Debates of April 25th, 2012

Study on Income Inequality

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I truly appreciate the opportunity to discuss today's motion introduced by the member for Kings—Hants, although I must express my sincere disappointment.

The member for Kings—Hants, not too long ago, would have mocked these types of grand but ultimately empty proclamations on income inequality. Indeed, in recent memory he told the House what truly drives economic growth and improves the fortunes of all Canadians. I will remind him of his own words. He stated, “Government does not create jobs. The economy does. The appropriate role of government in managing the economy is to set the conditions for investment opportunity, growth and job creation. Redistributing incomes is a poor substitute for ensuring that opportunities to participate in the economy are shared throughout all regions of the country and all sectors of society”.

I do not mind admitting that he was actually right then but he has really drifted away from that position now.

He ended up in the Liberal Party, which endorsed the lamentable and outdated policies of the 1970s, policies that created outsized government bureaucracies and endless social programs and imposed ever-increasing, damaging tax rates on businesses and individuals.

We know that during the last election, the Liberal Party, which was relying on the hon. member for Kings—Hants as its finance critic, made raising corporate taxes a key plank in its election platform.

Against all the empirical and theoretical evidence to the contrary, the Liberal Party wanted—and still wants—to deprive entrepreneurs and businesses across the country of billions of dollars annually in order to “invest” in a “fairer” Canada. But, it does not work that way and the hon. member for Kings—Hants knows it.

Increasing corporate taxes, the cornerstone of the Liberal Party's economic policies, deters investors, kills jobs and takes money out of the pockets of Canadian families.

As respected economist, Jack Mintz, from the University of Calgary School of Public Policy, recently explained in the Financial Post:

...corporations do not pay taxes—people do. People work for businesses, owners provide financing and consumers buy goods and services. Corporate taxes are either shifted forward to consumers as higher prices or shifted back onto shareholders through lower dividends and capital gains and/or workers by reduced negotiated salaries and benefits.

If Canada reduces corporate taxes.... Businesses will invest in more machines and structures, often with the most advanced technologies. The demand for workers consequently increases—businesses bid up wages to attract workers or take on more workers.

Mintz also referenced a recent independent Oxford University study that concluded that business tax increases, like those advocated by the Liberal Party, are passed onto workers by over 50% in the short run and more than 100% in the long run due to lower worker productivity. If the Liberal Party were really interested in improving prosperity for all Canadians, why would it publish the very businesses and entrepreneurs who make it happen?

Only a few short years ago, the member for Kings—Hants understood the folly of the left's reflexive demands for higher taxes on businesses. In this very House he said:

Innovative, forward-thinking governments globally have proven that we can build a competitive economy with dramatic reductions to corporate taxes....

We only need to look at the Netherlands, Sweden.... Australia and New Zealand....

The Scandinavian example is particularly important to help guide us because Scandinavian countries value investments in social policy...and, at the same time, they saw the need to reduce their corporate tax levels to some of the lowest corporate taxes in the world.

The old globaphobic, socialist, Luddite nonsense that somehow innovative and forward-thinking economic policy is contrary to good social policy is wrong.

We have tried to work with that Liberal member and hoped that the Liberal Party would listen to evidence presented at committee to disprove its flawed thinking but I am not overly hopeful. When it comes to waiting for some rational thinking from the Liberal Party, to quote Benjamin Franklin, “He that lives upon hope will die fasting”.

Let us be clear. Since coming to power, the Conservative government has brought in strong economic policies that have allowed us to offer more opportunities to more Canadians, and especially to low- and middle-income Canadians.

Furthermore, these economic policies are achieving results. Since 2006, some 1.1 million net new jobs have been created, which represents the strongest growth in the G7. This means that 1.1 million more Canadians are working than under the previous Liberal government.

What has contributed to this job growth? As I just said, the Conservative government has taken major steps to reduce the tax burden on businesses that create jobs. The result? Canada has the lowest overall tax rate on new business investments in the G7 and can finally compete with all major OECD countries regarding corporate tax rates. This has allowed Canadian job creators to offer better salaries and to invest in training, equipment and technology, so they can compete more effectively on the global market, thereby protecting jobs in Canada and creating new ones.

As Canadian Manufacturers & Exporters president, Jayson Myers, recently declared that without the Conservative government's aggressive tax reduction agenda “the recession would have been deeper and unemployment would have certainly been higher. Now, however, we have a business sector...better poised to take advantage of new market opportunities, which will, in turn, continue to generate job growth”.

However, we have done much more than that. Since 2006, and especially through Canada's economic action plan, we have made key investments in infrastructure, science, research and development and much more. We have also kept transfers to provinces and territories for health care and schools at record high levels, unlike the previous Liberal government that gutted them. It was a shameful Liberal legacy that hurt the most vulnerable Canadians.

Furthermore, we have taken targeted action to help low income Canadians. This includes removing more than one million low income Canadians from the tax rolls completely and one-third of the personal income tax relief provided by our Conservative government is going to Canadians with incomes under $42,000 even though they pay about 13% of taxes. Additionally, we introduced the working income tax benefit to reduce barriers for low income Canadians to enter the workforce, something that nearly everyone agrees has been tremendously positive, except for the Liberal Party that voted against its creation.

In the words of McMaster University professor, Bill Scarth, “[WITB] stimulates employment rather than subsidizes people not to work. ...it's a fundamental and beneficial change”.

