April 2, 1998

REF

Diane Ablonczy

Reform

Mrs. Diane Ablonczy (Calgary—Nose Hill, Ref.)

Mr. Speaker, it is a pleasure to speak at third reading of Bill C-28, an act to amend a whole bunch of other acts with respect to tax measures. It is a massive bill containing over 1,000 pages including accompanying notes. I wonder how many members of Parliament have read those 1,000 pages and know what we are getting into. We do not need greater fiscal and social engineering by the government in any bill but that is exactly what we are getting.

I will give a broad perspective in my critique of this bill and of the approach being taken. The Liberals and the Tories, the two parties that have been responsible for managing our economic affairs over the past several decades, have brought us to this point. We have a legacy of massive overspending, a legacy of 30 years of never balancing our books which has led to a legacy of a $600 billion mortgage on our children and a legacy of regular and unremitting tax increases. Because of all this the federal debt is nearly 70% of GDP.

The GDP is the gross domestic product, the value of all the goods and services produced in our country over a year. Seventy per cent of everything we produce over a year is offset by this massive federal debt. If we add provincial debts, that percentage approaches 100% of GDP. In other words, we owe everything we make in a year to our huge national debt. If we were to apply it all to the national debt, that would just about pay it off. Obviously we cannot because people have to live.

What it does mean for people and for the average family of four is a share of the national debt of a whopping $77,700. Every family has been put in the hole by past governments to the tune of $77,000 plus. This same average family paid $6,000 this year just to meet the interest on that debt. If there were no debt presumably each of these families would have an extra $6,000 to work with. Most families could feel the relief if that were the case, but of course it is not.

Also our income tax burden as a result of this abysmal record of fiscal mismanagement is the highest in the G-7 nations. Of the developed nations our income tax burden is the highest. The latest figures available show that between 1989 and 1995 the average Canadian family suffered a decline in real income after taxes of $2,540. One of the reasons for the decline in real income is the incredible tax burden being placed on regular Canadians.

I have a letter from a regular Canadian that illustrates all too clearly the ridiculous lengths to which this tax system punishes Canadians:

My son attended Notre Dame school in Saskatchewan on a scholarship this past year. Last week, he received a T41A in the mail in the amount of $9,500. The scholarship represents his only income for the year (he does not even have a social Insurance number). He now owes income tax in the amount of $450 (and of course, our tax burden increases because he was removed as a dependant).

I have several questions:

How can the Liberals claim that they want to support youth education when there is a tax on scholarships?;

Where does the government draw the line in taking money from its citizens? If $9,500 is not below the poverty line, then what is? $5,000, or perhaps $2,500;

Is not the future of our nation, its educated youth, worthy of the same tax free allowances as MPs or MLAs?;

Just what kind of joke is the millennium fund going to be given the government's penchant for having its hands in our pockets?

My wife and I are lucky in that the tax owed by my son is something we can afford. But, I can easily imagine families and situations where this would not be the case. Please, if it is possible in opposition, point out this ludicrous situation to the Liberals and continue your efforts to remove the tax burden from those who can least afford it—in this case our students.

This is the kind of real life tax grab that our income tax regime imposes on regular Canadians, the youngest, the hardest working Canadians. This bill does absolutely nothing to address that kind of situation.

For the first time in 30 years the chief financial officer of this corporation we call Canada has finally managed to balance the books.

Far from apologizing for the fact that this is the first year of doing something every Canadian and every financial institution must do routinely, we have a finance minister who acts like this is the beginning of easy street for every Canadian. Of course, this is nonsense. We are not out of the woods by any means as Canadians and Canadian families.

It is important to note that this one balanced budget has been achieved almost 70% through increased tax revenues. Here we have a bill of over 1,000 pages that does not do one thing to reduce that horrendous tax burden on Canadians. Yet that is what allows the one balanced budget we have had.

An additional 16.5% of the measures that balanced our budget were through cuts in support to key social services such as health and education. Less than 1% was from actual decreases in other government spending.

Government is good at piling the tax load high on everyone but very poor at restraining its own appetite for spending those same tax dollars.

In addition, the government has adopted some suspect accounting policies that allowed it to manipulate budget figures with an eye to maximizing a surplus closer to the next federal election. This manipulation was so unusual and so blatant that, as members know, the Auditor General of Canada felt it necessary to challenge the government in a very pointed and public way.

It is critical that we not only refuse to put additional charges on the Canadian credit card but that we have a solid financial plan to start paying down the huge debit balance and make the kind of prudent budget and lifestyle choices that will ensure our future fiscal well-being.

Unfortunately the government has not taken that kind of big picture approach. A detailed study this month by the chief economist of Scotiabank says: “Aiming for balanced budgets and relying on an unprecedented stretch of solid growth and low interest rates to reduce the debt burden is a high risk strategy for a debt heavy government”.

