1988-08-26

Hon. Tom Hockin (for the Minister of Finance) moved: that Bill C-139, an Act to amend the Income Tax Act, the Canada Pension Plan, the Unemployment Insurance Act, 1971, the Federal-Provincial Fiscal Arrangements and Federal PostSecondary Education and Health Contributions Act, 1977 and certain related Acts, be read the third time and passed.
He said: Mr. Speaker, I am very pleased to speak on third reading this morning of what is the most comprehensive reform of our tax system which the Parliament of Canada has seen in the last 20 years. We have had vigorous debate in the House this week. I have said pretty well all I want to say about the motions that have been moved by the Opposition. I would commend those who are interested in the debate to read my responses to the amendments which the Opposition brought forward yesterday.
The Bill, as you know, Mr. Speaker, had its genesis in the June 1987, White Paper on tax reform. This was followed by extensive consultations with taxpayers by myself, by the Minister of Finance (Mr. Wilson), by departmental officials, and by the standing committees of the House and the Senate.
I must say, having chaired a parliamentary committee in the first two years of Parliament, that I know how hard Members work on committees. The Standing Committee on Finance and Economic Affairs has worked particularly hard in this session of Parliament, especially so on tax reform. I would like to commend the members of all Parties for the work they have put into this project and the seriousness with which they conducted their deliberations.
I would like to summarize, as we begin third reading, what the objectives were of tax reform in the first place and what we are trying to accomplish. I want to reiterate the momentum we have put behind each objective of tax reform with our various provisions.
First, we believe the fairness of the tax system should be increased. Second, we believe the tax system should encourage competitiveness and growth in jobs. Third, the system should be internally consistent with other Government programs and it should provide a more reliable and balanced source of revenues to finance essential public services. These were our objectives and what we have tried to accomplish. They have been achieved by broadening the base of corporate and personal income tax systems, and by broadening the base we have been able to reduce the rates.
Let us not forget that tax reform reduces rates, and converting personal exemptions and some deductions to credits of course is a major philosophical and practical step forward for fairness in our tax system, which is often overlooked. People say that they would like more deductions or more credits. By shifting exemptions to credits we have made the system fairer and more progressive.
The results of tax reform illustrate how the objectives have been achieved. We are not sort of saying that we are aiming for objectives, but the results prove that the objectives have been reached by shifting more of the tax burden from individuals to corporations and, by lowering tax rates, removing preferences and loopholes in the system, the reforms make the personal income tax system fairer and more progressive.
Let me give you some examples, Mr. Speaker. People ask for results. What are the results of tax reform? How can you prove that it is fair and more equitable? First, net personal income tax revenues to the federal Government will be reduced by $12 billion over the next five years. Second, income taxes will be reduced for 9.7 million, almost 10 million households in this country-85 per cent of all the households-by an average of $490. People will see that difference when they fill in their tax forms.
Lower income Canadians, how have they done? Some
850,000	low-income Canadians will have their income tax reduced to zero or receive refundable credits in 1988.
Income taxes will also be cut for about 1.3 million of the 1.4 million households with at least one person aged 65 and over. About 250,000 elderly Canadians will have their income tax in fact reduced to zero as a result of tax reform. Elderly Canadians in preponderant proportion-1.3 million of the 1.4 million households with at least one person aged 65 or over-will benefit from tax reform.

August 26, 1988
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Taxes paid by persons with similar incomes and in similar circumstances will vary less after tax reform. One of the great problems that we have in Canada, in the sense of unfairness in the last 20 years, is that people felt that people with the same income were being taxed differently. They did not understand fairness regarding this. A good example is that some people are on salary, some people work for themselves, some people can take advantage of certain preferences and loopholes, and others cannot. We have tried in tax reform, and in a major way have changed this, by putting in place a situation where tax that is paid by persons with similar incomes and in similar circumstances will vary less after tax reform.
A good example-and I constantly had this brought to my attention when we were first elected-is a secretary who works for a large company, London Life, for example, in my home town and did not have the same deductions as somebody who was self-employed. This was becoming a very strong feeling of inequity. The tax reform deals in a major way with that.
Another feeling of inequity that existed was at the corporate tax level. People were saying that it is not just a question of small business and large business; it was industrial sectors. A manufacturing enterprise or a distribution enterprise or a warehousing enterprise pays a certain kind of average tax, but other industrial sectors in Canada such as real estate and financial institutions were in effect paying no tax. There was a perceived sense of unfairness among industrial sectors. For the first time this Government has come to terms with that problem and has made sure that all industrial sectors paid their fair share of taxes. It has not been easy and the finance committee knows this, because it went through the reverberations of this cost.
We have emerged with a package which, when it comes to corporate tax across the industrial sectors, is much more fair. Most taxpayers, as I have said, whose incomes consist primarily of a salary or wages, family allowances or standard pension and retirement revenue, will enjoy tax reductions. It is very important news and we cannot say that often enough.
I said at the opening of my remarks that we were able to reduce taxes. People say: "How can you reduce taxes?" We have done it by removing preferences and loopholes and by broadening the base. Because of base broadening measures through the removal of tax preferences and the conversion of exemptions and reductions to credits, we have produced a more progressive system. This is why 1 objected yesterday to the motion to amend our Bill, arguing for changing the middle income rate from 26 per cent to 23 per cent. Not only would this end up being an $8 billion haemorrhage on the system, but it would be regressive within the middle income bracket, not progressive.
While taxpayers with incomes of less than $15,000 represent 46.7 per cent of total taxpayers, their share of federal tax payable will now decrease from 1.6 per cent to 1.1 per cent. In other words, we are relying on that group.
The lowest income Canadians, the lowest income tax filers, we are relying on them profoundly, but less than we did before
tax reform. The share of federal tax payable by taxpayers with incomes greater than $50,000-these are the wealthier Canadians who represent only 6.3 per cent of the total of taxpayers-will increase from 34.9 per cent to 36.4 per cent. Do not let anybody tell you that we have not increased the burden on the wealthy and decreased it on the lower income groups. In fact, we have increased the burden on the wealthy and decreased the burden on those of lower income.
People ask: "Well, is anybody going to pay more taxes under tax reform". Yes, there are Canadians who will pay more taxes under tax reform. Who are they? These are the ones who have been claiming in the past large special tax preferences or large tax credits. Those with substantial investment income or selfemployment earnings will be subject to the new, fairer expense deduction rules. Those people will be paying more tax. They understand it, but that is part of the base broadening measure in order to lower taxes for other Canadians who are not taking advantage of those preferences.
Corporations will also be paying more taxes. The broadening of the corporate tax base will more than offset the lowering of tax rates. Corporate taxes will increase by 10 per cent or about $5.5 billion over the next five years.
We must remember that tax reform is about fairness on the corporate tax side. This is brought about by broadening the tax base, which allows us to lower tax rates. The result of those two moves, of broadening the base and of lowering the rate, is in fact the production of more corporate tax revenue.
Many more large, profitable corporations will now pay tax as a result of tax reform. With the reduction in tax preferences, the number of profitable corporations not paying tax will be reduced by more than 50 per cent.
Most corporations that do not pay taxes are generally small operations, fledgling operations, that are struggling to keep alive. Through tax reform we are going to be able to find ways to make sure that large, profitable corporations not paying tax will be paying tax. A good example of that, of course, is the taxation of the insurance industry.
Variations of tax paid by different sectors will be reduced prior to tax reform. Average corporate tax rates across industrial sectors range from 14.5 per cent to 24.5 per cent of income on financial statements, and reform has cut this range This is what I was speaking about earlier, the huge differences among industrial sectors on their burden. It is this range, which has been quite wide. It is now going to be narrowed so that it is going to be cut to 15.5 per cent from 22.6 per cent.
Tax reform will also reduce the rate of tax on the return from new investment, strengthening the incentive for firms to invest in profitable ventures. We have heard from the NDP members-and I do not want to ignite a new debate this morning-about how they do not like the capital gains tax. I would think that they would object to me reminding the House that they do not like the capital gains tax being treated differently from income tax.
August 26, 1988

