Pierre Brien

[Duplication And Overlap, September 22nd, 1995]

Mr. Speaker, how does the minister explain that some studies conducted by the Privy Council, notably by Stéphane Dion, Lorne Nystrom, a candidate in the NDP leadership race, Michelle Tisseyre, a former Liberal candidate, and Maurice Pinard, a professor at McGill University, cannot be released as requested under the Access to Information Act?

[Duplication And Overlap, September 22nd, 1995]

Mr. Speaker, my question is for the Minister of Intergovernmental Affairs. Last spring, the Minister of Intergovernmental Affairs justified a substantial increase in the Privy Council's budget by saying that this increase was intended for the most part to pay for studies to be conducted in order to reduce duplication and overlap.

Could the minister tell us how many studies on duplication and overlap between Ottawa and the provinces have been conducted by the Privy Council since spring?

[Excise Tax Act, September 21st, 1995]

Mr. Speaker, this is our third bill this afternoon. We shall continue, but our differences are now going to surface. We could agree on the first two bills, but we can only go so far. When we get to the excise tax on gasoline, our views will no longer coincide.

Bill C-90 contains a number of acceptable measures to which we have no objection. For instance, bringing the price of cigarettes

back to levels that are less an incentive to consumption. Provided this does not resurrect the smuggling network and does not give them that opportunity, I think it is satisfactory. Everyone expected this, if we want to keep fighting cigarette smuggling from the point of view of law enforcement and avoid encouraging people to buy this product, on health grounds.

Of course we have some questions, because there are a number of problems we will have to deal with in connection with anti-smoking campaigns. We need a plan with a very clear-cut purpose to ensure this campaign does not encourage smoking, especially among the young and young women, where smoking is very widespread. We will have to find ways to restrict tobacco consumption.

I will be very brief about this aspect. I agree that reducing the excise tax probably helped to destabilize smuggling rings, but there was not much in the way of law enforcement. Smuggling still exists because we have not dealt with the real problem. We may have the same problem with other products. It could happen whenever the tax on the product is unreasonably high. That is one reason we have to be careful in the case of gasoline, because there is a limit to what the public will tolerate.

When we consider the price of gas, when we break down the price at the pump, fortunately people do not see the real price, because taxpayers would be rather upset. The price includes a lot of different taxes. So many that we may have gone too far, especially-and this was said by the Canadian Automobile Association-since there is no guarantee that this money is invested in highway maintenance or used to compensate for environmental damage. It all goes into the consolidated fund, and there is no way to find out how this revenue is used.

In fact, they were in favour of creating a fund to ensure that gasoline taxes are used to compensate for the impact on the environment or reinvested in road maintenance. They did not talk much about an environmental fund, but if this initiative ever went ahead, one option would be to bypass the consolidated revenue fund and put part of this tax revenue into environmental funds.

There are other measures, including an air transportation tax, which would increase the maximum tax on international air travel from $50 to $55. This is no big deal, but when we consider taxation in general, after two years in the House, after everything that has been said and heard and discussed on the subject, the tax on gas was discussed in the last budget and this was basically a fiscal measure to quickly raise $500 million.

The purpose of this tax was to raise revenue fast. The air transportation tax was affected as well, and once again, it was changed at the expense of people in the regions, because they reduced the tax on short haul flights but the tax on longer flights was increased, in the case of domestic flights, which means that people in Baie-Comeau, Val-d'Or or Rouyn, in my region, are now faced with a tax increase of several dollars. It is not much, but the price of plane tickets was already very high.

But the major tax initiative, the campaign promise, was not to increase gasoline taxes, but to change the tax on goods and services. That was the campaign promise. The subject was raised in the House and studied in committee. The committee gave a report, which, if memory serves me, lasted 17 or 18 hours. The next day in the House, the Prime Minister distanced himself from the report, because the committee-and when I refer to the committee, I am excluding myself and the Bloc Quebecois-proposed a tax, a sort of hybrid tax on business activities mixed in with the GST, in other words, a very short lived and now shelved proposal.

The Prime Minister's promise was that two years after the Liberals arrived in power, let us give them two and a half years-so we will say January 1, 1996-the GST would disappear. Both during the election campaign and in the House, I have heard the Prime Minister say: "We hate this tax and we are going to eliminate it". Now, whether he hates it less or whether he is not going to eliminate it, the Prime Minister is no longer saying that he will eliminate the GST.

