Tony Valeri

[Depository Bills And Notes Act, June 8th, 1998]

Mr. Speaker, it is my pleasure to present Bill S-9 for third and final reading in the House of Commons. This bill establishes a new act to be known as the depository bills and notes act.

The proposed legislation is rather technical in nature but it is extremely important to the efficiency of capital markets in Canada. The proposed new act updates federal legislation to bring it into line with the way that trades and financial instruments are processed today.

As hon. members are aware, advances in information technology are changing the way that businesses in every sector of the economy operate. There is no doubt that the financial sector has probably been more affected by these changes than most.

Competitive pressures in the financial sector are intense. They ensure that new ways of doing business are constantly being found to make financial practices and markets more efficient. The depository bills and notes act is just one measure being introduced by this government to help support and encourage the modernization of our financial sector.

The specific area of activity covered by this legislation is the processing of transactions in certain financial instruments that come under federal law. A key element of modern market practice is the holding of financial instruments in central depositories.

When an instrument held in a central depository is sold, ownership of that instrument is transferred from seller to buyer by means of an entry on the books of the depository. This means that there is no longer any need to arrange for the physical transfer of the instrument from one party to another.

The use of securities depositories has obvious advantages in terms of both the safety and efficiency of transactions in financial markets. While transfers of many financial instruments are already handled in this way, the proposed legislation will expand the list of eligible instruments to include two new types of instruments, namely depository bills and depository notes. Bankers acceptances and commercial paper will now be eligible to be held in a central depository. Bill S-9 also establishes that changes of ownership of these instruments will be affected by making the appropriate entries in the records of the depository by book entry.

This legislation is necessary because the existing rules governing these types of instruments as set out in the Bills of Exchange Act were written well before the establishment of central depositories and still refer to being in physical possession of a financial instrument when describing the rights of the parties involved in a transaction. These requirements of the Bills of Exchange Act have so far precluded the use of a depository for financial instruments that are subject to that legislation.

In other words, because this legislation has not been amended to accommodate modern practices, the full use of central depositories has been held back. The legislation before us, the depository bills and notes act, addresses this situation.

The new act ensures that in law the purchaser has the same legal rights with such modifications as are necessary in the circumstances as a purchaser of a bill or note under the Bills of Exchange Act without requiring the actual delivery of the instrument.

The introduction of these new financial instruments in no way precludes individuals or institutions from purchasing and holding other bills and notes that still fall under the authority of the Bills of Exchange Act.

To distinguish these new types of instruments from other similar securities they will be marked on their face with wording that indicates that they are depository bills and notes subject to the depository bills and notes act.

The benefits of extending the use of central depositories should not be delayed any further. The Canadian depository for securities would like to make bankers acceptances and commercial paper eligible to be held in their depository this fall. Passage of the legislation would allow them to do that.

The introduction of the depository bills and notes act is consistent with the recommendations made by the private sector group concerned with the workings of the international financial system commonly known as the G-30. This group is calling for the widespread introduction of securities depository systems and book entry transaction recording on the basis that they will improve the efficiency of the money markets. This initiative is also supported by all elements of the financial community.

A related technical amendment to the Financial Administration Act has been included in the legislation. The Financial Administration Act permits negotiable instruments such as T-bills and government bonds to be traded in the market. However, there is a technical legal issue regarding the definition of negotiable instrument and whether it includes government debt for which there is no physical certificate. The amendment will make it clear that government debt of this kind can be traded.

Bill S-9 deserves speedy passage and I urge my hon. colleagues to concur so that we may move on to other legislation.

[Income Tax Act, June 3rd, 1998]

Mr. Speaker, I thank the member for Lakeland for providing an opportunity to address the issue of making mechanics tools deductible.

On a personal level I inform the member that I am certainly quite familiar with the issue. I have met on several occasions with the Canadian Automobile Dealers Association that has consistently raised concern regarding deductibility of tools as well as with individuals in my own constituency who own dealerships and employ mechanics that find themselves in this situation. They have also been very effective in advocating the case for the deductibility of tools.

I also assure my hon. colleagues that the government has been working on this issue and has found the interventions made by mechanics, their related associations and members of parliament to be quite helpful.

Having expressed our willingness to find solutions that will assist mechanics with regard to this issue, I want to spend a few moments outlining where some of the difficulties need to be addressed with respect to Bill C-366.

Tax recognition generally is not available for work related employee expenses because employers normally provide the items required for employees to perform their duties. While this is true as a general rule, individuals in some occupations including mechanics incur substantial expenses as a condition of employment.

