Roger Pomerleau

[Supply, March 19th, 1996]

That is a very good question to which I have no answer. And I have no answer precisely because we are being presented with a committee of experts on which we have no seat. We would just like to work with this committee, which will include Price Waterhouse, and Ernst & Young, in taking a thorough look at taxation.

If, after that, we see that there actually are not a lot of companies using tax havens to evade taxes, we will bow to the facts. However, in 1992, the Auditor General of Canada spoke of billions of dollars, from what little he could tell, that were not being taxed and recommended a review of the tax system. What we are being served up is a phoney review, which will be carried out behind closed doors, without representatives of the government or the opposition or even the third party, without any sort of parliamentary representatives, and we are being asked to reply to questions to which we do not wish to reply.

I hope that my hon. colleague will be among those who will try to convince the government that there should be representatives of Parliament on this committee of so-called experts, and we will be able to give him figures at that time.

[Supply, March 19th, 1996]

Mr. Speaker, I am always surprised when I hear about the very knowledgeable experts who will be advising us. We have been listening to experts for thirty years and the debt stands at $600 billion. So perhaps we should start to look seriously at who the real experts are in Canada.

I am speaking to the motion put by my hon. colleague, the member for Saint-Hyacinthe-Bagot. This motion essentially says that the technical committee to examine taxation announced by the government is in complete conflict of interest.

I am pleased to speak today on this topic, which is of concern to all citizens of Quebec and of Canada, but which does not seem to be all that troubling to the government. I want to talk about taxation, because that is what people are talking about. They are talking about tax collection. Taxation is admittedly not a very popular topic these days, with the state of the economy going from bad to worse. But, in fact, we are going through some difficult times economically. We are also witnessing the gradual disappearance of the middle class, another topic that is not often discussed.

The people of this country have had it up to here with taxes, with having their pockets emptied by one government after another, with watching each successive government hand over the deficit to the next for 30 years now. And all the government can come up with as a solution is cuts. It cuts certain programs and overburdens taxpayers in an attempt to make up the shortfall. In this year's budget, the Minister of Finance was supposed to be reassuring with his announcement that there would be no tax increases.

This cosmetic budget, as was shown in the speeches that followed its reading, is just a show aimed at saving face for the government. It does nothing more than camouflage the real cuts. It will be recalled that the 1994 budget saw government cuts of $44.9 billion over five years. In the 1995 budget, the government again cut $42.7 billion. This year's was perhaps intended to be reassuring by making only another $1.9 in cuts to various programs, yet this is the year taxpayers will bear the full brunt of the measures passed earlier but coming into force only this year.

Why do cuts have to be made? Because public finances have to be put back on their feet. The deficit must be eliminated, of course. The government claims that it has gained the upper hand and that it has solved Canada's financial problems. These are false statements. According to its own projections, the present Liberal government expects that, by the end of its mandate, this year's mandate, it will have added close to $110 billion to this country's debt. We are on the verge of clicking over to the $600 billion mark-our Reformer friends would be able to tell us when, since they are doing a countdown minute by minute.

The Minister of Finance has also announced a deficit reduction. He is patting himself on the back for it, claiming the honours are his. Let him if he wants to, but the only reason the deficit has lessened is that the economic situation last year was better than in previous years, and the Liberals had little to do with that. It is the low interest rates, the increase in exports and the unemployment insurance fund which have contributed to reducing the deficit. Digging into the UI fund is almost like garnisheeing everybody's pay cheques. Without those three things, we would be back in a recession.

Concretely speaking, this year's budget marks the end of efforts to restore Canada's finances. With this budget-and the same goes for all previous ones-the Liberals have done nothing to settle the matter of public finances. Yet we know that this is the one and only thing the public is calling for.

The Bloc Quebecois has long been calling for the government to get its finances in order, ever since we came to this House in fact. Not by getting more out of the ordinary taxpayer, but by collecting from those who do not pay their fair share into the public purse. Regardless of what our friends opposite have to say, a lot of people in Canada do not in fact pay their fair share. Last year, there was over $6 billion in unpaid taxes, and the government was unable to reduce this amount compared to the previous year. As we just said, it preferred to draw $5 billion out of the unemployment insurance fund, which amounts to a general confiscation of people's salaries.

We have also been calling in the past two years for major government reform of tax treaties between Canada and certain countries. Business taxes must be completely overhauled. According to the Minister of Finance's most recent estimates, approximately $10 billion in incomes go untaxed. Not only must the tax system be overhauled, but an end must be put to tax avoidance, also known as tax havens, because this is where we lose the most. My colleagues in the Bloc speaking before me have clearly shown how, in recent years, companies providing advice on the use of tax havens have made a lot of money and are tripling, quadrupling and sometimes quintupling their clientele.

I would like to talk about tax havens very briefly. There are real loopholes in some of the treaties between Canada and other countries, which allow individuals and companies to lower their

level of taxation significantly. What is not paid on one side, is obviously passed on to others. This is how a number of foreign countries become what are called tax havens-not for the middle class, but for the companies using them.

The area of tax havens is a highly complex one. We cannot hide the fact that the Canadian Income Tax Act is the most complex piece of legislation of all, and my colleague for Saint-Hyacinthe-Bagot, who spoke before me, pointed out that the greater the complexity, the easier it is to find loopholes. So, the section on foreign corporations is no doubt the most complex section in this most complex law.