Is the magic gone? What happened? There is no more mention of it at all, just as with every hot item here in Ottawa. The government gives the illusion of working on real things, but the legislative agenda is sparse. They are all more or less contentious matters, which have already been announced, whereas we are still waiting for measures on pension reform and on unemployment insurance reform.

What of the new human resource investment fund that is to be set up by the Minister of Human Resources Development, which is very important and will involve the reform or dismantling of the network of employment centres? Everyone is waiting to see it to get an idea where the federal government is going, but only a minimum of information is being provided, because of the political context in Quebec, and the federal government does not want to tell us clearly what is happening.

It is a bit unfortunate, particularly on the part of people like the Minister of Intergovernmental Affairs, who is taking pleasure in saying that the Government of Quebec is hiding things or studies. Well, here they are keeping what will happen after the referendum really under wraps. The people do not know what is going on. They have a hard choice to make, and I understand them, but when they look at the No side, they see nothing. They do not know what will happen to them. It will be a matter of trust. Are they going to trust the people who represent this camp, the present Prime Minister? If I were he, I would be worried. I am not sure people are going to give him a blank cheque to do what he likes afterward.

We are entitled to expect to know what initiatives the government plans to take. It remains silent, however. About the GST, though, I would like to remind them, because the opportunity is too good to miss, that they made promises to the people. In the finance committee, we heard just about anything. That tax is a bad one, everyone agrees on that, on a number of things.

The underlying principles are not all bad in it, but some government members were saying that the black market economy was due in large part to the GST. There are limits. Let us not exaggerate. The figures bandied about were surprising. The government was said to be losing billions of dollars in revenue just because people did not accept the GST. There is some truth in that, but not in the proportions they were talking about in the elections or before the committee.

Nevertheless, this was their opinion. They have all become silent about the GST. Apparently there was some discussion about it in caucus before Parliament resumed. There has been some discussion but not much in public, and in the long run the hope is that people will forget.

Implementing a reformed tax is not easy. The main criticism of the GST by business was the short time between when the decisions were made, when the tax was defined, and when it was implemented. Since it was all done very rapidly there was a great deal of confusion. This has moreover never been settled completely because there are still close to a billion dollars in unsettled accounts or unrecovered taxes, in large part the result of the initial difficulties many people experienced in understanding the tax.

If they want to reform this tax before the end of their mandate, there is not much time left for defining the rules. It is surprising that we are not hearing about it any more. These are people who are asking Quebecers to write them a blank cheque and trust them at their word. And yet, during the election campaing, they promised to do away with this tax and replace it with something else. Since that something else has not been defined yet, the first part is irrelevant. Nobody is currently looking for something else. Once in a while, the finance minister uses fancy words to tell us that he is holding discussions with his provincial counterparts, but are all these discussions leading somewhere? Where is this getting us?

We know full well that they were hoping for a Liberal government in Ontario, which would have been more inclined to cooperate; as we know the main stumbling block to revamping this tax is the fact that Ontario still taxes inputs used in the manufacture of other goods. For instance, a piece of wood used to manufacture a piece of furniture becomes an input when processed.

In Ontario, a number of inputs are taxed, apparently to the tune of a few billions of dollars. If both taxes were harmonized, Ontario would stand to lose substantial revenues.

As a result, far from being simple, the tax system is relatively complex. Quebec went ahead with harmonization but this reveals once again one of the fundamental problems of the current political system in Canada, which is the result of the federal government's spending power allowing it to spend in any area it chooses; but to do this it must collect money.

Since all governments, either provincial or federal, collect money the same way, through income tax and other taxes, the stakeholders are numerous. More particularly in Quebec, because in Quebec we never really had any confidence in receiving money indirectly through transfer payments. If we look at what is going on now, perhaps we did the right thing; it is still far better to get tax points than transfer payments, because sooner or later the government could very easily be tempted to cut them.

That has really complicated the system for people. For businesses as well. I am often asked by business people in my province what the concrete advantages for us would be if Quebec were to decide to take control of its own destiny and be fully autonomous, while maintaining relations with our trade partners? When we talk with them, they soon realize that there are very concrete, immediate advantages for them, and I am happy to underline that to my Reform colleague. Indeed, there will be only one taxation system.

