David Walker

[Speech From The Throne, February 28th, 1996]

Mr. Speaker, before beginning my speech in response to the speech from the throne I would like to take a minute to thank the House for the co-operation I received as Parliamentary Secretary to the Minister of Finance. It is a heavy workload and requires the patience of the Speakers and of the table officers to make sure the work gets done.

I would like to thank the Bloc Quebecois member who will sit with me on the finance committee. I think we will have a great time working together.

We are proud of our record for the first two years of our mandate. We have fulfilled the vast majority of the commitments made in the red book and our first speech from the throne. We have focused on our plan to promote job creation and economic growth. As a result, 500,000 jobs were created and our growth rate is one of the highest among industrialized countries.

This throne speech outlines our plan of action for the second half of our mandate. Our goals remain unchanged. We want to build on what we have accomplished so far. This throne speech has three main thrusts: job creation and economic growth, the security of individual Canadians, and streamlining the federal system to strengthen Canadian unity.

We will put special emphasis on three major areas, namely young people, science and technology, and trade.

We will continue to foster a healthy economic climate by strengthening the basic parameters of our economy. To this end, we will meet our deficit reduction targets and work together with the provinces at harmonizing sales taxes and eliminating domestic trade impediments.

We will therefore rely on the Team Canada partnership between federal and provincial governments and the private sector to create jobs for young people; double the number of federal summer student jobs as early as this summer; support technology development in the aerospace industry, in environmental technologies and in biotechnology, and launch a Canadian technology network; expand the access to the information highway, particularly in rural communities; undertake further Team Canada missions under the leadership of the Prime Minister; and finally, announce new measures to enhance export development and financing.

I will also spend some time today addressing the very real issue facing Canadians, the Canadian pension system, an issue that perhaps has been discussed the most in the time leading up to the speech from the throne and next week's budget, as announced by the Minister of Finance today.

I cannot think of anything that hits more at home to the security of Canadians than what they believe their pensions will be as they retire. Because of great media speculation the government has decided to take the initiative to bring security to the system.

I as a Canadian and as a Liberal and now as a parliamentarian am very proud of the progress made among our seniors since the mid-1960s. The cornerstones of that program are the Canada pension plan, old age security and the guaranteed income supplement.

We have designed a program which, more so than any other country in the industrial world, has lifted literally millions of people from the edge of poverty or in dire straits during their retirement years to having a secured monthly pension.

Any discussions in public debate, whether from the government in the House, from the public in general or from researchers, that insinuates the Canada pension plan cannot be secured and that old age security is about to be taken away creates an insecurity among older Canadians that reverberates across the country. My constituency of Winnipeg North Centre is one of the areas in which many elderly live in very poor conditions. This worries people.

Let me assure the House on behalf of the government that we are making every effort to secure and modernize our pension plan. Perhaps the best way to think about this is to realize that people my age, in their late 40s, the baby boomers, will be hitting retirement age in approximately 15 years. That means an effective planning system has to be set in motion and we literally need a 15-year countdown. We have to facilitate and maintain the security of those who are already in retirement because they have the least flexibility to respond to new situations.

That is why our low inflation strategy, our price stability strategy, helps so many seniors. It gives them the security that their monthly pensions will not be eaten away at 5 per cent, 10 per cent or 15 per cent per year, rates which are not just a nightmare but rates we have already had in our own lifetime.

The purpose of the Canada pension plan review, which will be launched in March with the co-operation of the provinces, done jointly with them, is to ask Canadians how they want to secure their Canada pension plan. Do you want to see any cuts in benefits? Do you want to see increases in contribution rates? Do you want to see

changes in disability pensions? Do you want to see changes in the age of entitlement?

None of the 11 governments involved, as well as the two territories, is coming with preconceived ideas as to how it should be changed. However, they are coming with the one idea that it must be changed and that it must be done jointly. I am very optimistic that by the time the new year rolls around again we will have a resecured Canada pension plan with a new structure that will enable Canadians to understand that long into this 15-year horizon they will have a plan that is stable and able to finance their own retirement.

On the issue of government funded pensions, not the CPP which is paid for by the employers and employees but the general pension plan, it is incumbent on all parliamentarians to enter into a debate with the retired and also with people in their 40s and 50s about the retirement plans they have, how we can best structure all the components, whether RRSPs, the OAS or the GIS, and what sort of package can we put together that will help them in their retirement plans.

I can think of no other purpose for parliamentarians, no higher calling right now, than the accomplishment of security for seniors. This will require work at a time when the government maintains its deficit reduction strategy. The less call we make on the public purse the better off the country will be.

