Debates of Nov. 28th, 2002

Tax Conventions Implementation Act, 2002

[Rahim Jaffer, Canadian Alliance, Edmonton Strathcona, AB]

Mr. Speaker, it is a pleasure to address this important bill and also to talk a bit about the inconsistencies we tend to see in the government's approach in the many different ways it deals with legislation. I plan to highlight some of that in the process of my discourse this afternoon, especially when I address the issue of the implementation strategy as it pertains now to the ratification of these tax treaties.

There is a growing concern, especially on this side of the House, that when it comes to dealing with international agreements there is really no rhyme nor reason as to how the government goes about implementing certain plans. During the debate on Kyoto, we on this side of the House demonstrated that the government has gone about the process of ratifying an agreement without presenting to Canadians a plan of how that whole strategy of reducing greenhouse gases is going to affect them. It is actually moving ahead to ratify an international agreement without a plan.

In this case, as we discuss Bill S-2 today, we see that the government is taking a completely different approach. It has actually taken the time to work out and implement strategies with a number of countries that the tax treaties will pertain to. It has gone through the process of doing all the background work, how it is going to affect our country and the people paying taxes in the countries that we are signing these agreements with. Now the government is bringing it to the House to finalize and ratify it. That is a huge inconsistency when it comes to the approach it has had on Kyoto.

I am going to address those particular areas, which will cover the countries, how we have gone about the process of implementing a strategy and how we are dealing with the tax changes with those countries. Then I will talk about how we are in the process of ratifying it here in the House. It is going to be a little long and drawn out, but it is an important part of the process. Important details need to be addressed and I hope to do that this afternoon.

I will start by addressing what the bill in its entirety is attempting to do. Bill S-2 is an act to implement tax treaties with Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

As was heard from the parliamentary secretary, clearly it is an advantage for Canadians to have tax treaties in place with many of these countries to avoid double taxation. It also avoids complications for Canadians who live abroad and collect some form of income in their home country or other countries, but are often faced with two tax bills, one from Canada and one from foreign countries as well. That can be quite a burden on many Canadians who are forced for whatever reason either to do business in other countries or to work outside Canada.

The bill is an act to ratify tax conventions agreed upon with the countries I mentioned, to avoid the double taxation between Canada and the respective nations and to establish a cooperative framework to prevent fiscal evasion. The Canadian Alliance has traditionally encouraged all measures to further equalize and liberalize foreign trade and investment. In this regard, Bill S-2 is a positive measure. Nonetheless, it was introduced in the Senate instead of the House of Commons. This was one of the big concerns we had with the bill.

As everyone knows, we have always had a concern with the other place in that it is unelected and unaccountable. We feel that any legislation introduced in the other place and then sent here does not have the authority of Canadians when it goes through Parliament. That is why on many occasions when bills have been introduced in the other place and are sent to the House, we have often questioned the motives of the government. We also question the legitimacy of that type of legislation. We wish the government would stop introducing legislation through the Senate.

In relation to Canadian Alliance policy, I want to address how we feel overall when it comes to limiting barriers to trade and economic growth with foreign countries.

We support securing access to international markets through the negotiation of trade agreements. Our trade agenda will focus on diversifying the products we sell abroad and the markets into which we sell those products. We will vigorously pursue the reduction of international trade barriers, tariffs and subsidies.

We will work with international organizations that have relevant expertise to ensure that Canadians' concerns about labour practices, environmental protection and human rights are also reflected.

The parliamentary secretary went into great detail on the implementation of Bill S-2. Tax conventions, such as the ones to be implemented with Bill S-2, seek an arrangement under which each government agrees to limit or modify the application of its domestic taxes in order to attempt to avoid double taxation. The tax treaties implemented by the bill reflect efforts to update and expand Canada's network of tax treaties so as to obtain results in conformity with current Canadian tax policy. These treaties are generally patterned on the model of double taxation convention prepared by the OECD. They are not to be double taxed on income coming from these countries.

I would like to expand on and highlight different parts during this afternoon's discussion. Parts 1 to 4 of this enactment implement tax treaties with Kuwait, Mongolia, the United Arab Emirates and Moldova. Parts 5 to 7 of the enactment implement the most recent tax treaties with Norway, Belgium and Italy. Parts 8 to 10 of the enactment correct the English versions of tax treaties with Vietnam, Portugal and Senegal, which have already been enacted.

Many Canadians are often confused when it comes to tax policy. We see over and over again the government tends to modify its tax bills, to introduce different forms of user fees and regulations that tend to affect the tax code and complicate our system over and over again.

We on this side of the House have constantly argued that whenever we go through the process of looking at how we can simplify our tax treaties with other countries, we should be doing the same thing here at home. We should be reviewing how burdensome our tax system is on Canadians. We should be doing things to improve our tax system first, by an overall reduction of taxes for Canadians. That would leave more money in the hands of Canadians at the end of the day to invest in the economy or to spend in any way they see fit, whether it is to save for their retirement or to spend on their families.

That is something the government normally fails to do. It fails to continue to review its own complications in the tax policy and its own effect of the burden of high taxes on Canadians. This is the chance, when we are looking at other jurisdictions and trying to harmonize our tax systems to some extent with other jurisdictions. We should be critical of the tax regime here at home and seeing if it is competitive with other jurisdictions around the world, especially with some of the countries that we are setting up agreements with.

The parliamentary secretary talked about promoting certainty, stability and cooperation. There is no doubt that in entering into these tax agreements they are things we hope to achieve in the final goal. As I mentioned, if we want to have a stable tax environment, if we want to have a competitive environment with foreign countries we need to give Canadians the tools they need to compete in those other jurisdictions.

We are still one of the highest taxed nations in the G-8. Coupled with our debt and a number of other factors that are a drain on our economy, it is no surprise that we have challenges with a lower dollar in this country. We still have the brain drain factor; people are moving down to the U.S. There are continuous takeovers by American companies here in Canada. Overall, the economic situation has been on the decline when it comes to the way the government has been handling finances.

It is ironic that the parliamentary secretary talked about promoting certainty and stability. The government has not done anything to address how we could strengthen our own economy by reducing overall taxes, paying down debt and creating a more competitive environment here at home to improve our productivity in light of some of the jurisdictions that we signed the tax treaties with and with whom we compete.

That is something we must continue to encourage the government to do on a regular basis. We must encourage the government to think about how Canadians are affected here at home by the negative fiscal policy the government implements.

In light of Bill S-2, I want talk a little today about its relation to a big problem with the way the government has approached the whole Kyoto accord.

When I addressed Kyoto, I said clearly that there was no plan. Almost five years after signing the Kyoto protocol, in 1997, there is still no federal plan and no cost analysis. The provinces have made it clear that federal-provincial consultation has been inadequate and they are still not onside. The Liberals have failed to gain cooperation of all provinces and territories to develop a national emissions reduction plan.

In light of Kyoto, we have identified a lot of effects that could come from that. I know my colleague from Red Deer so eloquently spoke on so many different facets of the Kyoto accord. He especially talked about the concerns that we had at home on the effects of Kyoto on the economy. By signing an international agreement that binds Canadians to certain reductions, obviously this will affect industry, incomes and the economic stability of Canadians. There is no certainty as to the negative effect it will have on the economy, the environment and on a number of other factors, such as people's salaries and job security.