I see the time has expired and so in closing I would like to say we cannot support this tax tinkering by the Liberals.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
BQ

Ghislain Fournier

Bloc Québécois

Mr. Ghislain Fournier (Manicouagan, BQ)

Mr. Speaker, I rise today to speak to Bill C-28 and, more specifically, to clause 241, which I consider warrants all our attention. Since February 5, everything leads us to believe, as the expression puts it so well, that there is something fishy here.

We all know very well how this matter might be of personal interest to the Minister of Finance, who, it seems, would have every advantage as the sole owner of Canada Steamship Lines if the bill were passed.

How could the Minister of Finance sponsor a bill that includes tax provisions that could benefit his own company, when he is not entitled to speak on this matter in order to avoid a conflict of interest? This state of affairs led to the presentation before the Standing Committee on Finance of five motions that would enable us to get to the bottom of this matter.

First, we asked for testimony from the president of the CSL, representatives of the trust company, the minister himself and Mr. Wilson.

The five motions were important, but the most important one called for the appearance of any other witness who might help the committee understand clause 241. Four of the five motions were rejected.

The only witness allowed was Mr. Wilson, the government's ethics counsellor, who is employed by the Prime Minister, paid by the government and accountable only to the government.

Something unexpected happened in that Mr. Wilson's testimony reinforced our argument when he admitted that the Minister of Finance had not acted properly and that the code of ethics adopted by the government in 1994 had not been respected.

That code of ethics clearly stipulates that public office holders must do everything they can to prevent real, potential or apparent conflicts of interest from arising.

On February 5, 1998, the government's ethics counsellor said on the CBC, and I quote “Canada Steamship Lines has indicated clearly to me that it has no intention of using this provision”.

However, twelve days later, on February 17, this same counsellor stated before the Standing Committee on Finance, and again I quote “Mr. Martin sponsored this bill and questions have been raised by some members that this constitutes an apparent conflict of interest. Had I been informed in advance, before this bill was introduced, there would have been a discussion on how best to handle the introduction of the bill for the Minister of Finance, who is responsible for all tax legislation. However, this prior consideration of our options did not take place as it should have”.

This flagrant lack of impartiality by Mr. Wilson is appalling. And we are not the only ones to express criticism. The Senate is also addressing this issue. In fact, Senator Marjory LeBreton stated in the Upper House that there is an urgent need to establish new guidelines for the ethics counsellor, who should be independent from the government.

This is a matter I could not overlook, and when the Liberal majority on the Standing Committee on Finance denied our request, the three other opposition parties saw, just as we did, that something fishy was going on.

That is why, in a press conference held on February 19, 1998, the four opposition parties requested that the Prime Minister strike a special committee to shed some light on clause 241 of Bill C-28. We are still waiting for an answer.

What is unacceptable is that the Prime Minister is still refusing to clarify this issue for us, and is determined to put obstacles in our path at every turn. It is obvious to us, unfortunately, that everything is co-ordinated from the Prime Minister's office, including the Standing Committee on Finance.

In short, the Liberal government is showing obvious bad faith, and wants to protect its Finance Minister at all costs.

In conclusion, what is important for people to understand is that the Minister of Finance is preparing to get a bill passed which he himself sponsored and from which he very likely will be able to profit. And this is unacceptable.

I also have some serious questions about how available the self-same minister is to look after the financial interests of Quebec when he has demonstrated without a doubt that what is closest to his heart is to have ships plying the waters of the world, instead of concentrating his focus on his work and on keeping our ship with its fleur-de-lis colours afloat financially.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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NDP

Dick Proctor

New Democratic Party

Mr. Dick Proctor (Palliser, NDP)

Mr. Speaker, it is a pleasure for me to rise today to speak on Bill C-28 which is described as an omnibus bill dealing with certain technical amendments covering a wide variety of acts relating to income tax.

Most of the amendments are housekeeping and we will not be focusing our remarks on them. We intend to confine our remarks to the significant reductions in the Canada health and social transfer that we have seen over recent years.

An earlier speaker noted that the bill is very technical and wondered how many people had read it and who had picked up a copy. I think it is fair to say that none of the members currently sitting in the Liberal benches have looked at the bill. I might also say that a member might need two hands to pick up the bill because it runs to over 400 pages. We believe it is absolutely ridiculous that parliament or Canadians should be expected to deal with such a complex bill which uses language that even highly paid tax experts would have difficulty deciphering.

We believe that Bill C-28 is anti-democratic in its format, its language and its content. It is wrong for a government to present legislation steeped in such isolated language and expect Canadians to be informed or to have any idea of what their government is doing.

