Scott Brison

[Foreign Publishers Advertising Services Act, June 10th, 1999]

Mr. Speaker, the hon. member is absolutely right, it is difficult to gauge or evaluate what is culture. It is fairly nebulous in some ways and it evolves over time. I know he argues that we should not even be trying to regulate culture, yet there are members within his party who feel we should remove Lolita from the parliamentary library based on some definition of what is culture. I would point to an inconsistency in that regard.

The issue of culture and the issue of what is unique to Canada, what is unique to Nova Scotia or Alberta, the distinctive elements of both our regions and our country, are clearly within the realm of Bill C-55 to protect, to ensure that there is an ability for Canadians to produce Canadian-originated stories about Canada and about the issues that are relevant to Canadians, and that there are vehicles to ensure that those stories and publications actually reach other Canadians. That is the issue.

When U.S. commercial interests are given unimpeded access to the Canadian magazine industry, the possibility for dumping magazines becomes immense. We have an 18% limit, which is a huge shift in policy. Actually, it becomes a trade issue because U.S. magazines have already covered their fixed costs.

I know that the hon. member's party has some real difficulties with the CBC. It is the same argument. However, there is a role for the CBC to deliver the stories and cover the issues that are relevant to Canadians. If we are to continue to be a knowledgeable society, a people respected globally for our global vision, a citizenry that fully supports the role that we play as Canadians as a middle power in an increasingly complicated world, we need to maintain and protect the Canadian identity. This is not, as some would argue, an anti-American view. Let us face it, we sit next to a cultural juggernaut, the U.S., and we are in a very difficult position.

The U.S. has one of the largest cultural industries in the world, particularly pop culture. We have to be very careful to ensure that the Canadian identity is not swamped as we progress into the 21st century.

[Foreign Publishers Advertising Services Act, June 10th, 1999]

Mr. Speaker, it is a pleasure today to speak to Bill C-55. Canada has a longstanding commitment and a tradition of commitment to protecting the Canadian magazine industry. This began in 1961 with John Diefenbaker's O'Leary commission, which was designed originally to develop a plan to protect the Canadian magazine industry against dumping from the U.S. and foreign magazines.

In 1965 the split-run legislation was introduced, again to protect the Canadian magazine industry. This is an issue which combines the elements of the free market with the elements of the importance of protecting Canadian culture.

We are not alone as a country in seeking to protect our culture. Most countries in trade agreements around the world have sought and successfully attained protection for their culture in trade agreements.

The Progressive Conservative government of Brian Mulroney was successful in protecting Canadian culture in both the FTA and in NAFTA. Unfortunately the Liberal government fervently opposed the free trade agreement and now embraces free trade. It has not even utilized the cultural protection instruments within the free trade agreement at this juncture to protect Canadian culture.

The parliamentary secretary said that he had a soft spot in his heart for the New Democrats. The only thing worse than hardness of heart is softness of head. I would argue that the U.S. arguments and threats of what would be illegal retaliation are far in excess of the dollar value of the Canadian magazine industry's advertising revenues in question. This revealed elements of an industry in the U.S. that demonstrated hardness of heart. In response we have a government whose softness of head provided very little opposition and in fact capitulated before the battle even began.

U.S. industry groups that made these threats were not the trade negotiators. They were not representatives of the U.S. government. They were members of U.S. industries with a vested interest. The threats that were made were in unrelated industries. The sanctions would have involved for instance steel and specifically targeted in a rather nefarious manner the home city of the minister of culture. The threats were in the amounts of up to $600 million when in fact the government had determined that $100 million was the actual dollar value of the advertising revenue in terms of Bill C-55.

The minister seemed to be standing firm during this debate and assured the House that Bill C-55 was tenable, was the right thing and would be consistent and defensible in our trade agreements. She provided reassurances to the House that it was a lock-tight agreement and that we would be able to protect the Canadian industry without incurring the wrath of our trading partners.

At the very last minute, after using the House in a very manipulative manner to develop Bill C-55 and providing those assurances, she gave in. It was almost as though the minister throughout that process huffed and puffed and then the Americans blew our house down. It was not the steadfast visionary leadership which is constructive in both protecting our culture and at the same time further promoting and developing our trade relationships with our trade partners.

The Reform Party has had a position from the beginning as being opposed to Bill C-55 and supporting in some ways the illegal U.S. threats. The Reform Party has said that it does not believe in regulating culture and that culture should not be regulated.

This is the same party whose literati have suggested that the book Lolita be removed from the parliamentary library because it is somehow offensive. On one hand it wants to regulate culture and on the other hand it does not want to regulate culture. I cannot quite figure it out. Perhaps we should be able to regulate tawdry publications like Lolita , but we should not be able to regulate culture to protect Canadian jobs and Canadian culture within the confines of our country. I disagree with that inconsistency demonstrated by the Reform Party.

