Alex Shepherd

[Income Tax Amendments Act, 1997, February 3rd, 1998]

Mr. Speaker, I have to agree with the comments of the previous speaker certainly as they apply to the Reform Party. We have been listening to a lot of innuendo about tax reform and how the Reform members are the defenders of the poor and the downtrodden. However most of their tax policies are to cover up the real issue which is trying to give tax breaks to their buddies and friends, the wealthy people of this country.

This bill is very complex. It involves many sections of the Income Tax Act, charitable donations, along with registered education savings plans which I will touch on a little later, transfer pricing and so on. It is a very large bill and affects many aspects of the Income Tax Act.

I would like to talk about one aspect the member for Saint-Hyacinthe—Bagot mentioned yesterday. He talked about how this bill changes the Canada Shipping Act. He then alluded that somehow the Minister of Finance would have some kind of conflict of interest. I would just like to refer to a number of issues showing the history of these sections of the Canada Shipping Act through the income tax system.

Since at least 1927 Canada has had special tax rules for non-resident companies that earn income from international shipping. The rule is that Canada will not tax that income provided their home country does the same for Canadian companies. Each country taxes its own residents, a fair application of international trade and agreements I would think.

To apply this rule, it has to be known whether the company is a non-resident or not. That was sometimes a problem because under Canadian tax rule, residence is not always easy to decide in advance. Canada was losing business because of this uncertainty.

In 1991 the previous government added a rule to clarify the residency rules for foreign shippers. Basically a foreign company that earns its income from international shipping is not a resident in Canada.

The amendment in today's bill responds to the suggestion from the non-profit International Marine Centre in Vancouver. It simply improved the 1991 clarification rule. It says that it does not matter whether a foreign company carries on its shipping business directly or through subsidiaries.

Another amendment brings the 1927 exemption up to date, including capital gains which were not taxable when the exemption was introduced and so may not have been covered.

Again these are technical amendments. They are not new. They were released in 1995 and were again released with some modifications in 1996.

Through the office of the ethics commissioner, the government has been informed by Canada Steamship Lines that it does not use section 250 of the Income Tax Act for the purposes of offshore operations. Consequently, the proposed amendment does not benefit Canada Steamship Lines and the company has no intention of utilizing this provision.

I would like to carry on with a very specific aspect of these amendments which talk about the registered education savings plan.

The Conference Board of Canada has stated so many times that Canada's education system has somewhat fallen behind in the world. Even though we invest many, many dollars in our education system, it would seem that some of our proficiencies, certainly in science and technology skills, have somewhat fallen behind the norm. That is why this government set up a millennium fund. It is also why we made this amendment to the income tax system.

The registered education savings plan is much like a registered retirement savings plan. The difference is that it allows parents to put money in a separate fund to get a tax deduction to save for their children's future education.

The registered education savings plan has been around for a good number of years but it has never been very effective. The reason it has not been effective is that what happened in these plans is that if your child did not attend a post-secondary education institution, you forfeited your deposit. In other words, you always ran the risk that if Johnny does not go on to university or to college, the money is lost. Of course, most people thought this was not a particularly good investment. This government realized that it was important for families to save for the education of their children and also to get young people access to our educational institutions.

We talk a lot in this House about the importance of access to post-secondary education. This is a place where the government is positively trying to accomplish that with partnerships and with private families.

In addition it eliminates to a large extent the liability that they are going to lose those deposits if Johnny or Mary does not go on to post-secondary education. More important, it raises the limits from $2,000 a year to $4,000 a year. It allows a tax deduction so we can save for the education of children. As a parent who has three children in post-secondary education, it is an expensive proposition. I wish this program had been in place 20 or 30 years ago. I would be utilizing it.

Many families live in the fear that they will not be able to provide for their children when it is time to go to school. This is an excellent opportunity for them. It is a positive way that governments can, together with the private sector, ensure there is education for our young people.

I just came back from the National Research Institute. We talk about brain drain. The member talked about people leaving her province. Memorial University in Newfoundland is one of the premier educators in Canada. These are the roots and the avenues to the future for us. We talk in Canada about having tremendous resources. We usually talk in terms of natural resources. We talk about our petroleum industries. We talk about our metallurgical industries and our forests and aluminium products, but in reality the biggest resource we have in Canada is between our own two ears. We have to do more to ensure that young people have an adequate education and that they are going to engage in those industries that will evolve and be the industries of the future.