There is a story making the rounds that a justice department official was removed from the working committee on Bill C-28 because he raised concerns about introducing such complex legislation. He was most upset with the complexity and the incredible volume of amendments contained therein.

It is fair to say that one would need to be a highly paid tax lawyer to even begin to tackle Bill C-28 in its present format. Needless to say, the lawyer's protests were not well received by the finance department and he was removed from working on this particular file.

To turn to the CHST, we noted with some interest that Tom Kent, who was recognized as the godfather of Liberal social policy in the 1960s and 1970s, delivered a lump of coal to the government on December 24 last when he lashed out at the cutbacks that the government imposed on our medicare system in particular.

There are other aspects of the CHST that I will get into in a moment.

Writing for the Caledon Institute of Social Policy, Mr. Kent accused the government of putting the 30 year old social program at a critical crossroads by simply neglecting to fund it properly. He wrote “Medicare has been sustained by the public will”, and “For this medicare, we owe no thanks to the present generation of federal politicians. It survives despite them”. Note the words, “It survives despite them. Though they pose, because of its popularity, as the defenders of medicare, in fact, they have destroyed the financial basis on which their predecessors created it”. That is where we are coming from on this.

There has been a lot of talk this morning from folks to my right, literally and figuratively, about the financial debt and deficit that we face. There is also a social deficit in this country. It is not only health care which is at risk, we have not made much progress in the fight against poverty.

I am referring to another article from the Caledon Institute of Social Policy that was issued in February 1998. The writer notes that the progress against poverty that Canada managed to achieve in the 1960s, the period that Tom Kent talked about, and in the early 1970s has stalled over the last 20 years. Poverty has increased since then. It was at 17.9% in 1996 compared to 14.2% in 1975. That is an increase approaching 3%.

In the past Canada could count on economic growth and healthy labour markets to fight poverty. Rising real gross domestic production reduced the number and percentage of people with low incomes while the faltering economy had the opposite effect.

Poverty is a result not only of the changing labour market which we have witnessed over the past couple of decades in this country. It is also linked to household structure and demographics. Gender is a critical demographic factor in the poverty story of this country.

Women typically have higher poverty rates than men and families led by women are more likely to be poor than those headed by men. The persisting inequality between the sexes is due basically to women's unpaid social and economic roles as homemakers and caregivers to children and aging parents. It is a major factor that women have lower incomes and risk higher poverty.

In addition to gender, marital status is a key factor. Single parent families, most of which are led by women, face a high risk of poverty.

Governments traditionally have played a major role in combating poverty in this country. Income security programs, also known as transfer payments, have supplemented or reduced employment earnings. Major programs such as old age security, the guaranteed income supplement, the spousal allowance and the Canada and Quebec pension plans have been crucial sources of retirement income for most Canadians.

Employment insurance and workers' compensation replace employment earnings lost due to unemployment, illness and accident. We know as well what has happened there. I think especially about employment insurance and the fact that prior to the changes 85% to 95% of people who applied for unemployment insurance, as it was previously known, received benefits. Today those figures hover around 40%. That is the reason there is a growing gap in this country between the very rich and the people at the bottom 20%.

Child poverty as well remains a grave problem in this country, as has been noted by our party in particular. One in five children now live in low income families. Just under 1.5 million children, or 21.1% of all children who live in what members opposite often refer to as the greatest country in the world, are living in poverty. That risk of course goes up if they are in a single parent family, especially one led by a woman.

Still other demographic factors are linked to poverty. Aboriginal Canadians are significantly more likely to be poor than the rest of the population. Canadians with disabilities, as other speakers noted earlier today, are another group at risk of poverty.

The Canada health and social transfer that replaced the Canada assistance plan in 1996 has retained only the non-resident requirement of the Canada Health Act, and the loss of the in-need criteria under CAP has opened the door to a very different welfare system today than the one we have known over the past couple of years.

In conclusion, this caucus is opposed to Bill C-28. We reject the Canada health and social transfer which has resulted in steep reductions in funding to health and education. There has been a 40% reduction in funding to post-secondary. We are advised that when the millennium fund kicks in in the year 2000 this government will be spending a full $3 billion per year less on post-secondary education.

The provinces are struggling to provide social services. They too have seen their budget allocations slashed from $18.7 billion in 1993-94, the last year of CAP, to the projection of just under $12.5 billion in 1998-99, the current fiscal year that we are debating. Therefore, this caucus will be opposing Bill C-28.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
BQ

Francine Lalonde

Bloc Québécois

Mrs. Francine Lalonde (Mercier, BQ)

Mr. Speaker, I feel obliged to speak on Bill C-28 for a number of reasons, the main one being that its sponsor, the Minister of Finance, is placing himself in a position to benefit from it. His interests in civilian live, outside politics, can benefit from this bill.

