House of Commons Hansard #95 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was refugees.

Topics

Business of the HousePrivate Members' Business

Noon

Some hon. members

Agreed.

Business of the HousePrivate Members' Business

Noon

Conservative

The Acting Speaker Conservative Royal Galipeau

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Business of the HousePrivate Members' Business

Noon

Some hon. members

Agreed.

Business of the HousePrivate Members' Business

Noon

Conservative

The Acting Speaker Conservative Royal Galipeau

(Motion agreed to)

The House resumed from December 8 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the third time and passed.

Budget Implementation Act, 2006, No. 2Government Orders

Noon

Conservative

The Acting Speaker Conservative Royal Galipeau

When we last considered Bill C-28, the hon. member for Western Arctic had seven and a half minutes left for his comments. He has the floor.

Budget Implementation Act, 2006, No. 2Government Orders

Noon

NDP

Dennis Bevington NDP Western Arctic, NT

Mr. Speaker, during my previous speech I spoke about the serious issue of tax fairness for northern people. As I indicated, the other issue that I wanted to speak to in this discussion regarding northern issues is the need to change the way that we are funding northern territories. We have had an expert panel reporting on how to change the funding formula for the territories, and I had just started in on this when my time was up on Friday.

I will just repeat that we have identified four key issues that stand in the way of the north achieving its full potential.

The first is a new fiscal arrangement with Ottawa, one that truly reflects the needs of the Northwest Territories. The current fiscal arrangement cannot continue. Not only is it inadequate but in many ways it acts as a disincentive to the Northwest Territories moving forward.

My territory is very much controlled by this august Parliament, unlike the other provinces and regions of this country. This Parliament really does play such an important role in what happens in the north. As a northerner, I have railed against that for my whole life. I have felt, in some ways, the inadequacy of my citizenship, living where I do in the north. Certainly, part of it is the way that the Government of Canada deals with northerners.

As such, we all hope that as the resources of our territory are extracted and developed, they will mean more self-determination for us as citizens of the north. There is no question about that. If our resources simply get taken and we end up, at the end of the day, with what we have now, that would be a tremendous letdown and a tremendous failure of the Canadian system which is to recognize that we are all equal across this country and that we all have equal political rights.

The federal government provides about 70% of the funds for the Northwest Territories, but that really does not make the NWT a have region because this government, not the northerners, owns the vast riches of the territories. Nearly as much goes to Ottawa in royalties, in land sales and in corporate taxation. Nearly as much goes to Ottawa right now from the Northwest Territories as comes in to the Northwest Territories.

With a proper fiscal regime that would put our resources on the same level as other provinces where governments collect considerably more royalty revenues, we would be in a positive situation in the Northwest Territories. We would be ahead of the game.

The Government of Canada has chosen to subsidize businesses that develop in the north at the expense of royalties and taxation that could make the difference between us being a have and a have not province. Province is a term I use somewhat lightly because we are a province in waiting. In the Prime Minister's letter to the NWT, he wrote:

The Conservative Party of Canada agrees unequivocally with the principle that northerners should be the primary beneficiaries of the revenues generated by resource development in the Northwest Territories similar to other jurisdictions in Canada. We also agree that the transfer of authority over lands and resources from Canada to the Northwest Territories (devolution) is the next logical step in the political development of the Northwest Territories.

Northerners would really like to know when this is going to happen and how this is going to happen. If this is the mandate of the Government of Canada, will it say it very clearly to its new emissary, Mr. Harvie Andre?

In 2004-05, public accounts showed that the federal government took in over $270 million in royalties and resource revenue from the Northwest Territories and the amount is growing every year. That amount went up quite a bit last year as well. Those figures have not come out, but that is because our second diamond mine is now into production. At the same time that does not include the corporate taxation that goes with that.

In comparison, the Northwest Territories public accounts showed only $3.5 million in corporate income taxes in that same year. This goes back to a problem that we have just like every other province or political region in the Northwest Territories and that is, if we set our corporate tax rate a little higher than anyone else, then of course the corporations are all filing somewhere else.

We have bounced around over the years because where we had huge surpluses, we lowered the rate and then everyone followed us down and then we balanced out. Then we raised the rate and then we got nothing. That is a fundamental problem with the tax system in Canada which should be addressed by the federal government. There should be some federal-provincial understanding on corporate taxation to avoid this kind of loophole, to avoid this kind of competition that takes the money out of the hands of the provinces and the regions.

People in the north simply want a fair deal from Canada in how our interests are treated. Whether it is on taxation or funding for government programs and services, we actually want to benefit and build our territory on the resources that we have. We want to make that happen for Canadians for the future. I hope in the future that the government will do much better than this budget in dealing with northern concerns and issues. The improvement has to take place.

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

Questions and comments. Resuming debate, the hon. member for Esquimalt—Juan de Fuca.

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, it is a pleasure--

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

My apologies to the hon. member for Timmins—James Bay. I did not see him. I recognize him under questions and comments.

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I was thinking I might have to start wearing some brighter coloured clothes like my colleagues from the Bloc just so that I would be recognized.

