Debates of Dec. 14th, 2004

Tax Conventions Implementation Act, 2004

[Rob Nicholson, Conservative, Niagara Falls, ON]

Mr. Speaker, I too want to congratulate the member for Medicine Hat on his comments to the House on this particular bill. I was interested in some comments he made toward the end that reiterated a point he made earlier, which was that he would have been pleased to have seen something come forward from the government that would result in tax cuts, and that while it is supportable that we are moving ahead to avoid double taxation, I think he quite correctly points out that most Canadians would be very pleased to get some sort of tax break. Certainly they have not seen it from the government.

The parliamentary secretary said, and I think I am quoting him, that he agrees with just about everything that the member for Medicine Hat said. Since the member for Medicine Hat made a point on two occasions in his speech of mentioning that he would like to see tax cuts, I suppose one could take some comfort from that, but this brings me to the question I want to ask the member for Medicine Hat.

He said in his concluding remarks that he looks forward to the day when he sees the government come forward with a bill that will cut taxes for Canadians. It is on this point that I want to ask him a question.

After seeing the performance of the government, does he think that is a realistic option? Is that just something that he hopes to see from the government? Or is it more realistic to say that Canadians will have to wait until the member for Medicine Hat is part of a government and he brings in those tax cuts? I would ask him to comment on that.

[Monte Solberg, Conservative, Medicine Hat, AB]

Mr. Speaker, let me start by saying how important it is that we have tax relief in Canada. Canada is falling behind in terms of productivity, our ability to compete, and therefore our standard of living remains much lower than that of our major trading partner, the United States. This is not just my opinion. This is a fact. It has been attested to over and over again by witnesses appearing before the finance committee.

That is regrettable, because Canada is a wealthy country in a sense. We have a wealth of resources. We have a wealth of human potential and talent. Unfortunately, because of public policy decisions, namely, taxes that are too high, we are not able to exploit that and we are not able to generate as much wealth as we could.

Therefore, all kinds of people who could be employed today remain unemployed. People who could have better jobs are underemployed. The result is that they do not have the income and the capacity to provide for themselves and their families that they otherwise would.

As to whether or not the government can do it, certainly this government is running surpluses in Canada today thanks to the efforts of hard-working taxpayers. However, the government has decided that increasing spending year after year is a much higher priority than tax relief. That is truly regrettable, especially considering how often the government wastes money on all kinds of boondoggles.

I could go on and on about that. I have given that speech many times in the House and the parliamentary secretary is throwing up his hands and saying, “don't do that again”, so I will not. Suffice it to say that we could have tax relief in Canada, but I do not expect it from this government any time soon, regrettably.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, it is with great pleasure that I rise to speak on Bill S-17, an act to implement an agreement, conventions and protocols concluded between Canada and Gabon, Ireland, Armenia, Oman and Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion. This gives me an opportunity to denounce once again a scandal, and the word is not too strong. I am talking about the tax convention between Canada and Barbados.

Obviously, where the tax system of the foreign countries involved is similar to ours, the Bloc Québécois will not oppose the principle of bills like this one. Indeed, as the parliamentary secretary indicated, it makes no sense to pay tax twice on the same income: once in the country where this income was earned, and again in Canada, because the taxpayer in question happens to be a Canadian citizen.

We are therefore totally in favour of tax conventions ensuring that income on which tax is paid in a signatory country is not taxed again in Canada.

We must remember that the principle of Bill S-17, like all the other conventions, is to not double tax taxpayers and not to prevent or spare them from paying income tax. In so doing, both countries, that is, Canada and the other country with which a tax convention was signed, must have a system where the income tax paid is for real, and not for show, and totally superficial like what we see in tax havens.

This brings me to the tax convention between Canada and Barbados. That convention allows Canadian taxpayers, Canadian citizens, be they individuals or corporations operating or appearing to operate in Barbados, to evade tax in Canada. That is not the intention of the bill before us or other tax conventions previously debated in this House.

As for Barbados, it is the only tax haven widely recognized by experts worldwide with which Canada has signed a tax convention. Barbados is known internationally as Canada's tax haven, for wealthy companies and Canadian taxpayers. In this regard, the government cannot plead ignorance.

On many occasions in the past, the Bloc Québécois and other opposition parties have denounced this situation. We are not the only ones. The auditor general and his successor, on many occasions, have also denounced this convention that allows Canadian corporations and individual taxpayers to avoid paying taxes.

Keep in mind that taxes are used to pay for the collective tools we give ourselves as a society. So every time taxpayers dodge their responsibilities by using a tax haven or any other kind of tax evasion scheme, they are not living up to their responsibility to the community. It is a very serious attack against social and moral solidarity.

Worse yet, taxpayers like you and me, who live up to their obligations and pay their taxes in full both to the federal government and the provincial government--the Quebec government in my case--are paying more taxes because those taxpayers, corporations or individuals, are not doing their fair share. As a result, the average tax burden of those who do pay their taxes is getting heavier. The middle class is left holding the bag.

It is extremely important. Indeed, as the auditor general said, it is not only eroding the tax base but also sowing the seeds of cynicism among Canadians and Quebeckers. As a result, now everybody sees nothing wrong in taking advantage of tax loopholes, one way or another and on a small scale, of course. Working for pay under the table is a case in point.

So on fiscal, ethical and social cohesion grounds, it has become urgent to close this loophole, the tax convention with Barbados.

Again, I point out that this no coincidence. The federal government, and particularly the current Prime Minister when he was Minister of Finance, arranged the income tax regulations to promote tax avoidance through Barbados, our tax haven.

The result is that, with a population of 272,000—which is the equivalent of a Montreal neighbourhood—Barbados has become the third destination for Canadian capital and direct investments abroad. It is right behind the United States—which is understandably our number one destination—and Great Britain.

Are these direct investments from Canada being made to take advantage of economic development opportunities offered by Barbados? Maybe so in some cases, but definitely not to the extent that we are talking about. When the number three foreign destination for direct investments has a population of barely a quarter of a million people, I think there is more than meets the eye.

It is easy to see that most of this money—although not all of it—comes from Canada's major banks. They use the tax convention with Barbados to avoid fulfilling their responsibilities in terms of income tax or benefits. They are taking advantage of the situation that the federal government, the current Prime Minister and former Minister of Finance, created by extending the tax convention with Barbados.

As I mentioned earlier, Barbados is a small island of a quarter of a million people and it is the third destination for direct investments from Canada. To give an idea of the scope and extent of this phenomenon, and therefore of the urgent need to condemn this tax convention, Canada's financial transfers to Barbados went from $5.1 billion in 1994—the year the Liberals first took office—to $23.9 billion in 2002. This is an increase of close to 400% in nine years.

The government would have us believe that there are investment opportunities in Barbados that justify such an increase. We are not stupid. Canadians and Quebeckers are not fooled, as the outcome of the June 28 election indicates.

The government has an opportunity to again raise the matter of this tax convention and, as I mentioned earlier, to remedy the situation. I have another figure which will show once again how absurd the situation is. Since 1988, Canadian investments in Barbados have increased by 3,600%. Once again, it seems to me that, despite the business opportunities which this magnificent island in the Caribbean might offer, it cannot absorb these investments entirely. Therefore, it may easily be inferred that Canadian businesses and taxpayers have used this tax loophole, the tax convention between Barbados and Canada.

Since 1996, the Bloc Québécois has been asking the Canadian government to beef up its international service in order to be able to discourage tax avoidance through tax havens. As I said, Barbados is the only tax haven we have a tax treaty with. It is the only one with which we have officialized and institutionalized tax avoidance. Nevertheless, tax havens as a whole are a problem. They are a problem for Canada and also for most other jurisdictions.

Again, since 1996, The Bloc Québécois has been calling for a comprehensive reform of Canadian taxation and will continue to do so, as I am doing today. We must eliminate all tax loopholes that enable companies to get out of paying their fair share of taxes, while the average taxpayer bears the brunt of this. People who cannot use such tools end up paying the bill. This mechanism was established by the Liberal government for the benefit of wealthy businesses and individuals.

We must also look at the very close link between money in tax havens and money laundering. Studies have been done to that effect by FATF, the group that examines the issue of money laundering and finding ways to counter it. I believe that FATF is celebrating its tenth anniversary this year.

