Yvan Loubier

[Budget Surpluses, September 19th, 2000]

Mr. Speaker, it just so happens that we expected the surplus to be very close to $12 billion.

While the Minister of Finance was making decisions based on forecasts that were off by 300%, taxpayers continued to pay too much tax.

Will the minister admit that this deliberate and hypocritical error in his forecasts has had consequences—

[Budget Surpluses, September 19th, 2000]

Mr. Speaker, the Minister of Finance is about to announce the real budget results for the last fiscal year and finally admit that he was off by 300% in his surplus forecasts, something unheard of in Canada.

Will the Minister of Finance admit that his refusal to provide real figures when he makes forecasts is just a strategy to avoid meaningful debates and to justify the drastic cuts to social programs and employment insurance, in spite of the huge surpluses?

[Financial Consumer Agency Of Canada Act, September 18th, 2000]

Madam Speaker, I heard some applause. It is a very odd way to start a pre-election period to have one of my Liberal colleagues applaud my rising to speak. Should I assume that he will agree with everything I say about his government in the next few minutes?

I am pleased to rise and speak to this important bill. It is an important bill because we have been waiting for it for over seven years, and that things kept being postponed in recent years. I see the Secretary of State for International Financial Institutions, who was acting as chair of the Standing Committee on Finance at that point. He knows what I am talking about on the subject of delays. There was a delay of at least two years in the government's introduction of a bill on financial institutions.

Everyone here can testify to the Bloc Quebecois' interest in this amendment to the laws on financial institutions. Two and a half years ago, when Mr. McKay introduced his proposals, the Bloc Quebecois presented a submission to the Standing Committee on Finance. Rather than question witnesses, that time we had decided to contribute to the debate on the amendments to legislation on banks and financial institutions in general by presenting a submission in more or less the following vein.

When we look at the way things are changing on the international scene, the first thing we notice is that they are moving very quickly with what they call the globalization of markets, especially with the increased opening up of a number of western countries in the financial sector, and the fact that, in the electronic commerce sector, the establishment of virtual banks is allowed. Banks without a national base in certain countries serving a certain clientele are being allowed to open what are called virtual banks. They offer consumers financial products without an actual physical location for the delivery of such products.

International competition is heating up. Even the six largest banks in Canada are small compared to American or certain Asian, particularly Japanese, banks.

What is needed is a legislative environment conducive to increasing the ability of our financial institutions to hold their own against international competition as well as the competition that will inevitably begin to appear—and of which there are already signs—within the markets of Quebec and of Canada.

The Bloc Quebecois supports the spirit of the legislation and several of its provisions. The competitive environment calls out for a bill such as this, which amends the Bank Act and legislation governing financial institutions in general.

That having been said, there are a number of problems with this bill and we intend to move amendments at report stage. I hope that members on the other side will give these amendments their attention, will note that we are open to 90% of what is in the bill; there is perhaps 10% of it that falls short and could be improved.

First, and not least, it is clear from a reading of the many pages of this bill and its schedules, a weighty 900 pages or so, that far too much discretionary power rests in the hands of one man, the Minister of Finance.

Throughout the bill, whenever there are provisions concerning banks, insurance companies, trusts, anything to do with the financial sector, the minister always reserves the right to determine, based on criteria known to him alone, whether or not an operation is acceptable. He alone defines certain concepts such as low-fee retail deposit accounts.

We know that the Minister of Finance claims to be concerned about improving the access of the most disadvantaged in society to banking and other services, but he is still leaving himself room to define in future what would be best for the least well off, such as those living in certain poorer neighbourhoods in Montreal or other large cities, or certain remote, rural areas.

There are way too many areas where the Minister of Finance, alone, has a decision making power and a power of life or death over certain transactions for us to be pleased with this bill.

Generally speaking, we would have liked more clarity regarding the decision making process and also more specifics regarding certain concepts, such as the minimum fee deposits for the poor. This is our first general comment.

The second one concerns consumer protection. It goes without saying that we cannot be opposed to any measure seeking to increase consumer protection.

However, we are opposed to provisions that duplicate and overlap those that are already included in the Quebec consumer protection act. Incidentally, consumer protection is an exclusive provincial jurisdiction. While there may be cases of specific protection with regard to banks, which fall under federal jurisdiction, consumer protection or the protection of privacy is, generally speaking, a provincial jurisdiction.

Yet, the bill constantly refers to new federal government initiatives in an area which, in the case of Quebec, is well covered by very comprehensive provincial legislation. We can think, among others, of the consumer protection act, the privacy act, the insurance act, the trust companies act, the Quebec savings banks act and the credit and securities act, all of which include provisions to ensure consumer protection.

There comes a time when a consumer no longer knows which legislation to turn to. Does the matter come under the jurisdiction of the federal government? Does it involve the new consumer protection legislation contained in Bill C-38? Or is it the Quebec consumer protection legislation which applies in this particular case? In short, in some respects, instead of improving consumer protection, I would say that certain clauses of Bill C-38 only add confusion. A lesser understanding means, of necessity, lesser protection for the consumer.

Another case concerns the protection of another category of consumers to which I have already referred, namely the most disadvantaged consumers. The minister has taken the trouble to include in Bill C-38 the concept of the low-fee retail deposit account. He says that it has long been argued that there are certain areas of major cities such as Montreal, Quebec City, Vancouver and Toronto that are greatly disadvantaged. So much so that when people in financial difficulty, people with less money than the Minister of Finance, the banks, and their branches in particular, show discrimination toward them.

When we undertook the process of reviewing the financial institutions legislation, we often ran into cases of people who had been totally denied permission to open an account because they did not have a fixed income, had not worked for some time, or could not produce any identification, and so on.

Now the minister is introducing his concept of the low-fee retail deposit account, but does not tell us what this will mean. This is a lovely concept that may appeal to certain consumer associations, but where is the minister headed with this “low-fee retail deposit account?” Who will this “low-fee retail deposit account” be aimed at? What sort of fee will it entail? Will it really be available to those who, in the past, have had trouble getting quality services without being discriminated against?

