Barry Campbell

[Competition Act, April 25th, 1997]

Mr. Speaker, I was speaking about some changes to the act concerning deceptive advertising and marketing practices.

The Competition Act will offer the bureau two avenues, criminal prosecution whereby the bureau will refer cases to the attorney general if an infraction has occurred, or civil resolution to rectify conduct which, though problematic, has occurred unintentionally. Under the new civil regime most of the deceptive practices now prohibited under the act will remain practically unchanged and will become reviewable matters.

The bureau can call upon either a judicial member of the competition tribunal, the Federal Court of Canada or a provincial superior court. Redress can be obtained through a court order or by way of consent. Orders to publish information notices as well as to pay administrative monetary penalties of up to $200,000 for companies and $100,000 for individuals may be issued. Consent orders may be entered into and will then be legally binding.

Measures such as these will expedite decision making and ensure it is done consistently and by a specialized body in the vast majority of cases. At the end of the day we will have quicker and more effective resolution of instances of misleading advertising and deceptive marketing practices.

I now turn to regular price claims, essentially comparisons between regular selling prices and cut rate prices. As we all know consumers like to wait until products they want are on sale rather than buy them at the regular price. Advertising showing how much one can save over the regular price can therefore be a powerful tool to attract consumers. The Competition Act already prohibits materially misleading regular price claims.

Representatives of the retail sales sector as well as some consumer groups have asserted that the act does not give clear guidelines on what kind of regular selling price claims may be made.

Under the amendments the government is proposing, representations as to the ordinary selling price will be valid if they meet one of two tests. One is based on the price charged for a substantial volume of sales. The other is based on the price at which the product has been offered for sale for a substantial period of time. According to the new provisions, when determining whether an order is called for the judge will take into account the nature of the product and the relevant geographical market. Even if the representations fail to meet either test no order will be made if such representations are not otherwise misleading.

On quite another subject, we are proposing amendments to the provisions requiring advance notice to the bureau of large merger transactions. An efficient pre-notification process is essential to allow the bureau to determine whether a transaction would have a negative effect on competition before the transaction is finalized.

A number of measures are proposed that would improve the process for businesses by reducing the regulatory burden for no issue transactions. This will be achieved through reduced information requirements and greater flexibility to waive the requirement for pre-notification or for some of the information required under certain circumstances.

Other measures are directed toward facilitating the review of transactions raising potential concerns. For example, the amend-

ments will provide more realistic conditions for the issuance by the tribunal of a provisional order to delay the completion or implementation of a proposed transaction.

It is widely recognized by experts that some provision for requiring pre-notification of mergers is essential to preserve the effectiveness of the merger review process. A more efficient process will benefit the players directly involved: the bureau and the merging parties. Ultimately improvements are beneficial to society as a whole if they help to safeguard competition, which is still the best way to provide consumers and business with a wide choice of products at the best possible prices.

I will say a few words about the amendments dealing with prohibition orders. The Competition Act provides that the court may, when it has found a person or company guilty of an infraction, issue a prohibition order enjoining the offender from continuing or repeating the offence. Independent of any finding of guilt, the prohibition order can also be issued if the parties consent and upon resolution of a contested case.

Amendments proposed in this area open up some new possibilities. In some cases it may be preferable to require defendants to commit themselves to the adoption of acceptable behaviour. That is why we propose to allow the courts to issue orders requiring defendants to take specific measures to conform to the requirements of the act. Among other advantages this may help avoid lengthy and extensive litigation.

In the past amending the Competition Act has been along and difficult task. The amendment procedure we have adopted is based on partnership and respect among stakeholders often with differing views. The amendments we are proposing reflect a consensus among stakeholders. We hope to build on the choices we have made to provide for a more regular review of the vitally important Competition Act.

As I said in my earlier remarks before we broke for question period, the act is functioning generally well but these changes will enhance its operation.

The details of the bill under review will be considered in detail in due course. I have merely provided an introduction to some of the principal changes contemplated and an indication of the benefits that may result from its passage. This package of amendments is balanced and achievable. It is the result of extensive consultation with stakeholder group representatives and consumers. The private sector, the judicial community, academia and law enforcement agencies took part in the deliberations of a consultative panel created to make recommendations to the government. I thank all individuals and organizations that have worked with dedication to review the Competition Act, as well as those who have provided us with the benefit of their opinions.