For them, that means a lot less paperwork, a lot less trouble, and it is a lot easier to understand. It is the same for individuals. One need only think of the spring, when the deadline for income tax returns is near; we get out our receipts, our employment statements, our unemployment insurance statements or other papers, and have a look at them to fill our income tax returns. It is extremely complicated.

Not much effort is put in making things simpler. Eliminating one level of government will already be an improvement in that area. For starters, this natural tendency towards duplication, with two levels of government collecting money they are free to spend as they please, will no longer be an issue.

This is one of the major problems with this political system in which a $500 billion debt was accumulated without any concrete steps being taken to restructure the federal government's spending power, this power to spend that eventually turned into the power to get into debt. What was achieved by this in concrete terms? With respect to employment, it did not even succeed in preventing unemployment and joblessness from reaching unacceptable levels.

There is one lesson to draw from the current situation and that is that we just cannot keep our heads buried in the sand all the time and claim on the basis of any odd statistical report that we are living in the best country in the world. It is not true that we have to hide behind this kind of thing.

I went to a school of administration where we studied cases, problem cases, and ways of resolving them. The first step in a good diagnostic, and the same applies to our personal circumstances, it is always the case, is to admit a problem exists. When I see people who refuse to admit there is a problem, even when it is staring us in the face, then the problem is compounded. I think that the people should not feel reassured, even though they have been told that in future administrative agreements will be negotiated or other ways will be found to improve the system. Unless we change the basic rules, we will always have problems.

It is unfortunate that we in Canada have trivialized such an important word as "constitution". A constitution sets out the rules of the game. Before sitting down to play a parlour game, people should first agree on the rules. If, in the middle of the game, they start to disagree on how the rules should be interpreted, they will have problems. That is what is happening with our Canadian constitution. We cannot agree on the rules of the game but we are not redefining them. This creates a lot of problems. We have tried to change the rules over the years but all our efforts have met with failure.

A country that is afraid to discuss its constitution is a sick country. A country whose prime minister refuses to use the word Constitution because he is not very proud of it is a country with a lot of problems. And this is what we see in Canada, at present. They say: We do not want to talk about it. They are ashamed. They are ashamed because there are past events they would rather not refer to.

Having said that, I would like to come back to the bill before the House and state that we cannot support the tax on gasoline, which raised the price per litre by 1.5 cents following the last budget. Since these taxes are often not visible, we tend to forget about them. After a couple of days, we forget about them, but I now have the opportunity to remind all those who are listening that they should not forget the 1.5 cent increase per litre they have been paying these last few months, because of the federal government and the measures undertaken in the last budget to generate $500 million.

Taxpayers are willing to let the government raise more taxes if it keeps a better control over its spending, but it is frustrating to give more and more money to the government and feel there is no real improvement in our debt situation.

It is all very fine to say that the Minister of Finance is likely to meet his deficit target of about $32 billion this year, but that still leaves us with a $32 billion deficit.

With our economic situation and the likelihood of a slowdown in the United States-maybe not later this year, but next year-that could affect Canada too, there is no guarantee we will still be on track with our public finances. The Conservatives had reduced the deficit to an acceptable level, but when the recession came about, it went out of control. It is a bit like trying to cram something into a box. When the box is too full, it just bursts open.

I think the same thing is happening now. Every time the box bursts open, it becomes harder and harder to pick up the pieces. The deficit has now reached a level that is extremely high.

We are certainly not willing to support measures aimed at increasing government revenues when there is still so much to do in terms of reducing government spending.

In conclusion, I want to remind the government of its commitments, one of which was to review the GST. We thought that it was too little, that the whole tax system needed to be looked at. We offered our help but the government refused. We did a detailed study of the GST in committee. Recommendations were made but the government never followed up on those recommendations, particularly those of the Bloc Quebecois, which were the best among those contained in the report. The day after the report was tabled, the Prime Minister himself rejected a recommendation made by the Liberal majority.

So they have commitments. They say they are people of their word and look after the real problems and are concerned about them. During the election campaign they said they were going to change the tax. We are still awaiting outcome and are eager to see what happens.