This special group made up of OECD countries has found that 25% of the money currently kept in tax havens is laundered money. In other words, the money that comes from fraudulent and illegal activities, such as drug trafficking, weapons trafficking and other such organized crime activities that, unfortunately, are being conducted throughout the world. These organized groups, especially those with warring or terrorist intentions, also use these tax havens to transfer money for carrying out their sinister plans.

There is a certain irresponsibility. As I mentioned, the Canadian government is not alone in this. The U.S. government, the British government and most western governments seem to be hypocrites. On one hand, they say they want to prevent money laundering and to fight terrorism, while on the other hand they maintain mechanisms such as the Canada-Barbados tax convention, which facilitates not only tax avoidance but the transfer of money for terrorist purposes.

If they were at least consistent and honest, if they had the political will to truly put an end to this financial pipeline provided by tax havens to terrorist groups, they would address this issue seriously.

A type of hypocrisy exists. At first, outside of FATF, other groups and governments, the U.S. and Canadian governments in particular, had shown a desire not only to prevent money laundering, but to gain real control over tax avoidance. It seems that in time, the groups working on this problem, FATF in particular, dropped the second element and dealt only with the issue of money laundering for terrorist activity purposes.

This is totally irresponsible and impossible. As long as there are tax havens, it will be impossible to stop money laundering. As long as there are tax havens, it will be impossible to prevent various groups from using them to launder money for terrorist activities. So, we must attack the very existence of these tax havens.

In her recent report on money laundering, the Auditor General says that the federal government has done very little. I am surprised that she does not make a more direct link among tax havens, money laundering and terrorism.

I want to focus on tax havens. Perhaps viewers would like to know a little about how to identify a tax haven. In 1998, the OECD gave it the following definition. First, it is a country that generally imposesno or only nominal tax on income. Second, there is noeffective exchange between countries of relevant information for tax purposes. A few years ago, Barbados announced it intended to improve the exchange of information. To my knowledge, no efforts have been made to do this.

Third, a tax haven is defined by the lack of transparency of legislation or taxation regulations; this is the famous bank secrecy. The fourth factor is the absence of substantial activities. As we know, real activity must be conducted in one location in order to benefit from a tax treaty, under Canadian legislation. Taxpayers who, to avoid paying taxes, put their savings or dividends in a bank account in a tax haven cannot legally use tax treaties to this end.

In 1972, we rectified this situation by making a distinction between passive activity, or simply depositing money in a bank account, and active activity, a real activity in economic terms, meaning providing a service or manufacturing a good. The fourth factor used to identify a tax haven is a lack of substantial activity, meaning that the standards for determining a real activity are extremely low.

In 1998, the OECD identified 35 tax havens, based on four criteria: no taxes, no effective exchange of tax information, no transparency, and no substantial business activities. Hon. members will not be surprised that Barbados was among these. I would also point out that Canada was one of the 47 countries listed with particularly lax laws concerning tax havens.

What follows is important because of the debate prior to the June 28 election. A number of editorial writers in the Quebec press in particular serve as Liberal mouthpieces, and this is my main source of news—though I do occasionally enjoy a look at the press in English Canada. In the year 2000, the OECD changed its definition of a tax haven, focussing more on the non-cooperating aspect.

As I have already said, following on that decision by the OECD to focus differently on the tax haven situation, Barbados announced its intention to take on slightly greater transparency in passing tax data on to other countries and jurisdictions. As a result of that commitment, the OECD decided not to keep Barbados on the list of uncooperative tax havens. This does not, however, change the fact that Barbados is still a tax haven.

What we heard from the federal Liberals, from the government side, was “Just look at the OECD listing”. It is true that Barbados was on it in 1998, but not in 2000. These two lists were not the same. In 2000, the list was of tax havens according to the OECD, based on the four criteria I mentioned. The focus in 2000 was more on lack of cooperation, particularly in connection with the campaign against terrorism. So the same things are not involved. After the definition's focus was changed, nine countries were still on the list. No one is going to convince me, however, that a list of 35 countries identified as tax havens in 1998 by the OECD was suddenly transformed into a list with only 9 countries on it, with the flick of a magic wand.

As I have said, the change was due to a change of focus by the OECD. I should add it is well known behind the scenes at the OECD that Canada, the United States and Great Britain lobbied a great deal to get Barbados struck off the list of uncooperative tax havens.

I said that because the subject will certainly be coming up again. When they talk about the tax treaty between Canada and Barbados, they will tell us that Barbados is not one of the countries the OECD considers to be tax havens. Once again—and I say this for those watching at home—we must not be fooled. The OECD is no longer worried about such things. Those countries that have disappeared from the OECD's list are the ones called uncooperative tax havens. Therefore, all those that intend to cooperate, or actually do so, are not on the list, although they are still tax havens according to the four criteria I just listed.

I would like, if I might, to return to the figures on Canadian direct investments abroad, because I think they are quite extraordinary. Everyone understands why the United States is the primary destination for Canadian direct investments. Just now, I mentioned that Barbados was the third on that list. The second destination is the group of countries consisting of Barbados, the Bahamas and Bermuda, three small island countries with small populations. Canadian investment in these three little island countries was $38.71 billion in 2001. That was more than the U.K.

Although the Bloc Québécois supports Bill S-17, we must take this opportunity to speak out against this tax agreement between Canada and Barbados once again. With regard to real, legal activities, we would be in agreement, but this convention is full of holes at present.

Moreover, the company that formerly belonged to the Prime Minister has—unfortunately—profited from this. I am speaking of CSL International,which has, according to our calculations and thanks to this convention full of holes, saved nearly $103 million in income tax over the five years we examined.

I hope that by the time of the next election, the Liberals will understand what they have to do, look right into those holes, and correct this Canada-Barbados tax convention.

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I listened quite carefully to the hon. member's long rant about so-called tax havens. It is hard to know where to start with such a naive analysis of the international taxation regimes in the world.

Everyone in the chamber, everyone watching us on television and everyone in this country is entitled to arrange his or her affairs, his or her own affairs, or his or her company's affairs to avoid taxes, to minimize the impact of taxes. That is lesson number one in law school and accounting school. Tax avoidance is an expectation on the part of the government and taxpayers are entitled to arrange their affairs accordingly. You do that, Mr. Speaker. My hon. friend does that. Everyone in the chamber does that. We try to minimize the tax impact on our income.

Tax evasion on the other hand is illegal. Tax evasion cannot be tolerated by any country whether or not one is in a so-called haven or whether one is in any other country.

It is amusing to me that my hon. friend conflates those two ideas and misses the point. It is more than ironic that the member purports to speak on behalf of Quebec. His separatist friends, the Parti Québécois, turned Quebec into not a tax haven but probably a tax hell. There the rates of taxation on the people of Quebec are probably among the highest, if not the highest, in North America.

If a person in Quebec or a person in any other part of Canada, or a corporation in Quebec or a corporation in any other part of Canada takes the first rule of income tax seriously and says “I am entitled to arrange my affairs in the way that is most advantageous”, in other words to avoid taxes, not to evade taxes, then he, she or it is entitled to seek the jurisdiction that most satisfies those needs.

What the hon. member fails to state in his diatribe about so-called tax havens is that the information exchange and the transparency allow countries that have entered into tax treaties with the so-called tax havens to tax income that is earned as a source income in Canada. Absent these treaties there is virtually no chance.

As I understand the thrust of my hon. member's diatribe, he would pull us out of any tax convention with any other country which does not tax at the level that he thinks is appropriate. Therefore a taxpayer would be left with some unhappy choices.

I put it to my hon. friend that having a tax convention, such as the one with Barbados and others that he disapproves of, is a good thing. Canadian authorities get access to information on which they can tax income that is sourced in Canada, that is earned in Canada which impacts many of these companies, especially companies from Quebec, that do some business in the Caribbean. Banks do some business in the Caribbean on which they pay taxes. Much of those taxes, because of the transparency and the OECD protocols, gets reviewed here and taxed as Canadian source income. Absent these conventions, absent these rules, we would see none of the income.

I put it to the hon. member that the entire premise of his speech is in error.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I will probably not have enough time to reply to all the wonderful questions I have just heard. However, if the parliamentary secretary is serious and really thinks that Barbados, which has a rate of between 1% and 2 1/2% on profits, is not a tax haven, he is not in the right place. We are not talking about identical systems but about comparable systems.

