Mr. Speaker, I appreciate the opportunity to speak today at second reading of Bill C-32, the budget 2000 implementation omnibus bill.
Budget 2000 is an historic budget. As the Minister of Finance stated in his budget speech, not only is the deficit a matter of history, but the government is now projecting its third, fourth and fifth balanced budgets in a row, something that has not been done in nearly half a century.
However, there are other tangible reasons why budget 2000 represents a dramatic advance for Canada and Canadians. Budget 2000 addresses the fundamental challenges we face as a nation, challenges we identified in last October's fall update.
First, as the minister said, the government will continue to provide sound fiscal management. He said that the days of deficits are gone and they are not coming back.
Second, the government will lower taxes to promote economic growth and to leave more money in the pockets of Canadians.
Third, in order to ensure equality of opportunity, the government will make investments to provide Canadians with the skills and knowledge they need to get the jobs they want.
Fourth, the minister said that together we will build an economy based on innovation.
All Canadians can be proud of the government's record. However, as the minister also stated, it is not a record on which we are prepared to rest. Canadians do not want to dwell on the past; they want to focus on the future. Indeed, that is the message of this budget.
Again, to paraphrase the minister, the government's challenge now is to build on this newfound strength. The government is sticking to its plan of sound fiscal management, lower taxes and investing in skills, knowledge and innovation. Through this plan, the quality of life for Canadians and their children will be enhanced.
Quality of life runs the gamut, from access to quality health care and post-secondary education, to healthy children, secure families and vibrant communities. It also includes sharing the benefits of economic prosperity with those who need support the most. That is what we are doing through this budget omnibus bill, implementing the budget's proposals to strengthen post-secondary education and health care, and to help children get the best possible start in life.
The bill we are debating today contains 10 measures that were announced in the 2000 budget. Three of these measures are of particular importance to the nation's well-being, starting with our health care and education systems, continuing through better assistance to families with children, and finally, financial assistance to students. To provide these benefits on time, these measures must be passed before the House adjourns this summer.
First, this bill amends the Federal-Provincial Fiscal Arrangements Act to authorize payment of the $2.5 billion increase to the Canada health and social transfer for health care and post-secondary education to a trust in support of health and post-secondary education.
Second, the Income Tax Act is amended to increase child tax benefits and to provide indexed GST benefits as of July 2000.
Third, the bill amends the Canada Student Assistance Act to ensure uninterrupted delivery of student loans after the current agreement with financial institutions expires on July 31, 2000.
Again let me emphasize the timing for the passage of these three measures is crucial. If we delay, it is Canadians who will suffer.
The remaining seven components of the bill may not face the same deadline. They are, however, just as important for millions of Canadians and for the effective and efficient operation of government.
These measures would amend the Employment Insurance Act and the Canada Labour Code to double maternity and parental leave to one year. They would increase the foreign property content limit in RRSPs and other deferred income plans. They would amend the Canada pension plan to allow provinces to redeem securities given to the CPP investment fund. They would amend the Special Import Measures Act to bring Canadian countervailing duty laws into line with recent changes to the World Trade Organization agreement on subsidies and countervailing measures. They would enable certain first nations to levy a 7% tax on sales of fuel, alcohol and tobacco products on reserve. They would amend the Excise Tax Act to preserve the GST-HST base and avoid tax evasion.
I would now like to discuss each of these 10 measures in some detail. I will begin with the $2.5 billion increase to the CHST.
The minister summed up the reasons for this measure in his budget speech when he said:
The success that we have achieved as a nation has come not only from strong growth but from an abiding commitment to strong values: caring, compassion and insistence that there be an equitable sharing of the benefits of economic growth.
For this reason the first announcement in the first budget of the 21st century was that we would increase funding for post-secondary education and health care. These are the highest priorities of Canadians and they are ours.
Bill C-32 legislates a $2.5 billion increase in the Canada health and social transfer. These funds will be distributed to provinces and territories on a per capita basis and paid into a trust from which they can draw down over four years, beginning as soon as the bill is passed.
