Debates of Feb. 25th, 2005

Points of Order

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I would like to speak to a point of order that was raised yesterday by the hon. member for Halifax.

Mr. Speaker, in your response you said that you would consider the matter further and come back to the House once a response from someone was provided. I am providing that response.

I want to make a couple of points for your consideration. One is that it should be borne in mind that our cabinet system of government is one in which no decision can be said to have been made until cabinet has agreed to it. In the case of BMD, cabinet did not make the decision until its regular weekly meeting, which took place yesterday. As soon as that decision was made, the Minister of Foreign Affairs quite properly informed the House of Commons at the earliest possible moment.

Since cabinet actually began its meeting after the time in the House agenda for ministers' statements and since the minister desired to enlarge upon the effects of the budget in his department by intervening in the budget debate, the minister chose to use that opportunity to provide the House with the information. I also want to make the point that it was only after the minister had made his statement in the House that the Prime Minister spoke to the media.

As to the assertion in the statement by the hon. member for Halifax yesterday that the decision was made many days ago and that American authorities had in fact been informed, once again it should be borne in mind that only cabinet can make a decision of this nature and that cabinet did not make this decision until yesterday.

It is true that the Prime Minister and the relevant ministers had reached conclusions on the course of action they would recommend to cabinet some days earlier. It is also true that the Minister of Foreign Affairs, as an informal courtesy, which, frankly, is quite normal in international diplomacy, gave an indication to the U.S. secretary of state of what course would be recommended to cabinet.

Nevertheless, Mr. Speaker, as you well know, in any system of cabinet government a decision is not made until cabinet has agreed to it. That decision was made in cabinet shortly after it met at 10 o'clock yesterday morning, and until cabinet agreed no decision existed.

I would ask, Mr. Speaker, that you consider these comments in your deliberation and in your consideration of the point of order the hon. member for Halifax raised yesterday.

[The Speaker]

I thank the government House leader for his intervention in this matter and I will take the matter under further advisement, as I indicated I would yesterday.

The House resumed from February 23, 2005, consideration of the motion that Bill C-33, a second act to implement certain provisions of the budget tabled in Parliament on March 23, 2004, be read the third time and passed.

Budget Implementation Act, 2004, No. 2

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am pleased to speak to Bill C-33, especially since, as you know, it implements certain provisions of the 2004 budget, and this week we were unpleasantly surprised by what was in the 2005 budget. I will quickly address Bill C-33 and then broaden the debate to cover what the government announced both in 2004 and in 2005. We have noticed that, despite the election promises by the Liberals, the Prime Minister, Minister of Transport and other ministers in this government, there was nothing in this budget to address Quebec's concerns.

As I was saying, Bill C-33 implements provisions of the budget tabled on March 23, 2004. This bill is in three parts: one on the air travellers security charges, another on the First Nations Goods and Services Tax Act for facilitating fiscal arrangements, and a third on implementing a series of amendments to the Income Tax Act.

I will not go into great detail about the first two parts. I will, however, note in passing that, from day one, we have condemned the air travellers security charge, the purpose of which is still unknown. This tax heavily penalizes the airlines, particularly regional airlines and people in the regions needing to travel by air regularly for business or even to obtain health care. Therefore, in our opinion, this tax was never appropriate. Under Bill C-33, it has been reduced. However, it should have just been axed.

As for the second measure, there is a community in the Charlevoix region that would like to take advantage of this. So, obviously, in keeping with tradition, the Bloc Québécois always supports the demands of the first nations when it is a matter of providing them with the means to ensure their own development. We are convinced that the first nations are able to manage their own destiny, particularly their economic destiny. So this will not pose a problem.

However, I want to mention one point in relation to the third part before I return once again to the main budgetary policies—when I say main, I mean the largest, not necessarily the most intelligent ones—in the recent budget.

I want to come back to the general anti-avoidance rule set out in the Income Tax Act, which targets misuse or abuse of the income tax regulations, tax treaties and all other federal legislation.

We are being led to believe that Bill C-33 closes an important loophole identified by the Auditor General with regard to tax evasion. In other words, the capacity of some taxpayers—be it a corporate citizen or an individual—to avoid paying taxes in Canada.

At first glance, this measure seems positive. It was a minimum. However, we are missing the main point, which is that, since the Liberals came to power, the Canadian government has constantly promoted tax havens, particularly its own, which is Barbados.

Since the Liberals came to power, direct investments by Canadians in Barbados has increased 400%. This is a small island of 270,000 inhabitants, which receives approximately $24 billion in direct investments from Canada each year. I wonder what kind of services or goods are produced in Barbados that require that level of direct investments.

I remind the House that Barbados is now the third destination in terms of Canadian direct investments, after the United States and Great Britain. It is strange that an island of 270,000 inhabitants is able to absorb $23 billion to $24 billion in Canadian direct investments. We are no fools. To a large degree, it is simply money sent to Barbados to avoid the responsibilities of all citizens in a democratic country, that of paying taxes to fund our collective tools.

Barbados is now Canada's tax haven. I think particularly of the business held by the sons of the Prime Minister, who greatly benefits from this. Last Spring, on Enjeux , we saw a program on CSL Inc. It was quite interesting to see, when cameramen and the reporter arrived at the headquarters of CSL, that it was a law firm with about 130 names of other companies. In fact, it is an empty shell that benefits from good tax treatment in Barbados, because it must be recognized as an international business corporation .

In this context, it pays 1% to 2.5% in taxes. What is very interesting in Barbados is that, contrary to all logic, the tax is regressive. For example, if your volume of business and your revenues are low, you will pay a 2.5% tax. However, the higher your volume of business and your revenues, the lower is your tax rate. Beyond a certain amount, your tax is only 1%.

