Debates of Oct. 23rd, 2017

Opposition Motion—Minister of Finance and Conflict of Interest Act

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Mr. Speaker, I certainly heard no personal attack. I have not ascribed motives to the finance minister. I have stuck to the facts about his stock ownings and earnings. The perceived conflict, which is very strong, is evident. I do not think that this is an irrelevant issue. It is not just the members of the New Democrat caucus who are talking about this. If this is a distraction from the government's agenda, it is entirely one of its own making. I would suggest that if the finance minister had followed the Prime Minister's instructions to go beyond the requirements of the law, to take the strongest steps in every case to avoid even the perception of a conflict of interest, we would not be having this conversation today.

Nevertheless, as New Democrats, we are trying to propose something. If the member did read the motion, he would note that our motion is that, “the government...immediately close the loopholes in the Conflict of Interest Act as recommended by the Conflict of Interest and Ethics Commissioner, in order to prevent a Minister of the Crown from personally benefiting from their position or creating the perception thereof.”

[John Barlow, Conservative, Foothills, AB]

Mr. Speaker, one thing that is bothering me the most about what is happening here today is the minister has had this history of doing the right thing all the time, but what we are talking about today is the ethical lapses that this finance minister has had. I do not care if he creates one job or two million jobs. This is about trust in the finance minister. Does the other member feel that Canadians and members in this House can trust the finance minister with the ethical lapses that he has had over the last couple of months?

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Mr. Speaker, I note the Ethics Commissioner's direct advice to the finance minister was, “...if an official function provides you the opportunity to further your private interests, those of your relatives or friends...you are considered to be in a conflict of interest situation.” On that basis, the minister should not have been the one to introduce Bill C-27, flawed or not. He should have taken the highest standard as recommended in his mandate letter, and he has failed to do so.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, as Jack Layton used to say, I rise more in sadness than in anger today and I resent very much comments that somehow the motion today involves, to quote the member from Hamilton, a “personal attack”. If one were to read the motion before Parliament today, one would understand that we are seeking amendments to avoid the situation that the finance minister found himself in.

Legislation in other jurisdictions, I will say, adds not just the term “conflict of interest” but “apparent conflict of interest”, which has been the standard, for example, in the province of British Columbia's legislation for decades. Had that section been in the act, I do not think we would be here, because most Canadians would accept that there is the perception that a reasonable person would have, reasonably well informed of the situation, that the minister has been in an apparent conflict of interest.

Whether the letter of the Conflict of Interest Act was broken, how many people could say with a straight face that the spirit of the act has not been broken? We want to avoid that in the future. Ever since the Sinclair Stevens scandal of many years ago, people have consistently sought for an apparent conflict of interest standard to be added to the legislation. When the ethics committee met in 2014 under the leadership of Pat Martin, it was accepted that there should be amendments to the legislation, and the Conservatives did none of it. After two years, the Liberals have done none of it, and here we are today.

If the finance minister had accepted the letter of the law and had simply told the Conflict of Interest and Ethics Commissioner that he would have a conflict of interest screen, then he would have had a staff member decide when he was or was not in conflict, whether that was adequate, and whether they were “controlled assets” because they were in a numbered company controlled by the member and then those shares were held by another company controlled by the member. If somehow Canadians thought that was just fine, surely the abysmal failure, error of judgment, of the minister has to be examined here today. That he is in an apparent conflict of interest that a reasonable person would have to conclude exists seems beyond doubt today.

However, even if it is wrong for a finance minister who regulates the pension industry, who gave a speech in 2013 concerning Morneau Shepell's work in New Brunswick, arguing for target pension plans instead of defined benefit plans, which clearly would benefit a company like his, and then introduced Bill C-27 in October of 2016, a bill that would make the world safer for companies like Morneau Shepell, what kind of judgment does the finance minister have in doing so? How can Canadians have confidence in the minister, even if the technical requirements of the Conflict of Interest Act, weak though everyone knows it to be, including the commissioner, that error of judgment stands apart.

That is what the NDP is saying today. It is calling for an urgent amendment to the Conflict of Interest Act. If Liberals do nothing but add what British Columbia has had for decades, that there should be an apparent conflict of interest where a reasonable person, well informed, looks at the situation and says there is a reasonable suspicion of conflict, that would be enough. Then the commissioner would be able to hold a minister to account where that standard was breached.