I would like to ask my hon. colleague a question based on his experience in the Northwest Territories because what he speaks of mirrors so closely the experience we have in northern Ontario. We too are a region which is based on resources. We are based on hydro. We produce some of the cheapest hydro in the world and yet our industries have no access to that cheap hydro. We are paying what they pay in Mississauga when they turn on their air conditioners in the summer.

We are based on mining and mining is non-renewable. We have had many communities that have been driving the economic engine of Ontario through hard times, yet when these towns fall on hard times, they disappear off the map.

We have forestry which is another mainstay of our economy. Many of our forestry communities are going under. There is question that has been asked again and again in northern Ontario. A fundamental disparity exists when a region is resource-based. It has to be able to access some of the wealth of the region in order to diversify and build an economy that is not simply based on drawing out the water and cutting the trees, but is based on taking that wealth and building a sustainable and diverse economy.

Given the hon. member's experience in the Northwest Territories, how does he suggest a region like the Northwest Territories, the northern Arctic or northern Ontario can move forward with an agenda that works for the resource-dependent regions of the north?

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

Mr. Speaker, I know my colleague sometimes blends into the windows that are behind him.

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

I am so shy.

Budget Implementation Act, 2006, No. 2Government Orders

12:10 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

And he is so shy that it makes it difficult.

There are fundamental differences in the Northwest Territories, which is an autonomous region and which theoretically, quite plausibly, along with northern Ontario should be a province in waiting.

What is not different about those areas is what the member alluded to. He said that when the government does not pay attention to the northern regions, when it allows them to be exploited without building the infrastructure and proper communities, without making the things happen that will leave behind substance, we end up with something far less satisfactory.

When the government does not do that and we allow ourselves to be manipulated by government and large corporations into doing things in the cheap and dirty fashion, which has been the practice for the last 20 years and which is a practice that has to stop in this country, we end up with something that is far less satisfactory than what we have.

I know that the hon. member's riding has representation at Queen's Park. Ontario is one of the dominant provinces of Canada. How these conditions can go on in this region year after year is something that really shocks me.

In my own territory, I can always blame it on Ottawa. I am able to say that Ottawa is not doing its share. My colleague has to deal with that provincial relationship.

What binds us across the north are the things that the federal government is able to do. I spoke about this earlier when I talked about tax fairness. We need some fairness in the system. The federal government agreed in the 1980s that it was fair to offer northerners right across the country an extra tax break because of their high costs. The government has recognized northern and remote communities in Parliament and in our taxation. What we need to do is to make it fair again.

Budget Implementation Act, 2006, No. 2Government Orders

12:15 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, it is a pleasure to speak on Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006.

When looking at a budget, the challenge of any government is to balance a budget that is going to ensure economic productivity and competitiveness and ensure people have money in their pockets. It should try to find a balance, that yin and yang between being able to have a productive dynamic economy and having the resources to provide the social programs we enjoy. As well, ensuring that individual Canadians have the maximum amount of money in their pockets and that governments do not waste money is the challenge of any budget.

The fundamental question of this budget is whether it meets that test. Does it enable our country to have a productive, dynamic economy and also provide the resources to allow us invest in the infrastructure we require in order to have a productive economy? Does it enable us to have the resources to provide for the social programs that all Canadians enjoy? I would argue that this budget fails on all of those counts. I will go through the reasons.

If we look at the global context, we can see in the future a greater amount of competitiveness in the world from giants such as India and China. They are on an economic juggernaut that will increase as time passes. It is up to us to change, modify, improvise and become more dynamic in order to stay ahead of those countries. If we fail to do so, we will suffer.

Right now Canada stands at eighth or ninth in the world in terms of economic productivity. That is okay, but we can do better. I am going to outline ways in which this budget fails as well as solutions for how our country can improve its productivity, for the reasons I mentioned.

This bill deals with a number of income tax measures. I am going to go through them in a second. I also want to say that the fundamental aspects of a balanced budget that will be useful are that the budget is indeed balanced, that there is responsible spending, there is debt reduction and there are tax reductions so that we will have a competitive international tax rate. I have mentioned the reasons why we ought to do that.

I also want to mention one of the profoundly disappointing aspects of this budget. Canadians would be very interested and very disappointed, I think, to know that this budget by the present government actually increases the taxes on the most vulnerable in society, the poor and the lower middle class.

How does it do that? The government increased the lowest tax rate that exists in our country. It also reduced the basic personal exemption. The government argues that the balance to that is the dropping of the GST, a consumption tax, but does a consumption tax really benefit the middle class and the poor? Dropping a consumption tax like the GST benefits primarily the rich, because in order to benefit from that, one has to spend. The more one spends, the more one benefits.

The people who are struggling to survive do not spend that much; ergo, they do not benefit as much. When government takes money out of the pockets of Canadians, it hurts Canadians selectively. Therefore, the wisest thing the government could have done in terms of productivity and of fairness, I would argue, would have been to drop the lowest income tax rates and increase the basic personal exemption. That puts real money in the hands of Canadians.

There is a reason why this budget is so peculiar and particular in certain areas, why it cherry picks certain benefits and does not deal with global tax reductions for individuals, particularly the poor and middle class. The reason is that this is a cynical budget. It is a budget that is designed to curry favour with the electorate. Naturally all political parties want to do that, but to do that by cynically parking one's brains at the door and not implementing solutions based on fact, reason and science is irresponsible.

