Debates of April 19th, 2002

Royal Assent Act

[Ralph Goodale, Liberal, Leader of the Government in the House of Commons]

moved that Bill S-34, an act respecting royal assent to bills passed by the Houses of Parliament, be read the second time and referred to a committee.

[Paul Devillers, Liberal, Secretary of State (Amateur Sport) and Deputy Leader of the Government in the House of Commons]

Mr. Speaker, I am pleased to rise today to speak to Bill S-34, an act respecting royal assent to bills passed by the Houses of Parliament.

The royal assent ceremony is based on the customs and conventions developed over previous centuries in the U.K. We rely on this ancient U.K. ceremony of royal assent for our own royal assent ceremony, which takes place in the Senate chamber.

I am sure that all members will agree that our royal assent ceremony is an important tradition of parliament. The ceremony lasts about 30 minutes and has taken place on 34 occasions in the course of the 36th and 37th parliaments. Each time a ceremony occurs, all MPs and senators must suspend their work on parliamentary business.

The royal assent ceremony requires the attendance of the Governor General or her deputy, a judge of the supreme court, who also have to suspend their work in order to attend the ceremony.

In recent decades, a number of issues related to royal assent have been identified by members of this House and the other place.

In 1983, the Senate launched discussions over alternatives to the procedure whereby the Governor General, in the Queen's name, signifies assent to bills passed by the Houses of Parliament.

In 1985, the standing rules and orders committee of the Senate issued its fourth report, recommending a change in the royal assent procedure. Also in 1985, in the House of Commons, the McGrath Committee Report on the Standing Orders recommended the simplification of royal assent.

In 1988, a bill on modernizing royal assent was introduced by the then leader of the government in the Senate. In 1988, the current leader of the opposition in the Senate introduced a similar bill.

The McGrath Committee and others have pointed to a number of issues regarding the royal assent ceremony. The ceremony interrupts the business of the House and the other place for approximately 30 minutes. This may have been appropriate in an earlier age, but in today's parliament, the need to stop all of the business of the House whenever royal assent is required no longer seems appropriate.

So, it is not surprising that other countries and provinces have acted to modernize the royal assent process by authorizing a written procedure for royal assent.

The traditional royal assent ceremony will also present members of this House with practical difficulties when renovations to the Centre Block begin, and continue over about eight years, with the House and Senate meeting in different buildings.

Particularly in the winter months, the maintenance of the traditional royal assent ceremony as the only way of signifying royal assent would be a burden on members of the House.

Members may be surprised to learn that Canada is the only Commonwealth country that still uses a traditional, but time consuming, royal assent ceremony on a regular basis as a sole procedure. Bill S-34 would aim to modernize the royal assent ceremony in keeping with what has been learned in other jurisdictions which share our parliamentary heritage.

In this regard members may be interested to know that the United Kingdom passed legislation in 1967 to allow royal assent by written declaration. In Australia the governor general's consent to bills is usually made known by a message to the president of the house of representatives and the speaker of the senate.

Other provinces also use the written process. In Ontario, in 1973, an all party agreement lead to the legislature waiving the formality of summoning the lieutenant governor to the chamber for royal assent. Except on special occasions the Ontario lieutenant governor now gives royal assent in her suite at Queen's Park. Quebec uses a written procedure which occurs in the offices of the lieutenant governor.

These practices by other Commonwealth countries and a number of provinces demonstrate that the written procedure of royal assent is purely a procedural matter. It does not alter the constitutional requirement for royal assent or affect the office and prerogatives of the governor general.

Section 55 of the Constitutional Act of 1867 requires that where a bill passed by the houses of parliament is presented to the Governor General for the Queen's assent, the Governor General shall declare, according to his or her discretion, whether he or she assents to the bill. This remains unaffected.

The leader of the government in the Senate has declared the Governor General's consent to the consideration of Bill S-34. It is a long-standing parliamentary practice and a matter of politeness and civility to seek royal consent before introducing any bill which might affect royal prerogatives. In keeping with this practice the government sought and obtained, and has been declared in the chambers, royal consent to proceed with Bill S-34 even if technically the bill does not affect royal prerogative since it is procedural in nature.

Bill S-34 would provide a way of maintaining an important parliamentary tradition in authorizing a simpler way of handling royal assent. First, it would preserve the royal assent ceremony as an important tradition by requiring its use twice in each calendar year including for the first appropriation bill of each session. Second, it would permit royal assent by written declaration.

The bill's provisions are procedural and relate to the form of signifying royal assent. The Governor General, or his or her deputy, would continue to exercise the royal prerogative of assent either in the Senate chamber when royal assent is done by way of ceremony or by a written declaration reported to the Speakers of the two houses of parliament. Both procedures would respect the convention that all three constituent elements of parliament, the Crown, the Senate and the House of Commons would be involved in royal assent.

By allowing royal assent by written procedure we would be able to address the concerns of a modern parliament and at the same time make the traditional ceremony a special and more visible part of our parliamentary process.

I am proud that Bill S-34 is a non-partisan bill which draws on the work of many members on both sides of this House and the other place. It follows on the McGrath Committee's recommendations. And it enjoyed the support of the leadership of both sides of the other place.

Royal assent by written declaration will remove a significant interruption in the business of this House, while preserving the royal assent ceremony as an ongoing tradition of parliament.

Bill S-34 is consistent with the practice of Commonwealth countries and provinces who use this process. For these reasons I would invite all hon. members to support the passage of this bill.

[John Reynolds, Canadian Alliance, Leader of the Opposition]

Mr. Speaker, I thank the government side. We will be supporting the bill wholeheartedly.

The bill will provide an alternative to the royal assent procedure currently used in the Canadian parliament so that royal assent will be signified by a written declaration similar to that used in Australia and the United Kingdom for many years. It will preserve at least one traditional royal assent ceremony per year. These procedures will take place during the parliamentary session in which both Houses pass the bill.

The first appropriation bill presented for assent in any session, however, will require a formal assent ceremony. The procedure for appropriation bills is slightly different in that the Speaker of the House of Commons presents them as a reminder that it is the House that grants aids and supplies and has the pre-eminent role in voting supply. The requirement that the first appropriation bill in a session be given royal assent in the traditional form will also assure the occasional holding of a formal ceremony.

The bill also provides that royal assent be signified in a traditional ceremony on at least one occasion in each calendar year. The bill proposes that the Speaker or person acting as the Speaker notify both the Senate and the House of Commons of a written declaration of royal assent. The bill also provides that where royal assent was signified by written declaration, the date of assent would be the day on which the declaration was reported in both chambers. This would be particularly relevant to bills that came into force upon royal assent or on a day related to the date of royal assent.

Most countries with a Westminster style of parliament have abandoned the royal assent ceremony. Canada appears to be unique among Commonwealth countries in retaining the procedure. The question of reforming the royal assent process in the Canadian parliament has arisen on a number of occasions in recent years. Throughout the eighties and nineties, committees of the House and the Senate studying parliamentary reform have all recommended that the royal assent ceremony be replaced with a written message and that the traditional practice be maintained for occasional and special uses. Bills to implement this recommendation have been drafted and have ground slowly through other parliaments, but were never given the priority to reach fruition. Perhaps it is the government's thin agenda that will finally give this new procedure life.

This change improves efficiency of the House and maintains the traditional ceremony when such a ceremony is desirable. The official opposition, as I have said, supports the bill and the official opposition would like to see more parliamentary reform, particularly in the area of private members' business. Over 70% of our members polled on this issue felt that reform was needed. Two hundred and thirty-five bills have been introduced by MPs from all political parties. None have made it past third reading. Only two House private members' bills have made it to a vote at second reading, less than 1%. The two bills that did make it into committee stage from the 36th parliament were killed in committee by the Liberal majority on those committees.

Liberals avoid voting on controversial issues by not deeming them votable. Senate private bills have been successful. The only three bills that have received royal assent have come from the Senate. They are: Bill S-10, parliamentary poet laureate; Bill S-14, Sir John A. Macdonald and Wilfrid Laurier Day; and Bill S-22, national horse of Canada. Of the 481 motions introduced, only 5 have been adopted, just over 1%.

We have had over 150 hours of debate in the House during this parliament for consideration of private members' business. If we consider that the budget of the House is $300 million, at a 1,000 hours per year that is $300,000 per hour. If we apply that to the amount of time used up by private members' business, we get $45 million of House time used to no avail.

The procedure and House affairs committee took on the task of reforming private members' business. It began in the fall of 2001 and had until April 2002 to come to some sort of arrangement to make all items votable. It decided in December 2001 that it could not do anything about it. The truth is that the government did not want to do anything about it.

Recently a rare event occurred. The Liberal majority on the procedure and House affairs committee actually allowed a bill to enjoy votable status, the bill of the member for Esquimalt--Juan de Fuca to decriminalize the use and possession of marijuana. However, as you are aware, Mr. Speaker, the government moved a poison pill amendment and had the bill withdrawn. The Prime Minister giveth and he taketh away.

The backbench should stand up to the Prime Minister and show him who is boss. It is the Prime Minister who is accountable to the House, not the other way around. If there were a few stray votes here and there, the Prime Minister might pay attention and he might even listen. He might even learn to respect the backbench, the House and democracy.

That being said, we support the bill. We wish the government well in bringing forth more reforms in the House of Commons, which members of the House from all sides would be quite happy to support.

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

Mr. Speaker, I am pleased today to speak to Bill S-34. As some of my colleagues explained, the purpose of this bill is to change the way we proceed, in particular through the introduction of a written declaration instead of what I would describe as the traditional parade we now have.

First, I want to say that we unreservedly agree with this legislation, which should have been introduced long ago. It is also surprising that it is coming from the other chamber instead of this one. We think that a genuine modernization of our institutions must be undertaken. Not only there must be a debate about the way the assent is given, in this case through a written declaration, but also a larger debate should be launched in this House about the way, for example, we proceed with voting. Would it be possible, for example, to consider holding a debate on what is called electronic voting? Would it not be worthwhile to hold a debate on the way our institutions work in order to speed up the process and make it more effective and efficient?

Today we are going at it with a timid step, one that we approve, of course, but we also want this debate to go further, to improve the effectiveness of parliament.

Need I remind the House that this bill comes from the other place. While the elected representatives of the people should be the ones involved in modernizing Canadian institutions, this piece of legislation is coming from the Senate. Ironically, the government has refused for years to make official something that should have been made so years ago.

Concerning Bill S-34, an act respecting royal assent to bills passed by the Housesof Parliament, let me say to the House that our party will support the bill, as I said earlier, since its intent is to modernize parliament, something we have been wishing for for a long time. This is the kind of debate young parliamentarians would like. We believe that we can speed up the proceedings of parliament through very simple measures that would make this institution more efficient.

We think this bill from the other house is a legitimate one. Its intent is to modernize the royal assent procedure by enabling royal assent to be signifiedby written declaration, instead of the traditional parade we now have for each royal assent ceremony.

The government member has reminded us that this procedure was changed a long time ago in Quebec. Back in 1969, Quebec opted for the written declaration procedure for the approval of bills. It is somewhat strange that we had to wait until 2002 to do the same thing, when other institutions and modern parliaments in America decided long ago to have this procedure, which should be considered normal, official, acceptable and legitimate.

In Quebec, I would point out, royal assent has been given through what could be called a summary process since 1969. More than 30 years ago, Quebec decided, through its institution, that it would use a written declaration process. On February 27, 1969, the National Assembly adopted the second report of its standing orders review committee. This committee recommended that bills be given assent in the office of the lieutenant-governor. The report was adopted that same day. It was a step towards the modernization of parliament.

There are many other fundamental reforms the government should implement. At the very least, the government should allow private members' business introduced by members on this side not only to be debated in the House, but also to be made votable. Such a move would be the first step in the modernization of parliament. Modernization is not a hollow concept, it is a concept that can increase the efficiency of our institutions.

The House should discuss certain matters, such as the modernization of the Senate, up to and including its abolition, as well as the modernization of the traditional voting process, up to and including electronic voting.

Obviously those substantive debates, by which Canada and this institution will move in the direction of true modernization, are far from the timid bill before us. This legislation is only designed to provide a written declaration as an alternative procedure for signifying royal assent, thereby doing away with the parade. While modern legislatures in America have decided to modernize 30 years ago, we can see through this debate that, compared to initiatives taken by other legislatures here in America, and I take as an example the National Assembly of Quebec, our institution is lagging behind.

Besides, need I remind the House that during what has been called the quiet revolution in Quebec, the government of Quebec carried out an extensive reform of parliamentary institutions. As a matter of fact, on November 29, 1968, the Legislative Assembly of Quebec passed a bill abolishing the legislative council, the equivalent of the other place in this parliament.

On December 12 of the same year, the legislative council undertook consideration of the bill providing for its abolition.

The council gave speedy passage to the bill. On December 18, 1968, the act abolishing the legislative council received assent. Under this legislation, there is now only one chamber, the National Assembly, with men and women democratically elected by the people.

[Some hon. member]

Who are responsible to the people.

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

They are responsible to the people and they are the ones who make the real decisions.

This bill came into force in 1968. This legislation, which basically abolished the legislative council, should also lead us to this real debate which we must have sooner or later in this House. We must not only change the procedure of royal proclamation in order to eliminate the so-called parade through a written declaration, but we must also debate what role of the Senate should really play.

Quebec was not afraid to start the Quiet Revolution and the Parliament of Canada, as an institution, ought not to fear a democratic debate that will lead eventually to a decision. That decision may not be a consensus, but it will change the way things are done.

We know that the Canadian Alliance wants to reform the Senate, while we want to abolish it. The government seems to want to keep it the way it is, and we all know why. We know that it is where they can make partisan appointments.

All that we can hope for, basically, is to make a few changes which will become official but which will not lead to any real and thorough debates on the role of that other chamber of this institution.

Need I remind hon. members that the Bloc Quebecois has done quite a lot in this connection. Back in 1996, my colleague from Kamouraska--Rivière-du-Loup--Témiscouata--Les Basques launched a debate on abolition of the Senate. On November 6, 1996, my colleague said the following: “while programs are being reviewed everywhere,” —as we are today doing with Bill S-34—“and expenses are being cut, the government has missed a great opportunity to make an important symbolic gesture that would have proven its good faith, its desire to give the elected representatives of the people their full voice and legitimacy.”

With this, my colleague launched a debate that could well have been part of the one we are having today on Bill S-34. We know that the budget directly allocated to the Senate totals $43 million , and that the other chamber constitutes a key element in the efficiency and effectiveness of our parliamentary institutions. This is, I would remind hon. members, a chamber that is not answerable to the people, is not elected, and very often serves as a political reward to friends of the government.

The government could have taken the initiative of holding this worthwhile debate, as my colleague form the Canadian Alliance and leader of the opposition has just said, in order to enable members so desiring to introduce bills and motions, which would not only be debated but also be made votable. Once these motions and bills are deemed votable, the government should not resort to dilatory motions to prevent the House from debating these fundamental issues and voting on them.

This should allow us to embark on the real modernization we want, which should not be limited simply to the abolition of the traditional parade leading to royal assent. It should lead to a real review of our institution in order to make it more effective and to give more powers to parliamentarians, regardless of which side of the House they sit on, so that decisions can also be made more efficiently.

At the dawn of the 21st century, it is hard to see how the government can consider the Senate to be truly legitimate in any way. Could the government not simply take a step toward modernizing the Senate, something it has always refused to do? It refuses to do so because it wants it to become a patronage den. It refuses because the Senate works for its benefit, in terms of friendships and decisions.

We must reflect on the role of the Senate, because it is delaying a number of bills. It duplicates the work being done by the house and, in the end, it only symbolic. This is something we came to understand in Quebec 30 years ago, when we abolished the legislative council.

Given that this parade is purely symbolic, why is it that the Senate, which is also symbolic, does not also deserve to be abolished, as we are about to do with respect to royal assent with Bill S-34?

In closing, we support Bill S-34, to abolish this parade and have royal assent signified by written declaration. We believe that this institution must be more effective. We believe that this bill constitutes a first step, a small one, granted, toward modernizing our institutions.

For 30 years now in Quebec, this type of measure has been proven to speed up the debate process, and ultimately, the decision making process, thereby making them both more effective.

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Mr. Speaker, it gives me pleasure to rise on behalf of the New Democratic Party to support Bill S-34, a basic act to make the procedures of royal assent a little easier here in the House of Commons.

I also wish to state that our House leader, the member for Winnipeg--Transcona, was an integral part of the committee that brought these changes forward. We believe that his leadership on this file has assisted in many ways in getting this to the forefront of where we are today.

The question of reforming the royal assent process in the Canadian parliament has risen on a number of occasions in recent years, notably in the report of the McGrath committee of 1985. Many significant reforms to the House came out of this report. In fact our House leader, again the member for Winnipeg--Transcona, was a member of the committee which introduced, among other things, the ability to have some private members' businesses votable, maybe not as many as I personally would like but it was a start.

This is what happens when we have a very effective parliamentarian in the House of Commons from the New Democratic Party to bring these great issues forward to all levels of government and all other parties.

Bill S-34 will continue to remind us how laws are passed in Canada, how the House, the Senate and the Governor General each play a unique role in bringing legislation forward, and of the ability for us as members of parliament to bring forward issues or amendments on various pieces of legislation and watch that legislation flow through the process in a parliamentary reform.

I also want to mention the fact that although this is a very important aspect of changes to our House of Commons in terms of forming more of a simple procedure in this regard, it maintains the traditions that we hold so strongly in our parliamentary tradition. It is worth noting that the majority of members of parliament here would support this initiative. We in the New Democratic Party support this and hope to see quick passage of the bill as soon as possible.

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I am pleased to rise in the House today as well on behalf of my party, the Progressive Conservative Party of Canada, to speak to Bill S-34 which originated in the other place. It is a bill that provides an alternative procedure for the granting of royal assent to legislation while at the same time maintaining elements of the present system.

Bill S-34 did originate in the other place with the subject matter that other members have touched on and harkens back to the days of the McGrath committee of the mid-1980s. The origins however are somewhat betrayed given the snail's pace with which the government has embraced even the mildest form of parliamentary reform.

Be that as it may, this form of modernization, coming some 20 years late, should lead some members of parliament at least to rejoice in its small ray of light. Will it in fact be a symbol of change or merely a few crumbs from the PMO? I fear the latter.

When we look at the history of the legislation, it goes back to 1988 when the then leader of the Conservative government in the Senate, senator Lowell Murray, introduced a bill to modernize royal assent. The current leader of the Conservative Party in the Senate, Senator Lynch-Staunton, then took up the mantle in 1998 by introducing a similar bill known as Bill S-19. That bill had several incarnations and Senator Lynch-Staunton of the other place, a very clear thinking and hardworking senator, persevered and continued to bring this legislation back to the floor of the Senate.

What we have here in the final bill practically mirrors Senator Lynch-Staunton's good work and provides an alternative procedure for the granting of royal assent.

The practice we have seen time and time again in both this place and the other place where the Liberals would take an idea, denounce it when in opposition, then embrace it and call it their own is being followed again.

