Roy Cullen

[The Budget, February 18th, 1999]

Mr. Speaker, the Bloc Quebecois is complaining about the budget, but this is nothing new, this is par for the course.

The Bloc members complain about everything and anything. I am glad to hear the opposition leader say that they will be around for a long time, not that I welcome them here in the House, but that means Quebeckers will not accept their vision of Canada.

One thing I found very interesting is the Bloc Quebecois and the Parti Quebecois talk about the per capita equalization. I find that strangely ironic because I guess some deal was cooked up with the previous Conservative government, the Quebec government and other governments. It is fine to have nice little cosy deals, but when they are not fair, that is when we speak up. What we have here is a per capita equalization on the CHST that is fair.

What the hon. member forgets to mention is the equalization.

Thanks to the new equalization formula calculated over a five-year period, the have-not provinces will get $5 billion more in the next five years than they did in the last five.

Sadly, Quebec is one of those less prosperous provinces. Why is it less prosperous? Because of the policies and politics of the Bloc Quebecois and the Parti Quebecois.

If we look at the equalization payments, Quebec received in 1997-98 $4.2 billion, and in 1998-99 $4 billion. That is about half of all equalization. In fact it will allow the province of Quebec to balance its budget.

The member conveniently forgets the equalization. He conveniently forgets the fairness of the per capita CHST.

[The Budget, February 18th, 1999]

Mr. Speaker, I am pleased to respond to the comments from the member for Sydney—Victoria.

I know of the unfortunate circumstances with Devco in his riding. That has been a matter for concern for all Canadians and all parliamentarians. I thought I heard the Minister of Natural Resources announce in the House a fairly complete package to do the very best we can to help those people reposition their lives. There were a number of measures announced.

When the member talks about high income Canadians with respect to the 3% surtax, the vast majority of the balance of the 3% surtax being removed is really targeting middle income Canadians and lower income Canadians. There are some at the higher end who will also benefit, but I think we owe it to some middle income Canadians who have borne a very serious burden in balancing our books and bringing our deficit under control that they should receive some benefit from their hard work and their sacrifices. I have no compunction about delivering some target tax relief to middle income Canadians.

At the end of the day, reducing and eliminating the deficit is a means to an end. It means we have more flexibility now and in the future to direct government resources in more targeted ways that benefit more and more Canadians.

[The Budget, February 18th, 1999]

Mr. Speaker, let me say right at the outset that the 1999 budget as tabled by our finance minister on Tuesday truly reflects the social and economic needs of all Canadians.

The budget highlights this government's commitment to continued co-operation with the provinces, on behalf of all Canadians, in order to safeguard and strengthen our society into the 21st century.

The budget was developed through an open and consultative process in which all members of the government were involved. The Ontario caucus, which I chair, fought hard to promote the interests of all Ontarians and all Canadians. I am pleased that our strong and united voice has been heard.

Canadians have told parliament that our health care system needs more funding to better serve those in need.

That is why, for instance, the 1999 budget announced that the provinces and territories will receive an extra $11.5 billion over five years for health care. This is the most substantial one-time investment ever made by the government.

The Ontario Liberal caucus fought hard for accountability measures to ensure that the new funding will be spent on health care and not for other purposes. Such assurances have been obtained from the Premier of Ontario and all territorial and provincial leaders.

The budget is good news for Ontario. It ensures that the federal government's health care investment will be distributed on an equitable per capita basis. Thanks to a policy of inequity introduced by the last federal Conservative government, Canadians have been treated differently under the CHST depending on where they live. Given the population of Ontario, we have not been receiving our fair share. The budget provides for a gradual narrowing of these disparities. Increases in CHST makes it possible for Canadians to obtain equal per capita entitlements by 2001-02. This will benefit provinces such as Ontario.

Transfers to Ontario will grow significantly over the next five years. New health money means transfers are projected to grow from about $9.5 billion this year to $12 billion over the next five years. Per capital CHST entitlements will grow from $830 million to $985 million by 2003-04. This means almost $5.3 billion more for Ontario over five years.

There are significant funds in these increased transfers to Ontario that could be deployed to assist the homeless in Ontario if this were the priority of the Ontario government. They have that flexibility.