The PC Party and the government of Brian Mulroney had the foresight to protect culture under NAFTA and the free trade agreement. During the free trade agreement negotiations the Liberals were saying that we would lose our culture and that it would not be protected. The Liberals were saying that we would lose our medicare because of the free trade agreement.

Interestingly enough, since 1993 some of the Liberals' predictions have actually occurred. Our medical system has been attacked in an unprecedented manner. Across Canada the medical systems are in a shambles or in crisis in many provinces. That has nothing to do with NAFTA. It has to do with a government whose priorities were clearly not on the health care system in Canada.

We have seen a further example of an inconsistency with the Liberal position. We see the diluted and gutted Bill C-55 potentially threatening Canadian culture. Not only have we seen our health care system attacked by the Liberals and not because of NAFTA, but we are seeing our cultural industries threatened by the Liberals' weak-kneed capitulation. They are not really fighting the good fight and utilizing the cultural protection elements and instruments in NAFTA which the Progressive Conservative government had the courage and foresight to put in there.

That is part of a larger issue. It is one of vision, foresight and understanding of public policy, of not just where the Liberal Party is going in the next election but where the country is going in the next century.

Last weekend I attended the Free Trade at Ten Conference in Montreal. The conference evaluated the impact on Canada of free trade over the past 10 years and of agreements like the FTA and the NAFTA. Donald MacDonald was there. He is a former Liberal cabinet minister and chairman of the MacDonald commission who came forward in the early eighties with a recommendation that the free trade policy with the U.S. be pursued.

It was very interesting to hear him compare former Progressive Conservative Prime Minister Brian Mulroney and Wilfrid Laurier. He said during his speech at the opening of the conference that Mr. Mulroney had the foresight and vision to do what would help Canadians in a new global economy. He compared Mr. Mulroney to Mr. Laurier except he added that Mulroney was able to achieve more of his vision than was Laurier.

That type of visionary leadership is very important and critical now as Canada faces more challenges in a global environment than we ever have. The protection of culture is becoming an increasingly complicated affair because of the advent of technology, globalization and the pervasive nature of the Internet and the fact that we are increasingly going to develop electronic means to effect change on issues of censorship and regulation in terms of protecting culture.

It is a new world and there are significant challenges. We should not be folding up our tent and going home. We should be rising to these challenges and fighting to protect Canadian culture.

The Liberals are responsible for the capitulation on this very fundamental agreement, this longstanding tradition of protecting Canadian culture which began in the 1960s. This has nothing to do with NAFTA. The Liberals have refused to exercise the instruments of cultural protection.

A New Democrat member said earlier that there are instruments within NAFTA and the free trade agreement to protect Canadian culture. Before utilizing those and before taking every possible step to protect Canadian culture, the Liberals gave in because of threats from the U.S.

This creates a tremendously dangerous international precedence. Whenever there are threats of trade wars, sanctions, or retaliation from any of our trade partners on any range of issues such as culture or the environment, we have demonstrated that we will give in before we exercise to their fullest extent the instruments we have within our trade agreements to defend them. This is clearly inconsistent with the principles of NAFTA and the free trade agreement.

The Liberals' gutting of Bill C-55 is inconsistent with the heritage of the Liberal Party of Canada which in the past has been consistent in the defence of culture. At this juncture the Liberals have turned their backs on a very important heritage. It appears less and less to be the Liberal Party of Pierre Trudeau. It is becoming the party of knee-jerk reaction, Earnscliffe polling, focus group economics and all types of crisis management and poll driven populism. Frankly it is the antithesis of what Canadians need at this juncture.

I mentioned earlier that the government has used parliament as a a pawn in this agreement. It has used parliament in the passing of Bill C-55 as a bargaining chip with the U.S. More offensive than that, the amendments made by the Senate to Bill C-55 have dramatically changed the intent and direction of this legislation. Whether or not the legislation is in order is in question.

When a piece of legislation is changed so dramatically and completely emasculated by a government and when it is not consistent with the general principles and directions of that legislation as passed in the House, it should require a whole new legislative process and a new piece of legislation. Clearly, the end agreement is not consistent with the agreement that the minister and the Liberals were talking about for so long. Their platitude to describe this agreement was that it would allow Canadians to talk to one another and communicate with one another. When the government gets through with this, the only way Canadians will be able to communicate with one another is by telephone.

The government has turned its back on a longstanding tradition, a tradition that was protected by the government of Brian Mulroney in both free trade agreements. In its commitment to Canadians the heritage of the Liberal Party should create a sense of conscience to be consistent in its protection of Canadian culture. Instead of fulfilling the promise to Canadians and instead of the minister fulfilling her promise and commitment to the House that she would stand up and defend Canadian culture, she gave up before the fight.

