Leon Benoit

[Agriculture, December 2nd, 1994]

Mr. Speaker, this week marks the end of the 30-day discussion period between the U.S. and Canada on proposals made by the U.S. department of agriculture that all Canadian grain shipments to the United States must go to a feed lot, a feed mill or an end user and require an end user certificate.

What have we heard from the minister of agriculture on this issue? Silence.

My question to the minister is what action has the minister taken on this issue which is a direct violation of the August 1 Canada-U.S. grain pact on wheat which specified that neither country would introduce any new trade restricting measures until the deal's one-year term ended?

[Income Tax Act, December 2nd, 1994]

Mr. Speaker, I am pleased today to rise for debate on Bill C-59, an act to amend the Income Tax Act and the income tax application rules.

Before getting into my speech, I want to say that I am deeply concerned for the health and welfare of the Leader of the Opposition as I know all my colleagues are. I want him and his family to know that our thoughts and prayers are with him through this ordeal. We sincerely wish him the very best.

I am going to speak against the bill today for reasons I will talk about later. I would like to first summarize the bill. As I do that I will point out the positive and negative aspects as I see them. I will outline why I will not support the legislation. Then I will briefly talk about what the government should have done instead of putting these changes in place.

To summarize, the bill has 12 main points. First is the elimination of the $100,000 lifetime capital gains exemption. I believe this is the most significant change in the bill. I will discuss it later.

Second, it extends employee benefits to include the first $25,000 of life insurance. Reform supports this measure. I support this measure because it harmonizes employer funded plans with private plans.

The third aspect dealt with in the bill is the age tax credit. It reduces the amount of credit based on an individual's income level. It provides for income testing which I believe is something we need in this tough financial crisis we are facing right now. It provides a clawback of credits that begins at $26,000 and ends at $50,000 when the credit is fully clawed back. We support this measure because it moves away from universality, benefiting those most in need. This is something we have to move to in the times we are in.

The fourth aspect is extending the homebuyers plan indefinitely for first time buyers. While I support this to some extent I do have some concern with it. It is discriminating against second and third time buyers and so on. One thing I do not like to see in the income tax system is measures that encourage and give special preference to one group and not to others. While I support the idea and think it will be productive, I do have some concerns for these reasons.

Fifth is the area of charitable donation tax credits. It lowers the threshold at which the tax credit is calculated. The amount is now 17 per cent of the first $250 donated and 29 per cent for anything over $250. The change lowers the threshold for the 29 per cent benefit to $200. This is an acceptable change.

The sixth change is a reduction in the business meals and entertainment expense allowance from 80 per cent to 50 per cent. I support the elimination of this measure which I believe has been a subsidy to business to some extent. I believe the meal allowance is due to some extent at least a double-up on an expense that would normally be there in the life of other individuals who are not carrying out business. I agree with the lowering of this level to 50 per cent from 80 per cent.

Seventh, in terms of tax shelters and partnership interests, it requires limiting the amount to passive partners. It really deals with the issue of using partnership interests for tax shelters. I believe this change will correct a loophole that Reform has seen and we support it for that reason.

Eighth, the device of corporate recognition closes tax loopholes. This loophole has allowed capital gains on disposition of corporate assets to be avoided in certain circumstances. Because it is being removed we support it.

The ninth measure, the investment in research and development tax credit, reduces regional disparity in certain credit schemes and distortions in the tax regime. Because it removes these disparities in the distortion we support it as well.

The tenth amendment is the expenditure limit on scientific research and development. It prorates the expenditure limit for a Canadian controlled private corporation and is based on the corporation's business limit for the year. It seems that it would make sense although we have some concern about that as well.

The eleventh measure reduces the small business deduction available to Canadian controlled private corporations with taxable capital over $10 million but under $15 million. These changes ensure that only small businesses can avail themselves of this deduction which was intended for small business in the first place. At least it is moving the deduction toward the more common or more accepted definition of small business. We support the measure for that reason.