Before coming to the House on being elected in 1993 competition law was an area of practice for me. I can say from my experience as a practitioner in this area that the consultation that goes on with the private sector, with people interested in the strength and operation of the Competition Act, is one of the best examples of the system working properly.

The amendments to the act at this time, as did earlier revisions to the act, represent a considerable effort on the part of government and stakeholders to arrive at valuable and timely solutions to sometimes complex issues. The proposals before us today have been carefully developed and considered. I believe they merit the support of the House.

That concludes my remarks on the Competition Act, but I might just take a moment while time still remains to me to say this may well be my last speech before the House. I will not be seeking re-election. As such I wanted to take a moment, first and foremost, to thank the people of St. Paul's riding in central Toronto, for putting their confidence in me and asking me to come here in 1993 to represent them. It has been an honour and privilege to do so.

I also recognize the staff of the House, table officers, pages and all those who assist us in the functioning of our work. If people watching our proceedings on television think it is easy and straightforward, they really need to know the hard work that goes on behind the scenes, behind the curtain, at the table and in the Speaker's chair to assist us in moving business along in the House.

I also thank members of my personal staff in Toronto and in Ottawa who have contributed enormously to my ability to serve my constituents. They have my gratitude.

In closing I will say a word about serving in the House and about my colleagues. Some people refer to serving in Parliament as serving in an exclusive club. I think that is a confusing description. It is exclusive only in the sense that it provides Canadians from all parts of the country the opportunity to meet, work together, share views, learn, grow and do a better job as a result. In that sense it is very exclusive and a privilege.

The House is a microcosm of our great country. It has been my honour to serve.

[Competition Act, April 25th, 1997]

Mr. Speaker, I am very pleased to have the opportunity to address this House on Bill C-67, an act to amend the Competition Act and another act in consequence.

The subject we are discussing today deals with a fundamental element of the economic framework governing business in Canada. Indeed, the free play of market forces is the very basis of our politico-economic structure and shapes all relationships between Canadians and companies doing business in Canada and abroad.

Canadians, whose quality of life is the best in the world, base their economic relationships on the principle of competition. It is through competition that productivity, efficiency and innovation are improved, thereby enhancing Canada's competitiveness, our prospects for growth and our standard of living.

The Competition Act plays an essential role in ensuring that this system continues to flourish. The Competition Act applies to all economic sectors and to all types of trade in Canada. It is the legislative framework by which Canadian society, through Parliament, ensures that businesses compete on a fair basis.

The Competition Act is also an important means of ensuring protection of the public interest in deregulated industries. It responds well to this government's desire to adopt less costly solutions for Canada by avoiding direct intervention in these economic sectors.

The amendments we have introduced seek to improve the code of conduct that defines the parameters for business conduct in Canada. With this bill, we can continue to promote a climate of vigorous competition while protecting consumers against deceptive or misleading practices. These changes will contribute to a healthier marketplace, and ultimately, to a better environment for economic growth and jobs.

In our discussion of the need for a healthy marketplace, we must make particular reference to the role of consumers. I would like to take this opportunity to consider the relationship between healthy competition amongst businesses and the effective protection of consumers' interests.

Experience has shown that, where international and domestic markets exist, consumers enjoy lower prices, a greater choice of products, better quality goods and services, and better information about these products.

As a result of the continued rivalry within markets where competition has free rein, manufacturers and merchants must innovate to anticipate consumers' needs. To keep its market position, each business must earn and renew consumers' trust daily. The most competitive markets are those where consumer information flows without restriction and options are avidly sought out before goods and services are offered.

When markets are competitive, consumers are more apt to inform producers and suppliers of needs and expectations. They are better informed of the choice of products, services and prices so they acquire greater power vis-à-vis producers and suppliers that must vie for their business. That is why the free play of market competition needs to be preserved and promoted. After all, restrictive practices that lessen competition are profitable only to the businesses that engage in them. They also decrease the overall welfare of society which is the reason we must be sure to keep vigilant and put an end to such practices.

A thorough revision and update of the Competition Act was last carried out in 1986. We want this key element of business law to continue to operate effectively. Accordingly, there is a need after 10 years of experience with the current model to ensure the legislation keeps pace.