While our Conservative government has been pursuing smart economic policies to encourage job creation, today's motion from the member for Kings—Hants, and more important, the Liberal Party's embrace of far left economic thinking of higher taxes, is not what Canada needs.

We have committee work to do. It is a charged agenda in the finance committee. We have tried to work with that member in the finance committee. I am not sure why he refuses to work with the rest of us. We tend to get along very well with the NDP members in committee. That lone member just does not seem to get that the economy is a priority of Canadians and we will work toward ensuring that Canadians' priorities are addressed with or without him.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Madam Speaker, I am very pleased to rise today to speak to this motion of income inequality. One of the fundamental tenets of the NDP is the promotion of a more equal society and therefore we will be supporting this motion.

Increased inequality is one of Canada's greatest challenges. Most Canadians' real wages have remained stagnant for several years now. In fact, the average income of Canadians has increased by only 5.5% over a period of 33 years.

According to the Conference Board of Canada, income inequality is growing faster in Canada than it is in the United States. Much of this growing inequality can be attributed to an increase in the revenues of the richest 1% of the population. Canadians who belong to that 1% have increased their share of the nation's total revenue from 8.1% in 1980 to 13.3% in 2007.

In fact, Canadians in that 1% are responsible for nearly one-third of all total income growth between 1997 and 2007. This growth occurred at the expense of other income groups.

This increase in equality of the 1% has had serious implications for the majority of Canadian families.

Lars Osberg at Dalhousie University argues that over the period from 1981 to 2006 the life experience of most Canadian families has changed. The new normal has been that entering cohorts of young workers have earned less in real terms than their parents' generation did at the comparable age.

We also now see double the unemployment rate for young Canadians. The national unemployment rate is already far too high. Our young people are also facing a much tighter job market. Conservative budget plans call for unemployment to actually rise. Women, aboriginal people, racialized communities and recent immigrants also suffer from disproportionate poverty relative to other Canadians. Such inequality has societal consequences.

In 2009 a groundbreaking book on inequality by British scholars Richard Wilkinson and Kate Pickett demonstrates that inequality, more than GNP or GDP, has a significant impact on a range of social indicators, indicators like health outcomes, such as the average life expectancy, and in other measures of human development, such as rates of literacy, teenage pregnancy or incarceration.

I see this growing poverty, this growing inequality, in my own neighbourhood, in Parkdale—High Park, where people suffering from poverty, from mental health problems, from lack of housing are seeing their condition worsen.

This is not the legacy that we should be leaving to the next generation.

Before the mid-1990s, Canada's tax and benefit system was just as effective at stabilizing inequality as those of Nordic countries, offsetting over 70% of the rise in income inequality. However, the impact of redistribution has declined since then. The OECD found that taxation and benefits now offset less than 40% of the increase in inequality.

The Conservatives tend to focus on an economic spinoff model with respect to income distribution. They seem to think that higher incomes for the rich will ultimately trickle down and benefit the rest of us. However, tax cuts for big corporations and the richest Canadians have resulted in rising income inequality, stagnant economic growth and increasing unemployment. They are really on the wrong track.

Moreover, several university studies have concluded that census data are critical to accurately measuring income inequality. The elimination of the long form census will interfere with our ability to tackle the problem.

The Liberals presided over increased income inequality when they were in power during the 1990s and 2000s. They have also consistently supported Conservative budgets that have led us down the wrong path. We saw during the Liberal government the most massive cuts to our social programs, which had serious and dramatic effects in increasing inequality.

Even when the Liberals had the financial ability with surplus budgets to make positive changes, they cut the national housing strategy and the funding for housing. They cancelled the national minimum wage. They failed to create a national child care program. They also failed to make serious and meaningful investments in our infrastructure.

The motion introduced by my colleague from Kings—Hants is a starting point, but the suggested study is limited in the taxes it would examine. Inequality is not influenced only by personal income tax and transfers. It is also influenced by consumption taxation, corporate taxation and international taxation. The motion would be stronger if it included some of these items in the scope of the study. Furthermore, there is no reason that this study should constrain the tools with which we can combat inequality.

It is important to learn from our mistakes, Liberal and Conservative mistakes, mistakes made around the world, and identify precisely what has contributed to the increasing inequality in the latter half of the 20th century.

The specific references to the welfare trap and the disincentives to paid work in the formal economy may open the way to unduly focusing the study on the characteristics of the poor and/or the unemployed as a cause of inequality. This is typically the manner in which the Conservatives approach the issue.

A stronger, more progressive approach would look at the full range of micro and macro economic and structural determinants of inequality, such as income redistribution through taxes and transfers, access to and the process of collective bargaining, access to education, health care and other social services, especially mental health services, structural changes to Canada's industrial composition, the government's role in employment transition and regional inequalities.

The suggested study also limits itself to recommendations to improve equality of opportunity. This is not consistent with the rest of the motion. If we are to study income inequality, there should be recommendations regarding the reduction of inequality.

Income inequality is a serious problem with serious consequences, and Canadians want us to take action.

According to the results of a recent EKOS poll, Canadians' primary concern is inequality. Another recent survey shows that 77% of Canadians believe income inequality is a serious problem, and that they are ready to do their part to find a solution.