Ontario will also benefit from $1.4 billion invested by our own government to promote health care research and prevention. In Ontario federal research dollars will support the work of two doctors from the Children's Hospital of Eastern Ontario whose research on genes will help patients suffering from Parkinson's disease, strokes and other related diseases. Researchers at Carleton University and Kingston General Hospital will also directly benefit from upgrades to MRI machines which will improve the detection of breast cancer. Mr. Speaker, I know that would be of great interest to yourself.

We are in a position to strengthen our health care system because of the prudent fiscal discipline undertaken by this government. After inheriting a federal Conservative deficit of $42 billion, we needed the help of all Canadians to put our finances in order. The sacrifices made by many will allow Canada to enjoy a prosperous future in the 21st century.

In 1998-99 we will balance the books or better. This is the first time since 1951-52 that the Government of Canada has been deficit free for two consecutive years. We are also on track for balanced budgets or better in both 2000 and 2001. This will mark only the third time since Confederation that the Government of Canada has recorded four consecutive balanced budgets.

Cuts in income tax are vital to the government's objective of building a better future today. Accordingly, the federal government is committed to making major tax reductions as equitably as possible.

For the first time since 1965, individuals are given a tax reduction without borrowing being required. The largest cuts planned in the 1998 and 1999 budgets will be for low and middle income Canadians, out of concern for fairness.

The 1999 budget builds on the $7 billion in tax cuts that were delivered last year by providing $7.7 billion in tax reductions over the next three years. The 1998 budget benefited low income Canadians by increasing the amount of income they can earn annually before paying income tax by $500. The 1999 budget increases the amount by $175 to $675 and extends it to all Canadian taxpayers. This means that effective July 1, 1999 the basic amount of income that all Canadians can earn annually on a tax free basis will rise to $7,131. In addition this budget also fully eliminates the 3% surtax.

This government is committed to substantially reducing taxes in the fairest possible way. Nonetheless for tax relief to be permanent, it must be affordable and not jeopardize the soundness of Canada's finances.

The 1999 budget also shows a strong commitment to keeping the debt to GDP ratio on a downward path. Last year Canada's debt to GDP ratio saw its largest single yearly decline since 1956-57, from 70.3% to 66.9%. For the current year, 1998-99, it will fall still further to around 65.3% and by 2000-01 the debt ratio should be down to just under 62%. This falling debt burden is allowing us to reallocate funds that would otherwise have been needed for interest payments on the debt. We increasingly will be able to free up resources for targeted social programs, tax relief and for investments in a more productive economy.

However, we need not be obsessed with paying down the debt. As our economy continues to grow, our debt ratio will shrink naturally as well.

The 1999 budget is based on a fact that applies the world over. Technology is changing at a phenomenal rate, before our very eyes. It is totally changing the nature of the labour and business markets and it is changing the skills and knowledge we require to remain competitive at home and abroad.

The new economy makes investing in knowledge and innovation essential for the creation of well-paying jobs and improving our standard of living. It is for this reason that the government has committed to spend more than $1.8 billion in knowledge spending. This money will help strengthen research and development and aid those companies producing leading edge products and services.

Last week I rose in the House to announce that the unemployment rate in Canada had fallen to 7.8%, the lowest in almost nine years. In 1998 Canada created 453,000 new jobs and led the G-7 with the highest job growth rate.

While these results are encouraging, we must continue to focus on reducing our unemployment rate even further. The best way to create jobs is by providing Canadians with the knowledge and training they need to adapt to our changing global economy.

On a final note, I would like to congratulate the Minister of Finance and the Secretary of State for International Financial Institutions for responding to an important initiative that I have promoted. This budget will amend the Income Tax Act to allow offshore investment funds to engage Canadian service providers without jeopardizing their tax status.

Essentially Canada has responded in kind to measures introduced in the United States to eliminate tax impediments for offshore investment companies that wish to conduct their back office work within the United States. Canada has done the same, allowing offshore investment companies to set up back offices in our financial centres to perform administrative work and investment services. This will help to create jobs and stimulate economic activity in the Toronto financial services sector and throughout Canada.

In conclusion, this budget is good for Ontario and good for Canada and it positions us very well to enter the next millennium. It is for this reason that I am proud and very pleased to support it.