As hon. members know, the federal government transfers approximately $40 billion a year to the provinces and territories through three major programs to help them provide vital services to Canadians. The first program is the CHST which supports health care, post-secondary education, social assistance and social services in the form of cash and tax transfers. It is also the largest federal transfer. The second is equalization which enables less prosperous provinces to offer comparable public services to those in other areas of the country. The final one is the territorial formula financing for public services in the north.
The federal government has already acted three times before now in the 1996, 1998 and 1999 budgets to strengthen the CHST. Combined with the value of tax transfers, total CHST in 1999-2000 was $29.4 billion higher than in 1993-94. With this new supplement it will be close to $31 billion for 2000-01. That also incorporates the $11.5 billion added to the CHST in the 1999 budget.
This additional support will provide an additional $1 billion in fiscal year 2000-01 and $500 million a year in each of the following three years for post-secondary education and health care.
As I said, combined with the 1999 budget $11.5 billion investment this means that the cash component of the CHST will reach $15.5 billion in each of the next four years, an increase of almost 25% from the 1998-99 level. If Canadians compare that with the rhetoric of the opposition parties, they will understand the government's huge commitment and priority attached to health care and education.
As I indicated, this supplement will be paid into a third party trust and the provinces and the territories will have the flexibility to draw on it as they see fit.
The bill should be passed quickly in order to get much needed money into the health care system to deal with the pressing needs of Canadians. Some Canadians might wonder, if there is money on deposit sitting there that is not being implemented by the health care system in certain provinces, why the government would do that.
We are responding to the very urgent needs of Canadians in the health care system. Whether that is in emergency rooms, waiting lists for surgery or whatever the case may be, the provinces have the flexibility to draw on it as they need it.
Another key measure in this bill concerns child tax benefits. As the minister emphasized in the budget, “assisting families is not only the smart thing to do, it is the right thing to do”.
Let there be no doubt, he went on to say, that one of the best things we can do is to leave parents with more money at the end of each month to invest in their children's well-being.
Budget 2000 does exactly that. To fully protect taxpayers against inflation the budget restores full indexation of the personal income tax system effective January 1, 2000.
This is the most important change to the Canadian tax system in more than a decade. Indexation has applied to personal income taxation for inflation but only when it reached over 3%. It has been that way since 1986. Indexation will particularly benefit middle and low income Canadians because of bracket creep and the fact that these taxpayers generally receive the benefits under the child tax credit and the GST credit.
As hon. members are aware, the Canada child tax benefit is a key element of federal assistance to families. It has two components: the Canada child tax base benefit for low and middle income families and the national child benefit supplement for low income families.
To further help families with the added expense of raising children, the bill also increases Canada child tax benefits by $2.5 billion annually by the year 2004. The government's goal is to increase the maximum Canada child tax benefit for the first child to $2,400 by then through fully indexing the Canada child tax benefit, increasing both the base benefit and the national child benefit supplement beyond indexation, increasing the income thresholds at which the base benefit begins to be reduced and the national child benefit supplement is fully phased out, and lowering the reduction rate for the base benefit.
These changes will bring the maximum Canada child tax benefit for the first child to $2,056 in July 2000 and to $2,265 in July 2001, well on the way to the five year goal of $2,400 which I just mentioned.
For the second child the goal is to raise the maximum Canada child tax benefit to $2,200 in 2004.
This means that benefits to middle income families will be substantially increased. For example, a family with two children with an income of $60,000 will see its Canada child tax benefit more than doubled from its pre-2000 budget level of $733 to $1,541 by 2004.
Overall these increases by the end of five years will bring the Canada child tax benefit to more than $9 billion annually, of which $6 billion will go to low income families and $3 billion to modest and middle income families.
The fact that low and middle income Canadian families are depending on the Canada child tax benefit increases and indexed GST benefits this coming July is another reason to pass the legislation without delay.
The federal government is taking the necessary steps to ensure that students who need student loans when they go back to school in September will receive them in time. This bill ensures that money will be available to students in need.
By way of background, the Canada Student Loans Program has played an important role in expanding access to post-secondary education since 1964.
Through loans and other financial assistance totalling over $15 billion, approximately 2.7 million students have been helped since then. Annually, the program helps over 350,000 needy Canadian students access post-secondary education.