The final change is to the mine reclamation fund. This results in lower taxes and provides for environmental clean-up. It is something that Reform expects in any business venture. Part of the business analysis before start-up should involve environmental reclamation in the case of mines or should involve figuring the cost of putting the environment in as near to the original condition as possible. Reform supports that.

Why does the Reform Party not support the legislation? The main reason is that the $100,000 capital gains tax exemption is being removed. This is a serious impediment to the build-up of wealth in Canada. To me that is a large concern.

Yesterday and the day before I attended a conference in Toronto. It was called Hitting the Wall and was sponsored by the Fraser Institute. There were speakers from several countries who were seized very much with the situation in countries like Canada that had refused to deal with the situation until it became a crisis.

One of the things that was talked about at the conference was the fact that it is very important to have savings in a country, especially a country like Canada that is seriously facing the very real possibility, in fact probability according to these speakers who had lived through this in other countries, of Canada being cut off in terms of bond issues to other countries.

It is a very real possibility. I will talk a little later about how the different speakers dealt with this issue and their thoughts on it. If there comes a time, and I believe there will come a time, that Canada issues a bond and there are no takers, we have a crisis. Our savings in Canada have been declining. It used to be that the United States had the lowest percentage of savings in the OECD countries. Now Canada has surpassed the United States in having the lowest savings level in the OECD. The United States which is notorious for having low savings now has been outstripped by Canada in winning that honour.

When the time comes that we have no takers on our bonds from outside the country, we will then we have to rely solely on Canadians to finance any additional debt and to finance payments on our present debt. What does it mean if savings are decreasing? It means there is that much less money available to finance the new debt and the new money that Canada has to borrow just to continue to keep the country operating. Therefore there is less money available.

Speakers at the conference made it known that it gives us less margin to react come the time when our bonds will no longer be accepted. There were speakers at the conference who deal in offering and buying Canadian bonds. One individual worked for a Japanese corporation. When asked he said that his corporation probably would continue to fund Canada's debt through bonds, but not because Canada is a good risk. In fact this gentleman said very clearly that Canada is a very bad risk. But his corporation will continue to buy bonds because Canada will pay the risk premium that is necessary for its investors to be willing to buy them.

Another reason is that the proportion of Canadian bonds held by this huge bonding company, of which this gentleman is the chief economist, is 3 per cent of its portfolio. Because of the high risk premium, in other words the high interest rates Canada must pay to maintain this foreign debt, this company will continue to finance these bonds for now.

However this gentleman said there could well come a time when the financial situation will be so bad that Canada will not be able to fund our debt from without. It could be very soon. That is why it is extremely important we have savings in the country to at least tide us over until we can make some kind of an arrangement with the International Monetary Fund to deal with the crisis, get some intermediate funding and work out an arrangement to work through the crisis which is caused by debt that is out of hand and government spending which is out of hand.

At this conference several things came across very clearly. First, most of the speakers at the conference said that Canada is in a very serious situation right now. Two of the speakers said they thought government would not deal with the problem. In other words they said Canada will hit the wall. It means that our economy and this country will go into a crisis situation. We will not be able to obtain financing from outside the country.

Both of these speakers were very clear in saying that it does not have to be like that, but that history has shown that is what happens. The history of Argentina, Brazil, Italy, Chile, Mexico and New Zealand among other countries has shown this. These are countries that had well developed economies, much like

Canada's. However history has shown that governments in well developed countries will not deal with the problem.

Two speakers said we are going to hit the wall, our economy is going to collapse. Most speakers said we do not have to. The telltale time will be the finance minister's next budget. If he comes out with a budget that cuts spending, that will lead to a balanced budget in a very short time, then we will avoid this crisis.

These speakers were not confident that will happen. They said we certainly can avoid it. But this next budget is the last chance. They made that very clear.