Let us do an exercise here and assume that CSL International pays a 1.5% tax rate on its income, which is more or less the average, between 1% and 2.5%. Let us not forget that it is the holding company that owns the companies which, in turn, own the CSL ships that sail the seas. By figuring out, based on the information available to us, the sales that CSL International must make, that is a profit rate equivalent to the average for that industry, we were able to calculate that, over the five-year period from 1997 to 2002, CSL International saved over $100 million in taxes by using this scheme, namely the tax treaty between Canada and Barbados.

These savings of $100 million by CSL International were covered by the average taxpayers, by those who cannot escape their fiscal responsibilities. This scheme results in a heavier tax burden for the middle class. I gave the example of CSL International. As I said, at least $23 billion are invested in Barbados every year.

Banks also benefit significantly from this convention. Recently, I read a small paragraph in the Bank of Montreal's report to the effect that the bank had saved $500 million in taxes. As we know, this is one of the five major banks. Therefore, it is easy to assume that, together, Canada's major banks saved $2.5 billion in taxes. These figures are from the bank's annual report; I am not making them up.

This additional burden lands on the middle class. It explains, to a large extent, why we are being overtaxed by the federal government.

Under the tax treaty between Barbados and Canada, once CSL International has paid its taxes to Barbados, at a rate of 1.5%, it can take its revenues back to Canada without having to pay tax on them here in Canada.

There was a slight problem, though. Since 1972, if my memory serves me right, we have had regulations on what is called passive income, in other words income generated by investments that are not used for concrete economic activity. For example, if you put money in the bank, earned interest is an income that is taxable in Canada, just like dividends, even if it has been earned in Barbados. This was a problem for CSL International, because this corporation is a holding company which does not own ships, but owns companies who are the owners of ships. Thus, the dividends paid by these companies to CSL International were taxable in Canada, under the Income Tax Act because this was a passive income.

This government has been quite creative in finding a way for CSL International and a few other companies that benefited from this taxation amendment—there were only eight of them, I think—to bring their income back to Canada after paying taxes in Barbados and not to pay taxes in Canada. Section 5907(11.2)( c ) of the Income Tax Act was amended so that, in the international shipping industry, the airline industry and another industry I cannot remember right now, holding companies would be considered as the owners and operators of their subsidiaries.

In this case, the scheme went like this: CSL would be the operator of the ships that generate the income and profits of the subsidiaries, so that it could get the dividends from these companies without having to pay taxes.

The Income Tax Act was amended to meet the requirements of a few taxpayers, including CSL International which has, I would remind you, been under the ownership of the Prime Minister's son since 2003. What is rather incredible, however—everyone alive must know this by now—is that the sponsor of the changes, the sponsor of Bill C-28, is none other than the Prime Minister, finance minister at the time. It is pretty incredible, in a country presented as an exemplary democracy, for there to be such a blatant conflict of interest and for this government and the governing party not to be more scandalized by it.

We have spoken out on numerous occasions about it, and have been accused of demagoguery and everything else under the sun, but one fact remains: the present Prime Minister is the one who amended the Income Tax Act in order to enable a handful of taxpayers, eight or so, to benefit from a change allowing them to bring back their profits from Barbados, thanks to the tax law in that country and the tax convention Canada has with it, and to pay no Canadian income tax. That needs to be mentioned.

There is another really juicy tidbit, if I can call it that. When the Prime Minister was in the finance portfolio , he had to move CSL International's headquarters, which had been in Liberia, because there was U.S. government pressure after Bill Clinton was elected to tighten up the rules on tax havens. Overnight, Liberia lost its status as a jurisdiction with all manner of tax advantages.

So then the Prime Minister moved CSL International's headquarters from Liberia to Barbados. That was in 1995. In 1996, the then Minister of Finance introduced Bill C-28, although that was not its title at the time, with the provision I have referred to. It stipulated that a shipping holding company is considered to be the direct operator of the ships of its subsidiaries.

However, along came the 1997 election. We know that during Mr. Chrétien's time the mandates were very short. I was not here at the time; they say they were about three years. In 1997 we had an election, and the bill died automatically. The finance minister at the time, who is now Prime Minister, came back with the same Bill C-28 after the election. That was in 1998. At that point, there was a little problem. What about the years from 1995 to 1998? Those three years fell through the cracks. That could not be, so they made the law retroactive to 1995, the date CSL International moved to Barbados.

We are not fooled. While the general anti-avoidance rule is a step in the right direction, it is not the solution to the problem. If the government had a bare minimum of ethics, I think this situation could be corrected once and for all. It would improve the reputations of the Prime Minister, the Liberal Party and Canadian democracy as a whole. I have a great deal of difficulty understanding why this essential amendment is still being resisted.

However, as you know, the Standing Committee on Finance, spurred on by our two representatives on it, will begin studying this issue of the tax treaty with Barbados. I believe this debate is far from over. Let up hope that common sense prevails and that all taxpayers assume an equitable share of their responsibilities for financing of our collective tools.

I am coming to the budget introduced this week, on Wednesday in fact, by the Minister of Finance. Unfortunately, he has not corrected any of the elements missing from the 2004 budget. There is not one word about tax havens. I will not say any more about it. I think I have been sufficiently eloquent.

What was particularly shocking on Wednesday, and it was pointed out by a number of political observers, was that not only have the legitimate demands of the Bloc Québécois concerning the issues the budget should address been brushed aside, but the needs of Quebec have been completely ignored, as well.

The first thing the Bloc Québécois asked the government to correct was the fiscal imbalance. People are well aware of that. Some may call it financial pressures on the provinces, but the fact remains that the Speech from the Throne recognized there was a problem financially for the provinces. We would therefore have expected corrective measures from the government. Yet, there is nothing more than what was negotiated or imposed by this government in the past few months.