Let us not forget that a bank operates in a competitive environment and that a bank is there to make profits. We are not, nor have we ever been, against profits. It must be borne in mind, however, that banks, like most financial institutions in Canada, are active in a very regulated, and therefore protected, environment. They are protected by a decision of parliament: the public decided that the regulatory framework for Canadian banks would be a protective one. We would not want to let our banks go like that.

In return, banks have a responsibility to the public, as do those holding voting shares. This concern with the responsibility of banks is absent from the bill. We are not looking for measures that would make it impossible for banks to make profits. But some effort is required, particularly since—as I mentioned—the banks are working within a regulatory framework decided by parliament. Within parliament, people elected by the public decided to protect the banking sector. I would say that the banks therefore have a certain duty to the community that is absent from the bill.

When it comes to a real social and community role for banks, or to put it another way, if the banks are going to remember what they owe us for bringing in tight regulations to protect them, we would have liked the Minister of Finance to pay attention to our proposals, including the one from the member for Hochelaga—Maisonneuve, who introduced a bill on community reinvestment by banks.

He has been fighting this battle for a long time. He brought us in the Bloc Quebecois into the fray. We fight almost daily for community reinvestment in the most disadvantaged regions, the most remote regions in Quebec and in the rest of Canada, as well as in the most disadvantaged neighbourhoods in Quebec and Canadian cities.

What does community reinvestment mean? It means—and it relates to a practice that has been in existence in the United States since the start of the 1970s—ensuring that certain banks are accountable to the community in specific regions or disadvantaged neighbourhoods in big Canadian cities. It involves, for example, evaluating in a given year all of the deposits taken in by these banks in neighbourhoods where in recent years a rate of unemployment higher than the national average has been observed. It involves noting the deposits made in these banks by both individuals and businesses and the loans and advances given out by the branch to the community, in a disadvantaged community in Montreal for example, just to see whether a discrepancy does not exist between what it takes out and what it injects back into the community through loans and advances.

If there is a discrepancy, that is, if the branch in one of Montreal's poorest neighbourhoods, for example, took in more in deposits than it gave out in loans to individuals and advances and loans to SMBs in the neighbourhood, it would be considered to be a problem and the banks could be asked to make an extra effort to contribute to the community.

The banks in this community reinvestment environment would be accountable to the local residents and to parliament. At some point, an accumulation of bad reports on the banks or financial institutions in certain poor neighbourhoods in the major cities or in certain remote regions would provide sufficient authority, I would say, to influence in general terms community reinvestment by the banks right across Canada.

From a local point of view, provisions for reinvestment in the community such as those in the bill introduced by my colleague, which we intend to introduce again through amendments to the banking bill, would also mean that representatives of the community could meet annually with managers of the bank branch in their neighbourhood or region to discuss the contribution it was making to the community, look for ways of improving things and identify mutually interesting projects that the community's deposits could be used to fund.

There have been a number of good results in the United States. It seems funny to be citing the United States as an example of progressive measures but, in the United States, making communities and banks accountable has meant that, at a certain point, the banks—and this is unusual, it is not often seen in Canada—became known for contributing to the advancement of communities.

In fact, at one point, in certain of the poorest regions of the United States, some of the most down and out were allowed to cash government cheques for free.

They went to those branches and there was no longer any charge for government cheques. For the most disadvantaged, the fees charged for banking services were very low or not levied at all for the most common services. The banks had been offering this since the early 1970s.

It was also agreed, after various discussions with the community, with representatives of bank branches in the United States, to freeze funds for a number of days or weeks. When we met with consumer protection representatives, they told us that funds had been frozen for more than a week.

In the United States, based on a concept called community reinvestment requiring the banks to be accountable to the community, this led to certain provisions, among them ones including those forbidding branches from freezing funds.

Based on this development of community reinvestment, some U.S. banks even decided to reduce to a minimum the mortgage charges to first-time property owners. This they did as a result of discussions with the community on the possibility of a two-way relationship between the least well-off in the area served by the bank and the bank, since it stood to gain in the long term from the improved financial position of the members of its community.

We would have liked to see the Minister of Finance take this type of novelty a little more seriously, not that it is really a novelty because it dates back to the 1970s in the United States. We would like him to lend an attentive ear to the arguments raised by my colleague from Hochelaga—Maisonneuve and all the members of the Bloc Quebecois relating to the possibility of reinvesting in the community.

We are not asking the banks to take over from the government. After the carnage wrought on social programs by this Liberal government, I believe we might even have been entitled to call upon the banks to compensate for it, but we are not, despite the billions of dollars in profit the banks are raking in.

We are not against the banks making profits, as the banks' profits are also, to a certain extent, our profits. The trust funds, the pension funds of the people of Quebec and of Canada also make profits.

What we are saying instead is that the banks have the means of balancing out the deposits they receive with the reinvestment they can make in certain communities that are worse off than others.

There was another problem relating to the people who were the most disadvantaged and were living in the least advantaged areas of major cities, or in remote areas. The closure of branches of banks and financial institutions in general was, is and always will be the problem with this bill.

Some regions do not or no longer have access to quality banking services, because branches were closed. It was no longer profitable for major Canadian banks to provide remote communities with complete services, as can be found in major centres.

There are poor neighbourhoods in Montreal—earlier we mentioned Hochelaga—Maisonneuve—where one must look hard to find a bank branch that provides full services. There are no longer such branches. Why? Precisely because it was not profitable for the banks to provide these services.

Since the community groups that appeared before the committee raised this issue time and again, we expected the bill to include provisions to prevent, in certain communities, people from being treated like second class citizens, like nobodies, because they have less money than those living in neighbouring communities.

There is nothing in this bill to prevent branch closures in those areas where poverty is a more serious issue than in other neighbourhoods or other regions of Quebec and Canada.

The only measure included in this bill—and I doubt any consumer association will applaud this initiative—is a requirement to give a six month notice before closing a branch. But whether a branch closes immediately, or in two, three, four or six months, it will close at some point. Entire communities will get fewer and fewer services from Canadian financial institutions, particularly banks, because this bill includes no provision to protect them.

