Thierry St-Cyr

[Securities, December 11th, 2007]

Mr. Speaker, tomorrow, the finance ministers will meet here in Ottawa. On this occasion, the federal Minister of Finance wants to explore, yet again, his idea of having a centralized securities commission. That idea does not respect the jurisdictions of Quebec and the provinces and has been decried by the National Assembly, l'Autorité des marchés financiers and the Montreal Stock Exchange.

Instead of trying to impose his hare-brained ideas, would the Minister of Finance not be better off taking firm and immediate action to help the manufacturing sector, which is in a crisis?

[Budget and Economic Statement Implementation Act, 2007, December 11th, 2007]

Mr. Speaker, I am pleased to speak once again to Bill C-28 before us today, even though, as already pointed out in this House, we have already discussed it at length and in detail.

The Bloc Québécois has decided that it will not support the bill for several reasons, particularly because it contains elements with which we do not agree. For example, under the Atlantic accord, revenue from non-renewable natural resources—in essence, oil—will be excluded from the equalization calculation.

We believe that the equalization program should be based on its original principle, which was to ensure that all provinces would have a similar fiscal capacity. When a province has a tax base, no matter what it may be, it should be taken into account in the equalization calculation.

In accordance with this particular agreement for the provinces, namely the Atlantic provinces, excluding non-renewable energy sources, oil, from the calculation gives the advantage to these provinces to the detriment of those with another resource.

For example, if Quebec were to exclude energy from renewable sources, such as hydroelectricity, it would immediately receive very significant equalization payments. However, this could not be justified as it would not respect the principle.

I would like to point out the irony of this to the House. When it comes to equalization, only the Bloc Québécois—a sovereignist party, as everyone knows—is defending the principle behind this program, which is to consider the provinces' fiscal capacity, taking into account all the resources at their disposal in the equalization calculation. This is one reason we are not in favour of this bill.

A number of measures come from the mini-budget, the economic statement introduced this fall. The Bloc Québécois came out against this economic statement, particularly because of what it did not contain. In fact, across Quebec and even in Ontario, the manufacturing and forestry industries are exerting a great deal of pressure and raising the alarm. These industries are asking the government to act immediately.

The government can be as arrogant as it likes, but this is not just a Bloc Québécois request that it can ignore. Not only the industries in Quebec, but Premier Jean Charest are calling for action. Last weekend, Premier Charest again called on the federal government to act and said that it can no longer sit on its hands and do nothing. Even the leader of the official opposition in Quebec City, the Prime Minister's buddy, Mario Dumont, asked what the Prime Minister was waiting for to act.

The government always answers that we will have to wait for the next budget, but we want action now. The government could take strong action even before the end of the session, before Christmas, to help workers in difficulty.

It is a bit pathetic when the Minister of Finance of the optimist party of Canada tells us that everything is just fine. I personally invite the Minister of Finance of the optimist party to come back down to earth and meet the people who are losing their jobs. I have met some people who worked hard all their lives in factories that have now closed. Many of these people live in single-industry cities where the shop—the factory, sawmill or paper plant—is the main employer.

When workers say that nothing is being done to help them and to protect their jobs, what are they told? They are told that the economy is doing well, that everything is just fine, that the unemployment rate is low and that revenues are up. What planet is the optimist party of Canada's Minister of Finance on? It makes no sense to say such things.

In the Standing Committee on Finance, it was even suggested that people who lose their employment in communities in Quebec should just move to Alberta.

Is that any way to treat people who have worked their entire life to build their community? Tell them it is no big deal if they lose their employment since they can move to Alberta where there are jobs?

Sometimes I get the impression that the government wishes people were cattle because it would be easier to move them around. That is not how things work. Recognizing Quebec as a nation does not mean telling people to go to Alberta if they are unemployed. The government has to recognize that people want to live in Quebec.

The government talks a lot about land occupancy. Having people working in towns and communities is part of land occupancy. It is far more important to keep our jobs in our towns and regions for land occupancy than it is to buy icebreakers without debate or discussion for protecting the Arctic.

