Tony Valeri

[Budget Implementation Act, 1998, March 24th, 1998]

Mr. Speaker, I could not help but notice as my hon. colleague was speaking to Bill C-36 that the members of the Bloc were squirming in their seats. One was going around actually ensuring that other individuals perhaps did not get up and ask any questions.

I want to ask the hon. member if he can describe for us what the impact this is having in the province of Quebec. The Bloc is here and purports to represent the people from Quebec. But let me ask the hon. member who is from Quebec and who so eloquently demonstrated in his speech the benefits of this budget if he could continue for a couple of minutes and speak to why this budget is receiving such support in the province of Quebec.

[Budget Implementation Act, 1998, March 24th, 1998]

Mr. Speaker, the hon. member talked about the millennium fund. It was announced in the Speech from the Throne, in the budget and it is in the legislation today. It is part of the activities for 1997-98. We made it quite clear that we pay for what we announce. We pay our bills. We tend to pay as we go.

It is not really the accounting issue which the Reform Party has a problem with. The real issue it has a problem with is that we are spending $2.5 billion to improve the lives of students. The Reform Party has a problem with putting money in the hands of those students. That is really the problem.

I will ask the hon. member more of an accounting question. The books close March 31. Adjustments are essentially made in August. At the request of the auditor general those adjustments are audited and scrutinized. Any surplus that comes over and above those adjustments goes directly to the debt, just as it has gone to the deficit year after year after year. Does the hon. member know that? She is arguing about the fact that we are not being transparent. We cannot get more transparent. If our transparency goes beyond the requirements of public accounting, so be it. I will let Canadians judge that.

[Budget Implementation Act, 1998, March 24th, 1998]

Madam Speaker, in listening to the hon. member's speech, I would ask if rural Canadians will not benefit from reduced taxes. Will the children from rural Canada not be able to attend higher universities, educational institutions, and have access to the millennium fund and the Canadian opportunities strategy in order to further their education and be able to compete?

This budget allows farmers and other self-employed business people to deduct premiums for health care. This would put them in line with other businesses. Do they not benefit from this type of initiative?

I also remind the member of the elimination of the surtax on incomes below $50,000. Does that not benefit Canadian farmers and rural Canada?

The member talks about rural Canada as though it were not a part of Canada, as though it were not benefiting from the initiatives in this budget. I want the hon. member to answer to that.

Students from rural Canada who are dealing with student debt will benefit from this budget.

I also want to mention that in my riding of Stoney Creek we have a substantial amount of grape growing and winemaking. Brock University put in place a university course for winemaking. Students in the rural part of my riding will be able to access, through the Canada millennium scholarship fund, education courses at Brock University. Do they not benefit from these types of initiatives?

Rural Canadians benefit from a balanced budget. Rural Canadians benefit from low inflation and low interest rates. The hon. member must stand in his place and admit that rural Canada will benefit from the achievements of this government. He may not agree with everything that we are doing but I cannot possibly accept the fact that he says this government has done absolutely nothing for rural Canada.

[Budget Implementation Act, 1998, March 24th, 1998]

Mr. Speaker, I would like to take a few moments to speak on behalf of the government in support of Bill C-36.

The proposed legislation contains some very important provisions that will help build a strong economy and a strong society, goals which this government has pursued since coming to office in 1993.

We have pursued these goals first and foremost by getting our fiscal house in order. The federal books will be balanced this year for the first time since 1970 and we will balance the budget next year and the year after that for the first time in almost 50 years. It will be the first time in almost 50 years that Canadians will see three consecutive balanced budgets.

Our commitment to fiscal responsibility, to putting an end to credit card government, does not end there. We will reduce Canada's debt burden through a two-front strategy of stronger economic growth and a concrete debt repayment plan.

What we will do is take the same approach to the debt that we have successfully used against the deficit since 1993. We took the deficit down step by step. The same incremental approach will, year by year, steadily reduce the debt burden.

We intend to keep the debt to GDP ratio on a permanent downward slide using a two-track strategy, a strategy of supporting economic growth and reducing the actual level of the debt.

