Scott Brison

[Income Tax Amendments Act, 2000, May 11th, 2001]

Madam Speaker, it is with pleasure that I rise to speak on Bill C-22.

The amendments to the Income Tax Act come as a result of the February 2000 budget and also as a result of the October mini budget, or economic statement or whatever semantics one would utilize to describe that pre-election document of the Liberal Party of Canada.

The amendments to the Income Tax Act represent a collection of baby steps. Some are in the right direction. Some simply represent a further complication of an already far too complicated tax code. Most represent the triumph of politics over public policy.

If we look at the general direction of these tax measures, we will find there is no general direction. In fact most of them have resulted from a flimsily put together pre-election document. The document is referred to as the mini budget and reflects a mini vision of Canada.

These baby steps and tinkerings do not reflect what Canadians truly need in an overall and significant broad based tax reform. Tax reform can be used as a vehicle to create greater levels of economic growth and opportunity. Instead of making tax tinkering part of a pre-election policy, we should seize the tremendous opportunity we have now with the budget surpluses to bring taxes down, but use tax reform and tax reduction in lockstep.

Typically with tax reform we always create winners and losers. However, if we implement tax reform and tax reduction simultaneously in lockstep, we can ensure that there are no losers created by significant tax reform. All Canadians then would be winners as we create a more competitive and less distortionary Canadian economy which is poised and positioned for significant growth and opportunity, particularly in new economic endeavours.

We have seen in recent years our competitiveness with our trading partners suffer. We have seen other countries like Ireland leapfrog over Canada and seize opportunities to grow and prosper while Canada languishes. Ireland had a 92% growth in GDP per capita over a 10 year period. During the same 10 year period Canada had a 5% growth in its GDP per capita. This is pretty anemic when we consider the extraordinary growth in Ireland, a country once referred to as an economic basket case. Now it is referred to as an economic lion. Ireland did that by utilizing significant tax reform, particularly focused on a reduction of capital and corporate income taxes.

One of my hon. colleagues opposite constructively offered her views on this. I appreciate her views, as someone with a profound understanding from her family perspective of Ireland, and I agree with her. Ireland's commitment to education over the last 20 years to 30 years has strongly helped position Ireland. That being the case, Canada has by and large with its provincial and federal governments over time made significant commitments to education, so I would argue that that part of the equation has been done quite well.

We could improve our commitment to education, as could any country. It could be argued that Ireland could improve its commitment. The greatest difference between the two environments at this point is not in their commitment to education, it is their commitment to tax reform as a lever to create greater levels of economic growth and opportunity. That is the part we have to address, and I am certain she would agree with me on that front as well.

If we look at the government's record on economic issues since 1993 and how international confidence has been demonstrated in the government's record since 1993, there is no better gauge by which to judge the government than the performance of the Canadian dollar. We have seen under this government a loss in the Canadian dollar relative to the U.S. dollar of about 11 cents. The dollar reflects the shareholder value of Canada has seen a significant decline under the government. Under the previous government there was a one cent decline over a period of nine years. This government has achieved an 11 cent decline in a period of about eight years.

Every time our dollar goes down it is effectively a pay cut for every Canadian. We depend on the U.S. to such a significant amount as our trading partners. From a consumer perspective, given the degree to which Canadian consumers buy from U.S. companies, it significantly reduces over a period of time their disposable income.

It also has a very negative impact on productivity. Canadian companies in the short term do not necessarily see the need to make productivity enhancement a priority if they can hide under this low dollar policy of the government.

The low dollar also damages productivity in the long term. Companies that purchase productivity enhancing equipment or technological advancement software, et cetera from the U.S. are less inclined to do so if the dollar is low. As a result it becomes a self-perpetuating prophecy that in fact the low dollar creates in the long term lower levels of productivity by actually reducing incentives for companies to do the right thing and build their productive capacity in Canada.

In general, what is particularly disturbing about the state of the Canadian dollar is that the Bank of Canada has in recent years pursued a high dollar policy, yet Canadians are suffering as under this low dollar result. The Bank of Canada under its policies has targeted inflation rates in Canada of about a point lower than those which are considered acceptable by the federal reserve in the U.S. Despite this high dollar policy, we are getting this low dollar result. We have to carefully analyze and respond to the fiscal inadequacies of the fiscal framework in Canada.

