Scott Brison

[Budget Implementation Act, 2000, June 5th, 2000]

Madam Speaker, it is with pleasure that I rise today to speak to Bill C-32, the budget implementation act for the 2000 budget.

It is important to take stock of where we are as a country and how we have achieved our current financial position. This is the third budget in which Canada has had a surplus. While the Liberals opposite will crow and take credit for this fiscal achievement, the very policies that were required to lead Canada to this point in economic history were vociferously opposed by the Liberals prior to their forming the government. I will refer to a few of them specifically: free trade, the GST, the deregulation of financial services, transportation and energy. All of those things the Liberals campaigned and fought against. Prior to 1993 they were completely and diametrically opposed to them.

Since then, unburdened by the yoke of principle, the Liberals have embraced these policies and in some cases have claimed some level of originality in introducing them or spearheading them.

It is important that we raise this issue at this time because on Thursday of last week McGill economist Tom Velk and historian A. R. Riggs released a paper evaluating Canadian governments back to World War II on economic criteria. It should come as no surprise to members of my parliamentary caucus in the Progressive Conservative Party that the best economic record of any Canadian prime minister since World War II was held by none other than Brian Mulroney. I think it is important that we recognize the vision and courage of a prime minister who actually took the big steps, who did not ignore the global trends and made the structural changes to the Canadian economy that were necessary to lead Canada into the 21st century.

The headline in the National Post on Thursday was “Mulroney ranked first, Chrétien dead last as leaders of the economy”. The Ottawa Citizen said “Recession beating Mulroney as economic champ, study says”. The study referred to a number of specific criteria upon which the economists based their judgment.

In applauding Mulroney, the professors said that he presided over a general fall in interest rates that lasted more or less the entire term of his office. Inflation took a beating during the Mulroney years. Mulroney, unlike the present Prime Minister, inherited a troubled economy with tremendously high interest rates and high inflation. They said that low income Canadians fared better under Prime Minister Mulroney than they did during the Liberal administrations of the present Prime Minister or under Mr. Trudeau. That may surprise some of the members opposite, but the numbers speak for themselves.

The study credited the vision and the courage of the Mulroney government in embracing the policies of free trade and the GST. These were not easy policies to embrace or to spearhead at a tumultuous time in Canadian political history. In fact in what was referred to as the free trade election in 1988, over half of Canadians voted against free trade. The question of course should not necessarily be what policies are the most popular, but what policies will lead to the greatest level of economic growth and prosperity for Canadians.

That was a government that was not focused on next week's polls as much as the present government is. It was focused on the challenges and opportunities facing Canadians well into the next century. The record of that government speaks for itself not just in terms of what it achieved during its years in office, but what its policies have achieved since then and are destined to achieve well into this century.

In studying the record of the current government, it said that under the tenure of the current Prime Minister and Minister of Finance, the dollar is lower than it has every been in Canadian history. Productivity is comparatively low and its growth has lagged behind that of the U.S. Per capita GDP is lagging comparatively to our trading partners. In the last 10 years Canada has had a GDP per capita growth of about 5% while countries like Ireland have had a 92% growth in GDP per capita. The U.S. and Germany have had a 15% growth in GDP per capita.

As our neighbours to the south and our trading partners elsewhere are improving their productivity, production and success, we are lagging behind. As citizens in other countries are getting richer, the Canadian citizenry is getting poor. Nowhere is that more exemplified than the dramatic and significant loss in the value of our dollar since 1993. Under the Mulroney government, the dollar lost one cent in nine years of power. The dollar has lost around nine cents since the current government took power.

Every time the dollar drops, Canadians effectively have a pay cut. We depend on our trading relations with other countries for many of the goods and services that Canadians need and enjoy. When the dollar drops, the purchasing power of Canadians drops and their standard of living drops. There has been a significant drop in Canada's standard of living over the past several years. In the 1990s, take home pay in Canada decreased by about 8%. This was during a period when Americans enjoyed a 10% increase. An 18% gap has erupted between Canada and the U.S. in terms of disposal income or take home pay at the end of the day. That is disturbing.

One of the impacts of that has been an unprecedented level of brain drain. The number of Canadians who are going to the U.S. to seek greater levels of opportunity and prosperity has grown from 16,000 per year eight years ago to about 100,000 per year last year.

It is not just the number of people who are going. The most disturbing area of this trend is who is going. In evaluating the type of people who are going we see that some of our young, bright talents, some of the best and brightest we have in Canada, are choosing to pursue their futures and opportunities in the U.S. Ultimately the loss will be to Canada not just in terms of future tax revenue, but in terms of the ability for these individuals to build stronger companies and ultimately a stronger country. It will ultimately benefit the U.S. and not Canada.

We should be doing more to keep these individuals and talents as opposed to driving them away. Before we decide what policies we should be implementing to keep them here, we should be evaluating what specific current policies are having such a deleterious impact on our ability to keep those people.

Certainly the Canadian tax system represents one of the largest impediments to growth and prosperity. It is not the only clue to the brain drain crisis but it is a very important area of public policy that we need to be concerned about. I can give a couple of examples of the degree to which our tax system affects the brain drain.

