Denis Paradis

[Supply, March 11th, 2004]

Mr. Speaker, first, in response to the first question concerning problems in our health system, I would say that problems do exist. I think everyone will agree with that. I talked about that earlier and I believe those problems will increase with time. Our population is ageing. That is a widely recognized fact. Therefore, as elected representatives, we must sit down together and decide how we will deal with health problems and our ageing population.

Second, it is impossible not to noticed that there are waiting lists in hospitals. In our region, at the Brome-Missisquoi hospital, there are beds everywhere in the halls. Room numbers have been replaced with bed numbers on the walls. There is bed number 14, bed number 15, and so on. Indeed, there are problems, and we must sit down together and deal with them.

I would not want to start a war of numbers. In fact, one thing the premiers have agreed on is that, as of April 1, in just a few days, there will be a slightly different set of rules. Instead of a single cheque for health, social services and education, the provinces will receive two separate cheques: one for health and one for the rest. This will clear things up.

[Supply, March 11th, 2004]

Mr. Speaker, first, I should mention that we have seen these ads on television. The federal share has never been 50%. It was never higher than 41%. The charts being shown on television indicate that our share was as high as 50% and has dropped to 16%. But it was never 50%. The highest it was is about 41%. I just explained how we figure out that percentage, and it is about 40%.

My point is that we should discuss this. Canadians want their elected representatives to work hand in hand. Let us sit down and discuss.

I have just finished a prebudget consultation tour that took me to nearly every region of Quebec. During this consultation, people told us that we need more money in health care, but that we also need new ways of providing health care. We should have a look at the way our system works. People everywhere told us that. Will money solve all problems? No, and that is what I heard throughout Quebec, in all the regions of Quebec.

So, let us sit down and discuss. There is just one taxpayer, and he or she does not care whether it is the provincial government or the federal government that is responsible. The taxpayer is telling us we should get along. I am telling you we should sit down and negotiate something that will suit the taxpayers, whom we all represent.

[Supply, March 11th, 2004]

Mr. Speaker, first I would like to mention that I will be splitting my time with the hon. member for Etobicoke North.

I truly appreciate the opportunity this debate offers to join with my colleagues in re-enforcing our government’s absolute commitment to the quality health care that has become a fundamental part of our national values and heritage.

Improving our health care system is the number one priority of Canadians and their government. I am just back from a prebudget consultation tour and that is what we were told everywhere. Canadians everywhere want to see real, practical and measurable progress on improving access to health care services and reducing wait times.

Clearly, now is the time for governments to stop pointing fingers and start working toward sustainable solutions for the Canadian health care system.

There is no question that people are deeply concerned about the challenges, including the cost, that confront the health care system.

This government has a concrete priority to work through partnerships with all orders of government and all stakeholders to provide Canadians in every region with the public health care system they need and rely on.

This is not rhetoric. We have backed that priority with real action and bottom line results.

For example, almost 80 per cent of all the new federal spending initiatives we have undertaken since balancing the books have been in just three areas: health care, education and innovation.

Indeed, just last year, the federal government announced increases in funding under the 2003 Accord on Health Care Renewal alone totalling $34.8 billion over 5 years.

A large part of these funds will increase the Canada Health and Social Transfer, or CHST, and will be available to provinces to use on health care, post-secondary education, social programs and early childhood development.

Of the $34.8 billion, $29.5 billion goes to provinces and territories through increased transfers. It comes down to this:$16 billion over five year for the health reform transfer; $12 billion through the CHST and its successor programs; the $2.5 billion 2003 CHST cash supplement; and $1.5 billion for the diagnostic and medical equipment fund.

The health reform transfer provides $16 billion over five years for the provinces and territories to target primary care, home care and catastrophic drug coverage.

Now let us turn to the CHST which is intended to support health, social security and post-secondary education. Since health spending represents about 62% of the total that provinces spend in those three areas, it is reasonable to assume that, on average, 62% of the $38 billion that the government is providing this year would be spent on health. I think it is a fair assumption.

That’s more than $23 billion of the annual CHST transfer. Adding in the $1 billion in support from the new health reform transfer and $500 million in the diagnostic and medical equipment fund increases this amount to over $24 billion just this year.

And again, this is only part of the federal health care funding story.

The federal government provides 8 of the 10 provinces with equalization, and they are free to allocate as much of this money to health as they choose. Quebec, for instance, is getting around $4 billion. So, we are talking about a lot of money.