The appointment of an ombudsman is a step in the right direction, but it is clearly not enough. The bill should show that the Minister of Finance wants to prevent people from not having access to banking services and to the so-called new economy.

There is no political will in this bill, not even the desire to find ways to prevent the most disadvantaged in our society from being totally excluded from the financial sector and the banking services available elsewhere in Canada.

In addition to the issues for consumers, the bill contains an enormous problem. It concerns the ownership of Canada's major banks and major financial institutions.

I listened to the Secretary of State for Financial Institutions discussing the importance of the flexibility given the financial institutions to enable them to continue their activities, to meet their competition and to respond to the development of new markets.

There is, however, a difference between the flexibility found in certain aspects of the bill and the fact that some of our financial institutions and banks could literally be given to foreigners, for example, or to a single investor, who could wield either total or partial powers of life and death over these institutions or their administration.

We supported flexibility from the start. Indeed, when we tabled our brief with the Standing Committee on Finance over two years ago, we proposed a more flexible regulatory framework in fact, so that the small and medium banks could join with other financial institutions, something the existing legislative framework does not currently permit, but the bill would.

Therefore, a bank could join with a trust company, with an insurance company or with other stakeholders in the financial sector to create a sort of consortium, a firm that could meet the challenge of the major international institutions either in the Canadian market, because they will no doubt penetrate it, some of them already have—there is the MBNA, for example, and its virtual banks—or in international markets by ensuring that strategic alliances will give us significant blocks to meet the international competition there.

I have to hand it to the Secretary of State for Financial Institutions, he did a good job. I want to salute him in passing, because he chaired the Standing Committee on Finance for several years. He worked very hard on this bill and he delivered the goods when it comes to flexibility for financial institutions, strategic alliances and the right way of making them more competitive.

Where I part company with him and with the Minister of Finance, however, is when it comes to bank ownership. An individual's right to hold a certain percentage of shares varies with the size of these banks in Canada.

I still have a lot of trouble with this and I have had no answers to the many questions I asked the Minister of Finance in meetings of the Standing Committee on Finance or here, during oral question period.

I have had no answers as to the reason for such amendments. Why, for instance, when it comes to the largest bank in Canada, the Royal Bank, will an individual now be able to hold 20% of shares? It has gone from 10% to 20% of voting shares. Why is it that when it comes to the largest bank in Canada, it can now be 20%, but no more? The limit is set at 20%. Does anyone know why? The reason is that it is dangerous, according to the Minister of Finance and the secretary of state, his spokesperson.

It is dangerous because an individual holding too many shares in a bank could have unprecedented power over the policies of that bank. He could also create problems for market competitiveness. I will come back to this shortly.

This is the percentage for the largest bank in Canada—a maximum of 20%.

But when it comes to the largest bank in Quebec, the National Bank, whose capitalization is in the middle range, an individual may hold 65% of voting shares.

Why this distinction? I have asked this of the Minister of Finance. Why different treatment? When it is a matter of protecting a major Canadian bank, then the maximum is 20%, but when it is a matter of protecting the biggest Quebec bank, it can be up to 65% of voting shares. It was enough to have 50% plus 1; with 65%, I do not know if the constitutional debate has so obscured people's vision that it is no longer seen that a majority for a single share holder is over 50%, that is 50% plus 1. Now it has gone up to 65%. Even 50% plus 1 would have been too high anyway.

The principle of what is called diffuse bank ownership, i.e. allowing capital to be broadly distributed in the hands of a number of individuals, relates to several fundamental elements in the banking sector. First of all, its stability, and second the fact that it might be unwise for a single individual to have considerable power over the savings of individuals.

The fundamental aspect underlying this division of ownership is to avoid cases of unfair competition, which I shall explain. A rich industrialist in the manufacturing sector could buy up 65% of voting shares in a bank like the National Bank.

For those who are not familiar with it, the National Bank is the bank of small and medium sized businesses in Quebec. It is the one that makes the most loans to these businesses. The industrialist purchases 50% plus 1—no need of 65%—of the voting shares of the National Bank. That business person, who is involved in a given economic sector, could decide to refuse to lend money to someone who wants to borrow from the National Bank to invest in the same manufacturing sector in which the bank owner is involved.

Certain things were possible in the past, are possible today and will be possible in the future. In fact, this is why, in the past, a single individual could not hold more than 10% of the shares of a bank. Currently, we can see at shareholders' meetings that a person who holds 10% of the shares of a bank has a great influence on the direction in which it is going.

So, we have a situation where a business person involved in a given sector could refuse to grant a loan to someone who wants to borrow from his bank, because that person is in the same industrial sector. The business person would in effect get rid of a competitor because he controls the capital and has the power to decide whether the other business person who wants a loan will survive or not. Such situations could occur in the future.

There is also the possibility of takeovers by foreign interests. Under the provisions of this bill, what would prevent the Royal Bank from being the target of a takeover bid? Why should we, in Quebec, put up with the risk that a foreign investor could get 50% plus one of the shares of the National Bank, thus taking control of that institution, moving its head office and its decision making centre elsewhere, eliminating specialized jobs and adversely affecting Quebec's economy? We are not prepared to take such a risk and rather resent the situation.

This is why we are asking that there be no difference between the treatment given to major Canadian banks and to our largest bank in Quebec. If the percentage of voting shares that can be held by a single individual is increased from 10% to 20% in the case of major Canadian banks, the same change must be made for Quebec's largest bank.

Not only does it require an increase from 10% to 20%, as in the case of large banks, but if an individual had 10% of the voting shares and wanted to increase his share to 20%, he would be subject to what the minister calls at page 56 of the bill, in clauses 395 and 396, an “approval process”.

A set of criteria would determine whether the fact of increasing one's holdings by ten percentage points met the following criteria. I would add others, but I will begin by identifying those that are there. I would also have some questions for the Minister of Finance and his secretary of state on a provision that strikes me as a bit odd. There are no doubt answers, as the minister always has answers. They are not always the right ones, but we will not go into that.