I am happy to support this bill and this specific aspect of it. A very important aspect of it is what we are doing to make a positive contribution for those children who may find it difficult to get to school. It gives their parents planning horizons to do that.

I have sat through this debate and I have listened to members of the Reform Party get up and defend the province of Ontario. I guess they are all part of the same material. It seems strange to me that the province of Ontario came in with a program of reducing taxes. At the same time it was going to cut expenditures and do all kinds of wonderful things. Some of the members of the Reform Party keep saying this government did this and that government did that. The reality is most people know their is only one taxpayer. Everybody in Canada has to try to get their books to balance, whether it is the federal government or the provinces.

One of the big things we do is transfer money to the provinces in support of health care. We have created a base level of funding there. Some of it had to be cut and the provinces had to adjust to that.

It is amazing to me that at the same time that cuts to health care and other aspects of our social structure in Ontario were going on, the province of Ontario cut indirectly or reduced taxes by $5 billion. When it made the announcement of the $5 billion, it was running something like $8 billion deficits per year. In other words, the province continued to run deficits on annual rated basis, even though it was also in a program of tax reductions. I heard the minister of finance of the province of Ontario saying they cannot make their budget reductions by the year 2000. They were to balance the books but now they cannot do it. The difference or shortfall was $5 billion.

I ask whether this is in the best interests of Canadians. My constituents are telling me to continue with our deficit and debt reduction targets, enhance our health care system but they do not need tax cuts today because they think there are more important things to do. I think most of the people in Ontario have come to realize that.

[Dairy Industry, December 11th, 1997]

Mr. Speaker, my question is for the Minister of Agriculture and Agri-Food.

The Canadian Dairy Commission is poised to set a price increase for industrial milk. Can the minister tell this House how this pricing regime operates? Second and most important, can he assure us that the Canadian dairy industry will continue to be competitive and a productive force in the Canadian economy?

[Committees Of The House, December 11th, 1997]

Madam Speaker, I am very happy to respond to the hon. member for Mississauga South who has also been very active in these areas. We share a lot of similarities in our vocation and also in our desire to create jobs in this country.

The whole concept of the expenditures in the technology partnerships program is about creating jobs. Sometimes we forget about taking it to the nth degree. It is about creating jobs. It is about creating opportunities for small and medium size businesses. It is also about helping our environment. Companies like Ballard Power are at the forefront of research and development in Canada and are creating exciting and good jobs for Canadians.

[Committees Of The House, December 11th, 1997]

Madam Speaker, I cannot specifically answer but I suspect that part of the problem is the predictability of income. For people to pay on a quarterly basis there has to be a degree of predictability of what the income of the trust is going to be. I suspect there is some argument that some trusts are active in some years and not active in others. It is very difficult to predict what their quarterly payments would be. I suggest to the member that it is probably not that significant a loss of revenue in any case.

There are more interesting areas of the administration. I think the member was talking to some extent about the auditor general's report. It was interesting how the banks are actually holding back cheques in the GST system and excise system before they deliver them to the government. Something our government is very keen on looking into is how we can make the whole collection process a lot more efficient and effective and increase some of the revenues to the government.

Most of us think that tax reductions will come and tax relief should come to some of the people the hon. member is talking about.

[Committees Of The House, December 11th, 1997]

Madam Speaker, it gives me great pleasure to enter into the prebudget debate in the House. I was very happy to have a town hall meeting in my riding of Durham which many of my constituents attended.

Reform members talked about their desire to consult their constituents. It is interesting to look at the back of this report. It talks about the members who actually submitted reports from their constituents to the finance committee. The list includes many of my own colleagues, many of the opposition party colleagues but not a single name of a Reform Party member. That is unfortunate because this was a great opportunity for Reform Party members to do what they are always saying in the House that they do, that they represent their constituents, that they want the views of their constituents heard in Ottawa.

I am happy to say that the people of Durham had a direct voice here. We had a very good and open discussion. Almost 70 people attended. They gave me their ideas on what should be done if there is a fiscal dividend. I was very happy to participate.

I have one slight criticism of the finance committee report. One of the recommendations is to allow for an increase in the deductibility in the foreign component of registered retirement savings plans. Within their RRSPs people can put up to 20% in so-called foreign investments, foreign assets. The finance committee has recommended that the limit be increased.

This is very important. This limit is used not only in RRSPs but in all aspects of the pension system. As I understand it, the newly formed Canada pension plan board would have a similar threshold. I object to this.

