Debates of May 10th, 2007

Business of the House

[Some hon. members]

Agreed.

[The Speaker, Liberal, Peter Milliken]

(Motion agreed to)

[Ralph Goodale, Liberal, Wascana, SK]

Mr. Speaker, I rise on a point of order with respect to one specific item the government House leader referred to, the legislation having to do with the Vancouver Olympics.

I think this will be the first time the House has had the opportunity to consider that matter. I wonder if he might undertake some consultations among House leaders to see if there is a will in the House to expedite that item.

I understand there are some timing considerations pertaining to that legislation and we might be able to arrive at some understanding to move it expeditiously in the interests of the Olympics.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I thank the opposition House leader very much for that very kind offer and I would be very happy to take him up on that.

Mode of Transport Used by Public Office-holders

[Jack Layton, NDP, Toronto—Danforth, ON]

Mr. Speaker, I rise on a question of privilege.

I wish to correct the misinformation that has been put before the House by the government House leader and ask the minister to correct the record. It has to do with allegations of commuting back and forth by a city councillor, who happened to have been me, about seven years ago in Toronto.

I want to make it very clear that unlike the allegations that were put forward, I was not commuting back and forth between city hall and my home, which was a four minute bicycle ride or a 10 minute walk away. It takes a heck of a lot longer in a vehicle.

For the record, the facts of the matter are that I was president of the Federation of Canadian Municipalities. The city had a vehicle, not a limousine, a vehicle, driven by disabled workers, workers who had been injured on the job. The vehicle was used, instead of hiring a courier company, a limousine or a taxi to go to the airport or to deliver parcels, by 43 different councillors, all members of council, for practical purposes. It kept someone employed and saved the taxpayers money.

Those are the facts of the matter. Being president of the FCM required a great deal of travel back and forth to the airport at the time.

One fact to be noted is that unlike the situation with the travel of government ministers, all of these facts are on the public record.

[The Speaker, Liberal, Peter Milliken]

I am sure the minister appreciates the clarification offered by the hon. member.

The House resumed consideration of the motion.

Opposition Motion—Finance

[The Speaker, Liberal, Peter Milliken]

Before statements by members and question period, the hon. member for Jeanne-Le Ber had the floor. He still has five minutes to complete his remarks.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I would like to recall that I am splitting my time with the member for Chicoutimi—Le Fjord.

In the first part of my presentation, I talked about interest deductibility. I would now like to talk about income trusts. I was explaining how, like the Liberals in the past, the Conservatives have bungled this file.

We recall that under the Liberal Party, there were hesitations and contradictory statements by the then Minister of Finance on the future of income trusts. Would they be taxed, and how much, in the near future? There was a moratorium on income trusts, which was subsequently lifted.

In addition, an RCMP investigation was conducted further to some suspect stock market movements prior to the announcement on income trusts by the then Minister of Finance.

Still, the Liberals are not the only ones to have bungled this file. The Conservative government promised at the height of the election campaign that it would never touch income trusts and would not tax them. Some investors believed the Conservative government and invested massively in this type of company, thus inflating prices accordingly. Unbeknownst to them, they were taking a huge risk since they had faith in the word of the Prime Minister.

We know what happened. Last fall the minister announced that he was going to levy a tax on income trusts, contrary to the commitment that had been made. So he reneged on his promise and cheated the investors that had trusted him, and that is what is serious.

Basically the Bloc Québécois is obviously not against the fact that the income trusts are being taxed. We think that this business model can be applied in some cases, depending on the nature of the commercial activity, but it is not always appropriate. A company must not structure itself like this for the sake of tax considerations alone. That was the problem to be dealt with. An increasing number of companies or corporations were turning themselves into income trusts.

This was becoming worrisome, particularly for our economy's productivity. Some companies, such as Bell and BCE, were forced to convert to income trusts to cater to their shareholders' wishes for very large profits in a very short time, even if it was not good for the company in the long term. Income trusts are required to redistribute all their profits each year, and they cannot set money aside to invest in the development and improvement of their business. In the long term, they are put at a considerable disadvantage. This must be fixed.

