Debates of June 11th, 2007

Budget Implementation Act, 2007

[Vic Toews, Conservative, President of the Treasury Board]

Mr. Speaker, I note the member said that money was set aside for this and that. In fact, when the Conservatives came to government there was no money set aside for any of those things.

I want to bring the issue back to my home province of Manitoba. The Liberal government had promised money for the floodway. Manitoba is deluged from time to time by the flood waters of the Red River, the Assiniboine and other bodies of water. The Liberals were good at promising money. Indeed, they made the promise publicly over and over again.

When the Conservatives came to government, the promise the Liberals had made of cost sharing the floodway, which was a $650 million project, the outstanding money was simply not there despite public assurances by former Treasury Board president, Reg Alcock, that the government was onside.

It took the Conservative government nine months of trying to ensure it had money and not take it out of local infrastructure money. In trying to find the amount of money that I was looking for in terms of the $171 million that was outstanding from the federal government, we could not take it out of local infrastructure money. We had to go to a national infrastructure program. Despite the assurances that the money had been set aside, that money had not been set aside. It simply was not there. We had to identify it.

With regard to the numbers that the member has pointed out, where were the moneys set aside specifically in terms of money that had been appropriated by any budget, a budget that had in fact been passed?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I find it odd that a Conservative member, a cabinet minister, would ask me a question that is specific to his own riding and how moneys are spent.

In the budget book there are some comparative numbers. I hope, especially since the member is the President of the Treasury Board, he understands where money is being spent. In this budget book there are comparative numbers where the government has said it spent between $130 billion to $140 billion on programs. I am hoping some of that money is accounted for reasonably and there are some controls in place.

I stated that most of the money was committed for programs. I do not think I have to tell the hon. member how that works, but the programs are developed. These are some of the arguments that we hear from the heritage minister when she says that the details for allocating the money for festivals have not been finalized yet and that is why the money cannot be allocated.

I am not sure where the hon. member is going with this, but in answer to his question, the money had been allocated for project green. The criteria on how the money was going to be spent were to be developed with the industry, environmental groups and stakeholders across Canada.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I will be very brief because I am so surprised that I am actually in agreement with something that one of the government cabinet ministers would say that I really do not quite know what to do. I am in agreement that the Liberal record is not actually anything to crow about.

In particular, I want to take the member back to Bill C-55. I have spoken in the House about how the manufacturing sector in my community is being decimated and I will talk about that again later when I get my own turn to speak. Members will recall that we hoped that at a minimum the Liberal government would address wage and pension protections in cases where companies went bankrupt.

The member will want to speak about the Liberal government's record some more, but the Liberals introduced Bill C-55. The bill did not do enough on pensions but at least the Liberals started to move forward on wage protection. That bill passed through the House. It passed through the Senate. It received royal assent, but when push came to shove, that bill was never proclaimed. Once again the Liberal government let down workers right across the country.

[The Acting Speaker, Conservative, Andrew Scheer]

I am going to have to end the question there to allow the hon. member for Saint-Léonard—Saint-Michel about 30 seconds or so to respond.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I find it curious that the NDP is now worried about workers' retirement money when that party was not in favour of the Liberal amendment to no longer tax income trusts. We know that a high percentage of retirement funds and retirees who invest in income trust funds were hit with a $25 billion shot overnight on Halloween. Therefore, the NDP should not be asking questions about the retirement money of Canadians.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am very pleased to have the opportunity to raise a matter that remains extremely contentious about the budget that has yet to be voted on and which presumably will be voted on within a short period of time.

It would not surprise anybody that I am rising on my feet to take this opportunity yet again to express the strongest possible feelings about the betrayal so far, and I underline so far, of the government in the current budget. This is about the promise made in the Atlantic accord which is most important and most advantageous to the people of Newfoundland and Labrador and of Nova Scotia. However, it is not missed on all Atlantic Canadians that the impact would affect the whole Atlantic region. The impact of this broken promise, of even the threat of the government cancelling the deal that was sealed in the Atlantic accord, is one that would be felt negatively if the government persists in cancelling the deal, or positively if the Atlantic accord is respected and upheld by the federal government. It is something that would impact on the whole of the Atlantic region.

One might ask why I would raise this yet again today. I have raised it again and again. The other New Democratic Party members from Atlantic Canada have raised it again and again. My leader has done so. A great many people who are in the public domain but not necessarily as partisan as we are have spoken out on the subject and have been of one view, which is that a very definite commitment was made in that accord in 2005. No matter how many different constructions the Prime Minister, the finance minister and the ACOA minister, the so-called political minister for Nova Scotia, put on it, it is actually, by the provisions in this budget, a deal that is broken, period, full stop.

