Roy Cullen

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, I listened as the member for Elk Island described in his story the length of time it took him to get his tax holiday. As he talked some of the reasons suddenly began to emerge. I saw the scenario wherein he had big parties and invited people over and they had tons of shrimp and then ran around his house using six or seven phones to make phone calls. I am sure that the average Canadian gets his or her tax holiday much sooner than the member for Elk Island.

He talked about positioning for elections. He also talked about the single rate tax, not the flat rate tax, and of course we know that leading up to the election the member's party went from 17% to 17% and 25% because of concerns the party had.

I was in British Columbia not too long ago. A lot of good parts of B.C. are Alliance territory. A lot of people told me that the single rate tax would be great because they could take their incomes and multiply by 17% or 25%. However, the member today and at other times in the House has really affirmed the fact that they would still have all the deductions, such as medical expenses over a certain amount, the charitable donations, RRSPs, et cetera. I suspect we would still have a big Income Tax Act. I wonder if the member could talk about how we would reduce complexity under the 17% and 25% scenario he described earlier.

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, I find it strangely ironic that parties on the right, if we want to call it that, always talk about the Canadian dollar. Of course there is a concern about the Canadian dollar, but on the one hand those members talk about the markets and how we should worship at the altar of the markets, but in the same breath they talk about how the government should be doing something about the Canadian dollar.

Although the member is not indicating this to the House, he knows that recently the Canadian dollar has actually been doing better than other currencies. I am talking about the European currencies, the euro, and the Australian dollar and the New Zealand currency. That is nothing to take a lot of relief from, but we do know the story, and that is that people are flocking to the U.S. dollar as a safe haven, which is strangely ironic in the context of the marketplace because markets in the U.S. are taking a beating and some of the economic fundamentals are not terrifically strong.

Nonetheless, there we have it. It is a migration to the U.S. dollar. The member for Kings—Hants talked about income taxes. This bill implements the $100 billion tax reduction package so that average Canadians will see their personal income taxes reduced by 21% and Canadians with families will see theirs reduced by 27%. No matter how we cut it, that is a very large cut in personal income taxes.

I have five small questions, if I may. The member talked about taxes. I wonder if he forgot that large businesses in Canada on average pay 5% less income tax than those in the U.S. I wonder if he neglected to mention that for small businesses earning up to $75,000 a year corporate taxes in Canada and the U.S. are similar but that for small businesses above $75,000 corporate rates in Canada are significantly lower.

I wonder if he forgot to mention that capital gains in Canada are two percentage points lower than the average top tax rate. I wonder if he forgot to mention the more generous treatment for employee stock options here in Canada.

I wonder if he neglected, just as an oversight, to mention the permanent 20% research and development tax credit for all R and D expenditures in Canada, a country with one of the most progressive and advantageous R and D regimes in the world. I wonder if he forgot that.

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, I welcome the opportunity to present Bill C-22, the Income Tax Amendments Act, 2000 for second reading today.

While the bill amends several sections of the Income Tax Act, more important, it implements key elements of the government's five year tax reduction plan which was introduced last year.

Briefly, this plan will provide $100 billion in tax relief by 2004-05, thereby reducing the federal personal income tax paid by Canadians by 21% on average.

Families with children will receive an even larger tax cut—about 27% on average.

The bill also includes many additional measures, including technical amendments that were introduced in Bill C-43 last fall but which died on the order paper when the election was called.

Many of these amendments are relieving in nature. Some correct technical deficiencies in the act while others lighten the administration of the tax system. Whatever the changes, one thing is certain, each is based on the principles of fairness and equity in the federal tax system to which our government has been committed since coming to office in 1993.

Once we eliminated the deficit in 1997-98, we began to cut taxes for all Canadians. The bill before us today is the biggest step forward in our tax cutting efforts to date and is based on four key principles.

First, our approach to tax reduction must be fair starting with those who need relief most, middle and low income earners, and especially families with children.

Second, we will focus initially on personal income taxes since that is where we are most out of line.

Third, we will ensure that Canada has an internationally competitive business tax system.

Fourth, we will not finance tax relief with borrowed money because that means an inevitable return to higher taxes in the future.

