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House of Commons Hansard #137 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was c-48.

Topics

Privilege

10 a.m.

The Acting Speaker (Mr. Bélair)

I will now give the ruling on the question of privilege raised by the hon. member for Mississauga South on October 6. I thank the hon. member for raising the question, as well as the hon. member for Yellowhead for his comments.

The hon. member for Mississauga South argued that, in light of the complexity of the bill and of the number of amendments which the House had adopted at report stage, members required a reprint of the bill in order to be able to properly conduct debate at third reading. He pointed out that this need was all the more pressing given that the bill had not been debated since April 10 of this year.

The unanimous consent of the House was sought on March 31 and again on October 3 to permit a motion ordering a reprint of the bill to be put to a vote. The consent was denied.

I would like to remind the hon. member that it is not the practice of the House to have bills reprinted at third reading. In this regard I refer him to the ruling by the Deputy Speaker on the same point concerning Bill C-13 on March 31, at page 4922 of the Debates .

As the hon. member is fully aware, the House may, if it chooses, order a reprint of the bill. The unanimous consent necessary to allow such a motion to be put without notice has so far not been forthcoming.

Privilege

10:05 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I welcome and accept the ruling of the Chair on the question of privilege. I would simply indicate that it would be my intent to make recommendations to the Standing Committee on Procedure and House Affairs, with possible reference to a future modernization committee, on the point simply that denial of unanimous consent for a reprint in matters such as this would not be unreasonably withheld.

Committees of the HouseRoutine Proceedings

10:10 a.m.

Liberal

David Pratt Liberal Nepean—Carleton, ON

Mr. Speaker, I have the honour to present, in both official languages, the fourth report of the Standing Committee on National Defence and Veteran Affairs.

Pursuant to the order of reference of Friday, September 26, 2003, your committee considered and held hearings on Bill C-37, an act to amend the Canadian Forces Superannuation Act and to make consequential amendments to other acts, and agreed on Tuesday, October 7, 2003, to report it without amendment.

Committees of the HouseRoutine Proceedings

10:10 a.m.

Liberal

Peter Adams Liberal Peterborough, ON

Mr. Speaker, I have the honour to present the 47th report of the Standing Committee on Procedure and House Affairs regarding the associate membership of the Standing Committee on Government Operations and Estimates.

If the House gives its consent I intend to move concurrence in the 47th report later this day.

Overseas Memorial Sites Student Visits ActRoutine Proceedings

10:10 a.m.

NDP

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

moved for leave to introduce Bill C-455, an act to provide for a program giving financial assistance to high school students visiting overseas military memorial sites.

Mr. Speaker, I wish to thank my seconder from Windsor—St. Clair and the person from Brandon—Souris who wanted to triple the bill.

The bill would allow the government to simply look at a program, to work with the provinces, the school boards and various veterans organizations, such as the Royal Canadian Legion, et cetera, to see if it is possible to encourage and financially assist high school students, some time during their high school year, to visit an overseas military site.

For those who were at Juno Beach for the opening on June 6 of this year, it was an extremely moving event to be with 900 veterans and their families.

The reality is that many Canadian young people simply do not have a complete understanding of what our soldiers and their families went through during our various wars and conflicts. I think this would be a great way to assist those young people in acquiring a better understanding of what our most hallowed veterans and their families went through during those times of crises and it could lead to everlasting peace throughout this world.

(Motions deemed adopted, bill read the first time and printed)

Excise Tax ActRoutine Proceedings

10:10 a.m.

Bloc

Caroline St-Hilaire Bloc Longueuil, QC

moved to introduce Bill C-456, an act to amend the Excise Tax Act.

Mr. Speaker, I am very pleased today to introduce a bill whose purpose is to amend the Excise Tax Act so that disposable and fabric diapers are exempted from the GST. I think that it is totally unacceptable that children's diapers should be taxed, as this is an essential need for families, children and also for parents.