Instead, the government and this budget are engaging in irresponsible behaviour because the solutions are based on cynically trying to curry favour with the public and putting forth woolly-headed solutions that sound good on the one hand but are not very effective. I gave the example of the GST cut. On the surface it sounds very exciting and good, but unless one spends a whole lot of money, which means one is rich, it is not really going to benefit the rest of Canadians. The fact is that Canadians with low or modest incomes are struggling hard these days. The increased tax burden on them is irresponsible.

One of the tax benefits the government has introduced in this bill is something called the Canadian employment tax credit. On the surface, that sounds wonderful. It is $1,000, but in reality, if we read carefully, we see that it is a tax credit for those who are working. Those who are unemployed and those who are really struggling, the most vulnerable, cannot access this. In fact, those who are working and making minimum wage or close to it do not pay very much in the way of taxes, so this kind of tax credit is not of as much benefit to the most vulnerable in our society at all. It does not help them at all.

What would be smarter? Earlier this year, I introduced something called the Canadian low income supplement, for which I have a private member's bill that will be introduced in the House in the next little while, a bill saying that a person who makes $20,000 or less will receive a cheque for $2,000, tax free. That number will decline to zero in a linear fashion, down to $40,000.

Why? Because this is real money in the hands of those who need it the most. A tax credit for those who do not make much money is utterly immaterial, because either they do not pay tax or the tax is so small that it does not really amount to much. When we so-called help those who are of modest means, we give them $50 a year.

Also, my bill does not apply only to people who work. It applies to people who do not work and who are on fixed incomes. For example, all of us here know seniors in our ridings who are living on fixed incomes. They have given their lives to our country and are living on a very tiny amount of money. The amount of money in my bill, the $2,000, is real money, tax free, in their hands. It will enable them to live and put food on the table. If people are younger, this will enable their children to have various benefits. If people are older and retired, it will enable them to pay for medications that are not covered, as well as a host of other challenges our seniors face day in and day out.

The Canadian low income tax supplement that I introduced earlier this year is something that the government ought to adopt. I hope Canadians who are listening will put pressure on the government, because this would mean real money in the hands of the most vulnerable in our society. It is fair, equitable and humane. It will help those in our society who are most impoverished.

Let us look at another couple of tax measures that are in this bill. One is the Canadian textbook credit of $500 annually, a credit for textbooks for students. On the surface it sounds good, but how does it actually materialize and get into the hands of a student? The tax credit is multiplied by the lowest income tax bracket. Therefore, this tax benefit is actually worth only $77.50. That is right. This $500 tax credit is worth only $77.50 in the hands of students. That, as we know, will not pay for even one single textbook for most courses in post-secondary education.

The next issue is the transit tax to reduce greenhouse gas emissions. We know that the government's so-called clean air act has been an absolute bust full of hot air. What would be a series of solutions that would actually reduce greenhouse gas emissions? I will give members a few.

If we take a look at greenhouse gas emission reduction, we will see that it is tied to our burning of fossil fuels, so the question is, how do we reduce fossil fuel consumption? I have a few suggestions.

Perhaps the simplest way of doing that is tied to how we build our homes. We lose an incredible amount of energy in our homes. We know that the technology exists today to build our homes more efficiently and substantially reduce our consumption of fossil fuels. China is making buildings that produce 70% less greenhouse gas emissions than buildings of a similar size in North America.

What the government can do is go back to adopting the EnerGuide program that it so callously cut because it was so-called Liberal. It may be something that we introduced, but the reality is that the EnerGuide is a good program. It enables people to have the tools, resources and know-how to provide and implement those changes in their homes that will reduce the consumption of fossil fuels and, therefore, the production of greenhouse gas emissions.

I have another couple of suggestions. As we know, cars made before 1986 produce 37 times the number of greenhouse gas emissions produced by a car made after 1996. That is absolutely staggering. By removing from the road one car built prior to 1986, we are actually reducing by the equivalent of removing 37 cars made after 1996.

The government should provide a tax break or eliminate the GST for anybody who takes a 1986 car off the road and buys a car made after 1996. It would be simple and easy to do. In effect, this is an example of tax shifting. The Minister of Finance should take a look at it. Frankly, it ought to be in this bill. It would enable us to shift the tax and encourage people to adopt actions that are more energy sensitive and environmentally sensitive.

Another issue is the Canadian children's fitness tax credit. This is a $500 tax credit for a parent, but again, it is only worth $77.50 because it is multiplied by the lowest tax rate. A parent would actually receive $77.50, not $500. The purpose behind this tax credit was noble: helping parents get their kids to become more active. We know that childhood obesity is at epidemic proportions in our country. How do we deal with this issue?

It would be smart to do two things. First, as I have argued repeatedly in the House, and in fact we passed it in this House in 1998, would be a headstart program for children. It could be adopted in the following way. The Minister of Health should call together all the ministers of health and the ministers of education from across Canada and tell them they should be providing this program for all children up to and including grade 3. Parents would be allowed to go into the class once every two weeks for two hours, if they wanted to, and they would deal with issues such as physical education, literacy and nutrition. Parents would be working with their kids on these three important things.

