Debates of Oct. 17th, 2017

Opposition Motion—Minister of Finance's documents submitted to the Conflict of Interest and Ethics Commissioner

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, the member is giving a speech on the situation of the economy, and some points that one might contest. However, the motion we are debating actually says:

That, given accusations by experts that the Minister of Finance’s family business, Morneau Shepell, stands to benefit from the proposed changes outlined in “Tax Planning Using Private Corporations” and assurances by the Minister that he has abided by his Public Declaration of Agreed Compliance Measures with respect to his family business, the House request that the Minister table all documents he submitted to the Conflict of Interest and Ethics Commissioner between November 4, 2015, and July 18, 2017.

This is the motion we are debating. Therefore, I think the rules of the House prescribe that the member address that motion and its particulars in terms of the unethical conduct of the Finance Minister.

[The Deputy Speaker, Conservative, Bruce Stanton]

I thank the hon. member for Sherwood Park—Fort Saskatchewan for his comment. It is true that all members must consider the relevance of their comments to the subject at hand. Today, the motion before the House requires members to always consider the mandate of the Minister of Finance.

The hon. member for Vanier has spoken for three and a half minutes and, to this point, I have heard no reference to the Minister of Finance. I expect that, in the next few minutes, the hon. member will be speaking to the matter before the House.

I remind hon. members that they must make sure that they speak to the matter before the House. At the same time, they have a lot of freedom as to their arguments.

I will be listening to the speeches given in today's debate to ensure that this is the case.

The hon. member for Vanier has the floor.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I thank you for the opportunity to continue my remarks. As I mentioned earlier, a number of initiatives have been put in place since we were elected, since our government came to power. There is still a lot of work to do and we are in the process of getting it done. To that end, yesterday, the Prime Minister, accompanied by the Minister of Finance, announced the government's intention to lower the small business tax rate to 10% in 2018 and to 9% in 2019, while moving forward on proposals to fix a tax system that is inherently unfair to the middle class. We want to ensure that the 9% tax rate for small businesses and the low tax rate for other corporations will be used for investments, growth, and job creation in the business community.

Our tax system encourages wealthy individuals to incorporate just so they can get a tax advantage. As a result, someone making hundreds of thousands of dollars a year can get a lower tax rate than a middle-class worker making much less.

In July, the Minister of Finance launched consultations to hear what Canadians had to say about what adjustments could be made so the tax system works for the middle class. We heard the opinions of business owners, professionals, experts and members of our caucus on how to improve our proposals so that they do not affect hard-working, middle-class entrepreneurs like family businesses, farmers and fishers. We listened to their comments and we are following up on what we heard. The minister is following up on what he heard. That is his role as finance minister.

In the short run, the government intends to streamline the proposal that would limit the ability of private corporation owners to pay less personal income tax by sprinkling their income to family members. Over the next few weeks and months, the government will unveil the next stages in its plan, which the Minister of Finance is mandated to promote, to address tax planning using private corporations. The measures we take will reflect the feedback that we have reviewed to date, and we will continue to carefully review the remaining feedback.

The government will continue to support small businesses and their contribution to our communities and economy. We will keep a low tax rate for small businesses and support their owners so that they can actively invest in the growth of their businesses, create jobs, boost entrepreneurship, and stimulate the growth of our economy.

We recognize the importance of maintaining family farms, and we will work with Canadians to ensure that the upcoming measures do not keep family businesses from being passed on to the next generation.

We will perform a gender-based analysis on the final proposals to make sure any changes made to the tax regime promote equality between men and women.

I want to reassure all Canadians and all members that every measure we take will support women's ongoing success. The Minister of Finance will do his utmost to make sure that Canadians can have confidence in these measures.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, the member talked about initiatives that the government had put forward, especially the middle-class tax cut. Two-thirds of working people, nine million Canadians, were not eligible to benefit from the middle-class tax break, anyone who earns $23 an hour or less and works full time. I know many people in the member's riding have been excluded from the middle-class tax break.

The Liberals have turned their attention to and put a square focus on small business in their tax fairness policy, as they call it. However, they forgot to talk about CEO tax loopholes and tax havens in their tax fairness policy.

I have huge concerns when the government talks about tax fairness, the middle class and those they want to help join it, when they are not included in the tax fairness policies.

The finance minister forgets to declare his company that might have a cottage in France, and a Prime Minister who will not be affected by these changes to the small business tax. We know they do not understand when we talk about middle class Canadians and tax fairness.