Let me give the example of Quebec for the current year. As hon. members know, the governing party in Quebec is a federalist party. So, I do not think that anyone will question the objectivity of the numbers.

The Government of Quebec has estimated at $3.3. billion the shortfall caused this year by the fiscal imbalance, from too much tax paid to Ottawa compared with its responsibilities and not enough fiscal room for Quebec compared with its responsibilities.

At the time the health accord was signed, in September, Quebec's share resulting from the negotiations was $500 million. This has to be put into perspective. Quebec's health budget is $20 billion. That is to say that $500 million is the cost of operating this system for just a few days. It is no great hardship, but that is what was agreed on in September.

Following the imposition of the equalization formula by this government before budget 2004 and the October meeting, Quebec will end up with an extra $300 million this year. So, for Quebec, this year, what was agreed on in September and what was imposed in October adds up to $800 million.

We need $3.3 billion. The shortfall for this year is $2.5 billion. These agreements have done little to correct the fiscal imbalance.

Given the multi-billion dollar federal surplus, we would have expected the government to do a little more, in its latest budget, towards correcting the fiscal imbalance. The Bloc Quebecois never asked for it to be corrected completely. We struck a committee, presided by the member for Saint-Hyacinthe—Bagot, to find solutions. It should have a report ready by June. We would have liked to see some kind of political effort to alleviate the financial pressures felt by the provinces.

But there is none. The government, sticking close to the books, gave $800 million to Quebec, instead of the $3.3 billion it needed.

We have been told there will be an $11 billion surplus for the coming years. What does the Minster of Finance do? Exactly what Mr. Manley did before him, and what the Prime Minister did when he was finance minister. He does a little arithmetic . He says he'll put $3 billion in the contingency reserve, and $1 billion in the economic prudence reserve. I have already asked Mr. Manley what the difference is between those two reserves. There is none. They are exactly the same. Their sole purpose is to hide the federal government's surplus.

As surpluses will keep increasing, $3 billion will be maintained for the contingency reserve and, over the years, the reserve for prudence will be beefed up by $2 billion, and then $3 billion, $4 billion, etc.

The result is that we are being told that for the next three years, there will be a $15 billion surplus. Where does that surplus come from? Three plus one equals four; three plus two equals five; three plus three equals six. If you remember your arithmetic, that totals 15. It is not any more complicated than that. This is a wholly arbitrary assessment.

Actually, it will be at least double that figure and these are numbers that come from private sector forecasters whom the Standing Committee on Finance heard. In fact, a summary assessment foresees $34 billion to $35 billion over the next few years. So the trick which has been used by this government for many years, when the Prime Minister was Minister of Finance, when Mr. Manley was there and now, with the current Minister of Finance, remains.

The real financial situation of the federal government is being covered up so as not to meet the needs of provinces, to financially strangle Quebec. This is unacceptable to the Bloc Québécois, just as it is unacceptable to the Government of Quebec and to Quebeckers. Indeed, the latter issued a reminder to the Liberals last June 28. They will never accept a federal government continuing to strangle them like that.

I would have liked to talk about employment insurance, but I will have an opportunity to come back to that issue, hopefully, in the debate on the budget. I would have liked also to speak to social housing, for which there is absolutely nothing. As to tax cuts, it makes no sense at all. It is utterly absurd.

In closing, let me state again that if Quebec were sovereign, we would be able to collect all of our taxes, to make our laws, to make choices and to sign international treaties, and we would no longer talk about fiscal imbalance. That would be settled once and for all.

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

Mr. Speaker, it seems that sovereignty is the answer to all problems. If Quebec were sovereign our dogs would not smell, everything would be perfect. The hon. member does not remember the time when we had a debate on Quebec separating because Canada was in a bad financial situation. Now, he complains of the contrary: Quebec is in a terrible situation and it is the fault of the federal government.

It is true that we made massive transfers to Quebec for health and under equalization. But that is not what I want to talk about. I am interested in something else.

Ethical questions are raised about the Prime Minister and his international affairs. I am happy to be in this House. I was a municipal manager. I am an ordinary guy from Nova Scotia. I have no holding company in other countries or in tax havens. I am happy here, but I would not want to be stuck with 308 municipal managers.

I believe that a good government and a good House of Commons is comprised of members from all regions of our country and all layers of our society. We cannot have a system without successful people, successful businesspeople who are knowledgeable about international trade and issues. Since we are talking about the Prime Minister's sense of ethics, we must recognize that he followed all the rules about trusts. No one has been more accountable on these matters than the Prime Minister. We are not talking about tax havens. Why not recognize that these matters are about international treaties that are not necessarily part of government budgets? They can be made at any time and need time to be negotiated. We are always moving forward, always allocating; that is the role of any federal government.

I certainly thank the member for his comments, but I believe we should recognize these matters. We should recognize that it is important for us to invite people who bring all kinds of views and experiences to the House of Commons. Does the member think that success should not rub off and should have a limited access to this place? We cannot simply have businesspeople who went bankrupt, we also need successful ones. We are very fortunate to have such high calibre and high quality people as the Prime Minister. I am happy to see him where he is. He is leading Canada towards a great future, including Quebec which is moving with us as an integral part of this country. That is using common sense.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, the member's intervention is peppered with questions. Unfortunately, I can only respond to a few of them.

First, I must say one thing. Barbados is the only tax haven with which Canada has an agreement. It is not for nothing. It is because some people close to the government have interests there.

Liberia is no longer considered a jurisdiction with which business should be done. There are a whole series of tax havens with which Canada has not signed a tax treaty. How is it that Canada has done so only with Barbados? It is a tax haven, since it meets all the conditions for it to be a tax haven: negligible taxation, standard bank secrecy and a total lack of cooperation with international financial institutions.

If the government in power and the Liberal Party were consistent, Canada would repeal its tax treaty with this tax haven, for the same reasons that it never signed any with any other tax havens.