Let us say a technology worker, a programmer in Vancouver, makes about $70,000 per year. That individual is in the top marginal tax bracket in Canada. We hit our top marginal tax bracket at $70,000, even after full implementation of the budget's initiatives. In the U.S. one does not hit the top marginal tax rate until about $400,000 Canadian. As a result, the software programmer in Vancouver will be paying federal and provincial taxes combined of about 52% of his or her income. At the same level of income, about $70,000 Canadian, about an hour and a half away in Seattle, that same individual would be paying about 26% of his or her income, effectively half the level of taxation that he or she would be paying in Vancouver.

Frankly for someone with a family and who is making student loan payments, car payments, mortgage payments and hockey costs for children, or whatever it is, that is not a lot of money. The notion that someone making $70,000 in Canada today is rich is probably wrong-headed. We are taxing those people as if they were fabulously wealthy. That is one of the reasons we are driving people, particularly within that critical $70,000 to $100,000 range, out of the country. Those are the people we need.

Another area where we need to address our tax issue significantly is at the lower end of the scale. Currently, our basic personal amount even after the budget is almost $8,000. That is far too low. The U.S. equivalent threshold in Canadian dollars at which an American starts to pay taxes is around $11,000. We call ourselves a kinder, gentler nation yet we start taxing people at about $8,000.

In the short term this should be increased to about $12,000 and over a period of time should be increased beyond that. In the short term we should be looking at an increase to $12,000. That would take millions of low income Canadians off the tax roles. It would reduce the tax burden of all Canadians in a fair and equitable manner.

In terms of impact on the new economy, there is probably no more negative tax in Canada than our capital gains tax regime. The recent budget and this budget implementation act would see a reduction in the capital gains inclusion rate from 75% down to 66%. That would still leave us with a 13% disadvantage over the U.S. in the critical area of capital gains. No form of taxation affects the new economy more than capital gains taxes.

The currency in terms of compensatory assets in the new economy is clearly stock options. Increasingly, whether it is in biotechnology or e-commerce, stock options are used to incent and attract talent and to keep talent. In Canada we have a 13% disadvantage even after this budget in the very critical area of capital gains taxation.

The reasons the government will not reduce capital gains tax further have very little to do with realities. It is very dangerous when we build public policy, as is often done in this place, around perceptions and not reality. Let me deal with a couple of those perceptions.

First, there is the perception that capital gains taxes are paid largely by the rich and it would be inequitable to reduce capital gains taxes and thus to reduce taxes on the rich. Over 50% of capital gains taxes in Canada are paid by people who make less than $50,000 per year. Individuals throughout the small growth companies, from the receptionists to the CEOs, are all incented and paid with stock options.

Also, with the level of market participation that exists today, more so than ever in the history of Canada, Canadians are investing in the equities markets through secure long term vehicles such as mutual funds. They are able to achieve diversification with a relatively small amount of investment and as such are participating in record numbers at this point.

The other perception is that somehow we cannot afford to eliminate the capital gains tax, which is what I would like to see done. A Progressive Conservative government would eliminate personal capital gains tax. Some people say we cannot afford to do that.

The capital gains tax only brings in around $1 billion per year. Estimates I have heard in terms of personal capital gains tax in recent years are revenues ranging from $700 million to about $900 million. If we assume that there will be some shift in the way employees are compensated as a result of the capital gains tax elimination, let us say if it goes from $1 billion to $1.5 billion, that is a very conservative estimate of the loss of revenue to the Canadian government. Ultimately that revenue would be made up significantly by the increased level of activity and by the unlocking of capital.

Effectively one of the most pernicious impacts of capital gains taxation is the degree to which people make decisions not based on economic or business realities and criteria, but instead on tax criteria. People hold on to investments far longer than they would have normally and do not make the types of investments they probably should be making in some of the new economy vehicles and opportunities. That locking up of capital denies many of Canada's growth industries, particularly in the knowledge based sector, access to the needed capital.

We live north of the greatest capital markets in the world, the U.S. We cannot afford to penalize and to handcuff our technology sector. In any of the knowledge based areas of our technology sector, whether it is biotechnology or information technology, we cannot afford to deny these players, the individuals who are building their companies and who are building a stronger and more competitive Canada, the opportunity to access capital.

Effectively by locking up this capital in Canada's capital gains prison we are actually preventing these companies from growing here in Canada. Ultimately in many cases these companies are gravitating south of the border in trying to raise capital.

The venture capitalists, whether it is Perkins or the Sequoia capitalists of the world, are investing in these companies and are then encouraging these companies to move their research and development activities and manufacturing south of the border.

While we would like to think that these investments can be made—and do not get me wrong, I encourage foreign investment in Canada's growth industries, we need the investment—I do think there is a significant risk which is borne out by the fact that when this foreign investment is made, it quite frequently leads to a movement or a migration of the companies and the innovators to the U.S. It stands to reason that over a period of time that would have a significant cost to Canada.

The fact is that by unlocking this immense pool of capital to reduce or, as we are proposing, eliminate personal capital gains tax in Canada, we would actually be able to fund and raise capital for these innovators here in Canada.

There are innovators in the financial service sector now who are already doing that. The one which comes to mind, Yorkton Securities Inc., has demonstrated that it is Canada's top investment bank in the knowledge based industries. We are putting in front of the Yorktons and in front of the McLean Watson Capitals, which are raising money for Canadian knowledge based industries, the barriers to success which ultimately threaten their ability to raise the capital they need to invest in the innovators who we as a country need to grow and develop greater successes here in Canada.

