizations no less than than the tax deduction for contributions to political parties.

I will not claim this as an original idea of mine. In 1996 the 24th report of the Standing Committee on Finance recommended that the government consider enhancing the charitable tax credit for donations to charities currently funded by governments to make it as generous as the current political tax credit for small donations to political parties.

The government chose not to implement that recommendation in 1996. However, the time has come. The budget is now balanced and it is an option that the government should consider. This motion, when passed, will ask the government to do the right thing; that is, to put charities on a level playing field with political parties.

There are other aspects of charities that some people may want to debate in the House. For example, the member for Wentworth—Burlington has done some work on the accountability of charities themselves, but that is a debate for another day. This has to do strictly with the donations and how they are handled by the tax system. That other debate is a good debate for another session.

Does the present tax credit system benefit political parties more than charities? Absolutely. For a $100 contribution to a political party a donor will receive a $75 federal tax credit. For a $100 gift to a charity a donor will receive a $17 federal tax credit. Clearly the donations to charities are not treated the same and are treated far less favourably than donations to political parties.

Today I will argue two points in relation to M-318. First I will explain why charities deserve special treatment under Canada's tax law and, second, why charities deserve no less favourable treatment than what political parties receive currently under the tax code.

First, the activities of charitable organizations provide sociably desirable benefits in a number of important areas of Canadian life. They includes everything from health services to services to prisoners, heritage exhibits and shelters for homeless people. In innumerable ways charities help society.

Charities employ over one million people in Canada. They are a big employer. Yes they take in charitable donations, but they in turn put that money back into services for people. Charities maintain and improve the quality of life in our communities. Charities provide a more direct and efficient way of identifying the needs and preferences in our communities than do governments.

I have used this expression before, but I think it is worth repeating. Governments take our money, deduct 50% for handling, then give it back in the form of services that the community often did not ask for. However, when an individual gives to a particular charitable cause they have chosen to direct their money to a particular need in their community. Rather than give $100 to the taxman, they have indicated that they would rather give their money to the Salvation Army soup kitchen, to a homeless group or to help someone who is providing hospice facilities for battered women.

Whatever the cause might be, the individuals have chosen to direct their money to a certain area. They have not asked the government to provide a program. They have said they will do it. They just want the flexibility to be able to direct the money. They can do it just as well and, in fact, often better than government.

Alternatively, governments must identify the needs and allocate resources as best they can to meet the needs. They do this in a variety of ways. They combine their political agenda with the perceived needs to create a blanket, country-wide program that often does not meet those needs. They often do not represent the needs required in a very diverse country like Canada.

Study after study has indicated that tax incentives designed to encourage charitable giving will increase revenues to non-profit organizations by an amount greater than the loss of tax revenues to the federal government. In other words, when we try to help the charities with this kind of tax measure we not only encourage more giving, we increase exponentially the benefits to all communities across the country.

Why should the charitable tax credit be no less than the political tax credit? First of all, the status quo hurts charities. In the 1990s federal, provincial and municipal governments have reduced spending on programs significantly. As a result the charitable sector has become a life support system for the hungry, the homeless, victims of domestic violence, refugees, the unemployed and medical patients who find themselves relying more and more on the charitable sector.

To help charities pick up the slack of these cuts the federal government has implemented a number of tax incentives to encourage giving to the charitable sector. Those moves which the government has made have been good moves. Although I have not agreed with the budgets that the government has brought forward in the last couple of years, the provisions it has made to charitable status, for example, increasing the amount of donations eligible for tax credit from 50% to 75% of net income, are good.

This indicates the government's acknowledgement that charities do good work in Canada. We should encourage charitable work. More than just dollars are involved. It increases the compassion of society.

We on this side of the House and I think all members would agree that governments cannot do it all. We will have to rely increasingly on individuals, on families and on charitable organizations to pick up the slack. That is not a bad thing; that is a good thing. That could be a very good thing. But we need to ensure that we do not discriminate against those organizations by making the tax system skewed one way or another.

The question that now remains is what are the best public policy tools to use to generate greater incentives for people to give to charities?

Motion No. 318 provides one of those tools. It is an excellent tool to generate greater giving to charities. I do not have a Canadian study on the equivalent but it probably is much the same as the American studies. They indicate that for every dollar in government revenue lost in the U.S. due to higher tax credits, donations to charities increase by over $1.20. In other words people pick up the slack and then some. They will say “If that is a cutback over there, I will give sacrificially in order to pick up that slack”.

Levelling the playing field between charities and political parties also would send a signal to Canadians that the government values donations to political parties and charities equally. Right now they value the political donations more highly than they do charitable donations. That is not right. This motion would eliminate the unfair advantage political parties have over charities when it comes to trying to attract donations and in fact when the taxpayer in essence is topping up the funds of a political party rather than topping up the funds of the local Salvation Army.

Where does the government stand on this issue? I will be interested to hear from the government side during this debate. Certainly in the 1996 prebudget report, the all-party finance committee recommended that the government enhance the charitable tax credit for donations to charities to make it as generous as the current political tax credit for small donations to political parties. This is exactly the motion I brought forward today.

That is why I admitted earlier I will not claim that this is my original idea. What it is trying to do is to bring to fruition the desires I think of all parties in the House to make charities more viable and give them the assets they need to fill the gap that has resulted from other government cutbacks.

Where do the charities stand on this issue? What would they think of this? In November 1995 the president and CEO of the Canadian Centre for Philanthropy said:

Dare I suggest as well that if you believe, as do I, that the value of a dollar donated to a voluntary charitable organization is every bit as important as the value of a dollar donated to political parties, you might also look at equalizing the tax treatment for contributions between those two groups or sectors?

Again it is exactly what this motion proposes. Why has the government ignored it to date? I touched on it briefly. My guess is that in the period of deficit budgets the government just felt it could not move any further on ways to help charities. It felt the budget just did not allow it to do that.

Now that we enjoy a balanced budget and we are going to find ways of distributing surpluses in the coming year, one of the ways no doubt will be some tax relief. That is much needed. One way will be to pay down some debt that is much needed. But another and a relatively painless way is to do what the all-party committee recommended which is to allow charities to do their work and do it better by equalizing this charitable donation. As Canada moves into this post-deficit world, levelling that playing field can be not only an affordable idea for the government but it will become a very politically wise move to show that we value the charitable organizations in our country.

I deliberately worded Motion No. 318 to talk about equalizing the charitable and political donation tax credits. I did not specifically say a percentage rate or whatever because I believe that could be part of an interesting debate over the three hours. We can increase the tax credit for donations to charities from 17% to 75%, the same thing as the current political parties get. That is an option.

The motion is worded in such a way that it allows the government to enter into this debate to say what it thinks that optimum rate should be. Obviously I think charities should get more of a break. We discuss whether political parties deserve any break at all, something in between or what it might be but certainly not more preferential than charities.

I will go through a couple of options. Option one is to increase to 75% the tax credit for charitable donations and political donations. That would cost the government $190 million a year. It is no small amount of money. It is significant dollars but it would at least level it for those small donations, the ones I mentioned earlier that flash on the screen during telethons.

Option two as another example is a 50% tax credit. Obviously that levels the playing field for those small donations. It costs considerably less. It has the appeal of being the same for both politicians and charities and would cost even less money.