Since Canada deals with several countries, and since each country has its own tax system, it is difficult to get our hands on exact figures-especially in those countries where they are confidential-regarding the extent of the problem and the amounts involved. But financial experts agree that nearly all major Canadian multinationals use tax havens as part of their tax strategy.

It has become a tax strategy in itself. They are not abroad necessarily to produce something. Corporations use tax havens as a strategy to avoid paying taxes; they derive several advantages from this.

The same experts also agree that the popularity of tax havens has reached unprecedented levels. Several elements show the size of the problem. Earlier, my colleague from La Prairie mentioned several corporations such as International Privacy Corporation which use and give advice on how to use tax havens. He made his point brilliantly and I will not go over it again.

In order to fully understand this tax haven phenomenon, we have to get back to basics. The general rule is this: any business income and any income earned by a Canadian corporation must be taxed, whether earned in Canada or abroad. But to every rule there is an exception; therefore, the legislation provides that a Canadian corporation can receive a business income from an active affiliate, without paying any tax on it in Canada, provided that the foreign affiliate is located in a country designated under the Income Tax Act, that is to say one of the countries with which Canada has entered into tax arrangements.

In the end, this means that a Canadian corporation with a branch in a designated foreign country does not pay taxes on the branch's income abroad. This provision was originally included in the law to avoid double taxation, as the previous speaker from the Liberal Party has just explained, by both Canada and the foreign country. The Canadian government considers that the income earned abroad

is taxed at about the same rate as in Canada. Tax havens were created on the basis of this false assumption.

This has had two major consequences. First of all, some countries have very low tax rates that hover around 2 or 3 per cent, while Canada's tax rates are in the 40 per cent range. Technically speaking, this gap can only lead to a tax inequity that costs the Canadian government millions of dollars.

Second, foreign subsidiaries can transfer their dividends to the controlling Canadian corporation without paying any taxes on them. In other words, the law allows corporations to transfer the losses of foreign subsidiaries to the parent company, to transfer Canadian corporate income abroad, and finally to shelter income that is normally subject to tax by transferring capital to foreign subsidiaries. One of my colleagues gave a very good explanation earlier of how corporations manipulate prices by buying something in Canada at a certain price from a foreign subsidiary and then selling it on foreign markets in order to make a profit in a tax haven.

The auditor general's 1992 report-which was widely quoted at the time but which was also, like all other reports by the auditor general, shelved and largely forgotten after being talked about for ten days-gives some 20 examples of tax havens. I will quickly go over four of them to at least show what the Auditor General of Canada thinks about this.

The auditor general gives us four examples. First, a U.S. corporation affiliated to a Canadian company has $684 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the affiliated U.S. corporation was used to reduce its U.S. tax losses. Interest charges on the money invested in the U.S. corporation are deducted in Canada. Although the Department of National Revenue, Taxation considered that investment income was subject to a source deduction, this manoeuvre allowed the corporation to transfer U.S. tax losses to Canada. That is what the auditor general tells us.

Here is another example. An American corporation affiliated with a Canadian company holds $672 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the American corporation has been used to absorb its American tax losses. The interest costs on the funds invested in the American affiliate are deductible in Canada. This scheme has effectively transferred American tax losses to Canada. Mr. Speaker, how lucky these people are to be able to transfer their losses just about anywhere.

A third example quoted by the Auditor General of Canada in 1992, specifically on the use of tax benefits, tax avoidance and tax havens, is that of a Hong Kong corporation affiliated with a Canadian company and holding $62.4 million in liquid assets and short term deposits from the Canadian company. The investment income earned by the Hong Kong corporation has been used to absorb tax losses incurred in Hong Kong. The interest costs on the funds invested in the Hong Kong affiliate are deductible in Canada. This scheme has effectively transferred Hong Kong tax losses to Canada. The tax avoidance section at Revenue Canada-Taxation has been following this case since 1990.

One last example-out of several pages of examples-is that of the Canadian company which has an interest free advance of $1.6 billion and a $133 million investment in an affiliated corporation in the Netherlands. This investment has generated $130 million in income, which is not taxable as foreign accrual property income for the foreign affiliate. In spite of the fact that this foreign affiliate's income has not been taxed at a rate similar to the one applicable in Canada, these $130 million can be transferred to the Canadian company tax free. Not only is this foreign income not subject to tax when brought into Canada, it entitles the corporation to federal and provincial tax credits for dividends paid abroad. These companies end up getting credits on top of it all.

I explained earlier how the Income Tax Act, the taxation legislation, is one of the most complicated acts in Canada and I think that the examples I have just given you are cases in point. The Auditor General of Canada works hard at making sure that very complicated cases can be understood by the general public. Nevertheless, a great deal of concentration is still required to read things like that. And these are just a few examples.

However, they illustrate how widespread the situation is. There are other indicators of the scope of the problem. In his 1992 report, the auditor general took a look at Revenue Canada's data bank. He discovered that, until 1992, Canadian corporations had invested $92 billion in non-resident companies with which they did not deal at arm's length. In 1990, these Canadian corporations received dividends totalling over $4.2 billion from foreign affiliates.

Of these $92 billion, $5.2 billion was invested in businesses in Barbados, which is a tax haven. In 1990 alone, Canadian corporations received over $400 million in dividends from companies based in Barbados. These dividends were not taxed in Canada.

All these figures are taken from the auditor general's report. A total of $10.9 billion was invested in businesses in Cyprus, Ireland, Liberia, the Netherlands and Switzerland, all considered to be tax havens. In 1990, Canadian corporations received over $200 million in dividends from companies run in these countries alone. These dividends entered Canada free of tax. That was in 1990. Then there is 1992 and other tax havens.

