Debates of Feb. 8th, 1999

Points Of Order

[The Speaker]

I am ready to make a ruling on the point of order raised on December 8, 1998 by the hon. member for Delta—South Richmond concerning Questions on the Order Paper.

First of all I want to thank the member for raising the matter. I also want to acknowledge the contributions made by the hon. House leader of the opposition, the hon. member for Winnipeg—Transcona, as well as the Parliamentary Secretary to the Leader of the Government in the House.

If I may, I wish to express my appreciation to the Deputy Chairman of Committees of the Whole who acted on my behalf to deal with the point of order raised at the time.

In his submission the hon. member for Delta—South Richmond presented arguments concerning three separate issues relating to Questions on the Order Paper. These are: first, the length of the questions; second, the number of questions allowed and the length of time taken by the government to answer the questions; and third, as the member stated, “failure to receive factual answers”.

The hon. member brought up this matter as a point of order. For the benefit of all members and the listening public, a point of order is a question raised with respect to any departure from the standing orders or customary procedures either in debate or in the conduct of the House or committee business. In this case the member alleges that Standing Order 39 has not been properly complied with.

Standing Order 39 has several components. Members may place up to four questions on the Order Paper and may request that the government provide a response within 45 days. In addition, this Standing Order gives the Clerk, acting for the Speaker, the authority to ensure that questions are concise and coherent and to order that certain questions be posed separately.

I will now address each of the three distinct issues submitted by the hon. member.

As the first point of his presentation, the hon. member alleged that his written question submitted on October 28 was refused because it was too lengthy. He argued that the standing orders do not provide the Clerk with any guidance on the division of questions and therefore there was no authority to divide his question. The member also reflected on the manner in which the question was handled by those responsible for the order paper.

Before I give consideration to the procedural dimension of this particular aspect of the point of order, I must take issue with the way in which the member expressed his frustration with the handling of his question. As so eloquently stated by my colleague the Deputy Chairman of the Committees of the Whole:

The people working for parliament work for parliament. They do not work for one party or another. They have a specific job that is mandated to them to make sure that the questions are in a form which may be responded to.

I want to assure all members that the staff of the House of Commons aim for the highest level of competence and professionalism in the services they provide to members in support of their parliamentary activities. Most importantly, I must attest to the impartiality of the Clerk's staff. As I am sure all hon. members do, I have complete confidence in these employees and the way in which they discharge the important duties they have been assigned.

That being said, I will now turn to the procedural issue at hand, the dividing of a written question. Standing Order 39(4) limits to four the number of questions a member may have on the order paper at any one time. As pointed out by the hon. member for Winnipeg—Transcona, this rule has its origins in the 1985 report of the Special Committee on Reform of the House of Commons, which is commonly known as the McGrath committee.

In return, there was a provision that the government would, upon request, reply within 45 days. The committee expressed concern that members might try to circumvent the limit of four by submitting questions containing numerous subquestions. The McGrath committee proposed that the Clerk should have the authority to reject outright or to split into separate and distinct questions those that contain unrelated subquestions.

I concur with my predecessor, Speaker Fraser, when he ruled on June 14, 1989, that although not explicitly outlined in the standing orders the Clerk must apply more rigorously the provisions of Standing Order 39(2) and have the authority to order certain questions to be posed separately, as was recommended in the McGrath report.

I have reviewed the question as originally submitted on October 28 by the hon. member for Delta—South Richmond and have found that proper procedures were followed and that the recommendations to divide his question were made according to Standing Order 39(2) and based on the precedents of this place.

The member contended that the length of his question prompted its suggested division. In my opinion this recommendation to divide the question was not an arbitrary one. The issue was not the length of the question but rather the fact that it contained unrelated subquestions. The subquestions may be linked from the member's point of view but are in reality separate and distinct questions.

As with any interpretation of rules there is unavoidably an element of judgment involved. In this case judgment was properly exercised and, if anything, a certain latitude was given to the member.

Guided by the many years of practice in the application of this standing order dealing with the conciseness and coherence of order paper questions, House officials are always willing to assist members with the editing of their questions and to discuss with them or their staff any issue that may arise.

I will now proceed to the second issue raised by the hon. member's point of order: the number of questions allowed and the length of time taken by the government to answer the questions.

The member stated that, by not answering his questions within the 45 days allotted by the Standing Orders, the government prevented him from asking questions due to the limit of four, and that his ability to ask a further question was thereby undermined.

The member raises a valid concern, one that has been raised many times in the past. However, the Standing Orders do not require the government to provide a response within 45 days. While the Chair sympathizes with the member, previous Speakers have ruled that there is no particular sanction that the Chair can use to force the government to meet this deadline. I refer members to the Debates of May 18, 1989, at page 1891, where Speaker Fraser indicated that:

—I cannot order the government to produce those documents or answers within 45 days—

Having said that, let me remind all members that there must be a balance between the requirements of the members asking the questions and the government which provides the answers. As I had remarked in my ruling on February 9, 1995, found in the Debates d at page 9426:

It is incumbent upon all those involved on both sides of the process ... to ensure that every care is taken so that these exchanges remain as fruitful and as useful as possible.

I would expect that the government would make every effort to respond within 45 days if so requested and that members would craft their questions in a manner to make this as likely as possible.

This having been said, the onus rests with the House to examine this rule and to make changes if it so chooses.

Moving now to the third item raised by the hon. member for Delta—South Richmond: the “failure to receive factual answers”. In particular, the member expressed dissatisfaction with the response provided by the government to his Question No. 91. This matter is essentially identical to the substance of the question of privilege he raised on May 27, 1998.

At that time, I had quoted from my previously mentioned ruling of February 9, 1995, in which I stated that:

There are no provisions in the Standing Orders for the Speaker to review government responses to questions posed.

I then also quoted from my predecessor, Speaker Sauvé, who stated on February 28, 1983, at page 23278 of the Debates :

It is not the role of the Chair to determine whether or not the contents of documents tabled in the House are accurate.

To summarize the Chair's position on the three issues raised by the member, I find first that proper procedure was followed in the request made to the member to divide his question of October 28. Second, I also find that while the 45 day limit causes problems for both sides of the House, the Chair has no authority to intervene in this area and, third, the Chair cannot comment on the quality or the factual content of the answers provided by the government to order paper questions.

I would like to conclude by saying that this is not the first time the member for Delta—South Richmond has raised this issue, not only during this session but also in the last parliament. It is obviously a matter he feels strongly about as evidenced by his well researched submission on December 8.

Members will recall that he alluded to the parliamentary practices of the United Kingdom and Australia with respect to written questions. Although I do not think it is relevant to the case he brought before the Chair, it would certainly be an area that may be of interest to the Standing Committee on Procedure and House Affairs. As I mentioned previously, the Chair can only enforce the standing orders as they have been adopted by the House. However, pursuant to Standing Order 108 it is within the mandate of the procedure committee to review and report on the standing orders, procedure and practice in the House and its committees.

The member has the option of voicing his concern either through his party's leader in the House, who is a member of the procedure committee, or to write directly to the chair of the committee.

Finally, I would like to take this opportunity to remind the government that it is responsible for the quality and accuracy of the answers it provides to Order Paper questions. I would also like to point out that the government is free to inform members if the 45-day deadline will not be complied with—and I am inclined to encourage this approach considering it may reduce interventions that sometimes take up valuable time away from the business of the House. It would also give members the option to pursue other avenues to obtain the information they seek.

I thank the hon. member for bringing this matter to the attention of the House.

[Chuck Strahl, Reform, Fraser Valley, BC]

Mr. Speaker, I appreciate your ruling on this issue. I have a comment and perhaps a question to put to the House. The Standing Committee on Procedure and House Affairs has been advised that our party would like this issue raised and dealt with in a review of the standing orders. That is as it should be. We will deal with it there and hopefully we can come to you with some proposals to solve this question.

Mr. Speaker, with respect to the other issue, you have ruled that the government needs some leeway in the 45 day period that the government has to respond to written questions. It has been a traditional ruling of the Chair that the government needs some leeway since 45 days sometimes is not long enough. If that is the case, if there is some leeway on that side, what is the member who finds himself blocked from asking another question to do? If the member is allowed four questions on the order paper and they stretch off into the distance at an unknown date, then he is blocked from asking future questions.

There is leeway on the government side with the 45 days. Mr. Speaker, as you have said and as other Speakers have ruled, there needs to be some leeway, but there is no leeway on the member's side. The member has four questions and four it shall remain. His conundrum is that he needs answers to those questions in order to do his work as a parliamentarian. He needs the fodder to answer questions, to critique the government and to put forward his own policy initiatives, but he is stopped at four questions because that is an absolute number.