We need in this system, and in just about all industrialized countries, a way to treat capital gains somewhat differently from ordinary income in order to encourage people to take some risks and to take advantage of opportunities that ordinarily would not be taken advantage of. Why? Because we can employ those people and put our economy into a new creative mode with higher employment. That is why there is slight difference in the treatment of capital gains and income tax. We therefore want to make sure that incentive remains.
The over-all financial sector in Canada will pay significantly more in taxes after tax reform, and I would like to speak to that as the Minister of State for Finance, answerable in the House for financial institutions. We have very strong financial institutions. Quite frankly, we have a system which is a model for the rest of the world.
There is a large country in South America with a very weak financial system. There are 360 different banks with just two or three branches each in that country and the people of that country are having great trouble mobilizing capital to lend or to invest in new ventures. The financial system is weak and therefore the economy of that country is very weak.
In Canada, our economy is strong because we have strong and highly efficient capital markets through a highly effective system of financial institutions. As a matter of fact, Canada has the fourth or fifth largest capital market in the world, and it is sustained and made stronger by strong financial institutions.
The strength of financial institutions does not mean exemption from tax. We all know that banks, trust companies, or insurance companies have certain reserves set aside for rainy days or for problems that might occur with people not paying their debts or for insurance claims coming due, but those reserves have to be appropriate from a tax point of view as well. We have attacked this problem. It has been a thorny problem and a difficult problem and we have emerged out the other end with a system that will now be taxing financial institutions fairly, unlike what went before, but not in such a way that will put in jeopardy in any way the great strength of our financial system.
The average tax burden for small firms is unchanged by tax reform while that for large corporations rises. We had a debate yesterday about small business, and there was a motion to decrease the rate on small business still further. The problem with that proposal was that it would also deliver the same benefits at the lower level to large corporations. It would put out of sync the taxation on dividends that flow through a corporation with the taxation of capital gains and the taxation on the corporations themselves. We have tried to align it carefully and have put in place this 12 per cent rate.
The average tax rate for small businesses over all will be 13.5 per cent, a full 7.6 per cent advantage over large firms.
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Large firms will have an average tax rate of 21.1 per cent. A major part of this relates to the small business deduction which has been maintained and gives a statutory tax for small business that is less than half that of large firms. These are very important steps to keep our small business sector strong and creative. As a result of tax reform, we have secured in place the advantage of small business over large corporations when it comes to taxation.
Canada is a very special country with its huge mining and resource industries. Incentives to the mining industry are very important to this Government. Flow-through shares and the ability to write off all investment against the income of a new mine will be retained, and the average tax rate of the mining sector will remain one of the lowest of all sectors in Canada. I spoke about equity among industrial sectors. There is a sector that we are treating in a preferential way and that is the resource and mining sector. The lower tax rate will more than offset the slightly broader tax base for the oil and gas industry.
All Canadians are concerned about the vitality and dynamism of firms that rely on research and development. Firms engaged in research and development will continue to benefit from one of the most favourable tax regimes for R and D in the industrialized world. Going through OECD arrangements for each country for tax treatment of research and development, one would be hard pressed to find one more generous than the one provided through the tax reform of this Government for research and development in Canada.
Revenue Canada's recent streamlining of the administration of the fully refundable R and D tax credit for small firms is a further useful step forward. A new general anti-avoidance rule will also help prevent abuse of tax avoidance arrangements and new information requirements for investment income and tax shelters will help identify avoidance and evasion.
I will not take much more of the time of the House, but let me relate all of this back to the objectives of the Government as stated by the Minister of Finance when he brought forth the White Paper in June of 1987. He said that in the final analysis, this whole package will be judged on whether we have given to our senior citizens more peace of mind and security, to those in greatest need a sense of a fairer and reduced tax burden, to our young a greater sense of opportunity and hope, and to our working people, more incentive, more stability and more freedom. I think Hon. Members can agree that we have met these objectives.
I would like to say a very special thank you to my colleagues and all members of all Parties who worked hard on the Standing Committee on Finance and Economic Affairs which, starting last fall, spent endless hours studying the tax reform package. The thorough review of the members of the committee led to a number of improvements and refinements in the legislation and I know that they are rightly proud of their work.

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[ Translation]
The tax reform proposals were designed to provide Canadians with a more equitable and more comprehensive system that encourages initiative, strengthens competitiveness, growth and job creation and provides a more reliable and balanced source of revenues to finance essential public services.

In conclusion, tax reform comes to terms with two difficult tasks. It makes the system fairer but it is also fiscally responsible. Yesterday during debate, a number of amendments were discussed. Good intentions were behind a number of these amendments, I have no doubt, in order to help certain groups, but I pointed out that the amendments themselves in every case ended up almost contradicting their own objectives because they would interfere in a contradictory way with the rest of tax reform.
Second, I did some mathematics. It would cost almost $9 billion in extra revenue for governments, and that would have the result of putting an additional burden on the Government of Canada to borrow, borrow, borrow. This causes the Government to pay more and more interest on Government borrowings, which in the long run simply burdens generations of those who will have to grow up and pay for the system. With tax reform, we have tried to make it fair, to make it clear, and to make it a system of hope for all Canadians, but also to be fiscally responsible.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, before starting the comments I wanted to make on third reading of this Bill, I would like to comment very briefly on what was said by the Minister of State (Finance) (Mr. Hockin). First of all, I must say I was very disappointed the Minister of Finance (Mr. Wilson) did not take part in the debate himself and left that responsibility to his Minister of State. This is no reflection on the competence and sense of responsibility of the Minister of State (Finance), but since the debate is about tax reform which the Minister claims has taken up the majority of his time since he was appointed, I wonder why he is not taking part in the debate and entrusted a junior Minister with the task of informing Canadians about the various aspects of this Bill.
In any case, the Minister of State (Finance) repeated the same kind of rhetoric the Minister of Finance gave us when he brought down his Budget. Unfortunately, this repetitive rhetoric fails to reflect the substance of the legislation. That is unfortunate and that is the whole problem.
Earlier, the Minister commended members of the Standing Committee on Finance and Economic Affairs of the House of Commons, and in fact all three Parties, for having worked so hard, both at public hearings and when drafting a report that was later tabled in the House. Of course we appreciate those kind words, Mr. Speaker, but for over three months we heard testimony from witnesses, both before and after the Finance Minister's report was tabled. We received a very clear message from most witnesses and it was: The Government's rhetoric is
at odds with the contents of the Bill. We heard this from senior citizens, businessmen, the mining industry, the insurance sector and from practically all groups that appeared before the Committee, explaining that they agreed with the principle but were against certain aspects. In fact, Mr. Speaker, it became a farce. Every time we received a brief, it said: We agree with the principles, we urge the Government to continue in the direction it proposes, but finally, the brief would shoot down the tax reform paper.
The Standing Committee on Finance and Economic Affairs made any number of recommendations over ninety if I am not mistaken, and practically none were accepted. It got to the point that even Conservative Members on the Committee on Finance and Economic Affairs who examined the Bill were tempted many times to vote against certain provisions. As my colleague from Glengarry-Prescott-Russell (Mr. Boudria) said last night, it was because of subsequent pressure that certain decisions were reversed.
Mr. Speaker, once again, the Minister has served up the same rhetoric we heard from the Minister of Finance, the rhetoric that does not coincide with the Bill and the tax measures it contains. He talked about lower taxes, as the Minister did, but of course he refrained from pointing out that these adjustments don't even compensate for the tax increases we had before. I have often explained tax reform by comparing it to a woman whose handbag is stolen by a thief in a park. A few minutes later, the thief gives the woman her purse back, after taking all the money, and he expects the woman to be grateful! That is something like what they have done. They increased taxes for four years and on the eve of the election, they lower them by about 10 per cent. Big deal! They claim to be the saviours who are bringing fairness to the tax system.
Mr. Speaker, today we are beginning the final stage of consideration of the tax reform Bill. I do not intend to repeat all the arguments that I developed in Committee and yesterday when the report was considered. The Minister, in referring to these amendments, just told us that it would cost a fortune! But the Minister knows very well that at the report stage, we cannot present amendments that are as complex as tax reform itself, because the Chair would reject them. What we were trying to show with these amendments was the inequity of this tax reform, which should have eliminated this unfairness towards different population groups and brought a little more justice to the various classes of taxpayers.
For example, I proposed full indexation of refundable tax credits for children and for blind or disabled people. Obviously, I see this as a matter of social justice, for two reasons: the financial problems families have and the declining birth rate in this country. Therefore, a way had to be found not to penalize families. The cost was not exorbitant. As for the disabled, it seems to me that the tax credit for them ... if there is one group in society that deserves to be protected from the ravages of inflation, it is this one! That was suggested by many groups. But the Minister and Government Members said no, it was too expensive.
August 26, 1988