The amendments we are considering today are not intended as an in depth reform of the act which is generally serving Canada well. They will however clarify the law in certain areas, promote voluntary compliance and provide a better and more effective variety of tools to the Competition Bureau. This is a balanced and focused package of amendments that result from broad consultations with consumers, businesses and experts. It reflects a high degree of consensus.

I will now deal with the main amendments we are proposing to show how they will promote healthy competition and lead to the faster and more efficient resolution of problem situations. To put the proposed amendments in context, I should first indicate that the current act contains provisions on criminal matters as well as those of a non-criminal nature. The criminal offences it deals with include price fixing, bid rigging, predatory pricing, retail price maintenance, misleading advertising and other deceptive marketing practices. In these matters the onus is on the crown to prove beyond a reasonable doubt that an offence has been committed.

The non-criminal or civil matters by contrast may be reviewed by the Competition Tribunal of Canada. These include mergers, abuse of dominant position, refusal to deal, consignment selling, monopoly tied selling, market restriction and delivered pricing. For reviewable matters the bureau may apply to the tribunal for a remedial order.

The bill before us builds on this foundation of enforcement tools and remedies, supplements the criminal provisions with a new offence related to deceptive telemarketing and creates a new civil approach for most instances of misleading advertising and deceptive marketing practices.

The bill also improves existing provisions relating to merger pre-notification, prohibition orders and ordinary price claims. The common denominator reflected in these amendments is a focus on clarifying the law for business and improving enforcement efficiency and effectiveness.

Telemarketing is a legitimate method of product promotion. However, when we refer to deceptive telemarketing, we are focusing on the use of deceptive representations and abusive tactics in the course of telephone promotions. Deceptive telemarketing has defrauded victims of large sums of money in the process. It has tarnished the reputations of honest telemarketers. Cleaning up this industry could be an asset to business and consumers.

Small and medium size businesses are also frequently targets of deceptive telemarketing. The Competition Act should not allow dishonest undertakings whatever their modus operandi to increase criminal operators' profits at the expense of honest businesses.

Currently the act prohibits the use of false or misleading representations for the purpose of promoting the supply or use of a product or promoting any business interest. The act also contains provisions relating to promotional contests. However, the existing law does not specifically forbid certain practices that have come to be associated with deceptive telemarketing. These need to be addressed.

This bill will create a specific new offence relating to these practices. The maximum penalty on summary conviction will be a fine of $200,000 or a year in jail or both. On indictment the maximum penalty will be a fine at the discretion of the court or jail for up to five years or both.

This new provision will apply to situations involving use of interactive telephone communications whether initiated by a telemarketer or by potential customers. The telemarketer will have to provide certain important information at the outset of the telephone conversation. Also, a number of deceptive practices will be prohibited.

To close on this subject, let me just add that another amendment will make it easier to obtain interim injunctions from courts to quickly put an end to the activities of deceptive telemarketers. These injunctions will also be available against third parties to enjoin them from providing products or services to deceptive telemarketers.

These amendments represent a considerable improvement in the current law. They address the most problematic practices that have been identified. They also incorporate penalties that will provide better deterrence.

In this area of competition law, the proposed amendments will be of great benefit to all stakeholders, consumers as well as businesses. As I have already mentioned, the current law contains provisions relating to misleading and false representations. Violations of these provisions are addressed solely through the criminal law process, prosecutions in criminal courts. Advertisers can avoid being convicted if they establish they have acted with due diligence.

Under the proposed amendments there will still be a blanket prohibition of deceptive advertising and marketing practices. The Competition Act will offer the bureau two avenues, criminal prosecution or civil resolution, to rectify conduct which though problematical has occurred unintentionally. Under this new civil regime most of the deceptive practices now prohibited will remain practically unchanged but will become reviewable matters.

The bureau can call upon a judicial member of the tribunal, the federal court or provincial superior court, and redress can be obtained through court order or by way of consent. Orders to publish information notices as well as to pay administrative monetary penalties for individuals may be issued. Last, consent orders may be entered into and will then be legally binding.

Measures such as these will expedite decision making and ensure that it is done consistently and by a specialized body.

[Quebec Contingency Act (Referendum Conditions), April 23rd, 1997]

Madam Speaker, I rise on a point of order. May I call it 6.30 p.m?

[Committee Of The House, April 23rd, 1997]

But not for the Bloc.

[Income Tax Budget Amendments Act, 1996, April 18th, 1997]

Madam Speaker, I welcome the opportunity to debate Bill C-92, the Income Tax Budget Amendments Act, 1996.