For the government, fiscal responsibility is fundamental and tax cuts are essential. At the same time, it is essential that an effective, fair and technically valid tax system be maintained, which is the thrust of the legislation before us today.

I will now discuss the main measures in the bill beginning with some of the personal income tax changes.

In 1999 the government promised Canadians that it would set out a multi-year plan for further tax reductions. The 2000 budget delivered on that commitment by making the most important structural changes to the Canadian tax system in more than a decade with a special emphasis on the needs of families with children. The bill provides for tax rate reductions at all income levels as of January 1, 2001.

The low and middle income tax rates fall to 16% and 22% respectively. The top 29% rate is reduced to 26% on incomes between about $61,000 and $100,000, which means that the 29% rate applies only to income over $100,000.

While tax burdens will fall for all Canadians, the decline will be felt substantially by middle income earners. In addition, the bill would eliminate the 5% deficit reduction surtax as of January 1, 2001.

One component of the five year tax reduction plan must be in place by July 1 of this year because it benefits Canadian children. I am referring to the increased support for families with children through the Canada child tax benefit.

As hon. members know, the Canada child tax benefit is a key element of federal assistance to families. It is an income based benefit with two components: the Canada child tax benefit base benefit for low and middle income families and the national child benefit supplement for low income families.

The maximum Canada child tax benefit for the first child will rise to $2,372 in July 2001, well on the way to the five year goal of $2,500 by the year 2004.

For the second child, the maximum Canada child tax benefit will increase to $2,308 in July 2004. Together with increases announced in previous budgets, annual Canada child tax benefits will exceed $9 billion a year in the year 2004, of which low income families will receive about $6 billion and middle income families about $3 billion.

The bill contains other personal income tax changes that are specifically designed to help those who need it most.

For example, the amount on which the disability tax credit, the DTC, is based is increasing from $4,293 to $6,000 effective 2001. This tax relief will increase over time, as the DTC is fully indexed to inflation.

The list of relatives to whom the disability tax credit can be transferred has expanded to make it consistent with the medical expense tax credit rules. In addition, speech language pathologists will now be able to certify eligibility for the disability tax credit with respect to speech impairments.

Another measure increases the maximum annual amount that can be deducted for child care expenses to $10,000 from $7,000 for each eligible child for whom the disability tax credit can be claimed.

The amounts on which the caregiver tax credit and the infirm dependant credit are calculated are both going up to $3,500. With full indexation, this tax relief will continue to increase over time.

At present, individuals with certain mobility impairments may qualify under the medical expense tax credit for renovation costs that enable them to gain access to, or be mobile or functional within, their home. Bill C-22 includes reasonable incremental costs relating to the construction of a principal residence to help these individuals.

To provide additional assistance to students, the annual exemption for scholarships, fellowships and bursaries received in conjunction with programs for which the education tax credit may be claimed increases to $3,000, up from $500.

I also want to mention that self-employed individuals will now be able to deduct one-half of their Canada pension plan or Quebec pension plan contributions on self-employment income. The remaining one-half will continue to be eligible for a personal tax credit at the lowest tax rate. Without the bill they would be entitled only to the credit on both the employer and employee contributions, which would put them at a disadvantage vis-à-vis owner-operators who can deduct the employer share.

The technical amendments in this bill are too numerous to mention in the short time allotted to me in this debate. However, I would like to highlight a few of them before moving on to the business tax changes implemented in this bill.

On the personal tax side, some of the changes ensure that the rules under which clergy can claim a deduction for their residence are clarified. They also ensure that Revenue Canada can release information about a former registered charity as long as it relates to when the organization was a registered charity.

They ensure that municipalities do not have to file T4s for volunteers to whom they paid not more than $1,000. They also ensure that the exemption applicable to reasonable travel allowances to part time teachers be extended to teachers who do not have other jobs.

The five year tax reduction plan also goes a long way toward making Canada's business income tax system more internationally competitive. This is important because business tax rates have a significant impact on the level of business investment, employment, productivity, wages and incomes.