The Minister of Health, who was on the finance committee herself at the time, must really know what is happening with this tax. They must have been studying it when it was introduced. The time has come for them to act and to stop hiding behind all the illusions they are giving the public about getting down to the real problems. Because in reality, nothing much happens in this House, except for the legislative agenda, which drags on and must be adopted. The real issues have to be put on the table so we can see what they are really going to offer the people. We will be able to do much more enlightened things.

[Customs Act, September 21st, 1995]

We will see. If Quebecers say yes, it will indeed be soon. Otherwise, we will see. There is an economic logic which all political parties, regardless of their position, have had to recognize in recent years. I doubt there are many in this House who are opposed to the opening up of our borders and to the fact that we can now help our businesses have access to foreign markets.

The American market is extremely appealing and will be even more so in the years to come, given the natural interest that currently exists for a north-south trade corridor. Over time, we did manage to develop an east-west economy in Canada. We built a railroad network and developed infrastructures to promote interprovincial trade. We can now see what is happening with the dismantling of the railway system. The more natural corridors are now emerging. The government can no longer afford to try to create artificial corridors.

Nevertheless, east-west trade developed over time and will continue to exist, but there is a natural need for a north-south movement of goods and services. The northern U.S. states immediately come to mind, but there is also the whole American market. Some very interesting business opportunities currently exist and will continue to exist after October 30.

We will do well if our entrepreneurs are able to manufacture products which offer a good quality-price ratio. If we are good today, we will still be good in a month. Canadians will still be good in a month and so will Quebecers, in those sectors where they already do well. However, we will not instantly become good in those sectors where do not already do well. We will have to work hard. But we will continue to do business on the basis of the logic that governs business activity.

At some point, we will have to stop getting the public confused by saying that business activity develops according to the political opinions of politicians. The business community will be there long after this government is gone. The logic that governs free trade will probably prevail longer than this government, at least I hope so, thus offering interesting development opportunities.

Later on this afternoon, I will have the opportunity to address another bill dealing with taxation. However, the bill before us, which contains some 100 pages of amendments designed to reflect the international agreements and treaties signed by Canada, promotes economic development and is also in line with the economic logic that currently prevails and that will continue to prevail in the future. I am pleased to see that the government is headed in the right direction. When it comes to the economy as a concrete reality, the logic that applies will still apply in six weeks.

[Customs Act, September 21st, 1995]

Mr. Speaker, Bill C-102 is rather complex but can be summarized easily by explaining that it seeks to lower custom duties, in compliance with NAFTA's most-favoured-nation tariff.

This bill includes some 100 pages of tariff items which I will not list, for obvious reasons. We will support this legislation because it is consistent with the opening up of our borders, something which the Bloc Quebecois has always promoted and which reflects the situation that has always prevailed in Quebec, particularly since 1988, when free trade was a major issue in the federal elections. At the time, Quebecers massively supported a party which was promoting free trade. The 1988 election was essentially a vote on free trade and the Conservative party won.

Quebecers showed their strong desire to be part of the major economic blocs. They felt confident that they could do well in the context of a global market.

Bill C-102, an act to amend the Customs Act and the Customs Tariff and to make related and consequential amendments to other acts, is essentially in line with the recent North American Free Trade Agreement.

Some provisions of this bill seek to amend amounts and increase exemptions, depending on the length of the stay abroad, when goods are brought back to Canada.

These amounts vary depending on certain factors, including the length of stay. In fact, these provisions have been in effect for several months, since a ways and means notice was passed before the end of the last session.

This is all part of promoting trade with our economic partners in the United States and now Mexico, and increasingly, there are plans to extend this free trade zone to other countries, Chile, for instance, and then we would have a vast economic zone covering North America and gradually extending towards South America. This is now the policy of a government that, since it came to power, has been won over by the arguments of certain ministers, including

the Minister of International Trade who was pro free trade, although his leader was far less enthusiastic, at least during the last election campaign.

But once they came to power, common sense seems to have prevailed. We now see on the government benches a party that is very pro free trade and very open to international trade, which corresponds with the interests of the Canada they represent and the interests of the Quebec we represent.