Literacy and physical education would be used, along with proper discipline, proper care and nutrition. This would have a profound impact on the lives of these children. The pillars and benchmarks would be laid for a solid individual in the future. Prior to the age of 8, neurons in a child's brain are actually quite malleable. They change. What a child experiences at that time could have a positive or negative impact on their future. It would be a smart move if the Minister of Health worked with his counterparts across the country to implement a headstart program.

The other thing that could be done is the implementation of a mandatory physical education program in schools, up to and including grade 11. Mandatory physical education would be very helpful in getting kids physically active during the course of the day.

As I said, it is very important that a budget such as this deal with productivity. I am going to outline a few solutions we could implement that would dramatically improve our productivity and enable us to be really competitive with those giants at our heels right now, particularly India and China.

First, we could reduce the basic personal exemption. Second, we could reduce the lowest tax rate. Third, we have to make sure that we reduce the tax rates on businesses so they are competitive across our country. Ensuring that we have a competitive business tax regime is extremely important.

With respect to surpluses, we should implement the one-third, one-third, one-third rule. One-third would be debt reduction; one-third would be spending on critical areas, which I will mention in a second; and one-third would be tax reductions for businesses and individuals.

With respect to investment, it is very disappointing that the government did not continue the research and development investments that my party made over the last five years. Rx and D is an absolutely integral part of our ability to be competitive. Therefore, I have no idea why the Conservative government chose to dramatically decrease research and development investment. This is one of the pillars of a vibrant and productive economy. Some of that money ought to be going to universities and colleges. Some of it should be used to encourage the private sector to reinvest profits into businesses.

The government should work with the provinces to harmonize the PST and GST to ensure that provincial sales taxes are not applied to business inputs but into their businesses.

The PST in some provinces is exempt from business inputs and in others it is not. The federal government could work with the provinces to ensure there is no PST or GST on business inputs, which would enable companies to make the investments they require.

On education, let us enable our students to get the higher education they require. With costs escalating, I find it reprehensible that individuals in our society are barred from accessing higher education because of the amount of money in their pockets. A fundamental tenet of our country is that everyone has the equal opportunity for success, not equal outcomes but an equal opportunity to be the best that they can become.

The fact that tuition fees have escalated so high and, quite frankly, have become a barrier for some people to access the education they require, is something the government should put its full effort into with its provincial counterparts.

In infrastructure, the government should be adopting the cities agenda that we started. The cities agenda is extremely valuable in ensuring that investments and monies that we have at the federal level will be driven at the municipal level for the needs of local communities. We did that. The agreements were hammered out with the provinces and municipalities and the Federation of Canadian Municipalities was very happy with that. I implore the government to continue with the program.

As the House knows, there are greater barriers to trade east-west than there are north-south. My province of British Columbia has signed a landmark deal with the province of Alberta to dramatically reduce and almost remove the barriers to trade between British Columbia and Alberta. There is no reason that the federal government cannot take a leadership role with the provinces to do this.

How would it work? The Minister of Finance, the Minister of National Revenue and the Minister of Industry should work with their provincial counterparts to call a trade council together where we put forward the trade barriers, eliminate those that are unnecessary and useless and we move on. It is a major restriction.

I will give one example, which is labour. The fact that somebody who is trained in Ontario cannot work in British Columbia or that somebody trained in B.C. cannot work in Newfoundland is ridiculous. The fact that we are all trained in the same country and yet our skills are provincial specific is an absurd situation. It is a major restriction to labour mobility and a major drain on the ability of our country to be economically competitive. I encourage the government to work with its provincial counterparts to do that.

When we were in government we started the smart regulation initiative, which took a ruthless look at the regulations. We started hacking away at and removing all those regulations that were unnecessary. The groundwork is there. The minister should take a look at this, continue with the smart regulation initiative and reduce those barriers to trade.

My last point is on the issue of immigration. With our changing demographics we know that the ratio between the retired population to worker population is increasing. We can do two things. First, retire the mandatory age of retirement. If the 65 of today is the new 50, why on earth do we not allow people who are 65 and above to work? It is absurd given the demographic changes that we require. These are smart, productive, willing people who want to work. They would be a boon to our economy.

Second, with respect to immigrants, many of the immigrants in our country are working on the margins because they may be here illegally. However, to ensure we honour the law but also enable these people to become integrated into our society and not live at the margins, we should give these people an opportunity to come in from the cold, apply for a worker's permits, give them a two year permit and renew it a couple of times. If they are law-abiding, pay their taxes and are employed, we then give them the chance to become Canadian citizens.

I have provided the government with a series of solutions and opportunities that it can take which would enable our country to be more productive. I am sure the government will find widespread support from across Parliament to give effective solutions to the benefit of our great people.

Budget Implementation Act, 2006, No. 2Government Orders

12:35 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Mr. Speaker, I want to pick up on the notion of moving up the mandatory retirement age from 65. I think that is a good idea and something that needs to be looked into.

One of the things we have repeatedly heard at the finance committee concerns bumping up the age at which we need to convert our RRSP into RRIF. The suggestion has been that we move the age from 69 to 71, which is what it was before the change was made about 10 years ago.