Until now Canada student loans have been administered and delivered on behalf of the federal government by financial institutions, an arrangement that will expire on January 31, 2000. Bill C-32 ensures that the Canada student loans program will continue to serve students after July 31 of this year. Money will be available for student borrowers and there will be no interruption in service.
The role of the Government of Canada is to provide the finances necessary to support the Canada student loans program. Loans will be administered by service providers on behalf of the federal government. Service providers, which many financial institutions currently use to administer their own loan portfolios, are private companies that have the capacity to administer loan portfolios including student loans.
Service providers would sign an agreement with the government to establish loan accounts, maintain contact with the borrowers and administer the loan once the borrower begins repayment. I want to assure students that there will be no significant changes to the program. Students who have already consolidated their loans and are repaying them will not be affected at all.
Before hon. members ask about students who have difficulty meeting their repayments, may I remind them that the federal and provincial governments have greatly increased the assistance available to borrowers having difficulties repaying their loans. One thing is for certain. This new program will be in place for those students who need financial assistance next fall. I am sure hon. colleagues will support this measure.
The 2000 budget also does a lot for parents of newborn and newly adopted children. It extends parental leave under the employment insurance program and makes benefits more flexible and accessible. At present, including the standard two week waiting period for benefits, the EI program provides up to six months of maternity and parental leave benefits for new parents. That is 15 weeks of maternity benefits for recovery from child birth and 10 weeks of parental leave available for both adoptive and biological parents.
The maximum amount of child related leave will now be doubled to one year. This will be done by increasing parental leave to 35 weeks, which can be claimed by either parent or divided between them. Combined with 15 weeks of maternity leave and the standard two week waiting period, the amount of child related leave will be one full year.
In addition, maternity and parental benefits will be made more accessible by lowering from 700 to 600 the number of insurable hours that must be worked to be eligible. Parents will be eligible for benefits with as little as 12 hours of work a week over the course of a year.
In addition, parents will have greater flexibility in choosing whether one or both of them spend time at home with a new child. Only one waiting period will apply rather than two as is currently the case.
Finally, parents will be allowed to work part time while receiving parental benefits in the same way as regular EI claimants. This will help mothers, if they and their employers choose, to gradually return to the workplace following their maternity leave, and also enable parents to maintain their skills and work contacts while taking parental leave.
Further, income earned while receiving parental benefits will be treated the same as for regular EI benefits. Parents can earn up to 25% of their weekly benefit or $50, whichever is higher, without affecting their EI benefits.
All of these parental leave benefits changes will positively impact some 150,000 families each year at an estimated annual cost of $900 million.
In addition, the Canada Labour Code is being amended so that employees in federally regulated workplaces will have their jobs protected during the extended parental leave period.
I would like to move along now and discuss some of the other measures in the bill.
For example, there is one measure that affects registered retirement savings plans, RRSPs, and registered pension plans, RPPs, which are the primary source of retirement income for middle income Canadians. Several entities, including the House of Commons finance committee, the Senate banking committee and the Investment Funds Institute of Canada, have asked the government to reconsider the current level for the limit on foreign property investments in registered pension plans and RRSPs. As a result, to provide better opportunities for Canadians to diversify their personal retirement savings investments through RPPs and RRSPs, the foreign content limit on those investments will be raised from 20% to 25% for 2000 and to 30% for 2001. These increases will also apply to the Canada Pension Plan Investment Board.
Speaking of the CPP, there is an amendment in the bill that directly affects the plan. Let me explain the background to this change.
Following extensive public consultations, federal and provincial governments agreed in 1997 on major changes to the Canada pension plan which were enacted by parliament in 1997 and brought into effect in 1998. The changes are expected to sustain the Canada pension plan throughout the aging of the population and the retirement of the baby boom generation.
Contribution rates are increasing in a phased manner. This will create a sound, adequately funded plan whose earnings can help pay for future benefits. The Canada pension plan provides a basic level of earnings replacement on which tax assisted private pension plans and RRSPs can build.
One of the important changes in 1997 supported by all Canadians, perhaps with the exception of the Canadian Alliance party, was to enhance the returns to plan members by investing in the market funds not needed immediately to pay for benefits. A fully independent investment board operating at arm's length from government manages these market investments in the best interests of CPP plan members.