In the case of Barbados, it is not a matter of double taxation but of tax avoidance. I was therefore careful to use the words—perhaps they were misinterpreted by the translators—“tax avoidance”. I did not speak of tax evasion. There is tax avoidance in the case of Barbados because it was the finance minister, now the Prime Minister, who changed the rules to ensure that it was not tax evasion.

There is a serious problem now. If the parliamentary secretary saw the show Enjeux , which was televised last spring, he saw journalists going to Barbados to see where the headquarters of CSL International were. They found that there were nine CSL companies under the same heading, whereas normally, Canadian law provides that there must be real business activities. There are apparently three people who work for these nine CSL companies, including CSL International. However, the receptionist was only able to name one person.

ATTAC-Québec has now filed a complaint against CSL International and the CSL Group to see whether there really were some business activities, in accordance with the tax treaty and with Barbados law and Canadian law. This is therefore something that should be followed.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, it was not my intention to speak to the bill until I heard the parliamentary secretary's attack on the Bloc member who just spoke.

I found it astounding that what we heard from the parliamentary secretary was effectively an elaborate defence of countries that make tax evasion legal. What he said was that tax avoidance was something that everyone does and that countries are a party to and so on.

However what he did not say is that we have a hemorrhage of taxes that ought to be paid by Canadian corporations to the public coffers to sustain our most important public services and programs precisely because the government refuses to do anything about the fact that the law does not capture those taxes properly.

While we heard the parliamentary secretary say that it was quite legal for people to avail themselves of tax havens, the previous member quite rightly pointed out that we needed to do something about the problem.

A great deal of analysis has been done on this but the parliamentary secretary treated the member's comment as though the member was somehow dreaming it up for some paranoid reason or some unduly partisan reason. The member was speaking of a very respectable body of research done by tax accountants and economists that points out the incredibly low levels of taxes that Canadian companies are paying in places such as Barbados and many other countries simply because they are completely free to do so.

While Canadians pay their fair share of taxes, we have examples of the major banks. It does not matter which bank but the Canadian Imperial Bank of Commerce happens to be the one at the centre of this particular analysis. This bank, which would have and should have been paying taxes in the amount of $844 million, was able to reduce that legally, because we do not have any tax agreements to capture this, to $239 million.

I know that seems like a lot of taxes but we have to consider the fact that instead of paying at a rate of 36.6% on the profits, the bank was actually paying only 10.4%. The result is that the government uses the fact that we do not have the tax dollars to maintain our basic programs very conveniently.

Earlier today the parliamentary secretary stood and agreed with an opposition member who said that we should do something about the problem of pensions not being indexed in the U.K.

We should also be addressing a problem that has been raised again and again by the member for Windsor—St. Clair and the member for Windsor West about completely unfair taxation, practically tax confiscation, that penalizes Canadians--

[The Acting Speaker (Mr. Marcel Proulx)]

The hon. member for Joliette.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I would just like to remind the hon. members that when CSL International was founded in 1992, its headquarters were in Liberia, a tax haven, as everyone knows.

Under pressure from the Americans, especially President Clinton, the current Prime Minister and finance minister at the time, tightened the tax criteria. Liberia was excluded from the countries that could take advantage of a certain number of tax benefits.

At that point, CSL International moved its headquarters to Barbados. If one moves from Liberia, which is a tax haven, to Barbados, it is probably because the latter has tax advantages under the treaty that was signed with it, advantages that do not exist elsewhere. Otherwise, they would just have brought the headquarters back to Montreal, which would have been the logical thing to do.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I am pleased to join in the debate on Bill S-17. It is an important discussion on tax policy in general and the degree to which we allow for tax avoidance or tax evasion. It has been a very curious intervention by the parliamentary secretary for finance with his suggestion that there are certain appropriate ways in which one should be allowed to avoid paying taxes in the context of the bill.

Bill S-17 on its own is a reasonable initiative on the part of the government. If one looks at it in isolation just for its own merits and in terms of the specific provisions in the bill, it is clearly an improvement in terms of the overall situation we are grappling with today. It is a bill that seeks to implement new tax conventions and treaties between Canada and the countries of Gabon, Ireland, Armenia, Oman and Azerbaijan.

It is an important initiative because the bill attempts to ensure that there is a way to avoid double taxation and the prevention of fiscal evasion. We know from previous speeches on this matter, and I refer specifically to the interventions by Senator Mac Harb, who at the time was spokesperson in the House on this bill, that Canada has been trying to increase the number of tax treaties in place and through this bill would increase those treaties to 87.

The senator went on to suggest that Canada had signed treaties or amended protocols with an additional 14 countries since 1976. However what was done in this instance and what is still a problem today is that the government has refused to address where such tax havens continue to exist and has failed to account for its tardiness in ensuring treaties are signed and precautions are taken with respect to tax havens between Canada and a number of other countries.

Before I address the concerns of many groups with respect to tax havens and tax evasion, it is always important to talk about tax policy in general and public policies that address the matter of productivity. In that context it is fair to point out that for all the rhetoric and all the protestations by Liberal members in the House on both these issues, we have yet to see a comprehensive, meaningful and progressive set of ideas or policies with respect to taxation in general and on our collective agenda to ensure a more progressive tax system so that those with the ability to pay are taxed accordingly and those at the lower end of the income scale are able to benefit from the riches accrued as a result of development and investments in this country.

We have heard a great deal from the government in the past about how it has put in place such a progressive taxation policy and how it has ensured that our taxation initiatives today help ensure that low income people are given some tax relief. However, as we look at this whole issue in the context of Bill S-17, the government has missed the boat and has neglected its responsibility in terms of ensuring a fair taxation system where those with the greatest burden and the greatest need are able to reap the greatest benefits from our policies.

Instead of ensuring such an approach, we have seen over the last number of years a government that continues to provide tax relief for those who have the most ability to handle that tax load. The government has provided tax relief for the biggest corporations and the wealthiest individuals in our society and done little to deal with the burden facing low and middle income earners.

Over the past number of years the government has used a considerable portion of the available surplus to provide tax relief for wealthy individuals and large corporations. We continue to be astounded at the fact that the government had the audacity to bring in a $200 billion tax initiative spread out over five years to benefit the wealthiest in our society while those at the bottom continue to struggle.

The other issue that has to be addressed is productivity and the role of corporations in that regard. The finance committee has just been through numerous debates leading up to the finalization of our report on pre-budget consultations. I was surprised at how often Liberals spoke about the need to provide more tax breaks for large corporations through the taxation system and their suggestion that in order to be competitive with the United States we had to continue to reduce the taxes on corporations.

That approach has been tried but we have not seen much benefit over the last number of years. The government continually focuses on corporate tax relief in the hope that it will increase productivity and boost our economy but we have not seen that. We have not seen the kinds of benefits that the Liberals espouse as they pursue this narrow program of tax benefits for the wealthy and money being set aside for lowering the debt without considering the impact on low and middle income Canadians.

Unfortunately, after trying this for a good number of years and seeing no results we still have a government that is wedded to an idea that has no basis in fact and for which there is no scientific evidence to suggest that approach should be continued.

In the context of Bill S-17, it is time we started talking about the responsibility of corporations to the country and what their obligations are to increase productivity. We cannot keep blaming workers and the tax structure. We need to ask corporations to what extent they are investing in Canada and to what extent they are taking the profits earned and produced as a result of the work of Canadians and putting those profits back into the economy to ensure Canadians have new economic opportunities and educational training opportunities that allow people to contribute to the best of their abilities and to use their talents in this country.

I find it rather strange that we are again dealing with a bill that deals with part of the problem but in the course of the debate we find that Liberals are less than enamoured with the idea of finding ways to ensure that corporations pay their fair share. We expect ordinary Canadians to pay their fair share and not to evade taxes so why would we not expect corporations to do their part in investing in Canadian industries, in Canadian economic opportunities and in community economic development and all that that implies?

