Jim Peterson

[Supply, September 21st, 2000]

Farmers get a rebate for the GST and they do not pay the tax on the coloured diesel.

[Supply, September 21st, 2000]

Mr. Speaker, farmers do not pay tax on coloured diesel. It is very simple.

[Supply, September 21st, 2000]

Of course I did not answer the hon. member's question because I said we are looking at mechanisms for passing it on. The hon. member's leader has suggested that it is not tax cuts but rebates. I am saying that this is at least slightly more thoughtful. I wish that the motion you brought forward had reflected the latest thinking and maybe it is just today—

[Supply, September 21st, 2000]

Mr. Speaker, that is a very good question. The Leader of the Opposition has adumbrated that this is indeed a very important question. He has suggested rather than just have a tax cut that we have a rebate. That could be a very real possibility.

I wish that whoever drafted the motion had talked to the Leader of the Opposition first, because he might have indicated that maybe just cutting gas prices will not be passed on. When there are fluctuations at the pump of five or six cents a day, a one and a half cent cut, even if there were goodwill to try to pass it on, would not even be noticed by the people. This is why the government is looking very seriously at the issue and is looking at other mechanisms for ensuring that a reduction of these very onerous fuel prices for all Canadians will have the best impact in terms of where they are most needed.

[Supply, September 21st, 2000]

Mr. Speaker, I will be sharing my time with the hon. parliamentary secretary.

What I would first like to look at is who the real culprit is when it comes to Canadian taxes on fuel versus the oil producers and the cost of oil. The simple fact is that two days ago the benchmark October contract for West Texas intermediate crude was $36.51 U.S. a barrel. A year and a half earlier in 1998 it was less than $11 U.S. Obviously the price of crude is the real culprit. This is why the finance minister will be taking very constructive steps, I hope, with his G-7 counterparts in Prague this weekend, to try to deal with the very serious impact on the economies of all the countries in the world.

The second point I want to talk about is the impact on truckers. To the extent government taxes add to the cost of diesel fuel, are these taxes mainly provincial or federal? Let us look at the federal taxes.

We have a GST of 7% but it is fully refundable to truckers. They do not pay it so it cannot be the GST. Is it the excise tax? The excise tax federally is four cents. It does not fluctuate with the price; it is constant. This is the lowest excise tax in the G-7 and it is fully deductible for tax purposes. Four cents, yes. It is deductible and it costs less for the trucker.

Let us look at the provincial taxes. In Alberta truckers pay a nine cent excise tax on their diesel fuel.

I want to look at this issue raised in the House today through the motion. It was the member for Pickering—Ajax—Uxbridge who first raised the issue of fuel tax prices in the country. Now we see very quickly, for the first time in history and never talked about before, that members of the official opposition are running after the parade, trying to catch up to it and get in front of it, but they are stumbling all over themselves in so doing. Nothing could be greater evidence of their craven efforts to grab headlines and of their abject incompetence in coming to grips with this particular issue.

Let us look at the motion before us. It talks about the severe hurt to Canadian truckers and homeowners. Then what does it propose as the antidote to this harm? Two things: cut the federal excise tax by 1.5 cents per litre and eliminate the tax on the tax for gasoline. That is what those members are proposing in this opposition day measure to deal with this huge issue we face in terms of the cost of fuels. How will these two little tax measures they propose help truckers and homeowners?

First, truckers. Let us look at the 1.5 cents per litre cut that has been proposed. It never applied to diesel fuel and it does not today so it cannot be that. Since the GST does not hit the truckers, there is no tax on the tax. So the measures have absolutely no impact on truckers. How will they help truckers? Not one nano-cent.

How about the homeowners the opposition talks about? Since there is no federal excise tax on heating fuel, their proposed 1.5 cent tax cut will not help them. And obviously there is no tax on tax. How will these proposed measures, the opening salvo of the official opposition, help homeowners? Not one nano-cent.

In conclusion, these proposed measures if enacted would have zero impact in helping homeowners and truckers.

Let us say the 1.5 cent tax cut went through. Even if it did, would car owners ever see it or would it just be swallowed up by the producers? These are very real concerns. In rejecting a fuel tax cut less than a year ago for Alberta, the present Leader of the Opposition said:

Will it flow through to the people? Will it be reflected at the pump? What kind of guarantees have we got that gas retailers are also going to drop the price?