Recently, we have been hearing a lot about the Cayman islands, and also the Turks and Caicos islands. These places have become very popular, not as sunny destinations, but for wealthy Canadian individuals and corporations. Corporations do not go there to enjoy the sun, but to take advantage of the tax benefits. The information returns compiled by Revenue Canada do not, of course, provide an accurate idea of the scope of the financial dealings taking place

between parties in Canada and abroad. Some data is incomplete and certain types of transaction are not listed.

But it is a known fact that people who do business in tax havens are allowed some degree of discretion and do not have to report to Revenue Canada all the profits made in these tax havens.

What the auditor general said was that it could reasonably be assumed that hundreds of millions of dollars in tax revenues had already been lost and would continue to be at stake.

I could have added another ten pages to my speech, but I see that my time is slowly running out. However, I would come to the following conclusion. Faced with the Bloc's proposals to review Canada's tax system, which we have kept reiterating ever since we have been elected to this place, the minister now says that he will finally set up a technical committee on taxation.

When our colleagues opposite tell us that the greatest experts in Canada will sit on this committee, we do not dispute that fact. I am totally convinced that the best experts in Canada will sit on this committee. However, what we are questioning is what has become obvious to everyone else, which is that this will be a closed committee, a committee on which no members will be allowed to sit but that will be made up of the very same people who advise companies on tax havens. There is an obvious conflict of interest here.

We are talking about the very same people who use these tax havens and a lot has been said about these companies, such as Price Waterhouse and Ernst & Young. These companies have affiliates in at least five tax havens. They are right in the middle of a conflict of interest, and all the minister has to propose is a mini-reform done behind closed doors.

In other words, we will bring together the best experts in Canada, the very same people who show corporations how to avoid paying taxes, and we will ask them to carry out a study on the best way to ensure these companies do pay taxes. This does not make any sense. If the government, the opposition or even the Reform Party have no representatives on this committee, it will be a phoney committee which will not even have an agenda.

We are told that a report will come out later and that, when it is released, the population will be able to review it. When will that be? After the next election? After another referendum? There will never be a tax reform and we are sorry about that. We also regret that this committee will be both judge and judged. We regret the committee's lack of openness and we hope that members of Parliament will take part in the tax study this technical committee will carry out.

[Supply, March 15th, 1996]

Mr. Speaker, my point of order is on the same issue and is along the same line as the comments made by the Liberal member.

There was a misunderstanding in the House, I believe. Some members did say no. However, when you asked the question a second time, a large number of members had already left, probably to have lunch. This is the reason for that misunderstanding. The fact is that some members from both sides of the House had said no.

[Supply, March 15th, 1996]

Mr. Speaker, I would like to start by saying that, on occasion, I have wished in this House that the Reform Party became the official government of Canada. But over the past few weeks, and especially today, I have changed my mind.

The motion before us today deals with a contract signed on behalf of two corporations by very smart individuals who took months to negotiate and reach an agreement. The case was heard by the Supreme Court of Canada, and the contract declared valid. A contract is a contract.

Reform members are taking advantage of the forthcoming elections in Newfoundland to engage in some Quebec bashing, telling Newfoundlanders that we are bad neighbours.

If you recall, Mr. Parizeau himself, at the last premiers' meeting, when Mr. Wells was still premier of Newfoundland, surprised Mr. Wells with a private offer to renegotiate the issue of a corridor through Quebec should the province become a country in the short term, which at the time was a strong possibility. We are very open to this kind of negotiations.

I would like to remind my colleague that if it were not for Quebec weighing heavily in favour of NAFTA, there would be no NAFTA agreement between Quebec and the U.S., and probably no GATT agreement, since it had a profound impact on the decisions in this respect.

I would like to ask a question of my hon. colleague who raised the issue of contracts; we have a proper contract, by which we will abide. In Canada, there is a basic contract called the Canadian Constitution. In 1982, the Constitution was patriated and Quebec was deliberately excluded from this contract. The terms of the contract were changed without Quebec's assent, against the will of Quebec's national assembly, even though Quebec used to be party to the contract. In Quebec, no premier, no political party-forget about sovereignists and let us look at federalists in Quebec-no federalist, the allies of our friends opposite, agreed to sign. We were excluded from this contract. Does my colleague find this normal?

[Privilege, March 14th, 1996]

Mr. Speaker, the hon. member from the Reform Party who spoke just before me asked: "What are the motivations of the government?" I would like to address this issue. Given the current political situation, there is something quite strange about both the motion put forward by the Reform Party and the amendment proposed by the Liberal Party. You will remember that, after the referendum, Mr. Bouchard promised to stop, for a while, to focus on the referendum in order to put Quebec's fiscal house in order.

But strangely enough, ever since Mr. Bouchard made that commitment, federalists have made a whole series of statements which all seem aimed at bringing the referendum issue back again for debate and at putting Quebec in its place. For two days now, we have been discussing a motion we did not put forward and which brings us back to the referendum issue. In fact, the motion before the House today is only the latest element in this long series of statements.

Why do we see so many strange things in the strategy our colleagues have been developing in the last few months? Maybe-and this might enlighten the Reform Party-it is because they have a hard time swallowing the close outcome of the last referendum.

