Debates of April 5th, 2001

Ethics Counsellor

[The Speaker]

With unanimous consent, we could go ahead. Is it agreed?

[Some hon. members]

Agreed.

Freshwater Exports

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, I hope no one was under the impression that I was trying to block out of vision the former prime minister from the Speaker's eyes.

My question is for the Minister of the Environment. Given what the Prime Minister said, which was sort of do not be worried as far as NAFTA and water are concerned, I wonder whether the Minister of the Environment is now prepared to rescind the concern he was expressing a week ago about Premier Grimes' plan in Newfoundland.

Is there no problem with respect to NAFTA now? Has the Prime Minister changed his mind?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, the hon. member clearly has not understood the importance of making sure that water is not considered an item of trade under NAFTA or other trade agreements.

We have to make sure that we do not get into a situation, through inadvertence or any other reason, whereby water then comes under NAFTA provisions. To do that we have an accord with the provinces and territories. To do that we have legislation in the House, Bill C-6, to deal with boundary waters.

It is clear that we must follow the procedures we have laid down and follow them to the letter.

Privilege

[Diane Ablonczy, Canadian Alliance, Calgary Nose Hill, AB]

Mr. Speaker, concerns have been raised about remarks I made on Tuesday when I spoke to the Alliance motion to set up an independent inquiry into the Prime Minister's business dealings concerning a hotel and golf course in his riding.

To my regret, I quoted from an article on Yugoslavia and the abuse of power by former president Slobodan Milosevic. I deeply regret having used that line of thought. It was an error in judgment on my part and one for which I am truly sorry.

To all those who have been hurt or offended by my remarks, I sincerely apologize.

Business Of The House

[Chuck Strahl, Canadian Alliance, Fraser Valley, BC]

Mr. Speaker, if the House leader will not answer the first question, I have a supplementary one for him.

Would he tell us what the business of the House will be for the rest of today and tomorrow, and then after the Easter break will we get an opportunity to speak about softwood lumber and other important issues involving natural resources? Will we get the chance? Would the minister tell us?

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to answer what is undoubtedly the most thoughtful question asked thus far today.

This afternoon we will continue with Bill C-22, the Income Tax Act amendments proposed by the very excellent Minister of Finance. Then we will deal with Bill C-4, the sustainable development foundation legislation. Tomorrow we will do report stage and third reading, hopefully, of Bill C-12, the Judges Act.

On Monday, April 23, we shall call Bill C-13, the GST technical amendments. We will then follow this with the organized crime bill, introduced earlier today.

Tuesday, April 24, will be an allotted day at which time members could raise such issues as softwood lumber, as they perhaps should have last Tuesday when it was an opposition day and other less significant issues were raised.

On Wednesday, April 25, we will begin with third reading of Bill C-9, the Canada Elections Act legislation.

Ways And Means

[Paul Martin, Liberal, Minister of Finance]

Mr. Speaker, pursuant to Standing Order 83(1), I wish to table a notice of ways and means motion relating to tobacco products. I am also tabling explanatory notes.

I ask that an order of the day be designated for consideration of the motion.

[Ralph Goodale, Liberal, Minister of Natural Resources and Minister responsible for the Canadian Wheat Board]

Mr. Speaker, pursuant to Standing Order 83(1) I wish to table a notice of a ways and means motion respecting the long term management of nuclear fuel waste, and I ask that an order of the day be designated for consideration of the motion.

Committees Of The House

[Derek Lee, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, there have been consultations and I think you would find unanimous consent to deal with the following committee travel authorization. It is a single committee authorization. I move:

That the Standing Committee on Citizenship and Immigration be authorized to travel to Vancouver, Winnipeg, Toronto and Montreal from April 29 to May 4, 2001 in relation to Bill C-11 and that the necessary staff accompany the Committee and that the Committee be authorized to televise its hearings.

[The Speaker]

Is there unanimous consent of the House for the parliamentary secretary to present the motion?

[Some hon. members]

Agreed.

[The Speaker]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

The House resumed consideration of the motion that Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act, be read the second time and referred to a committee.

Income Tax Amendments Act, 2000

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, we were in the questions and comments phase of the discussion. I have largely concluded my comments so I would entertain any questions.

However, I did want to remind the government of the issue of brain drain and the further complications in the tax code that Bill C-22 presents. I will give the example to the House of my own family.