As for the fiscal imbalance and Quebec sovereignty, I must first admit that the government has in fact improved its finances beyond belief. However, it has done so at the expense of the provinces and Quebec. It cut transfer payments, which has had a terrible impact on health and education, and continues to do so.

Who else was affected by cuts the federal government made in order to improve its finances? The unemployed. In order to avoid using unparliamentary language, I will say that $46 billion was pinched from the employment insurance fund, and used to inflate the surplus and pay down the debt. We can now boast that we have the lowest debt-to-GDP ratio. But, in terms of education, students are striking in Quebec. Why? Because the federal government cut its transfer payments and the Quebec government can no longer sustain the loans and bursaries program.

The same goes for health. The difficulties we are experiencing do not originate with Quebec or the provinces, where numerous reforms have been undertaken. They are the result of federal underfunding. Ours is the only government in the western world that has managed to solve its financial problems on the backs of others, and has never shouldered its responsibilities. The proof: there has never been as much spending here in Ottawa as there has been in recent years.

The committee we set up with Jacques Léonard, former president of the Quebec treasury board, has discovered that, in the five years from 1997 to 2002, the federal government had increased its operating expenses—that is its bureaucracy: its pens, pencils, papers and desks—by 40%. That averages out to 8% annually. The explanation for this is certainly not the population increase, nor the inflation rate, nor increased federal services to the taxpayers. They have quite simply inflated the bureaucracy artificially in order to avoid giving the money to the provinces and to Quebec to enable them to remedy their situation.

This is tantamount to a policy aimed at strangling the provinces and Quebec and imposing federal government standards and vision on all provinces. That is a far cry from the spirit of Confederation in 1867.

Given this context, Quebec sovereignty remains the only path for Quebeckers.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Speaker, first I would like to congratulate my colleague from Joliette on his speech; it was extremely pertinent and fair and exposed the true nature of this government, which serves its party and friends first, before it serves the country.

I have two questions for my colleague. First, with respect to his depiction of the way the members of this government succeed in avoiding the tax obligations of their businesses to the Canadian public, does he not think that this is a kind of money laundering, as we see in organized crime?

My second question came to me while the hon. member from the Liberal Party was saying that this budget was well received by municipal governments. Does he not think that in a sovereign Quebec the municipalities would no longer need to prostrate themselves and lick the government's boots in order to get their share of the pie to manage their communities? Does he not agree that if we were to collect all income tax directly in Quebec, the municipalities would be much better able to manage their communities properly?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I fully understand what the member for Chambly—Borduas is saying about money laundering.

The existence of tax havens and tax avoidance also allows for money laundering. Canadian law allows for this tax avoidance, and thus it is not tax evasion in the true sense of the word. Major international mafia and terrorist networks use tax havens for their financial transactions. It is estimated that at least one fifth of the money in tax havens is laundered money.

For the Canadian and U.S. governments to tolerate the existence of tax havens and say they want to fight terrorism, is a paradox.

In the case of CSL International—which no longer belongs to the Prime Minister, but his three sons, as I was saying—last spring the show Enjeux reported that the CSL headquarters in Barbados seemed to be a shell company, which is against Canadian law.

I know that an individual from Quebec filed a complaint with Canada Customs to ensure that CSL International was indeed obeying Canadian law, which is full of loopholes, as I just mentioned. I think this is something worth monitoring.

Now, I totally agree with the hon. member that if we collected our taxes ourselves, we could do things much more rationally.

The municipalities are a good example. Some of Quebec's mayors, especially those from larger cities, were pleased with the government's announcement, but when we look at the numbers there is a subterfuge. Billions of dollars are announced over a lengthy period, but this year only $600 million is being transferred to the municipalities, or $150 million for Quebec.

However, a small municipality of 3,000 people does not have as much of a say as the capital of Quebec. My region has 26 municipalities. The vast majority of these municipalities are better off allowing Quebec to help them choose their investments for infrastructure.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I am pleased to rise and speak to Bill C-33, an act to implement certain provisions of the budget tabled in Parliament on March 23, 2004.

I am pleased, but a little surprised that we are still dealing with last year's budget, particularly since we heard the budget for 2005 earlier this week. It was noted with some amusement by other members this morning when the Clerk called the debate on last year's budget. That is not to trivialize the importance of what is in this bill. Bill C-33 is a large bill that contains quite a number of measures and some of them are very important.

Bill C-33 contains a number of changes to other legislation.

Part 1 deals with amendments to the Air Travellers Security Charge Act to reduce the amounts charged to airline passengers under that act. It is probably a good thing to do, but I do have a general caveat around user fees.

When we put off the collective responsibility through our taxation system for things such as air travel security to user fees, it is a way of adding the tax burden on to individuals. We avoid our collective responsibility there. It is also a way of governments announcing tax cuts and then shuffling the real burden and increasing taxes in other very specific kinds of ways. It is not something that I generally support. I do raise a caveat about it, although reducing it I suppose is a good thing.

Part 2 of the bill amends the First Nations Goods and Services Tax Act to facilitate the establishment of taxation arrangements between the government of Quebec and interested aboriginal nations in Quebec. I hope that takes place. It is good to facilitate agreements between our governments and our aboriginal nations.

Part 3 of the bill has many changes around the Income Tax Act and related acts. These include things such as introducing a new disability support deduction and improving the recognition of medical expenses for caregivers.

Clearly, there are new measures in the new budget earlier this week to do better on those provisions. Probably what we are debating this morning did not go far enough and needed to be improved. In the more recent budget we have upped that, which is good. I suspect we could still go some way to improve the situation of people with disabilities and the people who care for those who have medical health problems.