I am very concerned not just about the contemptuous use of parliament as a bargaining chip and a pawn in this process, but also about the international precedent this will set, that any of our trading partners can bully us with threats of illegal sanctions and retaliatory actions without those claims being researched. Even when legal experts have advised us that these claims and retaliatory measures were untenable and would be illegal in their nature, we have given up. We have given up. That is not the signal we should be sending as we pursue more trade agreements and as we negotiate to play a larger role in a global environment, an environment that is becoming increasingly protectionist.

For instance, both on the far right and the left in the U.S. the protectionist movement is gaining steam and getting stronger. As that occurs and as we demonstrate at every possible turn that we are willing to give in, to cave in and to knuckle under when someone from another country in a specific industry group huffs and puffs, over a period of time the benefits we have gained in NAFTA and the free trade agreement will be lost significantly.

We will not have commensurate dispute settlement. We will not be utilizing the dispute settlement mechanisms that have been put in place intentionally to not only ensure access for Canadians to markets in other countries, but also to ensure that the issues and concerns that are important to Canadians, be they environmental or cultural, are protected.

While there are some who argue that this is some form of protectionism, the free trade agreement and NAFTA were both consistent in providing instruments by which we could defend our Canadian culture. Those are what we should be focusing on. We should be exercising those to the fullest extent. The government has clearly abdicated its responsibility to do so.

If we want to move forward on this and if we want to examine the types of policies that would really help further the competitiveness of the Canadian magazine industry both within domestic sales and potential opportunities for export, in the long run the best trade policy would be a sound domestic economic policy.

The PC Party would argue that the government has to couple its trade policy with a more forward thinking economic and fiscal policy. We have to address the issues of personal and business taxation in Canada.

The Mintz report on business taxation recommended that the corporate tax system in Canada be made more neutral. Treat all industries as consistently as possible and eliminate the non-neutralities and distortions within the corporate tax area.

The Mintz report also recommended that corporate taxes to the greatest extent should be based on profitability. The profit insensitive taxes should be removed. Taxes on capital which have a negative impact on investment and a negative impact on productivity should be removed.

Canada has the third highest corporate tax levels in the OECD countries. Canada has a capital gains tax regime that is twice as repressive as that in the U.S. Our personal income taxes are the highest in the G-7. All these have a negative impact on all types of Canadian enterprise and business, including the Canadian magazine industry.

While we support and believe that, we need to ensure that Canadian culture is protected through the vehicle that has been espoused by parliament since the 1960s through the split-run legislation to protect the Canadian magazine industry against dumping from the U.S. We also believe that the best way in the long term to ensure the viability of the Canadian magazine industry and all industries and small businesses in Canada is to ensure that we have a sound, innovative and forward thinking economic policy. Tax reform should be an integral part of that.

The government should utilize this opportunity now, not just for tax reduction in small politically palatable directions where the government sees fit and focused on a leadership convention or the next election, but in the long term on what Canadians need in the next century. A visionary and holistic approach to the systemic issues within the tax system is needed.

Mr. Speaker, have a good summer.

[Global Vision, June 1st, 1999]

Mr. Speaker, Global Vision was conceived nine years ago as an opportunity for Canadian youth to better prepare themselves for the challenges of the new world of international business. Today this is becoming more and more important as more than one in three jobs in Canada is created through exports.

Currently youth are being selected from junior team Canada regional training centres, like the one conducted in my home province of Halifax at St. Mary's University last week. Potential candidates are being interviewed in order to select the best possible people to participate in upcoming economic missions including southeast Asia this summer and Latin America in the fall.

I congratulate the partners in the Global Vision program who made all of this possible. They are here today at a special luncheon hosted by the Speaker. I wish all of them the very best as they prepare leaders in global business for Canada for the 21st century. They are doing a terrific job in preparing Canada for these challenges.

[Reform Of International Organizations, May 27th, 1999]

Madam Speaker, I begin by thanking the member for Esquimalt—Juan de Fuca for this thought provoking and important motion. It is a very timely motion because we live in a period of immense change. There are tremendous challenges facing Canada in a global environment.

Traditionally Canada has played a very important role as a middle power, a role that far exceeds our size as a nation, our population and our ability to influence affairs. Our chain of events in global events has been significant.

I would argue that over the past several years, particularly since 1993, there has been a decline in the role we have played particularly in the defence of human security and in the traditional linkage that has existed between foreign policy in Canada and human rights which has existed for some time. I would argue that there has been a significant de-linkage since 1993. More focus has been placed on trade missions than on actual foreign policy in a very positive sense.