However, mechanics are not the only occupation that incurs substantial expenses as a requirement of employment. Other expenditures for which tax recognition might be sought include personal computers purchased by employees, reading material, professional journals, business clothing, uniforms and construction safety clothing, home office expenses, and tools for employee trades persons, just to name a few.

Due to these realities we must look at adopting a more all encompassing approach than is proposed by the bill if we are to be able to be justified in providing the requested tax relief for mechanics. Any change in the tax treatment of employee equipment expenses would need to address all employee expenses incurred as a requirement of employment in a fair and consistent manner.

This private member's bill would also provide tax relief to all mechanics irrespective of the size of their expenditures instead of targeting relief to those incurring extraordinary expenses.

There are also a number of other issues which this private member's bill fails to consider that must be addressed before such a measure could actually be implemented. For example, provisions would need to be developed to ensure that tax relief is provided only for those items genuinely required as a condition of employment and not for those purchased for personal use. I am sure all members of the House would agree a tax deductibility or tax expenditure for personal use items would not be something they would support.

Given this consideration, providing full tax recognition as proposed by the bill would be unwarranted. The provisions needed to address these issues would inevitably be complex as they would need to account for a large variety of items for which tax recognition may be claimed and the different work situations in which such items are used.

To put the problem in context, consider the expensive provisions needed to ensure the equitable recognition of automobile expenses. Provisions governing the deductibility of employee equipment expenditures would apply to hundreds of disparate items and numerous occupations.

We need to take the appropriate amount of time and consultation. Some of that consultation has taken place with respect to the prebudget consultations in the finance committee which, as the hon. member so rightly pointed out, recommended this item be consider. We need consultation with respect to the affected sectors and to work through how such a tax deduction might work, minimizing its complexity while providing effective relief.

In light of what I have discussed it is clear that the government is serious about undertaking further studies on this matter so that a just and workable solution can be found for mechanics, taxpayers and the government.

I want to restate that the intent is one that would provide tax recognition not only for mechanics but for all those occupations that may find themselves in the same situation as the situation of mechanics described by my colleague across the way that have to make substantial expenditures and are not able to deduct them because they are employees and are not incorporated organizations.

The issue is one that the government will continue to work on. The interventions today by the hon. member are helpful in assisting the government to continue to pursue the issue. We will continue to speak with associations like the Canadian Automobile Dealers Association which has made numerous interventions, which I am sure has consulted with the hon. member across the way, and which has spoken with the department and myself in particular.

We are continuing to work on the issue. I thank the member opposite for bringing this important issue to the floor of the House for debate. I also thank him for the work he has done on the bill so far. I assure him and other members of the House that we will continue to work together to address the issue in a meaningful way. I say this in a non-partisan fashion.

I noticed in his opening remarks the hon. member was somewhat partisan, but I assure him we want to ensure the issue is dealt with in the most effective way, one that would reduce complexity, ensure efficiency and be in the best interest of the taxpayers, the government and the particular sectors that may be affected by it.

[Charitable Contributions, June 1st, 1998]

Madam Speaker, I welcome the opportunity to participate in the debate on Motion No. 318.

I will take a few moments to respond on behalf of the government to the motion that has been put forward by the member for Fraser Valley.

The government recognizes the motivation for the hon. member's motion and fully supports the principle of offering generous tax assistance to charitable giving. The purpose of the present tax regime with respect to charitable giving is to encourage larger donations.

The current tax regime was put in place in consultation with the charitable organizations. The government has provided additional incentives to charitable giving in four of the last five federal budgets. Measures that have been adopted include: lowering the threshold for eligibility for the 29% level of the tax credit to $200 from $250; raising the annual income limit for the use of charitable donations to most charities from 20%, and when the government took office to 75%; and reducing the income inclusion rate for capital gains arising from the donation of appreciated publicly traded securities to 37.5%.

The hon. member should recognize that the differences in treatment of political contributions and charitable donations reflect the different policy intention of the two measures. The design of the federal political contributions tax credit reflects the desire to encourage greater grassroots involvement by all Canadians in the political process.

For this reason a generous tax assistance is given to small political contributions. This tax assistance is reduced by incremental amounts to the point that the federal tax assistance is eliminated for amounts contributed to federal political parties in excess of $1,150 per contributor per year.

In contrast, tax assistance for charitable donations is greater for amounts in excess of $200 in order to encourage larger donations to charities. This type of larger scale giving allows for a greater measure of stability and predictability for charities.