The government describes having a balanced approach. The fact is a balanced approach is not the appropriate approach if we have significant inherent imbalances in the economic framework, and we do have some significant imbalances. Some are with taxation, not only in terms of overall levels of taxation but particular types of taxation which in and of themselves have the most negative impact on economic growth. Unfortunately, some of the taxes which are most politically palatable to reduce are ones that will probably have some of the smaller impacts on economic growth and opportunity. Some of the tax reductions which would spur the greatest level of economic growth are those that sometimes are less popular politically.

In the short term, and particularly after an election, the government should take some risks and tackle some of the major issues and addressing tax reform and the reduction of some of Canada's most productivity damaging taxes. I will speak about a couple of them.

One is our dependence on capital taxes in Canada. Capital taxes reduce investments and the incentives for Canadians and people outside of Canada to invest in the country. If we look at any study on productivity, there is a strong correlation between productivity and investment. If we tax capital and investment to the degree we do in Canada, that will have a significant negative impact on productivity enhancement.

The government has made some reduction in capital gains taxes. The government says that the effective rates of capital gains taxes are lower than in the U.S. That is not the case. We are still higher in Canada than in the U.S. However, the most important thing to recognize is the missed opportunity of the government to eliminate personal capital gains taxes. In this one instance we would be ahead of the U.S. in a very critical area of the economy, that of taxing capital gains and encouraging investment as opposed to discouraging investment innovation.

The government is losing this opportunity because of political reasons, the same reasons why the Liberal opposition fought vociferously against the GST. It was a case of politics then and it is a case of politics now. That is why it is not moving more aggressively to address capital taxes in Canada, specifically capital gains taxes.

I am focusing my comments today on tax reform, but we also need to see a greater commitment to debt reduction which in time would strengthen the Canadian dollar through fiscal policy.

In short, we are asking the Bank of Canada with one blunt instrument, the interest rate, to try to strengthen the Canadian dollar. We are ignoring in many cases the fiscal policy issues that could be addressed by the government, but it refuses to talk about the dollar. It also refuses to talk about some of the concrete measures it could take through fiscal policy to address the dollar.

We could also utilize tax reform in lockstep with equalization and other policies as part of our economic development strategy. I mentioned earlier the tremendous success that Ireland has enjoyed over the last 12 years. Some would say that comparing Ireland to Canada is not the best possible comparison because of the degree to which Ireland received EU transfers in order to allow it to invest so significantly in tax reduction. That argument is not necessarily a bad one. However if we want to look at the best possible comparison, we could compare Atlantic Canada today to Ireland 10 years ago.

Today we have a hodgepodge of economic development policies and agencies such as ACOA for Atlantic Canada. We also have our equalization policy which is the only constitutionally enshrined spending program of the government. I would suggest we should develop a tax policy in consideration of some of our economic development strategies.

In Atlantic Canada for example, the total budget for ACOA is a little more than the total amount of federal corporate taxes paid in Atlantic Canada. If we were to try to think in a more imaginative and visionary way about this, we could see the possibility exists with some assistance to eliminate federal corporate taxes in that region of the country to spur economic growth and opportunity. Quite possibly this could have a greater level of impact on economic growth than would result from the activities of ACOA.

I am not saying that ACOA has not had a positive impact in some areas. My personal belief is that in many ways it was probably a more appropriate instrument in the old economy than it is in the new economy. In the new economy tax measures have demonstrated far greater traction in achieving results in targeted areas than have direct investments by agencies such as ACOA.

We need to invest in infrastructure. If the Atlantic innovation fund focused on infrastructure, universities, technology transfer strategies and commercialization, those sort of initiatives could be very beneficial. I have great concerns about government agencies making direct investments in individual companies.

Another potential role for ACOA would be for it to take part, through the Atlantic innovation fund, in syndicated investment. Effectively the participation of ACOA would not be as an individual investor in a company, it would be part of a syndication of investors, the majority of which would be private sector investors.

That could help by reducing overall risk and encouraging private sector investment in particular geographic and sectoral areas, so that is a potential role. However, we need to get far more creative about how we encourage tax reform as a vehicle for economic growth. We must also consider other public policy priorities, such as economic development, and work more creatively in that regard.

On a technical issue, Bill C-22 would allow tax deferred rollover treatment for Canadians who hold shares of foreign corporations that have been subsidiaries to the parent shareholders. Some companies do not qualify because the bill would require distributing corporations to have their shares listed and actively traded on a stock exchange. That is inherently unfair. It is my understanding from the Parliamentary Secretary to the Minister of Finance that the issue will be addressed in future amendments and legislation. I would be supportive of that and would encourage the anomaly to be addressed.