Since the end of the cold war the evolution of human security has increased its pace significantly. There have been over 100 conflicts since the end of the cold war. Most of these have been interstate conflicts. The member for Esquimalt—Juan de Fuca has said there are approximately 40 current conflicts. Many of these conflicts are between governments and their own people. In that type of environment the evolution and recognition of human security becomes increasingly important.

The evolution of human security certainly did not begin at the cessation of the cold war. Some would point to the birth of the UN in 1948 and also to the Bretton Woods institutions that began in 1945 as the modern genesis of the notion of human security. From their very beginning the World Bank's and the UN's basic principles and mandates have recognized human security.

The mission of the World Bank is “to help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the private and public sectors; to fight poverty with passion and professionalism for lasting results”. These basic tenets of the World Bank are focused more on human security than national security.

The United Nations charter initially said “to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small”.

The focus from the beginning with the UN and the World Bank has been on human security and it certainly should be. The IMF is more focused on the financial side of things in providing and ensuring that nation states have the ability through financial systems and economies to actually provide successful economies for their people.

Globalization is playing a key role in the evolution of human security as well. Technology and telecommunications play a role in bringing the atrocities of war home to people in nations like Canada and creating political and public pressure for us to become involved in conflicts such as in Kosovo. There has been an interesting incidence whereby we have seen NATO, developed as a defence alliance for the cold war, actually playing a key role in the defence of human security.

Some would argue that the role NATO is playing in Kosovo should be played by the UN. In fact, it is the failure of the member states in the UN to agree and to come to some sort of common goal relative to the conflict in Kosovo. The UN is not playing that role but NATO has been able to play a very important role and one that many of us share.

The role that Canada has played in the landmines treaty with the UN countries is further evidence of the evolution of human security.

The issue of institutional reform for the Bretton Woods institutions and for the UN and other institutions, including the European Bank for Reconstruction and Development, which are involved in economic development and human security issues is very important and timely because there is a tremendous amount of redundancy between these organizations. There is also a significant institutional reform needed individually and collectively and an increased level of co-operation. There has not been in the past enough co-operation and communication between these institutions. As a result sometimes the goals have been muddied. Certainly the effort to achieve those goals has been even more confusing.

One of the difficulties with the UN is that it is very difficult to gain agreement from the member states on some common goals. Recently I believe China had some difficulty with supporting the UN peacekeepers in Macedonia because Macedonia has had a position in the past of co-operation with Taiwan.

The U.S. support for the UN has varied over time. The payment of dues by the U.S. to the UN has been a perennial issue. Even though the President of the U.S. may be supportive of the UN in a general sense, Congress sometimes is less so. If we read some of the comments of Senator Helms in that regard, we can see very clearly that one of the reasons many Americans are opposed to supporting the UN and paying the U.S. dues to the UN is simply that the U.S. does not agree with any devolution of the role of the U.S. as a national power or as a superpower and feel that supporting the UN will in some way reduce its power in a global sense. There are member states like the U.S. that are in some ways reflecting what is a pre cold war mentality in a post cold war environment.

I want to speak briefly about the IMF. Many people are critical of the IMF. I think some of the criticisms are legitimate, but by and large a lot of the criticisms I hear are not accurate. The IMF in spite of some of its failures has had some very significant successes. If we go back to 1995 and look at the bailout of Mexico for instance, that is an example where quick action by the IMF and the U.S. and the $40 billion bailout did help prevent a meltdown in Mexico and Latin America that would have played a significant and deleterious role in those economies.

It is questionable whether IMF support has helped in Southeast Asia. Again there were some criticisms of the IMF, both in the Southeast Asia crisis and in the ruble crisis in Russia last fall and late last summer. Many of the criticisms of the IMF have been based on the rather stringent conditions the IMF set on lending to those countries. I would argue that some of those conditions are very reasonable. Some of the conditions for instance in Russia have been that Russia gains a functional payment system, a functional tax system. These are reasonable demands.

The IMF conditions are significant to the debt issue. The debt issue in developing nations is extremely important. There are initiatives to retire the debts of some of the developing nations that are suffering under egregious debt loads at this time and are simply unable to provide the infrastructure they need in the long term in terms of education and health care and at the same time meet these conditions.

The World Bank has undergone some significant reform under Wolfensohn. It is the type of reform that I would like to see. I believe that this type of meeting, this type of initiative is very important.

In closing, in the long term I would like to see more focus on initiatives like microcredit, issues like early childhood intervention in some of these countries, and some of the pre-emptive measures that actually seek to focus on the causes as opposed to dealing with the conflicts once they have come about.

[Bank Act, May 26th, 1999]

Madam Speaker, the one thing I can say about the NDP members is that they are consistent. They opposed the GST when it was introduced and they continue to oppose it. At one point they opposed free trade and they continue to oppose it. We at least know what the NDP members are thinking and they have been consistent over a period of time.