My brother-in-law lives in Louisiana. My sister lives in Atlanta. They are part of the brain drain. In the 19th century, the great exodus of Loyalists to Canada on the underground railway had a song they used to sing. It was called Follow the Drinking Ground . The chorus of the song is:

So long old master Don't come after me I'm heading north to Canada Where everybody's free

That was the chorus of the song they sang when they came to Canada because Canada was the place where everybody was free.

Since then it is astonishing how things have changed. The underground railway has turned into a highway heading south, by which the best and brightest leave the country. They leave this country for better opportunities.

My own sister is an example of that. She has a degree in communications in French from Simon Fraser University and she is in Louisiana helping Canadian firms that are trying to sell Canadian products in the French Bayou country. She is a Canadian earning her keep in the United States because this country does not treat her the way she thinks government really should treat its best and brightest.

The United States has a better environment for cultivating, sustaining and taking care of the best and brightest in their country. The Americans treat young people as a resource.

In this country we do not get that. The finance minister brags in the House of Commons day after day about the fact that we have a balanced budget, but he does not give credit to the people who balanced the budget: young people, entrepreneurs, the best and brightest, small business owners, families, the people who sacrifice, and people in the university departments like the small university I went to, the University of Northern British Columbia, which has a crisis in its entire financing structure because of the government.

We have a balanced budget for a whole host of reasons, like the hospitals that get shut down because of this government and like the overtaxation of small businesses. The government stands atop a dustbin of bad decisions. It stands atop the rubble of bad financial decisions and atop the shoulders of small businesses and says that because of the government and its decisions Canada has a balanced budget. Canada has a balanced budget because of nothing government has done. We have a balanced budget because of a whole host of reasons, which frankly the government does not control. The finance minister and the Prime Minister do not appoint Alan Greenspan. They do not decide the economic growth rates of the United States. They opposed free trade. They increased taxes. They increased the payroll taxes that kill jobs and the Canada pension plan. They are driving the best and brightest out of this country.

They talk and brag about balancing the budget and about bills like Bill C-22 that we are debating today, but Bill C-22 goes in the wrong direction. It further complicates the tax code. It makes it less likely that people, entrepreneurs and builders, will want to stay here because they see that this country will be something they want to be part of in 20 or 30 years. That is not good enough.

I would love to see the day when we go back to that chorus of the underground railway, where Canada is an enterprise state, where we can sing that chorus again and be proud of it. For the government members who just walked in, I will remind the House of what that chorus is:

So long old master Don't come after me I'm heading north to Canada Where everybody's free

We need economic freedom and political freedom. We do not have them, we deserve them, and if we do not, we are only sacrificing our future.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, before question period the member was commenting on a suggestion that the first $250,000 of income be tax free. I believe the member's response to that suggestion was that that was the kind of progressivity that we should have.

It makes me reflect on the issue of progressivity in our tax system. For members information, progressivity is a principle by which the ability to pay is a founding principle. It means that at certain thresholds as our income grows the rate of income taxation would increase.

The member for Calgary Southeast once explained to the House that a 17% flat tax or single rate tax was a progressive tax because the more one would make the more one would pay. That is kind of interesting. Mathematically it is true but progressivity it is not.

Could the member square the fact that he is a proponent of progressivity in our income tax system, yet his party continues to suggest that we should not have different rates of taxation depending on how much we make. Rather we should lower it so high income earners pay less money under a flat tax or single rate tax and in fact pay the same effective tax rate as low and middle income Canadians.

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, this is what happens in politics when a political debate is dumbed down into catch phrases that are supposed to represent entire economic thoughts.

The progressivity that the member talks about is nonsensical. He is describing progressivity as progressive larger chunks of income that the government takes away. Our concept of progressivity is moving the economy forward, rewarding the best and brightest and letting people keep more of what they earn so they can have a better future. That is progressive.

Although it is broken, flawed and unproven in almost every jurisdiction it has been tried, there is an economic argument presented in Das Kapital that says “The harder you work, the more you build, the more people you employ, the more you innovate, the more entrepreneurial you are, the more the state should punish you”. Yes, there is an argument out there for that.

Speaking as a young Canadian, and I hope I am not alone, it is rather progressive to say to people that the bigger the risk they take, the more successful they are, the more people they employ, the more ingenious they are, the more creative they are, the bigger sacrifices they make, the more the state is going to champion them as the kind of people that ought to live here, not the kind of people we are going to target and punish because we can take money from them and give it to the Secretary of State for Multiculturalism. That is not progressivity.

