Mr. Speaker, I appreciate the opportunity to enter into the debate on Bill C-10.
I know from the investigation I have done that this bill comes to us as a result of two years of exhaustive consultations with various parties, most significantly the Federation of Canadian Municipalities which is the organization that represents municipal governments. There were many compelling issues which it had to address. From what I can understand the consultation process went very smoothly and people were well satisfied.
That satisfaction ended rather quickly when the FCM felt quite strongly that this bill was introduced too quickly. The FCM was not given the time to review the contents of Bill C-10 and have further consultation with its members. In other words, we are dealing with this bill now without having given the FCM the opportunity to do a broad consultation with its membership to look at the actual document.
We would hope that after the FCM has had the time to open this document and look at the various clauses that it would meet many of the issues which were identified in the consultation process. I understand that there are many compelling issues because this bill deals with property taxes and we all know how critical property taxes are to municipalities. Taxes are really their only source of revenue. The way property taxes are levied on federal government properties and the way municipalities can collect those taxes is obviously of key and paramount importance to anyone involved in municipal governments.
Property tax is the basis for the major source of revenue for municipal governments. It is the tax base that provides for the provision of municipal services and amenities. It is the capital against which municipal government itself can borrow for various undertakings. Control over property tax and the authority to set taxes from year to year is the only thing which gives municipal councils the ability to function and to flourish and to do their job.
Obviously the FCM took a very keen interest in this issue when the Municipal Grants Act came up for amendment and the consultation period began. It is a mystery as to why we would jeopardize such a co-operative undertaking as the consultation period by bringing the bill forward now without giving the Federation of Canadian Municipalities time to consult one more time. We should have given it time to ask: Is the document the way we want it? Have all the bases been touched? Is the bill going to give satisfaction to the many concerns we have regarding municipal taxation et cetera?
The Municipal Grants Act and various other acts establishing crown corporations provide for federal payments in lieu of taxes. They are called PILTs, payments in lieu of taxes. They are based on local property tax rates and the assessed values of federal properties. That is pretty straightforward. I did not have too much trouble following up to that point. It does get rather complex though. We are dealing with a very complex set of issues when dealing with the assessment of property taxes on properties owned by the federal government.
Most people do not realize that the federal government only began paying property taxes to municipalities in 1950. Until 1950 the federal government did not pay property taxes to municipalities for the properties it owned. It was only after very aggressive lobbying and representation by the Federation of Canadian Municipalities that it undertook and finally succeeded in having the federal government pay its fair share for the properties which it owned within the municipal regions around the country.
The purpose in making PILTs is to ensure that the federal government meets its financial obligations to those municipal governments where federal properties are located. In this way the principles of fairness and equity can be upheld.
That is the goal. That is the objective. In my conversations with the FCM that is all it really wanted, to have the principles of fairness and equity upheld. I am hoping to demonstrate how the federal government breached that noble aspiration. It really failed to be fair and reasonable. The principles of fairness and equity were not upheld in 1992.
In 1992 the federal government paid $426 million on departmental properties to the municipalities, a fair whack of dough by anyone's account. In addition, federal Crown corporations responsible to the treasury board paid another $175 million.
It seemed all would be well with the land and people would be generally satisfied to receive payments to offset their own costs in running their municipalities. However, in the last month of 1992, the federal government imposed a two year freeze on property tax payments. This is a luxury the federal government has. Arbitrarily, out of the blue, the federal government simply said to the municipalities that it did not want to pay any more property taxes because it was in sort of a budget crisis or a deficit situation. As one way to reduce its deficit it said that it would not pay its taxes to them.
Now there is a concept. I wonder how long we would get away with making a statement like that to the federal government. If my personal household finances were in disarray, which in fact they are, I cannot say to the federal government that I will not pay my taxes for two years until I catch up on my other obligations. It would not work.
We can see why the municipalities were very concerned that the federal government had the control, power and authority to arbitrarily and unilaterally announce that it would not pay property taxes any more. When the Municipal Grants Act came up for review there was a great deal of attention paid from across the country.