The Liberals on the other hand do not suffer under the yoke of policy consistency or integrity on public policy and can thus move back and forth wherever they want on these issues.

I think most people would agree that a large part of the underground economy is due to the fact that taxes are too high in Canada. Income taxes are too high, capital gains taxes are too high and payroll taxes are too high. We have to evaluate which types of taxes have the most dilatory effect on the Canadian economy.

I would argue that it is not the consumption taxes in a global environment. In a traditional sense, consumption taxes would reduce the consumption of Canadian produced goods which would reduce growth in the economy. In the new economy, it is income taxes that reduce the ability of Canadians to save and invest. Productivity levels are very closely related to investment. It is capital gains taxes that prevent Canadians from unleashing their capital and selling assets to invest in new and innovative opportunities. Those are the taxes that are punishing Canadians and reducing Canadian growth in the new economy. It is not the GST.

I would argue that the underground economy has more to do with the general rates of taxation, in particular income taxes, which are reducing the personal disposable income of Canadians. The hon. member said that if he were a contractor and approached me and asked me if I would pay him under the table, I would not do that. I pay my GST.

[Bank Act, May 26th, 1999]

Madam Speaker, the tax burden in Canada during the period 1988 to 1993 actually decreased in terms of income tax due to the replacement of the manufacturers' sales tax. That was developed as a revenue neutral tax reform designed at that time to eliminate a counterproductive, productivity killing tax policy that would have inhibited economic growth.

A witness to the soundness of that policy is the economic growth we have seen, in particular in our export sector since 1993. Forty per cent of our GDP now comes from exports. If the Reform Party member had an opportunity to respond, I would ask him if he would prefer that we tax the manufacturers that are exporting? Would he prefer to see a counterproductive tax that would reduce our economic growth in the export market? I do not believe he would.

I know that most of the recommendations made by the Canadian Tax Foundation and other tax think-tanks would like to see a further shift to a consumption based tax and potentially some changes and adaptations to ensure progressivity in a consumption based tax which would be very important.

If given the opportunity we would like to see significant tax reform now as we saw in the late 1980s and early 1990s under the previous and courageous government of the Progressive Conservatives. Unfortunately, the Liberals are not providing us with the meaningful, broad based tax reform that Canadians need in a competitive environment.

Far from apologizing for the proactive and innovative leadership of that government, I think Canadians, including members of the Reform Party whose leader stated in the House that deficit reduction started back in 1984, should be commending and recognizing the innovation and leadership of that government in providing the foundation for Canadian economic growth in the late 1990s and into the 21st century.

[Bank Act, May 26th, 1999]

Madam Speaker, I appreciate the question from my colleague from Sackville—Eastern Shore. In answer to his question, absolutely yes.

The policies of that government, including free trade, the elimination of the manufacturers' sales tax, which is a euphemistic way of saying the implementation of the GST, the deregulation of the financial services sector, the transportation sector and energy sector were all pivotal in the economic growth that we have seen in the late 1990s. This is not just my opinion. The 1998 global preview of the Economist magazine stated that the structural changes made in the Canadian economy in the late 1980s and the early 1990s had resulted in the Liberal government's ability to reduce and ultimately eliminate the deficit. It then went on to list those initiatives.

Deficit reduction began back in 1984. The leader of Her Majesty's Official Opposition, the Reform Party, said in the House that the deficit reduction effort in Canada began in 1984 under the government of Brian Mulroney. The deficit as a percentage of GDP was around 9% in 1984 and was reduced to about 5% by the time that government was politely asked to leave office in 1993.

Tax reform has considerable political risk and the GST was an example of that. It is very difficult to market a new tax, the GST in this case, even though it was replacing the manufacturers' sales tax, when only 17% of Canadians were aware that the manufacturers' sales tax existed in the first place. Instead of the government of the day replying on pollsters and focus groups to develop economic policy, it realized that the manufacturers' sales tax was killing jobs in a global environment that engages and embraces the opportunities of free trade.

Instead of accepting the status quo because of politics, that government had the courage to face the opportunities of the future and implement what was and may still continue to be an unpopular tax. However, it was the right public policy then and has helped to lead to the economic growth that has benefited all Canadians and in particular the gentlemen and ladies opposite in the Liberal government.

[Bank Act, May 26th, 1999]

Mr. Speaker, it is a pleasure today to speak to Bill C-67.

Bill C-67 is designed to increase and improve access to the Canadian banking industry through foreign participants and foreign banks.

The financial sector, both within Canada and globally, is in a period of immense change and has been for some time. This change is fuelled by a number of factors. Within Canada we have seen the decline of the four pillars of the financial industry and their dissolution is imminent. Technological advancements are having an immense effect, particularly on the banking sector.