I, frankly, get a little tired of hearing time and again from Conservatives and Liberals in the House that we have to lower our tax burden on corporations so we can compete with Americans and therefore create this happy scenario where everything will be fine. What they forget is that the United States is trillions of dollars in debt today, which is not necessarily an example for Canada. A country that does not provide any semblance of support for its citizens in the way of access to health care, education and social services, is surely not able to claim it is competing on a level playing field with Canada.

Canada should not be considering that in order to be competitive all it has to do is lower the corporate tax rate without taking into account the great contribution that all taxpayers in this country make through the taxation system to ensure we have a national health care system and some semblance of a post-secondary education system, even though it is falling into greater and greater disrepute as a result of government cutbacks and neglect. Canada is a country that at least recognizes as part of its identity the values of cooperation and community, of compassion and caring, of sharing the wealth, of ensuring that everyone has an opportunity. We distinguish ourselves from the American model of laissez-faire market approaches, a dog eat dog, survival of the fittest philosophy of life and any notion of civil society.

In that context we have to look at Bill S-17. It is always amazing just how little the government brings forward in terms of cracking down on tax havens and programs that allow for tax evasion. I do not think it is good enough for the parliamentary secretary to suggest that it is quite normal and that everybody looks for ways to avoid paying taxes. He says we all do it and therefore there is nothing wrong with having policies in place that do not enforce treaties between Canada and countries like the Barbados and the Cayman Islands.

Most Canadians would be appalled at that kind of thinking and rationalization of a very untenable and despicable process. Canadians are expected to pay their taxes. When they avoid or evade their taxes, they are hounded and pestered until they pay. They are penalized accordingly. Were it only possible for the government to apply the same principle to large banks and corporations.

It is important for us to recognize in the context of this debate that it is organizations like Oxfam that have called on the world's richest countries to make a genuine commitment to global poverty reduction. It is important to reference the millennium development goals under which we are doing an abysmal job. The report calls for powerful nations to invest in a strong and effective public sector in the developing world and suppress weak regulations and tax havens.

I repeat that the report addressing the millennium development goals calls for governments to address weak regulations and tax havens. It is noted that this is an essential element of the fight against corruption in developing countries. There is an inherent obligation on our part to do what we can here in Parliament to address the continued presence of tax havens and provisions that allow for tax evasion in terms of relations between Canada and other countries.

This whole issue was really brought home this week by an editorial in the Montreal Gazette on Sunday. It reiterated some of the concerns that members of the Bloc and the New Democratic Party had raised in the House. It had a way of raising the profile of this very serious issue. I want to quote very briefly from the editorial, which begins by saying:

Even as Canada's five largest banks announced record profits last month, they withheld from the Canadian treasury billions of dollars in taxes. Many big corporations in other industries were able to do the same. The corporations do this through the perfectly legal manoeuvre of funneling some profits through off-shore branches, conveniently located in tax havens such as Barbados, the Cayman Islands, the Bahamas and the Channel Islands.

The article goes on to suggest:

Canada's big banks have a total of 73 branches in such places, jurisdictions where the tax rates are much lower than in Canada. Under tax treaties, profits declared there are taxed there, and what's left can be repatriated to Canada with no tax liability here.

We have a very major issue to address in the context of Bill S-17. We have to get an understanding from the government as to how it intends to clear up this reprehensible state of affairs that continues to exist today. If we are talking about trying to find ways to build this country, to create jobs and opportunities, then surely we have to start by looking to ensure that profits generated in this country are invested back in this country and are not allowed to be shipped offshore for tax relief.

I fail to see any rationale in the argument presented by the Parliamentary Secretary to the Minister of Finance on that matter. When a profitable corporation takes money that is earned here on the backs of workers, as a result of efforts and creative energies by Canadians, and invests it offshore because of the tax benefit, I do not see how we benefit at all in this country.

We had the issue recently of operation loophole. A large family, identified in the press as the Bronfman family, invested $2 billion offshore. A small group based in Winnipeg, Manitoba called Choices, a social justice coalition, took it upon itself under the name of an individual, George Harris, to take on the Government of Canada over this absolutely reprehensible policy that allowed a wealthy family in this country to move $2 billion offshore and not pay a penny in taxes. It went all the way to the Supreme Court. Although George Harris did not win his case, it was clearly indicated that there had to be changes in policy and that the government had a responsibility to clarify this issue.

Have we had any clarity? Has there been a clarification? Has there been a change in policy to prevent the movement offshore of money, profits earned in this country as a result of workers' input, for tax evasion purposes and tax avoidance purposes? Have we learned anything from the furor and the uproar around the Prime Minister's own company, Canada Steamship Lines? Have we learned anything about the possibilities for conflict of interest when that kind of situation has arisen? Have we learned anything about what messages we send to Canadians when we have such a double standard?

The lesson for us today in the context of Bill S-17 is to find ways to crack down on such tax evasion and tax avoidance.

Bank profits continue to skyrocket. We have seen that in the news. Net profits for the six major Canadian banks reached $13.3 billion this year. According to La Presse , that is up 20.5% since 2003. Yet despite these massive profits, billions of dollars are withheld from the Canadian treasury each year. This is accomplished by the funneling of money through branches in tax havens such as Barbados and the Cayman Islands.

On top of the big banks' earning huge profits and moving money offshore, they are taking away services from Canadians. The double whammy occurs. Canadians are denied the benefit of profits reinvested in this country and at the same time the big banks have the audacity to destroy communities by eliminating all bank branches, by denying ordinary people, working families, access to financial services in their own communities.

We have a lot of work to do with respect to big banks and big corporations. Let us look at the facts. Last year the six big banks paid about $9.5 billion in Canadian taxes. This sum accounts for 89% of total taxes paid by the banks. The rest was paid in other regions, most notably in tax havens.

I will conclude by referencing the work that was mentioned in the Montreal Gazette and raised by my colleagues in the Bloc, about a month ago vis-à-vis a study released by Université du Québec Professor Léo-Paul Lauzon. He castigated the big banks for the exploitation of tax havens. According to Lauzon, as reported in an article, the tax bill for the Canadian Imperial Bank of Commerce would have been roughly $844 million but it dropped to $239 million, largely due to the bank's use of tax haven branches.

There is evidence around us. There is scientific fact. There is empirical evidence pointing to the problems with respect to tax havens and tax avoidance.

This is the time for Canadians to deal with it. This is the time for Parliament to address it. It is not sufficient to rest with Bill S-17, but to deal with the whole gamut of opportunities that corporations and banks use to take advantage of tax havens and tax avoidance.

[The Acting Speaker (Mr. Marcel Proulx)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mr. Proulx)]

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

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. Proulx)]

I declare the motion carried.

Consequently, the bill is referred to the Standing Committee on Finance.

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

Food and Drugs Act

[Joe Volpe, Liberal, for the Minister of Health]

moved that Bill C-28, an act to amend the Food and Drugs Act, be read the second time and referred to a committee.

[Robert Thibault, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I am pleased to speak in support of Bill C-28 which proposes two amendments to the Food and Drugs Act. These proposed amendments would provide the Minister of Health with the authority to allow Canadians faster access to a wider variety of safe and nutritional food products. Before I speak about the bill, I will provide some context to the reason the bill is being proposed.

The first proposed amendment responds to the concerns of the Standing Joint Committee on the Scrutiny of Regulations on the legal status of regulations that currently permit the issuance of notices of interim marketing authorizations under the food and drugs regulations.

These notices allow the earlier availability of safe foods in the Canadian marketplace while the formal process is undertaken to amend the regulations. That is quite important to a lot of producers, to a lot of consumers and to industry so that we can get these products on the shelves as quickly as possible without undue duress but in a safe manner. I will get to that later.

The amendments introducing this concept into the food and drugs regulations came into effect in July 1997 after thorough consultation and analysis in accordance with the regulations of the federal regulatory process. Members will notice from the dates that we are talking about something we have been exercising since 1997. It does not change the effect of the way we manage these things. It just brings it into the proper regulations according to the Standing Joint Committee on the Scrutiny of Regulations.

These provisions allow the director, defined as the assistant deputy minister of the health products and food branch of Health Canada, to issue a notice of interim marketing authorization to exempt certain foods from the application, in whole or in part, of the regulations after a thorough safety assessment has concluded that no harm will be caused to consumers or users. By doing so, the director can allow the sale of these foods by all manufacturers and producers while the regulations are amended. We do not have to go through this step for every manufacturer and every producer. Once this has been done, these products can go into the marketplace.