One speaker told a story about our finance minister. He said our finance minister had gone to the doctor because he had a serious hearing problem. The doctor said: "Your hearing problem is directly related to the fact that you are drinking a little too much. You have to cut your drinking down and that will fix the hearing problem". The finance minister went away and came back several months later. The doctor asked: "Have you quit drinking?" The finance minister said: "Yes, I have. I did quit drinking but I found that what I was drinking was much better than what I was hearing, so I started drinking again".

I hope sincerely that is not the case, that is not the way the finance minister will react to this crisis and that he will come down with the budget we need next February. It is our last chance to avoid this crisis.

Increases in taxation will not solve the problem. A decrease in government spending will. This is our last chance. Let there be no doubt about it.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, the hon. member started by saying that today he was not going to speak about agriculture. He did not but I have a question with regard to agriculture.

The member knows that in Ontario the Ontario Wheat Board has an elected board of directors. This elected board of directors controls the operations of the Ontario Wheat Board. In the west the Canadian Wheat Board is controlled by an appointed group of commissioners.

I am looking for an open and honest opinion. Does it make sense that a marketing group, the Canadian Wheat Board, which is paid for by western Canadian farmers, be controlled by a group of appointed commissioners rather than by an elected board of directors as is in place in Ontario?

If the member does agree this should happen, can he offer any suggestions for making it happen quickly? If the hon. member feels that it should not happen, that farmers should not take control of their organization which they pay for, why not?

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, I believe the question refers to the backtracking that has been occurring for several years and was pointed out to the minister very clearly a year ago. Backtracking involves grain being shipped under the subsidized rate to Thunder Bay and then going back at the full market rate. It makes no sense.

As my colleague mentioned before, it costs Canadian taxpayers between $15 million and $40 million a year. It is absurd. It should not be happening. Why could the minister of agriculture not say it will not happen any more within a month of when he found out it was happening? Why? There is no good answer for it. It should have happened.

The minister himself is backtracking. Originally he said that the backtracking would cease to exist on January 1. Now he has put it off until the end of July, to the new crop year.

Certainly there are some problems with contracts that were made before this problem was widely recognized but those should be dealt with directly and backtracking should have ceased long ago.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, the question was with regard to subsidies and whether subsidies should be distance related. A further comment by the member that there were no subsidies to grain from central Canada was untrue. The seaway is a very expensive system to keep open and operating. A lot of government money has gone into and continues to go into it. Certainly there are subsidies to central Canadian farmers in terms of shipments as well as to western farmers.

The second point was why the Crow benefit, as it used to be called, came into being in the first place. It came into being early in this century to get raw product to central Canada for processing. That was the reason that the Crow benefit was paid in the first place. It was not because western farmers needed a subsidy. It was because central Canadian processors wanted western farmers to be hewers of wood and drawers of water. This is no longer acceptable. The Crow benefit payment has prevented western farmers from developing a processing industry in western Canada.

We can no longer talk about whether or not the subsidy should be distance related. The question is whether we should have a subsidy. The answer is no. There should be no subsidy connected directly with distance or to be paid out in any other way.

The money now paid out under the Western Grain Transportation Act, the Reform Party has said, should be put into a trade distortion adjustment measure which would compensate farmers directly for damage done due to unfair trade practices in other countries. The compensation could be for damage in any commodity; it would be commodity neutral.

The way things work, probably the compensation would be for grain at first. Certainly over time the compensation would be for other commodities as well.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, I am pleased today to take part in this debate on the implementation of the GATT agreement and the World Trade Organization.

This is the first time since GATT negotiations have taken place that agriculture is a substantial part in the agreement which is very encouraging. As we can see from the general support for this legislation which will implement GATT and put in place the World Trade Organization, there is widespread support in this House as well. I think it is very encouraging to see that.

There are however some problems with this bill. I would like to speak about some of the concerns I have with the bill, although again I want to reiterate that Reform does support this bill strongly and I support this bill. However, there are still some concern mainly with regard to implementing GATT and the workings of the World Trade Organization.

I know farmers are ready for this trade organization. I have seen this over the past years as the GATT negotiations have proceeded. I certainly hear it now from individual farmers and farm groups that they do support this deal. Clearly farmers are ready for this deal to be in place and to have the World Trade Organization in place as a referee, to use the analogy of my colleague. Is government ready?