When I last addressed the House on Bill C-92 it was to recommend that it be sent to committee prior to second reading. It is important to note, therefore, that the House finance committee

recommended 13 amendments when it reported on the bill. All of them were technical in nature and were the result either of consultations or improvements in the wording of the relevant provisions. For example, there were some wording changes relating to labour sponsored venture capital corporations and resource properties.

There were also two amendments in the area of child support to help ensure that payments made after April 1997 were subject to the new system in accordance with the policy.

I would now like to make some observations about the context in which the proposed tax measures are situated.

In the present era of global changes, which have left many Canadians feeling insecure, the 1996 budget introduced measures in a number of areas that were designed to safeguard the future of Canada.

First were measures to safeguard our financial future, with guarantees that we would reach and even exceed our goals for public finances; in the same breath, we defined a role for government that meets the needs of the modern economy and of the federation.

We also took action to ensure the preservation of our social programs, including the old age security system and the offer of stable federal funding for programs administered by the provinces.

We invested in the future by reallocating money to priority areas for future jobs and growth, priorities like youth, technology and international trade. In the area of taxation perhaps the most noteworthy point is what we did not do. Despite the enormity of the fiscal challenge that faced us, a challenge we have continually handled with credibility and success, we did not increase tax rates in the budget, not personal, not corporate, not excise.

The government recognizes that taxes in Canada are higher than any of us would like. Fiscal turnaround is vital so that we can free up resources to ease the tax burden when it is responsible to do so. In the interim the government has made it a key priority to meet or better its fiscal targets without increasing personal income tax rates in any of the four budgets it has brought before the House.

Taxation is not only about generating revenues. It is also a matter of economic efficiency and fairness. That is why the 1996 budget undertook a number of important tax initiatives to enhance the fairness of the system and to ensure that it operates as effectively as possible.

Let me briefly outline a number of measures we are proposing in the bill before us today. In the area of personal income taxation several important changes concern the system for providing tax assistance to retirement savings. Specifically the budget proposed three measures affecting registered pension plans, RPPs, and registered retirement savings plans, RRSPs.

As the finance minister said at the time of the budget, Canada's retirement assistance program is effective and the government is firmly committed to its preservation.

The proposed changes will help to ensure the sustainability of the program by limiting its costs while at the same time better targeting assistance to modest and middle income Canadians.

First, RRSP limits are to be frozen at $13,500 through the year 2003 and then increased to $14,500 in 2004 and $15,500 in 2005. To provide comparable treatment to define benefit pension plans, the maximum pension limit for these plans will be frozen at the current level of $1,722 per year of service until the year 2005.

This change will keep the cost of the tax deferral for retirement savings in line and more fairly targeted. The federal revenue cost of this assistance is significant, amounting to nearly $16 billion in 1993.

Even with the changes the system will remain a generous one extending to twice the average wage. This means that only individuals with incomes over $75,000 a year will be affected in any way.

The second measure relating to retirement savings is the reduction in the age limit for maturing RPPs and RRSPs from age 71 to 69. In other words, individuals will not be able to contribute to RRSPs or accrue pension benefits after age 69 and will have to start drawing income out of these plans by the end of the year in which they turn 69. This change will help move the maturation age for retirement savings and pension plans closer in line to the ages at which most Canadians are retiring.

I pause here to say that contrary to the assertion that some have made about this change, it does not remove incentives to save in RRSPs, private pension plans or other retirement income vehicles. Canadians will always be better off saving for their retirement and using these vehicles as one way to do so.

Third, the bill proposes the elimination of the seven-year limit on carrying forward any unused portion of maximum allowable RRSP contribution. I am sure most of us can relate to the fact many younger Canadians have difficulty making significant RRSP contributions, especially during the years when they are raising families. This proposed change will improve the opportunity for all Canadians to benefit from the RRSP system. People will now have an unlimited time, within age limits of course, to make up for years of lower contributions. That is an important change.

The bill addresses another vital area for saving for the future, registered education savings plans or RESPs. Canadians know that a better education means a better job and the Government of Canada knows that to prepare Canadians for the 21st century we must support their efforts to secure a good education. Hence in both the 1996 and 1997 budgets the federal government increased tax assistance to students and their families. RESPs are an important mechanism that assists parents or grandparents to save for children's education. They do so by exempting the growth of assets

within the RESP from taxation. Eventually this growth is distributed to students who are typically taxed at a low marginal rate.

