Ronald J. Duhamel

[Grants And Loans, June 3rd, 1996]

Mr. Speaker, I am deeply troubled by the news that the Quebec government has decided to limit access to grants and loans for Quebec students wishing to continue their education outside the province.

These students will no longer have access to grants and loans, unless they meet extremely strict conditions. This measure will not save the government a lot of money.

But it is symptomatic of the narrowness of vision and mean-spiritedness of the separatist movement. Is this the kind of society that the Bloc Quebecois and the Parti Quebecois will want to build, one based on closing doors and building walls by limiting the opportunities of young people to broaden their horizons?

What a vision, what an obsctacle to our young people's development.

[Amendment To The Constitution Of Canada, May 31st, 1996]

Mr. Speaker, I thank the hon. member for his questions. It seems to me I clearly indicated that there were a number of alternatives, such as a reference to the courts to determine whether the agreement already reached meets the conditions of Term 17, or an amendment that would meet the needs of all those involved, or bring in changes, as was done before, and use the amendment later on, if necessary.

These are at least three options. As for francophones in Newfoundland and the fact that they do not manage their own schools, I do not know. It must be recognized that progress can sometimes be very slow in some provinces. However, I do hope that the new premier, who made a commitment and who showed some openness, will be able to remedy the situation. I say this in all sincerity, and I applaud the efforts of Newfoundlanders in this regard. I am prepared, along with my French speaking colleagues, to try to help them.

With regard to the comment made about Ontario, this is what I have been told. That comment was from a public school trustee who thought some savings could be made by somehow merging or restricting the powers or the authority of catholic schools or school boards.

Let us not get carried away. I do not believe that, if the amendment is adopted, minority rights will completely changed, whether in the education sector or in any other one. I suggest that a lot of questions will be raised. Debates will take place and they will not necessarily promote unity, whether at the community, provincial or national level.

[Amendment To The Constitution Of Canada, May 31st, 1996]

Mr. Speaker, it is with a certain sadness that I rise on this motion we are discussing and on which we will have to vote very shortly. It seems to me we are dealing with and debating a fundamental issue.

We are changing the constitutional rights acquired by minorities in exchange of their promise to join Canada-so it was an exchange-without their consent.

Changing the rights of minorities without their consent, particularly when they were given to Newfoundlanders in exchange and as part of the package for joining Canada and especially since they were broadened in 1987, is something I take very seriously and needs to be thought about very carefully. That is my principal and major concern in this debate.

There are other aspects that puzzle me and that I must absolutely talk about. There were other alternatives, other options.

What were those other options or alternatives? I guess it would have been a bold stroke of leadership to have come forward with an amendment which would have responded to the rights, hopes, dreams and aspirations of all of the key stakeholders. That is what I would have preferred. Then it would have gone through the House, probably unanimously.

There was another one. Why not proceed with the implementation of the changes that were supposedly required now? Some of them are happening today. Senior administrators have received notices that they will no longer be working as of August 31. Obviously, some movement is occurring. Later on, if it had been necessary to bring forward the amendment, it could have been used then.

I am told from very reliable sources, including both government and others who oppose, that an agreement has been reached, at least in principle-and one could quibble about that-on the number of school boards there would be, on funding of capital expenditures, on the viability of schools, busing and a construction board. Those are major issues that had been discussed and, at least, agreement in principle had been reached.

Why could this agreement not have been turned over to the court of appeal of the province or the Supreme Court of Canada in order to see whether it is consistent with Term 17? That would have been another alternative, besides the other two I have mentioned.

Some people maintain there will be no effects on education elsewhere or on minority rights in other areas. If we look at this issue from the legal viewpoint, they are absolutely right. We do not even need to debate the issue. But will links be made? Of course.

Already, Newfoundland francophones are asking the following question: "Why is there no concern for our rights to manage our own system at this time when we are discussing the rights of other minorities?" This is a question that has been asked before. I am told there will be no impact, legally speaking. There will be no legal impact. It will not change everything overnight, but there will, of course, be an impact.

The Federation of Newfoundland Indians said this: "What about our rights that have not yet been recognized? Why not recognize them now?" Some public school commissioners were quoted in Ontario newspapers as saying that something like this proposed amendment was needed in Ontario.

You are totally right in saying there will be no legal impact. I fully agree with you. However, it is not quite the case when we look at the links that will be established.

There has been some significant discussion with respect to lobbying. The Roman Catholics and the Pentecostal people performed all kinds of lobbying. I commend them. However, there was lobbying on the other side. In fact, I had more lobbying from the government side than I did from the other side which supposedly was doing a lot more than the government. Of course the resource base was not at all equal.