The House will recall that, immediately after the referendum, the Prime Minister, in what was probably a last-minute strategy, tabled here at the end of the session a motion to recognize Quebec's distinct society and a bill on the veto power. The motion, of course, does not bind the current or future governments or the courts, and the veto power, as any bill, can be revoked any time. Both were obviously in line with the Prime Minister's thinking, which is, as he said himself in the House: "Everybody knows that I am French when I speak English; I do not have to write that down in the Constitution."

Quebecers saw both of those things for what they really are, that is, smoke screens and meaningless attempts.

This is why, in spite of strategies, the sovereignist option is still on the rise in the polls, and more and more people, in Quebec as well as in Canada, are now convinced that Quebec's sovereignty is inevitable.

Why do sovereignists think that? Because they know Mr. Bourassa was right when he said that the status quo would be the worst answer for Quebec, and the status quo is what is offered to Quebec. Also because they remember Mr. Trudeau promising to put his government's seats at stake if there were no change, and they are fully aware that they cannot rely on that kind of promises.

If the Prime Minister did not learn a lesson from the referendum, the Canadian people did, forcing the Liberal Party to hurriedly review its strategy.

The Canadian people understood what was going on. Everybody now knows that the Prime Minister of Canada and the chief of the Conservative Party do not speak for Quebec any more. They both lost the referendum in their ridings. How can a man promise

anything for Quebec when he is not able to give any guarantee at all concerning his own riding?

Before the referendum, the Prime Minister was asking for support from his troops, his allies in Quebec, which is understandable, from his opponents in the House, the Conservative Party, and even from the Reform Party which he had made fun of for about two years. However, everyone knows that a man who needs to be supported is a man who is falling down.

The weakness of the Prime Minister had to be concealed as much as possible. A scapegoat had to be found to explain the unexpected result of the referendum. Mr. Ouellet, the then Minister of Foreign Affairs, pointed his finger at Mr. Daniel Johnson in Quebec and said: "We almost lost the referendum because this man was not passionate enough about Canada". I just want to remind the people and especially my friends from the Reform Party that Mr. Ouellet never came to Quebec during the referendum and did not even vote. That is how passionate he was about Canada.

Realizing that this strategy did not work, the Prime Minister announced a cabinet shuffle. To solve the problem, so it seems, because it is all part of a strategy, he appointed Stéphane Dion, the present Liberal candidate in Saint-Laurent-Cartierville, as the new Minister of Intergovernmental Affairs. Who is this man? A hard liner who always talks about plan B. He is the one who tells us, and I quote: "I am coming to change the reality"-nothing less-"I will be the architect of the great national reconstruction".

He is the one who said, before the referendum, as we remember, that no promises should be made to Quebec because, according to an infallible mathematical model, it was impossible that sovereigntists would get more than 42 per cent of the vote. This man will be the government's strategist. It is easy to understand why their strategy is slightly flawd.

He is the one who said, in Toronto, before the referendum debate, and Quebecers will not forget: "The more we hurt Quebecers, the more support for sovereignty will drop".

If he is elected in Saint-Laurent-Cartierville, it will be the first time a member from Quebec, paid by Quebecers to defend their interests, will come to Ottawa to hurt Quebec.

The fact that the Prime Minister has chosen such a man to be responsible for the great national reconciliation, a man who displays so much contempt for the people he would represent, shows just how much the Prime Minister was dreaming and how far reconciliation is out of the picture, despite the fine words of the speech from the throne.

Things like that can happen only in Quebec. We would never see an hon. member from British Columbia elected on the promise that he will have Western Canada suffer, but we see it in Quebec. We see it because members of Parliament who are elected to the House of Commons as members of the major political parties, when they have to choose between Ottawa's interests and Quebec's interests, will always choose Ottawa. We had the best example of that recently in the House, when our colleague from Sherbrooke tried to work out an alliance with the Reform Party. He is a member from Quebec, paid to defend Quebec's interests, but nonetheless, he tried to form an alliance with our friends from the Reform Party to deprive the Bloc Quebecois, the only party in this House that really defends Quebec's interests, of its status as official opposition. But there are many more examples of decisions and stands that go against Quebec. I would like to enumerate a few.

Before the motion we are debating today, we heard a series of utteerly absurd statements from followers of our Prime Minister. Of course, there were the infamous text by Mr. Trudeau, which begins "I accuse", and I remind you that people who have responded to it are not sovereignists, but federalists from Quebec. Mr. Bourassa responded to Mr. Trudeau by saying: "If Mr. Trudeau was so vehemently opposed to Meech, it may be because he did not want to admit he was wrong in 1981 and in 1982". Mr. Johnson also responded to Mr. Trudeau by saying: "Mr. Trudeau has no doubt forgotten his opposition to Meech and to Charlottetown, and considering what he did in 1982, we should forget Mr. Trudeau".

The Indian affairs minister made some fairly inflammatory statements, which I will not repeat in this House. Who responded to him? The response did not come from sovereignists, but from the leader of the Assembly of First Nations himself, Mr. Mercredi, and I quote: "The Indian affairs minister is not speaking on behalf of the aboriginal people, so when he raises the possibility of violence", because that was the issue, "and of retaliation, I disapprove of him. He should mind his own business, which means fulfilling his obligations to the aboriginal people. He should not consider himself as an aboriginal leader because he is not".