The reason I rise on it again today is, as I have said every other time, it is never too late to fix something that every indication simply reinforces is something that has to be fixed. It has to be fixed because it is immensely important to the people of Atlantic Canada. I think there is some indication that Conservatives are beginning to understand that it needs to be fixed as well. It is seen as an astounding breach of faith, an obscene breaking of a promise that was in black and white, that was sealed in a deal, for which the government can offer no excuse or no acceptable explanation.

One dramatic moment in this saga was the decision of the member for Cumberland—Colchester—Musquodoboit Valley to actually incur the wrath of his party to kick him out for indicating that he would be voting against the budget in its final form unless it fully honoured the Atlantic accord.

I see this as a moment of opportunity, another dramatic moment in this saga. I want to stand in my place and unreservedly thank the Premier of Nova Scotia for coming off the fence. I do not want to say that in a pejorative sense but rather to acknowledge that he made a decision. Holding his nose, he made it clear that he was very unhappy with what this budget did to Nova Scotia and to Atlantic Canada. I do not think any of us could totally fault him for saying that he was going to continue to try from the inside, in the back rooms, in the wheeling and dealing and negotiating back and forth between the Prime Minister, the Minister of Finance and the premier, as well as their senior officials, to see that it is fixed. The premier also signalled, and I noted it here in the House, that he would be making a very different decision if he reached the point that he felt that there was no good faith, that there was no real attempt taking place to move toward a satisfactory resolution of this broken deal. That moment has clearly arrived.

We have made repeated attempts to say to the premier that we want to work across party lines to fix this broken promise. We have pleaded with Nova Scotia politicians of all political stripes to work across jurisdictions to fix this. I respect the fact that Premier MacDonald has now reached the point where he has felt compelled, and I am sure he did not arrive at this lightly, to publicly announce there is no movement or no resolution in sight. The moment has arrived where he recognizes that giving leadership to the people of Nova Scotia, in the tradition of his predecessor, former premier John Hamm, requires and demands he stand up, be counted and make it clear that he is pressing for every Conservative member in the House, representing a constituency in Nova Scotia, to vote against the budget unless it can be fixed.

My plea, once again, to the government and my words to the members on all sides are these. By working together, we can fix this, and it is in everybody's interests to fix this. This is one of those episodes. Some people may say that it is only Atlantic Canada, that they are four provinces, but they do not make up a huge population. They may say that they do not have as many people in all Atlantic Canada, despite the four provinces, as there are in the province of Quebec, or Ontario, or Alberta, or British Columbia. That is true, but we live in a federation. We have four provinces on the Atlantic side of the country that are very upset about this broken promise.

Some of us have hurled some harsh words to say that we understand what is going on. First, we understand that the Prime Minister made a very definite commitment, and he is breaking it with this budget. We understand that the Minister of Finance is aware of that. He is from Ontario. We also understand that there has been a cynical, crass decision made that there are more votes to be courted, as we say in Atlantic Canada, more fish to be fried, by going after the more prosperous and populous provinces where there are more votes. Therefore, the decision was made to throw the Atlantic provinces overboard.

However, that is not good for the federation and it is not good for what plagues this land today, and that is a lot of disillusionment and cynicism about politicians and governments breaking their promises. This is one reason so much appreciation and respect has been expressed, within my own province but across the country, for the member for Cumberland—Colchester—Musquodoboit Valley. He knew he would incur the wrath of his party by standing tall, standing firm, and if necessary, putting himself in that position. Even though he was told he would not be thrown out, within moments of standing up and being counted in the House last week, he was informed by his whip that he was out on his ear. I watched it happen behind the curtain.

The issue is, what needs to happen to fix this? As the member for Cumberland—Colchester—Musquodoboit Valley has said so many times, it is quite simple. Just honour the deal. What is the problem? It is a legal deal. It is a negotiated agreement that has the effect of law, unless the government brings in this final budget measure, which tears it up and throws it away.

As Darrell Dexter, the official opposition leader in Nova Scotia, has again and again proposed that all of us need to pull together, all parties, all elected members, provincially and federally, to say that we stand in unison and in solidarity for the future of Atlantic Canada. To do that, we need to stand together and insist this deal be honoured.

The premier today indicated that he read the statement of the finance minister, which made it perfectly clear that the government was not working to fix it, despite a lot of talk by Conservative members of Parliament from Atlantic Canada, especially by the Nova Scotia Conservatives, who could not bring themselves to stand together with the member for Cumberland—Colchester—Musquodoboit Valley.

Everyone was working hard to fix it, but what kept coming back from the Minister of Finance, the Prime Minister and the officials was there was nothing wrong with what was happening. They have said that the deal is fully honoured by the budget, even though it is perfectly obvious that is not the case. On that side, it really seemed to be a case of one hand clapping.