For these two reasons, we will vote against this motion. On the one hand, we have not finished examining interest deductibility, which needs some further work, and on the other hand, even if the Conservative government has betrayed investors by deceiving them into thinking it would not touch income trusts, this correction was necessary. The Bloc Québécois suggested extending the transition period to 10 years. Unfortunately, the Conservative government did not go for this proposal, which is too bad.

The last reason we will not support this motion is that it does not mention tax havens. This has been a longstanding battle for the Bloc Québécois since the Liberals were in power. We remember the epic battles we led so that businesses would no longer be able to avoid paying taxes in Canada by setting up shop in Barbados and other places.

Essentially, a clause in regulation 5907—if my memory serves me correctly—enabled them to bring back foreign-earned profits, tax free, even though they were not truly taxed in Barbados, where the tax rate is ridiculously low at 1% or 2% in extreme cases. We thought this was inappropriate.

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

Mr. Speaker, first I would like to congratulate my colleague, the member for Jeanne-Le Ber, for his speech. Like him, I rise today to speak to the motion tabled by the Liberal Party with regard to income trusts.

As pointed out by my Bloc Québécois colleagues, we supported both the ways and means motion and the 2007-08 federal budget. The latter changes the taxation of existing income trusts, which will receive the same tax treatment as corporations at the end of a four-year transition period. Furthermore, it will no longer be possible to establish new income trusts.

There are reasons for our support. First, we must realize why corporations register as income trusts. In the March 2007-08 federal budget, the Minister of Finance indicated that, year in and year out, the different levels of government lost $400 million in revenue because of income trusts. And this was before companies such as Bell and Telus announced that they would convert to income trusts which, in and of itself, would have inflated tax losses to about $1 billion annually. This measure, which has allowed corporations to avoid paying significant amounts of tax, had to be eliminated.

Furthermore, the income trust structure practically forces a company to pay 100% of its profits to its shareholders at the end of the year. Although the shareholders are the main beneficiaries of this measure, it has a negative impact on the economy. If the company retains part of the profits for an investment project, for instance, it must pay the maximum amount of taxes on that non-distributed revenue. This is why, in addition to the tax losses associated with the conversion of a growing number of income trusts for reasons that are strictly tax motivated, we must also look at the potential loss of productivity in our businesses, in the context of a serious productivity crisis in the manufacturing sector of Quebec and Canada. Between 2005 and 2006, Canada dropped from seventh place to tenth place in the world, according to the World Competitiveness Yearbook 2007.

Over the past few months, thousands of investors have been pressuring members of Parliament to reverse this decision. I am sure we have all met citizens who have come to us to tell their stories. In my riding, some of my constituents told me that the drop in the stock market cost them thousands of dollars. During the last election campaign, the Conservative Party promised not to touch income trusts. Investors trusted that party, trusted the government, and either kept such investments or acquired more, which meant that those investments became even more attractive and we saw an artificial inflation of the price. The Conservative government is therefore partially responsible, because it deceived thousands of investors during the last election campaign.

The Bloc Québécois supports this decision, but deplores the Conservatives' lack of honesty during the last election.

It goes without saying that steps had to be taken to eliminate the corporate practice of converting to income trusts in order to avoid paying taxes. Until now, only shareholders were taxed on dividends, not the trust itself.

I also want to mention the importance of keeping campaign promises to voters. A promise made to the people is sacred and must be respected. During the election campaign, the Conservatives had two options. They could easily have said that they would make changes once in power, or they could have avoided creating false hope by saying nothing about it. In other words, they should have stuck to what was in place and made a decision at the right time.

In 2006, companies that decided to convert to income trusts accounted for $70 billion worth of market capitalization, and that is not including telecommunications giants BCE and Telus, which also planned to convert.

Canada has about 250 income trusts worth about $200 billion in sectors ranging from real estate, oil and gas and telecommunications to food processing and manufacturing. The income trust craze was getting so big that it was endangering the national economy.

Again yesterday, the Bloc Québécois issued a news release demanding the elimination of tax havens. My colleague talked briefly about tax havens earlier. It would have been nice to see some steps taken against these tax havens, which are causing Canada to lose billions of dollars.

Given that some companies are taking advantage of interest deductibility to deduct interest charges in a number of jurisdictions, which is a form of tax evasion, and given that the Bloc Québécois is strongly opposed to tax evasion and the use of tax havens, we cannot support this motion. We will vote against the Liberal Party's motion.