My preferred option is to make the charitable donations the same as the current political donation system. That system is very generous to political parties. It allows a 75% tax credit on the first $100. It allows a 50% tax credit for donations between $100 and $550. It would increase the charitable tax credit to one-third for donations over $550. That would cost $800 million. Again it is a significant amount of money.

When we consider that kind of a tax credit, if all other studies remain constant in Canada, it would increase donations to charitable organizations to well over $1 billion a year. Think of the good this country could do through its charities. Think of the goodwill we could extend through those charitable organizations by showing them through our tax system just how much we value their contribution to Canadian society.

Canadians are a very generous group of people. In 1996 there were over five million charity donors. Half of those donors gave $150 or less to charities. They are small givers. Sometimes they are people who are starting out in their married lives and cannot afford to give a lot but they give $100 or $150.

Charities rely on those small donations to make ends meet. That is their bread and butter. They do not get a big windfall at the end of the month where somebody comes by and says “I thought I would drop a million dollars on your organization”. They rely on those small donations. Logically then it seems appropriate to reward those people for their gifts and to encourage even more small donors to get into the habit of philanthropy early in their lives and give them the tax incentive to make sure that it happens.

Making the charitable tax credit no less than the tax credit for political parties is not too expensive. The government can choose one of these options. We could debate what rates are the most beneficial or the most preferential. Perhaps the government has some ideas of its own. I would be interested to hear that.

One must also keep in mind that any public revenue lost in the form of a charity tax credit will be more than made up for I believe in reduced social costs. It is part of strengthening the civil society by allowing charities, families and non-government organizations to do their work and to do it well. We can do that. We can strengthen it. We will help out the sick, the needy, the depressed, the homeless. We can help them all by increasing our support both tangibly with the money and also our public support, our words of support, our acknowledgement of the importance of charitable organizations.

It would also make the system more efficient. We would have a tax system which treats all those donations the same, whether they be political or charitable. We would have a tax system that would at least have one column taken out of the multipage form which would make it somewhat easier to fill out.

It would become a fairer system to the charity donor. They would not have to sit there biting their nails wondering whether it is $100 to the Reform Party or the Liberal Party or somebody else and that only costs them $25 so maybe they had better do it. They could also make that similar choice and what a delicious dilemma to be able to say “Instead I can give it to my local charitable organization of my choice”.

Motion No. 318 would send an important message to Canadians. It would signal the importance of charity work and the responsibility of all citizens to share toward helping to improve the lifestyle and the lives of everyone in society through charitable organizations. It would also send a message that government is not intended nor can it ever be all things to all people. There are other ways and other organizations in which we can help pick up the slack that will be better directed in local communities rather than in broad national programs.

In conclusion there was a newspaper article in the Vancouver Sun last year by well-known financial expert Michael Campbell. He wrote an editorial saying “If the numbers are any indication of the relative importance politicians place on the two activities, then in their judgment the re-election of a political party is about four and one-half times more valuable than charitable work”.

I do not belittle the work of political parties. They serve a purpose in society. I am part of one and I will continue to be. I agree with the all-party committee in 1996 which said “Let us do it right; let us make the playing field level”. I agree with comments like Michael Campbell's that say it is time to level that importance.

Let us put all donations whether they be political or charitable on a level playing field. When it comes down to debate and the vote some weeks from now, I hope all parties and individual MPs in the House will be able to rise to say we did the right thing by levelling the playing field and finally the charitable organizations are to receive the equal treatment they deserve.

Charitable ContributionsPrivate Members' Business

11:25 a.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Madam Speaker, I welcome the opportunity to participate in the debate on Motion No. 318.

I will take a few moments to respond on behalf of the government to the motion that has been put forward by the member for Fraser Valley.

The government recognizes the motivation for the hon. member's motion and fully supports the principle of offering generous tax assistance to charitable giving. The purpose of the present tax regime with respect to charitable giving is to encourage larger donations.

The current tax regime was put in place in consultation with the charitable organizations. The government has provided additional incentives to charitable giving in four of the last five federal budgets. Measures that have been adopted include: lowering the threshold for eligibility for the 29% level of the tax credit to $200 from $250; raising the annual income limit for the use of charitable donations to most charities from 20%, and when the government took office to 75%; and reducing the income inclusion rate for capital gains arising from the donation of appreciated publicly traded securities to 37.5%.

The hon. member should recognize that the differences in treatment of political contributions and charitable donations reflect the different policy intention of the two measures. The design of the federal political contributions tax credit reflects the desire to encourage greater grassroots involvement by all Canadians in the political process.

For this reason a generous tax assistance is given to small political contributions. This tax assistance is reduced by incremental amounts to the point that the federal tax assistance is eliminated for amounts contributed to federal political parties in excess of $1,150 per contributor per year.

In contrast, tax assistance for charitable donations is greater for amounts in excess of $200 in order to encourage larger donations to charities. This type of larger scale giving allows for a greater measure of stability and predictability for charities.

In the case of very large donations, tax credits may be claimed for donations up to 75% of a taxpayer's income in any given year. Tax credits may be carried forward to future years should the 75% limit be exceeded. Recently we have witnessed the important role that the present tax regime has played in charitable giving.

The charitable industry has reported seeing more large scale donations from individuals. In particular it has witnessed this trend following the implementation of the 1997 budget which contained provisions allowing for reduced taxation of capital gains on publicly traded shares given to registered charities. The Globe and Mail recently called this tax change which effectively cut in half the capital gains tax that donors pay on such gifts a bonanza for the charity industry.

The University of Toronto has received more than 70 individual contributions of $1 million or greater during its current fundraising drive. Gordon Floyd, director of public affairs at the Canadian Centre for Philanthropy, recently stated that charities have “all seen a real surge in major gifts of stock since that legislation changed”.

The executive director of the ROM Foundation has also noted an increase in tax driven gifts to charities, particularly from new benefactors.

He states: “Since 1997 we have received gifts from individuals in the form of shares that we would not have otherwise received. It has made a difference”.

The incentives for large scale giving also bore fruit in terms of a new community foundations movement which is a collection of endowment funds committed to local projects. A coalition of leaders heading up this movement recently announced in Calgary that their collective assets are now worth more than $1 billion. This announcement is clearly good news for communities.

These foundations tend to fill a unique need in that they are funding locally based projects across the country in almost every province. Gifts to such foundations can be allocated in many ways, including a general community fund or a specific cause. A little more than a week ago members of a youth advisory committee from Calgary announced a series of grants they were awarding, including a $1,000 grant to a high school program that helps with the integration of immigrants. This type of community action by these foundations is encouraging and helps to reinforce our collective notion about the relevance and importance of community in an increasing globalized world.

We can see from these examples that the tax regime that has been put in place has been working to maximize the benefits of charitable giving for both individuals and charities and the important work they carry out. Charities have mushroomed into an $88 billion affair spreading through 76,000 organizations ranging from hospitals to houses of worship to social services.

By any measurement this industry has been growing more important and stronger every year under the present tax structure. While we have seen that large scale giving has been greatly affected by tax incentives, we have also found that donations of small amounts to charities have not been strongly motivated by the availability of tax assistance. Consequently the greatest effect of this proposal before the House would be to increase the fiscal cost of tax assistance accorded to donations that would have, in all likelihood, been made in any case. Canadians donate in the smaller increments because they want to.