Would there be some consideration when the 45 days is extended for the government side that the member would be allowed to submit another question? If it is good for the goose is it also good for the gander?

[The Speaker]

I appreciate the comment made by the hon. member. From my perspective that is an avenue which should be pursued in this fashion. He does not of course question my ruling, but he is asking for some guidance.

I would suggest to him, with all due respect, that the way he and the hon. member have chosen to rectify the matter, with respect to the first part of his comments, might be one that he would also consider using for the question he poses to the Chair. The Chair is not in a position to make rules standing on his feet, but the Chair would always take direction from the committee on procedure and House affairs. I encourage the hon. whip of the Reform Party and the hon. member for Delta—South Richmond to pursue this as an avenue for this House.

[John Cummins, Reform, Delta—South Richmond, BC]

Mr. Speaker, I rise on a point of order. As in the discussion I had with you this morning, my intention was not to question the impartiality of the staff of the House of Commons. My intention was merely to point out the difficulty they face in dealing with a question such as the one I submitted when the rules are so vague.

I appreciate your comments this morning, but I point out that the vagueness is still a problem. However, you have suggested a big picture solution and we will certainly take that under advisement. I thank you for your ruling.

[The Speaker]

I thank the hon. member for his comments with regard to the quality and the impartiality of the work of our clerks, which is never in question and should never be in question in the House. I thank him for that clarification.

It being 11.19 a.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

The House resumed from November 4, 1998, consideration of the motion.

Transit Passes

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am pleased to rise in the House of Commons this morning to support Motion No. 360 which calls for employer provided transit passes to be an income tax exempt benefit.

I would like to congratulate my colleague, the member of parliament for Kamloops, Thompson and Highland Valleys, who has moved this motion and who has done an enormous amount of work, not only with members of parliament from other parties, but also with a number of municipalities, trade unions, environmentalists and businesses across this country to make sure that we have in the Income Tax Act a fair opportunity for working people to provide and receive an income tax benefit for using mass transit.

Before getting into who supports this idea and some of the real and significant benefits, I want to go over the reasons for which I support Motion No. 360.

First, it affects pollution in this country. It affects the health of Canadians. It deals with the congestion problem in the cities of Canada. It is a social equity issue, an environmental issue and an economic issue. I want to say a few words about each of those headings if I might.

We all pay tax on our income. Some of the benefits we receive from our employer must also be declared as income and are therefore taxable. Employer provided parking and employer provided transit passes are both considered taxable under the current federal Income Tax Act.

However, Revenue Canada's interpretation of this act provides tax preferences allowing most employees to receive their free parking income tax free. This is an incentive for commuters to drive and represents a significant loss of income tax revenue, but this is a bias in my view for those who drive automobiles and against those who use mass transit.

One way to address this unfair bias is to provide a tax exemption to public transit users. This provides equity for non-drivers as well as motivation for drivers to switch to a mode of transportation with lower environmental costs and lower costs to the taxpayer in terms of the maintaining of roads, health care and so on. I believe it is a rare opportunity for the federal government to effect public policy at the local level.

In the United States, the opportunity for employers to provide their employees with an income tax free transit subsidy became available under the Deficit Reduction Act of 1984 and the Tax Reform Act of 1986.

On average, transit expenditures among recipients increased by 23%. With a 31% increase in transit use by participating San Francisco employees, an estimated 17 million vehicle miles were removed from their roads, 61 million tons of pollutants were avoided and $1.6 million of new transit revenue was generated. This is an example of the benefit of providing transit passes to employees as an income tax exempt benefit.

With respect to Canada's commitment to greenhouse gas reductions under the Kyoto protocol, Canada has committed to reduce its greenhouse gas emissions to 6% below 1990 levels by 2012. Transportation is the largest single sector source of Canada's carbon emissions, at 32%, accounting for 30% of energy used and 65% of petroleum consumed. Half of these emissions are produced by cars and light trucks in cities where public transit is available. Transportation emissions are expected to rise 52%, if this major issue is not addressed, between 1991 and the year 2020.

We also have an interesting issue with respect to transportation and greenhouse gases. One of the greatest economic and environmental challenges facing the world is the control of CO2 and other greenhouse gases because they threaten to destabilize the climate and they lead to global warming. We are seeing many examples of that around the world.

In Canada we have seen the rising sea level. We have seen temperature change in certain regions of our country. We have seen unprecedented drought cycles and extreme weather events, such as floods, fires, ice storms and so on which, cause human displacement. They cause food shortages and losses exceeding the financial capabilities of the insurance industry.

This information was provided by the National Round Table on the Environment and the Economy in its strategy for sustainable transportation in Ontario, which it prepared in 1995.

With respect to health, whenever we travel to cities like Vancouver, Toronto, Victoria, Halifax and Winnipeg we see more and more smog, which is ground level ozone. It has increased by about 20% over the last decade. Medical research shows that smog is contributing to increased incidents of respiratory illness, higher physician emergency room visits and increased mortality.

This is a very significant development in light of the fact that our health care has been cut back by the Liberal government by $6 billion a year. When people are being subjected to broader ill environments and broader risks to their health, they will be ill in greater numbers, requiring health care, and our health care has been taken away by the federal government to the tune of $6 billion a year.

Support for this motion might encourage the Liberal government to provide some consideration which would be helpful to working people.

We can talk about traffic congestion and how it increases travel time, parking demand, vehicle costs and wear and tear on the roads. Two forty-foot buses carrying 130 people occupy about 80 feet of a single lane, but to carry the same number of people by car requires an extra 1,500 feet of lane.

If we have 130 people in cars, versus 130 people in two buses, we will see the wear and tear on our roads, an increase in smog and pollution and we will see all sorts of negative impacts upon Canadians in this country. We believe this is another reason to support the motion.

We can talk about social inequity. Generational poverty increases when people have limited access to education and work due to mobility barriers. Adequate mobility is essential for people to participate in society as community members, producers and consumers. Public transit provides safe, affordable, basic mobility for those persons without an alternative, including transit-dependent students, lower income workers, seniors and other persons who either cannot afford or choose not to own an automobile.

Converting to public transit reduces the costs associated with the impacts of pollution, traffic congestion and the other things I have mentioned. Public transit also provides substantial regional economic development benefits by channelling transportation dollars back into the community.

We see many reasons to support such a motion. There are also many individuals and organizations supporting this particular motion. The Federation of Urban Municipalities, which is our national organization representing municipal organizations across this country, supports the motion. In my province of Saskatchewan, the city of Saskatoon, the town of Langdon, the town of Martensville and the city of Regina support this particular motion for all of the reasons I mentioned.

We also have quite a lengthy list of organizations from across the country which support such an initiative. They include: The Canadian Lung Association, the Climate Change Task Force group of the National Air Issues Co-ordination Committee, the David Suzuki Foundation, the Ontario Lung Association, Physicians for Global Survival, Pollution Probe, the Saskatchewan Lung Association, the Saskatoon Environmental Society, the Sierra Club of Canada and various trade unions and other governments.

I would like to ask members to consider supporting this motion. It is votable. It will mean better access to transit by working people. Working people, as members know, who make $40,000 a year or less do not have a lot of options for tax deductions. We do not have a lot of support in our tax system to help them get to their places of work. I think in a country like Canada, which has such an expansive geography, mass transit is the only way to go.

The last example I give before I conclude my remarks is the example of grain movement in western Canada. We have seen passenger trains being pulled off the rails. Now they are thinking of closing a lot of the rail lines in western Canada that move grain. They are using trucks instead of boxcars. That is having an additional effect on our environment because more trucks on the road affect not just the environment but our roads.

I ask all members to support this motion which my colleague in the NDP has so thoroughly researched and presented to the House of Commons.

[Maud Debien, Bloc, Laval East, QC]

Mr. Speaker, I too wish to speak to Motion M-360, introduced by our colleague from Kamloops, Thompson and Highland Valleys.

The motion reads as follows:

That, in the opinion of this House, the government should consider making employer-provided transit passes an income tax-exempt benefit.

The Bloc Quebecois will be supporting this motion. I believe it is our duty as legislators to adopt policies which make it possible to attain objectives of public interest which are of vital importance.

If the government accepted tax exemption for employer-provided transit passes, it would be exhibiting fairness, encouraging public transit, and effectively combatting pollution.

At the moment, we have a situation of flagrant inequity: employees who take public transit and receive bus passes from their employers are deemed to have received a taxable benefit. To put it clearly, this benefit is considered to be income, and therefore taxable. On the other hand, according to a Revenue Canada interpretation, those whose employer provides parking can benefit from a tax exemption. There seems to me, therefore, to be a problem of equity here.

Responsible public policy dictates that we must stop encouraging automobile use over public transit. Public transit is safer, more economical, less polluting and, most importantly, accessible to more people. They are thus perhaps more humane, certainly more cost-effective, healthier and more democratic.