If we are not competitive in that new economy, a lot of these arguments are effectively moot. Our ability to afford the social investments that Canadians value and treasure, whether it is our health care, our social safety nets or the transfers to the provinces, become moot if we cannot afford them. It is critical to build a tax system around growth, not greed, so that we can afford the types of social investments that Canadians want well into the next century.

For some Canadians there is a belief that these investments, whether it is in our health care or equalization systems, define us as a country. It is very important to get our fundamentals correct, that we reduce our debt in real terms, that we reduce over a period of time not just our tax burden but that we use a system of tax reforms to do what is required to make Canada more competitive in the new economy.

I believe we can achieve success with visionary policies that will lead Canada proudly into the 21st century, but we have to move now. This caretakership government, which is taking baby steps when other countries are taking gigantic leaps, is clearly not appropriate or helpful.

[Budget Implementation Act, 2000, May 31st, 2000]

Mr. Speaker, it was an honest mistake. Sometimes I forget, and I think the majority of Canadians tend to forget, that this is a different political entity. I guess my confusion comes from the fact that reform is still in the name. I do not understand why there is a difficulty in referring to the Reform Party. It is the same as calling the Progressive Conservative Party the Conservative Party, periodically, or the Tory Party. It was an honest mistake, Mr. Speaker, and I assume that Canadians will make that honest mistake in the next election, as well, in forgetting that the Canadian Alliance is nothing more than a corporate re-imaging or a revamping of the Reform Party.

Mr. Speaker, it is with pleasure today that I rise to support my hon. colleague's motions to remove clauses 35 and 36 from Bill C-32, the budget implementation act. I share with my colleague his concern that the revenue agency already has more than ample power to enforce tax policies in Canada, and that in fact it has too much power.

I have not had one constituent come to me seeking help to strengthen the abilities of Revenue Canada in collecting money from Canadians. I have, however, had numerous constituents come to me citing egregious examples of abusive practices being performed by Revenue Canada. People, particularly those in small businesses, are being clamped down on by Revenue Canada at a time when it is difficult, with our level of taxation and regulatory burden, to have a successful small business to begin with. To have as one of their greatest enemies the federal government, through the revenue agency, which is on the attack and out to destroy them if unwittingly they fall into one of those grey areas because of the complexities of our tax codes, is clearly unfair and not consistent with the government's efforts to supposedly create an environment within which business can grow and prosper in Canada. The best way to have a small business in Canada is to start a big one and wait.

I have seen numerous examples of the abuse of small business people over GST issues in my riding. The heavy handedness of Revenue Canada, now the new Canada Customs and Revenue Agency, is consistently unfair and has created a situation of fear across Canada in the small business community and with ordinary Canadians who live in fear of that call or that letter from Revenue Canada.

A few years ago there was a study which evaluated the psychological impact of a number of events in people's lives. The fact is that people receiving a letter telling them they are being audited by either the IRS in the U.S. or by Revenue Canada has the same psychological impact as the death of a close relative.

I am sure that none of us would want to see the death of a close relative, but compared to a full audit by Revenue Canada there are probably some relatives we would trade in quite easily. All kidding aside, this is a very serious issue and I intend to support the motions of my hon. colleague, my unreformed colleague, in this regard.

The tax tinkering that I see in the budgets coming from this government, whether it is on the enforcement side or in terms of general tax policy, is clearly unacceptable. Other countries are using tax policy as a vehicle to create greater levels of economic growth and opportunity for their citizenry. Here we are in Canada with this government continuing its pathetic, anemic tax tinkering which will not really do anything that will have a major impact on the future of Canada.

The government boasts of progress in the recent budget and of steps in the right direction because of the fact that there was some level of tax reduction. These are baby steps. Baby steps in the right direction do not help Canadians if other countries are taking gigantic leaps. The finance minister is bragging of these small steps in the right direction, but a tortoise on the autobahn that is moving in the right direction is still roadkill, because the cars are moving faster. We as a country cannot afford to be that tortoise moving in the right direction on the autobahn. We have to be moving ahead of the pack and we have to provide our citizens and our businesses with the tools to not just compete globally, but to succeed globally. That means not just tax tinkering, but significant levels of tax reform. I do not mean reform in a party sense; I mean tax reform in a more generic sense. I would not want to be accused of tomfoolery in the House of Commons.

The issue of tax reform is extraordinarily important. I am sure my hon. friend would agree with me that we need a greater level of tax reform in the upcoming years. One of the most important areas of tax reform would be the elimination of the personal capital gains tax in Canada, which represents one of the single largest impediments to growth in the new economy of any of our taxes.

I see my colleague in the New Democratic Party shaking his head because he believes that the capital gains tax reduction would be a tax cut for the rich. He could not be more wrong. Over half of personal capital gains taxes in Canada are paid by people who are making less than $50,000 per year.

In terms of the new economy, there is no form of taxation that is any more deleterious in terms of its impact on the new economy than the capital gains tax.

