Roy Cullen

[Income Tax Act, April 3rd, 2001]

Mr. Speaker, I do not know if I have changed my mind, but this initiative has received the government's attention, and I congratulate the member on his tenacity with this measure.

Allow me to speak to some of the shortcomings of the bill. First, the private member's bill proposes changes to the Income Tax Act to help mechanics defray the cost of providing their own tools when doing so is a condition of employment.

The changes would allow mechanics to deduct the cost of buying, renting, insuring or maintaining their tools. An income deduction would be available for tools that cost less than $250. That amount may be adjusted according to inflation. Higher tool costs would be subject to some form of capital cost allowance. The allowances would be set by special regulation.

Canadian employers normally provide workers with tools and other resources they need to do their jobs. Canadian workers nonetheless bear job related costs, whether in getting to and from work, buying uniforms or other work clothes, eating away from home or keeping up with trade journals. All Canadians incur costs when they take a job.

The bill aims to recognize that employed mechanics face exceptional work related costs. The Government of Canada understands that tool costs can be significant, particularly at the start of a career.

Today I will put some of these issues in perspective. First I will talk about the cost of tools. We have heard many estimates. Today the member opposite cited an amount of $40,000. When we debated this bill previously I was struck by the wildly different numbers members had proposed in the Chamber. Different members stood and told us a mechanic could pay $10,000 or $25,000 or even $75,000 for their tools.

Well, maybe those are possible. Let us look instead at what is normal. The Canadian Automotive Repairs and Service Council surveyed technicians and apprentices a couple of years ago. They found that half of these mechanics owned some $20,000 worth of tools. But this is just an average. About a third of mechanics said they owned more than $30,000 worth of tools, for example. Either way, whether it is $20,000 or even more, these tools obviously add up to quite a bit of money.

Let us look at it a different way. Let us suppose a mechanic spends $20,000 on tools and uses them over a 40 year career. It is not obvious whether that is a tremendous burden. I do not believe either of those numbers is right. The numbers that make more sense are annual expenditures. Annual costs give us a better sense of affordability. They take into account that tools need to be replaced or updated over time.

A journeyman mechanic who has a basic tool kit probably built it up while learning the trade. How much would he or she need to spend to keep the tools intact and updated? The same Canadian Automobile Repair and Service Council survey I mentioned earlier would suggest that the average expenditure is about $1,500 per year.

Four in ten mechanics say that they spend less than $1,000 per year and 23% of mechanics say that they spend more than $2,500 per year. However there are two key points. The costs are not the same for everyone and one's ability to handle the costs depends on how much money one makes.

The members of this House all know that mechanics are not rich. They do, however, earn a better living than many other workers. Let us try to put it in perspective. In 1996, the average automotive service technician was making about $38,000 a year, not $26,000 as the Bloc Quebecois member mentioned.

In that same year, the average university graduate was making just over $42,000. And people with less than a university degree earned an average of $26,000. These are real numbers, based on the 1996 census.

Mechanics are not rich but they do all right compared to the national averages and compared to tradespeople, like bricklayers and carpenters, who make about $34,000 per year.

Let me go back to the Canadian Automobile Repair and Service Council survey one more time. It asked members to report how much they made. Some 15% said they made less than $25,000 per year, most of them no doubt apprentices, but 13% said they made more than $55,000 per year. Again, the point I make is that everyone's situation is different.

That brings me to another issue. When we recently debated a similar bill I was struck by the fact that all but one of the speakers singled out the impact of tool costs on the number of apprentice mechanics entering the field. I will take a minute to focus on apprentices' tool expenses and their earnings.

I guess the first question is, how much does it cost for a starter toolbox and tools? Well, the CARS Council says it can cost between $3,000 and $4,000. This is just the basic starter kit. The apprentice would add more tools as he or she progressed through the apprenticeship program. During a typical four year apprenticeship, it would not be unheard of to spend $15,000 and sometimes more. So let us compare that to what they earn. The average annual income is about $20,000.