Let us not forget that the bill concerning interest deductibility will be studied in committee, and that the Standing Committee on Finance will have an opportunity to submit its recommendations. Everyone will have the opportunity to suggest solutions to this problem during committee meetings.

The Bloc Québécois is very concerned about the increase in tax evasion in Canada. Canadian investments in tax havens between 1990 and 2003 soared, reached unprecedented levels, increased considerably. Canadian corporations invested large and growing amounts in countries recognized as offshore financial centres, particularly in the Caribbean. Assets held by the financial sector have practically increased tenfold, rising from $8 billion in 1990 to $72 billion in 2003. Barbados, where Canadian corporations operate 1,700 subsidiaries, is ranked the third most popular destination for Canadian capital abroad, after the United States and Great Britain.

Bill C-52 which is presently being studied by the House, amends the tax treatment of income trusts in order to eliminate the advantage of this entity over a corporation.

The Bloc Québécois has been giving thought to the issue of income trusts for a few years. We do not want income trusts to be abolished. One solution might be to introduce a minimum tax on income trust profits rather than preventing corporations from establishing themselves as income trusts.

With this bill, the government will impose a 21% tax for 2007 and will add 13% in subsequent years.

In closing, we will vote against the Liberal Party motion.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I listened with great interest to my colleague's speech and also the question that he raised about the obligation of telling the voters where one really stands on an issue.

I think it is germane to this discussion, because what we are talking about is something that was unsustainable. The income trust bubble created by the Liberals was unsustainable. Yes, corporations have an obligation to give dividends to their investors, but they also have an obligation to reinvest in their business and in the economy and they have an obligation to pay taxes. What we had was a situation where some of our top economic drivers in the country were being turned into a feeding frenzy for dividend investors. These were not sustainable in the long term.

The member for Wascana was one of the biggest promoters of this bubble that grew. The Conservative Party said it would support that bubble, but at the end of the day, as all bubbles do, it burst. I would suggest that perhaps the biggest burst was the credibility of the member for Wascana, which is why I think the Liberal Party is so adamant about dragging back this issue and trying to reclaim losses that cannot be recovered.

The fact of the matter is that this issue should never have been allowed to get this far. I would ask the member what he thinks about an economic policy, which seems to be driven by the Liberals and the Conservatives, to go for short term vote gains at the expense of a long term, holistic vision of building a national economy.

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

Mr. Speaker, as I said in my presentation, we are voting against the Liberal Party motion. We are against it because it takes a step backward. We think this measure must be upheld.

However, we deplore the Conservatives' attitude during the last election campaign, when they informed Canadian and Quebec citizens that they would not intervene in income trusts. When they came into power, they did indeed intervene. This prompted a certain attitude in investors. Some had bought more, believing that the government would not interfere.

We must also criticize the Conservatives' attitude toward their broken election promise.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I would like to ask my colleague whether he agrees or disagrees with the large philosophical thrust of his party versus ours. I believe he would have to agree that the 12 years of fiscal management by the previous Liberal government were extremely well done. That led the country to its first series of surpluses and what I think is the longest series of surpluses ever seen in the history of our nation.

Would the member share with me a great concern over the competence of the current Conservative government in the case of the income trusts? Obviously he is not going to support the motion, but could he explain why he then would support a decision by the government to break a promise that has led to a record number of takeovers by large foreign corporations, mostly American? These are takeovers of some very important energy and other income trusts in this country.

At the same time, the Conservative government is proposing, although now it is backtracking, to eliminate the interest deductibility for loans for foreign investments. That too is going to compromise Canada's ability to really compete in the world and workers' ability to benefit from what is actually a growing world economy.

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

Mr. Speaker, as I was saying earlier, the real shame is the way the Conservatives' changed their mind on their election promise.

In taxation, measures must always be fair. In that respect, we must advocate taxing these trusts. I believe that would be the fairest measure for Canadians and Quebeckers.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I will be sharing my time with the member for Newton—North Delta.

The misguided policies of the Conservative government, especially its finance minister, are making it increasingly difficult for Canadian businesses to succeed internationally. At the same time, Canadian companies are now particularly vulnerable to foreign takeover as a result of this government's income trust policy and, more recently, the wrong-footed corporate non-deductibility of interest proposal.