I believe that this measure can help families in a concrete way. I invite all my colleagues to support this bill.

(Motions deemed adopted, bill read the first time and printed)

Committees of the HouseRoutine Proceedings

10:15 a.m.

Liberal

Peter Adams Liberal Peterborough, ON

Mr. Speaker, I move that the 47th report of the Standing Committee on Procedure and House Affairs, presented to the House earlier today, be concurred in.

(Motion agreed to)

PetitionsRoutine Proceedings

10:15 a.m.

Progressive Conservative

Rick Borotsik Progressive Conservative Brandon—Souris, MB

Mr. Speaker, I am pleased to present two petitions on behalf of my constituents of Brandon—Souris.

The first petition asks that medical expenses be a tax credit. They wish Parliament to take the necessary steps to change the Income Tax Act to allow receipts for vitamins and supplements to be used as medical expenses in personal income tax returns and again have them GST exempt.

PetitionsRoutine Proceedings

10:15 a.m.

Progressive Conservative

Rick Borotsik Progressive Conservative Brandon—Souris, MB

Mr. Speaker, the second petition, again on behalf of the constituents of Brandon—Souris, is also with respect to their right to making informed choices and having access to non-drug medicinal products of their own choosing. They wish to provide Canadians with greater access to non-drug preventive and medicinal options.

I present both of these petitions to the House.

PetitionsRoutine Proceedings

10:15 a.m.

Liberal

Peter Adams Liberal Peterborough, ON

Mr. Speaker, I present a petition on behalf of the citizens of the Peterborough area who point out that marriage is a unique social institution that provides a supporting relationship between a woman and a man and that marriage is an institution so basic to the human condition and the common good that its nature is beyond the reach of civil law. They call upon Parliament to take all necessary means to maintain and support this definition of marriage in Canada.

PetitionsRoutine Proceedings

10:15 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I have two brief petitions today. The first is on the subject matter of stem cells. Petitioners from across Canada, including my own riding of Mississauga South, would like to draw to the attention of the House that Canadians do support ethical stem cell research, which has already shown encouraging potential to provide cures and therapies for illnesses and diseases. They also want to point out that non-embryonic stem cells, also known as adult stem cells, have shown significant research progress without the immune rejection or ethical problems associated with embryonic stem cells. The petitioners therefore pray upon Parliament to focus its legislative support on adult stem cell research to find those necessary cures and therapies.

PetitionsRoutine Proceedings

10:15 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, the second petition is in regard to same sex marriage. The petitioners would like to remind the House that on June 10 the Ontario Court of Appeal ruled that the definition of marriage was unconstitutional pursuant to the equality provisions of the Charter of Rights and Freedoms. The petitioners also remind the House, however, that the federal government can invoke the notwithstanding clause to override that decision. The petitioners therefore call upon Parliament to invoke the notwithstanding clause, thereby retaining the traditional definition of marriage as being the legal union of one man and one woman to the exclusion of all others.

PetitionsRoutine Proceedings

10:15 a.m.

Canadian Alliance

John M. Cummins Canadian Alliance Delta—South Richmond, BC

Mr. Speaker, I have a petition from the Wreck Beach community, friends and visitors in Vancouver. There are over 700 signatures on the petition. The petitioners call on Parliament to bring to the attention of the government the folly of purchasing a 20 year old British hovercraft as a replacement for the 045 Hovercraft at Sea Island base in Vancouver. They call upon Parliament to direct the Minister of Fisheries and Oceans to purchase a new hovercraft, a vessel that would be capable of doing the medical evacuations that are sometimes required and capable also of serving as an adequate dive platform for the Coast Guard dive team.

PetitionsRoutine Proceedings

10:20 a.m.

