Debates of March 11th, 2004

Income Tax Act

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

Mr. Speaker, I want to first congratulate the member for bringing this issue forward. I have brought my own private members' bills forward in the past and I know how difficult these things sometimes are. I regret to say, however, that I will not be supporting his bill.

The bill proposes to amend the Income Tax Act and provide a tax deduction for automobile expenses for forestry workers. We have already heard from previous speakers that they want to cover out of pocket costs in operating a vehicle, interest charges which might be incurred in the purchase of a vehicle and depreciation costs which are necessarily incurred both in driving to and from work and to other areas as well. There would immediately be some sort of a record keeping problem as to how to allocate depreciation among the various categories of what one would use the vehicle.

I fully appreciate that everybody who works has to get to and from home. There is probably not one member in the House who has held down a job outside this place and has not had to commute one way or another to work. Some of us have had shorter commutes than others. When I was practising law, I recollect that I spent a fair bit of time fighting GTA traffic to get to and from work.

The cost of getting to and from work is one of a range of costs that employees incur. Like virtually all employment related expenses, there is no specific income tax deduction. Instead, there is a general tax recognition which is by way of the basic exemption. The basic exemption is one that applies to all employees, indeed all taxpayers.

Some members of the House may recall that there was a $500 deduction for employment expenses available prior to the 1988 tax reform. The general deduction recognized that all employees incurred some work related expenses, even buying clothes. My wife is in television and clothing is a significant expense for her.

During the tax reform, the employment expense deduction was integrated into the basic personal amount. The basic personal amount has steadily increased since 1988 and now stands at just slightly over $8,000 for the taxation year 2004. This amount is deducted from all income sources in calculating taxable income. It does not much matter whether one earned income from employment or from other forms of generation of wealth. Regardless, one gets that tax deduction and that acts as kind of a leveller, and the government is then treating everyone equally.

The bill proposes tax relief for specific expenses, which is long distance transportation incurred by a specific group of employees, namely, forestry workers. We have to ask ourselves whether it is in fact fair to single out a specific type of expense in a specific occupation group when there are employees in other occupations in similar situations. For example, as other members have mentioned, what about construction workers? What is the argument there? Why would a forestry worker be preferred over a construction worker?

My hon. colleague from Yukon said that at some point or another as one is driving north on the Dawson highway, the trees run out and the only thing a person drives for is to do some mining or some oil and gas work. Why would the mythical forestry worker be able to deduct his or her expenses going to cut trees, but the expenses of the person driving further up the highway to mine something or extract oil and gas would not be deducted? That does not appear to be fair to other taxpayers and other employees. It is not uncommon for these workers to be employed at work sites that are quite a distance from their homes.

Many other types of employees have asked for tax assistance. This is budget season after all. I am personally aware of quite a number of people who feel that they are entitled to tax assistance or tax relief in some form or other.

I must confess that I have difficulty saying that some of these employment expenses are more worthy of tax relief than others. I find it even more difficult to say that one group of workers is more worthy than the next, when both groups incur the same kind of expenses.

While a tax system must treat all people fairly, all hon. members must understand that tax relief for all employment related expenses would come with a very heavy price tag.

To illustrate, we will say that there is a flat $500 tax deduction for all employees. That calculates very quickly into $1.3 billion per annum which would be removed from the federal treasury. Hon. members opposite may think that is a wonderful idea. However, I point out that we are running a very small surplus this year, and I do not know why that category of employees would be entitled to eat into that surplus.

Instead of granting piecemeal and arbitrary tax concessions, the government has chosen to deliver major tax relief to all Canadians. Members will recollect that we are well into our five year tax reduction plan of $100 billion which was announced in the year 2000. We have cut taxes further in the 2003 budget. Therefore, $100 billion for all taxpayers is probably a better way to go. Then the government is not in the position of preferring of one category of taxpayer over another.

The tax deductions themselves were three-quarters personal and one-quarter business related. These tax reductions are providing a significant relief, particularly to low and modest income families with children, which is what the package targeted.

Federal personal income taxes are falling by more than 21% for the average taxpayer. The savings are even greater for families with children, as they come in at a 27% average. For instance, before the five year plan, the basic personal amount stood at $7,131. As a direct result of the $2,000 tax reduction plan, it is now up to just a touch over $8,000, probably with schedules to go higher. The higher basic amount benefits all taxpayers.