The occupy movement gave rise to a major public debate in many western nations about income inequality. The OECD stated that governments like Canada's should do more to reduce income inequality because inequality undermines growth and social cohesion.

The OECD's 2011 report also underlined “the need for governments to review their tax systems to ensure that wealthier individuals contribute their fair share of the tax burden.”

One of the fundamental goals of the NDP is a more equal society and even in its present form, the motion is consistent with that goal.

New Democrats have a long history of fighting to reduce inequality and fighting for equality. Unlike the Conservatives, we will not work actively to increase inequality. Unlike the Liberals, we will not say we want to reduce inequality and then do the opposite.

Supporting the motion will be a continuation of our decades of work on income inequality. Canadians can count on New Democrats to work for a prosperous Canada for all.

[John McCallum, Liberal, Markham—Unionville, ON]

Madam Speaker, I am very pleased to have the opportunity to speak to the motion from my colleague from Kings—Hants.

I was disappointed by the Conservative response in particular, because the motion was presented in a totally non-partisan way to address an issue which more and more Canadians have come to regard as of critical economic importance. I do not think it is a right wing or a left wing issue.

The parliamentary secretary kept talking about corporate taxes. My colleague never said a word about corporate taxes. It does not necessarily involve corporate taxes. The parliamentary secretary went on about all the accomplishments of the Conservative government. Well, maybe yes, maybe no, but that is not the point.

The point is whether we can make Parliament work, whether we can have a study over a course of one year to deal with a problem that is increasingly important in the minds of many Canadians and many people around the world. I do not know why the Conservatives are so hostile to that idea, although the good news is they have more than a month until the vote, so with any luck they might choose to reconsider.

Very rich people are concerned about inequality. The late Wallace McCain, as my colleague quoted Frank McKenna on, was concerned about that. The case of Warren Buffett is well known. He was concerned that his secretary paid a higher tax rate than he did. These are not raving socialists. These are very rich business people.

I therefore cannot understand the government's attitude in this regard. I hope that it will change its mind over the coming weeks.

A lot of work has already been done on this, particularly by the OECD. I can perhaps mention some points made by the OECD.

The OECD spoke about three important areas for improving income distribution. First, build human capital; second, build a tax and transfer system; and third, create jobs.

All three of these areas are important for the subject at hand. We do not know enough about them all, which is why the proposed study is so important. We do know something. The first of these, the creation of human capital, is really important for the improvement of income inequality and the increase in equality of opportunity.

As my colleague mentioned, if children are educated how to read at a young age, that will improve their life skills and life chances and this will have a positive effect. There are many other areas, training and retraining, education. All of these are critical to the success of younger and older Canadians. That is one major domain, human capital or human skills, that is of critical importance in this area. We could have done the study, and hopefully we will have such a study, to examine best practices in various places around the world.

There is the Quebec child care program. There are experiments and important lessons to be learned, perhaps from Germany or some of the Scandinavian countries. If we do not do this study, we will not achieve any of this.

The second domain is the tax system and social transfers. The government mentioned the working income tax benefit, WITB, which was a joint program in a way because we brought it in in the 2005 budget. We then lost the election and the Conservatives reintroduced it. This is a very effective program to both increase the efficiency of the economy and to reduce inequality.

However, we cannot solve the whole question of inequality with one WITB program. I think if we had this study, we would find more WITBs, more things to do that would reduce inequality, while at the same time potentially increasing productivity and the efficiency of the Canadian economy.

Germany, again, is a good case. Germany has actually had stronger growth recently than Canada, lower unemployment and less inequality. Maybe we can learn from the Germans what they have done well in the area and how Canada could copy some of the ideas.

There is not a socialist government in Germany. We do not have to be fearful of those dangerous socialists from Germany. It is actually a conservative government.

Finally, there is the third point of the creation of jobs. As others have said, the best solution to poverty is a job. That is certainly true. I am sure all sides of the House agree that continued success in creating jobs is a really important ingredient both for its own sake to create those jobs and also in terms of the reduction of inequality and increase in equality of opportunity.

In closing, let me say I think this motion was presented in a positive and non-partisan spirit. It is a balanced proposal, neither left nor right. It has the potential to launch us on a track that will allow the government and Parliament to address one of the more pressing issues affecting Canadians today. The only regrettable side of things is that the Conservatives have provided so far a very partisan and negative response. I can only say, in concluding, that I hope in coming weeks they will have sober second thoughts and possibly be able to support this motion.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Madam Speaker, I would like to thank the member for Kings—Hants for giving me this opportunity to discuss the government's contribution to building a prosperous Canada and the important action we are taking to reduce inequality. Certainly Governor Carney yesterday indicated that this is a global issue.

We do not need another study. When there is an issue, I am proud to be part of a government that acts. I think it is important. We just looked at the information that the previous member for Markham—Unionville gave us. He talked about the numerous studies and he talked about three areas that are very important for us to move forward with. We are moving forward. I think this comes back to my nursing days in Emergency. We know what a problem is and we take action. We do not need to navel-gaze forever. It is an important issue. Our government is taking action.

Some of my comments are going to perhaps help the member look at the budgets that he has voted against and how they apply to some of things where he has voted against supporting equality for Canadians.

Since coming to office in 2006, our Conservative government has recognized the needs of individuals and families in our country and the challenges they face, which is something that today's motion neglects to mention.