The bill before us proposes to increase the annual contribution limit from $1,500 to $2,000 per beneficiary. It will increase the lifetime limit from $31,500 to $42,000.

As most hon. members will recall, the 1997 budget proposed to enhance tax assistance delivered through RESPs further still, notably by doubling the annual contribution limit to $4,000 per beneficiary and by improving the potential flexibility of these plans.

Two further elements of today's legislation recognize the increasing importance in the cost of education. First, the bill proposes to increase the amount on which the education tax credit is calculated from $80 to $100, an amount that the 1997 budget has proposed to increase still further.

Second, the bill will increase from $4,000 to $5,000 per year the limit on the unused tuition fees and education amounts that students may transfer to spouses or parents. Once again this measure would be enhanced by the proposals of the 1997 budget which would allow students to carry forward those unused amounts.

Many of the individuals who need training or retraining to make the most of the opportunities in today's economy already have young families to care for. For many of them, especially single parents, school is not an option without day care for their children. That is why today's bill proposes to broaden eligibility for the child care expense deduction by allowing parents who are full time students to claim the deduction against all types of income.

I should mention that the bill would also raise the age limit for children for whom child care expenses may be claimed from age 14 years up to age 16 years, thereby providing increased tax savings for families with older children.

A further measure in the bill that will benefit taxpayers with children is the change to the rules governing child support. Specifically the bill provides that child support paid under a court order or written agreement after April 1997 not be deductible by the payor or included in the recipient's income. This change reflects the widely held view that the old system of deduction and inclusion was not working to benefit children.

I remind my hon. colleagues this tax measure is one element in the larger child support package which recently received parliamentary approval. In addition to the tax changes in the bill, the package includes guidelines to set fair and consistent support awards, new measures to enforce child support orders and, as announced in the 1997 budget, an enrichment of the child tax benefit. Education and child care are important components of the economic and social infrastructure for tomorrow.

I will now turn to to another keystone of Canadian society, the charitable sector. That sector is playing an increasingly important role in meeting the needs of Canadians. The government recognizes the importance of giving charities the tools they need to accomplish their important work. For that reason the 1996 budget increased from 20 per cent to 50 per cent the annual limit on the amount of taxpayer net income eligible for tax assisted charitable savings. Once again I remind hon. members that the 1997 budget has gone further, substantially increasing tax incentives for charitable giving.

I will skim over some of the other major measures included in the bill beginning with labour sponsored venture capital corporations. These funds sponsored by labour organizations help improve access to capital for small and medium size businesses and thereby contribute to job creation. Generous federal and provincial tax credits have helped LSVCCs attract large amounts of venture capital, so large in fact that by the time of the 1996 budget they had a more than three-year supply of capital. Given this level of capital accumulation, measures were warranted to keep the level of special tax assistance in these funds in line with current fiscal realities.

Consequently today's bill proposes reducing the federal LSVCC tax credit from 20 per cent to 15 per cent, reducing the maximum purchase eligible for the credit from $5,000 to $3,500 and not permitting a taxpayer to claim the federal LSVCC credit for three years after he or she has redeemed an LSVCC share.

The bill also includes important measures for the energy and resource sectors, for the oil, gas and mining industries. The bill modifies rules relating to the resource allowance thereby resulting in a more stable and consistent tax structure. For the oil, gas and mining industries the bill proposes significant improvements to the flow through share regime.

Flow through shares are an important mechanism for financing exploration and development programs in these resource industries, as they can be used to accelerate deductions for such expenses. Companies issuing flow through share which incur exploration and development expenses within the first 60 days of a calendar year can renounce those expenses which are then treated as having been incurred by the flow through share investor in the previous calendar year.

Consultations with the industry have indicated that the 60-day limit was too restrictive and encouraged corporations to make economically inefficient decisions. Accordingly the bill would allow the issuing company a full calendar year to incur and renounce the exploration expenses. In return for this accelerated

deduction, however, the issue will be required to pay a monthly financing charge to the government.

Among the other provisions of the bill is a change to the accelerated cost allowance rules for new mines including oil sands which will ensure that all types of oil sands recovery projects are treated more consistently. The bill also includes measures to designed to promote sustainable development of energy resources by providing an essentially level playing field between certain renewable and non-renewable energy investments.