The level of tax assistance accorded most charitable donations results in a roughly 50:50 partnership between government and the private sector in support of charities. It is consistent with the principle that although charities promote the public good they have direct control over their activities in these areas and their priorities will not generally be identical to those of government.

In summary, the government cannot support this motion for the following central reason, our basic difference in approach. The current design of the charitable donations tax credit acts to encourage larger donations while recognizing the value of smaller donations verses the argument put forward by the hon. member across the way where he draws the analogy between charitable donations and political contributions. The political contribution tax credit encourages small donations but limits tax assistance for large contributions. That is the basic difference between the two. The greatest impact of this motion would be to increase tax assistance accorded to donations that would have been made in any case.

Tax assistance accorded charitable donations has contributed significantly to the growth of this industry. For the reasons outlined we cannot support the motion. I thank the member opposite for bringing this motion forward for debate so that we can all be reminded of the importance of charitable giving and the worthy causes pursued through their work.

Charitable ContributionsPrivate Members' Business

11:30 a.m.


Stéphane Bergeron Bloc Verchères, QC

Madam Speaker, it is my pleasure to rise today to speak to Motion M-318 moved by my colleague, the Reform Party whip and member for Fraser Valley.

His motion calls for legislation to be brought in to make the deduction for contributions to charitable organizations no less than the tax deduction for contributions to political parties.

This motion flows from a recommendation made by the House of Commons Standing Committee on Finance in its 24th report to the 35th Parliament, which was tabled in January 1996.

Indeed, the committee recommended that the government consider increasing tax deductions for contributions to charitable organizations to match the tax deduction for contributions to political parties. The government never took this recommendation into account in preparing the various budgets tabled since 1996, preferring to maintain a policy of cutbacks, particularly in transfer payments to the provinces.

These cuts have resulted in the first surplus in a very long time being accumulated in the coffers of the federal government, which merrily took advantage of this fiscal flexibility regained through other people's efforts to shamelessly step into provincial jurisdictions with blatant initiatives like the millennium scholarships.

As noble as the stated purpose of helping students may be, there was a hidden agenda to increase the federal government's visibility at the provinces' expense. In addition, in the riding of Verchères, the government's erratic fiscal behaviour led to the termination of the Tokamak project in Varennes, a world leader in microwave technology stemming from nuclear fusion research.

Research conducted in the Tokamak laboratories was promising in terms of new, safe and clean sources of energy. This motion is a wake up call to the government about its unfairness and its fiscal inconsistency.

Those making a $100 contribution to a political party enjoy a federal tax credit of $75. However, a $100 gift to a charity entitles the contributor to a tax credit of $17. Today's social difficulties arising from the many federal budget cuts have created an ever expanding socio-economic role for charitable organizations because of the increasing withdrawal of governments.

The donors enabling these organizations to carry on their work in the community should enjoy the same tax benefit as those, who, equally legitimately, contribute to political parties.

In my opinion, the government must remedy the situation as quickly as possible. Most charitable organizations operate thanks to the many volunteers who work there for nothing. I take this opportunity to pay tribute to and congratulate our many fellow Canadians who volunteer body and soul, with often very limited means, to help attenuate the effects of the problems affecting our society such as poverty, violence and suicide among the young, to name but these few.

Charitable organizations operate in a variety of sectors. There are fundraising activities and help for victims of natural catastrophes such as the ice storm and the floods of the Saguenay and of the Red River in Manitoba, for example.

In the fight against poverty, there is United Way and the many other volunteer action centres we have in our various ridings.

There are services helping young people. I pay tribute to the workers at houses for youth, drop in centres to help young people find a job, and cadet, scout and guide troops.

There are also fundraising and volunteer work for hospitals and seniors' residences. Fundraising for such foundations as the Muscular Dystrophy Foundation, the Heart and Stroke Foundation and the Fondation Enfant-Soleil, which held its telethon yesterday. I would like at this point to thank all those who, each according to their means, made the telethon such a success.

Funds are being raised for university research and various school organizations.

Charitable organizations are involved with young people, handicapped people, municipal libraries, museums, leisure parks and summer camps, among other things. I want to take this opportunity to salute service clubs such as the Optimist Club, the Lions, the Knights of Columbus, the Daughters of Isabel and the senior citizens clubs that organize meaningful activities for young people, the elderly, and underprivileged families.

Raising the tax deduction would encourage donors to invest more in charities to help them meet their humanitarian and philanthropic goals, especially since these donors are their main source of funding.

Speaking of donors, I would like to mention some telling statistics.

In Canada, in 1996, there were over 80,000 registered charities, 14,000 of them in Quebec, that received over $4 billion, including $457 million in Quebec, from 5,451,860 donors, 1,255,773 of them in Quebec. In 1996, the total number of donors was 5,461,860, compared to 5,460,730 in 1992.

How can we explain the levelling, if not the net drop in the number of donors? I submit this is the result of a charitable tax deduction which is not enough of an incentive. The government must review the tax deduction for contributions to registered charities and make it more appealing for donors to take a more active part in funding these organizations.

My colleagues from the Bloc and I will vote in favour of the motion.

Charitable ContributionsPrivate Members' Business

11:40 a.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, it is with pleasure today that I rise to speak on this motion being put forward by the member for Fraser Valley.

The PC party is willing to support this motion on behalf of charities across Canada. With the latest round of government downsizing, charities across the country have been placed under even more pressure to perform in many of the same areas previously the exclusive domain of government.

I think of areas of health care, for instance where many hospitals across Canada have had to increase their private fundraising efforts to make up for the slack of the downsizing of government funding and the reduction to CHST transfers to the provinces which has resulted in a tremendous amount of hardship, especially in the Atlantic provinces where the local tax base simply cannot support, under current charitable donations regulations, the amount of fundraising required to keep our health care system alive and well.

I think of the Victorian Order of Nurses. The VON is a national organization with branches across the country. In recent years the role of the VON has been forced to expand exponentially as our health care services have been cut by the Liberal government. Many branches have been forced to increase their fundraising efforts to make up for the decline in funding resulting from these higher level cuts in federal government funding for health care.

It is one thing to offload financial responsibility to the provinces. It is another thing to offload leadership, which is effectively what the federal government has done in the area of health care.

The VON branch in my riding of Kings Hants has suffered severe funding cuts from the municipality as the counties struggle to deal with the cuts from the provincial and federal governments.

When the federal government reduces funding to health care it creates a domino effect whereby the province of Nova Scotia and ultimately the municipalities have to pick up the slack. We simply do not have the local tax base. That is why this motion is very important. It recognizes the needs at the grassroots level for changes to charitable donations and the treatment of charitable donations to increase the incentive for Canadians in communities across Canada to contribute and to help pick up the slack for the cuts and the reduced responsibility of the federal government.

A charitable organization like the VON offers essential health services to the elderly in my riding. Programs like the PEP program, promoting elderly participation, which was initiated with the help of Health Canada during the Conservative government's time in office, help keep seniors active and involved with other citizens in their community. They are very important, particularly in the context of an aging population. These are programs that no longer receive government funding and the charities have had to find alternative funding arrangements just to continue these services.