Many have argued over the years that there has been a need for an alternative to the practices which, some might argue, are time consuming, archaic and interrupt the flow of parliament. Some of the practical arguments that have been made to bolster and bring about this change talk about the practical problems. The ceremony itself has sadly fallen into some disrepute in that it is very rarely attended in any great numbers by members of this Chamber. The royal assent practice is usually delivered by a supreme court judge acting as deputy governor general. The judges themselves have raised concerns about the time constraints and the time consuming elements of their attendance.

Looking again at very practical concerns, we know there are times when the two Chambers are not sitting simultaneously, which might technically hold up or hold back certain legislation.

The royal assent ceremony is time consuming. There is also reference to the planned renovations to the House of Commons as being something that would create further challenges with respect to the practice of royal assent.

Numerous studies, including the McGrath commission, did look at ways to reform parliament and this is but one of those pearls of wisdom.

Given that the royal assent is held with such frequency, it is a ceremony as referenced that sometimes receives very little attention yet it has obvious longstanding, traditional origins with respect to the granting of the passage of bills.

There are some who take umbrage and exception to these practices, including members of the Bloc and in many ways members of the Alliance, nee the Reform Party, who were very much against the Senate until it got a senator of its own. Like some of the other practices, Alliance members have been noticeably kinder to the other places, much like their embrace of things like Stornoway, pensions and other parliamentary privileges.

With respect to the substance of the bill, the obvious reason to allow for written consents, as the bill now does, is that there are instances when the bill might be before this House while the Senate is in recess or vice versa. Often the Commons is required to technically resume sitting for the sole purposes of granting royal assent.

While I certainly respect the views of those, such as the Monarchist League of Canada, that has a branch in my riding in Nova Scotia in Pictou county, who argue that the traditional royal assent ceremony is very important, constitutionally and symbolically, it must be noted that Canada is the last commonwealth country to require royal assent be given in the presence of both Houses. We are somewhat languishing behind in the commonwealth country family in that regard.

Elsewhere in the commonwealth, including Australia, New Zealand and other countries, royal assent is usually delivered in writing. In fact this is what the bill will enable our parliament to do.

To further put to rest concerns that Bill S-34 does not require that the traditional ceremony be used, the bill allows at least once a year and for the first appropriation bill of the session, although this bill would not be invalid simply because the government failed to use the traditional ceremony within a calendar year, for the ceremony to occur at the will and whim of parliament.

The Progressive Conservative Party very much supports Bill S-34 as a snail pace, a gradual baby step forward in terms of parliamentary reform. Previous members did reference the fact that we bore witness to yet another erosion of parliamentary practice, which I think very much impinges upon the members of parliament, the members of the opposition in particular, to bring forward private and useful initiatives aimed at improving the quality of life and the workings of parliament. Two days ago we saw the government embark upon an unprecedented step of essentially killing a private member's bill, which again is a dark day for parliament.

Sadly, this incident resulted in another outburst which challenged some of the respect and goodwill that should exist around this place. Certainly the level of frustration continues to grow, not only among members of the opposition. I strongly suspect that this sentiment is shared by many of the backbench on the government side who feel these erosions of the last bastions that parliamentarians have to bring forward private initiatives and ideas is being cast aside.

Bill S-34 is one that at least symbolically shows that this place can change, modernize, adapt and become more relevant in the eyes of Canadians and in the eyes of those who participate in what sometimes seems like a circus.

The Conservative Party also wants to congratulate our colleagues in the Senate, Senator Murray and Senator Lynch-Staunton, for taking leadership on issues such as this over the years. We again commend the members of the other place for ensuring that there is an efficient use of parliamentary time and parliamentary privileges that at the same time respect the historic traditions of all who have graced these halls and all who have been fortunate enough to come to this place to represent Canadians nationwide.

[The Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Speaker]

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

[Some hon. members]

Agreed.

[The Speaker]

Accordingly the bill stands referred to the Standing Committee on Procedure and House Affairs.

(Motion agreed to, bill read the second time and referred to a committee)

Payment Clearing and Settlement Act

[Paul Devillers, Liberal, for the Minister of Finance]

moved that Bill S-40, an act to amend the Payment Clearing and Settlement Act, be read the second time and referred to a committee.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I welcome the opportunity to present for second reading Bill S-40 which amends the Payment Clearing and Settlement Act.

This legislation provides Canadian securities and derivative clearing houses with legal protection, similar to those in place in the United States and other G-7 countries, in the event that one of the members becomes insolvent or declares bankruptcy. Before discussing the bill, I would like to take a few minutes to provide some background which will put these changes into context.

These amendments are in line with the commitment the government made in the Speech from the Throne in January 2001 to keep Canadian laws and regulations competitive. Bill S-40 helps to meet this commitment. I want to remind the House of the government's long term plan to build a strong economy, a plan that also includes an internationally competitive economy. An efficient and strong financial sector is a key requirement for achieving a strong economy.

With the major contributions to job creation, export growth and tax revenues, Canada's financial sector is vital to the country's economic well-being. Central to a healthy financial sector is the Canadian securities and derivatives industry, its exchanges and their clearing houses.

The Canadian securities derivatives industry is a key player in Canada's financial system. Its contribution is significant. The industry provides a mechanism for raising capital and hedging financial risks through derivative contracts. It is a highly competitive industry.

For example, in recent years the number of security firms in Canada has increased from 170 in 1995 to almost 200 today. These firms are important players in Canada's securities and derivative clearing houses. The size of the industry is significant. Gross revenues in 2001 were $10 billion. In 1999 security firms assisted corporations raising $39 billion in debt and $21 billion in equity. Security firms also assisted provincial governments in raising $25 billion in debt and participated in the sale of $50 billion of Government of Canada bonds.

The Winnipeg Commodity Exchange trades over $2 million agricultural futures and options contracts per year worth about $13.5 billion. Participants trading in the Winnipeg Commodity Exchange include international grain trading companies, brokerage firms, primary and terminal elevator companies, local floor traders, financial institutions and farmers.

The bill we are debating today focuses on Canada's security derivative clearing houses, which are among the most efficient in the world. These organizations enable consumers and businesses to settle securities and derivative transactions in a timely manner and at a reasonable cost. They accomplish this by acting as a central counter party to securities and derivative trades.

In Canada, the clearing and settlement of securities derivative trades is conducted through three clearing houses. The Canadian Depository for Securities, CDS, is Canada's national securities depository clearing and settlement centre. It handles about $57 million security trades each year for banks, brokers, trust companies and other industry members. The CDS is also a custodian of securities for federally incorporated institutions like banks, trust and loan companies, insurance companies and pension funds.

The Canadian Derivatives Clearing Corporation, CDCC, is the clearing house for derivative contracts traded on the Bourse de Montreal.

The third organization, the WCE Clearing Corporation, WCECC, is the clearing house for derivative contracts relating to agricultural commodities traded on the Winnipeg Commodity Exchange, the WCE. The WCECC has an arrangement with CDCC to provide certain clearing and settlement services for the WCECC.

These three clearing houses clear and settle trades carried out on the four major exchanges in Canada. Securities and derivative exchanges underwent a major realignment in 1999 to enable them to better compete with exchanges around the world and new electronic entrants to the Canadian market. Each exchange now specializes in a certain area.

The Toronto Stock Exchange is the sole market for senior equities. Its listed companies represent a broad range of businesses from across Canada, the Untied States and other countries.

The Canadian Venture Exchange, CDNX, in Calgary, which was created through a merger of the Alberta and Vancouver stock exchanges, is the major market for junior equities. The Canadian Venture Exchange recently has been renamed the TSX Venture Exchange. Its companies are particularly active in the mining, oil and gas manufacturing and technology sectors.

The Bourse de Montréal is responsible for all non-commodities derivatives trading and other clearing services to its corporation, the CDCC. Transactions involving agricultural commodity derivatives take place on the Winnipeg Commodity Exchange, which is Canada's only agricultural futures and options exchange. Future contracts traded at the WCE include canola, canola meal, flaxseed, domestic feed wheat, western barley and field peas.

The centralized clearing and settlement services provided by clearing houses for securities and derivative markets are important in three aspects.

First, securities and derivatives markets are critical in providing opportunities to raise capital for investment and hedging financial risks.

Second, securities and derivatives markets rely upon the efficient and timely clearing and settlement of transactions through clearing houses.

Third, these clearing houses take measures to reduce risk and cost and settlement of securities and derivatives transactions.

Any factors that negatively affect the operation of these clearing houses and increase their costs will impact on the securities derivatives markets by reducing their efficiency and increasing trade costs. A potential cost to these clearing houses--

[The Speaker]

I hesitate to interrupt the hon. member but I can see he has some part of his speech left to deliver and we would have to interrupt him sooner or later. It might as well be sooner than later so the House can proceed with statements by members, which of course everyone wants to hear. We are all looking forward to the continuation of his remarks a little later today.

Cultural Communities

[Yolande Thibeault, Liberal, Saint-Lambert, QC]

Mr. Speaker, I am pleased to rise in the House today to talk about an issue that is close to my heart. Canada is a country that promotes rights and freedoms.

Unfortunately, because of a sensitive international context, some unfortunate incidents may occur between various cultural communities.

I deplore demonstrations of violence between citizens of our country. The openness and tolerance, for which Canada is well known, must continue to inform our actions.

I call on all Canadians to remain vigilant and respectful toward each other. There is an impressive number of cultural communities in Canada. Each one contributes to our society. Together, we can preserve the wealth that results from these contributions.

Agriculture

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, in Saskatchewan farmers and ranchers looked for moisture all winter. No moisture came and they are now faced with dry dugouts, dry wells, dust storms, disappearing pastures, no feed for livestock and crops not being planted.

Cities, towns and villages are experiencing problems due to the serious financial situation in agricultural industries. Workers are being laid off and businesses are closing. We need a government that cares about this national industry. Instead we have a government with no vision and no plan. All we have is an interim report from the Prime Minister's task force on farming.

Interim reports do not put food on the tables. Interim reports do not pay the bills. Interim reports do not keep families on the farm or businesses open.

Improved safety net programs are desperately needed . The government cannot continue to ignore the situation faced by the agricultural industry. We need decisive action and we need it now.

Multiculturalism

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, in the aftermath of September 11, Canadians banded together to implore their fellow citizens to refrain from committing acts of violence against members of the Muslim community. Six months later, I am saddened that I must rise again to condemn recent acts of hatred against members of both the Muslim and Jewish communities across Canada and in my own riding.

These deplorable acts undermine our national values of tolerance and understanding. Canada is known throughout the world as a place where people of diverse backgrounds coexist peacefully and indeed are enriched by the varied cultures which surround them.

Canadians must set an example for the world, that it is possible for people of any nation to live side by side, peacefully and without fear. Canadians are proud of our multicultural heritage and there has never been a better time to embrace our diversity and with it our strength as a nation.

Hate Crimes

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I rise today with profound sadness to condemn recent acts of vandalism and hatred against Jews in Ottawa. Hate messages on Temple Israel, on a community centre and on a shopping mall reflect an ugly side of our community that we must not tolerate.

Whether it is the desecration of a synagogue, a mosque, a church or a temple we must speak out against the hatred that motivates the cowardly goons who perpetrate such crimes. It is a short step from a spray can of paint to the intimidation of children, the persecution of whole segments of our society or even more violent ways of expressing hatred.

Such actions are a betrayal of our most cherished value of pride in the diversity of religions, ethnic backgrounds, traditions, cultures and races with which we are lucky enough to share this nation. Our silence in the face of hatred against any group in our society would be a further betrayal.

Ethnic Tolerance

[Raymonde Folco, Liberal, Laval West, QC]

Mr. Speaker, I would like to add my voice to that of the whip, who spoke earlier.

Some recent incidents in Canada have shown that we are not immune to international conflicts.

We must strongly condemn the violence and intolerance directed at certain people because they belong to an ethnic or religious group.

The Liberal government has adopted appropriate measures to ensure that those who choose violence to express their political beliefs will receive a fitting punishment.

However, legislation cannot solve everything and the state cannot stop all the activities of a minority that prefers conflict to peace.

I am asking all Canadians to unanimously condemn those who take conflicts abroad and turn them into conflicts in Canada.

Let us remember our values and what it means to be Canadians.

Veterans Affairs

[Roy H. Bailey, Canadian Alliance, Souris—Moose Mountain, SK]

Mr. Speaker, yesterday the veterans affairs committee visited Ste. Anne's Hospital in Montreal. This facility is equal to any facility in the world in the care given to over 500 Canadian veterans. We were told that the waiting list for a bed at the facility was somewhat less than one week. The rest of Canada's vets who are in need of long term care suffer through many months of waiting for a bed.

With the tragic events of two days ago it is only proper that our minds at this time should be filled with sympathy for the families and that our words should be controlled until all the facts are known.

There is one thought that permeates my thinking of this tragic event and the facilities I visited yesterday, and it is this: We the government must do more across Canada to alleviate the long waiting list for Canadian veterans and show the world we really do put their care first.

Multiculturalism

[John Finlay, Liberal, Oxford, ON]

Mr. Speaker, Canada is a country that is home to individuals of diverse faiths, ethnicities and political beliefs, and I am proud to celebrate the cultural richness that those from all over the world bring to our country. We are fortunate to live in a society where we can learn from and enjoy the friendship and company of individuals from a myriad of cultural backgrounds.

Yet Canada is not immune to the conflicts that so often create bad feelings between cultural and religious groups in other parts of the world. At this time as we witness the struggles in the Middle East and elsewhere let us reflect on how vital and special is the harmony we enjoy here in Canada. I hope all Canadians regardless of their backgrounds and political views will continue to guard against intolerance, thus ensuring Canada remains an open society providing acceptance and refuge to all.

Middle East

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, the current crisis in the Middle East reminds us that the old hatreds and animosities do not fade easily.

As Canadians we condemn all acts of terrorism and all acts of violence. Neither serves the interest of peace. The emotions and passions of the latest suicide bombings and Israeli reactions have led to deepened suspicions and left hopes for a just and lasting peace in tatters. We must not allow, nor can we accept, the spilling of innocent blood in the name of so-called justice.

However we must not allow our society to be polarized and politicized by events which, however painful to some, cannot obscure our country's desire to see a political settlement that provides for secure borders for Israel, recognition of the Jewish state by the Arab world, and the creation of a Palestinian state living side by side in harmony with its neighbours.

I am saddened and disturbed to see Canadians young and old shouting slogans and demanding retribution. This is not the Canadian way. Nor does it serve the cause of peace. Benedict Spinoza said of peace:

Peace is not an absence of war; it is a virtue, a state of mind, a disposition for benevolence, confidence, justice.

Canada is working with its friends and allies to seek an end to the cycle of violence and mistrust, develop the beginnings of a dialogue that can lead to bringing the parties together to break down the walls of hatred and suspicion, and begin the process of healing and building a framework for concrete discussions.

Canadian Forces

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, yesterday we learned that a regrettable error had been responsible for the deaths of four soldiers in Afghanistan, including Quebecer Ainsworth Dyer.

This tragic accident is all the more unfortunate because it occurred during an exercise.

The Bloc Quebecois wishes to reiterate today the most sincere condolences, expressed by its leader yesterday, to the families and friends of the victims, as well as all those who put their lives on the line daily to safeguard our freedom and democracy.

We wish the injured soldiers a speedy recovery, and wish as well to draw attention to the role of the soldiers on duty in Afghanistan and throughout the world, as well as their families. Thank you for your devotion and sense of sacrifice. Today more than ever, we realize its importance.

Child Abuse

[Larry Spencer, Canadian Alliance, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, Canada's low age of sexual consent at 14, coupled with the government's failure to protect children from sexual predators, has resulted in Canada potentially becoming a preferred destination for sexual predators to prey on innocent Canadian children.

The damage to children due to the proliferation of child pornography and the exploitation of young girls and boys through sexual abuse and prostitution has been incalculable. The need to protect innocent and vulnerable children from pimps and other adult sexual predators is a matter of the highest priority.

I urge the government to send a direct and clear message to Canadians that it will no longer stand for the abuse of innocent children by sexual predators and immediately introduce legislation to better protect children from sexual abuse.

Racism

[Irwin Cotler, Liberal, Mount Royal, QC]

Mr. Speaker, yesterday a group of students occupied my constituency office after entering on the pretext that they were constituents looking for assistance. When it turned out they wanted to protest Canadian foreign policy in the Middle East, which my staff was prepared to discuss, they rejected discussion, proceeded to occupy the office, told my staff to leave for their own security, refused to leave when the police arrived and were subsequently charged with trespass.

It is ironic than when we are commemorating the 20th anniversary of the Canadian Charter of Rights and Freedoms people choose not to exercise their right to speak and give expression to their grievance but choose to enter under false pretenses, illegally occupy an MP's office, intimidate employees and effectively assault the very values that underlie a free and democratic society.

I say this because I am increasingly concerned about the importation of hatred from the mideast conflict. After September 11 many of us spoke out and continue to speak out against the singling out of any visible minority, particularly Muslims, for discriminatory treatment but we must now sound the alarm about the increasing anti-Semitic assaults on Jews and Jewish institutions and threats of “death to the Jews” at public demonstrations.

We have to make it clear that racism and hate against any individual or group has no place in our society.

National Defence

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Mr. Speaker, I rise today with a heavy heart to offer condolences on behalf of the New Democratic Party and, I am sure, of all parliamentarians on the deaths of Corporal Ainsworth Dyer, Private Nathan Smith, Private Richard Green and Sergeant Marc Léger.

As a representative from Nova Scotia where two of those brave men came from I also offer condolences to the families and friends of all military personnel who suffered through this terrific and unfortunate tragedy. I also want to say on behalf of our party and the people of Nova Scotia how proud we are of the Governor General of Canada and her husband John Ralston Saul for breaking their itinerary so quickly to be with the troops who were injured and those who have fallen.

Again on behalf of all Nova Scotians and on behalf of all of us we offer our prayers to the injured. We offer our heartfelt prayers and condolences to the families and their friends. We also offer our support to the government to ensure adequate resources are put in place to help communities and families deal with this tragic incident.

May God bless their memory, and God bless our troops in Afghanistan and elsewhere around the world.

National Volunteer Week

[Monique Guay, Bloc, Laurentides, QC]

Mr. Speaker, April 21 through April 27 is National Volunteer Week.

Every day, hundreds of thousands of people throughout the world give generously of their time to improve the well-being of their fellow citizens. We thank them.

Volunteerism is each and every one of those little gestures which illuminates not just the life of the person who receives it, but also the person who makes it.

Volunteerism too is the unseen work done by many people, the bulk of them women, who have not hesitated to become involved in their communities.

Let us hope that some day there will be open recognition of their indispensable contribution to the economic and social development of the communities in which we live.

Bravo, all you men and women of Quebec, and the world over, who contribute to lending a more human face to our society. Bravo, and thank you, for the joie de vivre you contribute to us all.

Let us all find time to give a few hours as volunteers and to contribute to the expansion of the volunteer sector.

Canadian Charter of Rights and Freedoms

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, this week Canadians celebrated the 20th anniversary of the charter of rights and freedoms. Our nation has been built on the premise that with diversity comes strength. Never before has it been so important for all Canadians to remember this.