Because we are a Liberal government we have priorities. Our priorities are to focus on social security. We will have negotiations with the provinces this year to jointly set out a framework for the continuation of social and health transfers. We will make sure that social policy has direction and that the right thing is done for Canadians from sea to sea to sea.

We will also ensure, as outlined in the speech from the throne, that the cash component of the transfer does not disappear and that Canadians know that real money will continue to be put in the system by the federal government. This will bring upon us a new level of co-operation among the provinces so we can be assured that we have a transfer which is flexible, which allows the provinces to do what they think is best and is done in the framework agreed to by all of us and with the declared values we have as Canadians toward the health system, social assistance and post-secondary education.

These are the parameters of the government. This is what we are trying to do. The social agenda is evolving. It began with the former Minister of Human Resources Development. It is being continued with the present minister who is being assisted by the Minister of Finance and is being led by the Prime Minister. This is the cornerstone to providing social security for Canadians of all ages and turning our attention to the youth.

I say to the people of Winnipeg North Centre, this speech from the throne addresses issues of prime concern to you. We will have in front of us an agenda that treats people as fairly as possible and gives us a sense of purpose in our social policy.

[Finance, December 14th, 1995]

Mr. Speaker, just over a year ago I was privileged

to lead off the last take note debate on the possible measures for the 1995 budget. Today it is a pleasure to replay that role for the 1996 budget. It allows me to renew the heartfelt challenge to all hon. members of the House.

I also take the opportunity to thank on behalf of the Minister of Finance the finance committee for its work not only on prebudget consultations but on many other issues. I see both of my colleagues from two opposition parties here and I extend my thanks to them.

The chair of the finance committee who was here earlier to present a report told us yesterday that the finance committee has met over 200 times since the government was formed. It has a considerable workload. The attendance has always been first class. There is continuity in what has been said in debate in the committee. The collegiality we have in the organization of our work is greatly appreciated. We know that in a partisan House there are natural divisions, some very heartfelt divisions, but it is also reassuring to those of us to enjoy Parliament to see a committee work so well. On behalf of the minister I say thank you and wish everyone season's greetings and I look forward to continuing the work in the new year.

Today's debate is an accumulation of the work done by the committee as well as individual members of Parliament. Since September we have been meeting with Canadians in Ottawa and across the country. The committee split itself in half. Half went west and half went to Atlantic Canada and Montreal. We have heard hundred of witnesses in a series of round table discussions. We have also heard individual presentations. The interested public as well as members of the committee are getting more familiar with the process. We have had some very good debate.

I would highlight the work by charitable organizations. They have given us some new ideas. I would also highlight the work by health coalitions. They have given us some suggestions to what the budget response should be on health care. We have also heard from several business organizations talked about their optimism with the economy and at the same time their desire to see some changes in the way we do business.

These suggestions are always considered. They are always taken in good faith. They are very much appreciated. The government has every intention to follow up on these many ideas. The government is awaiting the committee report which will tabled in the House during the Christmas recess. It will have more ideas and a semblance of what we think should be done.

The Minister of Finance was before the committee last week. He presented his idea of where we should be heading, the 2 per cent target for the deficit in two years. That was the new announcement for the second year of our rolling target. The committee wholeheartedly endorsed the suggestion, although there were two dissenting opinions. On the whole, the committee appreciated that the minister was very forthright about our new target. Parliamentarians, Canadians and people around the world watching the Canadian fiscal situation were very pleased with what the minister said.

One of the pledges which brought our government to office was to deliver genuine change in how the federal government manages its fiscal decision making; change that provided the public with more open access to information and a change which would give Canadians and their representatives, their members of Parliament, a real role in charting the course of action for the nation.

The latest economic and fiscal update, which the Minister of Finance submitted last week to the House Standing Committee on Finance, is a very concrete example of this commitment to account publicly for our actions and to make our decisions openly. The same thing can be said about this debate.

Again, I must challenge my hon. colleagues from all parties to seize this opportunity and provide the government with concrete, sensible, non-partisan advice. This is a chance to really make a difference in the interest of our constituents and of all Canadians.

The 1995 budget demonstrated clearly and convincingly that public and parliamentary input was valued and acted on by our government. This was confirmed by the substantial public acceptance of that budget.

It must be and will be the ideas and suggestions of all members that dominate this debate. Meaningful discussion occurs most easily when there is a clear and defined context for the issues involved. When it comes to budget planning, that context is nothing less than Canada's economy and the fiscal situation of this government.

I would like to spend a few minutes highlighting some of the key points that the finance minister made in his presentation to the finance committee last week. Let me start as the finance minister did by reiterating one fundamental point.

Our government's objective is not simply to provide a better balance sheet. It is to provide and work toward a better country, a fairer society. It is an economy that more than anything else is capable of producing the kinds of jobs and growth that will enable Canadians to have faith in their future. This is a compelling reason why our commitments to fiscal health will not falter.