You can see what I am driving at. Of course I am going to draw a parallel with what is going to happen. I just want to say I am surprised at what people say outside the House or even in the House when they talk about the political situation in Quebec. As we know, in Quebec there will be a referendum in which Quebecers will be asked to speak out on sovereignty, and also on an offer of economic and political partnership which, to use the terms of this bill, is aimed at maintaining the free circulation of goods, persons, capital, a customs union, a monetary policy, manpower mobility, and so forth. All measures we are trying to take now.

Canada today, especially with respect to the free circulation of goods and services, capital and individuals-admittedly not as free in the case of individuals, but consider the other three-especially with the Americans and the Mexicans and soon with the Chileans, and there is also a whole strategy of trade development, which is more important for provinces like British Columbia or the other western provinces where they are looking at the Asian market for business opportunities.

However, behind all these rules for trading with these countries, we have to look at the figures and the nitty-gritty. Today, trade between Quebec and Ontario is very substantial. Trade in goods and services between the two is around 40 to 45 billion. I would like to say to those who are listening to us that when I see a government, the present federal government, adopting a measure such as this which is aimed at facilitating trade with the United States, I have trouble understanding why the same thing would not be done with a partner just on the other side of its border, that is Quebec, instead of saying "Between us and you trade will be restricted".

I was listening to the parliamentary secretary's interesting statement, in which he said that it would make it possible to reduce input costs. That when you reduce input costs, it makes it possible to create employment opportunities and stimulate exports. That is absolutely true.

The input referred to is the material used to produce a finished product. For example, the wood used to make a piece of furniture is an input. So, the items used as an input in production, that is where customs tariffs are reduced progressively on inputs, tending toward their eventual elimination in order to create employment. This is the same logic which gave rise to the goods and services tax. That system of taxation resulted in no tax on inputs used in manufacturing. That is what the previous government did.

The members of this government vigorously criticized this tax, which they labelled as new but which replaced an old one. It did not necessarily replace it because they are very much aware that this tax is totally in line with the principles they are defending in this act, that is to encourage our exports. Yet the GST is not perfect. There will be a chance to discuss it when taxation is discussed a little later this afternoon. We are still waiting for the amendments the government intends to propose and implement in order to make good on its election promises. It does not have much time left. I doubt it can do so but we will have an opportunity to discuss this later.

Saying that we must promote our exports and ensure that the materials used in our exports are as cheap as possible is quite consistent with the trade logic of 1995 and the next decade.

Political decisions matter little. However, if Quebecers decided to take control of their political future while maintaining economic links with Canada, why would an entrepreneur from Ontario, for instance, who buys materials from Quebec because they are cheaper there say, "In the future I will buy more expensive materials; I want to be less competitive because the Prime Minister of Canada tells me we should not do business with Quebec"?

Do you think this kind of logic will prevail? No way. What will prevail is the same capitalist business logic in effect today. These people will look for the cheapest materials and products available. They will continue to buy and to sell to all those willing to buy their products. No one will refuse to sell goods and services to those who want to buy them. This is not the way our economy works.

I do not know any entrepreneur in Quebec or Canada who would refuse to sell their products to anyone because of their political affiliation or the political system in which they live. Even Canadian business people invest in South Africa despite its very controversial political system. Although that country does not have the most stable political system, people still invest there because they see business opportunities in mining and gold among other sectors.

The people who will invest here know that it will be more profitable for them. It will be the same thing the day after the referendum. They invest here because they see the best market opportunities.

That is why I am quite puzzled by the Prime Minister's political stand. His Minister of Labour, who is responsible for the referen-

dum in Quebec, seems out of step with the bill before us, which is aimed at promoting Canada's foreign trade.

It seems to me that this government is committed to promoting trade so Canadian businesses can export as much as possible. I would be very surprised if, after October 30, the government decided to put a brake on this direction for all kinds of political reasons because its stated priority, although it is still hard to believe, is job creation. If job creation is a priority, would it be in the government's interest to act in a way that will hinder job creation? I think not.

The people of Quebec and Canada can clearly see the economic conditions we are in. In Ville-Marie, where I live, if I look across the lake as I wake up in the morning, I can see Ontario. All that separates us is a lake just a few miles long. So, on not too foggy days, we can see the other side of the lake. On week-ends, people often go across to buy goods and services in Ontario; out of habit for some, but also because a certain type of service-based economy has developed over there. The same thing goes for the other end of my riding, in the City of Témiscamingue, where 200 Ontarians come in to work every morning at a very successful pulp and paper operation we have there. These people will want to keep on working in Quebec, I am sure. They will also want Quebec customers who buy their products in their shopping centres and businesses to keep doing so. Coincidentally, Témiscamingue is also located in the riding represented by the Premier of Ontario, who just got himself elected on the promise of major tax reductions.