When he introduced the motion, the hon. member for Kamloops. Thompson and Highland Valleys gave a detailed explanation of how the Americans implemented this system. There is no lack of precedent, therefore, on which we can build. The benefits to public transit in the U.S.A. are undeniable. Everywhere that employees were able to take advantage of this measure there was an increase in the use of public transit, and major improvements to infrastructures and services to the population.

It has become obvious in the greater Montreal area and other areas in Quebec and Canada that, when services are cut, there are fewer users. And when the demand drops, bus routes are removed. This creates a vicious circle of the worst kind. On the other hand, whenever the demand for public transit is encouraged, a virtuous circle is created, which promotes the expansion of public services.

It was no accident that the three major urban transit companies in Quebec, namely the Société de transport de la Communauté urbaine de Montréal, Société de transport de Laval and Société de transport de la rive sud de Montréal, as well as most if not all their unions and employees are asking that we support a progressive and innovative policy. In addition, it seems obvious that promoting public transit is also a matter of social fairness.

As our colleagues so aptly pointed out, and I quote:

It is unfair that low-income families have been left with less access to educational and job opportunities simply because they do not own a vehicle.

That is to say nothing of the environmental aspect. According to a Transport Canada 3000 report, it is estimated that transit passes could help reduce automobile travel by as much as 300 million kilometres over 10 years.

This would result in lower noise levels, fewer traffic jams and accidents, less congestion in parking areas as well as tremendous savings in terms of fuel and other non-renewable resources.

Finally, if approved, this proposal would assist in fulfilling Canada's Kyoto commitments. For the record, I will go over them briefly.

The Kyoto protocol calls for an average 5.2% reduction of greenhouse emissions in all industrialized countries between 2008 and 2012. This means that Canada will have to reduce its 1990 levels of emissions by 6 per cent. However, the federal government has been dragging its feet regarding this issue. It has long put off any concrete measure to help fight climate change, which is a result of the greenhouse effect.

Following the signing of the Kyoto protocol, the federal government proposed the setting up of task forces, where some 450 experts would try to devise a strategy. While the 1998 budget provided for $150 million over a three-year period, it was only on October 19 that the first initiatives were announced, and that a Canadian strategy finally seemed to be taking shape, following the Kyoto protocol.

The government will spend millions to correct this environmental mess. Therefore, some may think it will surely refuse to make transit passes an income tax-exempt benefit, since this measure would deprive the government of valuable tax revenues. This is not the case. Indeed, how do these revenues compare with the savings in the health sector and in the budgets for the construction and renovation of our infrastructures, not to mention the incentives related to employment and distributive justice?

Why does the government not cut the billions of dollars that it has been giving for years to the oil and nuclear industries? Oil consumption is the primary cause of greenhouse gases, that scourge that those in Kyoto said they wanted to fight.

As for nuclear technology, it creates more problems than it solves. For example, CANDU reactors are neither efficient nor profitable and they pose a major threat to human safety and international security, since it is possible to divert that technology and use it for military purposes. Just remember, barely a few months ago, when the Indo-Pakistani crisis brought the threat of a nuclear conflict to the whole world.

Some might accuse me of exaggerating in establishing a link between bus passes and nuclear threat. Not so, considering that cumulative short sighted policies have often led our world on the brink of disaster during the 20th century.

We are moving step by step on the road to a better world. With the 21st century just months away, let us take a measure that will promote fairness, a healthier environment, sustainable development and a more just society.

The motion of the member for Kamloops—Thompson and Highland Valleys seeks to do that, and we support it.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I congratulate the member for Kamloops, Thompson and Highland Valleys for putting forward this motion. The motion certainly gives us an opportunity to put on the table various views concerning the subject. It allows us to talk in general terms about the commitment we all have to the environment to ensure that it continues to be one which we cherish and one which we will continually take steps to improve.

The government recognizes that encouraging the use of public transportation is important. Other members have raised some concerns with respect to the measure, the fairness and the efficiency.

We have to ensure before we commit the government's scarce resources that any measures taken represent an efficient use of public funds. When we look at this particular motion, the bulk of tax assistance would accrue to individuals already using mass transportation. Although we have heard various numbers quoted today in the debate, the incremental increase in the number of transit users is expected to be small compared to the existing users. One could argue that the proposed measure would not be the most cost effective way to reduce greenhouse gas emissions.

We should also note that the tax system is not always the most efficient and effective mechanism for accomplishing various policy objectives. We all know that all levels of government have a variety of policy tools at their disposal and they must be careful to use each one properly.

We must be clear that the government recognizes the importance of sustainable development in all its aspects including its impact on climate change. The government is committed to pursuing the principle of long term sustainability across a wide spectrum of government activities. To provide leadership in this important area the federal government has required all of its departments to prepare sustainable development strategies for tabling in parliament. Federal departments are expected to update these strategies every three years and to provide annual progress reports on implementing them.

The Department of Finance which is responsible for tax policy had its sustainable development strategy tabled in parliament on December 10, 1997. The department recognizes that closer integration of economic and environmental goals is an important objective and has taken concrete steps toward furthering this objective in every budget since 1994.

Last year's budget provided an additional $50 million annually for three years. The funds will help lay a strong foundation including developing a national implementation strategy, carrying out public education, encouraging early action by Canadians, identifying best practices and mechanisms such as emissions trading, all with the objective of reducing the impact of climate change.

To co-ordinate efforts in this regard the Government of Canada announced the establishment of a climate change secretariat that will support the efforts of the ministers and will work with the provinces and stakeholders to develop the national implementation strategy to honour our Kyoto commitments to reduce greenhouse gas emissions. As part of this process a transportation issue table has been created to determine the most appropriate measures to reduce greenhouse gas emissions in the transportation sector. The table will examine the merit of the proposed tax treatment of transit passes along with other available options and will make recommendations to governments.

I want to thank the hon. member for bringing this important issue to our attention. I believe that the measure will be reviewed as part of the national process. It would therefore be premature to take any action in this regard immediately. I am sure I am like all members of the House who would like to make gains against greenhouse gas emissions, but I would also like to take a comprehensive approach, an approach that is all inclusive.

Governments in the past have sometimes taken a piecemeal approach to challenges that we face. We know the results. We have made progress in a number of areas. But we know that when we approach an issue from a comprehensive and all inclusive perspective, the results and the outcomes are ones that we are proud of and that we can live with.

The issue of greenhouse gas emissions is global. We have a global commitment to deal with it. We will deal with this issue in a collective fashion. It has been stated by other speakers that this initiative alone may not provide the results we are looking for.

It is questionable whether we will see an increase in ridership. This particular motion solely addresses the aspect of making the employer provided transit passes an income tax exempt benefit.

I believe the member for Regina—Lumsden—Lake Centre made reference to making this tax deductible. There is a difference. In this motion we are only focusing on those individuals who are employed. There are individuals who are most in need like seniors who have benefits that local municipalities provide by offering them reduced rates for public transportation.

The issue should be approached from a much wider spectrum. Also it is being suggested at a time when there is a more comprehensive approach being taken by the government, by the stakeholders and by all the partners.

I know members who have engaged in this debate have talked about the support that is out there among the municipalities and environmental groups. The government is supportive of initiatives that will deal with greenhouse gas emissions. However, we must be cautious in ensuring that whatever we do we do it in a manner that will be efficient and will make best use of taxpayers dollars.

By moving on the motion as it is presently worded we would not be achieving our objectives in Kyoto and our objectives with respect to the tax assistance that we may be able to provide. With that being said, I would urge hon. members not to support the motion.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I too commend the hon. member from Kamloops for bringing the issue forward in this motion.

The fact is that we have made commitments in Kyoto. Global warming is real. It is a very important issue, one that all Canadians and certainly members of the House from all parties should be extremely concerned about.

The parliamentary secretary spoke about the need for a plan and that the federal government would work toward developing a plan. He was also very clear in terms of his opposition to the motion. Where he was not so clear was what in fact was the government's plan to deal with this extraordinarily important issue.

The government is very good at pinpointing a particular initiative such as the one suggested by the member from Kamloops as being inappropriate or wrong headed, but the government has not been as good in actually providing some level of leadership or strong consultation with the provinces and the municipalities to develop a strategy that addresses this very real issue.

Initially when I saw the motion I had some concerns. I typically have concerns about a Pavlovian type tax policy that encourages some types of behaviours and discourages others. We already have a tax code in Canada that is far too complicated. The logical corollary of the motion, for instance, is if people were walking to work we might remove taxes on shoes. I am not being facetious, but we get into a very murky area when we talk about complicating a tax code that is already far too complex.