The point I was trying to make initially is that the dichotomy of the government, especially in its approach to this bill, is astounding because with the Kyoto accord there is a complete double standard. Look at Bill S-2 and the particular countries that it pertains to, like Kuwait, Mongolia, the UAE, Moldova, Norway, Belgium and Italy. Look at the background which has been worked out with these countries before coming to the point of ratification of these tax treaties in the House. A lot of work has been done and a lot of thought has been given to how these international tax treaties will affect Canada and those countries and whether those effects will be positive or negative. We have the figures, the facts and the effects they would have on Canadians if the strategy of these tax changes is implemented, and we can debate that.

However on the flip side we have Kyoto. We are talking about the ratification of a plan. We have not seen any details from the government. We have no impact study. We have no idea what the costs will be. Yet the government wants us to go ahead and ratify an accord on which we clearly do not have enough background information.

Why has the government approached the Kyoto accord in such a backward way with regard to the implementation and then ratification? It is not following the consistency that we have with a bill like Bill S-2.

Clearly we want to get all people onside. That is really to what it comes down. If we want to have successful legislation, if we want to have all Canadians on board to achieve our environmental goals, whether they be reducing emissions or cleaning up air quality, whatever the strategy might be, and if we want to have the most success with any form of a strategy, all stakeholders should be brought together. It is not at all a proper to go about using a divide and conquer type of strategy, especially when dealing with important legislation, legislation that will affect generations to come.

The government refuses to take the prudent steps to bring stakeholders together to rally around the environment. It refuses to engage Canadians with the proper facts, figures and effects the Kyoto accord will have on them. It refuses to bring Canadians to the floor to work and to get them behind the accord.

Instead huge concerns have been raised across the country. The opinions of Canadian on the accord have plummetted because the government has not come clean with the effects of the ratification on them and how it will be implemented. None of this has happened, and the government has not been straightforward with them.

I think of my own province of Alberta and of some concerns many Albertans have brought to my attention. Much of the industry voluntarily has been moving in the direction of trying to implement certain strategies to reduce emissions, if that is how it affects their production, to improve their production methods and to go green, as many of them say when it comes to natural resource production.

They have done that on their own because they know Canadians expect that from them. They expect investments in a greener way. They expect better air quality. They expect certain production methods to improve with technological investments. Many of them are making those efforts regardless of the Kyoto accord. They are putting together their own implementation plan in achieving those goals within their own industries.

After I looked at the summary in Bill S-2, I looked at some of the tax conventions signed in the past between Canada and Norway. Let us look at clause 10, which addresses the whole issue of royalties and how royalties may be effective in each of the host countries and if we need to be aware of any negative effects. They are worked out so that Canadians know that, in signing this tax treaty, there will be no negative effects on their income or any tax royalties that may collected in home countries like Norway and here in Canada.

Proposed paragraph (1)3 of article 12 of the Income Tax Conventions Implementation Act, 1998, states:

The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including payments of any kind in respect of motion picture films and works on film, tape or other means of reproduction for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process or other intangible property, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

That gives us an idea of the amount of thought that went into that proposed paragraph of the income tax convention which was signed initially in 1967. It considers the effects when it comes to copyright use of literary, artistic or scientific work and how it may be affected by a tax treaty signed between these two countries. The government and bureaucrats have gone as far as to identify these areas in the bill and how they could affect us negatively. Obviously we would take that into consideration before we entered into any sort of tax treaty with another country.

On the flip side I have to continue to use Kyoto as an example of the process the government has chosen. I do not know why it has not followed the consistency as identified with Bill S-2. It is asking us to ratify the accord. We still do not know the effects of that accord on any part of the economy.

Bill S-2 talks about the effects of literary, artistic and scientific work on tax treaties. At least we have the information before we engage in any sort of tax treaty with another country. We know the implementation strategy and the effects of it if we sign onto the tax treaty. We can now go ahead, deal with it and ratify it.

We do not have to go into it blindly and ratify it, like the Kyoto accord. We are being asked to ratify this without any form of implementation strategy whatsoever.

I want to cite another part of Bill S-2 just to make the point about knowing ahead of time the effects that any sort of tax treaty will have on Canada.

One country that Bill S-2 deals with is Kuwait. The Canada-Kuwait Tax Agreement Act was enacted initially in 2002. Ultimately in harmonizing some of our tax treaties now under Bill S-2, we deal specifically with different parts of tax treaties as they pertain to Kuwait. I will read a couple of sections so we can understand the type of thought that has gone into this tax agreement.

Section 4(1) states:

Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Conventions and the provisions of any other law, the provisions of this Act and the Convention prevail to the extent of inconsistency.

(2) In the event of any inconsistency between the provisions of the Convention and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

There is constantly reference to any potential problems that may come up with any sort of tax agreement, ensuring that we know exactly how they will be dealt with if there is any conflict or any misinterpretation.

It is clear, within this document through the implementation plan of Bill S-2, that any sort of conflict which may come up will have a resolution method. We will know how to deal with that one on one. We will know that there is a process that we can go through to ensure that tax income of Canadians is protected from double taxation and other forms of problems when it comes to conflicts that could arise with many of these countries.

As I said, because I know we will be debating Kyoto very shortly in the House, none of that can be said for the Kyoto accord. None of that can be said in the sense of the sorts of effects that international agreements, which are currently signed, can have when they come into contact with the Kyoto accord.

We are talking about international tax treaties. However one of the interesting points and one of the biggest inconsistencies with the Kyoto accord is that we are being asked to ratify that accord but we do not have any background information.

We still do not have any information from the government on one of our questions. If we sign onto the Kyoto accord, how will that affect some of our other international agreements, including NAFTA. Ultimately there will be some huge legal ramifications under the obligations of Kyoto. Outside of having any sort of cost analysis, we still do not have any sort of analysis from the various legal departments of the government as to whether there will be conflicts within, say, the environment department, industry or international trade if we sign the Kyoto accord. There could prove to be a huge violations under agreements we currently have with other countries, whether it be trade issues, defence issues or in the case of Bill S-2, tax issues. It begs the question, how are we going about this?

Just before we revert to the Kyoto debate, we are debating a bill that has gone through serious scrutiny and a process of working out an implementation strategy. How it will affect Canadians in an important issue like revenue and their incomes has been worked out. Then we can moved to the point, once everything is clear, to ratify it. Canadians have had a chance to see how it will affect them. We have worked out mechanisms in the event of conflict to ensure there are certain procedures that can take place. Basically we are presenting all the items on the floor of the House. We are able to debate them, whether they are positive or negative, Canadians can say if they support it or not and we can go ahead and ratify in this place.

As we will see, when we revert to the debate on Kyoto, that none of that sort of thought has gone in to the accord. None of the information has been presented to the House or Canadians in a way which they deserve to be presented. Unfortunately we will be faced with a vote in the House on the accord without the proper information that Canadians deserve to make the proper decisions on whether to engage in that sort of an agreement.

I would also like to address another country, like the United Arab Emirates, in which I think many people have an interest in the growing investment. If we look at part 3 of the bill, specifically the sections to be dealt with under Bill S-2 as it pertains to the UAE, we see the different provisions again.