There was no prior consultation with the Federation of Canadian Municipalities or with any municipal governments, many of which already had their budgets prewritten for 1993. They had already planned on a certain amount of money coming in during 1992 that they were to spend in 1993 when their intergovernmental partner arbitrarily announced it would not give them the money. Understandably it caused some furor across the country.
This freeze came just weeks after the Federation of Canadian Municipalities finished participating in a two year evaluation of the municipal grants program by the department of public works. It had just gone through a long, drawn out consultation with the municipalities. Again, much in the same way it happened here, the federal government arbitrarily stopped the consultations and did something that was entirely negative.
The two year evaluation at that time concluded that federal property tax payments represented the government's fair share of local costs as property owner. The freeze was arbitrary. No concern over levels of property tax payments was expressed in the evaluation.
An important principle behind the federal payment of property taxes is that municipal governments and local ratepayers should not be at a disadvantage by having federal properties on land that could otherwise be taxed by a private sector owner at a better rate.
In other words, it should not be a liability to have federal government buildings within municipalities, but in fact it is if they have to forgo revenue. If they cannot charge the federal government tax at the same mill rate they would be able to charge a private sector company on that land, surely the municipalities are at a real disadvantage.
We must structure the Municipal Grants Act in a way that people do not view having the government department as a liability, especially one which takes up a large area. That is land which could otherwise be taxed at a reasonable rate of return and the municipality could prosper and function.
All properties should be taxed equally regardless of ownership. That is the principle we want to see reflected in Bill C-10. There is some concern within the Canadian Federation of Municipalities that may not be the case. It really has not had time to review Bill C-10 because it just showed up on its doorstep a few days ago and we are debating it in the House of Commons already. There is a great deal of concern out there.
As the largest property owner and taxing authority in the country, the Government of Canada set a dangerous example when it declared a freeze on property tax payments to some 2,200 municipal governments with federal properties in their municipalities.
I know the federal government owns 50,000 buildings across Canada. Actually I have heard a figure as high as 68,000 buildings across Canada. That is an awful lot of property on which it should be paying taxes at a normal mill rate to municipalities. They should celebrate when a government department wants to move to their area. They should not have to be suspect and worried about a net loss by hosting the federal government in their communities.
The FCM, Public Works Canada and the Treasury Board Secretariat formed a joint technical committee on PILTs in the spring of 1993 to look at options for long term improvements in arrangements for federal payment of property taxes and to consider the implementation of the freeze.
Through its political and technical representations, FCM succeeded in having the federal government interpret the freeze on departmental properties such that it met all increases in PILTs during the first year of the freeze. There was some satisfaction. Some very in-depth negotiations went on and some very capable people on the part of the FCM came forward to represent, thankfully, the people who live in the municipalities.
We have to remember that municipal governments are really the level of government most close to us. They take care of our immediate needs in terms of road repair, garbage collection, fire departments and cats stuck in a tree. They are the ones who will help.
It is very important that they are adequately funded because people often question what gets done with the taxes they send to the federal government. Often the federal government is dealing with things that are at a level three steps removed from the ordinary Canadian. It is very important what happens to the PILTs. What the FCM does with its PILTs is very important to Canadians.
The FCM made federal property tax payments a major issue in its call to action during the 1993 election campaign. I dare say it played a big role in the 1993 election campaign.
We all know what happened in 1993. The government of the day was humiliated. It was absolutely dismantled. It went from a couple of hundred seats down to two. It was partly this campaign from municipalities, people who had direct contact with their people, that probably led to that. They were so dissatisfied, in fact so horrified by the arbitrary freeze of their property tax payments, that they were angry at the government of the day in such a way that I believe they did help shape the results of that 1993 election campaign.
As a result of the strong municipal support for FCM's 1993 election campaign on PILTs, the newly elected government committed that all increases on PILTs, on departmental properties, would be met for the second and final year of the freeze. They were getting some satisfaction from the newly elected government after the 1993 election.