The Conservative industry and finance ministers stand by as strategic Canadian corporate icons are swallowed up by interests outside our borders. The worst is yet to come. Energy and other natural resource companies are special targets of private equity players awash with cash and of companies in emerging economies seeking more control over their commodity supply chain.

Already the list of recent foreign takeovers is staggering: Inco, Falconbridge, IPSCO, Dofasco, Algoma Steel, Fairmont Hotels, Labatt, CN, Four Seasons Hotels, and Hudson's Bay. Hudson's Bay is the oldest commercial corporation in North America. It received its royal charter in 1670 to develop the fur trade in Canada and it is now in the hands of outside interests. Canadian corporate icons Bell Canada Enterprises and Alcan are also in play as foreign takeover targets.

What does the Conservative government do? Nothing.

The Conservatives stand by and rubber stamp the takeovers, using the toothless provisions of the Investment Canada Act. Since the Investment Canada Act was passed in 1985, there have been over 11,000 foreign acquisitions of Canadian companies. No investments have ever been blocked under the Investment Canada Act.

The reason for this is that the current criteria under the act, with the exception of certain financial services, telecommunication, transportation and cultural industries, are strictly economic. The stated purpose of the Investment Canada Act is:

--to encourage investment in Canada by Canadians and non-Canadians that contributes to economic growth and employment opportunities and to provide for the review of significant investments in Canada by non-Canadians in order to ensure such benefit to Canada.

Typically what happens today is the following: a non-Canadian company wishing to acquire a Canadian company convinces Industry Canada that their transaction will result in more investment and more jobs. Industry Canada signs off, perhaps after achieving some modest concessions, and the deal is approved. They are all approved, Mr. Speaker.

What happens in the medium to long term to the companies that emerge from these transactions after the dust has settled? Who monitors the commitments made? While it is difficult to get straight answers on this from Industry Canada, we have anecdotal evidence that would suggest that after the passage of time the acquiring company’s real strategy emerges.

Plants are closed, corporate decision makers are located outside of Canada, and product mandates and core competencies are focused in jurisdictions outside of Canada. When hedge funds and private equity players are involved, we can assume that short-term increases in shareholder value are the goal. Assets are downsized, stripped and sold for short-term profit.

What should we do about this hollowing out of corporate Canada? Our Liberal government in the last Parliament introduced changes to the Investment Canada Act to give more power to the federal government to reject unwanted takeovers. This bill died on the order paper because of the January 2006 election and this Conservative government has not reintroduced similar legislation. This is not surprising at all, given the laissez faire attitude of the current industry minister and this government.

I have great faith in the markets, but markets alone do not always respond in ways that are beneficial to Canadians. That is why Canadians elect members of Parliament to the House of Commons, to protect and assert their interests, not stand by and watch while our national assets are being eroded.

In my view we should amend the Investment Canada Act and replace the current net benefit test with a national interest test, or at the very least, with a national security test. There are many countries that already have such criteria.

Companies wishing to acquire a corporation in the United Kingdom must demonstrate that the transaction is in the public interest. In Japan foreign takeovers are reviewed to ensure that they do not pose any public security, public order or public safety threats and that they do not have the potential to adversely influence the national economy.

Not surprisingly, foreign takeovers of strategic assets in countries like China, Mexico, Russia and India are difficult, if not impossible.

In Australia, a takeover must prove to the satisfaction of the Australian government that the proposed acquisition is in Australia's national interest. In Australia, national interest is considered in relation to the widely held concerns of Australians, its laws and policies, national security interests and economic development. In my view, Australia's approach to defining the national interest is a sound one.

Some argue that the national interest or public interest tests discourage foreign direct investment. We need to encourage, not discourage investments by foreign interests in Canada. I agree with that.

Let us look for a moment at the experience in Australia. Although it seldom occurs, Australia has used the national interest test to block large scale foreign investment. For example, in 2001, the Australian government rejected an attempt by Shell Oil in a hostile takeover bid for an Australian energy company, Woodside Petroleum Limited. This $10 billion Australian bid was rejected on the grounds that Shell would operate the company as part of its global portfolio and not in the best interests of the company itself. Does this sound familiar? Have we had similar concerns?