In terms of general tax reform, the government would do well to dust off the Mintz report on corporate taxation and implement its recommendations without significant amendment. That would go a long way to improving competitiveness and reducing the distortionary nature of our tax code.

We must move aggressively not just to reduce taxes in totality but to reduce those which have the most negative impact on economic growth and opportunity. Jack Mintz, in his report to the Minister of Finance, went a long way toward doing that. However the report has collected a lot of dust and has not garnered the respect it deserves. The significant changes that should have followed the report never occurred.

To compare the way the current Liberal government deals with the erudite reports of great Canadians like Jack Mintz to the way the Mulroney government dealt with such reports, we need only look at the great report of Donald MacDonald on free trade.

Donald MacDonald had been a Liberal cabinet minister yet the Mulroney government recognized the inherent benefits of following the recommendations of the MacDonald commission. The Mulroney government pursued a controversial free trade policy, fought an election on it and did what was at the time relatively unpopular. In the 1988 election over half of Canadians voted against free trade yet the Mulroney government had the courage, vision, foresight and wisdom to pursue innovative policies and do what was right.

That is what I hope to see from the current government. I hope it has the courage, vision and foresight to pursue an aggressive policy of innovative tax reform and thereby create greater economic growth and opportunity for all Canadians.

[Employment, May 11th, 2001]

Mr. Speaker, the Government of Canada is actively promoting the brain drain. A search of the HRDC job bank website finds listings for jobs located in the United States.

Why is the Government of Canada using Canadian taxpayer dollars to promote the brain drain? Why is the government posting jobs located in the U.S.?

[Acadia University, May 11th, 2001]

Mr. Speaker, Acadia University in my riding of Kings—Hants will graduate 750 students this weekend. These students, along with honorary degree recipients, the Hon. William Hoyt, Reverend William E. O'Grady, Mr. Hector Jacques and Col. Ian S. Fraser, will forever be connected to a university with a reputation second to none.

The Maclean's annual ranking of universities has again declared Acadia the most innovative and once again the best overall undergraduate university in Canada. Acadia has also placed first in the leaders of tomorrow and most innovative categories. This marks the fifth consecutive year that Acadia has been considered the most innovative.

Acadia has been honoured by the Smithsonian, has received the Canadian information productivity award and recently was the only Canadian university to receive a pioneer award, an award that recognizes outstanding commitment to the creation of a successful, ubiquitous learning environment.

The launch of the Acadia advantage program has been a key factor in Acadia's success. This program connects students, faculty and staff to a campus wide network. I hope the Canadian fund for—

[Proceeds Of Crime (Money Laundering) Act, May 10th, 2001]

Mr. Speaker, I have caused a stir with a couple of my remarks but I have never had that level of dramatic response. It has been another great day for democracy and a moment in which I take great pleasure in having participated. My time in the Senate was all too brief, I may add.

The issues in Bill S-16 of critical importance to me and to our party pertain to whether the new agency has the resources necessary to deal with the increasing challenges and the great level of complexity in the nature of money laundering, the sophistication of financial instruments, and the almost unlimited resources of international organized crime. We have to ensure that we do not simply create an agency with a tremendous level of responsibility but with very little resources to do what has to be done.

A bad job is one with lots of responsibility and no authority. I would suggest that to ask the agency to take on such a mammoth task and not provide it with the appropriate level of resources would be typical of what the government has done in a number of areas, but it would not be an appropriate way to proceed.

A concern that I have had in the past and still have is the accountability of the agency, particularly in terms of the criteria required to meet the conditions that the agency share information with other agencies, for example, the Canada Customs and Revenue Agency.

It would be appropriate that any information attained by the Canada Customs and Revenue Agency indicating money laundering activity would be shared with the money laundering agency.

That type of sharing of information back and forth could be constructive. However I would be very concerned if, for instance, the individuals involved in the new money laundering agency were to identify no evidence of money laundering but some evidence of potential money laundering which could indicate some tax evasion or something similar. I would be concerned if the agency were to share that information with Revenue Canada.

While I agree that we need a much stronger approach to money laundering, Canadians would not feel comfortable with a resulting beefed up Revenue Canada agency. We have to be careful there are clear criteria and conditions that have to be met before it is deemed appropriate for the money laundering agency to share information with Canada Customs and Revenue Agency.

I have another concern that the arm's length nature of these agencies tends in an institutional way to reduce the amount of accountability to parliament. I understand some of the arguments, particularly from the government, in favour of achieving greater levels of flexibility for compensatory arrangements with the workers and offering a more flexible approach to provide these public services to arm's length agencies.

