Bryon Wilfert

[Resumption of Debate on Address in Reply, October 9th, 2002]

Mr. Speaker, I am pleased to participate in the debate on the Speech from the Throne, which outlines the objectives the government has for the coming years. We have to keep in mind that the real flesh, the real detail is in the budget. I will be concentrating my remarks on two areas, on competitive cities and on children and families, which are very important to the constituents of Oak Ridges.

It is extremely important to remember that the government is committed to balanced budgets or better; to disciplined spending; to a declining debt to GDP ratio; and fair and competitive taxes. We are not on the cusp of spending money we do not have. We are not in the process of doing the things that some colleagues on the other side would suggest we might do.

Fiscal responsibility is critical in any government. Having come out of that deep $42.5 billion debt that we saw over the years, the government does not intend to go back into it, no matter how much some members on the other side might suggest that we are going to do.

We need some strong fiscal anchors and we have them. For example, in Canada the GDP growth averaged 5.3% in the first half of this year. In the United States real GDP grew by 3.1%. With respect to employment, over the first eight months the Canadian economy grew by 386,000 new jobs, while U.S. employment remains down 40,000 jobs since December 2001.

On net foreign indebtedness, we are the only G-7 country paying down the national debt. We paid over $40 billion on the national debt over the last four years. This is something that is very important for members to keep in mind. The fact that Canada is the only G-7 state to be paying down the national debt at over $40 billion is a real accomplishment.

Canada's net foreign debt as a share of GDP is down to its lowest level since the 1950s, from a peak of 44% of the GDP in 1993 to 19% last year. In contrast, U.S. net foreign debt has been increasing since the early 1990s and recently surpassed the Canadian level.

Members should not take only my word for it; they should take it from the OECD. The OECD has come out with another report card. It indicates very clearly that Canada is doing extremely well in many fronts economically in terms of our openness to trade and in terms of our macro policies. We are a leader in the OECD, which is extremely important.

[Iraq, October 2nd, 2002]

Mr. Speaker, I think a multilateral approach to the member's multiple questions might be in order.

First, without giving the member a basic 101 lesson on international law, international law is traced back to the Treaty of Westphalia of 1648. There are certain norms of behaviour in the international community that have been developed over the years. Aggression clearly is not acceptable in the international community. What is important is how states respond to aggression. We saw the failures of aggression that were not responded to with the Japanese in Manchuria in 1931, the Italians in Ethiopia in 1935 which as we know eventually led to the second world war.

In this case, the issue of multilateralism is that there must be a collective approach in dealing with world issues. If we do not have that, what is the point of the UN? Maybe the member opposite is advocating that we close down the United Nations, but the fact is that the United Nations is the forum to bring these issues to.

The United Nations has acted. In 1950 when South Korea was invaded by North Korea, the United Nations responded with a collective voice in a collective action against the invasion by the north. The United Nations responded in 1956 in the Suez crisis. The United Nations responded in the Congo in 1960-61, and the list goes on.

The fact is that no state has that right in my view. I could certainly agree to disagree and I am sure the hon. member would respect my view. If the United States decided that it is Iraq which is one of the axis of evil, and I do not think anybody in the House is suggesting that Saddam Hussein is a boy scout; clearly he needs to be dealt with. However, the question is, what approach should we take in dealing with that individual?

If we use the scenario that Saddam Hussein is eliminated, and I do not know who would take power because the Iraqi opposition is very fragmented, then do we move on to Zimbabwe, Burma, or wherever? Clearly, taking out states individually without a collective approach in my view is folly and is very short-sighted.

Kosovo was a collective--

[Iraq, October 2nd, 2002]

Mr. Speaker, I am pleased to participate in this discussion this evening.

The issue of Iraq must be seen in the context of a working system of collective security. The problem of security is no longer the concern of an individual state, to be taken care of by armaments and other elements of national power. Security becomes the concern of all states, which will take care collectively of the security of each of them, as though their own security were at stake.

If A threatens B's security, C, D, E, F and G will take measures on behalf of B against A, as though it was threatening them as well as B and vice versa. One for all and all for one is the watchword of collective security. As Bismarck put it to British ambassador Lord Loftus in 1869, according to the latter's report to the British foreign secretary:

If you would only declare that whatever power should wilfully break the peace of Europe, would be looked upon by you as common enemy--we will readily adhere to, and join you in that declaration--and such a course, if supported by other powers, would be the surest guarantee for the peace of Europe.