We are, through our capital gains tax disadvantages, driving entrepreneurs, driving venture capitalists, driving the innovators whom we need to strengthen the new economy out of Canada. There is a consensus on this issue. The Senate banking committee and the House of Commons industry committee have spoken of the significant need for a reduction in capital gains taxes. We have seen a movement in the right direction, but our capital gains tax is still 13% higher than that of the United States. A 13% disadvantage is a signal to our innovators in Canada that we do not want their innovation. These people could build a stronger country. They could build stronger businesses. I want those businesses. I want that country to be Canada. I do not want it necessarily to be the U.S. We are driving people out of Canada.

The capital gains tax issue is particularly important based on the degree to which the new economy uses stock options to compensate employees. In the new economy the beneficiaries of stock options will not just be the fat cats on Bay Street, but the ordinary people: the receptionists, the innovators, the software engineers and the assembly people. All employees will benefit from these types of initiatives. We would be far better served as Canadians if the government and parliament were to focus on these types of issues as opposed to trying to strength Revenue Canada's ability to pillage and burn the private fiefdoms of Canadians. We should be trying to reduce the tax burden and impediments that the government places on Canadian entrepreneurs by changing our tax system and by reducing not just the tax impediments, but also the regulatory impediments.

When the government hears the need for tax reform, I suggest that its emphasis is on the wrong syllable. The government thinks that tax reform means strengthening Revenue Canada so it can collect more taxes. We in the Progressive Conservative Party suggest that tax reform means reducing and simplifying the Canadian tax system such that more Canadians succeed and ultimately do not have to pay as much tax when they choose to build their futures here in Canada.

[Budget Implementation Act, 2000, May 31st, 2000]

Mr. Speaker, I thank my colleague from the Reform Party for his intervention into—

[Supply, May 30th, 2000]

Mr. Speaker, I thank the hon. member for his words today. I share with him many of the views he expressed relative to the malaise in our federal transportation policy, if I could call it that, particularly relative to Atlantic Canada.

I am not certain whether the hon. member was able to hear the member for Mississauga West speak of the highways and roads in Nova Scotia earlier today. The member for Mississauga West went on at great length about how Nova Scotia had excellent highways, that there was nothing to complain about, that the main highways were excellent and that the byroads were terrific.

I would like to know whether the hon. member agrees with me that the member for Mississauga West was clearly misinformed. He is one who is sometimes prone to hyperbole and exaggeration and maybe he had fallen into that trap. Would the hon. member agree with me that rural roads in Nova Scotia are in significant disrepair and that the issue has to be addressed from a tourism perspective?

Where I live, in Cheverie, Hants County, it is so bad that I have to go to the dentist every six months to have my fillings replaced.

Secondly, not just from a tourism perspective, but from a safety issue, Highway 101 has been an issue for a number of years. There have been over 40 deaths on the highway since 1993. It has the highest level of traffic in the province of Nova Scotia.

The federal government is now investigating the notion of a cost share program with the provinces. Does the hon. member share with me the concern I have about cost sharing programs? Because of the mess that the current government in Nova Scotia inherited from the government of Russell MacLellan, the province does not really have the ability to match funds. Should the federal government not be more proactive in addressing these safety issues and spend some of the money that it receives by way of fuel taxes, of which only 5% is invested in highways?

In view of the fact that the province of Nova Scotia is clearly not in a financial position at this time to enter into a cost sharing agreement, why is the federal government not recognizing the safety issues, including Highway 101, and spending a greater level of the tax money collected from fuel taxes on highway priorities like Highway 101 instead of simply creating these straw man arguments around cost sharing programs in which clearly the province is not in a position to participate?

[Competition Act, May 16th, 2000]

Madam Speaker, it is with pleasure today that I rise to speak to Bill C-276, the legislation that addresses the issue of negative option billing.

It is important when we are developing solutions to complex problems that we do not use solutions which are overly simplistic and may not in fact address the actual complexities of the problem. H. L. Menkin, the American humorist, once said that for every complex problem there is a neat, plausible solution that is wrong.

I have some concerns as a member about the legislation. That being the case, I recognize the position of the hon. member for Sarnia—Lambton in bringing forward the legislation and support the ends he is trying to achieve. I am just questioning whether or not this may be the most effective means to achieve those ends.

Every industry that may use negative option billing is different and operates within different parameters. For instance, cable companies are clearly different from industries within the financial services sector or the banks. In an effort to reduce negative option billing or to address the issue of negative option billing, we have to be careful that we do not create an onerous level of regulation in one industry where it is more prevalent and impose the same level of regulation on another industry that in fact is not utilizing negative option billing as much.

This may lead to greater costs for consumers with a complicated process where effectively participants in that given industry, for instance the financial services sector, may find that it creates a competitiveness disadvantage relative to industries in other areas.

One issue that needs to be addressed is the fact that in mailings from banks or financial institutions to customers there is only a 5% return rate currently. As such, it would create an immense amount of administration within a financial services institution or a bank to actually try to eliminate completely any level of negative option billing.

If negative option billing is being used, for instance to bundle or to package services in ways where a customer may in fact benefit in some way or that would actually reduce the costs to the customer, there is no negative to the customer. That is the case for some of our financial institutions.

It is also important to realize that we heard from the Minister of Finance last June with a response to the MacKay task force of the Government of Canada. Those measures have not yet been implemented. I believe they should have been implemented earlier.