We also had statements by the Minister of Transport regarding Mirabel, because it is a hot issue these days. He said this, and I will simply quote these few words: "The phasing out of Mirabel by the Montreal airports authority is a consequence of separatism, which has caused the economic downfall of the city". In this case, it is our friend Mordecai Richler who responded to that statement in a

passage from his book Oh Canada! Oh Quebec! Here is what Mordecai Richler said:

"Once the St. Lawrence seaway was in place, Montreal's slippage was inevitable".

That is when Montreal's slippage started. Finally, we had some bizarre statements by Mr. Dion, who said that "Quebec sovereignty could lead to a conflagration in Africa, a conflagration in Asia and could hurt Europe". In this case, nobody responded. Such statement was not worth responding to.

Finally, we get to the motion we have been debating for two and a half days and the amendment proposed by the Liberal Party. Of course, all my colleagues have examined this issue very carefully, they have looked at it from all sides. They have taken out their dictionaries, because of the seriousness of the words, they have considered all the facts, and I think now that they will be able to vote on this issue.

I would just like to say in closing that before voting for or against this motion and this amendment, members should keep things in perspective. First, what we have in this text, this communiqué, is a sovereignist vision. We are, after all, a sovereignist party. Second, this is not a statement that was made just like that, without thinking. We gave it thought before issuing it and all of us in the Bloc Quebecois are behind our colleague from Charlesbourg.

Third, our electoral platform was and is still very clear: it is first of all to defend the interests of Quebec, and second, just as clearly, to promote sovereignty. We firmly believe, even if this is not the opinion of everyone here in this House, that after 40 years of debate, sovereignty for Quebec is definitely the only solution for Quebec and for Canada.

Fourth, I would like my colleagues to remember that we have been elected to this House, that we have been through an election, on this platform and that we have been elected to do what we said we would. I would also like my colleagues to remember that we have always respected all the rules of this House and all the rules imposed on us as citizens. I do not think that anyone in this House can deny this fact.

Finally, I would like people to be aware that the letter from my colleague from Charlesbourg tells Quebecers currently in the Canadian Armed Forces what they would be offered in a sovereign Quebec. Contrary to what certain members of the Reform Party think-not all, perhaps, but I have heard at least two references to a call to arms when there is no call to violence involved at all-this is well thought out information being transmitted to people who will be voting on our political agenda. On the strength of that alone, there is nothing to generate discussion.

I would like people to reflect upon the fact that dragging our colleague before a committee to examine the circumstances involved means putting his motives on trial, for there is nothing in this document to justify taking it to committee. If that decision is made, there will be a political price to pay. Quebecers, whether federalists or sovereignists, know full well that the decision to shape their own future, their own destiny, is theirs and theirs alone, and that aCommons committee has no say in the matter.

[Privilege, March 13th, 1996]

Mr. Speaker, I would have a question for my hon. colleague, who is no doubt a democrat. I know him personally. I would like to react to a statement made by the hon. member just a moment ago, and by the Speaker before him, to the effect that this House is living through its most important moments.

There is a fundamental reason for the Speaker to tell us that; it is because we are dealing with the very foundation of democracy here. We are, of course, elected members of this House, and the only thing that legitimizes our discussing this matter here today is the fact that we were elected.

We are elected members, and the majority of us were elected on a very clear platform of jobs, jobs, jobs, elimination of the GST, renewal of federalism or of the system under which we live, while our platform, a remarkably clear platform, was to look after the interests of Quebec and promote the sovereignty of Quebec.

You will recall that we were elected in an election in which Bloc candidates ran against Liberal and Conservative candidates. The people of Quebec voted to send 54 members to Ottawa to promote this option. I am a 100 per cent behind my hon. colleague for Richelieu, who described events that took place in his riding as well.

I would like to ask a question to the hon. member who spoke before me. He claimed to understand what is going on here, and he is still willing to refer the issue to a committee and have my colleague from Charlesbourg be judged by that committee.

Does the hon. member understand what that means? Does he understand that a committee will pass judgement on an elected member because he stood for what he was elected on? By doing that, Quebec as a whole would be sent to be judged by a committee.

[Supply, March 12th, 1996]

Mr. Speaker, I would like to ask a very broad general question of my hon. colleague from St. Boniface concerning the nature of employment at this time throughout the world. We are aware that the problem affecting Canada and Quebec is not peculiar to ourselves. One has only to look at the rising unemployment levels in virtually all of the usual industrialized countries at the present time to realize that the nature of work is in the process of being totally redefined.

We understand that there is an increasing trend toward robotics and computer assisted design, which means higher production, better products, and fewer and fewer people involved. This is a fundamental problem. We will recall Henry Ford's saying in the early years of this century: "When I start production, I will make sure that my workers earn enough to be able to purchase what I am producing". Today we are doing the very opposite. At the very moment that companies are recording the highest profits, they are laying off the most people, and in the medium term, within ten years or so, there will be a fundamental problem everywhere in the world: no one will be able to afford the products available for sale any more.

My question to the hon. colleague is a general one, therefore. He has kept abreast of this issue since entering the House, and therefore during several mandates now. I would ask if he does not think that the time has come on the international level for countries such as Canada to start redefining the concepts of work, wealth and production?

[The Budget, March 7th, 1996]

Mr. Speaker, I hope that my colleague does not expect me to congratulate the government.

To start with, I would like to set the record straight regarding some of his comments. He said that Greeks have always been Greeks. If they celebrate Independence Day in Greece, it is precisely because they had to gain their independence. He said that we have always been part of Canada, and yet we were here well before Canada became a country. Lastly, he tried to tell us that we do not have that many problems in Canada.