These words have relevance today in dealing with Iraq. There is no question the government of Saddam Hussein has been a blight on the international community since 1979. His policies of mass murder and use of chemical and biological weapons against the Kurds in the north and the Shiites in the south are well documented.

The United States which once supported Iraq against Iran in the 1980s shifted by the end of the decade and culminated in the actions of Desert Storm. In 1991 the United States sought a multilateral approach to Iraq but could not indefinitely quarantine Iraq. It was naive to think that the broad coalition cobbled together during an unusually perilous moment in 1990-91 would stand as a permanent arrangement. The demographic and economic weight of Iraq and Iran meant that those states were bound to reassert themselves.

The United States has done well in the Persian Gulf by Iraq's brazen revisionism and the Iranian revolution's assault on its neighbours. It has been able to negotiate the terms of the U.S. presence: the positioning of equipment in the oil states, the establishment of a trip wire in Kuwait, and the acceptance of an American troop presence in the Arabian Peninsula at a time when both Iraq and Iran were on a rampage.

As time went by Iraq steadily chipped away at the sanctions that were imposed upon it and the sanctions began to be seen as nothing but an Anglo-American siege of a brutalized Iraqi population. It has been said that the campaign against Saddam Hussein had been waged during a unique moment in the politics of the Arab world. Some Muslim scholars have even suggested that the alliance with foreign states to check the aggression of Iraq was permissible under Islamic law.

The government of Saddam Hussein outlasted the campaign by foreign powers against him. He worked his way into the local order of things. He knew the distress that was created in the region after the 1991 gulf war. All around Iraq the region was poorer; oil prices slumped and the war had been expensive for the oil states that financed it. Oil states suspected they were being overbilled for military services and for weapons they could not afford.

In 1996 Saddam Hussein brazenly sent his squads of assassins into the safe haven that the United States had marked out for the Kurds in northern Iraq after Desert Storm. He sacked that region and executed hundreds who had cast their fate with American power. The U.S. was alone. The two volleys of Tomahawk missiles fired against Iraqi air defence installations had to be launched from U.S. ships in the Persian Gulf and B-52 bombers that flew in from Guam.

The United States had not stayed for the long term. United States officials characterized this episode as an internal Kurdish fight, the doings of a fratricidal people. After the gulf war Iraq was left wounded but not killed. President Clinton had spent his time and his energies on the Israeli-Palestinian issue and had paid scant attention to the Persian Gulf. There was a pattern of half-hearted responses to terrorist attacks.

September 11 changed American policy but regrettably it seems only briefly. In the events before that tragedy the United States under President Bush had retreated into a situation where it took a go-it-alone approach, rejecting international attempts at dealing with issues ranging from chemical weapons to small arms.

After September 11 the United States briefly rediscovered multilateralism and the collective security approach to international terrorism. It lined up states as diverse as Russia, Iran, European states, Malaysia and others in a common cause against terrorism. Now the United States is urging a strike against Iraq. This time there is no broad coalition. Canada and other states have stated that a multilateral approach is key in responding to the issue.

The United Nations was created in part to deal with international crises. Responding to crises through a collective voice is critical to provide legitimacy and weight to actions against Iraq or any other state. The United States cannot plunge the Middle East into a crisis by acting as a vigilante. We know that war is the extension of politics by other means. Is it unreasonable to say that the UN weapons inspectors should have unfettered access to any sites, including Saddam Hussein's presidential palaces?

The facts can be placed before the international community. If weapons of mass destruction are found, then the collective will of the international community can be heard through UN resolutions and possible military action. If the U.S. acts alone against Iraq, why not against another international pariah, such as Robert Mugabe of Zimbabwe, the Burmese junta, and the list could go on.

The rule of law must be maintained and adhered to. If we allow the actions of one state to dictate in this case, we will have turned the clock back many years to a time when states acted in their own national self-interest to the peril of others. Canada must continue to support and advocate a multilateral approach to this issue. If the decision is war, then the international community will have spoken clearly. We cannot afford otherwise.