The government is being rather inconsistent. And yet there are simple, very effective, inexpensive solutions available to the government. Among others, 22 recommendations were unanimously adopted by the Standing committee on Industry, Science and Technology. Even members of the government supported the recommendations. In the recent economic statement, out of 22 measures, only half a measure was implemented.

I would like to speak about two of these measures. The first is accelerated capital cost allowance to invest in equipment that helps businesses increase productivity. This measure is the one being referred to when we hear about the government announcing half of a measure, because the Standing Committee on Industry, Science and Technology recommended that it be implemented for at least five years, if not permanently. But the government implemented it for two years. Obviously, that is not very useful, since in many cases, if a company starts investing today, the investment spans more than two years. In fact, these projects often last up to five years. If the measure spans two years, these companies will not really be able to benefit.

This measure is not very costly; the accelerated capital cost allowance is not a tax giveaway. It makes it possible for businesses to defer taxes over time. So a business would pay lower taxes the year it amortizes more of its equipment. However, once the equipment is completely amortized, it will pay more taxes the year it no longer has a capital cost allowance to deduct from its revenues.

So this measure allows businesses to delay paying taxes when they are experiencing difficulties. What is smart about this type of measure is that it gives our businesses a break so that they have the cash they need to make investments that will help them increase productivity. They will pay taxes when they earn a profit later on.

Similarly, the committee proposed a credit for research and development. This credit already exists, but the committee wanted to make it refundable. Now, if a business is losing money and not earning a profit, it cannot deduct this credit from its taxes, since there is no profit. What does it do? It banks it until money starts coming in again.

In order to help our businesses that need help right now—not five or ten years from now when they are making profits, but now when they are having difficulties—this credit has to be refundable. Companies could claim the tax credit right away. It would be refunded to them even though they are not turning a profit. In any event, these are credits that would be refunded later. Again, this tax is being deferred. We want to give our manufacturing and forestry companies a break to allow them to get back on their feet and increase their productivity. Nonetheless, when they eventually make a profit, then the taxes will be payable. In my opinion, this is not a very expensive solution.

Even though this is a deferred tax, there are costs involved. The Bloc Québécois realizes that. For example, there are costs associated with inflation. A dollar is worth more today than it will be two or five years from now, we know that. However, given the current rate of inflation in Canada, these costs pale in comparison to the benefits this measure could bring.

As far as tax credits for research and development are concerned, under the current system if a company were to declare bankruptcy, these tax credits would never be recovered. Thus, by granting these credits now, the revenue agency would incur more expenses. That is true, but it would be an odd argument for the optimist party of Canada to make, saying that this would cost too much because many businesses would go bankrupt. Indeed, businesses are going to go bankrupt if the government does not take action right now.

I want to emphasize the fact that we have to act now because the government does not seem to understand the urgency of the situation. For example, part of the problem is related to the rise in the Canadian dollar. The repercussions of that are somewhat delayed. As the manufacturers who appeared before the Standing Committee on Finance told us over and over, what we are seeing now is not the impact of parity with the U.S. dollar. It is the impact of a U.S. dollar worth 80¢ Canadian. What we are seeing today is the result of where the dollar stood a year or two ago.

We have not yet seen the catastrophic repercussions of parity with the U.S. dollar. We have not yet seen that, but it is coming. That is why we have to act now to mitigate the effects. The optimist party of Canada would have us believe that businesses just have to increase their productivity and everything will be fine, but that is not the answer.

The value of the Canadian dollar has risen by 40% in a very short time. It shot up from 60¢ to $1. No matter how productive a business is or how creative people are, it is impossible to ask them to boost their productivity to compensate for rising costs in such a short period of time.

That means we need to put transitional measures in place. The government is using its billions of dollars to provide tax cuts for profitable companies, including its oil company friends. But it cannot find a few dollars, perfectly reasonable amounts, to help manufacturing businesses, particularly those that really need it.

I would like to review some of the things manufacturing sector representatives told us when they appeared before the Standing Committee on Finance. In general, they asked us to look at the problem by separating businesses into three groups. The first includes businesses that will survive regardless of the manufacturing crisis, and regardless of the dollar's relative strength or weakness because they are strong and are not experiencing any difficulties. The second group, however, includes businesses that are going through such tough times that no matter what might be done to help them, they will not make it. The third group is in between. Businesses in this critical group might survive if they get some help, but they might have to close up shop if nothing is done to help them.