[Co-Operative Housing, February 9th, 1999]

Mr. Speaker, I thank the minister responsible for the Canada Mortgage and Housing Corporation. Recently the minister responded to the strong and united voice of the Ontario Liberal caucus by ensuring that co-op housing funded by the federal government will not be part of a transfer of the management of social housing resources to the Government of Ontario.

As a result, some 21,000 individuals and families in Ontario will have their homes preserved in federal hands.

In my riding of Etobicoke North, members of the Comfort Living, Summerlea Park and West Humber Community Co-operatives are fiercely proud of their community lifestyle and applaud the minister for protecting their co-operative.

They, like other co-op members from across the province, will now sleep better knowing that their housing is in safe hands.

[Employment, February 5th, 1999]

Mr. Speaker, this is a great day. In addition to the good news about our Prime Minister's successful and significant negotiations with the provinces on the social union, I awoke this morning to learn that the unemployment rate in Canada had fallen to 7.8%, the lowest rate in almost nine years. This means that in January 87,000 more Canadians, including 44,000 young people, had a job to go to each day, jobs that they did not have in December. Bravo.

For some time I have been concerned that as our economy went through a period impacted by technological change unemployment had become structural. By smashing through and below the 8% unemployment barrier, our government has proven that its policies of sound fiscal management and progressive job creation initiatives are working. This bodes well for the country as this government will continue to offer all Canadians the strong and visionary leadership that it has since 1993.

[Tax On Financial Transactions, February 3rd, 1999]

Mr. Speaker, I am pleased to participate in the debate today on the motion put forward by the member for Regina—Qu'Appelle, a very thoughtful and considered individual. I had the opportunity to participate in a debate with him not too long ago on our caucus task force report on financial institutions. We dealt with the bank merger. It was supposed to be a debate but it turned out to be more like a love-in. I was a little concerned given our different political stripe but most political parties were in favour of the recommendations we made, although we never did hear much from the Reform Party on bank mergers. I guess it was in a difficult spot on that issue.

The motion by the member for Regina—Qu'Appelle calls on our government to show leadership and enact a tax on financial transactions in concert with the OECD countries. The Bloc Quebecois has proposed an amendment that enlarges it to the international community in lieu of the OECD. This is one of those rare occasions where I find myself in agreement with the Bloc Quebecois. I would support enlarging it to the international financial community if we are to consider it as a motion.

In principle I support the motion in general terms but we need to clarify a number of issues. Given the events over the past year or so, I do not think many Canadians would argue with the fact that global financial markets are interconnected. There does not seem to be any doubt about that. The financial meltdown in Asia started in Thailand over a year ago. It was followed by the financial crisis in Russia and more recently the events in Brazil. They have had an enormous ripple effect throughout all the economies and financial markets of world.

Although our Canadian dollar has shown some improvement recently, it has been taking a beating. This is for reasons I believe are largely unrelated to the underlying factors of the Canadian economy. While some might argue that the markets are always right, in some circumstances they are somewhat irrational. In this case they seem to be acting irrationally. One has to wonder what is going on behind this apparent irrationality.

Our finance minister is pushing for an international agency that would monitor financial institutions worldwide. I gather its purpose would be to identify emerging problems and develop more time sensitive and co-ordinated solutions. The proposal is a good one and one that I support.

Other solutions have been proposed to address the destabilizing effect of currency traders and speculators like the Tobin tax which has been much mentioned here today. The Tobin tax would be a tax on individual financial transactions. However, unless all countries agree to such a tax it would not be workable.

Imagine 27, 28 or 40 countries around the world enacting a Tobin tax and a number of countries not. It would not be a surprise if suddenly the financial transactions migrated to those jurisdictions where they did not incur the Tobin tax or financial transactions tax. Unless all countries are in harmony with such a tax it is just not workable.

The member opposite talked about the finance minister saying he thought it was a good idea. The finance minister realizes that there are a lot of good ideas out there. The question is which ones are feasible and which ones would he implement. I think his approach in pushing for an international agency to monitor financial institutions worldwide is a more workable solution.

It is important to acknowledge that the issue of global financial market speculation and its impacts on global and domestic economies is one that deserves the attention of world leaders and deserves the attention of the House.