[Criminal Code, June 19th, 2002]

Mr. Speaker, it is unfortunate the member feels that was the answer that he had expected. The fact is, I think I clearly outlined the role of equalization. We are very pleased at what is happening in Voisey's Bay. We think it is going to be very important for the people of Newfoundland and Labrador. The fact is, it is an excellent opportunity for resource development.

If in fact the member has some suggestions that he feels should be incorporated, there will be an opportunity and there will be a time as we look at the whole issue of the equalization formula. I would invite and encourage the hon. member to participate in that discussion.

[Criminal Code, June 19th, 2002]

Mr. Speaker, I appreciate the question from my hon. colleague, although if I heard him right initially I thought he had also determined the answer. I hope that in fact is not the case, because as one who has visited Newfoundland and Labrador on at least seven occasions I think I can speak with some understanding of this, particularly of the communities in Newfoundland and Labrador.

First I certainly want to say that we are pleased that the province of Newfoundland and Labrador, INCO and aboriginal groups have in fact reached agreements that will make it possible for the Voisey's Bay project to proceed. The government certainly welcomes the jobs and prospects that major development offers the people of Newfoundland and Labrador.

In terms of the suggestion that equalization prevents provinces from benefiting from their resources, it does not reflect reality. The recent Voisey's Bay announcement is certainly evidence of that. The criticism of equalization is not merited when we consider the purpose of the program.

What is equalization? It is found in the constitution. It is to ensure that all provincial governments, all of them, have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. I think all Canadians support that. As the member knows, there will be a review of this coming up in April 2004, I believe, when the federal government and the provinces will be discussing this.

In other words, equalization ensures that all provinces have access to a standard level of revenues.

With the development of Voisey's Bay, Newfoundland and Labrador revenues will grow due to royalties and increased personal and corporate taxes. The province will keep every penny of revenue it earns from the project. The federal government does not claw back any provincial revenues.

It is a fact, though, that as Newfoundland and Labrador get richer, lower equalization payments will be required to ensure that the province has access to the national standard level of revenues. That is the way the program is supposed to work. That is the way it was envisioned. The common standard ensures that all provinces are treated fairly.

We sometimes hear that equalization is a disincentive to development because it erodes benefits to provincial treasuries. This claim obviously, in the view of the government, does not stand up to scrutiny. First, it is the private sector that drives most economic activity. We have seen that in this situation. Equalization is not a factor in private sector decisions. Second, provincial governments, including the province of Newfoundland and Labrador, have strong incentives to encourage development. Economic growth creates jobs and higher incomes and lowers the cost of social programs. It allows provinces to replace federal transfers with own source revenues. Equalization receiving provinces themselves have consistently stated that equalization is not a disincentive to development.

Looking at creative solutions, when the federal and provincial governments come back every five years to review the situation, there will be an opportunity, and I have no instant answer for the member today, to put all of this on the table for what will be, I am sure, some very interesting and creative discussions.

[Canada Pension Plan, June 14th, 2002]

Mr. Speaker, I rise to speak at second reading of Bill C-58 which amends the Canada pension plan and the Canada Pension Plan Investment Board Act.

Through the bill the federal and provincial governments as joint stewards are completing the final stages of the 1997 reforms to the Canada pension plan.

Future generations of Canadians, including our children and grandchildren, would benefit from these measures which transfer all remaining CPP assets to an independent investment board, namely, the Canada Pension Plan Investment Board, CPPIB.

Endorsed by the federal and provincial financial ministers five years ago these reforms would help ensure that Canadians have a pension plan on which they can always depend.

The end result of moving to complete the market investment policy for the Canada pension plan would be increased performance, better diversification and enhanced risk management of the entire CPP portfolio.

To put Bill C-58 in context, it is necessary to take a moment and review the role and the responsibilities of the Canada Pension Plan Investment Board. However, it goes without saying that any discussion of the CPPIB must also include some remarks about the Canada pension plan itself. The background I am about to provide will be useful to hon. members in understanding why the amendments in the bill are needed.

I wish to begin my remarks with some general comments about Canada's retirement income system. As hon. members may know Canada's retirement income system is supported by three pillars--a blend of public and private pension provisions that are considered internationally as one of the most effective ways to provide for retirement income needs.