So, let us look at how the measures proposed by the government in its economic statement will have an impact on these three groups of businesses.

The first measure consists of a general corporate tax cut. For the first group of businesses, those that are getting by and will not have any difficulties, these tax cuts are a welcome gift. They stand to make even more money and are quite happy, with good reason. So much the better, but they are not the ones that need help. As for the second group of businesses, those that might pull through if they are given a boost, in fact, they will not receive any support. They do not even pay taxes, since they are having financial difficulties. Thus, the government measures would do absolutely nothing for them. Of course, the same is true for the third group of businesses.

Let us consider instead the measures proposed by the Bloc Québécois, measures that were unanimously supported by the Standing Committee on Industry, Science and Technology. Let us look at the impact those measures would have on the three groups. Such measures include an accelerated capital cost allowance and refundable tax credits for research and development.

For the first group, businesses that are doing well and having no problems, there would be no change. Whether tax credits are refundable or not, they would have them the same year and this would not change a thing, since they were already turning a profit. As for an accelerated capital cost allowance, this would allow them to save a little on taxes this year, but they would have to pay it back a little later. Thus, there is no need to give billions of dollars to companies that are already doing well.

However, these measures can make a difference to the second group, which is in difficulty but has a fighting chance. Our targeted measures will become effective in this case. To get through the crisis, companies essentially need two things: better productivity and ready cash. That is exactly what these measures will give them. They will improve companies' productivity, because they will let companies invest now in research and development and in equipment to become more profitable. They will also give companies ready cash, because they will allow companies to defer paying taxes. Thus, companies will have the money they need now to get through the crisis. This seems far more effective than the government's strategy for these companies, which is to give them no help at all.

Obviously, in the case of the third group I mentioned—companies that will not make it through the crisis and will have to close—we will be giving them assistance that, unfortunately, will be lost. However, we cannot tailor our policy to companies that will go bankrupt and will not be able to recover, especially since if we do nothing, there will be a great many companies in this group. If we do something, we will be able to help many companies that otherwise would have gone bankrupt or been forced to close. We can bring them into the group that can weather the crisis.

I therefore wanted to demonstrate that the government did not have a real reason for not providing assistance to the manufacturing sector in the mini-budget or economic statement. It was surprising to see, among other things, the position of the Conservatives who ran in the last byelection in regions where the forestry sector difficulties are being experienced. They promised voters that having an MP in power would solve their problems. We now find ourselves with an economic statement that does absolutely nothing for the manufacturing and forestry sectors in crisis. When citizens, for example from Roberval—Lac-Saint-Jean, heard their candidate make promises and tell them that he would help companies in order to save their jobs, everyone thought he would help those businesses that needed help. No one thought Alberta oil companies would get the help. That was a bit of false representation that occurred during the byelection.

It is deplorable, if not pitiful, to see members elected in a byelection on the promise that if they are in power they will move things along stand up and vote for an economic statement that does not contain a single measure for troubled companies in the forestry sector. Even worse, when we tabled a motion asking the government to take immediate action, we saw these same members stand and vote against it and against the campaign promises they made in their riding.

I hope, and I am confident, that Quebeckers will remember this when the next election is held. They will remember that, in tough times, the Bloc Québécois is always prepared to stand up and defend them. The Conservative members from Quebec always boast about the government that is so good and fine, but when the time comes to show some determination and to vote in this House to have some real influence and to change things, they fail to deliver. Only the Bloc Québécois takes up the challenge.

[Budget and Economic Statement Implementation Act, 2007, December 11th, 2007]

Mr. Speaker, the economic statement does not include anything to help the manufacturing sector, despite unanimous recommendations issued over a year ago by the Standing Committee on Industry, Science and Technology. Two of those recommendations were particularly interesting. The first was accelerated capital cost allowance, which would make it possible for businesses to improve their productivity. The second was the refundable research and development tax credit to enable businesses to get the funds they need immediately.