I wonder whether the hon. member has a comment on whether that appears to be a good idea. It is consistent with his notions of changing the retirement date. Does he have any thoughts as to whether, given his mental--I mean medical background, possibly his mental background as well or possibly his heavy metal background, for which I am sure there is some hearing loss, 71 or 73 might be a more appropriate age given that we are all medically a little healthier than we were in the past?

Budget Implementation Act, 2006, No. 2Government Orders

12:35 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, I will not make any comment about his preamble as it would be telling far too much.

As the former parliamentary secretary to the minister of finance, he is well-versed in these issues. We can do a few things. I agree with him about shifting the age upward for the RRIF but we can two more things.

First, we could allow people to take, say, $10,000 from their RRSP after the age of 55, tax free, if they make below a certain amount of money. The reason for that is that there are costs we incur as we get older, particularly medical costs. Why not allow people to access those funds from their RRSPs, tax free, to enable them to provide for themselves? That could be something innovative.

Second, if we were to completely abolish the mandatory age of retirement, in order to give an incentive to keep people engaged in the workforce but also lessen the pressure on our CPP, we could do the following. I introduced a bill that would work like this: at 65 we would receive 50% of our CPP, tax free; at 66, 60%; at 67, 70%; and at 68, 80%. What would this do? It would keep people engaged in the workforce, lower the demands on the CPP, improve our productivity and give people more money in their pockets at a time when they may need those moneys in their pockets because of personal circumstances. In doing so, it would be a win-win situation for all concerned.

Those are innovative solutions that we could adopt and they would be helpful to people as they get older.

It is interesting that when the mandatory age of retirement was put forward at 65, the average life expectancy was only 58. People thought they would never reach that age so they thought it was a small thing. Women are now living to the age of 82 and men to 79. It is now incumbent upon us to rethink the situation.

Budget Implementation Act, 2006, No. 2Government Orders

12:35 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Mr. Speaker, in the absence of any other interventions, I think this is actually an interesting conversation. I like to see that the hon. member has actually thought about some of these issues.

Another issue that came up at the finance committee was allowing self-employed people to have access to actual pension plans that operate like an employer pension plan as opposed to an RRSP. I thought there was some merit in that idea because a lot of people are not very versed in investments and things of that nature. We could have a fiduciary entity, such as a large trust company, a fund company of some kind or another or possibly the government itself, operate as the pension entity so that people could actually make contributions in the same way that they make contributions to their pension, as would their employer make contributions.

I was wondering whether, for self-employed people or for people who have irregular income, the hon. member thinks that might be an idea that is worth exploring by the government?

Budget Implementation Act, 2006, No. 2Government Orders

12:40 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, my colleague is very well versed on this and, as a parliamentary secretary, I know he has worked extremely hard with our former minister of finance to implement many of the solutions.

If viewers were to look back in history and look at the innovative partnership that occurred there, they would see the types of innovations that were implemented on behalf of the Canadian public.

The member's suggestion is very good because those people who are self-employed do tend to fall between the cracks. Their income ebbs and flows as time passes. It is very important that we look at the fiscal pressures that are placed on people as they get older.

I suggest that the demographic time bomb that is before us is the most under-represented and underappreciated issue of our day. Unless we implement the solutions today to deal with those challenges, a lot of people will be unnecessarily hurt.

Quite frankly, all we need to do is take a look at the European experience and the pressures being applied to the pension structure in Europe and we will see how worrisome this is. We need to look at that in order to implement the solutions today that will ensure Canadians as they get older will have the money they need. Some solutions that we have worked on for some time could provide that.

However, if we fail to deal with this today it will be a gross act of negligence on the part of the government. I implore the government to do that and to work with the rest of us to implement these solutions for the benefit of our citizens.

Budget Implementation Act, 2006, No. 2Government Orders

12:40 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Mr. Speaker, the area that the hon. member is talking about is at least one of the foremost challenges facing any government today, and it does not really much matter whether it is Liberal or Conservative.

Does the hon. member have some comments with respect to not only moving up the age, but what the impact of moving up the age from 65 to something else would be in situations where there is a defined benefit plan which is in trouble? My recollection is that there is something in the order of 50% of plans that are not fiscally sustainable at this point, given the year and the date at which the beneficiaries would cash in. If the date were moved forward, or up, their fiscal sustainability would be there.

It would also have an interesting impact on the Canada pension plan. Right now, due to the work of the previous government, the Canada pension plan is fiscally sustainable for another 75 years. If there were small changes such as that, we would suddenly take the pension crisis that we are potentially facing and, as I say, it does not matter which government will be on that side of the aisle, change the entire conversation and the dynamics. How to deal with people who have legitimate expectations at 65 is another issue.

Has the hon. member given some thought to that kind of an issue?

Budget Implementation Act, 2006, No. 2Government Orders

12:45 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, I think there is a situation that people must understand. When I said that one could retire later on, I think there should be no mandatory age of retirement. However, if people want to retire at 65, that would be the age upon which they could access their CPP. They would receive their full CPP if they simply chose to retire at 65 and they would access all of what they were entitled to.

