Yvan Loubier

[Bank Act, March 28th, 1996]

So soon, Mr. Speaker? I knew that the government had little to say, but taking only two minutes to propose ten amendments is rather short.

At 9.15 this morning, barely one hour before the beginning of the debate on the amendments to Bill C-15, we learned that the government had decided to propose a series of ten amendments to its own bill.

We deplore this way of doing things, which has almost become the norm with the government, and which consists in tabling, literally at the last minute, a series of amendments to create confusion in the debate. This has happened before. This morning, we took a very serious look at all the amendments to make sure that the government was not trying to pull a fast one on us. It is unacceptable on the part of a responsible government to resort to such tactics, especially in the case of a measure like Bill C-15, which concerns financial institutions and which is of vital importance to the future of that sector, particularly securities.

I wonder who the Secretary of State and the ministerial assistant think they are. I have the impression that they think they are a bit like Moses, but with ten amendments instead of ten commandments. The difference is that we are in Parliament, where democracy is to be respected, where public information and transparency must prevail. If it had not been for my colleagues' alertness and our research service's technical support, we would have been at a loss with the new amendments being systematically dumped on us.

Let me recall, and this is something we discussed last year, that Bill C-15, previously Bill C-100, directly affects an area over which provinces have exclusive jurisdiction, that of securities, which includes liquid assets, shares, bonds and debentures.

This is an area over which provinces have exclusive jurisdiction under two sections of the Canadian Constitution. The first one is Section 92.13, which provides for property and civil rights in the province. The second one is Section 92.16, dealing generally with all matters of a merely local or private nature in the province.

From the beginning of this debate on the bill relating to financial institutions, we have received only half-answers and half-truths when we asked how it happens that the bill clearly infringes upon an exclusive provincial jurisdiction.

Bill C-15, notably by implementing across Canada a system for the clearing and settlement of payment obligations, infringes on powers already exercised, for example, by the Quebec Securities Commission-the same applies to Ontario and British Columbia-, and by the Quebec inspector general of financial institutions.

This situation results in costly overlaps for taxpayers. Liberals have become masters at it. They add overlap, particularly in the area of securities. Who is paying for that? The taxpayers. The Liberals are adding not only costly overlaps but also administrative inefficiencies, because Quebec financial institutions will be subjected to dual controls.

Why end up controlling an area which is already very well controlled and which has been under Quebec's exclusive jurisdiction for a long time? Why is the federal government showing that much paternalism? Why does the federal government want to monitor the various provincial institutions, particularly the Quebec ones?

We have deplored it, we deplore it today and we deplore most of all the fact that, in these Moses' ten commandments or rather the ten amendments put forward by the secretary of state and assistant to the Minister of Finance, there is nothing that deals with the official opposition's requests and nothing that responds to the criticisms of various provinces with regard to this encroachment by the federal government.

With regard to securities more specifically, the second concern that is not dealt with in Bill C-15 nor in the amended version put forward by the government with these ten amendments is the fact that this is not a partisan issue, an issue of sovereignty versus federalism, but a fundamental issue in Quebec.

Even Daniel Johnson, in a letter dated February 16, 1994, when he was premier of Quebec, stated that it was out of the question for the federal government to encroach on the area of securities-for the federal government was already expected at that time to try to encroach on that area-and that the Government of Quebec would refuse to accept it and would fight tooth and nail to keep its prerogatives in that area.

Daniel Johnson said so, and he is an ally of the people opposite, and too unquestioning an ally at times. He wrote to the intergovernmental affairs minister of the day to remind him of the Quebec consensus-because there is a consensus-on this exclusive jurisdiction over securities. But the government does not even care to respond to its own allies, and it is blatantly ignoring specific sections of the Canadian Constitution.

Besides jurisdictional issues, a third difficulty, as I said earlier, is that financial institutions and even investors in Quebec will suffer from this duplication created by the federal government. Costs will rise, and the securities market will lack the consistency it requires. Let us not forget that all agents on the securities market, like all other financial markets, need clarity and consistency of rules and stability. Everybody knows that financial markets need stability.

Instead of introducing the consistency and stability all financial markets throughout the world require, the federal government comes in clumsily with Bill C-15. It sets out to create its own institutions and let the Bank of Canada and the Canadian superintendent of financial institutions interfere in the securities sector. Such an attitude cannot be accepted.

Last August, the secretary of state for financial institutions appeared before the finance committee. To all our questions on the federal government's infringement upon the securities industry, a field of exclusive provincial jurisdiction especially in Quebec, the secretary of state will have to acknowledge today that he answered

just about anything. He said just about anything. We even had the feeling that the secretary of state did not even know his own bill.