In fact, this is the final stage of the federal regulatory process and of the review conducted by the Standing Joint Committee on the Scrutiny of Regulations made by the governor in council, under the Statutory Instruments Act.

The standing committee examined the provisions on the notices of interim marketing authorizations and expressed concern that the power to exempt some foods from the requirements of the Food and Drug Regulations would give to the director administrative discretion that exceeds the legislative authority granted by Parliament to the governor in council.

Essentially, the standing committee maintains that the regulations authorizing the issuance of notices of interim marketing authorizations go beyond the scope of the Food and Drugs Act.

Since the coming into effect of these regulations, Health Canada has issued 82 such notices without any concerns being raised by consumers or the industry. Consumers have had quicker access to new and safe food products. For example, foods to which vitamins or mineral nutrients were added to increase their nutritional value were offered more quickly on the market.

It is important to understand that the committee's concerns are not related to food safety. Rather, they are technical having to do with the powers of health bureaucrats or personnel, under the act and regulations. This is what we want to correct. They are not making any comments, since this is not their role.

As to whether the system works, we have already issued 82 notices of authorizations without encountering any problems. We have been doing this for a while, following a public discussion process.

Moreover, the notices of interim marketing authorizations allowed for the quicker sale of foods from cultures that were treated with agricultural chemicals, including safe and effective pest control products.

In order to maintain the current mechanism that offers benefits to consumers and industry by allowing the consumer timely access to safe food products, the government has brought forward Bill C-28.

The first proposed amendment would provide the Minister of Health with the authority to exempt the food from the application, in whole or in part, of the Food and Drugs Act and the applicable requirements of the food and drug regulations.

The minister would do this by issuing an interim marketing authorization, which would allow the immediate sale of some food products for which scientific assessment has already established that these products would not pose a hazard to the health of Canadian consumers or users.

The sale of these food products would be allowed while the full regulatory process was undertaken to amend the regulations. It has to be clearly understood that all the questions of safety have already been taken care of and all the testing has been done; then we go through longer term regulatory process and the mechanics, which could take some time.

Just to stress this latter point, I repeat that the issuance of an interim marketing authorization would not affect or circumvent the conduct of a thorough safety assessment prior to the availability of these food products on the market.

These authorizations could only be issued when the scientific evaluation concludes that no harm to consumers would result from the consumption of the food, and Health Canada has made the decision to propose a regulatory amendment for a number of reasons: first, the extension of use of a food additive already permitted to be added in other foods into a new food or the change of a permitted level of use of a particular additive; second, maximum residue limits of an agricultural chemical or veterinary drug in a food where the food and drug regulations already permit these substances in other foods, or the increase in the permitted maximum residue limits; or again, the addition of vitamins, mineral nutrients and/or amino acids at different levels than those listed in the regulations, or to new foods.

This limited scope of application of the interim marketing authorization mechanism in the bill is exactly the same as in the current regulatory mechanism that was reviewed by the standing committee. The only difference is that it clearly specifies the authority in the Food and Drugs Act instead of the regulations.

Again, it is nothing new. It is giving stability to the industry and making sure that Standing Joint Committee for the Scrutiny of Regulations is comfortable and confident that what we are doing is within the regulatory powers of the department.

The second part of Bill C-28 deals with pest control products and their regulation pursuant to the provisions of the new Pest Control Products Act and the Food and Drug Regulations.

The new Pest Control Products Act, which was given royal assent in December of 2002, empowers the minister to specify maximum residue limits for the product or for its components or derivatives in food.

When specifying maximum residue limits, the minister shall evaluate the health risks of the product or its components or derivatives and determine if they are acceptable. To that end, he must determine that there is reasonable certainty that no harm to human health will result from use of a food item containing a residue level of a specific pest control product no greater that the maximum limit.

However, under the adulterated food provisions of the Food and Drugs Act and its regulations, a food is adulterated if it contains a residue level of a pest control product greater than the levels stipulated in the regulations.

Therefore, any food with a residue level of a pest control product not greater that the maximum limit set by the minister, under the Pest Control Product Act, cannot be sold until the maximum residue limit is officially set in the Food and Drugs Regulations. The regulatory change process can easily take up to two years.

The proposed amendment to the Food and Drugs Act to recognize maximum residue limits specified under the new Pest Control Products Act, for Food and Drugs Act purposes, would result in administrative efficiencies and would also benefit the agricultural industry by allowing faster access to improved pest control products for use on food crops.

The proposed amendments to the Food and Drug Act support the Speech from the Throne objective of providing a “predictable regulatory system that accomplishes public objectives efficiently while eliminating unintended impacts”.

They are also in line with the ongoing intent of the Government of Canada's smart regulation initiative and the recommendations from the external advisory committee on smart regulation. These aim in part to provide access to safe products in a more timely fashion and remove possible restrictions on international trade.

Finally, the proposed amendments will support ongoing work under the North American Free Trade Agreement technical working group on pesticides, through which Health Canada and the United States Environmental Protection Agency have accelerated bilateral harmonization in the registration of pest control products in order to provide faster and simultaneous access to a wide range of newer, safer pest management tools in both countries.

[Réal Ménard, Bloc, Hochelaga, QC]

Mr. Speaker, my comments will be brief, which is unusual for me, although I do not exclude the possibility of expanding somewhat, if I feel any enthusiasm in this House.

Bill C-28 is a rather technical bill, as the hon. parliamentary secretary very eloquently reminded us. The purpose of Bill C-28 is to provide the Minister of Health with the authority to issue interim marketing authorizations. This is a bill reflecting the full extent of the will shown by the government to review the regulations.

As I said, the purpose is to enable the Minister of Health to issue interim marketing authorizations for foods that contain certain substances at specified levels, which are not hazardous to health, and therefore exempt from certain regulatory requirements for foods that have not yet been commercially approved.

We are not opposed to the principle of this bill. But I will be curious to see how it will be received in committee. In fact, I have just come from the Standing Committee on Health, where we approved a somewhat more controversial bill, on which I was pleased to work in a great spirit of consensus, a bill dealing with the whole issue of fire-safe cigarettes put forward by the hon. Parliamentary Secretary to the Minister of Health.

This study was undertaken in the previous Parliament. It is something to realize that, in committee, we have approved regulations drawing from the work of that precedent setting city of New York. In my opinion, it has to be one of the most beautiful cities in the world. l do not know how many hon. members have visited New York City during the Christmas period. Might I add that the people of New York elected their first female senator to the U.S. Congress? That is not the only thing that makes New York City an interesting place.

So, in principle, we support Bill C-28, which seeks to amend the Food and Drug Act. We will see just how far the minister wants to go in issuing interim authorizations. We understand that a number of criteria will have to be met. At first reading, however, we were not convinced that the minister was the best person to issue these interim authorizations. We will see what the Department of Health and the experts have to say in committee. This is a fairly technical bill, but we will do our work in committee as usual.

Personally, if I may say so on our last sitting day, I would have liked there to have been more work this session on the important issue of drug costs. This is an important debate that can create a welcome division of opinions. It is not always about agreeing on everything, since the right to dissent exists.

If I were asked to identify a few measures that this House could agreeably consider, I would spontaneously suggest four. First, it is not really acceptable, as the hon. member for Saint-Lambert knows, for the retail prices of generic drugs to be 30% higher in Canada than in the United States.

The United States is not, we agree, a society that opposes free enterprise. When I think that President Bush, a Republican, who is not a model for anyone in this House, is one of the most right-wing men I have never met, since I was denied access the day he came to the Hill. But it was not the right time to talk.

In my opinion, we must remember that the United States of America limited the scope of the Notice of Compliance, which was adopted in 1984 by the Conservatives, who wanted to establish various provisions to prevent counterfeiting. This was received favourably by some.

I remember, for example, that a man named Bernard Landry tabled a brief before the MacDonald Commission saying that it was important to have a national bio-pharmaceutical R and D industry.

We understood that the conditions were not in place for this industry to emerge when, from 1923 to 1988, anyone wanting to copy a drug—the parliamentary secretary knows this because he is very much on top of this question—could just pay a fee to the innovator. So a generic manufacturer wanting to copy a pharmaceutical product of an innovative manufacturer needed only to pay a royalty to the originator in order to do so.