However much of this could be achieved within the context of more direct departmental agencies as opposed to these arm's length agencies. I have a significant concern about what seems to be a secular decline in the level of accountability to parliament that the government seems to be very comfortable with. Again, these arm's length agencies are all part of that greater reduction in accountability to parliament.

The Progressive Conservative Party supports the legislation and the amendment which would improve accountability of the new agency. The agency in the legislation is a step in the right direction. Canada needs to do less following of what is happening in other countries and what our trading partners in the G-8 and OECD are doing. We should try to be more proactive in leading on some of these issues whether it be on money laundering or in corporate governance issues.

It always seems that we are just a step slower than a lot of our international partners. I would hope the government of a country like Canada, which in the past under the previous government was an international leader in many ways, would try to copy some of the initiatives of that previous government. It has on other issues. The government should provide some level of international leadership on some of these issues as opposed to being followers. That is my wish in closing my remarks today.

[Proceeds Of Crime (Money Laundering) Act, May 10th, 2001]

Mr. Speaker, I credit my colleague from Pictou—Antigonish—Guysborough for the comprehensive nature of his discourse. There simply could be no questions after such a detailed and articulate speech.

It is with pleasure today that I rise to speak to Bill S-16. The money laundering issue is of huge importance to Canada. Earlier today I spoke in the House on corporate governance issues. It is extraordinarily important to put in place procedures, agencies and structures to deal with corporate governance and money laundering issues, issues which are increasingly global and are forcing governments to be vigilant if they wish to maintain international credibility.

The estimates of money laundering are difficult to get a handle on. In Canada some estimates are as low as $5 billion per year and some are as high as $20 billion per year. That variance alone speaks to the nature of the problem. We do not know the full depth and breadth of the issue in Canada but we know we had better get a handle on it soon. We hope this initiative will help us do that.

I have spoken of previous incarnations of the legislation and of my concerns with them. I still have not seen a commitment by the government to provide the resources to enable the agency to do its work. I am very concerned about that.

The member for Pictou—Antigonish—Guysborough, our justice critic, has spoken about the urgent situation of underfunding and the resource starved RCMP. With the money laundering agency we could see the same types of issues.

Organized crime networks today use sophisticated technologies and have almost unlimited global resources. We must provide the new agency the resources to be successful in the fight against money laundering. I have significant concerns in that regard, particularly given the sophistication of financial instruments today. There was a time when derivatives were considered sophisticated financial instruments but we have gone far beyond that.

A message was delivered by the Usher of the Black Rod as follows:

Mr. Speaker, The Honourable Deputy to the Governor General desires the immediate attendance of this honourable House in the chamber of the honourable the Senate.

Accordingly, the Speaker with the House went up to the Senate chamber.

And being returned:

[The Economy, May 10th, 2001]

Mr. Speaker, economists helping the finance minister prepare his economic statement are warning that Liberal election promises will put Canada back into deficit in three years.

In a world changing so rapidly and in a country trending back toward deficits because of new Liberal spending, why does the finance minister think it is acceptable to have a two year gap between budgets?

[Canada Business Corporations Act, May 10th, 2001]

Mr. Speaker, I thank my hon. colleague from Brandon—Souris for his very serious question somehow linking my birthday to the gift of a position in the Senate. It is an interesting position but, Mr. Speaker, I would argue that if that in fact were the case it would be a gift that keeps on giving.

[Canada Business Corporations Act, May 10th, 2001]

One of my hon. colleagues has referred to me as Senator Brison. That is not the case, but we are still waiting.

We need to impress on the government that its policies relative to an industrial policy for the country and relative to a framework for growth and competitiveness have been sadly lacking. That the legislation is coming to us after such delays and dilly-dallying is unfortunate. We need to ensure on an ongoing basis that we are updating our corporate governance rules and that not only are we keeping up with global trends but perhaps actually seeking to set some global trends in this and in other areas.

[Canada Business Corporations Act, May 10th, 2001]

Mr. Speaker, I commend the member for Churchill on her impassioned speech and her reference to the Westray disaster in Nova Scotia. As a Nova Scotian it means a great deal to have members of parliament from other parts of the country recognize the call for action that is represented by what happened in Westray.

I learned a great deal about consumer power and the power of consumer advocacy from the hon. member for Churchill, even about ethically raised grapes. I would suggest that any farmer or jurisdiction which allows grapes to be raised in an unethical manner will be subject to the wrath of grapes from the hon. member. Further to that I will also recognize that we have global leadership provided by some companies, for instance, on issues of the treatment of animals and animal testing and that sort of thing.