In the case of very large donations, tax credits may be claimed for donations up to 75% of a taxpayer's income in any given year. Tax credits may be carried forward to future years should the 75% limit be exceeded. Recently we have witnessed the important role that the present tax regime has played in charitable giving.

The charitable industry has reported seeing more large scale donations from individuals. In particular it has witnessed this trend following the implementation of the 1997 budget which contained provisions allowing for reduced taxation of capital gains on publicly traded shares given to registered charities. The Globe and Mail recently called this tax change which effectively cut in half the capital gains tax that donors pay on such gifts a bonanza for the charity industry.

The University of Toronto has received more than 70 individual contributions of $1 million or greater during its current fundraising drive. Gordon Floyd, director of public affairs at the Canadian Centre for Philanthropy, recently stated that charities have “all seen a real surge in major gifts of stock since that legislation changed”.

The executive director of the ROM Foundation has also noted an increase in tax driven gifts to charities, particularly from new benefactors.

He states: “Since 1997 we have received gifts from individuals in the form of shares that we would not have otherwise received. It has made a difference”.

The incentives for large scale giving also bore fruit in terms of a new community foundations movement which is a collection of endowment funds committed to local projects. A coalition of leaders heading up this movement recently announced in Calgary that their collective assets are now worth more than $1 billion. This announcement is clearly good news for communities.

These foundations tend to fill a unique need in that they are funding locally based projects across the country in almost every province. Gifts to such foundations can be allocated in many ways, including a general community fund or a specific cause. A little more than a week ago members of a youth advisory committee from Calgary announced a series of grants they were awarding, including a $1,000 grant to a high school program that helps with the integration of immigrants. This type of community action by these foundations is encouraging and helps to reinforce our collective notion about the relevance and importance of community in an increasing globalized world.

We can see from these examples that the tax regime that has been put in place has been working to maximize the benefits of charitable giving for both individuals and charities and the important work they carry out. Charities have mushroomed into an $88 billion affair spreading through 76,000 organizations ranging from hospitals to houses of worship to social services.

By any measurement this industry has been growing more important and stronger every year under the present tax structure. While we have seen that large scale giving has been greatly affected by tax incentives, we have also found that donations of small amounts to charities have not been strongly motivated by the availability of tax assistance. Consequently the greatest effect of this proposal before the House would be to increase the fiscal cost of tax assistance accorded to donations that would have, in all likelihood, been made in any case. Canadians donate in the smaller increments because they want to.

The level of tax assistance accorded most charitable donations results in a roughly 50:50 partnership between government and the private sector in support of charities. It is consistent with the principle that although charities promote the public good they have direct control over their activities in these areas and their priorities will not generally be identical to those of government.

In summary, the government cannot support this motion for the following central reason, our basic difference in approach. The current design of the charitable donations tax credit acts to encourage larger donations while recognizing the value of smaller donations verses the argument put forward by the hon. member across the way where he draws the analogy between charitable donations and political contributions. The political contribution tax credit encourages small donations but limits tax assistance for large contributions. That is the basic difference between the two. The greatest impact of this motion would be to increase tax assistance accorded to donations that would have been made in any case.

Tax assistance accorded charitable donations has contributed significantly to the growth of this industry. For the reasons outlined we cannot support the motion. I thank the member opposite for bringing this motion forward for debate so that we can all be reminded of the importance of charitable giving and the worthy causes pursued through their work.

[Budget Implementation Act, 1998, May 27th, 1998]

Mr. Speaker, Bill C-36 is a comprehensive bill incorporating a diverse number of measures that relate to the 1997 and 1998 budgets. Each however is important to building a strong economy and a secure society, two goals our government has pursued since coming to office in 1993.

For example, the government believes there is no better investment in the future than investments in education, knowledge and innovation. The establishment of the Canada millennium scholarship foundation in Bill C-36 is proof of this commitment. This is the single largest investment ever made by a federal government to support access to post-secondary education for all Canadians.

Elements of the Canadian opportunities strategy, which is designed to provide Canadians with greater access to the knowledge and skills needed for jobs and opportunities in the 21st century, are included in this bill.

The government also believes that equality of opportunity means a good start in life. This is why the national child benefit system, which was developed to provide better support for low income families with children, is also part of this bill.

Other measures in Bill C-36 include changes to old age security, increased excise taxes on tobacco products, air transportation tax reductions, tax arrangements with aboriginal governments, and measures dealing with Canada's international obligations and the Hibernia oil project.