The bill also addresses expanding the education tax credit to apply to the cost of an otherwise eligible course taken without any reimbursement in connection with an office or employment. It accelerates the 2005 increase in the small business deduction threshold to $300,000. There are a whole series of measures, including things such as limiting the period during which taxpayers may open up old income tax returns to 10 years, preventing the use of schemes to sell otherwise unusable charitable donation tax credits and introducing a new regulatory regime for registered charities. Those are some of the provisions in the bill. There is quite a number of measures in the bill.

There are many important things in the legislation.

One particular measure I want to talk about is something for which the New Democrats have been calling for a number of years. It is with some pleasure that it has finally sunk into the consciousness of the government and it appears in the legislation, and it appeared in the budget last year.

Hopefully not, but probably because we were coming up to an election and this was such a glaring example of a failure of government policy, the government took the opportunity to make this change. The change I want to talk about is the elimination of the deductibility of fines and penalties.

This glaring loophole of avoidance of responsibility and tax responsibilities has been raised a number of times over many years. Members in this corner of the House have over the years called the provision perverse, outrageous and absurd. I have to agree that it is perverse, outrageous and absurd that corporations could deduct fines for criminal activity or for environmental violations and chalk it up to the cost of doing business. Somehow that flies in the face of what a fine or a penalty is.

A fine or penalty tries to seek some kind of corrective action, not provide another opportunity for a deduction against corporate taxation or taxes to be paid. This is an incredibly important issue, so I am glad it is finally being addressed. However, I wonder why it took so long to do so.

Bill C-19 deals with amendments to the Competition Act and includes changes to the fines levied against corporations for a wide variety of anti-competitive offences. However, in the committee my colleague from Windsor West felt that it would be inappropriate to deal with the changes to the Competition Act before we dealt with the change to the taxation laws. The cart was being put before the horse. Thankfully, the committee was moved by that argument and agreed to put off consideration of the legislation until we dealt with this matter.

This is an important issue for the folks who are looking at the Competition Act. If the fines and levies in reference to anti-competitive offences do not have any real effect, then why deal with them. The committee made a good decision, and I am glad the NDP member for Windsor West raised the issue.

Some examples of the kinds of situations that this has led to are really absurd, perverse and outrageous, as I said earlier. One of those examples is a pharmaceutical company was fined $50 million in September 1999 for a variety of conspiracy offences related to the sale of some of its products. That company was able to deduct no less than $10 million or 21% of the fine from its total taxable income. It is unbelievable that somehow the penalty was turned to an advantage for this company. That it got any advantage from being fined for conspiracy related to the way it did its business is a crazy situation. Therefore, it is good that the legislation finally addresses this.

New Democrats have raised this. The member for Winnipeg Centre, the member for Windsor—Tecumseh, the member for Winnipeg North have all raised this issue over and over again, in 2002, 2003 and 2004. All pointed out the absurdity of this situation.

If I get a parking ticket, which I did a couple of weeks ago as I rushed off to an event and forgot to put money in the parking metre, I cannot deduct it from my income taxes. It is outrageous that a business or corporation can deduct fines it encounters in the misconduct of its business. To chalk up fines and offences that way should not be another cost of doing business. It is good that we are finally dealing with this. I cannot believe it took so long, but there is certainly some benefit to it, This has been a glaring example of some of the problems with our taxation system.

When I look back at the budget in 2004, I remember that budget seemed to be about tax cuts and debt reduction. The whole social deficit, the important social spending was ignored again in that budget. We did not need a year ago, just like we do not need now, budgets that ignore the important social issues and concerns, budgets that do not invest in the future of needs of Canadians to improve their quality of life.

The budget of last year was a blatant example of focusing almost entirely on tax cuts and debt reduction. I am glad we have seen a bit of a change this year with the most recent budget. At least there is some reflection that the government is in a minority position in the House and it took a broader perspective on the important needs of the country.

We found out last fall that the surplus projections of the government were completely wrong, which is a continuing trend. The surplus projections of the government have been wrong for a number of years in a row, and by whopping margins.

Last year the government predicted a surplus of $1.9 billion and in the end it turned out to be a $9.1 billion surplus. It shakes our confidence in the ability of the government to do the whole budgeting process. If it cannot get the figures right on what money is coming in, how can it make appropriate decisions about where that money should be spent and what the important expenditures are from year to year? How can the government determine appropriate priorities when it does not really know what is coming in?

Last year was a particularly blatant example of that where incredibly important needs of Canadians were ignored in the budget, yet as it turned out the numbers were based on a faulty projection of the surplus that year. The government could have done a lot more in the budget of 2004 than it did. I hope measures are in place to ensure that down the road it does not make those kinds of mistakes and that it can restore the confidence of Canadians in the budget process.

By focusing on debt reduction and tax cuts, important things were left out of the budget. The government promised for years to address the issue of child care, for instance, and last year's budget did not do that. Yet again for over a decade the promise of the Liberal government to deal with child care was missed. We know something not good enough happened this week, but at least it made it on to the list in this new situation in a minority government.

Last year's budget did not deal with the issue of housing. It did not deal with the issue of student debt. It did not really deal with the issue of poverty in Canada, of child poverty and families living in poverty. I want to talk a bit about some of those issues.

In my riding of Burnaby--Douglas, affordable housing is a crucial issue. During the last election, I campaigned hard on the fact that we needed more affordable housing in our community. Burnaby--Douglas had done very well back in the 1970s and 1980s when Canada had a national housing program. We did very well in terms of the kind of affordable housing which was built in our community. Co-op housing was a major component of our housing stock. Co-op housing is an excellent model of communities and people of mixed economic backgrounds living together and working together to maintain and manage their homes. It makes an incredible contribution to community life and to the overall community. There are a number of fabulous housing cooperatives in my riding.