I am going to ask a lot of questions today about whether this government is ready for the implementation of this GATT deal and for the World Trade Organization to be put in place.

My questions fall into two areas. The first question is in the area of interprovincial trade barriers and the lack of this government's dealing with that area, especially in agriculture.

Agriculture is a major part of the GATT negotiations. Yet in the negotiations on reducing interprovincial trade barriers held by the government with the provinces over the past summer, there was virtually no substantial agreement or deal made between the provinces and the federal government in the area of agriculture. This important part of trade in the world situation and in the GATT has not been dealt with in this country. That is the first area.

The second area is with regard to government agencies. I have questions about whether the government is ready for the deal when we look at how it is taking part and refusing to change certain government agencies.

I would like to briefly talk about interprovincial trade barriers. Agriculture is an important part of the overall GATT deal, but it has not been dealt with as a serious issue in terms of freeing up the barriers between provinces in the area of the trade in agricultural commodities. It is important that there be some action on the part of the agriculture minister and other cabinet ministers in the area of lowering and removing interprovincial trade barriers.

The third area is government agencies and how the government has dealt with them. The agencies I am talking about particularly are the Canadian Wheat Board, the supply management system and the Western Grain Transportation Act. I will keep my comments on the Western Grain Transportation Act very brief because the member for Lisgar-Marquette has already dealt with the issue to some extent. I will talk about the Canadian Wheat Board and some of the questions I have with regard to changes that will be required to the Canadian Wheat Board to make the GATT deal work.

In the agreement there are two changes to the Canadian Wheat Board Act. They are laid out in clauses 48 and 49 of the bill. Clause 48 deals with changes to section 45 of the Canadian Wheat Board Act. Under these changes the Canadian Wheat Board will control only exports and no longer control imports of wheat and barley.

I want members to think about that a bit. Right now the Canadian Wheat Board controls imports and exports of wheat and barley. Under the change the Canadian Wheat Board will only control exports of wheat and barley. I ask if it makes much sense for our government to control exports when we have just negotiated a trade agreement which is meant to allow for freer trade of goods in and out of the country. It makes no sense.

Clause 49 changes section 46 of the Canadian Wheat Board Act. It says that the Canadian Wheat Board no longer controls licences for imports into Canada. It gives up the restriction on imports of grain and gives up the control of licensing imports. At the same time it maintains under the Canadian Wheat Board Act restrictions on exports. It seems absolutely ridiculous that imports are no longer restricted under the act and exports continue to be restricted under the Canadian Wheat Board Act.

What does that mean in terms of what will happen in the grain industry? I think it means a lot of things. It means that American farmers will now be able to sell directly to Canadian millers while Canadian farmers may not. Does that sound incredibly ridiculous? It is. We need further changes to the Canadian Wheat Board Act to allow Canadian farmers to sell directly to Canadian millers. American farmers will have this right after the bill is passed, as it surely will be.

I would like to tell a story about a Canadian entrepreneur that I heard at the wheat board rally in Regina three or four weeks ago. To diversify his operations a farmer built a flour mill on his farm. He employed people from off farm to run the mill. It was the type of operation we all want to see.

What was his concern and why was he one of the speakers at the wheat board rally in Regina? The reasons are really quite simple. For him to use his own wheat in his flour mill, it was necessary for the farmer to sell his grain through the Canadian Wheat Board to be strictly operating under the law. He needed his own flour because he was making specialty flour products and selling them across western Canada. Yet to do that, to use the wheat that he was growing to produce flour, he had to go through the Canadian Wheat Board. That sounds almost unbelievable when we are talking about opening up the trade environment.

The farmer also wanted to expand into the American market with his specialty flour. What was restricting him from doing that? The Canadian Wheat Board was restricting him from doing that. He would have to get a permit under the Canadian Wheat Board Act to sell his flour into the American market, a restriction that he did not want to live with.