I have been a sovereignist for a long time, but in Quebec, many became sovereignists in 1982. Why in 1982? Because that was when the basic agreement holding this country together was torn up; Quebec was excluded. And today we are told that it is not a problem. It is just as if two individuals had signed a lease and the owner had gone down into his basement to redraft every single clause of the lease, and the revised version became the real lease to

be used by all parties. The tenant would have every right to consider this a breach of contract.

In 1982, the Canadian Constitution was patriated, the terms were changed and no government in Quebec, even a federalist government, has agreed to sign it. Quebecers had some of their rights taken away. And today we are told that we should stop talking about it, that it is not important.

I am sorry, but the basic agreement in this country has been torn up. Quebec did not refuse to go along with the Constitution, rather, it was excluded from the Constitution. What we are confronted with today is the result, the consequence of this Prime Minister's actions. We must not forget that the current Prime Minister is the one who brought the Constitution back from England, the same one who is now saying: "Stop talking talk about the Constitution; let us talk about real issues. I changed your lease, but never mind that, we love you very much; let us talk about real issues".

I am very sorry, but that is exactly what we are planning to do: talk about real issues.

To my hon. friend, who says that 263,000 jobs were created, I will reply as the people of my riding would. Quite simply put: Where? That is what they would say: Where?

People who go out for a stroll in downtown Montreal notice all the stores that are closed. I was a carpenter in a previous life. Today, there is nothing left for carpenters in Montreal, neither construction work nor retail stores. Half the stores are closing their doors. Where are these 263,000 jobs he is talking about? In light of the long list of businesses that have to lay off workers, I wonder: where are these 263,000 new jobs? I realize that this is what statistics say, but what the people want to know, however, is: Where?

Finally, there is this nice initiative to stimulate job creation. We had one in place in Quebec: the RRSP of the FTQ investment fund. This was the only tax measure that promoted any real job creation, and they just chopped it to create, maybe, a few student summer jobs. I do not know how many exactly. Student summer jobs are being created, while at the same time, measures truly capable of creating employment in the long run are being chopped.

On the one hand, they will be giving students a few jobs for the summer, but on the other hand, by cutting transfers to the provinces, they are making their school fees go up. Where is the logic in that? Personally, I can see none. If the government deserves praise for anything, it is for helping us show the public that we no longer have our place in there. With 25 per cent of the voting shares, you have no power over the company. When this company is going bankrupt, it is time to pull out.

[The Budget, March 7th, 1996]

Mr. Speaker, thank you for recognizing me; some people could go on and on and on.

Needless to say, my colleagues will speak on the budget in the days to come, analyzing it thoroughly for Canadians because there is a lot to analyze in this budget. They will examine its impact on the Canadian health and social transfer, on government downsizing, on dairy producers, on regional development and on several other points.

I think that all my colleagues will come to the conclusion that this really is a cosmetic budget which totally ignores the employ-

ment growth. And although the finance minister called it a "job budget" earlier, there is nothing in there to create jobs.

As for me, I would like to focus my comments on a sentence on page 6 of the budget, which says simply this:

-whatever the numbers might say, many do not see evidence of improvement in their own lives.

I would like to direct my remarks specifically to those, and there are many of them, who will see no improvement in their day-to-day life in the next six to eight months, but who will instead notice a deterioration in their situation when they become unemployed-because I believe more and more people will lose their job-, who will notice that the funds on which they relied during their period of unemployment have been considerably cut-because of the coming unemployment insurance scheme reform-, and who will notice that social assistance payments, to which some of them will have to resort-because the reform of the unemployment insurance scheme will send them there faster than they thought-, have also been cut, because the transfers to provinces will be reduced. As we know, the cut amounts to $650 million for Quebec alone in 1995; it will amount to $1.2 billion in 1996, and will keep on increasing during the next three years.

What the government has to say to them today can be found on page 8 of the budget speech, and this is the last time I will quote the budget speech, Mr. Speaker. It is a very short sentence which states:

Chronic deficits put the disadvantaged at risk, because it is they who suffer when the financial strength of government is so weak it can no longer reach out to those in need.

This short sentence simply sends people the message that there are no more resources and that we have to cut, which is extremely debatable.

First, what it says is that there are no resources in Canada, that is primarily what is said. What people really need-the Prime Minister himself admitted it on many occasions-is to have a job. There must be job creation. However, we are told that there are no resources in Canada. This is what the government wants people to believe.

I want to say that there is no strong will to create jobs-and I will get back to that-because, fiscally, large corporations in Canada do not pay their fair share of tax. If there is a shortage of resources, it is precisely because the will is not there et because the tax system is inadequate.

As far as Quebec's resources are concerned, it is even worse, because the second point I want to make is that the federal government is depriving Quebec of its whole economic infrastructure.

So there is no strong will to create jobs. The central government, the federal government itself, tells us this: "It is not my responsibility to create jobs. We will rely on the private sector for that". However, companies are indicating that they are not responsible for job creation either, not in so many words, but in the way they behave.

Companies are doing massive layoffs at a time when they are reporting record profits. I will quote a few figures, some of which were already mentioned by the hon. member for Roberval, the Leader of the Opposition, as well as by members of the NDP.

