Debates of May 16th, 2007

Income Trusts

[Pat Martin, NDP, Winnipeg Centre, MB]

An article of faith, a tenet for the Liberal Party of Canada.

It went from a relatively obscure tax gimmick to $200 billion in capital holdings, an untold lost revenue for Canada in terms of taxation. As that money flows through the shell to the unit holders, the unit holders get taxed as individuals with earnings, but they may be taxed at an entirely different rate. Depending on their personal tax status, they may not pay any.

In actual fact, the lost opportunity has been staggering. It is corporate greed gone wild. The lost opportunity has been devastating. It has been irresponsible. It has been nothing short of stupid to allow it to continue to this point.

We should have spoken out louder. My colleague from Timmins—James Bay and I feel a bit sheepish for not speaking out more loudly the day we learned about this atrocious system. We should have stood up to Bay Street, when the Liberals would not, and said no, that in no uncertain terms would we be the only stupid country in the world allowing this ridiculous situation.

At the shareholders meeting where they voted on whether or not they should convert, one CEO, of an oil and gas company in Alberta that converted, told the shareholders that this would not be allowed forever. He said that he could not believe they were being allowed to do it now but that seeing that it is legal, he advised the shareholders to vote yea on it and convert to an income trust because it was too good to be true. Sure enough, they went ahead and did it and they succeeded.

For many companies it started to snowball. A domino effect took place until it was out of control. Now it is not a popular move. The Liberals have ganged up with the Bloc in trying to find a way to condemn the government for doing what it had to do. I am no big fan of the Conservative Party but this is our opinion too, that the income trust debacle had to be stopped. It had to put the breaks on it and it is irresponsible now to try to reverse that.

We have been following this. The Liberals' record on income trusts has been to do what they do best, which is absolutely nothing. They stood by and watched as this debacle grew.

Independent studies show that income trusts have been over-valued by as much as 40%. Therefore, there is a whole campaign of misinformation. They will eventually drop in value. More than 20% of the business trusts that have come on stream since 2001 are down 20% in value.

What people need to know is that two out of three business trusts are paying out more in dividend earnings to their unit holders than they are bringing in. Is that not a recipe for disaster? Does that pretty much sound the death knell for that particular business because it can only do that for so many years before it will be out of business? That is simply the way this is happening.

Corporations have openly admitted that their attraction to income trusts has been tax avoidance. That is not a very noble thing to guide itself by if a business' sole purpose for restructuring its entire company is that it does not pay its fair share of taxes in this country. Even though we have stripped down the tax rate for businesses in Canada, which are lower than in the United States now, businesses are still looking for ways for wholesale tax avoidance. I call them tax fugitives. I have no respect for people or businesses that do not want to pay their fair share of taxes in this country.

The concern over the resulting loss in tax revenue has been noted by both the federal and all provincial governments irrespective of their political stripe and it is irresponsible for somebody today to be arguing that we should reverse this decision. They have not consulted anybody but the wacko little bunch of activists who have put on the most lame and ineffectual lobbying campaign I have ever seen.

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

Are you talking about the member for Wascana?

[Pat Martin, NDP, Winnipeg Centre, MB]

No, I am not talking strictly of him. I am talking about the income trust campaign, the income trust unit holders who are lobbying government. We all get the e-mails from them but they have no substance to their arguments. Their only argument is agreed. They want it all and they want it all now, and they do not give a damn what happens 10 years from now to the economy. It is a recipe for economic disaster. It is irresponsible. It is the role of government to step in and intervene when we are on such a disastrous course, when we are riding that bus over the cliff, as somebody said.

The NDP is committed to a dynamic economy. Witness after witness, including the Bank of Canada, supported the NDP's concerns that business income trusts were inappropriate business structures that can undermine the long term growth of a dynamic economic future for Canada.

We need to stay the course and do what is right and get back to a stable financial market and a stable investment culture and atmosphere without this unfortunate hiccup of income trusts.

[The Speaker, Liberal, Peter Milliken]

The hon. member for Ottawa—Orléans on a point of order.

Alleged Conduct of Member for Ottawa—Orléans

[Royal Galipeau, Conservative, Ottawa—Orléans, ON]

Mr. Speaker, this afternoon in the House there was an exchange between the member for Ottawa South and myself and I want to speak to that this evening. I made some efforts to have the member in the House but, unfortunately, it is not so.

The exchange between he and I resulted in a call on his privileges. After that we both met the media outside where I admitted that I should not have crossed the floor to complain about his attack on me. Since I admitted it outside the House, it is only fair that I do so inside the House.

Within 10 minutes I will be presiding over the committee of the whole House and, before that happens, I need to clear the air.

I am sorry to have approached the hon. member for Ottawa South in that manner. As a father, I have often told my children that two wrongs do not make a right. If he wishes, I will still speak with him.

