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House of Commons Hansard #33 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was seniors.

Topics

Department of Social Development ActGovernment Orders

12:45 p.m.

Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Mr. Speaker, I have listened very carefully to what the hon. member had to say. Of course this new department would have a great deal to offer many people, seniors in particular.

That is not where the problem lies. The problem lies mainly with the encroachment into areas of provincial jurisdiction, and the jurisdiction of Quebec in particular. We have all understood it: what we want is for the federal government to respect its jurisdictions as set out in the 1867 Constitution.

My hon. colleague has just been referring to the guaranteed income supplement. We know that this is a battle that the Bloc Québécois has been waging tirelessly for some time. The hon. member for Saint-Maurice—Champlain can testify to that, as he has put a great deal of effort into it. In Quebec, 68,000 seniors have been deprived of the GIS, and in all of Canada , 270,000.

I would like to ask the hon. member why his government, despite all its fine words and expressions of good intentions, will not agree to make the GIS fully retroactive. That way, it would be able to go back. not 11 months, but 11 years. As a result, all the people who have been deprived of the GIS since 1993 could now be getting it. It must be made retroactive, and retroactive back to 1993. I would like the hon. member to explain to me why they are passing off the creation of this department as a cure-all, when there are still people in need, still people whom this government has deprived of the guaranteed income supplement and full retroactivity of that supplement

Department of Social Development ActGovernment Orders

12:45 p.m.

Liberal

Mario Silva Liberal Davenport, ON

Mr. Speaker, I want to point out that this is an important issue for all members, not just Bloc Québécois members. I believe that all members here are very concerned about seniors. I can unequivocally state that, in our country, this government spends in excess of $63 billion annually on services programs for the elderly.

It is also important to mention that public pensions have helped reduce the proportion of seniors living below the poverty level. Indeed, the percentage went from 20.8% in 1940, down to 7.3% in 2000.

We continue to try to reach more and more people. I am proud that our government made it a priority to help vulnerable people in our society, including seniors.

Department of Social Development ActGovernment Orders

12:45 p.m.

Conservative

Randy Kamp Conservative Dewdney—Alouette, BC

Mr. Speaker, the hon. member's speech was very well done and clearly presented. I have a question and perhaps a comment.

I understand from the throne speech that the government is telling us that seniors are now a priority. It has never really seemed like that and certainly all the seniors I speak to in my riding have a hard time seeing that.

Today I understand that there are intentions to raise the guaranteed income supplement. That is a good thing, I think, but my question is, what are the criteria? How does the government decide, both for the amount of the old age pension itself and then for the supplement? How does the government pick this number?

Seniors have been asking me that over the years. I have never known for sure just what the government bases this on. Is there is some sort of basket of goods that they are supposed to be able to buy for this? Most seniors still seem pretty poor to me.

The second question relates to seniors and their benefits and also to people on disability. This might be outside the realm here, but what really bothers me is these people who live right on the edge of being able to survive, have a hard time putting money aside for income tax, and then at the end of the year owe income tax. It might be only $200 or $400, but when people have no disposable income, how are they supposed to pay this?

Department of Social Development ActGovernment Orders

12:50 p.m.

Liberal

Mario Silva Liberal Davenport, ON

Mr. Speaker, indeed, the issue of seniors is very important for the government and, as was outlined in the Speech from the Throne, the government is increasing the guaranteed income supplement.

In my riding of Davenport, seniors play an incredible role in community development. It is something that I have kept a very close watch on and have been quite involved with for a number of years. I understand the issues of seniors quite well. I understand the importance of seniors living out their lives with dignity and respect.

As I alluded to, the government in fact is reaching out to seniors and is now working to implement some of the details in relation to the increase of the guaranteed income supplement. Certainly the seniors in this country are a priority for the government.

Department of Social Development ActGovernment Orders

12:50 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, I am pleased to have this opportunity, on behalf of the New Democratic Party, to speak to Bill C-22, regarding the new social development bureaucracy and the new ministry of social development. I note with interest that our critic for this area recommends that we support the bill at this stage because we support the idea of restructuring HRDC into two separate entities.

We were always critical that HRDC was too much. It was a mega portfolio, a massive undertaking, that was clearly too big for any one minister to manage. The issues and subject matter being dealt with were overwhelmingly difficult to manage, especially when we looked at the type of issues with which it had to deal.

I note the new Minister of Social Development deals with issues such as the Canada pension plan, the old age security program and the guaranteed income supplement. I hope, in a broader context, the new Minister of Social Development would not simply administer programs, but would help guide the government in a new national objective, a new set of priorities, regarding social development so we could think outside the box and dare to dream of elevating the standards of living conditions for all Canadians in measurable ways and then put in place a yardstick to measure that progress.

I take no pleasure in pointing out that the campaign 2000 was recently on Parliament Hill reminding us that over one million Canadian children live in poverty, in what one could argue is the wealthiest and most successful democracy in the free world.

Clearly, our priorities have been skewed or our interests have been diverted and we have not paid enough attention to the area of social development. We should be measuring the progress of the country not by the monuments and structures in our cities and not by our GDP, but by the quality of life of Canadians. Maybe the Minister of Social Development could be seized with that issue as a national priority.

My riding of Winnipeg Centre is the third poorest riding in Canada. Some people do not realize that, and I take no pleasure in pointing that out either. Of all the families in my riding, 47% of them live below the poverty line and 52% of all the children. I raise this with a matter of great urgency, especially in this era of cutbacks. The cutbacks have come from social programs. Granted we have paid off the deficit, but we have left an enormous social deficit in its wake. I can testify to that on a day to day basis. I deal with this reality every day.

We went through an era of the 1990s, which was a record profit era for Bay Street, Wall Street, the banks and corporations and record era of cutbacks in social spending. The predictable consequences are record numbers of poor kids in my riding and all the predictable outfall of that. Somehow we have been derailed.

I am a socialist, granted, so maybe I am jaded and biased in this regard. I have a theory that the big money has controlled things in Ottawa for so long that all of our bills, laws and legislation are geared to look after the interests of big money, and everyone else has been forgotten. I can point to the social conditions in my riding as evidence of that.