First, there is an old age security program which provides public pensions for seniors and ensures all Canadians a basic income in retirement.

Second, there is the Canada pension plan, a national contributory pension plan, which provides working Canadians and their families with income support at retirement and in the event of disability or death. It is central to today's debate.

Third, there are tax assisted fully funded employer sponsored pension plans, RRSPs and other private savings, the private component of the system.

Most Canadians take our retirement income system for granted, but that was not always the case. In Canada, in the early years, taking care of older citizens and those with disabilities was primarily the responsibility of individual families. The introduction of income tax in 1917 allowed the federal government to adopt national social programs, such as Canada's first old age pension in 1927, which included a means test. Unemployment insurance, family allowances and a universal old age security program were introduced after the second world war.

There was also a need for a public pension, one that could be carried from job to job and, indeed, from province to province. The answer was the Canada pension plan, a compulsory earnings based national plan set up jointly by the federal and provincial governments in 1966 to which all working Canadians contribute.

The CPP provides all wage earners with retirement income and financial assistance to their families in the event of death or disability. Quebec administers its own complementary plan, the Quebec pension plan, QPP. The Canada pension plan was designed to complement, not replace, personal savings and employment pension plans and for 30 years it worked well. By the 1990s, however, the sustainability of the plan had become a concern.

The Chief Actuary of Canada predicted that the assets of the Canada pension plan, the equivalent of two years of benefits, would be depleted by 2015 and contribution rates would have to be increased to more than 14% by 2030.

The federal and provincial governments subsequently released a document entitled “An Information Paper for Consultations on the Canada Pension Plan”, which outlined the challenges facing the plan in the coming years.

They followed up in February 1996 with the announcement of public consultations on the Canada pension plan. Guided by panels of federal, provincial and territorial elected representatives, extensive consultations were held in every province and territory. In joint hearings from coast to coast, governments heard from actuaries, pension experts, social planning groups, chambers of commerce, seniors' groups, youth organizations and from many interested individual Canadians.

A common theme that emerged was that Canadians wanted governments to preserve the Canada pension plan by strengthening its financing, improving its investment practices and moderating the growth costs of benefits.

Following these consultations, the federal and provincial governments in 1997 adopted a balanced approach to CPP reform so that the plan could meet the demand in the coming years when the baby boomers would be retiring. These changes included: a rapid increase in CPP contribution rates and a building up of a larger asset pool while baby boomers are still in the workforce, investing this fund in the markets at arm's length from government for the best possible rates of return, and slowing the growth costs of benefits. Altogether, these measures ensured that a contribution rate of 9.9% could be sufficient to maintain sustainability of the plan indefinitely.

A key part of the 1997 CPP reforms was a new market investment policy for the CPP. The Canada Pension Plan Investment Board, an independent professional investment board, was set up in 1998 to implement this market investment policy. The mandate of the CPP investment board is to invest for CPP contributors and beneficiaries and to maximize investment returns without undue risk of loss.

Until 1999, when the CPPIB began operations, the CPP's investment policy was for funds not immediately required to pay benefits to be invested in provincial government bonds at the federal government's interest rate. This represented an undiversified portfolio of securities and an interest rate subsidy to the provinces. Since then, under the new policy, CPP funds that are not needed to pay benefits and expenses are transferred to the CPPIB and are prudently invested in a diversified portfolio of market securities in the best interests of contributors and beneficiaries.

The CPP investment board operates under investment rules similar to those of other pension plans in Canada, which require the prudent management of pension plan assets in the interests of plan contributors and beneficiaries and, like other pension plans, is subject to the foreign property rule. This market investment policy is consistent with the investment policies of most other pension plans in Canada, including the Ontario teachers' pension plan, the Ontario municipal employees' retirement system, OMERS, and the Quebec Caisse de dépôt.

Because the CPPIB is responsible for billions of dollars of retirement funds belonging to Canadians, it is imperative that the board be fully accountable to them. These funds must be managed prudently to the highest professional standards and at arm's length from governments, with qualified managers making investment decisions.

The CPPIB act was designed to ensure full transparency and accountability. Let me explain. To begin, the CPP investment board is accountable to CPP plan members and federal and provincial governments. It keeps Canadians well informed of its policies, operations and investments by: making its financial results and investment policies public; releasing quarterly financial reports; publishing an annual report that is tabled in parliament; holding regular public meetings in each participating province to allow for public discussion and input; and maintaining a very informative website.