However the Liberals seem to define progressivity as the progressively larger chunks that the government can take away from the builders, producers, entrepreneurs and the people who make the country work. I would suggest that the Finance Minister spend more time out there talking to small business people and telling them that in Canada they are worth something because they make the country work. They employ the people and they make the country work. The government should reward them not punish them for being the best that this country has.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I would have to disagree with the member for Port Moody—Coquitlam—Port Coquitlam. I miss the kind of passion and energy that the previous member from that riding had. I find it strangely ironic that a member would stand up in the House and say that Canadians will not like $100 billion in tax cuts because it is going to complicate things.

I will go back to the flat tax or single rate tax. Of course what it did was shift the burden of tax from high income Canadians to middle income Canadians, and close to the election campaign the Alliance changed it to a 17%, 25% tax. We are not sure where it is going with its single rate tax but I am not sure anybody cares very much.

The member talked about complexity in the income tax system. We might all agree that the Income Tax Act is complex.

However if the Alliance Party were to introduce a flat tax or single rate tax, does that mean that all the various deductions such as RRSP, medical expenses over a certain amount, charitable donations in certain circumstances, et cetera would not apply, or would he simply have Canadians take a number and multiply it by 17 or 25?

A lot of Canadians think that might be the case, but many of the member's colleagues in the House said that it will not be that way. They said we would have all the same deductions because that was what Canadians wanted and expected. Could the member clarify that?

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Mr. Speaker, along with the language of progressivity, it speaks again to what I said before about the contortions taken to distort a position of a political party.

Single rate tax is not a flat tax. There is a big difference. There is also a big difference between $47.1 billion in tax relief which is what is actually happening, not $100 billion in tax relief. He is not factoring in the Canada pension plan. This is what Canadians do not understand.

He made reference to the previous member for my constituency and said he missed him. The 70% of people in the riding who did not vote for him sure do not miss him.

This speaks to Liberal math. It is not $100 billion in tax relief. It is $47 billion. There is a bottom line net amount. The net amount is not good enough. Young Canadians are still leaving the country. Businesses are still closing down. Provinces are not better off. The welfare state gets larger and larger.

Frankly, I would like to see a lot of government departments have smaller budgets.

[Paul Szabo, Liberal, Mississauga South, ON]

Name them.

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

The hon. member says to name one. The Secretary of State for Multiculturalism deserves a smaller budget. There is one.

[Paul Szabo, Liberal, Mississauga South, ON]

Why?

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Because she does not.

[Keith Martin, Canadian Alliance, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak on Bill C-22. I find it intriguing, listening to the debate, the completely different psychologies of our side and that of the government.

I listened to some of the comments made about the tax structure. Our party is for a progressive tax structure, not a punitive tax structure which is what we have today.

Why do we have a system where the more one earns, the greater chunk is taken away? Our party has always fought for the ability of individuals to take care of themselves and for a fair tax structure that takes the same percentage from the amount people make as they grow older. Therefore the more one makes, the more one pays, but the more one pays is not a greater percentage of what one makes.

Also what is not as well known perhaps is that our party stands for radically and dramatically improving the health and welfare of the poorest and most impoverished people. How would we do that? Simply by raising the amount of money that people would have to make before they pay taxes. That is progressive, innovative and demonstrates ingenuity.

If the government truly wants to help those who are most in need, then it would look at our single tax rate, look at the way we have articulated it and understand very clearly that it strikes a balance between helping those who are most impoverished while enabling those who are innovators to have the tools to innovate.

There is one major complaint that I think all members in the House hear when they talk to small and medium sized businesses in their ridings. That is the government takes too much money from their pockets. They generate jobs, innovate and are the major engine of economic growth in our country.

They ask us why the government is not listening. There have been reports and committees at federal and provincial levels for years. Report after report says the same thing. Canadians want the ability to provide for themselves, to pay a fair share of tax but not a punitive share of tax. Businesses want to generate the funds to hire people, to do research and development and engage in the actions that build a strong economy which enables us to have strong social programs.

One of the mythologies that has always been connected to the right of the political spectrum is that the right does not care, the left does and that the right only cares for the rich, the left cares for the poor. This is completely nonsensical.

We have shown and demonstrated over the years that the budgets put out by the members of New Democratic Party have been abysmal and the arithmetic has not added up. Instead of helping the poorest people in our society, they would actually hurt them. What they would do is raise taxes up to such a level that the ability of the private sector to function would be constricted and restricted. This leads to brain drain, the exodus of businesses from Canada and the lack of ability for businesses to get on the cutting edge in their chosen field.