My province is no stranger to conflict of interest. That is the section that has been used countless times by commissioners in the past. That is the section that the commissioner and others have sought to have added for years, but yet nothing gets done. We find ourselves in this embarrassing situation today, a situation, according to Bloomberg News, where the minister himself called for legislation allowing target benefit plans in a 2013 speech on the company website of Morneau Shepell and then his shares rose 4.4% in the week after the legislation, Bill C-27, was introduced, where the benchmark TSE composite index actually went down 0.2% during that period.

Canadians get it. This was a colossal error, unless the minister recused himself. After countless efforts to have him acknowledge or explain, I do not believe today we have had an explanation as to whether he recused himself, as the act clearly requires in circumstances of that sort. That is what is at issue. That is why we are here today.

Did he divest himself of the shares? Did he put them in a blind trust? Not really. Did people believe that he had done so, including his Liberal colleagues on Twitter? Yes, they did. However, suddenly, because The Globe and Mail reported that he did not do that, he decided it was time to clear the deck.

He owns a numbered company, which, as the commissioner quite properly says, is a separate legal entity. A corporation is different from the individual minister. I understand that. However, if he owns shares of a company that owns shares of a company that he controls, and he watched his shares go up by $2 million, allegedly, during that period, after he chose, as the minister responsible for pensions, to introduce pension reform, do Canadians expect that not to be something a responsible opposition would bring forward?

The Prime Minister the other day said that this is “petty politics”. This is somehow “gutter politics”. With respect, this has to be fixed urgently. That is what the tenor of this motion is. It talks about calling on the Minister of Finance to apologize for breaking trust and about calling on the government to immediately close the loophole in the Conflict of Interest Act, as recommended by the Conflict of Interest and Ethics Commissioner, to prevent a minister from personally benefiting.

This is not about intent. This not about us alleging that this was or was not done knowingly. That is not what is relevant in the current conflict of interest test. The test is whether a reasonably well-informed person would think that it has caused a problem.

Professor Lorne Sossin, the dean of Osgoode Hall Law School, when he testified in 2013 before the ethics committee, talked about lots of jurisprudence on the reasonable apprehension of bias test. It seems ironic that regulators are constantly subject to that reasonable apprehension test, which is whether a reasonable person would perceive a lack of impartiality, when a minister of the crown is not. This seems to be where we are today. That is why it is argued that this legislative change is so urgent.

When he testified before that same committee, British Columbia's conflict commissioner, Mr. Fraser, said that “if there is a suspicion or if there's a taint [of conflict of interest], then that's enough for an investigation.” That, of course, has occurred on countless occasions in British Columbia, but there is no such test in the circumstances here.

This is the problem of judgment that really needs to be addressed. Should the minister have recused himself? Yes, he should have. Should he have divested before he made decisions, as the regulatory minister for pensions, that had an obvious impact that would benefit him and his company, in which he held so many shares. Yes. Knowing that, and simply saying that because we have a conflict of interest screen, that is sufficient, suggests an error in judgment that Canadians have a right to have addressed today.

In summary, the NDP is asking for the Conflict of Interest Act to be amended. It is asking for the minister to finally apologize for breaking the trust and giving politicians of all stripes a bad name. Most significantly, it is asking to get this legislation fixed so we can join the 21st century, as other provinces and jurisdictions have, so this kind of conflict does not occur again.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Mr. Speaker, it is interesting how the member talked about not tainting the names of other politicians when in fact this motion brings into great disrepute all politicians here. We are poisoning the well of all of us. We are not allowing the Ethics Commissioner the opportunity to really study this issue properly, to make sure that she can share with us her recommendations concerning the situation.

When we take the time to sit and question the morals and ethical judgment of someone, we have to look to what they have done. On the finance committee, for instance, with the enhancements to the Canada pension plan benefits, we saw how the Minister of Finance built a coalition of other finance ministers across the country to increase the amount of benefits that would be paid to Canadians, to make sure that Canadians would have a better future in the long term, so that our pensions would be better and would provide for us.

I am very proud of the work of the Minister of Finance. He is a very honourable individual and has done great work for this country. I hope we will take the time to allow the Ethics Commissioner the opportunity to do her work, so that we can rely on her good judgment. Once that has been done, then we can also make the judgments that we want to make here in the House.

At this time, however, I think we should really be very considerate and protect this honourable profession of politicians and politics.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I thank my friend from Winnipeg Centre for his effort to change the channel. However, this is not in fact about the individual, as I keep saying, but about the reasonable perception of conflict. It is not necessarily impugning motives. It is simply asking, “How did this happen? How can you let yourself be the regulatory minister and then make a decision that has an immediate benefit to the tune of $2 million for a company that you regulate?”