I will get back later to the issue of cost and the promises made by the Conservative Government. Why do they have money for promises and none for providing a fair tax system?
The Minister says that some of our measures would cost billions of dollars. Yesterday, for instance, I suggested that the tax credit that would replace personal exemptions be made refundable for people on very low incomes, the reason being that people with high incomes can take advantage of 100 per cent of the credit, but if a person has no taxable income, he loses out on the tax credit.
The Minister ridiculed my suggestion, saying that the Government would have to give a refundable tax credit to every new-born child. Mr. Speaker, that is the silliest thing I ever heard and it is a deliberate attempt to trivialize the purpose of this amendment. I realize that it is only fair for Members on the other side of the Elouse to try and shoot down the arguments of their opponents, but for a Minister of Finance, for a Minister of State (Finance) to put this kind of interpretation on an amendment and calculate the cost at billions of dollars is totally irresponsible.
So despite the hard work by the Finance Committee and by Liberal Members on that Committee-we tabled the fifteen amendments we considered yesterday-despite all our hard work, the Government did not see fit to accept those amendments. If it had, it would have been possible to improve the Bill and bring it more into line with the Government's objectives.
Mr. Speaker, I think we should see tax reform within the broader context of the fiscal strategy we have seen unfolding in recent years.
There is always a tendency on the part of the Government- fair is fair, I suppose-to put the spotlight on tax reform so as better to hide the tax increases it introduced in recent years. If you put this reform in its proper perspective, we see that despite tax reform, over the past four years Canadian taxpayers have been hit by tax increases that are the biggest and most massive we have known in our parliamentary history.
Mr. Speaker, 1 will start with indirect taxes. When I give you the figures, I am going to give the rates and amounts the Minister gave us, which do not allow for the effects, if any, of economic growth.
For instance, since 1984, the Conservative Government increased federal sales tax from 9 per cent to 12 per cent. That decision alone will, in 1988-89, raise $3 billion more in revenue than the Government would have collected in federal sales tax if there had been no increase, and I am not talking about any effects of economic growth or growth in consumption but only about the rate. In one year, as a result of successive increases in sales tax, the Government collects $3 billion more, and I am referring to 1988-89.
The Government also expanded sales tax to cover candy, soft drinks, certain pharmaceutical products, snacks and so
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forth. On an annual basis, for 1988-89 this change in the sales tax structure provides the Minister of Finance with $400 million more in revenue. The excise tax on a litre of gas was increased 5 cents, which means that for 1988-89 alone, the result is additional revenue for the Minister of Finance totalling $2,225,000.
The Minister of Finance has repeatedly raised taxes and excise tax on alcohol and tobacco. For 1988-89 alone, the result of the policies of the Minister of Finance has been to take an extra $735 million out of taxpayers' pockets. I take all those figures, Mr. Speaker, from the budgets tabled by the Minister of Finance.
By imposing a 10 per cent tax on long distance telephone calls and cable television service, the Minister is taking another billion dollars from the taxpayers' pockets in the current fiscal year. The Minister raised the tax on paint, wallpaper and air transport by $60 million a year.
If one adds all this up for the 1988-89 fiscal year alone, without factoring in economic growth, the effect of the Government's policies to increase tax rates is to collect $7.4 billion more from the taxpayers in this fiscal year.
The sales tax had been increased from 9 per cent to 12 per cent; the excise tax on gasoline by five cents per litre. Taxes on tobacco and alcohol have been increased during the last four years. There was a 10 per cent tax on long distance calls, costing Canadian taxpayers $1 billion. When we add it together, in the fiscal year 1988-89 the Minister of Finance (Mr. Wilson) collected, just from the increased rate of taxation on indirect taxes, $7.4 billion of new money.
Let us consider the direct tax system, particularly the personal income tax. The numbers I will give to the House come directly from the budget speech. I did not invent them. The fact is that since 1986, personal income tax has been deindexed one year after the another. This means that in this fiscal year the Government will collect $1.8 billion of new taxes from personal income tax. This is not due to a change in rate but as a result of partial deindexation of our tax system. It is a hidden tax because the Minister does not announce those changes every year.
In the first year it amounted to $650 million; the second year it was $1.2 billion; and this year it is $1.8 billion. It has an accumulative effect year after year. In 1988-89, the Minister will collect close to $2 billion more in taxes due to partial deindexation.
The Government has eliminated some of the fiscal advantage that the family received in the past and, as a result, will collect $600 million more in 1988-89.

August 26, 1988
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[ Translation]
Mr. Speaker, the Government imposed a general 3 per cent surtax which was to be temporary, but which has been in effect for several years and now seems to be embedded in the system. This too provides the Government with more money, so that the total amount of new money that the Government has obtained not from economic growth but from changes in tax rates and fields of taxation and from partial deindexation of the system is $4 billion.
Mr. Speaker, if I take the increases in sales tax, which in 1988-89 amount to $7.4 billion, and add the increases in personal income taxes of $4 billion, I come out with a total of $11 billion in direct taxes for only one year. I did not add up the figures for 1986, 1987 and 1988, but for the 1988-89 fiscal year alone, the increases in direct and indirect taxes were $11 billion.

For the fiscal year 1988-89 alone, the Minister of Finance will collect from the Canadian taxpayer $11 billion more just through the increase in the tax rate in the field of taxation. It is not as a result of an increase in the economy.
Let us examine those figures and take into account certain fiscal advantages coming from the fiscal reform. While the tax breaks are less, let us be generous and assume that they will be $2 billion. If we take $11 billion of increases minus $2 billion in tax breaks just before the election, there is a net amount of $9 billion in new taxes. When one considers that there is a deficit of $28 billion, without those tax increases the real deficit of the Government would be $37 billion. One of the Government's main campaign platforms from the Minister of Finance was deficit control. He said that the deficit would be solved, not by tax increases but by better management of public affairs. It is really a farce.

Adding up the $7 billion in indirect taxes and the $4 billion in direct taxes, and taking account of the positive effects of tax reform on some sectors, one sees that the Minister of Finance has collected $9 billion net more in taxes in 1988-89 alone; comparing that to the $28-billion deficit, one realizes that were it not for massive tax increases, the deficit would be $36 or $37 billion. For a Government that boasts of its good management of public finances, this is really laughable.
Mr. Speaker, consider as well that economic growth is due to the world economic situation and that the Minister of Finance clearly said in his budget speech, perhaps a little naively, in the first part of his speech, that the economic recovery in Canada had begun before the Conservatives took power. If we were in a more stable economic situation, we would have a deficit of over $40 billion. I want to point out to the Minister of Finance that his management of public finances has been completely irresponsible and that the promises he made to Canadian taxpayers... I still hear the Finance Minister and the Prime Minister talking to us about this solemn promise not to raise taxes, that the deficit would instead be controlled by reducing expenses. Well, as in other cases, these promises have not been kept. Not only were they
not held, but the Minister of Finance and the Prime Minister chose a direction directly opposite to their commitments.
Mr. Speaker, returning to tax reform proper and the legislation now before us, I would say that one feature of those tax increases, in addition to being the most massive in Canadian history, because no other government had succeeded in a four-year period in raising taxes to such a dramatic extent-the worst part of the matter is that most of those tax increases were hidden by the indirect effect of de-indexation and by increases in indirect taxes that the taxpayer, the consumer does not see when he buys goods from the store. Because the Government preferred to raise indirect taxes, the invisible ones, those that are hidden in the price of goods, rather than direct taxes. Even when the Government increases direct taxes, it does so in a secretive, devious way. This is why, instead of raising rates directly, it went through partial deindexation.
Mr. Speaker, one of the major failures of that tax reform is that it did not reach the goals set by the Minister in his White Paper, neither did it meet the goals referred to by the Minister of State (Finance) each time he rises. It is one thing to recite principles and state objectives, but when bills are introduced that fly in the face of those principles, Mr. Speaker, we wonder whether they are being naive or quite simply hypocritical, whether they are trying to deceive electors. For instance, looking at the major questions that might be asked on the matter of fairness, I am not the only one to suggest this, Mr. Speaker. True I have been stating this ad nauseam since the beginning, because this tax reform is structured in a way that is unfair to middle-income people, to families and to some extent to low-income senior citizens.
I would like to know how the Government explains away a number of concerns raised by taxpayers, by associations that appeared before the Committee on Finance and Economic Affairs. I would like to refer to those questions that were raised and that I am also raising to the Government and the Minister of Finance.
How does the Government explain that Canadian middle-income earners will pay $1,200 more in taxes this year than they did in 1984, while Canadians whose earnings are greater than $117,000 a year will pay $3,500 less in taxes? How does the Government explain the inequity of low income earners paying more and higher income earners paying much less?
Why has the Government abolished the $1,000 deduction for investment income which is frequently used by middle income earners and by old age pensioners, while granting an exemption of $100,000 in capital gains for the benefit of the wealthy? Why this double standard? Why do we abolish exemptions that help the middle class and senior citizens, on the one hand, and give to the rich people an exemption of capital gains?
August 26, 1988