Now the jig is up and the truth is out. I suppose I should applaud the fact the Minister of Finance saw fit to tell the truth and acknowledge that, as far as he was concerned, for the sake of a few votes, he would not honour this deal. If we turn that around and look at the other side of that coin, what he is really saying is there are more votes to be had in other parts of Canada by throwing this deal overboard.

He wrote an op ed article, and applaud the fact that he actually told the truth. There is no interest and no indication that the government is serious about fixing the deal. In fact, the it does not even consider it a broken deal.

In part, here is what he said in his op ed article, which is a direct quote:

Our government is not in the process of making any side deals for a few extra votes. You cannot run a country on side deals. Equalization has been restored to a principles-based program for the first time in many years. That’s what all premiers asked us to do and that’s what all Canadians expect us to do.

The problem with that is a new equalization formula was brought in and in defiance of the Atlantic accord, the decision was made to bring that after the fact equalization deal down hard on the Atlantic accord, tear it apart and toss it aside.

It is true that the equalization formula is immensely complex and it hard for Canadians to fully understand. Let us be honest, it is hard for every member of Parliament to have a full grasp of all the complexities of that formula. However, what is absolutely clear is the Prime Minister, the Minister of Finance and the Nova Scotia Conservative members and all Conservative members in Atlantic Canada, except the member for Cumberland—Colchester—Musquodoboit Valley, hope the complexities of the equalization formula are such that Atlantic Canadians, and all Canadians, can be bamboozled into thinking that there is not a problem with the Atlantic accord being tossed overboard. The real problem is that we do not understand the equalization deal.

I think people understand the fundamental principles of the equalization deal. I think they also, with no difficulty whatsoever, can understand what is wrong with this picture. In the process of bringing in an equalization formula in the budget, on which we are about to vote, the government has decided to violate clause 4, which says that notwithstanding any new equalization formulas, the Atlantic accord shall be honoured.

One thing is for sure, no Canadian anywhere, with any sense of fairness, cannot understand what it means to decide to scrap the whole deal, in defiance of clause 4, and clawback funds that it was promised would not happen. Some will say, “There go the four Atlantic premiers, what's their problem”. Let me remind the House that it is not only Nova Scotia and Newfoundland and Labrador that have a problem with the budget and with the broken deals.

I will quote directly from an article that appeared this morning in CanWest News Service, which leads me to believe it probably landed in a lot of places across the country. The Premier of Saskatchewan has equally and eloquently argued the case for his province and his constituents province-wide. The premier said that he received a letter from the Prime Minister saying “there will be no more side deals”. Referring to the Minister of Finance's weekend letter saying there would be no deal with Nova Scotia, he said “It's becoming like Alice in Wonderland. It gets curiouser and curiouser”.

The reality is a similar deal was made, a promise was made, on the eve of an election. At the time, a lot of us thought, perhaps a bit cynically, that there was probably not much of a guarantee that the government would honour the deal. However, the government made the commitment in the light of day and in black and white. It is absolutely understandable that the people of Saskatchewan and the premier and the government of Saskatchewan are equally outraged that the Conservative government has ignored the commitment made with respect to the treatment of the revenues from Saskatchewan's resources as well.

What is not understandable is the fact that Conservative members in the House, knowing what the negative impact both economically and politically would be, could entertain the possibility of supporting the budget. This is causing a lot of anguish on the part of a lot of people not just from Atlantic Canada or Saskatchewan, but in all parts of the country. Further than entertaining the possibility of supporting this budget, Conservative members have made it quite clear they have no intentions of standing against the budget. At the end of the day, this causes a serious problem. This feeds into the sense of disillusionment that people feel. It is hard to perhaps imagine the degree of fury, the sense of wrath, being expressed in Atlantic Canada.

I do not think polling is a good basis for making public policy. However, I do think that when a dramatic number of people say they are outraged at what the federal government has done in the budget with respect to the Atlantic accord and promises made to the people of Saskatchewan, that it behooves the government of the day to consider this. All those people cannot be imagining that this is a grievance.

People are surprisingly forgiving, and I say that as a member of a party, which at the federal level, has never made huge breakthroughs. Sometimes it is disappointing that people are so forgiving of governments that break their promises. Again and again this has come up for mention in this debate over the last many months. It is amazing how people are sometimes prepared to be fairly forgiving and how that is sometimes detrimental to other political parties or politicians trying to earn people's confidence and their support and hopefully retain it.