We know that the equalization-receiving provinces spend this money on health care because they tell us so themselves—when equalization payments fluctuate due to changes in provincial economies, the provinces are quick to point out that lower equalization payments mean fewer health care services for their residents.

Equalization is not targeted just to social spending, so let us look at all provincial program spending in order to determine a reasonable amount.

On average, provinces spend about 38% of their program budgets on health care. It is reasonable to assume 38% of annual equalization goes to health, which means about $3 billion a year for health care.

Added to the more than $24 billion in federal support through the CHST and health reform transfer, this brings the federal contribution to approximately $28 billion, or 35% of provincial health care spending.

The real question, of course, is: how does this fit in with provincial health care spending? And the answer may surprise you.

In 2003-04, the provinces spent $78 billion on health care. And, as I have demonstrated, federal transfer funding that can be related to health care is $28 billion. In other words, we actually funded about 35 per cent of provincial health care spending, more than one-third.

It is important to note that, because we are working with national averages, the actual share varies from province to province, because of their different spending on health care and the fact that not all provinces receive equalization.

But, maybe the member opposite can explain how the federal government only funds 16% of health care in his province, when federal transfers this year are estimated to account for about 23 per cent of Quebec’s revenues.

In summary, federal transfers currently cover over one-third of provincial health care costs, but we also have to recognize that federal support for health care extends beyond transfers to the provinces.

There is also direct federal spending for health care. The federal government’s direct spending for health care is estimated at approximately $5 billion in 2003-04.

This spending funds such important initiatives as first nations health, veterans’ health, health protection, disease prevention, health information and health-related research.

Furthermore, through the tax system, the federal government provides support worth about $1 billion a year. This includes credits for medical expenses, disability, caregivers and infirm dependants.

When you add the over $6 billion in direct spending and tax credits to $28 billion in transfers to provinces, which we talked about earlier, the federal government is providing about $34 billion a year, about 40% of all national public spending on health care in Canada.

And this amount will continue to grow following recent investment outlined in the 2003 budget. I think the bottom line here is pretty clear.

Still, let us continue to build on a positive partnership so that taxpayers can get good value for their money. It is always the same taxpayers who contribute at the municipal, provincial and federal levels, and they are asking their elected officials to agree with each other. Let us go in this direction.

[Ways and Means, March 9th, 2004]

Mr. Speaker, pursuant to Standing Order 83(1) I have the honour to table a notice of ways and means motion to amend the Excise Tax Act. I ask that you designate an Order of the Day for the consideration of the said motion.

[Customs Tariff, February 25th, 2004]

moved:

That Bill C-21, an act to amend the Customs Tariff, be referred forthwith to the Standing Committee on Finance.

Mr. Speaker, it is my pleasure to speak today about Bill C-21, an act to amend the Customs Tariff. I also welcome the opportunity to support the motion that this legislation be referred to committee.

Briefly, this bill provides for the continuation of a longstanding policy of providing preferential tariff treatment to developing and least developed countries.

The two tariff programs in question—the General Preferential Tariff (GPT) and the Least Developed Country Tariff (LDCT)—are implemented through the Customs Tariff Act and are set to expire on June 30, 2004.

This bill proposes that the programs be extended for another 10 years, from July 1, 2004, to June 30, 2014, as per past practice.

Before discussing the bill, I first want to provide some background, which will help to put these measures in context.

During the mid-1960s there was a growing recognition that preferential trade treatment for developing countries was a means of fostering growth and the well-being of poorer nations.

Following a recommendation by a United Nations conference on trade and development, developed countries implemented unilateral tariff preferences for goods originating from developing countries in order to help them increase their export earnings and stimulate their economic growth.

Canada's general preferential tariffs program, the GPT, was implemented on July 1, 1974, for a 10 year period and has been renewed twice since then, in 1984 and 1994. As indicated, it is now set to expire on June 30, 2004.

Under the GPT, more than 180 countries and territories are entitled to zero or low tariffs on a range of products that are covered under the customs tariff, with the exception of some agricultural products, refined sugar and most textiles, apparel and footwear.

In 2003, Canadian imports under the GPT were valued at $9.3 billion and accounted for 2.8% of total Canadian imports.

In 1983, Canada introduced the Least Developed Country Tariff—or LDCT—in an effort to provide even more generous preferential tariff treatment to goods from the world’s poorest countries, as designated by the United Nations based on a number of criteria such as national income, health and education. This program also expires on June 30, 2004, as I stated before.

Since January 2003, the government, acting on a commitment made at the 2002 G-8 Summit in Kananaskis, provides complete duty-free access under this program to all imports from 48 least developed countries, except for certain agricultural goods such as dairy, poultry and eggs.