This means that we will continue to present fiscal plans based on prudent economic planning assumptions. Let me say that most budgets fail because they are based on overly optimistic assumptions. The consequence is severe. It is lost credibility.

In addition to prudent planning assumptions we will continue to build our plans on a substantial contingency reserve of $3 billion a year. This is designed to handle unexpected events and to provide greater certainty that we will meet our balanced budget targets.

However, if the contingency reserve is not needed, and in fact it has not been needed in each of the past three years, it will go directly to paying down the overall stock of debt.

Where do we expect this prudent approach to budget planning to take us?

We project that by 1999-2000 the debt to GDP ratio, by our comprehensive Canadian measurements, will have fallen almost 10 percentage points from its peak of almost 72% of GDP in 1995-96. If we use the measurement which most other countries use, that being the debt held by the public, Canadians' market debt to GDP ratio will fall from a peak of almost 59% in 1995-96 to 48.5% by the year 1999-2000.

In fact the Organization for Economic Co-operation and Development is forecasting that between 1997 and 1999 Canada will have the largest decline in debt burden among the G-7 countries.

While we must ensure the continuing decline of the debt, we also recognize that the tax burden on Canadians is too high and has to be reduced. That is why we have introduced targeted tax relief measures in each of our previous budgets. For now these measures are modest because the so-called fiscal dividend that makes them possible is still modest. But even so, 90% of all taxpayers will get some degree of personal income tax relief from our recent budget.

Some 400,000 low income Canadians will be taken off the tax rolls entirely. As our financial resources permit we will broaden tax relief in future budgets.

Of course, some would argue that the dividends should go only to reducing debt and cutting taxes. In my view this would be shortsighted and, quite frankly, bad economics. We recognize that the private sector is the engine of job creation, but government too has a responsibility to provide leadership in the economy.

To meet that responsibility we are putting the fiscal dividend to work by increasing our investments in access to education, in skills development, in low income families with children and in health care.

For example, in last month's budget we unveiled the Canadian opportunities strategy. It is a co-ordinated set of measures to provide Canadians with enhanced access to knowledge, knowledge and skills for jobs that can deliver a better standard of living for the 21st century.

In fact, Bill C-36 implements some very important elements of this strategy. For example, it establishes the Canadian millennium scholarship foundation. This arm's length foundation with an initial endowment of $2.5 billion will award more than 100,000 scholarships each year over 10 years to full and part time students across Canada.

Scholarships will increase access to post-secondary education for low and middle income Canadians to prepare them for the jobs and knowledge based economy of the 21st century.

As the minister of finance said in the 1998 budget speech, “This investment in the future of our country is the result of our successful battle against the deficit. It is an investment that will pay for itself over and over again in the years ahead”.

The Canada millennium scholarships are, in effect, the largest single investment ever made by a federal government to support access to post-secondary education for all Canadians. They will be awarded to individuals who need help financing their studies and who demonstrate merit. For full time student scholarships will average $3,000 a year. Individuals will be able to receive up to $15,000 over a maximum of four academic years of undergraduate study.

What this means is that a student receiving a $3,000 scholarship for four years will in fact see his or her student debt load cut by $12,000, about half of what it otherwise could have been.

These scholarships are not just for young Canadians at university. Canadians of all ages studying full or part time in publicly funded universities, community colleges, vocational and technical institutes, and cégeps will be eligible. Awards will help recipients to study away from home, particularly outside their home province. They will also support limited terms of studies in other countries.

Student debt has become a heavy burden for many Canadians. In 1990 a graduate completing four years of post-secondary education faced an average student debt load of about $13,000. By next year the same graduate's average debt will almost double to $25,000. At the beginning of this decade less than 8% of student borrowers had debts larger than $15,000; now almost 40% do.

Last December federal and provincial first ministers agreed that something must be done to reduce the financial burden on students. They asked the federal government to take action in the 1998 budget and we have. Bill C-36 will put in place a number of provisions that will help individuals manage their student debt loads.

First, we are increasing the income threshold used to qualify for interest relief on Canada student loans by 9%. What that means is that more graduates will be eligible for interest relief.

Second, we are introducing graduated interest relief which will extend assistance to more graduates further up the income scale.