I do not think it is by neglect or innocent oversight that we have allowed these circumstances to overwhelm certain regions. I point to the guaranteed income supplement as an example. My colleague from the Bloc Québécois pointed this out, quite rightly. I do not care how busy the Minister of HRDC has been in recent years. What the Liberals did in the administration of the guaranteed income supplement was nothing short of cruel. They knew full well that hundreds of thousands of Canadian seniors were eligible for the supplement, but they did not get it.

They knew this because of the income tax records of those Canadians. They knew full well that these Canadians, by virtue of the amount of money they earned from other sources, were eligible for this payment, but they took no steps to advise them of that. We had seniors living in abject poverty when they could have been receiving another $500 a month. There is a natural justice issue here. These people had a right to know. Then when we called attention to this, they used the guise of the Privacy Act. They said that it would be a violation of a senior citizen's privacy, if Revenue Canada told HRDC that the person was eligible for this benefit

I do not think seniors would complain if somebody advised them that they were eligible for another $300 to $500 a month when their income has to be lower than $12,000 a year to be eligible. These are poorest of the poor, yet the government hid behind the guise of the Privacy Act so it did not have to give these seniors the benefits they were due. That did not happen because the Minister of HRDC was too busy and seized with other issues. That happened as a conscious choice of the government trying to pay down the deficit on the backs of the most vulnerable people in society. It is reprehensible, and I condemn the government in the strongest possible terms for that.

An added irony to this is the Privacy Act does not seem to apply if a person who is collecting EI benefit crosses the border for a day. Let us say from my home town of Winnipeg, a person on EI crosses the border to buy some jeans in Fargo, North Dakota and comes back through the border. The border customs agent turns him or her in to employment insurance officers saying that the individual is on EI and is supposed to look for work all day, every day, not driving across the border to shop.

Somehow it is not a violation of people's privacy to rat them out because they took an afternoon drive, but it is an invasion of privacy to advise senior citizens that they are eligible for a $500 a month guaranteed income supplement premium. What kind of pretzel logic is that? That is what I mean when I said that some of these policies bordered on cruelty. They certainly were not designed in the best interests of Canadians. I do not know in whose interests they were designed, but it was not to benefit us to the maximum.

I would point out another thing. The government has paid down the deficit on the EI surplus. There is no secret there. The Auditor General reminds us of it all the time. We went through riding by riding across country. When I say “we”, we hired professional pollsters to do this. They analyzed the impact, riding for riding. In my riding of Winnipeg Centre, the third poorest riding in the country, the cutbacks to EI alone cost $20.8 million a year. For people who were already at the margin, if not poor, this pushed a lot of people from the edge of being working poor to unemployed to abject poverty.

Imagine what we would do if we could attract an industry into our ridings that had a $20.8 million payroll. We would pave the streets with gold to attract businesses like that to our ridings. Those guys in the government cut that payroll out of my riding with one stroke of the pen, when they changed the EI provisions to where nobody qualified any more. No wonder there is a surplus in EI. Nobody qualifies any more. We have to pay in, but we cannot pull out. The government paid down the debt on the back of that surplus.

The other thing on which the government paid down the debt was the $30 billion cut from the Canada health and social transfers. Where did it get the remaining $30 billion? At the time I did this math, there was a $30 billion surplus in the EI fund and the government announced a $100 billion tax cut. A further $30 billion came from the public sector pension plan. People forget there was a huge surplus in that pension plan. It was built up largely because the government let go or fired a third of the Canada public service during those cutback years.

Rather than negotiate some sharing mechanism with the beneficiaries of the plan or simply admit that this was the employees' money, part of their wages and therefore their benefits should go up, the government took it all. The last act of Marcel Masse, when he was president of the Treasury Board, was to force, through closure, a bill through the House which gave the government the right to grab all $30 billion out of the public service pension plan surplus, call it the property of the Government of Canada and put it into the general revenue.

It is no secret that it did not take any good money management skills to pay down the debt and deficit. The government took it out of EI from unemployed workers, the most vulnerable people in the economic force. It took it out of guaranteed income supplement payments to low income seniors. It took it out of the public service employees pension plan.

That is the paucity of social development standards that we see in the previous government.

When I rose today to say I support Bill C-22, I support having a minister perhaps responsible for social development. However, I can serve notice right now that we will be holding the government to a standard. We will have our own yardstick by which we will measure progress and that measurement will be this. Will there be less poor kids in my riding? Will anything we do in the House ever elevate the standards of poverty and living conditions of the people in my riding?

The last thing I would point out is the face of poverty in my riding is by and large native. I can say without any hesitation and without any fear of contradiction, the overwhelming majority of the people living in poverty, and true abject poverty by anyone's definition, are off reserve aboriginal people who flock to the city in the hope of finding some measure of opportunity. In many cases they go from the days drudgery in their reserve to the inner city of Winnipeg. Desperation is what they find when they arrive. There is no social services network really left. There is a mere shadow of what it used to be when we used to talk about the just society. We used to say that the number one priority of Parliament and of government was to elevate the standards of living conditions of its people. That seems to have been lost in the shuffle.

Therefore, we had a decade of record profits in businesses and corporations and a decade of cutting, hacking and slashing. What happened to the post-war labour compact? Perhaps our new Minister of Social Development would like to talk about that when the department gets up and running.

In the post-war years, there was a deal, a tacit agreement with labour that when productivity went up and when profits went up, workers' wages were supposed to go up, thereby creating a burgeoning middle class, thereby having a healthy economy. That was thrown by the wayside. Somehow the Liberals decided they did not need to live up to their end of the bargain anymore. Now record profits do not justify any sharing with employees. In fact, it justifies in their mind a screwing down of standards and labour laws and a reduction in the rate of unionization, the only effective tool for elevating the living conditions of most working people, with free collective bargaining.

I am anxious to speak to our new Minister of Social Development when the new bureaucracy is fully engaged and up and running. These are glaring shortcomings and oversights that we take note of on this side of the House.

I have already said that in my riding, 47% of all the families live below the poverty line. Overwhelmingly the face of poverty is native. The National Association of Friendship Centres is struggling to try to cope with servicing the needs of aboriginal people in the communities in Quebec and in other provinces in Canada.