Our government is showing leadership on this issue in the G-7 and other international fora. There are solutions to the downward pressure on the Canadian dollar that can be found right here at home. Statistics Canada recently reported that Canadians are investing abroad in stocks, bonds and bank accounts at record levels. This is a result in part of changes the previous Conservative government made in 1990 to the foreign content rule of RRSPs. The limit at that time was increased from 10% to 20%. Perhaps that should be revisited given the effect it is having on the Canadian dollar.

I am sure there are people in this Chamber who would disagree and perhaps argue that the limit should go the other way. However, I am of the view that we should be very cautious in that area and perhaps consider moving it back. If Canadians want to have foreign investments in their RRSPs no one would debate or argue that but why should the Canadian taxpayer support that, particularly when it could be having a detrimental effect on the Canadian dollar?

I am offended as I am sure all Canadians are when the international financial markets are disturbed profoundly by speculators.

Let us examine a tax on financial transactions. Presumably such a tax would be targeted on foreign currency transactions. The targets hopefully would be short term capital movements because investors should really not be penalized or inhibited from moving capital from one currency to another based on long term decision making or structural decision making.

I throw out a word of caution. We often hear Thailand cited where huge capital outflows caused a crisis. Was the movement of capital a symptom of some deeper underlying problems? In other words, where was the chicken and where was the egg? The answer to that in the case of Thailand is a categorical yes, there were some underlying fundamental problems.

Some good Canadian friends of mine who have lived in Thailand for many years described to me recently the financial devastation in that country. Did the migration of capital from Thailand precipitate the financial crisis there or vice versa? This is an important question.

I am told by my colleagues in Thailand that the banking system collapsed as a result of three major issues. There were some very bad investments by the banks, a lot of cronyism in the banking system and a lot of corruption in the banking system. So foreign investors in Thailand perhaps could see this coming and decided to relocate their capital. I think the causal chain of events is important here and we should not be just looking at speculative movements. There are often some underlying reasons for the movement of capital.

I do applaud the Minister of Finance in pursuing the establishment of an international agency, perhaps created from within the resources of the existing international agencies, that would track the fundamental financial stability issues in countries around the world and proactively develop strategies and actions required to prevent problems, not respond to events after the fact.

Coming back to Canada and the downward pressure on the Canadian dollar vis-a-vis the U.S. dollar that we have experienced over the last year, we are told we experienced a flight of capital to so-called safe havens. I find this curious when the economic fundamentals in Canada are so strong, if not the best among the developed countries.

In Canada we still suffer with the prospect of another referendum in Quebec. This creates uncertainty in financial markets. I am sure this had some bearing on the fate of our Canadian dollar. Our colleagues opposite in the Bloc Quebecois and the Parti Quebecois in Quebec should be held accountable for this.

I applaud the member for Regina—Qu'Appelle for his interest in this important topic. I think it is very worthy of debate and discussion in the House and indeed around the world in the various international fora. I think it is a very important issue. I support the motion in principle and the concept, but we do need more discussion and debate. The main thrust of the motion is that our government should show leadership. We are showing leadership.

[Canada Customs And Revenue Agency Act, December 8th, 1998]

Mr. Speaker, I thank the Bloc Quebecois member for his comments.

I think the member opposite has missed the intent of the new agency. If I might say, it is the typical paranoia from the Bloc Quebecois. It is always a plot to look at harmonizing Quebec taxes.

As my colleague from Mississauga West pointed out earlier, the Quebec government already has its own unique or separate income tax system.

What this new agency will do is it will provide more flexibility. It will eliminate redundancy, overlap and duplication. It will be one-stop shopping for businesses. It will provide efficiencies for government. The bill is about achieving certain economies and efficiencies for the benefit of all Canadians.

[Canada Customs And Revenue Agency Act, December 8th, 1998]

Mr. Speaker, I thank the member from the Bloc Quebecois for her comments.

This initiative does not mean we are privatizing Revenue Canada. On the contrary, there will be more accountability with this new bill. At the present time, there are five accountability measures at Revenue Canada. This bill will add three more.