An interesting question dawned on me the other day. There are companies that for years have marketed against animal testing. I think the Body Shop was probably the first company. The other day I was in a pet supply store buying shampoo for my dog. I looked at the label of the dog shampoo and was shocked and appalled because there was no warning against human testing. Perhaps that is another issue for another day in this place and for now we can move forward, but right now my dog is using shampoo that may have been tested on humans. That is clearly a loophole we should seek to fill.

Bill S-11, an act to amend the Canada Business Corporations Act, is a very important and long overdue act. The bill comes to us from the Senate, where it should be noted that a very important amendment was put forth by my colleague, Senator Oliver, and adopted by that House.

Senator Oliver's amendment corrected a major flaw in the act. Before the amendment there was no statutory review of the act, an act that has a major impact on Canada's business framework and indeed on our competitiveness. The amendment was proposed because it is recognized that in a global, hypercompetitive, ever changing economy we cannot leave legislation or a regulatory framework like this untouched for 25 years, as was the case in this instance.

When we are looking at the types of policy frameworks that companies or investors look at when determining where to invest in the world, not only is tax policy important, and it is, or regulatory burden important, and it is, but increasingly issues of corporate governance are moving to the forefront as being extremely important in every country in the world. We need to ensure that we have clear, consistent, up to date policies in that regard that are reflective of those that exist in other countries.

While I am glad to see the government finally move forward on this issue, the fact that it has been 25 years since we have had major updates is unfortunate. I heartily commend the initiative and the amendment of Senator Oliver which will ensure that this does not happen again.

Canadians are battling on a daily basis to attract investment and capital to our country. If we look at the secular decline of the Canadian dollar over the last 30 years, much of that has to do with declining levels of productivity. Productivity is closely related to levels of investment, and when we fail to attract investment usually the consequence is that we fail to develop greater levels of productivity in our country.

Of course that is reflected in our limp loonie, our falling dollar, which continues to be a source of concern if not embarrassment for many Canadians as Canadians see their standard of living decline with the declining dollar. In fact, Canadians are taking a pay cut every time our dollar drops relative to that of the U.S. These are some of the issues we have to consider.

Certainly corporate law administration in Canada has been consistently quite good. On the issue of corporate governance addressed by the legislation, Canada has not had a bad record, but we have failed in many ways to keep up to some of the trends that have occurred in other countries and with our trading partners.

In researching our response to the legislation, I was shocked to find that a 1996 recommendation by the Senate banking, trade and commerce committee to institute a review within 10 years was actually rejected by the industry department. The government's reasoning at the time was this:

The increased recognition of corporate law and corporate governance issues as factors affecting the competitiveness of corporations will likely ensure the continued improvement of corporate laws.

That is a great leap of faith coming from the government. I would argue that where government does have a responsibility in a market driven economy is to set in place the framework within which the private sector and in fact the public sector can work and develop. In not rigorously maintaining and updating its regulations relative to corporate governance issues, the government has clearly abdicated its responsibility in this regard.

This is just one part of competitiveness and one part of the framework required to ensure to investors looking to make investments anywhere in the world that Canada is a good place to do business and that in fact, along with tax policy and regulatory policy, along with these other issues, corporate governance is increasingly important. I would hope that the government would become much more vigilant in evaluating the threats and opportunities in this competitive global environment and would move more proactively in addressing them with legislation in the House.

Again this legislation came to us from the Senate and again it is reflective of some of the very positive benefits of our Senate and of some of the forward thinking and visionary approaches taken by our members in the upper House. I would commend them for their input on this initiative and for their amendments, which in fact have improved the legislation.

[Patent Act, May 10th, 2001]

Mr. Speaker, when the whip of your party says something nasty about you in this place, you are really limited in terms of your response. Therefore I guess I will not even talk about the first part of that question and comment.

On the political question about the current Minister of Industry and self-promotion, I would argue that for the individual to have had a philosophical change in mindset would, first, require a philosophy and, second, a mind. I have not seen a tremendous degree of evidence in support of either.

In terms of capital investment, I fear that if we reduce the incentives for leading edge, or in this case bleeding edge, development of pharmaceuticals and biotech in Canada, we will reduce and drive the much needed capital and investment from Canada. It is not just taxes that redistribute investment. It is also regulations, particularly in the areas of intellectual property and knowledge based economies.

I think the hon. member is absolutely right. We would be taking a huge risk of losing a lot of that investment, productivity, growth and opportunity for Canadians.