With the tragic events occurring in the Middle East and with tensions running high elsewhere, Canadians and indeed people from around the world must take a moment to reflect on the power of peace and mutual respect.

Canadians have a long tradition of showing the world how countries with a diverse population can live in peace and harmony. All Canadians should be proud of this tradition and continue to strengthen the ties of friendship and community that have made our country a beacon of peace through justice around the world.

Health

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, yesterday our colleagues in the other place released the latest chapter in their study on the state of our health care system. Their conclusion is simple and straightforward: As presently funded and structured our health care system is not sustainable. If funding problems are not addressed and serious reforms are not introduced the system will continue to fail Canadians.

Thankfully, our colleagues did not stop there. Rather than dance around the difficult issues they have provided the government with concrete options to save our health care system. First, it must provide stable, predictable, multi-year funding, something for which my party has been calling for some time. Second, it must make the system more transparent and accountable by separating the roles of funder, provider and evaluator of health care services. Third, it must enhance the quality of services by creating competition within our publicly insured system.

It is time to end the charade. The government can choose to delay reforms and hide behind the Romanow commission indefinitely, or it can act now on the sensible recommendations found in this report. Everyone knows the system is broken. It is time for the government to fix it and fix it now.

Ethnic Tolerance

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

Mr. Speaker, you have no doubt noticed that all of our members' statements today are on the subject of rejecting intolerance in Canada.

My message is directed specifically to this minute minority that does not seem to understand the very foundations of democracy in Canada, where differences of opinion never justify reprehensible acts, be it a racial slur or violence.

There is no point in praising the merits of multiculturalism if we do not reject intolerance in our actions.

It is to be expected that there will be some differences of opinion in a democracy. In Canada, we may have even stronger reactions to certain problems in other parts of the world because they sometimes affect our family, our friends or our roots abroad.

The resulting divergent opinions must be respected, as is the case with those who express these opinions. We must reject, together, the actions of these few who are attacking our society through their unacceptable behaviour.

Age of Consent

[Darrel Stinson, Canadian Alliance, Okanagan—Shuswap, BC]

Mr. Speaker, it is about time the justice minister did the right thing and raised the legal age of sexual consent. Fourteen year old children are too young to drive. They are too young to consume alcohol, smoke or even vote. Yet the justice minister irresponsibly agrees to not change the laws that allow our 14 year olds to consent to sexual relations.

The sexual exploitation of our nation's children by adults should one of the government's top priorities. At the very least, the minister should increase the legal age of consent to 16. This would in part help protect our children from sexual exploitation.

A 1999 department of justice paper states that the present age of consent is too low to provide effective protection for children from sexual exploitation by adults. Additionally, last year both the provincial justice ministers and the Canadian Police Association passed resolutions calling on the federal government to raise the age of consent for sexual activity to at least 16 years of age.

Where is the justice minister on this issue?

National Defence

[John Reynolds, Canadian Alliance, Leader of the Opposition]

Mr. Speaker, we are usually quite partisan at this time but I want to put that aside, if only briefly, and commend the government for the action it has taken in dealing with the deaths of our soldiers in Afghanistan. Nonetheless, the Canadian Alliance and Canadians want this matter duly investigated and action taken to ensure that similar circumstances do not lead to needless deaths again.

Can the Deputy Prime Minister give Canadians an update on the nature and scope of the investigation into these deaths?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, the national investigation service of the Canadian forces is presently on site in Afghanistan gathering evidence and information as part of its investigation. A similar unit of the United States military is also there doing the same thing at the same time.

Meanwhile yesterday I announced that a board of inquiry will be established. It will be chaired by the former chief of the defence staff, retired General Maurice Baril. We want to get all of the information. We want to get a thorough investigation of this matter so we can get the answers as to what happened and what we can do to prevent these kind of things from happening again.

[John Reynolds, Canadian Alliance, Leader of the Opposition]

Mr. Speaker, it is pleasant to know that the U.S. partners have been co-operative and forthright about their role in this terrible instance.

Can the defence minister assure Canadians that the Americans have pledged to give our investigators full access to their records and personnel in order to properly investigate this matter?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, the evening before last, I received a call from secretary of defense Donald Rumsfeld. He assured me of their full co-operation in this matter. They have also indicated that they would put a position for a Canadian on their inquiry team. I expect that there will be this kind of sharing of information and co-operation to the highest degree possible so that both countries can find the answers to the questions that bewilder us at this time about what happened and how we can reduce these kinds of incidents in future.

[John Reynolds, Canadian Alliance, Leader of the Opposition]

Mr. Speaker, I am sure all Canadians are happy that General Baril is part of the investigation. We have the greatest respect for him. Canadians want to make sure that all questions are answered.

Can the defence minister tell us roughly when the investigation is expected to end? Will he assure Canadians that the results of General Baril's investigation will be made fully public?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, yes, I will be meeting with General Baril today to discuss the terms of reference and the procedure to follow in this matter.

One of the things we will discuss is to be as open and as transparent as we possibly can be with regular updates so that the families and all Canadians, including members of the House, will know how this matter is progressing.

There are Privacy Act considerations and operational security considerations that have to be taken into account. I can assure you, Mr. Speaker, it is our aim to maximize the transparency and openness of this entire process.

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

Mr. Speaker, the Edmonton area armed forces base is actually in my riding. As their member of parliament, it is with great sadness that I rise today to inquire after the care for our injured soldiers.

Can the defence minister update Canadians on the status of our soldiers who were injured in Afghanistan on Wednesday night?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, I appreciate the question.

There are eight soldiers who have been injured. Two of them suffered minor injuries and have stayed with the battle group in Kandahar. Six of them have been transported to the medical facility in Ramstein, Germany. As has been mentioned, Her Excellency the Governor General is there and has greeted them.

The two who were in the most critical condition have improved. There have been operations involved in both cases and they are in stable condition. All six are in stable condition and are expected to recover. A number of them, perhaps as many as four, will be coming back to Canada very shortly.

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

Mr. Speaker, it is great to hear that optimistic report.

All members of parliament from Edmonton know military families. I am sure that all of us from the Edmonton area on both sides of the House have lost constituents or know someone who has been touched by this loss. The families of those who were killed are foremost in our minds.

Can the defence minister explain what special efforts are being made to keep the families informed about the progress of the investigation?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, as I indicated in response to the question of the hon. Leader of the Opposition, we want to be as transparent and open about this as possible. While past boards of inquiry usually only reported when they were finished, in recent times on other boards of inquiry we have used a system where there are periodic reports so that updates can be given as the process goes along.

I hope this will not be a very lengthy process, a matter of weeks as opposed to months, but until we get into it and see what the challenges are, we cannot be sure of that. We want to give updates and progress reports to keep people informed.

Bilingualism

[Caroline St-Hilaire, Bloc, Longueuil, QC]

Mr. Speaker, implementing bilingualism in Canada continues to pose serious problems, particularly within the federal public service management, where close to one third of bilingual positions are still being held by unilingual anglophones.

Will the President of the Treasury Board agree that these figures eloquently confirm the government's lack of will to implement its bilingualism policy and to serve francophone minorities in their language?

[Lucienne Robillard, Liberal, President of the Treasury Board]

Mr. Speaker, the government is as firm as ever when it comes to the Official Languages Act: the federal public service must meet certain standards to be able to provide services in both languages, and also to allow federal public servants to work in the language of their choice.

It is true that we have set higher standards for senior managers. They still have one year to meet these standards. While I cannot anticipate the results, I firmly hope that all senior managers will comply with the new standard.

[Caroline St-Hilaire, Bloc, Longueuil, QC]

Mr. Speaker, 20 years after the charter was adopted, the equality between the two official languages remains a problem, as the Commissioner of Official Languages, Dyane Adam, pointed out yesterday when she stated that real equality has yet to be achieved, that it is still an unfinished project.

What does the government have to say about its lack of action, its lack of will in an issue where Canada's francophones are still the ones being shortchanged?

[Lucienne Robillard, Liberal, President of the Treasury Board]

Mr. Speaker, I should mention to the hon. member that, in recent years, many efforts have been made to improve this whole area of service in both official languages, and to ensure the equitable participation of anglophones and francophones.

There are still some problems, but they are not limited to francophones exclusively. For example, just look at the participation of anglophone federal employees in Quebec. Some progress is in order there as well.

I can assure the House that all efforts will be made to achieve our objectives in the coming months.

[Benoît Sauvageau, Bloc, Repentigny, QC]

Mr. Speaker, on Tuesday, the President of the Treasury Board again said that 32% of federal public service managers were still not bilingual, that they had one year left to become bilingual, and that some of them would not succeed in doing so.

Will the President of the Treasury Board tell us what she plans on doing with managers who do not meet the linguistic requirements of their position by the March 31 deadline?

[Lucienne Robillard, Liberal, President of the Treasury Board]

Mr. Speaker, as a matter of fact, the Standing Joint Committee on Official Languages discussed the matter this week. I hope that all senior managers will reach this standard, which is now higher.

If some of them fail to meet it—and there is still one year left—we are in the process of looking into measures that could be taken in their case.

[Benoît Sauvageau, Bloc, Repentigny, QC]

Mr. Speaker, will the President of the Treasury Board give us an assurance that positions with a bilingual designation will not be changed to unilingual positions, and that the March 21, 2003 deadline will be respected, once and for all?

[Lucienne Robillard, Liberal, President of the Treasury Board]

Mr. Speaker, every year, the number of bilingual positions in the public service increases. Therefore, the number of bilingual positions will not decrease.

We are more and more encouraged to see young people from eastern, central, and western Canada who are bilingual when they apply for positions with the federal public service.

So, it is very clear that we will meet the deadlines.

National Defence

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, the tragic deaths of our Canadian soldiers in Kandahar are deeply felt. My own community is mourning the deaths of Private Richard Green and Private Nathan Smith who belonged to the Halifax regional family.

It is imperative for General Baril to get to the bottom of the so-called friendly fire casualties. The minister has pledged co-operation and the Americans have committed to co-operating but it is going to take a lot more than that. Specifically I want to know if the government has received U.S. assurances that General Baril will have full access to all U.S. witnesses and documents, all communications records and flight data. Did the minister get that absolute assurance?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, as I indicated previously, we are working on the terms of reference and the details are in progress at this point in time. I have the assurances of the secretary of defense, and the Prime Minister also got the assurances of the president of the United States of full co-operation in this matter.

[Peter Stoffer, NDP, Sackville—Musquodoboit Valley—Eastern Shore, NS]

Mr. Speaker, my question is for the Minister of National Defence.

In light of the tragic incident that happened in Kandahar, has the minister of defence along with the military over there, considered at all postponing all live military exercises with the Americans in Afghanistan until at least General Baril has had the opportunity to find the reasons for the incident so that this type of incident again will never occur again? Has he at least considered postponing future live exercises?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, we certainly want to reduce any possibility of any risk of this ever happening again. As to whether we use that specific site again or not, I could not say at this point in time.

Certainly there is a need for ongoing training in that area relevant to any activity of combat that may exist. Our troops have to be prepared for combat activity with the enemy. We would want to make sure that they are able to survive in any circumstances and we want to reduce the risk of any harm coming to them.

[Joe Clark, Progressive Conservative, Calgary Centre, AB]

Mr. Speaker, we look forward to seeing the report of General Baril but there are things the minister would already know.

Was the American aircrew briefed that there were Canadians in the designated training area that it bombed and that the area was off limits? Has the minister seen the American rules of engagement covering activities of this kind and would he table those American rules of engagement in the House?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, if we knew all the answers to that, we probably would not need a board of inquiry. We do need a board of inquiry to get to the truth of the matter and to understand thoroughly what has happened.

The answers are not available to those matters and the board of inquiry will seek them out. That is its duty.

[Joe Clark, Progressive Conservative, Calgary Centre, AB]

Mr. Speaker, yesterday, the leader of the government in the Senate said that the special duty area pension order for our soldiers in Afghanistan and their families has still not been passed. It has been 66 days since the arrival of the Princess Patricia's in Afghanistan.

Why were our troops sent into a war zone without assurance from the government that they and their families would receive the necessary protection in case of incidents?

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, I can assure the right hon. member they will receive all of the support they should get under the circumstances of these troops operating in a combat zone. There is a special duty area designation which is currently in the process of being put in place. It will be put in place and the remuneration and all of the benefits that are associated with special duty areas will be made retroactive to the beginning of this mission.

The Environment

[Bob Mills, Canadian Alliance, Red Deer, AB]

Mr. Speaker, economists say that the uncertainty surrounding Kyoto is forcing industries to rethink their investment plans for Canada. Just one example is that important gas exploration is being delayed. The industry is telling us we will soon see gas shortages and a spike in the prices.

Will the government finally reject Kyoto and develop a made in Canada climate change program as we have been advocating all along?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, the basic approach of reducing greenhouse gases is to substitute low emission fuels for the higher emission fuels. Natural gas and of course electricity are at the top of the list. The prospect for the gas industry as a result of this approach is of course expansion, not contraction.

[Bob Mills, Canadian Alliance, Red Deer, AB]

Mr. Speaker, 200,000 litres of diesel fuel are leaking off the coast of Newfoundland, which is only the latest crisis in that region. A quarter of a million seabirds are killed annually with the dumping of oil. Yet only one aircraft is patrolling the entire Atlantic region.

The government is not dealing with the issues of oil spills on our east coast. The fines are too small. The surveillance is disgraceful. When will the government show that it has an environmental conscience?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, I genuinely appreciate the support of the Alliance Party in increasing expenditures in this area of Department of Fisheries and Oceans activities and Department of Transport activities. I genuinely appreciate that because it is important and it is enormously expensive to have surveillance of every one of those ships crossing the Atlantic and going into American ports that come so close to the coast of Newfoundland.

He is correct: The mortality of seabirds is quite unacceptable to Canada. That said, I am very pleased to report that the last time we took a ship to court, which was quite recently, the fine was dramatically higher than previously. The judicial system is beginning to recognize the importance--

[The Speaker]

The hon. member for Beauport--Montmorency--Côte-de-Beaupré--Île-d'Orléans.

[Michel Guimond, Bloc, Beauport—Montmorency—Côte-De- Beaupré—Île-D'Orléans, QC]

Mr. Speaker, yesterday, the president of the FTQ, Henri Massé, called on all stakeholders in Quebec to unite to save the Alsthom plants in Montreal. Through the Agence métropolitaine de transport, Quebec undertook to do everything possible to save the 650 jobs at Alsthom, and the Bloc Quebecois intends to do likewise.

The only player doing nothing is the Liberal government. Will the Minister of Justice, who is the political minister from Quebec, tell us whether the government intends to impose environmental standards on the rail industry and propose tax incentives in order to ensure that this company survives?

[David Anderson, Liberal, Minister of the Environment]

Yes, Mr. Speaker. Yesterday, I answered a similar question from the Bloc Quebecois.

Yes, it is true that it is possible to benefit the environment by reducing greenhouse gases and, at the same time, to have economic growth. I am very pleased that the member has noted that it is possible to have both.

But there are also other factors which must be taken into consideration before a railway company can change its system of locomotive engines. I expect a decision which takes into account all the important factors.

[Michel Guimond, Bloc, Beauport—Montmorency—Côte-De- Beaupré—Île-D'Orléans, QC]

Mr. Speaker, during the last federal election, the Liberals claimed to be able to defend the interests of Quebec. Today, all stakeholders in Quebec are joining forces to save Alsthom because it is in Quebec's interests to do so.

The Liberal candidate for Verdun says she wants to stand up for Quebec, but her colleagues here are doing nothing to deliver on their promises.

Will the Minister of Justice, the political representative from Quebec, undertake to persuade his cabinet colleagues to do something, or will he continue to keep a low profile and abandon the 650 GEC Alsthom workers to their fate?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, it is very important to know that a decision to purchase rail equipment is not just up to the Government of Canada. A number of factors must be taken into consideration.

At this stage, all I can tell the hon. member is that, yes, we are taking into consideration the impact of greenhouse gases and all other factors. However, this is primarily a business decision.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, the Minister of Industry recently stated in Alberta that he has serious reservations about ratifying the Kyoto accord. He was concerned about the impacts on productivity, investment and our standard of living. He vowed to serve as industry's advocate in cabinet and publicly favoured an approach based on innovation and technological advances.

Will the parliamentary secretary reaffirm his minister's public opposition to the Kyoto accord?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, the position of the government--

[Some hon. members]

Oh, oh.

[The Speaker]

Order, please. Perhaps the debate going on at the far end of the Chamber could be continued outside the House, because there are questions and answers that are doubtless of great importance.

The hon. Minister of the Environment.

[David Anderson, Liberal, Victoria, BC]

Mr. Speaker, the position of the Government of Canada is clear. It was stated in the House this week by the Prime Minister and that is the position of all the ministers of the crown. It is that we would like to ratify Kyoto this year, but we will not make the decision on ratification until such time as we have had full consultations with the provinces and territories, our partners, and also with the industry that is affected and the general public.

Further, there would of course be no ratification decision until such time as we have a plan in place that does not adversely disadvantage any particular region of the country. That is the position of every member of this government.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, the reality is that there is not a clear consensus in cabinet on this issue. There are different signals, particularly from the industry minister and from the natural resources minister, on the issue of Kyoto ratification.

In fact, the industry minister said “I'm not comfortable until we get some reliable information on that...the impact of Kyoto on the economy. The decision has to be based on facts, not on ideology and not on theory”.

The industry minister is responsible for productivity and competitiveness, yet he has no figures on how Kyoto ratification will affect productivity. If he has no figures or reliable information, how can the government possibly continue to support ratification of the Kyoto accord?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, I forget the number of times I have told the Alliance Party that there is a federal-provincial-territorial working group, including every province, every territory and the federal government, which will be reporting on the issue of costs with respect to Kyoto some time at the end of this month or early next month. Obviously until that report comes out, the government is taking no position on costs and the words of the Minister of Industry are absolutely correct. We should indeed get that information from a working group that is not of the government but is of the provinces and the territories as well. When we get that we will be in a position to go further and decide on our decision.

Guaranteed Income Supplement

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, in response to pressure from the Bloc Quebecois, we have the members of the Liberal caucus coming on board now, and sending letters to eligible seniors inviting them to apply for the guaranteed income supplement.

Do these seniors have to wait for the support of the Liberal MPs before getting the full retroactive benefits to which they are entitled?

[Raymonde Folco, Liberal, Parliamentary Secretary to the Minister of Human Resources Development]

Mr. Speaker, as far as the GIS is concerned, there has always been a retroactivity provision. I would emphasize, as has been said here in the House already on numerous occasions, that the guaranteed income supplement is subject to an 11 month retroactive period.

However, since the hon. member is boasting about representing the people of Quebec and wanting to help them, I would again point out that the government of Quebec allows retroactivity only in certain programs, which I could easily list. There is either no retroactivity or a maximum of one year.

[Marcel Gagnon, Bloc, Champlain, QC]

Mr. Speaker, we do not need any red herrings here. All that is required is for a single line to be added to the letter, saying “As a recipient of the guaranteed income supplement, you will be entitled to full retroactive benefits”.

Can these seniors expect to find this addition in the next communique they get from the Liberal MPs?