Organizations like the VON are now forced to fundraise to subsidize visiting nurses programs, for instance to individuals who need to be checked at home. For the elderly who cannot afford to pay for home visits these services are extraordinarily important.

These visiting nurses programs, combined with the PEP program, respite care and meals on wheels, would not exist if not for the dedication and perseverance of volunteers and of course the generosity of donors.

When a person representing a political party in Canada can offer a potential donor a greater tax incentive to donate to their political party than an individual canvassing for a group like the VON that provides essential health services, it uncovers an injustice in our tax system and one that the member for Fraser Valley is quite right in recognizing and in addressing with this motion.

It highlights a larger problem, that being the complexity of Canada's tax code. If I had a complete copy of our tax code it would stand at about the same height as I am standing. I studied taxation as part of my finance degree in university. Not only was it one of the driest courses I have ever taken, which I would not wish on anybody, but it acquainted me with the incredible and egregiously complex nature of the Canadian tax code.

It is appalling that a person with a small business in Canada has to hire a tax accountant to deal with the government. Filing a tax return should be a simple transaction between the person and the government. They should not need to be represented by a third party to deal with the government. This motion helps to recognize the greater problem, which is the tremendous complexity of Canada's tax code. The PC Party will continue to fight for a fairer, flatter tax system.

As I discuss tax relief for low income Canadians, it should be remembered that tax reform needs to be done in a more holistic manner instead of addressing one part or another. It is unfortunate that much of the tax reform brought forward serves to complicate and not simplify the tax code. The guiding principle behind tax reform should be tax simplification.

Even the finance committee recognized the need to assist our charities in their efforts to expand their fundraising activities. During pre-budget consultations last year witnesses who appeared before the committee suggested that a motion similar to this motion be brought forward. The finance committee included this idea in its recommendations to the Minister of Finance.

Charities like the VON and particularly charities involved in the provision of health care, which has been so tremendously affected by the irresponsible cuts of the Liberal government since 1993, should not be disadvantaged compared with political parties when canvassing for donations. If we were to increase the advantages of donating to charitable organizations, or if they were at least brought into line with political contributions, charities across this country would receive considerable benefit. In fact, all Canadians would benefit from such a change. Charitable organizations offer essential services to society and they should be encouraged, not discouraged, by parliament to continue their activities.

Charitable ContributionsPrivate Members' Business

11:45 a.m.


Dick Proctor NDP Palliser, SK

Madam Speaker, I am pleased to take part in the debate today on Motion No. 318 which was moved by the member for Fraser Valley. The motion suggests that charitable donations should be treated no less equitably than donations to a political party. There are some arguments to be made in terms of fairness and equity on this subject.

I tend to agree with the government member who spoke on this motion a few minutes ago. He said that we are really discussing apples and oranges. Political donations have a very limited threshold. It is 75% of the first $100, 50% of the next $450 and 33% of the last $600, with a cap of $1,150. If a person gives more than that to their favourite political party they do not enjoy any form of rebate. The tax credit is given in the year in which the money is donated to the political party.

That is quite a bit different than the situation we have with charitable donations where up to 75% of a taxpayer's income can be forwarded to the charity or charities of their choice. Tax forwarding advantages can be used on many other things that are simply not available with the political tax credit.

By way of history, the political tax credit came into being in this country following the 1972-74 minority government. It was one of the conditions for our party's support for the then Trudeau government that it bring in some kind of public financing for the political process and it may very well be in need of updating and redressing.

The Lortie commission on electoral reform and party financing discussed a number of these things several years ago. I might remind members opposite that this government has managed to ignore the recommendations of the Lortie commission since it tabled its report in 1992.

I remember being involved with the Lortie commission on a trip to Harvard University where we met with a number of American politicos. They wondered, I think quite correctly, why we were in their country talking to them about political donations because we had a much fairer system in this country. Thanks to funds that come in through public financing for political parties we get away from all the soft money and all the money that is raised. There are limits. There is a process. Generally speaking, it has worked well in this country for the last two decades.

I think it is all well and good to talk about the explosion of charities and the need for more money. I agree with what has been said on that point, but let us get at the reasons there has been an explosion in the need for money for charities.

As has been correctly pointed out, but with no editorial comments attached, cutbacks have been made by all levels of government as they have focused on balancing their budgets, eliminating their deficits and concentrating on paying off their debts.

I think we could have a very interesting debate about why we need all these charities and that if we had a proper tax system and financing for a number of social programs people would not be required to go door to door or call us at six o'clock at night for a donation for their favourite charity.

I think when the member moved his motion he was clearly directing his attention at the small donor, the person who gives $50 or $100. It may very well be that we do need to look at levelling the playing field for those small donors, with a cap of perhaps $1,150, which is currently what the political tax credit is, or perhaps with inflation over the last two decades we should be looking at moving that number up to $2,000 so it is more appropriate in this day and age.

Someone might make the argument that there should be symmetry between political givings and charitable donations at the low end. However, we should be be careful about the absolute amount that is donated to a political party.

There are lots of good arguments that could be advanced on another day on that topic, but with respect to charitable donations, nobody is arguing that we should cap them, so we are talking, to some extent, about oranges and apples.

In conclusion, I believe that there is a case to be made at the low end for levelling the playing field, but I would leave it at that.

Charitable ContributionsPrivate Members' Business

11:50 a.m.

Winnipeg North—St. Paul Manitoba


Rey D. Pagtakhan LiberalParliamentary Secretary to Prime Minister

Madam Speaker, I am pleased to debate this motion. However, before we rush to adopt this motion, which on the surface would appear to give added tax benefits to charitable donors, let us first examine the present status of tax benefits for charitable donations and ask ourselves what would be the fiscal cost to government and, most importantly, what would be the consequence to charities themselves.

In fact, the immediate consequence to charitable contributors, were the legislation to be put in place as moved, would be a zero federal tax benefit for charitable donations in excess of $1,150 per donor per year. That is the present situation for federal tax credits on political contributions.

Why is the design for tax treatment different between political contributions and charitable donations?

The difference in design reflects the difference in the policy intent and goals of the two. A tax credit for political contributions is aimed at encouraging greater grassroots involvement by all Canadians in the political process, while at the same time preventing the overbearing influence of those who can afford a large donation. Hence, more generous tax assistance is given to smaller political contributions.

This tax assistance is reduced incrementally to the point of zero when political contributions exceed $1,150 per contributor per year.

In contrast, the tax credit for charitable donations is aimed not only at recognizing the value of all levels of donations, big or small, but also at encouraging larger donations to charities. Hence, tax assistance for charitable donations is greater for amounts in excess of $200, 29% or more versus 17% for the first $200, and the threshold for this eligibility was recently lowered from the original $250.

Moreover, tax credits may be claimed for very large donations up to 75%, raised from the previous 20%, of a taxpayer's income in any given year. The tax credit may be carried forward for the ensuing five years should the 75% limit be exceeded.

The income inclusion rate for capital gains arising from the donation of appreciated publicly traded securities was also reduced to 37.5%.

So we can see that in four of the last five federal budgets tax measures have been taken to ensure that donations to charities indeed are encouraged.

To date, the level of tax benefits accorded most charitable donations result in approximately a 50-50 partnership between the government and the private sector in the support of charities.