Some would say we need to raise taxes even more. If we look at the European models of Sweden, Norway, Switzerland and countries that have historically been the bastions of socialism, countries that have been looked upon from the socialist left, as being the nirvana of economic thought, they not only damaged and destroyed their social programs, they gutted the soul of their countries and severely compromised their economies. This has been proven in history.

I would encourage members of the NDP to listen very carefully and look at their history books. What they ought to do is come over to the Canadian Alliance, as should members from across the House, and listen to what we have fought for over a long period of time. Indeed, the former leader of the Reform Party was an individual who was at the forefront of this and deserves a great deal of credit for doing this.

One of the major reasons I joined the party in 1993 was out of a deep concern over the state of our social programs. I did not look at the NDP for that. I chose the Reform Party. Why? Because the Reform Party articulated constructive economic solutions to enable us to have a fairer and a lower tax rate which would give our private sector the ability to generate the funds to expand. It would also provide the moneys for our social programs.

A healthy economy and a healthy private sector means strong social programs. After all, the best social program any individual could ever have is a job. Whatever we can do to strike that balance between enabling our private sector to be strong, aggressive and competitive, as well as ensuring that we have tight, strong social programs that are targeted and fair, will create the right balance.

I believe the public who is watching and members from across party lines will understand very clearly that this is something we have striven for throughout our entire professional careers here.

We only need to look at the tax differential between ourselves and the United States to see what it has done. We heard about the brain drain. We heard about the exodus of companies. Perhaps what we have not heard about is a more subtle and perhaps more insidious problem in our society. That is what this has done to the soul of our country.

Punitive tax rates erode the deep, inherent desire that all of us have to strive to better ourselves. It destroys that edge of innovation that every country needs to be competitive in a global environment. Let us not forget that we are not only competing among ourselves, within provinces and between provinces, more important we are competing with other countries. As the barriers to trade come down, which is a good thing, we will have to find our niches and be more aggressive in how we capitalize on those.

I would also re-articulate the issue of a single tax rate, not a flat tax rate, but a single tax rate that lowers and simplifies the tax system while still allowing many of the deductions that we have enjoyed in the past.

I would also suggest, and this is a personal issue, that we lower the GST. The government has never looked at lowering it, although it promised to, or simplifying it. One of the major complaints we all hear about back home is that the GST is far too complex. The amount of money that goes into managing it chews up about one-third of all the moneys received from GST. That is not an efficient system.

Personally, I would implore the government to look at ways to simplify the GST, make it a single one time per year reporting, make it more comprehensive and lower the amount by 2%.

On the issue of payroll taxes, the EI moneys that companies pay are in many ways just another tax. The government has generated billions of surplus dollars from the EI fund that we have said time and time again must go back into the hands of the Canadian people and the companies that hire them.

EI, under the guise of being a social program, is actually a tax. Payroll taxes by and large are another form of tax. What we can do is ensure fair EI payments and restructure EI into a true insurance policy.

I will also speak about charitable donations. There is a theory that the higher the taxes, the greater the desire of individuals to donate in order to receive a tax benefit. The facts prove the opposite to be true. The United States has done some interesting studies to show that the more money people have after tax, the more they donate.

Between 1982 and 1989 the marginal top tax bracket in the United States dropped substantially. The amount of money people had in their pockets increased dramatically and there was a 29% increase in the amount of money people donated. That is a huge amount.

These days, when people have less and less money and non-governmental organizations have more and more responsibility to raise money, is it not fair and equitable that the government give them a chance to take care of themselves? Is it not fair that organizations like the Canadian Cancer Society, Juvenile Diabetes Foundation Canada and others have an opportunity to raise money from the public and that the public derive the benefit from that?

We cannot take money away from non-governmental organizations while denying them the ability to raise money. The government should look at what the U.S. did in terms of enabling people to increase their donations. Again, it is about more money at the end of the day in people's pockets.

Another thing the government can do is enable NGOs and the people who donate to them to derive the same tax benefit as a person who donates to a political party. Why do people who donate to the Liberal Party or the Alliance Party receive a higher tax benefit than if they donate to the Canadian Cancer Society?

We should ensure there is equitability, that a person who donates to an NGO receives the same tax benefit as someone who donates to a political party. I encourage the government to look at that. It is quite innovative work. People in Canada who rely on non-governmental and charitable organizations would benefit enormously from such a progressive move on the part of the government.