Maybe the member could tell us who is in the Liberal middle class. We would like to know.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I thank my hon. colleague for his question and speech.

I want to reiterate the importance of the new measure that was announced yesterday. As mentioned earlier, we announced that we have lowered the small business tax rate from 10% to 9%. I see this as an opportunity to strengthen Canada's small and medium-sized businesses. This is a measure that will truly support small businesses and their owners and help us keep growing our economy.

I think we need to really look at the measures being implemented and those to come.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Mr. Speaker, I listened carefully to my colleague's speech on the motion we have put forward today.

Her speech reflected exactly the same attitude we have seen from the Liberal government since the beginning. The government is trying to divert attention. It is trying to talk about other things, because it knows that it acted poorly. It knows that it did not listen to Canadians, small businesses, and farmers. It knows that decisions were made in Toronto. It knows that one of the government's economic advisers thinks family farms do not exist and that they are just parcels of land to help farms and farmers pay less tax.

My colleague's speech sums up very well the way the government is addressing the very important issue in our motion, the credibility of the Minister of Finance.

My question is very simple: can my colleague, who has just made a speech on all sorts of topics other than today's motion, tell us whether she thinks, yes or no, the Minister of Finance should submit all his documents to the House so that it can assess his competence and credibility?

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I thank my hon. colleague for his comments.

As members know, the Minister of Finance took this summer's consultations very seriously. The good news is that I personally had the opportunity to speak with a number of my constituents who had serious concerns. With their help, I was able to submit some suggestions to the finance minister, and he took them into account. We can see the results of that today with the new measure brought in to help small and medium-sized businesses, including the ones in my riding.

In Ottawa—Vanier, 66% of residents earn less than $50,000 a year. The new measure announced yesterday will encourage small and medium-sized businesses to invest in the region. That is just one example of the suggestions the Minister of Finance took into account in order to move forward with new measures to strengthen our economy.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Speaker, the motion before us essentially casts aspersions on the character of our finance minister. It talks about accusations. It talks about the minister standing to benefit. It is a simple motion.

Before I get in to the motion, I have a confession to make. I have been involved in tax avoidance.

[An. hon. member]

No.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Yes, I have done it for multiple years.

[Peter Fonseca]

I don't know if I want to know about that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I have been buying RRSPs. I am deferring my taxes as well, but I am avoiding taxes and I am doing it legally. I plan to continue to do it.

My point is that tax planning is legitimate. The government puts in a number of rules to encourage us to plan in certain ways. RRSPs are designed to help people save for their retirement. It is a tax planning measure that allows people to avoid taxes, encouraging them to put aside money for when they retire.

There is a difference between that and tax evasion. Tax evasion is doing something illegal to not pay taxes. There are no rules. People are evading taxes.

Our government has not criticized any of our citizens for tax evasion. There is nothing wrong with tax planning. What happens at times is that certain structures that are designed to encourage certain behaviour also encourage other behaviours that the government may or may not want. When that happens, the situation is looked at and addressed. That is what the government has been doing in this case. It has been looking at whether certain rules are being used in certain ways that were unforeseen. This happens all the time. It happens when any law is introduced. It is the law of unintended consequences. That is what our finance minister is trying to deal with today.

The motion purports that the finance minister is looking to help a company with which he used to be involved. That is not the case at all. The case is looking at a tax planning strategy that is used in the ways we want it to be used, but also in ways we do not want it to be used.

The key point is that anybody involved in tax avoidance through proper planning is not a tax cheat, is not doing anything illegal, is using the rules to his or her benefit. There is nothing wrong with that. There is something wrong when people are involved in tax evasion, but we are not seeing that tax evasion. This has happened but why does it happen? Because tax rules are complex.

Taxing involves putting something in place and expect a certain outcome, but at times other things happen. The rules are looked at after a while and we see certain behaviours we want to encourage, but we also see a few other behaviours we do not want to encourage. When that happens, we look to make certain changes.

The finance minister is working on exactly that. He is not looking to attack anybody. He is not looking to denigrate any part of our society. He is not looking to attack farmers or physicians. He is not looking to attack anybody.

He is simply looking at tax strategies that are working in ways that we do not want to encourage in certain key instances. That is all of it.

This government's commitment is to the middle class and, it should be underlined, those working hard to join it, absolutely. Most of our 1.8 million Canadian-controlled private corporations are very small businesses and they are the middle class. Our government is committed to not do anything to hurt those businesses, and we are working diligently in that direction. This paper does not talk about any of those issues. It does not bring up one measure that has been proposed by the finance minister with which it is in disagreement. This brings up character assassination.