We have been visited by the National Association of Friendship Centres. It has said that it exists as a national chain of institutions. It is already up and running. It is a structure that could deliver some of these services to non-status, off reserve and Métis people who are floundering in the inner cities, needing assistance to get into the mainstream economy, whether it is life skills training of access to adequate housing, et cetera. Many of these services could be delivered through the Association of Friendship Centres were there the political will to do so.

Rather than set up any new bureaucracy and try to invent new institutions to deliver services to low income aboriginal people in the inner city of all of our major cities, I urge the new minister to forge a relationship with the National Association of Friendship Centres. It might form some kind of a service delivery contract, single window operation to reach out to people.

In closing, we expect the new Department of Social Development and the new Minister of Social Development to set targets for social indications of progress in the same way that the government set targets to eliminate the deficit and tackle the debt. We want to see new targets and a new yardstick to measure progress which results in less kids living in poverty and a better standard of living in our inner cities. That is something that we could be proud of as members of Parliament if we use that as our indication of progress as Canadians.

Department of Social Development ActGovernment Orders

1:05 p.m.

Ahuntsic Québec

Liberal

Eleni Bakopanos LiberalParliamentary Secretary to the Minister of Social Development (Social Economy)

Mr. Speaker, I thank the hon. member, who is the critic for the New Democratic Party, for his party's support of the bill.

I was listening very carefully to the hon. member's speech and to some of his comments on some of the issues that we will be tackling, together I hope, both on the committee and within the lifespan of this Parliament. He raised some very important issues with which we will struggle and, as a new ministry, we will learn. As I have always said, we always must learn from the past.

A question that came up earlier concerned the seniors' supplement. I think the minute the government knew there was a problem it put measures in place to assure that ever senior who was entitled to the supplement received the supplement.

Canadians who are listening to the debate should know that 1.5 million seniors receive over $5 billion in guaranteed income supplement benefits and that since 2002, 285,000 letters were mailed out by the department to seniors who had not applied for the supplement and who might be eligible. Letters and personalized application forms using our tax system were used and over 172,000 more people subscribed.

It is the responsibility of every one of us in the chamber to make sure that even if there is one senior who is entitled to the guaranteed income supplement that the senior will have access to it. I put out a householder encouraging them to do so. If any member in the House knows of any senior who is not receiving the supplement and should be, I encourage them to please let the department and the minister know.

I also want to talk about eliminating poverty because it has been an issue in the House for far too long. Even if one child lives in poverty, we cannot be proud of that. We must make sure that we eradicate the social deficit, as the hon. member said, and as effectively as we eliminated the economic deficit in the country.

After the report of campaign 2000, certain measures were taken to decrease child poverty and poverty in general in the country. The opposition members referred to the $5 billion that is on the table for the national child care program. They said that it was a very good initiative and that we should be putting money on the table for a national child care and early learning system.

We did introduce the Canada child tax benefit which has provided $7.7 billion in income support to low and middle income families.

The member talked a lot about the poverty issue. Besides the fact that we have put measures in place and that campaign 2000 said that these measures were in the right direction, would the member say that the establishment of this new ministry is a step in the right direction in terms of assuring that programs and services will be--

Department of Social Development ActGovernment Orders

1:10 p.m.

Some hon. members

Oh, oh!

Department of Social Development ActGovernment Orders

1:10 p.m.

Liberal

Eleni Bakopanos Liberal Ahuntsic, QC

Mr. Speaker, it is not Bloc Québécois members who preside over this assembly, it is the Chair. I believe it is up to you to decide.

Department of Social Development ActGovernment Orders

1:10 p.m.

Some hon. members

Oh, oh!

Department of Social Development ActGovernment Orders

1:10 p.m.

Liberal

Eleni Bakopanos Liberal Ahuntsic, QC

Is there a limit? Is it you, as members of Parliament, who decide? Unfortunately for you, that is not the case.

Department of Social Development ActGovernment Orders

1:10 p.m.

The Acting Speaker (Mr. Marcel Proulx)

The hon. parliamentary secretary is well aware that she must address the House through the Chair.

The hon. member for Winnipeg Centre.

Department of Social Development ActGovernment Orders

1:10 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, I and I think members of my caucus are optimistic that having a ministry of social development and a minister assigned specifically to social development may result in more attention to the issue of social development. I am willing to concede that but I do have to comment on some of the parliamentary secretary's remarks.

I do not believe we have done enough to make sure that everyone who is eligible for the guaranteed income supplement is getting it. It really is not up to members of Parliament to knock on every door and ask seniors whether they may be eligible for this. The government is the one that knows who they are, how much they make and whether they are eligible. It is through their income tax returns that the government can see quite plainly if a person is making less than the $12,000 a year, or whatever the cutoff is, if they are eligible and how much they are eligible for.

I believe the onus is on government to make sure it gets this necessary income supplement to everyone who is eligible for it.

Department of Social Development ActGovernment Orders

1:10 p.m.

Conservative

Andrew Scheer Conservative Regina—Qu'Appelle, SK

Mr. Speaker, I have a quick question for the hon. member for Winnipeg Centre.

He spoke a lot about the damage done to his riding when social development programs are not applied equally. However I think the tone of his party in particular is very discouraging. He referred to it as an industry in his riding.

Would the member not agree that the best way to address poverty line issues and child poverty would be to create jobs in the areas that need them, and that instead of having an industry of public programs and social assistance, to pursue economic policies that would actually result in the creation of new jobs?

In my riding in Saskatchewan, which, unfortunately, is under a regime of socialism and communism, the jobs are not there because the policies of the NDP, which we have seen federally and provincially, discourage the creation of jobs and drive business out of those areas and then we see a further cycle of dependence on public programs and social assistance.

Department of Social Development ActGovernment Orders

1:10 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

What an idiot. I am sorry, Mr. Speaker. What I meant to say is that the program I was making reference to is the EI program. Changes to the EI program took $20.8 million per year out of my riding, which would be comparable to a plant closure losing $20.8 million in payroll.

Obviously our first choice is to have opportunities for work for everyone. I can point to one thing that would point us in that direction. On the desk of the Minister of Finance right now is a duty remission order that he could sign that would extend the duty remission for garment manufacturers for a further seven years. I have 43 garment manufacturers in my riding and many of them do employ immigrants and aboriginal people who come into my riding looking for work, but they will topple like dominoes if the Minister of Finance does not sign the duty remission order because the garment industry needs that support while it transitions to the stresses of the new global marketplace.