There are more than 400 clauses in Bill C-28. It is complex, and multi-facetted. The clause on shipping companies with foreign holdings takes up a half-page, and could easily have gone unnoticed as the pace of the House speeds up.

This clause puts the finance minister, the sponsor of the bill, in an apparent conflict of interest. It is sad and incomprehensible that the finance minister himself, or the Prime Minister, did not try to put people's minds at rest.

Politicians have questions. All opposition parties unanimously requested that the government shed light on the matter. Through their MPs, citizens also are involved. They need to know that their finance minister is in no way, shape or form in an apparent conflict of interest.

Let us not forget how proud the finance minister is to have eliminated the deficit. One of the main ways he was able to reduce the deficit was to cut not federal spending but transfers to the provinces, the Canada social transfer, which replaced the former grants for heath, education and social assistance.

Payments were drastically cut back. The cuts are not over yet, they are ongoing. They are cruelly evident in the health care problems experienced by every province. They are just as cruelly felt in education and social assistance.

It is this same minister who was at the origin of the first major reform of employment insurance, reducing the duration of benefits, benefit levels and accessibility in a major way. In fact it is this first reform which is at the origin of the spring gap which affects many families, especially those who depend on seasonal work. They do not have enough insurable weeks to bridge the gap until they can work again in the spring; it is not for lack of wanting to work, but there simply is no work to be found where they live.

If they own a house or have some savings, they have to spend the money they saved, and depending on the value of their house, they may not be entitled to any help at all. They are not eligible for social assistance. Several families have nothing to live on until work starts again. This spring gap has its origin in the 1994 reform.

The finance minister needs to be above all suspicion. It is difficult for opposition parties to understand why the Minister of Finance would not meet this basic requirement, which is to demonstrate that he is not in a conflict of interest, not even in an apparent conflict of interest.

Given the minister's reputation, why does he not agree to have a special committee struck to shed light on the whole issue? Why does he not find another solution of his choice to protect himself, once and for all, from such suspicions? It is hard to understand.

It is hard to understand why the Prime Minister, whose interest should be to defend the integrity of his finance minister, only does so by repeating statements that have not convinced any member of the opposition.

Anyone taking a look at the issue can only conclude “but he is in an apparent conflict of interest”.

When the person looking after the minister's company says he does not intend to avail himself of the opportunity, it implies that he could actually do so. If this is not the case, then we should be told about it, because so far we have not received such confirmation. Again, the opportunity was provided by the same minister, whose reputation had not been tarnished.

The Minister of Finance has been hard on ordinary Canadians regarding health, education and social assistance. He has been hard on the unemployed. Now, he must shed light on this issue. It is not too late. As far as I know, the bill will not be passed before April 21. The Minister of Finance must, for his own sake, for the sake of all politicians and for the sake of the public, shed light on this issue.

Bill C-28 will remain a sad episode. There are other clauses in this legislation that remind us of policies against which we fought hard in the past. It is one thing to have dissenting opinions on economic and social policies, but it is another thing to see the Minister of Finance in an apparent conflict of interest and refusing to shed light on the issue.

As a member of parliament, I would have much preferred not to have to say these things but, given the facts, I have no choice. I would not be carrying out my responsibilities if I did not speak out. The Minister of Finance has a duty, which is to shed light on the whole issue, for his own sake, but also for the sake of the public and for the sake of politics.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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BQ

Pierre De Savoye

Bloc Québécois

Mr. Pierre de Savoye (Portneuf, BQ)

Mr. Speaker, I am pleased to have the opportunity this afternoon to speak to Bill C-28, an act to amend the Income Tax Act.

Taxes are important. Everyone pays them, or at least everyone should. Of course, no one has to pay more than the law requires but, at the same time, the law should require that everyone make a just and reasonable effort.

Bill C-28 is a complex bill. It contains hundreds of clauses. It affects all sorts of provisions. It is a bill that, by and large, is in the public interest.

Unfortunately, it contains one clause, just one, that we have a problem with and that is clause 241. Others before me have pointed this out, and I am going to look at it as well. Between you and me, we are not going to pull any punches.

The situation is this: in accordance with his role and responsibility, the Minister of Finance introduced this bill. He sponsored it. The Minister of Finance must be above all suspicion. There should never be a situation in which anyone could think that the Minister of Finance was trying to use legislation to derive personal benefit.

And I most certainly want to believe that the Minister of Finance is above any suspicion, and is not trying to derive any such benefit.

But there is a problem with clause 241. The Minister of Finance owns Canada Steamship Lines. This is a large company, and the Minister of Finance is fortunate indeed to be the sole owner of this major company.

He put the company into a trust so as not to be able to intervene directly in its affairs and derive any benefit. That is all very well. It is indeed the normal and expected procedure to follow.