It is the job of the opposition to critique the laws that are being proposed. It is the job of the opposition to say that something proposed in the government's tax changes is not correct. However, we are not seeing that. We are not seeing the opposition doing its job. We are seeing the opposition members engaging in character assassination instead of saying they see a problem with the way farms are being targeted. Fair enough; let us hear it, but we do not have it here—

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

We do. We did say that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Yes, it wasn't important enough to trump character assassination. Members could say they see a problem with how it is affecting small business, but it was not important enough to trump character assassination.

There is an old saying, “If you live in a glass house, don't throw rocks”. The House of Commons is not a glass house, but we are engaging in rock-throwing instead of a constructive debate and critique of any one aspect of what is being proposed.

If opposition members see opportunities to improve the legislation, I strongly suggest they put them forward. They could put them forward in a constructive manner, and the government would be very open to considering any constructive feedback. This is what we have been engaged in for the last 75 days, and the finance minister continues to be open to hearing feedback on how to improve these suggested changes. I expect to see more changes being implemented.

If there are good ideas and suggestions, I would tell the opposition to put aside these silly motions of character assassination and put forward good suggestions for the finance minister to consider. I know he is open-minded. I know he is working hard for the Canadian economy, and I am certain he will listen to them.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, the member spoke about tax-planning strategies, but what we really saw is topic avoidance and accountability evasion from the government. He called this a silly motion. The motion calls for the finance minister to table documents in the House with respect to his compliance or non-compliance—one of those two—with very clear rules by the Ethics Commissioner. This can happen. Sometimes people forget that they own villas in France. I get it. However, it would help if the minister simply tabled the evidence so that people can see it.

The member asked that we raise other issues with respect to tax changes. I invite him to stay for question period. I think he will see some of that take place in a very short time. What is his problem with voting in favour of a motion that asks for the minister to table the information? If the minister does not want to table the information, is that not quite revealing in and of itself?

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Speaker, my problem is this. We have different sections in government. Different people do different things. For example, we have the Ethics Commissioner. It is the Ethics Commissioner's job to look over these documents, and she has done her job. If there has been an oversight, she will look into it. If we are talking a technicality here, let the commissioner do her job. While she is doing her job, it might be a good idea for the opposition members to do their job.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mr. Speaker, I find it strange that my colleague oopposite would use metaphors that could so easily be turned against his party. He talked about how people who live in glass houses should not throw stones. Well, maybe the Liberals themselves should heed that old saying, but in their case, it would not be a glass house, it would be a glass villa.

In recent weeks, the government has been going after small businesses and poor people, turning a blind eye to all manner of tax evasion, and, worst of all, tolerating behaviour like that of the Minister of Finance. The fact that he did not disclose how deeply he was involved in the pension fund business when he was making laws affecting that very sector is unacceptable. The Liberals should choose their metaphors carefully.

Does my esteemed colleague see the shame in waiting until now to lower the small business tax rate from 10.5% to 10% and to 9% in the coming years? This is a bald-faced attempt to distract us from the villa issue and the fact that the minister did not disclose everything to the commissioner.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Speaker, I have spoken to a number of small business owners for whom this tax cut is no mere distraction. They welcome this measure and are very happy about it. They think it is an excellent initiative on the part of our government, one that was part of our election platform.

I am not sure how to answer the member's question when he claims that small business owners think reducing their tax rate significantly is a distraction. It is by no means a distraction. It is a very important initiative for our economy.

[Robert Sopuck, Conservative, Dauphin—Swan River—Neepawa, MB]

Mr. Speaker, if this is not an ethically challenged government, it is clearly incompetent: 10.5 million bucks to a convicted terrorist; the small business tax proposals that are falling flat; losing the northern gateway pipeline; the Petronas energy project; energy east, with $50 billion in investment down the drain, and thousands and thousands of lost jobs.

I read an article about energy east, and the author described how it was lost. He attributed it to regulatory dysfunction. I wonder if there is a pill to cure that kind of dysfunction.

The minister's excuse for not reporting his villa was that it was only an “administrative” failure. Imagine that. A minister of the crown is saying that it was an early administrative failure. Would the member have a comment on the minister's excuse for why he did not report his villa?

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Speaker, the member touched on a number of issues. I was trying to keep track of them as he was going along, but there were so many. He was all over the place, and I had a hard time catching it.