Since debate has already taken place at second reading and in committee, I will limit my remarks to a brief overview of this bill.

I will begin with the Canadian opportunities strategy. The aim of the strategy is to help ensure that all Canadians, especially those with low and middle incomes, have equal opportunity to participate in the changing labour market. This means reducing the financial barriers and other obstacles to acquiring skills and knowledge. I will take a moment to talk about some of the specific measures of the Canadian opportunities strategy.

Bill C-36 establishes the Canada millennium scholarship foundation which will provide scholarships to students in financial need and who demonstrate merit. The scholarships will improve access to post-secondary education for low and middle income students. The foundation will operate at arm's length from government and, in consultation with provincial governments and the post-secondary education community, will decide how the scholarships are designed and delivered.

The government's initial endowment of $2.5 billion will provide more than 100,000 scholarships annually for 10 years to both full and part time students, beginning in the year 2000. Full time students will be eligible for an average of $3,000 a year with individuals potentially receiving up to $15,000 over four years. This could reduce student debt load by over half. On a related issue, Bill C-36 amends the Canada Student Financial Assistance Act, the Canada Student Loans Act and the Bankruptcy and Insolvency Act.

Agreement was reached last December at the first ministers meeting that the 1998 budget had to include measures to reduce the financial burden on students. The 1998 budget followed up on this commitment and several of those measures are contained in Bill C-36.

First, interest relief will be extended to more graduates. Second, the repayment period will be extended for those who need it. Third, for borrowers who remain in financial difficulty, there will be an extended interest relief period. Fourth, for individuals still in financial difficulty after these relief measures, the loan principal will be reduced. These measures together will help up to 100,000 additional borrowers.

Bill C-36 also legislates the Canada education savings grant, another important component of the Canadian opportunities strategy. This grant will make registered education savings plans one of the most attractive savings vehicles for parents to save for their children's education. It will provide for a 20% grant on the first $2,000 in annual RESP contributions made after 1997. It will provide that grant for children up to the age of 17.

Bill C-36 addresses the problem of youth unemployment by giving an EI premium holiday to employers who hire additional young Canadians between the ages of 18 and 24 in the years 1999 and 2000. This measure will increase youth employment opportunities and reduce payroll costs for employers by about $100 million a year in 1999 and 2000.

Bill C-36 also deals with a new Canada child tax benefit. Hon. members will recall the government's commitment to the national child benefit system which was announced in the 1997 budget. Under the new system, the federal government provides an enriched Canada child tax benefit while the provinces and territories redirect some money into better services and benefits for low income families, especially the working poor.

The government proposed a two step process in the 1997 budget whereby the current $5.1 billion child tax benefit would be enriched by $850 million to create a new Canada child tax benefit by July of this year.

Beginning last July the working income supplement was increased by $195 million. Working income supplement benefits are now provided per child instead of per family. This coming July over 1.4 million Canadian families with 2.5 million children will see an increase in their child benefits. Families earning up to about $21,000 will receive Canada child tax benefits of $1,625 for the first child and $1,425 for each additional child.

Once discussions have taken place with the provinces, territories and Canadians, the Canada child tax benefit will be enriched by an additional $850 million, a commitment made in the 1998 budget.

I would like to turn now to some changes in this legislation which relate to seniors. The government remains committed to providing a secure retirement income for its senior citizens. Starting in 1999 the payment year for both the guaranteed income supplement and the spouse's allowance will move to July from April. This will give GIS recipients three additional months to file their income statements with the government and reduce the possibility of underpayments. The payment period for war veterans allowance will also change from July in one year to June of the next. These changes will improve services to low income seniors, eliminate government duplication and increase fairness.

Another component of Bill C-36 addresses the issue of First Nations taxation. The Kamloops Indian band will now have the authority to levy a 7% value added tax on all fuel, alcoholic beverages and tobacco products sold on its reserves. The Westbank First Nation will be able to impose a similar 7% tax on all alcoholic beverage sales on its reserves. It already has the authority to tax tobacco products.

In addition, with the approval of the governor in council, the Minister of Finance or the Minister of National Revenue will be able to enter into tax administration agreements with aboriginal governments that want to tax.

I want to mention the two amendments to the Excise Tax Act contained in this legislation.

First Bill C-36 increases federal excise taxes on tobacco products which will add an extra $70 million annually to federal revenues and will help to discourage Canadians, particularly youth, from smoking.