At that point, there was not a lot of either legislative or regulatory control, but I can assure you that when the regulation was adopted, inspired by the U.S. legislation, the desire was to ensure that counterfeiting of drugs would be impossible.

There was some very real pressure brought to bear, both on the Government of Canada and on the governments of certain provinces, to adopt regulations similar to those in effect in the U.S. The objective of the link regulations was to avoid counterfeiting. While I do not want to stir up any unpleasant memories for anyone here, I would point out that the Conservatives under Brian Mulroney passed a link regulation in 1989.

What was this link regulation that was adopted under the patent legislation? The regulation provided that Health Canada could be blocked in the process of issuing a compliance notice if the same company filed a notification citing reasons to believe that a patent was about to be infringed.

Just to amuse my colleagues, I will take Viagra as my example. Viagra could have eight patents out on it, one for colour, another for the key ingredient, one for the secondary ingredient. So let us assume there is a total of eight patents. The generic company therefore has to go down the whole list of patents and prove that it is not going to infringe upon any of the patents for which a compliance notice has been issued

At the slightest hint of counterfeiting, the company that holds the first patent, generally an innovative company, can gain an injunction for 24 months. We know that, from the legal point of view, an injunction is a pretty potent thing—no bad pun intended there—a pretty serious thing, because the process will be held up for 24 months.

Hon. members need to know that this injunction is issued prima facie, and is a very drastic measure. The slightest allegation can block the process for 24 months.

If it were up to me to propose four measures, let us say, I think that this House should look at a better balance on the Patented Medicines (Notice of Compliance) Regulations. The Patented Medicine Prices Review Board has the same powers as a superior court. It limits the prices set by manufacturers for all patented medicines to ensure they are not excessive. In Canada there is control over medicines, but not a limit on the retail price. That is not what we are talking about. This is control linked to the cost of medicines from the moment the manufacturer puts them on the market until the time the Patented Medicine Prices Review Board has a look at them.

Thus, the Patented Medicine Prices Review Board Act could be amended to ensure that the generic manufacturers are also subject to it.

Third, in addition to asking questions about the Patented Medicines (Notice of Compliance) Regulations, and hoping for changes in the Patented Medicine Prices Review Board, I think we all know that Canada is participating in an international conference on data harmonization.

Of course, we can easily imagine how thrilling a quest for learning this must be. Canada is therefore an observer at an international conference where Japan and the European Union are represented. Should we not be looking at mechanisms for making drug approvals easier?

Should we not be asking questions, as parliamentarians, about the way we want the companies to present their clinical data? Let us not forget that there are usually three phases in getting a notice of compliance. In each phase, clinical data must be presented. Naturally, this can cost thousands of dollars.

In short, with respect to the cost of medicines, we must look at the issue of the PM(NOC) Regulations, the role of the Patented Medicine Prices Review Board, and the way this can be done as quickly as possible. It is in the public interest, so that Canadians and Quebeckers can have access to medicines and know they are safe. It is a matter of health and public safety to make certain that the medicines for which a notice of compliance is issued will not be subject to a recall.

Unfortunately, over the past few weeks there have been three examples of drug recalls. That is not good. There needs to be a good balance between quick and careful registration and there also needs to be mechanisms that give reasonable and solid guarantees on the safety of the drugs.

I know that in the previous budget the government had announced an extra few million dollars to help Health Canada perfect its analysis techniques. When a clinical monograph is submitted it can represent a stack of books from this wall to that wall. I am talking about thousands of pages of information that has to be looked at by examiners, who are often doctors, people who have a doctorate who must fully understand—research drugs are first tested on animals and then humans—the entire framework of the clinical trials.

If the parliamentary secretary does not mind, I will digress a little and talk about something that is at the heart of Bill C-28. The issue of clinical trials in Canada is a bit slack. We looked at this in the parliamentary committee. There are no real regulatory agencies that monitor clinical trials. Health Canada does this a little, somewhat horizontally. This issue of clinical trials is an extremely important one. It poses ethical questions as well as medical questions.

In the parliamentary committee, we presented 15 or so recommendations to the Minister of Health so that Canada could become competitive in terms of the conduct of clinical trials and also so that these trials could be publicly funded. It is unsettling to see that most clinical trials in Canada are conducted at the instigation of the private sector. Very little publicly funded research has been done on clinical trials. One has to wonder: is it good, in a society like Canada's, for the pharmaceutical industry to dictate, in a way, the clinical information program? I am not so sure. I think a solid research infrastructure needs to be implemented.

I want to digress again. We have, of course, the health research institutes. We do have to recognize that their budgets are now over half a billion dollars.

I have very fond memories of the time I spent as R and D critic for my party. The following will recall those fond memories for the House.

The former premier of Quebec, Mr. Bouchard, is a brilliant lawyer and a first-rate litigator. He was a remarkable premier, a strong statesman, who served Quebec very well. I am being, of course, very objective here. Let me remind my hon. colleagues of the brilliant campaign we led in 1993 under Mr. Bouchard, who was the leader of the Bloc Québécois at the time, which turned us into the official opposition.

In a huge fit of generosity, rarely seen in public life, Mr. Bouchard entrusted me with the R and D portfolio. That kind of surprised me. As people close to me know, I am a noble-hearted man, who has a very tough time operating a VCR. So, I was not too familiar with research and development. But I certainly tacked it. I met with people and read a lot of reports.

At the time, there was no department dedicated to research and development. I was very surprised then to read a report from the OECD, which, in a way, is the rich countries club. During the 1990s, the OECD was saying that Canada was next to last in research and development. This is serious. A continental country such as Canada, which had a relatively high GNP, was focussing less on research and development than other nations that had much fewer resources.

At the time, the industry was bitterly complaining about this situation. Some leadership should be assumed through public funds for research and development. We should not think that this is merely the responsibility of the private sector.

I will conclude this digression by saying that we have witnessed the creation of 13 Canadian institutes of health research, which basically replaced the medical research council of Canada.

The council was well known to Quebec researchers. During at least one generation, particularly when Mr. Bureau provided leadership with the health research funds for our province, on average, Quebec researchers were presenting 33% of the applications for funds to the medical research council of Canada. Even though we accounted for only 24% of the country's population, our ratio of researchers was much higher. Consequently, we were hoping to get corresponding funds.

When we examined the research by the Canadian institutes of health, we found out that they were virtual. Consequently, we were funding researchers and infrastructures, but these were not physical locations. We wanted networking for each of the research centres that existed at the time. We had an institute of health research for neurology, another one for cancer, and yet another one for mental health.

Concerning mental health, I want to digress for a moment. In the next years, one Canadian in five will have various degrees of mental health problems. Our relationship with mental health will thus face a major challenge in the next years. In a society where there is a lot of stress, health determinants vary.

It is interesting to ask ourselves why a person may go through life with a healthy attitude, a good mental balance, even a certain joy of living. We realize more and more that it is not medication that contributes to this. Tobacco use, among other things, has some effect on this.

In conclusion, we will study Bill C-28 in committee. It is a technical bill, but we realize that it has a lot of substance. We will be happy to hear representations from officials. We have some concerns over the role that the minister might want to take upon himself in respect of voluntary notices of compliance. We will be vigilant, but we view favourably a bill that I have examined thoroughly.

[Robert Thibault, Liberal, Parliamentary Secretary to the Minister of Health]

Mr. Speaker, I do not know exactly where to start in putting my question. The hon. member and Bloc Québécois critic for health started off by saying that he would be brief. By that he meant that he would touch only briefly on the matter at hand and spend all his speaking time on several issues, each more interesting and more important than the other.

He raised all at once clinical trials, horizontal application and Viagra. Bearing in mind the time of day when our proceedings are broadcast on television across the country, perhaps we should be careful with that.

Regarding Bill C-28, I am pleased to see that we can count on cooperation and discussion at committee. The hon. member and all the other hon. members will recognize that the intent is to institutionalize what is already in place, what we have already been doing for the past five or six years, and that we are responding to the request by the Standing Joint Committee for the Scrutiny of Regulations. We must therefore make sure that the regulations we apply will not be successfully challenged in court.