A robust process with strong checks and balances that is in place for identifying and appointing CPPIB directors also assures full accountability of the CPPIB. Great care was taken in structuring the CPPIB to ensure that the board of directors is independent and accountable to CPP contributors and beneficiaries. Directors are appointed by the federal government following consultation with the ministers of finance in the participating provinces. The Minister of Finance also consults with provincial ministers of finance and with the board of directors on the appointment of the chair.

Based on specific criteria, directors are chosen from a list of qualified candidates recommended by a joint federal-provincial nominating committee, which comprises one representative from each of the nine participating provinces. In addition, in making appointments to the board of directors, consideration is given to ensuring that a sufficient number of directors have proven financial ability or relevant work experience to enable the CPPIB to carry out its objectives. As a result, the board includes individuals with business, financial and investment expertise.

I am pleased to say that the independence and the quality of the CPPIB board of directors have received strong support from the public and pension management experts. Independence from governments in making investment decisions is critical to the CPPIB's success and public confidence in the CPP investment policy. This is of utmost importance, because the money the CPP investment board invests today will be needed by the CPP to help pay the pensions of working Canadians who will begin retiring 20 years from now.

This brings me to the measures in Bill C-58. Bill C-58 proposes to transfer all assets remaining with the federal government to the CPPIB over a three year period. This includes a cash reserve and a large portfolio of mostly provincial government bonds. In other words, these changes would mean that all CPP assets would be managed by one independent professional organization.

These asset transfers would represent the final steps of the path established by the federal and provincial governments in 1997 to invest CPP assets in the market by an independent professional investment board. Consolidating all assets in one organization would also put the CPP on the same authority and footing as other major public pension plans, thereby providing fund managers with the flexibility to determine the best asset mix and investment strategies to manage risks and optimize returns.

This may sound theoretical, but I want to take a moment to point out that the analysis undertaken by the Chief Actuary of Canada indicates that CPP assets fully invested in the market would be expected to earn a greater return and thereby grow more rapidly. The benefit, as estimated by the chief actuary, is very significant, in the order of an additional $75 billion over 50 years. Obviously this welcome result would add considerably to the soundness of the Canada pension plan and enhance Canadians' confidence in the their public pension plan. In addition, transferring the bonds to the CPP investment board over three years would provide a smooth transition for capital markets, provincial borrowing programs and the CPPIB.

Last, all changes in the CPP and CPPIB regulations require the approval of the provinces. I am happy to report that all provincial and territorial governments unanimously support these changes and let me emphasize that it is unanimous. Also, before new legislation comes into force, the provinces need to formally approve the changes. As I have stated more than once during my remarks, the bill essentially would complete the process the federal and provincial governments began in 1997 of investing CPP assets in the market by an independent professional investment board.

Let me reiterate a few of the other points I made earlier. First, as I have just stated, according to studies, investing CPP assets in the market will produce a very large benefit in the order of $75 billion over 50 years for the Canada pension plan. Second, as I also indicated, phasing in the transfer of the assets over a three year period will help to ensure that the transfer is absorbed smoothly by capital markets, the CPPIB and provincial borrowing programs. Third, placing all CPP assets under the management of the CPPIB will allow the board to develop a more coherent investment policy for all CPP assets to enhance rates of return and better manage risks on the total portfolio, thereby helping to ensure the sustainability of the CPP. This puts the CPP on the same footing as other public pension plans.

As hon. members know, the CPPIB is responsible for establishing and fully disclosing its investment policies and for investing CPP assets while properly minimizing risk. With the transfer of the assets to the CPPIB, Canadians can feel secure that prudent, sound investment diversification as well as increased performance will result. I should mention, too, that the transfer of the CPP assets to the CPPIB will have no impact on the Quebec pension plan, which is administered separately from the CPP.

In closing, may I remind the House that during the 1997 public consultations on CPP reform, Canadians told their governments to fix the CPP and to fix it right. As I noted at the beginning of my remarks, Canadians also told their governments to preserve the CPP by strengthening its financing, improving its investment practices and moderating the growth costs of benefits. The provincial and federal governments have completed their work and have complied with all these requests.