[Raymonde Folco, Liberal, Parliamentary Secretary to the Minister of Human Resources Development]

Mr. Speaker, I believe that Bloc Quebecois members get confused sometimes and do not know where they stand.

I would just like to repeat the words of a Bloc member, who recently stated “The minister has made efforts to locate these people. For example, she sends letters to those who are not collecting the guaranteed income supplement, or even the old age pension”.

“There are some 65,000 people not even collecting the old age pension, and the minister has made an effort”. That is what a Bloc Quebecois MP had to say.

Auditor General's Report

[John Williams, Canadian Alliance, St. Albert, AB]

Mr. Speaker, the Canada Health Infoway is another Liberal slush fund, which was given $500 million a year ago and, according to the auditor general, is still not open for business. The auditor general also says that parliament has no idea what is being done with the $500 million, and that is more than just a little petty cash.

My question is for the Minister of Finance. If it is not parliament, if it is not the government, if it is not the Minister of Health, if it is not the Minister of Finance or the auditor general who is looking after this money, then who is looking after this money?

[John McCallum, Liberal, Secretary of State (International Financial Institutions)]

Mr. Speaker, as was said in the House by the minister yesterday, all of these foundations, including the one to which the hon. member makes reference, were approved by parliament. All of them are audited. All of them have their leaders or other members who have visited parliamentary committees many times and are willing to do that again.

The foundations provide billions of dollars for innovation, for Canada to grow in the new economy and to be a leader in research and development. Am I to assume the opposition is opposed to those measures?

[John Williams, Canadian Alliance, St. Albert, AB]

Mr. Speaker, I did say they are not open for business yet.

The auditor general also says that Canada Health Infoway “is required to respect key federal legislation...including...avoiding conflict of interest”. However, the chair of the board of directors, Mr. Eric Maldoff, is a loyal Liberal who has made sizable donations to the Liberal Party in each of the last three years.

My question is for the Minister of Health. If Infoway is required to avoid a conflict of interest, why has she given a loyal Liberal $500 million of Canadian taxpayers' money with no requirement to explain to parliament how it is being spent?

[Anne McLellan, Liberal, Minister of Health]

Mr. Speaker, the Canadian Health Infoway is an important and new contribution to federal, provincial and territorial ability to manage and renew our health care system. Its number one project, as identified by all the provinces and territories and ourselves, is the development of an electronic health record. I resent the fact that the hon. member would impugn the integrity of this arm's length corporation in which every deputy minister of health in this country is a member of the board of directors.

Health

[Tony Tirabassi, Liberal, Niagara Centre, ON]

Mr. Speaker, statistics released recently show that the need for organ transplants in Canada continues to grow. Almost 4,000 Canadians are currently waiting for an organ transplant and that is a 100% increase compared to a decade ago. While the need for organ and tissue donation has increased, the number of donors is simply not keeping pace.

Could the Minister of Health inform the House what steps are being taken to alter this trend and address the difficult issues surrounding organ and tissue donation?

[Anne McLellan, Liberal, Minister of Health]

Mr. Speaker, this is a very important question. The hon. member mentioned that 4,000 people in the country are awaiting either organ or tissue transplantation. The tragedy is that some of those people will die.

What I would do this morning is call upon everyone in the House to take up the challenge, personally and in relation to their constituents. Next week is national organ and tissue transplantation awareness week. I would ask all members in their householders and in their communications with their constituents to let them know that they can participate. They should be signing their organ and tissue donation cards. Next week, I would ask you all--

[The Speaker]

The hon. member for Halifax.

Middle East

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, the world is awakening to the horror of what has happened in the Palestinian refugee camp of Jenin. A UN envoy describes the conditions as horrific and shocking beyond belief, yet the Israeli government continues to deny humanitarian aid to the victims by blocking access and imposing curfews.

What specific steps is the Canadian government taking to pressure the Sharon government to lift the curfews and ensure that humanitarian aid is reaching the desperate people of Jenin?

[Bill Graham, Liberal, Minister of Foreign Affairs]

Mr. Speaker, as I reported to the hon. member yesterday in committee when she was there, we have spoken to the ambassador from Israel and urged him and his government to lift the curfew and enable humanitarian aid to get through.

As members know, the United Nations is seized of this matter. Mr. Kofi Annan has spoken about it. It is being discussed in the security council.

We ourselves have announced $8 million of aid, through various UN agencies and respectable agencies in the area, to provide immediate aid for humanitarian purposes. We follow this issue carefully. We want it resolved in a way which will enable the parties to come back to the bargaining table in peace and not exacerbate the terrible situation there.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, the foreign minister knows that the Canadian delegation at the UN human rights commission voted against sending a fact finding mission into Jenin. We know that the scene is horrific; it has been described as having been struck by an earthquake, with 2,000 people left homeless and 300 buildings destroyed.

Since the government opposed a fact finding mission going in, what is its plan to expose what has happened there to the world? The world's eyes are blindfolded at the moment. Will the foreign minister and the Canadian government agree to a full international investigation into what has happened?

[Bill Graham, Liberal, Minister of Foreign Affairs]

Mr. Speaker, as the hon. member well knows from my evidence before the committee yesterday, the government opposed the sending of a human rights mission to the area for the reason that it was entirely biased and unacceptable at that time, because we strongly believe that in fact the move by the security council, which is presently supported by this country, is the right one. The government will continue to take practical steps to aid the people in the region and not resort to polemics, which in the end will only exacerbate and render the tensions more difficult.

The Environment

[Loyola Hearn, Progressive Conservative, St. John's West, NL]

Mr. Speaker, my question is for the Minister of the Environment.

The minister is undoubtedly aware of the shrimp trawler which recently sank while being towed to port in Newfoundland. This vessel contains a huge amount of fuel which is now seeping to the surface.

As this trawler sank on prolific crab fishing grounds and is only a few miles away from a bird sanctuary which has, at this time, breeding time, over one million sea birds, what steps is the minister taking to avert an ecological disaster around the cliffs affected?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, I thank the hon. member for that extremely important question. It is true that from fishing activity, as well as commercial vessels referred to by the hon. member for Red Deer a short time ago, there is an enormous risk to our bird and marine populations on the coasts of eastern and western Canada.

The Department of Fisheries and Oceans in combination with the Department of Transport and my own department will be taking every step we can to recover the maximum amount of fuel.

However I must warn all hon. members that recovery of spilled fuel at sea is an extremely difficult process easily hampered by wind and waves. The result is that we cannot--

[The Speaker]

The hon. member for Pictou--Antigonish--Guysborough.

Fisheries

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, the Minister of Fisheries and Oceans has stated time after time in this place that he would not take quota from one community to give to another. Yet we know his department is currently and actively offering to purchase snow crab licences in Guysborough county, which in turn would be handed over to native communities. The minister was surely aware of this practice when he made those comments.

In the interest of saving an historic fishing community in Atlantic Canada will the minister consider purchasing some licences for Canso and Mulgrave and will he meet with the mayor and stakeholders to discuss their future?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, the hon. Minister of Fisheries and Oceans has answered the question with respect to Canso on a number of occasions in the House. I will report to him the request of the hon. member who asked the question about further meetings but I believe he has in fact reported directly to the town of Canso himself. I can get that information for the hon. member perhaps by the end of the day.

Middle East

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

Mr. Speaker, my question is for the Minister of Foreign Affairs.

After a week, reporters have finally been allowed into what is left of the Jenin refugee camp. The death toll is unknown with the UN reporting a massacre. Canada has a moral obligation to find out the truth.

What steps has the Canadian government taken to find out what happened in Jenin and to find out how many Palestinian civilians were killed?

[Bill Graham, Liberal, Minister of Foreign Affairs]

Mr. Speaker, as I said, at the moment I believe we should all be concerned about access to Jenin and providing humanitarian aid to the people who are suffering there. That is what we are stressing and what we are doing.

The member might well be aware of the fact that at the moment there is a British resolution before the security council which will include, not only access to Jenin for the purpose of humanitarian aid but to find out exactly the facts, both what the world can do and what has happened. We are supporting that process. I and the government have raised these concerns with the Israeli ambassador.

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

Mr. Speaker, as a result of the IDF's actions at Jenin, families are separated and tensions in the region are mounting. The propaganda on both sides is extreme with the facts lost somewhere in the middle.

If Canada is indeed an independent broker of peace in the Middle East, we must do the responsible thing and find out the truth. What has the government done to find out the truth?

[Bill Graham, Liberal, Minister of Foreign Affairs]

Mr. Speaker, I am very pleased by the introductory comment in the question suggesting that propaganda on both sides is what we want to avoid. I explained to the House that we were trying to get the facts. We are working through the United Nations to do that.

We have been responsible for providing immediate humanitarian aid through proper UN agencies to the people who are there and we will continue to do that. We will act responsibly. We will ensure we avoid the propaganda war and get to the root causes, which is to help people and try to reduce tensions in the area.

Kyoto Protocol

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

Mr. Speaker, as regards Canada's promise to stabilize greenhouse gas emissions at the 1990 levels by the year 2000, ten years ago the current Minister of Finance asked if the government at the time would pledge that Canada would honour its domestic commitment. Since then, Canadian emissions have increased by 20%, which explains why Canada, without Quebec, would have the worst record on the planet.

Does the Minister of the Environment agree that it is time for Canada to stop backing off and that the Kyoto protocol must be ratified by the largest possible number of countries, and particularly by the country that has the worst record in the world, namely Canada?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, I realize that this is a very important issue. I will repeat what the Prime Minister told the House this week: our goal is to ratify the Kyoto protocol and we are going to dedicate ourselves to that end. But at the same time, before making a decision we must have discussions and consultations with the provinces and territories, the industry and the public, that is Canadians from all parts of the country.

We must also have a good plan. We are just waiting to hear from the joint federal-provincial-territorial committee before going ahead with these discussions.

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

Mr. Speaker, the Canadian government is trying to evade its international obligations with a new toy, the clean energy export credits.

This idea is so ridiculous that it was flatly rejected by the European Union and by the United States. Yet the Minister of the Environment is defending it.

Does this mean that the minister shares the opinion of the Minister of Finance that Kyoto is not the solution to the problems caused by climate change?

[David Anderson, Liberal, Minister of the Environment]

Mr. Speaker, this is not something new. The Prime Minister even indicated in 1997 that clean energy exports was a very important issue. The position of the Canadian government has not changed since.

This issue has become very important following the changes to the American position, compared to last year and to seven years ago, which were announced in the Bush plan, on February 14 of this year. It will reduce greenhouse gas emissions. As far as we are concerned, such is the purpose of the Kyoto protocol. This is why we are expecting a shift in the policy of the European Union.

Agriculture

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, all grain and oilseed farm associations and Agricore United and the Saskatchewan Wheat Pool are publicly calling upon the government to provide a trade injury compensation program. Even the Prime Minister's task force is calling for bridge financing due to the harm caused by foreign subsidies.

Yesterday the agriculture minister sidestepped answering this important question. I will ask it again. Will the agriculture minister immediately implement a trade injury compensation program?

[Lyle Vanclief, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, the government has shown very clearly in the past that we have taken a number of steps and adjustments to programs that are already there to address, to the best of our financial ability, along with the provinces, the effects of trade injury, the effects of weather and the effects of international markets on production and agriculture.

I can pledge to the House and to the industry that I will continue those efforts on behalf of Canadian farmers.

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, the reason these associations and farm groups are making the request is because nothing has been done, and that is the problem.

The minister's own department has identified a 25% decline in prices due to the foreign subsidies. His only response is to spend $15 million on more consultations across the country, $15 million of waste. He is long on talk and short on action. A trade injury program is needed now. Why will the minister not provide the program?

[Lyle Vanclief, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, I again express my amazement that the party that talks about grassroots consultation is opposed to consultation. There is a bit of a contradiction there.

I remind the hon. member, as I did yesterday, that program payments through a number of programs, including the spring cash advance, interest free money to farmers, the NISA program, the crop insurance program and other programs, between the federal and provincial governments last year, $3.7 billion went into supporting the primary producers in this country. That is a significant amount of money for that support.

Research and Development

[Brent St. Denis, Liberal, Algoma—Manitoulin, ON]

Mr. Speaker, as the government advances the innovation strategy to rank Canada among the top five countries in the world for research and development, our country also needs to develop highly qualified people to fuel Canada's innovation performance.

Could the Secretary of State for Science, Research and Development tell the House what the government is doing to help attract young people to careers in science and engineering?

[Maurizio Bevilacqua, Liberal, Secretary of State (Science]

Mr. Speaker, for Canada to reach its R and D potential target, we need to encourage young people to pursue careers in science and technology. That is the reason I recently announced a $1.4 million initiative entitled PromoScience, an investment in 41 organizations that promote science and engineering among Canada's youth.

I also had the pleasure to participate in the launch of a new teacher's guide and new learning materials as well as a website to encourage young people to participate in this very exciting area.

I believe that these are smart investments--

[The Speaker]

The hon. member for Battlefords--Lloydminster.

Government Expenditures

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Speaker, another Liberal ad going there.

The numbers on the new Challenger jets just do not add up and there is a very good reason for that. It is March madness spending at its worst. There is nothing in the budget, nothing in the main estimates, no planning whatsoever.

I am sure the auditor general will have a hoot with this program come the next time she tables her report.

In November 1992, the current minister of public works asked:

--when will this old and tired government learn that the taxpayers' money does not belong to the Tories and that they cannot use it to reward their friends?

What has changed?

[Paul Szabo, Liberal, Parliamentary Secretary to the Minister of Public Works and Government Services]

Mr. Speaker, as the House knows, the government has placed orders to purchase two new Challenger jets.

What the member does not realize is that these new jets will not only provide a longer range capability, be more fuel efficient, have better and safer avionics and more up to date security and satellite communications but the operating costs of the new Challengers will be 34% less than the current Challengers.

[Gerry Ritz, Canadian Alliance, Battlefords—Lloydminster, SK]

Mr. Speaker, I will take 34% more holidays.

It is tax time again and Canadian taxpayers have serious doubts about the Liberal government's priorities. When they see $100 million going to upgrade the Prime Minister's flying circus instead of the very real priorities of water treatment plants or highway improvements, they get upset, and rightly so.

Would the minister not agree that newer, faster, more efficient jets should at least carry a newer, faster, more efficient government?

[Paul Szabo, Liberal, Parliamentary Secretary to the Minister of Public Works and Government Services]

Mr. Speaker, in addition to the points I raised in the previous answer, the member should also know that these particular aircraft will have the capability of landing at more than 50 more airports within Canada than the existing Challenger jets. This is part of the improvement of productivity.

The member should also know that these particular aircraft will be available not only to the Prime Minister, government officials, the Governor General and members of parliament, they will also be available to the military, and the member knows how important that will be.

École de médecine vétérinaire de Saint-Hyacinthe

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

Mr. Speaker, the École de médecine vétérinaire de Saint-Hyacinthe is fighting to keep its accreditation with the American Veterinary Medical Association. Without this recognition, new veterinarians in Quebec will suffer. The school, the only French language veterinary school in North America, will lose its research expertise and will not be able to survive this downgrading. The government of Quebec has already done its part by injecting more than $40 million.

Will the minister of agriculture tell us when the federal government will do its part and come up with the $59 million being requested? The situation is urgent.

[Lyle Vanclief, Liberal, Minister of Agriculture and Agri-Food]

Mr. Speaker, the hon. member raises a very important issue. We know the role veterinary colleges play, not only in the health of the agricultural portion of our industry but to human health in this country. He has raised the issue with me.

I have had discussions with my cabinet colleagues and members of parliament on this side. I can tell the hon. member that we are looking at all ways in which we as a government look at the accreditation of those colleges--

[The Speaker]

The hon. member for Malpeque.

Trade

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, Mexico is Canada's most important trading partner in Latin America. In fact, last year it was our second most important export market.

However Mexico does not always abide by fair trade. Since the fall of 2000 it has shut out seed potatoes from P.E.I. and New Brunswick on extremely weak grounds.

What action is the minister taking to strengthen our relationship with our NAFTA partner to ensure that it trades fairly and by the rules?

[Pat O'Brien, Liberal, Parliamentary Secretary to the Minister for International Trade]

Mr. Speaker, as the member noted, the next ministerial trade trip will go to Mexico from June 3 to June 7. He mentioned the fast growth in trade with Mexico. Mexico is indeed our sixth biggest export market. Since NAFTA, it has more than doubled, to $2.5 billion in 2001.

The member for Malpeque mentioned a trouble spot in our trade with Mexico. It is important that we recognize that. The purpose of this trip is to increase our trade with Mexico and to make sure it becomes even fairer.

Tabling of Documents

[Art Eggleton, Liberal, Minister of National Defence]

Mr. Speaker, two days ago, in response to a question from the opposition leader and others, I referred to some figures relevant to the purchase of the two new Challengers.

I would like to table that document, in both official languages, as I indicated I would.

Committees of the House

[Mac Harb, Liberal, Ottawa Centre, ON]

Mr. Speaker, I have the honour to present, in both official languages, the sixth report of the Standing Committee on Foreign Affairs and International Trade.

Pursuant to the order of reference of Friday March 22, 2002, the committee proceeded with the examination of Bill C-50, an act to amend certain acts as a result of the accession of the People's Republic of China to the Agreement Establishing the World Trade Organization, and agreed to report it without amendment.

Petitions

[Eleni Bakopanos, Liberal, Ahuntsic, QC]

Mr. Speaker, I have the honour to present in the House a petition in both official languages, signed by the residents of my riding, Ahuntsic, asking parliament to urge the Government of Canada to request that the United Kingdom return the parthenon marbles to Greece.

The petitioners ask that every effort be made to have the Parthenon Marbles, which were removed from Greece almost 200 years ago without the consent of the Greek people, returned to Greece, their country of origin, prior to the 2004 Olympic Games when Greece will host the 28th Olympiad.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am very proud to rise to present a substantial petition signed by thousands of first nations citizens in the province of Manitoba.

The signators reject the minister of Indian affairs' first nations governance initiative. They allege that it is nothing more than a repeat of the 1969 white paper. They point out that the consultation process that went with the bill was a sham and was completely inadequate.

Questions on the Order Paper

[Sarmite Bulte, Liberal, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, the following questions will be answered today: Questions Nos. 114, 115, 116 and 119.

Question No. 114—

[Ted White, Canadian Alliance, North Vancouver, BC]

With respect to the government's National Strategy on Community Safety and Crime Prevention: ( a ) what measurement systems have been used in the past, and are presently in place, to determine whether any of the 1,900 crime prevention projects funded since 1998 have produced the intended results, and whether certain types of programs are more effective than others; and ( b ) can the government identify the programs which have resulted in measurably different reductions in crime and improvements in community safety when compared with areas which have not used those programs?

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

The national strategy on community safety and crime prevention is a fairly recent initiative. Phase II of the national strategy, launched in June 1998 at $32 million per year, built on the recommendations and the four years of consultation and policy work of the former National Crime Prevention Council. The objectives of the national strategy are:

(a) to promote the integrated action of key governmental and non-governmental partners to reduce crime and victimization;

(b) to assist communities in developing and implementing community-based solutions to problems that contribute to crime and victimization, particularly as they affect children, youth, women, and Aboriginal people; and

(c) to increase public awareness of, and support for, effective approaches to crime prevention.