However, the Minister of Finance knows full well that the trustee of the Canada Steamship Lines, the company he owns, has not sold the shares to buy some woodlot. He did not sell the shares to buy a bus company. The Minister of Finance knows very well that he is still, through the trustee, the owner of his shipping company.

Companies with ships registered offshore stand to benefit financially from section 241, through a tax reduction. The Minister of Finance, through his trustee, is very much aware of the fact that his fleet is partially or totally registered offshore. The minister or his trustee used to his advantage some of the provisions already in the legislation, under which ships registered offshore somehow have less tax payable here in Canada.

I still find it a little strange that the Minister of Finance, who is in charge of taxing all Quebeckers and all Canadians, corporations and citizens, would shelter his company through existing fiscal provisions. It may be ludicrous, but it is legal.

Where the plot thickens is when section 241 is amended to allow shipping companies that meet specific criteria, just as that of the Minister of Finance does—to enjoy additional tax benefits.

Mind you, there are not that many shipping companies in Canada. If section 241 was giving some tax benefit to convenience stores and if the finance minister happened to own one, through a trust company, I would say that he will indeed get some benefit, but that so many store owners will get it too that he has certainly not done this just for his own sake.

I am not suggesting here that the finance minister has done this just for himself. But it does look kind of odd, and even more so because since the beginning of February, the Bloc Quebecois has been asking the finance minister, in a respectful way, with courtesy but also with determination, to clear up all manner of doubt on the risk of conflict of interest as far as section 241 is concerned.

We never got an answer from him. The Prime Minister himself jumped to his feet to tell us he trusts his finance minister. I should hope so. We should not expect anything less.

But you have to agree with me that this is not good enough to make Canadians believe everything is just fine. If the rules in our code of ethics provided that a minister should avoid all conflict of interest situations or that he should have the confidence of the Prime Minister, it would be all right because that is what the rules say.

But the real code of ethics does not say that. It says that a minister should avoid not only actual but also apparent conflicts of interest. That is the rule. What does the Prime Minister's confidence in his finance minister have to do with this? It is all very fine for him to trust his minister, but it would be much better if everybody could trust him.

Why does the finance minister refuse to shed light on this? Why does he not give us all the facts? Why does he hide behind the Prime Minister? Why does he not give all the information to the House and the media?

We have a problem. We asked that clause 241 be withdrawn from the bill, which would have allowed us to pass the rest of the bill with much less reluctance and then to deal with clause 241 on its merits. But this was all put in the same package. The Liberals put in the whole cake something that looks like a rotten fruit. Do they think I will eat this cake? Do they think that the Bloc Quebecois will eat this cake?

We will have to vote against the whole bill because of these few lines that let the worst suspicions hang over the finance minister. Perhaps he has a good explanation. The Prime Minister may be right to have confidence in his finance minister, but why not give us the evidence to support this confidence? In the absence of such evidence, all bets are off, not only for the members of the Bloc Quebecois, not only for the opposition members, but also for the members opposite, and especially for the people of Quebec and Canada.

As we all know, this kind of thing erodes people's confidence in the government machinery, in Parliament itself. Why are the Prime Minister and the finance minister not taking the opportunity today in this House to clarify the situation and restore confidence?

I will not be able to vote in favour of the bill before us because of the potentially rotten fruit in this cake poisoned by clause 241. I will not be able to vote in support of this bill, but I strongly hope that the finance minister will shed some light on the issue.

If he does not, the confidence that the people have in Parliament will be eroded and it will be the finance minister's fault.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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BQ

Hélène Alarie

Bloc Québécois

Ms. Hélène Alarie (Louis-Hébert, BQ)

Mr. Speaker, I am happy to speak in this House on Bill C-28, which is sponsored by the finance minister.

I will not read the bill, since it is so thick that it discourages most people from conducting a thorough analysis. And yet, this did not prevent the Bloc Quebecois from noticing clause 241 and its two small paragraphs which will amend subsection 250(6) of the Income Tax Act. The possible benefits for the finance minister, who is the sole owner of Canada Steamship Lines, an international shipping company, are obvious and yet do not represent even two pages of this 464-page bill.

This raises several questions about the government's and the minister of Finance's real interest in supporting this bill.

While Quebeckers and Canadians pay for the cuts that the Liberal government has been making since 1993, while everyone is tightening their belts, while this government continues slashing federal transfers to the provinces, thus directly affecting people, while the finance minister is boasting about having eliminated the deficit in his last budget without saying that he did it on the backs of the provinces, the finance ministre, in spite of an apparent conflict of interest, is sponsoring a bill that will give him some fiscal advantages.

The whole population should know that some members of the government are very generous to themselves. It is inconceivable for a minister to propose a bill which contains tax provisions favourable to his company. This is an apparent conflict of interest.