In the overall tax reduction package, we restored full indexation so the system itself would not eat into people's income. We lowered personal income tax for all taxpayers. We eliminated the deficit reduction surtax.

The child tax benefit, which has become basically a $10 billion program, is probably the most significant social initiative of this government. It is targeted to low and middle income families.

We provided additional tax assistance for those most in need of it, particularly those with disability. We substantially increased tax support measures to our students in post-secondary education.

I know that my hon. member's colleagues are enthusiastically awaiting what I might say next.

The 2003 budget also established a new child disability benefit for low and modest income families and for a child with a disability. That is something in the order of about $1600. I know my colleagues opposite are very enthusiastic and supportive of that initiative on the part of the government.

The bottom line impact on taxpayers for all these tax cuts is very impressive. For example, compared to what taxes would have been in 2004, a typical two-earner family of four earning $60,000 will save about 35%, and a typical one-earner family earning $40,000 will save about 60%. I know all hon. members will join me in applauding that initiative on the part of the government.

That is the government's way of trying to address, in a fair and balanced way, issues such as the one the hon. member has raised. I congratulate the hon. member on his initiative, but we will not be supporting this bill.

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Speaker, I too would like to congratulate the member who has presented his private member's bill for the House's consideration.

As my colleagues have pointed out, the government's intent with respect to the reform of the tax system is to make the system a progressive system, one that is equitable and treats taxpayers the same regardless of what regions they live in and what employment they are involved in. Generally speaking, there should not be any hyphenated taxpayers in this country. They should all be respected and treated as Canadians fully committed to an equitable tax system.

I remember talking about provisions in the tax regime that would look at mechanics, particularly apprentice mechanics. I remember that for a great deal of time the industry was asking for a particular tax regime that would recognize tools used by mechanics, especially during their apprenticeship, as being tax deductible and viewed as educational components.

At that time other arguments were put forward by tradespeople, arguments that had just as much legitimacy as the arguments relating to apprentice mechanics. The government struggled with that and worked toward finding an equitable treatment before it could go ahead and give a tax dispensation to people in a specific trade. I think the ultimate solution was welcomed by industries right across the country.

The forestry workers are obviously a very large, substantial and respected part of the economic life of Canada. If it were at all possible to provide, within that regime of progressive and equitable treatment, a dispensation or compensation for necessary moves, then obviously the government would like to try to do that.

However, the implications have been pointed out. I think it is important that when exemptions are made they should, generally speaking, fit into a category that is available to all Canadians. If individuals who are involved in the construction trades, those who are heavy equipment workers and operators, those who are involved in the steel industry or the mining industry or whatever it may be, need to go to another region of the country, then the amendments should be equitable and as of right to all Canadians.

In my humble estimation, the way to achieve that would be to have a moving allowance which would be deductible for the purposes of individuals relocating to another region in order to avail themselves of the opportunity to work in that region. That is the kind of mechanism that is available to workers, as I understand it, whether they are in the forestry sector or other sectors, and even students have particular access to the tax regime that allows them to deduct the costs of moving.

That is the way the tax system responds, equitably and right across the board to Canadians as of right. For that reason, while we laud the objectives of our colleague who has moved the private member's bill, we cannot support it because it really does treat Canadians as different classes and makes them either more or less equal before the tax regime. That is not the objective of the tax system.

[The Deputy Speaker]

The hour provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

Message from the Senate

[The Deputy Speaker]

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed certain bills, to which the concurrence of this House is desired.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

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

Mr. Speaker, it is always a pleasure to see you in the Chair.

I am here to respond to a question that was placed before the House and put to the Minister of Public Security and Emergency Preparedness.

When I first put this issue to the minister, I was under the impression that the government wanted to respond in a substantive way to this issue of terrorism. I was referring specifically to a report that came to the attention of Canadians some time ago, a U.S. state department report that was prepared by the Library of Congress, which alleged that in fact there was substantial and significant terrorist activity going on within Canada and that Canada was in essence being named as a safe haven for terrorists and for criminals.

The highlights of that report underlined that Canada was becoming a transit point, a place for raising funds for terrorist organizations, for criminal groups, and that Canada has provided safe routes for trafficking of humans and various illegal commodities into the United States.