This is very pertinent to the debate today. The last time the Liberal government, in a major shift of policies and with an absolutely devastating budget affecting Atlantic Canada, turned its back on Nova Scotia, the 11 Liberals representing Nova Scotia's interests in the House of Commons were defeated in the 1997 election. None of the members were prepared to stand up against a very harsh, punitive budget. I would have hoped people would have a bit longer memory and not opened the door for some of those very same members to come back in, but that is the democratic process and I accept this.

In wrapping up let me again appeal, through the premier of Nova Scotia, to all politicians of all stripes, provincial and federal, to stand together to get this job done.

What is the job? It is to fix the budget by honouring this simple, straightforward agreement, the Atlantic accord, and honouring the commitment made to the people of Saskatchewan, though not identical but along the same lines. Let us be able at the end of the day to say that Atlantic Canadians and the people of Saskatchewan are not second class citizens, and that this is a government that honours its commitments.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Speaker, the member might want to get her pencil because I have four quick questions and she can write them down. I know that in her speech she outlined how this budget has devastated Atlantic Canada and indeed Saskatchewan, and that is in chaos now for the government. I want to ask questions in regard to other areas.

First, search and rescue planes were high on the agenda of the government. It should have put a contract out. If Canadians are now going to be at risk because of the old planes or if our soldiers die, Canadians will hold all Conservative members accountable. Would the member comment on why that has not gone ahead and what other spending has taken place?

Second, what do the Conservatives have against the north? Why did the government break its only promise to the north which included icebreakers and a northern port? The government got people all excited about a northern port, but that has now disappeared.

Museums across the country are in an uproar today because of insufficient funding. Does this affect the member's riding? Does she have a comment on that?

Finally, does it hurt her riding as much as it does mine that the government cancelled the GST rebate for individual tourists? That has not been reinstated. It is certainly hurting my riding as are other cuts to tourism.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, the one thing I would have to do is not so much write down the questions, although I want to say I did and I thank the member for his suggestion, but appeal to the Speaker for more time to answer all the questions.

Let me give the member the short answer; yes, yes, yes and yes. These are all problems. That is the most consistent and shortest answer I have ever given to a question in this House and please let the record show that.

Very specifically and very briefly, before I am cut off by the Speaker, with respect to search and rescue planes, it is an absolute disgrace that the contracts have not been let. Let me say I feel proud when I can stand in my place and mention that the very first press conference that I held, together with my three other New Democrat colleagues in Nova Scotia after we were elected to represent our people in the House of Commons in 1997, was around demanding that the Sea Kings be addressed. This was a very serious issue. I have no hesitation at all about reaffirming the position of our party on the question that has been raised.

Second, with respect to the north and the icebreakers. There could be a whole day's debate on why this is so important. Let me say not everybody makes the connection between the icebreakers and what is happening in the north and climate change, and what is going to happen with respect to Canadian sovereignty in the north. We need to be hearing a lot more about that.

Third, the museums are absolutely a problem. Wendy Lill, the former member from the Dartmouth riding was a huge champion of this. She actually spoke on my behalf when I was required to be here for a budget vote on this issue at a large meeting. We all stand together.

Finally, yes, the GST rebate for individual tourists absolutely should have been retained. It is more serious for some of the smaller areas and the less affluent areas, such as Yukon, the northern territories and the have-not provinces.

But then, what this whole debate is about is whether the government understands that have-not provinces are either going to stay in that status forever or have-not provinces are going to be given the kind of support, the kind of stimulus that will actually allow them to get out of that seemingly permanent entrapment of a have-not province, largely as a result of ill-conceived Tory and Liberal government policies over a very long time.

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

Mr. Speaker, I would like to thank the member of the NDP for her salient comments on the issue of the budget. I would like to know what she thinks about a Nova Scotia MP who represents Central Nova who also happens to be the Minister of Foreign Affairs and the minister responsible for the region of Nova Scotia who said on May 15:

We won't throw a member out of caucus for voting his conscience. There will be no whipping, flipping, hiring or firing on budget votes, as we saw with the Liberal government.

As we know, the member of Parliament for Cumberland—Colchester—Musquodoboit Valley did in fact vote against the budget. He did in fact vote his conscience and he was in fact thrown out of the Conservative caucus.

What does she think of the member for Central Nova who said that would not happen and who had the audacity to actually vote in favour of the budget which harms Nova Scotia and the other Atlantic provinces so badly?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, it is really hard, in response to such a straightforward, sensible question, for me to restrain myself from just letting rip at the member for Central Nova, but I will not take the opportunity to do that this morning, although I have to say there is a problem with the statement made because it clearly was not a spontaneous statement.

It was not one made without consideration. No one can tell me that whipping, flipping, hiring and firing was not a kind of a cute term that was worked into an answer all ready to throw out there in response to the question that would be asked.