For example, since 2006, our Conservative government has cut taxes 140 times, while ensuring that low- and middle-income Canadians receive the greatest benefit. These tax reductions are leaving significantly more money in the pockets of low- and middle-income Canadians. In fact, the average family of four now saves more than $3,100 per year in taxes than it did under the previous Liberal government, of which, I must point out, the member for Kings—Hants was a member. Indeed, the progressive tax system that he calls for is alive and well here in Canada.

As a recent Ottawa Citizen editorial reminds us, “In 2009, more than 19 million Canadians reported income of less than $50,000. They paid an average income tax of 7.5%. Those who made more than $250,000 paid 32.1%. That is pretty progressive.”

As a mother and a Canadian who has worked hard to make ends meet, measures introduced by our government have done more for Canadians who struggle with poverty than the motion before us ever could. Not only that, it fails to acknowledge the important work of the Standing Committee on Finance which has already undertaken numerous studies.

And so, again, really, do we need another study? Or should we just act?

For too many low-income Canadians, working can mean less money than staying on social assistance. For these Canadians, it is irrelevant that hockey players make millions of dollars a year. The important thing is finding a job that enables them to support their family. That is why budget 2007 invested more than $550 million a year to establish the working income tax benefit. Not only did the working income tax benefit fulfill our government's commitment to make work more rewarding for low-income Canadians already in the workforce, it increased the incentive for more Canadians to find work.

We went even further in budget 2009, when we doubled the tax relief provided by WITB, paying out over $1 billion in benefits to vulnerable Canadians and their families. I am proud that this program is making a real difference in the lives of Canadians who need it most, lowering the welfare wall so people can keep more of their hard-earned money.

For example, without the WITB, a typical low-income, single parent in Manitoba would have only kept about 28¢ of every additional dollar earned between $3,000 and $1,000 due to reduced benefits in federal and provincial income-tested programs and taxes. Because of our government's action, the same family now keeps 53¢ of every additional dollar earned. Programs like WITB demonstrate our government's commitment to the most vulnerable Canadians. However, we did not stop there.

Recognizing that families are the cornerstone of our society, budget 2011 introduced measures to further reduce the tax burden on hard-working Canadians. Some families need extra help. For example, many Canadians have added responsibilities in caring for their parents and other family members. These family caregivers make enormous sacrifices, often leaving the workforce and forgoing employment income.

In support of these families that care for one another, our Conservative government introduced the family caregiver tax credit, which came into effect this year.

We also recognize that parents of children with severe disabilities face emotional strains and financial hardships that can be overwhelming. Based on the recommendations of the 2006 Expert Panel on Financial Security for Children with Severe Disabilities, we established the registered disability savings plan. It is designed to help parents save for the long-term financial security of a child with a severe disability. Last fall, the government launched a review of the RDSP program to ensure that RDSPs are continuing to meet the needs of Canadians with severe disabilities and their families. Based on the feedback received during the review, economic action plan 2012 proposed a number of measures to improve the RDSP, including greater access to hard-earned savings.

Another area that he talked about was how important jobs are. Despite the targeted action our government has taken to help low-income Canadians access greater opportunity, the economy and job creation remain our top priorities because we know without a doubt that they are the best way to ensure a brighter financial future for all Canadians. That is why economic action plan 2012 contains important measures to respond to current labour market challenges and meet longer-term labour market needs.

We are taking action to help under-represented Canadians, including immigrants, persons with disabilities, youth, aboriginal people and older Canadians, to find good jobs. For example, we increased funding to expand the ThirdQuarter project, an innovative initiative led by the Manitoba Chamber of Commerce to help employers find experienced workers who are over 50 by connecting them with potential employees. Furthermore, we are extending the temporary hiring credit for small businesses for one year, continuing an important incentive for job creation.

For younger workers, the government currently invests more than $330 million annually to support young Canadians through the youth employment strategy, including youth at risk and recent post-secondary graduates. Last year alone this investment helped to connect nearly 70,000 youth with the work experience and skills training they needed to build the foundation for success in the job market. Our economic action plan 2012 builds on this investment by providing an additional $50 million over two years to assist more young people in gaining tangible skills and experience. This funding will focus on connecting young Canadians with jobs in fields that are in high demand.

Our Conservative government has dedicated itself to helping low-income Canadians and I know we are on the right track to improving the economy for Canadian families. While the member for Kings—Hants wants to study income inequality, we are hard at work building a fair and prosperous Canada with opportunity for all Canadians.

In conclusion, I am very proud to be a part of a government that acts and does not sit and study and study issues. When action is required, it is not a right issue or a left issue, it is an issue that requires action. I am proud to be acting.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I am very pleased to rise today to discuss the hon. member for Kings—Hants' motion to undertake a study on income inequality.

First, I would like to congratulate the hon. member and tell him that this is a very good topic. Before I begin talking about the motion, I would really like to thank all of my colleagues on the Standing Committee on Finance who agreed to examine my motion on tax havens and tax evasion, whether they are on this side of the House or the other.

I would now like to come back to the motion in question and the studies that have been conducted. Contrary to what the government says, it is important to examine what is happening. Right now, it seems as though the government is not making decisions based on facts. It is saying that everything is fine and that the system is working. However, if we look at the facts and rely on the studies that have been done, we realize that the inequality between the rich and the poor is continuing to grow.