The report went on to talk about some of the legislative action that had been taken. However, the report deemed that to have been an insufficient response and said that enforcement and full implementation would be the keys.

I asked a substantive question to the minister at that time, hoping that there would be a plan placed before the Canadian people, hoping that in fact the government would reflect a clear understanding of the serious nature of this problem. In fact, to highlight this further, in February of this year before a Board of Trade dinner in Toronto, United States Ambassador Paul Cellucci told the crowd there were still numerous hurdles to overcome with respect to the Canadian border. The ambassador cited marijuana legislation proposed by the Liberal government as a real problem. He said:

For us, marijuana is not really a policy issue, it's a border issue...the perception is that it will be easier to get marijuana in Canada. It may not be accurate, but that's what it is...it creates problems at the border.

What it tells us and what it tells Canadians, sadly, is that the government does not appear to understand the implications for some of its legislative action, some of its lack of policy in the area of responding to terrorism, both at home and abroad. This is but one of the examples creating this atmosphere of fear and concern.

I would say that these very legitimate concerns held by the Americans have further broad-reaching implications as they relate to trade. My point is that the government does not and has not put forward a blueprint in response to these problems, both at the border with respect to terrorism and with respect to a proposal that I and others in the Conservative Party have brought forward surrounding a North American security perimeter. We know that ports police were disbanded by the government, creating further vulnerabilities at our many ports in Canada.

We need an aggressive plan to address these shortcomings. We need an active border security protection against terrorism. The public safety minister should not disregard out of hand that Library of Congress report which outlines the shortcomings and calls upon the government and our country to act decisively. Unfortunately, this cavalier attitude, these platitudes, the rhetoric that it is all being addressed and is in hand, do little to satisfy our largest and most important trading partner and little to allay the fears of Canadians generally.

Canada's lax laws need to be corrected. Legislation must be put in place. Most importantly, there has to be a plan laid out with resources to back up this plan and to put the process in place right away.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Indian Affairs and Northern Development]

Mr. Speaker, I always enjoy debating with that member for whom I have a great deal of respect. This will be fun.

First, I will reply to the point on marijuana. The United States will be very happy that we are increasing the penalties for the producers and pushers of marijuana. Also during that debate, I mentioned that a number of states had already done what we were proposing to do, and that was having lower penalties for the usage of small amounts of marijuana.

In relation to the border, the government takes the border quite seriously. Subsequent to September 11 that was one of the success stories between Canada and the United States. The good working relationship and the improvements that we had made to the border was loudly applauded by members from various parties in the House.

The member had a question about increasing our intelligence ability abroad. I want to deal with that question until I run out of time.

The mandate of the Canadian Security Intelligence Agency is to investigate and report on threats of security to Canada wherever they may occur in the world. This is an objective it pursues while respecting the law and protecting human rights.

Section 12 of the CSIS Act , which establishes the operational mandate of the service, does not impose any territorial restrictions on investigations dealing with threats to national security, such as terrorism.

I am sure the member across is fully aware that in response to the increasingly international nature of threats to national security, CSIS has increased its security intelligence gathering activities overseas. Given this trend, CSIS has also increased its exchange of intelligence with security intelligence organizations of friendly nations supporting Canada's commitment to fighting international terrorism.

In regard to the evolution and internationalization of the threat, the Government of Canada has made new resources available to CSIS following the events of September 11, 2001, to ensure that it has the means to meet current challenges, including increased security intelligence gathering overseas.

Section 17 of the CSIS Act allows the service to enter into cooperative arrangements for the purpose of performing its duties and functions, including the exchange of information. Section 17 also allows for the service to enter into joint operations with allied agencies abroad because no one country can do all the intelligence gathering.

That said, strict standards and guidelines are in place at CSIS to govern international cooperation and the sharing of intelligence, especially if it involves information about Canadians. All foreign arrangements made by CSIS must have the prior approval of the Ministers of Foreign Affairs and Public Safety.

Currently, CSIS has relationships with a number of services around the world, both security intelligence services and foreign intelligence services, and in some cases signals intelligence services. After this debate, I will give the member opposite a bit more information on that if he would like. Those relationships are often important in specific cases, in terms of being able to check information, obtain information or seek some other assistance.