In 2003, Canadian imports under the LDCT were valued at $408 million, accounting for 0.12% of total Canadian imports.

I have provided some background to these two programs. Now, I would like to explain why they should be extended.

To begin, extending the GPT and LDCT for another 10 years reaffirms the government’s commitment to promoting the export capability and economic growth of developing and least developed countries—the main reason these programs were initially established.

It also provides a predictable business environment to traders using these programs, both in the developing world and here in Canada.As well, an extension would be consistent with the practice of other developed countries, such as the United States, members of the European Union and Japan, who also continue to have similar programs.

Further, continuing these two longstanding unilateral preferential tariff programs sends a positive message to beneficiary countries who see such programs as an important factor in encouraging their development.

The decision on whether to extend the GPT and the LDCT affects a number of stakeholders.

First, it affects the exporters in developing and least developed countries that benefit from the preferential access provided by the two programs. The premise that originally led to the establishment of preferential tariff programs--that they would encourage and increase exports from developing and least developed countries and hence stimulate economic growth--still holds today.

Various studies by international organizations such as the International Monetary Fund and the World Bank support the principle that export expansion contributes to economic growth.

While these programs clearly benefit developing and least developed countries, Canadians also benefit from them. As a result of lower tariffs on goods from the developing world, Canadian consumers enjoy access to imported goods at competitive prices and will continue to do so if these programs are extended.

In addition, Canadian producers will continue to benefit from the reduced tariffs on inputs they import from the developing world and use in production of goods in Canada, which ultimately increases the competitiveness of Canadian industry.

If these programs were not extended, the increased duty costs incurred by Canadian importers and consumers would be approximately $272.8 million. Not continuing these programs would also raise questions about Canada's commitments to international development.

As noted earlier, all other major industrialized countries provide preferential access for developing and least developed countries, and some, such as the United States, Japan and the European Union, have extended similar programs in recent years. As such, not extending the GPT and LDCT would isolate Canada internationally.

Continuing these programs would also be consistent with our commitments to assist developing and least developed countries. These commitments have been reiterated on many occasions in fora such as the G-8, the World Trade Organization and the United Nations. Clearly, letting these programs expire could negatively affect Canada’s image internationally.

The reasons that justified the introduction of the GPT and the LDCT decades ago still remain.

The economies of many developing countries have still to make great strides if their citizens are to attain acceptable income levels. This bill constitutes one substantive measure Canada can take to continue to assist the developing world in achieving this goal, and continues Canada’s tradition of assisting the developing world.

In considering this bill, I encourage hon. members to keep in mind that Canada stands with all other major industrialized nations—the United States, Japan and the European Union—in supporting the developing world through such programs.

Before closing, let me review the advantages of extending the GPT and LDCT for an additional 10 years.

First, Canada would continue a longstanding international practice of providing preferential tariff treatment to goods from the world’s poorer nations.

Second, continuing the programs for a fixed period of 10 years will provide certainty and predictability to traders using them in Canada and in the developing and least developed countries.

Third, continuing the programs complements Canada’s foreign aid policies.

Finally, while these programs were mostly conceived as an economic assistance measure for developing and least developed countries, they also benefit Canadians by providing them with goods that are subject to lower rates of duty.

A 10 year extension of these programs is consistent with past practice, provides a predictable business environment to traders and reaffirms the government's long term commitment to international development.

In conclusion, the government is aware of the situation in the clothing and textile industry and is currently looking at additional measures to support the industry.

[Federal-Provincial Fiscal Arrangements Act, February 25th, 2004]

moved that the bill, be concurred in at report stage and read the second time.

[Supply, February 24th, 2004]

Mr. Speaker, it is my pleasure today to speak to a motion introduced by the hon. member for Winnipeg Centre, which deals with the investment policies of the Canada Pension Plan Investment Board.

First, I would like to provide all hon. members with some background on the Canada Pension Plan Investment Board and explain some of the measures it has taken to protect the sustainability of our pension system while promoting the values of Canadians.

The Canada Pension Plan Investment Board is the product of the need to ensure that the Canada pension plan will continue to provide the vital benefits that allow our seniors to enjoy a comfortable, indemnified retirement.

The Canada pension plan was created in 1966. The then government realized that Canadians needed a public pension plan that could be carried from job to job, and 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 to which nearly all working Canadians contribute.

The CPP provides all wage earners who paid into the plan with retirement income. It also provides financial assistance to their families in the event of death or disability. The Canada pension plan was designed to complement, not replace, personal savings and employment pension plans.