The government is in fact stalling on implementing its response to the report on the financial services sector. The legislative enabling of that response should have taken place by now but it has not. When the Senate looks at the legislation it should ensure that it somehow fits within this private member's bill and that any recommendation would fit within the parameters of the government's white paper response to the MacKay task force.

The issue of the competitiveness of our banks and our financial institutions is paramount right now.

Currently we are seeing around the world immense changes in the financial services sector relative to information technology. Effectively the forces of technology and globalization are transforming the financial services sector.

We have to be very careful in Canada. For instance, this type of legislation does not exist in the U.S. There is nothing like it relative to negative option billing in the U.S. As we increase levels of competition or access to Canadian markets by foreign banks, there is a risk that if we handcuff Canadian financial institutions with this type of legislation we in fact may be imperilling Canadian banks and creating a deleterious impact on them and their shareholders, which in fact include 7.5 million Canadians who actually own bank shares in Canada.

We have to ensure that legislation that is designed on one hand to help Canadian consumers does not on the other hand hurt the 7.5 million Canadians who directly or indirectly depend on their investments in our chartered banks for part of their retirement income or in many cases in most portfolios a significant part of their retirement.

The issue of addressing the differences between industries is paramount. If we create some type of regulatory body or vehicle and focus on protecting people from one industry which affects a broad range of industries, clearly it may have a lot of unforeseen and unintended consequences. We have to be awfully careful of that.

We are supportive of the ends of this legislation, in that negative option billing may be something that is more common in Canada and have a more negative impact on Canada than members of the House are aware. We are studying and discussing as a caucus our position on this matter currently.

When we are crafting public policy in the House we have to be sure that we are crafting it around realities as opposed to perceptions. It is very easy sometimes to develop public policy around perceptions in the current environment of poll driven policy as opposed to policies that reflect the realities of what is going on in Canada.

I would prefer to see a greater level of competition in all these sectors, including the financial services sector. I would like to see the government truly address issues of competitiveness, including greater opportunities for smaller financial institutions to compete fully with the banks in Canada, and thus enable both on the consumer side and on the lending side Canadians to have a greater range of services from a greater variety of financial institutions in Canada.

It is important that we address the basic fundamental issues of competition and do not treat these issues with a less holistic approach. It is important to recognize that effectively we should try to ensure that our regulatory burden in Canada is not grossly different from that which exists in countries with which our Canadian companies need to compete.

Clearly the issue the hon. member from Sarnia raises is a very important one. We have to ensure that the means by which he is proposing we address it are the most appropriate means.

[Access To Information Act, May 11th, 2000]

Suspicious perhaps, but never frivolous or abusive.

Whenever we get into nebulous descriptions there is the potential to use what I refer to as weasel words to benefit perhaps the governing party. I think we have to be clear that, by and large, any request for information through the Access to Information Act should be considered to be more important than would be deemed frivolous or abusive. Clearly a sound opposition on any number of issues has been based on access to information and the ability to receive information that perhaps other parties were not smart enough to ask for. There are some concerns about that.

We also pose as some concern the requirement of payment from individuals who use the ATI service frequently. Again, clearly we do not want to create a system whereby ultimately access to information is more achievable by people with means than people without means. That is something we should consider.

We are supportive of Bill C-206. I commend the hon. member for Wentworth—Burlington for his continued diligence in bringing to the House erudite and well thought out contributions. While I differ with him periodically—in fact often—I generally respect his opinions, even when those opinions are frivolous or abusive. I commend the hon. member for a well thought out piece of legislation which is very constructive at this time.

[Access To Information Act, May 11th, 2000]

Mr. Speaker, it is with pleasure that I rise to speak to Bill C-206, an act to amend the Access to Information Act by defining more precisely what records held by governments are to be disclosed and providing more severe penalties for those who would wilfully circumvent the intent of the legislation.

First, I am very supportive of this legislation, as is our party. It is a step in the right direction. The updating of this act, which was introduced and served its purpose well during less complicated times, is long overdue. Clearly the act needs to be updated and strengthened at this very critical time.

It is notable that the government of the leader of my party, the Right Hon. Joe Clark, first introduced the freedom of information legislation in Canada in 1979. It is in that tradition that we are supportive of improvements to the act at this time to bring it up to date with today's circumstances.

Under the current Access to Information Act the government almost got away with what was perhaps the most egregious abuse of government power recorded in a long time, perhaps even at any time during the country's history, and that was the HRDC scandal. There was an obvious abuse of the public trust and mismanagement of public funds, which ultimately uncovered innumerable counts of unethical or at least dubious uses of taxpayer money to buy electoral support. The improvements brought forward in Bill C-206 would help to guard against this and perhaps bring to light these types of abuses earlier.

One thing we have to consider is the degree to which the government is privatizing many of the government services which previously were the exclusive purview of government departments. Whether this is within the new Revenue Canada agency, the new money laundering agency or any of the new arm's length agencies that are separate from government, we have to ensure that we are being vigilant in ensuring that we continue through the Access to Information Act to have an opportunity to seek information that should be in the public domain.

It is a fear which I have and which others validate that sometimes when we see these new agencies access to information may be compromised. That is something we have to be awfully careful of, particularly given the degree to which the trend in government service provision in Canada is to that sort of agency model. I would urge all members of the House to consider this very carefully to ensure that as this trend evolves we do not see a compromising of the access to information mechanism.