The Minister of Finance keeps using several arguments to prove his supposed non-involvement in Bill C-28. He argued in this House that his company has been in a blind trust ever since his appointment to cabinet, and that he would not profit in any way from this bill.

This may be true, but it only applies to the present. As soon as the minister leaves his position, the trust arrangement will cease. Not intending to use a privilege is not the same as not having the right to do so.

Obviously, we do not know enough about section 241 of this bill. The motions introduced in the finance committee by Bloc Quebecois members were all defeated by the Liberal majority, except one allowing the ethics counsellor to appear before the committee. This counsellor is an employee of the Prime Minister, paid by the government and accountable only to his employer.

Yet, the testimony of this witness only served to reinforce our arguments since he acknowledged that he was not an expert in international tax laws and was therefore unable to answer several of our questions. He went as far as saying that there might be an apparent conflict of interest and that, had he been made aware of the implications of section 241, he might have acted differently.

Therefore, it is clear to the Bloc Quebecois and the whole population that the Minister of Finance did not abide by the code of ethics approved by his government in 1994, which says that anyone holding public office should avoid being in a real, potential or apparent conflict of interest. In this case, there is an apparent conflict of interest and this is why I ask, in good faith, that the Minister of Finance withdraw section 241 of Bill C-28 while there is still time left.

As parliamentarians, we have a duty to our fellow citizens to improve their quality of life and collective well-being, not the right to use our power to our own benefit. Surveys show that members of Parliament are not well perceived by the public. After seeing such ways of doing things, it is easy to understand why.

The finance minister says he is innocent of any intention. However, in 1996, he introduced a bill in the House containing the same provisions as clause 241; however, that bill died on the Order Paper. In 1998, the minister came back and sponsored Bill C-28. How could he not be aware, as he would have us believe? How can a minister introduce a bill without knowing its content?

How could Paul Martin be allowed to sponsor a bill containing tax provisions that could be beneficial to his own company, considering he is not allowed to speak on the matter so as not to be in a situation of conflict of interest? In fact, there is appearance of conflict of interest and considering the importance of his position and the integrity with which he should manage the finances of the country, the finance minister should be clear of any suspicion.

This is a warning to the government. We asked the finance minister to delete clause 241 of Bill C-28 until the matter can be cleared up. He should do so as quickly as possible if he wants to preserve the credibility he has left in Quebec and in Canada.

My colleague from Saint-Hyacinthe—Bagot has introduced another amendment proposing to refer Bill C-28 to the finance committee so witnesses can be questioned and the situation clarified. The amendment says that the motion be amended by deleting all the words after the word “that” and substituting the following: “Bill C-28, an act to amend the Income Tax Act, be not now read a third time but be referred back to the Standing Committee on Finance for the purpose of reconsidering clause 241.”

I support the amendment proposed by my colleague from Saint-Hyacinthe—Bagot because, in my humble opinion, it answers the numerous issues that the opposition has been raising for more than a month.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
BQ

René Laurin

Bloc Québécois

Mr. René Laurin (Joliette, BQ)

Mr. Speaker, since we are at the end of the debate, I would like to try to illustrate the main reasons the Bloc will be voting against Bill C-28.

Through this bill, the Minister of Finance is trying to pass legislation that, in all likelihood, could provide certain tax advantages to his company, Canada Steamship Lines, of which he is the sole owner.

Clause 241 of Bill C-28 would amend section 250 of the Income Tax Act. In this 464 page omnibus bill, clause 241 contains only two paragraphs and it concerns shipping exclusively. The bill is sponsored by the Minister of Finance himself. These two facts constitute the appearance of a conflict of interest, which contravenes the government's code of ethics and that is what we have been seeking explanations for since February 5.

How can the Minister of Finance sponsor a bill containing tax provisions that could benefit his own company, when he is not entitled to speak on the matter in order to avoid a conflict of interest? There is the appearance of a conflict of interest and, given the importance of his position and the requirement that he manage government finances honestly, this great Minister of Finance must be above suspicion.

Even if the minister offers the defence that his company has been in a blind trust since he became minister, he will not always be a minister and may perhaps draw benefit from this tax amendment. The minister and the representatives of his company insist that Canada Steamship Lines does not intend to take advantage of the measures included in clause 241. They do not intend to, but that does not mean they are not entitled to. This is the point we would like to see clarified by the Standing Committee on Finance.

From the start we have demanded that light be cast on this in the finance committee. The Prime Minister tells us: “I have complete confidence in my Minister of Finance. He is not involved, the legislation cannot provide him with any advantages, and if you have any questions, ask them where they should be asked, in the finance committee”. But when we get to the Standing Committee on Finance with its Liberal majority, the majority response is that they want to hear no more witnesses.