An OECD report dated December 5, 2011, clearly states:

The gap between rich and poor in OECD countries has reached its highest level in over 30 years, and governments must act quickly to tackle inequality.

This report examines what is happening in Canada and other countries, and points out that inequality is increasing quickly in the rest of the industrialized countries, including the United States. Thus, the gap between rich and poor continues to grow.

Personally, in my role as the member for Brossard—La Prairie, I have observed this trend. Some of my constituents are workers. The husband and the wife work, have children and must now use food banks. Why? Because, despite the fact they have jobs, they do not make enough to cover all the increases in the cost of living and housing. There is a problem.

It is deplorable when the government decides not to look at what is really happening, because it ignores the real problem and does not ask the right questions. Even my Liberal colleague has admitted that this problem was created not just by this government, but also by previous governments.

When we look at the numbers and how things have evolved over the years, we know that we are heading in the wrong direction, here in Canada and in other industrialized countries. Some countries, such as Denmark, are dealing with this gap. In Canada, the problem is that we are not considering it. The fact that the government does not want to conduct a study is somewhat disappointing.

In September 2011, another agency—the Conference Board of Canada—truly studied the problem. It pointed out that since the mid-1990s, income inequality has been growing faster in Canada than in the United States. We were under the impression that in Canada, everything was going well, and that our country ensured equality between the rich and the poor, but on the contrary, inequality is growing faster here. In the United States, there is truly a significant gap between the rich and the poor and that is where Canada is headed. If the government does not wake up and realize what is happening, we are going to hit a wall. The government also has to listen to what the population is saying.

Does the government realize that there are currently occupy movements in Canada? A number of people, students and families alike, are outraged. The population is speaking and they are saying there is a problem. Studying this problem, with this type of motion, is a start.

Unfortunately, we will have some work to do in order to amend the motion to take it a little further. However, this is a step in the right direction and we can work with the other parties in order to really ensure that we identify the problem and come up with solutions.

One of the things that the Conference Board of Canada looked at was the Gini index, which most people do not know about. Basically, it is a means of measuring the degree of income inequality in a given society. The Gini index ranges from zero to one, with zero meaning perfect equality and one meaning complete inequality. The goal should be to use this index, but unfortunately, Canada does not.

We know these numbers, but Canada does not use them. Furthermore, as the government did with Statistics Canada, it is taking away more and more information and facts that otherwise would allow us to really take stock. If we want to know what is really happening, we need tools like the Gini index.

The Conference Board of Canada is not overly left or right leaning, but I would have to say that it leans a little to the right, if anything. What matters is understanding the effects, the repercussions and what is happening right now, so we can respond.

That is why we will support a study on this. And simply to—

[The Deputy Speaker, NDP, Denise Savoie]

Order. I am sorry to interrupt the hon. member, but the time provided for the consideration of private members' business has now expired. He will have about four and a half minutes left when this motion reappears on the order paper.

The order is now dropped to the bottom of the order of precedence on the order paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

National Defence

[Matthew Kellway, NDP, Beaches—East York, ON]

Madam Speaker, I am again rising to talk about the recent Auditor General's report, in particular, chapter 2, regarding the replacement of the CF-18s. The Auditor General's report laid bare not everything, but enough to confirm that the only responsible path to Canada's next fleet of fighter jets is by way of an open, transparent and competitive tender. The benefit of such a process is the truth, something which has been in short supply to date.

Parliament's independent watchdogs, the Auditor General and the Parliamentary Budget Officer, have been invaluable sources of information to Parliament, and by extension, to Canadians. Within the scope of their offices they have revealed important facts, figures and discrepancies, and pointed to even more. However, full disclosure would be the benefit of an open, transparent and competitive bidding process. What truths would be exposed by such a process?

The first casualty of the government's story to date would be the fiction that the F-35 is a fighter jet. Truth be told, it is at this point in time more a concept than a reality. Flight testing is only about 20% complete with the most challenging flight tests still years off. According to the March 2012 testimony of the U.S. Government Accountability Office, testing is still at the point of verifying that the plane “will work as intended”.

The recent news that the F-35 does not meet at least one of its mandatory requirements missed the point that as of now and for some time into the future, the F-35 does not meet any of the mandatory requirements, unless general airworthiness is one of them.

This is, in essence, the second truth: Nobody really knows when we will be able to determine what requirements the F-35 is capable of meeting. This plane is still very early in its development. According to the U.S. Government Accountability Office, the joint strike fighter's “mission systems and logistics systems are critical to realizing the operational and support capabilities expected by the war fighter, but the hardware and software for these systems are immature and unproven at this time”.

In fact, only 4% of testing has been completed on these critical systems. Similarly, its stealth capabilities are far from proven. According to a recent report in Aviation Week, test flights at design speed in December caused the stealth fibre matting to peel and bubble.

When the Department of National Defence justified sole sourcing the CF-18 replacement on the basis of only one contractor being able to perform the contract, it sole sourced the contract on a fiction. The truth of the matter is that no contractor has a plane capable of performing the contract. It is an open question of whether Lockheed Martin ever will be able to perform the contract and whether it will be able to do so by 2020 when the CF-18 gets grounded. It is best to put this out to tender.

[Chris Alexander, Conservative, Parliamentary Secretary to the Minister of National Defence]

Madam Speaker, it is a real pleasure to rise in the House to reply to my hon. friend, the member for Beaches—East York, on the important questions that he has raised.