However, if people wanted to continue to work, the incentive for them to work would be that they would receive 50% of their CPP at 65 and it would increase as time passed year by year, receiving full CPP at the age of 70 if they were to continue to work, and there is no reason on earth why they cannot.

What we need to realize about this demographic time bomb is that if nothing is done we not only have a shrinking workforce, but we also have increasing demands on our social programs.

Many good people in this country have done some great work, including those at Simon Fraser University and in the House, such as my hon. colleague. All of us would be willing to help the government to deal with this issue that is most pressing.

Budget Implementation Act, 2006, No. 2Government Orders

12:45 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, I am very pleased to speak to Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on May 2, 2006. As we all know, the Bloc Québécois supported that budget.

I am especially pleased to speak to Bill C-28 here today because several measures in this bill are quite similar to measures that the Bloc Québécois has been proposing for many years. Consider, for example, the tax credit for public transit passes. I seem to recall that one of our colleagues already proposed in this House a private member's bill that was very similar. Another example is the textbook tax credit. For some time, the Bloc Québécois has been calling for the elimination of taxes on all products and services related to books. This has been done in Quebec. This encourages access, not just to textbooks, but to all literature, regardless of target audience, since we must start somewhere.

Finally, the tax break for microbreweries—in fact, the government has extended it to all breweries—is completely in line with what the Bloc Québécois has been proposing. The Standing Committee on Finance also looked at this issue several times. Bill C-28 finally contains this provision, which we have wanted for quite a while now.

There are also provisions to help the next generation. This has been a major concern of the Bloc for quite some time. We even organized a symposium together with the Union des producteurs agricoles on the next generation of farmers. It is important, therefore, to have provisions in the act that facilitate the intergenerational transfer of businesses, although I will have a chance later, of course, to say that much more could have been done in this regard and in other regards as well.

In addition, there are provisions to help apprentices and tradespeople acquire the tools they need. Other provisions help out family fishing firms. Finally, a whole series of tax measures help to strengthen small business, which is the real economic backbone of Quebec. The Bloc Québécois will obviously, therefore, support these measures.

In general, much still needs to be done, but we have a few steps here in the right direction and the Bloc Québécois will vote in favour of Bill C-28.

I would like, first, to describe the bill because it contains a host of provisions. It is important for the people listening to us to understand the full scope of what is in this bill. Basically, there are five main groups of provisions.

The first is a whole series of tax provisions for individuals. Here we find the tax credit for apprentices and tradespeople, an increase in the non-refundable credit for people receiving a pension, the establishment of a public transit tax credit, and an increase in the refundable credit for medical expenses. This first group is aimed, therefore, at individuals.

The second group extends benefits already given to farms to fishing firms as well. The fishing sector is in serious difficulty at the present time. These benefits are therefore very important to us, especially in regions such as the Gaspé, the Lower St. Lawrence and the North Shore. So as I was saying, the second group extends certain provisions previously available to farms to fishing firms as well.

There are various measures dealing with capital gains, the transfer of a business to other members of the family and agribusiness tax benefits.

A third main group of provisions in Bill C-28 has to do with various tax measures for businesses including, among others, the abolition of the surtax on the revenue of Canadian corporations and an increase in the amount a small or medium-sized business can earn if it wants to benefit from a tax credit.

A fourth series of legislative changes pertains to lowering the tax rate on capital gains of Canadian banks.

The last series of measures aims to lower the excise tax on the first 75,000 hectolitres of beer brewed in Canada in order to stimulate the growth of this sector and microbreweries in particular. This is an emerging sector that has had significant growth in recent years.

This sector has been growing in the regions also. For example, in the Joliette region, the Alchimiste microbrewery was experiencing difficulties because taxation by some of our European and American trading partners benefited their microbreweries. In the Canadian tax system, no distinction is made between a major brewery—such as Molson or Labatt—and microbreweries.

We will see that the minister has somewhat changed his tune from his initial announcement. It is interesting to note. We will all have the opportunity to comment on the reasons that led the minister to apply this measure not just to microbreweries but to breweries in general, as requested by the Standing Committee on Finance. The lower excise tax will also apply to major breweries as well.

I would now like to come back to the first series of measures: tax measures for individuals. The first measure for individuals introduced in this notice of ways and means and in Bill C-28 implements a mechanism allowing apprentices and tradespeople to deduct expenses for certain tools. Deductible expenses may not exceed $1,000 or 5% of the apprentice's annual income, whichever is greater. It also allows tradespeople to deduct up to $500 of the cost of certain tools.

Next, the bill implements indexation of the tax credit for apprentices and tradespeople. The maximum non-refundable credit for some people receiving pension income will double from $1,000 to $2,000. It also creates a $1,000 non-refundable tax credit for employment income starting at $250 for 2006 and increasing to $1,000 in 2007.

It creates a non-refundable tax credit for public transit. To be eligible for the credit, taxpayers must supply a receipt or proof of purchase of a long-term public transit pass. Obviously, this does not apply to daily or weekly passes because we want to promote the use of public transit and relieve congestion on our roads. We could also have talked about meeting the Kyoto protocol targets or helping meet them, but because that word has become taboo for this government, we thought it best not to mention it.