For instance, let us look at one element, bank machines. Through the Interac network, through the telecommunications, the computerization and the automation of this sector, these machines are effectively everywhere. They are in many grocery stores. Every teller has the capacity to give people money through the debit system. Consumers have the ability to withdraw money or to purchase goods and services. That technological shift and advancement has improved banking services immeasurably for Canadians. That is just one of the areas where that has occurred.

Globalization has played a very important role. That is what we are talking about today. The government is responding to the WTO agreement on financial services that it signed. In fact the government has to respond prior to June 1 and that is what Bill C-67 is all about.

Foreign bank participation in Canada has grown somewhat since the early 1980s but it has continued to be stymied by regulations and tax policies that have limited the growth of foreign banks in Canada. Ultimately this has limited the services provided to Canadians and the access to capital for instance that small businesses need.

Despite the government's policies that have been discouraging to foreign banks, we have seen the growth of companies like MBNA banks including Capital One and Bank One. In the brokerage industry we have seen Merrill Lynch purchase Midland Walwyn. We have seen Charles Schwab, a discount brokerage, grow in Canada. These companies are real and these banks and this competition is real.

During the merger discussion the minister and some other members on the government side were saying that foreign competition is not playing that key a role. In fact, the role of foreign competition in the Canadian banking sector has grown somewhat.

One example is Wells Fargo which about two years ago had 10,000 customers in Canada. In a 12 month period its 10,000 customer base grew to about 120,000 customers in Canada, yet Wells Fargo employs less than 100 Canadians. It is able to expand so significantly with so few people in Canada because of telecommunications and the nature of technology and its impact on banking and the nature of globalization and its impact on banking.

In the banking sector on a global basis there have been a huge number of mergers in recent years. In countries such as Italy, Switzerland and the U.S. significant levels of merger activity have occurred. Banks are getting larger to develop economies of scale in order to afford the types of technologies to compete in a global environment which is increasingly competitive.

The intent of this legislation is logical. It is designed to ensure that we are complying with the 1997 WTO agreement on financial services. As I have said, the presence of foreign banking in Canada has grown even before this agreement if we look at companies like Wells Fargo and their success in lending particularly to small business but also to medium size business. This agreement will provide further access for foreign banks to the Canadian market.

This legislation, despite some of its flaws to which I will be speaking, should improve the competitiveness of the Canadian financial services sector and ultimately the services and products available in the banking sector to Canadians.

Ultimately one of the biggest challenges facing Canadian small business for some time has been access to capital. As a small business person I know that one of the difficulties faced by small business is access to capital. Part of the problem has been the concentration of banking in Canada over a period of time.

I spent some time in the U.S. I was amazed with the number of U.S. banks and as a small business person the fact that if someone with a business proposal was turned down at the Bank of Bath in Maine, he could go to the Bank of Bangor with the proposal and maybe get the loan. In Georgia if someone was turned down by the Bank of Snellville, he would be able to go to the Bank of Loganville. Both are actual banks. The Bank of Loganville has been there for 150 years.

In Canada in recent years, certainly after the banks stopped doing what they used to refer to as character lending, banks started using something called ratio lending. If ratios did not work for one bank, they probably would not work for any bank. It was very difficult for a small business person to get the money. It seemed for a lot of small business people the only way they would be able to get the money was if they did not need it which is counterproductive.

This legislation is designed to provide greater access to capital for small business people. It may reach those goals. However some issues need to be addressed.

Bill C-67 in its original form did not allow foreign banks to carry losses forward to be applied against future profits to reduce their taxes. Wisely the government changed this. There would have been a competitiveness issue relative to the foreign banks that currently exist in Canada as compared to those that enter Canada after Bill C-67. On May 11 the Secretary of State for International Financial Institutions acknowledged before the House of Commons Standing Committee on Finance that Bill C-67 would be virtually useless to foreign banks in Canada without some changes in this regard.

Wisely the secretary of state has announced some changes to several sections of the Income Tax Act. There will be alterations for a limited time so that foreign banks operating in Canada can take advantage of this legislation.

The tax rule will allow the foreign banks' subsidiaries to transfer assets such as property to their new branches without being taxed for the next three years to allow for the transitional period. Furthermore the retained earnings of the subsidiary will be transferred to the new bank branches. The government will also give the foreign banks a three year transition period to enact all these transfers.

The Canadian Bar Association is still critical of the bill. It has numerous concerns. For example, foreign banks will still need ministerial approval for some transactions that Canadian banks do not face, for instance in the area of takeovers. Foreign banks will also be at a competitive disadvantage because they will be subject to provincial laws as opposed to federal laws. Domestic banks in Canada are subject to federal regulations. That is a complication we would like to see addressed.