I agree with him that jobs are the number one priority and that the best social program in the world is a job, but the Minister of Finance could help us in that regard in my area by signing that duty remission order ASAP.

Department of Social Development ActGovernment Orders

1:15 p.m.

Bloc

Nicole Demers Bloc Laval, QC

Mr. Speaker, I thank my colleague for Winnipeg Centre for his speech. It was very interesting. I had the opportunity to visit his riding not long ago, during the symposium on child care. I found that, even though Winnipeg may be poor, it is a city where people are very welcoming and generous.

My riding is also very poor. There are people who, for the most part, are on welfare because they are not entitled to employment insurance benefits. We certainly wonder why the government wants to create a new department when it is not even able to meet the needs and demands of the people who are entitled to EI benefits because they have been paying premiums for years. This is insurance, not a program that the government is paying for. It is the people who are paying for this.

I wonder how my colleague can think that his province is unable to provide social and community services to its citizens, when the government that would want to do so, the federal government, is unable to manage its own programs or to solve problems such as mad cow disease, the softwood lumber dispute and scabs. These are very important issues that fall under its jurisdiction. How can the member believe that this government would be better than his own provincial government at solving the problems in his province?

Department of Social Development ActGovernment Orders

1:15 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, we will fiercely fight to protect our jurisdiction in Manitoba when it comes to the delivery of social programs, but we will just as fiercely demand that this new ministry of social development does something about the inadequacy of the transfer payments to the provinces so that they can meet the genuine need within inner city ridings like ours.

The Canada health and social transfer has been an abject failure in terms of block funding for post-secondary education, health care and social services. Perhaps through this new Minister of Social Development we will be able to argue that basic needs in our communities are not being met by their current structure, their current policy and their current miserly treatment in the transfer of money to the provinces so that we can deliver those programs in our own jurisdictions.

Department of Social Development ActGovernment Orders

1:15 p.m.

Liberal

Jean-Claude D'Amours Liberal Madawaska—Restigouche, NB

Mr. Speaker, last December, the Government of Canada established the Department of Social Development to provide a centre of expertise for social policies and programs, thereby enabling Canada to maintain and strengthen its reputation as a nation that cares about the well-being of its population.

In the past 10 months, Social Development Canada has taken bold steps in support of its mandate. Now, in introducing a bill to provide a legal basis for the department, we are building on the work accomplished and laying the foundation for a more aggressive approach to social issues at the federal level.

With its 161,000 non-profit organizations, the Canadian volunteer sector represents both a social and economic force in our country. Once again, I want to stress that, when we say that there are 161,000 non-profit organizations across the country, we have to pay attention to this great force.

The basic purpose of volunteer work and non-profit organizations is to ensure that we can help not only our region, our city or our province progress further, but the whole country. It is therefore extremely important to work with and support these organizations which, in practice, make a useful contribution, very often, in more specific ways than the government or other institutions could.

Non-profit organizations, including charities, provide a full range of services to meet human needs: child care, elder care and youth recreation.

Many organizations focus their efforts on the members of groups which are often marginalized, such as persons with disabilities, aboriginal people and new immigrants. They provide services such as education and training, housing and shelter, and places of worship. In so doing, they improve the quality of life of millions of Canadians.

While providing essential services, non-profit organizations also give Canadians an opportunity to reach out to their fellow citizens. Newcomers to Canada, for instance, get acquainted with their adoptive country through volunteer work, not to mention that this is an opportunity for all these newcomers to gain valuable and fulfilling work experience.

All in all, more than six million Canadians give their time to non-profit or community organizations. This is a donation of more than deux billion hours of work every year. I want to say that despite my full schedule, both in the past and the present, I have taken part in voluntary activities many times. I thought it was very important, not for myself, but like those millions of other Canadians, in order to help and encourage the rest of the population. In fact, when we belong to an organization that provides assistance to the public, we are certainly not doing it for our own personal good.

The assistance provided to these organizations is often dismissed as marginal. Nevertheless, we must never forget that without the concern of the people who keep voluntary organizations and volunteerism going, it would be even more difficult to ensure that everyone in our country is very well taken care of.

Two billion hours of work is a great deal. The Canadian people give many hours of their time so that everyone in Canada can benefit. Two billion hours of work per year is quite a contribution for the entire population of Canada and for its well-being.

Whether they are delivering meals to seniors in their homes, coaching in minor league sports or offering respite care for families in need, our volunteers are doing essential work that reflects well on Canada's dynamic communities.

When we talk about delivering meals, I would just like to point out that in my home region the Canadian Red Cross offers this service. But the service does not appear simply by saying, “We will do it”. It can only be provided by hundreds of volunteers all over Canada who donate their time and energy to help those who need it most.

Our volunteers also contribute to community life outside Canada's borders. They give their time to organizations that create awareness of the need for pollution controls, that establish bridges of hope and understanding between cultures, and that increase the ability of developing countries to help themselves.

These actions show compassion and well-understood personal interest. Once again, I have been aware for a number of years of the importance of working with these organizations and with the people who are attracted to them. It makes it possible for us, in our communities, to ensure that we can help others with needs greater than ours, and contributes to social progress in this country.

At the end of the day, what is given comes back. In other words, as sustainable development takes root in these countries, the entire Canadian population will benefit from the emergence of a safer world that is more stable and more prosperous.

The not for profit and community organizations in Canada are important allies in creating solid and dynamic communities. Not only do they fill a real and growing need, but they speak on behalf of the most vulnerable in Canadian society. Since they are close to ordinary people, they give the government valuable information that can help improve social policy.

When I say they give the government valuable information, I believe that it is important, as parliamentarians, to take some time to talk to these people and get involved in these organizations in order to have a better understanding. That is not to say we do not understand. Nonetheless, we have to make sure we have a better understanding of the needs and the benefits of the not-for-profit organizations that work in the volunteer and community sector. This will facilitate the establishment of a link to provide information to the government so that we can move closer toward really good social policies, as we are doing today.

The volunteer and community sector is at the heart of what is most often called the social economy. It includes all the not-for-profit companies and activities utilizing people and companies to benefit communities across the country.