In other words, the Prime Minister is saying “You may ask questions, but you will get no answers”. We are entitled to ask questions, but the committee members, most of whom are Liberals, turn around and tell us that they do not want to hear the answers, that their confidence in the finance minister is all they require to be assured that the bill will not bring him any advantages.

I have three main reasons for doubting the confidence inspired by the Minister of Finance. If we remember back to when the Minister of Finance was negotiating the harmonization of the provincial sales taxes in the maritime provinces with the federal sales tax, the Minister of Finance included $1 billion in his financial statements a year before that amount was paid to the maritime provinces.

In other words, he pulled out $1 billion with which to inflate his deficit for that year. In order to avoid what? In order to avoid having to calm down the people who were clamouring for a bit of a break from taxes and budget cuts. It was to the Minister of Finance's advantage to have a higher deficit showing than there actually was, because this took the heat off him, stopped people from demanding more, and from begging “Spare us, we cannot bear the tax burden any longer”.

The minister used a strategy that has been denounced by the auditor general. According to the auditor general, “The Minister of Finance, in keeping with the accounting principles generally recognized for governments, must not proceed in this way. He must allocate to each year the amount of expenditures that occur in that year”. The Minister of Finance did not do so. He cannot be trusted.

Second example. The Minister of Finance decided to establish a Canada Foundation for Innovation with an investment of $800 million. What did the minister do? He budgeted $800 million last year, knowing that not a single cheque would be issued to the foundation until the following year.

Furthermore, the minister allocated $800 million to the foundation in his budget, while it had not yet been officially established. The auditor general told the Minister of Finance he could not do that. He said “There must be transparency and continuity in accounting, and under the rule of continuity books must be kept the same way year after year so that people know where they are going. You cannot do it that way”.

The finance minister's answer was “I am in charge here, and I will do as I please”. He made sure to inflate expenditures by $800 million to avoid, once again, achieving zero deficit too quickly. This way, he could keep penalizing the unemployed, maintain employment insurance premiums and not give a penny more to help children living in poverty. This way, he could keep cruising at his own pace to eventually show a surplus.

In spite of the fact that he was told by the auditor general that he cannot do that, the minister keeps doing as he pleases.

The third example is the millennium fund. The minister is investing $2.5 billion in this fund to grant scholarships to students, but the first cheques will not be issued until the year 2000. Yet he budgeted this amount in the budget for the year that just ended two days ago, on March 31. Not one penny has yet been expended by the government, since the first cheques will be issued in the year 2000.

The Minister of Finance recorded this amount in the budget for fiscal year 1997-98. Why? Because, had he not, he would have had to report a surplus of nearly $3 billion. He did not want to show a surplus, just a zero deficit. Had he reported a surplus, he would have had to use this money in accordance with the people's wishes. So he did not, preferring to keep doing as he pleases.

What did the Bloc Quebecois do? We went before the public accounts committee. Wet denounced this attitude and supported the auditor general's recommendations. But the Liberals, who have a majority also on this committee, showed up in full strength. They came to say that the finance minister was right to behave the way he was behaving, and to do his accounting the way he wants and if, in another year, it suited his purpose to do otherwise, he would do so.

This means that the finance minister, whom the Prime Minister trusts, does what he wants with numbers, even if it lacks transparency, and gives a distorted picture of reality, making people believe things that are not true.

Can we trust a finance minister who behaves in such a way? We say we cannot. So when the minister tells us his company is not involved and will not profit from these benefits, can we trust him?

If the minister can behave the way he has with financial statements, could he not do the same when it comes to two little subclauses on tax relief which could possibly benefit his company? Can we believe him? Judging by his previous behaviour I am not sure we can trust him.

What we are asking him is this, and we are not accusing him of being dishonest. But we are saying “There appears to be something that might benefit you. Could you put our minds at ease and allow the committee to call tax experts who will come and tell us categorically that these two subclauses are unlikely to give any tax advantage to your shipping companies which are registered in Panama?”

This is what we want to know and what the Liberal government has so far refused to tell us. For these reasons, we will not be able to support Bill C-28.

It is still not too late, and we are still hoping the government will wait to put its bill to a vote, withdraw these two subclauses, and come back with it once the committee has prepared a decent report after a comprehensive review.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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LIB

Paul Szabo

Liberal

Mr. Paul Szabo (Mississauga South, Lib.)

Mr. Speaker, originally I was not going to speak to the bill. However I would like to inject a bit of information that Canadians should be aware of.

The gist of the Bloc's arguments is appearance, as the member just stated. Canadians will know that when members of Parliament are asked to join cabinet there is a requirement that they put all their assets into a blind trust. There is a requirement that they also adhere to the provisions of conflict of interest under the auspices of the ethics commissioner.