The government told us that these measures would cost too much. But these are not tax expenditures for the government because they are actually deferred taxes. Businesses that benefit from accelerated capital cost allowance on investments pay less tax when they amortize the equipment, but once the amortization is done, they will pay more taxes, taxes that would otherwise have been paid sooner. The same applies to refundable research and development tax credits. If businesses try to claim the credit now, when they are not making a profit, that is indeed an expenditure for the government. At any rate, the tax expenditure would be engendered when the business makes a profit and claims these credits.

In this case, the two measures proposed by the Bloc Québécois and supported unanimously by members of the Standing Committee on Industry, Science and Technology would cost the government very little. They would give struggling businesses the resources they need to get through the manufacturing and forestry crises.

Instead, the government decided to put all of its resources into cutting taxes, a move that will only benefit companies that are doing well.

My question for the parliamentary secretary is as follows: Can he tell the House that he understands that these two specific measures are simply deferred taxes and that nobody is asking for special handouts for the manufacturing industry?

[Budget and Economic Statement Implementation Act, 2007, November 30th, 2007]

Mr. Speaker, I did not have the opportunity before to ask a third question. However, perhaps my Liberal colleague could respond.

A great deal has been said about this heartless government that refuses to pay back money owed to seniors cheated out of the guaranteed income supplement. I realize that our views on state assistance to citizens will vary according to our political philosophies. The belief that solidarity is important or that personal initiative and individualism are more important will depend on whether we are on the left or the right side of the political spectrum. I can understand that. However, I believe that one thing should be clear to all members, whether they are on the left or the right, and that is that we must be concerned with justice. When money is owed to seniors—or to anyone for that matter—it should be given to them even though the debt goes back one, two, three, five or ten years. A debt must always be paid.

Does my Liberal colleague agree that, no matter whether we are on the right or the left, it is reasonable that seniors who failed to claim amounts to which they were entitled, over the years, should receive these amounts?

[Budget and Economic Statement Implementation Act, 2007, November 30th, 2007]

Heartless, a heartless government!

[Budget and Economic Statement Implementation Act, 2007, November 30th, 2007]

Mr. Speaker, I congratulate my colleague from Repentigny for his moving remarks about a senior who was short changed with the guaranteed income supplement. He spoke a little about how it was shameful that the government is going to pay down the national debt—which is not a bad thing—when it should start by paying back the money owed to seniors.

The Bloc Québécois is not asking for new subsidies to be created here. They have a right to that money; they simply did not claim it in the past, because the government did not provide enough information.

If, as a country, we are going to pay our debts, we should start by paying back the debt we owe to seniors. It is even more shocking that they cannot get full retroactivity. I think that if the situation were reversed, if the seniors had failed to pay their taxes for five or ten years, they would not be able to tell the tax man that it has been more than 11 months, and too bad for him, but they are not going to pay their taxes.

Does my colleague not find this double standard absolutely disgraceful? If a senior owes the government money, it will go back 5, 10, 15 years, but when the government owes money to seniors, for some inexplicable and unknown reason, they get only 11 months retroactivity.

Also, does my colleague not find it shameful that during its election campaign, the government promised to fix this problem and it still has not? It is breaking—

[Budget and Economic Statement Implementation Act, 2007, November 29th, 2007]

Mr. Speaker, I have a question. For a long time now, the Bloc Québécois has been recommending that tax credits for research and development be refundable, especially during the current crisis in the manufacturing sector. The government claims that this represents an extremely significant tax expenditure. What the government is not saying is that unused tax credits will represent a tax expenditure one day or another. When the business in question makes a profit, it will then use these credits.

The purpose of the Bloc Québécois proposal is to allow this tax credit to be advanced and applied now, without necessarily creating a new gift for businesses, as is the case in the tax reductions for the oil companies. The last budget granted a general tax reduction.

Can my hon. colleague explain how this refundable tax credit we are proposing, instead of a general tax reduction, would be more beneficial to the industries that really need it?

[Budget and Economic Statement Implementation Act, 2007, November 29th, 2007]

Mr. Speaker, over a year ago, the Standing Committee on Industry, Science and Technology unanimously adopted a report in which all parties, including the Conservatives, made 22 recommendations. In the last economic statement, just one of those recommendations was implemented, and only halfway at that.