I would like to come back briefly to tobacco use. I want to congratulate the Parliamentary Secretary to the Minister of Finance, who raised the issue. We considered it today at committee and heard testimonies. All members of the committee unanimously approved a report.

It is indeed important to have this discussion today because, this evening, the hon. member for Cape Breton—Canso will be introducing a bill concerning a deduction for volunteer emergency service workers and the contribution they make to Canada when it comes to curbing among Canadians the risk of fire associated with tobacco use. That is very important.

I would also like to congratulate the hon. member, as well as the hon. members of all stripes who sit on the committee. We have done good work on the quarantine issue. We have moved the issue forward and demonstrated that a minority government can work, take action and count on the cooperation of everyone. These were my comments.

I would like to thank the hon. member for his cooperation with respect to Bill C-28.

[Réal Ménard, Bloc, Hochelaga, QC]

Mr. Speaker, you will have noticed, as I did, that the Parliamentary Secretary to the Minister of Health started with Viagra and finished with thanks. However, I would also be remiss if I did not mention the very good work that he has done in committee.

As a matter of fact, this is developing our taste for a minority government. Indeed, if all committees and parliaments had worked the way we are working now and had considered everyone's opinion, it would have been interesting.

Indeed, what is interesting about the situation of a minority government is that the government has to work more cooperatively with all political parties. What is interesting in the Standing Committee on Health is that all opposition parties, like the government, have had their amendments agreed on and, of course, these were highly relevant amendments.

Concerning smoking, of course I share the minister's elegantly euphoric enthusiasm about the adoption of regulations on fire-safe cigarettes.

I hope that we will be able to rely on the minister and on another matter which, although not directly related to health, is not totally unrelated, that is the brilliant suggestion by the member for Charlesbourg—Hate-Saint-Charles to change the gay marriage legislation to also allow for divorce. I believe there is a link here with health. The health determinant must encourage us to make links. All this is encouraging us to prepare for the agenda of 2005, which will be a fertile year.

Once again, the key word in this parliament must be government: cooperation with the opposition. In a minority government, the government gains in stature from its cooperation with the opposition. We are in a period of our collective history where the main characteristic of the opposition is its eminently reasonable, serious, forward-looking, perceptive, dogged nature and, of course, its relevant judgment and amendments.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, from what I understand, the hon. member for Hochelaga is saying that the ideal thing would be to have a Liberal majority government that acts like a minority government.

[Réal Ménard, Bloc, Hochelaga, QC]

Mr. Speaker, of course I understand how the parliamentary secretary feels about his political party. We cannot hold that against him. However, the ideal solution, the one that would better serve the interests of Quebeckers and Canadians alike, would be based on cooperation where, in committee, the amendments brought forward by the opposition would be agreed upon in order to enhance bills that would hopefully serve the public interest.

[Gurmant Grewal, Conservative, Newton—North Delta, BC]

Mr. Speaker, I am pleased to rise today on behalf of the constituents of Newton—North Delta and the official opposition of Canada to participate in the debate on Bill C-28, an act to amend the Food and Drugs Act.

This enactment would amend the Food and Drugs Act to provide the Minister of Health with the authority to issue interim marketing authorization for foods that contain substances at specified levels, and to exempt those foods from the applicable requirement of the act and its regulation relating to their sale.

The proposed amendments are in response to concerns raised by the Standing Joint Committee for the Scrutiny of Regulations regarding an administrative process put in place by Health Canada under the regulations of the Food and Drugs Act to allow Canadians faster access to food products under specific circumstances. All members of the House want our food supply to be safe, efficient and effective.

The bill proposes to amend the Food and Drugs Act to achieve two purposes. First, to provide the Minister of Health with the authority to issue an interim marketing authorization for the early sale of safe food and safe food products that contain certain substances; and second, exempt any food that contains an agricultural chemical, at or below the maximum residue limit specified by the minister under the new Pest Control Products Act, from the prohibition in the Food and Drugs Act of the sale of foods containing these residues because the sale of these foods would not pose harm to consumers. We are talking about safety.

The bill would give the minister authority to issue interim marketing authorization for food products wishing to enter the market earlier or that have previously entered the market and have added or modified contents since initially approved by Health Canada.

Currently, the deputy minister of health responsible for health products has the authority to issue interim marketing authorization, IMA. The minister is arguing that the authority to issue the IMA is a power of Parliament granted by the Crown and therefore the responsibility for the IMA should rest with the minister.

The bill would also allow for food products which contain pesticides, veterinary pharmaceuticals or added vitamins, minerals or amino acids at or below the maximum residue limit to be exempt from the FDA regulations while in the approval process.

Briefing material provided by Health Canada argues that Canadian companies are currently at a great disadvantage because of the lengthy approval time for new or modified food products. Canadian companies are not on a level playing field with their trading partners, particularly in the American market. This is because the U.S. government allows food products in the approval stage to be marketed, given that they are not harmful and not restricted by any other law or legislation.

The amendment that we are debating would put Canada on a par with the United States and give our food producers a level playing field when it comes to new products entering the market.

We would not be here today were it not for the Standing Joint Committee for the Scrutiny of Regulations. Bill C-28 is a direct consequence of concerns first raised by that committee in April 1999. At that time, over five years ago, the committee identified the regulations of the Food and Drugs Act permitting interim marketing authorization as illegal. In other words, it was not supported by legislation.

Much of the law that affects Canadians is not found in the statutes of Canada, but in the thousands of regulations made pursuant to powers granted by acts of Parliament. Each year the federal government introduces about 1,200 new regulations. Since 1975 the federal government introduced over 28,000 regulations. That is 122,000 pages of regulations. About 20% of the laws in the country stem from legislation debated and passed in this legislature. The remaining 80% of the laws that we see are made up of regulations; just 20% is what we passionately debate in the House.

After a debate, we vote yea or nay, depending on the merit of the proposed law. The media and the general public focus on the 20% component. However, the 80%, which is coming through the back door by way of regulations, is not debated nor are other parliamentary democracy principles applied to those regulations.

Regulations on the other hand, receive virtually no debate in the House or even the other place, no public policy input, no studies or media scrutiny. This is an affront to democracy. Under parliamentary reform, this is the one the main issues at which we must look.

My private member's Bill C-205 passed in the House. I thank all members for their support. What will the bill do? We all know the government rules, but does not govern through the complete parliamentary democracy and practice. Some 80% of the regulations, which comprise the law, are made under the authority of Parliament. Various agencies, bodies or quasi-government organizations are delegated the authority to make regulations. However, when they make regulations, Parliament does not have the authority to scrutinize or review those regulations.

Therefore, a big chunk of our laws have been completely ignored. There is a big black hole in accountability and democracy which has been ignored for so long until Bill C-205 passed. With the passing of the bill, Parliament now has the authority to review regulations of those agencies through the Standing Joint Committee for Scrutiny of Regulations. They will now be scrutinized and if need be, disallowed.

My bill restored some of that democracy. It was a huge step in parliamentary reform. We talk a lot about reform, but little action is taken.

The Standing Joint Committee for Scrutiny of Regulations does the only scrutiny. Very limited scrutiny of regulations is done in Parliament. Our new regulations are permanently referred to the committee pursuant to the provisions of section 26 of the Statutory Instruments Act. Members of Parliament and Senators are on the committee. Legal counsel and staff work diligently, scouring through thousands of papers on dry, technical, legal subject matter as part of their thankless task of reviewing regulations.

This committee is generally misunderstood and ignored. This committee is considered to be not a very high profile committee, despite the hard work it does. In fact, talking about parliamentary democracy, this committee should be considered a very important one. It is an essential watchdog, protecting democracy, controlling bureaucracy and holding the government to account.

The standing joint committee does not judge regulations on the basis of policy measures, general merit, or necessity. Its study of regulations is instead limited to the questions of validity and legality. Members follow uniform and clearly defined criteria in their examinations. Compared to most committees, this committee is non-partisan and we build consensus in the committee.

The committee judges whether or not an statutory instrument: is not authorized by the enbabling legislation or is not in compliance with the conditions set forth in the legislation; does not conform with the Canadian Charter of Rights and Freedoms or the Canadian Bill of Rights; purports to have retroactive effect without express authority being provided by the enabling legislation; imposes a charge on public revenues, imposes a fine or imprisonment without express authority; excludes the jurisdiction of courts; has not complied with the Statutory Instruments Act with respect to transmission, registration or publication; appears to infringe on the rule of law, trespasses unduly on rights and liberties, make rights and liberties unduly dependent on legislative discretion, makes some unusual or unexpected use of powers conferred by the enabling legislation; amounts to the exercise of power that should properly be the subject of parliamentary enactment; and is defective in its drafting, including the translation.