This bill also creates a tax credit for textbooks of $65 per month of full-time study and $20 per month of part-time study. The refundable medical expense supplement will be increased from $767 to $1,000 and continue to be indexed to the cost of living. In addition, the bill will reduce the threshold for deducting medical expenses to the 2005 level. It will then continue to be indexed.

This first series of measures for individuals, some of which are better than others, aligns with what the Bloc Québécois has been proposing over the past few years.

The second group of provisions extends the same tax benefits currently enjoyed by fishing businesses to agricultural businesses as well. Thus, tax measures such as forward averaging when transferring a family business that includes agricultural capital property will also apply to fishing businesses.

The third group of provisions has to do with corporate taxation. The business limit under which Canadian and Quebec small and medium-sized businesses can seek a reduced income tax rate is being increased from $300,000 to $400,000. This will reduce the tax rate for small and medium-sized business from 12% in 2007 to 11.5% in 2008 and 11% in 2009. This measure will allow small and medium sized businesses to generate the liquidity they need for future investments.

This bill will eliminate the 1.2% surtax targeted for Canadian controlled private corporations in 2008, with a subsequent reduction of 0.5% planned for corporate income tax in 2009 and 1% in 2010. As a result, this will translate into a corporate income tax reduction from 22.2% in 2006 to 19% in 2010. These measures should encourage investments, although a generalized tax reduction such as this does not automatically lead to increased investment, as we have learned in recent years.

The corporate tax rate was some 28% in the early 1990s, but has fallen to 22.2%. Despite that, the rate of investment last year was not as high as expected, and Canada has moved down in the ranks in terms of productivity. We are currently ranked 15th or 16th, although we ranked much higher just a few years ago.

These measures are necessary, but are not enough to ensure that the Canadian and Quebec economies regain their former productivity. This is important, as we all know, especially considering our aging population and the knowledge-based economy.

The fourth group of provisions amends the tax rate for banking institutions. A single tax rate will now be applied on the taxable capital surplus of financial institutions, and the threshold at which financial institutions start paying tax is being increased. Previously, banks were taxed according to a sliding scale. For example, corporations did not have to pay tax on surplus capital of $0 to $2 million. Between $2 million and $300 million, the tax rate was 1% and for higher amounts it was 1.25%.

The new legislation amends the tax scale whereby a 1.25% rate will apply when taxable capital exceeds $1 billion. In future, we will have a uniform tax rate at a tax level that is quite interesting, especially for small and medium-sized banks, as I was saying.

The last group of provisions has to do with reducing excise duties on beer brewed in volumes up to 75,000 hectolitres. This new measure amends the Excise Tax Act and the Excise Act, 2001, by implementing a sliding scale based on the number of hectolitres brewed.

As I mentioned earlier, prior to this amendment all breweries, no matter the amount brewed, paid a fixed duty according to the volume of beer brewed. This new measure is favourable to microbreweries. In addition, and this is rather surprising, major breweries will also benefit from the reduction in excise tax payable on the first 75,000 hectolitres produced. I am almost certain that some of these major breweries exerted pressure on the government to have this measure apply across the board. Nevertheless, what is important to us it that it will benefit microbreweries and allow them to compete with American and European microbreweries in particular.

I would now like to comment on our position on these provisions. With regard to the first group, concerning taxation of individuals, as I mentioned, we have been calling for a tax credit for tradespeople's tools for some time. These workers often have to pay for their tools out of their own pockets even if employed by a garage or shop. It is quite a significant expense for them. In our opinion, this tax credit will be a tremendous help, particularly for apprentices who not only have to upgrade their tools but also purchase a basic set of tools.

The second measure pertains to public transit. I mentioned that a non-refundable tax credit is being proposed by the government. I have two comments in this regard. We would have preferred a refundable credit because quite often, people who use the bus, subway or public transit are not well off, do not pay income tax and thus cannot benefit from this measure. Consequently, we feel they could have gone one step further by providing a refundable tax credit.

Naturally, we do not believe that the overall number of users of public transit in Canada and Quebec will increase solely because of this measure. We need much more, particularly in light of the fiscal imbalance, to ensure that municipalities and transit commissions to have the necessary means to provide good service at affordable prices. Once again we support this measure in view of attaining the Kyoto targets.

What about the elderly and other segments of the population such as individuals receiving disability pensions, for whom these benefits represent their main source of income?

We in the Bloc Québécois have always maintained that older people should receive special treatment. Obviously, we would like to go much farther than that. Specifically, we are calling on the government, as we have done for a number of years, to ensure that all older people who qualify for the guaranteed income supplement receive it. A few years ago, we noticed that tens of thousands of people who were entitled to the supplement were not claiming it, because they did not know the program existed. Unfortunately, this is still true. At the time, Marcel Gagnon, the member for Champlain, travelled across Quebec. We were able to locate many people who did not think they qualified for this program. Unfortunately, many people still are unaware that they qualify.

As for the tax credit for textbooks, I repeat that we are not opposed to this measure, but we would have thought a refundable tax credit would be preferable, because students, especially full-time students, usually work only during the summer and therefore do not pay income tax, because they do not have sufficient income. They will therefore not benefit from this measure. I know that students can carry this credit forward, but they are purchasing books now. It therefore would have been preferable to have it now.