Why did the Government not follow the suggestion made by the Standing Committee on Finance and Economic Affairs and abolish the capital gains exemption with a formula that would take inflation into account? Why did the Government set aside this proposal? Why does it have money to give capital gains exemptions to the rich and does not have the money to keep the $1,000 interest deduction for senior citizens?
How does the Government explain that benefits which flow from the child care expenses deduction or those from the RRSP contributions are greater for higher income Canadians? Why were these deductions not converted into tax credits which would have contributed to improving the equity of the tax system and the usefulness of these programs?
Why has the tax rate for small manufacturing companies increased from 10 per cent to 12 per cent when the objective of tax reform is to reduce the tax rate?
Why did the Government give a break to large companies? It seems to have the money to do that, but the Government increases the tax rate for small manufacturing companies from 10 per cent to 12 per cent. Not only did the Government increase the tax rate for small businesses from 10 per cent to 12 per cent, but it went back on the promise the Minister made in this House to bring down that rate to 8 per cent. Not only did the Minister not respect the commitment he made in this House to the small business sector, but he did the opposite and increased the rate from 10 per cent to 12 per cent.
How does the Government explain that some 60,000 profitable businesses will continue to pay no taxes after tax reform? How does the Government explain that the tax system has not been simplified? According to the report of the committee on finance, the tax system will be more complex when the objective was to simplify it.
How does the Government explain its decision to base its tax system on credit which can be easily and fully used by taxpayers in the middle income or higher income brackets but which cannot be fully used by lower income taxpayers? Why are they not made refundable? Why was this opportunity not used to set the stage for a true minimum guaranteed income? Where is the equity in this legislation?

As I asked a moment ago in English, Mr. Speaker, how does one explain the Government's decision to do away with the $1,000 deduction? First, alleging that it is too costly, they scrap the $1,000 investment income deduction of older Canadians, then they turn around and allow a $100,000 capital gains tax exemption. What is the rationale behind the fact that, through direct taxes and lower family benefits, the average income taxpayer with children has to pay back to the federal Government 31 per cent of any salary increase, whereas the very wealthy taxpayer's repayment is only 29 per cent? Is that fair? Why would family assistance programs be eroded every year as a result of partial de-indexation when Canada's birth rate happens to be among the lowest in the world? Where is the fairness in the approach of the Minister of
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Finance? Would someone tell me why the Government chose to abolish the deduction for dependent children aged 19 to 21 precisely when they undertake costly post-graduate studies?
Mr. Speaker, not only does the Government disallow the child deduction even for those aged 19 to 21 and still attending school, but it also eliminates the option a mother living alone might otherwise have had to claim her 19-year-old child as spouse for tax purposes. This has always been possible under our system. In the case of a widow or the case of a singleparent family it was possible to claim the so-called equivalent to married credit. The Conservative Government has now struck out that provision in the case of children over 18 so that a family whose children are attending a post-secondary institution or going to university can no longer claim the child tax credit. And a widow or a single-parent family will no longer be able to use a university-attending dependent child to claim the equivalent to married deduction in the tax return.
How are we to explain this inequity? How are we to explain the Government decision to base its tax system on credits which can be easily and fully used by middle and higher-income taxpayers, but which cannot be used by lower-income taxpayers?
Mr. Speaker, it is clear that if you do not have enough income to pay income tax, you cannot benefit from this tax credit. This seems to me as clear as day! It seems to me also that if the Government had wanted to be a little imaginative it might at least have allowed this class of citizens to use and benefit from the tax credit system just as their fellow citizens in higher-income brackets do.
When the Minister of State (Finance) mockingly suggested that perhaps the Government should grant tax credit to newborn babies, he showed both his ignorance and unwillingness to make our tax system more equitable.
How are we to explain that small businessmen, as well as self-employed workers and contractors will no longer be allowed to claim a full deduction for entertainment expenses on their income tax returns, even those who have to go outside their towns or villages where their head-offices or main working locations are situated.
The situation is such that if you were to go and work for a corporation, or if you are self-employed and living, say, in Quebec, and decided to come and attend a seminar in Montreal to improve your skills or seek more expertise in attending work groups, you could not use 100 per cent of your hotel or restaurant expenses against your income, even if these expenses are directly related to your business operations.
I suggest it is alltogether unfair. These expenses will be limited from now on to only 80 per cent. We know that will result in all sorts of complication and encourage these people into making income tax returns which are not true to reality, because the Minister of Finance has failed to demonstrate openmindedness, and both listen to and understand the recommendations made by all these self-employed workers.

August 26, 1988
That is the reason why we, on this side of the Elouse, declare that this Tory Government has failed in its effort to carry out a true tax reform, and that the Minister and his Tory colleagues are making claims which are not at all reflected in the Bill before us. I suggest that the Government did not avail itself of this opportunity to . ..
Mr. Speaker, I understand that it is now 11 o'clock and that we will resume following Question Period.


Mr. Deputy Speaker:: It being 11 a.m., pursuant to Standing Order 19(4), the House will now proceed to Statements by Members pursuant to Standing Order (21).



STATEMENTS PURSUANT TO S. O. 21


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, Bill C-156, the Bill to protect Canadian water resources, which was tabled yesterday by the Minister of the Environment (Mr. McMillan), is not comprehensive, or coherent. It is a hastily put together, incomplete, and hollow response to public pressure. For example, because the Bill only prohibits the increase of water flowing across the international boundary, it will not prevent the export of water by tankers.
Cabinet has powers to allow the export or diversion of water without an environmental impact assessment. Cabinet can also remove restrictions on the quantity of water that can be exported without consultation with Parliament, according to Clause 13.
The offences under the legislation are bizarre. Can you visualize, Mr. Speaker, someone being fined or imprisoned for diverting a river? Would it be after diversion, before, or when cutting the ribbon?
Finally, and most important, this Bill makes no difference to the free trade agreement, confirming the fact that this Bill cannot stop the export of water under the free trade agreement.



HUMAN RIGHTS


Mr. Andrew Witer (Parkdale-High Park):: Mr. Speaker, since the announcement of the 1988 version of glasnost and
perestroika, many have held high expectations for change in the Soviet Union. However, those expectations continue to be dashed and betrayed.
On August 7, Reverend Michajlo Hawryliw was arrested in Ukraine for serving a Catholic mass. He was sentenced to 15 days at an internal KGB prison in Rozhniatiw. Reverend Petro Zeleny was fined 100 rubles for serving the holy liturgy.
In Lviv, Ivan Makar is serving time in the Hapaev Street Prison for his part in the July 7 demonstration in front of Ivan Franko's monument, where thousands of demonstrators, in the spirit of the supposed reforms, asked for the legalization of the Ukrainian Catholic Church, proclaiming Urkainian the official language in the schools and erecting a monument to the victims of Stalin's terror.
Once again we are reminded that we must not confuse Soviet promises with Soviet reality.
I call upon the Government of Canada to issue a formal protest to Soviet officials for their continued blatant violations of fundamental religious and human rights in Ukraine.



PUBLIC SERVICE


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, I want to draw to the attention of the House the problems that members of the Professional Institute of the Public Service and its leadership have been having in dealing with the President of the Treasury Board (Miss Carney) and with the Government.
This is a union which is not militant. It is a union whose
18,000	or 20,000 members serve the Government loyally and strongly in many areas.
In 1984, the Prime Minister (Mr. Mulroney) promised that his Party looked forward to working "constructively" with the Professional Institute of the Public Service as they negotiated solutions to many complex Public Service issues.
Since the new Minister took office this spring, apart from one reception which she gave for Public Service union leaders, she has refused to arrange any constructive and reasonable meetings with those Public Service unions, including the head of PIPS. She has told them that she does not want to meet if collective bargaining is going on. However, the fact is that collective bargaining has been frustrated for a year with PIPS members and leadership on a master bargaining contract, which means that the President of the Treasury Board would never meet them.


*:
.
August 26, 1988

Her office has told the President of PIPS, Iris Craig, that she is either too busy or too tired to meet with those representatives. If the President of the Treasury Board is too tired, then she should resign and let someone else have the job.



SMALL BUSINESSES


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, there are more than 840,000 small businesses in Canada. Over
1,200,000	jobs have been created since the election in 1984 of the Conservative Government. Many of those positions have been created by small businesses.
The President of the Canadian Federation of Independent Business maintains that small businesses view free trade as being advantageous for growth and future prosperity.
This week I visited numerous small businesses in my riding of Edmonton East. All the small business people with whom I spoke endorsed free trade with the United States.
One company, Titan Foundry Ltd., stated that the elimination of the 7 per cent American tariff would immediately double exports to the U.S. market.
It is clear that most small businesses in Edmonton want to see the free trade agreement with the United States become a reality.