The issue that the members have raised has been talked about quite a bit in this place and was before the finance committee. The ethics commissioner appeared before the finance committee and tabled a report on all the holdings of the finance minister, on all matters that had to be put into the blind trust.

I have looked at the report and all the information filed as required by the laws of Canada. I have concluded that very little could occur in the country that would not impact on the finance minister with regard to his investments or holdings. If interest rates go up, the finance minister will win. If interest rates go down, the finance minister will probably win. It is the same for any change with respect real property, rental property or other investments that happens in the House.

Should we say that anything the finance minister or any other cabinet minister has any direct or indirect relationship with should be exempt from any legislation that ever occurs in the House? Clearly the answer is no. That is why there is a blind trust and why others take care of the affairs of a minister who has responsibilities.

The members brought forth information and made indictments of the finance minister. They have suggested, for instance, that the bill was tabled by him when they know that is not the case. It is was the Secretary of State for Financial Institutions. They said that he brought forward these provisions. In fact that is not true. Those provisions were actually brought forward by the B.C. association responsible for shipping. The advocacy on its behalf was basically to stimulate the shipping industry in Canada. It was the association's advocacy; it was not the finance minister, as the members would like to suggest. As a matter of fact it has even put on the record that Canada Steamship Lines could not get any advantage presently from this provision.

However, if a few things were changed and a few other things were done there may be some tax advantages. It is a business and business will not be changed simply because of some changes. Business decisions are made on much more. This is not applicable only to this company. It is applicable to the entire shipping industry and those who would like to be involved in the shipping industry to try to promote shipping within Canada.

I wanted to raise this point because Canadians should know that information is being presented in an eschewed fashion. It is being presented in a way which questions the integrity of the finance minister. The members even suggested that it was contrary to the code of ethics. That is not so. The ethics commissioner came before the finance committee and ruled that it was not a conflict of interest. He had checked it out.

The opposition then decided to do even more work on it. There is no prohibition for members of Parliament or any committee or anybody else to do any further work that they might deem necessary, but this basically constituted allegations that were unsubstantiated. There was really nothing to prove.

The members want to say there is an appearance or an allegation, but I can bet they will not say that outside the door here. In here they have parliamentary immunity. They will not go outside the door and accuse the finance minister of bringing in provisions for his own benefit. That would be a slanderous statement. They would be sued.

I reaffirm for Canadians that the rules of this place require that all of the affairs of a minister be placed in a blind trust. The ethics commissioner has made a detailed ruling with regard to this matter. He has answered all questions from all members of all parties. The committee as a whole decided that there was no further business to deal with on this issue. The committee is not empowered to deal with witch-hunting or fishing expeditions. There was business before the committee and that is exactly what was done.

I suggest to the members and, perhaps more important, to Canadians that the question before the House is with regard to an omnibus bill relating to the budget of 1997. There are some important issues in it, the most important of which is that fiscal responsibility has always been demonstrated by the government since it took office in 1993.

The government has moved the country away from a $42 billion deficit and is now delivering in a fair and responsible fashion the balanced budget that Canadians asked for. It did not do it in a meanspirited way. It was the Liberal way to make sure that we dealt first with those who had needs, those with low and middle incomes. This was also reflected in the 1998 budget that we have already debated in the House. Provisions were focused and targeted to make sure that Canadians received the benefit of the hard work all of them had done to ensure that we got our fiscal house in order.

We all benefit from the financial health of Canada, from low interest rates, from growth in the economy and from growth in employment in Canada which will continue. The commitment of the government to be fiscally responsible continues. The leadership of the finance minister has been very prevalent. He has had to make some tough choices, but I believe those choices have been fair and in the best interest of all Canadians.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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?

The Acting Speaker (Mr. McClelland)

Is the House ready for the question?

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

Some hon. members

Question.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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?

The Acting Speaker (Mr. McClelland)

The question is on the amendment. Is it the pleasure of the House to adopt the amendment?

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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?

Some hon. members

Agreed.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

Some hon. members

No.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

The Acting Speaker (Mr. McClelland)

All those in favour of the motion will please say yea.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

Some hon. members

Yea.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

The Acting Speaker (Mr. McClelland)

All those opposed will please say nay.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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?

Some hon. members

Nay.

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
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?

The Acting Speaker (Mr. McClelland)

In my opinion the yeas have it.

And more than five members having risen:

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

The Acting Speaker (Mr. McClelland)

Call in the members.

And the bells having rung:

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink
?

The Acting Speaker (Mr. McClelland)

The chief government whip has asked that the vote stand deferred until Monday, April 20 at the end of Government Orders. Is that agreed?

Topic:   Government Orders
Subtopic:   Income Tax Amendments Act, 1997
Permalink

April 2, 1998