With this in mind, Bill C-22 includes significant corporate tax rate reductions. Corporate tax rates will drop to 21% from 28% for businesses in the highest taxed sectors, such as high technology services, to make them more internationally competitive. These reductions begin with a one-point cut effective January 1, 2001.

By 2005 the combined federal provincial tax rate, including both income and capital taxes, will drop from the current average of 47% to 35%. This would put our businesses on a more competitive level with other G-7 countries.

Two measures in the tax reduction plan involve capital gains. The first provides a tax deferred capital gains rollover for investments in shares of certain small and medium sized active business corporations. It includes increasing the $500,000 investment limit, originally announced in the 2000 budget, to $2 million as announced in the economic statement and increasing the size of small businesses eligible for the rollover from $10 million to include corporations with no more than $50 million in assets immediately after the investment.

The second measure reduces the capital gains inclusion rate to one-half. This would reduce the tough federal provincial tax rate on capital gains in Canada from an average of about 31% to about 23%, lower than the typical U.S. combined federal state top rate of about 25%. Both measures would improve access to capital for small businesses with high growth potential. High technology industries would particularly benefit.

Consistent with this change to the capital gains inclusion rate, the deduction for employee stock options would increase from one-third to one-half. As a result, employees in Canada would be taxed more favourably on their stock option benefits than employees in the U.S. The bill defers the taxation for certain stock option benefits and allows an additional deduction for certain stock option shares donated to charity.

Another measure that I want to discuss relates to branches of foreign banks operating in Canada.

These new rules stem from the 1999 amendments to the Bank Act, which allow foreign banks to establish specialized, commercially focused branches here. Previously, foreign banks could operate in Canada only through Canadian incorporated subsidiaries.

The tax system for the new foreign bank branches would now be comparable to that for Canadian banks. These new rules would give foreign banks a time limit window to move their operations from a Canadian subsidiary into a Canadian branch without undue tax consequences.

As with the personal tax measures, the business tax changes are too numerous to discuss individually during today's debate. I would like to summarize a few of them.

The bill, for example, provides a tax deferred rollover for shares received on certain foreign spinoffs. It strengthens thin capitalization rules. It phases out over a three year period the special income tax regime for non-resident owned investment corporations. It treats provincial deductions for scientific research that exceed the amount of the SR & ED expenditures as government assistance. It ensures appropriate treatment of foreign exploration and development expenses in computing foreign tax credits. It introduces a temporary 15% investment tax credit for grassroots mineral exploration and it amends the corporate divisive reorganization rules.

Other technical amendments ensure that Canadian corporations that hold shares of non-resident corporations through partnerships are not subject to double taxation. The additional capital tax on life insurance corporations is extended until the end of 2000. Shares of one foreign corporation can be exchanged on a tax deferred rollover basis for shares of another foreign corporation. The tax treatment of resource expenditures and the rules governing gifts of ecologically sensitive land are clarified. In a chain of corporations, a corporation is controlled by its immediate parent, even where the parent is itself controlled by a third corporation. Replacement property rules do not apply to shares of the capital stock of corporations, and a member of a limited liability partnership under provincial law is not automatically a limited partner under the Income Tax Act.

Those are some of the more technical changes incorporated into the bill. There are three remaining measures that I wish to discuss briefly before closing. The first involves changes to the rules governing the taxation of trusts and their beneficiaries.

Bill C-22 addresses the tax treatment of property distributed from a Canadian trust to a non-resident beneficiary. It also introduces measures dealing with the tax treatment of bare, protective and similar trusts, as well as mutual fund trusts, health and welfare trusts and trusts governed by RRSPs and RRIFs.

For example, the existing rules whereby an individual can roll over property to a trust for the exclusive benefit of a spouse or common law partner would be extended to alter ego trusts and joint spousal or common law partner trusts.

Several new anti-avoidance measures designed to ensure that transfers to trusts cannot be used to inappropriately reduce tax are also included in the bill. For example, there would be limits on the use of rollovers where trusts were used to avoid tax when a beneficiary emigrates. Also, income allocations to beneficiaries could not be used by trusts to circumvent the rules ensuring that spousal or common law partner trusts, alter ego trusts and joint spousal or common law partner trusts would not allocate income to others before the beneficiary, spouse or common law partner dies.