Revenue Canada has legislation on taxpayers' rights, and it will be maintained with this bill. It deals with all Canadians who have tax related problems. Therefore, this bill improves the situation for Canadians.

[Canada Customs And Revenue Agency Act, December 8th, 1998]

Mr. Speaker, I am sure that earlier sign was a victory sign because I heard a lot of winning arguments by the member for Mississauga West.

We are looking at the demands of Canadians for better, more responsive and streamlined tax, customs and trade administration services. It is one of the most important reasons for Revenue Canada's move to a departmental agency status. It is a sign of the times, the times of economic expansion, the times of increased demand for tax, customs and trade services, and the times of a marked increase in new jobs since 1993 which has resulted in a marked increase in tax filers. Canada's exports are at an all time high.

In 1997 alone, actual total exports increased 8.6%. The upturn in the domestic economy stimulates imports. This will not be a fleeting trend; the volume of activities will continue to increase.

The commitment to improve client service will not change. Over the years resources at Revenue Canada have remained relatively stable during this period of economic expansion and sharp increases in business volumes.

Revenue Canada has done its very best to accommodate the new demand. As a government department Revenue Canada has to submit to across the board federal government rules and guidelines which apply to some 80 other government departments and agencies, many entirely dissimilar from the work done by Revenue Canada. These government-wide rules often fail to meet the specific needs of the unique functions the department undertakes.

Revenue Canada has exhausted its internal operating efficiencies. There are few gains that can be made through this approach. That work has been done. There is new work to be undertaken. We must forge ahead and create a new structure, a new framework that will provide opportunities and generate new efficiencies.

It is time for the proposed new Canada customs and revenue agency. It is time for this unique, Canadian model that combines the strengths of both the public and private sectors, while remaining fully accountable to parliament and the Canadian public—while remaining, proudly, in the federal public service.

In developing the Canada customs and revenue agency, Revenue Canada has been sensitive to the fact that tax, customs, and trade administration affects the lives and livelihoods of Canadians.

Revenue Canada's clients insist on better services while at the same time they must be dealt with fairly with their rights fully protected. The design of the new agency makes certain the essential checks and balances which govern its activities are in place and ensures that the accountability as presently stipulated under Revenue Canada has been maintained.

The enforcement powers of the new agency will be the same as those currently provided to Revenue Canada through such legislation as the Income Tax Act, the Customs Act and the Excise Act.

The minister will still be fully accountable to parliament and the public for the administration and enforcement of specific legislation. Revenue administration is not being devolved to anyone.

The minister will still have the authority to answer questions in this House. The minister will ensure that the agency is providing appropriate services to Canadians.

I can assure members that a taxpayer's personal information will remain confidential. It will continue to be protected under the agency just as it is currently with Revenue Canada. The authorities governing its confidentiality are clearly set out in program legislation such as the Income Tax Act and they will not, I repeat, not be changed by this bill.

Bill C-43 will permit the agency to offer new and better services to the provinces and territories. Some have said that this bill is all about harmonization. To the contrary, Mr. Speaker. Revenue Canada can already administer harmonized taxes.

What is new is that the proposed Canada customs and revenue agency will also be able to collect non-harmonized taxes for the provinces, something Revenue Canada is unable to do now.

The new agency will be able to expand the potential for single window tax collection with considerable savings for businesses and individual Canadians. Is that not what alternative service delivery is all about?

It is about greater co-ordination between the federal, provincial and territorial governments. A simplified tax administration for Canadians will reduce costly overlap and duplication between governments.

The move to agency status will also permit the adoption of a more client oriented approach. This will increase operational flexibility in the management of internal resources.

As Mr. Blair Nixon pointed out when he appeared before the House of Commons Standing Committee on Finance on November 24 on behalf of both the Canadian Bar Association and the Canadian Tax Foundation:

The move to the agency should provide more flexibility to deal with personnel issues, a fundamental aspect, we think, of the organization. That flexibility should provide a better position to the agency to hire, train and retain good personnel. The agency needs to bolster its ranks with good people in order to provide better service to taxpayers, which we understand is one of the fundamental thrusts of the agency.

The bill before the House today will allow the proposed agency to tailor its human resources and administrative functions to meet the needs of its clients—as well as those of its employees. This will mean better service—to provinces and territories, to businesses, and to Canadian taxpayers.