That perception is what gives politicians a bad name. That is what we are saying that we need to amend the legislation so that this perception can be removed and we can create a standard that gives the commissioner the tools she needs to do the job. She does not have those tools. She has made 100 recommendations, and they have not been accepted. The ethics committee made a recommendation. It was the Oliphant commission in 2010 dealing with Mr. Mulroney and Mr. Karlheinz Schreiber that first recommended that apparent conflicts of interest be added to the act.

This is something that has been sought for a long time. We are hoping that this Parliament takes the job seriously and amends the law accordingly.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, my Liberal colleague from Winnipeg Centre recently commented that we should give the Ethics Commissioner time to sort this all out.

The facts are that the government has been in power for two years. The act and the code are very clear as to what is expected of members of Parliament and cabinet ministers. We constantly hear, “I am working with the Ethics Commissioner.” There should be no need to say that one is working with the commissioner, because the guidelines are clearly written and clearly laid out for all of us to see. For someone of the calibre of our current Minister of Finance to say that he was not aware of them sounds rather dubious at best.

Could my colleague comment on the fact that the guidelines are all clearly written and that there should be no question as to whether or not we should follow those rules and no need to continue dialoguing with the Ethics Commissioner if we are simply following the rules?

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, the rules are the rules.

When I started my remarks, I talked about the difference between the letter of the law and the spirit of the law, even when a minister has a conflict of interest screen wherein the chief of staff gets to decide when a minister can or cannot engage about a company in which the minister has millions of dollars worth of assets. We need to change the rules so that the minister is not dependent upon an employee to signal yea or nay, but rather has clarity, as other legislation provides, so that when a situation arises in which the minister owns shares in a company, but the company is actually at the issue and not the individual, there is clarity about what controlled assets are directly and indirectly held.

The technical loophole that allowed the situation to occur is one that the Ethics Commissioner has frequently said needs to be addressed. We are simply saying in this motion that this should be clarified and the rules be changed so that this kind of situation is not allowed to occur again.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I will be splitting my time this afternoon with my friend and colleague who I sit with on the Standing Committee on Finance, the member for Hull—Aylmer.

Before I begin my formal remarks, I want to discuss the concept of pensions in Canada. I had the pleasure of working in downtown Toronto for a number of years. I have an economics and finance background. I sat on the CICA user advisory council panel, which is the chartered accountancy panel, and provided continuous feedback for a number of years.

I also was a pension analyst at a ratings agency. I helped put together the annual study on pensions in Canada, how solvency ratios and pensions were performing, and what the coverage ratio was. With respect to pensions, we noticed over a number of years that the defined benefit pension plans of many firms were becoming fewer and fewer for various regulatory and economic reasons.

It was this government, under the current finance minister, the member for Toronto Centre, who, working with the provinces, achieved an enhanced Canada pension plan. The prior government was unable to achieve that in 10 years. This is important. If we look at the Canada pension plan, it is transferable, indexed to inflation, people can move it from one job to another, it goes to all Canadians, and it is actuarially fully funded. It was our government, under this minister, that achieved that result. That is remarkable. That speaks not only to the character of the finance minister, but to him as an individual. He understands complex issues with respect to finance and economics based on his career. It also speaks to his ability to bring the provincial and territorial ministers around the table to reach an agreement for an enhanced CPP that will benefit millions of Canadians today and tomorrow. It will benefit my children and all of the children in this entire country. We should be proud of that.

When we talk about pensions, I know that members have thrown about words like “defined contribution plans”, “hybrid plans”, “target benefit pension plans”, “RPPs”, and “RRSPs”. We will have that debate. I would have that debate all day if I need to, with everyone here, all my colleagues. However, when it comes to the facts and substance, it was this government that sat down with the provincial and territorial finance ministers and got the job done. We need to be proud of that.

Before I go into my formal remarks, I had the pleasure to host the finance minister this summer in my riding of Vaughan—Woodbridge. We had a great tour of an apprenticeship program. We met with the carpenters union in my riding. We had a tour of its facility and saw the great work its members are doing in Ontario and across the country. We also had a chance to meet with the local business owners. We heard the praise from local business owners about what we are doing for the economy, how we are investing in infrastructure and the middle class, and creating good jobs that will provide the benefits for my kids and for future generations. That is the finance minister I know, a finance minister who cares deeply about what is going on in our economy and about the future of all Canadians.

I am pleased to rise today in the chamber to speak on the recently concluded consultation that our government undertook regarding tax planning using private corporations. However, before I speak about our plan to make our tax system fairer, I would like to talk about what has brought us to this point.