CSIS also maintains liaison offices in certain countries. Liaison officers are involved in the exchange of security intelligence information and carry out a security screening role in dealing with cases of concern in national security. Liaison officers posted in foreign countries are not involved in overseas operations.

Section 16 of the CSIS Act defines the service's role in the collection of foreign intelligence.

In summary, let me reiterate that CSIS has both the mandate and the capacity to operate abroad and has done so in the past, in support of its section 12 mandate, and will continue to do so as circumstances dictate.

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

Mr. Speaker, I thank the parliamentary secretary for his response. I too enjoy the thoroughness and the relish which he brings to his position.

I still am very concerned that the government does not appear prepared to respond in a substantive way to the allegations made in this report. It talks of the backlog in the refugee applicants, the fact that there are war criminals currently at large in Canada and that there are a number of individuals who have been identified as a threat but who cannot seem to be located.

Yes, there may be some capacity, I would underline some limited capacity, on the part of CSIS for intelligence gathering abroad. However, it has not clear mandate to do so. This is an issue that has been raised repeatedly at the justice committee by myself and other members.

The government has been lax in this area and too slow and weak in its response. There does not appear to be a long term plan or a commitment of resources necessary to address the threat, certainly not at the level on which the United States has been pleading for greater attention.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I definitely agree with the suggestion to improve the system. I know some of our new ministers are working on that.

However I did explain that CSIS has a mandate overseas and that we are collecting more intelligence since September 11. We have given it more resources to do so. Everything CSIS does is subject to review by the Security Intelligence Review Committee. The independent external review body reports to the Parliament of Canada on its operations.

CSIS is also subject to review by the Office of the Inspector General which serves as the Solicitor General's internal auditor ensuring that it is complying with the law, ministerial direction and operational policy.

CSIS activity, whether it is done inside or outside the country, is subject to review. All activities including joint operations are reviewable by SIRC and the Office of the Inspector General. That is very important considering that we have now given it more resources. Wherever security threats are around the world, CSIS is now funded to provide this country with a good watchdog function.

[Cheryl Gallant, Canadian Alliance, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, it is with considerable disappointment that I find it necessary to rise during the adjournment proceedings as a consequence of the response that I received regarding the Liberal slush fund known as the sponsorship program.

What was truly remarkable about the reply that was made on behalf of the Prime Minister was that it was even made. The President of the Treasury Board was being truly deceptive when he suggested that the $3,000, for example, that was asked for from the local fair in an opposition riding was somehow equivalent to the hundreds of thousands of dollars and in some cases millions of dollars that were funnelled into the ridings of Liberal Party members, with the appropriate commissions skimmed off of course.

What has truly amazed Canadians is the shameless gall of the Liberal Party in this scandal. How low can one go in stealing from children? People in my riding of Renfrew—Nipissing—Pembroke were shocked to hear how a Liberal ad firm pocketed $350,000 in commission from the Boy Scouts of Canada. Out of $600,000 that was supposed to go to the Boy Scouts for a camping jamboree, it received $250,000. Therefore, $350,000 was skimmed off to a Liberal ad firm, perhaps for an eventual campaign contribution to the Liberal Party of Canada. The Liberal Party does not go any lower than when it steals from children.

Opposition members participate in government programs in good faith. The President of the Treasury Board was wrong to suggest that opposition members were somehow tainted by the sponsorship scandal because opposition members trusted the government to run a program in an honest fashion.

The Prime Minister has repeatedly denied knowledge of the sponsorship program as a secret Liberal slush fund. The President of the Treasury Board, on the other hand, said in this House that the presence of this Liberal slush fund was common knowledge, so common in fact, that the staff of the Minister of the Environment referred to this program as a Liberal slush fund.

Who is telling the truth? The Prime Minister who denies any knowledge of the slush fund, or everyone else, including the President of the Treasury Board, who tell us that the existence of the slush fund was quite public?

The sponsorship scandal has directly touched my riding of Renfrew—Nipissing—Pembroke. In response to a legitimate request for funds for a hockey tournament, the Fred Page Cup that was being hosted in Pembroke, local organizers received several thousand dollars.

The question that is being asked in my riding by the parents of the hockey players in that tournament is, out of the dollars requested, how much was skimmed off into the pockets of the Liberal Party ad agency Compass Communication? How much of that money was eventually put into the pockets of the Liberal Party as a campaign contribution? How much of that money actually went toward the children that participated in the hockey tournament?