Doing something better is not an expansion of power but an extension of service, service to Canadians, service to businesses, and service to the provinces and territories. Better service means savings in time and money, savings in compliance costs for businesses and savings in administrative costs for governments.

The intent of Bill C-43 is to establish a framework with all the checks and balances for a superior agency, a winning proposal for government and Canadians alike.

I encourage all members in this House to support this important piece of legislation.

[Canada Small Business Financing Act, November 23rd, 1998]

Madam Speaker, I am very pleased to rise today to speak to Bill C-53 and the various amendments that are before the House.

Some of the amendments, if I am not mistaking, are enacting amendments or enabling amendments. I would like to focus on the substance of the bill, which is to provide access to capital to small business. The Small Business Loans Act has been an effective tool for helping small businesses access financing over the past 37 years.

Bill C-53 was designed to meet three objectives: to continue helping small young businesses access financing, to increase program accountability, and to move the program toward cost recovery. Bill C-53 contains no changes to the basic program parameters. The new provisions it contains are aimed at ensuring the program's long term viability, cost effectiveness and stability to better meet the needs of small business.

The recent and quite unexpected volatility in currency and trading markets that we have all witnessed confirms again the importance of sound, consistent public policy. Small businesses need stability, even more so at a time when we face the prospect of restructuring in the financial services industries.

Decisions related to the recommendations of the MacKay task force and the proposed bank mergers will have a direct bearing on the well-being of small business, which is the source of economic and job growth in every region of the country.

Small and medium size businesses are the cornerstone of our economy. Their contribution is vital to our economic welfare. This is one of the reasons why it is so important to support the bill before us.

In Canada, there are over 2.5 million small businesses, if we include the self-employed. They account for 99% of all Canadian companies and for between 70% and 80% of all the jobs created in Canada in the past three years.

The SBLA has been serving Canada's small businesses since 1961 and is widely recognized as a necessary and effective program. Last year it helped some 30,000 small businesses across the country to access nearly $2 billion in financing from Canadian lending institutions.

These firms acquired necessary financing that might otherwise not have been available to them for the establishment, expansion, modernization and improvement of their businesses. Some 9,000 of these firms were in rural communities and the majority of loans averaging nearly $68,000 went to firms less than three years old.

Bill C-53 results from a comprehensive program and policy review conducted over the past year in consultation with both private and public sector stakeholders. It takes into account recommendations of the auditor general and the Standing Committee on Public Accounts.

The Canada Small Business Financing Act will keep the basic parameters of the Small Business Loans Act: loans granted by approved lenders for a maximum of 10 years; possibility for businesses of borrowing up to $250,000; requirement that lenders pay only once the 2% registration fee, which the borrowers can absorb; and requirement that lenders pay an annual administration fee of 1.25%.

Bill C-53 is a step forward in streamlining, improving and stabilizing the Small Business Loans Act. The key provisions are as follows.

First, the bill will provide authority for the Department of Industry to conduct audits to ensure compliance with the act and regulations.

Second, it will provide authority to create limited pilot programs on a cost recovery basis on capital leasing and lending to the voluntary sector.

Third, we are also proposing to replace the current sunset clause. Every five years Industry Canada will conduct a comprehensive review of the program. The resulting report on the program's performance would be tabled in parliament for committee consideration.

As a means of maintaining and ensuring cost recovery, the governor in council through regulation would have the power to restrict eligibility criteria for access to program loans.

The maximum amount of the government's potential liability would be set at $1.5 billion over five years. This means that, regardless of the monetary value of the loans granted under the act, the taxpayer would never be required to cover more than $1.5 billion of the loans granted during that period.

That $1.5 billion figure would only be reached in the highly unlikely event that all loans were defaulted on. Historically, the loss rate on loans is 5.6%, which means that over 94% of all loans were paid back without incident.

This potential liability would be renewed automatically every five years. Loans could therefore continue to be made while Parliament carries out its in-depth investigation.

Since 1961 the SBLA has served the small business community well. The Canada small business financing act will provide an even more effective mechanism for the government and financial institutions to share the risks of lending to small businesses to help them grow and create jobs.