I believe we have to focus on what we are talking about when we are talking about RRSP deductions. RRSPs are used as a tax deduction. Essentially, the result of this would be to subsidize, and I underline the word subsidize, higher income earners to invest in foreign countries.

There are no laws in Canada against foreign investments. People are free to do that if that is their choice. However, they may have to do it with their tax paid money, in other words from their normal savings as opposed to actually getting a tax deduction, an incentive if you will, to invest in another country.

That is one small point on which I differ. I believe it would be improper and unwise to proceed in that direction.

A lot of the debate on budgetary items concerns expenditures. The Reform Party and others talk about government spending, spending, spending. What is missing when we talk about the expenditure of money is that sometimes, in fact a lot of the time, the expenditure is an investment.

We should all know the difference between investing and spending. When we invest in something, we expect a return. That is why it is important to recognize in the upcoming budget that we are not wasting money to spend money in areas of some things that will actually come back to us. In other words, that money did not disappear. It will come back to us in the form of a return on our investment.

One of those very important areas is science and technology. There is a general recognition that we must move forward and embrace the challenges which science and technology present to us.

Durham College is in my riding. It has a science and technology faculty. There is something like three jobs for every one of its graduates. We talk about youth unemployment on the one hand, but we also have on the other hand a disproportionate demand for people who are trained in certain areas.

Today I attended the industry committee and we heard from the granting councils. Representatives of the National Research Council, NSERC and MRC appeared before us. They pointed out that Canada's expenditures in research and development lag behind just about every other country in the western world. I think the only country that gives less money to research and development based on its gross domestic product is Italy. We need to invest more in the science field.

Recently the Conference Board of Canada published a very excellent report about the Canadian economy. It found some very remarkable things. It found that Canada is one of the highest spenders in education.

I should interject, Madam Speaker, that I am sharing my time with the hon. member for Oxford.

The Conference Board of Canada made a number of observations. Some of the very important ones were that in post-secondary education, Canada is one of the highest spenders in the world. At the same time, some of the performance in the area of science and technology is in fact some of the most mediocre. We need to revamp some of our educational institutions to ensure that we are training our people properly.

Having said that, it is interesting that one of the initiatives which our government is involved in is called technology partnerships. It is a program I am very proud of. In fact the member across the say said to give away money to Bombardier. Bombardier was a recipient of the technology partnerships program. But that just shows the lack of knowledge that exists on the other side of the House.

Technology partnerships matches the expenditures by companies in the area of research and development. It provides a degree of risk capital but it is an investment that is based on a royalty system. For instance as Bombardier sells more Dash-7 aeroplanes, money comes back into the government.

This program has only been around for about three years and just recently we received our first cheque, a royalty payment coming back to the government. It is very clear that the object of the exercise is to allow this funding to assist. It is sort of risk capital. We are matching money. We have a partnership going with small and medium size businesses to do this.

There is a company close to my riding called Camateoid which is another recipient of a technology partnerships venture capital loan. This is a very interesting company. It makes the paint for the Challenger aircraft. It is very much related to aerospace.

These are some of the ways we can use the resources we have in government to lever other forms of capital, pools of capital that possibly would not have been spent in the area of research and development. That generates all kinds of multipliers in our economy.

It allows our graduating students from high tech institutions to have a place to work in this country. We often talk about the brain drain and how people are being forced to leave this country because the opportunities are not there. This is a very specific way in which the government can invest in some of these sectors, not give the money away but invest it in such a way that the money is coming back to the people of Canada.

I hope that when we are putting our budget together we can find some room to move in these areas. As the granting councils and the Conference Board of Canada have said, Canada is lagging behind.

A lot of the growth in our economy has been based on the export sector, almost 40% now. If our Canadian dollar goes upward vis-à-vis the U.S. dollar which it probably should—and some people suggest the Canadian dollar is worth 85¢—if that happens, we are going to see a lot of unemployment because we have not kept up with the productivity challenges that are going to make this country great.

I reiterate it is important that this government puts more money into research councils and also the technological programs that will make this country strong.

[The Environment, November 26th, 1997]

Madam Speaker, I have a comment to which the member can respond. We touched several times on the topic of tradable credits tonight. The member for Sherbrooke mentioned that in his speech. He said that tradable credits are new and are just starting to be traded, even though they were traded as long ago as 1990 in the United States at a time when he was Minister of the Environment.

There is something missing from the equation in our business cycle, that is, the costs of polluting. Often we do not try to put a number on that. This is the problem with industrial structure. We do not have a cost of pollution. The notion of tradable credits allows us to recognize there is a cost to pollution which requires companies to buy these credits.