There are no guarantees in this motion reflecting these very real concerns expressed by the Leader of the Opposition. I just listened to him a few minutes ago. In response to questions dealing with this issue, he said that he really does not favour tax cuts, that he prefers tax rebates. Then why did he not bring forth tax rebates in the motion? Even the Leader of the Opposition is admitting that it is a flawed motion. Is there a guarantee in the motion that a cut would be passed on to the consumers? Not one nano-cent.

This is either very cheap politics or it is total legislative incompetence on behalf of the official opposition. Canadians will not buy into this phoney motion because it will do nothing to help the homeowners, the truckers, or the people buying gas at the gas pump and they are not going to be hoodwinked by this type of flim-flam.

[Income Tax Act, September 20th, 2000]

moved for leave to introduce Bill C-43, an act to amend the Income Tax Act, the Income Tax Act Application Rules and certain acts related to the Income Tax Act.

(Motions deemed adopted, bill read the first time and printed)

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

moved that Bill C-38, an act to establish the Financial Consumer Agency of Canada, be read the second time and referred to a committee.

Mr. Speaker, I am very pleased to rise to speak to Bill C-38 concerning our financial institutions, which I introduced to the House last June 13.

This is the seventh major initiative of the government dealing with our financial institutions in the last four and a half years.

Early in 1996 we brought in Bill C-15 which enhanced the powers of the Superintendent of Financial Institutions to undertake early intervention with respect to troubled institutions, thereby enhancing the safety and soundness of our entire system.

In 1997 we entered into the WTO agreement on financial services, enhancing the access of Canadian financial institutions to foreign markets throughout the world. Again in 1997 the government brought in Bill C-82 to strengthen consumer protection by prohibiting coercive tied selling.

In 1998 probably one of the most important measures was passage of the bill which allowed the mutualization of some of our major insurance companies and put over $10 billion in the hands of policyholders.

In 1999 we passed the bill dealing with foreign banks being allowed to operate as branches in Canada, utilizing the capital of their global entities in order to enhance their capacity to lend to Canadians.

In June 2000 the money laundering bill was passed, which is a direct blow to organized crime by clamping down on money laundering through our institutions.

Our seventh initiative is Bill C-38. As we all know this is a tremendously important bill in size and in consequences. It amends 22 acts and establishes one entirely new act that covers almost 900 pages. It is so important because as we know our financial services sector is truly a driver of our economy.

There are more than 500,000 Canadians employed in this sector. Its payroll is in excess of $22 billion annually. It accounts for approximately 5% of our gross domestic product, and close to $50 billion annually in exports from this country. It also pays over $9 billion in taxes yearly to all levels of government. This is the most heavily taxed industry in Canada.

Given the direct and indirect importance of the financial sector, one of which I am extremely proud, the strategic framework within which it operates must foster opportunities for growth, for export and for job creation, to the benefit of our economy as a whole.

Bill C-38 implements a policy framework which ensures that the sector continues to make its crucial contribution to our economic well-being by enhancing its ability to compete in the new world of globalization and rapid advance in technologies, by making it easier for these institutions to seize opportunities both in Canada and abroad, and by following a balanced approach that is in the interest of consumers and the sector itself.

As we all know Bill C-38 is the culmination of a process of very extensive consultations. This process began in June 1996 when we announced the creation of an advisory committee to review the payment system. This was followed in late 1996 by the establishment of the task force on the future of Canada's financial services sector, a task force which was known as the MacKay task force and which reported to us in September 1998.

Following that report the House and the Senate finance committees held extensive consultations throughout Canada and reported back to us by the end of the year.

All this advice was considered very carefully in the preparation of the June 1999 policy paper which gave the government response to all consultations and input from colleagues in the House. Over the past year, following tabling of this white paper, more extensive consultations were undertaken so that we could enact in legislation the results of all the undertakings and considerations. I tabled that bill in the House last June 13.

More precisely, Bill C-38 encourages the efficiency and the growth of Canadian financial institutions in international markets, fosters competition within the country, enhances the protection of consumers of financial services, and improves the regulatory framework.