Yesterday, the Standing Committee on Finance passed a motion asking the Minister of Finance to implement those of the industry committee's 22 recommendations that relate to fiscal measures. Once again, I do not know whether this is unanimous or not because the Conservatives did not vote. It is strange that the Conservatives are hesitating to implement recommendations that were unanimous.

The crisis is a major concern in Quebec and Ontario. The finance committee was impressed to see such rare unanimity among unions, management, industry and cities. Everyone is saying that something must be done right now.

This is especially important because we heard repeatedly about the problem of the time lag between the rise in the Canadian dollar and energy costs and the economic consequences in terms of plant closures and job losses. People said that one, two or even three years can go by between the two. For example, the plant closures that are happening at present are due to the strength of the dollar perhaps a year ago, when it was worth $.80 American. In one, two or three years, when we see the impacts on our economy because the dollar is at $1, $1.01, $1.02, $1.03, $1.04, $1.05 and so on compared to the U.S. dollar, it will be too late. The situation will already have deteriorated.

It was unanimous. Everyone said that action was urgently needed. No allies of the Conservative government came to tell the Standing Committee on Finance that the situation was not that pressing, that manufacturers could wait until the next budget and that the minister had been right not to include any measures in his economic statement. Everyone said that the government needed to take action right away. That is why we could not support this economic statement. These measures absolutely must be included in the next budget. They should even be implemented as soon as possible.

I can guarantee the Minister of Finance that if he wants to put forward measures to help the manufacturing and forest industries in Quebec earlier than planned and he needs our cooperation in this House, we will give it to him so that we can take care of this quickly, if that is what he wants, of course.

[Budget and Economic Statement Implementation Act, 2007, November 29th, 2007]

Mr. Speaker, I am pleased to speak to the budget implementation bill that is currently before us.

The Bloc Québécois will not support this bill to implement, among other things, the economic statement and the Atlantic equalization accord. The major sticking point is the fall economic statement that we opposed both because of what it contained and because of what it did not.

Throughout Canada, in Quebec and in our communities, people are experiencing a range of serious socio-economic problems. Even though the government has recorded significant surpluses despite tax cuts and all kinds of breaks for oil companies, it has refused to act. For a government that prides itself on taking action and keeping its promises, the mini-budget, the economic statement, was pretty pathetic.

I want to start by talking about the crisis in the manufacturing and forestry sectors. We keep hearing about more and more forestry and manufacturing businesses closing their doors and going through tough times. These are not just numbers we are talking about; these are lives and this is reality. These workers, their families and everyone around them are going through very difficult times. This kind of economic upheaval affects communities in cities where factories can improve quality of life, boost prosperity and keep them from becoming ghost towns.

The Bloc Québécois proposed a number of solutions to help the manufacturing industry, but the government has refused to take action and always hands us the same line. The optimist party of Canada's Minister of Finance says that everything is just fine. The optimist party of Canada says that employment has never been as low as it is now, that the growth rate is good, that profits in Canada are high and that companies are making lots of money. But the optimist party of Canada's minister is out of touch with reality. In both Quebec and Ontario, where manufacturing and forestry industries are major parts of the economy, things are not looking so good.

The figures from the optimist party of Canada do not take into account that reality is being obscured by the oil boom in Alberta. Here is a simple example. If you go to a bar in a small town where people have just lost their jobs, and twenty or so unemployed people are there when Bill Gates, the president of Microsoft, walks in, statistically everyone in the bar is a millionaire. Obviously, it is just statistics. Once Bill Gates leaves, everyone is still unemployed and facing the same problems.

The same thing is happening in Canada. While statistically there is an economic boom in Alberta, the situations are extremely difficult in Quebec and Ontario and economists are predicting a downturn because of the high dollar. Such is the economic reality and the effects and after-effects will not be felt until one, two, even three years down the road. If we do nothing about it right now, we will end up with even bigger problems in a few years. We need to take action right now.