If we look at the particular situation of the farmer and carry it a little further and if the bill passes as it almost certainly will, the farmer may go to an American farmer across the border, buy his flour without going through the Canadian Wheat Board, buy wheat for his mill without going through the Canadian Wheat Board. He will not be able to do that under the changes. The sellers will not need a licence to import the wheat to be used in his mill. Yet he cannot use his own flour in his own mill. He cannot use his neighbour's flour in his own mill because of the restrictions of the Canadian Wheat Board. It sounds absurd and it is absurd.

I would like to ask the minister a series of questions. First, does it seem reasonable to allow Canadian farmers the same freedom American farmers enjoy? Does that seem reasonable? Should not Canadian farmers at least have the same freedom in marketing their wheat and their barley as American farmers have, especially when we are talking about marketing into the Canadian market? They do not now have the same freedom.

The second question is in regard to giving farmers control of the Canadian Wheat Board which, after all, is their organization. Farmers pay the bills to operate the Canadian Wheat Board. The Canadian Wheat Board supposedly exists for the benefit of farmers. That being the case, how could the minister or any other minister possibly refuse to give farmers control over this organization?

I have asked the minister this question several times over the past few months and the answer has been that they have to study the matter or the answer went in some other direction entirely.

When I am talking about giving farmers control over their own organization, I am only talking about farmers electing a board of directors to replace the present appointed board. That would make the Canadian Wheat Board accountable to farmers who really pay for the operation of the organization. Why on earth would the minister or anyone else have to do a study to decide to give farmers control over their organization by electing a board of directors? I cannot think of an answer.

I would just like to ask a couple more questions in the time I have left. Has anyone asked farmers whether they want the wheat board maintained as a monopoly operation? I know other Reform members and I have. The minister certainly has not and it is time that he did. The minister has an obligation to ask farmers whether they want this monopoly maintained. Has anyone asked farmers whether they want appointed commissioners replaced with an elected board of directors?

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, actually I was standing for debate. We had shared time, the member for Lisgar-Marquette and I.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, when the hon. member makes a comparison between supply managed industry, which is an industry that has an artificially high price developed, and the beef industry, he is fooling no one. Clearly beef trades at world prices everywhere including inside Canada. Quebec has become a much smaller part of the Canadian beef market. Trying to compare the consequences of supply management with that of beef is totally trying to fool someone and it is not going to work here.

I would like the member to respond to that.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, I would like to pursue this matter a little bit further. I think it is very important that Quebec dairy farmers and Quebec farmers involved in supply management really consider this issue. It is extremely important.

I would like to ask the member to pursue this a little further. First Quebec is not a signatory to GATT or the free trade agreements. These agreements would not apply if Quebec were to separate. This is the first thing to consider.

Second, international law has never had a precedent set that would be along the line of Quebec voluntary separation. There is no precedent under international law.

I would like this member to explain how he can go straight faced to the Quebec dairy farmers and say we are not going to have a massive problem in terms of having markets available and with regard to prices falling virtually overnight to world prices, not to the artificially high prices set under supply management in Canada.

[World Trade Organization Agreement Implementation Act, November 29th, 1994]

Mr. Speaker, I listened with interest to my colleague's comments, particularly with regard to supply management.

I would like to follow up a bit more. In his presentation the member expressed concern with the implementation of GATT and concerns about which free trade agreement, GATT, NAFTA or CUSTA, really will apply. Canada has one idea in that regard and the United States has another. Certainly these are very important issues.

I would like to ask another question. If Quebec is successful in separating over this next year or so, how would the hon. member rate the harm and damage to the supply managed sector in Quebec because of separation? For example, in dairy they will certainly lose half of their market virtually overnight because right now Quebec has almost 50 per cent of the market with only 25 per cent of the population. Certainly the rest of Canada would not be open to taking this oversupply.

I would like the member to comment on the damage that will be done due to separation as compared to his concerns in regard to the implementation of GATT and the other agreements.