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

The federal and provincial governments subsequently released a discussion paper and held Canada-wide consultations on the CPP in the mid-1990s.

In joint public hearings from coast to coast, Canadians sent governments a clear message. They wanted them to preserve the Canada pension plan by strengthening its financing, improving its investment practices and moderating the growth costs of benefits.

Canadians expressed their desire to see the necessary changes made to the Canada pension plan. During these hearings, governments heard not only from one or two interest groups, but from Canadians who truly represented the public. They heard from seniors, young people, social planning groups, pension experts, actuaries, chambers of commerce, and from a great many ordinary Canadians interested in and concerned about the CPP.

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.

All changes to this federal-provincial program must be approved by at least two-thirds of the provinces representing at least two-thirds of the population.

Those reforms included a rapid increase in CPP contribution rates, a buildup of a larger asset pool while baby boomers were still in the workplace, its investment in the markets at arm's length from government for the best possible rates of return, and administrative and expenditure measures to slow the growing costs of benefits.

All together, those measures ensured that a contribution rate of 9.9% could be expected to maintain the sustainability of the plan. The federal and provincial ministers concluded, in their most recent study in December 2002, that the plan was financially sustainable and would be able to pay benefits to future retirees.

The new market investment policy was a key element of CPP reform in 1997. The Canada Pension Plan Investment Board, which is the subject of today's debate, was set up in 1998 to implement this new investment policy.

Created as a professional and independent investment board, its mandate is to invest on behalf of contributors and beneficiaries and to maximize the return by reducing the risks of unjustified losses.

Before the board was created, 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 and an interest rate subsidy to the provinces.

Now, under the new policy, 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.

I would like all of my colleagues to know that the new investment policy is consistent with the investment policies of most other public sector pension plans, including the Ontario teachers' pension plan—which is a major pension plan—and the Ontario municipal employees' retirement system. The CPP Investment Board operates under investment rules similar to those of other public sector pension plans in Canada.

These rules require the plan's assets to be prudently administered in the interest of plan contributors and beneficiaries. As well, like all other public plans, it is subject to the foreign property rule restricting investment in non-Canadian companies to 30% of the portfolio.

I would now like to address the content of the motion presented by the hon. member for Winnipeg Centre. Our position on this has always been clear. Canadians are entitled to know why, how and where their CPP contributions are invested, who makes the investment decisions, what assets are held on their behalf, and what the yield is on their investments.

It is essential that the board be fully accountable to Canadians and to federal and provincial governments, and this is indeed the case. It is also essential that Canadians' retirement funds be managed to the highest professional standards and at arm's length from government, with highly qualified, professional managers making investment decisions. And this too is the case.

As many of my colleagues are aware, the framework of governance established for the investment board is designed to ensure total transparency and accountability. I will go into detail on that if I may.

The CPP investment board keeps Canadians well informed of its policies, operations and investments through quarterly financial reports, an annual report tabled here in parliament, regular public meetings in each participating province, and of course its website, where its financial results and investment policies are posted.

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. Directors are chosen from a list of candidates recommended by a joint federal-provincial nominating committee after consultation with provincial finance ministers. As a result, the board includes individuals with strong business, financial and investment expertise.

Independence from governments in making investment decisions is critical to the CPPIB's success and public confidence in the CPP investment policy. I should point out that the independence and the quality of the CPPIB board of directors have received strong support from the public and pension management experts.

Some Canadians, including the hon. member for Winnipeg Centre, are concerned that the CPP's assets are being invested in companies or countries whose activities or policies are contrary to their own convictions. In the context of promoting socially responsible investments, they feel that we should take advantage of the power represented by our investment portfolio to influence factors that do not relate to investments.

However, there are other Canadians, some of whom use socially responsible criteria to make their personal investment decisions, who feel that we should focus on the return of the investments, since the financial security of the pension plan is in itself a major social policy goal.

It may be easy for an individual or a group of people who share the same ideals to make investments that pursue social goals. However, it is rather difficult if not impossible to do so for an institutional investor who represents over 16 million CPP contributors and beneficiaries whose personal convictions are extremely varied.

The legislation that regulates the board's activities specifically prohibits it from engaging in any investment activities other than maximizing investment returns without undue risk of loss. Consequently, the board does not select or exclude investments through the application of positive or negative screens based upon religious, social, economic, political, or personal criteria, or any other non-investment criteria.