The second amendment reduces the air transportation tax and clarifies the rules relating to the elimination of the tax later this year. This measure is part of the government's program to commercialize air navigation services in Canada.

On the international front, the recent Asian crisis reinforced how crucial it is that the International Monetary Fund be able to support a stable international financial system. It also reinforced the importance of our government having the ability to participate in internationally co-ordinated efforts to resolve short term liquidity crises.

As a result this legislation amends the Bretton Woods act to ensure adequate resources for the IMF to fulfil its mandate of preserving monetary stability. The amendments also give the government additional means to participate in co-operative financing arrangements with other countries to supplement IMF led assistance packages.

At the same time consultations between the Minister of Foreign Affairs and the Minister of Finance will be mandatory prior to Canada providing any financial assistance to institutions covered under the International Development Assistance Act. Consultation with the Minister of Finance will improve control over the growth of contingent liabilities associated with Canada's participation in these institutions.

Action taken through international institutions is critical if we are to benefit from a stable global financial system. That is why in addition to the action we can take at home, such as that found in Bill C-36, our government is working in concert with other governments around the world to address economic stability issues.

Sparked by lessons from the financial crisis in Asia, the Minister of Finance has proposed that a global banking supervisory body be set up to monitor the stability of financial institutions around the world. This idea has received considerable interest and support with the latest endorsement coming from last weekend's meeting of the APEC finance ministers in Kananaskis, Alberta. Turning to other aspects found within Bill C-36, there are provisions to allow the Canada Development Investment Corporation to sell the government 8.5% interest in the Hibernia oil project when market conditions are favourable.

In addition, the bill provides the authority to wind up CDIC following the sale of its remaining principal asset, the Canadian Hibernia Holding Corporation.

These are highlights of Bill C-36. As I stated at the beginning, each is key to help build a strong economy and a secure society, goals the government has pursued since 1993. These are goals the government will continue to pursue as we complete this mandate.

Many Canadians are waiting to benefit from these measures. I urge my hon. colleagues to pass the legislation without delay.

[Conditional Sentencing, May 26th, 1998]

Mr. Speaker, despite the rhetoric from the NDP the government remains concerned about the growth and support of small businesses in Canada.

Small businesses are the backbone of economic growth and job creation. That is why the government has worked hard over the past few years to improve the environment for small businesses, including the issue of access to credit.

We have worked with the banks to improve the reporting of small business lending activity. As a result statistics are now available publicly on bank lending to small and medium size enterprises.

Concerns have been expressed that the proposed mergers in the banking sector may result in reduced access by small businesses to bank credit. The government is indeed concerned about the potential effects on the Canadian consumer including small businesses of allowing bank mergers. The proposed mergers have the potential to fundamentally change our domestic banking sector.

The work of the task force and the future of the Canadian financial services sector will be valuable in the government's deliberations of the merger issue and I look forward to its report in September.

The government will not allow any merger in the banking sector to proceed without understanding its impact on the small business community in Canada and without the input of Canadians during the consultation process.

I invite the hon. member to join the Standing Committee on Finance when we hear from Canadians on this issue as we go across Canada. The last time I checked the Standing Committee on Finance was an all party committee. I believe a member of the NDP sits on that committee. I invite the hon. member to participate.

[Conditional Sentencing, May 26th, 1998]

Mr. Speaker, I am pleased to respond to the hon. member for Halifax West regarding the Deline community concerns about past mining activities involving the Port Radium uranium mine.

The government is taking this matter extremely seriously and is seeking to gain a better understanding of the activities associated with the mining and the transport of the uranium ore.

The Department of Indian Affairs and Northern Development has been assigned the lead role in co-ordinating federal government activities. Key to these activities will be the active participation of Natural Resources Canada and Health Canada. A collaborative approach with the Government of the Northwest Territories health and social services department has been established.

The federal ministers are committed to meeting with the Deline community members in the near future to determine an appropriate course of action.

Over the past year the Department of Indian Affairs and Northern Development has been working in collaboration with the community to address a number of environmental issues of interest to them. Drawing upon this existing good working relationship, a strategy for meeting the information, research and communication needs related to the radiation concerns in the community is being developed with the Deline uranium committee.

In fact we are already working with the Deline uranium committee to answer questions about present day levels of radiation. Current conditions will be assessed through a research proposal developed earlier this year by the committee.

We hope to build on this spirit of co-operation as we work to address concerns about the historic operation of the Port Radium mine and the transportation of ore from the mine. The next steps will be determined as our collaborative work with the community progresses.