One measure is to create a Canadian renewable energy and conservation expenses category in the tax system. The second measure is to extend the use of flow through share financing currently available for non-renewable energy and mining and similar costs for certain renewable energy and energy conservation projects.

With this, I will conclude my overview of the measures addressed in the bill under consideration today. These measures are equitable and will make it possible to improve the effectiveness of the tax system. Several of these measures, by their very nature, eliminate constraints, and many Canadians have already benefited from the provisions of this bill.

These measures will help Canadians prepare for the future in a world that is constantly evolving, by stimulating job creation, education and charitable donations, among other important sectors of activity.

The measures in the bill under study reflect the values and expectations of the Canadian people. As their elected representatives, it is our responsibility to respect these values and expectations.

Accordingly, I have no hesitation in urging my colleagues to support this bill in its entirety and to give it speedy passage.

[An Act To Amend Certain Laws Relating To Financial Institutions, April 15th, 1997]

Mr. Speaker, it gives me great pleasure to present Bill C-82 for third and final reading. The legislation before us has three main objectives: to strengthen protection for consumers of financial services, to ease the regulatory burden on financial institutions, and to fine tune certain provisions of the financial institutions statutes.

This bill is the product of extensive consultations. We started our review of the financial institutions legislation in 1995 by consulting with a range of stakeholders, including consumer groups, industry representatives and other interested parties.

In June 1996 we released a consultation paper entitled "A 1997 Review of Financial Sector Legislation Proposals for Changes". The House of Commons Standing Committee on Finance and the Senate standing committee on banking, trade and commerce held hearings on this paper last fall. Their views and the views of other stakeholders are reflected in the measures in the bill before us today.

Since we tabled Bill C-82 on February 14, we have received comments from interested parties imposing some modifications. In addition, the House of Commons finance committee has conducted a clause by clause study of the bill and passed amendments. As a result, there have been several modifications to the bill since second reading. They are largely technical, mostly helping to clarify the language contained in provisions. As a result of the review, the legislation we have before us will ensure that the best interests of consumers in the financial sector are served.

I would like to elaborate on key measures in the bill. I will begin with a subject of tremendous importance to all of us and that is consumer protection measures. There are several.

First, consumers have made it clear they want better privacy protection in their dealings with financial institutions. Accordingly, the bill before us provides authority to require that financial institutions establish procedures governing the collection, retention, use and disclosure of customer information, implement complaints handling procedures and report annually on complaints. Once the legislation is passed, regulations will be introduced to implement these requirements.

Following up on the recent federal-provincial agreement to harmonize the cost of credit disclosure regulations, the bill enhances the disclosure provisions of the financial institution statutes. As a result of these changes in similar amendments to provincial statutes, disclosure practices will be improved and made uniform throughout the country.

Hon. members on all sides of the House are aware of the concerns about the potential for financial institutions to exert undue pressure on consumers when selling financial products. The government takes these concerns very seriously and is taking preventive action. Bill C-82 includes an amendment to the Bank Act to prohibit coercive tied selling. The government intends to bring the amendment into force on September 30, 1998. But before that date, the government wants to see two things achieved. First, it wants all financial institutions to adopt a policy on tied selling.

Under the policy, financial institutions will be expected to ensure that their staff clearly understand and do not engage in unacceptable sales practices. The policy would seek to maintain high customer and staff awareness of procedures for reviewing tied selling complaints. These procedures must be transparent, timely and fair if they are to be effective. In the case of the major banks, they have internal ombudsmen, all of whom will deal with and report on tied selling complaints.

Second, the government will be seeking guidance from the House finance committee. That committee has been asked to review tied selling concerns across the sector and the progress of financial institutions in addressing concerns through their policies. The committee will also consider how to differentiate between beneficial and anti-competitive forms of tied selling. The government has also asked the Senate banking committee to undertake a similar review of the tied selling matter. This process should enable the government to assess how the self-regulatory procedures have been working.

In the consultation paper, the government resolved to work with financial institutions and consumer representatives to improve access to basic financial services for low income Canadians and information about fees for all Canadians.

While the government is not proposing legislative changes in these areas, the major banks have made a number of commitments to address consumer concerns. For example, to improve access they have agreed to ensure that only two pieces of signed identification will be required to open accounts or cash cheques. This is decreased from the current requirement of three.