The Canadian Bar Association has also warned that Bill C-67 does not meet the goal it was intended to, and that was to open up the Canadian banking market to foreign competition to be in compliance with the WTO.

Ultimately I believe that while this legislation is heading in the right direction it does not go quite far enough. The legislation will help domestic competition in the Canadian banking sector as I said earlier, particularly in the area of small business lending.

I would like to see greater competition in the Canadian banking sector, for instance changes to the co-operatives act as recommended by the MacKay task force, which would allow credit unions to compete directly with banks. That would be extremely positive, as would a loosening of the ownership rules to make it easier for Canadian individuals and companies to start up banks to increase competition in the Canadian financial sector, again in compliance or agreement with the recommendations of the MacKay task force.

We are waiting to see the government's response to the MacKay task force in the spring with the white paper. I would certainly hope that the government moves to change the co-operatives act, to loosen the ownership rules and also to improve and broaden access to the payment system to create greater competition domestically.

These changes in addition to the changes brought about by Bill C-67 will improve foreign access to the Canadian domestic market. They should achieve certain goals as articulated by MacKay in terms of improving the quality of banking services to Canadians and the competitiveness of the Canadian banking sector.

The bill is positive but as I said there are some design issues and some flaws in specific areas.

The MacKay report made 131 recommendations. One of those recommendations was that a process be set out whereby if Canadian banks wished to merge they should have to face a process within which they would be given the opportunity and the challenge to address the legitimate concerns of Canadians. Some of these concerns included lending to small business, services in rural communities, bank service charges and commitments on jobs and hiring. Criteria like these would have to be met in the processes articulated and represented in the MacKay task force report.

With bank mergers Canadians feel that this type of process would have been a good idea. A Maclean's poll in December indicated that while 53% of Canadians were opposed to the bank mergers, 57% of Canadians would be in favour if the banks were to make commitments and meet the conditions and criteria that were important to Canadians.

When the MacKay task force report first came out, the Minister of Finance actually spoke positively of the process that MacKay had put forward in terms of approving bank mergers but having to meet the conditions and making commitments to Canadians first. MacKay went as far as to actually recommend that these commitments be legally binding for the banks and for the directors of the banks.

In response to some of the demands by Canadians to improve services and to improve lending to small businesses and to commit to better services for rural communities, some of the merger proponents including the Royal Bank and the Bank of Montreal made some very serious commitments during that merger discussion. They said that they would reduce service charges. They made a commitment to reduce service charges to Canadians by 10%. Furthermore they said they would actually be increasing their customer service staff as well as continuing the services to rural communities. They were willing to make commitments in that regard and increase their number of outlets.

One of the greatest commitments they made was to double the amount of money that they were lending individually as a merged entity. They would double the amount they were lending to small business from $25 billion to $50 billion. It was a 100% increase in the amount of money they would commit to lend to small business. They were willing to set up a new separate bank focused solely on the small business community. These were very positive commitments the banks were willing to make.

The Minister of Finance however, even though earlier he had stated that he felt favourably toward the MacKay task force recommendation on a process for merger approval, in my opinion and in the opinion of our party simply said no to the mergers for political purposes. This was done before a proper negotiation, before an opportunity for the merger proponents to make the commitments on the types of services that were important to Canadians and the types of commitments that could have benefited Canadians.

We had an opportunity to negotiate with the banks. We had some leverage. We gave all that up because of the Minister of Finance's political ambitions for the next Liberal leadership campaign and for the next federal election. It is unfortunate that the focus of the members opposite is solely on the next election. Canadians really need a government that is focused on the challenges of the next century.

What has been the impact? We have had a few months to see the short term impact. The Dominion Bond Rating Service has downgraded the credit rating of the Canadian banks citing directly the minister's decision on the bank mergers. When the Dominion Bond Rating Service or any bond rating service reduces the credit rating of a bank, a company, an individual, or even a province, that means that entity, in this case the banks, pays more money for its capital. Its capital is more expensive. Ultimately that will lead to a higher price for consumers and/or downward pressure on bank earnings.

There are many people who whenever the banks come out with their earnings speak critically of the banks. The fact is over 50% of Canadians directly or indirectly through their pension funds, through their mutual funds, through their union pension funds are bank shareholders. It is very difficult to invest in the Canadian equities markets without buying bank stocks. They dominate the Canadian equities markets.

Canada has an 80-20 rule where 80% of pension investments and RRSPs have to be in Canada and not external. At the same time we have to recognize that only 1.5% of the global equities markets are Canadian. Those equities markets are dominated by banks. It is almost impossible to have a diversified portfolio in Canada in terms of the equities markets without owning a bank stock.