What I can say is that the finance minister has been doing his job, collaborating in depth with the Ethics Commissioner. The Ethics Commissioner is happy with what she has seen. She has not raised an issue. She is doing her job. She is moving forward with it. It has been disclosed, perhaps not in the exact manner it was supposed to be disclosed, but that can be fixed, and it will be.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Mr. Speaker, I am going to be splitting my time with my colleague from Charlesbourg—Haute-Saint-Charles.

It is going to be hard to follow the comedy show that we just witnessed from our friend from Hastings—Lennox and Addington. I know it is a difficult day for the Liberals on the other side. This is a tough one for them to explain to their constituents about the ethical lapses of the finance minister. Let us just get back to the basics. All we are asking for today is for the finance minister to be completely transparent here and that he follow through with the request of the motion that the House will hopefully adopt later today, to table all the documents that he submitted to the Conflict of Interest and Ethics Commissioner between November 4, 2015, and July 18, 2017.

A lot of people will ask why that is important. We are talking about the second most powerful person in the cabinet of the Government of Canada. This the individual who has all the control over the financial levers of our country. This is the individual who has to have the most trust of Canadians, of investors, and of our financial markets. This is the individual who has to make sure he is working in the best interests of Canadians and not of himself. What we have witnessed so far is that this minister hates transparency, hates accountability, and really has a lapse in judgment in trying to circumvent the rules that have been laid out by the Conflict of Interest Commissioner.

As a former parliamentary secretary, when I was sworn in, I had to immediately comply with the Office of the Conflict of Interest and Ethics Commissioner. There is a complete act called the Conflict of Interest Act for ministers and parliamentary secretaries as well as the book that the Prime Minister himself has updated on the accountable government, a guide for ministers and parliamentary secretaries. We have to look at all the rules that are in there, on which the Minister of Finance himself has refused to follow through. That in itself is something where the minister is really letting down not only his own caucus, but I really feel sorry for all my friends on the other side who have to sit through this miserable situation, listening to the Minister of Finance try to weasel out of this situation and actually have the Prime Minister step in and handle all the questions at a press conference because the minister was not able to do it himself. The Prime Minister was definitely disappointed in his finance minister. I can say that based upon what happened

In the guidelines, there is a section in chapter IV, part 1, called “Ministerial Conduct”. The Prime Minister's own book says:

Ministers and Parliamentary Secretaries must act with honesty and must uphold the highest ethical standards so that public confidence and trust in the integrity and impartiality of government are maintained and enhanced.

Looking at the definition of integrity and as it relates to ethics, we see it says in Wikipedia, “In ethics, integrity is regarded by many as the honesty and truthfulness or accuracy of one's actions.” We are not getting that when we look at the Minister of Finance and how he has completely dodged the issue of being transparent, of making sure that he has done things to the letter of the law, that all the is are dotted and the ts are crossed. I do not know whether he was trying to find loopholes in the Ethics Commissioner's guidelines or in the Conflict of Interest Act, because he definitely has broken the law in the way it is defined in the Conflict of Interest Act as it applies to ministers.

I am sure the members of the cabinet have all read the documents and they are all well aware of what needs to be done here, but the thing that struck me the most is that, once they become a public office holder, they have to provide all disclosure to the Conflict of Interest Commissioner. In subsection 22(1), the act says:

A reporting public office holder shall, within 60 days after the day on which he or she is appointed as a public office holder, provide a confidential report to the Commissioner.

That is two months, not two years but two months. Let us do the math over there. That never happened, because the French villa was not on that original list. Once they do report it, there is a public declaration, in subsection 25(2), which states, on “certain assets”:

A reporting public office holder shall, within 120 days after the day on which he or she is appointed as a public office holder, make a public declaration of all of his or her assets that are neither controlled assets nor exempt assets.

That is two months beyond the two months that the minister already had, so four months. Let us do the math—it is four months in total—for our Liberal friends.

We heard about the French villa that was reported in July of this year, two full years after the Minister of Finance was sworn in to cabinet. Here is an individual who completely missed the mark, and he is calling it an administrative oversight, which is just unheard of.

It further states, section 26:

(2) The summary statement must contain the following:

(a) for each controlled asset of the reporting public officer holder, and for each asset of the reporting public office holder that the Commissioner has ordered divested under section 30, a description of the asset and the method used to divest it;...

All of his assets would have received direction from the Ethics Commissioner.