There are two important programs that are priorities for the Government of Canada that have been referred to in the question. One is the development of a new fighter jet capability, not just for Canada, but for nine countries, all of them allies of ours around the world. It is intended to be the backbone of the fighter jet capacity for our Royal Canadian Air Force; for the U.S. military, not just the U.S. air force; and for seven other allies. The number could well grow by the time this aircraft reaches production. We are talking here, obviously, of the F-35.

I have to take exception to something the hon. member said. It is one thing to dump on the project, to express skepticism about this aircraft, and even to deny its existence, as the hon. member's leader, the leader of the opposition, has done. Hundreds of jobs across Canada, in over 60 companies, actually exist because of the investments Canada has made in this developmental aircraft. All of those facts are beyond dispute. We say these things almost every day. They deny them. However, it is particularly egregious to say that it only exists in concept. One can go on YouTube, or go down to the United States, to the Texas coast, where the physical aircraft is flying. There are not just one or two, but dozens. These are not just the standard version, which Canada may be acquiring in the future, but a much more complex version of the aircraft, which is meant for aircraft carriers. It has apparently landed 87 times on aircraft carriers in recent tests.

This project is important. Canada is committed to developing this aircraft with its allies, but this is just one of the two programs to which the hon. member referred. The other is the program to replace the aging CF-18 fleet that performs invaluable missions for Canada around the world, but particularly at home in protecting our sovereignty and protecting North America.

This is a separate project. It is a procurement project. It must, and will, take place under the laws, policies and regulations governing procurement in Canada. As such, it is under the leadership of the Minister of Public Works.

As many of us on this side have said in recent weeks, the Government of Canada is absolutely determined to hit the same high standards of integrity, transparency and accountability in this project as we have in other important military procurement projects, such as the national shipbuilding strategy and others, which are unprecedented in the recent history of Canada, but which tend to be voted against by the member opposite's party. He knows that as well as I do. It is nice for him to show concern about these things, but the bottom line is, his party does not support this program, and we have come to no longer expect his party's support.

Our recent announcement was that this procurement will now be led by a secretariat, involving all the relevant departments. Costs will be for the full life cycle. They will be estimated comprehensively and will be verified. All of this will take place in strict conformity to the procurement laws of Canada. Treasury Board will see to it.

[Matthew Kellway, NDP, Beaches—East York, ON]

Madam Speaker, I thank my colleague for his response, but it is indeed a worrying response. Two things were fundamentally missed in all of that. First, is the very central point that the Auditor General makes in chapter 2 of his recent report, which is that these two programs have been linked in practical and real terms, that the investment and commitment of almost $1 billion in this developmental program is understood by the Auditor General to be, in reality and practice, actually a commitment by the government to the second program, which is the procurement program.

That is the second worry. If this is really the priority of the government, it has gone around a very troubling and strange way of fulfilling a priority by putting all of its marbles in the F-35 bag.

I would recommend to my colleague that he read the GAO report which talks at length about all the technical difficulties that still call into question, ultimately, the very existence of this plane as a fighter jet.

[Chris Alexander, Conservative, Ajax—Pickering, ON]

Madam Speaker, I do not think anyone in the U.S. navy, the U.S. marine corps in any branches of the U.S. military who actually worked on this project is questioning the existence of the dozens of F-35 prototypes that are now flying.

Yes, there is a link between the two programs. The F-35 developmental aircraft is clearly a candidate, and we have stated it to be so, for procurement to replace the aging fleet of CF-18s. However, that procurement, which has not taken place and for which funding is frozen for the time being, will only happen in strict conformity with our procurement laws once the secretariat has done its work, once full life-cycle costs are presented to Parliament, not just for one year but in the successive years to come.

The member opposite will have the full benefit of that information, just as our government will. The F-35, while remaining developmental, is nevertheless real, just as Canada's needs for a replacement to the aging CF-18s are absolutely real.

I would remind the member opposite that the Auditor General's report, and this is the report to which we give priority because it is a Canadian report and our procurement will take place in accordance with Canadian rules, did not call for a competition or a re-opening of tenders. It called for—

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. We will have to leave the debate on this for now.

The hon. member for Edmonton—Strathcona.

Aboriginal Affairs

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Madam Speaker, I have come here this evening to raise this matter in greater detail and look forward to the response from the government. This is a matter that touches every aboriginal community in our country.

When I put my question to the government, in his wisdom, the Minister of Aboriginal Affairs and Northern Development rose and spoke to it. However, I intended it to be directed to either the current Minister of the Environment or the Minister of Natural Resources, who appears to be speaking on behalf of the Minister of the Environment these days. My question raised concerns about the Canadian Environment Assessment Agency reducing to less than a quarter the funds available to consult with aboriginal peoples in the review of major resource projects.

I followed up with a question to the government about how it could defend against not only the cutbacks in the resources available to aboriginal communities to participate in these reviews, but there was very clear decision by the Minister of Natural Resources to throw unfounded assertions and name-calling of aboriginal communities about their motives for being involved in the review of major projects, such as the northern gateway pipeline.

It is important for the government to understand that when cases are brought before our courts and rulings are made by the courts, the government errs in law by not considering important information. It is incumbent upon it to respond according to the direction of the courts.