In addition, rollovers to a trust would be denied if the transfer was part of a series of transactions designed to defer capital gains through the use of a trust as an intermediary between a vendor and purchaser of property.

A final anti-avoidance measure would prevent certain pre-1972 trusts from using graduated income tax rates if they received property from a trust not subject to these rates, and the beneficial ownership of the property had not changed.

The second measure I wish to highlight involves the new taxpayer migration rules, which are also part of the government's ongoing commitment to greater fairness in the tax system.

Since 1972 Canada has had special tax rules that apply when people give up Canadian residence. The basic entitlement of those rules is a deemed disposition that treats the immigrant as having disposed of property immediately before leaving.

For many years, questions have persisted as to the exact scope of this deemed disposition on departure from Canada and its interaction with Canada's international tax treaties. Under Bill C-22, Canada retains the right to tax emigrants on gains that accrue during their stay in Canada.

The bill would also clarify the effect of the new rules on various kinds of rights to future income and would allow returning former residents to reverse the tax effects of their departure, regardless of how long they were a non-resident.

In addition, former residents would be able to reduce the Canadian tax payable on their pre-departure and distribution gains by certain foreign taxes paid on the same gains. This is part of Canada's commitment to avoiding international double taxation, a commitment that is reflected in our network of tax treaties as well.

Since 1999, in anticipation of these rules coming into effect, Canada has been negotiating its tax treaties to reinforce protection against double taxation when immigrants' pre-departure gains are taxed.

A final measure, deals with amendments to the Income Tax Act that relate to the June 3rd, 1999 agreement between Canada and the United States concerning foreign periodicals.

Since the 1960s the Income Tax Act has precluded the deduction of advertising expenses unless a newspaper or a periodical is at least 75% Canadian owned and has at least 60% original Canadian content.

As a result of the Canada-U.S. agreement, this rule no longer applies to advertisements and periodicals. Instead, advertising expenses and periodicals with at least 80% original editorial content would be fully deductible and advertising expenses and other periodicals would be 50% deductible regardless of ownership.

In addition, after July 1996, the meaning of Canadian citizen will include Canadian pension funds and other entities that own Canadian newspapers to ensure that they qualify as citizens under the ownership requirements of the Income Tax Act. For periodicals, this amendment applies from July 1996 to May 2000, after which time nationality of ownership is irrelevant.

In conclusion, while the bill is lengthy, very detailed and technical in nature, its components are all very important and deserve to be passed without delay. Most are relieving or clarifying measures and a few are housekeeping measures.

As I indicated earlier, each measure is designed with the principle of tax fairness in mind and there are many taxpayers out there who will benefit from these changes. The measure with the highest profile of course implements the key components of our government's five year tax reduction plan. In summary, that plan reduces the tax burden at the middle income level, increases support for families with children and makes Canada's business income tax system more internationally competitive. As I stated earlier, the five year tax reduction plan will provide $100 billion in cumulative tax relief by 2004-05.

I urge all hon. members of the House to give the bill quick and speedy passage and, most importantly, to keep in mind all the Canadian children who will benefit from the increases to the Canada Child Tax Benefit on July 1.

[Financial Consumer Agency Of Canada Act, March 27th, 2001]

Mr. Speaker, Motions Nos. 3, 4, 5, 6 and 7 brought forward by the Bloc relate to the provisions of the Bank Act on crown corporation governance.

As hon. members know, the Senate is presently considering a separate bill, Bill S-11, to amend the provisions of the Canada Business Corporations Act relating to corporation governance.

The government is closely monitoring progress of Bill S-11 with a view to assessing the opportunity to apply the various initiatives included in that legislation to financial institutions.

After parliament has completed consideration of Bill S-11, the government will consult interested parties on the changes.

The consultation process will allow parties who did not take part in the amendment of the Canada Business Corporations Act to express their views on the appropriateness of making similar amendments to corporation governance provisions that apply to financial institutions.

Since the general examination of provisions of financial institution legislation concerning corporation governance will focus on the issues raised in the motions, we think there is no need to amend the bill at the moment.