There is a lot of effort being made to ensure that there is no the duplication and conflict within tax policy to ensure that Canadians are having the highest level of protection from double taxation. If we look at the different schedules outlined here they all deal with those particular issues to ensure that there would not be any effects of double taxation and that there is consistency. That is something I continue to raise, the lack of consistency when it comes to the government dealing with legislation. However, when we look at the implementation plan of Bill S-2 there is consideration given to consistency. Unfortunately, we are not seeing that across the way.

Part 1, subclause 4(1) states:

Subject to subsection (2), in the event of any inconsistency between the provisions of this Act or the Agreement and provisions of any other law, the provisions of this Act and the Agreement prevail to the extent of the inconsistency.

Part 1, subclause 4(2) states:

In the event of any inconsistency between the provisions of the Agreement and the provisions of the Income Tax Conventions Interpretation Act, the provisions of that Act prevail to the extent of the inconsistency.

Part 1, clause 5 states:

The Minister of National Revenue may make any regulations that are necessary for carrying out the Agreement or for giving effect to any of its provisions.

This is similar to the tax treaty that was signed with Kuwait and now with the United Arab Emirates. It is clearly spelled out that if there are any violations within our tax code, if there are any violations between other countries and Canada, that there is a proper recourse available to Canadians and to the government to ensure that the protection of income would be there and there would not be any double taxation issue to deal with. On that issue there is no mention at all in Kyoto about any of these issues and it is a big concern.

The last two countries that I will mention are Norway and Belgium. There are important changes being made in light of all the investment going into these countries or Canadians working in these countries. We can see some of the tax freebies that were implemented in the past, and that many of these international agreements that we enter into with other countries affect other agreements that are already in place. I will give an example from the Canada-Belgium tax convention. Part 6, subclause 8(1) states:

Schedule II to An Act to implement conventions for the avoidance of double taxation with respect to income tax between Canada and France, Canada and Belgium and Canada and Israel is replaced by the Schedule II set out in Schedule 6 to this act.

There is always mention of certainty and the ability for us to ensure there is no conflict. There are a number of other areas which list the protection of intangible property and the use of equipment. All the details are outlined. That is why, on this side of the House, we have given in the past our support to Bill S-2. We have said that, even though the bill was introduced in the Senate and that we have had some concerns with that, we support the effort to reduce the overall barriers to trade and to protect Canadians from double taxation, and to continue to work in a more global economy.

We know that tax treaties are a positive thing. The official opposition has continuously supported the government in its endeavour to sign those international tax agreements. It makes it difficult for Canadians to get behind a government that shows such a lack of consistency as it approaches other areas of international agreements, and the Kyoto accord is a perfect example.

In the ruling that was recently given before we entered into debate on Bill S-2 the Speaker ruled on a point of order raised by the Leader of the opposition as it pertained to the validity of introducing the Kyoto accord in the House, given the fact that maybe it had not gone through the proper procedure. The Speaker ruled that the executive had a right to enter into any international agreement and could ratify any international agreement without bringing it to the House. We are fortunate that we have the opportunity to have a vote on Kyoto, because the government could have gone ahead and ratified it without getting the consent of Canadians through this place.

The point being raised is that we must have the opportunity to have and open and honest debate. I have demonstrated with Bill S-2 the fact that there must be many considerations taken before signing any form of international tax treaty. We must do a lot of ground work. We must have a strategy for implementing those particular tax agreements. We must know how those agreements would affect Canadians. We would have to take into consideration a lot of the negative and positive effects that could come from signing international agreements.

We have not been able to do any of the things that we end up doing in this particular place when it comes to the Kyoto accord. Other than discussing some of the effects on the environment, the effects on Canadians in a general way, and how we can try to improve the environment through Kyoto, there is no real cost structure being presented by the government as to the negative effects on the economy, on the jobs of Canadians and their families.

That is something that makes it difficult for us. We do not have an implementation plan that we could discuss, as we are doing with Bill S-2, and to look at all the different aspects. It makes it difficult with the Kyoto accord for this side of the House to say that we will sign on with the government and that we will say yes to the accord when there is no implementation plan to ratify this particular accord.

That is something that Canadians have said over and over again. They would like to do more for the environment. I know we in the opposition would too, but we need to know what we are getting into before we give our consent.

It is important that I put on the record that we will be supporting Bill S-2. Notwithstanding the fact that the bill was introduced in the Senate, which is unelected and lacks legitimacy to address legislation prior to the House of Commons, the Canadian Alliance will be supporting Bill S-2 as an initiative to expedite tax procedures for Canadians abroad, reduce tax evasion, and focus CCRA resources on collecting taxes from Canadians living in Canada.

It is something that we generally tend to support. We would have liked to have seen a little more thought being presented by the government when it comes to how we could make our tax jurisdiction here at home even more competitive in light of some of the countries that we are signing this tax treaty with.

We could always do more in this country to evaluate how we can be more competitive to improve our productivity. Canadians expect the government to review that on a constant basis and look at the many aspects of regulations. They expect to know how the regulations would affect the ability of Canadians to produce here at home, and how the government is addressing the concerns that many Canadians have about tax levels and debt.

This is something that I wish would have been addressed more seriously by the government, especially in light of how some of these tax treaties would affect our competitiveness among some of these countries who may be more competitive than us. We may in fact need to make some changes to those rights and reductions in overall taxes. A simplification of the tax system is also something most Canadians would like to see. Unfortunately, despite the fact that there has not been any real thought put into that process, we will be supporting the bill.

Finally, why is it that the government follows that form of inconsistency? Why could it not have brought all stakeholders together, especially on an accord as important as Kyoto? Why could it not have followed the same sort of procedure that it does with other forms of international treaties, like Bill S-2 which we are debating today? Why could it not have done the same sort of background work, the checks, the cost analysis, and the effects on the economy, which are all important parts of Bill S-2, with Kyoto so as to bring all those facts and figures to the House?

Canadians could then see what they are getting into by signing on to Kyoto before ratification is forced through the House, as it is being done now. It would give us a chance to debate the implementation plan and see in fact that there is an implementation strategy in place, and then promptly and properly go through the process of ratification as is being followed with Bill S-2?

It is a shame the government does not show that form of consistency. If it had maybe we would have had a consensus in the House. Maybe all sides of the House could have come together to support the Kyoto accord as an important international agreement as is Bill S-2. We would have had a long term goal with Canadians working toward meeting the targets that would have been outlined under an implementation strategy that is far too absent under Kyoto.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to rise on Bill S-2, to implement an agreement, conventions and protocols concluded between Canada and Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion and to amend the enacted text of three tax treaties.

First, I would like to point out that, in the title of the bill, there is an error in the French version, because Moldova is the name of the country in the language of the country, but in French, we say Moldavie or république de Moldavie. It seems to me that this could be corrected without us having to go through a lengthy procedure. I remind the House that, otherwise, we would have written Italia, instead of Italie and, in this sense, it seems to me that we must write it correctly in French. Perhaps in English it is indeed Moldova.

I also remind the House that Moldova became independent in 1991. It is interesting to see that the Canadian government is capable of making agreements with newly sovereign countries. I am convinced that this will be the case when Quebec decides to become a sovereign country.