That being the case, while I should have perhaps been happy to hear the parliamentary secretary speak about simplifying the tax code—and again his government has done nothing but complicate the tax code—our party continues to stand for and believe in broadly based tax relief, increasing the basic personal exemption, reindexing the tax brackets, and eliminating and phasing out the surtaxes that are currently driving some of our best and brightest elsewhere, the types of tax policies that will benefit all Canadians not just now but as we enter the 21st century.

Our party is supporting the motion. One of the reasons we will be supporting it, despite our concerns about an increasingly complicated tax code, is that the environment is a very unique issue. The environment and economics are inextricably linked. For far too long we have in a lot of jurisdictions in the country dealt with the environment separately from economics. In fact those people typically interested in economics discount environmental arguments and vice versa. In fact we cannot do that. It is not appropriate to do that and it is not logical.

It is very important at the time of the production of an environmental externality, that is emissions, that the cost of that externality be internalized into the cost of the consumer who is utilizing the service or the product which is causing that environmental externality. It is very important that there be a direct cost for environmentally unsound behaviour and a benefit for environmentally positive behaviour.

It is very difficult for us in our day to day lives to see the benefit of sound environmental actions on a micro level because we cannot tie it directly to our quality of life in the short term. Global warming for many of us is something that still seems fairly esoteric and arcane. It is important that somehow we can link in a very direct way people's behaviours: negative behaviours to a negative policy in this case or positive behaviours, that is taking public transit, to a positive treatment under the tax code.

I lived in New York for several years. During that period the degree to which New Yorkers relied on public transit was amazing to me. In north New Jersey and New York City there are about 10 million people living in a very small land mass. When we consider how efficiently that city operates in terms of its public transit system, probably from an environmental perspective the low impact the citizenry of New York has in terms of global warming compared to other centres that are more spread out, it is almost a miracle. We could look at cities like Los Angeles, Atlanta, Toronto and such cities that were built around the suburbs and urban sprawl. Cities like New York rely on public transit and were designed very well from the beginning to accommodate public transit and ultimately have become in my opinion examples of environmentally sound urban planning.

Perhaps that is one area in which the federal government should be working more closely and playing a leadership role. Part of our Kyoto commitment could be working with provinces and municipalities in terms of urban planning and the types of initiatives that have been successful globally. Linking environmental policy to day to day action is very important. We need to explore this issue further.

I know the Reform Party has spoken against the motion but we are supporting it. We also recognize that there are other examples where tax policies have been suggested by Reform members. For instance, the mortgage interest deductibility was supported by and large by the Reform caucus. There are examples where the Reform Party will recognize the importance of some types of behaviours but not necessarily other types of policies.

I would argue that certainly home ownership is as extraordinarily important as a clean environment, an environment that is sustainable and is there for future generations of Canadians. One thing Canada has that we must covet and protect is our relatively clean environment. We are recognized around the world for our relatively pristine surroundings and environment. It is something we cannot take for granted.

If we look at the demographics and the fact that people are moving into the cities, that urban centres are growing, this is the type of policy we have to explore very carefully. It should not be summarily discounted by the government as a bad idea until it has a set of policies to address these very important issues.

It is also important to recognize and commend the New Democrats for doing something that I had not expected them to do and that is to suggest a tax cut. Perhaps we should recognize that important evolution. If we support this private member's motion on providing a tax benefit for taking public transit, in the future perhaps we could engage the New Democrats in a discussion about their supporting our belief of tax cuts for everybody in Canada. Clearly that is something we all need. It would be sound not just for the environment but for all aspects of our quality of life.

[The Speaker]

I understand the hon. member for Leeds—Grenville will be splitting his time with the hon. member for Davenport. Is that correct?

[Joe Jordan, Liberal, Leeds—Grenville, ON]

Yes, Mr. Speaker. I appreciate the chance to discuss the motion before us concerning the tax status of employer provided transit passes.

On the surface this initiative would seem destined to digress into what is an all too familiar confrontation, to which the previous speaker alluded, between the environment and the economy. Framed in those narrow terms I know how that story will end, but I honestly feel that this issue has the potential to encourage needed debate on a number of important issues. We have heard that already this morning in previous speeches.

The first issue debate around this point raises is the notion of costs. I have seen a number of reports both in Canada and the United States that outline the financial impacts of a whole variety of transit benefit programs. I was struck by what was not included in the cost benefit analysis. Things such as the health costs associated with increasingly poor air quality are not included in the calculation of whether this is a good or bad idea.

There are remedial costs associated with cleaning up the air. We will have to do it sooner or later and somebody will have to pay for it. There is lost productivity associated with traffic gridlock. One of the previous speakers used a calculation that 100 cars equal two buses. If we can put more people on buses then people will spend less time in traffic jams and more time engaged in the productive activities they are hired and paid to do. There are the costs associated with the construction and maintenance of the infrastructure needed to support the number of cars on the highways and bridges.

I am not saying for a minute that including these costs would cause the equation to lean in one direction or another, but I am saying they are rather conspicuous by their absence. The fact that some of these costs are difficult to quantify should not be rationale for ignoring them completely.

These types of costs transcend not only ministries in the federal government. They also transcend levels of government. It is important to remember there is only one taxpayer in the country. We are fooling ourselves if we think that over time the costs we are not calculating will simply go away. The Sydney Tar Ponds are a $2 billion shrine to that kind of nonsensical thinking. Sooner or later these costs have to be captured and have to be paid.

To make matters worse, we are not only passing these costs on to taxpayers that had no share in any benefits these initiatives might have realized, but we are in some cases passing these costs on to our children, our grandchildren and our great-grandchildren. Those kinds of debts and leaving that kind of legacy of debt are extremely hard to justify on any level.

The challenge we face is to meet our own needs without compromising the capacity of future generations to meet their needs. To that end I think government has a definite role in the identification, the calculation and the verification of the full costs and benefits of activities and in the development of policies that allocate these costs appropriately.

The impact on the natural and human resources of the nation need to be taken into account for any decisions we make. This motion also brings into question the fundamental concept of what is the role of the tax system. To put it bluntly this initiative goes against the grain. Not only would a tax exemption reduce tax revenues to the government, but increased mass transit ridership would also reduce gasoline sales, a commodity that is also a source of tax revenue. It does illustrate the role the tax system can play in encouraging certain behaviours.

Governments seem to spend a great deal of time and effort developing regulatory regimes and trying to reinforce corporate behaviours that run directly counter to what the tax system encourages them to do. Not only are command and control approaches expensive. They are all too often totally ineffective.

We need to look at fiscal policies that encourage sustainable behaviours. Spending in environmental areas should look and act like investments, not costs.

Ideally we need a tax system that places taxes on the things we want less of and exemptions for activities that result in the things we want more of. This motion is certainly attempting to do just that.

I congratulate the hon. member for bringing this motion to the House. I draw the attention of all members to the wording of the motion; that we consider this action is hardly radical. I would be the first to admit that this action is not without repercussions. The discussion which would result in a detailed examination of those factors would not only be a valuable exercise in and of itself, but it would also serve to send a very clear and positive message to Canadians that we not only understand but are prepared to address the challenges we face as we shift to support the core and non-partisan value of sustainability.

[Charles Caccia, Liberal, Davenport, ON]

Madam Speaker, the recommendation of the member for Kamloops, Thompson and Highland Valleys is praiseworthy. It has been proposed by the Federation of Canadian Municipalities each year since 1990, imagine. It has also been made in two reports of the Standing Committee on the Environment and Sustainable Development.

It was first proposed in the 1995 report “Keeping a Promise: Towards a Sustainable Budget”. We heard a number of witnesses on the question of transit passes which was one topic of discussion before the committee. Witnesses noted that levelling the playing field in the transportation sector by making transit passes a tax free benefit would encourage employees to use public transit. The result would be reduced energy consumption, decreased atmospheric pollution and reduced traffic congestion.

In 1997 the same committee produced the report “Kyoto and Beyond: Meeting the Climate Change Challenge”. One recommendation of the committee was to let Finance Canada conduct a comprehensive study of the fiscal and regulatory tools available to the federal government to encourage a shift to public transit, including the provision that employer provided transit passes be considered a tax free benefit. So far this recommendation seems to have been ignored.

In 1998 a request to the finance department to provide an accounting of the total value of benefits currently provided through employer provided parking was referred to the Department of National Revenue. However, Revenue Canada was unable to provide the data. In other words we are in the unfortunate position of not knowing how many people take advantage of tax free parking benefits.

Nevertheless both the Department of Finance and Revenue Canada argue that by offering the benefit to other commuters there is a negative impact on the tax base, as we heard earlier from the distinguished parliamentary secretary.