I am convinced that he will want to look after the interests of his constituents, protect their jobs and business opportunities for the local business community. There will be discussions, negotiations and agreements. Everybody will keep working according to the spirit of the legislation before us today and which we support. It is intended to foster foreign trade. The days of closed, self-centred economies are over. Around the world, all markets are becoming increasingly open, forming into major trading blocs, be it in Europe, here in North America, in South America or Asia.

Last year, a parliamentary delegation travelled to Australia. It became clear that this country wished to integrate the Asian economic bloc. Everyone is trying to join a bloc without necessarily losing their own political identity in the process. Australians remain Australians, even though they are trying to join the Asian economic market place.

The same choice is being put to the people of Quebec, who will have to decide. What I want to do is to reassure them by showing them that, when we see people act like the government today, we realize that when the time comes to take concrete action, the economic reality prevails over the strategic political line designed to sow fear, confusion and doubt in the people's minds. I often say that economics are one thing and politics another. I was involved with economics before getting into politics, and I may revert back some say, who knows, but it is quite clear to me that trends-

[Canada-United States Tax Convention Act, 1984, September 21st, 1995]

Mr. Speaker, as far as Bill S-9, whose purpose is to amend the August 31, 1994 tax convention between Canada and the United States, is concerned, we do not see any major problems with these amendments to a tax convention that was first signed with the U.S. in 1980, if I am not mistaken, and then amended in 1983 and again in 1984. So this is the third time we are amending this tax convention to make it better with time and facilitate trade between Canada and the U.S. to the maximum extent possible. I will get back to these trade relations between Canada and the U.S. and between Canada and its other trading partners toward the end of my speech.

Of course, since this is my first speech in this House since Parliament reconvened, I cannot help but point out that our legislative agenda is extremely modest. The bills we are reviewing are anything but controversial or would have very little impact in the short term. In other words, we are trying to dispose of our leftovers.

While we might have expected, upon returning to the House, to be able to debate the reforms announced by the government that are late in coming with respect to unemployment, the old age pension plan, the human resources investment fund as well as the long-awaited GST reform that the Liberal Party promised in the election to carry out within two years. Time is running out; we are almost there. We now realize that this will not happen. There is absolutely nothing on the table indicating this can be done within the next two years.

Since these matters are not on the table, we are debating those bills that were tabled. However, we can deplore the fact that a government which claims to be concerned with job creation and the real problems has put so little on the table for the people of Quebec and Canada to enable us to discuss the economic and social future of this country as seen by this government. Instead, we are debating other important issues. There is no denying that tax conventions are important, but we would have liked to be able to discuss other topics as well.

Coming back to this convention and the subject of tax conventions in general, the purpose of tax conventions is to avoid double taxation, that is to say the levying of taxes in two different countries on foreign investments. This fosters the free movement of capital without putting tax barriers in the way of investing in other regions. And this fits in with the strong world-wide trend towards free capital flow. This is a good thing in that it allows resources to be directed where they will be the most useful to make better use of often scarce resources. In time, this will enable us to improve our economic system, provided of course that we manage to incorporate the other factors.

So, avoiding double taxation and ensuring that fiscal constraints are not created fosters trade between countries. Bilateral trade between Canada and the United States is constantly growing. As well, trade between Quebec and the U.S. is also on the rise, particularly since the free trade agreement, which received strong support from Quebecers, came into effect. In fact, Quebecers were

the instigators of this agreement. Therefore, we are dealing with a strong tendency.

We know that a north-south pattern, that is commercial trade between the U.S. and Canada or Quebec, is often much more natural than an east-west movement.

We often overlook the fact that it is very appealing to trade with several northern U.S. states, given their huge potential market, both for Quebec and for Canada. The same is true for western provinces in particular, but also for Ontario. There is a huge market out there and this is why we must ensure the best possible movement of capital, goods and services between the two countries.