Liberal

Nancy Karetak-Lindell Liberal Nunavut, NU

Mr. Speaker, I present this petition on behalf of my colleague, the member for Western Arctic. It states that in the event the Government of Canada may be asked to support the U.S. national missile defence program to be operated by North American Aerospace Defence Command, this might be a step toward deployment of weapons in space and lead to a new arms race. Also, the international non-proliferation treaty and the 1972 anti-ballistic missile treaty were cornerstones of the arms control and disarmament regimes and have been long supported by Canada. The petitioners call upon Parliament to declare that Canada objects to the national missile defence program of the United States and also to play a leadership role in banning nuclear weapons and missile flight tests.

Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Bras D'Or—Cape Breton Nova Scotia

Liberal

Rodger Cuzner LiberalParliamentary Secretary to the Prime Minister

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

Questions on the Order PaperRoutine Proceedings

10:20 a.m.

The Acting Speaker (Mr. Bélair)

Is that agreed?

Questions on the Order PaperRoutine Proceedings

10:20 a.m.

Some hon. members

Agreed.

Points of OrderRoutine Proceedings

10:20 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I rise on a point of order. Earlier during routine proceedings the chairman of the Standing Committee on Procedure and House Affairs tabled a report from the committee and then, under motions, sought concurrence for that report. I would like some clarification from the House as to whether or not the motion to concur in the report is debatable and, if so, why the Chair does not call for debate prior to asking for unanimous consent.

Points of OrderRoutine Proceedings

10:20 a.m.

The Acting Speaker (Mr. Bélair)

To answer your query, in theory a motion of this kind is debatable but in practice it has not been the case for many years. I do not know if the member would like to pursue the matter with the hon. member for Peterborough in order to get the explanation he is looking for.

Points of OrderRoutine Proceedings

10:20 a.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I raised the issue and it is important. I will pursue it, possibly again with the Standing Committee on Procedure and House Affairs or others who may have some impact on the Standing Orders.

I would remind hon. members that such a report and such a concurrence motion without debate was one of the reasons why the Lord's Prayer was eliminated from the routine of this place without the knowledge of members of the House, so I will be pursuing it.

Income Tax ActGovernment Orders

10:25 a.m.

Bourassa Québec

Liberal

Denis Coderre Liberalfor the Deputy Prime Minister and Minister of Finance

moved that Bill C-48, an act to amend the Income Tax Act (natural resources), be read the third time and passed.

Income Tax ActGovernment Orders

10:25 a.m.

Oak Ridges Ontario

Liberal

Bryon Wilfert LiberalParliamentary Secretary to the Minister of Finance

Mr. Speaker, the legislation before us, Bill C-48, implements a new federal income tax structure for Canada's resource sector, to be phased in over five years.

To begin, I want to give the House a sense of the overall importance of the resource sector, especially mining and oil and gas, to the Canadian economy as a generator of investment, exports and jobs for Canadians.

In 2001, for example, the sector accounted for almost 4% of Canada's GDP, with over $64 billion in exports and more than $30 billion in capital expenditures. As well, over 170,000 Canadians work in resource businesses.

The potential for future resource development exists right across the country. While the mining industry is vital to rural and northern economies, the oil and gas industry is important to both the western and Atlantic provinces and the territories.

Internationally, Canadian resource industries are large investors in innovative technology and they also play a significant role in the provision of exploration and extraction services.

Overall, the changes in Bill C-48 will be positive, both for mining and for the oil and gas industry, but before discussing them, I want to briefly review the existing sector specific tax measures.

As hon. members know, income earned in Canada from the extraction and initial processing of non-renewable resources has historically been subject to a range of targeted tax measures.

For example, certain provisions determine the timing of deductions for capital expenditures. They include Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses and capital cost allowances. These measures recognize the risks involved in investing in resource exploration and extraction and also play an important role in ensuring a competitive business environment.

In addition, the resource sector is able to use flowthrough shares to raise capital for resource exploration and development. Individuals investing in flowthrough shares for grassroots mineral exploration are also eligible for the 15% mineral exploration tax credit, introduced in October 2000 as a temporary measure to moderate the impact of the global downturn in exploration activity on mining communities across Canada.