[Financial Consumer Agency Of Canada Act, March 27th, 2001]

Madam Speaker, what I propose to do is deal with the motions in the following order: Motion No. 14 from the member for Prince George—Bulkley Valley; then those from the member for Saint-Hyacinthe—Bagot, the Bloc amendments; and then finally the amendments from the NDP member for Regina—Qu'Appelle.

Dealing first with Motion No. 14, of course the members on this side of the House do not need convincing about the importance of the credit union movement and the kind of expanded and enhanced role we would like to see them play in the Canadian economy by providing consumers with more choice and by providing more competition. That is a given. The Secretary of State for International Financial Institutions, when he spoke at committee, gave the undertaking that the government would work with the credit union movement to try to enhance its role in the Canadian economy.

With respect to this particular motion, which was actually put forward by the NDP at committee, I would just like to mention that the member for Regina—Qu'Appelle seems to argue that the legislation does not provide equal treatment to credit unions.

The credit union movement, when it came to the committee, was looking for preferential treatment. We cannot accept having treatment for the credit union movement that would be preferential to the treatment we have for other financial institutions.

Members on this side are not the only ones to work actively with the credit union movement. The Department of Finance has worked closely with it in developing Bill C-8. The resulting legislation responds to the need of credit unions for greater structural flexibility as they move to restructure their operations and become more integrated.

However with this new flexibility come prudential concerns resulting from a whole new set of ownership possibilities, most of them unknown at this point. Because the landscape is changing so quickly we must be concerned about the potential for prudential risks. The control requirement is necessary to safeguard against such risks and is designed to ensure the parent company has the power to intervene in situations where a subsidiary might get into financial trouble. These same provisions apply to other financial institutions such as large banks and insurance companies that are also widely held.

Given the broader risks associated with this new flexibility it is more prudent, in the government's view, to establish a general safety net or prohibition and to provide the regulatory flexibility to make exceptions as necessary. This is a common use of existing regulatory authorities. If unforeseen circumstances arise, a general prohibition allows us to err on the side of caution.

The change made to proposed subclause 396(a) at committee would broaden the scope of the regulation making authority and provide further comfort to the Credit Union Central Canada, CUCC, that the government had all the flexibility it needed to provide exceptions from the control requirements as necessary.

The Department of Finance is already engaged in an extensive drafting exercise to prepare the regulations stemming from Bill C-8. It has had early discussions with the CUCC on the possibility of drafting a regulation that would provide the required flexibility. Once approved, the regulations would have the same effect as legislation.

I now want to speak to Motion No. 9 by the hon. member for Saint-Hyacinthe—Bagot. This motion deals with the matters the minister might take into account in determining whether or not to approve acquisition of a significant interest in a bank.

The matters to be taken into account under proposed paragraph ( i ) of the motion are contemplated in paragraph ( f ) on the conduct of businesses and operations of applicants. Consequently, the minister shall have the legislative authority to take into account the matters outlined under paragraph ( i ).

Since there is no need to amend the legislation to allow the minister to take these matters into account, it was determined for reasons of clarity and transparency to have these matters set out in the guidelines.

The guidelines indicate the government's commitment to take these matters into account in category changes.

I will clarify a point made by the member for Saint-Hyacinthe—Bagot. In his speech he seemed to imply that a bank with assets of over $5 billion may not be subject to the widely held rule. Bill C-8 states that banks with assets over $5 billion would automatically be subject to the widely held rule.

We have other motions before us from the member for Regina—Qu'Appelle, the NDP finance critic, and I will now refer to them.

I will move to Motion No. 10, which deals with low cost accounts. The member for Regina—Qu'Appelle and others spoke about how the government and the Liberal Party have talked about the need for low cost accounts. The amendment from the NDP would amend the definition of low fee retail deposit accounts in clause 439(1) to specify that such accounts shall cost $3. The members opposite seem to be implying that we do not have a commitment to low cost accounts.

Bill C-8 in fact establishes the low cost account and that is exactly what the Liberal government has advocated for some time. Rather than reneging on our promise, the bill delivers on that promise. As members are aware, the Department of Finance has successfully negotiated low cost account memoranda of understanding with each of the major banks.