I am pleased to see that the Liberal Party finally changed its tune regarding international trade. As you remember, the Liberals were strongly opposed to the free trade agreement. Even during the election campaign, they still had some reservations. However, once they came to office and saw the benefits of that treaty, common sense prevailed. I am glad to see that when the government is confronted with economic reality, common sense prevails. And this will always be the case in the future.

I am also pleased to see that the Prime Minister's views on international trade, which seemed so irresponsible to me during the election campaign, have now been adjusted in light of reality.

Sure, we can criticize someone who says one thing during the election campaign only to act differently once in office. However, that irresponsibility is not related to what is said or done once in office: rather, it has to do with the promises made to Canadians during the campaign and the resulting expectations.

The government's attitude is now much more responsible. And that is true in the case of international trade. We are pleased to see that Canada is prepared to accept Chile as a party to the North American Free Trade Agreement. Indeed, we are glad to see that when there are real opportunities to promote economic trade, the government leaves politics aside and strives to promote the development of new markets.

All this leads me to believe that, if Quebecers decide, as they will be asked to do very shortly, to opt for political sovereignty and be in charge of their own political agenda, their tax system and their economy, logic and common sense will prevail. I think Quebecers realize that. My riding is right on the border with Ontario, and I think people are well aware of the day-to-day reality of this when they go and buy or sell goods outside the province. So the economy is one thing and, in many cases, the interests of partisan politics are something else altogether.

As far as tax treaties are concerned, I must say that although it is not the first time we have discussed tax treaties since the beginning of this session-there were a number of other occasions-we never really tackled a problem mentioned by the auditor general, when he said that tax treaties were a very good way to avoid double taxation but that in some cases, when tax rates differed substantially in each country, they could lead to a tax haven. It could be very attractive for some people to put their profits on the books of a foreign branch instead of letting them be realized by parent corporations which are often located in countries with higher tax rates.

This is quite a problem. The auditor general gave 16 examples which could be considered tax havens, to varying degrees. Some very slight changes were made in one of the finance minister's two budgets, but they were not more than that. There have been no further discussions on the subject since that time, but we will have to do it sooner or later.

Trade is expanding between countries throughout the world. The free trade movement is spreading and covers all of North America. If you go to South America, each country has its own tax system. Increasingly, multinationals are using the so-called butterfly system, in which certain components are manufactured by one company and other components by another company. They are all connected to the same corporation which, in the process, manages to pay the lowest possible tax rate.

Companies do that, they hire tax experts to check the various tax rates and best locations for booking losses and profits. These companies sell goods to each other, to their various branches, and they can often artificially change their prices so as to channel their profits to the country with the most attractive tax rate and their losses to another country. Furthermore, in Canada, interest payments on loans are tax deductible.

So a company can decide it is attractive to borrow money here, to use our tax system to deduct interest costs, and then try to channel profits to another location. We must not forget that capital losses are also deductible in this country, which is normal, so they can declare their losses here, take advantage of the deduction on interest payments and channel their profits abroad. This is quite a problem.

It is less of a problem with our biggest trading partner, the United States. But that does not mean it is not a problem in the 16 cases listed by the auditor general. As I said, we must not necessarily assume that the same degree is involved in all 16 cases, but an extremely thorough analysis would need to be done, looking at each situation closely.

The government has undertaken no action in this connection. The finance minister has even been questioned on this matter on several occasions and has never even admitted that it was a

problem for him. Under such circumstances, we have a long way to go. It is like denying reality. As you know, in solving problems the first step is admitting there is a problem. I therefore hope that my colleagues in the government who are present will be able to make the minister aware that there is a major problem he will have to address. It is certain that our Parliament can pass tax conventions piecemeal, one at a time, as they are modified and adopted. Others will need to be adopted in future with other countries with which we might create economic ties.

There is much talk of Canada's turning its eyes to Asian markets. One day there will also be talk of agreements with them, and that will have to be looked into. It would therefore be rather appropriate for somebody, somewhere, who is concerned with real problems and admits to being concerned with real problems to say that this is something that needs further examination.

There is no denying it could become a financial problem, at a time when we are continuing to tighten the screws on society's most disadvantaged, claiming rightly that public finances are in a sorry state. Socially, however, it is becoming hard to accept, because the same people are always being hit.

I understand that these things are complex and not easy to explain to the public, but it is our job to follow them.