There was a very important recent Federal Court ruling a year ago--last summer--which held that the then Minister of the Environment had erred in law by deciding that he did not have to consider the impacts of his decisions related to threats to endangered species. He did not have to consider any potential impacts to aboriginal treaty and rights. The court further ordered the minister to go back and reconsider his decision.

In that case the government still has not fully delivered in that responsibility and has been taken to court again. It is my understanding that the ruling has not yet come down.

Why do I raise this important matter? Nobody makes it more clear how important it is that the government deliver on its responsibility for advanced, thorough, direct consultation with aboriginal peoples and to consider and accommodate their interests than the current National Chief of the Assembly of First Nations.

I will share with the House the recent words by the National Chief. He said:

Currently, First Nations are often the last to know about major resource development. This relegates our communities to few options, usually resulting in confrontation. So we end up with protests and legal battles that frustrate opportunities for everyone and deepen tensions...We are not opposed to development, but we must be involved at the outset...about exploration, ownership, participation in production, and long-term sustainability of our environment, our communities and our futures.

He said that economic partnership and direct consultation should be the cornerstone of the true reconciliation promised by the government.

I look forward to the response of the government to these serious concerns being raised by our aboriginal peoples.

[Greg Rickford, Conservative, Parliamentary Secretary to the Minister of Aboriginal Affairs and Northern Development]

Madam Speaker, I am pleased to respond to the member for Edmonton—Strathcona's question.

Our government wishes to fulfill its legal obligation to consult by carrying out meaningful consultations directly with aboriginal communities to ensure that their opinions are taken into account when the time comes to make a decision about a project that could compromise their rights.

Currently, the northern gateway pipeline project is at the environmental assessment stage. I would like to assure the member that consultation with aboriginals is a key part of the assessment.

The Government of Canada, through the Canadian Environmental Assessment Agency, employs a government-wide approach by collaborating closely with federal regulatory bodies to ensure that consultation with aboriginals is integrated into the environmental assessment and regulatory approval process.

The health and safety of all Canadians as well as the environment are priorities for our government. Understanding and minimizing cumulative impacts is a key part of environmental management and the overall governance of Canada's lands and resources.

We are aware that Canada has a legal duty to consult and accommodate aboriginal groups in certain instances and our government takes its consultation obligations seriously. We consult aboriginal groups where a federal activity may have an adverse impact on an aboriginal or treaty right. We believe consultation is an important part of good governance, sound policy development and decision-making.

Currently, we are working with aboriginal groups, provinces and territories to develop collaborative processes on consultation and accommodation that will result in efficient decision-making and reduce or eliminate duplication with other jurisdictions

The role of Aboriginal Affairs and Northern Development Canada is to support and advise federal officials on fulfilling the legal duty to consult. A designate lead Crown consultation coordinator is identified for each project providing a whole-of-government approach to aboriginal consultation. This meaningful consultation supports the Canadian economy by moving projects forward.

Our government continues to work in concert with aboriginal people in both the development and implementation of strategies to ensure informed decisions are made to meet today’s needs and those of future generations.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Madam Speaker, there are a lot of generalities, but what I am still looking for are the specifics. The specifics are becoming increasingly apparent, as laid forth by the Minister of Natural Resources mostly in speaking to industry and in response to questions that we raise in the House.

It has now been revealed by the government of the day that it intends to reduce down federal assessment of major projects to just three agencies. While previously agencies such as aboriginal affairs had been invisible in reviews of major projects, including resource projects in Alberta, it is now apparent that they will not be involved at all.

Who then in the federal government will actually stand up and speak for the rights of aboriginal peoples to have a voice in decisions which directly impact them, their lands, their waters and their future interests?

[Greg Rickford, Conservative, Kenora, ON]

Madam Speaker, as I have already said, our government takes its obligation to consult very seriously. As the hon. member for Edmonton—Strathcona knows, the Crown has a legal obligation to carry out consultations and to provide assistance if a project could potentially compromise ancestral treaty rights. That is exactly what we are doing.

We take our obligation to consult very seriously. The northern gateway pipeline is at the environmental assessment and environmental impact review stage. This review includes consultation with aboriginals, which is exactly what the government is committed to doing. We will fulfill that obligation.

Flooding in Montérégie

[Tarik Brahmi, NDP, Saint-Jean, QC]

Madam Speaker, on February 10 of this year, I asked the Minister of Transport, Infrastructure and Communities to tell me what he thought about the request by a group of flood victims from the Richelieu valley for authorization to launch a class action suit and what he intended to do about it.

I asked this question following a press conference held in Montreal on February 9 by the Arsenault and Lemieux law firm. Oddly enough, the parliamentary secretary told me that she sympathized with the flood victims in Manitoba, her home province. First, I would like to say that I too sympathize with the flood victims in Manitoba. The Minister of Industry also answered my question. He said: “there are disaster mitigation programs that the provinces and federal government are constantly working on”.

However, my question was not about Manitoba, public safety or even industry. My question was for the minister responsible for infrastructure, who did not provide me with an answer. That is why I am asking the question again this evening.

I would first like to talk about the situation of Mr. and Mrs. Dupuis, the couple who are behind this class action suit.