Everyone who has come to see us in the Standing Committee on Finance lately, from employers, to unions, to representatives from society in general, has told us it is imperative to take immediate action in light of the high Canadian dollar and other problems the manufacturing and forestry sectors are experiencing.

In this context, it is rather sad to see that the government has preferred to push ahead with measures that have so little, if any, value added in terms of economic development. One need only think, for example, of the reduction of the GST. We will agree that it is certainly a popular measure. Of course, everyone is happy to pay less tax. In reality, however, all the economists who have spoken on this issue have said that reducing the GST will produce very little in economic terms.

The same goes for lowering corporate taxes for the big oil companies. They are already making exorbitant profits. The fact that they will now make even bigger profits will not help the manufacturing and forest industries because those companies are in trouble and are not making any profits. If they do not make a profit; they do not pay taxes. A drop in the tax rate is no help and does not improve their position.

However, they are starting to talk about it. The Bloc Québécois has been talking about this for a long time. Recently, we heard the minister say he recognizes that the manufacturing industry is having difficulties and that, perhaps, it may be necessary to act. Let us hope this change of heart will continue. The Bloc Québécois will continue to apply pressure.

That gets me thinking about the fiscal imbalance. At first, the Bloc Québécois was the only party talking about it. The other parties said there was no fiscal imbalance, it did not exist and we were inventing it. Finally, we succeeded in obtaining a significant amount in the 2007 budget for the fiscal imbalance, although the situation is not completely sorted out yet. There has been a transfer of money but still no transfers of tax fields. Yet, this was a situation that people thought was a fabrication by the Bloc Québécois. Now, we are getting some solid results.

We are in the process of doing the same work on behalf of the manufacturing industry. Only a few months ago, in fact, only a few weeks ago, the government was still saying here in this House that everything was fine, that there was no problem and the economy was doing very well. Now, we see that they are starting to change their position a little. We will continue to apply pressure to obtain measures for the manufacturing industry as quickly as possible.

One important measure that could have positive results, despite its rather technical nature, is refundable tax credits to companies for research and development. To offset the strength of our dollar, which makes our companies less competitive in the United States and elsewhere in the world, we need to encourage companies to invest in research and development, as well as new equipment to increase productivity.

Traditionally, in most advanced countries with strong economies, companies receive tax credits to encourage this. This is currently the case in Canada, except that these tax credits are non-refundable. So, companies that do not turn a profit cannot claim them. They bank them and when they do turn a profit, they can claim the tax credits. For the government, that is a future tax expense. In a few years, when a company turns a profit, it can claim those tax credits.

The Bloc Québécois wants these tax credits to be immediately refundable for a company that does not turn a profit, but that decides to invest in order to increase productivity, become economically viable and then make a profit. In fact, when a company is not turning a profit and is experiencing difficulties is when it needs that money, that cash, to compete and to invest in equipment and research and development. Later, when it turns a profit, it will pay the taxes.

The government argued that this measure would be too costly. Obviously, if tomorrow morning companies started claiming all these tax credits, even if they are not generating a profit, there would be an increase in claims. They say it would cost billions of dollars. However, the government's calculations are incorrect, because they were done on an annual basis. But if they are managing a country and claim to be running it, they need a more long-term vision.

If we look over time, what is going to happen? In terms of the tax credits and refunds that the companies are calling for now, even if they are incurring losses, they would claimed those tax credits in the future. So it is a measure that has virtually no effect. I will come back to this. There are costs, certainly. However, we have to take into account costs that will have to be covered in any event, in terms of tax revenue and tax spending in future.

Perhaps the example that is best known among the public and even members here is RRSPs. RRSPs are not income tax exemptions. They are deferred taxes. The money is deducted from the tax payable during our working years. When we reach retirement and withdraw the money from our RRSP, then we pay taxes.

That means the tax is simply moved to a later time. It is the same thing for converting these research and development tax credits into a refundable tax credit. You are doing the same thing, but you could really say it is the opposite. The principle is the same, however: giving an immediate tax refund that might have to be paid back later.