General Motors of Canada reported record profits of $1.39 billion, but still laid off 2,500 employees. The five big Canadian banks made profits totalling $4.9 billion but reduced their workforce by 2,800 employees. In 1995, Bell Canada's profits reached $502 million and the company cut 3,200 positions-and they are talking of creating a few summer jobs for students?-on top of the 8,000 that were cut since 1990. Petro-Canada recorded profits of $196 million in 1995 and cut 564 positions. Shell made $523 million in profits and cut 471 positions. Imperial Oil, with profits of $514 million, lais off 452 employees. And the government is talking about job creation.

If the government does not create jobs because, as it says, it is not its business to do so and if big companies, the major players in the economic field-we know that jobs are created by small companies in Canada-lay off workers, who will create jobs?

Yet, the government says on page 3 of its speech:

It will require the concerted efforts of individual citizens, their governments, business and others for our country to tackle these challenges effectively.

What we see is that businesses do not want to be part of that effort and that government considers that it is none of its business. These are nice words, but where exactly does that leave us?

The truth is citizens and only citizens are asked to make an effort. That is what that means. Those words, on page 3, are a statement of principle:

It will require the concerted efforts of individual citizens, their governments, business-

Businesses do not want to make these efforts, the government says it is not its job, and Canadians will have to suffer the cuts.

In December 1993, the Department of Finance, in a document on tax expenditures, identified 288 tax exemptions available to businesses. The department said it was aware of the cost of 176 of these exemptions, which amounted to more than $17 billion a year, and admitted that it did not know the cost of the other 112. The lack of precise information on tax expenditures leads us to call for a review of our tax system. That is what the Bloc has been asking for since we came to this House.

Here is what the International Monetary Fund said, as reported in La Presse on December 8 of last year: ``Corporate taxes represent a smaller percentage of the GDP in Canada. This indicates that it may be possible to reduce some of their tax benefits.'' There is the

International Monetary Fund adopting the same position as the Bloc. That is where we should look first.

What is the greatest tax benefit used by large Canadian corporations? It is, of course, the use of tax havens.

It is difficult to obtain precise information on the extent of the tax avoidance phenomenon through the use of tax havens because of the lack of available data and the confidentiality rule which often applies in this area. Companies that do business abroad are not required to declare here the profits they declare in another country. Therefore, since they do not have to declare those profits in Canada, they do not pay taxes in this country.

There are several tax benefits related to tax havens. In 1987, the Minister of Finance made a commitment to study this issue; these studies have yet to be undertaken despite the insistence of the auditor general and the revenue department. However, it must be said that, in the 1994 budget, the Minister of Finance amended the Income Tax Act provisions related to foreign affiliates. These amendments were in accordance with the recommendations of the auditor general of the day and the Public Accounts Committee. But they will not prevent companies from using these tax havens.

It is difficult if not impossible to calculate the amount of tax revenues lost by Canada in these tax havens. However, several indicators can give us an idea of the extent of these losses.

For example, in his 1992 report on tax havens, the auditor general, although it was not necessarily in his mandate to do so, said that it could reasonably be assumed that hundreds of millions of dollars in tax revenues had already been lost et would continue to be at stake in the years to come. This was in 1992. We are now in 1996 and it is still going on. The amounts lost have even increased considerably since then.

Tax exemptions for businesses operating in foreign countries can have two major effects. Some countries considered as tax havens have very low tax rates, hypothetically, in the 2 to 3 per cent range compared to 40 per cent in Canada. This difference leads to an unfair tax treatment which can cost the Canadian government millions of dollars.

The foreign affiliate can transfer its dividends tax free to the Canadian corporation, despite the fact that the income corresponding to those dividends was not taxed at a rate comparable to that in Canada.

I have at least another five or six pages on tax havens I could read. The important thing is to realize that tax havens do exist and that more and more companies are using them. Some companies even specializing in helping other companies use tax havens to avoid paying the Canadian government the taxes they normally should.

To deal with that issue and because the Bloc Quebecois has been asking for a review of taxation for two and a half years, the government has finally decided to set up a technical committee on business taxation, which will examine business taxation. As the hon. member for Saint-Hyacinthe-Bagot, who is finance critic for the Bloc, has already mentioned, those who will examine the taxation of businesses are all Canadian tax experts and some of them-not all, but a good number of them, the best among Canadian tax experts, as it has already been said during question period-are themselves using these tax havens.

The Bloc asked that a special parliamentary committee be set up to review taxation, but here we are with a technical committee. They have waited two and a half years before doing something. We asked for a public and open process and here we are with small groups working behind closed doors. We wanted a precise calendar. What we are told is that later this year, a report will be made which will be scrutinized by the public. This just puts it off indefinitely, just like the GST.

We wanted MPs to look at this issue so as to be able, on behalf of citizens, to review taxation. This is a bit like putting the fox in charge of the henhouse. It is well known that those who are going to examine the tax rules are the same persons who are going to advise the government on the taxation system and the same persons who are going to tell companies how to apply these rules in order to avoid paying any taxes.

This is the worst conflict of interest in Canada today. None is more serious. Those who make the tax rules are the same ones that help businesses take advantage of tax loopholes. By stretching the process out-if it takes one or two years as in the case of the family trusts-they give businesses time to review their tax strategy.

I would like to send an urgent message to Canadians who are anxious to understand what is going on in this area, because the government is really up to no good.

A few years ago Linda McQuaig wrote the book Behind Closed Doors: How the Rich Won Control of Canada's Tax System . This book explains fully how in 30 years the rich people in this country have taken control of the Canadian fiscality and do not pay any more taxes.

Linda McQuaig's book was also published in French under the title La part du lion . In it, she shows how rich Canadian families have used all tax loopholes available in order not to pay any Canadian income taxes.