One of the most glaring concerns with the legislation is that it proposes to prohibit access to information to users who make frivolous and abusive requests. As a member of the fifth party in the House of Commons I would certainly hope that the hon. member, or any member of the governing party, would not see requests coming from my party as being frivolous or abusive.

[Sales Tax And Excise Tax Amendments Act, 1999, May 9th, 2000]

Mr. Speaker, I thank the hon. member for his question. I look forward to being on that side of the House and having him lob similar softball questions across to us once we are back in government. That was indeed a softball question.

The Mulroney Progressive Conservative government was successful in reducing the deficit as a percent of GDP from 9% when it took office to 5% by the time it left office. It was kind of like that old country and western song, Give Me 40 Acres and I'll Turn This Rig Around . That previous government inherited an 18-wheeler that was going down the road at 200 miles per hour in the wrong direction. Somebody had to slow it down and somebody had to implement the types of structural economic changes that were necessary to enable this visionless government to effectively cruise through the last several years and, through no fault of its own, to have fairly decent economic results.

Those were not my words crediting the Progressive Conservative for the reduction and elimination of the deficit. Those were the words of the greatest news journal in the world, in my opinion, the Economist magazine out of the U.K., which said very clearly that credit for the deficit reduction in Canada belongs largely to structural reforms made to the Canadian economy by the previous government. I would not be so audacious as to say that myself. I was just quoting a wonderful news publication that brings a very objective view to the situation here in Canada.

[Sales Tax And Excise Tax Amendments Act, 1999, May 9th, 2000]

Mr. Speaker, I thank the hon. member for his excellent points and questions. He has raised a couple of very important issues.

First, the last significant overriding tax reform was around the time of the Carter commission back in 1971. The changes were introduced by the Carter commission which reported in the late sixties, approximately 30 years ago. Since then we have seen amazing changes in the Canadian economy. It is clear that we do need some level of reform.

The GST was a significant change as well. The Minister of Industry said in a speech at the BCNI that tax reform was a non-starter for the government because it could not get consensus on tax reform. There was a consensus on the GST. Unfortunately it went against the governing party and resulted in not just significant tax changes but significant political changes in 1993.

The question the hon. member had was relative to how we balance tax reduction and the other needs. Ideally, there should be tax reform and it should be based, in my opinion, on growth and not greed. We should be looking at tax reform from the perspective of what taxes can we reduce to create the greatest level of economic growth and opportunities here in Canada.

I can point to a few examples. In Ireland much of the tax reduction that has occurred has been in corporate taxes. By reducing corporate tax rates, Ireland has actually increased corporate tax revenue by attracting companies from around the world.

There are examples closer to home. I would argue that Quebec has been very successful under Bernard Landry with many of his tax policies, particularly those focused on the new economy. One of the most innovative aspects of the Quebec tax policy has been on the provincial income tax not being paid by research scientists, the Ph.D.s coming from other places to Quebec to participate in research. The new economy, whether it is in e-commerce or biotechnology, needs those Ph.D.s and researchers. As a result of the policy by the Quebec government, it has effectively been able to reduce the personal tax rates for these minds that Quebec and Canada need to U.S. levels, which has been very innovative.

I would argue that we can reduce some types of taxes without reducing revenue overall. Another example of that is capital gains taxes. When we reduce capital gains taxes there is often a resultant unlocking of capital which actually leads to a greater level of capital flow and a greater level of taxes being paid.

Unfortunately tax reform is usually based on political criteria as opposed to economic criteria. We often build tax reform around what is politically palatable or what is popular and do not think of what will lead to the greatest levels of economic growth. It is not always the same thing, but in many ways the Quebec government has pursued some policies that have been quite innovative in terms of attracting the type of industries that are necessary.

I would like to see the national government be a little more amenable to that kind of thing. Some of these successes have resulted of course in the recent move of NASDAQ to Montreal.

While I disagree with the policies of the Parti Quebecois in terms of its position on federalism, I have to express some level of admiration for some of what the Parti Quebecois has done on economic policy.

[Sales Tax And Excise Tax Amendments Act, 1999, May 9th, 2000]

Mr. Speaker, it is with pleasure that I rise today to speak to Bill C-24, an act to amend the Excise Tax Act, the Budget Implementation Act, 1997, the Budget Implementation Act, 1998, the Budget Implementation Act, 1999 and the Income Tax Act.

Here we are in May 2000 debating amendments to the budget implementation act dating back to the 1997 budget. It should be noted that in reviving parliamentary democracy the Liberal plan for the House of Commons and electoral reform from the 1993 Liberal platform stated:

In addition, the credibility stretching tradition of not passing actual tax measures until many months after a budget, often even after the measures have come into effect, must, within the context of a suitable system of consultation, be ended.

What we have here is another example of a broken Liberal promise. In this case it is one of parliamentary reform to provide a more reasonable time period within which budgets would be implemented, as opposed to talking about these changes three years after an actual budget is presented by the Minister of Finance.

Another area of the specific legislation which magnifies some of the broken Liberal promises is the fact that we are discussing some measures relative to the changes to the GST. Everyone in the House remembers, particularly the Liberal members opposite who ran in the 1993 election, campaigning on a Liberal commitment to get rid of the GST.