We need a program like that and we still do not have it. We did not have it in the budget of 2004. We did not get it in the budget of 2005. I know some of my constituents are very disappointed that this did not happen. They know people in our riding are paying way too much for housing. People on the lower end of the economic scale are spending way too much of their available income to be housed in often substandard housing. We need better housing, more appropriate housing and affordable housing in our community.

I represent a community that is generally seen to be a fairly well off community, but the poverty in my community is very well hidden. Almost 30% of people in the city of Burnaby live in poverty. It is a tribute to the caring for people in the community which sometimes makes it appear invisible. This community, like all communities in Canada, has a crying need for more affordable housing. We did not get that in 2004 when more corporate tax cuts and debt reductions were the order of the day and investing in the future of Canadians fell by the wayside. Unfortunately, in 2005 it is the same story on affordable housing.

Students in my riding were really concerned about the budget in 2004. There were no measures in it to address the incredible $20,000 to $25,000 average debt loads that students face upon graduation. That limits the ability of students to undertake post-secondary education.

The cuts in transfer payments to the provinces which were made the Liberal government years ago, and which have not been restored, have forced up tuition fees, making post-secondary education unaffordable for many students and their families. That is a huge issue in my riding. Burnaby--Douglas has two fine post-secondary educational institutions: Simon Fraser University and the British Columbia Institute of Technology. We depend on students being able to attend those institutions. We want to ensure that they have access to them.

Families in my riding want to make sure that their children can get the best possible education so that they can succeed in life. That is very important to people in my riding. It is very important to new immigrant families in my riding. They very strongly believe in the importance of education and want to make sure that their children succeed in their new country.

This is an important issue. The 2004 budget did not deal with it. The 2005 budget dealt with one aspect. In the 2005 budget a student loan is forgiven if the student dies or is completely disabled. That hardly addresses the situation. It is a good measure, but students are literally dying to get help and the government is saying that they really do have to die before they get any assistance with their post-secondary education. That is not acceptable.

The Simon Fraser Student Society has decided to pursue this issue. It has been trying to be very creative about how it pursues the responsibility of the federal and the provincial government in British Columbia for post-secondary education.

Recently the society launched a complaint with the United Nations saying that both Canada and British Columbia are in violation of the United Nations International Covenant on Economic, Social and Cultural Rights which was approved back in 1976 and which Canada signed at that time. Article 13 of the agreement calls for the progressive introduction of free education as a means to achieving equal access for all.

I think everyone in the House knows that we have been going in the opposite direction on free education. Education is becoming increasingly expensive. Tuition rates have gone up 75% to 150% in British Columbia. A significant part of the reason is that the federal government cut the transfers to provinces for post-secondary education.

I am proud that the previous NDP government in British Columbia put a freeze on tuition fees during its term so that students did not face ever increasing tuition fees. The NDP put on that freeze in the face of the decrease in transfer payments, the shortfall in money that the province received from the federal government. The B.C. government made education and health care a priority during the difficult period when funding from the federal government was cut because of the social transfer payment cuts to the provinces.

I am proud that the New Democrats held the line on that. As soon as the NDP was out of government and the Liberals were back in, tuition fees shot up dramatically. That is an unacceptable situation.

I strongly support the Simon Fraser Student Society in its attempt to bring attention to Canada's failure to move toward free education and improved accessibility to education. It is a very important issue and one on which Canada should be leading the world, not struggling to catch up with other countries that are making important strides in this area.

Last year's budget and this year's budget have done little for people living in poverty in Canada. We have heard how EI continues to suck money from workers and employers, but it is not being put back into programs for workers in Canada. We need to reduce the threshold for qualifying to 360 hours from 720 hours. That change is long overdue. The money is there to do it. There is no excuse. That move would go a long way to reducing poverty for families and children in Canada. EI is not just an insurance program; it is a key part to reducing poverty in this country.

The new budget increases the basic personal tax exemption. That is touted as a measure to help low income Canadians. I suppose it provides a small measure of support for those people, although it is hard to imagine how somebody who is only earning $11,000 a year should be paying any income tax. It is a very small measure. Unfortunately, proportionally it benefits high income Canadians far more than it benefits low income Canadians. We need to target our tax measures a little more carefully around eliminating poverty than we have been doing.

Mr. Speaker, I see you are indicating that I should be wrapping up my speech. I will say it has been interesting to speak to last year's budget when we are already dealing with the budget for the coming year. It is time to get on with it.

I am glad that finally after years of pressure from New Democrats in this corner of the House the government has finally sought to eliminate the deductibility of fines and penalties. That is a good part of the bill. With that I will close my remarks.

[The Speaker]

When the House resumes consideration of this matter, the hon. member will have 10 minutes for questions and comments following on his remarks.

Black History Month

[Marlene Jennings, Liberal, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Speaker, every year to celebrate Black History Month the Government of Canada holds the Mathieu Da Costa Challenge. I am pleased to acknowledge the presence in the House of Commons today of the winners for 2005.

The 11 winners in the 11 to 17 age group for the best drawings are Peter Millman, Sarah Robert and Tae-Kyung Kim and for the best essays in French Benoît Beaulieu, Roman Blomme, Jean-Daniel Bergeron and Ariane Brun.

For the best essays in English, the winners are: Julia Spears, Kristi Martin, Varman Koneswaran and Kaitlin Wood.

Mr. Speaker, congratulations to all of them.

City of Langley

[Mark Warawa, Conservative, Langley, BC]

Mr. Speaker, on March 15, 1955 the City of Langley was born. This year it celebrates its 50th year, its golden anniversary.

At the inaugural council meeting first magistrate of the city, Archie Payne, officiated the oaths of the new council by stating, “The pioneers have handed you the torch and it is yours to hold high”.

Langley city has grown from a country town of 2,100 residents to a bustling urban centre of 24,000 residents with hotels, a convention centre and the largest shopping district in the Fraser Valley. Langley city has kept the friendly small town community spirit and a vibrant urban core.