We do know that social, environmental and equity benefits would arise from implementing the transit pass tax exemption. We also know there is widespread support for the measure, as indicated already by other members. The Amalgamated Transit Union has organized a campaign. Support comes from sources so diverse as the city of Saskatoon, the Ontario Coalition of Senior Citizens, Pollution Probe, the Lung Association of Canada, the Canadian Labour Congress, the National Round Table on the Environment and the Economy, the city of Toronto, and the Regional Municipality of Ottawa-Carleton.

This motion is well timed and deserves the support of this House and the Government of Canada, considering the commitment made in Kyoto by the Government of Canada. The parliamentary secretary's arguments are worth examining but the basic thrust of this motion reflects widespread support across the country. Therefore we must conclude it is time for Ottawa to act.

[Rahim Jaffer, Reform, Edmonton Strathcona, AB]

Madam Speaker, the motion before us calling on the House to consider making employer provided transit passes an income tax exempt benefit was recently brought to my attention by one of my constituents. While I was aware that this issue was being debated in the House, I will admit that before the meeting with my constituent, I had not invested much time in understanding the issue completely.

Mary Jane Dawson came into my office with her children over the Christmas break to talk to me about why she felt this was an important initiative and one which deserved my support and the support of the Reform caucus. Her young children, Riley and Kelsy, also had very strong views about this motion. They were concerned about the state of the environment and about the impact of emissions on global warming, air quality and health.

As a member of the Reform caucus, I believe strongly that I should work to best represent my constituents within the framework of Reform Party principles that were established in a democratic grassroots process. However, as any member of my caucus can attest to, it is not always possible to determine the views of our constituents on each and every issue. At best we attempt to gauge public opinion by the number of letters that cross our desks or the number of people who phone or visit our offices. It is not very scientific, but I believe this is a useful guide.

The visit I had with Ms. Dawson and her children forced me to examine the issue more closely and determine whether I could support the motion and still stay committed to the policies that have been painstakingly developed by thousands of average Canadians across the country.

There is no question that this motion would add to the complexity of the tax code. What this country needs is tax cuts and not more tax exemptions.

The Reform Party would work to create a flatter, simpler and fairer tax system. We would also remove 1.2 million Canadians earning less than $30,000 a year from the tax rolls completely. This means that seniors, students and other low income Canadians will have more money in their pockets. This would enable them to purchase transit passes or pay for other transportation needs with their own money.

But we do not live in a perfect world and we do not have a Reform government in power until the next election. What we have is a Liberal government that is taxing hard working Canadians into poverty. Let us look at the Liberal record.

Income taxes under the Liberal government are 56% higher than the average of our G-7 partners. The average Canadian family paid about $21,000 in total taxes in 1996. For 1998 the government will collect $19 billion more in income taxes alone than it collected in 1993, a 37% increase. Bracket creep, the deindexing of the personal income tax system, has sucked an extra $13.4 billion from taxpayers. In 1997 alone, Canadian taxpayers paid $4.3 billion more than they would have had the system been indexed in 1993.

According to Statistics Canada, between 1989 and 1995 real after tax family incomes fell by $3,461 from $41,000 to approximately $37,000.

In the first two quarters of 1997, governments took two of every three dollars of additional personal income earned by Canadians in direct taxes alone.

Low income Canadians who earn more than $6,456 are taxed at 17% of their income.

Finally, Canadians pay indirectly for the cost of Canada's burdensome regulatory environment, which cost Canadians the equivalent to 12% of GDP.

This is a shameful Liberal record. This is why the advocates for the working poor are looking for ways to give low income working Canadians a break with tax exempt transit passes.

If we let the poor keep what little they earn, we give them the means and motive by which to improve their lot in life. If we tax them into poverty to feed an insatiable bureaucracy, we breed dependency and destroy hope. How can the poor be expected to pick themselves up by the bootstraps when this Liberal government has stolen their boots?

This is the dilemma I face. I can work hard to push for tax cuts and to ensure that a Reform government with its sound economic plan forms the next government. But what do I tell the overtaxed working Canadians in my riding who find it difficult to meet their transportation needs today?

To work out this problem, I thought about the infamous Peter and Paul. When the government spends money, it takes that money from Peter and gives it to Paul. Since Peter has worked hard to earn his money, it can be argued that taking the money from him is not a very nice thing to do. Furthermore, Peter might not even like Paul or the things that Paul does with the money he is given. This compounds the offensiveness of the original taking.

For this very simple reason, the members of the Reform caucus look at government spending with a healthy dose of suspicion. Unless tax dollars are being spent on programs with very broad base support, such as health care, it becomes very difficult to justify the expenditure. However, since Peter has the right to keep the rewards of his labour, allowing him a tax exempt benefit does not place an unfair burden on Paul. It does however place a burden on the government which is forced to either look for revenue elsewhere or reduce expenditures.

Given that Canadians endure the highest tax rates in the G-7, finding additional revenue in the form of increased tax levels would probably not find much support with the general public. This leaves us only with one other option: decreasing expenditures.

In a letter to the Canadian Urban Transit Association the finance minister estimated that the cost of implementing the tax exempt transit passes would be $140 million for the federal and provincial governments. I want to make it clear that this is $140 million of forsaken revenue, not $140 million of spending. The difference here is very important. When the government spends $140 million it takes the money from Peter and gives it to Paul. When it forsakes $140 million, it simply leaves that money in Peter's pocket.

The question of course is how does the government compensate for the $140 million shortfall? It should do this by cutting the fat.

I do not believe that any member of the House can claim there does not exist at least $140 million in waste in the federal government. Our party has identified $15 billion in federal government waste that we would like to eliminate when we form government. If we can find $15 billion in waste, surely the Liberals across the way can find a measly $140 million.

My hon. colleague from Calgary Southeast, our chief critic for revenue, has made it clear that he will not be supporting this motion. I respect his position. He believes, as I do, that the tax system should be transparent, fair and simple. However, I believe we must make a clear distinction between those looking for relief from taxes and those looking for government grants and subsidies.

Canadians should be allowed to enjoy the benefits of their labour without undue tax penalties. If employers wish to provide transit passes as part of their remuneration packages, why should low income Canadians be taxed on this?

What I am proposing is that in this environment of tax oppression we should look at an interim policy option that gives working Canadians a break until Reform can form the government and give Canadians serious tax relief.

On a different matter, Canadians who choose to use public transportation because they wish to make as benign an impact on the environment as they can should have the freedom to make that choice. Canadians must be allowed to make choices. Tax relief will help them make choices and act on values they hold, whether those values involve environmental preservation or the independence that comes from owning a car. It is that choice that I will defend. It is that choice that is in peril if the Liberal government continues to tax Canadians to death.

On the advice of my constituents and based on the belief that low income Canadians need tax relief, I will be supporting this motion. I would ask the members of my caucus to review the arguments presented by myself and the chief critic for revenue to determine for themselves how they will vote.

The Reform Party does not believe in making Private Members' Business partisan politics. We believe in free votes. Especially when it comes to Private Members' Business we do not believe in making it partisan business. I note the member from the Conservative Party spoke earlier on behalf of his whole party. I encourage all members in the House to give this motion consideration as I have, speaking against one of my own colleagues. I think the motion has merit and deserves support.

[Bev Desjarlais, NDP, Churchill, MB]

Madam Speaker, what I am going to mention will reinforce much of what we have heard this morning.

It is quite apparent there is widespread support for the motion of my hon. colleague from Kamloops, Thompson and Highland Valleys, and rightfully so.

It has been a pleasure to hear those comments. I do not think there is any doubt in anyone's mind that by encouraging people to use the public transit system we are going to benefit the environment and the health of many Canadians. There is no question that that feeling is out there.

It is a bit disconcerting that the only real argument against this is that we are not going to bring in enough revenue dollars. I find it hard to comprehend one against the other. Those are the types of issues that should not be an if/or. We know what the effects will be and we should respond to that.

It would be nice to see government departments working together for the overall benefit of Canadians. There is no question that there would be health savings. If anybody could come up with an argument that there would not be savings I would like to hear it. We have information to indicate that there could be savings of between $320 million and $427 million in health care costs in Ontario alone. If that is not reason enough to encourage people to stay on the public transit system, or to get on to it, I do not know what is.

Environmental benefits, especially in the area of greenhouse gas emissions, are further reason to give full support to this motion. It is an opportunity once and for all for this government to take a holistic approach to improving the environment, society and health. It is an opportunity for a government that has shown no vision of looking beyond and seeing all the benefits of a motion such as this. I thank my hon. colleague for presenting the motion.

I will take a moment to comment on the impression that was given by my hon. colleague from the Progressive Conservative Party. He said that he was surprised to see New Democrats suggesting a tax break and he thinks it would be great if we did this. I want to emphasize that New Democrats have always believed in investing in Canada and in Canadians. That has been the way since the beginning of the party. That is what we will continue to do. That is what we are doing with this motion.