The current government promised at various points during the 1993 campaign to eliminate, to scrap, to abolish the GST. The finance minister in 1989 once said in the House of Commons that the GST was a stupid, inept and incompetent tax. As a candidate for the Liberal leadership he was quoted as saying that he was committed to scrapping the GST and replacing it with an alternative. Since then the Prime Minister during foreign travels has not just embraced the GST but has actually told foreign dignitaries that it was his idea in the first place and that it is a great tax.

For the Liberals today to embrace the GST after campaigning vociferously against it qualifies them for the award of the patron saint of hypocrisy in the Canadian parliamentary system. For Liberals to have fought against the GST and now take credit for it and benefit as a government from the proceeds of the GST is one of the reasons Canadians are so skeptical and cynical about politics in general.

The Economist magazine 1998 year preview stated quite clearly that credit for the deficit reduction in Canada belonged largely to structural reforms made by the previous government. The Economist magazine went on to list them. They included free trade, the GST, deregulation of financial services, transportation and energy. If I remember correctly, the Liberals campaigned vociferously against all those policies in previous elections. The current government has utilized those policies to eliminate the deficit.

I am not suggesting that I would have been happier had the government reversed those policies. In fact I am quite pleased that it maintained them. The only thing worse than the Liberals blatantly stealing Conservative policies and taking credit for the results would be if they were to implement Liberal policies which would probably be far more deleterious for the Canadian economy. Instead of trying to creatively develop Liberal policies we are pleased that they had the good sense to embrace and support the sound policies of the previous government.

I could go further and say that this is a government of sound and original ideas. Unfortunately its original ideas are seldom sound and its sound ideas are never original.

Although the GST was an appropriate tax measure and appropriate tax reform at the time, we have not seen any meaningful level of tax reform under the current government. We could look at other countries with which we are competing and the degree to which they are using tax reform and tax reduction as vehicles to create greater levels of economic growth. I suggest that we look at what Izzy Asper, former leader of the Liberal Party in Manitoba, the CEO of CanWest Global Communications Corporation and head of the Global Television Network, said when he spoke recently at the BCNI meetings in Toronto.

He said that the Canadian tax system we were living under was last reformed 32 years ago, that it was obsolete and that the world it was designed to deal with no longer existed. He went on to say that the system was a nightmare of complexity and a sea of uncertainty, and that the tax system was anti-business, anti-private sector and anti-entrepreneurial.

He asked a question of the Minister of Industry who spent some time speaking to corporate leaders. The Minister of Industry responded by saying that there could be no significant level of tax reform in Canada and that tax reform would require a complete consensus.

Obviously we will never have complete consensus on tax reform or on any other major public policy reform or issue. The industry minister and the whole government are so focused on poll driven incrementalism and focus group economics that they cannot really embrace the courageous visionary changes and steps toward the more competitive economy which is necessary now because it would involve political risk.

We have an industry minister who is credited by some as being one of the most commonsensical in terms of his recognition that the private sector plays a role in the economy. He actually believes there cannot be any tax reform unless there is 100% complete consensus on tax reform issues. I think that is a sad state of affairs.

Canada needs a significant level of tax reform. Such reform should be used as a vehicle for tax reduction. It is not just personal taxes. We need a significant level of corporate tax reduction.

The most recent budget reduced corporate taxes somewhat over a period of years. However, prior to this budget we had the second highest corporate taxes in the OECD. After the full implementation of budget measures over a five year period we will still have the fourth highest corporate taxes of 31 OECD countries.

It is not really a very significant step in the right direction, particularly given that 27 of the 31 OECD countries have stated plans to further reduce their corporate taxes. While we are taking baby steps in the right direction on some of these issues, other countries with which we are competing are taking gigantic leaps.

On the hypercompetitive global information highway upon which individual Canadian companies are trying to compete and succeed, we run the risk of becoming road kill unless the government actually embraces some of the realities of the future as opposed to always dealing with reforms around an economy that no longer exists. That is part of the difficulty in discussing and making these types of changes so long after a budget is introduced.

Right now the rate of economic change has never been greater. Now is probably the worst time in Canadian history to have a caretaker, cruise control kind of government that is more focused on next week's polls than on the challenges and opportunities for the next 20 or 30 years. My fear is that Canadians will continue to be held back by this weak leadership that is not focused on the real issues facing the private sector and all Canadians.

We should be moving more significantly toward reducing and ultimately eliminating capital taxes in Canada. The taxation of capital in itself is of dubious benefit. It creates significant disadvantages to accumulating capital in Canada and some significant competitive disadvantages for our Canadian financial services sector and banks. Some 7.5 million Canadians are shareholders of those banks directly or indirectly.

The capital gains tax issue needs to be addressed. The government's recent budget would reduce capital gains inclusion rates from 75% to 66.6%. That is a step in the right direction but it still leaves Canadian entrepreneurs with a 13% disadvantage in terms of effective capital gains tax rates over the U.S. A 13% disadvantage is certainly not something to crow about.

The capital gains tax issue particularly in the new economy is important because of the degree to which stock options are used as compensatory assets. There is no reason to suspect this will not continue to be the case even with the recent volatility. The new economy is going to continue to depend on stock options as a very important compensatory vehicle.