There is simply no contradiction between deficit reduction and job creation. Continued deficit reduction is essential if we are to get our interest rates down, interest rates that stand in the way in the creation of jobs.

The federal fiscal situation is directly tied to the outlook for the economy as a whole. I want to touch on how our economy has evolved since the last budget.

Last February the budget projected an economic slowdown as high interest rates weakened the U.S. economy. Unfortunately that slowdown came much sooner than anyone anticipated. Today however we seem to be back on the right track. The U.S. economy is poised for a moderate expansion through 1996 and beyond, a growth that will contribute directly to Canada's growth.

Domestically, interest rates have been falling. They are almost down 2.5 percentage points from the early 1995 highs. This contributes not only to spurring consumer and business confidence and investment, but also eases the cost of our debt charges.

Another harbinger of renewed growth is the fact that our cost competitiveness continues to rebound strongly vis-à-vis the United States. It is now the best that it has ever been in the 45 years that we have kept data on this particular issue. In turn, our merchandise trade balance, exports over imports, stands at $34.6 billion, an all-time high in September.

As we can see, our economic fundamentals are strong but as the finance minister warned our committee and all of us, the challenge is to keep them strong, to take the further budgetary action that will translate those basic strengths into more jobs for Canadians. That takes us to the fiscal challenge and the relationship between public debt and the economy.

Twenty years ago for the federal government the debt to GDP ratio stood at 19 per cent; ten years ago it stood at 50 per cent; today it is close to 75 per cent. The issue is not simply excessive government spending. The very nature of the ratio is the relationship between two variables. The debt to GDP ratio reveals the two things on which we believe very strongly we must concentrate. One is to keep our spending under firm control. The other is the necessity to maximize the nation's potential, its productivity, its capacity to grow, its capacity to create jobs.

I agree with the Minister of Finance. Our strategy must be based on synergy. Neither growth nor deficit reduction is sufficient alone but pursued together they can do the job.

This brings me to the heart of our approach, the steady pace approach based on rolling two year targets that we have adopted. In my view, these do not undercut our commitment to ultimate deficit elimination. Instead, they are a credible strategy to make sure that we get to where we have to go without throwing the baby out with the bath water. Of course we could lighten our load further, just like we could lighten a car by throwing out the engine or removing the brakes, but that would not likely take us to where we want to go.

Our government knows where it wants to go: to the destination Canadians have set for us which is to bring down the deficit firmly and consistently but in ways that sustain and enhance economic growth. That is what we are doing.

By 1996-97 with our 3 per cent interim deficit target secured, we will have halted the growth of the debt to GDP ratio. But that simply sets the stage for the next challenge which is to ensure that this ratio continues to track downward, year after year, cycle after cycle.

Meeting that challenge means more jobs. It means enhanced economic sovereignty as we free ourselves from being beholden to foreign lenders. That is why our government has mounted the largest assault on the federal deficit in Canadian history.

In the 1994 budget we took action to deliver three year savings of $20 billion. In the 1995 budget we took even more dramatic action for a further $29 billion in budget turnaround. In both budgets the vast majority of our action items were spending cuts.

The results are already becoming clear. Last month the finance minister announced that the deficit for our first full year in office was $37.5 billion, $2.2 billion below the target set in our first budget and $4.5 billion lower than the previous year.

In 1993-94 the deficit stood at 5.9 per cent of GDP. It went down to 5 per cent last year. This year the deficit will continue to decline to 4.2 per cent of GDP, on its way to 3 per cent in 1996-97.

In order to maintain that progress, the finance minister announced last week that the deficit for 1997-98 will be brought down to 2 per cent of GDP. This is estimated to be approximately $17 billion. This means that we will have cut last year's deficit by more than half. It also means that the debt to GDP ratio will be on a downward track.

Furthermore, this means that the government's new borrowing requirements on credit markets in that year, which is the way that many other governments, including the United States, calculate their deficit, will be less than $7 billion, less than 1 per cent of GDP. This means that by 1997-98 new borrowing requirements in relationship to the size of our economy will be at their lowest level since 1969.

I have emphasized our action on the spending side of the fiscal equation but I want to reiterate that there is a second track, which is the redesign of government itself and its programs to play a better part in creating jobs and growth. It is jobs and growth and the revenue they bring to government which will also help us to ultimately eliminate the deficit.

That is why we have made improvements to the unemployment insurance program which have been the most profound in the last 25 years, bringing it into line with the labour market realities of the 1990s. It is why we are encouraging small businesses to invest and hire by lessening the regulatory burden and by improving their access to capital. It is why the government is emphasizing trade

missions around the world. Canada is a trading nation and new exports mean new jobs.