The views of consumer groups on the desired features of the low cost account were sought prior to negotiating the arrangements. Taking those views into account, the accounts adhere to certain standards, including a maximum monthly fee of $4 and the availability of some in branch transactions. Providing banks some flexibility in pricing and designing the accounts ensures consumers greater choice in obtaining low cost accounts that best meet their needs.

Motion No. 11 from the member for Regina—Qu'Appelle deals with branch closures. I will comment on that briefly. Our proposed reforms are intended to encourage financial institutions to be more responsive to the public without unduly interfering in the day to day business decisions of banks. Some members opposite have clearly pointed out that the motion presented by the member for Regina—Qu'Appelle is intrusive into the day to day decision making of banks.

Issues such as branch operating hours and closures are a matter for individual banks and the marketplace to decide. That being said, we believe consumers should receive adequate notice of branch closures to facilitate adjustment to the closures. Under our new policy framework, should a financial institution choose to close a branch it would be required to provide at least four months' notice. If the branch is the last one in a rural community, six months' notice would be required. The notice period would give the community an opportunity to discuss alternatives with the institution or to approach other financial institutions that could perhaps fill the gap. That deals with the motions in Group No. 2.

[Financial Consumer Agency Of Canada Act, March 27th, 2001]

Madam Speaker, I will be speaking to Group No. 1. I take this opportunity to thank the members of the House of Commons finance committee for their constructive approach to this very important and very massive legislation.

I would like to comment on Alliance Motion No. 1 which deals with the reporting of the financial consumer agency.

I would point out that under Bill C-8, the Minister of Finance is responsible for the financial consumer agency of Canada. Reporting arrangements have been specified which would allow the minister to appropriately monitor the activities of the agency.

However, the bill currently contains a provision that ensures that the consumer agency will be fully accountable to parliament. In particular, clause 34 of the bill requires the minister to annually lay before each House of parliament a report showing the operations of the agency for that year and describing in aggregate form its conclusions of the compliance of financial institutions with the consumer provisions. The financial consumer agency of Canada accountability structure and government reporting requirements mirror those that are currently in place for OSFI.

The second motion in this group from the Alliance, Motion No. 13, deals with the Canadian payments system. The process for designating a payment system in the proposed legislation is very extensive and would require the minister to consult with payment system managers and participants before notification of designation.

It is not necessary to detail in legislation, as proposed in Motion No. 13, process issues that would likely be part of any consultation. It is likely that the minister would outline the public interest reasons for the possible designation during the consultative period. It is possible, but if the payment system manager and participants addressed the concerns of the minister, there would not be a need to designate.

I will go now to the motions presented by the member for Regina—Qu'Appelle, the NDP finance critic. Motion No. 8 concerns itself with bank mergers. I should make it absolutely clear to the House that the government recognizes the importance of the role that parliament can play in assessing the public interest impact of bank mergers in Canada.

That is why the merger review guidelines include referral to both the House finance committee and the Senate banking committee. Through the reports of these committees to the Minister of Finance, the views of parliament would be considered in reviews of large bank mergers in Canada. The report of the finance committee would be presented to the House of Commons.

The Minister of Finance, however, is ultimately responsible for the safety, soundness and efficient functioning of the financial sector in Canada. The ultimate decision regarding whether a merger is approved or not needs to rest with the Minister of Finance and should not be conditional on approval by a resolution in parliament.

Furthermore, the proposed change could seriously undermine the safety and soundness of the financial services sector. Since mergers involving troubled institutions would not require the special resolution, this would signal to Canadians that at least one of the banks involved is in financial trouble. This could lead to a run on either one or both of the institutions, which in turn could seriously undermine the public's confidence in the financial services sector and the payment system.

I will now go to Group No. 1, Motion No. 12, from the member for Regina—Qu'Appelle. The motion deals with adding a new clause that would require any regulations made under the new bill in a calendar year to be referred to a committee of the House, the Senate or both for a comprehensive review.