Since we formed government about two years ago, we have always been clear about our priorities. We said that we would strengthen and grow the middle class. That is why our first priority was to make our tax system fairer by raising taxes for the top 1%, so we could cut them for nine million Canadians, providing over $20 billion of tax relief over a four-year to five-year period. That is why we introduced the Canada child benefit, the CCB, lifting hundreds of thousands of children out of poverty and making a difference for millions of families across this country. By investing in our people and our communities, we have made important strides toward a fairer Canada, a better Canada.

Today the Canadian economy is resurgent. Everywhere we look there are positive indicators that tell us that the wind is in our sails. Since the fall of 2015, 400,000 new jobs have been created, most of them full time. That is a great thing. Our economy is now growing faster than any other G7 country.

However, we know that as our economy grows, we need to ensure that all of the benefits of economic growth that accrue are given to every Canadian, so that all Canadians feel they have a stake in this economy and this country, and that their standard of living is rising. All Canadians, not just the wealthy few, should experience the benefits and opportunities that come with an economy that is firing on all cylinders. Therefore, we cannot be indifferent when we find instances within our federal tax system that give some people an advantage and that others cannot access—

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

On a point of order, the hon. member for Kitchener—Conestoga.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I am not sure if my colleague has failed to read the motion that we are discussing today, but he is not talking about this motion at all. The motion clearly outlines the concerns that we have relating to the ethical standards that the finance minister is or is not operating by. The member is simply going over some of the so-called consultation that did or did not occur over the summer.

I would ask you, Mr. Speaker, to ask my colleague to return to the motion at hand.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

I mentioned earlier the same concern with other people who were speaking. I will leave it with the hon. member.

As I said earlier, we hear members speaking in what appears to be a tangent and we wonder where they are going with their remarks but they seem to bring them back to the argument they are trying to make.

I will leave it with the hon. member for Vaughan—Woodbridge to continue.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Speaker. I do like the word tangent.

I also like the fact that the finance minister has announced a number of additional steps, including establishing a blind trust for all assets held by him and his family. He is going above and beyond what is required and above and beyond what we want but he is doing the right thing and I applaud him for that. He is an individual for whom I have a lot of respect. He is an individual who has done a lot for his community. He has served on many boards, such as C.D. Howe, St. Michael's Hospital, and a number of others that benefit the broader community.

We cannot be indifferent when we find instances within our own federal tax system that give some people an advantage that others cannot access.

We have found that in some cases someone earning $300,000 with a spouse and two adult children can use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year. Such tax planning strategies are legal, but that does not make them fair. Tax fairness is a prominent issue for me. It is an important issue for our caucus. It is an important issue for all Canadians. I am glad to see our finance minister taking leadership with regard to tax fairness.

The need to level the playing field is at the heart of our current consultations on proposals to ensure equity in Canada's tax system while maintaining Canada's low and competitive business tax rates that support growth and job creation.

This summer the government put forward proposals that would address tax planning strategies that may be employed by wealthy and high income Canadians to pay less tax.

We inherited a system that encourages wealthy individuals to incorporate in order to pay less tax. That is a fact. This means someone making $300,000 can save about as much on tax as the average Canadian earns in a year, $48,000. That is not fair and we are going to fix it. Under the leadership of the finance minister, I am proud to say we are going to fix that. We are making changes to address tax advantages that only the richest individuals using high-priced accountants can take advantage of.

We have listened to small business owners, professionals, farmers, and fishers during the consultation and we will act on what we have heard to avoid unintended consequences.

I met with a number of tax experts in the riding that I represent and also with former associates who work in downtown Toronto on Bay Street, tax experts. I have listened to them and I have heard the unintended consequences that the consultation paper provided. I spent half of Labour Day and most of Thanksgiving Day on it.

We are listening, because that is what a government does. It does listen to its constituents and it does listen to stakeholders. That is what this government is doing.

We committed to reducing the small business tax rate in our platform and we followed through on that. By 2019, the tax rate will be down to 9%, saving businesses across this country up to $7,500, that they can use to reinvest in equipment, in salaries, in training, and so forth, whatever they choose to use it for.

That is why we see SMEs and formation rates for small business in Canada at robust levels. People have confidence in our economic platform. They have confidence in the finance minister and will continue to do so.

Right now there is upwards of $300 billion in passive savings sitting in private corporations not contributing to the fullest amount to the growth of the economy or business. Eighty per cent of this money is held by just the top 2% of the wealthiest corporate owners.