Let us put that aside very quickly. I do not know if I was a fortunate MP who got more attention from government than others, but I have to tell the House that there was lobbying from both sides.

Much has been said about the academic achievement of Newfoundlanders. Some people have suggested that because the system is as it is, the achievement is not what it ought to be. Listen to what the department of education of Newfoundland and Labrador had to say: "The general level of education among all age groups in Newfoundland has risen dramatically since the mid-1970s to where the gap with the rest of Canada has all but closed". Does that suggest a large gap? Hardly.

The former minister of education said: "The gap in higher education between our province and the rest of Canada is becoming a myth-Our university participation rates are higher than the national average. If the present trend continues, Newfoundland and Labrador will soon have educational levels equal to the rest of the country".

I could have found another half dozen to a dozen quotes from the department of education, bureaucrats and elected officials but I chose those two just to make the point. Let us not exaggerate that situation.

The other point that needs to be mentioned is that the government is the one that has complete authority on curriculum, text materials, numbers of teachers, funding, teacher education and performance standards. The government has the responsibility now. If there is poor performance who are we going to blame? Of course I have shown that there is not necessarily poor performance.

Some people have spoken about the referendum as an ideal, a model mechanism. Referendums can be useful but they can also be extremely dysfunctional. This referendum by the way was held on September 5. It was preceded by the summer months which is not a great time for substantive debate on an important question.

I wonder who had more resources at their disposal in order to make the point. Let me share with the House the question. This is what the people of Newfoundland were asked to vote on: "Do you support Term 17 in the manner proposed by the government to enable reform of the denominational educational system?"

With a question like that one could expect to get 50 per cent even with no debate. Ask the question in any province or territory: "Do you support reform of education?" Ask parents whether or not they support reform. Yet the turnout was 52 per cent and 54 per cent in favour of such a question.

Was that an appropriate tool to use to legitimize what the government wanted? Frankly, I would have preferred no referendum. Now in a sense we have a benchmark. Again, it has no legal basis but do we really believe that someone is not going to try to use this to advance a political agenda? It has already been done.

It was done in the House of Commons here in Ottawa not too long ago, and it will happen again.

Let me share just a couple of points very quickly. I contend that schools are at the mercy of provincial legislation. I want to quote a bit of the legislation. It reads: "Subject to provincial legislation that is uniformly applicable to all schools specifying conditions for the establishment or continued operation of schools". This is subject to provincial legislation so the constitutional right has been lost. Someone could be premier today, later another premier and it is subject to that provincial legislation.

Further it states in part: "and to direct the teaching of aspects of curriculum affecting religious beliefs". The idea was to ensure that those groups that were affected would still have something to say. To direct is not to determine. It does not give a policy decision making capability. It limits involvement.

Why could we not at this time bring forward an amendment to the amendment that would respond to those legitimate concerns which would respond to other concerns that have been voiced that are legitimate, that really strike at the heart of the concerns which have been expressed here.

I know that I have but a few seconds left, and I want to finish on this note. It seems to me that we need to hear more about this issue. As I said before there are other alternatives: a reference to the courts, an amendment that would respond to the needs of all people or proceeding with the changes and then coming with the amendment. That would prevent us from having to address this whole issue of a changing of constitutionally acquired rights of minorities given to them as part of a package to join Canada. If we can find a rationale in this situation, why can we not find one in another situation that is convenient to us in the future?

I could have said much more on this whole matter, but I would simply like to say, in closing, that if this amendment is passed, I think Canada will survive. On the other hand, I am convinced reference will be made to how a referendum was used in this situation. I am also convinced that some people will make other attempts to erode the rights of minorities in other areas.

[Petitions, May 31st, 1996]

Mr. Speaker, these petitioners want the Government of Canada to refuse to accept the amendment to the Constitution being proposed by the Government of Newfoundland and Labrador. They believe it is changing the rights of minorities without their consent. They feel that if an amendment is needed it should be brought forward as one that has the support of all of the key stakeholders.

They propose the changes should be tried to the educational system and then and only then if an amendment is required in order to make them go forward that should happen. They also point out there could be an impact in other sectors.

[Francophone Communities, May 31st, 1996]

Mr. Speaker, some time ago, the government announced its intention to withdraw from the area of manpower training and to transfer that responsibility to the provinces.

Right now, several francophone communities have access to training programs in French. It is a right that is essential to the development of the language as well as the community. I think it is imperative that the government fulfil its obligations under the Official Languages Act when it enters into negotiations with the provinces.

We have a responsibility toward these communities not only to maintain training services in the minority language but also to improve these services where necessary. I am pleased to see that the government has made such a commitment.

[Income Tax Budget Amendment Act, May 27th, 1996]

Mr. Speaker, my colleague's question is an appropriate and important one.