The bill provides that any particular transaction aimed at, for example, increasing by 10% the shares held by an individual would be subject to a set of criteria. The minister identifies eight of them. The first involves the minister considering: a ) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

That is right. That is reasonable. They cannot have anyone holding shares do just anything and interrupt the continuing business of the bank. They will also consider: b ) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

This applies to amalgamations, combinations and the like. Under the third criterion, the minister would consider: c ) the business record and experience of the applicant or applicants;

Other criteria are: d ) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity; e ) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

That is quite right. One must be very responsible, particularly with other people's money. Let us not forget that these are our deposits in all the major Canadian banks. f ) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;

This is the clause that covers the particular case I mentioned earlier. A business person buys the majority of shares in a bank and refuses to make a loan to a competitor in his industrial sector. The minister will take this into account. There is nothing wrong with that. g ) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to

(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank;

This is normal. They have to comply with certain rules. Rules are made to be complied with. So even without this criterion, should the superintendent decide that the applicant or applicants are not complying with the rules, the Minister of Finance will take this into account.

Finally, the same clause also includes the following provision: h ) the best interests of the financial system in Canada.

We would like to see the Minister of Finance add other criteria to the bill. We are going to move certain amendments to round them out. As members know, Quebec is now a distinct society. We are familiar with the historic words. The Prime Minister has already admitted that Quebec is a distinct society. The fact of the matter is that Quebec is indeed a distinct society financially. It has jurisdictions and institutions to which it is attached. The National Bank is an institution we wish to keep, particularly for its contribution to the economic and financial development of Quebec as a whole and of Montreal in particular as an international financial centre.

Incidentally, Quebec's minister of finance, Mr. Landry, wrote a letter to his federal counterpart on June 7 to express his concerns about the new legislation and to ask for safeguards regarding the public interest of Quebecers.

Four criteria should be added. That is not asking too much. We know that with the very specialized and competent human resources that are available in the House of Commons we can draft provisions covering these four additional criteria, which would apply strictly to Quebec, given the special nature of the National Bank.

First, Quebec's minister of finance is asking that we take into account the changes that affect the banks' current operations, including the services available in Quebec and in Canada, because the minister does not mention the services available in his criteria. Service to consumers does not seem to be his main concern.

In proposing an increase in the percentage of the voting shares of a Quebec or Canadian financial institution held by an individual, the government should take into account the impact of that change on the level of the portfolio.

The first additional criterion when the Minister of Finance decides whether or not he will accept that a shareholder can increase his share in a bank should be the impact of the change on the bank's current operations, including available services.

The second criterion that the Minister of Finance should add to the list that I mentioned earlier is the effect of the change on employment. That is important. Why is employment not considered in the criteria proposed to us by the Minister of Finance in clause 396?

Does this mean that employment is not important for the Liberals, for the Minister of Finance and for the Prime Minister? Not important to them? Minister Landry and the Bloc Quebecois are calling for an examination of the effects on employment of this additional participation relating to voting shares, both at headquarters and in the branches, including professional positions and those requiring specialized expertise.

It is important to maintain these specialized resources if we want to have financial strength for Quebec. These are not to be found on every street corner.

The third criterion is the effect of change on the economy and the technological development of Quebec. This too is important. On the Canadian level, this does not even appear to be the object of any specific criteria for the federal Minister of Finance. This is scandalous.

Finally, the effect of change in the financial sector of Quebec and the role of Montreal as a financial centre, particularly as far as keeping final decision-making centred in Montreal is concerned. These criteria must be maintained.

I wish to inform hon. members that the Bloc Quebecois will be presenting amendments for this purpose at the report stage, in order to ensure that this important bill is complete. With a bit of good will from the other side, that could be accomplished. We support this bill overall, but the three points to which I have referred are so problematical that they will force us to vote against it tomorrow morning.

[Banking, June 13th, 2000]

Mr. Speaker, can the minister tell us who will decide whether it is in the public interest and in the interest of Quebecers? Who will decide which conditions will be met? What evaluation criteria and what sort of analysis will be used? Will he not be the one ultimately deciding? Is he not looking more and more like a minister in a banana republic?

[Banking, June 13th, 2000]

Mr. Speaker, could the Minister of Finance tell us where his bill mentions the conditions governing the ownership of up to 65% of National Bank shares by a single shareholder, the conditions on the maintenance of available services, the maintenance of professional positions or those requiring a particular expertise in Quebec, the benefits for the economy of Quebec and its technological development and the benefits for Quebec's financial sector?

Where in the bill did he provide for these assessment criteria?

[Income Tax Act Amendments, 1999, June 7th, 2000]

Mr. Speaker, the 1999 budget presented by the Minister of Finance was terribly disappointing, given the immense possibilities for intervention that we calculated were available, even as far back as 1998. The surplus, which he estimated at a minimal figure, was in fact far larger than he implied.

To give the taxpayers, who are entitled to know the true state of this country's finances, a bit of an idea of the situation, in the three years between 1997 and 1999 the Minister of Finance made a forecasting error of an average of $15 billion. He was an average of $15 billion off in forecasting the surplus.

Year in and year out since 1998, the Minister of Finance has been forced to revise his forecasts on the surplus. Again recently he told us in the 2000 budget that his forecast surplus for the next five years was $95 billion in all. Knowing him, it is far more than that. The Minister of Finance is, once again, being sneaky.

When the forecasts are looked at by anyone, whether by specialists or by the Bloc Quebecois, we expect as a minimum over the next five years, conservatively, a surplus of $140 billion.

So the minister could have done far more in 1999 to help those who are worst off, the most disadvantaged, and could have taken a different tack as far as tax reform is concerned, particularly by decreasing the income tax. He could have re-established a proper employment insurance program, but he did not either then or in his budget 2000.

Recently, I read a document which the Prime Minister of Canada presented in Germany. In this document, The Canadian Way in the 21st Century , he said the following:

The success we have achieved as a nation has come not only from strong growth but from an abiding commitment to strong values—caring and compassion, an insistence that there be an equitable sharing of the benefits of economic growth.