I think that in itself was really pretty reprehensible. We are sort of left wondering, actually what does it mean? Does it mean that he actually thought that this expulsion would not take place? In which case he was pretty out of touch with his leader, but it would not be the first time. Did he actually know otherwise and was quite prepared to see a member with that kind of principles, guts and integrity, stand up and vote on the wrong side and then get punished for it? I am not sure how he would think that would be a positive thing.

I want to appeal to the member for Central Nova today and the member for South Shore—St. Margaret's to say that they can yet play a role in fixing this. Their minds have very likely been cleared over the weekend by seeing what is going on in their ridings.

The same is true, not only in Newfoundland and Labrador but Atlantic province-wide. People are furious at this because it is an injury to all of Atlantic Canada.

I want to appeal to the member for Central Nova by saying that he is in the position as the political minister for Nova Scotia and Prince Edward Island, as the ACOA minister, who understands better than probably anybody else in his riding what the Atlantic regional impact is of this broken promise. I say to him, show some leadership, show some backbone, show some integrity, and if none of those are good enough reasons, show that he is willing to respond to his own constituents and the people of his region in his riding. He should reverse his position and put the pressure on to have this fixed.

At the very least, the hon. member should show that he is prepared to work with--

[The Acting Speaker, Conservative, Andrew Scheer]

Questions and comments? Resuming debate, the hon. member for Mississauga South.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I understand that the member for Scarborough—Rouge River is seeking to rise on a question of privilege at about 1:55, so I am going to cut my comments off so that he will have the opportunity to do that before question period.

First of all, I am absolutely astounded that last week the government put a motion forward that “the question be now put”. In other words, let us close down debate on the budget. It must be understood that Canadians want to know what their parliamentarians have to say about important elements of the budget. We must consider the last round of controversy in this place having to do with the Atlantic accord and indeed not just Atlantic Canada but Saskatchewan as well.

Promises made, promises broken. This is a very disturbing pattern on behalf of the government wanting to shut down debate so that we do not have an opportunity to confirm to Canadians what the facts are. The Auditor General once said Parliamentarians have to have fact-based information on matters related to the taxation of Canadians. There are a number of examples touching on the budget which show frankly that the government has done absolutely everything to frustrate the tabling of factual information it continues to deny. There is no credibility here. There is no trust. The government is trying to shut down debate because it does not want Canadians to know.

When the finance minister did a poll about the budget and asked the question “Are you receiving a benefit from the current budget?” The last time I spoke at an earlier legislative stage of the budget the poll showed that 93% of the respondents said that the budget did not benefit them. What happened the very next day? The finance minister yanked the poll off his website. He did not want Canadians to see exactly what other Canadians were thinking. There has to be something about it when 93% of respondents to the finance minister's website said they would receive no benefit from the budget.

There are some Canadians who not only did not receive a benefit, but they received cuts, serious cuts. I do not have to go into the Atlantic accord or the Saskatchewan agreement. I know what it means to those provinces.

Some hon. members have stood up and laid it on the table and what does the government do? It says that is not the case, they have their choice, they can do this, or this, trying somehow to explain away what the premiers of those provinces have clearly said to the Government of Canada, that it broke its promise, a written agreement. Remember the line “broke your promise”. The Prime Minister, during the last election, put out a piece of literature which said, “There is no greater fraud than a promise not kept”.

I assume that the Prime Minister now is beginning to accept that he has committed a fraud because he has broken a promise. He said he would not raise taxes, but in the first budget he raised taxes. He denies that he raised taxes, but we all know that the taxes on the first tax bracket went from 15% to 15.5%. It is on the tax returns. Conservatives are arguing that the budget implementation did not pass, but every Canadian who filed a tax return for that year knows exactly what the tax rate was on the tax return.

I assume that the tax return provided by the finance minister himself is correct in terms of what the real rate is. So why would the Conservatives come in the House and deny that they raised taxes? It is a fact. They should say they did, but they had to do it to pay for the GST cut that they also promised.

Apparently, the value of the increased taxes that a taxpayer would pay through the increase in the tax rate from 15% to 15.5% on the first bracket works out to $400. Do we know how much we would have to spend to save on or to offset the $400 increase? For that 1% in GST, it would be $40,000. We actually have to spend $40,000 on GST taxable goods and services to save the $400 tax increase.

Who in Canada spends $40,000 on GST taxable goods and services? They are people who buy very expensive cars and houses, the major things. What does this do for someone who is living from paycheque to paycheque? What does it do for someone like that?

Obviously this is a very regressive move that the government has made. I would love to reduce the income taxes of Canadians rather than reduce the GST. It is a fairer way to do it. People who have a lot of money have more disposable income. They have greater latitude and control over what they have to spend it on, but not with regard to GST.