The establishment of the Canada pension plan in 1966 was one of the most important public policy initiatives ever undertaken in the country. The CPP reflects a national benefit that retirement for working Canadians should not be a time of hardship. It also captures the Canadian value of shared responsibility among contributors and governments to provide reliable support to wage earning Canadians after they cease active work.

Ours is a government with a conscience. Together with the 1997 reforms, the measures in the bill ensure that the Canada pension plan will remain on sound financial footing for future generations, to which I am sure all members can relate. Through Bill C-58 the government is well on the way to fulfilling its goal of making the retirement income system secure for all Canadians. Most certainly, Canada's success as a nation must be the security of its seniors and the protection of those at risk.

I urge hon. members to support the passage of this legislation without delay.

[Amyotrophic Lateral Sclerosis Month, June 12th, 2002]

Mr. Speaker, I rise today to speak about ALS, sometimes called Lou Gehrig's disease. June is ALS month across Canada and today I am proud to wear a blue cornflower, the floral emblem of the ALS Society of Canada.

Imagine individuals not being able to walk, write, smile, talk, or even breathe on their own and yet their mind usually remains alert. This is what is happening to ALS victims. More than 1,500 Canadians suffer from this disease. It can strike anyone and results in complete paralysis and death, generally within three to five years of diagnosis. Each day two to three Canadians die of ALS. Although promising research continues there is still no known cure.

Throughout the month of June ALS volunteers will be asking the public for donations to fund research to fight this devastating disease. I urge my colleagues and all Canadians to make a generous donation so the dream of finding a cure soon becomes a reality.

[Supply, June 6th, 2002]

Madam Speaker, I cannot believe what I have just heard. The member suggested that the former minister of finance has mismanaged, in the eyes of the hon. member, the state of the nation's affairs.

This is a finance minister who came in with a $42 billion debt. We have had five better surpluses in a row in terms of the books. In terms of the GDP, we have had 6% growth in the first quarter. We have the highest sales in housing starts and cars. Clearly Canada is the only G-7 country that is paying off its national debt.

The member talked about the heating rebate. People do die I would tell my hon. colleague and people do go to prison. It happens when sending out rebates without creating a whole new regime, which of course the hon. member would have been jumping up and down over, that in that time some people went to jail. We got the money back. People die. It happens. It is a fact of life.

We did copy I guess to some degree what the hon. gentleman did when he was the treasurer for Alberta. Alberta had a similar program and look what happened.

The hon. member talked about overpayments. We are now looking at the reports from the auditor general. We will be reviewing them and will make a prudent response in the public interest.

I do not know this and I am merely asking the hon. member as he was the treasurer for Alberta, is it not the policy of the provinces that if they overpay municipal governments they want it back and they get it back? It certainly is the policy in Ontario. In fact Ontario has done that repeatedly. I presume this may be the policy in Alberta.

I do not want to impugn the member in terms of when he was the treasurer but he might at least have some experience and I look forward to his comments in that regard.

Does he think it would be appropriate for us after having the report for only three days to make a rash decision when we have not been able to really look at all of the evidence that we have received?

[Supply, June 6th, 2002]

Madam Speaker, I thank the hon. member for his question.

First, the hon. member suggested we were going after the provinces and territories. As I indicated in my speech very clearly, we are reviewing the auditor general's report. It is a complex issue and no decision has been made. It would therefore be premature for the hon. member to come to a conclusion we in the government have not reached.

We are not going after anyone. We are reviewing. We have been up front with the provinces and territories. We have provided them the information. We have released the auditor general's report not only to the provinces and territories but to Canadians as a whole. An assumption has been made regarding a conclusion which has not been reached.

As far as Industry Canada is concerned, I am sure the hon. member can appreciate that I do not have the information in my hands. I appreciate the comments he has made. He may find it helpful to direct the question in writing to the appropriate individual, probably the minister. Otherwise I cannot comment on it.

It is critical that the information on the overpayment be available in the public domain so people can look at the four reports. As I mentioned, there are four reports and they are very complex. We want to make sure that when we come to a decision we do so in the interest of all Canadians.