In Canada, some 10,000 social enterprises and organizations employ roughly 100,000 people and produce $20 billion in annual revenues. This is extremely significant in terms of revenues, but even more significant in terms of the number of people who have the opportunity to work at these social enterprises. Some 10,000 people working at 100,000 companies is significant, and it is extremely important to recognize and promote these companies.

The government is determined to foster the social economy. In fact, it has already started to reach its budget commitments of 2004 in this regard. The funding has been allocated to three priority areas. First, there is $100 million over five years in support of financial initiatives that will increase lending to social economy enterprises. As I mentioned, we can see that this contribution is important to help these social economy enterprises move forward and prosper in the country.The funding in the second initiative includes $17 million over two years for a pilot project for strategic planning and capacity building of community economic development organizations. Finally, in the third initiative, $15 million over five years will go to the Social Sciences and Humanities Research Council in support of community based research on the social economy.

It is extremely important to recognize these social economy enterprises and the importance of social economy in this country. It is important to recognize them because, often, they do not get the attention, but people need a little help that is often more moral than financial.

This investment in the social economy will total $132 million. However, funding is not enough. The government is committed to helping foster the environment that supports social economy enterprises. To this end, as the Speech from the Throne said, the government introduced a new Not-for-Profit Corporations Act, an initiative of Industry Canada.

The new legislation will modernize the regulatory framework, increase public confidence and streamline rules for charities. It will help create the necessary conditions so that social economy enterprises can prosper. In principle, everyone will benefit, since these enterprises put their surpluses back into the community.

Department of Social Development ActGovernment Orders

1:30 p.m.

The Acting Speaker (Mr. Marcel Proulx)

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's Order Paper.

Resuming debate, the hon. member for Madawaska—Restigouche will have nine minutes.

Excise Tax ActPrivate Members' Business

November 26th, 2004 / 1:30 p.m.

Conservative

John Duncan Conservative Vancouver Island North, BC

moved that Bill C-259, an act to amend the Excise Tax Act (elimination of excise tax on jewellery), be read the second time and referred to a committee.

Mr. Speaker, Bill C-259 is an act to eliminate the excise tax on jewellery. I think it is instructive to read the brief preamble and the actual legislative change in the bill, but before doing so I would like to say that I have had the bill in the hopper for a number of years. It is finally coming before the House largely as a result of the fact that we have changed the the way we draw bills. I was fortunate enough to win the lottery from the standpoint that my bill was picked sixth in this Parliament for private members' business. I feel quite blessed in that regard.

Bill C-259 is now a timely bill. When I first put it forward, we were dealing with a circumstance where this change had been promoted by the jewellery industry for decades, if not generations.

Now what has really changed is that we have everyone involved, right from the mining industry through to the retailer who has anything to do with diamonds and/or jewellery of all kinds, including costume jewellery. They are all now involved in this. Any item deemed to be jewellery that is sold at retail for more than $3 is subject to this tax.

Since I first introduced the bill in the House two Parliaments ago, Canada has become a diamond powerhouse, so the urgency of removing this anachronism of a tax is greater than it has ever been.

The preamble of the bill states:

Whereas manufacturers currently pay an excise tax of ten per cent on the sale price of jewellery manufactured in Canada and importers currently pay an excise tax of ten per cent on the duty-paid value of imported jewellery;

Whereas this tax was introduced in 1918 in respect of several types of goods considered to be luxury goods but today is the only luxury tax in Canada;

Whereas Canada is the only industrialized nation and the only diamond-producing nation that continues to have a luxury tax on jewellery;

And Whereas, as a result of this tax, diamonds mined in Canada cost more in Canada than anywhere else in the world;

Now, Therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

  1. Paragraph 5(c) of Schedule I to the Excise Tax Act is repealed.

That is pretty simple. The preamble actually says a lot.

Here is what Canada is currently doing. If we have an item manufactured outside of Canada and imported into Canada and it is identical to an item manufactured in Canada, we tax the made in Canada item and do not tax the item coming from outside. This is obviously killing jobs. The excise tax on jewellery is a 10% levy paid by manufacturers on the sale price of items manufactured in Canada and by importers on the duty paid value of imports.

The House of Commons finance committee reported in 1996 that the tax was an anachronism and concluded that it should be abolished. It said the same thing in 2004. The revenue collected from the tax in 2003 was $87 million.

As a result of the growth in the diamond industry, it is now producing government revenues at current rates of about $500 million a year. Canada is currently the third largest manufacturer of diamonds in the world. By the year 2012, Canada is going to be the number one producer in the world. Government revenues from this burgeoning industry are far more than the much smaller revenues that are coming in as a consequence of this unfair and discriminatory tax.

The average Canadian household spends about $170 per year on taxable jewellery, so the average Canadian is affected by this tax.

The threshold for defining taxable jewellery is items that cost more than $3. Therefore, on every jewellery imitation at a Kmart or a Zellers or a Wal-Mart, the tax applies in Canada, but of course that tax does not apply in those same stores in the U.S. We are penalizing ourselves and driving business across the border, where even expensive jewellery can avoid the taxation because people bring it back under the $750 tax exemption for returning residents.

Steven Parker appeared before the finance committee. He is a small business jewellery manufacturer based in Vancouver, whose company employs about 20 full time people making wedding rings, family rings, earrings and necklaces. He had these observations about the tax. He is at a tax disadvantage compared to imported products because the 10% tax applies to all his costs, including marketing, distribution, manufacturing and payroll costs. He can import and have a lower cost base that he applies the 10% tax to; it would be based on landed value only.

Steven Parker and others would manufacture more jewellery in Canada. Two large Canadian jewellery manufacturers relocated outside the country since the 1998 investigation by the finance committee simply because they got tired of waiting for the government to remove this excise tax. They concluded it was not going to happen. The companies were tired of being undercut by manufacturers outside of Canada, so they relocated. This tax is demonstrably killing jobs.

About one-half of the jewellery sold by value in Canada contains diamonds. Saskatchewan will soon be joining the Northwest Territories as a world class diamond producer. Any of the premiers who are involved in jurisdictions where diamond production is either present or about to be are calling for the removal of this tax. It is pre-empting local jewellery manufacture. It is pre-empting tourists buying jewellery made in Canada because they know they can get it cheaper elsewhere.