A little later, page 5 of the document states:

—a society of excellence with a commitment to success—

In speaking of Canadian society, the Prime Minister added:

—a society where prosperity is not limited to the few, but is shared by the many and where every child gets the right start in life.

Since 1993, when this government came to office, the third way, the Canadian way, has primarily consisted of cutting everywhere, particularly in the Canada social transfer and in the employment insurance program. The government also constantly displays inertia with regard to tax reform to lighten the burden of low and middle income taxpayers.

The Prime Minister's document presents a picture that is just the opposite of reality in Canada. It says that children must get the right start in life, but since this government has been in office, the number of Canadian children living in poverty has increased from one million to one and a half million. There are 1.5 million children who are not all getting the right start in life, to use the expression found in the document entitled The Canadian Way in the 21st Century . In this document, the Prime Minister describes a theoretical reality, a utopia, a picture that is totally different from the true picture in Canada.

The Prime Minister talks about an “equitable sharing of the benefits of economic growth”. For the past seven years, the economy has constantly been growing. This is unprecedented. The economy is continually growing. How is it that we find ourselves with figures such as the ones I just mentioned, with 1.5 million children living in poverty, while there were one million in 1993, before this government took office?

How is it that, for all categories, particularly single mothers with children, poverty has increased so steadily? How is it that, for the first time in 30 years, it was noted—by the National Council of Welfare—that the income of seniors had dropped? This is something not seen in 30 years, since measures such as old age pensions, and so on were introduced to help old folks, as they were then called, out of their poverty. How is it that we have reached this state of affairs?

The situation for female seniors living alone is even worse. They are one of the poorest categories in the country.

When the government is talking about sharing, equity and compassion, how is it that—the Prime Minister is going to say this in Germany, but he would not dare to say it here—the situation in Canada is actually the opposite? If the government has so much compassion, how is it that, when it tabled its budget in 1999, and again last February, it did not restore the Canada social transfer that has been so drastically cut since 1994?

How is it that this situation is allowed to continue and that, in 2001-02, there will be cuts of more than $30 billion in the Canada social transfer to the provinces to fund health, postsecondary education and social assistance, and income security for the poorest Canadians?

How is it that in 1993, 1994, 1995, 1996, 1997, 1998, 1999 and 2000, this government, with all its compassion, has not set aside one additional dollar for the construction of social housing, when people growing poorer and poorer are spending over 50% of their income on accommodation? Already at 30%, people are considered badly off and unable to afford to put a decent roof over their heads, buy food and clothing, pay for drugs, and so on.

How is it that this compassionate government has been working since 1993 to make people poorer? How is it that for about the past four years the new employment insurance plan has marginalized some 60% of the unemployed? How is it that such a compassionate government is allowing a situation to go on in which, according to its own figures, only 43% of the unemployed are entitled to employment insurance?

How does this government, with the Canadian way, the third way of the Prime Minister, let the situation happen? How is it that, despite the huge surpluses of the past three years, the government has given no thought to the disadvantaged? Is this the Canadian way? Is this the third way? Is this a vision?

We in the Bloc Quebecois think it is, because, since this government came to office, the only way it has shown us is the way of further centralizing powers in all areas of jurisdiction. It involved keeping taxpayers' money in its pockets. It involved stealing money from the unemployed and putting it in its own pockets. It involved stealing money from the most disadvantaged. It involved taking money from the poorest families in this country. It involved stealing bread from the mouths of the 500,000 children who have been added to this government's record of poverty since its arrival in office.

That is what the Minister of Finance is doing. That is what this government has done since 1993.

If the Minister of Finance forecasts a surplus of $95.5 billion for the next five years, it means that some of the 30 million Quebecers and Canadians will have less in their pockets. This means that those who already did not have enough have just had some of what they did have stolen from them by the Minister of Finance.

Over the next five years, the plan is to take still more from them. Their money will be taken from them. What little they have in their pockets to meet their basic needs will be taken from them. That is what is being announced to us.

When the minister tells us that there will be a surplus of $95.5 billion—that is a very conservative minimum, because our estimate is $140 billion, and our forecasts have not been a single percentage point off since 1994 when we started doing them—this means that he is going to get it somewhere, and that somewhere will be our pockets, as it has been since 1993.

Part of the large surpluses that have accumulated in the past three years, and will continue to accumulate in future, comes essentially from three sources: cuts to the Canada social transfer, which goes to provide sick people with a decent health care system, cuts to the Canada social transfer for income security—those poor children I referred to a while ago—and cuts to post-secondary education. This is the first major source: the Canada social transfer.

The next is the employment insurance surplus, which is some $6 or $7 billion every year.

The Minister of Finance helps himself to that. Already a $32 billion surplus has accumulated in the employment insurance fund, and the Minister of Finance has helped himself to it. Most of it comes from small and medium size businesses and from workers. He also helps himself from the pockets of the unemployed who are not eligible from employment insurance.

That is the Canadian way. That is what the Canadian way has meant to us since 1993. There is no compassion; they go after the most disadvantaged, they cut transfer payments to the provinces.

The government leaves it up to the provinces, which provide the first line of direct services to the public, to deal with problems that have their roots here. In the meantime, the Prime Minister travels all the way to Germany to talk about the Canadian way.

It is the same with taxes. The situation is so serious that the federal tax has become a major contributing factor to families getting poorer. This is unprecedented. Originally, federalism meant policies based on fairness, compassion, redistribution and equalization. We now have a situation where, from a tax point of view, instead of helping poor families and families saddled with huge responsibilities, the government is crushing them.

Families—and I am talking about families with two adults and one child—start paying federal tax as soon as their income reaches $13,700. By comparison, families begin to pay tax to the Quebec government only when their income reaches $30,000.

At the federal level, because of the tax structure and the lack of indexation during all these years, a family with two adults responsible for a dependent child starts paying federal tax when its income reaches $13,700. Of course, this is hard to understand for a millionaire, for the Minister of Finance, for a shipowner who does not pay tax in Canada but, instead, pays a minimal amount to tax havens. It is difficult to understand that an income of $13,700 is well below the poverty threshold.