[Supply, June 6th, 2002]

Madam Speaker, I am pleased to have an opportunity to address the motion put forth by the hon. member for Peace River.

The issue of overpayments to provinces under the tax collection agreements is a complex one, so I would like to take a few moments to provide some background, beginning with a quick explanation of how the tax collection agreements function.

Under the tax collection agreements, the Canada Customs and Revenue Agency, CCRA, collects personal income taxes from all provinces and territories except Quebec. The federal government pays to those provinces the appropriate share of the taxes collected, based on accounts provided by CCRA.

Overpayment to the four provinces, namely Alberta, British Columbia, Manitoba and Ontario, are the result of a tax accounting problem at CCRA. The problem relates to the accounting of capital gains refunds by mutual fund trusts. Mutual fund trusts pay federal and provincial income tax on capital gains. Under some circumstances, mutual fund trusts can receive a refund of both the federal and provincial portions of this tax paid.

Due to a problem with CCRA accounting processes, however, the provincial portion of the capital gains refund claimed by mutual fund trusts was, for many years, not being deducted in the computation of the provincial tax revenues. Instead, it was deducted from federal revenues.

In other words, when mutual fund trusts paid provincial income tax on capital gains, the amount of the tax was added to the payments to the provinces. However, when the mutual fund trusts received a refund of provincial taxes paid, the refund was not deducted from the payments to the provinces.

The problem did not affect taxes paid by individuals or businesses. It was strictly an issue between governments. Nevertheless, the amounts of the overpayments were significant. They amounted, as was pointed out, to some $3.3 billion for the years 1993 to 1999. Alberta, British Columbia, Manitoba and Ontario are the most significantly affected provinces. Ontario's overpayment is about $2.8 billion and Manitoba's is more than $400 million. British Columbia was overpaid by $120 million and Alberta by $4 million.

In the course of enhancing computer systems used for tax accounting, the CCRA realized that there might be a problem and, as a result, initiated an indepth review. As soon as this internal review process indicated that the problem was real, the CCRA informed the finance department and the auditor general.

I am pleased with how the government has acted on this issue. In all instances we have been upfront and transparent with Canadians. We have been quick to take action. As soon as the auditor general confirmed that the problem existed, we took action to prevent further overpayments, we began discussing the issue with the provinces, and we asked CCRA and the auditor general to confirm the amounts involved, which brings us to where we are this week.

Just a few days ago, on Monday, the auditor general gave the Minister of Finance the reports on the overpayments. There are four reports altogether. There is an auditor general's report for the years 1997-99. There is an accountant's report for 1993-96 and another for the years prior to 1993. For the 1993-96 period, the procedures carried out are the same as those used to conduct an audit. However, because some documentation was not available, the auditor general cannot express an audit level verification on the amount of the overpayments for these periods.

I am sure that when my colleague, the Parliamentary Secretary to the Minister of National Revenue, speaks she will of course elaborate on this. She will be splitting her time with me.

For the period prior to 1993, the auditor general found that the necessary financial information to determine the amount of the overpayments relating to the period does not exist.

The fourth report deals with CCRA accounting practices. It essentially verifies that CCRA has implemented procedures to account for the provincial portion of the mutual fund trust capital gains refund. Practically speaking, it means that problem has been solved.

In the spirit of accountability and transparency the Minister of Finance made the auditor general's report available to the provinces and all Canadians as soon as he received them.

Moving forward, we need to review and thoroughly understand the auditor general's findings before making a decision on how to resolve the issue. I am sure all members would agree that it is prudent to do so. Otherwise we would be taking rash action. We must also consider what the impact may be on the provinces and territories. Because the overpayments made under the tax collection agreements affect the calculation of equalization they have an impact on all provinces, not just the four I mentioned earlier.

I think hon. members will recognize that where there is an overpayment of any kind, whether by a federal or provincial government or by an individual, it is normal to expect the amount overpaid to be returned. However as I mentioned earlier, this is a remarkably complex issue. The solution is far from clear at this point. Suffice to say that the government is determined to ensure the problem is resolved in a reasonable and fiscally responsible manner.

As we work toward resolving the issue I can assure the House that the government will continue to co-operate fully with the auditor general and with the provinces and territories. We will continue to be honest and up front in dealing with the issue for Canadians.