Following the decision by the Australian government, while there were market reactions in the short term, the impact was short lived. Foreign direct investment into Australia has grown from $9 billion U.S. in 2001 to $58 billion U.S. in 2004.

If we moved to a national interest test for foreign takeovers, how should we define this? As I mentioned earlier, I believe the Australian model is a good one. National interests need to be defined, as best one can, by policy, by regulation and with guidelines. We should have a debate around this in Canada.

In my judgment, Canadian companies that are of strategic importance to Canada because of their size and reach, companies that are focused on the development and environmentally sound exploitation of our natural resources, and Canada’s energy assets should be subject to careful review and protected from foreign acquisition.

If Canada adopts a national interest test for foreign takeovers, will this impact on the ability of Canadian companies to grow and expand internationally? Not in the least, I submit. These Canadian companies will still have to meet the test imposed by those countries in which the acquisition target is located. How can there be retaliation when so many jurisdictions have national interest or national security tests of their own?

What will slow down international expansion is the rules the government has brought in on the non-deductibility of interest and also on the income trusts.

We must stand up for Canada. Where non-Canadian companies wish to acquire Canadian companies, it is often quite obvious what their agenda is. The question for us as parliamentarians to consider is, what is Canada's agenda, what is in our national interest? We cannot avoid this question. It is time to act.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I listened with great interest to the fascinating pitch the member made. About halfway through I found my feet were starting to get wet and then I had to start tucking my pant legs into my socks because of the crocodile tears that were spilling over on the floor of Parliament from the member.

When I hear him talk about the toothless revisions of the Investment Canada Act, I am astounded. Of the 11,000 sell-offs of Canadian corporations that happened, under which party did they happen? They happened under that toothless party, the Liberal Party of Canada. That party stood by and told us that we did not need national protection, that we did not need a national standard. The Liberals stood back and allowed a massive sell-off of so much of our corporate sector.

To come in the House today and to have the gall to stand up and say that the sell-offs of Falconbridge, Inco and Abitibi and other main Canadian companies are somehow due to income trusts is not only an abuse of the facts, but it is selling the intelligence of the Canadian people short. Canadians well remember that it was the member's party, when it was in government, that did nothing about toughening up the Competition Act and allowed so many of these sell-offs.

It was his party, under his prime minister, that created the concept of the flags of convenience. It was the former prime minister whose company had Canadian workers fired on the high seas and hired Filipino and Korean replacements, and had tax havens set up in the Barbados so that a man who was the prime minister of Canada did not have to pay his proper share of taxes.

I want to ask him how he has the gall to stand here now and talk about strengthening Canada's corporate sector.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, if the member for Timmins—James Bay has a problem with his trousers, he should get his tailor to properly adjust the length of them. Maybe someone should tell him that the floods are over.

With respect to what he said, he perhaps was not listening to what I said earlier. It was our government that brought in legislation to change the provisions of the Investment Canada Act.

Maybe the member does not read the newspapers, but I certainly do and I think many colleagues in this House do. We have seen the recent spate of takeovers. Those takeovers are a result of a number of things. They are a result of the fact that there are many private equity players awash with cash. It is a fact that it is a global economy. I do not think that should say that we stand back. It is time for us to reassess our Investment Canada Act and the criteria that we use. There are many countries that have a public interest test or a national interest test. It is time that we began to look at that.

Regarding the member's question about the tax havens, in this House I think there is a lot of misinformation that is being promoted. The member for Timmins—James Bay perhaps does not fully understand business economics, but the reality is that those in the international shipping business have to base themselves offshore. They have to have a flag of convenience or they simply cannot compete.

It is the same with respect to the non-deductibility of interest. Even though we might argue in this House that it is not a very wise policy, the reality is that if Canadian companies want to bid on companies abroad, that is what they are up against. They are up against companies that can deduct interest for the acquisition of companies abroad. We need to get a little bit of reality into the discussion.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I listened to the Liberal member give a selective history on the whole issue of protection for foreign takeover of our economy. I wonder if he could address the question so we are clear about this.

I believe he was correct when he said, but maybe I have misinterpreted, that it was in fact the previous Conservative government that took the teeth out of some of our important legislation that would have made it possible to put to the test the question of national interest in our own economy before approving foreign takeovers of some of our major industries. I believe that occurred in the mid-1980s. Perhaps the member could confirm that. I think the unanswered question is really what happened since it was recognized by then that what was effectively happening was that there was a bean counter just counting the numbers of takeovers, with no opportunity to stand up against our national economy being hollowed out.