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Madam Speaker, it is clear that there is a lot of interest in this topic among all parties. As well, good evidence has been presented that there is a lot of interest among Canadians. Therefore I am pleased that we have had this debate this morning.

On occasion I am surprised at how much one can learn in the House of Commons. In that respect I want to thank the member for Kamloops, Thompson and Highland Valleys for introducing this topic.

As to what will happen next, I understand from the parliamentary secretary that there will be further debate on this topic. Like my colleagues on this side of the House I look forward to further debate. I look forward to hearing what the member from Kamloops and my other colleagues will have to say on that occasion.

[The Acting Speaker (Ms. Thibeault)]

The time 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.

Federal-Provincial Fiscal Arrangements Act

[Alfonso Gagliano, Liberal, for the Minister of Finance]

moved that Bill C-65, an act to amend the Federal-Provincial Fiscal Arrangements Act, be read the second time and referred to a committee.

[Tony Valeri, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, I am pleased to open debate at second reading of Bill C-65, which proposes to amend the Federal-Provincial Fiscal Arrangements act.

This legislation involves the renewal of two federal programs—the provincial personal income tax revenue guarantee program and the equalization program—each for an additional five years.

Under the revenue guarantee program the federal government protects those provinces participating in tax collection agreements from large revenue reductions resulting from changes in federal tax policy. The major portion of this bill, however, deals with equalization, a program that in many ways defines the generous spirit of Canada.

Hon. members will be aware that the commitment to equalization payments is enshrined in section 36(2) of the Constitution. These payments exist so as to enable provincial governments of varying levels of affluence to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.

Equalization has a long tradition. It was established as a program in 1957 and has been continuously renewed and improved ever since. This government's commitment to equalization was clearly evident from the fact that this program was exempt from the restraint measures of the past five years when Canadians were facing a $42 billion deficit.

The most recent official estimates made last October indicated that receiving provinces would get almost $9 billion in 1998-99 from the federal government under equalization. These estimates will be updated later this month.

If we use the existing October estimates, it is clear that these transfers are very significant indeed. They can make up between 15% and 40% of total provincial revenues and the payments are unconditional. It means that receiving provinces can use them as they wish and experience has shown that they play a significant role in improving the quality of a wide array of public services.

Currently seven provinces benefit directly from equalization payments: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Manitoba and Saskatchewan.

There are also indirect benefits for all Canadians. We all benefit from knowing that we live in a country where the objective is to provide health care, education and basic public services at essentially the same level in all provinces.

In renewing the equalization program this bill proposes a package of improvements, improvements that aim to ensure that the program continues to accurately measure the revenue raising ability of each province.

The proposed modifications will be gradually phased in over the next five years so that the impacts on the provinces will be smoothed. In addition, this will give federal and provincial governments time to plan for changes in the amounts of the transfers.

The proposed modifications are expected, according to current estimates, to result in transfer increases of almost $50 million in 1999-2000, rising to about $200 million by the year 2003-04.

What makes this happen? There are three components to the equalization renewal package proposed in this bill. First, the equalization legislation will be renewed for five years. That provides a secure planning framework for the receiving provinces.

Second, the equalization ceiling and floor provisions will be improved. The ceiling provision provides protection to the federal government against unexpected increases in equalization payments. In other words, this prevents changing economic circumstances from unaffordably driving equalization payments through the roof.

The new ceiling will be set at $10 billion in 1999-2000 and will grow by the percentage change in gross domestic product. This change will ensure that the program remains affordable and sustainable over the five year renewal period.

The floor provision is the other side of the coin. It provides protection to the provincial governments against unexpected large and sudden decreases in equalization payments. The new floor will be applied equally across all receiving provinces. It will reduce the fluctuations in floor protection that can result from application of the equalization formula during a period of economic change. This will mean more predictable protection for provincial governments.

The third change is that improvements will be made in the measurement of the provinces' ability to raise revenues on their own. The equalization formula measures provincial revenue raising capacity by looking at over 30 different provincial taxes and comparing the results to a standard. It is on the basis of this exercise that the size of equalization transfers is calculated for each province.

However, the taxation environment is not static. It changes. The changes proposed in this bill are needed to ensure that the equalization program reflects existing provincial tax opportunities and practices.

These changes in measurement, which will be implemented through regulation, relate to five tax bases that require significant improvements and other tax bases that require technical changes because of revised or new data.

For example, changes are proposed for the measurement of the provinces' ability to raise sales taxes. The new base will now reflect the taxing practices of those provinces that have moved to the value added tax as well as those that have maintained the existing retail sales tax systems.

Similarly, because of increased activity related to games of chance, the treatment of revenues that flow from them needs to be updated.

The proposed changes will take into consideration the ability of provinces to raise revenues from casinos and video lottery terminals.

However, let us get the facts straight. We have not changed the revenues which equalization takes into account at all. Before the proposed changes we looked at all the revenues from all types of gambling and after the changes we continue to do so. What we have changed is our measure of which provinces have a high ability to raise these types of revenues and which provinces have a low capacity. Our measure of disparities has changed, not our measure of revenues.

For disparities, we used to look just at lottery ticket sales per capita. Now we look at lottery ticket sales per capita and the capacity that different provinces have to raise revenues from casinos and VLTs as measured by differences in their incomes.

The new way of measuring disparities is fairer to all provinces, but, let me emphasize once again, in no way encourages gambling.

In addition to this, a number of resources, such as forest products and natural gas, will be measured according to value rather than by volume as is currently the case.

At this point I would like to repeat what I said earlier about these modifications happening gradually. The proposed tax base changes will come into effect in stages over a five year period. This renewal follows more than two years of consultation with the provinces. Considerable tactical work was undertaken by both federal and provincial officials and was then reviewed by ministers of finance at both the federal and provincial levels.

I believe that hon. members will recognize that it has been important to fully analyse the equalization program in order to assess accurately what change is needed. I submit to this House that this has been done.

It is important to build on this groundwork and finish the renewal. Our deadline is March 31, 1999, when the current five year equalization legislation expires. It is important to have new legislation in place before that happens.

I want to make it clear that the passage of this bill will provide important continuing benefits to Canadians by assisting provincial governments in providing services on which Canadians can rely. It will provide for the next five years a stable funding horizon for equalization. It will provide substantial support for the less affluent provinces, underscoring the priority the government has placed on equalization, and ensuring that equalization receiving provinces have resources to provide the services their people need and want.

The legislation intends to maintain the fairness with which the equalization program is delivered. It is important legislation and I believe hon. members will support the speedy passage of it.

[Preston Manning, Reform, Leader of the Opposition]

Madam Speaker, I rise to speak to Bill C-65, an act to amend the Federal-Provincial Fiscal Arrangements Act. As the parliamentary secretary said, the primary object of the legislation is to renew the federal equalization program for another five years.

I would like to begin by simply stressing the importance that the Official Opposition, and I am sure all members of the House, attach to equalization. Under our Constitution, as the parliamentary secretary said, parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenue to provide reasonably comparable public services at reasonably comparable levels of taxation. I do not think it can be stressed enough that equalization is an important principle which makes our federation work.

The Official Opposition, the Reform Party, is committed to equalization and has been from the outset. Also I believe that the rank and file people in provinces like British Columbia, Alberta and Ontario who receive no equalization payments and in fact are net contributors to federal-provincial transfers also support the principle of equalization. They have objections as to how the federal government administers it, how the federal government handles transfers, but do not object to the principle itself.

Equalization is linked to taxation. It is linked to the finances of the provinces. It is linked to the financing of social programs. It is linked to the social union. It is literally linked to the financing of federalism itself.

Besides commenting on the particular bill, I also want to take the opportunity to comment on the broader subject of federal-provincial financing arrangements of which equalization is only one part. In particular I want to make the case that the reform of federalism which the government consistently avoids requires the reform of the financing of federalism that should include the reform of equalization and not merely the tinkering reflected in the bill.

The average person reading the bill and the act it amends—and I venture to say most of us as MPs—would find it utterly incomprehensible because equalization payments are now supposedly based on a complicated formula that has over 30 elements to it as well as ceiling and floor provisions which complicate it even further.

Finance ministers and officials of the Department of Finance often imply that every element of this program is based on principles and rationality beyond the ken of ordinary mortals. In other words there is a mystique associated with equalization and federal-provincial fiscal arrangements which often tends to discourage members of parliament and ordinary citizens from investigating the subject or questioning the status quo. I encourage all members to disregard that mystique in considering the bill and to penetrate it with some common sense, analysis and suggestions for improvement.