In approving resources for phase II of the national strategy, the Treasury Board Secretariat required that a mid-term evaluation be completed by March 2001 and a summative evaluation be completed by November 2002. The mid-term evaluation focused on the organizational structures that have been built in support of the national strategy and made a number of recommendations for improvement. The upcoming summative evaluation will focus more on the results that are attributable to the work of the National Crime Prevention Centre, NCPC, in its support of the national strategy. In short, the evaluation will assess the extent to which the NCPC has moved toward the achievement of its objectives.

In the summer of 2000, a mid-term process evaluation of phase II of the national strategy was conducted to determine whether the design and implementation of the national strategy would support the attainment of its objectives and its five long term impacts. Key stakeholders and the mid-term process evaluation of phase II identified the need for a gradual, strategic expansion component to the national strategy. The findings of the evaluation specifically stressed the need for improvement in the following five areas if the national strategy is to be successful in reaching high risk groups and vulnerable communities: more comprehensive support structure; stronger policy, research and evaluation capacity; expanded and strategic use of partnerships; greater focus on sustainability; and effective public education and promotion.

As a result of recommendations made in the mid-term evaluation, the NCPC underwent an organizational review during the summer of 2001.

All projects funded under the crime prevention investment fund, one of the strategy’s five funding programs, undergo rigorous, third party evaluations. Through this research and development crime prevention fund, we will learn what is promising, what works, what does not and in what context. Evaluators are required to conduct process evaluations, outcome evaluations and collect costing data to be used by the NCPC to carry out a benefit-cost analysis of selected crime prevention projects. It should be noted that virtually all of the third-party evaluations are still on-going today as they typically last four years in duration; notwithstanding, the NCPC has received promising interim results for many of the project evaluations.

In June 2000 a study entitled an Evaluation of Crime Prevention Community Mobilization Projects in Selected Communities Across Canada was completed. Although the sample size of projects reviewed and analyzed was small and the focus of the study was on process evaluation, several key findings emerged. It was found that project evaluations tended to report on activities, client satisfaction with these activities, e.g., services, workshops, or communication information, and future program or service needs. In some regions, such as Nova Scotia, representatives of the Department of Justice realized that community groups varied in their level of expertise in carrying out evaluations and produced a hand-out providing guidance on how to identify project outcomes, in particular impacts on client groups and partnerships established. To attempt to address these and other issues associated with evaluation, the research and evaluation section of the NCPC will be releasing a publication this spring pertaining to the development of logic models and theories of change. It is hoped that this document will assist community groups and organizations in developing their projects and logically linking up proposed crime prevention activities to anticipated short, intermediate and long term outcomes.

Crime prevention through social development, CPSD, is a community based, long term approach to preventing crime and victimization that recognizes the complex social, economic and cultural processes that contribute to crime and victimization. Because CPSD focuses on the social development end of the crime prevention equation, it can take time, i.e. years, for the crime prevention benefits to accrue. Notwithstanding, we are very confident that projects and interventions, which have resulted in measurable reductions in levels of crime and victimization and in improvements to community safety, can be identified.

Many problems of crime and victimization are common worldwide. As a result, it should be noted that Canada can also learn from the promising, model and best practices of other countries. Scientific evidence to date already shows that some prevention programs work, some do not, some are promising, and some have not been tested adequately. NCPC works hard to keep abreast of this information and to subsequently share what is learned for the purpose of guiding our policy frameworks and project funding decisions.

Question No. 115—

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

With reference to the Residential Schools litigation, how many lawyers and how many support staff in the Department of Justice have worked on these actions and for how many hours?

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

For the last five years, the Department of Justice, DOJ, has been working on the Indian residential schools, IRS, litigation. However, only in the past three years has it kept detailed data on the overall work on these files as the significance of this litigation became apparent. Therefore, we are presenting comprehensive information from the last three fiscal years. Prior to this, IRS litigation formed part of the general litigation the Department of Justice conducted on behalf of the Department of Indian Affairs and Northern Development and no separate records were kept with respect to the number of full time equivalents, FTEs, working on IRS litigation.

The number of employees working on IRS litigation is based on actual utilization of time spent on IRS files rather than on number of employees since most lawyers work on numerous files throughout the year. One full time equivalent, FTE, is composed of 1,300 billable hours of work per employee per fiscal year.

Table 1: No. of employees working on IRS files in the DOJ (based on FTE utilization)

Table 2: Hours worked on IRS files for DOJ (The actual number of hours worked on IRS litigation is recorded through timekeeping.)

Note A: 2001-02 is as at February 28, 2002.

Question No. 116—

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

With respect to the Goods and Services Tax (GST), how much GST revenue has been collected, broken down on a year-by-year basis from 1993 to 2001?

[Elinor Caplan, Liberal, Minister of National Revenue]

The following table provides the amounts of goods and services tax, GST, revenue collected, broken down on a year by year basis from 1993 to 2001.

Net GST Collection per fiscal year ended March 31st (in billions of $)

• Net GST consists of the following: Gross receipts less: Refunds and Rebates less: Harmonized sales tax--Transfers to provinces less: GST Credit to persons less: Government Tax Remission Order

Question No. 119—

[Elsie Wayne, Progressive Conservative, Saint John, NB]

As of March 11, 2002, what is the total expenditure on the submarines acquired from Great Britain, and when are these vessels expected to be in full service for the Canadian navy?

[Art Eggleton, Liberal, Minister of National Defence]

Total expenditures on the Victoria class submarines as of March 11, 2002 were $472.31 million.

Current plans anticipate the first two submarines becoming operational in 2004 and the last two boats in 2005.

Questions Passed as Orders for Returns

[Sarmite Bulte, Liberal, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, if Question No. 117 could be made an order for return, the return would be tabled immediately.

[The Speaker]

Is that agreed?

[Some hon. members]

Agreed.

Question No. 117—

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

With respect to Parliament Hill and the surrounding vicinity: ( a ) how many tourists are expected to visit next summer; ( b ) how many buses are expected; ( c ) what arrangements will be available to facilitate access to Parliament Hill by vehicles carrying tourists; and ( d ) what arrangements will be available to facilitate access to Parliament Hill by vehicles carrying tourists who have mobility challenges?

(Return tabled)

[Sarmite Bulte, Liberal, Parkdale—High Park, ON]

Mr. Speaker, I ask that the remaining questions be allowed to stand.

[The Speaker]

Is that agreed?

[Some hon. members]

Agreed.

Business of the House

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, there have been discussions between all parties with respect to Bill C-441. I believe you would find consent for the following motion. I move:

That notwithstanding any standing order or the usual practices of the House, Bill C-441, an act to change the names of certain electoral districts, be deemed to have been read a second time, referred to a committee of the whole, reported without amendment, concurred in at report stage and read a third time and passed.

[The Speaker]

Does the hon. chief government whip have the unanimous consent of the House to propose 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, bill deemed read a second time and referred to a Committee of the Whole, deemed reported deemed reat a third time and passed.)

The House resumed consideration of the motion that Bill S-40, an act to amend the Payment Clearing and Settlement Act, be read the second time and referred to a committee.

Payment Clearing and Settlement Act

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, a potential cost to these clearing houses is the risk that any member may default before a transaction is settled which would result in a financial loss to both the clearing house and its members.

As a central counter party, securities and derivatives clearing houses take measures to reduce this risk. For example, members are required to post collateral and to net their payment and delivery obligations with the clearing house.

By way of explanation netting is a way to significantly reduce the net payment and delivery obligations of members of the clearing house, in some cases by tenfold. If, for example, a member of a clearing house buys a security for $1,000 and sells another for $900, the member's net obligation to the clearing house is $100.

Collateral, as hon. members know, is an asset that is posted, in this case with securities and derivatives clearing house, to partially offset members' obligations to the clearing house in case they cannot fulfil their obligation. Collateral is usually provided in the form of a cash deposit or the transfer or pledge of a security.

Like many of its counterparts in other countries, the Canadian securities and derivatives industry has been faced with the challenges of globalization, rapid technological change and consolidation.

Proximity to the United States and relatively low barriers to entry for foreign securities dealers, free movement of capital and an increasingly North American focus of many large Canadian corporations have made the securities and derivatives markets be more competitive. As a response, larger Canadian securities firms have been improving their quality to service clients on a North American basis. Canadian exchanges have also been facing this intensifying competitive environment.

Issuers of capital are increasingly able to access global markets, bypassing local markets and intermediaries. A growing number of Canadian firms are choosing to list their stock on U.S. exchanges. In addition, U.S. derivatives exchanges offer derivatives on Canadian indexes, commodities and companies.

It is imperative then that the Canadian securities and derivatives industry be able to compete with other countries, particularly with the United States where a significant portion of Canadian securities and derivatives trading occurs.

The industry needs a competitive legal regime that lowers settlement risks and the associated costs to these clearing houses. Such a change will make these clearing houses in Canada more efficient and competitive with the United States and other G-7 countries and help to keep trading activity here at home.

Without these changes, more securities and derivatives trading will occur outside of Canada, primarily in the United States where bankruptcy and insolvency legislation generally exempts securities and derivatives clearing organizations from court ordered stays and allows them to net the obligations of members and realize their members' collateral.

Recent changes in Europe also reaffirm the importance of keeping our industry competitive.

The settlement finality directive which came into force in 1998 established a legal framework for payment and securities settlement systems in the European Union. EU member states must ensure that securities settlement systems can net obligations and that the netting is legally enforceable and binding on third parties in the event of insolvency. The directive also provides for collateral to be realized in a timely manner in any wind-up procedure.

Laws in Canada do not fully protect netting agreements and collateral posted with securities and derivatives clearing houses to the same extent.

Stakeholders in Canada have raised concerns that current federal legislation does not prevent court imposed stays from securities and derivatives clearing houses realizing collateral in the event of their members becoming bankrupt or insolvent.

The Bourse de Montréal, on behalf of the CDCC, along with the WCE Clearing Corporation and the Canadian Depository for Securities have all requested that the Payment Clearing and Settlement Act be amended to cover securities and derivatives clearing houses. They are concerned that Canadian bankruptcy and insolvency laws add to the cost of their clearing house operations and to their members by increasing the costs related to the risk of a failure of one of their members.

It is difficult to attract large international dealers and trades to Canada if these Canadian clearing houses face higher costs because they cannot enforce their netting and collateral agreements with members in the event of the insolvency of one or more members.

Given how our competitors function, it is imperative that changes be made to ensure that Canadian securities and derivatives clearing houses can compete with those in the United States and in Europe.

Bill S-40 addresses these issues. The amendments in Bill S-40 will make Canadian securities and derivatives clearing houses more efficient and competitive with the United States and the other G-7 countries, allow them to lower their costs and help to keep trading activity in Canada. This is accomplished by amending the Payment Clearing and Settlement Act to include legal protections for securities and derivatives clearing houses of their netting agreements and collateral posted by their members.

These amendments protect netting agreements and prevent stays imposed by a court on the ability of securities and derivatives clearing houses to realize collateral in case of bankruptcy or insolvency of one of their members.

Hon. members should bear in mind that the protections being sought through this bill are over federal bankruptcy and insolvency laws. These legal protections will allow Canadian securities and derivatives clearing houses to lower their settlement risks and settlement costs, thereby making them more efficient and competitive with the United States and other G-7 countries.

Before closing I want to draw the attention of hon. members to recent recommendations made by the Bank for International Settlements, the BIS, to which the amendments of the bill adhere.

The BIS is an important forum for international monetary and financial co-operation between central bankers and other regulators and supervisors. Its work has contributed to the setting of standards, codes and best practices that are deemed essential for strengthening the financial architecture worldwide.

Last November the BIS made recommendations about securities settlement systems, including securities clearing houses. These recommendations support a well-founded legal basis for securities settlement systems so that rules and procedures can be enforced with a high degree of certainty. In particular, it favours the enforceability of netting arrangements and the ability to realize assets pledged as collateral.

As I mentioned earlier, securities and derivatives clearing houses are important to the efficient operation of our financial markets.

First, securities and derivatives markets are critical in providing opportunities to raise capital for investments and hedging financial risks.

Second, securities and derivatives clearing houses take measures to reduce settlement risks and associated costs through netting and requiring members to post collateral.

Third, it is important that the measures taken by these clearing houses to reduce risks are supported by a sound and competitive legal regime.

In considering the bill, I urge hon. members to keep these three additional points in mind: First, that these amendments are in keeping with recommendations by the Bank for International Settlements regarding securities settlement systems; second, that they are supported in Canada by financial sector participants and their associations, by provincial governments and by the insolvency community; and third, that they help meet a throne speech commitment to keep Canadian laws competitive.

It is essential that Canada's financial sector remains strong and efficient. The amendments in Bill S-40 will help to ensure this. A competitive legal regime will help keep securities and derivatives trading in Canada and assist the industry in attracting international deals and brokers here.

For those reasons, I urge hon. members to pass the legislation without delay.

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

Madam Speaker, I will begin by thanking my Canadian Alliance colleague, the member for Prince George--Bulkley Valley, for agreeing to switch positions with me.

I am pleased to take part in the debate on Bill S-40 for the simple reason that the bill's purpose is to modernize the securities sector. The Montreal Stock Exchange, which recently became the only derivatives clearing house in North America, will therefore be able to benefit from this bill. In fact, all key players at the Montreal Stock Exchange worked very hard to move this bill forward and ensure that its wording would satisfy the objectives of both the Montreal Stock Exchange and the Canadian Derivatives Clearing Corporation.

First, I wish to congratulate Luc Bertrand, president of the Montreal Stock Exchange, Giovanni Giarrusso, first vice-president and general manager of institutional affairs, and Michel Favreau, first vice-president and chief of compensation. I wish to commend them for their excellent work, for their contribution to the debate and for the necessary changes incorporated in Bill S-40 with respect to the proper conduct of operations at the Montreal Stock Exchange and the clearing corporation.

As I mentioned, the Montreal Exchange is the only derivatives market in Canada. It has a wholly owned subsidiary known as the Canadian Derivatives Clearing Corporation, whose job it is to clear financial transactions involving derivatives.

What does clearing mean?All it means is that when there is a transaction involving derivatives, in other words, when there is a seller of derivatives and a buyer, the clearing house, in this case the Canadian Derivatives Clearing Corporation, ensures that the buyer is able to pay the seller and that the seller is able to receive the money from the buyer. This is referred to as clearing a transaction.

There is a problem with how the Canadian Derivatives Clearing Corporation operates, one that Bill S-40 will rectify. Before, the corporation did not afford the same legal protection to buyers and sellers as other clearing houses in North America. In a field that is fiercely competitive, the situation can arise—and this is what has happened to the Montreal Stock Exchange and to the Canadian Derivatives Clearing Corporation—where derivatives from Canadian companies are listed on foreign exchanges, particularly in the United States, and if they have a clearing house, it is easier to go through an American stock exchange clearing house, instead of using the Canadian Derivatives Clearing Corporation.

This is easy to do, because this is a competitive environment, and made even easier because, without the proper legal protection, the Canadian Derivatives Clearing Corporation was at a disadvantage, since the derivative seller, seeing the increased risk in trading through the Canadian corporation, preferred to trade with American clearing houses.

Once passed, the bill will rectify this problem. I invite all of my colleagues in the House, from all political parties, to support it, because we will solve this problem. We will provide the Canadian Derivatives Clearing Corporation with the competitive capacity it should have had from the outset. We will level the playing field and allow the corporation to face the music and compete with all of the other North American clearing houses.

Passing Bill S-40 will allow the Montreal Stock Exchange to make a major investment in the automated derivatives system.

This would be a first in America. It will also allow investments to increase the growth of transactions on derivatives and will raise the credit rating of the Canadian Derivatives Clearing Corporation.

There will also be—and this is where the beauty of this bill lies—impacts both upstream and downstream, among them the creation of skilled workers. As we know, the financial sector requires ultra-specialists.

The new environment created by increased prospects at the Montreal Stock Exchange and the Canadian Derivatives Clearing Corporation will attract such specialists. It will be far easier for the Montreal Stock Exchange to attract such workers, who are hard to find, even elsewhere in North America.

Given all the advantages offered by Bill S-40, I therefore encourage my colleagues in all parties, in opposition as well as in government, to vote in favour of this bill. As I have said, it will give new life to the Montreal Stock Exchange as a specialized derivatives clearing house, and to the Canadian Derivatives Cleaning Corporation, a wholly-owned subsidiary of the Montreal Stock Exchange.

Once again, congratulations to all those who have contributed to the drafting of this bill and those who are going to vote in favour. I thank them all in advance.

[Dick Harris, Canadian Alliance, Prince George—Bulkley Valley, BC]

Madam Speaker, I know we have heard from the government speaker and my colleague from the Bloc who spoke in support of Bill S-40. I plan to speak on behalf of the Canadian Alliance in support of this bill as well. Although, members know our feeling about bills that originate in the Senate. Although this is an amendment, so it is a little different. We have always held the opinion that bills should originate in this House but we will make an exception here because this is a good bill.

Bill S-40 would amend the Payment Clearing and Settlement Act. It is important to note that this glitch in the act has existed for some time and the government has known about it. The Minister of Finance and his department officials have known that our clearing houses have been operating at a disadvantage to our counterparts, particularly in the G-7, which have made changes to look after the problem involving bankruptcy and dealing with the collateral and derivative contracts.

The government has known about the problem for some time. Principal groups and companies that are involved in this type of business have been saying that there is a problem. On the grand scale of running government, something like this is a minor change that would eminently be beneficial to the various types of clearing houses, to the buyers and sellers who deal with the trading companies, to our competitiveness with our G-7 counterparts in attracting foreign business to our clearing houses and to the people who buy and trade through the clearing houses.

One would think that someone in the finance department would have said “let's just get this done” and make the change. This will not change the direction of the world but it will make the people in Canada who are involved in this sector of our economy a lot happier. They will be able to attract more business, create more jobs and acquire a higher degree of technology in their operations. However this has been dragging on for some time now.

In February the member for Calgary Southeast, who was our finance critic at that time, wrote the finance minister and asked him to introduce the requested amendments as soon as possible. The way the government marks time, February, March, April, a month and a half is really nothing.

There has been precious little other business on the government agenda. It could have introduced the amendment earlier than this. As well, it could have been done even before our finance critic had to write to finance minister to ask him to get on with it. It is just the typical slow wheels of government turning. I have been here since 1993 and I have never seen government wheels turn as slow as I have with this Liberal government.

There are so many issues that parallel the movement on this amendment. One only needs to look at the softwood lumber issue. When the softwood lumber agreement was signed in 1996, there was a set termination date five years hence. The government knew that. It knew it would have to prepare for the eventual end of that agreement.

One would think it would be good government business to begin looking five years ahead from the date the agreement was signed in preparation for when it would run out in order to avoid a trade crisis. The fact is the government simply did not do that. Anyone who has some sort of gift for planning, and one would hope that there would be some in the government who could look further ahead than 10 days, would see that five years from 1996 we would be in some sort of a trade crisis with the United States unless we did some planning.