LA FRANCOPHONIE


Mr. Nic Leblanc (Longueuil):: Mr. Speaker, since our Progressive Conservative Government is in power, we have realized the urgency that Canada be better recognized internationally as a French-speaking country, since an educated, intelligent and enterprising French-speaking population represent almost one third of the Canadian population.
What have we done for that in concrete terms? First, we advocated French-speaking Summits, as the one in Quebec City last year. Second, we have passed Bill C-72 on the official languages to protect, maintain and promote the Frenchspeaking minority in Canada.
Next week, that is September 2 to 9, the International Association of French-speaking parliamentarians, of which I am an executive member, will meet in Quebec City, Pointe-
Au-Pic and Ottawa, as an ad hoc follow-up commission after the French-speaking Summit of Quebec City.
Mr. Speaker, those are the concrete measures that our Governement has taken to support the French-speaking people of Canada and of Quebec.



UNEMPLOYMENT INSURANCE


[Stage Direction]
Mr Fernand Robichaud (Westmoreland-Kent):	Mr. Speaker, for some months now, people in southern New Brunswick have been very concerned about their Unemployment Insurance benefits. The eligibility period has been extended from 10 to 16 weeks in an area where often unemployment adjusted rates nearly reach or are even higher than 30 per cent. The only reaction from the Minister to this serious problem has been to announce a full review of all economic regions. Again another review! Why did the Minister choose this course of action? Many studies have already been conducted. This problem has been examined quite a few times. The Standing Committee on Labour, Employment and Immigration submitted a unanimous report on unemployment insurance. That report suggested as a first recommendation the establishment of a standard eligibility period of 10 insurable employment weeks. The Minister has all the facts at hand. Time has come for her to act, and right now, so that people from southern New Brunswick be treated with some justice.


Mr. Cyril Keeper (Winnipeg North Centre):: Mr. Speaker, the tragic incident at Saint-Basile-le-Grand has alerted us all to the dangers of PCBs. We find now that in Winnipeg there is a boxcar with PCBs in it sitting in the city of Winnipeg. It is right beside an actively used railway track. There is no fencing. This boxcar is inadequately secured.
My colleague, the Hon. Member for Winnipeg-Birds Hill (Mr. Blaikie), has taken the time to see this site and talk to officials involved. He is looking into the matter.
The provincial government has said that it is not its responsibility. It is the responsibility of the federal Government. Environment Canada says that it needs the guidelines of the department. We need more than guidelines to protect us from these environmental hazards. We need regulations.

August 26, 1988
As a first measure we ought to be inquiring into the whole question of PCBs across the country, where they are, under what conditions they are presently stored, and what standards are needed so that people can be assured that they are safe.



LABOUR RELATIONS


[Stage Direction]
Mir. Ross Belsher (Fraser Valley East): Mr. Speaker, Canadians do not like strikes. In an article in yesterday's The Gazette William Johnson made the following observations regarding the postal strike:
"Postal strikes are absurd. The government creates a monopoly of mail delivery which makes the entire population vulnerable; then it gives a few thousand post office workers the right to stab the public.
Strikes in the post office are not an economic tug-of-war in which both sides to the dispute must take into account the survival of the company being struck.
Post office strikes are political strikes. The damage is not done to the employer; it is done to the public.
In his recently published book, A Public Purpose, Tom Kent, a policy adviser to the Pearson Government, refers to collective bargaining and the right to strike. He makes this comment:
"The cause of subsequent trouble lay not in public service collective bargaining, which was inevitable, but in the broadness of the right to strike and the carelessness of bureaucratic expansionism that followed. Before the end, the Pearson government was beginning to take fright at the prospects.
In his article Johnson went on to state:
"To restore labour peace and restore true collective bargaining, some form of compulsory arbitration must be imposed on the post office.
I whole-heartedly endorse the above views.

Mr. Brian White (Dauphin-Swan River):: Mr. Speaker, the Canadian Wheat Board has been a valuable asset for Prairie farmers. Under the terms of the Canada-U.S. Free Trade Agreement it will continue to benefit Canada. The agreement will not require changes in the Wheat Board marketing system, nor will it require disclosure of Wheat Board prices or other commercial information that could benefit competitors. If anything, the Board's ability to market grain will be enhanced.
As well, with the requirement under free trade for end-use certificates for imported grain, the integrity of our grain system will not be compromised. What the agreement does is create tremendous opportunities for Canada's grain producers
in the U.S. market. Commodity groups, such as the canola producers and the Western Canadian Wheat Growers Association, agree.
The opponents of the free trade agreement will have a tough time convincing Canada's grain farmers.



NATIONAL DEFENCE


Ms. Sheila Copps (Hamilton East):: Mr. Speaker, last night in the town of Milton the Minister for National Defence (Mr. Beatty), in his usual courteous manner, referred to the Member for Hamilton East as a dog. I can tell the Minister one thing. I would rather be a dog than a Tory.
I also challenge the Minister who, in the same speech, did not have the courage to address his position on the submarines. Instead of making snide remarks about opposition Members, he should be dealing with his Government's dossier and shelving the horrendous fiasco of the submarines that even some of his own colleagues do not want. The Minister should cut out the partisan bitterness and get down to the issues. Submarines are no good for this country. Nuclear submarines will cost us billions of dollars. That money would be better spent in other dossiers.
However, I do not expect a Minister who compares an hon. Opposition Member to a dog to understand what it means actually to deliver programs in this country. Again, Mr. Speaker, I would rather be a dog than a Tory.



ABORTION


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, at recent conventions both the United Church of Canada and the Canadian Medical Association reaffirmed the position that a decision regarding abortion is a medical decision that should be made by a woman and her doctor after all options are seriously considered.
The Canadian Medical Association also recommended medical standards for counselling, informed choice, medical, surgical, and nursing procedures, and follow-up care. Health care insurance should cover costs of medically required services, including counselling, early diagnosis of pregnancy, and early access, across Canada, to abortion should be encouraged.
August 26, 1988

The medical profession has provided an important contribution in clarifying abortion as a medical procedure with standards for practice and respect for differing personal views. The Canada Health Act must ensure fair access across Canada.
The best manner in which to reduce unwanted pregnancies is prevention; greater emphasis on effective and safe birth control, and government funding for family planning are essential. Women and doctors make responsible and moral decisions, and there is no evidence to the contrary.



ECOLOGICAL ACCIDENTS


Mr. Richard Grise (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, since last Tuesday, my constituents in Chambly, and especially in Saint-Basile-le-Grand and Saint-Bruno, have been going through an emergency crisis.
The area was the scene of the worst-ever environmental disaster in Quebec. A PCB warehouse caught fire, and several thousands of residents in my constituency had to evacuate their homes.
As soon as I heard about the fire, I rushed to the scene. I stayed until the next morning ensuring all concerned of my full co-operation.
When such a disaster strikes, it is comforting to see the joint efforts by authorities to ensure the security of the people. For example, when 1 was asked to contact the CFB Saint-Hubert, they immediately sent a fire truck specially equipped for this kind of accident.
I want to mention the tireless efforts and hard work of the firefighters in my constituency of Chambly. I also want to congratulate them for their courage.
Our Government also took their responsabilities, as is the rule in this kind of situation. Yesterday, on the Prime Minister's (Mr. Mulroney) request, the Transport Minister (Mr. Bouchard, the Environment Minister (Mr. McMillan), the Member for Vercheres (M. Danis) and myself went to the scene of the accident to guarantee the population our support.
In fact, the Prime Minister has announced that our Government will join others in offering financial assistance to the residents of Chambly. Last night, following a request by Environment Canada, a sophisticated mobile laboratory was sent to evaluate the air inside the homes. This service is paid for by the federal Government.
Mr. Speaker, I want to assure the population of my constituency of Chambly, of Quebec and of Canada that our
Government is doing all we can to help the victims and to make sure such a tragedy never happens again.