There is a companion priority to jobs for our national well-being that our budget planning must encompass. That is to sustain our social programs in the face of a changing global economy and domestic demographics.

This priority is reflected in our unequivocal support for Canada's health care system. It is also reflected in our commitment to ensure that Canadians are not discriminated against when they move from one part of the country to another and seek social assistance.

Let me add a few notes about the nature of Winnipeg and Winnipeg North Centre. I was first elected to represent that constituency in 1988. Many people have said to me: "You were the social policy critic of the Liberal Party in opposition and now you are working in finance. How do you resolve the two? Do you not feel as if you are doing harm to your own constituency?"

Let me state quite clearly to the House that the actions we are taking will help my constituents to have a strong province and a stronger country. It will increase the ability of governments to respond for years to come. The actions we are taking now will provide more opportunities for them than could be imagined under the present debtload.

The situation which has developed in the last 15 years has been an increase in child poverty, a high rate of high school dropouts, and the incidence of high unemployment in downtown Winnipeg. There is a feeling of helplessness, a feeling that governments cannot respond, that governments have neither the energy nor the ideas to develop a stronger economy.

I want to assure my constituents that uppermost in my mind as I carry on in the position as Parliamentary Secretary to the Minister of Finance, is the impact of these actions on their lives. I know that by the way we are gradually reducing the deficit we will not harm the ability of the federal or provincial governments to respond to their needs.

There is in the public debate a great deal of noise about the impact of cutbacks on the provinces, about the impact of social transfers. Let me again assure everyone that every thought was given to minimize the impact on provinces such as Manitoba, Saskatchewan and other poorer provinces across the country so that they could retain the fiscal capacity to respond and deliver appropriate health care and social policies to our people. As the government regains its strength it will be able to respond even more clearly and strongly to ensure that there are job opportunities, school opportunities and a lifestyle we can all be proud of.

Let me conclude on the same note as I did over a year ago. For many years when it came to decisions on the economy and our fiscal dilemma, the federal government too often took the easy way out leaving the hard choices to another day. That has not been our path. We have taken the hard choices and the role of leadership, real action to bring the deficit down sharply, but we have also taken measures to boost economic strength and a real commitment to sustain the social safety net Canadians from coast to coast to coast cherish.

The struggle is not over. We have more to do, further to go to complete our fiscal freedom. We must continue to set priorities for where the government can and must act to help growth and jobs.

This is where we came in today. On behalf of the government, I encourage hon. members to share the ideas and concerns that we can work together on to ensure a strong and prosperous Canada.

[Committees Of The House, December 12th, 1995]

Mr. Speaker, in accordance with its mandate under Standing Order 83(1), the committee on finance is now submitting its interim report to the House.

[Excise Tax Act, October 31st, 1995]

Mr. Speaker, I appreciate the opportunity to speak on the last of the amendments proposed by the third party through the work done by the member for Medicine Hat.

The issue of split runs that we are talking about is very important to the country and, as I said earlier in the debate, has an historical context. One has to go back to the O'Leary royal commission in the early sixties and be familiar with the work of Senator Keith Davey. A decade later we dealt with the newspaper industry. Canada has constantly had to go back to look at the vehicles it should be using to promote its own culture.

This will not be an exclusionary role. This will not push away other meaningful cultures. We are very involved, for example, with the American culture. They are our best neighbours, as they have shown in recent weeks, and perhaps our most important ally in the world. It will also put into context that which we have to do within Canada to promote Canadian culture.

In so doing we try to make sure people from around the world feel welcome in our markets. If they have products they would like to distribute in the Canadian market, whether it be films, television, magazines or books, they are readily available to all Canadians.

In my former life I was an academic. Nobody more than somebody trained as an academic can feel the pressure of censorship, the pressure of not having access to information to make sure they can contribute to the dialogue in their disciplines, in the public and with our students. It is essential to have access to information that no one else has filtered.

The approach of the government is not in any way, shape or form to prohibit access to materials of benefit to Canadian sports fans. I know the Speaker has probably picked up an occasional Sports Illustrated . I have looked at the New Yorker cartoons to pass the time on a flight back to Winnipeg. These things we love to do and would love to share with other countries.

The Canadian magazine industry has been a particularly vulnerable and difficult industry. We are proud of the way it has responded to measures in the past 30 years and we hope it will continue to do so.

The cornerstone of our current policy as embodied in Bill C-103 is not the work of a group of officials working secretly in a department or of an industry led group trying to push through some protectionist measures. Rather it is a function as a result of the work done by a task force set up in 1993 by another government to deal with the issue posed by a Canadian edition of Sports Illustrated .