I would hope that all hon. members would respect the fact that as a chair occupant I steer clear of partisanship and that I stick strictly to the impartial running of the proceedings of the House. Since the event occurred, an hon. member from the official opposition has already commended me for that sort of behaviour and I had planned to continue in that way.

[The Speaker, Liberal, Peter Milliken]

I thank the hon. member for Ottawa—Orléans for his statement. I will certainly take it into consideration. In light of what he said, I suspect I will not need to come back to the House but, if necessary, I will be back with a final ruling on the question of privilege raised earlier this day, but I believe that is likely to conclude the matter.

Resuming debate, the hon. member for Halton.

The House resumed consideration of the motion.

Income Trusts

[Garth Turner, Conservative, Halton, ON]

Mr. Speaker, I would like to thank the hon. member for Ottawa—Orléans for his intervention. He is an honourable gentleman and those of us who have worked with him certainly know he is sincere in what he has just said to the House.

Turning to the topic at hand, it has been six months since, out of the blue, the administration imposed a 31% tax on investors and caused their retirement savings to tumble. Some people ask why we, on this side of the House, keep fighting this move. Why do we tell average taxpayers not to give up? Obviously, we could and that would be the easy path but the easy path is not what we are choosing in this particular instance.

I will give five reasons why we think the income tax trust must be stopped, delayed or at least modified.

First, there, but for the grace of the Minister of Finance, go all the rest of us as taxpayers. If the Minister of Finance and the Prime Minister can impose a crushing new tax on personal investments and wipe away $25 billion in private savings and not care and get away with it, then it will probably happen again. One must ask what the next target will be of the finance department to minimize tax expenditures and to maximize revenues. Will it be to eliminate, to cap or start to tax RRSPs? Will it be to impose a capital gains tax, maybe even a modest one, on the massive real estate capital gains being enjoyed homeowners these days? Let us think about it. Without political accountability anything can happen.

Second, this is a simple betrayal. Many people invested in income trusts or increased their stake precisely because the Minister of Finance and the Prime Minister said that it was okay to do this. They said that they would never tax these investments. The man who is now Prime Minister said that over and again and his very words of course caused an increase in the flow of savings into these vehicles. His very words also encouraged many companies to convert into trust, secure in the knowledge, they thought, that a Conservative government could be counted on to keep its word. Now we know differently.

Third, this shows a profound and deep and troubling lack of respect. Such a draconian move by any government demonstrates that it does not care about individual security and, more worrisome for the government, it does not care about property rights.

The Prime Minister and the Minister of Finance knew well what this move would do to the pool of private savings in Canada: that the tax would depress the market value of all trusts and erase capital. However, they did it anyway. What is worse is that they knew a majority of these income trusts investors were seniors who had no pensions and so pension splitting is of no value to these people whatsoever. There is no offset and many of them are too old to recoup their losses. However, those guys did it anyway. A government that so disrespects seniors is not deserving of our respect.

Fourth, this really hurts the political system. The government was supposed to be different. It promised transparency and it promised consistency with no tricks, not getting elected saying that it would eliminate a tax and then not doing it, just steady Eddie government that we could all count on with a populace streak and a new respect for the common voter. That is what we were told but not so much. In a stroke that changed. It is now politics as usual: say one thing to gain support, get into power and do another, and that sucks.

It proves once again that politicians deserve to have the same standing as used car salesmen, which is what the latest survey shows.

Fifth, this unfairness is overwhelming.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I rise on a point of order. I take offence to what the member just said. There are a number of people, and I am certain a number of people in his own riding, who work in the automotive industry and do not deserve to be drawn into disrespect by that member or any other member in the House in the manner that the member has just done. I would ask him to withdraw his comment.

[The Acting Speaker, Conservative, Royal Galipeau]

The hon. member for Halton is rising on a point of order?

[Garth Turner, Conservative, Halton, ON]

No, Mr. Speaker, I am on debate.

[The Acting Speaker, Conservative, Royal Galipeau]

You have less than a minute to finish.

[Garth Turner, Conservative, Halton, ON]

I thank the member for Peterborough for eating up some time uselessly.

As I was saying, Mr. Speaker, my fifth point here is that we have an unfairness this week that is overwhelming.

This past Monday, the Minister of Finance went to Bay Street and at the modest urging of corporate Canada did a flip-flop and all of a sudden eliminated a $1 billion tax loophole from his budget. Yet, he does not have the decency to stand in this House and even apologize to investors from whom he stole twenty-five--

[The Acting Speaker, Conservative, Royal Galipeau]

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

When this matter returns, the hon. member for Halton will have another four minutes.

Pursuant to Standing Order 81(4), the House will now go into committee of the whole for the purpose of considering votes under Canadian heritage in the main estimates for the fiscal year ending March 31, 2008.

I now leave the chair for the House to resolve itself into committee of the whole.

(Consideration in committee of the whole of all votes under Canadian Heritage in the main estimates, Mr. Bill Blaikie in the chair)

Canadian Heritage--Main Estimates, 2007-08

[The Chair, NDP, Bill Blaikie]

I would like to open this committee of the whole session by making a short statement on the evening's proceedings.