Some interesting things have happened recently in the United States. These credits are now traded on the Chicago Board of Trade. Environmental groups like Greenpeace are buying them. They are removing these credits which limits the ability of these companies to pollute. The object of the exercise is to give companies an incentive not to pollute by developing new technologies to reduce their emissions.

What does the member think about that kind of concept?

[Supply, November 25th, 1997]

Mr. Speaker, just to reiterate, on this side of the House we understand distinctiveness not only in Quebec but throughout our country.

I wish to share my time with my colleague, the member for Mississauga South, although there may not be time.

Only two weeks ago I was at the commemoration of the first time we issued a historical plaque outside of this country at Vimy Ridge. I was taken aback by the ceremony and going through some of the trenches and seeing some of the carvings on the walls that had been done by people who had been shot or killed at Vimy. I realized that both French and English had fought together in that war.

Nobody asked them when they showed up to free France from the invaders whether they were French or English, whether they were Quebeckers or Ontarians, whether they came from the west. They fought together as a nation of Canadians, and very successfully.

Over 3,900 Canadians, if I recall correctly, of all backgrounds lost their lives there. These are some of the histories that we have shared together as a country.

It is with that view in mind that I rise today to speak in favour of not only the Calgary declaration but the motion that has been moved by my hon. colleagues opposite.

We have discussed a variety of issues today and there is this constant issue of decentralization versus centralization. I sometimes do not think that we have given proper address to how our world is significantly changing.

Often the debate is very sterilized because it talks about taking power away from some kind of central authority. I would like to indicate that over the last 10 years Canada has entered into a number of international treaties such as NAFTA, GATT and some of the other treaties that we are now discussing and will be discussing in this House such as the multilateral agreement on investment.

All these treaties, if you will, have resulted in the delegation to a certain degree of authority from the so-called central government to international bodies, often dispute settlement mechanisms.

What I am trying to get at is that we have actually already given up a certain degree of power at the federal level to international institutions to effect more global trade. This is the reality of the world.

If we sit at the other end and constantly try to take power away from this institution that has already given up power internationally, we can understand how we are slowly but surely weakening our system of government and weakening the ties that bind us together.

I was heartened today by the Reform Party's talking about national standards because I very rarely hear it talk about those. I hear it defending provincial rights. Once again, I sometimes do not think we have given enough thought to how our country has changed.

I sometimes wonder if we should be debating provincial versus federal rights or talking more about urban versus rural rights. When we talk about the delivery of services on a local basis, of course large municipalities have the ability to do that.

We have just seen in my own province the amalgamation of the city of Toronto. Whether people like it or not it seems that is a very huge governmental authority that could probably deal effectively with a lot of local issues.

On the other hand, there are communities within our country that have a great deal of difficulty making even the basic services available to their people just because they are few in number or they are spread out over a wide geographical area.

I have often wondered if we should not restructure some of this debate about dealing with how to deliver services directly to the people who require them.

I support the initiative of the Calgary declaration. I think we very much have to continue the dialogue, but I think also we have to start talking about how to build this country. We have to stop talking about how to tear it apart. We have to start talking about how to build a stronger nation as we move toward the 21st century.

We have institutions of government. I have come to believe that there is a role for some kind of reformed Senate. I suspect it has some of the parameters that some of the members are talking about today, guaranteeing some kind of minimum standards and ensuring that our medical system, for instance, in British Columbia is not significantly different in a minimum kind of way from those in other parts of the country.

I have been appalled in some ways to find that people who have a cardiac or a diagnosis cardiac operation in British Columbia have to wait three weeks for an operation, while those in Manitoba only half a week.

Therefore when we talk about things in the Calgary declaration such as equality of people, I sometimes wonder whether we are really addressing those issues and whether, if we are really concerned about the equality of people, we should find ways to ensure there are minimum standards across this country we can all agree to as a nation.

Most people who have studied national unity would say that the things that unite us as a nation are the ways we treat each other. Most people would say one of those things is the health care system. Another is education. Heaven forbid, it says here that belongs to the provinces, but most people would say we should have some kind of minimum standard on which we can all agree that people can move around this country without needing an entry test to discover whether they are in grade two or grade twelve or whatever grade. We should all have some standards recognized which can unite us as a nation.