It was roughly a year ago that the Minister of Finance indicated we needed to review this whole area and to close some of the loopholes. Decisions have been made to do exactly that. As a result of a recent event where large sums of money were taken out of the country without, according to some individuals, appropriate levels of taxation or no taxation, there will be continued work done in that

area. Further loopholes will be closed. In fact this mandate has been given to the finance committee of which I am a member.

I agree that the matter often comes up at election time. I emphasize it is something that is not always well understood. I am told by very highly respected people that they can have some benefits but clearly they should not give advantages to people who have large sums of money to escape a fair rate of taxation. They too must contribute to the well-being of this nation.

Our objective at the end of this exercise is to make sure that all people who earn income are taxed in a fair and equitable way and that they make legitimate, reasonable, sensible and meaningful contributions to the welfare of this nation and to its people.

[Income Tax Budget Amendment Act, May 27th, 1996]

Mr. Speaker, I will be splitting my time with my colleague from Algoma.

My colleague from the Reform Party who made some negative remarks about the government's $6 billion infrastructure program forgets the almost 100,000 jobs that were created. He forgets the large majority of municipal officials throughout Canada would love to have that program continue. He forgets business people who are aware of it would also like to have it continue.

I find it rather strange that all of these people want it and the Reform Party does not. It says something about being out of touch. If one wants to talk about being out of touch, I assure the House it is not this government. Reform has not been popular. It was not popular at election time and has been even less popular since then. It has been dismembering itself member by member.

I am pleased to have the opportunity to address the House on Bill C-36, the income tax amendment act. I assure the House it is not tinkering. As the House is aware, these amendments implement certain measures announced in the budgets of February 27, 1995 and March 6, 1996 as well as Income Tax Act and Excise Tax Act amendments released on August 9, 1995 concerning the government's business under a number of programs.

The bill is very technical in nature and since there are those better qualified to address the technical aspects I take this opportunity to summarize points addressed by the bill. It talks about retirement savings. It reduces the limits on contributions to registered retirement savings plans, registered pension plans and deferred profit sharing plans and it reduces the allowance for RRSP over contributions.

[Translation]

On fiscal periods, it eliminates the opportunity to defer the taxation of business income by selecting an off-calendar fiscal period.

On family trusts, the bill eliminates the election to defer the 21-year deemed realization rule and the rules allowing the allocation of income to preferred beneficiaries.

The film tax credit replaces the capital cost allowance tax shelter incentive for certified Canadian productions with a new tax credit for Canadian film production companies.

On charitable donations, the bill eliminates the 20 per cent of income deduction limit for gifts of ecologically sensitive land.

On scientific research and experimental development, the bill eliminates inflation of SR&ED tax credits through non-arm's length contracts and introduces other measures improving the administration of the SR&ED tax incentives.

On corporate tax rates, the bill increases the refundable tax on investment income of Canadian controlled private corporations. It increases the rate of part IV tax on dividends received by private corporations and increases the capital taxes on large corporations and financial institutions.

On joint and several liability, the bill provides joint and several liability for unremitted source deductions and similar amounts where a person has influential control and causes taxable payments to be made without remittance.

On the old age security benefit, the bill modifies the structure of the recovery of OAS benefits to provide for tax to be withheld from benefits as they are paid.

On business numbers, the bill allows Revenue Canada to exchange business name and address information with other federal government departments and the provinces when they adopt the business number. I note here that the Bloc Quebecois' critic has commended the government for this initiative.

Interest rates provide for different rates of interest on amounts payable by the crown to taxpayers and amounts payable by taxpayers to the crown. How could one call that tinkering? If one had read that bill one would know it is not tinkering. It is dealing with affairs of the state in a substantial, meaningful and profound way.

More specifically, I would like to discuss the changes to taxation of family trusts.

Family trusts allow assets to be held for beneficiaries. Trusts are used for various purposes, particularly for business succession planning and for meeting the needs of beneficiaries in special cases such as old age and disabilities.

The 1995 budget proposed two changes to the taxation of family trusts: one, the existing election to defer the application of the 21-year rule eliminated effective January 1, 1999; two, to restrict income splitting, the preferred beneficiary election mechanism be repealed for taxation years of trusts that commence after 1995, except for elections with respect to persons with mental or physical disabilities.

On the 21-year deemed disposition rule, the existing provision relating to the taxation of trust generally require that assets are to be treated for tax purposes as if they were disposed of every 21 years. The measure accompanied the introduction of capital gains taxation in 1972 to prevent trusts from being used to void the taxation of capital gains on death.