There were warnings from the official opposition about the perils that lie in the SLA. There were warnings that when the softwood lumber agreement ended we would be in a trade dispute which perhaps would lead to a crisis situation. There were warnings not to get into the SLA in the first place. Despite all the warnings, the government did not move until about six months before the softwood lumber agreement expired. That foot dragging, the same type of foot dragging it did on the amendment to the Payment Clearing and Settlement Act, got us into a full scale trade crisis with the United States on softwood lumber.

Now the U.S. is playing hardball. We went into the game at the end of the SLA unprepared hoping that the negotiators and the U.S. forest industry and the lobby group that represents it would somehow do us a favour. Well it does not work that way. They do not do anyone any favours. They play for keeps and they play hardball. Those who are not prepared, as Canada was not, are going to get beat up.

In relation to Bill S-40, this is the sort of the thing that was placing our clearing houses at a disadvantage to our competitive partners in the G-7. The other G-7 partners, as the Secretary of State for International Financial Institutions will know, were way ahead of us on this one. Canada was lagging behind.

I am sure the hon. member knows how important this amendment is. Not only should we get it in now but we should have had it in long before now to allow our clearing houses to be more competitive. In particular, the one in Montreal has been really pushing this so it can expand its business. Other similar businesses and clearing houses in Canada could attract foreign business and use the services of the clearing houses with the confidence that the agreements are not going to be held up through some court order due to a bankruptcy from some of their members.

It is important to be on top of things like this and the government simply has not been on top of it. The hon. member, being a former chief economist and a good one at that, has to know how important it was to get this amendment in. However there has been more foot dragging which should not have happened.

We can talk about the slow pace of the Liberal government on a number of other issues and draw parallels to this bill. For example, the part of British Columbia where I live has a huge natural disaster called the pine beetle infestation. The government has known about this situation.

The Pacific forest centre in Victoria that deals with the science of forestry and forest management has known about this and the federal government has known about it for a number of years now. A few short months ago I asked the government if it would come to the assistance of the British Columbia government in fighting the pine beetle infestation.

The answer was that the federal government had not been asked yet. My question had to be, is there anything wrong with being a little proactive on it? Why not call B.C. and ask if the federal government could be of help? There is an obligation on behalf of the federal government to return some of the billions of federal tax dollars that have come out of the British Columbia forest industry.

Just a few short weeks after that day, the British Columbia government did make a formal proposal to the governing Liberals. It presented its five or six year plan to deal with the pine beetle infestation and asked for the federal government's help.

The forest industry is in crisis out there. Tens of thousands of B.C. workers have lost their jobs not only in the forest industry but in related industries. The future of that particular part of the province because of the pine beetle infestation looks dismal.

The fact is the federal government has not responded to the request for help by the Government of British Columbia. That is a shame considering that the B.C. forest industry has sent billions of dollars, perhaps tens of billions of dollars to Ottawa over the last number of decades. The five year plan calls for a total expenditure of about $500 million. That is a very small percentage of what B.C. has sent here. Also it would be a cost sharing plan so perhaps the federal government's share would be down to about $250 million.

The federal government has simply ignored the west once again in the face of a very serious crisis. It has ignored the western forest industry, a prime area of softwood lumber harvest and production in Canada. It has ignored it and allowed the softwood lumber crisis to develop. It has ignored the province of British Columbia, and in particular my riding where literally hundreds of thousands of acres are infested by the pine beetle. It has ignored that.

The government seems to ignore and drag its feet on the real important issues that face various parts of our country, as it has been ignoring this amendment to the Payment Clearing and Settlement Act. Now it is acting on it. It is late but at least the government is acting on it.

While the Liberals tend to delay making decisions on major issues that affect the country, they seem to have no problem when it comes to making a perk-like purchase for the Prime Minister and cabinet, such as a couple of Challenger jets to fly around the country. It took them 10 days to do that. My colleague from Elk Island has been keeping track of the government on this issue.

It appears that one day in the parliamentary restaurant the Prime Minister said to some of his colleagues “Listen folks, I may only be around here for another year or year and a half. It would sure be nice to have some new planes to fly around in because I have a lot of countries to see and a lot of people to meet. I want to ensure that my final year or year and a half is filled with a very high degree of comfort and a lot of travel because that is always fun”. It took them 10 days to spend $101 million on Challenger jets.

This has not come up yet but I am sure it will. Under questioning the Minister of Public Works and Government Services said that the planes were ordered from Bombardier because it was the only one that could supply Challenger jets. The government wanted Challenger jets because it already had four Challenger jets and it wanted to stay with the same type of aircraft and therefore Bombardier got the order.

That is the wrong way for a government to order its goods and services. There is a written process. It appears the order was deliberately put through national defence so that the government could avoid going to public tender to allow other companies that build that type of aircraft to bid on it.

Under the procurement guidelines any contract for goods and services over $37,000 must be publicly listed through the MERX system and is open to bid by suppliers in Canada, the United States and Mexico. That is part of the NAFTA agreement. This is the way the rules were set up under NAFTA so that suppliers in the U.S. and Mexico as well as in Canada could bid on these contracts. This was the reason the government established what is called the MERX system, which is being run by one of the major banks, that posts all the requirements for the government on the service so that suppliers can make bids.

When the government is looking to purchase airplanes, it is very deceiving of it to put the tender out in such a way that it names the manufacturer and the brand of aircraft it wants. Under the procurement rules the government should have stated that it needs a passenger jet which must have a certain number of seats, a flight range of x number of miles, a fuel economy of a certain standard and it must be fitted to special requirements regarding avionics and things like that.

That is the way the government should have put that tender into the MERX system which would allow companies that are capable of supplying an aircraft like that to bid on it. It is a public tender. That is what the procurement system in the government is all about. The MERX system is there so that the government can easily put its requirements in front of anyone who chooses to bid on a contract.

There are companies in the United States, such as Gulfstream, Citation, Beachcraft and Lear that build corporate jets. Had the government put the requirements of a type of plane out, it could have had four or five other tenders including Bombardier's. If all the other tenders were simply not suitable, the government could have held them up and said “These are the tenders we received and here is why we chose Bombardier”. No one would question that, but the government did not do it.

The government may have another problem with the purchase. It may be in direct violation of the NAFTA rules by not allowing American and Mexican companies to bid on the planes. I would advise the Minister of Public Works and Government Services to be prepared for a NAFTA challenge from a company that could have provided that same plane.

Everything the government needs has to go out to public tender unless for example it is required for a state of emergency or if it is an issue of national security. I suspect that the government put the purchase of these aircraft through national defence hoping that people would think it must have been a security issue and would not worry about it. The people watching the procurement system the government is bound to operate under are a lot smarter than that. I suggest that the government be ready for a NAFTA challenge on the purchase of the aircraft.

I could talk about Kyoto. However the House has heard enough about how the government has been mismanaging that issue so I will instead try to sum up Bill S-40. It is important to point out that Bill S-40 would make technical changes to correct a significant problem faced by certain Canadian clearing houses. Under existing solvency laws derivative contracts are not exempt by court ordered stays. If member corporations go into bankruptcy any collateral deposited at clearing houses is frozen along with other assets. Clearing houses have to line up behind all the other creditors. Our counterparts in the G-7 foresaw this problem years ago and took steps to correct it by introducing legislation. However the Liberal government has not. This has put Canada way behind.

Bill S-40 would bring Canadian law into line with our G-7 counterparts by exempting such collateral deposits from the law relating to bankruptcy or insolvency procedures. This would allow clearing houses to realize collateral deposited by its members without the risk of a court imposed stay. Under existing law Canadian clearing houses operate under a competitive disadvantage compared to derivative clearing houses in the United States and Europe. This is exactly what I was talking about.

Our friends in the G-7 have been way ahead of us on the issue. As a result they have been attracting businesses from outside their countries that have confidence in dealing with them because the flaw in our laws governing the issue does not affect them. The passage of Bill S-40 would put us on a level playing field with our friends in the G-7.

I will make an observation for those who are watching. During a trading day a member of a clearing house will be both a buyer and seller of listed stocks. That is the way it works. Instead of each member making separate settlements with other members a designated central clearing system or clearing house handles the daily settlement process between members. The Montreal stock exchange has spearheaded the effort to change the law but the Liberal government has not listened to it.

Bill S-40 must go through. We in the Canadian Alliance Party will support it. It is about time the bill came forward.

Before I close I am sure the House will allow me to say hello to my father who is watching. He is in Sidney and has been very ill. I told him I would try to brighten his day by saying hello to him. We are hoping all the treatment he is getting will bring his strength back, and I will see him in a couple of weeks.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, I too am pleased to have the opportunity to join in the debate on Bill S-40, an act to amend the Payment Clearing and Settlement Act.

I will start by saying there is not much in the world I know less about than the clearing of derivatives, et cetera. However I undertook to learn a bit about it so I could convey my party's opinion and the recommendations of our critic. I found it quite fascinating. It is an area of study I have never expressed an interest in or spent a lot of time on but I found it gripping.

I can tell from some of the speeches given today that some people view this as a rather dry issue. I do not. Even as a layperson in the financial market sector I sense there is a crisis of confidence in the financial community on Bay Street, on Wall Street and among major institutional investors. Bill S-40 is one step that may re-instill at least some semblance of confidence because it deals with making sure investments enjoy a greater degree of security.

The bill seeks to amend the Payment Clearing and Settlement Act to permit securities and derivatives clearing houses to realize the collateral of members, for example deposits for commodities, securities, or currency contracts in the event of bankruptcy or insolvency. This would give a measure of added confidence to the sector.

Bill S-40 had its genesis in extensive consultations with officials from clearing houses and from the stock exchange in Montreal. The finance critics of all opposition parties had broad consultation and were allowed input at the early stages. This may explain why we are seeing a great deal of co-operation in putting the bill through.

Bill S-40 is a technical bill with only one clause. It is short and to the point. It was expedited through the Senate in only two weeks. The committee stage lasted only an hour. Clearly there was broad consensus that it was a necessary and desirable thing to implement.

Canadian securities and derivatives clearing houses enable consumers and businesses to buy and sell securities and derivatives in a timely manner and at a reasonable cost. They do this by providing clearing and settlement services and acting as a central counter party to securities and derivatives trades. This is what our research revealed.

Although the NDP generally and I personally do not have a lot of use for unfettered speculation and are no great friends of derivatives, in researching the issue we have come to learn that there are good and bad derivatives. Our criticism of the speculative derivative market is therefore only valid in a certain sense.

There are good and bad derivatives. Good derivatives help hedge corporate treasuries against risk such as price changes and currency fluctuation risks. There is a role for such derivatives in helping corporations hedge risk with their investments.

Bad derivatives, the ones we are critical of, are about gambling. They are about rolling the dice with people's money. They are about casino capitalism. Speculative derivatives allow corporate or individual gamblers to make bets on the future price of underlying assets by betting a fraction of the cost of an asset. The leverage comes about because the derivative instrument replicates the borrowing or lending of the underlying asset.

This is what I have found although I had to read it a couple of times to get the gist of it. The opportunity for leverage comes about because the derivative instrument involved replicates the borrowing or lending of the underlying asset without ever having to physically own it.

This is an abstract concept a lot of lay people and ordinary Canadians would not necessarily know. However they had better get to know it because it is an unbelievably exploding market. A lot of people's pension dollars may be invested without their knowledge. Money managers who handle employee benefit plans and investments are surely dealing with some of these issues. We should know about it.

I will give members an illustration of the explosion of the derivatives market. Some $64 trillion was traded in derivatives in 1995. In 1997 the figure was $360 trillion. Today more than $1,000 trillion is invested in the derivatives market. Surely we need to take great interest if that is the direction in which the investment marketplace is going.

We view this as a negative. We do not believe such massive investment marketplace can be regulated in an adequate way. As members might expect, the scope and magnitude of the investment marketplace causes major regulatory problems. It is a moving target. Anything growing and expanding at that rate is difficult to nail down. The bigger the corporation the less transparency and accountability. That is what has led to the crisis of confidence in the investment marketplace. It is because of the massive losses of companies like Enron. We have all heard of Merrill Lynch. Merrill Lynch is being charged by the New York state attorney general for biased research. It is causing a crisis of confidence in the whole financial sector.

As we are dealing with this or trying to get our minds around what $1,000 trillion worth of activity and derivatives speculation looks like we must also try to get our minds around how to safeguard those involved in the massive free for all gambling in the derivatives speculation marketplace.

There are major regulatory problems. The Enron fiasco is only the tip of the iceberg. It was partly due to the fact that derivatives transactions were booked between private parties rather than a public, transparent and fully regulated clearing house system. The failure of auditors and their lack of independence was a contributing factor but the real root of the problem can be traced to the fact that derivatives transactions were booked through private parties rather than a public, transparent and fully regulated clearing system. Anything we can do to alleviate the problem would surely would give comfort to those involved in the financial sector.

A massively leveraged hedge fund was held by Long Term Capital Management fund or LTCM. I am sure most people are familiar with it. It showed up in the news. LTCM had a substantial amount of the world's economy hedged on the future narrowing of interest spreads by the U.S. treasury. It rolled the dice based on the future of narrowing of interest spreads in the U.S.

By mid-1998 LTCM had about $4 billion in equity capital and borrowed funds of about $120 billion, a hefty leverage of about 30 times. Red lights should be going off all over the place when a company is leveraged at 30 times, with $4 billion in equity capital and $120 billion borrowed on something as speculative as the spread between real interest rates. It is a recipe for disaster. Amazingly, the leverage was compounded tenfold by LTCM's off balance sheet derivatives exposures which amounted to another trillion dollars.

These are the stakes the big guys play with. With $4 billion in equity capital LTCM borrowed funds of about $120 billion for a leverage of 30 times. It compounded that tenfold with off balance sheet derivatives exposures that amounted to more than $1 trillion. It is like Rumplestiltskin spinning straw into gold when a company takes $4 billion and spins it into a trillion dollars. It is incomprehensible to little people like us.

A consortium of private banks led by the federal reserve in New York had to bail out LTCM. Fortunately no public sector money was involved, but it goes down in history as one of the biggest runaway freight train catastrophes in financial sector history. The truth of the matter is that we really do not know the long term consequences of what I call derivatives wizardry. We do not know what the real implications are for the real economy. What does it mean to real people? These guys are playing for big stakes in casino style capitalism. They are rolling the dice in this derivatives market and I think they are putting us all at risk.

Frankly, the real losers at Enron were not even the investors and the shareholders but the ordinary Americans who, with confidence, had their pension funds invested in that company on their behalf by money managers. They believed the auditors' accounts. They had no reason not to believe them. They trusted this institution of American capitalism. They thought that a company that big was beyond corruption. People think surely to God a company that big is regulated carefully and analyzed by the government and surely to God somebody is in our corner in that marketplace. It turns out that was not true. Tragically there were snakes at the top who were doing terrible things to thousands and thousands of Americans, because a lot of them have personally directed pension funds, like the Alliance has always advocated. The Alliance wants pension plans to be private, individual accounts that are invested on people's behalf. In this case, people's privately invested accounts disappeared and they lost their retirement security.

The step we are taking today in Bill S-40 is a step in the right direction to help alleviate some of those concerns and some of those fears. Our critic, the member for Regina--Qu'Appelle, who actually knows something about this kind of thing, recommends that we support Bill S-40. He points out some of the positives of Bill S-40, stating that it:

Enhances the stability of the financial system by enabling a securities and derivatives clearing house to immediately realize assets pledged as collateral in the case of default or bankruptcy.

I note as well that the bill will have primacy over the Bankruptcy and Insolvency Act. In the case of a clearing house being involved, this amendment to the bill will now have primacy over the terms and conditions and the order of disbursement of assets under the Bankruptcy and Insolvency Act.

What is good about this change in Bill S-40 is that it guarantees a swift payment of collateral to those clearing houses and ultimately it protects the stability of the system. That is what we are trying to do: restore people's faith in the integrity of the system. Frankly, that faith is wounded. It is damaged, it really is, and that is not good. We live in a system that relies very much on confidence in the system to promote investment. Bill S-40 achieves this by taking a shortcut to override the other bankruptcy legislation, as I have pointed out. It will have primacy over the Bankruptcy and Insolvency Act.

The mainstream argument in favour of Bill S-40 is that the legislation puts Canada on a level playing field with the U.S. and Europe and increases our financial competitiveness and Canada's ability to attract capital. That point has been made adequately by most who have spoken to the bill.

A main beneficiary of the bill would be the Montreal Stock Exchange, which also clears derivatives transactions for the Winnipeg Commodity Exchange in my riding of Winnipeg Centre. The Montreal Stock Exchange also specializes in futures.

We normally do not support legislation originating from the other place, but because this is a purely technical bill I think maybe it is a good idea to waste the time of the Senate instead of wasting the time of the House of Commons, so we can in fact approve of the bill coming forward through this method.

I will replay some of the key things. I caution members of the House. The truth of the matter is that we really do not know the long term consequences of derivatives wizardry. We are still critical of what we call the bad derivatives, because it is a rolling of the dice. It is gambling with futures and it is gambling with the confidence of the investment community, with the real implications for the real economy. Are we playing sorcerer's apprentice with the system?

Financial deregulation has expanded the investment horizon of private investors but has also created new systemic risks without really improving access to affordable capital and loans, which is one of the critical requirements for a moving economy. The increasing poverty of so-called emerging countries is an obvious case in point. The disciplining effects of markets adjusting to speculative derivative bursts contribute to endemic deflation, which, I would caution again, hurts the weakest and most vulnerable of countries, especially developing third world nations.

What is key in this debate? We believe that in order to restore confidence in the mainstream investment marketplace it is necessary to obtain a regulatory environment that would mandate transparent, standardized and strictly regulated off balance sheet items such as derivatives. We want to see this regulated for our own protection, not so that the heavy-handed estate interferes with the marketplace but for own protection. All derivative products should fall under that same regulation.

I note that when we dig a little deeper into the details around this amendment to the Payment Clearing and Settlement Act, Bill S-40, what it does is provide the Canadian securities and derivatives clearing houses with legal protections similar to those in place in the United States and other G-7 countries in the event that one of their members becomes insolvent or declares bankruptcy. There is a remedy put in place that is above and beyond the courts. It saves the lineup for who will divide up the assets of an insolvent company.

With over 190 member firms, the Canadian securities and derivatives industry is a key and vital player in Canada's financial system. The industry provides a mechanism for raising capital, channeling savings into investments and minimizing and hedging risks through these derivatives contracts. To explain the network throughout Canada, the three clearing houses, the Canadian Derivatives Clearing Corporation, the Canadian Depository for Securities and the WCE Clearing Corporation, clear and settle trades on four different exchanges, these being the Toronto Stock Exchange, the Bourse de Montreal, the Canadian Venture Exchange in Calgary and the Winnipeg Commodity Exchange.

As a central counter party, they assume settlement risks, that is, the risk that a member may default before a transaction is settled, which would result in a financial loss to both the clearing house and its members. Because of this, securities and derivatives clearing houses have risk reducing measures that require members to post collateral and net their obligations with the clearing house.

The Canadian securities and derivatives industry is in need of a competitive legal regime that lowers settlement risks for the clearing houses, and we support that point of view, and therefore lowers trading costs. We support that as well. This will make these clearing houses more efficient and competitive with the United States and other G-7 countries.