As we move forward, we will create a $50,000 threshold on investment income annually, or approximately $1 million in savings, to ensure business can continue to save for contingencies or future investments in growth.

Under our plan, 97% of businesses will see no tax increase on investment income. Changes will protect past investments and income from those investments.

We will also ensure that venture capital and angel investors are not impacted. We want to ensure that the next generation of innovation occurs here in Canada. The recent announcement in downtown Toronto with Google and Alphabet making their investment is literally going to transform the waterfront and create thousands of jobs—

[The Acting Speaker, Liberal, Anthony Rota]

The hon. member for Longueuil—St-Hubert on a point of order.

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

Mr. Speaker, I believe that my colleague opposite is once again bragging about the virtues of his government's various economic reforms. However, today, we are talking about a serious ethical issue, a conflict of interest. I would like him to talk about the subject at hand.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

As I said earlier, sometimes members go off on tangents that we do not understand, but I will allow members from all parties to share their comments and find a way to sum them all up in their conclusion.

The hon. member for Vaughan—Woodbridge has 15 seconds left.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, the Finance Minister's ethics are beyond refute. We as members always must uphold the highest standards as publicly elected officials. Knowing the Finance Minister, I know that has been done.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Speaker, what we just heard from the member is what we would call the “Dance of the Seven Veils” in the verbal version. He literally talked about everything but the content of the motion, avoiding, at some points brilliantly, to talk about the failure of the Finance Minister to meet the very simple and reasonable ethical requirements set forth by the law and the Liberal government by the very documents it put out in the mandate letters sent to every cabinet minister.

How can the member say truthfully and without laughing that the minister has met the requirements of the law and the expectations of Canadians on his personal ethics?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, the Finance Minister has announced that he established a blind trust for all assets held by him and his family. The minister is working closely with the Conflict of Interest and Ethics Commissioner and a trustee to divest all of his family's holdings in Morneau Shepell in an orderly fashion and as soon as practical.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, the minister just put his holdings in a blind trust. He did not do it two years ago.

The letter that the Conflict of Interest and Ethics Commissioner sent the minister said that “if an official function provides you the opportunity to further your private interests...you are considered to be in a conflict of interest situation.” That is exactly what the minister did.

How can Liberal members, including this MP, claim that the minister was not in a conflict of interest situation up until yesterday?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, the Finance Minister continues to work closely with the Conflict of Interest and Ethics Commissioner to ensure that all rules are followed, as is expected of him and all members of Parliament.

[Sean Fraser, Liberal, Central Nova, NS]

Mr. Speaker, I listened intently to my hon. colleague's remarks. He did a great job of highlighting some of the contributions the Finance Minister has made, which really focus on the Canadian people, including the consultation process over the course of the summer.

The issue of helping small business and adjusting some of the proposals that initially went out has consumed the public discourse for some time. When we started to release the adjustments to these proposals, I could not help but notice that the channel had been changed by the opposition.

Does my hon. colleague believe this is because the opposition knows these changes will be good for small business in Canada?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, these changes are not only going to be good for small business, but they are going to be great for small business. They will help grow our economy and help create good middle-class jobs. The opposition knows it and we know it.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, this is my first opportunity to take the floor in this debate on the matter of supply relating to the problem of ethics and the finance minister. I would like to thank my friend from Vaughan—Woodbridge for his speech and ask his indulgence that I state, on the record, my deep concern that Bill C-27 must be withdrawn. It appears to me that there is a blatant conflict of interest in the finance minister bringing forward this measure.

As for much of the rest of the debate, I find it regrettable that we cannot focus on the need to bring into this place, and it is part of the motion before us today, ethics rules that are binding. The code of ethics for members of Parliament that we find in our Standing Orders book says very clearly that we must avoid conflict of interest and the perception of conflict of interest, but as far as I can see, it is impossible to commit an ethical violation. On this, I refer to more than the hon. Minister of Finance, but to other members in this place who have committed, in any common-sense understanding, a violation of their conflict of interest guidelines, the guidelines are unenforceable. Would my friend from Vaughan—Woodbridge agree that we should make them enforceable?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I have two brief points. First, retirement security and retiring in a dignified way for millions of Canadians is important to us. That is why we enhanced the CPP and boosted the GIS. If there are other avenues we could take, we will obviously look at them. We need to make sure we strengthen our retirement system.

On the other matter, the finance minister is working closely with the Conflict of Interest and Ethics Commissioner to ensure that everything is being taken care of properly.