CANADA-UNITED STATES FREE TRADE AGREEMENT-POSITION OF FARMERS

Mr. Bob Porter (Medicine Hat):: Mr. Speaker, on August 24, a press release from the Canadian Agricultural Policy Alliance strongly endorsed the trade agreement with the United States. This group, which represents farmers all across Canada, has expressed strong support for the free trade agreement.
Past CCA president, Stan Wilson, stated: "Contrary to the view expressed by the Canadian Federation of Agriculture, it is clear that the large majority of farmers would welcome freer access to the large and prosperous U.S. market". The Canadian Agricultural Policy Alliance represents grain, oilseed, hog, beef, and cattle producers from all parts of Canada.
The United States is already Canada's largest market for farm commodities, and it is becoming more important as other countries reduce their purchases.
The members feel the removal of tariffs and quotas, the improved method of dealing with disputes, and the process for resolving non-tariff barriers are all positive developments for Canadian farmers. This is especially true for the sectors interested in selling processed, high quality products into the large and sophisticated U.S. market.
Mr. Wilson concluded: "There is no doubt freer access to the U.S. market will be beneficial to the large majority of Canadian farmers. With the decline of traditional markets for grains and oilseeds, the very survival of large sectors of Canadian agriculture could well depend on secure access to the large and prosperous North American market. All farm groups should be working together to that end".



UNEMPLOYMENT INSURANCE


[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, last week the Minister of State for Employment (Mrs. Vezina) announced a further study on unemployment insurance. This is the result of persistent questioning by my colleague, the Hon. Member for Westmorland-Kent (Mr. Robichaud), who has put questions to the Government with regard to the unfair situation in New Brunswick and the variable entrance requirement for unemployment insurance.
[Stage Direction]
August 26, 1988
Oral Questions
Why another study? This whole subject has been exhaustively studied, first by the Forget Commission, and then by a long study made by the Standing Committee on Labour, Employment and Immigration. That committee recommended that there should be a standard 10-week entrance requirement for unemployment insurance.
There have been enough studies. Why do we not have some action from the Government? Let it take up the recommendations of the Standing Committee and give us some action, not more studies.


Mr. Gus Mitges (Grey-Simcoe):: Mr. Speaker, there is no question that the pervasive use of toxic pesticides by many countries is the greatest threat posed to the health of people, and to the world environment.
A plea for reduced pollution and wiser world economic development always seems to fall on deaf ears, whether they be governments or the private sector, which show little remorse in gambling peoples' lives and health for the sake of the almighty dollar.
Eating food or drinking water contaminated with toxic residue has resulted in deaths, in cancers, and in birth defects.
It is shocking to read that the U.S. Government has estimated that, of 600 active ingredients used as insecticides, only 10 per cent have been studied enough to form an adequate opinion of their health risks.
However, it is gratifying to see some light at the end of the tunnel. More than one thousand labour, community, consumer, and health organizations, including the City of Toronto, and the Ontario Public Health Association, have endorsed the boycott of insecticide contaminated grapes from California. More action and leadership along this line is needed if we are ever to eliminate this scourge of contamination from our food products.



NATIONAL CAPITAL COMMISSION


Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, correctly spelling Prime Minister Wilfrid Laurier's first name is one of the smaller challenges confronting students of Canadian history.
The National Capital Commission has finally been forced to recognize that the spelling on the plaque placed at Speaker's Corner on the Sparks Street Mall is wrong.
I expect that you are as shocked as I am, Mr. Speaker, that the NCC's response to this discovery is not to replace the plaque with a corrected version but to dismantle the Speaker's Corner.
The Speaker's Corner was, after all, originally unveiled by the Speaker of the House of Commons and the Mayor of
Ottawa, now also a worthy colleague in this debating Chamber the Hon. Member for Hamilton Mountain (Ms. Dewar).
The NCC Director of Communications blamed Murphy's Law for the original spelling mistake. However, the NCC's decision to remove Speaker's Corner this fall surely gives new meaning to the corollary of Murphy's Law-Murphy was an optimist!



THE ECONOMY


Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, how many times have we seen the Prime Minister (Mr. Mulroney), and the Minister of Finance (Mr. Wilson), rise in this House and tell Canadians how the Tory Government was responsible for lowering interest rates while the trained Tory seals, surfers, and book-ends were cheering and applauding?
Well, Mr. Speaker, if one can take credit for lowering interest rates, then one has to take credit for increasing interest rates. As you know, Mr. Speaker, I always give credit where credit is due.
The Government cannot only blow its own horn when it feels that things are going its way. Can we expect both the Prime Minister, and the Minister of Finance, to rise in the House today and say to Canadians: "If the interest rates are higher and you need to dig deeper in your pockets, you can say, 'thank you Brian, thank you Michael, we did it for you'"?



ORAL QUESTION PERIOD


Raymond Garneau: Mr. Speaker, the fire at a PCB warehouse in Saint-Basile-le-Grand near Montreal is becoming one of the worst environmental tragedies in Canada's recent history. Would the Minister of the Environment or the Minister now acting on his behalf tell us what advice his experts have given him concerning the negative impact of this tragic incident on the health of the residents of Saint-Basile and surrounding areas? What steps has the Government taken to give the residents precise and clear information on their situation? All sorts of rumours are circulating. What is the possible impact of toxic fallout on the health of pregnant women? Are vegetables safe to eat, is milk from cows grazing in contaminated fields safe to drink? Those are the kind of questions people are asking and I am sure the Minister would be willing to share the advice from his experts with this House and, through television, with all Canadians. This would surely help and reassure the people involved.
August 26, 1988


Hon. Pierre H. Cadieux (Minister of Labour):: Mr. Speaker, we are obviously very concerned by this human and environmental tragedy, and I can assure my colleague that, despite the fact that provinces are primarily responsible for the storage and handling of PCBs, the Government of Canada is cooperating fully with the Government of Quebec to help everybody who, directly or indirectly, is affected by this disaster.
Concerning the precise information which my colleague is asking for, tests have been going on since the tragedy occurred and the results should be made public next Monday. In the meantime, I am told that my colleague, the Quebec Minister of the Environment has set up two information centres on the site so that all questions from residents who are understandably worried by all this might be answered immediately. And I repeat that the Government of Canada will do all it can to assist the Government of Quebec and the residents affected by this tragedy.


REQUEST THAT GOVERNMENT ESTABLISH WORK COMMITTEES
Raymond Garneau: Mr. Speaker, I thought that the Minister would take this opportunity to convey to the people the advice he has received from his experts. However, perhaps he will be able to do it at some other time because I think it is important. Among the questions asked, in addition to the health impact, there is the whole matter of financial security.
I would like to ask the Minister whether the Government has established working groups at the level...


An Hon. Member:: Question!


Raymond Garneau: Mr. Speaker, what is wrong with the Hon. Member? Is he going nuts, or what? I would like to ask the Minister whether the Government has established working groups either at the Canadian Mortgage and Housing Corporation or at the Department of Agriculture in order to prepare specific plans to come to the assistance of affected people? Already, people contend their property will lose value. Farmers have seen their crops seized and taken off the markets, with good reason no doubt. At this point, mention has been made of significant financial losses.
I would like to ask the Minister this: Are working groups already on stream, particularly at the Department of Agriculture and also at the Canadian Mortgage and Housing Corporation, in order to assist the people with specific programs, concrete measures?
I recall other situations much less serious wich arose in the past. Problems had then been solved with the help of working
Oral Questions
groups established right from the start to dispense adequate information to the people.


Pierre H. Cadieux: Mr. Speaker, first of all, regarding the issue of making public the advice from experts, as I indicated earlier, tests h^'ng made are now in the process of completion, therefore I think it would be wise to wait before making it public. As I also said earlier, the results of the tests should normally be announced on Monday or sometime next week.
Mr. Speaker, concerning the assistance to the people affected by this disaster, I believe the Prime Minister of Canada announced yesterday that the Federal Government will provide assistance to the province in accordance with the disaster financial assistance arrangements as was done after the tornado that hit Edmonton, and in other similar circumstances.
On the other hand, Mr. Speaker, the departments concerned are obviously appraising the situation. Indeed, as early as yesterday, the Minister of Transport and the Minister of Environment were sent to the site by the Prime Minister precisely to assess what was going on and to report back to him.


QUERY ON WHAT PREVENTIVE MEASURES GOVERNMENT INTENDS TO TAKE
Raymond Garneau: Mr. Speaker, I find my viability to get some specific answers from the Government rather disappointing because when thousands of human lives are at stake, it is not the time to make federal-provincial differences an excuse for lack of action.
Perhaps if we wait until next week, the Minister's answers might be more definite.
Now that we finally come to the realization that this environmental crisis may be much more serious than we had contemplated at first, I should like to know . . .


Mr. Deputy Speaker:: I suggest all Hon. Members should pay attention to the extremely serious issue raised by the Hon. Member for Laval-des-Rapides.