Congratulations to Mayor Marlene Grinnell and the city council, and to the citizens of Langley city as they celebrate 50 years of success. Their legacy of pride in the past and confidence in the future makes the City of Langley “The Place To Be”. I invite everyone to join the City of Langley celebrations on March 15.

John Gilbert Chambers

[Marc Godbout, Liberal, Ottawa—Orléans, ON]

Mr. Speaker, just recently we learned that a Canadian resident from Ottawa--Orléans, Dr. John Gilbert Chambers, died in a tragic car accident in New Zealand.

Dr. Chambers had an illustrious career as a scientist and a public servant. In the early 1960s he pioneered research in laser optics and he established the first fibre optic communications project in Canada.

As director general of Space Communications, he was instrumental in developing experimental satellite communications programs. He initiated cooperation between Canada and the European Space Agency. He also played a key role in the creation of the Canadian Space Agency in 1989.

After his retirement in 1996 he continued to be very active and appreciated as a consultant and adviser to the Canadian space program.

I wish to take this opportunity to extend my deepest sympathy to the Chambers family and friends. Our thoughts and prayers are with them. On their behalf I would also like to thank the minister and the Department of Foreign Affairs for their assistance and cooperation in this unfortunate matter. Their help was greatly appreciated by all.

Poverty

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Speaker, Référence Espoir is a new organization that has been set up in my riding of Chicoutimi—Le Fjord to help the most disadvantaged by offering to accompany them as they lift themselves out of poverty.

I would like to congratulate the founders of this organization: Pascal Thibault and the board of directors.

Poverty hurts, even in the regions, and the riding of Chicoutimi—Le Fjord is no exception. Fortunately, people in the field are actively looking for ways to change things.

People in the field have possible solutions to suggest, but they need the support of the government to fight this war on poverty.

The Bloc Québécois wishes good luck to this new organization: Référence Espoir.

Huntley Dingwell

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I take this opportunity to acknowledge the passing of Mr. Huntley Dingwell of New Glasgow, P.E.I.

Huntley defined what being a citizen of a community means, being active in business as well as the volunteer sector. Many will recall his dedication to his work with the New Glasgow Fire Department.

Huntley held the positions of deputy fire chief as well as treasurer. In recognition of his service, the New Glasgow Fire Department made him an honorary deputy fire chief in 1987 and honoured him for 50 years of service in 1999.

Key among his many awards are the Certificate of Merit from the Government of Canada and the Prince Edward Island Firefighters long service medal.

Huntley was an active member of the New Glasgow United Church, as well as a longstanding member of the Prince of Wales Masonic Lodge where he held an outstanding record of 35 years of perfect attendance. Imagine that, Mr. Speaker, 35 years of perfect attendance.

On behalf of all members, I extend my condolences to Huntley's wife, Giena, and daughter, Heather.

Agriculture

[Jeff Watson, Conservative, Essex, ON]

Mr. Speaker, one in five grain and oilseed producers in Essex are facing spring foreclosure. Income projections for 2005 are bleak. Family farms in Essex expect to lose $26 million.

These losses are the direct result of trade injury from U.S. subsidies, something over which our producers have no control, yet the 2005 Liberal budget wilfully ignores their plight.

Last week Liberals voted against the Conservative motion to drop the CAIS cash deposit. Now they want to drop it--eventually. For the sake of farmers, I say get rid of it now and honour CAIS payment commitments to producers not later but now.

To get farmers through the spring the government must also fund a per acre, per commodity lump sum directly to producers.

Last, the government must refine CAIS for sectors where it works but design a market revenue style support program to backstop grain and oilseed producers against trade injury, one that will end when this government finally gets foreign subsidies to end. The government owes it to family farmers.

Estonia

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

Mr. Speaker, yesterday Canadians of Estonian heritage celebrated the 87th anniversary of the declaration of the independence of Estonia.

On February 24, 1918, the Salvation Committee declared the independence of the Republic of Estonia. This date was celebrated as the date of independence until the Soviet occupation of Estonia in 1940. However, during the Soviet occupation, Independence Day continued to be celebrated in Estonian communities around the world, including those in Canada.

This is an important day for all Estonians. Even during the days of Soviet occupation, Estonians around the world openly celebrated this day in hopes that once again Estonia would be a sovereign state.

Since the restoration of independence on August 20, 1991, Independence Day continues to be a day of celebration and a day of reflection for the Estonian people.

I would like to offer my congratulations to the people of Estonia and Canadians of Estonian descent on this momentous occasion. Elagu eesti .

Steve Dumas

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I take this opportunity to extend my warmest congratulations to writer-composer-performer Dumas, originally from Victoriaville, in my riding, on winning the Jutra award for best movie soundtrack.

With his partner Carl Bastien, Dumas—whose full name is Steve Dumas—signed the score of the Quebec movie Les aimants , which I encourage you to see, Mr. Speaker, because it is an excellent movie.

A gas station attendant in another life, this local artist has come a long way since 1999, when he took home top honours in the writer-composer-performer category at the renowned Granby International Song Festival.

The following year, he won the people's choice award at the Festival en chanson song festival in Petite-Vallée. After putting out a very well crafted self-titled CD in 2001 and performing several shows, he signed on for a second CD Le cours des jours , released in 2003, which I encourage you to listen to, Mr. Speaker, because it is excellent.

With his creativity, Dumas is among the new wave of francophone writer-composer-performers who make Quebec proud and are an inspiration for the next generation of artists in Quebec.

National Flag of Canada Day

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

Mr. Speaker, today I would like to acknowledge the individuals who recently took part in an event held to mark the National Flag of Canada Day. The event, which took place in Sainte-Anne-de-Madawaska, was conducted in an exceptional fashion by Alfreda Bérubé, and I thank her.