My own first encounter with the mystique connected to federal-provincial financial relationships occurred at the University of Alberta when I was a student there in the early sixties. I sat through a lecture by a learned economist in which he carefully and cautiously explained the principles and the rationale that lay behind the old tax rental agreements which were the predecessor to the current equalization formula. It was a beautiful theory. It was beautifully laid out. Everything was connected to principle and analysis.

I then went across the river from the University of Alberta and had lunch with my father, who was Premier of Alberta at the time, and attended the dominion-provincial reconstruction conferences initiated by Mackenzie King after the war from which came the tax rental agreements that then later gave birth to equalization.

I rehearsed for him this grand rationale and theory that lay behind the tax rental agreements which I had just learned at the University of Alberta. I got halfway through and he started to laugh. The reason was that when he attended those conferences Mr. Ilsley was the finance minister at that time. Mr. Ilsley presented the tax rental agreements and of course, as usually happens at these conferences, they could not agree. The premiers could not agree. The federal government could not agree. No one could agree on anything.

As also usually happens, they went to the prime minister's house for dinner that night and they did arrive at an agreement. They then hauled in the officials and told them they had an arrangement where Boss Johnson of B.C. was supposed to get so many million, Manning in Alberta was supposed to get so many million, Garson in Manitoba was supposed to get so many million and Douglas was supposed to get so many. They wanted to come up with a formula that delivered those dollars to those provinces, and so on it went right across the country.

I am not saying there is no rationale or there are no principles behind both equalization and federal-provincial fiscal relations, but a lot of it has been added after the fact. Beneath and behind a lot of this complicated formula lay some very basic financial needs and, I would also add, some very basic political considerations.

If members want to be reminded of the political factors that go into equalization, we need look no further than at the events that just preceded the calling of the Newfoundland election which is to be held tomorrow. Just days before the Newfoundland provincial election was called the government of Premier Turbot, as he is affectionately referred to on this side of the House, was projecting a $30 million deficit. Lo and behold on January 15, just two days before the election was called, the federal finance officials recalculated the equalization formula and the payment even though the figures were not supposed to be released until February 15. It was a miracle. Lo and behold, coincidence of coincidences, the projected increase in Newfoundland's equalization entitlement was just enough to cover the deficit and to enable Premier Tobin to announce that the budget would be balanced.

There may be rationality and principles behind equalization but there are also some very tangible political considerations and MPs should not allow the mystique of equalization to deter us from discussing those here.

I will read into the record a brief description of the federal equalization program. It is only 10 paragraphs. As members will know, because of the Official Opposition's interest in federal-provincial relations and reform of federalism, we read a lot of what the provincial governments produce on this subject and we read what the federal government produces and often we compare the two. Sometimes it cannot be recognized that these descriptions are describing the same thing.

For example, the federal description of the Calgary declaration and the descriptions produced by the provincial governments are so different that it is hardly recognizable they are talking about the same thing.

On equalization I am happy to report that the information sheets in most of the provincial information packages and the federal package are almost identical. This is a miracle in itself. It deserves a little recognition.

Here, therefore, is the official description of equalization:

Equalization is an unconditional transfer. Provinces receiving equalization may spend it in accordance with their own priorities. Equalization is funded by the federal government and is authorized by federal legislation covering five-year periods.

The current equalization legislation expires on March 31, 1999. Seven provinces currently qualify for equalization—Newfoundland, Prince Edward Island, New Brunswick, Nova Scotia, Quebec, Saskatchewan and Manitoba. Three provinces do not receive equalization program payments—British Columbia, Alberta and Ontario.

Equalization transfers are determined on the basis of legislated formulae. First, the amount of revenue which each province could raise if it applied national average tax rates is calculated for each kind of revenue that provinces and their local governments typically levy. Second, each province's overall ability to raise revenue from these sources is compared to that of the five provinces making up a representative standard—Quebec, Ontario, Manitoba, Saskatchewan and British Columbia.

This incidentally is one national standard to which Quebec does not object. If a provincial government's total revenue raising ability falls short of this standard its per capita revenues are raised to the standard level through federal equalization payments. If a provincial government's total revenue raising ability exceeds the standard, as in the case of B.C., Alberta and Ontario, it does not receive equalization. As a result of this formula, when the fiscal capacity of a receiving province decreases in relation to the standard its equalization increases. When the fiscal capacity of the receiving province increases relative to the standard its equalization falls.

Equalization is subject to ceiling and floor provisions. The purpose of the ceiling based on the growth of the national economy is to protect the federal government from open ended growth in payments while the floor provisions protect the individual provinces against any large annual declines.

The ceiling and floor provisions are referred by economist Tom Courchesne as part of the bells and whistles connection to equalization which often ensured that the actual payments are not exactly what the formula itself delivers. It is just part of the mystique.

Equalization is the most important federal program for reducing disparities among provincial governments and their relative abilities to raise revenues and based—and this is the bottom line—on current estimates equalizations for 1998-99 will ensure that all provinces with average tax rates have revenues of $5,431 per resident to fund public services.

Now that is the program as it is described. The bill in front of us essentially renews that program with a bit of tinkering.

The broader financial and political considerations affecting equalization are as follows. I was disappointed that the parliamentary secretary did not connect equalization to the other things it is connected to, namely the whole approach to tax policy, to social policy and to the operation of federalism itself.

First, health, education and other social services have now become the largest component by far of the budgets of the provincial governments. Whether or not the federal government recognizes it, Canadians now rely more and more on private resources and the provincial governments for health, education and social assistance expenditures than they do on the federal government.

For example, in the all important area of health care, out of a total of $82 billion in health care expenditures, 30% now represents private spending, 61% represents provincial expenditures and only 9% represents federal expenditures. This incidentally is in a field where a previous Liberal administration once promised, once swore up and down on a stack of Bibles it would never change. The federal government would always assume 50% of the approved cost of health care.

No wonder that more and more Canadians' summary impression of the government is boiling down to two phrases: they raised our taxes and they cut our health care; they make us pay more and they give us less.

Second, it is increasingly clear that all the provinces, including British Columbia, Alberta and Ontario which receive no equalization, are experiencing increasing difficulty in financing health, education and social services. These difficulties are compounded by the insatiable appetite of the federal government for tax revenues, federal tax revenues having increased 38% since this group got into office, and the reduction of federal transfers to the provinces by over $6 billion per year which adds up to a cumulative decrease, if we add up the annual decreases over the period since they have been implemented, of about $16 billion.

In light of these circumstances, what is required? What is required with respect to equalization? I would say something more than tinkering, something more than what is contained in the bill for which the government has had five years to prepare. It is dealing with one of the pillars of social financing and we always hear how passionately committed the government is to social programs. It brings a bill to the House that is mere tinkering with one of the pillars of social service financing.

If we are concerned about hospital closures and the shortage of doctors and health care personnel; if we are concerned about the 200,000 people on the waiting lines; if we are concerned about spiralling tuition fees and Canadian students rapidly increasing their debt load; if we are concerned about the ever increasing number of Canadians, particularly children, living in poverty; if we are truly concerned about all these things, what is needed is a substantive reform of federal-provincial financial relations. That includes a substantive reform of the three pillars that undergird the financing of social services, namely tax policies, federal-provincial transfers such as the CHST, and equalization, the subject of the bill before us.

I also suggest that any significant improvement in federal-provincial financing of social programs requires a substantive rethinking of tax policy, CHST and equalization. These have to be considered together because they are all tangled up together. They are all interrelated. We cannot change one without affecting the other.

What is the record of the Liberal administration with respect to implementing the real reforms needed to revitalize the financing of social programs? There is no record other than defending the status quo.

It is mere tinkering with regard to tax policy. Prebudget discussions have disclosed that the budget will only include token tax relief in comparison to the over $30 billion of increased revenue which the government has collected per year since it took office.

With regard to transfers for social purposes, it is mere tinkering. The recent social union and health agreement proposals disclose that the federal government appears prepared to put only $2 billion to $3 billion back compared to the $16 billion it took. It plans no real reform in the relations between the federal and provincial governments that would allow the provinces to do more with less. What reforms Ottawa has agreed to have been initiated by the provinces and not by Ottawa.

With regard to equalization, as I said it is mere tinkering again. Despite having five years to plan for this bill, it contains no rationale connecting it to the other aspects of federal-provincial program financing. It contains no substantive reform of equalization at all.

In these three things, the federal budget, the social union proposals and the equalization bill, we have only the latest example of fossilized federalism. The status quo is maintained with just a little tinkering to try to create the impression that substantive improvements are being achieved. Meanwhile, Canadians continue to pay more for less in terms of social services. Canadians must look elsewhere for substantive reform of the financial underpinnings of federalism.