It would certainly be a challenge for an apprentice mechanic to buy $3,000 worth of tools on an annual income of $20,000 per year. We understand that. In some cases the costs might even make someone think twice before signing up to be a mechanic.

I only want to reinforce my point. That this bill fails to take into account the different circumstances faced by different mechanics. At one level, we have apprentices who pay somewhere around $3,000 a year for tools, on an annual salary of $20,000, and we have journeymen spending around $1,500 a year on tools, while they are making $38,000 a year.

At another level we have different journeymen with different incomes and tool expenses. Is that what the member for Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans wanted, to help a mechanic earning $60,000 a year write off $500 in tools? Perhaps that is his intention, but what will he tell the plumber or carpenter who must cover similar tool costs out of pocket?

There is merit in the idea behind this private member's bill. The very substantial employment expenses incurred by some employed mechanics are certainly a concern. I would also say that exceptionally high work related expenses should not prevent people from participating in the economy.

However, the bill fails to distinguish between those who can reasonably afford to cover tool costs and those who might really need some help. The government intends to work with representatives from the automobile industry to explore better options to address this issue, particularly with respect to the challenges faced by apprentices. In exploring other options the government hopes to find ways to address some of the shortcomings of the private member's bill. Accordingly, I would ask members to think carefully about this bill before supporting it.

[Supply, April 3rd, 2001]

Mr. Speaker, I am pleased to take part in this debate. I have been puzzled by some of the remarks earlier, and I will come back to it with a question for the hon. member opposite because I know he is from British Columbia.

The leader of the fifth party earlier talked about the former premier of British Columbia, Mr. Bill Vander Zalm, and he talked about a report that had been done by Mr. Ted Hughes. I think he said that in his report Mr. Hughes had stated that the premier was the highest elected position in the province and that he had a duty with respect to conflict of interest.

I was living in British Columbia at that time and what I think the right hon. member forgot to mention was the fact that there was a small matter of $15,000 or thereabouts in bank notes that were in the safe of the premier's fantasyland gardens, or whatever it was called, just outside of Vancouver, and it happened to be from a land developer, et cetera.

In this particular case, it is fairly clear that the Prime Minister had no personal interest. He had a debt owing to him but the shares had clearly been sold even though the share register was not updated. As a chartered accountant, I have dealt with many companies with registered shares that had not been updated for years on end. I had to tell them to update.

The shares were clearly sold. The Prime Minister tabled the bill of sale. He had a receivable from someone who was an executive of some means so that the loan could be recovered through the courts. It had nothing to do with the interdependence of the golf course and the hotel. It had everything to do with a receivable from a person who had the means to pay the receivable. It was a fixed sum.

I find the debate is really out of hand. I know the hon. member is from British Columbia so perhaps he will remember the incident involving the former premier, Bill Vander Zalm. I think to draw that analogy is absolutely scurrilous.

[Taxation, April 3rd, 2001]

Mr. Speaker, I believe the member opposite is confusing a number of issues.

Canada is a strong participant in an OECD initiative that is dealing with anti-tax competition. In fact last year we brought in very stringent anti-money laundering legislation. We are part of the OECD tax competition exercise. We do have tax treaties with certain countries, and that works for all citizens in a very positive way.

[Budget Implementation Act, 1997, April 2nd, 2001]

Mr. Speaker, while listening to the comments of the member just now, I noticed an inconsistency in the debate that emerged from the Alliance Party across the floor. I was not totally surprised or shocked by that because it is quite commonplace.

If I recall, earlier on in the debate the member's colleague, the finance critic, attacked the amendment that dealt with the amendments made to the Canadian Wheat Board Act in 1998, and the Canada Pension Plan Investment Board was deleted in error. The member for Calgary Southeast commented that because of that the government, through the finance minister, could have been involved in some decision making with respect to the investment board. He went on in quite a diatribe about that.