[Conditional Sentencing, May 26th, 1998]

Mr. Speaker, the government is committed to taking the time to fully examine what is best for the public pension system and the retirement income system as a whole. That is why we held meetings across the country last fall with seniors groups, social groups and pension industry experts on the proposed seniors benefit.

From Halifax to Vancouver we listened carefully to the concerns and views that Canadians expressed on this very important matter. We have taken the time to consult with seniors and other interested parties on the 1996 proposal.

We believe the government has a responsibility to ensure that it is fully aware of Canadian concerns and views about the public pension system and the retirement income system. That is what we have done. Now we are reviewing the proposal based on what we have heard. That is why an announcement has been delayed. We are making every effort to ensure that the concerns of Canadians are reflected in our proposed policy on the public pension system.

[Bank Act, May 13th, 1998]

Madam Speaker, I will begin by making it clear that the government fully supports the principles of community investment.

We are also committed to ensuring proper accountability and transparency of the banks' small business lending activities. We will continue to challenge the banks to do a good job of meeting the needs and in particular the credit needs of consumers and small businesses across Canada.

It is also important to note that the Task Force on the Future of the Canadian Financial Services Sector is examining the responsiveness of financial institutions to community needs as part of its work. Consequently we believe that it is appropriate to wait for the task force views before deciding whether any further action is required.

The issue of community reinvestment involves a number of important considerations. At the end of the day the task force will need to assess whether there is a need for a more focused approach to community investment by the banks. There may be a number of models that would have to be carefully considered. The government's primary task, should it decide to move forward on this matter, is to ensure that the model chosen will accomplish specific policy objectives in an efficient manner.

Bill C-289 represents one approach to community reinvestment. While the bill's provisions are intended to promote equity in community investment, it contains some elements that could have unintended negative impacts.

Bill C-289 appears to be loosely modelled on the American community reinvestment act, legislation that was implemented in the U.S. in response to a unique credit discrimination problem. This type of credit discrimination does not exist in our banking system.

It is important to recognize that the CRA was introduced in the U.S. during the 1970s to discourage financial institutions from red lining inner city areas, that is, taking deposits from the entire service area but not lending in certain neighbourhoods. This practice is believed to be the primary factor underlying the transformation of many U.S. inner cities into urban ghettos.

While the CRA has been useful in raising U.S. lenders' awareness of their lending patterns, it remains unclear whether its benefits, primarily social, outweigh the regulatory costs. This legislation has been criticized for imposing cumbersome and expensive data reporting and record keeping requirements on both the government and regulated institutions.

Bill C-289 will require Stats Canada to produce estimates of monthly unemployment rates for each federal riding. Statistics Canada has estimated the initial implementation cost would be $15 million. The ongoing annual cost of the monthly labour force survey would mushroom to $40 million, triple the current cost. We would want to explore whether there may be a more cost efficient method of designating disadvantaged communities and establishing stress measurements.

Under the provisions of the bill, branches of schedule I banks located in designated disadvantaged federal ridings would be required to produce detailed lending statistics for those specific areas. Disadvantaged ridings would be defined on the basis of the unemployment rate within the riding. However the proposed criteria that would be used to assess whether a riding is disadvantaged is problematic.

Any federal riding having an unemployment rate equal to or higher than the national average unemployment rate would be designated as disadvantaged. Furthermore a riding's monthly unemployment rate need only equal or exceed the national rate once during the preceding year to be designated as disadvantaged. Such a loose definition goes far beyond capturing those ridings with chronic unemployment problems.

Moreover there is a problem with the definition of community in general. Imposing artificial limits on bank lending based on the geographic source of deposits presupposes that the market is not working efficiently. In considering any potential community investment initiatives, the government would want to be assured that the model being examined would not lead to inefficient allocation of capital.

A further area of concern with Bill C-289 is the requirement for banks to generate detailed lending statistics at the federal riding level. This could impact negatively on privacy protection for bank customers.

During its hearings with the banks on small business financing, the House industry committee explored the concept of requiring a much more detailed breakdown of lending statistics. In fact the committee looked at seeing whether we could get the breakdown by postal code or community. In the end it was determined that the aggregating of lending statistics to this extent would potentially result in the breach of client privacy.

I want to re-emphasize the government's commitment to community investment despite the criticisms I have put forward here. Today the government is taking action to promote community investment. The regional development agencies and other government programs continue to play a big role in financing community needs across Canada. We are also sustaining efforts to aggressively encourage the banks to meet legitimate small and medium size businesses' financing needs in all regions of Canada.