Also, employment will not be a requirement for opening a bank account and staff will be trained to follow these policies and be sensitive to the needs of low income people. The banks will also ensure that clear and understandable information about products and services, including low cost banking options and ways of minimizing service fees, is readily available in publicly accessible areas in branches.

Moreover, the banks are working with Industry Canada using Industry Canada's Internet site to provide information to help Canadians choose the right financial services for them, minimizing costs.

During the consultation process we heard convincing testimony about regulatory burden. We want to act on what we heard. Bill C-82 contains important changes for foreign banks, changes that will lower costs and improve operational efficiency which will benefit many Canadians. In particular, regulated foreign banks which own a schedule II bank will no longer be required to hold other financial institution subsidiaries through a schedule II bank.

The bill also proposes changes to ease regulatory requirements for near banks. Near banks are those entities which do not generally take deposits, that are not regulated as banks in their home jurisdiction, but do provide one or more banking type services.

The approval requirement for near banks will be reduced. Once they receive an initial approval to enter the market, they will not need further approvals. The condition is that their unrelated activities not include taking retail deposits.

In addition, the government plans to develop a new framework for the entry foreign banks, including a new branching regime. This regime will encourage new banks to enter the Canadian marketplace and allow existing foreign banks greater opportunity to compete. It should be noted, however, that this latter initiative will continue on a separate track from the legislation before us today.

Until the new entry framework is developed, foreign companies offering a limited range of financial services and now operating unregulated in Canada as well as new entrants that meet certain criteria will be allowed to continue operations as unregulated financial institutions.

Another element of the bill recognizes that banks are not all the same. Some do not need the retail deposit insurance offered by the CDIC. This is the case for banks which deal mostly in the wholesale market. The government will permit banks that do not take retail deposits to opt out of CDIC coverage, provided they are not affiliated with another CDIC member. This will reduce their costs and streamline regulatory requirements.

The bill extends the in house powers of financial institutions. Currently financial institutions can engage in certain types of businesses only through subsidiaries. After reviewing the types of business that must be carried out through subsidiaries, the government has decided to permit financial institutions, with the approval of the Minister of Finance, to carry on both information processing and specialized financing activities in house. These changes will reduce the operating costs associated with those activities by promoting effective management. Furthermore, the increased flexibility for specialized financing activities will improve access to venture capital for Canadian small businesses.

A number of changes are proposed to streamline the self-dealing regime. This regime implements control over transactions between financial institutions and persons who are in positions of influence over or control of the institution.

While the government believes that the basic framework remains sound, certain provisions of the regime impose unnecessary costs. Bill C-82 therefore streamlines the operations but the conduct review committee narrows the range of related parties and allows subsidiaries of the federal financial institution to transact with each other.

These are all important initiatives aimed to cut down regulatory burden. The initiative before us does not stop there. We are proposing to fine tune legislation.

Changes have been introduced in the area of corporate governance to encourage financial institutions to adopt appropriate processes to manage risks. For instance, the duties of the audit committee will be clarified. The rights of policy holders of insurance companies will be enhanced. For example, the bill proposes to reduce the number of policy holders' signatures needed to allow for a proposal nominating directors to be circulated in advance of the meeting.

Regulatory adjustments will be made to provide more flexibility to financial institutions seeking to enter into joint ventures. These adjustments will enhance the ability of financial institutions to make alliances, enter new markets and compete more effectively at home and abroad.

The legislation also includes a number of amendments to enhance access to capital for mutual insurance companies. First, such companies will be permitted to issue participating shares and second, flexibility will be added to the demutualization regime and it will be extended to apply to all mutual life companies, not just

the small ones. It should be noted, however, that a large mutual insurance company will be required to remain widely held once it is converted into a stock company.

A few days ago, the opposition raised the issue of transferring policies. This is an important issue and I would like to say a few words about it.

A solution to this problem will require more studies and consultations. The mechanisms of supervision and the contractual rights of those insured must both be taken into account. Consultations are already under way between representatives of the federal government and of the Province of Quebec. Following these consultations with the provinces concerned, we will be able to arrive at a satisfactory solution in the near future.

But I must add that Bill C-82 contains a great number of favourable measures. All major stakeholders and myself want to see this bill passed as quickly as possible.