As members are aware, Bill C-8 is a significant legislative initiative that sets out in comprehensive detail the key policy framework announced in the government's June 25, 1999 white paper. Within this framework, there are authorities to provide flexibility to specify elements of the new regime in regulations. Any regulations proposed under this framework would be subject to the same rigorous oversight process that applies to regulations proposed under any other federal statutes.

The Privy Council Office will review the regulation to ensure that it is consistent with the objectives of the legislation and interested stakeholders will be given an opportunity to comment on the proposed changes.

A key component of this regulatory flexibility is that it allows the government to respond to rapid changes in the industry in a more timely way than might be allowed by a five year review of the legislation. The motion, as proposed, would negatively impact on this flexibility.

A yearly review of the regulations would create uncertainty for the industry as to any changes proposed by the government in a particular area. To the extent that the review created delays, the proposed motion could lead to regulatory initiatives not being completed in a more timely way than a full fledged legislative amendment. For this reason, the government does not support this proposed change.

[Financial Consumer Agency Of Canada Act, March 27th, 2001]

Madam Speaker, I seek clarification. Will we be debating group by group? It seems to me that we missed one motion in Group No. 1, did we not? Was Motion No. 12 presented by the member?

[Judges Act, March 22nd, 2001]

You voted against it.

[Federal-Provincial Fiscal Arrangements Act, March 22nd, 2001]

Mr. Speaker, I know the member for Winnipeg—Transcona has been in this place for a long time and I can only conclude that he has just not kept up to date with some of the current facts. I would like to clarify for the House and for Canadians a few facts. I find it strangely ironic that they came from a member from Manitoba.

In 2000 and 2001, transfers to Manitoba will be $2.3 billion. It will account for about 35% of Manitoba's revenues and is about 45% above the national average. It is the highest of all four western provinces.

What exactly did the first ministers agree to at their meeting? Perhaps the member for Winnipeg—Transcona has not read the communiqué, so I will remind him. It said:

First Ministers raised the issues of Equalization. The Minister of Finance will examine this issue further after consultation with provincial Ministers of Finance. While final revisions for Equalization purposes for fiscal year 1999-2000 likely will not be known until October 2002, the Prime Minister agreed to take the necessary steps to ensure that no ceiling will apply to the 1999-2000 fiscal year. Thereafter, the established Equalization formula will apply, which allows the program to grow up to the rate of growth of GDP.

It said in 1999-2000 and all premiers signed this.

The member for Winnipeg—Transcona said because of the removing of the ceiling, Manitoba or some of the have not provinces will not benefit and the others will. That is simply misinformation. He knows full well that Manitoba will receive an additional $76 million as a result of lifting the ceiling.

I have one final note. Equalization has actually increased faster than anticipated. It has grown by 33% or $2.7 billion since our government took office. It was the only area of government programming that was not affected by program reviews.

Did the member for Winnipeg—Transcona have an opportunity to read the information that was available to him in the communiqué that was widely published and signed by the premiers?

[Federal-Provincial Fiscal Arrangements Act, March 22nd, 2001]

Mr. Speaker, what seems to be forgotten in the debate is that the development of offshore resources in Nova Scotia and Newfoundland promises new jobs, higher incomes and greater self-reliance for the people of both provinces. The people of Nova Scotia and Newfoundland will be the big winners, and that is the way it should be. Provincial treasuries will also benefit.

To suggest that equalization payments should remain entirely intact was never the intent. I come back to the comment made about the province of Alberta. While it is true that Alberta received equalization payments when they were introduced in 1957, only three tax bases were used at the time: personal income taxes, corporate income taxes and succession duties. As the tax bases were broadened Alberta failed to qualify. If we were to go back today to the original program of personal income taxes, corporate taxes and succession duties, Nova Scotia would receive about $740 million less per year.

We have the right balance now. There is an incentive for provinces to develop offshore resources. There is a transition away from equalization payments. The bottom line is that it provides a tremendous opportunity for these provinces to create new confidence, new employment and new career opportunities.

Given that argument, we have a formula that recognizes incentive and provides an equal footing for all provinces depending on their resource and taxation bases. Would the member agree that it is a fair and sound formula?