Raymond Garneau: Now that we realize that this environmental crisis will not be solved overnight, that it is very serious indeed, I should like to ask the Government and the Minister what precautions, what program and what approach the Government intends to develop to avert a repetition elsewhere in Canada of such a tragic incident, either with the PCBs, because now that the cat is out of the bag, we know that there are sites almost everywhere in this country where PCBs and other very toxic materials are stored! What is the Federal Governement planning to do to avert the reoccurrence of such a dramatic situation?

August 26, 1988
Oral Questions


Pierre H. Cadieux: First of all, Mr. Speaker, I agree with you that these are very serious issues which sould transcend partisanship.
Mr. Speaker, my Hon. friend has just said that this problem will not go away overnight. Just the same, it took the Liberal Party two days to suddendly become aware of it.
In view of the previous Liberal Government's record on this issue Mr. Speaker, I do not think the matter of Federal-Provincial differences should come up because I suggest even Mr. Lincoln, the Quebec Minister of the Environment and my own provincial representative at the National Assembly, has clearly indicated that the two levels of government are working hand in hand and doing everything possible do deal with this very serious situation.
Concerning the Federal Government's approach to this problem, I should like to call my hon. friend's attention to a press release issued on April 20, 1988, by the Public Relation Information Service where it is stated:
"NRC scientists have developed a process to render highly concentrated PCBs harmless for elimination."
Mr. Speaker, negotiations are now in progress with a view to marketing this process in order to deal with the situation.


DANGEROUS SUBSTANCES
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, in the absence of the Minister of the Environment my question is for the Deputy Prime Minister. In view of the fact that three years ago when the federal Environmental Minister met with provincial Environmental Ministers and agreed-here I am reading from the final statement of May 31, 1985:
"That a co-ordinated national system of destruction facilities must be quickly put in place".
-will the Deputy Prime Minister admit that the federal Government has failed to deliver on this commitment?


Hon. Frank Oberle (Minister of State (Science and Technology)):: Mr. Speaker, perhaps I could answer the question. Following the statements made by my colleague, the problem at that time was that no technology was available to proceed with the destruction. It was deemed advisable throughout the country to store these harmful substances in a safe and supervised location until such time as technology became available to destroy and dispose of them. My colleague has already informed the House that the National Research Council continued its research in that area and he announced in April that technology has now been developed and is
available. We are negotiating presently with 30 firms throughout the country to develop a commercial licence for them to go on site and destroy the substances wherever they are stored.


PROPOSED MOBILE TREATMENT FACILITIES
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, at the same meeting three years ago it was decided that, and I quote again from the same statement by the Environment Ministers:
"The federal Government will take the lead in arranging for mobile treatment facilities, and as a matter of urgency, Ministers agreed to develop national codes of practice for storage and destruction of PCBs".
Will the Deputy Prime Minister admit that his Government has failed to deliver on this commitment as well?


Frank Oberle: Mr. Speaker, my hon. friend insists on reading from his prepared text.


An Hon. Member:: It is your text.


Frank Oberle: I just told him that the federal Government did assume its responsibility, did take the lead, did develop the technology, and did arrange a federal-provincial code in terms of the storage of these substances until the technology was ready to destroy and dispose of them. That technology is now ready, including the private sector in developing commercial licences, to have it done. Whatever the Hon. Member asks us to do, he is as usual two years behind the times.


INVENTORY OF STORAGE SITES-REQUEST FOR PUBLICATION
Michael Morris Cassidy: Mr. Speaker, my question is for the Deputy Prime Minister or whichever other Minister chooses to speak on behalf of the Minister of the Environment. It deals with this environmental time bomb which exists. Across Canada there are some thousands of sites where PCBs are being stored. There are close to 800 sites in Quebec. There are about 500 in Ontario and there are 32 here in the city of Ottawa alone.
So that people know the kind of danger they are facing, is the Government prepared to take the initiative now to publish an inventory of PCB storage sites across Canada along with an evaluation of whether or not the PCBs stored there are stored in a safe manner which does not risk the health of people in the adjacent areas?


Pierre H. Cadieux: Mr. Speaker, notwithstanding the fact that the prime responsibility with respect to storing and dealing with PCBs is provincial, the Government of Canada, particularly the Department of the Environment, does have an inventory of all storage facilities, and particularly commercial storage facilities of PCBs. I am informed that that information will be made available some time next week.
August 26, 1988


SAFETY OF STORAGE CONDITIONS
Michael Morris Cassidy: Mr. Speaker, I would like to ask the Minister a couple of follow-up questions to that specific question. In the first place, can we have an evaluation by the Minister of the Environment about the safety of the storage?
It has been discovered in Quebec that in Shawinigan South there is another facility owned or controlled by the person who controlled the facility in Saint-Basile-le-Grand. That facility is surrounded by a flimsy, rusting metal fence. The grounds are littered with wooden loading palettes. It has not been licensed for three years. Will people have information about that as well so that early action can be taken to prevent these environmental time bombs from exploding and creating another situation, perhaps in a community of 200,000, not 3,000?


Pierre H. Cadieux: Mr. Speaker, again the prime responsibility with respect to the storage and destruction of PCBs is provincial. If my hon. colleague has specific information with respect to the fact that some establishments are not operating under licence, it would be appropriate for him to make it available to the appropriate department in the province in question and to give it to us as well. I am sure my colleague, the Minister of the Environment, will do everything necessary to inform his colleague so that this situation can be corrected.


REQUEST FOR FINANCIAL ASSISTANCE
Michael Morris Cassidy: Mr. Speaker, the Minister suggests that the Opposition Members should do the government's job in trying to find out if the storage sites are secure or not. Mr. Speaker, that is the Government's job. More precisely, as far as the Saint-Basile-le-Grand residents are concerned, what kind of compensation does the Government contemplate in view of the fact that we are not dealing with the destruction of houses or farms by a storm, as in Edmonton, but with consequences that may last up to 25 years if one looks among other things at cancer, at the destruction of farm lands, etc. Will the Government play a role in compensating the people of Saint-Basile-le-Grand who are already affected and who are likely to suffer consequences that could last 25 years because of this disaster, of this environmental bomb which has exploded in their community?


Some Hon. Member:: Irresponsible!


Pierre H. Cadieux: Once again, Mr. Speaker, partisanship prevails over common sense notwithstanding the seriousness of certain situations.
Mr. Speaker, if I understood the reasoning of my Hon. colleague correctly, he is saying that because he is an Opposition Member, even though he has some information that might help to preserve the health of Canadians, he will withhold it because in his opinion, it is the Government's job to deal with the situation.


Michael Morris Cassidy: It is in the papers.


Pierre H. Cadieux: If my Hon. colleague has some information he should give it to us and we will take the necessary steps to
Oral Questions
solve the problem. However, as I have said before, the prime responsibility for the storage of PCBs lies with the provinces. Of course, the Government of Canada will take every possible step within its jurisdiction, to ensure that the health and security of Canadians are protected. In terms of the present situation, Mr. Speaker, I repeat that the Prime Minister has already indicated that the Canadian Government will share the cost of helping the victims, and will do as much as the provincial authorities. We have been there since the beginning and we will continue to take an interest in the situation. We can assure the people of Saint-Basile that they are in good hands and that they will be compensated as provided under the law.


QUERY ON WHAT PREVENTIVE MEASURES GOVERNMENT INTENDS TO TAKE
Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, my question also deals with that tragic PCB situation. Last night, all Canadians could learn on TV that the owner of the PCB warehouse in Saint-Basile-le-Grand also has a warehouse in Shawinigan South, and the latter is in the same situation as that in Saint-Basile-le-Grand. Also, Mr. Speaker, which is most serious, that warehouse is unlicensed since May 13, 1985, and more serious still the owner is nowhere to be found.
In view of the fact that the owner cannot be found and holds no license since May 13, 1985, what will the Government do to prevent the same kind of tragedy that happened in Saint-Basile-le-Grand from repeating itself in Shawinigan South or elsewhere in the country, with similar results?


Pierre H. Cadieux: The only encouraging sign on that matter that I can see today from the Liberal Party, Mr. Speaker, is that finally they realized there is a tragedy there.
Mr. Speaker, may I repeat once more that the responsibility for PBC storage and destruction lies primarily with the provincial government. I am convinced that my colleague, the Quebec Minister of Environment, Mr. Clifford Lincoln, is indeed reviewing the facts referred to by my hon. friend, after having heard them on television.


GOVERNMENT RESPONSIBILITY
Alfonso Gagliano: Mr. Speaker, the Minister answers there should be no partisan politics on such a serious matter. I would urge him to stop playing politics himself, in view of the fact that my colleague for Outremont since the beginning of that tragedy has been putting questions everyday and we have been closely monitoring the situation. The Minister is looking for the kind of information anybody could see on television. Perhaps he should do his homework. Now that we know there are thousands of dangerous warehouses across Canada, will they stop suggesting this is a provincial matter, and look after the safety and health of Canadians in order that they may enjoy safety and peace of mind? Is there a national government or not?