The Liberals came to power in 1993, and if I am not mistaken, on the eve of an election suddenly wakened to the fact that we needed to have such legislation in place. Now the Liberals are apoplectic that it died on the order paper just before an election, some 13 years after the Liberals came to power.

Am I not correct in that historical account? Although I think the real issue is what needs to be done in the future and who actually can be trusted to follow through, based on their record in this House. If I can finish by making a reference to the fact--

[The Deputy Speaker, NDP, Bill Blaikie]

The hon. member will not be able to finish. The time for questions and comments has expired.

I will go to the hon. member for Newton—North Delta.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I am very happy to speak to this motion because what we are addressing concerns an issue that is of crucial importance in my riding of Newton—North Delta. It is the issue of income trusts. There is no other issue on which I have received more phone calls, letters and e-mails from my constituents. I do not know how many times I have heard from them. Many voted Conservative and not Liberal in the last election and said that the government they voted for is not the one that would have reversed its position on this. If it did, my constituents would never have given it their conditional trust, never mind the responsibility to handle income trusts.

Because of the volume of complaints I received, I decided to hold a town hall meeting for those who had lost so much of their hard-earned savings. I listened and could not believe all I was hearing. These are ordinary Canadians who do not speak from positions of great wealth. Many are not in their peak earning years any more. Many cannot even dream of making up half of what they lost because of this decision.

I sat down with them in the town hall meeting and we talked about the real costs of this decision. We know the numbers: an estimated $25 billion, an average of $25,000 for each Canadian. However, the numbers are just the facts. They do not tell the story. They are too abstract. One cannot understand these losses until one actually sits down with some of the people who have suffered from this decision, but talking and consulting with the Canadian public does not seem to be a core strength of the government to begin with.

One gentleman, Mr. Maurice Bouchard, was one of the Canadians who based his retirement plans on an investment portfolio that included income trusts. He is 60 years old. He has a mortgage and four children, one who has lost his chance to own a home because of this meanspirited decision by the government. Mr. Bouchard did not expect to be in this position. He has worked hard all his life. He has paid his taxes. He has been an active member of the community in Newton—North Delta.

Here in Ottawa where it is all about numbers on the books, we could use some of his clarity. For him it is very simple. He stated, “How can I tell anyone, my kids or grandchildren, that the high morality of one's word as a promise is still the foundation of our society...when our political leader of the day breaks his own word for no good reason?” That is a very good question. It is the one I cannot see the government answering any time soon.

It is not just those who are planning their retirement who were hit hard by this decision. I also received an e-mail from Mr. Bouchard's son. He is 23 years old, just starting out in life. He has worked hard doing overtime in labour jobs, rarely making more than $13 per hour. This young man, Mr. Mark Bouchard, does not want to be a millionaire. He just wants what so many other Canadians want. He wants to own a home.

Of course, the government might not pay much attention to the property prices in my riding of Newton—North Delta, but let me make it simple. This young man put his savings for a home into income trusts. Those savings are gone now.

All I can say is that I wish the Conservatives had the wisdom to speak to ordinary Canadians like the Bouchards before they made their decision. We on this side of the House know that there were better ways to manage the file. That is what this motion is all about.

We all know that the government had the opportunity with the committee process to truly listen to Canadians before it broke its promise to them.

I know many of the measures in Bill C-33 are about tax fairness, avoiding tax havens, ensuring no Canadian has a tax advantage over another and for the principle of fairness, which is why I support the bill.

However, there is no fairness involved with this aspect of income trusts. My colleague, the hon. member for Markham—Unionville, the finance critic who worked so hard on tax reform in his role as a minister, put it very well. He said that this was a “nuclear bomb” approach to solving this problem. There were alternatives and he clearly outlined them in his speeches here in the House.

As for consultations, we heard about advisers on taxation but there are no better advisers on taxation than hard-working Canadian families, like the families in Newton—North Delta that were affected; families like those who spoke with me at my town hall meetings; and families like those who have written to me or phoned my office in numbers the House could not imagine. I have received more phone calls, e-mails and letters on this one issue than on any other issue.