In terms of promoting efficiency and growth we have a holding company structure which will give greater flexibility for these institutions to compete with monoline institutions doing a single type of business. They will enjoy a lighter regulatory regime through that holding company.

In terms of ownership we are permitting up to 20% of the shares of larger institutions to be used for strategic alliances to allow our banks to enter into joint ventures with other institutions both domestically and abroad. We have enhanced the range of permitted investments for our financial institutions.

Through guidelines, we have stressed the possibility of mergers, thus recognizing that such mergers can be a viable strategy. A new transparent review process will be put in place to evaluate mergers and to protect public interest.

In terms of fostering domestic competition we will be allowing new entities to establish with lower capital requirements. We will have three levels of institutions: those with equity exceeding $5 billion, those with equity under $1 billion and those medium size ones in between. Finally large banks with equity over $5 billion will be required to be widely held under the new 20% ownership regime. This new ownership regime will encourage the establishment of community banks.

We have also included provisions whereby co-operatives, credit firms and credit unions could get involved in the establishment of a national service entity. Such an entity would allow co-operatives to adopt a national structure, while fostering competition with large Canadian and foreign institutions.

By accommodating new entries into our payment system for life insurance companies, for securities dealers and for money market mutual funds we will see enhanced competition domestically.

Looking at what the bill does in terms of empowering and protecting consumers, it will ensure access to basic financial services regardless of income or place of residence, including access to low cost accounts and a process that will govern the closure of any branches.

It establishes the financial consumer agency of Canada to strengthen the monitoring of protection measures for consumers and to extend the scope of consumer awareness activities.

It establishes the independent Canadian financial services ombudsman to deal with disputes with institutions.

In terms of improving the regulatory framework we have a streamlined approvals process. We have significant amendments to the governance and oversight of the Canadian Payments Association, and we have new powers for the Superintendent of Financial Institutions to deal with potential risks.

This is an era of extremely rapid change and global competition. We recognize that our financial institutions must have flexibility and freedom to adapt to changing times. The world will not stand still. Nor will the sector. Nor will we. This is why constant attention to fostering competitiveness and to ensuring safety and soundness are so important and are for the benefit of all Canadians.

In keeping up to date we have ensured that this legislation has a five year sunset clause, unique among institutions in the world, to ensure that constant review processes are in place and to ensure that our institutions can adapt.

Second, the government is prepared, if it deems appropriate to do so, to reassess the legislation before the scheduled five year period between reviews, to ensure that the framework remains adapted to a rapidly changing market.

Third, the bill allows for many key elements to be dealt with by regulation so that we will not have to come back to the House through the cumbersome procedure of legislative change in order to allow our financial sector to adapt.

The legislation provides a new policy framework that will keep our financial institutions strong, safeguard the interests of Canadians, continue to contribute to job creation and economic growth, and maintain the safety and soundness of our financial sector.

I thank colleagues for their very valuable contributions to the bill. They will see many of their ideas and suggestions reflected in it. It is because of the extensive consultation and co-operation of all members that the early passage of the bill is supported by consumer and industry groups alike. We in the House look forward to early passage.

[Financial Consumer Agency Of Canada Act, June 13th, 2000]

moved for leave to introduce Bill C-38, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions.

(Motions deemed adopted, bill read the first time and printed)

[Health, June 9th, 2000]

Mr. Speaker, let us look at what we have done. In the past two years we have increased the transfers to the provinces for health care by fully 25%. The transfers to the provinces are at an all time high. That is our commitment as demonstrated by what we have done. We have also said that when the provinces will join together with us to secure the future of the Canada Health Act there will be a lot more federal money on the table.

[The Economy, June 9th, 2000]

Mr. Speaker, of course it will cost us a fortune and what it will do is really hurt the middle class and benefit unfairly the very rich.

Let me quote: “I think Canadians have become used to a progressive tax system where the higher your income, the higher the rate of tax you pay. There are certain basic expenses of life one has to go through and it is a lot easier to do it at $250,000 than $50,000. From that perspective a flat tax is inequitable. It is not progressive”. Who said that? Ernie Eves.