The previous government passed a provision allowing a special election to defer the 21 year rule and the taxation of capital gains on trust assets until the last "exempt beneficiary" dies. An

"exempt beneficiary" essentially means a relative who is removed by no more than one generation from the person who established the trust.

Effective January 1, 1999 the bill proposes to eliminate this special election. Those trusts which have at any time before that date elected to postpone capital gains taxation will be subject to a deemed realization of trust assets at fair market value on that date. This would not apply where all of the trust property has been distributed to beneficiaries before that date. Where properties are distributed from a trust to an exempt beneficiary, capital gains would be realized when the exempt beneficiary disposes of the property or when the exempt beneficiary dies.

On preferred beneficiary election, the bill provides that, before it is distributed among the beneficiaries, the income from a trust fund is calculated in the same way as for other taxpayers. The interest, dividends and capital gains realizable are all included in the calculation of the income from the trust. The taxable income of a testamentary trust, and of some trusts created before 1972, is subject to the same progressive tax rate structure as individual income. The taxable income of other trusts is taxed at the maximum rate applicable to individual income.

The preferred beneficiary election currently allows trust income to be allocated to preferred beneficiaries defined to include the spouse, children and grandchildren of the settlor of the trust and taxed in their hands rather than at the trust level. This allows trust income to accumulate without the need to pay the income to beneficiaries. There is no requirement that the income allocated to a beneficiary ultimately be paid to that beneficiary.

The selection made by a preferred beneficiary is an exception to the general rule that the income from a trust is taxable as a trustee's income, except where this income is payable to the beneficiaries and thus taxable as their personal income.

The flexibility of the preferred beneficiary election and the potential to split income among large numbers of preferred beneficiaries make it a significant tax planning tool. The preferred beneficiary election allows trust income to be split among family members for income tax purposes without regard to the amount the beneficiary would ultimately receive.

For example, where trust income in the form of dividends is allocated to a beneficiary such as a young child with little or no other income, substantial amounts can be accumulated on a tax free basis because of the dividend tax credit. In addition, the entitlement to the $500,000 lifetime capital gains exemption can be multiplied because of the preferred beneficiary election.

This bill proposes to eliminate the preferred beneficiary election except as it applies to those beneficiaries who are entitled to a tax credit for mental or physical impairment, or who would be so entitled if amounts paid for the remuneration of an attendant or for care in a nursing home were ignored. The measure eliminates a tax planning technique and seeks to ensure a level playing field between property held in trust and property held directly. This measure is to apply to taxation years of trusts that commence after 1995.

The recent auditor general's report cited examples of tax avoidance and raised concerns about the administration of the Income Tax Act involving the movement out of Canada of assets held in family trusts. The department is undertaking certain specific initiatives to combat and deter avoidance. The finance committee is about to begin a study of the administration of the Income Tax Act in this regard.

Changes such as those made in the 1995 budget discussed earlier and including terminating the election to postpone capital gains taxation under the 21-year rule will ensure that family trusts cannot be used to defer capital gains taxation and ending the preferred beneficiary election limits the opportunity for family trusts to be used for income tax splitting purposes. The changes will help to further close the loopholes.

Bill C-36 is an important part of this government's fiscal agenda. As my hon. colleague noted earlier, it is the heart and soul of our program. It is another step toward our goal of getting government right.

[Petitions, May 27th, 1996]

Mr. Speaker, these petitioners seek no change to the constitutionally acquired rights of minorities in Newfoundland without the consent of those minorities.

They point out that if an amendment is needed it should be one that meets the hopes, aspirations and dreams of all of those minorities. They ask that the changes to education be tried and if subsequent to that an amendment is required, then one could be brought forward. They fear the impact of this amendment on other sectors of education and perhaps other rights such as minority language rights.

[Cksb Radio Station, May 27th, 1996]

Mr. Speaker, I wish to congratulate CKSB, Manitoba's French language radio station, on its 50th anniversary.

On May 27, 1946, at 6 p.m., CKSB, a radio station financed by the generous donations of francophones in Manitoba, went on air for the very first time. In 1973, CKSB joined the CBC network. After 50 years of existence, CKSB remains an indispensable part of our community, a tool that unites us and helps us to know one another better.

I applaud CKSB and all the members of its team, past and current, for their dedication and their contribution to the Francophonie in Manitoba and Canada.

[Supply, May 16th, 1996]

Mr. Speaker, I hope my colleague will admit that this is a beautiful great country, a country held in esteem by everyone on this planet. I trust that he did not want to indicate that it was anything other than that.

As for the polls, I would be prepared to compare our polls and yours across Canada, if that is what you want to do. We must pay some attention to polls, but we must not let ourselves be led by them. The most important poll of all is the one held on election day itself.