The government is nevertheless sensitive to the fact that many rural communities have experienced difficulties in accessing not only credit but banking services in general. Let us be clear. The banking landscape has changed dramatically in recent years. The banks must take steps to ensure that rural and remote communities have sufficient access to banking services.

The government is also keeping a watchful eye on the banks' lending activities and carefully reviews their lending data in order to assess progress in meeting the financing needs of small business. Regular House industry committee hearings with the banks provide a good opportunity to question the banks on statistics which may reveal problem areas with respect to access to capital. While it is recognized that credit decisions are highly subjective and involve potential considerations, the data reporting requirements of the banks provide an effective check on the banks with respect to their efforts to support community development.

Much of the debate on community reinvestment has focused on the increasing availability of microcredit to small business. I would note that there are a number of federal and provincial microcredit initiatives run by a variety of community organizations right across the country.

In general these programs offer financial assistance as well as training, mentoring and counselling services. These programs serve not only small business operators but also target youth, aboriginal peoples, women and non-urban rural communities. The government considers these microcredit programs to be of vital importance in promoting community development at the grassroots level and will continue to support and promote microcredit lending.

In summary, while the government supports the principle of community investment, Bill C-289 may not be in fact the best approach. Furthermore, we believe that it would be premature to take any action in this area before the task force submits its views to the government this fall. For this and the other reasons I have outlined in my discussion today, I believe that it would be incumbent upon the House to reject Bill C-289.

I also want to say that the hon. member, I am sure, is quite sincere in putting forward the bill and does believe in what he is doing. I merely want to point out a number of deficiencies that I see in this particular bill.

In fact the reason we set up the task force was to look at the changing financial institutions and the changing financial sector. I do believe that waiting for that report would be the most effective way of dealing with the change that is going on.

In the end we all want to ensure that Canadians in urban Canada and rural Canada, Canadians who are involved in small businesses and Canadians who deal in microcredit are all properly served by the financial institutions in this country.

I certainly applaud the work of the industry committee and certainly the work of all members. The outcome is the benefit that can be achieved by ensuring that small business and Canadians in general do have the proper access to capital and do receive the necessary banking services they require so that they can continue to contribute in a very real and effective manner to the growth of this country and its economy.

[Budget Implementation Act, 1998, May 13th, 1998]

Madam Speaker, let me start off by saying that the 1998 budget set up the arm's length foundation to manage the millennium scholarship fund. It is intended to increase access to post-secondary education for deserving students from lower income families. It is a priority that has support right across Canada. It has been discussed at the first ministers meeting and in other fora. Federal and provincial officials have been working together co-operatively to address the issue of student financing for post-secondary education.

The foundation has been mandated to undertake an extensive consultation with the various stakeholders, which would include the provinces, on the definition and administration of the scholarships. We heard during committee the concern that individuals have with respect to overlap and duplication. That is why the foundation has been mandated to take on those consultations.

Let us be very clear. The millennium scholarship foundation will not be a federal program. Scholarships will be distributed from a private arm's length organization which will deal directly with the students. That means the foundation and the scholarships will not be under the control of the federal government, nor will the government be able to dictate to the foundation the parameters of these scholarships or their distribution.

The scholarship fund will provide 100,000 scholarships a year to students in every province and every community, up to $3,000 per year for full time and part time students. It is about increasing access to knowledge and skills. It is the country's dividend for balancing the books. It is the recognition that Canadians from coast to coast, province to province deserve equal access to the opportunities that will secure a better future for them and their families.

I have said it in committee and I will say it again here. Something as important as this should be taken out of the hands of politicians and put into the hands of experts. That is what this millennium scholarship fund is doing. The foundation will be administering the scholarships and over time will attract private sector endowments so that it can grow and help even more young Canadians.

With respect to the motions in Group No. 1, the member for Kings—Hants talked about his amendment and the idea that private schools should be designated by provincial law as eligible for the millennium scholarship fund. Under the current legislation, universities, community colleges and CEGEPs will be eligible institutions.

The current legislation also provides the foundation with the flexibility it needs to determine the eligibility of privately funded institutions. This flexibility gives it the means to designate bona fide credible private institutions as eligible institutions. There is no intent in this legislation to exclude such institutions.

I go on to the Reform motion that would require the foundation to establish an appeal process for applicants who do not receive scholarships. I said it in committee and I will say it again. There is nothing in this legislation to prevent the foundation from establishing an appeals process.