The Mining Association of Canada said this in May of this year:

In less than a decade, Canada has emerged as a diamond powerhouse...By providing the right mix of fiscal and regulatory policies, governments have the opportunity to maximize the contribution of Canada's diamond industry to the benefit of all Canadians.

One of the key recommendations is “eliminating the federal excise tax on jewellery”. There is virtual unanimity on this subject.

Finally, the application of this tax is an art, not a science. It is applied unevenly. This is very threatening to businesses that are looking for predictability on their taxation.

The finance committee this year heard from Mo Charania of Ottawa, a third generation jeweller with five stores. In 1999 he had an excise audit covering the previous three years. He was assessed over $800,000 in excise tax and was prepared to wrap up his business because that was a bill he could not pay.

Upon investigation of discrepancies and other ways to interpret the tax, especially in terms of how a manufacturer is defined, in his case, because of these discrepancies and differences they were able to reduce his tax bill to $340,000, which meant having to sell only a couple of the five stores in order to pay the bill. I say “only” rather satirically.

Upon further investigation, it became apparent that other companies were not being assessed by the Canada Customs and Revenue Agency because of an administrative policy created outside of the legislation which allows the excise to be paid at a discounted value for multiple items of the same article produced for retail. By application of this formula, it was not an $800,000 bill, nor was it a $340,000 bill. In fact, Mr. Charania would receive a credit.

This tax is incredibly complicated and very subjective in its application. On the part of the business owner, it often requires manual tracking rather than computerized tracking because of these characteristics. Also, it is subject to different opinions of and rulings by different auditors and people within CCRA. That is why CCRA has created a guide on how to apply it that is outside of the legislation. Only some of the businesses to whom this tax is being applied are even aware this guide exists. Obviously not all of the auditors, even with that interpretive document, operate the same way.

It is fairly easy to summarize many of the reasons why we should axe this tax. Consumers are paying a hidden luxury tax for non-luxury items. We can hardly describe a $3 item of costume jewellery as a luxury item.

Canadian jewellery retailers and manufacturers are discriminated against. Canadian jobs are lost. Canada will soon be the largest producer of diamonds in the world and our diamonds will cost more in Canada than anywhere else.

The finance committee has recommended that the tax be abolished.

First nations want the tax abolished; they are important participants in the diamond industry at the mining level and also increasingly in the value added participation.

A really important aspect is that retaining this tax is driving the jewellery industry in Canada underground. The volume of illegal evasion and legal avoidance of the tax is estimated to be in the range of 50% of recorded sales or larger. In 1990 recorded sales were $2.3 billion, just to give a benchmark of what kind of numbers we are talking about. When we get that kind of avoidance or evasion, the GST is also completely avoided, which means that in all likelihood this tax is actually revenue negative for the government and an incredible burden for the business community.

It is time to axe this tax. I have a letter from the member from Oak Ridges completely agreeing with my statement. That is dated January 30 of this year. I have a letter from the chair of the Manitoba caucus completely agreeing with my position. That is dated February 6 of this year. I have a letter from the minister of resources for the Northwest Territories that says the same thing.

My time is up, Mr. Speaker.

Excise Tax ActPrivate Members' Business

1:45 p.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Mr. Speaker, my colleague has done an absolutely stellar job of bringing forth this bill. It has been long waited for and is long overdue.

I wonder if he has any comments on why a government that has been in power for over a decade, nearly a dozen years, has not looked at this. We hear a lot of talk and speculation by the Prime Minister, of course it is when he is abroad, on making Yukon, the NWT and Nunavut into provinces, but no discussion from him on how these territories should fund their provincial governments.

Obviously, with the burgeoning diamond industry in the north, well instituted mining industries throughout the north, this would be one source of revenue for them and we hear about value added every day in this country. We tell all of our producers that we must have value added, yet we have a punishing tax that the government has done absolutely nothing about.

Excise Tax ActPrivate Members' Business

1:45 p.m.

Conservative

John Duncan Conservative Vancouver Island North, BC

Mr. Speaker, my colleague's comments allow me to say a couple of things I forgot to say. My colleague from Durham, who seconded this motion, talked about a jeweller family, Hooper's Jewellery, which has been operating for 60 years and for the last two generations, the owners have wanted this excise tax removed. This tax has been there for 86 years. I know in the case of my own community, Preston Jewellers has been fighting this tax and I continue to receive letters concerning this issue.

People have made such good cases in the last 10 years on several occasions before the finance committee and with their own independently commissioned reports and submissions to the finance department. They felt the case was so strong and the promises were so strong, that when there was no delivery at budget time, they have actually given up.

This private member's bill has reawakened some real optimism and they are thinking that this time it might really happen. It is rather inconceivable that members from all parties in the House of Commons are going to reject this notion. The tax is an anachronism.

In terms of the north and the provinces, the Premier of the Northwest Territories has stated publicly his real concern on several occasions. There is a burgeoning diamond industry and the Northwest Territories is getting about 4% return on the royalties. It is the same argument for the east coast offshore oil and gas.

During the east coast offshore oil and gas debate I empathized with Premier Handley's position because eventually the provinces, the territories and industry will find other alternatives or these ventures will not proceed simply because they are not the beneficiary. It is too indirect when the moneys go to the federal authority and then the federal authority transfers them back on a different basis and reduces or increases them on a one to one basis based on the royalties.

It is not a happy situation and needs to change. My bill does not address the bigger question. It only addresses abolishing this tax.

Excise Tax ActPrivate Members' Business

1:45 p.m.

An hon. member

One step at a time.

Excise Tax ActPrivate Members' Business

1:45 p.m.

Conservative

John Duncan Conservative Vancouver Island North, BC

Yes, one step at a time.

Excise Tax ActPrivate Members' Business

1:50 p.m.

Ahuntsic Québec

Liberal

Eleni Bakopanos LiberalParliamentary Secretary to the Minister of Social Development (Social Economy)

Mr. Speaker, Bill C-259 proposes the repeal of the excise tax on jewellery. I am pleased to have the opportunity to respond to this proposal having worked with my colleague, the former parliamentary secretary to the minister of finance, as well as my colleagues on the finance committee and the Liberal caucus on this very important issue.