We know through the sworn testimony of the former deputy minister of public works, Ranald Quail, to the Standing Committee on Public Accounts, that the Prime Minister's Office was directly involved in selecting events that received sponsorship money.

If the Prime Minister were truly sincere when he tries to distance himself from his years as finance minister by pointing fingers at Mr. Chrétien and his political handymen for the sponsorship scandal, he would be purging his party of all these individuals, not just high profile targets like Mr. Chrétien's--

[The Deputy Speaker]

Order. The hon. Parliamentary Secretary to the Minister of Indian Affairs and Northern Development.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Indian Affairs and Northern Development]

Mr. Speaker, I would like to respond to the member for Renfrew--Nipissing--Pembroke on this important matter.

I would like to reiterate what has been said numerous times in the House over the last few years. The sponsorship program was fraught with deficiencies and fundamentally flawed. The government acknowledged these mistakes and eventually cancelled the program.

However, a number of measures were taken before cancelling the program. After the internal audit of 2000, the following measures were taken. An action plan was developed to deal with the managerial problems. In early 2002 specific measures were put in place to end the problems that existed in the sponsorship program. In March 2002 the Auditor General audited three contracts that were awarded to Groupaction. In May 2002 a moratorium on the sponsorship initiative was imposed. In December 2002 a redesigned sponsorship program was put in place for a trial period of one year. On December 13, 2003 the Government of Canada announced the abolition of the sponsorship program.

Members opposite continue to talk about the sponsorship program only being a Liberal fund, but to the contrary, opposition members were applying to the program at the same time. It was a program that sponsored good events in local communities and that is why all members of Parliament are upset for the very reasons that the member opposite has outlined.

The problem was not money going to festivals or other activities within communities. There was a problem with the management of certain companies that, it appears, were acting inappropriately. That had to be stopped and that is why the charges have been laid and why we have had a public inquiry. That is why we are trying to recover the money.

The opposition speaks about there being no transparency in government and asks why nothing is being done to clean up the program. Nothing could be further from the truth. We have a wide open public inquiry headed by a judge which will go wherever he chooses to get the information required. We have an unprecedented release of confidential cabinet documents, Treasury Board documents and departmental documents. We have separate reviews and we have the public accounts committee, to which we are sending everybody. This is fully transparent and probably unprecedented attention when a problem is determined in government.

[Cheryl Gallant, Canadian Alliance, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, what is curious is that months after events in opposition ridings and after the date the Prime Minister alleges that he cut the sponsorship program, the opposition ridings received a sprinkling of money: $3,000 for the Cobden fair; $3 million for a Liberal minister's riding in downtown Toronto.

Once again it is time to talk about the true victims of this government scandal. Every dollar that gets skimmed off into the pocket of some Liberal ad agency is one dollar less for health care, for farmers, children, seniors, the military, the environment, affordable housing, research and development, and a host of other items that should be priorities of the government and which obviously are not.

Canadians were shocked to learn during the Prime Minister's recent farewell tour in eastern Ontario that he is so preoccupied by scandal that he was unaware of the child poverty in eastern Ontario. Liberal policies are impoverishing the people in rural Canada and nowhere is it more evident than on the faces of our children. It is the most vulnerable in our society who end up paying for--

[The Deputy Speaker]

Order. The hon. Parliamentary Secretary to the Minister of Indian Affairs and Northern Development.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, I am delighted that the member mentioned the number of areas that government should be, and actually is, concerned about and has mentioned in the Speech from the Throne. It has a great record for Canadians and great proposals, and we will be happy when the opposition starts questioning those in the House of Commons.

The Auditor General tabled her latest report on February 10, 2004 and we accept her recommendations. In response to her report, the government announced a comprehensive set of measures to ensure that we get to the bottom of this matter.

The measures include the establishment of an independent commission of inquiry, the appointment of a special council for financial recovery, the introduction of whistleblower legislation by March 31, measures to strengthen the audit committees for crown corporations, the possible extension of the Access to Information Act to crown corporations, and the initiation of reviews on changes to the governance of crown corporations, on changes to the Financial Administration Act, and on the accountability of ministers and public servants.

I believe the government is acting responsibly.

[The Deputy Speaker]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 6:36 p.m.)