What the fiscal cost of the measure would be were we to implement the motion as moved would be approximately $125 million per year for the federal government and some $55 million for the provincial governments. The effect on the level of charitable donations likely would not be that much.

Small donations to charities are not strongly motivated by the availability of tax benefits. Thus, treating charitable donations in the same way as political contributions would not necessarily increase the total amount of donations from small donors. At the same time, larger donations from big donors may in fact diminish in number.

In a recent news item reported in the May 27, 1998 issue of the Ottawa Citizen , the increase in the number of large donations—in millions of dollars—to help the Canadian Red Cross, land mine survivors and cultural institutions was attributed to tax measures adopted in the last five federal budgets of this government.

The greatest effect of the proposal would be to increase the fiscal costs of tax assistance accorded to donations that would have been made in any case. Charities themselves would receive little benefit.

I share the principle of charitable giving. We share the belief as Canadians that charitable giving, which is a defining character of the Canadian nation, expresses the best in our people. We are people who take pride in helping the most vulnerable of our citizens and in advancing lofty causes such as scholarships, the performing arts, research, professional faculties, ethnic studies, finding cures for diseases, literacy, sports, international development projects and others.

In essence, we help to ensure that the Canadian citizenry is sound in mind and body. This goal is a chance we give as well to the people in developing nations. This spirit of helping fellow citizens, neighbours and strangers, is very much a part of the Canadian culture. Essentially, Canadians, particularly the small donors, give not because of tax incentives or any monetary inducement, but because they want to give.

Viewed in this light, Canadians will see the soundness of the current differential government policy with respect to the two types of donations and see the absence of need to treat them in the same way.

A political contribution is a contribution to help advance the cause of democracy. Charitable donations are more than a contribution. Charitable contributions are gifts to help advance the noble causes of the heart. We value and hold in esteem charitable donors for their gifts of the heart.

Charitable ContributionsPrivate Members' Business



Jay Hill Reform Prince George—Peace River, BC

Madam Speaker, I see we only have a minute or two left in Private Members' Business. There is not a lot of time to adequately address Motion No. 318 put forward by my hon. colleague from Fraser Valley.

I find it absolutely unbelievable, not only to members on this side of the House, but indeed to all the people across Canada who are watching at home today that we would even have to have this debate, that we would even have to have this motion put forward by my hon. colleague from Fraser Valley. I certainly applaud his initiative to bring this matter forward.

We are talking about the issue of levelling the playing field at a minimum. The motion as my hon. colleague pointed out says “no less than”. That is a key phrase in the motion itself. It says that in the opinion of this House the government should bring in legislation making the tax deduction for contributions to charitable organizations no less than the tax deduction for contributions to political parties.

In reply or rebuttal, the hon. member from the governing Liberal Party who just spoke is missing the point. He said that if this were to go ahead and we levelled the playing field and treated both exactly the same, that anybody wanting to make a donation to a charity of more than $1,150 in any given year would get no additional tax credit. He is quite correct if we did it exactly the same, but that is not what the motion says. The motion very clearly says no less than.

In the excellent presentation that my hon. colleague from Fraser Valley made in speaking to his private members' motion, and the need to bring this type of legislation forward, he threw out the challenge not only to government members but to members from all the political parties to suggest some options. He said to look at alternatives.

One of the options I would like to discuss is the option of eliminating the tax credit for political parties and reassigning the benefit from that to charities. That type of tax reform would certainly be supported by a lot more Canadians than the present system. The small donors, the average donor, the person who can only donate $50 to any given entity be it a charity or a political party, those are the people we need to target. We need to ensure that it is not a case where $100 to a political party gets a $75 tax credit but $100 to a charity only gets a $17 tax credit. That is the issue. That is the driving force behind this motion and the reason why I am certainly speaking in support of it.

Charitable ContributionsPrivate Members' Business


The Acting Speaker (Ms. Thibeault)

The period provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

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Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC


That the House castigate the government for the catastrophic effects of its reforms to unemployment insurance; for having taken over funds destined for unemployed persons; and for its inability to adapt the unemployment insurance system to the new realities of the labour market, particularly where young people, women, and self-employed persons are concerned.

Madam Speaker, I wish to inform you that I will be sharing my time with the member for Québec, who is also my assistant on the Standing Committee on Human Resources Development.

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12:05 p.m.

The Acting Speaker (Ms. Thibeault)

If the hon. member wants to share his time, I have to ask for the unanimous consent of the House to proceed in this fashion. Is it agreed?

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Some hon. members


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Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, I am very pleased to speak today to this motion brought forward by the Bloc Quebecois.

Around this time last Monday, the Bloc Quebecois launched the first initiative of employment insurance week, making the whole country aware, among other things, that only one out of every four unemployed young people is entitled to employment insurance benefits. Three out of four young people who have paid contributions cannot receive EI benefits.

The week dedicated to employment insurance also included a public forum and a panel of experts. We saw the impact of that week on parliamentary business. We saw all kinds of statements, particularly by the Minister of Human Resources Development, who said that tightening the requirements was good for young Canadians since it gave them a chance to go back to school. According to him, there is nothing wrong with being strict to the point where people who have contributed to a plan are not entitled to benefits. It is perfectly legal and it actually shows compassion for our young people. We saw the public condemn that statement.

Last week also gave us the opportunity to expose what has been called the employment insurance scandal. We now have the proof we needed. The minister was forced to admit that the billions of dollars paid in employment insurance premiums were not put into a distinct account. Still, it was again pointed out, as it was by the Auditor General of Canada, that there had to be a separate account to ensure that employment insurance was monitored appropriately.

There is no such separate account. The government used the money to reduce the deficit. We understand the deficit did have to be dealt with, but we have understood today as well that this was done at the expense of workers earning less than $39,000 a year, and of the unemployed, whose eligibility for and duration of benefits the Liberals have twice managed to reduce, in both the 1994 and the 1996 reforms.

Late last week, five studies were released on the assessment of the 1994 reform, and these were not carried out by Bloc Quebecois experts or by experts wishing to express their opinions but by experts on the government payroll.

Among other things, these studies addressed the consequences on long term employment. Part of the conclusion states “It seems therefore that Bill C-17 has attained its objective, which is to reduce the eligibility for benefits of those who are eligible but have spent little time in the workforce”.

These conclusions are an admission that the objective was to decrease eligibility for employment insurance benefits for seasonal workers and others with similar jobs.

Another finding of the study addressed the duration of the lost employment and the eligibility for employment insurance. According to the expert, “Workers in high unemployment provinces, the Atlantic provinces in particular, and Quebec to some extent, or high unemployment industries, such as the primary and construction sectors, are far more prone to job loss. A randomly selected worker in these provinces or industries could expect to lose far more in weekly benefits than a worker from any other region in Canada, as a result of Bill C-17”.

Those choices were deliberate. They knew the consequences would be lower benefits to the unemployed, and even less employment.

Another study on the duration of unemployment benefits was released at the same time.

It compared two groups: that of 1993 and that of 1995. It said that belonging to the 1995 group increased one's chances of getting off unemployment, resulting in a significant decrease in duration. Right after the election campaign, the Prime Minister said “We are going to set aside all the Progressive Conservative reforms and start treating people properly again”.