There you have it, Mr. Speaker, a pretty significant package of changes, important to the well-being of consumers of financial services and that is just about all of us. It is important to the financial sector and this too is significant for all of us because this vital sector underpins the whole economy.

I urge the House to move quickly to pass this important legislation.

[Taxation, April 14th, 1997]

Mr. Speaker, at this time of year everyone is focused on taxes. The hon. member is right. It is tax season.

Canadians understand the taxes they have been paying support a number of things that are extremely important to them.

The government has taken extraordinary actions in each of its budgets to close loopholes, to make the system fairer and to respond to the concerns of Canadians. We all look forward to the day when that burden can be reduced. When that day comes we will do that. We are getting the fiscal house in order. Canadians know and understand that.

[Taxation, April 14th, 1997]

Mr. Speaker, I will not use the word creeps but it is incredible to hear members of the party opposite, which plans to decimate and devastate seniors in its budget, talk about what the government has done.

As the member knows, through seniors benefits, changes to the CPP and all the steps we have carefully taken through our four budgets, we have ensured seniors will have the support and the help they need to count on, those seniors most in need. Those are the facts.

[Taxation, April 14th, 1997]

Mr. Speaker, the government has not in any of its budgets increased personal income tax rates.

There is no question that as the economy has recovered there has been growth in revenue partly accounted for by growth in the economy. Surely the member opposite does not believe that is a bad thing.

As a percentage of GDP, which is the way people measure these things, it has remained roughly unchanged over the course of the government.

[Income Tax Act, April 10th, 1997]

Mr. Speaker, I was only afraid that the hon. member for Calgary Centre wanted yet another five minutes. The spirit of co-operation only goes so far.

I would like to comment on Bill C-324, which we have been debating for the last few moments. It concerns the income tax system and specifically taxes on corporations.

I understand the intent of the bill is that certain company expenses on entertainment should not be deductible. In addition to the procedural irregularity of the receipt of the bill before the House which you, Mr. Speaker, have taken under advisement and on which I am not commenting further, there is a different problem.

I note, with all respect to my colleague the hon. member for Scarborough-Agincourt, the bill suffers from a drafting error, which I am sure was not the intent of the member. The bill would raise the current deduction for business entertainment expenses which is subject to several limits under the current Income Tax Act to 100 per cent of eligible expenses on entertainment.

I know that the intent of the bill and the tenor of his comments are quite different. The question before us is, to what degree should entertainment expenses be deductible in the computation of income for businesses.

As indicated earlier, the current deduction for business entertainment expenses is limited in several ways. First, businesses are not allowed to deduct certain types of business expenses. Specifically, expenses paid for the use of a yacht, camp, lodge or golf course facility are not deductible unless the taxpayer made or incurred the outlay or expense in the ordinary course of his business from providing the property for hire or reward.

Second, the Income Tax Act requires that any business or entertainment expense must be reasonable in the circumstances and incurred for the purpose of earning income from a business or property.

Third, since 1994, qualifying business meals and entertainment expenses have been deductible at a rate of 50 per cent. Prior to 1994, 80 per cent of qualifying meals and entertainment expenses were deductible.

The current income tax rules are based on the presumption that business meals and entertainment expenses contain a portion which is incurred to earn income and, therefore, would normally be regarded as legitimate business expense. They also contain an element of personal consumption which should not be deductible. However, it would be very difficult to identify the precise proportion of business meals and entertainment expenses which represent the business component.

For this reason, the Income Tax Act permits businesses to deduct 50 per cent of eligible expenses on business meals and entertainment expenses in the calculation of taxable income.

I should also note that Canada's treatment of business meals and entertainment expenses is in line with the level of tax deductions in all provinces, including Quebec. I was startled to hear the hon. member say that he thought it should be changed. I wonder if he has told his provincial friends in Quebec City that. The federal deduction level currently is in accord with the level in all provinces and in the United States.

In conclusion, I would first say that the government cannot support Bill C-324. Indeed, I doubt that the hon. member for Scarborough-Agincourt would support it because of the drafting error which, in effect, causes the opposite result from that which he has asserted he intended.

However, even if the bill was redrafted in a way which would carry out its stated intent, I would recommend to the House on behalf of the government that it not be approved because it does not recognize that a portion of these expenses do have a legitimate business person. The complete denial of these expenses would not constitute an improvement in the system we now have.