I know that the Minister of Finance was interested in the suggestion my colleague from Jeanne-Le Ber made at a meeting of the Standing Committee on Finance to look into this. In my view, it should go further.

As well, we are calling for the abolition of the GST on books. Once again, this is vital for us, especially when we are talking about a knowledge-based economy.

Now, if we look into the second main group of provisions—new measures for fishing businesses—as I have mentioned, we are in favour of the new measure aimed at introducing the same types of forward tax averaging in the fishing industry as for farm businesses. However, we think that this benefit could have been more widely accessible. The measure proposed by the government applies to transfers between people in the same family. We think that the government could have gone further and extended the measure to intergenerational transfers outside the family.

As to the third series of provisions, corporate taxation, as I was saying, we fully support increasing the amount of revenue that would allow small and medium-sized businesses to have access to a lower tax rate. In fact, that was part of our 2000 election platform. The Bloc Québécois will stand up for measures that strengthen our SMEs, especially in Quebec, where the economy is made up of small and medium enterprises.

We are aware that competition exists among different countries and jurisdictions with respect to taxation. We must therefore also reduce the corporate surtax.

However, in the case of oil, there is no danger of relocation because companies cannot transfer the oil supply to China or Mexico. Therefore, we think it makes sense to maintain a surtax for oil companies and to abolish rapid amortization in the oil sands, where all investments can be written off in one year, instead of 25% per year, as is the case for conventional oil and gas. We think that is abusive.

I mentioned the fourth group of provisions, which has to do with taxation of banks. Obviously, the proposed measure benefits all banks, but it could also have an impact on the smaller banking institutions. I would like to remind the House that, as we have said in relation to Bill C-37, we have been trying for many years to increase competition in the banking sector, which is extremely concentrated. Five big banks control nearly all of the activity and do not really offer consumers any choice. The proposed measure will most likely have a positive impact in this respect. Let us hope it does.

I would like to conclude by saying that we are very pleased with the measure to reduce the excise tax for microbreweries. I am certain that the entire microbrewery sector, particularly in Quebec, will benefit from this new measure. Might I remind the House that we have been asking—

Budget Implementation Act, 2006, No. 2Government Orders

1:05 p.m.

Regina—Qu'Appelle Saskatchewan

Conservative

Andrew Scheer ConservativeAssistant Deputy Chair of Committees of the Whole

Questions and comments.

The hon. member for Timmins—James Bay.

Budget Implementation Act, 2006, No. 2Government Orders

1:05 p.m.

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, I listened with great fascination to my colleague's support for the budget, particularly in two areas. We follow with great interest the Conservatives' changing position on climate change. First, was that it did not exist, that it was something made up by the eco-freaks. Then we heard the theory that the last round of global warming was caused by dinosaur flatulence. Then they finally admitted there was some global warming, but we were not to worry, that a bus pass would stop the glaciers from melting. I believe that position was brought forward to Nairobi and was laughed out of the joint.

However, I am amazed that the members of the Bloc Québécois are now agreeing that the science of the Conservatives is exact, that thank God they have brought in a bus pass because it is going to stop global warming and go a long way toward achieving our Kyoto targets. The budget has trashed all the Kyoto targets, but the Bloc totally supports it.

The other thing I found interesting was our students getting a tax deduction to buy school books. I do not know what the students in his riding go through in terms of debt, but students in my riding rack up $40,000 worth of debt. They come to southern Ontario from northern Ontario and spend four or five years going to university. Guess what? They fall in love and that gives them $80,000 worth of debt with which to come home. The New Democrats feel we need a policy to lower student debt.

However, I am glad to see the Conservatives have an ally in the Bloc. It believes that getting a $65 break on a text book is all students need. I guess I am somewhat flummoxed that this is the Bloc's position. On top of that, the other reason it supports a budget this bad is it helps microbreweries. I like beer as much as the next man, however, I did not think that was the basis of a national strategy or a budget.

Does my hon. colleague believe the budget really does do anything for Kyoto or is he just trying to prop the government up?

Budget Implementation Act, 2006, No. 2Government Orders

1:05 p.m.

Bloc

Pierre Paquette Bloc Joliette, QC

Mr. Speaker, I would like to thank the member for his question, but I would also like to clarify a few things. We supported the budget on May 2. Our leader was very clear about that. We supported the budget because the government promised to correct the fiscal imbalance as of the next budget. Last December 19, while he was on the campaign trail in Quebec, the Prime Minister promised to do so. We expect the Conservative government to correct the fiscal imbalance once and for all next February. By our calculations, it amounts to $12 billion for all of Canada and $3.9 billion for Quebec.

Of Quebec's $3.9 billion, $1.2 billion is for post-secondary education and social programs. The rest of Canada will be spending $5 billion on those objectives. I would like to remind my colleague that university rectors, professors' associations and unions and student unions agree on those figures.

We are working to ensure that the education sector receives adequate financing and, within the next few weeks, we expect the Conservative government to agree to this request made by the Bloc Québécois and all education stakeholders.

That said, it is clear that, taken together, these measures do not do enough. Nevertheless, we believe that many of them are a step in the right direction.