He did not say it verbally. It appeared in a letter that pointed out, in so many words, that, under a Liberal government, they would not treat people that way any more. Yet, less than three months after the election, they passed a law that was even tougher, even more restrictive than everything the Progressive Conservatives had done before them. It was the GST all over again.

That is why people are angry today. People throughout Canada are angry; those affected by the cuts resulting from the 1994 reform are angry, but not as angry as those affected by the cuts resulting from the 1996 reform, because the same implacable logic is at work.

In 1994 the government said it was going to limit duration of benefits. It then realized that this was not enough to wring a bit more out of unemployed workers. In the 1996 reform, it decided to come at it from the eligibility angle. This was when it brought in the 910 hours for someone entering the job market.

A young person must work 26 35-hour weeks or, and this is to be found nowhere, 62 15-hour weeks. Only the Liberals have a 62-week year. These young people have no other way of qualifying. That is the direct reason why only one young person in four qualifies for EI.

We are therefore looking at two Liberal reforms that have had a major negative impact. The weekend editorial in the Nouvelliste said, and I quote: “There is no shame in changing course when it is clear that our policies are not producing the effects we thought they would. Minister Martin announced that his old age pension reform would be reworked, because it became clear that it was going to penalize those who are setting money aside for their later years. The time has now come to re-assess the EI policy. Otherwise, this week's discontent, which goes well beyond Quebec's borders, could turn into a time bomb for the Liberals”.

I think the judgment that was passed reflects the reality. Last year, on election night, almost one full year ago, the federal Liberals received a clear message both from Atlantic Canada and from the Quebec regions, who harshly criticized the reforms to employment insurance. Last week, particularly when judgment was passed on this issue, all Canadians clearly expressed their dissatisfaction with the way the funds are currently managed and stated that the government must react.

I would like to conclude by quoting an expert in this field, Mr. Marc Van Audenrode, who co-wrote the study that demonstrated that reforms to employment insurance push people onto welfare. This morning, this author pointed out, among other things, that Canada used to have one of the most generous employment insurance schemes among OECD countries. Nowadays, our system is not as generous as the average program provided by OECD countries or by our competitors in New England. It is about as generous as the program in Alabama.

We live in a parliamentary system. We have a government of Canada. The duty of this government is not only to look through the window to see if the economy is growing. Its duty is to ensure that wealth is adequately distributed. It has to realize that an adequate employment insurance program is the best way to ensure that people do not end up unemployed and on welfare.

Given the situation, the federal government must quickly go back to the drawing board. We offer the government our cooperation through the Standing Committee on Human Resources Development and the Status of Persons with Disabilities or in any other way. The government should consider our six bills and come up with a concrete proposal, because we cannot afford to wait any longer.

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12:15 p.m.


Daniel Turp Bloc Beauharnois—Salaberry, QC

Madam Speaker, I simply want to comment on my colleague's efforts and stress how much Bloc Quebecois members appreciate his work regarding this issue and last week's very conclusive results.

It is important that we pursue the fight to achieve greater fairness and a better distribution of wealth in Canada and in Quebec. The Bloc Quebecois is particularly concerned about the plight of young people, since one in four can no longer get the support needed to ensure his or her future and return to the workforce.

In light of this, my question to the hon. member has to do with young people. I would like to know to what degree young people are penalized by this reform and how—since this is the object of our efforts—we could improve their fate by overhauling this employment insurance reform?

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12:15 p.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, I thank the hon. member for his question.

Young people are indeed greatly affected. Three out of every four are no longer eligible for benefits. Part of the solution is found in our proposed bill, which seeks to bring back the number of hours worked by a young person to be eligible for benefits for the first time to a more reasonable figure than the 910 or so hours that are currently required, so as to allow people, after their first job and particularly when they have just finished school, to qualify with a reasonable number of hours.

The other objective is to give self-employed persons access to the employment insurance program. In addition to being unfair, the program does not reflect the new realities of the labour market. Many young people are self-employed and would appreciate having some income security. Sometimes, for example, this is what makes the difference in the decision to start a family. There is a new reality, but there is also a solution.

These are measures that the government should consider and that this parliament should approve. Therefore, I ask the consent of the House to make the motion votable, so that we can effectively see where each parliamentarian stands on a crucial issue that is being debated right across the country.

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The Acting Speaker (Ms. Thibeault)

Does the hon. member have unanimous consent?

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Some hon. members


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Some hon. members


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The Acting Speaker (Ms. Thibeault)

There is no consent.

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12:15 p.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, just to finish answering the question, I have to say the Liberal majority has not only refused to discuss this issue in committee, but has just refused that this motion be put to a vote.

I certainly hope the members from Quebec and the maritime provinces will have to account for this decision by the government when they go back in their ridings. Why have they refused today to have this motion put to a vote? Why do they show such a lack of courage, and why did they make this decision? Are they totally out of touch with reality in their ridings or are they more afraid of their whip than their need for electors' trust?

I hope this opposition day will be an opportunity for the Liberal majority to reconsider the issue and change its attitude. When we ask the House to castigate the government for the catastrophic effects of its reforms to unemployment insurance; for having taken over funds destined for unemployed persons; and for its inability to adapt the unemployment insurance system to the new realities of the labour market, particularly where young people, women, and self-employed persons are concerned, it is because Canada should go back to the drawing board, examine the situation, and take remedial action as soon as possible.

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12:15 p.m.


Christiane Gagnon Bloc Québec, QC

Madam Speaker, like my colleague, the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, I am pleased to speak today on this important issue.

It is a well known fact that the Bloc Quebecois is very concerned with the employment situation and the new employment insurance reform.

The Bloc Quebecois has made this whole issue its priority. We have made many suggestions to the government to improve the employment insurance reform, which is extremely hard on those who lose their jobs. This is an unjustified reform, especially when the government is piling billions of dollars, more precisely $6 billion a year, in the employment insurance fund.

The motion of the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques reads:

That the House castigate the government for the catastrophic effects of its reforms to unemployment insurance; for having taken over funds destined for unemployed persons; and for its inability to adapt the unemployment insurance system to the new realities of the labour market, particularly where young people, women, and self-employed persons are concerned.

Last past week, there were editorials in various Quebec newspapers describing this reform as unjustified.

Let me quote a few. La Presse called it primarily intellectual fraud, a poor approach to taxation, a fundamental lack of transparency on the part of this government. The government is not honest with the people. That is what we have been denouncing for over a year. We have denounced this lack of transparency where the government helps itself to money paid first by the workers and second by the employers. This is a very harsh reform, which runs counter the very essence of what a real employment insurance reform should be.

In Le Soleil , Donald Charest wrote “This is a fictitious surplus”. It is well known that the $19 billion soon to be accumulated in the employment insurance fund are no longer available. It has been used to pay the government's grocery bill, its deficit.

The government will be in a jam in the event of a recession. As one of the editorials said, if at least the government had had the foresight of accumulating this kind of surplus in case of a recession, it could have been said that the government had an ounce of wisdom. But this is not what is happening in reality, because we know full well that the amounts have been spent. These amounts are virtual. They are not in the fund.

The fact that contributions are being maintained at very high rates, that is $2.70, is very harmful for job creation. They were reduced by only 20 cents. We know that for a worker who earns $500 a week, these 20 cents represent $1 less in weekly contributions.