Bill S-2 does not pose any problem with regard to its content and the Bloc Quebecois will support it. However, the problem is what is not in the bill, particularly concerning the issue of tax havens, and this is not the first time that the Bloc Quebecois has pointed this out. I know that, since 1994, my colleague from Saint-Hyacinthe—Bagot has constantly been mentioning this issue of tax havens.

Bill S-2 would have been a good opportunity to denounce tax conventions that are a problem. To give an example, tax conventions between Canada and Italy, and between Canada and Barbados were signed at the same time. In the case of Bill S-2, we are re-opening the agreement with Italia to improve it. In the case of Barbados, we could easily have done the same to put an end to this tax agreement, because Barbados is indeed a tax haven.

There is a rationale for not wanting to force businesses or individuals that already pay taxes in another jurisdiction to pay taxes on the same income in Canada. If it is logical to have these kinds of tax treaties, it is because those countries, like the ones mentioned earlier, have tax rates that are normal for a responsible state that has to collect a certain amount of money to provide services to its people.

In the case of Barbados, it seems to me that we are not dealing with a country that has normal tax rates. Here are a few example. In Barbados, the tax rate is 1% when profits exceed $15 million US. It goes up to 2.5% for profits under $5 million US.

We can see that not only is the tax rate totally ridiculous, but the approach used is completely opposite to the one that we have developed in Canada and in Quebec, where we have progressive tax systems. In this case, small businesses, or relatively small businesses, are paying the most tax. When I say that they are paying the most tax, again it is relative; we are talking here about a 2.5% tax rate, compared to slightly less than 30% in Canada.

Barbados has no capital gains tax, no payroll deductions, and no monitoring or control with regard to trade. Therefore, it is clear that, in the case of Barbados, there is no double taxation and that, in these circumstances, a tax treaty makes no sense. A tax treaty to avoid double taxation implies that both jurisdictions have an appropriate tax rate, one that is normal for a responsible state, as I was saying earlier.

On February 27, 2001, the Auditor General even said that “one of the biggest threats to the tax base lies” in our openness to countries some Canadian taxpayers and corporations use as tax havens. This should be a concern to all of us. When a Canadian corporation decides to avoid paying taxes by opening a branch in a tax haven, it is the taxes of those who choose to take their responsibilities in Quebec and in Canada that go up.

I think it would have been important to use the bill before us to put an end to our tax treaty with Barbados. This is not an immaterial or insubstantial issue. The Auditor General referred to it in her 2001 report, as I mentioned earlier. What caught my attention is that Canada's direct investments abroad totalled $257 billion in 1999 figures.

Some $134 billion were invested in the United States and $29.2 billion in the U.K. That is understandable. But I was quite surprised to see that the third country where Canadians invest the most is Barbados, with $16.8 billion.

I just cannot believe that those investments of $16.8 billion have all contributed to the economy of Barbados. For the most part, these direct investments were done to avoid paying taxes in Canada with the consent of the Canadian government, because, as we know, it is not illegal. This has to stop.

Let me give more examples showing how important this system has become. Out of our total investments abroad of $257 billion, $27.9 billion were invested in Barbados, the Bahamas and Bermuda, three countries the OECD considers tax havens. This represented 10% of all Canadian investments abroad in 1999. This is more than all Canadian investments in Asia, Latin America and Africa. This is far from insignificant. It is therefore imperative that the Canadian government take the bull by the horns and terminate these tax treaties with tax havens.

At this time, the total amount of money invested in tax havens—there are 40 or so in the world—is estimated at $5,000 billion, one fifth of which is considered laundered money.

By being extremely permissive in tax treaty matters and allowing tax havens to be considered legitimate jurisdictions as far as taxation goes, the Canadian government is dodging its responsibility to control money laundering. I repeat that one fifth of the money invested in tax havens is laundered money.

What is cause for concern is the fact that the Department of Foreign Affairs and International Trade promotes tax havens. In a July 16, 1999 document, we can see that one of the conferences scheduled by CanadExport was to demystify tax havens. The items covered were: the origin of tax havens; their use as a financial strategy; the criteria for choosing a good tax haven--as if there could be such a thing as a good tax haven; tax havens and the Canadian tax system; and finally, the steps to follow in order to use them properly.

It is clear that not only did the government duck its obligation to put an end to tax treaties with tax havens, Barbados in particular, but it also promoted tax havens through some of its agencies. On the Department of Foreign Affairs and International Trade Web site, one can order a booklet entitled “Barbados: A Guide for Canadian Exporters”.

It is very worrisome to see that Canada promotes tax havens. I raised the issue a bit earlier; we all know that much of the money placed in these tax havens constitutes not only tax avoidance but money laundering as well, and is probably used by terrorist groups around the world.

There is a blatant contradiction here with what the government officially said about measures that were taken after September 11, 2001.

As I was mentioning earlier, it is interesting to see that, since 1994, not only has my colleague from Saint-Hyacinthe—Bagot, when he was the finance critic, asked that the Canadian government review its relations with tax havens, but the OECD has also asked members—we know that Canada is a member—to consider denouncing tax agreements that may have been concluded with tax havens.

Bill S-2 would therefore have been a good opportunity to raise this issue, particularly because the tax agreement with Italy was signed at the same time as the agreement with Barbados and Italy is one of the countries with which we have reviewed our provisions in Bill S-2.

Until now, the federal government has not listened to the OECD, to the Bloc Quebecois or all the groups in society, including ATTAC-Québec, which are asking the government to assume its responsibilities concerning this laxness toward tax havens. Since the finance minister's businesses were using tax havens—we have identified more than a dozen numbered companies that are operating in Barbados, in Bermuda or in the Bahamas and that are owned by Canada Steamship Lines—we thought that, being judge and jury, the finance minister was uncomfortable raising an issue that, I remind the House, is not illegal, but may have some illegitimacy. When the person responsible for the finances of a state such as Canada encourages his own businesses to operate in tax havens, we are justified in asking some questions.

However, now that we have a new finance minister, it seems to me that we should be able, especially since the former finance minister wants to be the next Prime Minister of Canada, to have a debate not only for the good of Canadian and Quebec taxpayers, but also for the good of politicians. It might raise questions when the public sees this lax attitude towards tax havens and businesses that use them and realizes that some of our most prominent politicians also take advantage of these tax havens.

Therefore, I think that in the next few weeks, maybe in the budget that will be coming in February or in March, the government should propose a number of ways to deal with this issue.

We have made suggestions and we are making them again today. We think that, in the free trade area of the Americas negotiations, we should seek the addition of a clause prohibiting harmful tax practices, as defined by the OECD. We know that a number of jurisdictions across the Americas have harmful tax practices.

The Bloc Quebecois is also demanding that Canada withdraw as soon as possible from its tax treaty with Barbados, as recommended by the OECD. We are also asking that the Canada Customs and Revenue Agency strengthen its international service to discourage tax avoidance through the use of tax havens. We have also been asking since 1996 that an overall reform of the Canadian tax system be undertaken to eliminate tax loopholes as well as certain abusive practices that are used at the expense of the average taxpayer. Taxes that are not paid by large businesses and by those individuals who are rich enough to use these schemes are paid by middle and low income people in our society.