In chapter VII the task force talks about a renewed framework of support. Because this report is pivotal to our understanding of what we are trying to do, I thought I would take some time in the House to read some key paragraphs into the record so that we allunderstand why the government is proposing what it is proposing. In part it states:

Free speech would lose much of its potency if there were no Canadian magazines. Without the means to express a distinctive voice speaking to a Canadian audience, cultural expression, social cohesion and a sense of national destiny would be impaired, if not irrevocably damaged.

As part of their heritage, Canadians are doubly fortunate to have unparalleled access to publications from around the world. It is the task force's desire to maintain this freedom of choice, and the measures it is proposing do nothing to deny Canadians the right to purchase the magazines of their choice. We cannot make our borders impenetrable even if we wanted to, which we decidedly do not.

The object of the task force recommendations is not to discourage readership of foreign magazines, but to maintain an environment in which Canadian magazines can grow and prosper in Canada alongside imported magazines. This is a high-wire balancing act that the task force is attempting to accomplish.

The measures we are recommending are consistent with the broad principles of the cultural and media policies of successive federal governments since the 1930s. These policies have been developed in response to the fact that the cultural industries in this country-film, television, sound recordings, books and magazines-are largely dominated by foreign products.

If left to market forces alone, a day could arrive when Canadians would no longer enjoy the choice that they have today between foreign cultural products and those developed for the Canadian market. There simply would be no Canadian product because of the relatively small size and the vulnerability of our cultural industries.

These are words of warning from a group that has spent a long time looking at the issue. It goes on to state:

The Government of Canada has adopted a variety of policies and measures to strengthen the viability of Canadian cultural producers: it promotes, for example, Canadian ownership and content in the broadcast media; it requires the review of investment by foreigners in businesses relating to Canada's cultural heritage and national identity; and it encourages Canadian ownership and original content in the newspaper and magazine industries.

The recommendations of the task force follow in this tradition, while at the same time seeking to ensure that Canada's rights and obligations under international trading arrangements, such as the GATT, the FTA and the NAFTA, are respected. We have also been careful to ensure that the measures we are proposing represent a proportionate response to the problems being faced by Canadian magazines, which have been outlined in detail in the body of this report. We are convinced that what is being proposed interferes as little as possible with freedom of expression or choice. Indeed, in the final analysis, we are seeking to expand choice by ensuring the continued availability of magazines with original content.

Later it concludes with the following:

Although favouring the development of original editorial content, regardless of country of origin, goes beyond the narrower focus of promoting only content of Canadian origin, the task force is of the view that, on balance, it is better to aim wide and comply with trade obligations by promoting original content than to target a narrow field and end up in protracted disputes with Canada's principal trading partners by promoting Canadian content alone. In other words, although it is quite obvious that the task force is concerned with the survival of magazines expressing a Canadian perspective and view of the world, it believes that the best way to achieve that objective is to promote original content, regardless of country of origin.

By promoting magazines with original content, we will meet the objectives and at the same time meet Canada's international trade obligations.

In conclusion I will spend a minute on the specifics of the motion proposed by the member for Medicine Hat on behalf of the Reform Party. Motion No. 4 would allow split run periodicals distributed in Canada to be exempted from the split run tax based on the number of split run issues distributed in Canada during the 12-month period prior to the day the bill receives royal assent. The motion would therefore fundamentally alter the limited grandfathering treatment of split run periodicals distributed in Canada that is proposed in the bill and is therefore inconsistent with the vote of the House to adopt the ways and means motion and the approval in principle given to the bill by the House at second reading.

The motion ignores the fact that on two occasions in 1993 the government clearly warned magazine publishers that should they decide during the work of the task force on the Canadian magazine industry to undertake any new publishing activity that would contravene or sidestep the government's policy objectives for the magazine industry, they would be doing so at their own risk. The motion would also send the wrong signal in that it would reward magazine publishers whose actions, while not directly contravening tariff code 9958, offend the spirit of the legislation. For this reason the government opposes the motion.

[Excise Tax Act, October 31st, 1995]

I can tell you from many conversations with the people from CanWest that they would not exist if a licence had not been given to them by the Government of Canada.

The regulatory framework set up by this government in previous times is what makes it possible for that industry to get together on an annual basis. We are very proud as Liberals of the contribution we have made. Those people, because of the base they have in Canada, have gone off now to compete with the world. But you do not compete with the world until you have a company, and you do not have a company until you have a regulatory base. They did not have a regulatory base until they had a good Liberal government. It is as simple and as straightforward as that.