The poorest find themselves in that category: $13,700, two adults, one income and one dependent child. They pay federal income tax in order to fatten the surplus of the Minister of Finance, to cover the income tax he does not pay because his ships fly the Panamanian flag, because he does business in the waters off tax havens. As the Minister of Finance, he takes money from couples with one child when their income reaches $13,719, whereas in Quebec it is at $30,000—a bit better—that this family starts paying income tax.

The government has not reformed taxes, as we have been asking it to do since 1993. The aim of such a reform is to re-establish some balance and fairness in the federal tax system, which now adds to poverty.

With the tax paid at this income level, it means that the people Statistics Canada and others call the poorest people, the most disadvantaged, who spend probably more than half their income on housing, who have a hard time making ends meet, are beginning to fill the pockets of the Minister of Finance, a millionaire shipowner, the owner of ships flying the Panamanian flag, who pays tax elsewhere than in Canada.

I do not understand why, up to now, people have not rebelled more against this. It is an absolute scandal to find ourselves in such a situation. And the federal tax system is not unfair solely for a family of two adults and one child. It does not add to the poverty of just this one socio-economic category; it also adds to the poverty of a single parent family with two dependent children. This family too starts paying income tax at $13,719. It is already having trouble—because it is usually headed by a single mother with children—making ends meet. There is never enough at the end of the month to feed and dress her two children, keep them warm and pay the rent. This government, with the Minister of Finance at the helm, will drain them of the few resources they have.

That, then, is the Canadian way, the Prime Minister's third way: crushing the weaker members of society, who can barely manage, crushing the most disadvantaged, those who are already discouraged and depressed, who have perhaps lost the will to fight. And all to help the rich get richer. The opposite of Robin Hood is what the Prime Minister's third way is.

In the 1999 budget, the one that we are interested in, there was one tax relief measure, and one only, that made sense. I should say that it was consistent, because in my view, it did not make sense, but perhaps it did to the millionaire friends of the Minister of Finance and the Prime Minister.

The 3% surtax was abolished. This was a surtax introduced in order to reduce the deficit. The thinking was that, since there was no longer a deficit, they would abolish the tax. What is not mentioned is that the category that has benefited most from the elimination of this 3% surtax is those with incomes of $250,000 and up.

These guys, the Prime Minister's friends, people like Mongeau and company who are getting their palms greased with our money—you know, the buddies—got a $3,700 tax break in one shot, whereas single families with two children earning $13,719 a year got nothing in 1999.

In 2000, they will not get much more. A few years down the road we might hope that, with full indexation of the tax tables, they might start paying taxes on a slightly higher income of $14,000, $15,000 or $16,000. Nevertheless, they are below the poverty level and federal taxes are making them poorer.

This is compassion, according to the Prime Minister of Canada, who goes to Germany to deliver his speech. He is afraid to deliver it here, because he is afraid that people will point out to him that the only tax break in 1999 was for the rich, and that it is the same thing in 2000. The only significant tax break was the lowering of the surtax from 4% to 3% in 1999, and its phasing out in 2000.

Again, those who benefit from the bulk of this tax break, which amounts to more than $4,000 in the 2000 budget, are people making over $250,000 a year. This is what the Prime Minister calls compassion and a fair redistribution of the dividends of economic growth.

Taxation is one of the reasons retired couples over 65 years of age are getting poorer. I mentioned earlier that for the first time in 30 years the welfare council found the elderly were getting poorer. This is happening for the first time in 30 years, because measures had been taken to allow senior citizens who had worked all their lives to have a decent retirement income. Yet, retired couples over 65 start paying federal tax when their income reaches $20,000. An annual income of $20 000 is not much. It is below the poverty level, yet federal income tax makes those people even poorer.

With surpluses coming out of his ears, the Minister of Finance could have made a small effort in 1999 and in 2000 and reduced income tax, given back what he took to the poor, made the employment insurance system somewhat fairer, invested more money in social housing and restored some balance in the tax system.

If he believes that surpluses are still not high enough, when he is strangling us with income tax, crushing the neediest and raising all statistics on poverty, the minister might have changed the corporate tax system as well. He could have forgotten his cronies. He could have said to Thomas d'Aquino and others, as well as to large companies, that the time has come for them to pay income tax like everybody else.

The statistics are alarming, at least the ones we know about, because the Minister of Finance stopped publishing this type of data several years ago, the statistics on taxes deferred by large corporations and due to Revenue Canada. This is alarming.

Figures were published by the Canadian Labour Congress, figures which we had ourselves compiled in 1994 when we arrived. In 1995, we could no longer compile these numbers because the Department of Finance had asked, by order of the Minister of Finance, that the data no longer be published.

Some large corporations, which make a profit year in and year out, have paid no income tax for the last ten years. In 1994-1995, it was estimated that the federal government was losing $35 billion a year. The situation has not changed considering the fact that, since 1994-1995, our economy has been growing and businesses, especially large ones, have been making record profits.

Believe it or not, even the most profitable businesses never pay taxes even if they owe taxes to the federal government. For example, Bell Canada, whose chairman, Mr. Monty, has been appointed as head of the millennium scholarship foundation, owes Revenue Canada $2.1 billion. These taxes are deferred year after year, but it is money owed to Revenue Canada.

BCE, Bell Canada Enterprises, which includes all of Bell Canada's communications businesses, owes Revenue Canada $2.3 billion. I see that the secretary of state is smiling over there. I do not see anything funny in the fact that businesses such as Bell Canada and BCE, which are worth billions and are making money, and whose chairman, Mr. Monty, has stated that he wanted to buy CTV for $2.3 billion, are not paying taxes. That is exactly the amount he owes Revenue Canada.