The argument of the member for St. Albert went along quite a different track. He asked why we would exempt the pension plan investment board from the Financial Administration Act. It seems to me that the party is really inconsistent. Could the member for St. Albert would comment on that?

[Budget Implementation Act, 1997, April 2nd, 2001]

Mr. Speaker, I rise on a point of order. I did not want to interrupt my colleague on the other side, but I was just wondering about the relevance of what he is speaking about. I have been listening very carefully and I thought we were debating Bill C-17, which has to do with the Canada foundation for innovation and the Financial Administration Act.

[Budget Implementation Act, 1997, April 2nd, 2001]

Mr. Speaker, I am delighted to have the opportunity to speak today at second reading of Bill C-17.

The bill amends the Budget Implementation Act, 1997, by providing funding increases for the Canada foundation for innovation. It also contains amendments to the Financial Administration Act relating to the Canada Pension Plan Investment Board and the borrowing power of federal departments.

I will begin my remarks by discussing the additional funding for the Canada foundation for innovation. I had planned to talk about the history of the Canada foundation for innovation but I think members in the House are familiar with the story. With the bill, funding for the foundation will rise to $3.15 billion. That demonstrates the government's commitment to fostering a knowledge based economy and a climate of innovation.

I will move to the specific measures of the bill which pertain to the CFI and I will explain the funding provisions in detail.

The $500 million announced last October will be invested in two ways. First, $400 million will allow the foundation to contribute to the operating costs of new awards. Second, $100 million will help support the participation of Canadian researchers in leading edge international research projects and facilities that offer significant research benefits to Canada.

The recent announcement of an additional $750 million for the CFI will build on that funding by providing additional stability to universities as they plan their future research priorities. At the time of the announcement the finance minister said:

Giving the knowledge economy of the 21st century a preferred home in Canada will lead to higher incomes, better jobs and increased opportunities for all Canadians.

In addition to establishing the Canada foundation for innovation with a series of funding initiatives that now total $3.15 billion the government has implemented other funding initiatives for research over the past four years.

The initiatives include: one of the most generous R and D tax regimes in the world; increased funding to the granting councils, including the creation of the Canadian institutes for health research, to maximize the advantage Canada enjoys in medical research; funding of $900 million over five years for the Canada research chairs program which would establish 2,000 research chairs at Canadian universities; increased funding for the network of centres of excellence; funding of $300 million for Genome Canada; the sustainable development technology fund; and a Canadian foundation for climate and atmospheric sciences.

As announced in the Speech from the Throne in January, the government is committed to at least doubling its current federal investment in R and D by 2010.

The Speech from the Throne also specified that during its mandate the government intends to increase investment in granting councils, accelerate Canada's ability to commercialize research discoveries and turn them into new products and services, and pursue a global strategy for Canadian science and technology so that Canada can be at the forefront of collaborative international research.

Increased funding for the Canada foundation for innovation, CFI, is not the only component of the bill. Bill C-17 also contains amendments to the Financial Administration Act which I will now discuss briefly.

I should first explain that the financial administration of the Government of Canada, the establishment and maintenance of its accounts and the control of crown corporations all fall under the purview of the Financial Administration Act, the FAA.

In addition, the Financial Administration Act sets out the statutory framework under which the government can borrow money. The Minister of Finance needs authorization from parliament through borrowing authority acts before the government can borrow new money. Authority to refinance maturing debt is contained in the Financial Administration Act. The finance minister is also responsible for debt management under the Financial Administration Act.

The first FAA amendment in the bill concerns the Canada Pension Plan Investment Board. When the Canadian Wheat Board Act was amended in 1998, the Canada Pension Plan Investment Board was inadvertently deleted from subsection 85(1) of the Financial Administration Act.

The error meant that legally the Canada Pension Plan Investment Board was subject to various crown corporation control provisions under the FAA which put it in conflict with its own mandate. Clearly that was not intended. Bill C-17 rectifies the situation.