As my hon. colleague from Mississauga South would like a few words, I will conclude. I am definitely in support of the Calgary declaration initiative and of the motion before us today. More important, we have to find ways to reinvent our country. We happen to think that devolution is the way to do it. There may well be cases where we should be giving power back to the central government in order to create national binding standards in our country.

[Supply, November 25th, 1997]

Mr. Speaker, I listened with intent to the member's speech. I thought he gave a very good speech. Sometimes we do not have the opportunity to praise each other in this House. Perhaps we should do that more often. It is interesting that of all his colleagues, he is one of the few whom I have actually heard defend the concept of having national standards in this country.

I think that sometimes we get involved in the issue of devolution and do not look at what is behind it. Presumably the theory is that the closer the government is to the people, the better the administrative services. Does the hon. member for Lethbridge feel that programs administered out of Edmonton would be superior to a local CEC office in Lethbridge which would deal directly with the people?

I wonder if the hon. member could think of things which are under provincial jurisdiction which would be better handled on a national basis.

I visited a softwood lumber forestry operation in British Columbia which was very close to the Alberta border. I was surprised how every province in this country competed against each other. The net result was that the Americans were able to plot province against province to create a quota system. In fact, what we should have been doing was talking with one voice in international trade.

I wonder if the hon. member could comment on some of those items.

[Child Benefit, November 19th, 1997]

Mr. Speaker, it gives me great pleasure to debate the motion of the hon. member for Shefford. I congratulate her for bringing this matter to the House. It is something we are all concerned about and that is the issue of child poverty.

We talked a lot tonight about the issue of inflation and how we need to adjust child tax credits for that. I would like to come at this from a different angle.

It was not that long ago that not all of our legislation, through the income tax system, was totally indexed to the rate of inflation. In fact, we lived in inflationary times. Peoples' wage agreements and various other aspects of their financial lives were tied to the consumer price index.

I suggest that that creates an inflationary spiral. In other words, every time the rate of inflation went up, everybody's income went up, child tax credits went up, everything else went up and it similarly impacted on inflation. I cannot help but impress on the member how devastating that inflationary time we lived in not long ago was to low income families. They are the ones who are less likely to be able to adjust to the dramatic rising costs of living, their rent, food, et cetera.

That is one aspect I want to address on why I oppose the member's motion. I believe that if we move in this specific area of child tax benefits, we will similarly be obligated to do the same thing throughout the whole income tax system. You cannot very well argue that at one point is a necessity and yet at another point it is not.

If you look at it in broad terms you will also see that this would create over $850 million in lost tax revenues. Not only that, it also brings us back into this inflationary economy which will have a tremendous dilatory effect on low income families.

The government is concerned about the issue of child poverty. We did in fact inject $850 million into the envelope of an enhanced child tax benefit system for working income families. As we speak members of both federal and provincial governments are debating the issue of how to deliver this program within provincial envelopes.

I am happy to see that one of the things our government is insisting on is that there be an accountability package that goes with it. In other words, it is not simply money locked into an envelope of a benefit package but there is some way as a country we can measure the success of those programs. In other words, there is some way to measure if child malnutrition has been improved.

These are things that are not so easy to jump up and be in favour of and implement. They take time and effort and dedication.

I am very pleased to be part of a party and a government dedicated to the issue of child poverty, trying to find ways not only to get money out to those families most in need but also to ensure that money gets to those children to alleviate the very problems that some of the members have brought out here today.

[Supply, November 6th, 1997]

Madam Speaker, I listened intently to the member for Kamloops as I always do. I suppose that if, when my government showed up at this House in 1993 there had been no GST, things would have been a lot different. The reality is that it had been implemented.

The member talked about being on the finance committee. I did that trip. Only we were talking about a harmonized tax at the time. The small and medium sized business people said resoundingly “Harmonize the tax. We are dealing with two administrations here. It is ridiculous. The bureaucratic overlap and duplication for small businesses is inefficient”. It was that initiative, to make a dynamic economy, to get more money in the hands of Atlantic Canadians which we strove for.

Having said that, it is not just Canada. It is Australia. It is the European Union. It is New Zealand. All these countries have moved toward a consumption tax.

I agree with the member when he says it is a retrogressive tax in the sense that it affects all income groups the same. What I cannot understand is the member's acceptance of having said that and at the same time arguing for a reduction in the rate because if it is retrogressive on the upscale, it is retrogressive on the downscale. When those reductions are given, they are being given to the wealthy just as they are being given to the poor. Why would the NDP members not argue for a more targeted tax cut? Why do they want to reduce a retrogressive tax?