In the publishing industry the key thing to remember, which has not been pointed out perhaps enough in this debate, is that subject to questions of pornography and so forth, any magazine that wishes can enter the Canadian market and be circulated and read. It does not matter whether you are coming from the American market, from the European market, or anywhere else in the world. You can come into Canada, put it on the news-stand, set a price, and people read it. That is competition.

What Canadian publishers have worried about and we as a government have worried about for the last 30 years is the ability of larger companies to use the strength of their organization to undercut the advertising market within Canada. We were convinced originally, when we set out these measures, that certain protections were needed for the Canadian industry. As a result of the steps we took, we have seen an industry flourish. We have seen people have careers in writing. We have seen Canadian subjects come up. We have seen a great deal of research done. We have seen magazines make a profit and we have seen a whole new set of publications that simply were not available to the Canadian reader before that.

From time to time governments have to review their structure to make sure they are up to date with technology. The broadcasting industry is changing dramatically and quickly because of changes in technology dealing with direct broadcasting techniques, new uses of cable, new uses of the telephone system. We are working hard with the CRTC to keep up with these changes. In fact the government just appointed a commission to look at digital television to see the impact it may have on communication systems.

We have a change in technology, which made the regulatory framework we were involved with obsolete. I am not going to speak to the motivation and whether it was done by happenstance or whatever, but somebody saw an opportunity to come into the market and make use of a split run to affect negatively the advertising dollars available to the Canadian industry.

We did not move on this quickly. The last government set up a task force. The last government announced publicly that it was concerned about what had happened, that it was likely to make changes. That task force met, studied the issue for close to two years, and made public its recommendations. Perhaps later I will come to those recommendations. They suggested that the government update its regulatory framework to take into account the new technology. That is what the nature of Bill C-103 is. It is an updating of a strategy that has shown itself to be very positive, very influential, and supportive of the Canadian publishing industry. Those who know Canadian publishing know it is not an industry that creates tremendous wealth. It is not one in which there are moguls involved in huge companies. They are very much small shops in Canada, where people take a great deal of pride in their magazines.

I have a very close friend whose magazine unfortunately did not go as far as he would have liked it to have gone, but the love of that magazine captured his life for a couple years. He enjoyed trying to strike out a market and see it published. Among his friends there is a little club of people with failed magazines. It is a proposition that is enticing and daunting at the same time. People lose a lot of money in magazines. At the same time, the desire to nourish along a project and the desire to build something unique in the Canadian market is something we admire as a government. We did not want to see practices emerge that in fact make it more difficult to survive and make the publication industry more fragile.

I was struck by the arguments put forward by the Canadian Magazine Publishers' Association when they appeared, I believe

two weeks ago, in front of the finance committee. Their arguments were coherent and logical. They understood their responsibility in terms of a product people will read.

Everyone in the House probably goes by a news-stand on their way to the airport to go home for the weekend. They probably pick up some sort of magazine. I do not think any of us would stop and not buy something because it was from another country. I do not think we would say as a government we do not want to see these publications, not at all. If we look at the news-stands we see there is easy access to magazines from other countries right in front of us. I think we should remember that. We should not raise the spectre that somehow the government has arbitrarily taken away the right to distribute a magazine in Canada or the right to make profit out of this Canadian market.

I will bet there are many Canadians, including myself, who regularly buy magazines from other countries and do not think twice about it because of the news and perspectives they bring us.

Simply stated, without Canadian advertising there would not be a Canadian magazine industry. Therefore, we have to make sure there are opportunities for those advertising dollars to be accessed by the Canadian publisher. That is the intent of this act and will continue to be the intent of this government in support of the industry.

In speaking directly about the amendment to Bill C-103 as proposed by the member for Medicine Hat, let me make the following comment. Motion No. 3 would prevent the application of the proposed excise tax on split-run editions altogether. This motion is therefore inconsistent with the vote of this House to adopt the ways and means motion and the approval in principle given to the bill by the House at second reading.

By debating the imposition section of the tax on split-run editions, this motion fails to recognize the important objective the split-run tax is intended to achieve. In particular, the tax will update the government's policy instruments in support of the Canadian magazine industry and therefore allow the government to support the continued existence of a viable and original Canadian magazine industry. That is why we are sticking by our original intent in this and will not support this particular motion.

[Excise Tax Act, October 31st, 1995]

Mr. Speaker, I thank the House for the opportunity to rise on Motion No. 3 put forward by the hon. critic from the third party, the member for Medicine Hat.

He asked a rhetorical question as to why the parliamentary secretary for finance was afraid of competition. I would like to set the record straight. Neither the parliamentary secretary nor his government are afraid of competition.

If you look at the question differently and ask what we are proud of, we are very proud of the Canadian magazine industry. We are very proud of the fact that we have within Canada a very strong and flourishing industry. In fact one of the associations involved, the Canadian Magazine Publishers' Association, has about 300 members. This gives you an idea of the strength being brought to the Canadian market by the Canadian industry.