The Canada Pension Plan Investment Board will again be included in the list of crown corporations exempt from part X of the Financial Administration Act. The change will be retroactive to December 1998 to ensure that the Canada Pension Plan Investment Board has always operated within the laws of Canada.

The second amendment reinforces the authority of parliament over any borrowing by or on behalf of the crown. It also strengthens the role of the Minister of Finance in ensuring the appropriate management of government indebtedness.

The amendment provides for greater certainty that it is parliament that specifically authorizes borrowings made on behalf of Canada. Bill C-17 ensures that all borrowings, not just money but instruments like capital leases, are covered under section 43 of the Financial Administration Act and are subject to supervision by the Minister of Finance.

In closing I will summarize. The amendments to the Financial Administration Act are designed to improve the operation of the act.

The changes to the Budget Implementation Act, 1997, to provide additional funding to the Canada Foundation for Innovation and extend its activities are consistent with the government's commitment to at least doubling its current investment in R and D by 2010.

The Canada foundation for innovation is about looking forward. It is about education and investing in the future. In other words, it is making a down payment today for a much greater reward tomorrow. Let me quote the Minister of Finance when he spoke on October 18. He stated:

—success in the new economy will not be determined by technology alone, but by creating an environment of excellence in which Canadians can take advantage of their talents, their skills and their ideas.

The Canada foundation for innovation and its successes reflect the minister's sentiments. The CFI deserves this increased funding so that it can continue to promote research in Canada and inspire young Canadian researchers, thus contributing to the environment of excellence.

I am confident that hon. members from all sides of this House will agree that investing in education, research and innovation is the most significant investment Canadians can make to foster future success.

Clearly the government is on the right track. I encourage hon. members to give this legislation their full support.

[Federal-Provincial Fiscal Arrangements Act, April 2nd, 2001]

Mr. Speaker, I listened carefully to the comments by the member for Winnipeg North Centre. In looking at the federal transfers to Manitoba, a one year removal of the ceiling on equalization payments was agreed to at the first ministers' conference. Because of the pressures on equalization payments, the Prime Minister agreed to lift the ceiling for the year 2000. After that, it would be based on growth in GDP year by year. It will go back to the original year so we will not know what the equalization will be for another year or two once all the numbers are in.

By lifting the ceiling on equalization payments, Manitoba would receive a further $76 million, which would be the second highest increase in equalization payments to Manitoba. In fact, if we look at total federal transfers to Manitoba for the year 2000-01 it would be $2.3 billion. That would account for approximately 35% of Manitoba's estimated revenues. Canadians are doing a pretty good job in terms of recognizing Manitoba's needs.

The member is quite right when she says that equalization is meant to ensure that there is equality in services and programs across Canada notwithstanding where one lives in Canada. It is not an exact science but that is the intent. When provinces have offshore revenues, the idea is to allow them to take advantage of some of those revenues but over time to bring them back to the intent of the equalization program.

I wonder if the member knows about the impact on Manitoba as a result of lifting the ceiling and about how that is good news for Manitoba.

[Federal-Provincial Fiscal Arrangements Act, April 2nd, 2001]

Mr. Speaker, the member for South Shore talked about the fact that equalization or what Nova Scotia and Newfoundland are asking for is not rocket science. It is not rocket science when they are asking for something that no one else gets, that is preferential treatment.

We should go back to the original principles of equalization. The way equalization is supposed to work is that when a provincial government gets better off by a dollar its equalization goes down by a dollar. When its revenues decline its equalization increases.

In rare circumstances the federal government has reached some accommodations with certain provinces that departs from this. It happened with Quebec for asbestos, Saskatchewan for potash, and Nova Scotia and Newfoundland through special accords. Nova Scotia and Newfoundland are allowed to keep 30 cents on the dollar or more from revenues raised from offshore oil and gas.