The government's policy of the 20% limit on foreign investment for Canadians in their RRSPs and also for pension funds, combined with its backward policies in preventing without proper negotiation Canadian banks the opportunity to develop the economies of scale to compete globally will result significantly in reduced retirement incomes for Canadians in the future.

There has been a significant downward impact on Canadian bank shares in recent months as a direct result of this decision.

In terms of the general equities markets in Canada, we have seen a 60% growth in the TSE since 1993, but during the same period we have seen 180% growth in the Dow Jones Industrial Average in New York. This is a very important issue because as Canadians are getting poorer while our neighbours to the south are getting richer.

In formulating public policy, we have to be very careful that it is not only focused on leadership campaigns and the next federal election, but focused on the opportunities and challenges faced by Canadians in a global environment as we enter the next century.

The best analogy of public policy is that it is more like making a cake than it is eating from a buffet. The difficulty is that the minister is treating public policy and the MacKay task force, those 131 recommendations, a little bit like a buffet in that he is choosing from that buffet what he considers to be politically palatable and he is leaving the rest.

Public policy, and particularly a piece of public policy like the MacKay task force, is more like a cake recipe. If we put some of the ingredients in the cake but not others we could end up with a flat cake.

I am concerned that this mishmash, haphazard, knee-jerk reaction, crisis management approach to public policy that the government is utilizing will result in the types of public policy in Canada that would be analogous to the pastry chef's flat cake. That is effectively what we are seeing with this government. It is actually not focused on a holistic approach to these complex issues and is only focused on short term politics.

The minister said that the upcoming white paper will respond more fully to the MacKay recommendations. In the government's response, we would like to see more flexible ownership rules on banks, a broadening of the access to the payment system and a change to the co-operative act to allow credit unions to compete directly with banks. We want to see improved competition for Canadians and improved services for Canadians. At the same time, we do not want to sacrifice our banks' competitiveness globally. The Canadian financial services sector is one of the growth areas of the Canadian economy and we do not want to lose that.

We also do not want to see the types of policies that the government implements in terms of denying mergers without proper consultation and negotiation and at the same time exposing Canadian banks to foreign competition while they are handcuffed by a government that will not allow them to achieve the economies of scale they need. It is very important that the government become much more careful in developing public policy.

We will be supporting Bill C-67, but we hope the government does not continue to hinder and handcuff the Canadian financial services sector that will continue to lead to job creation in Canada.

The government has a role to lead and to develop public policy. The economic policies in Canada that have led to growth in the late 1990s have been as a result of a forward-thinking government in the late 1980s and early 1990s with free trade and the GST, et cetera. We want to see the same type of leadership from this government that will prepare Canadians to not only compete globally but to succeed into the 21st century.

[Public Sector Pension Investment Board Act, May 25th, 1999]

Mr. Speaker, I appreciate the hon. member's erudite and thought provoking interventions today in the etymology of conjugal and its relevance to this debate.

I wonder if the hon. member agrees with me that the Supreme Court of Canada has a very important role in interpreting the charter of rights, which was deliberately and politically developed to protect the rights of minorities; that the political process, particularly one driven by a populist environment, can be very dangerous in terms of the defence of minority rights; and that populism sometimes cannot be guaranteed or majority rules, for instance, which is the tenet of parliament, does not always serve the interests of minorities.

Is it the way parliament or the government has interpreted these rulings that bothers him as opposed to the supreme court making fairly significant and sweeping judgments in defence of minority rights that bothers him? I would like him to clarify that.

[Public Sector Pension Investment Board Act, May 25th, 1999]

Mr. Speaker, a number of times during my speech I referred to Bill S-3, the Pension Benefits Standards Act, which sets out guidelines for the negotiations relative to pension surpluses.

There are guidelines that clearly lay out the role for negotiations with the contributors to the pension over the period of time, the employees and former employees, and with the employers as well.

I would suggest that the government engage in that kind of negotiation and discussion over a longer term and work through that process, as any private sector corporation would, with the employers and the contributors to achieve an agreement as to how that surplus should be divided.

While the size of the surplus seems huge, up to 50% of that money will be invested in the private equities markets. It is very important to note how unprecedentedly high the equities markets are right now. Some economists are even pointing to threats of potential deflation and that our equities markets may be overvalued. Although some members may disagree, the price earnings ratios for our stocks are very high now. I believe they are the highest they have been since just before the Great Depression in 1929.

I do not want to be morbid nor do I want members to rush from the House to call their brokers or anything like that, but I would suggest that a large pension surplus is a good level of security against market fluctuations.

I do support the government moving toward investing this money privately in the equities markets. In the long term, that will maximize the return for public servants. However, in view of the increased risk and the commensurate increased returns, it would be prudent for the government to maintain a large surplus within the public service pension. I think that would benefit not just the government but also the employees and contributors over the long term.