The board's social investment policy, approved in March 2002, considers as eligible for investment securities of issuers engaged in a business that is lawful in Canada; and securities of issuers in any country with which Canada maintains normal financial, trade and investment relations.

The policy further states that the board will not accept or reject investments based on non-investment criteria. However, it will generally support corporate policies and practices and shareholder resolutions that would result in the disclosure of information that could enable investors to evaluate whether a corporation's behaviour will enhance or hinder long-term investment returns.

The board has also established mechanisms to promote sound corporate management and proper accountability on the part of corporations whose securities are part of its portfolio.

Under these instructions for proxy voting, the board uses its right to vote as a mechanism for encouraging corporations to provide information on their corporate code of conduct and ethics. This can help investors determine whether the corporation's conduct is a gauge for good long-term results or a risk to their return.

As a rule, the board believes that companies that respect the environment, human rights, fair employee practices, community relations and otherwise act in an ethical manner tend to perform better over the long run. We as government wholeheartedly agree with that principle, but in recent months the board has shown that it is prepared to go further on these issues relating to public concern over its investment practices.

When allegations were raised that companies currently being helped with the CPPIB's investment portfolio were involved in the manufacture of anti-personnel mines, the board undertook its own investigation in the matter. After consulting the specific companies directly and conducting its own investigation through third party sources, the board has reported that it has not found any evidence to support these claims.

Moreover, the board told my colleague, the Minister of Finance, that, if one of these corporations it invests in were found to be conducting such activities in Canada or abroad, the board would sell its shares in this or any other corporation conducting this type of activity, pursuant to its policy on the social aspect of its investments.

The results of the board's investment strategy speak for themselves. In 1997, the Canada pension plan had a deficit of over $6 billion and many believed the CPP would not satisfy the needs of the next generation of Canadian workers. For the hundreds of thousands of Canadians reaching retirement age, this was hardly good news.

A little less than seven years later, the plan has undergone nothing short of a spectacular turnaround. The plan's reserve fund is currently worth more than $64.4 billion. What is behind this turnaround? Without a doubt, the decision to increase the contribution rate to 9.9% has a lot to do with it.

However, we must not underestimate the role of investment income from the board's activities in explaining the dramatic improvement of the plan's finances. Retired Canadians will be able to count on the CPP for many years to come. Despite equity and bond market fluctuations, the board's prudent investment strategy will continue to pay dividends to Canadians of all ages.

If current estimates prove correct, the reserve fund will reach $80 billion in 2007, and nearly $160 billion ten years from now. These figures support the statements of the Chief Actuary of Canada, who said publicly that the CPP is sound for at least the next 75 years.

This means that all the members, their children and even grandchildren can expect to receive the CPP benefits to which they will be entitled. In this uncertain world, this is a very remarkable achievement.

In conclusion, I want to quote the President and CEO of the Canada Pension Plan Investment Board, John MacNaughton, in a speech he recently gave to the Calgary Chamber of Commerce.

He said that no investment strategy is—or should be—written in stone, and undoubtedly further adjustmentswill take place over time in line with shifting market conditions and portfolio needs. For now, weare proud of what we have accomplished, and we are confident we can meet Canadians’expectations, fulfill our mandate, and keep our promise.

The promise is nothing less than the right of all working Canadians to collect pension benefits to which they are entitled, and to enjoy a comfortable and dignified retirement. They deserve nothing less.

For these reasons, I cannot support the motion of the member for Winnipeg Centre as written. However, I thank the hon. member for having raised this important question.

[Taxation, February 20th, 2004]

Mr. Speaker, it is common knowledge that Canada has concluded tax treaties with over 80 countries.

The purpose of these treaties is, first, to prevent double taxation and, second, to restrict tax evasion.

We are closely monitoring all these tax treaties and we are continually seeking ways to improve them.

[Income Tax Act, February 20th, 2004]

Mr. Speaker, we are looking into this matter to determine the appropriateness of imposing new legislative restrictions on companies.

The Supreme Court of Canada ruled that fines and penalties could be deductible in so far as they constitute business expenses, unless the breach is so egregious or repulsive that the fine subsequently imposed could not be justified as being incurred for the purpose of producing income. It is being looked into.

[La Francophonie, October 6th, 2003]

Mr. Speaker, Canada is proud to be a major partner in the international Francophonie.

The International Organization of the Francophonie has 54 member states as well as two observer governments: the Government of Quebec and the Government of New Brunswick. It deals with various issues such as language and culture and issues relating to Canadian values, namely democracy, human rights and good governance.

This is an exceptional opportunity for Canada to showcase itself on the international scene.