It was in the 1980s that the governments of Nova Scotia and Canada discussed the ownership of offshore resources. Both governments agreed that Nova Scotia should be allowed to tax offshore resources as if it owns them.

The member for South Shore talks about the offshore accord. Has he skimmed through it and does he realize that once triggered Nova Scotia is able to shelter about 90% of offshore revenues against equalization? That comes down over 10 years or until it is clawed back. However the equalization was never meant to provide an ongoing benefit. It is meant to be a transfer from the so-called have provinces to the have not provinces.

If oil and gas revenues from Alberta were also excluded, we might be paying equalization to Alberta. How would the member for South Shore feel about that?

[Financial Consumer Agency Of Canada Act, March 30th, 2001]

Mr. Speaker, I rise on a point of order. I do not like to interrupt the hon. member for Prince George—Bulkley Valley, but I would like to know the relevance of what he is speaking about. When we started this debate we were discussing Bill C-8.

[Financial Consumer Agency Of Canada Act, March 30th, 2001]

Mr. Speaker, I am pleased to be here in this crowded House to take part in the third reading debate on Bill C-8, an act to establish the financial consumer agency of Canada and to amend certain acts in relation to financial institutions.

I think we can all agree that the financial services sector plays a critical role in the Canadian economy. It underpins all other sectors in the economy by providing the means to channel savings into investment, resulting in economic growth and wealth creation.

The role the financial institutions play in the life of Canadians is equally important. In fact, these institutions protect Canadians' assets well and meet the needs of consumers and businesses as far as major financing, purchases and investments are concerned.

Let us not forget that half of Canadians are shareholders of our financial institutions, either directly or indirectly, so this represents an important source of revenue for Canadians now and in the future.

As legislators, we have an important responsibility to encourage the health of this sector. According to 1999 Statistics Canada data, 863,000 Canadians were employed in the financial services sector, including finance, insurance, real estate and leasing.

Canada's federal financial institutions operate within a legislative and regulatory framework defined by parliament. These legislative acts require the government to periodically review this framework and to bring before parliament any amendments needed to ensure that it remains current and relevant.

I would like to call the attention of the House to the four fundamental principles that underpin the legislation and which guided the government's decision making on the specific measures in the policy paper “Reforming Canada's Financial Services Sector”. It was released to the public on June 25, 1999, as the government's response to the MacKay task force report.

The first principle is that banks, trust companies, credit unions, insurance companies and other financial institutions must have the flexibility to adapt to the changing marketplace and to compete and thrive, both at home and abroad. Upholding this principle is necessary if the financial sector is to maintain its contribution to economic growth and job creation in the face of increasing globalization and rapidly changing technology.

To this end the bill provides additional flexibility for banks and insurance companies to organize themselves under a new holding company option that would be available to them, thus permitting them to explore opportunities to improve efficiency and grow their businesses by reducing the regulatory burden, among other things.

Similarly, we are raising the limits on widely held ownership of financial institutions in order to permit the exchange of considerable shares which is required for the conclusion of strategic alliances and joint ventures. This important business strategy is becoming increasingly common in other industries and ought also to be available to Canada's financial institutions.

The bill substantially expands permitted investments for financial institutions and makes these available to both the holding company and the parent subsidiary structures.

The second principle guiding the bill stresses the importance of competition. Specifically, we believe that vibrant competition in the financial services sector is necessary to allow consumers and businesses alike to benefit from a wide range of choice at the best possible price. With this objective in mind, the government is acting to remove unnecessary barriers for a bank start-up. We want to encourage new entrants. To that end, we are lowering the minimum amount of capital required to start a bank to $5 million from $10 million.

We are also proposing a new three tier, size based ownership regime that allows for the single ownership of small banks.

Banks with equity of $1 billion to $5 billion are also allowed to be widely held, provided at least 35% of shares are widely distributed among the public. There will, however, be no restrictions on the ownership structure of small banks with equity of less than $1 billion. These measures will make it possible to increase competitivity in the banking sector and to encourage new players.