Lastly, I would like to make two suggestions or recommendations concerning tax havens. I think the income earned by Canadian corporations in tax havens should be taxed at the rate in effect here in Canada. Again, I will use Barbados as an example. The tax rate there is 1%, compared to about 29% here. The income of the corporations and branches in operation in that country should be taxed here to make up the difference. In other words, a tax rate of around 28% should be applied. We should also prevent agencies and departments and the government as a whole from providing funding or any form of assistance to corporations which have decided to shirk their fiscal responsibilities. This would be consistent with the official position of the Canadian government.

As I said earlier, the problem with Bill S-2 is not really what is in it but rather what has been left out.

Having said that, as I mentioned at the beginning of my speech, the Bloc Quebecois will be voting in favour of this bill.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I am pleased to have the opportunity to say a few words on Bill S-2. I am making these comments on behalf of the member for Kings--Hants, who is the official critic in this area but cannot be in the chamber at the moment.

As we are all aware, the bill lets Canada ratify income tax treaties with Kuwait, Mongolia, the United Arab Emirates and Moldova. Canada did not previously have tax treaties with any of these states. It also ratifies treaties with Norway, Belgium and Italy and corrects errors in the English version of the treaties with Vietnam, Portugal and Senegal. These treaties set out a framework for taxes on investment income flowing between Canada and other countries. They provide mechanisms to avoid double taxation and prevent tax evasion.

Over the past several years, Canada has negotiated tax treaties with about 80 countries. These agreements deal with problems that arise when residents of one nation earn income in another country. They are based on the model double taxation convention prepared by the Organization for Economic Cooperation and Development.

A key problem that these treaties address is that of double taxation. That can occur when the same person or business pays comparable taxes in two or more states on the same taxable income for the same period of time. For example, double taxation would occur if a resident of Italy were taxed in both Canada and Italy on dividend income received from a Canadian company. Preventing double taxation helps facilitate investment.

To prevent double taxation, each treaty limits the application of each country's respective tax law and ensures that taxes paid in one country are recognized in the other country as well. Limits on withholding taxes in the country where the income is earned are established. An exemption is provided for certain income that would otherwise be taxed in the country where it is earned.

The treaties outline the maximum withholding taxes that may be charged on different forms of income, such as dividends, royalties and interest. These will vary by country. When the income is then received in Canada, double taxation is prevented by subtracting the tax already paid from what would otherwise be payable on that income.

The treaties also provide for measures to prevent double taxation of income earned in Canada by residents of the countries concerned.

Another problem addressed by tax treaties is that of tax evasion, whereby income earned abroad is not reported in Canada. To prevent tax evasion, the treaties provide for the exchange of information.

A further area that needs addressing is one that transcends fiscal, taxation and investment issues, and that is the very important area of human rights. Canada must ensure that the countries we have tax treaties with recognize the importance of human rights. Also, it must be more than a perfunctory recognition. It must be a real and cognizant recognition. If some of these countries have a checkered history of human rights, then the government should undertake all steps to ensure that the human rights record of the foreign signatory is improved.

That issue was studied recently by the foreign affairs and international trade department and it indeed has reported back on it. The specific issue is this: Should Canada enter into double taxation agreements with countries possessing poor human rights records? The response from the department is as follows:

The protections that a Double Taxation Agreement...can provide for Canadian businesses (e.g., transparency, rule of law, and greater predictability/stability) are consistent with Canada's policy of encouraging governance, democratic and human rights reforms wherever necessary. The increased trade and investment that may result from such agreements can lead to economic development (an important factor related to the promotion of human rights) and provide additional vehicles for promoting Canadian beliefs and values--central among which are the promotion and protection of human rights. We encourage and fully support ongoing Canadian private sector efforts to work with stakeholders such as local communities, NGOs and labour unions to develop and implement innovative environmentally and socially responsible business practices.

For these reasons we would have no concern in finalizing DTAs with the following countries: Belgium, Norway, Italy and the United Arab Emirates. In doing that we would make these comments.

The UAE has acceded only to the convention on the elimination of all forms of racial discrimination and the convention on the rights of the child. Canada is not aware of excessive human rights violations in the UAE. Canadian concerns include the general lack of transparency in judicial proceedings and the fact that there are no elections or legal political parties in the UAE.

Mongolia is a party to all six major human rights instruments. Canada is not aware of excessive human rights violations in Mongolia. We are, however, concerned about the weaknesses of the penal system and reported discrimination against women.

Moldova has acceded to all six major human rights instruments. Human rights are generally respected in Moldova, and the concerns that Canada notes have to do with the problematic administration of governance and justice. Complaints arise, of course, about the mistreatment of ethnic Albanians on the grounds that they harbour separatists and terrorists, but the government and the governing system understand the need for reform and seem to be making progress.

Kuwait has acceded to all six major human rights instruments. Canada is not aware of any excessive human rights violations in Kuwait. Canada remains concerned, though, about the denial of political rights for women.

Just because the various countries do not have any egregious human rights violations does not mean that the human rights records of the various countries could not be improved. For instance, in regard to Kuwait, how can the government talk about Kuwait's humanitarian record as no longer egregious if it still denies political rights for women, who make up about one-half of the population? In Canada would this not be seen as egregious human rights violations?

Furthermore, what is the difference between gender and race with respect to human rights? What if the same violations were being made in Kuwait or some other country that we have a tax treaty with and one-half of the population was denied political rights and they were black? Case in point, we do not have a treaty with Cuba. I assume this is for many reasons, but one could surmise that one of the reasons is that Cuba does not have a great human rights record.

My point in all of this is that the government must be satisfied that the human rights records of these countries are on a par with Canada's or must at least be seen to be improving. After all, these countries want investment from Canada. In return, it is high time that any of these human rights violations be rectified. This is one of the positive effects emanating from globalization.

Our concerns notwithstanding, we support the bill.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I was not going to speak on Bill S-2 today, but in listening to the riveting debate taking place in the chamber in the last hour, I have been motivated to get up and say a few words about this very important bill.

This bill emanating from the Senate is about a treaty with different countries on a very important financial matter, that is, taxation.

First I would like to say a few words about this concept of double taxation. It is incredible to me that we are willing to enter into agreements with other countries to avoid double taxation when double taxation is rampant for our own citizens within our own country.

I could give many examples. The best one, I suppose, is the one of my private member's bill, which I hope will come forward one of these days. In nine years I have never yet been picked in the lottery draw on private members' business, but with the rules being changed hopefully I will get an opportunity to debate it now. It is a double taxation bill because it deals with the fact that every one of us has to pay income tax on money that we earn in order to have money to pay our property taxes. We have to pay taxes on money that we earn solely for the purpose of paying taxes. That is double taxation. I hope I can get a chance sometime soon to have that private member's bill brought forward so that within this country we can avoid the kind of double taxation which Bill S-2 addresses with respect to our citizens who have businesses abroad or some of our citizens who live in other countries who still have business interests back home here.

Another example of double taxation, and really it is triple taxation, is that when we buy fuel we first have to pay income tax on the money we earn so that we have some money in our pocket when we pull up to the service station. Lo and behold, about one-half of the cost of fuel these days is taxation in one form or another if the income tax that the energy companies pay is included. Really, it is a 100% rate of taxation. I pay 30¢ for the actual fuel and the rest of the bill, 30¢, is for taxation at various levels. It is a 100% rate of taxation on gasoline, but when I pay it I am paying it with money on which I have already paid taxes. That is also a form of double taxation.