When we referred to specific sections, we got the feeling that the secretary of state had senior officials draft this legislation and was simply providing us with a summary. Every time we told him that the federal government intended to get involved in the securities industry, he said no. Every time we told him that the federal government was paving the way for systematic infringement upon this field, he said: "Come on, where do you see that in the bill?"

However much we referred to specific provisions-

[Unemployment Insurance Fund, March 27th, 1996]

Mr. Speaker, why is it then that, last week, senior officials at the Treasury Board and the assistant auditor general confirmed our fear, a fear we have had for the past six months, of seeing employer and employee contributions used to replenish the federal government's consolidated revenue fund like any other tax or revenue collected by the federal government. Someone somewhere is not telling the whole truth.

In this context, I would like to ask the Minister of Finance the following question: Could he confirm that his government's refusal to transfer any active employment measure to the Government of Quebec may have been motivated not only by his own centralizing designs and those of the Minister of Human Resources Development, but also by the fact that this would create a shortfall of a few hundred million dollars in the federal government's annual budgetary revenue, letting its real deficit show a bit more?

[Unemployment Insurance Fund, March 27th, 1996]

Mr. Speaker, last year, more than 25 per cent of the contributions paid by employers and employees into the UI fund, or $5 billion out of $18 billion, were used for purposes other than providing assistance to the unemployed. The Minister of Finance will divert another $5 billion this year, and more than $5 billion next year to reduce his deficit at the expense of the unemployed.

Why does the minister persist in calling UI premiums money that no longer goes back to the unemployed and which, in fact, constitutes a hidden tax?

[Securities, March 25th, 1996]

Mr. Speaker, to justify his interference in the area of securities, the minister mentioned normal competition between stock exchanges but not reasons that might encourage investments in that area, something the minister could act on. One thing has strictly nothing to do with the other.

Will the Minister of Finance not admit that there is no need for him to interfere in the area of securities, since all the problems he mentioned, including how complex the share issue process is, will be resolved by next September, when a harmonized system designed by the provinces will be put in place without the federal government getting involved?

[Securities, March 25th, 1996]

Mr. Speaker, last Saturday, Le Soleil quoted the Minister of Finance as saying in an interview that it was urgent for the federal government to invade the area of securities, an area of exclusive provincial jurisdiction, because Canada was losing its capital markets to New York and Chicago.

Does the minister recognize that what makes New York and Chicago attractive to Canadian investors is the greater savings available in the U.S. as well as higher prices for an initial issue of shares, and has nothing to do with purely political motives like his excessive taste for centralization that makes him interfere in this exclusive provincial jurisdiction?

[Borrowing Authority Act, 1996-97, March 21st, 1996]

Mr. Speaker, as I listened to the secretary of state explain his borrowing authority bill, I was very touched, but not in a positive way.

Contrary to what the hon. member just said, what is costly to the state is not the delay in passing this bill but, rather, the federal government's inability to make decisions that should have been made since it took office. It is also the lack of a true and sound management of public finances, with a determined effort to eliminate waste. It is the inability to make decisions that should have been made two and half years ago, so as to put our fiscal house in order with a real tax reform and not the smoke and mirror scheme proposed in the last budget.

It is also the inability to develop policies that would truly stimulate employment. All this is costly to the Quebec state and to taxpayers. What is also costly to the Canadian state is to have a government that does not do its job in its fields of jurisdiction and, moreover, continues to want to interfere in areas which come under provincial jurisdiction. This is costly to the Canadian state, as well as to the taxpayers of Quebec and Canada.

Earlier, the opposition leader lambasted the government because the Prime Minister will not make a decision and comply with Quebec's unanimous request concerning manpower training and active employment measures. The Prime Minister refuses to comply with the wish of 800,000 Quebecers who are waiting for a true labour market policy to rejoin the workforce, earn a living with dignity.

All this is costly to the Canadian state, but it is particularly costly to those who have been paying since the finance minister took over, and I am referring to the unemployed and the poor in our society.

The government is asking us to authorize it to borrow $18.6 billion on behalf of Quebecers and Canadians, while it is plagued by chronic incompetence. This is asking a lot from the official opposition. We will, therefore, oppose this bill.

[Taxation, March 21st, 1996]

Mr. Speaker, the Prime Minister is telling us that there is no problem, that the foxes are guarding the henhouse and even contributing to Liberal Party coffers. Well, the foxes are going to reach biased conclusions, because these committee experts advise large corporations on how to avoid paying their fair share to Revenue Canada. The Prime Minister is telling us: "There is no problem; we are in good hands". The world has turned topsy-turvy.