We are satisfied that the amendments in Bill S-40 accomplish this by expanding the scope of the Payment Clearing and Settlement Act to include legal protection for these securities and derivatives clearing houses of their netting agreements and collateral posted by their members. I would note that the protections being sought are above and beyond the current bankruptcy and insolvency laws.

Before closing I should mention that the changes in the bill are in line with recommendations made by the Bank for International Settlements, which is an international forum that fosters co-operation among central banks and other agencies in the pursuit of monetary and financial stability. The BIS supports a well founded legal basis for securities settlements so that rules and procedures can be enforced with a high degree of certainty. In particular, the BIS favours the enforceability of netting arrangements and the ability to realize assets pledged as collateral.

We believe that the amendments to Bill S-40 will help to ensure that Canada's financial sector remains efficient and competitive.

[Loyola Hearn, Progressive Conservative, St. John's West, NL]

Madam Speaker, I rise on behalf of our party to also support the amendments to Bill S-40. We think it is a very good move.

It is a bit ironic, perhaps, that here we see government making some very solid, positive moves that would help Canadian companies, whereas just today, and it is an issue I will raise later because it may not entirely be relevant, we see the situation where a government department, in calling tenders for supplies, eliminates small Canadian business, small local competition, and really passes tenders into the hands of large American based companies. There are many areas where we have to scrutinize what we are doing to make sure that perhaps we do as we are doing here, which is to bring in proper legislation and take proper procedures to protect our own companies so we can be competitive in the overall marketplace.

Increasingly Canadian companies are going to the United States markets to meet their funding needs. Our largest companies trade more shares on the United States exchanges than on the Toronto Stock Exchange. The past three years have seen net portfolio investment go from an inflow of $14 billion per year to an alarming outflow of $30 billion per year. This is extremely serious. During that period of time, foreign purchases of Canadian companies have outweighed Canadian acquisitions of foreign companies by more than $75 billion. As these companies come under foreign ownership, their financing activities move out of the country.

In addition, the present circumstances make it very difficult to nurture new companies because they do not have access to adequate capital. Furthermore, they are unable to attract attention in the United States marketplace or even meet the higher U.S. listing requirements.

Bill S-40 is one of the initiatives that would reverse this trend. It is a step toward addressing the declining competitiveness of the Canadian economy and the declining liquidity of the Canadian capital markets.

The globalization of financial markets in recent years has permitted investors to move their investments rapidly away from riskier markets to others where the legislative framework is friendlier and less risky. In the United States, bankruptcy and insolvency legislation generally exempts securities clearing organizations from court ordered stays and allows them to net the obligations of members and to realize on their members' collateral. Thus, some trades that could and should occur in Canada, particularly in derivatives, are being handled in the United States because of the risk issue on the Canadian exchanges and the lack of protection in our bankruptcy and insolvency legislation. In particular, the Bourse de Montreal, Canada's major derivatives exchange, is at a marked disadvantage compared to exchanges such as the Chicago Board of Exchange.

The securities and derivatives industry is very significant for our Canadian economy. Strong and competitive Canadian financial markets are the key to the overall growth and prosperity of the nation. However, it is difficult to attract large international dealers if Canadian clearing houses face higher costs as a result of their inability to enforce their netting and collateral agreements with their members or because they present greater risks to the participants in the event of the insolvency of one or more members.

Clearing houses for Canadian securities and structured products such as derivatives and options must be able to clear transactions in a timely manner, but under existing law in Canada they cannot clear transactions when either the buyer or the seller becomes insolvent. The various Canadian laws that currently govern bankruptcy and insolvency, namely the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Winding-up and Restructuring Act, do not offer Canadian clearing houses the same protection that is offered in the laws of other G-7 countries.

This is of great concern to the four exchanges in Canada that trade in securities and structure products, namely the TSE, the Toronto Stock Exchange, the Bourse de Montréal, the Canadian Venture Exchange in Calgary and the Winnipeg Commodity Exchange. This is also of great concern to the three clearing houses that clear the trades of the four exchanges, namely the Canadian Derivatives Clearing Corporation, the Canadian Depository for Securities and the WCE Clearing Corporation.

The Bourse de Montréal, on behalf of the Canadian Derivatives Clearing Corporation and the two remaining clearing houses, have all asked that the Payment Clearing and Settlement Act be amended to cover securities and derivatives clearing houses.

Bill S-40 is designed to provide clearing houses with the legal protection they need in the event one of the trading parties becomes insolvent or bankrupt.

The amendments in Bill S-40 would expand the scope of Canada's Payment Clearing and Settlement Act by providing protection for the netting agreements for our securities and derivatives clearing houses. They would also provide protection for the collateral posted by the members of the clearing houses.

Passing the bill will encourage both domestic and foreign investments in Canadian companies. That is what we want. We do not want to see this business going to the United States. We should not only hold our own here in Canada, but we should entice foreign investment here as well. We can only do that if we are competitive.

Should Canada fail to adapt its financial legislation to international norms, there is a clear danger that a significant number of Canadian businesses will move to foreign markets.

Bill S-40 will ensure that the Canadian market enjoys the same protection that is provided in the other G-7 countries. It will enhance our competitive position by enabling clearing houses to lower their costs by reducing the settlement risks caused by poor bankruptcy protection. Thus it will allow our financial markets and institutions to grow their business in Canada and reclaim certain specialized financial business that has moved to foreign markets. It may also attract new investors from the United States and other foreign countries.

It should be noted that the amendments to the bill follow up on the November 2001 recommendations made by the Bank of International Settlements and the International Organization of Securities Commissions.

One of the central recommendations was that the transactions involving the clearing houses have a well-founded legal basis so that their rules and procedures could be enforced with a high degree of certainty. This includes the enforceability of transactions, netting arrangements and liquidation of assets pledged or transferred as collateral.

Bill S-40 will help more of our financial markets to become more competitive. However more work needs to be done.

Tax reform is crucial. Despite federal and provincial tax cuts, Canadian taxes are still higher than in the United States, and the United States rates are scheduled to decline even more over the next four years.

A modern regulatory structure that will work in a fast paced marketplace is also necessary. We must eliminate rules that are duplicative, contradictory or not in the public's interest. Financing in Canada is more expensive and complicated than it should be. Each new regulatory policy should undergo a rigorous cost benefit analysis and be implemented in a way that minimizes cost and excessive red tape. How often have we heard that?

A single and national governing body must also be created to oversee Canada's financial markets. The multiple Canadian regulatory authorities have created a fragmented and decentralized system.

In conclusion, securities and derivatives clearing houses are crucial to the efficient operation of our financial markets. Bill S-40 will allow them to reduce costs, because of better bankruptcy protection legislation and thus become more internationally competitive. The bill, in conjunction with tax reform, reducing the regulatory burden, and consolidating the many financial market regulatory authorities will help restore Canada's competitiveness.

After all that is what collectively we should all be doing; ensuring that we are a major player in the financial markets in the world. We can be. We have everything here that would draw investment. The only thing we need is the will to ensure that investors feel comfortable, get a fair deal and we can compete with other countries around the world.

[The Acting Speaker (Ms. Bakopanos)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Ms. Bakopanos)]

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

[Some hon. members]

Agreed.

[The Acting Speaker (Ms. Bakopanos)]

Accordingly the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

[Paul Devillers, Liberal, Simcoe North, ON]

Madam Speaker, I rise on a point of order. I think if you seek it you will find unanimous consent to see the clock at 1.30 p.m.

[The Acting Speaker (Ms. Bakopanos)]

Is it agreed?

[Some hon. members]

Agreed

[The Acting Speaker (Ms. Bakopanos)]

The House will now proceed to the consideration of private members' business as listed on today's order paper.

Pension Savings

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

moved:

That, in the opinion of this House, the government should create a personal retirement account whereby Canadians may be given an after-tax option for pension savings.

Madam Speaker, I started working on this motion back in 1998 and it has been a long dusty road to get it here. I am delighted to speak to my private member's Motion No. 357.

What I am recommending is that another vehicle for retirement income be added to the array currently in existence in the Canada retirement income system. I call this the personal retirement account. It is not unlike the Roth IRA, which was recently introduced into the U.S. tax system for Americans wishing to save for their retirement by contributing after tax money into an individual registered account in which any growth is sheltered from all future taxation. Americans have had this popular new alternative at their disposal since 1998.

This savings vehicle offers no immediate tax benefit. Instead, interest dividends or capital gains income earned in the retirement account accumulate free of tax. The intention would be that withdrawals of principal and earnings after a specified age, for example age 60, are free of tax as long as the plan has been in existence for five years.

Most Canadians understand the basic concept of our current retirement income system which consists of public and private components. The public component consists of old age security and guaranteed income supplement for Canadians with lower incomes and the Canada and Quebec pension plans.

The private savings component is in the category of registered retirement savings plans, otherwise known as RRSPs, or registered pension plans, RPPs. I am proposing is a Canadian alternative for private savings under a personal retirement account which will utilize after tax money as opposed to the RRSP which defers current taxes until withdrawals are made from the RRSP and treated as income later. This income is then taxed.

Since the Roth IRA was offered to Americans in 1998, it has proven to be very popular. I believe the option I am presenting to put after tax money into a personal retirement account where all future growth in income would be sheltered from taxation, would be popular with Canadians and would offer them an alternative which would encourage them to save for their retirement.

A simple analysis clearly indicates that both an RRSP and an after tax personal retirement account are preferable to saving in an ordinary bank account. It is important for the government to encourage private savings for retirement. The federal government must plan for its tax revenues based on projections of changes to revenue based on people's retirement savings behaviour. RRSPs tend to defer taxes more than reduce taxes so what the government loses in revenues upfront, it tends to gain later.

If Canadians were offered a choice of an after tax personal retirement account, as I am recommending, and if it became as popular as it apparently is in the U.S., federal tax revenues would easily increase by several billion dollars in the next few years. Furthermore, if, as the Americans have done, Canadians were given the option of converting funds in existing RRSPs into these after tax personal retirement accounts, the federal government would enjoy a further tax windfall. The government would want to offer both RRSPs and personal retirement accounts and would have to take into account the impact of when taxation of revenues would be received.

The current demographics indicate that between 1995 and 2030, seniors, as a percentage of the working age population, will increase from 20% to 39%. This makes it essential that private savings be encouraged to enhance the public portion of retirement income which will obviously be seriously under strong pressure with current projections indicating a shortfall.

The aging of the population will have a profound impact on the ability of the government to provide programs to allow retirees to maintain a reasonable standard of living. Some of the characteristics that I would suggest as being appropriate for an after tax personal retirement account might look like the following description although the details are obviously flexible and specific details should not be used as ammunition to support or criticize the concept since they are not part of my motion and would be subject to the design of the government. I am merely offering suggestions to allow for clarity of understanding as to how an after tax personal retirement account might work.

First, the after tax personal retirement account should be created regardless of other recognized retirement schemes then in effect. Contributions allowed to the after tax personal retirement account should not be linked in any way to the contributions allowed for other retirement plans or schemes.

Second, the money contributed to the personal retirement account should consist of after tax dollars. Any contributions made to the account should not be tax deductible. However, any income earned and any withdrawals made from the personal retirement account should not be taxable.

Third, an individual may contribute a maximum of $5,000 in after tax dollars in each taxation year to personal retirement accounts.

Fourth, the individual contributor may use the unused portion of each year's allotted $5,000 in subsequent years.

Fifth, individual contributors may contribute their money to an after tax personal retirement account that belongs to their spouse or child as defined in the Income Tax Act.

Sixth, an individual may contribute to any after tax personal retirement account regardless of whether or not that individual is an income earner.

Seventh, there should be no age restrictions whatsoever on the after tax personal retirement account. Any individual may contribute after tax dollars to any personal retirement account at any time. Any individual who owns or is the beneficiary of an after tax personal retirement account may withdraw funds from his or her account at any time.

Eighth, the individual owner or beneficiary of an after tax personal retirement account should be able to invest in any investment vehicle provided that a record is kept of the invested funds of the income earned on the said investment.

Ninth, all after tax personal retirement accounts should be fully transferable on death with no tax implications for the funds retained within the account, including any income earned within the personal retirement account. Personal retirement account owners should be able to transfer their account to any other individual they choose. An individual transferee in this context should only include natural persons.

Tenth, withdrawals of principal or interest from an after tax personal retirement account should not be treated as income for any purpose.

There are obviously a host of other details and administration that would be required, but certainly the PRA would prove to be no more cumbersome to administer than a registered retirement savings plan account. For many people the certainty that all income generated would not be subject to future taxation at some uncertain rate of tax would be a huge incentive. It is my belief that it would encourage a substantial number of people who do not currently save through RRSPs for retirement because they do not see any certainty of advantage to saving subject to future taxation with the uncertainty of future rates of taxation.

Just as with the Canadian system of registered retirement savings plan modifications over time, there would be modifications in design of the after tax personal retirement account. For example, the Roth individual retirement account in the U.S. allows contributions to be used, up to $10,000 if it has been in the plan for five years, to purchase a first home. The U.S. has also built in an education savings component.

Many Canadians who put money into an RRSP during the 1970s, 1980s and 1990s would have been better off with an after tax personal retirement account because in many respects they are facing tax rates upon retirement that are higher than when they were making the contributions.

My proposal for an after tax personal retirement account would be a private retirement savings vehicle in addition to RRSPs and registered pension plans and not designed to replace any of the current retirement income vehicles.

Most RRSP contributors would, in all likelihood, choose to contribute to an RRSP and also contribute to the new after tax PRA. Many people are looking for as much certainty as possible for their retirement planning and the after tax PRA would certainly be appealing from the standpoint that revenue would not be taxed after taken out after a certain age.

In the U.S., 59 and a half years of age has been designated as the age after which non-penalty of withdrawals occurs. It is my belief that any negative long term revenue impacts to the government would be offset by the fact that retired persons would be more self-supporting. The principle that the after tax PRA and earnings within it would belong to the taxpayer and could be withdrawn without the huge penalty normally associated with the early withdrawal from an RRSP would be a real advantage.

The U.S. applies a 10% early withdrawal penalty for any withdrawals of earnings before reaching the age of 59 and a half when withdrawing from a Roth IRA. Contributions however, not earnings, may be withdrawn from a Roth IRA without penalty at any age. This kind of flexibility would be very attractive to a great number of people.

The government has not had a significant reform to the retirement income system for Canadians for many years. The after tax personal retirement account that this motion is advocating would be a positive and exciting addition and alternative for Canadians who are increasingly concerned about how to structure their financial affairs for their senior years. For example, in 1998 fewer Canadians contributed to an RRSP than in 1997. This trend is worrisome. In 1998 only a minority of tax filers under age 65 contributed to their RRSP account. This worked out to 40% for men and 30% for women.

I offer this motion as advocating what could be an exciting addition to the retirement income vehicles available to Canadians.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, the motion proposes the introduction of what are commonly referred to as tax prepaid savings plans, TPSPs.

Hon. members may be aware TPSPs have been proposed by the C.D. Howe Institute and others as a new retirement savings vehicle to complement the existing system of registered pension plans, RPPs, and registered retirement savings plans, RRSPs.

I welcome the initiative of the hon. member for Vancouver Island North in putting forward the motion to the House. Tax prepaid savings plans are an interesting idea and worth exploring. While TPSPs may offer certain benefits they also raise a number of important issues.

I would like to review the current retirement income system and the system of tax assistance for retirement savings and touch on some of the issues surrounding TPSPs.

Hon. members may be aware Canada's retirement income system is composed of three pillars. These three pillars help achieve two basic objectives. First, to ensure a basic minimum income guarantee for all seniors. Second, to enable Canadians to avoid serious disruptions in their living standards upon retirement.

The first pillar compromises the old age security and guaranteed income supplement programs, which provide a basic minimum income guarantee for seniors.

The second pillar is the Canada and Quebec pension plans, which provide a basic level of earning replacement in retirement.

The third pillar is the current system of tax assistance for retirement savings. As hon. members are well aware this system provides Canadians with opportunities to save on a tax-assisted basis. Individuals may contribute 18% of earnings per year to an RRSP, a registered pension plan, or a combination of both, up to a maximum dollar limit of $13,500. For defined pension plans benefits are limited to 2% of earnings per year of service up to a dollar maximum of $1,722, which corresponds to 2% of $86,100. These limits allow a pension equal to 70% of covered pre-retirement earnings after a 35 year career.

The pension and RRSP maximum contribution limits are legislated to increase from $13,500 to $15,500 by 2004 and 2005 respectively, and be indexed to average wage growth thereafter. The $1,722 maximum pension limit for defined benefit pension plans is legislated to be indexed to an average wage growth starting in 2005.

The government's commitment to the pension and RRSP system is significant. According to estimates published last year the federal government will provide tax assistance of more than $14 billion this year alone on savings in RPPs and RRSPs. It is clear that the government's investment is significant.

Statistics Canada data indicates that Canadians had accumulated assets of more than $1 trillion in RPPs and RRSPs in 1999, accounting for 34% of all assets owned by Canadian households. Seventy-one per cent of all family units had assets in registered plans in 1999.

Most members would agree with me when I say that the current system of tax assistance for retirement savings has been a success, given the statistics that I just mentioned. Indeed Canada's retirement income system is regarded as an excellent system internationally and has been cited as such by the OECD, the World Bank and the IMF.

Nevertheless, this would not prevent the government from considering further measures to encourage and assist retirement savings in Canada and to make the tax-assisted savings system as fair and effective as possible, given competing needs and available fiscal resources. In this context tax prepaid savings plans are an idea worth examining.

I would like to raise some of the questions that need to be examined with respect to TPSPs but before that, allow me to explain exactly what TPSPs are, how they would work and the sense in which the tax is prepaid.

It is easier to see how TPSPs would work by comparing them to RRSPs which everyone is familiar with. An RRSP is an example of a tax deferred savings plan. Contributions to RRSPs are tax deductible. Investment income earned within RRSPs accrues free of tax. Withdrawals from RRSPs are taxable. In this sense the tax owing on contributions and investment income is deferred until the funds are withdrawn from the RRSP.

In contrast, contributions to a TPSP would not be tax deductible but investment income and withdrawals from the plan would not be subject to tax. The tax would be prepaid because contributions would be made from after tax dollars. Under certain conditions the tax assistance benefits to savers and the net costs to the government under a TPSP would be identical to those associated with an RRSP.

As some hon. members may be aware, tax prepaid plans exist in other countries notably the United States and United Kingdom. In the United States they are known as Roth IRAs. In the U.K. they are called individual savings accounts or ISAs. Since tax prepaid plans are being used in other countries hon. members may wonder why we cannot adopt them here. The U.S. and the U.K. have different systems for retirement income and tax assistance for savings than we have in Canada.

It is not clear that TPSPs should be adopted in Canada simply because they exist in other countries. We should first study fully their implications. Many questions need to be examined in assessing the appropriateness of TPSPs for Canada. First, how would a TPSP program fit in with the tax assisted retirement savings programs currently in place?

Second, what would be the impact on government revenues of introducing TPSPs?

Third, should income earned within a TPSP be taken into account in determining income tested tax and social benefits such as old age security and guaranteed income supplement benefits?

