Mr. Speaker, I rise to address the House on Bill C-10, the payments in lieu of taxes act. I am speaking on behalf of the Minister of Public Works and Government Services in support of this important legislation which will go a long way toward strengthening the relationship between the federal government and municipalities across Canada. As a former municipal politician, it is a real pleasure for me to speak to this bill in the House.
Before I address the legislation I would like to congratulate the minister for his dedicated and constructive approach to this issue. His efforts to improve the fairness, equity and predictability of federal payments in lieu of taxes are truly commendable. In particular, I underline the minister's decision to directly involve local officials in developing these changes to the Municipal Grants Act and program. An obvious sensitivity to the opinions of municipal politicians by the minister is reflective of his own years in municipal politics.
In his speech to the Federation of Canadian Municipalities in June of 1998, the minister made it clear that municipal input was absolutely essential if we were to find the best possible structure for municipal payments in lieu of taxes. He also made a commitment at that time to hear the voices of those who represent Canadians at the municipal level.
Throughout the summer of 1998 the minister presided over 11 round table discussions in major centres from coast to coast to obtain firsthand views on the municipal grants program and to gather advice on how to make it work better for local communities and citizens. These meetings gave mayors, municipal officials and appraisal professionals the opportunity to have a direct say in modernizing Canada's payment in lieu of taxes system.
I know for a fact that the minister's round tables were greatly appreciated by municipal officials. His face to face meetings were a gesture of solidarity between the two levels of government, a sign of respect and a clear recognition of the challenging work undertaken by municipal governments.
The minister's undertaking and the enthusiastic participation of municipal officials demonstrate that much can be achieved through dialogue and co-operation. Indeed, the minister's consultation tour has led directly to some important changes in the way the renamed and reformed municipal payments program will be managed.
Two examples come to mind. First, the minister has undertaken to establish a municipal payments program advisory council of stakeholder representatives to give advice on administrative and policy issues relating to the management of the program. This advisory council will carry on the constructive dialogue initiated by the round table consultations.
As we learned during those discussions, issues that arise must not be be allowed to simmer for years until they begin to adversely affect relations between governments, as has happened in the past. They must be dealt with expeditiously and the advisory council will play an important role in this regard.
The second ministerial initiative is the decision to engage national professional appraisal associations to draft best practices for unique types of properties. As the minister has noted, problems often arise when federal and municipal appraisers cannot agree on the value of certain types of federal properties such as penitentiaries and airports. There are simply no equivalent assets in the private sector against which these properties can be compared.
By developing best practices through a co-operative process involving municipal and federal stakeholders the government will ensure consistency in the treatment of these properties across Canada. We will also avoid unnecessary and acrimonious disagreements with municipal officials and improve the predictability of payments to municipalities. These administrative issues can be addressed without legislation; however, some of the changes included in the package proposed by the Minister of Public Works and Government Services do require amendments to the Municipal Grants Act, which is the purpose of Bill C-10.
During their meetings with the minister, municipal officials made it clear that the Government of Canada must behave in a manner similar to other property owners. This is what Bill C-10 aims to achieve. The underlying objective of the proposed legislation is to make federal payments in lieu of taxes as much like the taxes levied against private landowners as is possible, while still recognizing the government's exemption from local taxation under the Constitution Act, 1867.
Complicating this balancing act is the need to account for the uniqueness of certain types of federal properties, as I mentioned a moment ago.
The way the government has pursued these objectives is by strengthening the principles of fairness and equity that have guided the municipal grants program since its inception some 50 years ago. Let me give the House some examples.
Bill C-10 will require the federal government to pay a supplementary amount equivalent to interest when payments in lieu of taxes are unreasonably delayed. It will make the disputes resolution process more accessible to municipal governments and make the objectivity of the disputes advisory committee more apparent.
Bill C-10 will empower the minister to make payments in lieu of taxes on tenanted federal property when these tenants default on their tax obligations. Under the current regime municipal governments often have little recourse when a tenant in a federal property defaults on taxes.
The proposed legislation will also remove limitations on payments in lieu of taxes to first nations governments. It will change the reference in the legislation from the word “grants” to the word “payments” in lieu of taxes. This change will reflect the fact that the government receives valuable direct and indirect services from local governments for its payments in lieu of taxes.
Bill C-10 will expand the definition of federal property contained in the legislation to put the government on a more level playing field with taxable property owners.
In his speech to the Federation of Canadian Municipalities the minister also indicated that a primary goal of the consultation and reform exercise would be to improve the predictability of payments in lieu of taxes. I might add on a personal note, as a former school board chair, that knowing how much money we could budget for each year was a very important issue with which we had great trouble.
Again, several measures in Bill C-10 are designed to achieve this goal. For example, the government has undertaken to make payments according to the municipally established schedule, assuming information from assessment and taxation authorities is received on a timely basis, equivalent to that accorded other taxpayers. As mentioned earlier, the government will pay supplementary amounts equivalent to interest when these payments are delayed.
The government will also work with assessment authorities to attempt to finalize federal property values prior to the close of the assessment roll. This will reduce the number of disputes and improve predictability for municipalities when they set their tax rates and when they set their budgets.
The government will be working with tax appraisal professionals to arrive at an acceptable and balanced means of valuing certain types of property. The government will also clarify the process to be followed when a taxing authority is unwilling or unable to provide a service to federal property which it customarily provides to taxable property.
This is the first comprehensive review of the municipal payments program in 20 years.
Given this fact, I am pleased to inform hon. members that these proposed changes will have a minimal impact on the cost of the program. In fact, the cost increase will amount to less than 1% of a $400 million program, a total of about $1.7 additional millions, which will be distributed among departments.
As elected representatives, we are all mindful of the need to control the cost of government. However, I believe the movement of the federal government toward a more equitable position in relation to taxable property owners will provide more protection from large increases in costs by aligning the government with the common interests of the taxable community.
Let me reiterate that Bill C-10 strengthens the fairness, equity and predictability of federal payments in lieu of taxes. It achieves a balance between ensuring that Canada pays its fair share of the cost of municipal services while protecting the broader interests of all Canadian taxpayers. It deserves the support of hon. members on both sides of the House and I would ask them to join me in supporting the bill.