Jewellery and watch products are the only products that are subject to a hidden luxury tax. I agree with the Canadian Jewellers' Association, with which I have worked with for the last five years, including its former president, Mr. Pierre Akkelian, that the federal government is discriminating against this industry.

Some people believe that we are attempting to remove a luxury tax, yet this tax applies to inexpensive jewellery. Jewellery is not luxury. One in three households buy jewellery and the average household in Canada spends less than $130 annually, the hon. member said $170, on jewellery and watches. The average expenditure in fact for a female is actually $98 and for a male it is $36, according to statistics that were furnished by Ernst and Young.

Four million to five million households bought jewellery in 2001 and most of them are low and middle income households. Low and middle income households account for 50% of the sales of jewellery.

In my culture, being of Greek descent, we always buy jewellery for every newborn child. The grandmother tends to buy jewellery, under $100 normally, and gives this as a gift to the child. Looking at the statistics, it is very strange that we would in fact tax a wedding band that costs sometimes around $100 or $200, perhaps more, and we do not impose an excise tax on the wedding gown that costs maybe $1,000 or $2,000. So there is some incongruity in terms of our tax system.

A single mother, for instance, may buy a pearl necklace. It is important to keep in mind that it is not a luxury tax. It is in fact something that would help low and middle income families. As I said, in my culture, it is an automatic thing to do. We normally buy some jewellery for our children. The average receipt, even from a chain like Birks Canada, is under $400.

On the other hand, other true luxury items, and I have always pointed this out to both the present Minister of Finance and the former ministers of finance, such as yachts, expensive cars, designer clothing are all exempt from this tax. In my opinion this tax should be abolished.

As a starting point, I would note that this private member's bill is one of 15 such bills that have been tabled in the current session, each of which requests some form of tax relief in specific circumstances. The proposed measures cover a broad range of initiatives, such as the income tax treatment of adoption expenses, herbal remedies, and fees paid for participation in physical activity or amateur sport. I understand that additional private members' bills proposing tax relief are waiting to be tabled.

There can be little doubt that these proposals reflect genuine concerns about how Canadians interact with and are affected by the taxation system. At the same time, it must be recognized that each and every one of these proposals carries a cost to the fiscal framework. In fact, the 15 private members' bills amount to $2.5 billion per year.

In addition to the fiscal cost that is associated with these private members' bills, one must also consider the difficulties that they may pose for the integrity and robustness of the taxation system and fiscal framework that the government works under.

Taken in isolation, any one of the private members' bills may raise important issues and express intentions that deserve attention and investigation. I am already on the record that I agree with the removal of this tax.

What we should not lose sight of, however, is the cumulative effect that a series of such bills could have on the taxation system. Individual proposals, even those with a relatively modest fiscal cost, could result in an inequity vis-à-vis other taxpayers who would then need to have their circumstances reviewed. Proposals that are evaluated on a stand-alone basis may have unintended consequences or create difficult precedents. A series of such measures may well increase the complexity also of the taxation system or even create opportunities for tax avoidance and evasion, as the hon. member has stated.

On the basis of these considerations, I would suggest that a certain degree of caution is appropriate on the part of the government in terms of studying this bill lest the government lose sight of its longstanding commitment to fiscal responsibility. If there is something that we have come into government to do, it is fiscal responsibility.

One of the hallmarks of the annual budget process is the consultation that takes place with the government asking Canadians for their input to help determine the difficult choices that must be made among competing priorities. Every year, as the hon. member pointed out, the Canadian Jewellers' Association has come before the finance committee with at least two reports, if I am not mistaken because I am not a member, that have suggested that the government do remove this tax. Both the Liberal members and the chairs, who were Liberal, agreed and there was, I believe, all party agreement.

In its May 5, 2004 appearance before the finance committee, the Canadian Jewellers' Association reiterated its request for a repeal of this tax and raised several concerns about this tax. As the hon. member said, the act's $3 tax threshold suggests that the federal excise tax on jewellery is a remnant from a bygone era, something that was once considered a luxury but is no longer considered a luxury. It is the only remaining luxury tax still levied by the federal government

While taxes on alcohol and tobacco can be justified, rightly or wrongly, for health promotion reasons, there seems to be little justification for the excise tax on jewellery as a luxury tax, since other luxuries, as I mentioned earlier, do not face a similar tax. Furthermore, according to the association, because Canada's tax system largely moved away from excise taxes with the replacement of the complex manufacturers' sales tax with the more transparent GST, the CRA no longer has the ability to administer a tax as complex as the federal excise tax on jewellery.

In its presentation to the committee, the Department of Finance disagreed with the characterization of the federal excise tax on jewellery as a luxury tax, noting that “most jewellery sold in Canada is relatively inexpensive and purchased by average consumers”. The department agreed, however, with the Canadian Jewellers' Association that the tax favours imported jewellery over domestically manufactured jewellery and that deficiencies in the tax “make it prone to tax avoidance and evasion”. The department has agreed with everything that we have said so far. According to the department, if “the jewellery excise tax were not already in place, it is less than certain that Parliament would want to legislate one today”.

I would like to add a point that perhaps was not raised by the hon. member. The president of the World Jewellery Confederation, CIBJO, wrote to the Prime Minister and stated that Canada was the last remaining country to have a jewellery tax. Australia and Russia have removed it because of the diamond industry and we are the last remaining country with this tax. Canada cannot be competitive internationally because of this excise tax. As a member of Parliament, I have had the opportunity to make recommendations to the finance committee. The elimination of the jewellery excise tax is one of the issues that I have raised and supported.

To assist the government in its support for small business, following up on budget 2004, the Minister of Finance wrote to the chair of the finance committee asking that the committee take an active role in assessing the merits of a number of measures proposed to support business. The finance committee has recently delivered its second report dealing with excise duties and taxes as they affect vintners, small brewers and jewellers. The report from the committee recommends some form of tax relief for each of these three industries, including a recommendation to phase out the excise tax on jewellery over a five year period.

In delivering its report, the finance committee is mindful of the need to assess competing priorities and the fact that limited fiscal resources are available, but the committee is making a recommendation to the minister. The government supports small business and will continue to review measures to improve the environment for small business to succeed.