I do not want to be entirely negative. In contrast to the fossilized federalism of the federal government, we have the flexible federalism recommended by the official opposition in its new Canada act. I also have to say it is advocated by an increasing number of the premiers. In contrast to the frozen federalism of the federal government, we have the springtime federalism recommended by the official opposition and also advocated by a number of premiers.

What does flexible federalism advocate to reform federal-provincial finances for the 21st century and to rebuild the financial foundations of our social programs, including equalization? Does the federal government not collect any of the thinking that is being done by the provinces on how to reform federal-provincial finances? Does it pay no attention to the work that has been done by the think tanks? Why is it that the federal government shows no leadership in these areas at all? It just clings to the status quo and adds a little tinkering. That is its only contribution.

I am proposing three things that substantive reform of federal-provincial financing would entail.

First, simplify and rationalize federal transfers for social purposes by providing simple equal per capita grants to all provinces for social purposes. Stop trying to equalize through every social program envelope, from health to social assistance to unemployment insurance. This position has been well articulated by both the Alberta and Ontario governments. I anticipate objections to this from some of the lower income provinces but I ask them to wait until I am finished.

Second, reform if necessary and refocus the equalization program we are discussing today even more heavily on the low income provinces. Listen to what I am saying. Equal per capita grants for social program funding across the country, then reform equalization and tip it even more steeply toward the lower income provinces to bring their capacity to finance social programs up to a national standard established by interprovincial agreements.

Third, complement these preceding measures with broad based substantive tax relief to increase the disposable incomes of individuals and families in every province so that private resources are also available for social spending and are enhanced.

For example, a $15 billion broad based tax relief program such as was in the Reform Party platform during the last election delivers financial transfers to the people of each province of the following orders of magnitude. Listen to the orders of magnitude. People do not seem to understand how much broad based tax relief could deliver into the pockets of people, particularly lower income people and businesses in the various provinces.

Newfoundland, $216 million. Nova Scotia, $396 million. New Brunswick, $329 million. P.E.I., $56 million. In Atlantic Canada $998 million in total can be delivered into the pockets of individuals and businesses through tax relief, more than what the federal government currently pumps in through regional development grants. For Quebec, $3.256 billion. For Ontario, $5.45 billion more. Manitoba, $498 million more. Saskatchewan, $438 million. Alberta, $1.4 billion. British Columbia, $1.8 billion. This is the order of magnitude of what can be pumped into provincial economies through broad based tax relief.

If this country had federal leadership committed to reformed federalism rather than fossilized federalism, if this country had a finance minister committed to the positive reform of federal-provincial financial relations instead of mere tinkering, what should have happened over the last year in discussions between Ottawa and the finance ministers of the provinces should have been this.

The finance minister should be meeting with every provincial finance minister to discuss and agree on substantive measures to stabilize and improve the financing of social services in this country. When the finance minister meets with his provincial counterparts, their discussion should occur with a simple table that has four columns.

Column one would show what the province would receive through simple, equal, per capita grants in support of social programs. Column two would show what the province would receive in terms of enhanced and better focused equalization. Column three would show what the people and employers of the province would receive through broad based tax relief which the province is free to either let it do its stimulative work or to tax back in part if it so desires. Column four would give the total and would show that each province would be better off financially, better equipped to finance health, education and social assistance than it would be under the status quo and Liberal tinkering.

In conclusion, the official opposition urges parliament to reject this equalization amendment bill as mere tinkering. The government ought to be embarrassed to bring something like this before the House. It is inadequate just as we consider the financial components of the social union agreement juvenile and inadequate and the tinkering tax changes in the next budget as inadequate.

As more and more Canadians and more and more of the provinces begin to see the inadequacies of this Liberal government's fossilized federalism, I express the hope that at some premiers conference in the not too distant future, instead of meekly accepting these tinkering proposals of the fossilized federalists, the premiers will take off their premiers' hats for just a day and put on their political leaders' hats.

In their capacity as political leaders, I would like to see some of those provincial political leaders, whose views on flexible federalism are more advanced than that of the federal government and more in tune with the need of the 21st century, discuss just for once their vision of flexible federalism and the political alliances and initiatives required to get a new government in Ottawa which is prepared to make the substantive reforms of federalism and federal-provincial financing required for the 21st century.

If and when that day comes, I assure those provincial leaders who favour reform of the federation over fossilized federalism that they will find an ally in federal Reformers united to create a better alternative to this bankrupt administration.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I am pleased to speak to an important bill concerning equalization payments in Canada.

First off, I wish to comment on what the Leader of the Reform Party said earlier about the equalization program. The Leader of the Opposion said that it was complex, incomprehensible and riddled with political interventions. With all due respect, I would differ.

If there is one program right now that is clear, technical and technically comprehensible when one takes the trouble to look more closely, that is fair to all Canadian provinces, that is based on verifiable, scientific facts and not on political decisions, that is the very foundation of what has been described as the compassion of this regime from its very inception, it is the equalization payment program.

For the benefit of all those listening, I would like to give a brief explanation of the origins of equalization payments, what they are, how they are calculated, and how they benefit the public.

Equalization payments are not a recent phenomenon. They first began in 1957. Why do we have them? They are the result of the post-World War II Rowell-Sirois report, a huge royal commission of inquiry into the workings of the Canadian federation which, after months of discussions, briefs and analyses, recommended certain directions that the federation should take to ensure a fairer future for all Canadians.

One of the recommendations was equalization payments, a program to ensure that provinces across the country, even those with differing tax capacities, could all provide reasonably comparable levels of public service.

For a self-respecting federalist, and even for a sovereignist looking at the system from the outside, equalization payments are the foundation of fiscal federalism. They make it possible to reduce—but not eliminate—the disparities from coast to coast, as the members opposite would say.

How are payments arrived at? Using a very specific formula, an analysis is made of the tax revenues that each province and each local government is capable of raising from their populations in order to provide public services that are comparable from one province to another without levying additional taxes that would bleed taxpayers dry.

First, the sources of revenue for each of the provinces and local governments are identified. When the program was first introduced in 1957, three sources of revenue were identified for each province. Now there are 30. These include property taxes, income taxes, sales taxes, and so forth, for a total of 30 categories. There is nothing political about it. It is simply a list of 30 ways in which each of the provinces generates provincial and local fiscal revenue. A list is compiled for each province.

Then, one takes five provinces considered representative and puts them through the same process. For each of the five representative provinces, such as Ontario and Quebec in particular, a standard is developed against which every other province will be assessed in terms of its capacity to levy taxes on its territory.

These 30 fiscal parameters for each province, the standard developed for the five representative provinces, will serve as the basis for calculating the equalization payments each one is entitled to, unless they are not eligible because they exceed the standard set for the five Canadian provinces regarding the capacity to levy taxes.

After all this has been done, the federal government agrees with the provinces that, for the next five years, equalization payments will be calculated per capita—and this is a very important detail—so that each province can provide public services in a fair manner, at approximately the same level, taking into account its particular fiscal capacity and economic strength.

There is nothing political about this, nothing off the wall, as the Leader of the Opposition suggested. If there is a program that is still appreciated, regardless of how much is paid to each province, it is this one. We may come back to this later. There are individuals who are getting a lot of political mileage out of this. But regardless of the amounts paid, equalization per se is a very good principle. It is also a principle that would deserve further and more serious consideration, and more social understanding as well, especially on the part of a staunch federalist.

There is nothing complicated in equalization. Finance Canada has put out a booklet, about 30 pages long, that outlines the situation very well. For those with more inquisitive minds, who put more energy into understanding what is going on in this country, there is, of course, 450 pages of annexes. Hard work can be done on every aspect of the fiscal parameters.

As I said, this is a matter of personal taste and preference. My preference would be the fiscal system. It is a system that has captivated me for many years.

Even though we have concerns about the estimates done for certain of the parameters used to calculate equalization payments per province, we will wait until the bill goes to committee to ask more precise questions, in order to have an even better idea of the results of the last negotiation and of the new equalization system that will apply as of April 1.

In the meantime, allow me to set the record straight and to denounce certain members across the way who are trying to score political points in talking about equalization and Quebec—

[An hon. member]

Oh, oh.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

If I were the Minister of Human Resources Development, instead of staying here, I would go back to the drawing board and overhaul the employment insurance system, which presently covers less than 40 per cent of the population. It would be better for everybody if the minister did that instead of commenting on what I have to say about equalization.

Concerning equalization in Quebec, there is a myth that has been circulating for many years, ever since equalization payments started, to the effect that Quebec is the great beneficiary of equalization. I pointed out earlier that when we take into account the 30 fiscal parameters of equalization—

[Pierre Pettigrew, Liberal, Papineau—Saint-Denis, QC]

Four billion dollars a year.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, would you be so kind as to tell my colleagues across the way that they should listen carefully in order to avoid perpetuating a myth that is complete nonsense?