I also wish to draw attention to the presence of participants from the Atelier Éclosion, namely Jeannot Beaulieu, Manon Boutot, Mathieu Cyr, Rina Cyr, Nicole Girard, Diane Leclerc, Emmanuel Levesque, Gérard Martin, Julie Martin, Mélanie Martin, Pauline Martin, Bobby Mitchell, Robert Parent, Camilla Perrault, Julien Sirois, Ghislain Violette, Yvon Violette and Yves Voisine.

Finally, I want to thank the employees of Atelier Éclosion for their dedication to this activity to mark flag day. They are Julie Francoeur, Anne Deschênes, Jocelyne Deschênes, Anne Gauvin and Claudette Martin.

Infrastructure

[Brian Jean, Conservative, Athabasca, AB]

Mr. Speaker, today all members of the House are invited to northern Alberta.

From Edmonton to Fort McMurray it is a five hour drive, and members may even survive. There is one lane north and one lane south, and on the way, members should try to avoid the 300 logging trucks and 60 buses that make the same journey every day.

They should stay away from the many wide loads that block most of the highway and the moose that may wander into their path while they take time to enjoy the view on the highway with the highest death rate per mile in Canada.

If they do survive the drive, they are welcome to Fort McMurray, the city with the lowest doctor to patient ratio in Canada. It has 19 doctors for 70,000 people.

The Liberal government takes $10 billion per year from my constituency and with this budget gives us less than $2 million for infrastructure for the fastest growing city in Canada. That is not enough.

We need doctors and we need highways and we need them now. Our families and our friends are suffering and dying every day in northern Alberta. The government can fix it.

Paul Fournier

[Michael John Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, two days ago the Government of Canada committed over $275 million for the purchase of 10 new large vessels for the Coast Guard. This investment, along with the $47 million budgeted annually in the 2003 budget, is a significant investment in our Coast Guard and it is good news for the people of Dartmouth—Cole Harbour.

Today's Coast Guard is served by highly skilled and trained men and women and we thank them for their service. We also honour those who served in the past and risked their lives in the service of our country.

Captain Paul Fournier is one such person. He died recently in Nova Scotia at the age of 91. Born in Quebec, he served in the Canadian Coast Guard from 1941 to 1976. He was in command of the Sir John A. Macdonald when that ship escorted the Manhattan through the Northwest Passage in 1968. He was made an Officer of the Order of Canada.

We remember Captain Fournier for his long service and love of country. I hope all members will join me in extending our condolences to the family of Captain Fournier.

Fisheries

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, the Department of Fisheries and Oceans is promoting seriously flawed policies that are threatening the coastal communities of British Columbia. The science around open net farming is clear: this man-made technology is threatening the existence of wild salmon and destroying a tradition that is centuries old. The DFO and Gordon Campbell refuse to acknowledge the science, preferring instead to placate their big money friends and political contributors.

The communities I represent are deeply concerned with the serious risks posed by sea lice to wild stocks. There are viable alternatives available to this industry, which the Liberals have chosen to ignore. The NDP has pledged to support farmers who would establish closed net or land based systems and yet the Liberals insist on continuing down their reckless path.

I call on the Minister of Fisheries and Oceans to show leadership today. I call on the minister to step in and save the wild salmon fishery in British Columbia before it disappears by putting a halt to the expansion of open net fish farming.

Accountability of Foundations

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, the Prime Minister and this government have buried over $7 billion in government foundations. This money is beyond the reach of the Auditor General. In fact, it is beyond the scope of the Access to Information Act.

Foundations are failing the most basic fundamental rules of accountability. They are not subject to the scrutiny of Parliament. This is the fourth time the Auditor General has raised the issue of foundations, and four times the government has failed to act.

Where is the government's commitment to transparency and accountability as promised? Parliament voted this past Tuesday 161 to 114 in support of our motion, which called on the government to ensure that the Auditor General has the authority to audit and to investigate foundations.

Canadians have spoken. Parliament has now spoken. If the government truly believes in financial accountability and responsibility, it will honour the will of Parliament and put an end to these abhorrent financial practices.

Agriculture

[Denise Poirier-Rivard, Bloc, Châteauguay—Saint-Constant, QC]

Mr. Speaker, this year, February 8 was Food Freedom Day. It was the day when middle income taxpayers had earned enough money to pay for their entire year's food supply.

Quebec farm producers are pleased to contribute to the abundance of safe and high quality products available to us. In addition, our food basket is one of the most affordable in the western hemisphere.

However, there is a down side to this situation. Our farmers are getting a smaller share of the money spent on groceries, because their production costs are increasing. For example, the farmer who grows corn only gets 11 ¢ on a box of corn flakes that sells for $3.99 at the grocery store.

I invite hon. members and all our viewers to eat a bowl of corn flakes produced here, with some good milk produced here by our own producers. In doing so, we will contribute to their situation and their independence.

Justice

[Art Hanger, Conservative, Calgary Northeast, AB]

Mr. Speaker, I rise today to pay tribute to a great Canadian lawman. I speak of Julian Fantino, Chief of the Toronto Police Service, who will retire from active police duty on February 28, 2005.

Chief Fantino was called to the police profession 36 years ago. He rose through the ranks of the Toronto police and established an extraordinary career: patrolman, investigator, division commander, and later Chief of the London Police Service, then Chief of York Regional Police and finally Metro Toronto's chief constable.

Chief Fantino served his city, province and country with integrity and courage. He called things as he saw them. In spite of the verbal attacks he often endured from his critics, he always stood tall, rose above his attackers and sought only the truth.

I thank Julian for his friendship and encouragement over the years. I express my thanks for his strong advocacy on behalf of children and for fighting child sexual exploitation. Finally, I express our thanks for his commitment to public service and the safety of all Canadians. May God bless him in his future endeavours.