Third, for individuals who have used 30 months of interest relief, we will ask the lending institutions to extend the loan repayment period to 15 years.

Fourth, if after extending the repayment period to 15 years a borrower remains in financial difficulty, there will be an extended interest relief period.

Finally, for the minority of graduates who still remain in financial difficulties after taking advantage of these relief measures, we will reduce their student loan principal by as much as half.

Together these new interest relief measures will help up to 100,000 more borrowers. Over 12,000 borrowers a year will benefit from the debt reduction when this measure is fully phased in.

Any long range plan to acquire knowledge and skills for the 21st century must look ahead to the students of tomorrow. The best way to help to ensure children's futures is to save for education today. We want to establish a new partnership to help parents save for their children's future.

Bill C-36 introduces the Canada education savings grant. What it does is it makes registered education savings plans even more attractive.

Beginning January 1, 1998 we will provide a grant of 20% on the first $2,000 in annual RESP contributions for children up to age 18. That is $400 of grant money per child that would go directly into an RESP program. With the introduction of this new grant, RESPs will now be among the most attractive savings vehicles available to Canadians for their children's education.

Bill C-36 also contains measures for the Canadian opportunities strategy to help address the urgent problem of youth unemployment. In this bill we propose to provide employers with an employment insurance premium holiday for hiring additional young Canadians. Canadian employers who hire young Canadians between the ages of 18 and 24 in 1999 and 2000 will be allowed to take advantage of a premium holiday in employment insurance. This will increase employment opportunities for youth and reduce payroll costs for employers by about $100 million over the next two years.

While the role of education is very important in ensuring equality of opportunity, the capacity to learn does not begin in school. It begins at home and depends on the nurturing and caring provided to the smallest infant.

That is why over the past year federal, provincial and territorial governments have begun to build a national child benefit system that will help fight child poverty so as to provide a good start in life for all Canadians. To build the system the 1997 federal budget allocated $850 million to create an enriched and simplified Canada child tax benefit. Bill C-36 implements this commitment.

The new benefit commences in July and provides $1,625 for the first child and $1,425 for all other children to all families with incomes up to $21,000. In the future legislation will be brought forward to implement the commitment in the 1998 budget to further enrich the child tax benefit by an additional $850 million. The federal government will announce details of this enrichment after discussions with provincial and territorial partners and Canadians.

The Canadian opportunities strategy and the child tax benefit provide diverse and comprehensive assistance to Canadians. These initiatives will help Canadians acquire the knowledge and skills they need for better jobs and a better life in the 21st century. By expanding access to opportunity we are building a stronger economy and a more secure society. I urge all members in this House to support Bill C-36 in moving us forward to implement key elements of our strategy.

[Income Tax Amendments Act, 1997, March 23rd, 1998]

Madam Speaker, I would just like to respond to this motion and restate this government remains firmly committed to the Canada Health Act.

Bill C-28 strengthens the federal government's ability to enforce the Canada Health Act. This legislation guarantees that the cash portion of the Canada health and social transfer will never fall below $12.5 billion in each and every year over the next five years. That is an increase of $1.5 billion over the previous cash floor of $11 billion.

In other words, the bill before the House means there will be more cash to uphold the principles of the Canada Health Act. It responds directly to the recommendations by the national forum on health that CHST cash be set at $12.5 billion to sustain the principles of the Canada Health Act.

The member's motion recommends yet another annual report to examine the adequacy of the CHST cash and upholding the CHA. I would like to remind her that the Minister of Health is already required under the Canada Health Act to table an annual report on the administration of the act and provincial compliance with its conditions.

Quite frankly I think the last thing Canadians need is another report. Canadians asked us to take action and we have. We have taken real concrete action. Bill C-28 ensures that there is more cash to uphold the principles of this act, $1.5 billion each and every year. The first thing this government did was put back $1.5 billion as the fiscal environment changed, and we are well on our way as the Minister of Finance said back in February. We will continue to balance the books, we will continue to invest in Canadian priorities and we will continue to uphold the Canada Health Act.

I want to assure the hon. member that I certainly look forward to her interventions to help us ensure that Canadians receive the kind of health care they want within the fiscal means we have set and the conditions we have set forward. I am sure Canadians all across this country will continue to support this government as we continue to provide for them as we move into the next century.