In other words, Bell Canada Enterprises wanted to buy CTV with our money, the money it owes us. Let us not forget that, when BCE does not pay its taxes to the federal government, that money has to come from somewhere. It is taxpayers like you and me, the single parent with dependants, who have to make up in part for the taxes not paid by Mr. Monty and Bell Canada. They will also have to make up in part for the taxes not paid by the Minister of Finance. They will have to make up in part for the taxes used for patronage, for contracts awarded by the CIO, the Canada Information Office.

We saw that this week. The Bloc Quebecois leader and House leader have raised these questions with my colleague for Chambly. People's palms are being greased with our tax money. It is already hard enough to earn a living, to have to file our income tax, because doing so—excuse the expression—irks us, but what is even worse is to know that these people are using our money to butter up their friends. The Mongeau affair is just the tip of the iceberg.

With the Human Resources Development Canada scandals, the CIO scandals, with communications contracts being awarded for the monkey business of having federal ministers traipsing about Quebec spreading propaganda, trumped up contracts for checking spelling and punctuation to the tune of $250,000 and other such stupidities, we can see where our money is going.

When we see a grant intended for the riding of our colleague from Rosemont end up in the riding of the Prime Minister, when the invoices supporting this are not forthcoming, there is a problem. We can now see that the scandals, the propaganda, the buddy system, the sloppiness in administering public funds, have become systemic. We have, to use Fabienne Larouche's term, become a banana republic. This is totally senseless.

The Minister of Finance, with surplus money spilling out of his pockets, is announcing some very bad news at the same time. It is very human to behave that way: the more money a person has, the less attention a person pays to it, especially when it is someone else's money. The Minister of Finance will have a big surplus over the next five years, a lot of money but not his. In time, the financial administration will become still sloppier. The Minister of Finance has surplus money coming out of his ears but it is not his money, so what does he care? This government's sloppiness will increase, that is a sure thing.

Therefore, the Minister of Finance is announcing the very bad news for Quebecers, who pay $32 billion in taxes to this government, that their hard-earned money, part of which goes to the federal government, is being used for propaganda, choosing political friends, greasing the palms of party friends, providing grants so as to arrange under the table for donations to the Liberal Party of Canada. This is unacceptable.

The 1999 budget is like the other ones; it is just like the others. It is, in any case, just like the 2000 and 1998 budgets.

It is a totally heartless budget, compared with the third way, supposedly the Canadian way, as presented by the Prime Minister.

These budgets contain no provision for lightening the burden of low and middle income taxpayers. Like the others, this budget offers nothing to ease misery in Canada. On the contrary, it contains the seed of what appeared in the last budget and what may well appear in future budgets, the failure to restore the Canada social transfer.

The government will continue to dip blithely into the annual employment insurance surpluses of $6 billion to $7 billion by keeping contributions high.

As for tax cuts, we can forget about those, because every time the Minister of Finance makes a dramatic announcement about lowering taxes, a closer look reveals that he has done nothing. A closer look reveals that he is taking away with one hand what he is giving with the other.

Mention was made of cost recovery for expanding government services, particularly for agricultural SMEs. The government lowers taxes a bit and increases indirect taxes by implementing cost recovery for expanding federal programs, which was recently criticized by the Canadian Federation of Independent businesses as one factor cutting into the competitiveness of SMEs.

I would like to make one further comment about this budget. The 1999 budget contained a sad piece of news. It had to do with the level of compensation for victims of contaminated blood, of hepatitis C.

The House will remember, as the Bloc Quebecois has done since the beginning of this issue, in connection with the work done by the member for Drummond and continued by the member for Hochelaga—Maisonneuve, that victims who contracted the disease before 1986 and after 1990 are still not entitled to any compensation, although they contracted the disease in exactly the same way as everyone else.

It is sad to be talking again about the 1999 budget when we know that there may be thousands of people who deserve compensation because they have suffered serious health consequences. Some of them may already have died. With surpluses of $95.5 billion, this government is not even thinking about revisiting this issue and providing compensation for victims who contracted the disease before 1986 and after 1990, who have still not received anything.

I will conclude by saying that, for all the reasons I have given and because of the fact that there has not been adequate compensation for hepatitis C victims, the Bloc Quebecois will be voting against this bill, with our usual vigour.

[Banking Sector, June 1st, 2000]

Mr. Speaker, we must be clear and serious about this.

The minister's white paper protects Canadian banks by limiting foreign ownership to 20%. It is important to Canadians to control their banks and we are in full agreement.

But why would it not be just as important to the government to protect Quebec's banks in the same way? Why would what is good for Canadians not be good for Quebecers as well? Where is the problem? What is behind the government's policy?

[Banking Sector, June 1st, 2000]

Mr. Speaker, the Minister of Finance is getting ready to reform the Canadian banking sector.

By redefining the rules of ownership, his plan encourages the takeover of small and medium size banks by single individuals and by foreign interests.

Will the Minister of Finance explain why, under his plan, the largest bank in Canada would be completely exempt from foreign takeover, while the largest bank in Quebec would be offered up on a silver platter to foreign investors? Is this how the federal government is going to strengthen the Canadian banking sector?

[Budget Implementation Act, 2000, June 1st, 2000]

Mr. Speaker, we ought to have been able to rejoice with a projected budget surplus over the next five years of what, according to the minister's own analyses, will be $95.5 billion. For the first time, we can anticipate, for such a considerable length of time, some amazing surpluses in federal public finances. The last budget by the Minister of Finance is, however, a great disappointment. Why? One has to think about where those $95 billion have come from.

There are three main sources for the Minister of Finance's budget surpluses of the past two years and the next five to come. A surplus of that size is not good news when one learns its sources.

First of all, since 1993, since this Minister of Finance has been in that portfolio, things have been arranged so that the taxpayers of Quebec and of Canada have paid $30 billion more in taxes without the Minister of Finance having to announce any increases. This was done by not indexing the tax tables.

In the last budget, he announced that he was going to start indexing. It will, however, take years and years to correct the tables to reflect inflation, years before the Canadian taxpayers can see any difference in their pockets as far as a tax return is concerned. We are talking $30 billion in additional taxes here.