If the government had consulted with the business sector it would have heard the same things too. It would have heard what many people wisely predicted but has now become a reality. The income trust tax has resulted in at least 15 takeover attempts in the last five months. Interest deductibility will just make this situation worse.

Again, the government has broken its promise to ordinary Canadians. It has mismanaged this file and it cost hard-working Canadian families over $25 million in losses in one day. We could be waiting a long time for sound fiscal management from the government, as we had strong fiscal management from the previous government.

Time is money. Many Canadians are now wondering what happened to the sound fiscal management that 13 years of Liberal government brought in with 8 years of balanced budgets and the best economic performance in the G-8 countries.

It is not me who is saying this. In fact, if we go back to the Economist magazine, it says that Canada was one of the best countries, the second best country to Denmark, in which to invest. If we look at between 1990 and the time we left the government, Canadians were taking 11% more in their take-home pay after paying taxes. Many Canadians, like my constituents, want the old Canada back now.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Speaker, it is pretty clear from the comments of my colleague from British Columbia that he does not believe in tax fairness. He knows that some of the corporations in Canada are earning, not millions, but billions of dollars in profits. In fact, last year, EnCana, one of our largest oil and gas companies, earned $7 billion worth of profits which it was planning on converting into an income trust.

Is my friend suggesting that EnCana should not being paying taxes on those profits?

We need to look at what the public says about this. The Globe and Mail said, “The Finance minister tackled a difficult issue that the Liberals could not muster the gumption to resolve”.

The National Post said, “Everyone else has gotten the message. Why haven't the Liberals?”

The Toronto Star said the same thing. In fact, the member's own finance critic said, “It was absolutely the right thing to do”. Sheila Copps and John Manley both said that the income trust decision was the right thing to do.

If the member believes that tax fairness should be the rule in Canada and that ordinary taxpayers should not bear the burden of having to carry the taxation that corporations normally carry, why will he not support the income trust decision that the government so courageously made?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, if we want to talk about third party quotes, I have two pages of them but I do not want to read them.

I want to go back to ordinary Canadians. I fully believe in fairness, which is why I supported not taxing the income trusts the way the government has. I am not talking about the millionaires or billionaires. I am talking about ordinary Canadians like the one I mentioned, Mr. Mark Bouchard, the fellow who wanted to build a house and live his dreams in Newton—North Delta. It is his dream that has gone down the pipe.

I have a quote here by John Priestman who is the managing director of the Guardian Capital Group. He says:

[The Minister of Finance] has dropped the ball on income trusts, he's dropped the ball on interest deductibility. . . he's dropped the ball on income splitting. He's promised us dramatic reductions in corporate taxes and individual taxes. How about capital gains? They've delivered on nothing.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I listened with great interest to my colleague and I remember Bre-X. Many people in my riding lost money in Bre-X, people who invested because they thought this was a good investment. It was heartbreaking for them.

What is similar is that this was a bubble, like Bre-X, that was allowed to grow out of control. We know that it went from a relatively obscure form of investment to $200 billion in capital holdings in just a few years. That is $200 billion that was not being paid into taxes.

We have seen so many financial players who were about to switch over to income trusts and the Liberals made the decision at the time to go for cheap votes and refused to deal with it. The member for Wascana helped create this bubble beyond what it was and average people were hurt because of a government that was committed to short term political votes rather than a long term commitment to the economy.

If my friend says that he wants the old country of Canada back, what about the $200 billion-plus of money that was diverted away from taxable income that would have helped average Canadians like the average Canadians in my riding who are seeing more and more costs downloaded to them because there is not a proper tax base?

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, is what the hon. member or the NDP mean when they talk about protecting working class Canadians and tax fairness, the $25 billion hit to the populace of seniors and ordinary Canadians like the person I mentioned earlier who wanted to buy a small house? If that is what it means to New Democrats, they should be supporting this motion.

On the other hand, the bigger issue is that the Prime Minister made a promise to Canadians that he would not abolish the income trusts.

Based on the Prime Minister's word, many Canadians went to the bank and invested their hard-earned money, and he broke his word to Canadians. I do not know how the member feels about ordinary working Canadians in my riding and in--

[The Deputy Speaker, NDP, Bill Blaikie]

Order, please. The time for questions and comments has expired.