This strength has not been there by a wish or by a magic wand. The strength of the Canadian magazine industry is in fact predicated upon 30 years of actions and 30 years of considerations by the federal government. It began with a study that is known as the O'Leary royal commission and went on to be studied later in the 1960s by Senator Davey, who is still of course in the upper chamber, who looked at the problems in the Canadian communication industry.

It is not simply a case of taking a look at one segment or the other. I was happy to see that the hon. member got a chance to meet the broadcasters and talk to them about some of their ambitions. He too probably heard from the Canadian Broadcasters' Association and how proud they are of the regulatory regime, which allowed companies like CanWest to grow and prosper.

[Excise Tax Act, October 31st, 1995]

Mr. Speaker, I rise on a point of order. Just before the break for question period the member for York-Simcoe was in the middle of her speech, but unfortunately because of other parliamentary business she will not be able to finish her speech. Therefore I think the House is ready for the question on the first motion.

[Excise Tax Act, October 31st, 1995]

Mr. Speaker, we are here today to consider four amendments to Bill C-103. This bill contains major amendments to the Excise Tax and the Income Tax Act in areas that will benefit Canadian periodical publishers.

It has been a longstanding policy in Canada to channel Canadian advertising revenues into Canadian periodicals. The Canadian magazine industry actually depends on these revenues, as they represent 65 per cent of total revenues. More than 30 years ago, in 1961, the Royal Commission on Publications, commonly referred to as the O'Leary commission, looked into the situation of the Canadian magazine industry.

After a comprehensive review, the commission recommended that steps be taken to increase the flow of advertising revenues toward the Canadian magazine industry to give this industry a sound financial footing.

As a result, two legislative provisions were enacted in 1965: (i) section 19 of the Income Tax Act, limiting income tax deductions for advertisement directed at the Canadian market to advertisement bought in Canadian periodicals, and (ii) Code 9958 of the Customs Tariff, which prohibits the import into Canada of split-run editions or special editions of periodicals whose content is substantially the same as the content of the original edition, except for publicity specifically tailored to a Canadian market.

Over the past 30 years, section 19 of the Income Tax Act and tariff code 9958 have been successful in supporting the government's policy objective of encouraging Canadian advertising revenues to be directed to Canadian magazines. These two policy instruments have allowed the Canadian magazine industry to expand and to prosper.

However, a potential threat to the Canadian magazine industry arose in January 1993 when Time Warner announced its intention to publish Sports Illustrated Canada, a Canadian split run edition of the U.S. magazine Sports Illustrated . It would be printed in Canada using editorial content electronically transmitted from the U.S. Since Sports Illustrated Canada would not involve the physical importation of split run magazines in Canada, tariff code 9958 would not apply.

Time Warner's initiative demonstrated that there was a loophole in tariff code 9958 and a need to update Canada's magazine policy. As a result, in March 1993 the Government of Canada established a task force on the Canadian magazine industry. The task force was asked to examine existing policy instruments and to propose new measures which would ensure the continued effectiveness of federal policy in support of the Canadian magazine industry.

In its final report, the task force presented 11 recommendations to the government, two of which are addressed in Bill C-103: an excise tax on split run editions of periodicals distributed in Canada; and an anti-avoidance rule relating to the deductibility of advertising expenses in non-Canadian newspapers and periodicals.

The proposed excise tax will be levied on split run editions on a per issue basis at a rate of 80 per cent of the amount charged for all advertising appearing in the issue. Without this measure, the task force noted that new split run editions would likely enter the Canadian market and the Canadian periodical industry would risk

losing up to 40 per cent of its advertising revenues over a five-year period.

The proposed amendments to the Income Tax Act will add an anti-avoidance rule to section 19 of the act. This will ensure that newspapers and periodicals which claim to be Canadian are in fact Canadian controlled for the purposes of the act.

The proposed amendments to the Excise Tax Act and the Income Tax Act update our policy instruments in support of the Canadian magazine industry. They maintain the government's longstanding policy respecting Canadian magazines and underscore the federal commitment to support the continuing existence of a viable and original Canadian magazine industry. I wanted to put that before the House to give a context to the amendments which are being discussed.

I would like to take this opportunity to thank the hon. member for Medicine Hat for his participation in the finance committee deliberations. He is not normally a critic in the finance area, but rather in the heritage field. However, this bill went to the finance committee because it affects legislation which is under the jurisdiction of the Minister of Finance. His participation was greatly welcomed and contributed to the questioning of witnesses and our general deliberations.