Another thing the government can do in an age of so much new wealth is enable people in the top tax bracket to create foundations. Foundations can be an enormous generator of funds for charitable and other non-governmental organizations. Why does the government not put provisions into the tax structure that enable people to create foundations which give them control and ownership and, I would argue, efficiency in ensuring those moneys get to people in need?

Another innovative program is energy tax incentives. The United States in its budget last year put through some innovative energy tax incentives aimed particularly at reducing greenhouse gas emissions. Many of those tax benefits rest on the ability of individuals to invest in other forms of non-fossil fuels and non-greenhouse gas producing energy sources that benefit both the environment and the individuals themselves.

I encourage the government to look at what the U.S. has done. Solar power, new ways of heating homes and hybrid cars that use non-fossil fuels would all provide our environment, individuals and the organizations producing them the tax incentives that would wean us away from fossil fuels.

Our demand for energy will increase substantially. We will need alternative fuel sources. Nuclear power is a clean source, but it has an obvious downside. Fossil fuels are limited. Since greenhouse gas emissions will only increase, we must look at alternative measures. We could learn from the U.S. energy tax incentives to greatly improve our environment at home.

On the education system I encourage the government to look at another proposal from our side, the income contingent loan repayment plan. Students today face increasing difficulty in finding the money to pay for their education.

I am a physician, but I could not have gone to medical school if costs had been what they are today. Tuition fees at my alma mater are now more than $12,000 per year. There is no way, given the socioeconomic conditions I grew up in, that my family could have afforded the fees. That is the situation students across the country are facing.

We are now seeing a very dangerous situation in which professional faculties are becoming the purview of the rich. A recent study looked at family incomes at various schools, and I will take the University of Western Ontario as an example. The study found that over the last four or five years the average family income went from $60,000 to more than $120,000 for students entering medical school at the University of Western Ontario. That pattern is borne out across the country and in other professional faculties like law and dentistry.

People in lower socioeconomic groups who want to enter professional faculties face an economic obstacle. Gaining access to professional faculties is no longer an issue of merit or competence. It is becoming an issue of how much money one's parents make. This is a critical issue that must be dealt with now. It is an matter of fundamental fairness for a country that prides itself on equality for all people regardless of socioeconomic condition.

The situation will only get worse. I encourage the Prime Minister to call together the ministers of education across the country to urgently look at the matter.

The shortage of professors and faculty members is also an issue now and will be one in the future. Across the country the dearth will become critical. It is so bad now that universities and post-secondary institutions have sent out a clarion call for help. We must find innovative ways to train and retain individuals who can teach and work in our post-secondary institutions. A professor cannot be trained overnight. It takes at least seven years.

I encourage the government to raise the issue at a first ministers conference as soon as possible. It will take years to deal with it, but it must be done for the sake of our youth and our economy. The economy is predicated on hiring and training good, competent individuals. If we cannot train people of excellence our economy will face a fate we do not want to contemplate.

Lastly I will address the issue of accountability. My colleagues have raised the issue time and time again. A backbench member of the Liberal government articulated a solution with which it is difficult to disagree. The individual quite intelligently raised, as have my colleagues, the fact that we do not know where our money has been spent.

We need to know the amount of money going in, where it is spent and what the output is. Whether we are talking about health care, agriculture or the environment, we need to measure this. There are ways it can be done.

Every ministry ought to be on a spreadsheet so that a deputy minister would know, if asked, where the money has gone, how it was spent and have a way of measuring the output. That is what we want and what the public wants. If we are to build an effective public service we must do that.

The government has been very clearly asked to do this by the Clerk of the Privy Council. He has asked for an urgent indepth look at our public service and how we can make it more efficient. The good people who work in our public service urgently need that as well. We must find ways of innovating and allowing members in the public service to put their incredible talents and intelligence to the best use.

I will again draw attention to something Mr. Gore did when he was vice-president. President Clinton asked Mr. Gore to rejuvenate the public sector. Mr. Gore did something I thought was quite innovative. He told public sector members they had carte blanche to do the right thing but with certain restrictions. He then gave them a card listing the restrictions.

We need to be able to unleash the power of our public service. We need to increase its efficiency and accountability. We need to streamline it so we have an efficient public service that works for the public good.

I know my time is up. I will close by saying that the bill, while it moves in the right direction, should have come out three years ago.