Through the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, six bills have been introduced. When the human resources development minister responds to our questions in the House, as he did during the employment insurance week, he is not very credible. He gives us somewhat farfetched answers that reflect his lack of humanity and compassion toward unemployed people.

The minister tells us there are 500,000 more part time workers who were not covered by the system and who are now covered. He says to women who are on maternity leave that once their children are raised they will have some extra assistance through employment insurance. He also says that the government has acted in a courageous manner and wanted to break the dependence cycle.

I respond to this by saying that even though there are 500,000 more part time workers who were not covered by the employment insurance system previously, in fact this means that these workers are paying contributions but cannot get any benefits. These women do not qualify for employment insurance because they have not worked enough hours. This is especially true for part time workers.

For some women who have worked for 40 weeks, if they have worked more hours during the first weeks, it does not count, because the calculation is on the last 26 weeks. Consequently, they receive even less benefits than before.

This is a reform that is unwarranted and we have several comments as a result of the minister's answers. He says that the government did not want a repeat of the situation that existed when the Liberals came into office, when the deficit was at $6 billion. I can fully understand that a $6 billion deficit is a concern for the government, but when there are $19 billion in the employment insurance fund, I say to the minister that he is not in a rush to undertake a reform, because it works to the government's advantage. At present, the government gets another $700,000 every hour. Each and every hour, $700,000 more comes into the government's coffers. So leaving the reform as it is means that, in the meantime, the government is making money on the backs of the workers. This is something to be severely criticized.

I am glad much was made of this last week. The minister responded to questions from the Bloc Quebecois by saying that he had been all over the country meeting with people to discuss the impact of the reform and that it is always a pleasure for him to listen. He is very polite, but he is not very quick to act.

It is all fine and well for him to listen. However, members of the Bloc Quebecois are not the only ones criticizing the reform. Last week, other parties were as vehement in their criticism of the government's attitude in dipping into the employment insurance fund to wipe away its deficit, which was very dishonest and showed its disdain for the public.

The minister does not want to rush into any hasty decisions. I understand, it is worth his while not to. When a government is accumulating a surplus of $6 billion every year, there is no need to worry about the deficit, because the employment insurance fund is right there to dip into. Taxes could have been raised, but we are wise to the game the Minister of Human Resources Development and the government in general are playing. We are wise to them. They did not want to be unpopular, there they were with a smile on their faces. They paid down the deficit and now they can walk with their heads held high as a result. But I would not be so proud of myself, knowing that thousands of people are no longer eligible for employment insurance.

The minister's response to the Bloc Quebecois bills is that they are no solution that will help the unemployed to get back in the work force. My response to that is that we are concerned for the workers in transition, the ones who are short of weeks for employment insurance, the women who are not qualified for maternity benefits.

My response as well is that we are very concerned about a solution that encourages people to go directly onto welfare. That is the path the present Liberal government is pointing people to. We know this costs millions of dollars, $845 million in Quebec and $1.6 billion in the rest of Canada. This means $2.5 billion downloaded onto the provinces.

As we know, the Canada social transfer was cut by $42 billion instead of $48 billion. This is what the minister calls giving provinces money back for health care. We call it cutting less than previously announced. The minister had announced $48 billion in cuts and he cut only $42 billion. He was able to be this generous thanks to the employment insurance fund. He did not even have the honesty to show his true colours, and say what he really intended to do.

The unemployment insurance reform was aimed at revitalizing the job market, and what do we see? Thousands of workers in vulnerable jobs on the fringe of the labour market are being excluded. This is a disaster. It is estimated that only one out of four young workers between the ages of 20 and 24 qualifies for employment insurance benefits.

And then there are women. The minister gives us simplistic answers. He does not even have statistics to back them up. He tells us it is due to the birth rate. Then can he explain why maternity benefits dropped by 6% while the birth rate dropped by only 1%? The discrepancy is obvious.

I deplore the bad faith of the Minister of Human Resources Development, who enjoys reading his files, but has very few concrete measures to offer. The Bloc Quebecois has worked very hard to find solutions and make the reform easier on the unemployed. But obviously the government has no intention of backing off.

The people will judge it on its accomplishments. We know how the former Minister of Human Resources Development was voted out of office. He lost his seat because his reform was too harsh on the least fortunate.

I am asking the government once more, as we did on the human resources development committee, to review the whole issue of the reform; hopefully the employment insurance week will give it cause for reflection.

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12:30 p.m.


Maud Debien Bloc Laval East, QC

Mr. Speaker, recently, the Minister of Human Resources Development said rather suavely if not innocently “We no longer have a deficit in Canada, which means that the poor families are now richer.”

Yvon Deschamps, a renowned stand-up comic in Quebec, once said “It is better to be rich and healthy than poor and sick.” I do not know if the Minister of Human Resources Development is trying to compete with Mr. Deschamps, but with statements like that one, he is succeeding.

In other words, what the minister is telling us is that, thanks to the tightening of the employment insurance program, poor families are getting richer. Since this Liberal government was elected in 1993, there are 500,000 more people living below the poverty line in Canada. We cannot hope to solve the problem with the poverty insurance system we just talked about—because it is not an employment insurance system, but really a poverty insurance scheme.

Poverty insurance will particularly affect one category of workers, pregnant women. For these women, it will become increasingly difficult to qualify for maternity benefits. The hon. member for Québec touched on that issue and I would like her to answer my question.

What will happen to pregnant women whose access to maternity benefits and special benefits in general, like maternity leave, sick leave and adoption leave, will be reduced?

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12:30 p.m.


Christiane Gagnon Bloc Québec, QC

Mr. Speaker, I thank my colleague for her question. Indeed the minister's statement is shameful. He is telling us that we are richer because the deficit has been eliminated.

We know now where the money that was used to eliminate the deficit came from. It came from the employment insurance fund, which is essential to help the unemployed find a job at a time when jobs are precarious and to give them a minimum income so they do not have to go on welfare.

One and a half million poor children in Canada is nothing to be thrilled about. One and a half million poor children also means poor parents. I do not know if the minister can see the relationship between poor children and poor parents.

Women are also very affected by this reform. We know now that, with the reform, a woman must accumulate twice as many hours to become eligible for maternity benefits and EI special benefits.

The minister's answer to that is that the fertility rate has dropped. Even though the fertility rate has dropped, do special benefits not also include parental, adoption and sickness benefits? There has been a substantial decrease in these benefits in 1997. Will the minister tell me that people are sick because the fertility rate is lower? I do not know what his answer will be. He will certainly come up with another farfetched answer.

We have spoken out against these kinds of things and will continue to do so. This will definitely not encourage young couples to have children. We know that the minister's reform is not adapted to the job market because young women have unstable part time jobs and do not have any strong ties to the job market. Those are the things that we denounce.

We hope the Minister of Human Resources Development will finally see the light and will be more human and more realistic in this reform that particularly affects the unemployed, women and young people.

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12:35 p.m.

Malpeque P.E.I.


Wayne Easter LiberalParliamentary Secretary to Minister of Fisheries and Oceans

Mr. Speaker, the hon. member's motion talks about the disastrous effects of reform of the employment insurance system. What disastrous effects?