I will now deal with the first two amendments presented by the member that are grouped together. Motion No. 1 would delete the definition of excluded edition. An excluded edition is defined as an edition primarily distributed outside Canada. This is a key concept that appears in several provisions of the bill. If the motion were adopted, a periodical edition distributed in Canada could be a split run edition if its editorial content is more than 20 per cent the same as that of another edition primarily distributed in Canada.

Thus the motion would result in regional editions of Canadian magazines being subject to the split run tax, even though at least 80 per cent of their editorial content is original to the Canadian market. This would be contrary to the government's stated policy objective for the Canadian magazine industry. It would also be inconsistent with the vote of the House to adopt a ways and means motion and the approval in principle given to the bill by the House at second reading.

The purpose of the bill is to encourage publishers to include at least 80 per cent original editorial content in magazines containing advertisements directed at Canadians. However, provided that a magazine satisfies this editorial content objective, there is no intention to discourage the publisher from publishing regional Canadian advertising editions of the magazine. For that reason the government will have to reject the motion.

The second motion would eliminate exceptions that would exempt certain types of publications from being subject to the tax on split run editions. The first exemption specifies the tax will not apply to an edition primarily distributed outside Canada even though it has some circulation in Canada. This exception would allow regional editions of foreign magazines to continue to be distributed in Canada, provided that the editions are primarily distributed outside Canada.

The second exception would allow a publisher of a foreign magazine to distribute in Canada an edition that contains some but not all the adds that appear in one of the editions distributed in a magazine's home country, provided that the edition distributed in Canada does not contain any new ads.

These two exceptions are intended to allow foreign magazine editions to continue to be distributed in Canada without being subject to the split run tax, provided that they do not contain ads primarily directed at Canadians. By deleting these exceptions the proposed motion would extend the scope of the split run tax to magazine editions not intended to be subject to the tax.

Thus the motion is inconsistent with the vote of the House to adopt the ways and means motion and the approval in principle given the bill by the House at second reading. For this reason the government will reject the motion.

[Customs Act, October 31st, 1995]

Mr. Speaker, I thank the member for Algoma for his speech. More important, the work done by the finance committee was very important in the development of this legislation.

Members of the finance committee over the last year and a half since I have been involved with it have had to deal with a number of different subjects. It requires a lot of work behind the scenes to make sure they understand each of these different bills.

A member such as the member for Algoma who is close to the border, an area which also has a lot of tourism, really depends on the operation of Canadian borders not only for industry but for tourism. A member such as the one for Algoma has to spend a lot of time making sure he or she understands this legislation and is able to contribute to the debate.

The witnesses who came in to talk about Bill C-102 were all very knowledgeable and very expert witnesses. They had very different opinions sometimes from what we wanted to do. It was up to the members of the committee to really strike a balance, to review these interventions and to come out with what I consider to be a first class piece of legislation.

Could the member comment on some of the things he heard in committee and whether he thinks the bill accurately reflects the best way of proceeding on these various issues?

[Customs Act, October 31st, 1995]

Mr. Speaker, I thank the Parliamentary Secretary to the Prime Minister for getting involved in the debate as it affects all Canadians.

I appreciate that growth is the heart of the Canadian economy. It is very important for all of us to remember that the growth of the wider Toronto area has been in large part based on the export industries. Major cities around Toronto house the auto industry, the direct manufacturers being the big three, and small firms that feed into it such as the parts suppliers. In Toronto a number of different industries export across Lake Ontario into the heartland of American industry.

The message the government is trying to get across to Toronto area business people is that we are there to support them in the expansion of the economy and the expansion of their businesses. We are there to make sure they can get through customs at Buffalo or Windsor quickly.

Individual travellers or those who own businesses and use border crossing points know that there are long lines and it can be very difficult. It is one thing for individual citizens to be tied up for a few hours on a Sunday. It is frustrating if they are with their children. However it is another thing for truck drivers to be constantly held up as they do business. It extends the working day too long. It makes the cost particularly for businesses with just in time delivery systems very expensive.

We are trying to recognize the new realities in the legislation. We are trying to have members such as the parliamentary secretary take an interest because it helps us to give the message to the business community. The hon. member would probably want to go to the business community in Toronto to explain some of these points.

By way of a question I ask the hon. member whether or not the business community on the export side, as far as she knows, was beginning to understand the changes and the fact that we can accommodate tax free transitions as goods are brought into Canada and exported not only into the United States, which accounts for a large part of what we are doing, but also into Europe and South America. The Pearson airport is a centre for such transactions into new markets.

The Toronto business community would be very interested. I ask her to discuss it with her colleagues from Toronto. Perhaps we on this side of the House, those from Ontario and others, could help to take the message into the business community and to promote Canadian exports through the new legislation.