Deny, deny, deny: the credibility is not there. I do not trust the government. I do not believe that Canadians trust the government. Its word is not good. Credibility is the issue. The Atlantic accord shows it.

There is another thing. The Conservatives said they were going to have a good, responsible government that is open and transparent. Let us look at income trusts. My goodness, here is another broken promise.

Let me stop here and simply indicate that the Canadian Association of Income Trust Investors and their president, Mr. Brent Fullard, have been very active in representing the interests of those who are income trust investors. I have to say that I do not agree with absolutely everything that they have said and written. They have been getting very involved in the communications process with members of Parliament.

However, I can tell members that with regard to the broken promise of the government on income trusts they are 100% correct. They have given parliamentarians every opportunity to see that the decision taken to break that promise, to impose a punitive 31.5% tax increase on income trusts, which led to a $25 billion meltdown of the marketplace, means that people who owned income trusts lost $25 billion of their investment value. These are people who were saving for their retirement or who are in retirement. They were depending on the cashflow.

I have to say that this was so enormous that we could not believe it actually happened. I went to the finance committee and participated in the hearings in which the finance minister came before committee to explain the tax leakage. The government was saying that the corporation that pays dividends pays a certain amount of tax and an income trust does not pay any tax so it is awful.

The previous speaker, during private members' business, said that corporations pay taxes and income trusts do not pay taxes. We have to look at the tax burden of everyone involved in that transaction. When the corporation makes money, it pays corporate income tax, yes, and corporations also pay dividends, and those dividends are taxable in the hands of the investor. As well, there is a dividend tax credit to lower the burden of the double taxation. Thus, a corporation and the individual investors pay a certain amount of tax.

Income trusts as an instrument do not. An income trust organization does not pay tax at the so-called corporate level. The earnings are distributed to the investors. It is the investors who pay tax on the full amount at their own personal rate. Someone who already makes an awful lot of money is paying 47% on every distribution from an income trust. There is no corporation that is paying 47% tax to compare it to, so I do not know how the government ever figured this out. In fact, I would bet that the finance minister does not even know how it was figured out, because he could not even explain to the finance committee how he did it.

With regard to the finance minister's presentation, he showed a nice little chart that looked like a kindergarten chart and concluded that there was $500 million of tax leakage in 2006. Over six years, that would be $3 billion; if we multiply that one year by six, we get $3 billion. This is a terrible amount of money that we are losing on tax leakage.

The finance minister was the first to speak. All the people who spoke with him, the people the Conservatives brought in to pat him on the back, were all going on the basis of the information provided by the finance minister himself. However, on the second day, there were witnesses who wanted to bring another perspective to this.

The Canadian Association of Income Trust Investors, CAITI, was there, but there was one I really liked because it raised a very important challenge for all members of Parliament. That was HDR/HLB Decision. Its representatives came before us and said they had worked with the finance department step by step on all of the factors that one would take into account to determine what the leakage was or was not, but they found that there were three or four areas in which the government did something a little different.

Number one was that Parliament passed some legislative changes for tax law effective in 2007 and related to corporate taxation. The finance minister did not include those tax changes in his computations. The calculation is therefore wrong. The finance minister simply should have said that he made a mistake and that he should have incorporated the legislative tax changes in the determination of the tax leakage. Did he do that? No. He is still saying the same stuff. He is denying it. He will not admit it. He is not believable and he is not truthful on these matters.

The Auditor General says we need to have true, full and plain disclosure. We need to have openness so that we can debate these things honestly and make decisions based on information. The finance minister is playing some game with the House. Those are facts. They are not even debatable. This is objectively determinable. Legislative tax changes were not included in his calculation. He made an error. He should admit it and he should change it, but he did not and he will not and the Conservatives are trying to shut down debate because they do not want us to talk about it any more.

The last time I raised this in the House the finance minister was in his place and started to yell at me. He started to shout me down. He wanted me to shut up. That is not the way this place operates. If the finance minister is agitated by the truth, I am sorry, but he should also say that he is sorry for making calculations based on incorrect information.

What else did HDR/HLB bring out? It said the finance department does not include any tax revenue from income trust distributions where the holder of the income trust is a pension plan, an RRSP or a RRIF, a registered retirement income fund. The reason is that when an income trust makes a distribution to a person in a registered retirement savings plan or a pension plan, there are no taxes paid immediately. They are payable only when the money ultimately comes out and passes on to the investor. Thus, the government excluded any revenue component whatsoever with regard to distributions of income trusts to pension plans.

If we take that to its logical extreme, we would say that if every income trust was owned by a pension plan, the Government of Canada, according to the finance minister, receives zero revenue. He never receives a penny from day one to infinity. That is ludicrous. Obviously the money eventually comes. That has to be taken into account and the government did not.