[Income Tax Amendments Act, 1997, March 23rd, 1998]

Madam Speaker, I would like to essentially clarify a number of things that were said this afternoon.

Let me start by saying that the motion would remove a clause that clarifies the rule on the deemed residence of foreign incorporated shipping companies. It has nothing to do with tax policy, shipping policy or any other policy. It has everything to do with political rhetoric, nothing more than that.

Let me go back and talk a bit about the clause itself. To look at the clause we have to go back over 70 years. In the 1920s Canada decided that non-resident shipping companies should not pay Canadian tax on their income from international shipping as long as companies' home countries gave Canadians the same treatment. The reciprocal agreement greatly simplified a complex double tax problem.

Around 1990 some foreign shippers, especially in Asia, wanted to open offices in Canada that would create jobs and economic activity. If we look at Vancouver, that was exactly the impact this policy had.

These foreign shippers were concerned that the 1920s tax rule was not clear enough. To benefit from the rule a foreign shipper had to be a non-resident.

The Asian companies were concerned that if they opened Canadian offices they would fall under this definition and be found to be resident in Canada. They would not benefit from the rule and would be subject to tax on all their international shipping income.

Therefore shippers along with a British Columbia government agency called International Marine Centre Vancouver persuaded the government of the time in 1991 to clarify the rule in the Income Tax Act.

The clarifying rule was enacted in 1991. It gives foreign shipping companies the assurances that they are not resident in Canada provided their principal business is international shipping and that is where substantially all their revenue comes from.

When the rule says international shipping, it specifically excludes Great Lakes and St. Lawrence shipping between Canada and the United States.

In 1994 IMC Vancouver suggested some fine tuning of the 1991 rule. In April 1995 the government responded by announcing the technical change that is now in this clause.

The change says that in counting a foreign shipper's revenue and in deciding what its business is, we can look through to the revenue and business of its wholly owned subsidiary. Why? The shipping companies are organized in different ways. It would hardly be fair to treat foreign shippers differently, depending on whether they hold their ships directly or in a subsidiary.

The clause that we are debating is not new policy. It goes back to 1920. It is not even a new rule. The rule was enacted in 1991. It is just a minor improvement of an existing provision, the sort of improvement that makes the tax system work better.

We heard a lot about that, but for several weeks allegations have been made in this House and repeated both in this House and elsewhere about the origins and the effects of this clause.

In the beginning, it was stated categorically by certain opposition members that this clause would help Canadian companies beat what are known as the foreign accrual property income or FAPI rules. That was complete nonsense.

It was not enough to be wrong once. These members, in effect, accuse the Minister of Finance of being in a conflict of interest. That, too, was utterly discredited. The fact is that the minister was kept entirely apart from this issue at all times.

The original inquiry from IMC, Vancouver and all subsequent discussions along with the decisions made on this issue were made and handled by the secretary of state. Then the allegations shifted.

We are told by these members that the minister could somehow benefit from this technical amendment. Exactly how was never explained. Why? He cannot benefit. The allegations persisted even after it was made amply clear that this clause, indeed, the whole policy that has been in place since 1920 has to do with foreign incorporated companies, not Canadian companies.

Now we get this motion. I might be a little emotional about this because I had the unfortunate experience of having to sit in this House all afternoon and listen to this political rhetoric that had absolutely nothing to do with what was before us.

Therefore, having totally misunderstood the amendment, having failed to show the slightest impropriety on the part of the government, having ignored all the information it has been given, the Bloc Quebecois wants to remove the clause from the bill.

This is not policy. It is politics. It is an attempt to discredit a respected minister with innuendo by repeating unfounded charges in the hope that they could cast him in a bad light. It is an attempt to taint with suspicion a man of honour who happened to have a successful business career before entering public life.

Let us be clear. The hon. member for Medicine Hat sits there and ridicules. I had to sit here and listen to his rhetoric. He cannot stand the facts. He has to sit there and ridicule. Let us be clear. The Minister of Finance has always exceeded the requirements for disclosure for members of Parliament and cabinet in 1998 and 1993. When he became a member of cabinet he voluntarily disclosed all his business assets, his personal holdings and registered them with the Clerk of the House. They are available to the public, including the media and members of the opposition. That is not a requirement of a member of Parliament.