What I just said concerns all Canadians. Every time there is excessive use of tax evasion, it means a loss of revenue for Canada and, as we now know, it is the little people, the future unemployed,

who end up footing the bill. They will start paying in the middle of the summer with UI reform.

Things are even worse in Quebec. The employment situation in Quebec is worse than anywhere else in Canada, except Newfoundland. They are telling us-and they will continue to do so throughout the coming year-that all this is due to the political uncertainty in Quebec. Nothing could be further from the truth.

There are all kinds of sovereignist movements around the world; some are even in power. There is a sovereignist party in Scotland, the Scottish National Party, which has long had elected members to Parliament. They advocate Scottish sovereignty; one of their most famous propagandists is Sean Connery, the actor who first played James Bond, whom we all remember very well. Yet no one calls the Scots racist or xenophobic.

There is a sovereignist party in Taiwan, as I have said before in this House, the Democratic Progressive Party. In 1992, with 31 per cent of the vote, this party won 51 out of 161 seats in Parliament. No one in the world claims that political uncertainty in that country has led to economic uncertainty. On the contrary, everyone wants to do business with Taiwan, including Bombardier. Strangely enough, the President of Bombardier, who was complaining about insecurity in Quebec, has decided to invest in Taiwan, where the situation is exactly the same as in Quebec.

There is even a new sovereignist party in British Columbia, which is being built around Roger Rocan and is apparently supported by 12 per cent of the population according to the polls. We will never hear the Prime Minister talk about the big, bad separatists in B.C. That is reserved for Quebec. They would never say this to the people of British Columbia. On the contrary, in its analyses, the Fraser Institute goes as far as saying that B.C. would benefit from sovereignty. So they conduct studies over there but when we do the same here, we are big, bad separatists.

Since 1980, close to 40 new countries have joined the UN because it is the normal destiny of peoples to become nations and of nations to become countries. That is what the UN is for. There are even countries that have achieved sovereignty twice: Singapore, among others. In 1963, Singapore left the British empire to join Malaysia and, two years later, it seceded from Malaysia to become an independent republic.

The population of Singapore is half that of Quebec and is very cosmopolitan-in no way can it be considered homogeneous-with 80 per cent Chinese, 15 per cent Malaysians, 4 per cent Indians and 1 per cent people from other parts of the world, including a fair number of Canadians. All this in an area 2,500 times smaller than Quebec, that does not have any natural resources or energy resources. Anyone who travels to Singapore cannot help but notice that the leading foreign commodity is dirt on which to build by reclaiming land from the ocean. Singapore is a tiny country. No one denies that Singapore's economy is booming; economic success has nothing to do with the size or population of a country.

Responding to a question yesterday, my hon. friend from Saint-Denis, who is of Greek origin, stated that the idea of Quebec becoming sovereign bothered her. I would like to remind her, not without some pride, that we all are more or less Greek. Greece was the birthplace of science and democracy and, as you know, Mr. Speaker-you studied the Classics-we were brought up on that. All this to say that, were we to ask the Greeks tomorrow morning if they would be ready to give up their sovereignty and become a minority in some other nation, the answer would be no. I think therefore that the Greek community should understand Quebecers for wanting to do just like them.

Things are not going well in Quebec because our economic infrastructure is being drained away. A long time ago, it was decided to centralize all the economic activity in Ontario. Canadians did this for very good reasons. What were they? Geographically, Ontario is at the heart of the country. If you are going to centralize, you might as well do it in the centre, in the province with the largest population and which provides direct access to the heart of the U.S. market, cities such as Detroit, Chicago and Milwaukee, across the Great Lakes. The decision to empty Quebec of its economic infrastructure was made a long time ago.

Let me just tell you when this decentralization process started, because I had prepared a longer speech, which I probably will not have the time to finish.

Somewhat surprisingly, our dear friend, Mr. Mordecai Richler, tells us in his book O Canada! O Québec when that decentralization started. He mentions it in a short sentence, on page 107, which I will read in

"Once the St. Lawrence Seaway was in place, diminishing the importance of our port-il parlait bien sûr de Montréal-and the Toronto stock market was doing more business than St. James Street, Montreal's slippage was inevitable".

Once the St. Lawrence Seaway was in place, Montreal's slippage was inevitable. We are now witnessing the decline of Montreal. It started with the building of the St. Lawrence Seaway. We could go on about all the other decisions that were made concerning airports, the petrochemical industry, the Borden line, the money spent in Quebec by the government which is less than the standard 25 per cent, and also the new areas in which the federal government is about to interfere, including the securities business, as mentioned

in the speech from the throne. Once again, the government will centralize all that.

Given that Ontario's economic appeal was built from scratch, it is no wonder that foreign investors all want to move to that province.

This is the current situation. We have a budget which does not do anything about employment. It merely maintains the measures that were decided last year, such as taking money from the UI fund, reducing assistance to individuals and cutting transfers to the provinces. There is basically nothing about employment. Within that structure, all Canadians lose, Quebecers in particular.

[The Budget, March 7th, 1996]

Mr. Speaker, the government is putting the review off indefinitely, as it did with the GST.

Will the Minister of Finance admit that two of these experts are from Ernst & Young and Price Waterhouse, two accounting firms that each have at least five subsidiaries in countries considered to be tax havens, including the Cayman Islands, Barbados and the Bahamas? Does he think that these people have every reason to wish for tax havens to disappear?