These criteria deal with matters of legality and procedural aspects of regulation, not the merits of the regulations or policy.

The committee works meticulously, and with the complex nature of its undertaking, work proceeds at a slow pace. The long delays in dealing with particular items are largely related to the large number of regulations which the committee has to review relative to the number of meetings it can hold each year. All this considered, the committee, with the able assistance of its long-time legal counsel, Mr. Francois Bernier, is remarkably productive. Consider that over the period from November 7, 1997 to December 6, 2001, the committee dealt with 1,133 pieces of subordinate legislation in the course of 45 meetings.

I am a seven term co-chair of the Standing Joint Committee on Scrutiny of Regulations, representing all members of the House and I speak from personal experience. The work of the committee members can be extremely frustrating. We in effect hold ministers accountable for the legality of subordinate legislation, primarily regulations, sponsored by their departments.

However, this task is at times almost impossible. When the scrutiny of regulations committee finds a regulation that it deems in conflict with the legislation, our first step is to inform the respective department in writing. It should be a simple process. We identify a problem regulation, inform the department and then it fixes it. Instead, what we usually encounter is foot-dragging that can carry on for years or even decades.

The Food and Drugs Act regulations are an example of this foot-dragging. For five years, the department argued that there was nothing wrong with the regulations concerning the notice for interim marketing authorization. We are debating this today. Finally, after so many years, the department abruptly informed the committee last April that it was proceeding with the legislation before the House today. For over five years, the department has been using illegal regulations. Those are the regulations we are trying to correct today.

In a democracy that prides itself in the rule of law, this is unpardonable, but it is not the least bit unusual. Recently, my committee finally closed another file that had been opened for 27 years, more than a quarter of a century.

The committee's usual practice is to deal with a problem regulations informally by letter to the relevant officials. This allows the minister involved to amend the regulation with minimum fuss. The committee can also prepare and issue a disallowance report, but this is usually done only after the department has failed to address our previously identified concerns. Disallowance reports are very rare.

Let us consider the sequence of events surrounding the Food and Drugs Act regulations concerning interim marketing authorizations. I want to give this example so that the members in the House, the public in general, and our media scrutiny can also understand and comprehend the problems facing this committee.

On April 7, 1999 counsel for the scrutiny of regulations committee wrote to the DIO and questioned the legality of provisions of food and drug regulations that provided for notices of interim marketing authorization. The objection was that these provisions provided for unauthorized exemptions and also involved an illegal sub-delegation of powers.

On November 25, 1999, 232 days later, the department responded that it considered the provisions to be a valid exercise of regulation-making powers conferred by the Food and Drugs Act.

On December 23, 1999, the committee counsel reviewed the arguments put forward by the department and sent a letter countering those arguments, asking for reconsideration.

On March 8, 2000, now 355 days, almost a year after the initial correspondence and over three months since the last letter, the department replied indicating that generally it was committed to the policy, but that it might review the regulatory provisions in question with a view to making a “clarifying amendment.”

Exactly seven months later, on September 28, 2000, the committee was forced to again write to the department to inform it that it wished a detailed response to its letter of December 23, 1999.

Nothing more was heard from the department until October 17, 2001, over one year since the last correspondence, when a comprehensive reply to the letter of December 23, 1999 was finally received by the committee.

On December 12, 2002, the file was re-submitted to the joint committee with a 13 page note on the October 17, 2001 response.

On March 3, 2003, myself, as co-chair of the standing joint committee, wrote to the Minister of Health to restate the committee's position and explain why the response from the department was not accepted.

Over a year later, on June 24, 2004, the committee was informed that:

It is the intention of the Department to bring forward legislation in the early Fall 2004 that will amend the Food and Drugs Act to allow the Minister of Health to issue NIMAs and provide for a limited power to exempt food products from the application of the Food and Drug Regulations and paragraph 4(d) of the Act.

Finally, on November 29 Bill C-28 was introduced. There was a little over five years between the time the issue was first raised with the department and the introduction of remedial legislation. As I said earlier, when compared to other files that stretch on for decades, this issue was resolved rather quickly. However, five years is still five years. That is far too long for illegal regulations to remain in place.

Departments and their ministers take far too long to respond to concerns of the committee. There is no good reason for the department to go over a year without responding to a letter from the committee. It is an affront to the rule of law, it is an affront to Parliament and it is an affront to democracy. That is why we need Parliament to be reformed, including scrutiny of regulations issues.

I support Bill C-28. The amendments to the Food and Drugs Act are years overdue. I give full credit to the members, the staff and the counsel of the Standing Joint Committee for the Scrutiny of Regulations for identifying the drawbacks in the system, bringing that to the fore, and following and chasing it through until remedial action is taken by the department to correct this parliamentary affront that has been going on so long.

I will conclude by asking members of Parliament to look into the regulatory process so that the regulatory process in this country is fair, efficient and effective.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I welcome the member's comments on this. It is an issue that has been with us for decades, actually, this issue of legislation in fact being made through regulations rather than through Parliament. It really is the governor in council making laws.

In this case, as the member has laid out, the issue is more about expediting the timeframe between a decision being taken and getting a product approved for use. As I think the member pointed out, there have been over 80 interim authorization orders executed and there has been no adverse feedback from any of the stakeholders.

In that regard, is that the member's understanding? Is this a mechanism or the model whereby regulations are in fact further seconded down to a fast track? Is that not an area which the member would consider to be a further risk element to having legislation being done through regulations or interim authorizations?

[Gurmant Grewal, Conservative, Newton—North Delta, BC]

Mr. Speaker, in the first instance, I think it is a serious concern for all members in the House when some regulations are contradicting the authority given by legislation. Second, safety and security are at risk in many issues when the departments are dragging their heels and not dealing with the issue.

In general, I think we have to work a lot in this place on regulatory reform. There are many regulations that overlap and duplicate. In various departments, some of the regulations completely contradict each other. They need to be taken care of, and as well, I think harmonization of regulations is a serious issue.

The government has been dragging its heels on the harmonization of regulations, even with our largest trading partner, and even in east-west trade that is taking place in our country from province to province. There is a lot of overlap and duplication. Harmonization is needed to correct those mistakes.

I will say that as a first step we could identify the regulations and put them in three categories: good, bad and ugly. We need to keep some good regulations, which ensure safety of food, protection of the environment and provide us with security, but we need to get rid of the ugly regulations, which should not be in place.

I think regulatory reform becomes an integral part of parliamentary reform, about which there has been a lot of talk but little action.

I take some credit for this for having my bill, Bill C-205, pass in the House. That is not a very common occurrence. It is very rare that a private member's bill becomes law. It brought various regulations by various quasi-government agencies and organizations under the umbrella of Parliament. It restored parliamentary democracy and accountability to a great extent. It did plug the regulatory accountability black hole that had existed for so long.

I believe that Parliament should take the direction of bringing about regulatory reform as an integral part of parliamentary reform so that such issues are dealt with more effectively and efficiently.

London Knights

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, it gives me great pleasure to pay tribute in the House today to the London Knights of the Ontario Hockey League. Their 0-0 tie with the Guelph Storm last Friday night set a new Canadian Hockey League record of 30 straight games undefeated. Sunday's overtime win against the Kitchener Rangers extended the unbeaten streak to 31 games.

This surpasses the 1978-79 record of 29 games without a loss, previously held by the Brandon Wheat Kings of the Western Hockey League.

This is a remarkable accomplishment for the Knights. I am proud to have been among the thousands of fans at the game to witness this historic event. I know that some other colleagues from the House were there also.

I wish to extend congratulations to all the team members, as well as the president and head coach, Dale Hunter, and vice-president and general manager, Mark Hunter, for leading such a well-rounded and disciplined hockey team.

I know that all members of the House, especially my London colleagues, will join me in congratulating the London Knights as the CHL record holder for the most consecutive wins. I say keep going, Knights, and well done.