At the finance committee meeting, members would have seen another chart by the minister in which he actually stated that the effective taxation rate of corporate energy companies was 6.2%. In the calculations, the government assumed that it was at the full corporate rate. It did not take into account all of the other machinations by which corporations that are capital spenders, et cetera, can defer taxes on all these other things. There is one other point, which I have forgotten. I think it had to do with exempt investors.

Those are three or four very good examples of where the finance minister's calculation of the tax leakage was erroneous or absolutely had false assumptions. As a consequence, I would say, because I want to finish now to make sure that the member for Scarborough—Rouge River gets his opportunity, that in regard to the income trust thing, I believe the government has made a very serious mistake. Two and a half million Canadians, most of them seniors, have lost $25 billion of their hard-earned savings for retirement.

There is another way to do it. The Liberals have proposed a 10% tax refundable to Canadians so that ultimately the tax is only paid by foreign investors, which is where the major leakage actually occurs and which the finance minister also denies.

I cannot believe this. We need the Auditor General to do a full enquiry into the lack of information and what the truth is with regard to income trusts so that parliamentarians can make the best decision possible.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

As always, Mr. Speaker, I listened with interest to my colleague.

Speaking of erroneous, he talked about the tax revenue that comes to the government through income trusts. It is just another example of the way he continuously misleads the House. He talks about distributions being 47% taxable at the highest rate. That is just simply not true. Distributions can be in the form of capital gains, dividend interest or return of capital, all of which are taxed differently, and I think the hon. member knows that.

If he does not know that, then his lack of understanding is simply regrettable and leads to misinformation in the House. If he does understand it, and I think he does, then it is a case of deliberately misleading the House, and that is inexcusable. That is a—

[The Acting Speaker, Conservative, Andrew Scheer]

I am sorry, but I am going to stop the member. There have been a few comments made about members and truthfulness and being deliberately misleading. I did not hear “deliberately misleading” until now and that is definitely an unparliamentary term, so I would ask the hon. member for Edmonton Centre not to use that phrase when describing a colleague.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, I withdraw the unparliamentary language if that is your ruling. I seem to have heard those words in the House otherwise, but I will refrain from using them.

Let us just say, if it is acceptable, that the member lacks some credibility in what he is saying to the House. I wish that he would just simply acknowledge, which I know he will not, that the figure of a $25 billion loss is simply also lacking credibility and was generated by the fearmongering and the inflammatory language from that side of the House and in large part from that member.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member referred to the 47%. I think if he checks the transcripts he will see that I specifically said that if a taxpayer is already at the highest marginal rate and receives an additional distribution from an income trust as income then it is automatically at the highest marginal rate.

The member also mentioned capital gains, so I suppose I could throw this one in as well. The finance minister failed to take into account that if $25 billion of appreciation of investments is wiped off the books, the Government of Canada just lost the capital gains tax on $25 billion or increased the loss for people. One way or another, $25 billion at the capital gains rate also has been lost, which should have been included in the tax leakage calculation and was not.

This is incompetence on behalf of the Government of Canada, particularly the finance department for misleading Canadians and misleading parliamentarians.

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

Mr. Speaker, I would just like to ask my learned colleague how he would qualify a government led by the Prime Minister, the leader of the Conservative Party-- I cannot call them Tories because they are definitely not Tories--

[Robert Thibault, Liberal, West Nova, NS]

Neo-cons.

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

--neo-cons--makes a promise with regard to income trusts and clearly breaks it, makes a promise in a signed deal with regard to the Atlantic accord and breaks it, and misleads the House continually on the issues of the Afghan detainees. In fact, the Minister of National Defence had to stand in the House and apologize for misleading the House. I believe he is the only member of cabinet I have actually heard admit to misleading and apologize for it.

I have yet to hear the Prime Minister apologize for breaking a promise to Canadians on income trusts. I have yet to hear the Minister of Foreign Affairs, who is also the political minister for Nova Scotia and who represents Central Nova in Nova Scotia, apologize for misleading the House on the budget and the Atlantic accord and voting in favour of breaking the Atlantic accord through that budget, and literally harming thousands of Nova Scotians.

How can the member qualify such a party and such a government? It appears to me that being members of the Conservative government means getting their facts wrong, never admitting that they are wrong and never saying they are sorry when they are wrong about something.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member has given the answer in her question.

The thing that keeps coming back to me is that piece of literature from the Prime Minister during the last election in which he said that the greatest fraud was a promise not kept. We cannot take these things lightly. Canadians now are more attentive, more alert and more unforgiving for those who do not apologize when they make mistakes or do not correct errors.