I could go on. There are many examples of this. Every time I buy something I pay the GST. It does not matter what it is. In Ontario, when I escape from the wonderful province of Alberta, I end up paying not only the federal tax but also the provincial tax, even on a simple thing like a $7 meal at McDonald's. Although I should not admit that I sometimes eat at McDonald's because it gives away my diet plan, I do eat there occasionally. The other day I think it came to about $7 with a tax bill of approximately $2 on it. It was incredible. I still think I got ripped off, but more by the taxman than by the young lady who served me a Big Mac. That is double taxation. That is a very expensive Big Mac, and please do not tell my wife because she thinks I am still on my diet program. That was my one occasion this week when I sort of dropped the ball.

Double taxation is to be avoided on principle, so I support Bill S-2 because it states that people who have business interests in other countries do not have to pay taxes in both countries. There is an agreement made to pay in only one.

One of my colleagues just pointed out to me that when we buy fuel we pay GST on the excise tax. I remember very early on, way back in 1994 in his first budget, that the hon. member now seeking the leadership of his party, and to become the next prime minister, got up and said they were going to increase the taxes on fuel by 1.5¢. I remember saying then that it was not 1.5¢ but actually more. It was really an increase of 1.605¢. When we add the GST to it, there is a tax on a tax. We actually pay GST on the excise tax that we pay when we buy gasoline: absurdity of absurdities. Of course we need to get rid of double taxation. I would like to see us make a treaty with ourselves so that our citizens do not have to pay double taxes. I am looking forward to that.

The other thing that I want to address very briefly is of course this idea of treaty making. Some of my colleagues, especially the member for Edmonton--Strathcona, drew some attention to this. I too think it is totally outrageous.

I scanned Bill S-2 before I got up to speak. I find it interesting that in Bill S-2 there is a whole section for each country with which we are entering into an agreement. It is put out in detail. It is the actual wording of the treaty. I expect we will pass Bill S-2, because I am sure the Liberals will vote for it, I am going to vote for it and I imagine most of my colleagues will. It will most surely pass on the strength of the Canadian Alliance vote in the House today.

It will pass, but what we have is the actual passing of actual wording of treaties right there in the bill. That is what is being passed in the House. We must compare that to what we have been seized with in the last couple of days, this Kyoto affair. What we have there is a simple motion that says “let us ask the government to sign a blank cheque”. There are no details in it. It is just a motion that says we ought to ratify Kyoto.

Why can we not get this lame duck government to bring into the chamber an actual treaty and let us debate it and let us vote on it? Instead, what the government is saying is to give it the authority and it will ratify the treaty and will not bother telling the House any of the details, the costs, the implementation plan or anything, none of that; it is just “let us ratify it”.

I trust my wife a lot. She writes cheques occasionally on our account, but I never ever let her even write a cheque without reporting back to me immediately and usually in advance how much it is for and who it is to. I need to know that.

The Prime Minister and the government are asking us to sign a blank cheque. Then, of course, in the debate a couple of days ago and in some of the challenges, the parliamentary secretary had the audacity to get up and say that it does not really matter if it is not passed by the House, because the government has the right to ratify it anyway.

What kind of a democracy is that? I do not think it is a very good democracy and I would like to see that improved.

With respect to Bill S-2, my comment is simply this. Let us apply at least the same standards to Kyoto that we are applying to Bill S-2. Let us have the treaty. Let us have the voting. Let us have an actual authoritative Parliament ratify the treaty instead of this garbage that we are having to put up with from the other side on the Kyoto treaty.

Mr. Speaker, I will restrain myself. I know I have more time, but I am going to just say that this is enough for this particular occasion.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

I declare the motion carried.

(Motion agreed to, bill read the third time and passed)

[The Deputy Speaker]

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Vancouver East, Chinese Canadians; and the hon. member for New Brunswick Southwest, Health.

The House resumed consideration of the motion and of the amendment.

Kyoto Protocol

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am very pleased to take part in this debate on the motion which reads:

That this House call upon the government to ratify the Kyoto Protocol on climate change.

I think everyone knows that the Bloc has been asking for months now that we ratify the Kyoto protocol.

I want to congratulate the member for Rosemont—Petite-Patrie who was very persistent when the government seemed to waver about this ratification. He worked relentlessly and formed a coalition; more than 70 groups joined in, even large Quebec labour confederations. We owe it largely to him if we are now debating in the House this motion on the ratification of the Kyoto protocol. All this lobbying pushed the Prime Minister into promising, at the Earth Summit, that this protocol would be ratified before the end of the year.

When we look at the facts, we realize that Kyoto is the first step that could lead us to a solution to a very serious problem that jeopardizes our planet and the future of our children. If nothing is done, the current warming trend will only get worse. If nothing is done, 50 years from now, the concentration of CO

2

in the air will have doubled and we will be faced with the effects of climate changes, of which we have already had a taste, like respiratory problems, the recurrence of diseases thought to have been eradicated and serious environmental changes. We know that polar bears are already being affected by the melting of the ice cap. If we do not do anything about this, not only are we doomed, but we show an incredible lack of responsibility.

Kyoto will not solve all of our problems. The target is relatively modest, as we know. We are only talking about the industrialized countries lowering their greenhouse gas emissions 6% below 1990 levels.

When we look at the facts and at the known and foreseeable impact our failure to act could have, I think that any responsible person would support the ratification of this treaty, knowing that it is only a first step and that other measures will have to be taken in a few years to further reduce greenhouse gas emissions.

We must reverse the current trend towards global warming and this is even more important for Canada, which is a large source of greenhouse gases.

I know that, sometimes, some members opposite do not like us giving Quebec as an example, but one thing is certain: in Quebec, greenhouse gases have only increased by 2.3% between 1990 and 2000, as opposed to 19.6% in Canada. If we exclude Quebec, Canada's production of greenhouse gases is about the worse. From year to year, Australia can compete with us on this bad record. So, it is essential that Canada act quickly. We know that the United States plays an extremely important role, being the source of about 40% of greenhouse gases, but, per capita, Canada is one of the worst sources of greenhouse gases.

So, between 1990 and 2000, greenhouse gases in Quebec had increased by 2.3% as opposed to 19.6% in Canada. In the case of Quebec, we see that it is possible to find solutions that are both economically viable and geared toward an effort concerning the environment and sustainable development.

If our greenhouse gases have only increased by 2.3% in 10 years, this has happened despite the fact that our use of fossil fuels has increased by 7%, that our gross domestic product has increased by 26% and that the population has increased by 6%. So there is no contradiction between reaching the goals established by Kyoto and ensuring economic development, as well as responding to the needs of the public.

With the efforts that have made by Quebec—to which I shall return later—we are now at 12 tonnes per person, as far as greenhouse gas emissions are concerned—about the European level—compared to the figure for Canada, which is 23.6 tonnes. As I said, this is one of the worst results of the OECD.