If the Prime Minister wants his government to be credible when it says it wants to restore fair and equitable taxation in Canada, he should immediately undertake to open up and democratize his committee by getting all Canadians involved, because taxation concerns everyone, and not only those who benefit.

[Taxation, March 21st, 1996]

Mr. Speaker, my question is for the Prime Minister. Yesterday, at the end of the summit, the premier of Quebec announced the establishment of a roving commission on taxation that will review the whole tax system as part of a transparent process that will call for public input.

Can the Prime Minister tell us why his government has decided that the tax system should be reviewed behind closed doors by a small group of experts, a group of insiders who have become rich by using tax shelters, who in fact would not benefit in any way from any changes?

[Supply, March 19th, 1996]

Mr. Speaker, I am sorry I missed that when I prepared my speech. I will go on with my quote:

While I recognize that your party, the Bloc Quebecois, has specific aspirations, your comments mirrored the concerns of many citizens in Canada.

[Translation]

And further:

Reform of the tax system should be a primary responsibility of a future oriented government. Instead, our present leaders seem to have their feet bonded firmly in the concrete of outdated, cumbersome legislation. Your speech informed taxpayers such as myself that Ernst and Yonge, a management firm most noted for their legitimization of patronage appointments, have been appointed to the tax commission studying the taxation law for large corporations. Using our tax money to pay Ernst and Yonge for these services is similar to appointing a fox to plan a security fence for a flock of chickens. Of course, the ordinary citizens of Canada have had our feathers plucked so often by our elected officials that we should not be surprised when the last vestiges of equal opportunity are removed.

There is a lot of work to do. As I told you, this lady took the time to write, to tell me that she thought this committee was a farce, that there was no real political will to reform the fiscal system. This lady also called for serious consideration of our tax system. There is a lot of work to do in the area of fiscal reform.

Just in the area of tax expenditures, that is to say the area of exemptions, tax credits and so on given to companies, it is estimated that some of them-and there are scores the impact of which is not known-are costing Quebec and Canadian taxpayers, year after year, around $10 billion.

Those are the known measures, because of course there are others that have not been evaluated for want of a review by a serious and transparent committee, one that really wants to make the process work. Ten billion dollars a year. These taxes that go unpaid or these credits that are allowed look like indirect subsidies, since, when the taxes are not collected, it as if the government were investing in these businesses, or were giving subsidies to these businesses.

It is all the taxpayers of Quebec and Canada who pay for those $10 billion a year. When you pay such large amounts you hope to get something for your money, but this is not necessarily the case. When we look at each of the tax expenditures, each of the exemptions, it is not true that we get something for our money.

Take for example the partial inclusion of capital gains. Under that measure only three-quarters of corporate capital gains are taxed. So, any company buying shares and reselling them at a higher price makes a capital gain equal to the difference between the buying price and the selling price. Only three quarters of the profit between the buying price and the selling price is taxed. Why do we not apply a normal tax rate? Why not tax 100 per cent of these capital gains? Much has been made about this everywhere in the country, and even the fiscal experts say that this should not be the case, that we should tax, as in the case of all the taxpayers' revenues, 100 per cent of the capital gains. Any investor or company buying and reselling shares already makes a gain, a profit on this sale. On top of that, we give them even more. We say: "Only three quarters of this amount will be taxed". Why not 100 per cent?

Do you know how much this measure is costing? It is costing $400 million each year to the taxpayers of Quebec and Canada. The same thing applies to the investment tax credit and the scientific research and experimental development tax credit. Essentially, this is a very good measure. It is excellent. We have to promote research and development in Quebec as in Canada. We should have done this ten years ago. We should have had these credits and grants for research and development to increase the competitiveness of companies.

Yet, once again, there are serious deficiencies in the rules which govern this research and development tax credit. They are so permissive, as far as the equipment and the research projects themselves are concerned, that there are definite abuses. I remind the House that, last year, the Bloc Quebecois condemned the use of the research and development tax credit by major Canadian banks and that, had it not been for our condemnation, banks would have continued to claim this tax credit to develop their automated teller machine systems and their internal software. Major Canadian banks have already taken advantage of an amount of $300 million in investment tax credits to develop their equipment and their internal software.

I could go on at great length, but you are indicating to me that I have about three minutes left. I could go on at great length, because there are dozens of exemptions such as these that would deserve to be examined seriously, in a transparent way, that would deserve to be explained to the people and also to be judged by them through the work of an open and transparent parliamentary committee, not a committee such as the one that the finance minister has set up, which is partisan, which is likely to skew the assessment of exemptions and of the tax system in general, and which will not

meet the objectives that we would hope it would meet, that is a real tax reform benefiting the taxpayers of Quebec and Canada generally.