I note that the private member's bill also proposes to eliminate the excise tax on jewellery and makes particular note of Canada's role as a diamond producing nation. I want to put on the record that I agree with the hon. member's statement that Canada is a diamond producing nation and we must be competitive. We are known worldwide as having an exceptionally good diamond industry. I agree with his comments that we will continue to help, especially in aboriginal communities.

Mining exploration in Canada, including diamonds, should be supported by targeted income tax provisions designed to recognize the special operating environment of this capital intensive and high risk industry. Provisions include the write-off for capital costs and the carry forward of resource deductions. Exploration companies also derive considerable benefit from the ability to flow expenses that would not otherwise be claimable within the company to investors in flow through shares.

The government has taken several recent actions to improve the taxation of the resource sector. I will end by saying that I agree with the hon. member. Liberal members and other members of the finance committee have been supportive of the removal of this measure.

Excise Tax ActPrivate Members' Business

2 p.m.

Bloc

Guy Côté Bloc Portneuf, QC

Mr. Speaker, jewellery is a powerful symbol that transcends centuries and cultures. When we think of jewels, we think of James Bond in Diamonds are Forever , or Marilyn Monroe singing Diamonds are a girl's best friend . Unfortunately, I do not think today that I would have got far offering Marilyn a $5 diamond.

Canada and Quebec both have their jewellery industries. This is why I will be supporting Bill C-259 of my colleague for Vancouver Island North. In Canada, the jewellery industry has a total worth of $1.2 billion, most of this is concentrated in small and medium businesses. Some 4,500 companies employ a total of 35,000 people. In Quebec there are about 9,000 such workers in 1,200 companies.

As has been pointed out, hon. members need to keep in mind that this excise tax was created in 1918 to help with the war effort. We won that war, but unfortunately that tax, like many others, although meant to be temporary, had a tendency to put down roots and is still with us. I would give just one other example of such a tax: the income tax that was inaugurated during the second world war.

Indeed, at that time, it was a tax on luxury goods, such as jewels and watches. While a $3 item of jewellery was a luxury item in 1918, as was mentioned earlier today, it is no longer the case today.

But what exactly is the excise tax? According to the Excise Tax Act, it is a federal tax collected on goods that are imported, or made or produced in Canada, based on the duty paid value of imports, or the sale price in the case of the item made or produced in Canada.

I will give all three examples, although the bill only applies to jewels. People at that time spoke of 10% of the portion of the selling price or duty paid value over $50 of clocks and watches for household or personal use, except railway men's watches, another example of the anachronism of those regulations, and watches specially designed for the use of the blind.

It is also 10% on all kinds of articles made in whole or in part of ivory, black amber, amber, coral, mother of pearl, natural shells, tortoise shell, jade, onyx, lapis lazuli or other semi-precious stones. Finally, something pertains a little more specifically to us, it is 10% on articles commercially known as jewellery, whether real or imitation, including diamonds and other precious or semi-precious stones for personal use or for adornment of the person, and goldsmiths' and silversmiths' products except gold-plated or silver-plated ware for the preparation or serving of food or drink.

Again, there is no denying that this tax no longer plays a role at all. We are talking about $3. I have three children who regularly ask me for some change on the weekend. They come back, indeed, with trinkets and some jewels from the discount store. I am surprised to think that they paid a 10% tax on the value of a good for which they may have paid $4 in the first place.

Worse yet, the cost of administering this tax is not known with certainty. According to the Canada Revenue Agency, its administration would cost a maximum of $1.5 million a year. However, it has to be mentioned that the Canadian Jewellers Association told the Standing Finance Committee that administering this tax would cost somewhere between $7 million and $14 million. I agree that there is a very wide gap, but given the often erroneous forecasts by the finance department, I would be inclined to grant more credibility on this issue to the Canadian Jewellers Association.

It would appear increasingly unjustified to collect such a tax on jewels as luxury items. In the current context, in other words in 2004 and no longer in 1918, other luxury items are not treated this way. One could mention, only as an example, yachts, estates, mink coats, caviar and champagne. Nowadays, they are considered luxury items, but they do not come under the scope of this tax.

Our Liberal colleague took great pleasure in mentioning the whole gamut of measures proposed in various private members' bills which increased the costs for the government. I can understand why the government is concerned to some extent, as this excise tax generates roughly $55 million in its coffers.

If the government is really concerned about how to make up for this loss of income, allow me to remind it that the Minister of Finance is planning to put $31.5 billion in the contingency reserve over the next five years. So, I do not think that a little $55 million will jeopardize the government's balanced budgets.

As part of its representations to the Standing Committee on Finance, the Canadian Jewellers Association pointed out, among other things, that while the jewellery excise tax applies only to imported and national items, Canadian jewellers are facing a relatively higher tax bite for three reasons. First, the duty paid value is generally lower for importers than the sales price of Canadian items of jewellery. Second, the popularity of Internet sales makes it easier to order from abroad jewellery that is then imported into Canada, while avoiding—bearing in mind that this is legal—duty and taxes. Third, the excise tax is in fact a tax on stocks in the sense that it limits the quantity of jewellery that a dealer may stock, display and sell.

I want to reiterate something the Liberal member opposite said in her speech because I thought it was important. She said that in her presentation to the Standing Committee on Finance, the Department of Finance and the Canadian Jewellers Association agreed that the tax favours imported jewellery over domestically manufactured jewellery and that deficiencies in the tax make it prone to tax avoidance and evasion. According to the department, if the jewellery excise tax were not already in place, it is less than certain that Parliament would want to legislate one today. I doubt it as well.

That is why we feel that the federal jewellery excise tax is outdated: it no longer meets any social policy objective nor it have the characteristics a tax should have. What are those characteristics? They are: fairness, effectiveness, ease of administration and transparency.

We believe that this tax has a negative impact on employment and the viability of the jewellery sector. Even the provincial, Quebec, and territorial ministers of mining agree that this tax should be eliminated in order to encourage the retail sale of diamonds.

Representations have been made over the last few years by various stakeholders. In committee, the Bloc Québécois, among others, expressed its position a number of times on this issue. Also, back in 1996, the Standing Committee on Finance proposed various recommendations to eliminate this excise tax, and these recommendations were adopted. I sincerely hope that Bill C-259 will be passed by the House. We will support this legislation.