When we look at the efforts made by Quebec, they suggest a direction that the rest of Canada could follow. This Parliament absolutely must call upon the government to ratify Kyoto. Canada is one of the key figures in its implementation. I also think that, on the political level, and let us not kid ourselves about this, ratification by Canada, Europe and Japan will put pressure on the U.S., because it will be totally isolated among the developed countries.

I know it is not always easy to convince. This can be seen with Iraq and the International Criminal Court. Ratification by Canada will, however, add to the pressure on the States to also ratify Kyoto.

As hon. members are aware, Quebec made some energy choices in the early 1970s. These are what have allowed us to achieve the results we have today. That was a major debate, and I have referred to it already in another debate. When Robert Bourassa came up with the idea of using the water from James Bay to generate hydroelectricity, an extremely important debate ensued. Some argued that nuclear energy was the way of the future, as far as clean energy was concerned. We now have a hydroelectricity infrastructure that gives us good results as far as greenhouse gas emissions are concerned. And we did it without any federal assistance, unlike the western petroleum industry.

Let us be clear. The Bloc Quebecois is in favour of ratifying the protocol, but not in favour of the Minister of the Environment's plan, because they want us to foot the bill for the third time. We paid once to develop oil in the west, with the Borden line. We had to pay more for our oil and gas than we would have on the international market.

At that time, we bought our oil from Venezuela. It cost only a few dollars a barrel. However, to make the production of western oil and gas cost effective, we were forced to have a single price across the country. As I said earlier, the government invested a lot of money in oil and gas projects in western Canada as well as in the Hibernia project. In fact, $66 billion were invested in oil and gas projects. No investment was made in hydroelectricity. Almost nothing was invested in renewable energies, whereas $10 billion went to the development of nuclear energy, which has become totally obsolete.

We developed our own hydroelectric production, which is compatible with Kyoto targets. First, we were forced to pay more for our oil. Then, through our taxes and through these $66 billion, we had to pay for part of the infrastructures needed for the development of the western oil and gas industry. Now the government wants us to pay because the action plan that is on the table uses 2010 as base year.

Considerable conversion efforts were made by Quebec, by Quebeckers as well as by industry, including the pulp and paper industry and to a lesser extent the steel industry and the metallurgy industry. All these efforts would not count in the action plan that has been proposed to us. We believe that this approach is totally unfair and that it will be detrimental to Quebec. Instead of recognizing the efforts and investments made by Quebec, as it should, the action plan will penalize Quebec and benefit those that have polluted and are still polluting our atmosphere with their greenhouse gas emissions.

We must be clear here. I said it and all my colleagues said it. The fact that we support this motion does not mean that we support the action plan tabled by the minister. Finally, it seems important also to mention that the National Assembly of Quebec adopted, unanimously, a motion regarding the ratification of the Kyoto protocol. I will read it into the record. It is relatively short.

...The National Assembly asks:

That the allocation formula take into account the reductions achieved since 1990 and those that will be achieved by 2008.

That the manufacturing sector be treated equitably and not be included in the energy sector with regard to allocation of emission rights in order to balance the efforts that are asked of all the major economic activity sectors.

That the allocation formula involving the energy sector discriminate in favour of the energy sources that emit less carbon.

That the Government of Canada initiate with the Government of Québec the negotiation of a bilateral agreement on the financing—particularly of targeted measures—and the implementation of the greenhouse gas reduction strategy.

So, after expressing its support earlier this year—I think the National Assembly supported the ratification of Kyoto in May—this motion was passed on October 24, 2002 to remind everyone that it is not because we agree with the ratification that we are going to buy just any action plan. We prefer a bilateral approach between the federal government and Quebec where previous investments by Quebec would be taken into consideration.

I want to point out not only that we consider the action plan to be unfair, but also that the way the environment minister is presenting the Kyoto protocol is extremely negative. We have to understand that with or without Kyoto, we do not have any choice. I went over some figures earlier. Our economic development should be increasingly in sync with a healthy environment. This is not an economic negative, quite the opposite. The Kyoto protocol and our whole approach to sustainable development give us an incredible opportunity to develop new niches. It is true for Quebec and it is also true for Canada.

Therefore, we must be very proactive regarding this issue. We must not just talk about job losses, we must also look at what this will create. In order to achieve this result, the government must pledge to make investments with the provinces, so that we can be successful.

The Bloc Quebecois presented, among other things, a proposal whereby for each dollar given to industries that use hydrocarbons during the transition process toward the implementation of the Kyoto protocol, one dollar would be paid to industries for renewable energies. We presented a report on wind energy, which can create many jobs.

This is not merely a project to meet our needs for electricity or for energy. We already have electricity. But with these projects, we will be able to meet future needs and export our knowledge and know-how all over the world, and particularly to developing countries, which have a huge need for energy and which, right now, often rely on sources of energy that are extremely polluting, including coal-fired plants. As regards such coal-fired plants, I should point out that Ontario and Alberta are not setting good examples.

So, the Canadian government must not only promote the Kyoto protocol, it must also act as a leader in the repositioning of our economy, it must insist on the benefits that could flow from understanding the global situation, and it must look further ahead than the next six months as regards the implementation of the Kyoto protocol.

As I mentioned, there is a huge economic potential relating to environmental protection. Quebec and Canada must be leaders in this regard. There is a principle of equity that is totally non-existent in the action plan, namely the polluter pay principle. It seems to me that if there is one principle or premise on which there is a world-wide consensus regarding the environment, it is the polluter pay principle, which consists in ensuring that those who pollute are the ones who pay. As I said earlier, this is not how the action plan of the Minister of the Environment has been set up. For us, it is a matter of equity vis-à-vis Quebeckers, but it is also a matter of respecting a universally recognized equity principle.

The federal government obviously must not be allowed to use the ratification and implementation of the Kyoto protocol, namely its action plan, to once again paternalistically pass itself off as having the solutions to everything. Today, when we see the Romanow report and the government's response, it is a bit worrisome. This is not the federal government's only centralization initiative.

In the case of implementing the Kyoto protocol, I believe that there must be an agreement right now that the federal government will respect provincial jurisdictions with respect to the environment, natural resources and economic development. I believe this will be the key to success.

I will conclude by saying that the Bloc Quebecois hopes this House will support unanimously, if possible, the ratification of the Kyoto protocol. We must continue the debate on the action plan. Our position on ratification of the protocol must certainly not be seen as support for the action plan tabled.

The Government of Quebec made some recommendations which were well received by other provinces. I urge the Minister of the Environment to listen to provinces proposing solutions to problems raised by provinces, by Canadians and by Quebeckers.

That being said, I think that the way has been laid. The Kyoto protocol is only a first step. We must learn to live with the need to respect the environment, not in a negative but in a positive way. This is a new opportunity to develop not only technologies but also industrial niches. I think that it is with this in mind that we should promote the ratification of the Kyoto protocol.

I am very happy that the Prime Minister suggested that the House debate and ratify the protocol. I remind the House that the Bloc Quebecois would like to see a debate and a vote in the House on any major international treaty, before its ratification.

We spoke about this in connection with the Free Trade Area of the Americas. We are also speaking about it in connection with free trade agreements currently being negotiated, in particular with Latin American countries. We believe it is extremely important that Parliament be allowed to debate international treaties—the major ones, of course—and vote on them before the government ratifies them.