Large banks with more than $5 billion in equity would continue to be widely held. Furthermore, commercial enterprises would also be allowed to establish new banks. This may be potentially attractive to retail companies that already have a network of stores or outlets.

The bill also includes measures to strengthen credit unions and caisses populaires. It contains measures that could accommodate their plans to restructure themselves in a way that reduces structural fragmentation and increases efficiency. It also provides the government with the regulatory flexibility to respond to new initiatives that may be forthcoming from the movement. The end result could be a stronger and more competitive credit union movement in Canada, better placed to challenge other financial service providers across the land.

We also propose to open up the Canadian payments system to life insurance companies, securities dealers and money market mutual funds. We believe that a broader range of participants in the payments system would foster competition because these firms would be able to offer services akin to chequing accounts.

Moreover, we will implement measures to align access rules for foreign banks in Canada with those governing domestic banks, so as to provide greater flexibility to foreign banks that wish to settle in Canada.

All in all, these measures will promote competition in the financial services sector, thus contributing to ensuring that Canadians get the best possible deal from suppliers of financial services.

I know the House is interested in the third guiding principle underpinning this legislation and that is to empower and protect consumers of financial services.

To that end, this bill would provide better access to basic services. It would allow us to specify in regulation what are reasonable identification requirements for an individual to open a bank account. The legislation also would provide regulation making authority regarding the provision of a low cost account and would oblige banks to follow a fair and reasonable process if they decide to close a branch.

As for low fee retail deposit accounts, memoranda of understanding have already been signed by the eight largest banks. While such accounts may vary from bank to bank, they must all comply with standards that will allow us to ensure that all Canadians have access to an account at an affordable price.

The bill would also establish two new organizations to promote and safeguard consumer interests in the financial sector. The Financial Consumer Agency of Canada, or FCAC, would consolidate related functions currently housed in Finance Canada, Industry Canada and OSFI. This agency would uphold the consumer protection provisions of our financial institution statutes, monitor institutions' compliance with their pledges to self-regulate, and provide consumer information and promote consumer education about financial services.

The government would also work with financial institutions to launch the new Canadian financial services ombudsman. This office would provide an independent, objective and impartial third party who would review complaints from individual consumers and small business owners who believe that their financial institution has treated them unfairly and have not been able to resolve these matters with the management of the financial institution.

However, we are also mindful that regulations are not without cause, which brings me to the fourth and final guiding principle underlying this bill.

We believe that our government should initiate improvements to the safety and soundness of the sector, but we should also take every opportunity to lighten the regulatory burden when we can. Bill C-8 would do just that.

The bill before us today seeks to implement a streamlined approval system for numerous operations that must be approved by the superintendent.

We are also proposing to improve the payments system, to ensure that the public participates more fully in the decision making process, and to ensure that the standards, regulations and rules of the CPA reflect the public interest.

The bill would also enhance the powers of the Superintendent of Financial Institutions to deal with firms that do not meet the regulatory requirements. It would also bolster the superintendent's power to intervene in the affairs of a financial institution that is heading for trouble. This would ensure that the prudential safeguards for the financial system are consistent with the new reality of stronger competition which we are trying to bring about.

In conclusion, the measures embodied in the bill we are debating today uphold and advance all four of the guiding principles I have just enumerated.

Canada's financial sector has an excellent reputation. Our financial institutions are extremely successful, both at home and abroad. To retain this excellent reputation and to keep our financial institutions strong, we need this new policy framework, a framework for the future. We need it because it recognizes the change around us, it permits our financial institutions to seize new opportunities and it manages change for the benefit of all Canadians.

I would like to thank the members of the finance committee and the hon. members of the House for being very supportive of this bill. I firmly believe that the measures proposed in this legislation provide an important framework whereby we can move forward together.