Before April 23, 2011, Mr. Dupuis' property had never flooded. The applicant's certificate of location shows that the property is not considered to be in a flood zone. Mr. and Mrs. Dupuis were forced to leave their home on April 23, 2011, as a result of springtime flooding, which caused 14 inches of water to accumulate in their home, which is quite a bit. They were unable to return to their home until December 28, 2011, eight months later. To date, they have spent $135,000 on repairs and they have received only $30,000 from the Ministère de la Sécurité publique du Québec. It is this specific case that initiated the request.

What are the plaintiffs' allegations?

Let me provide a little background. Since 1963, there have been 25 floods over 100 feet recorded at the reference point in Rouses Point, New York.

On April 1, 1937—this goes back quite a while—the Government of Canada applied for the right to build a work and set aside $500,000. On June 10, 1937, the joint international commission approved the construction of the Fryers Island dam and stated that the construction would also involve dredging.

On January 5, 1976, the Secretary of State for External Affairs of Canada stipulated that the Government of Quebec would build the dam and maintain it, including dredging, pursuant to an agreement reached with the Government of Canada. That is the history and the request.

What are the claimants asking for?

They are mainly calling on the government to finally keep a promise made in 1937 to complete this infrastructure, and to carry out the dredging to compensate for the reduced water flow that has resulted from various interventions on the river. Because of this reduced water flow, the entire Richelieu valley is being flooded every time water levels rise.

[Candice Bergen, Conservative, Parliamentary Secretary to the Minister of Public Safety]

Madam Speaker, I appreciate the opportunity to address the hon. member's question regarding disaster assistance for provinces and territories for flooding in 2011, including those in the flood-affected Richelieu valley in Quebec. I am very pleased to clarify for the member the federal responsibilities and the federal commitment that our government has made and continues to follow through on.

The 2011 flood season highlighted the importance of this government's continued commitment to strengthen the safety, security and resilience of communities across Canada. In the case of flooding, as with all emergencies, the provinces and territories are primarily responsible for the design and delivery of financial assistance to those directly affected by a given disaster. The primary mechanism that the government uses to support the provinces and territories in post-disaster recovery is the disaster financial assistance arrangements. Since its inception in 1970, the Government of Canada has provided over $2.1 billion in federal financial assistance under the disaster financial assistance arrangements, or DFAA, across the country, of which over $970 million have been provided to the Government of Quebec to administer.

In respect of provincial and territorial jurisdiction, individuals who have not yet received assistance should contact their provincial or territorial emergency measures organization. This will allow our officials to process provincial requests for assistance in the most efficient and expedient manner. The Province of Quebec has submitted its request for assistance under the disaster financial assistance arrangements. Public Safety Canada officials are working with provincial officials to move forward with the request as quickly as possible, as is the process. Should the application for DFAA be approved, Public Safety Canada will then work to review provincial expenditures in support of an advanced payment in accordance with existing guidelines.

In order to eliminate or reduce the impact and risks of hazards, some provinces made proactive permanent mitigation investments in advance of the 2011 flood season. The Government of Canada is committed to sustainable investments in disaster mitigation. For mitigative measures taken in advance of the 2011 flood season, the Government of Canada has agreed to cost share these investments with the provinces on a fifty-fifty basis.

The Prime Minister also stated that the Government of Canada was committed to discussing a long-term national mitigation strategy. The member opposite will also know that budget 2012 provided up to $99.2 million over three years to assist the provinces and territories with the cost of permanent flood mitigation measures undertaken in advance of the 2011 floods. That is the budget he did not support. He should have stood up for his constituents in Quebec and supported budget 2012 to help with mitigation costs.

Disaster mitigation is recognized as one of the most effective means to address and/or eliminate disaster risks. Investment in mitigation reduces the impact of disasters on the lives of Canadians. Additionally, it is an effective approach in reducing the financial burden on governments, businesses, communities and individuals who are affected economically by disasters.

The government is committed to the safety and security of our citizens. Through our collaborative approach to working with our federal, provincial and territorial partners, we will continue to make our communities more resilient to all types of natural disasters.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Madam Speaker, I listened carefully to the parliamentary secretary's answer, which did not touch on infrastructure. She spoke about the $99 million allocated over three years. She is answering a question about the past with a question about the future. I am not asking what investments will be made in the future; I am talking about a promise that was made in 1937 and then repeated by various federal governments, a promise that the federal government would do dredging in order to compensate for the lower flow of the river. I would like her to respond to this first point.

There is a second question she has not answered. What will the government do if a class action suit is accepted? This suit could be looking for up to $200 million for the people who were affected by the 2011 floods.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Madam Speaker, we will continue to be committed to the safety, security and resilience of Canadians. Working with our federal, provincial and territorial partners, we will continue to make our communities more resilient to all types of natural disasters. The Government of Canada supports victims of natural disasters in the provinces and territories through the disaster financial assistance arrangements, which is administered by the provinces.

Public Safety Canada has received a request for assistance under the DFAA from the Province of Quebec and officials from both governments are working together in moving this request forward.

I again would remind the member opposite that budget 2012 provided up to $99.2 million over three years to assist the provinces and territories, like Quebec, with the cost of permanent flood mitigation measures undertaken in advance of the 2011 floods. I also remind the member that he did not support the budget. He should have stood up for his constituents and supported budget 2012.

The government remains committed to closely working with the provinces and territories and affected communities to increase resilience and help return them to normal life as quickly as possible.

[The Deputy Speaker, NDP, Denise Savoie]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 7:03 p.m.)