If we take a model over 10 years, or over a longer period of time, and exclude cases where companies go bankrupt, and compare the two systems, non-refundable tax credits versus refundable tax credits, the cost should be zero, because over time, for the taxes we are refunding now, they would have to be paid back later in any event. Obviously, the cost is not zero, because inflation is going to eat up some of the difference. That is because a 2007 dollar is worth a little more in 2008, a little more in 2009, and a little more in 2010. But it is a cost that is ultimately marginal, in terms of the measure as a whole.

The second case where there would be a cost is obviously if a company that did not make a profit went bankrupt. In the existing system, a company that does not make a profit accumulates non-refundable tax credits, never claims them, builds them up, but when it goes bankrupt, it loses that bank of tax credits, and that represents a tax savings for the government.

If we had a system of refundable tax credits, as the Bloc Québécois is proposing, obviously, the government would have to pay back the refundable portion to the companies, as they incurred research and development expenses, and that would mean that this system would cost slightly more.

We are not saying there is no cost involved in this measure. Obviously there is a cost, but it has to be assessed in comparison with the benefits to society. When the manufacturing industry representatives and research and development people appeared before the Standing Committee on Finance, I was struck by the testimony of one person in particular.

We were told that manufacturing industries can be divided into three broad categories based on their position in this crisis. The first involves companies that are doing well, that are strong and that will get through the crisis no matter what, regardless of whether we help them or not. At the other extreme, obviously, there are companies that are in serious difficulty, that have major structural problems. Whether we help them or not, those companies are not going to get through the crisis. In the middle, obviously, is a category of companies that are promising, that are having problems at this point in time, and that could get through the crisis if the government took the trouble to give them the hand they need.

Let us take a closer look at the effects of the measure proposed by the Bloc Québécois, namely, to make the research and development tax credit a refundable credit for these three categories of businesses.

As for the companies that are doing well, that are making huge profits and getting through the crisis, our measure would have absolutely no effect, no impact, and would change nothing. It would be business as usual. In other words, they are already making a profit and claiming their tax credits. Whether they are refundable or not, this would not change anything; they would get them immediately.

This is an interesting point. Indeed, a general tax cut, like the one brought in by the Conservatives, helps businesses that are making a lot of money, but does not help those that are not turning a profit. Our measure does the opposite: it does not help those that have lots of money—it is status quo for them—but it helps those that need a hand to make it through this crisis.

Consider the second category of businesses, those that are having difficulty, but can make it through the crisis. It is precisely this kind of measure that can give them the boost they need to get through this crisis, because, among other things, this would give them cash assets by making the tax credits refundable. This would then give them the money they need to get through the crisis, while, under the current system, they will not get the money they need until later, although they need it now. How ridiculous.

In this case, as I mentioned earlier, this would not cost the government very much. It would basically mean the cost of inflation, since the tax credit would be postponed. If we take into account the fact that the boost will allow businesses to remain open, to pay taxes, to pay their employees who will also pay taxes, one can see how this measure would be beneficial for the entire Canadian tax system.

Take finally the last category of businesses, those that will probably not survive the crisis. If these tax credits are immediately refunded to them and they end up going bankrupt, the costs will be greater than what we have under the current system. If a company goes bankrupt now, these accumulated unused tax credits are just lost, which means more income for the Canadian tax system.

We certainly hope that this category of businesses that do not make it through the crisis in manufacturing will be as small as possible. In the view of the Minister of Finance from the optimist party of Canada, which has a very positive view of our economy, not many businesses are likely to fall into this category. As a matter of fact, the more we help them, the fewer there actually will be.

All this is to say that the proposed measure to make research and development tax credits refundable is much less costly than the government claims. It would simply move up in time tax credits that in most cases would otherwise constitute an expense for the tax system if the companies earned a profit.

I have not mentioned accelerated depreciation yet for structuring investments, such as investments in machinery and equipment. The principle is the same. When accelerated depreciation is allowed at some point in time, there is a tax saving. However, as soon as the company has finished amortizing the equipment, it starts paying taxes. Once again, therefore, tax that is payable now is simply postponed until later. There is a cost to the government because inflation has to be taken into account, but the cost does not match the actual expense. The expense has to be spread out over a number of years and its total impact calculated.