Another resource specific provision is the 25% resource allowance. This provision was introduced in 1976 primarily to protect the federal income tax base from what were rapidly increasing provincial royalties and mining taxes, which had been deductible for federal tax purposes.

The resource allowance, however, is an arbitrary deduction that does not necessarily reflect the actual cost of royalties and mining taxes. Consequently, it can distort the returns from individual resource projects and the allocation of investment between projects within the resource sector and between the resource sector and other parts of the economy.

As well, the complexity of the resource allowance calculation has meant substantial compliance costs for the industry and administrative costs for government.

The economic conditions that led to the introduction of the resource allowance have changed significantly since the 1970s, leaving the original need for it less relevant. In today's economic environment, there is greater pressure on producers to be efficient and on host jurisdictions to levy royalties at competitive rates.

The government recognized that the resource sector tax regime is capable of generating even greater investment and jobs for Canadians. In designing a new tax regime for the sector, the government was guided by three main goals.

First, the tax regime must be internationally competitive, particularly in the North American market. Second, it must be transparent for firms and investors. Third, it must promote the efficient allocation of investment both within the resource sector and between sectors of the Canadian economy.

Following extensive consultations with the industry, and I underline extensive, the government announced in the 2003 budget that it intended to improve the taxation of resource income.

Subsequently, on March 3 the Minister of Finance released a technical paper on the budget proposals. These proposals were reviewed in the course of extensive consultation with the industry and with the provinces. In response to these consultations, some special transition measures were incorporated into the legislation before the House today.

I would now like to briefly review the measures in Bill C-48. The proposed new tax structure will ensure that the resource sector firms are subject to the same statutory rate of corporate income tax as firms in other sectors. It will also ensure that these firms can deduct their actual cost of production rather than an arbitrary allowance.

Let me explain a little further. The first measure in Bill C-48 would reduce the federal statutory corporate income tax rate on income earned from resource activities from 28% to 21% by 2007. This rate is often the first piece of information viewed by prospective investors. If Canada is to send a positive message to investors that it is competitive, then this uniform lower rate is indeed essential.

The second measure would eliminate the arbitrary 25% resource allowance and would provide a deduction for the actual amount of provincial and other crown royalties and mining taxes paid. This means that projects would now be treated in a more comparable fashion. This change would promote efficiency by ensuring that the investment decisions were based more consistently on the underlying economics of each project. It would also result in a simpler tax structure, streamlining tax administration and compliance.

The government has recognized the particular circumstances of the mining sector in Bill C-48 by proposing a new 10% mineral exploration tax credit and it will apply to both Canadian grassroots exploration and preproduction development exploration for diamonds, base or precious metals and industrial minerals that become base or precious metals through refining.

It is proposed that these new measures be phased in over a five year transition period. An exception is the new mineral exploration credit which will reach its full rate in only three years. The proposed implementation schedule provides a reasonable transition to an improved tax structure in a fiscally responsible manner.

In addition to the resource tax changes, Bill C-48 includes measures that promote renewable energy and energy conservation projects by improving the treatment of Canadian renewable and conservation expenses, the CRCE. These expenses are fully deductible in the year that they are incurred and can be transferred to investors under a flow-through share agreement.

As I clarified in the standing committee hearings, we are discussing federal tax changes only. To the extent that the provinces rely on the federal tax base though, if offsetting adjustments are not made, provincial income tax revenue from the resource sector may increase as a result of these changes.

The international competitiveness of Canadian firms will be maximized where provinces provide a mechanism to return to the industry any provincial revenue gain arising from the changes to the federal tax structure.

The new tax structure for the resource sector complements other measures in the 2003 budget. We discussed these measures during the debate last spring on Bill C-28, the Budget Implementation Act, 2003. That bill eliminated the federal capital tax over five years, which will strengthen the Canadian tax advantage for investment in the capital-intensive resource sector.