The CPP legislation allows all provinces to borrow from the CPP for terms of up to 20 years. The proposed amendment before the House is to allow the provinces to prepay their obligations to the Canada pension plan in advance of maturity and at no cost to the Canada pension plan.
The provinces asked for this change and federal and provincial finance ministers agreed to it at their meeting last December. This will provide more flexibility for provinces that are enjoying fiscal surpluses as the economy booms and they are looking for ways to reduce their debts. It also means that more funds will be transferred to the CPP investment board and invested in the market at higher expected returns.
Turning now to the Special Import Measures Act, SIMA, these amendments will bring Canadian countervailing duty laws into line with recent changes to the World Trade Organization agreement on subsidies and countervailing measures. The WTO subsidies agreement contains provisions that rendered certain foreign subsidies that satisfied very specific criteria immune from countervailing duty action. These non-actionable subsidy provisions lapsed on December 31, 1999 as a result of the failure of WTO countries to agree to their extension.
The amendments in Bill C-32 allow for the suspension of provisions in SIMA that implement these non-actionable subsidy provisions into Canadian law. In addition to bringing Canadian countervailing duty law into line with these recent changes to the WTO subsidies agreement, these amendments will ensure that we are not treating our trading partners more favourably than they are treating us in countervailing duty investigations.
Bill C-32 also addresses first nations taxation. This year's budget marked the fourth time that government has indicated its willingness to enter into taxation arrangements with interested first nations. As a result, the Cowichan tribes, the Westbank first nation, the Kamloops Indian band and Sliammon first nation all levy a tax on the sales of certain products on their reserves. Personal income tax collection and sharing agreements with the seven self-governing Yukon first nations are also now in effect.
This legislation will enable 13 first nations, all listed in the schedule that accompanies this bill, to levy a direct 7% GST-style sales tax on fuel, alcohol and tobacco products sold on their reserves.
The Canada Customs and Revenue Agency will collect the first nation sales taxes and the federal government will vacate the GST room where the first nation tax applies.
In the future, interested first nations could be added to the schedule through an order in council without the need for a legislative amendment.
The Excise Tax Act is also amended in the bill. Among GST and harmonized sales tax registrants there is generally a high degree of voluntary compliance when it comes to reporting or remitting tax. However, instances can arise where allowing a registrant the usual remittance period can put these tax revenues at risk.
Where the Canada Customs and Revenue Agency has reason to suspect tax evasion in these circumstances, it has been powerless to proceed with assessment and collection action. The bill provides the Minister of National Revenue with the authority to take immediate collection action to protect revenues in these circumstances. The minister can now apply ex parte without notice for judicial authorization to assess the registrant before the normal due date and to take the necessary collection actions to recover the money. The registrant will have the right to apply for a judicial review of the court's decision.
I would like to point out that the Income Tax Act contains a similar provision relating to the collection of income tax.
In conclusion, I am confident that hon. members can be counted on to pass this legislation with haste. Canadians across the country are awaiting the benefits. We all know why this bill has to be passed quickly.
First, the CHST increase must be enacted to get much needed money into the health care system to deal with the pressing needs of Canadians.
Second, in order for the child tax benefits and indexed GST benefits to come into force on July 1, this legislation has to be passed before the end of June.
And third, the bill must be passed in time for the student loan program to be available for students entering school in September.
I believe that one telling fact about the 2000 budget was the respect it was accorded from hon. members opposite and from Canadians in general. In fact, question period in this Chamber the day following the Minister of Finance's speech was revealing by how few questions were asked about the budget. Hon. members opposite along with Canadians across the country knew that the 2000 budget delivered what the Minister of Finance promised: help for low and modest income families with children, help for the health care and post-secondary education systems, and help for students who want to pursue higher education.
All are measures that build on the new-found strength the minister talked about in the budget and which are designed to improve the quality of life of Canadians.
This is a new budget signalling a new beginning for a new century. Canada greeted the 21st century with a new fiscal record and a renewed hope for improving the quality of life for Canadians.
This is a government that cares and this is a government that has a social conscience. The 2000 budget measures in this bill reflect this. I urge my hon. colleagues to accord speedy passage to this legislation.