Tonight's debate is a general one on all of the votes under Canadian Heritage. Each member will be allocated 15 minutes. The first round will begin with the official opposition, followed by the government, the Bloc Québécois and the New Democratic Party. After that, we will follow the usual proportional rotation.

As provided in the order adopted earlier this week, parties may use each 15-minute slot for speeches or to question the Minister. The Chair would appreciate it if the first member speaking in each slot would indicate how the time will be used, particularly if it is to be shared by one or more members.

In the case of speeches, members of the party to which the period is allotted may speak one after the other. When time is to be used for questions and answers, the Chair will expect that the minister's response will reflect approximately the time taken by the question since this time will be counted in the time originally allotted to the party. However, in the interest of a full exchange, I am prepared to exercise discretion and flexibility in the application of these rules.

Although members may speak more than once, the Chair will generally try to ensure that all members wishing to speak are heard before inviting members to speak again, while respecting the proportional party rotations for speakers. Members need not be in their own seats to be recognized.

I would remind hon. members that, according to the special order, during this evening's debate, no quorum calls, dilatory motions or requests for unanimous consent shall be entertained.

As in the House, ministers and members should be referred to by their title or riding name and of course, all remarks should be addressed through the Chair.

I ask for everyone's cooperation in upholding all established standards of decorum, parliamentary language and behaviour.

At the conclusion of tonight's debate, the committee will rise, the estimates under Canadian Heritage will be deemed reported, and the House will adjourn immediately until tomorrow.

We may now begin tonight's session. The House in committee of the whole pursuant to Standing Order 81(4)(a), the first appointed day, consideration in committee of the whole of all votes under Canadian Heritage in the main estimates for the fiscal year ending March 31, 2008.

Just to clear up any confusion such as existed on a previous evening, we will start the clock now.

For the first 15 minutes, the hon. member for Churchill.

[Tina Keeper, Liberal, Churchill, MB]

Mr. Chair, I will be splitting my time with the members for Laval—Les Îles and Beaches—East York. I will be asking five minutes of questions, as will each of those two members.

After inheriting the best financial picture in Canadian history, a $13 billion surplus from the previous Liberal government, this minister has not made a commitment to her portfolio.

She has failed artists. She has failed women. She has failed youth. She has failed museums. She has failed volunteers. She has failed to protect the integrity of the Canadian identity.

Why could she not protect her programs from her cabinet colleagues when they decided to “trim the fat”?

[Bev Oda, Conservative, Minister of Canadian Heritage and Status of Women]

Mr. Chair, I would suggest that we have accomplished a great deal in a year and a half.

In fact, I would ask members across the way to stand up for programs and stand up for Canadians. I would suggest that they ask themselves when it was their responsibility to take care of taxpayers' money and to make sure that it was utilized effectively, where did $40 million go? It went into the Liberal Party.

I would also suggest that--

[The Chair, NDP, Bill Blaikie]

Order, please. I am sorry, but the answer can only take as long as the question.

The hon. member for Churchill.

[Tina Keeper, Liberal, Churchill, MB]

Mr. Chair, the minister has no voice at the cabinet table. The fact that her government had $160 million of aboriginal language funding is reprehensible. It reeks of the misguided and racist residential school policy.

Where has the minister redirected these funds?

[Bev Oda, Conservative, Durham, ON]

Mr. Chair, how can that member and that party question us on aboriginal school policy? We actually settled the aboriginal school agreement.

Where was that member? Where were the women in that party who stood by and did nothing about matrimonial property rights for aboriginal women? Where were they when we saw that Canada was on a watch list for human--

[The Chair, NDP, Bill Blaikie]

Order, please. The hon. member for Churchill.

[Tina Keeper, Liberal, Churchill, MB]

Mr. Chair, I will remind the minister that her government actually cut back the residential school package.

This minister sat back and watched the Canadian television fund nearly collapse. Now the Conservative appointed CRTC chair is calling for lighter regulation and increased dependence on market forces.

When it comes to arts and culture, all this government provides is rhetoric, no commitment. Why is the Conservative government committed to the Americanization of our Canadian identity?

[Bev Oda, Conservative, Durham, ON]

Mr. Chair, first of all, let us have the actual facts. There was no cutback in the aboriginal school agreement. There was no agreement.

We know the importance of the Canadian television fund. That is why I made a $100 million commitment not only for one year as the previous government always used to do but for two years because Canadian content is important and our production industry is very important.

[Tina Keeper, Liberal, Churchill, MB]

Mr. Chair, in the 2006 election the Conservatives promised to introduce a new national museums policy. This is another example of a Conservative broken promise. Since then, they have cut $4.6 million to the museums assistance program.

I asked the minister this the other day and I will ask it again. Why does the minister care so little about heritage in rural Canada?