Together with the elimination of the federal capital tax, the new measures in the bill we are considering today will substantially reduce the effective tax rates, both for the mining and the oil and gas industries.

For oil and gas, this reverses a current disadvantage relative to the United States. For mining it will build on an existing advantage. In both cases the changes place the Canadian resource sector in a markedly improved position to attract capital for exploration and development.

Bill C-48 reflects the government's ongoing commitment to an efficient and competitive corporate income tax system which plays an important role in creating a stronger and more productive economy. The resource sector attaches considerable priority to the delivery of these proposed changes. I cannot emphasize that enough for the members.

During the finance committee hearings on Bill C-48, the industry representatives and many committee members indicated that they considered the timely delivery of the legislation to be of utmost importance to their constituents and, indeed, to many provinces such as Alberta, Saskatchewan, Nova Scotia, et cetera. Given the benefits of these changes for the resource industries and the communities on which they depend, I would encourage all hon. members to give quick and speedy passage to Bill C-48.

Income Tax ActGovernment Orders

10:35 a.m.

Canadian Alliance

Jason Kenney Canadian Alliance Calgary Southeast, AB

Mr. Speaker, I have two questions. Why did it take three years for the government to finally understand the logic of tax equity? Why did it take between the budget of 2000 and the budget of 2003 for the government to finally realize one very simple principle: that we ought not to discriminate against particular sectors of the economy, in this case the energy sector? Why the delay?

Second, why will it now take five years from this point to create equity for the men and women who work in the oil and gas, mining and forestry sectors of Canada? There is an eight year gap between the general reduction in corporate taxes in 2000 and the full implementation of the changes to non-mineral resource taxation. What can possibly account for that?

Income Tax ActGovernment Orders

10:35 a.m.

Liberal

Bryon Wilfert Liberal Oak Ridges, ON

Mr. Speaker, I would have expected the member to get up and actually praise the fact that the government has brought in Bill C-48 and that we are now ensuring that we have a competitive tax regime for the mining and the oil and gas sector.

Clearly, we want to ensure on this side of the House that when we bring in legislation, we do it with the full support and concurrence of the major stakeholders, whether they be in the resource sector or with the provinces.

The hon. member also knows that the government has been a leader in not only eliminating the deficit and paying down the national debt, but also ensuring that we have the necessary dollars to do these things and that we do not go back into a deficit. We have had now six balanced budgets or better.

Rome was not built in a day. Obviously we are responding to the industry, to the provinces and we are doing it in what I believe is a timely fashion. We are implementing a phase-in over a five year period, again in concert with the consultations that we have had.

I would assume, the member being from the province of Alberta which is obviously very supportive of this, that we can expect his support on this legislation.

Income Tax ActGovernment Orders

10:35 a.m.

Canadian Alliance

Jason Kenney Canadian Alliance Calgary Southeast, AB

Mr. Speaker, that response was completely disingenuous. I have enough respect for the parliamentary secretary to know that he knows it is disingenuous to suggest that it will take the government eight years from the lowering of general corporate tax rates in 2000 to bring about full equity for the non-mineral resource sector because it wanted to consult “with the stakeholders”.

In other words, the parliamentary secretary is trying to tell us that oil and gas companies were asking the government to do this as slowly as possible, that these companies, which are responsible for hundreds of thousands of jobs in our economy, asked the government to please let them consult over three years about whether they would ever get the tax equity with other corporations and that it should please take five years after that to implement it. This is utterly ridiculous.

The other reason the member alluded to for the eight year delay in tax equity for this important sector was that it was necessary to do things in the context of fiscal responsibility. Once fully implemented the total static forgone revenue projection for this tax change will be $260 million a year. If I am not mistaken, that is about as much as the cabinet decided to spend on new jets.

Where are the priorities? If it is really about fiscal responsibility, why not cut the parties of the Minister of Canadian Heritage at Whistler and across the country? Why not put the jets on hold?