The ethics counsellor has totally rejected, unequivocally, the Bloc's claims entirely. I will say this ever so slowly because this is what I have had to listen to all afternoon. He said no conflict of interest exists and therefore no appearance of conflict exists.

The member for Drummond said today that the ethics commissioner actually said this clause should be put in the annex of a bill. He never said that. I do not know where they get this information. He said there is no conflict of interest and therefore no appearance of conflict of interest exists.

It was quite a sad day today to sit here and listen to these people in opposition go on and on attacking a member of this House, attacking the finance minister who is very well respected in this country, who did more for this country and whose family did quite a bit for this country. I tried to remain calm. I am a little excited now but I think for a very good cause.

If there was ever any doubt that the opposition party charges are about politics at its worst, that was clearly demonstrated by the member for Battlefords—Lloydminster who told the Ottawa Sun when asked if he thought the minister behaved unethically, and I quote because I think this really puts it in context: “Personally I don't believe so. I think Mr. Martin is a man of integrity. I really do”. Those are not my words. Those are the words of a member of the opposition.

I only hope that the members opposite would listen to that member so they understand in effect that what these members in the House today did was essentially to go on a political witch hunt after this minister for their political gain. I do not believe for one second that there is a Canadian who believes the Minister of Finance has nothing but the best interests of Canadians in mind first and foremost. He has demonstrated it since 1988, since he was elected to this House. He will continue to do so.

I hope we will see this clause defeated. I also hope these members at some point throughout this mandate will stand up and apologize for the kind of behaviour we saw today in this House.

[Income Tax Amendments Act, 1997, March 23rd, 1998]

Mr. Speaker, I am having great difficulty sitting here listening to this member talk about a member of the House going outside the bounds and casting a light of—

[Income Tax Amendments Act, 1997, March 23rd, 1998]

Mr. Speaker, I rise on a point of order. I am listening to this debate. While I am sure there is an amount of respect for each and every member of Parliament, I completely and very strenuously object to the fact that this hon. member is standing in her place and essentially saying that members of Parliament in this House, our Minister of Finance in particular, are crooks.

[Income Tax Amendments Act, 1997, March 23rd, 1998]

Madam Speaker, as I sat here and listened to the intervention from the member for Medicine Hat, I could not help but come up with a one-word description and that is hypocrisy.

I cannot believe he actually stood up and talked about the fact that he wanted to now support infrastructure at the local level when it was the Reform Party that stood up in this House day after day saying the federal government should not put forward an infrastructure program for the municipalities that was partnered by the federal level, the provincial level and the local level. Those projects that took place at the local level took place because the local municipalities provided input and direction as to where the money should flow, bottom up.

As he stood there I was amazed that he actually had the nerve to talk about the bill doing nothing more than providing tax increases. What about the $1.5 billion increase in transfer payment going to health, going to a different level of government? What they do not understand is that if you remove something it is a decrease. If you put something back it is in fact an increase in the eyes of those who are receiving it.

Then he goes on to talk about tax increases and that is what this is all about. Then he made reference to the Canada pension plan. I think he only once had a point to make with respect to the motion. Other than that he talked about the broader issue. He brought up CPP so I thought it would be important to comment on that. And he made reference to the fact that CPP was a tax increase.

Once again I just want to be perfectly clear, and I will speak slowly so the member can understand, that a tax increase occurs when in effect revenues flow to the consolidated account, to government revenue. CPP premiums flow to a separate CPP fund and that fund will be managed to provide rates of return in the best interests of Canadians.

I know they have great difficulty understanding that. Let us talk about another, what they often refer to as a payroll tax, the employment insurance premiums. Let us talk about the $7 billion reduction which has taken place since we came into office.

There are a number of points I find quite surprising that the hon. member would make and then go on to defend in this motion and this intervention. Let us talk about the motion for one moment.