Fourth, would a tax prepaid option for retirement savings be attractive to savers given that the Liberal government has introduced the largest tax cut in Canadian history and future tax rates are declining?

The question of introducing TPSPs would have to be considered in the context of the many competing tax and investment needs for available fiscal resources. These and other issues need to be examined.

Before concluding I will take the opportunity to remind hon. members of the recent tax reductions made by the Liberal government. In the October 2000 economic statement and budget update the federal government announced the largest tax cut in our history. Canadians are already benefiting from the tax reduction plan. The tax cuts are providing significant stimulus to the economy and contributing to building a strong economy in the future.

The tax reductions will lower the personal income tax burden by 21% on average and by 27% for families with children by 2004-05. In addition, the reductions are promoting jobs, growth, entrepreneurship and innovation by creating a Canadian advantage in the taxation of businesses and capital gains relative to the United States. The tax reduction plan provided tax relief of about $17 billion in 2001 and will provide about $20 billion in tax relief this year.

Among the personal income tax reductions announced in the 2000 budget and the October 2000 economic statement and budget update were the restoration of full indexation of the tax system, the lowering of tax rates for all taxpayers, legislated increases in the tax bracket thresholds by 2004, and a reduction in the capital gains inclusion rate. These measures are putting more money in the pockets of Canadians, money they can choose to save and invest.

To conclude, it is not appropriate to support the motion when many important issues regarding TPSPs still need to be carefully examined and assessed. Furthermore, as I mentioned in my remarks, pension and RRSP limits are scheduled to increase beginning next year with limits being indexed to an average wage growth beginning in 2005 for RPPs and in 2006 for RRSPs.

Again, I thank the hon. member for putting the motion forward and giving us a chance to address it today.

[Wendy Lill, NDP, Dartmouth, NS]

Madam Speaker, I am pleased to speak to Motion No. 357 which was placed on the floor of the House by the hon. member for Vancouver Island North. It reads:

That, in the opinion of this House, the government should create a personal retirement account whereby Canadians may be given an after-tax option for pension savings.

I do not support the motion because it would be a way for Canadians with middle to high incomes to escape paying taxes. Let us face it, the motion is calling for a situation whereby people who had money to put into private investment accounts would not need to pay taxes on those accounts. The motion would create a government sponsored personalized tax haven for every Canadian who could afford it.

That is a bad idea. Unlike RRSPs and pension plans which are tax holidays these accounts would be tax exemptions, pure and simple. Most people I know who play the stock market are not the ones in society who need tax breaks.

Besides the general unfairness of creating another tax loophole for people with money to play the stock market while the government still forces single mothers on welfare to pay the GST, the motion would create an overall policy problem by depriving the government of revenue. The sad consequence of people being allowed to escape paying their fair share of taxes is the continued deterioration of public services like medicare or the pension system. I would prefer the House to look at ways of increasing public support for institutions like our pension system, public education system and health care system.

Let us look at the values of Canadians in this regard. Canadians do not mind paying taxes as long as they know the taxes will be used for the benefit of the community. They do not mind paying if the result will be more public transit, better public housing, support for their neighbours with disabilities and generous support for seniors.

My constituents get angry when they pay unfair levels of taxes. They get angry when they pay 40% or 50% marginal tax rates on modest incomes while the wealthiest families are able to shuffle billions of dollars out of the country in family trusts without paying tax and with the permission of the government.

My constituents lose confidence in the system when they pay 40% tax rates but see their health care system underfunded; transfers cut to the provinces for education; people paying into the employment insurance scheme who are unable to collect; and families of our Canadian forces who have to visit food banks to make it through the month. Canadians lose confidence when at the same time corporations get huge tax cuts, private companies make huge profits doing the work of recently privatized public services, and companies that should be contributing to local communities are instead lining up to the government with lists of social and economic demands in the name of globalization.

If hon. members do not believe we can rebuild our public services with higher taxes they should check this week's budget in Great Britain. The British government raised taxes and ran a temporary deficit so it could pay for a 41% increase in funding for the national health service and substantial increases in essential public services like education and transportation. That is the kind of economic direction I can wholeheartedly support.

The system proposed by Motion No. 357 would fundamentally undermine that. A personal retirement account that is never taxed would ultimately undermine the Canada Pension Plan and our RRSP system.

Under the present system people can put a portion of their income into an RRSP. The amount put into the RRSP does not count as income for the tax year in which the contribution is made. Upon retirement when people's incomes are usually lower and their tax rates are less they can take money from their RRSP accounts and the withdrawals are taxed at the lower rate. RRSPs are a tax holiday but the government gets the revenue eventually. Under Motion No. 357 there would be no tax deferral or holiday but a total loss of income for the government.

I am wondering if the member actually believes that we do not need revenue to pay for our social programs, such as pensions. Does he not see that the consequences of gutting income for government is the gutting of programs which help people?

I believe it is morally backward that wealthy families should receive retirement benefits in the form of a tax exempt retirement allowance at the cost of the existence of public pension plans for the poor. It is wrongheaded to say the least.

In conclusion I hope the member for Vancouver Island North will abandon this notion of tax exemptions for families who can afford large savings and work with New Democrats to develop policies that will put a fair tax system in place which will support reliable and sustainable public services like pensions and health care.

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Madam Speaker, on behalf of the Progressive Conservative Party I am pleased to speak to the initiative found in Motion No. 357.

The Progressive Conservative Party certainly supports any initiative that offers flexibility to the Canadian public in preparing for retirement. However there are many alternatives to Motion No. 357 that should be considered in this context.

Tax reform as always warrants serious consideration. For example, eliminating the capital gains tax, which is something the Progressive Conservative Party strongly advocates, in addition to alleviating the tax burden on those saving for retirement, will also stem the flow of skilled workers to the United States. We see capital gains as a very regressive and punishing tax for Canadians.

Canada is losing too much of its knowledge and too many of its workers to our southern neighbour. This has serious implications for our long term economic health. Government policy should be geared toward ending brain drain as quickly as possible. Canada's brain drain is a problem of quality, not quantity. Those leaving for the United States surely represent a valuable section of Canada's human resources pool.

The current Prime Minister has suggested that Canadians should leave the country if they are unhappy with Canada's tax. This surely is a further sign of arrogance and disconnect on the part of the Prime Minister with respect to Canada's youth. When Canada loses it brightest and best young people, it loses the capital and the talent essential to generate a higher level of productivity. We know we need to be more productive in this country.

The elimination of the capital gains tax is also the most direct way to unlock and speed the flow of private equity financing. A study in the United States demonstrates that eliminating the capital gains tax completely in that country would lead to a $300 billion increase in national output. That amounts to nearly one million new jobs and an additional $46 billion in tax revenues due to the economic growth.

The United Kingdom, Germany, Norway and Sweden have adopted a more aggressive tax cutting strategy than Canada. Germany reduced its capital gains by 50%, Great Britain by 75%. Norway has eliminated completely all forms of double taxation on capital income. We should look to those countries for inspiration.

President John F. Kennedy spoke disparagingly about the capital gains tax as early as 1963. He stated:

The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital, and the ease or difficulty experienced by the new ventures in obtaining capital.

Allan Greenspan, the chairman of the federal reserve, stated in 1997 shortly after the United States capital gains rate was cut:

If the capital gains were eliminated, we would presumably, over time, see increased economic growth which would raise revenues for the personal and corporate taxes. Its major impact is to impede entrepreneurial activity and capital formation.

The Progressive Conservative Party also strongly supports the Standing Committee on Finance's recommendations to eliminate the remaining capital gains tax for gifts of listed securities. This is the single most important step the government can take to improve funding for the charitable sector and in so doing strengthen Canada's social support network.

Time and time again we are seeing charitable organizations doing the work that used to be assumed by government. We certainly should be, at the very least, getting out of the way of their ability to raise capital for worthy causes in this country.

Numerous presentations have been made to the House of Commons finance committee by the non-profit sector urging the permanent elimination of the capital gains tax on gifts of publicly listed securities. The government has made permanent a reduction to capital gains tax on publicly listed securities, but that was simply a baby step in the right direction.

The Canadian philanthropic sector, Canadian charities whether a university foundation, the United Way or a hospital foundation, is at a competitive disadvantage when competing with funds currently being drawn in places in the United States and the United Kingdom and those outside Canada.

The government has not worked with the non-profit sector to make it easier for Canadian institutions, the non-profit sector, universities, hospitals, foundations and charities to raise money that is necessary, particularly during the period of decreased federal and provincial funding.

The elimination of personal capital gains tax would also dramatically strengthen Canada's venture capital community.

A look at reducing income tax among others is also needed. In the old economy the purpose of taxes was to redistribute income. In the new economy high taxes redistribute people. When Canada's tax policy dictates that workers earning just $100,000, which sounds like an exorbitant amount, pay half their income in taxes, those highly valued workers will certainly look elsewhere. By comparison, in the United States we would almost have to go to an income range approaching $400,000 to reach that same income tax bracket.

This is particularly risky for Canada in the digital economy where valuable intellectual property, assets, expertise and energy depart with every professional who crosses the border.

In the United States the highest rate of taxation does not apply until income reaches the range of $400,000. An American earning $100,000 will pay only one-quarter of that amount. It takes a considerable degree of patriotism and choosing Canada's quality of life over that of sheer return to make the choice to stay home. Although many Canadians continue to stay home, they do so at a competitive disadvantage. We should do everything we can to get out of the way of disincentives that drive our best and brightest outside of Canada for them to achieve their potential.

The people who are tempted to leave are those with fewer roots in our country and less attachment to some of the lifestyle advantages. They are often young people who the country needs to grow and prosper. They are young people like our pages who are here working very hard to further their careers while studying, who work every day to help members of parliament with their daily duties.

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

And student loans.

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

And student loans. My friend from St. John's quite rightly mentions the issue of student loans.

Many students graduating from an undergraduate degree today are leaving their studies with the equivalent of a mortgage to pay back with no house in which to live. For future generations and for the current generation, this is a huge and often insurmountable hurdle to get over. Many declare personal bankruptcy as they start out in life. As they start on their new careers, they face that very daunting prospect of forfeiting their credit rating by declaring personal bankruptcy for investing in their own future by furthering their education and pursuing a degree.

The people who are tempting to leave do so with very heavy hearts. We in the maritimes in particular have faced this for 100 years or more. The very best, the talented young people who have educated themselves and have a great sense of tradition and attachment to their communities and towns and villages face this very gut-wrenching decision of having to leave to work. Contrary to the opinions of many, the people of the Atlantic provinces are not unlike any other region in the country. They simply want to have an opportunity to work, live and contribute in their communities.

Taxing income discourages people from earning, saving and investing, all of which are crucial to economic growth in Canada. If we continue down this path and this philosophy of punishing those who are more productive then we will see that the productivity continue to wane.

According to Jack Mintz, a professional on taxation at the University of Toronto's J.L. Rotman School of Management , the costs in terms of lost output are $15 billion to $140 billion a year or from $500 to $4,500 per person annually.

We should also target capital taxes, high sales taxes on business outputs and high personal taxes on business owners. A more progressive step would be for the government to shift from investment and savings taxes to consumption based taxes. Dare I say it, the GST, the much hated tax, was introduced with that very much in mind, a consumption tax that was fair and that was meant to be attached to the deficit. Canada could adopt a personal expenditure tax and more taxes on the user pay principle.

[The Acting Speaker (Ms. Bakopanos)]

I am sorry, the hon. member is out of time. The hon. member for Elk Island.

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

Madam Speaker, some members will remember that for me the cause of retirement incomes is a cause célèbre, maybe not a very positive one during the last election campaign, because I made the error of giving a very ill-advised interview to a hostile newspaper person not recognizing that I was not speaking to someone with whom I should enter into a debate on how we can improve things.

I find the various viewpoints very interesting, particularly those of my NDP friends. I am absolutely amazed that they could so totally miss the point of what we are talking about today. This is a pre-tax paid plan. In other words, we pay the tax upfront and the government gets revenue now instead of having to wait for it, but the NDP says that it is not fair. I do not know why they make that conclusion because this is giving people a further option.

When it comes to retirement incomes, we must as a government address this issue with a view to improving the purchasing capacity of our seniors when they retire. In the fall of 2000, when this reporter phoned me to ask how things were going in my riding, I told him that one thing I was hearing from seniors was that they were having trouble making ends meet, and we need to fix that.

Seniors across this country have month by month incomes that are barely sufficient to pay their property taxes or rent, utilities, food and clothing. Many of them cannot afford to do a number of things they would like to do because of this.

One lady called me. She said that when she and her husband were working they skimped and saved to provide for their retirement but, unfortunately, her husband passed away. Her roof was leaking and she needed $3,000 for repairs. Lo and behold, when she withdrew $3,000 from her RRSP account, the government took 40% of it. Therefore, she had to make another $3,000 withdrawal. She told me she was worried that she would run out of money before she died.

That is a real concern to me. It is so important for us to think about this issue. I really appreciate my colleague bringing this motion to the House today so we can begin to address this issue. What can we do to improve it? What can we do to provide for our seniors on retirement an income which is adequate to meet their needs after all taxes have been paid, regardless of this scheme, whether the taxes are paid in advance, as is in the scheme proposed by my colleague today, or whether those taxes are paid in retrospect?

The parliamentary secretary says that the Canada pension plan is the answer; it is one of the pillars. If one does the mathematics on it, it is pretty well the worst retirement investment a person can make. My calculations showed that instead of getting an annual income of about $9,000 a year, as one does with the Canada pension plan, one could actually get an income of up to $10,000 a month if that money were adequately invested over a person's lifetime. That is a huge difference. We need to look at that. We always are considering the taxes on this and when they are collected.

The NDP is totally wrong in thinking that increasing tax rates also increases tax revenue. There is a very well known economic theory, by a Professor Laffer so it is called the Laffer curve, which states that somewhere between an income tax rate of 0% and 100% is a maximum rate.

It is easy to think about this. I want members to think about someone selling something. For example, a hockey team owner is thinking of selling tickets to hockey games. We are thinking of hockey in Canada these days. He decides to charge zero dollars for the tickets. The place will be packed and the fans will be cheering and his income will be zero, because zero dollars per ticket times 40,000 tickets equals zero. Let us say on the other hand that he decides to charge $10,000 per ticket. I suppose there would be a few really rich people who would like to show off their money who would bring their two or three kids or relatives and pay $40,000 to go to a hockey game at night. At that price I think there would probably only be four people in the stands and the rest of the seats would be empty. For all practical purposes, we could say that if the rate per seat is high then the number of seats purchased will be zero, and again we have zero times the number which is zero. With zero dollars per ticket, the income is zero. With $10,000 per ticket the income is as good as zero. However, in between there is a number.

Let us take it up $1 at a time. Let me use a 40,000 seat stadium as an example, where it costs $1 per ticket. Now the income is $40,000. If ticket prices were increased to $2, I would venture to say that the stadium would still be full. Then there would be an income of $80,000. Ticket prices could be increased to $3 with still no change in the number of people buying them, and the individual would be making $120,000. At those low rates, increasing the amount per seat will not do anything other than double or triple income every time, but there comes a place somewhere between zero dollars per ticket and $10,000 per ticket where income reaches a maximum. After that, a further increase in price reduces income because people stop going.

The same thing is true with tax rates. If we had a 0% tax rate, government revenue would be zero, our economy would be doing great and maybe we would not need any taxes because we could look after ourselves and our neighbours. Everybody would have jobs. For those who were disabled and did not have any jobs, we would look after them, because we are good charitable people in this country. Maybe we have too much government, but I still believe we need to have a government that functions in certain areas.

On the other hand, if we had a tax rate of 100% government tax revenue would be zero because nobody would get up in the morning and go to work. There might be a few workaholics who would go out and earn $100 and then send it to the government. Interestingly, somebody e-mailed me a new simplified tax form consisting of two lines. I presume he did this because it is tax season. Line number one asked how much money was earned. Line number two said to send it in. However, if the 100% rate scheme were adopted government revenue would be zero. It must be somewhere in between.

I would like to inform members of the NDP that sometimes reducing tax rates by 4% or 5% can actually increase government revenue. This has been proven. Why would we not do it? Why would we not reduce tax rates, leave more money in the hands of the people and let them look after themselves in a better way? Meanwhile this would increase tax revenues so the government could do more. It is just an oversimplification to think this stuff is linear, as we say in mathematics. Indeed, it is not linear at all.

As a parliament, we need to commit to looking at retirement incomes, at the different plans that are available, at the different ways of taxing them, and we certainly are as a party, but the objective is and always must be this: How can we set things up so that on retirement our seniors have a maximum amount of income after all of those taxes so they can meet their needs and live in comfort? I do not think we want to say they should live in luxury. They should live in comfort with their needs being met and without having to worry where the next meal is coming from or whether they can afford a new shirt.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Madam Speaker, I welcome the interventions from colleagues in the House on my motion.

The message and signal that I heard from the parliamentary secretary was that the finance department welcomes this initiative. Obviously I am pleased to hear that. I am pleased to hear the Parliamentary Secretary to the Minister of Finance say this concept of an after tax personal retirement account is worth investigating.

It is my belief that many Canadians would endorse this initiative if and when they become aware of the concept. I welcome the parliamentary secretary's statements as they probably represent the view of the department.

The parliamentary secretary was correct that there are many questions and much research that needs to be done in order to determine the appropriate design of an after tax personal retirement account. I also said that in my speech. All the points I made were only examples in order to lead the discussion in the right direction.

I urge the department to get on with it. I thank the parliamentary secretary for his supportive comments but there was no sense of urgency. If it were a worthy initiative then we should simply get on with it.

I share the concern of my colleague from Elk Island. Canadians are feeling poorer, especially our seniors. They do need other options available to them to look at when they reach retirement.

The hon. member for Dartmouth missed my point. The government gets the taxes sooner rather than later. The hon. member for Dartmouth talked about this retirement savings vehicle and described it as a tax loophole. It is hardly a loophole. As a matter of fact many governments would view this as a tax grab, a tax windfall. That is exactly my point. It is not a tax loophole. Taxes are paid up front rather than deferred until later.

Many low income earners would choose this after tax way of saving for retirement because of the certainty of what their later income would be, or could be, and also because withdrawals in a flexible way would have no impact on income for taxation purposes when people are more vulnerable to government tax grabs. That is the point the hon. member for Elk Island made with the senior with the leaky roof. Those kind of rainy day withdrawals would be much more enabled through an after tax personal retirement account than under the RRSP program.

I am not arguing against an RRSP program. I am saying a judicious mix of the two would be appropriate. The hon. member for Pictou--Antigonish--Guysborough spoke on the motion and I too advocate other tax relief measures.

The motion is not votable. It was deemed not votable by a small all party committee requiring unanimous consent. This drives private members' business into mundane business at times rather than substantive issues. It is time and it is overdue for all private members' business to be votable in the House.

[The Acting Speaker (Ms. Bakopanos)]

The period provided for consideration of private members' business has now expired. Since the motion has not been selected as a votable item, the item is dropped from the order paper.

It being 2.16 p.m., this House stands adjourned until Monday next at 11 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 2.16 p.m.)