A very strange occurrence happened concurrently with the announcement of the taxation of income trusts which was the announcement that there would be pension income splitting. When we look at the calculations, which I would be happy to table or provide to any member would who like them, only about 12% to 14% of seniors actually have pension plans. Income trusts are an instrument that are meant to emulate pension plans so that people get a reasonable stream of income to pay bills. Therefore, offering pension income splitting to 12% to 14% of seniors who are not income trust holders does not offset the damage that was done to these seniors.

That is why the Liberal Party has promised to include in its platform in the next election, whenever that is, that we will remediate the situation with a 10% tax, ultimately only payable by foreign investors in income trusts. It is estimated that two-thirds of the losses of those seniors will be recouped. I believe that is responsible governing.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, as my colleague has become one of the foremost authorities on parliamentary procedure, history and tradition in this House, he would understand, as I do, that traditionally a budget vote or a vote on the Speech from the Throne are matters of confidence.

However, in this instance we had a senior member of the government, no less than the Minister of Foreign Affairs, somebody who the entire world must trust, must understand and take at his word, stand in this House and say that the budget in this instance would not be a matter of confidence, that members could stand and vote their conscience, that Atlantic ministers, to protect the Atlantic accord, could vote against the budget and that there would be no retribution, no whipping, no flipping, no firing, no expulsion from caucus, that they could remain in the caucus.

However, a few days later, the member for Cumberland—Colchester—Musquodoboit Valley, when he had the courage to defend Nova Scotians, did not have time, after he voted against the budget, to make it to the curtains before the member for Central Nova's word was completely broken.

Does he know that as anything else but hypocrisy?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I think we have another situation where the member has given the answer in a question.

It is regrettable when members of the Conservative Party on all of these matters cannot be taken at their word. Credibility in this place is something we, as members of Parliament, all hold very high in terms of protection. Our credibility is what makes us good members of Parliament.

I am sorry that a lot of this has happened but the government is doing it knowingly. What concerns me is that Conservatives do not care whether or not their credibility is damaged.

I see the member for Scarborough—Rouge River is ready to rise.

Alleged Conduct of Member for Calgary East

[Derek Lee, Liberal, Scarborough—Rouge River, ON]

Mr. Speaker, I am rising on a question of privilege in my own attempt to be helpful to the Chair in connection with a matter of privilege raised by the member for Brampton—Springdale last week. I rise principally because of reports that the member for Calgary East, who had been mentioned, indicated publicly that he would not be attending and rising in the House to deal with it.

The first question I would put to the Chair is whether or not that was a question of privilege. I know the Chair must determine that in the matter of parliamentary friendship groups but this, I would urge upon the Chair, is a matter of participation in a parliamentary activity and related to parliamentary responsibilities.

I would point out that these groups have a membership of MPs and senators. The executives are often chosen based on membership of the House and Senate. The meetings take place on parliamentary premises almost all of the time and both governments and diplomats make use of these groups for bilateral relations with Canada and Parliament.

I am urging that you accept that these parliamentary friendship groups are a crystallized and manifest accretion to the working context of members of the House, perhaps one that did not exist 100 or 200 years ago when the foundations of parliamentary privilege were born.

Second, was the member intimidated? I would put to the Chair that if the member felt intimidated then she was intimidated.

I draw reference here to what is sometimes called the thin skull theory in Tort law. You will be the best judge, Mr. Speaker, of whether or not the words and the body language constituted an intimidation of the member. However, there were words used right before and right after the formal meeting in question and I urge upon the Chair to recognize that the issue may not be the words, it may be the intimidation that is the issue.

Last, these things occur between members from time to time. They occur actually in a lot of different places, including on hockey teams, in offices and in churches between people and their day to day activities. I think it would be very helpful if the member for Calgary East would attend, rise and help us all, including the Chair, to sort this out in the proper way so that we can deal with it and move on.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, just in response, I would note that on a question of privilege I believe it is the requirement that it be the member whose privileges are said to be breached who should be raising that point, and that is not the case in this circumstance.

In terms of whether the Speaker should involve himself, I think it is obviously not the case that the Speaker should involve himself in the resolution of these kinds of disputes at parliamentary friendship or other associations, otherwise that would be a full time job for the Speaker, running the elections, refereeing them and dealing with all the issues there. That is clearly beyond anybody's conception of the role of the Speaker of the House.

As for the suggestion of the thin skull principle, if conduct in the House is any example, I suggest that the individual in question has a thick skin, among other things, and certainly if what one dishes out is any measure of what one can take oneself, then that is hardly a concern.

[The Acting Speaker, Conservative, Andrew Scheer]

I thank members for their interventions on this point. I know the Chair is taking these arguments under advisement and I am sure he will come back to the House.

At this moment, though, we will move on to statements by members.