Another significant source of the Minister of Finance's surplus is the employment insurance fund. Year in and year out for the past four years now, he has been dipping into the employment insurance fund to find surpluses ranging from $6 billion to $7 billion annually. These funds are made up of the contributions of employers and employees to the employment insurance fund, not the federal government's contributions, for it has not put a cent into it since 1992. So one part of the surplus the Minister of Finance is so proud of comes from the surplus in the employment insurance fund.

There is another major source of these surpluses. The Minister of Finance, who is full of compassion for society's disadvantaged and who blithely puts his hand to his heart as he thinks of Canada's poor children, is the same Minister of Finance who, in 1994, put a budget mechanism in place that year after year ensures systematic cuts are made to the Canada social transfer, without any announcement of them. This transfer enables the provinces to fund social assistance, income security, post-secondary education and health.

Even with the minor adjustments he made in his latest budget, the 2000 budget, by 2003, the Minister of Finance will have withdrawn no less than $32 billion from these transfers to the provinces.

When we take a look at the Minister of Finance's evaluation of the surpluses over the coming years and the evaluation of what he has systematically stolen from these three budget items, we cannot miss the striking similarity of the figures. He will take the $90 billion from taxpayers as disguised tax increases and from the Canada social transfer by cutting it on the backs of the provinces. He will take it as well from the surplus in the employment insurance fund.

We should be pleased with what he calls good management of public finances and what we call robbery of taxpayers, the most disadvantaged in society and the unemployed.

We must not forget that the surplus in the employment insurance fund is not just an over-contribution by employers and employees. It is also the product of a tightening of the criteria under which unemployed workers may benefit from this plan.

Are members aware that only 42% of those unemployed can benefit from the employment insurance plan? It no longer covers the majority of the clientele it serves. This has got to change.

With surpluses coming out his ears, the Minister of Finance should be thinking about showing real compassion, instead of deliberately waiting until an election campaign is in full swing before announcing any sort of relief.

Since the government knows perfectly well that it will have a $95 billion surplus over the next five years, according to the minister's estimates, and over $140 billion according to ours, it is unconscionable to wait, while the problems of poverty and the problems in the health care system throughout Canada and not just in Quebec grow worse.

There has been an anti-Quebec campaign since we came here. We are more aware of it in the Bloc Quebecois, since we are the only ones defending the interests of Quebecers in this House. We are very aware of the systematic attacks and anti-Quebec propaganda around here.

With respect to poverty, when we see the latest figures provided by such bodies as the National Council of Welfare, it is outrageous, scandalous and unacceptable that a Minister of Finance, who will have surpluses coming out his ears over the next few years, does not introduce drastic measures to do something about this poverty, does not restore the Canada social transfer, and does not make the EI system more flexible in order to benefit unemployed workers.

When we look at the issue of poverty since the Liberal government has been in power, the government led by the little guy from Shawinigan, it has increased for all categories of the population. Let us look at the case of children alone.

In 1993, during the election campaign, the Liberal Party of Canada was critical of the Progressive Conservatives because, at the time, there were one million poor children in Canada. The latest statistics indicate that there are 1.5 million poor children in Canada, an increase of 50%.

If there are poor children, this is because there are poor parents, and if there are poor parents, this is because the Minister of Finance, the Prime Minister and this Liberal government have blithely slashed the Canada social transfer, and have accumulated a stupendous surplus, with plans to accumulate still more in coming years, on the backs of the poor.

When we look at the incidence of poverty among female seniors, it comes close to 50%. What is this government doing to remedy poverty in this group, in Quebec and in Canada? Nothing. It is swimming in surplus funds and is proud of it, but is doing nothing to remedy the situation.

As far as seniors are concerned, according to the Canadian Council on Social Development, we are seeing the reversal of a trend that has been in place for the past 30 years, which was to ensure that seniors had a decent income. Now we are in the process of quietly impoverishing certain sub-categories of seniors, while we ought to be continuing along the path of ensuring them a stable and fair income in a society that claims to be full of compassion and justice.

When we look at the new forms of poverty this government has created, we see that even now there is a new phenomenon which is impoverishing the employed. Now we have the working poor, a phenomenon we had not seen for several decades. People work, but because of a variety of factors, including government inertia when it comes to correcting injustices, such as in federal taxation, they are becoming poorer.

I will give an example. A couple with one child and a single income starts paying federal income tax once their income reaches $13,700, whereas in Quebec, this family would pay income tax only once their income reached $30,000.

Is it reasonable, when they have surpluses coming out of their ears, for the government to start taxing poor families with a dependent child at $13,700? In Quebec, the situation has long been rectified, and income tax is not applied until the income threshold of $30,000 is reached.

Is it reasonable for this man, who is boasting about having surpluses—and the money is here, not in the provinces—to continue to brag about these surpluses, with his Prime Minister bragging about the Canadian model around the world, while no thought whatsoever is given to reforming taxation for Canada's poorest families as the Bloc Quebecois has been requesting since 1993? It is deplorable.

Federal taxation is now contributing to the impoverishment of society, and that is serious. When the Minister of Finance sits on his behind doing sweet nothing and ignoring our requests, despite all these surpluses in his budget 2000 forecasts, that is completely unacceptable.

Not to mention, and I will conclude with this, that the money we give this government, the $32 billion Quebec taxpayers hand over every year to this government, is being used to pay off their buddies in the HRDC scandal, in the form of grants to friends of the Liberal Party for the ministerial tour around Quebec to spread anti-PQ propaganda.

Their buddies are getting money. But it is money from our pockets—$32 billion from Quebecers—that is paying for this anti-Quebec propaganda, for ministers to parade around singing the praises of federalism and squandering our tax dollars.

We are going to vote against this bill at report stage now before us. The Bloc Quebecois is here to defend the interests of Quebec and of Quebecers, because they are very ill served by this government.

[Banking System, May 16th, 2000]

Mr. Speaker, what guarantees is the Minister of Finance offering that the only two Quebec-owned banks located in Quebec will not fall victim to takeovers by Canadian investors from outside Quebec or foreign investors, because of these new ownership rules?