It goes on to state that he has to:

(b)...recuse himself or herself under section 30, a description of the matter and information regarding the process to be put in place by the reporting public office holder and others to effect the recusal; and

(c) for any other matter in respect of which the Commissioner has issued an order to the reporting public office holder...

Everyone sitting over there who is a parliamentary secretary or a minister of the crown has had to follow these rules. That is everybody except the Minister of Finance. That is why it is so important that we get the documents from the Ethics Commissioner herself, so that we, as parliamentarians, and Canadians can see whether the integrity of the finance minister is in question. If he said he received direction from the Office of the Conflict of Interest and Ethics Commissioner and somebody in that office said no, he did not need to put his assets in a blind trust or he did not need to disclose that he has a beautiful villa, owned by a private corporation, in France, possibly earning income from rentals to tourists or people who love the Mediterranean, that we need to find out. The only way to do that is if the Minister of Finance is honest and up front, and provides those documents to all of us in Parliament.

The other part of this is the requirement for divestment of assets through that appointment. Through the divestment, a minister has to either sell them, so that they do not influence the person's behaviour as a minister of the crown, or put them into a blind trust. When I was sworn in as parliamentary secretary in the previous government, I had to put my little farm into a blind trust. My wife had to be the manager and I was allowed to work on the farm, but not allowed to provide any input into the day-to-day operations of the farm. I was not allowed to talk to any of our clients, some of whom were my buddies. We could process cattle together, move them from pasture to pasture or vaccinate them, anything like that, as long as we were working, but I could not talk about any of the contracts that existed between them, as clients, and myself, as one of the owners of the blind trust.

Therefore, there are rules to follow. We know for a fact that the Minister of Finance did not put his considerable assets in Morneau Shepell into a blind trust. He was sitting on millions of shares worth over $32 million. As I said, the finance minister is the most important person in cabinet. He handles the finances of this country. He is really the flag-bearer for the most ethical behaviour, and we are not seeing that since he did not put his French villa into a blind trust.

To add insult to injury, we also now find out that Morneau Shepell has a private corporation called Morneau Shepell Bahamas, registered in Barbados, where it gets preferential tax treatment at an income tax rate of 2.5%. Through a tax treaty that Finance Canada negotiated with Barbados, it can repatriate that money back into Morneau Shepell Canada at no Canadian tax level at all. It pays its 2.5% income tax in Barbados, brings the money back here, and redistributes it through dividends to its shareholders, the Minister of Finance being one of the biggest shareholders of the company.

Let us also look at the overall issue of how this has completely hurt the finance minister's credibility. All we are asking is that he finally be honest, show some integrity, and provide parliamentarians and Canadians with the respect we deserve, the respect that the Office of the Conflict of Interest and Ethics Commissioner deserves, the respect that everyone involved in this issue deserves by being honest and up front, and disclosing all of the information he has relating to his relationship with the Office of the Conflict of Interest and Ethics Commissioner.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, the Conservatives have opposed everything that the current Minister of Finance has done. What did the Conservatives do when we decreased taxes on Canada's middle class? They voted no. What did the Conservatives do when we put on a special tax on the wealthiest 1%? They said no. What do the Conservatives do when we talk about tax fairness? They say no.

I suggest that the Conservatives have once again found a topic to disagree on with the Minister of Finance. However, I believe that Canadians as a whole will have more faith and trust in what the Ethics Commissioner has to say than they do members of the Conservative Party who have consistently been critical of the Minister of Finance.

The Minister of Finance himself has said that he will follow the advice of the Ethics Commissioner. I understand why we will not follow the advice of the Conservative Party. It is because we believe in Canada's middle class.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Mr. Speaker, the member for Winnipeg North can sit here and yell and scream at the top of his lungs all he wants, because I can tell members that nobody that I have talked to on the small business tax changes trusts the Liberals. They even trust them less because of the actions of the Minister of Finance.

The member can rally on and say that things are just great, but all the Liberals are doing is saying that there is one set of rules for the Liberals and a different set of rules for all the rest of us, and that is not right.

[Harjit S. Sajjan, Liberal, Minister of National Defence]

Mr. Speaker, on behalf of the Minister of Finance, I wish to table these documents in the House, in both official languages.

[The Deputy Speaker, Conservative, Bruce Stanton]

I thank the hon. minister.

The hon. member for Selkirk—Interlake—Eastman will have three minutes remaining in his time for questions and comments when the House next returns to debate on the question.

We will now go to Statements by Members.

The hon. member for Brossard—Saint-Lambert.