I want to make an appeal, but just before I do, I would add that committee members will not propose to eliminate benefits related to tax conventions signed with countries that are considered as tax havens, since they themselves take advantage of them. So, what do we expect from this committee?

In conclusion, I would like to appeal to the Minister of Finance on behalf of all Quebecers and Canadians. If he really wants to get the government's fiscal house in order, if he really wants fair taxation in Canada, if he really wants not only to make people feel that everything is fine, but also to make some improvements to the tax system, I urge him to set up a real parliamentary committee supported by experts to conduct a serious, extensive, in-depth review that will produce results in the end. Once we have such an assurance, you can be sure that the official opposition, and especially myself, will work on this reform in a serious and constructive manner, with all the co-operation the Minister of Finance could hope for.

In the meantime, allow me to table the following motion:

That this House deplores the fact that the technical committee set up by the Minister of Finance to analyze business taxation is comprised of members who are both judge and judged with regard to business tax reform; and that, this being so, the Minister of Finance should set up a joint committee of experts and parliamentarians to examine business taxation in an impartial manner according to an open and transparent process.

I table this motion on behalf of the official opposition.

[Supply, March 19th, 1996]

As I was saying, we were happy of that development, and I said so to the Minister of Finance. At last, you understand that pressing requests from Quebecers and Canadians for a reform of taxation cannot be ignored, but if you really wish to get public finances in order, the whole system must also be re-examined.

The news release that accompanied the committee's creation was wonderful in it first two paragraphs. It said, and I quote: "Canadians want a tax system that is both as fair and as simple as possible, Mr. Martin said. They also want a system that encourages economic growth and job creation. Given the complexity of these objectives, a comprehensive review of taxes related to investment and business activity is warranted. The Technical Committee will consider ways of improving the tax system to promote job creation and economic growth, simplifying the taxation of businesses to facilitate compliance and administration, and enhancing fairness to ensure that all businesses share the cost of providing government services".

When we heard that, we almost gave three cheers. When we looked at the back of the news release, things started to deteriorate, because the objectives stated there are the same we, in the Bloc Quebecois, have been steadfastly fighting for. These are goals we wanted and still want to reach with regard to tax reform.

But when we look at the process and the make up of the committee, we are compelled to conclude that this is a fraud. Why? For three reasons. First, some committee members represent businesses whose main mandate is to advise big earners and major corporations on how not to pay taxes to Revenue Canada, a fact we have often criticized.

These businesses have branches in countries such as the Bahamas, the Caiman Islands, just about everywhere in the world, countries considered as tax havens through which hundreds of millions of dollars are rerouted instead of being paid to Revenue Canada. Not only are these individuals advising corporations on how not to pays taxes, but they themselves are party to tax evasion through tax conventions signed with countries considered as tax havens.

Under such circumstances, how could committee members not be biased in favour of maintaining certain exemptions, commonly known as tax expenditures, which benefit major corporations, their own businesses and themselves? What kind of report do you think these committee members are going to produce as a result of their work through the year?

How can you expect a process taking place behind closed doors-which is what the finance minister is suggesting-to produce a true business tax reform, a complete overhaul of the system, including what is commonly known as tax expenditures? It is not in their interest to have things changed. It is in their interest to maintain the complexity of the tax system, since individuals representing firms such as Price Waterhouse and Ernst & Young make a living out of it.

If the tax system was simpler, if it was easier to monitor, if it was not possible to take advantage of tax loopholes to avoid paying federal taxes, these individuals would be out of a job. Try to find someone, anywhere in the world, who would be willing to shoot himself in the foot, not only one but thrice. Enough is enough. We learned this week that these same people contribute as much as $80,000 a year to the Liberal Party fund. How can they be totally unbiased? I think this is a masquerade.

A lot of things could be done in the taxation area. People are already up in arms. All over Canada, from coast to coast as they say, taxpayers from Quebec and all other provinces say that we must change the tax system, and it has nothing to do with a constitutional option. We must implement a more equitable tax system. We have been repeating that to the government for two years and a half but it has done nothing, it has shown no political will to reform the tax system; it just created a committee that is in all likelihood, in my opinion, a phoney committee.

How can we ever get any results? I tell you, all over Canada people say that this committee makes no senses and that the government should reform the tax system. Let me quote, as I did yesterday, another part of the letter I received from a Canadian taxpayer, Miss Jansson from Regina, Saskatchewan. In fact, she sent me a fax because the Reform members do not have the exclusive use of the fax, nor do they hold a monopoly, we also use that equipment from time to time. Miss Jansson says, and I quote:

This fax is to express my appreciation to you for presenting several important issues during your response to the finance minister Paul Martin's budget speech. While I recognize that your party, the Bloc Quebecois-