We have to understand this is an arm's length foundation. It is completely within its purview, and the legislation allows for this flexibility, to establish an appeals process. Establishing an appeals process pursuant to regulations established by the government would undermine the arm's length nature of the foundation. We cannot have it both ways.

The Conservative Party proposed an amendment that calls for the Auditor General of Canada to be appointed as the auditor of this foundation. There is really no need for this amendment because the auditor general could be appointed as the auditor for this foundation. There is no legal obstacle to naming the auditor general. It is completely within the purview of the foundation to choose the auditor general as its auditor.

The same member from the Conservative Party calls for the Minister of Finance to remove the auditor of the foundation from office. I could not believe this amendment when I read it. The hon. member's motion gives the Minister of Finance the power to remove the auditor chosen by the foundation. This amendment compromises the arm's length nature of the foundation. It gives the minister a direct role in the removal of the auditor. That role properly belongs to the members of the foundation.

What is actually being said is on the one hand there is a call for transparency and accountability and on the other hand this amendment says if the Minister of Finance does not like the particular auditor, the minister can pull him. I do not think we can support that amendment. We are looking for independence, an arm's length relationship, accountability and transparency.

Motion No. 65 makes reference to the booking of this foundation. The auditor general came before the committee. As I have said before, the accounting issue has also been discussed by the public accounts committee. In its majority report the public accounts committee supported the government's accounting policies with respect to the booking of such non-recurring liabilities. It is certainly very clear.

The member from the Bloc spoke eloquently at the meeting. I believe that member is in agreement with me that there is disagreement within the accounting profession with respect to this issue. That means professional judgment should be exercised in such cases, which is exactly what the government is doing and what it will continue to do.

When the government announces a program and commits to funding a program, it is incumbent upon the government to pay for that program. When we came to office there were a number of unfunded liabilities on the books. There were programs that had been announced but not funded. We came to office and there was a $42 billion deficit and decisions needed to be made.

What we are saying is no more. We are saying that when a government makes an announcement and makes a commitment to a particular program, the government should pay for it. I believe Canadians will support that. Canadians want to know that when an announcement is made and a program is put in place that the money is there to pay for it, even if the program is going to begin down the road, as long as certain criteria is met.

That criteria was certainly discussed at the finance committee. What we have here is a disagreement within in the accounting profession. Professional judgment will be exercised as it has been in the past and as it will be in the future.

The other point brought forward by the hon. member from the Conservative Party was about access to information. Again the foundation is an arm's length entity and it is independent of the federal government. Let us talk about what it is required to do.

Sections 36 and 39 of the bill talk about what the foundation is required to do with the annual report. It needs to outline its investment activities. It needs to include the auditor's report. It needs to include the portfolio on the policies, the statement of outlook, and the results achieved with respect to the foundation's scholarships which are placed. Finally it is also required to hold a public meeting every year. It is required to provide ample advance notice of the public meeting so the public can attend, scrutinize, ask questions and discuss what the foundation has done over the past year. So it is not about access to information.

I should also say that the annual report which is then tabled in the House of Commons is certainly open to the auditor general to review and comment on it, as is any other document that gets tabled in the House. It is completely within the purview of the auditor general. There is transparency and there is accountability.

I will close by saying that this is not a government program. It is an arm's length foundation. The opting out option is not there because it is not a government program, it is an arm's length foundation.

[Dna Identification Act, May 11th, 1998]

Mr. Speaker, the quality of health care available to Canadians is of utmost importance to the government. We know that high quality health care is a key contributor to a healthy population.

Simply focusing on how much money is being spent on health care will not provide a real picture of how good the quality of care is and how well the health system is doing in achieving important health outcomes.

Quality health care is also about the effectiveness and appropriateness of the care, treatment and services available to Canadians as well as providing those services in the most efficient way possible.

This government recognizes the importance that evidence based decision making has for improving the quality of health care. For example, we have implemented the three year $150 million health transition fund to gather in collaboration with the provinces and territories evidence and test pilot approaches in the areas of pharmacare, home care, primary health care and integrated health services delivery.

Also the government is spending $50 million over three years to examine the development of a health information system to ensure that those in the health system have the best information they need to provide quality care to Canadians.

Finally, the 1996 budget allocated $65 million over five years for the Canadian health services research fund.

The Canada health and social transfer provides the stability and predictability by ensuring $12.5 billion annually in cash transfers and total transfer entitlements that will gradually increase from $25.3 billion in 1997-98 to $28.5 billion in the year 2002-03.