According to a newspaper article I was reading, there is even a Liberal member challenging this and other tax conventions and other government actions, on sometimes legitimate and sometimes debatable issues. So, as we can see, even within their ranks, things are not unanimous. It would be worthwhile discussing this seriously.

The Standing Committee on Finance would be an appropriate venue, but this must not become simply a matter of passing a hot potato on to the committee so the minister does not have to deal with it. We have to give some quick thought to the situation.

This bill is at second reading and will go to the Standing Committee on Finance between second and third reading. There is one aspect of this convention, which the parliamentary secretary talked about earlier and which we will be wanting clarification on. It has to do with the fact that an amendment in 1988 in the United States reduced the non taxable amount of estates for foreigners from $600,000 to $60,000. This tax convention re-establishes the non taxable amount of foreigners' estates at $600,000.

As, today, we are correcting matters and returning to the 1988 figure, it appears that the amendment is retroactive. In a number of cases, therefore, it will mean expenditures, because at the same time a deduction will be allowed for amounts paid as taxes on estates.

This point requires some technical clarification. I am not sure I have hit on the effects of the provision, but we would be happy to clarify this in committee and to have a better look at what it is about. I noted that the parliamentary secretary indicated this was a good thing to do. I know that the matter was discussed in the Senate as well. We in the finance committee can seek clarification from department officials and make sure that, if it is done retroactively, there is some logic behind it and that the government does not lose a lot of money to people who might be able to afford these taxes.

It is a sensitive issue. I have some problems with it. It is difficult to accept such changes on a retroactive basis. This is something governments are increasingly resorting to and it is a rather dangerous trend. It would be better if retroactive amendments were to the people's advantage, but that is not always the case. We have been through this before. I remember in particular the cool reception given the rather important retroactive amendment made by the former government of the current leader of the No side in Quebec.

It is difficult because individuals are being asked to act more responsibly, to plan for their retirement, and so on, while the government can decide to change the rules of the game from year to year. The retroactive effect of one provision of the amendments to the convention is something that should be clarified in committee.

In conclusion, may I remind you that this tax convention is nothing new. These are simply amendments to a convention that was signed with the U.S. 15 years ago. This is the third time it is being amended. That is quite normal. Things evolve with time, allowing us to improve economic relations, especially since the 1988 free trade agreement with the U.S., which is an important instrument of future trade for both Quebec and Canada.

I am happy to see that when the government side does something concrete for the economy, common sense prevails over last year's electoral stand on the U.S. They must be pragmatic enough to make sure that businesspeople in both Quebec and Canada can do business and be as profitable and efficient as possible so they can contribute to the country's economic growth.

I hope they will take the same attitude during the Quebec referendum campaign, although I doubt they will because of their partisan politics. But common sense will prevail again the day after. The economy is one thing, but politics is something else.

[Post-Secondary Education, September 20th, 1995]

Is the minister also aware that these cuts are forcing many students to spend more than half their income just to pay tuition fees, putting them further in debt? This is why they took to the streets today.

[Post-Secondary Education, September 20th, 1995]

Mr. Speaker, what the minister is neglecting to say is that he is transferring responsibilities but keeping all the money. That is what he is doing.

[Post-Secondary Education, September 20th, 1995]

Mr. Speaker, my question is for the Minister of Human Resources Development. The federal government is forcing the provinces to significantly raise the tuition fees in higher education because of the drastic cuts it has made to social programs.

Will the Minister of Human Resources Development acknowledge that the cuts he is imposing on Quebec will raise tuition fees by $1,500 a year thus limiting access to higher education?

[Social Program Reform, September 19th, 1995]

Mr. Speaker, tomorrow, students will hold rallies throughout Quebec to protest against the federal government's cuts to social programs and its intransigent attitude toward the Quebec National Assembly's unanimous and legitimate demands.

The budget cuts made by the federal government will have a disastrous impact on the provinces' tax burden, which the Prime Minister is loath to admit. His government's cuts to social transfers have left the provinces and the students with no way out. These cuts are forcing the provinces to impose an unprecedented hike in tuition fees, on the one hand, and to increase student indebtedness to unmanageable levels, on the other hand.

Given all the secretiveness and tricks used to hide the consequences of his reforms, how can Quebecers trust the Prime Minister of Canada?