I think that the Kyoto protocol offers a good example which, hopefully, will be followed by the government during the coming months.

Business of the House

[Jacques Saada, Liberal, Brossard—La Prairie, QC]

Mr. Speaker, discussions have taken place between all parties, as well as with the member for Ottawa—Vanier, concerning the order of reference of Bill C-202 listed as Item No. 24 on the order of precedence in today's Order Paper.

In this regard, I move:

That Bill C-202 be referred to the Standing Committee on Official Languages as opposed to a legislative committee.

[The Deputy Speaker]

Does the deputy whip have the unanimous consent of the House to move this motion?

[Some hon. members]

Agreed.

[The Deputy 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, and of the amendment.

Kyoto Protocol

[Bernard Bigras, Bloc, Rosemont—Petite-Patrie, QC]

Mr. Speaker, I listened with great interest to the speech by my colleague from Joliette. First I must say that I appreciated the fact that he made a clear distinction between the ratification and the implementation of the agreement. I would like to ask him a question that deals, among other things, with the federal implementation plan.

He did point out to us that the base year used in the federal plan was 2010, and not 1990 as provided for in the Kyoto protocol. When we look at the increase in emissions by industry, we can see that, between 1990 and 2010, the projected increase is 131% for the fossil fuel industry and 3% for the manufacturing industry.

Can the member explain to us how Quebec will be penalized with this federal plan? Marginal costs associated with the efforts that will have to be made will be clearly greater for the manufacturing industry, which is the backbone of Quebec's economy, than for the fossil fuel industry.

If we take tar sands, for example, we can see that the projected increase in emissions is 310%. Can the member explain to us why the marginal cost will be higher for the Quebec manufacturing industry, compared to the fossil fuel industry, which happens to be in western Canada?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for Rosemont—Petite-Patrie for his question. This looks a little like when we have a fundraising campaign. Members of this House appreciate that this is not a fundraising campaign. It is easy to go and get the first dollars. It is very difficult to get the last ones.

Quebec having grabbed the bull by the horns several years ago and the Quebec industry and several areas having made this choice, we went and got the first savings in terms of greenhouse gases, that is those that were the easiest to get. For example, when we shift from coal energy to electric energy or to dual energy, we get extremely significant returns on our investment.

As time goes by, returns coming from the reduction of greenhouse gases will require more fundamental changes. In essence, and I was mentioning this earlier, what the Kyoto protocol and the inevitable constraint of the respect for the environment require is a renegotiation of a kind of social contract, with regard to our lifestyle.

Since Quebec has already been investing in the reduction of greenhouse gas emissions for several years, the results that were the easiest to reach have already been reached. If we use the year 2010, the effortwe will have to make will be greater than the effort of the extremely polluting provinces. I am not impugning motives or giving a lecture, in this regard.

For example, a number of years ago, we chose thermal energy, including coal from Pennsylvania, which is low grade coal. At the time, this was not a concern. The thermal plant produces a lot of pollution. When we close it, we will have a very significant reduction in greenhouse gas emissions, at relatively low costs.

In this regard, Quebec will then be penalized—and, then again, the distinction must be clearly made between the principle of the ratification of the protocol and the action plan—to the point that, in the report tabled by the government on the impact of the jobs not created as a result of the action plan tabled by the Minister of Environment, we see that Alberta, which is responsible for 31% of the greenhouse gas emissions in Canada, will only have a burden of 10% in terms of jobs not created.

One can see also that this is all very static, because it ignores the fact that, where industry is concerned, new niches will be developed, which will create new jobs. If nothing changes, however, while being responsible for 31% of greenhouse gases, Alberta's share of the burden of jobs not created will be only 10%.

By comparison, Quebec, which is responsible for 12.7% of greenhouse gases, will have to shoulder 30% of the burden of jobs not created, because much more difficult and expensive choices will have to be made now to achieve reduction targets. That is why this action plan is totally unfair and inequitable. It denies the polluter pays principle.

As I indicated, we do not want this plan. There should be negotiations between the Government of Quebec and the federal government on the basis of principles selected by the National Assembly. That having been said, as I mentioned right at the outset—and my hon. colleague from Rosemont—Petite-Patrie mentioned it again later—we are in favour of ratifying the Kyoto protocol, while being opposed to the action plan tabled by the Minister of the Environment.

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I am a bit surprised that the hon. member did not talk about the economic costs associated with the ratification of Kyoto not only for western Canada but to our whole economy.

Does he not worry that the ratification of Kyoto will hurt economic growth in Canada?

Also, could he elaborate on the fact that no other country from the western hemisphere will be ratifying this treaty?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, of course, there will be changes to the industrial structure. When we had the debate on the Canada-U.S. free trade agreement, we also pointed out that there would be changes to the industrial structure. I was among those who supported opening up our borders, but realized that we would need assistance programs for retraining and industrial conversion.

We must approach the Kyoto protocol the same way. Just like free trade, it is here to stay. It is part of the natural evolution of our planet. We must respect nature; if we do not, at some point, we will not have any economy left.

I believe we must deal with this debate just like we dealt with the one on the Canada-U.S. free trade agreement. The question is not to determine if we are against opening up our borders or against the Kyoto protocol. The question is to see how we are going to convert of our industries and retrain of our workers. It isclearly the government's responsibility.

However, I think that the impact has been exaggerated. A study was conducted in Quebec by an environmentalist who is also an economist. He believes that the price of gas will go up by about 1 cent per litre. When one considers that, in the Montreal area, the price of gas can vary from 69 cents one day to nearly 80 cents the next day, a 1 cent per litre increase will have no impact whatsoever on the economy.

We must see the bigger picture. Maybe a few jobs will be lost, but I do not think that number will be significant. There will be a lot of changes to be made in our way of doing things, but there will also be some job creation associated with the implementation of a smart plan—not the one that has been proposed to us—for reaching our Kyoto targets.

It is abundantly clear that the United States is the only country that is directly targeted among industrialized nations. There is a modulation associated with the results in terms of reducing greenhouse gas emissions, depending on the level of development of each country.

For Latin America, it is not the same at all.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I would like to point out to the hon. member from the Bloc who just spoke that Canada comprises about 2% of the world's population. Kyoto is about limiting greenhouse gas emissions, the primary one of which is carbon dioxide.

With one-half of 1% of the population and 2% of emissions worldwide of carbon dioxide coming from our country, does he really believe that the economic risk and the economic loss is worth what will be nothing but an infinitesimal change to the total amount of carbon dioxide emitted in the world?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I think that the level of our emissions compared to the rest of the planet is not the issue. What is important is how we take our responsibilities, as Canadians and as Quebeckers, with regard to a universally recognized problem.

I will remind members that Canada, if we exclude Quebec, is the worst polluter per capita in terms of greenhouse gas emissions. Australia may be worse than we are some years. However, last year, Canada was again the worst polluter per capita in terms of greenhouse gas emissions. Therefore, we have a great responsibility to succeed in meeting our Kyoto targets, which call for a reduction of our greenhouse gas emissions to 6% below 1990 levels.

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, I rise on a point of order. In view of the great interest in this debate, I would ask for unanimous consent that the House continue to sit after the ordinary time of adjournment until 10 p.m. in order to consider government order Government Business No. 9.