They are disappointed now, though, that the newly elected government that took power after 1993 is acting in the same kind of arbitrary way. It is not dealing with the monetary issue, but it is arbitrarily ceasing the very productive consultation process and showing up with the document we call Bill C-10 without giving the FCM a real opportunity to screen it, to test it and to make sure the language is such that it will meet the needs and very real concerns we see in the position paper.
We all know that acts do not get opened for amendment every day. It is very difficult. Once we have an act open for amendment, that is the opportunity to amend any section of the act. We are not limited to the one or two specific reasons the government opened it up. We might want the opportunity to make an amendment to a completely different section. We want to make sure to get it right because we do not get chances every day to amend legislation.
I strongly voice my concern too. Why did the government stop listening? When things were going so well and it looked like some co-operative settlement might be arrived at on what to do with the Municipal Grants Act, why did it then begin to act with such a heavy hand and arbitrary way?
As a result of the strong municipal support for the FCM's campaign, again the newly elected government committed that all increases on PILTs would be met for the second and final year of the freeze. The freeze on crown corporations was lifted outright for the second year. Moreover, the Minister of Public Works and Government Services and the President of the Treasury Board agreed in 1995 to negotiations with the FCM on longstanding municipal concerns respecting laws and regulations governing PILTs.
I will summarize what we have seen as the real concern through our research on this issue. The real concern is that there should be rules in place in the Municipal Grants Act to ensure that neither party can arbitrarily alter the terms and conditions of the relationship by simply backing out, as we saw in 1992. We also want to make sure the assessment on government buildings is no different from the assessment on private sector buildings.
The predictable consequence of that is that no municipality would want a government department to set up shop in its area because it would be forgoing revenue. Why on earth would a municipality want all that space occupied by a freeloader, one might say? I do not think any responsible municipal government would encourage that.
The rules governing federal payments of property taxes have long been an issue in relations between federal and municipal governments. There is a long history that goes back to 1950 when the federal government did not pay any taxes at all on its buildings. It was only after quite a brouhaha that the FCM got satisfaction and the federal government started paying any taxes whatsoever.
Under the Municipal Grants Act the government is able to set its own assessed values on properties and pay lower property taxes. That is a key point that we would like to see addressed in Bill C-10. The government should not be able to arbitrarily say what it will pay per year for occupying a couple of acres of land. That is a big brother type approach that is outdated and obsolete. It does not speak well of the type of intergovernmental relations we would want to see.
Currently federal reviews of property values frequently lead to the retroactive reduction of PILTs, causing severe financial disruption to municipal governments. I use the example of 1992 where 2,200 municipalities already had their budgets set for 1993 only to lose their main source of revenue, the federal government tax transfer or the payment of property taxes from the federal government to the municipalities. We cannot have that.
The only recourse of the municipalities is to the municipal grants review committee comprised of appointees of the minister. If they have a grievance about the way property tax values were assessed, their only avenue of recourse is to a group of the minister's own appointees. That is not in the interest of basic fairness or natural justice either. I cannot see how that is fair. I know that is one of the issues that is addressed in Bill C-10. They want an appeals board or an advisory committee that will be structured in a more fair and democratic way.
One thing I will certainly say about the Federation of Canadian Municipalities is that it is nothing if not democratic. It has great consultation with its people. It does not move forward on an issue until it has done broad consultation across the country. It truly builds consensus on issues before it makes an announcement. Hence its frustration that it is not able to have that level of consultation about Bill C-10.
After heavy and long drawn out negotiations in 1995 there was a consensus report of the joint technical committee on PILTs to which I referred. Many of the issues I started my remarks with stem from that report, such as the critical importance of having a guaranteed stream of taxation revenue that they do not have to worry about being arbitrarily interrupted by one party and the fact that property taxes should be set at the same level for government buildings as they are for private sector buildings to avoid the bizarre spectre of losing revenue by having a government department set up shop in a community.
With those few reservations and criticisms our party is reviewing Bill C-10 with the guidance and direction of the Federation of Canadian Municipalities. If it is satisfied with the bill we will do what we can to help get it through to give the federation the security it wants on at least the issues addressed in Bill C-10.