As such, when we maintain a 13% disadvantage over the U.S. in terms of the way we tax capital gains, the resultant gain from exercising a stock option, we are driving entrepreneurial talent from Canada. We are sending the risk takers and the great minds who are capable of building better companies and better opportunities and thus a better country, somewhere else. That better country may not be Canada. It may be the United States of America or somewhere else because of the wrong-headedness of the government and its inability to get with it in terms of embracing the realities of the new economy.

There are several revenue neutral changes in Bill C-24 which relate to the goods and services tax, the GST, and the harmonized sales tax, the HST. These measures were announced on March 20, 1997. Most of them relate directly to Atlantic Canada and Nova Scotia in particular. It is notable that these were introduced on March 20, 1997, just a few short months before the Liberals were turfed from Nova Scotia. I am not suggesting that the unanimous decision in ridings across Nova Scotia to remove the Liberal representatives from their seats was a reflection of this issue specifically, but I think it did play a certain role.

By and large the measures are revenue neutral changes. Some of them are positive. Assistance to charities that employ individuals with disabilities and charities that are involved in bottle recycling, enhancements to visitor rebate programs and changes benefiting small businesses that sell products to direct sellers are positive measures and we in the Progressive Conservative Party can support them.

The general tax direction not just of this legislation but of any Liberal government legislation in recent years has been so flawed by a fundamental lack of vision and initiative that it is very difficult to support almost any tax package brought forward.

There have been some changes on the tobacco tax regime and also the tax regime on split run magazines.

I would like to speak to some of the things that are not addressed in this legislation and which I would like to see more of in Liberal fiscal and economic policies.

It is time to significantly raise the basic personal exemption in Canada. It is absolutely atrocious how much people are being taxed. The most recent budget would have raised the basic personal exemption to $8,200, the amount at which the government feels it is appropriate to start taxing Canadians. In the U.S. the basic personal exemption is not hit until someone earns approximately $11,000 Canadian. Here we are in Canada which supposedly is a less harsh country and we actually tax people at $8,200 per year. That seems fundamentally unfair and needs to be addressed, but the government clearly has not set that as a priority.

Canada needs to redefine its middle class. Currently the top marginal tax rate is hit at $60,000. The most recent budget would increase that to $70,000. The fact is in the U.S. an American does not hit the top marginal tax rate until he or she is making $420,000 Canadian. As a result, we are taxing at $60,000 and the government with the full implementation of the most recent budget would increase that to $70,000.

Using $70,000 as the amount, at $70,000 the government feels it is appropriate to tax Canadian families as if they are rich. That creates immense pressure for those people earning $70,000 to $100,000 to be drawn south of the border to greater opportunities and lower taxes.

For example a software designer or a knowledge based worker in Vancouver making $70,000 per year will pay 52% of his income in combined federal and provincial income taxes. Less than an hour and a half away in Seattle, a software worker or a knowledge based industry worker making the same amount of money, about $70,000 Canadian, will pay 26% of his income in combined state and federal taxes. An hour and a half away in the United States, the same individual in the same industry will pay half the level of taxes that he would pay in Canada.

The argument that is used quite frequently, and to a certain extent there is some validity to it, is that of medicare. That argument has been reduced significantly in recent years as the government particularly since 1993 has cut, slashed and decimated the Canadian health care system which for a long time defined Canadians. The health care system played a large role not just in protecting the health of Canadians but also in defining to a large extent the Canadian psyche.

The government through its draconian cuts since 1993 has created immense havoc in every province in the country. Every province has had to deal with the significant level of cuts for health care funding that the government has perpetrated. As a result of the cuts, the percentage of federal commitment to health care has declined steadily to a point that some estimates are that the federal government is paying around 13% of every dollar spent on health care in Canada. Clearly that is unacceptable and that is part of the problem.

On the tax side, the Canadian advantage with medicare really does not exist any longer. What we have seen develop in Canada is a fairly mediocre system for everybody. While it is egalitarian, it is a poor system. As a result, those who can afford it are increasingly being drawn toward making the choice of seeking health care elsewhere or to actually live elsewhere. Many of the professionals who have been drawn away by the brain drain work for companies that provide health care insurance so it is less of an issue.

We have to consider this from a competitiveness perspective. We have to ensure that we are not allowing economic symbolism to define us. Economic performance is more important than economic symbolism.

We have to get our fundamentals right. We need a sound tax structure which is more reflective of the current realities. We also need a more effective health care system which recognizes the current realities.

The fact is that Canada already has a two tier health care system. Around 30% of our health care costs are in the form of costs covering pharmaceuticals, much of which is already paid for privately.

The changes in health care which have occurred and to a large extent the rising costs of pharmaceuticals, the increased level of sophistication in biotechnology and the pharmaceutical industry have already led to rising costs and an increased level of participation by the private sector. Add to that the fact that many Canadians are drawn to the U.S. for health care treatments in private sector facilities.

We need significant levels of economic reform on the fiscal front. We need sound and firm debt reduction targets. We need lower taxes, better tax reform and a better health care system. That is only going to be accomplished with a more visionary, courageous government. Unfortunately, I have lost faith in the members opposite to provide that type of leadership.