We now have Reformers saying they want the municipalities to compete with the private sector. That is essentially what they are saying. They are saying let us take taxes that are collected by the municipality, collected in the form of property taxes, and set up a corporation which will compete with other private sector organizations. Now they want municipalities to compete in private business. They stand up here and argue that they are the big defenders of businesses. Now they want municipalities to actually go out and compete with those corporations.

What in fact the government is doing with Bill C-28 is ensuring there is a level of service provided to local taxpayers by municipalities while at the same time allowing those taxpayers in the municipality to engage in activities outside their specific municipalities while at the same time ensuring that private business is allowed to compete on a level playing field.

The 10% factor came into play. If 10% of a municipality's income is derived from activities outside its jurisdiction, it remains tax exempt. If its income is derived by more than 10% outside its jurisdiction, the municipality loses the tax exempt status.

I can give an example of where one municipality is providing hydro to another municipality through an intergovernmental agreement. The municipality providing the hydro will still remain tax exempt. We are saying in an activity where a municipality is deriving income greater than 10% perhaps as a result of these intergovernmental activities it should not lose that tax exempt status because it is still providing a service to municipalities.

We can talk about areas where the government did receive interventions along those lines and I point to the examples of Edmonton and Calgary where those municipalities came forward and provided that scenario. The government responded by allowing them to maintain that tax exempt status.

The Department of Finance has received a number of interventions. One of the amendments passed in committee of which the hon. member is a member was to provide for a deferral of one year from 1998 to 1999 of the application of the proposed amendments to tax treatments of municipal corporations. This will allow for a detailed review of all the comments and recommendations forwarded to the government's attention on this issue.

The government's intent is not, as the opposition party attempted to paint, to tax another level of government. What is intended is to provide a fair and equitable way for municipalities to maintain their tax exempt status while providing services to their local municipality and their local residents while at the same time ensuring that private businesses and Canadians who are involved in businesses are able to compete on a fair and equitable basis.

The Reform Party puts forward this motion that would allow a municipality to enter any jurisdiction and compete by setting up a corporation with taxpayer dollars collected through property taxes and compete with other private sector organizations. It is absolutely incredible that it would make that type of recommendation.

We are not competing with the private sector. The role of the private sector is very clear. Businesses should be allowed to compete among themselves and should not use taxpayer dollars in the form of local municipal corporations, as the Reform Party is suggesting, to compete with. It is absolutely incredible the Reform Party would actually say that.

On a more technical note, the motion is deficient in that while it intends to remove the 10% income test in paragraph 149.1(d)(5), it leaves in that paragraph the reference to subsection 1.2 which becomes meaningless in the absence of the 10% income test. The actual motion presented to this House does not reflect what I believe the Reform Party was intending to do to begin with.

The motion as it is presently put forward is flawed. The basis on which the hon. member makes the argument that this government is intending to tax another level of government by putting forward this motion is completely false. Reformers go on to argue that the purpose of this federal government is to put in place tax increases to Canadians, which is completely incorrect.

The budget provided targeted tax relief and reinvestment not only in transfers to the provinces but directly to Canadian students in allowing them to access education and compete in the global economy.

The bill is providing a framework for municipalities to provide services to their local communities in an effective, tax exempt manner. When those municipalities decide they want to derive more than 10% of their income from their activities outside their local jurisdiction they will be treated just like any private business and they will be taxed.

Put in that context to any councillor at the local level it would be a surprise if they stood in opposition to this. The government has already taken measures to respond to continued interventions and we will do so over the next coming year.

[The Budget, March 10th, 1998]

Mr. Speaker, I thank the hon. member for his hard work on the finance committee as well as for his work in his constituency on prebudget consultations. He certainly had a dramatic impact on the budget. He is very learned in terms of tax issues.

Would the hon. member draw upon his tax experience and comment on the tax system in general? Would he also provide some input on what he has heard from his constituents with respect to the opportunities program that was put in place by the budget? That program will be essentially for families, on which the hon. member continues to focus.

The hon. member for Mississauga South has consistently been a strong promoter of families. He has done a fair amount of work in that area and continues to do so. He has spoken with me on the issue, as well as with other members of our caucus.

Could the member tell us what he heard from his constituents after the budget was presented? I am sure he has talked to a number of people. I would be very pleased to hear what his constituents had to say.