As I said, we are opposed to this mini-budget because there is not much in it for our manufacturing industries. Other things are missing as well, but I did not have time to talk about them. I wanted instead to go into detail to explain our proposal on the refunding of research and development credits. There was no money to make the guaranteed income supplement fully retroactive, a promise that the Conservatives broke. There was no money for a program to help older workers. The government promised this in its first Speech from the Throne, but we have not seen the money yet. I also could have told the House about equalization, which is turning to Quebec’s disadvantage. I will certainly have other opportunities, though, to talk about these things.

[Income Tax Act, November 28th, 2007]

Mr. Speaker, I am pleased to speak to the bill before us here today. This bill was examined in committee and my colleague from the Liberal Party who introduced the bill did a good job summarizing our discussions and the current situation.

I would like to give a bit of background on the evolution of this bill, which basically aims to establish deductions from taxable income for any contributions made to a registered education savings plan, in order to help our young people and our children meet their needs when they are studying. For what it is worth, it is not only a matter of paying tuition fees, but also of paying our students' living expenses. These young people often have to leave the family home, especially if they live in areas that do not have a university. Students must then rent an apartment and have a car, or some means of getting around. We must have measures in place to support them.

To encourage this type of investment in our youth, we want to create a system where contributions would be tax deductible. Currently, the money that is invested in a registered education savings plan grows tax free. In other words, income generated from this investment is not taxable, but the investment is not tax deductible. Of course, the interest is taxed later, when the student withdraws money from the fund.

As far as the progress of the bill is concerned, it was first introduced in this form and in a slightly different form where there was a general credit, equivalent to the same ceiling as the registered retirement savings plan, or 18% of income up to a maximum of $18,000. The Bloc Québécois had a problem with that because we felt this was really a disproportionate tax incentive that essentially benefited the wealthy. When a beneficiary withdraws money from their RRSP, that person pays the tax. An RRSP, is used to defer income tax until a later time. The taxes saved when a person invests in the RRSP are paid at the end, when they withdraw the money for retirement.

This is not the case for a registered education savings plan, or RESP, since we can save taxes and it is the beneficiary, a student, who receives the money and will have to pay taxes. Obviously, since students are in school, for the most part, they will not pay taxes.

I will give a concrete example based on the current state of things with the amendments proposed by the Liberals. For example, in a given year, a taxpayer could earn $150,000 and contribute $50,000 to an RESP. Therefore, he would have a tax refund of $14,500. Then, in the next five years, his child could withdraw $10,000 from that RESP without paying taxes on the money withdrawn. Ultimately, we would have given $14,500 to the rich.

To avoid that, it was proposed in committee to set the yearly maximum at $4,000 or $5,000, adjusted for inflation. Proposals were made, but they no longer work, since they referred to a section in the legislation that, in the meantime—as my colleague explained—has been amended by the ways and means motion on the budget.

At that point, the law became ineffective.

As such, we cannot support this bill in its current form. That is why, at the end of my presentation, I will propose an amendment to the bill to make it acceptable to all.

I am sure that the sponsor of the bill will support this amendment, which limits the amount that a person can contribute in a given year so that the person is obliged to contribute over time. This will benefit the middle class, not just the rich.

The Conservatives will also be able to support this amendment to the amendment because it will limit the cost of the measure by preventing taxpayers from claiming a $50,000 tax credit all at once, for example.

The NDP is also concerned about education. Like the Bloc Québécois, the NDP does not want to bring in tax breaks that will benefit only the rich, not the middle class, so it will surely support my amendment to the amendment.

The committee did a lot of work on this. The vagaries of procedure often yield unexpected results. Nevertheless, I am sure that we can come up with a good version of this bill. The amendment I wish to propose would limit the maximum yearly contribution, or at least the maximum yearly tax deduction, to $5,000, which is better than letting the credit reach the lifetime deduction limit, as set out in the present bill. The Bloc Québécois will not support the bill without this amendment. I am sure that this condition will enable all parties to support this bill.

Consequently, seconded by the member for Berthier—Maskinongé, I move:

That Motion No. 2 be amended by adding after the word “years” the following:

“, to a maximum of $5,000.”