As I reviewed last week's Hansard and listened to the speakers opposite today, it is obvious the hon. members opposite have been trying to raise people's fears, trying to manufacture disaster where none exists. Instead of assisting people to use the programs available they are agitating complaints.

I will speak in a moment of a few of the programs available under the system. The first speaker opposite spoke of the EI scandal, so-called, alleging that the government is taking over funds of workers. That is not the case at all. When the government first came to power there was a major deficit in terms of the unemployment insurance fund. We have set up the system so that we are sure there is an investment there in the future, that there is a fund we can go to in the future that will protect workers in the future. That is good management to ensure there is a system available to workers in the future so that employment insurance premiums do not have to be raised should we get into a downturn in the economy.

Employment insurance reform is helping Canadians get back into the workforce. We are accomplishing this through a number of direct initiatives. This is a reasonable reform package. This is a compassionate reform package that is clearly in the best interests of all Canadian workers.

Unlike the old passive UI system, the system the Bloc would have us return to, employment insurance is a proactive approach to supporting and encouraging Canadians to stay in the labour market as long as possible. That is why employment insurance combines income support with effective active re-employment measures.

Employment insurance rewards people who work. It invests in people who are prepared to invest in themselves. Taken together, employment insurance measures are fair and balanced.

Let us consider some of those programs. Let us consider the five active re-employment measures for a moment, the first being targeted wage subsidies. The Government of Canada contributes part of a person's wage and that enables employers to hire claimants or former claimants who receive valuable on the job experience. In 1996-97 this measure helped some 9,000 individuals.

For those with an entrepreneurial spirit we provide self-employment assistance. This measure, and I believe it is one of the better programs under the system, provides claimants with financial support and planning assistance to help them get a viable business off the ground. In 1996-97 this measure assisted over 13,000 entrepreneurs in starting their own business.

The government believes in proactive collaboration so we have job creation partnerships where we work with the provinces and the territories, the private sector, labour and community groups. Together we develop projects that do two things, generate new job opportunities for unemployed Canadians and enhance the local economy. In 1996-97 job creation partnerships assisted over 18,000 workers.

We are also piloting targeted earnings supplements that top up a claimant's wages for a short time. This active re-employment measure encourages the person to take work that pays less than their previous job. It is an effective way of helping them make a transition back into the workforce and find permanent work.

The fifth active re-employment measure is called skills, loans and grants. It offers training to upgrade people skills by helping with fees for study courses and living expenses. Training is now a provincial responsibility. So this measure is delivered by the provinces through labour market development agreements with the Government of Canada. Those five programs help people get work and have active re-employment measures to help them get back into the labour force. Employment insurance reform is generating savings of $800 million that the government will reinvest annually in these measures.

I can assure the hon. member that the effects will not be disastrous. They will be highly beneficial to Canadian workers and to the Canadian economy and to Quebeckers and the Quebec economy.

For 1998-99 Quebec will receive $5.3 million for active measures that will go toward helping workers in the hon. member's province. No one can accuse this government of short changing Quebeckers. But by golly members opposite, in terms of their fearmongering and their separatist rabble-rousing with their misleading information, are killing the economy. They are causing the loss of jobs. Instead of recognizing the programs available and talking about them in Quebec and showing people how they can utilize them to get back into the force, they are out there with their separatist leanings which are killing the very economy we are trying to improve.

The hon. member's motion says that employment insurance does not have the capacity to adapt to the new realities of the labour market. With all due respect, the member is wrong again. He should try telling that to a woman in Chicoutimi or in the riding of the member for Acadie—Bathurst who works 14 hours in a department store before becoming unemployed. Under the old UI system that the member for Acadie—Bathurst supports as well she was just plain out of luck because none of her work was insurable. Under the new hours based system, after 30 weeks of work she will qualify for employment insurance benefits. What is more, under the hours based system women working part time are now eligible for maternity benefits.

They say it is not adaptable to the labour market. Try telling that to the 270,000 women now covered by employment insurance for the first time in their lives. And yes, mothers who left the workforce to stay home and raise their children and who now want to return to work are eligible for active re-employment measures. That is being adaptable and that is looking to the future.

The hon. member says employment insurance reforms are tough on youth. No, they are not. They are designed to discourage young people from throwing their lives away by leaving school before they have completed their education.

Do hon. members opposite want to encourage young Quebeckers and young New Brunswickers to throw away their lives by dropping out of school and ending up on the treadmill of short term work followed by employment insurance income? I should think not, but their speeches lead me to believe otherwise. That is certainly not what the Government of Canada wants.

That is why we have the youth employment strategy to break that cycle. That is why we brought in the Canadian opportunities strategy to further provide young men and women with the opportunity to pursue their education and thus improve their chances of finding employment.

The objective, in case the hon. members do not get it, is not to see how many young people we can put on to employment insurance but how many we can find meaningful employment and long term work for.

What about seasonal workers? Employment insurance is there for seasonal workers. Again, the basic premise of employment insurance is to encourage workers to continue to work as long as possible. We wanted to discourage people from falling into the old habit of using employment insurance as an income supplement. That is what created dependency on unemployment insurance. It is too early to get the complete picture but it appears that workers are finding extra weeks of employment needed to qualify for benefits.

When we saw there was a flaw in the system in terms of the short weeks, we on this side instead of ranting and raving about it put in place pilot projects to ensure that those short weeks would not hurt workers and that the program would be there for those in the seasonal industries.

Unlike members opposite, we on this side are moving forward to ensure that the system is in place for the workers in the future, that there is investment so that we have the kind of program and social safety net the workforce so direly believes in.

SupplyGovernment Orders

12:45 p.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, my colleague has criticized my talking about a scandal.

I quote a sentence from two of the five studies released on the 1994 evaluation “For example, a woman working in the fishing industry and a man in forestry would have each received an average of 25 weeks of benefits a year before the new system. After the bill, the number of weeks was reduced to 20. The effects of Bill C-17 were therefore disproportionate in provinces and industries relying most heavily on the insurance system”.

Another study, this time ordered by the government, noted “We have concluded that Bill C-17 has caused a 20.7% reduction in benefits paid out, essentially because of shorter qualifying periods”.

These are two scandalous effects of the 1994 reform in which the Liberals, three months after an election campaign in which they talked about moving forward and never repeating Conservative strategies. Their results were worse than those of the Conservatives.

I would therefore say to the hon. member in conclusion that he does not know what he is talking about on the subject of active measures. These measures were transferred to the provinces for the good of all Quebeckers and Canadians, because this way they might be effective.

SupplyGovernment Orders

12:45 p.m.


Wayne Easter Liberal Malpeque, PE

Mr. Speaker, I appreciate the question. Again as with so much of what the member opposite said previously, he has it wrong. He is interested in raising fears and talking about disaster. The hon. member has heard this before but I think maybe he should hear it again.

The Government of Canada under this new system, under the labour market development agreements will invest $2.7 billion over five years to enable his province to deliver active re-employment measures. Those are measures designed to get people back to work and into the labour force.

I again want to emphasize that one of the reasons why we have to make that investment is that the separatist leanings across the way are killing the economy and driving people out of the province. They are raising unemployment.

Let me say that figure one more time. The Government of Canada will invest $2.5 billion over five years to enable the province of Quebec to deliver active re-employment measures.