August 26, 1988
Oral Questions


Richard Grisé: Go and tell that to Bourassa!


Pierre H. Cadieux: There certainly is a national government, Mr. Speaker, and it is going to be a Conservative one for a long time if the Hon. Member's reactions are any indication.
Concerning the situation that now prevails, no one is putting the blame or pointing the finger at the jurisdiction involved, but nonetheless this is indeed a provincial matter. However, Mr. Speaker, the whole federal Government machine has been made available to the Quebec Government to deal with that serious, tragic situation, and to help the people involved.


CONDITION OF FARMLAND SURROUNDING WAREHOUSE FIRE
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, my question is directed to the same Minister. Since he does not want to answer political questions, I wonder if he would be prepared to give the House answers to informational questions. In conversations yesterday with the colleague of the Minister of Agriculture, it was learned that Ministry officials had been sent to Saint-Basile-le-Grand to assist in analysing the situation. Is the Minister prepared to tell us what they have found?
Will the farmland surrounding the warehouse fire be reusable? When will the produce from the farmland in the area be permitted to be used by consumers, if at all? Will all of the crop be lost? Will future crops be endangered? How long does the Minister anticipate the cleanup will take?


Pierre H. Cadieux: Mr. Speaker, it is obvious that this is not a political situation, so that may explain the fact that my hon. colleague says that we are not answering political concerns. Nevertheless, with respect to the specific and very serious question of my hon. colleague, samples have been taken. They are being analysed, and I presume that the test results will be made public sometime next week.


EFFECT ON LIVESTOCK
Victor Fredrich (Vic) Althouse: Mr. Speaker, we know from reading the press that the residents of the little village have been evacuated and, according to one report, they are being permitted back for an hour today to feed pets, pick up clothing and the like. What is happening to the farm people in the area? What is happening to their livestock? Have all been evacuated? What is the situation with regard to the use of products that are now on the farms?
Will the farmers in the area have to await an announcement sometime next week or does the Government, along with the province, have a recommendation for them?


Pierre H. Cadieux: Mr. Speaker, tests are being made and concluded. I think what is important here is to establish the facts and the situation as it is. It would be abnormal, not to say unreasonable, to divulge partial test results or give partial answers when we have not concluded the studies.
I can reassure this House and all Canadians that everything is being done as quickly as possible in order to get all possible and relevant information not only to reassure Canadians in general but obviously to deal with this very tragic situation.


TECHNOLOGY
Sheila Maureen Copps: Mr. Speaker, my question is directed to the Minister of State for Science and Technology. This morning, he issued the surprising statement that the National Research Council already had the technology needed to destroy PCBs and was only waiting for trade agreements with about 30 companies across the country. I would like to ask the Minister this: Does he not he find it strange that the technology to prevent this crisis already exists and that commercialization is what has kept it from being made available to people who need it?


Frank Oberle: What I said, Mr. Speaker, is that the technology has been developed and is now available. If the Hon. Member wishes I will send her, by messenger in the House so she does not miss it, a press release issued by the NRC a couple of months ago saying the technology has been developed and is available now at the NRC.
Despite the assertion yesterday that the NRC has stepped away from working on this critical issue, the technology is now available and we are building the machinery, mechanisms, and infrastructure to address the problem throughout the country. We are talking about literally thousands of sites, and all of this will happen in due course. Of course it is unfortunate that the technology was not developed three or four years ago, but as you know, three or four years ago or four or five years ago, we had another Government that did not take these things as seriously as we do.
August 26, 1988


Sheila Maureen Copps: Mr. Speaker, a press release issued a couple of months ago brings no comfort to today's disaster victims.


REQUEST THAT TECHNOLOGY BE MADE AVAILABLE
Sheila Maureen Copps: I am telling the Minister that it is the commercialization of the National Research Council by his Government, which favours profit over people's health, that causes problems. 1 would like to ask him if he will put in a request at the federal level to make that technology available to all sites and provinces where the potential exists for such disasters as the one which has just occurred in Quebec.


Frank Oberle: Mr. Speaker, this technology developed by the NRC will of course be available throughout the country to anyone who wishes to use it. Shouting louder and engaging in more histrionics will not solve the problems, nor will it be any comfort to the people so tragically affected by this unfortunate accident.


NATURAL RESOURCES
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, my question is directed to the Deputy Prime Minister. Yesterday the Government of Canada, after much prodding by Members on this side of the House, came a little bit closer to protecting Canada's water resources from being exported south of the border. Will the Deputy Prime Minister indicate to this House whether or not the Government is now prepared to take the final and most necessary step and in some way amend the trade agreement with the U.S. in order to ensure that water is not considered a commodity under that agreement?


Pierre H. Cadieux: Mr. Speaker, it has been indicated on many occasions here in the House by my colleague, the Minister for International Trade, and his very able Parliamentary Secretary, that water exports were not in the free trade agreement with the U.S. That, notwithstanding, because of scare tactics of the Opposition an amendment to Bill C-130 was introduced in order to make that very clear. Obviously everything has been dealt with with respect to the trade agreement, and the legislation to which my hon. colleague refers makes that even more clear.


REQUEST THAT AGREEMENT BE AMENDED
Iain Francis Angus: Mr. Speaker, the Acting Minister of the Environment should know that our deputy chief negotiator, Mr. Ritchie, said in committee that
Oral Questions
the U.S. Government, because water was declared a commodity in the agreement, could take the issue to the dispute settlement panel if it felt we were not treating the U.S. fairly on its request for us to export water.
Will the Minister go back to Cabinet and say to them that the people of Canada do not believe that Bill C-156 is everything we need? We need one more thing and that is to amend the trade deal.
Will he do that?


Pierre H. Cadieux: There is a little distinction, Mr. Speaker, between what the people of Canada believe and what the Hon. Member believes. With respect to what has been said by various authorities, I would just remind my hon. colleague that Mr. Yeutter, the U.S. trade representative, indicated water was not covered by the free trade agreement.


ADMINISTRATION OF JUSTICE
Mr. Ross Belsher (Fraser Valley East):: Mr. Speaker, my question is directed to the Minister of Justice. I recently saw articles in the newspaper saying that alleged murderers hope to obtain refugee status in Canada and thus avoid the law of their own country. Charles Ng came to Canada in 1985, to escape the authorities in California and has not yet been extradited despite a formal request from the U.S.
Why can Mr. Ng not be extradited immediately? We do not want Canada to become a haven for murderers.


Hon. Ray Hnatyshyn (Minister of Justice and Attorney General of Canada):: Mr. Speaker, I thank the Hon. Member for his question. We have to keep in mind the distinction between immigration law dealing with deportation, and refugee status and the extradition process which operates according to treaties between countries.
With respect to Mr. Ng, officials in my Department have been working closely with American officials on this very sensitive issue. A formal request was received on, I believe, November 3, 1987. An arrest warrant was initiated by officials of my Department on behalf of the Americans on November 17. Before the matter came up for a hearing the fugitive made an application for adjournment of the case to the fall of 1988 on the basis that he had not had sufficient time to prepare material for the case. We vigorously opposed this but the court ordered the matter set forward to the fall.

August 26, 1988
Oral Questions
I can assure the Hon. Member that the position of counsel acting on behalf of the Americans continues to be that the case should proceed at the earliest possible date. Once the matter is before the courts I cannot comment on it, but as soon as it is received by me in my capacity as Minister of Justice I can assure the Hon. Member it will be given the appropriate attention.


PENITENTIARIES
Mr. George Baker (Gander-Twillingate):: Mr. Speaker, my question is also directed to the Minister of Justice. Yesterday in this House the Solicitor General said: "The site selection committee determined that Buchans did not contain the necessary infrastructure, which includes access to court facilities, hospitals, doctors and emergency services such as police, fire and national defence. The Buchans area does not contain that infrastructure, that is why Buchans was not selected".
Is the Cabinet not aware that court cases are heard in Buchans? Is it not aware that they have a hospital in Buchans with two doctors on duty all the time, 37 people on staff, and a brand new 1988 ambulance at the front door? They even have a public health nurse and clinic along with the hospital.
He says there are no police. The RCMP have a detachment there from his own Department, complete with a jail. There is a fire department with 32 firemen. As to national defence, the only base is in Gander, which is ten times closer to Buchans than it is to St. John's or Harbour Grace.
Will Cabinet cancel the Harbour Grace decision and reconsider Buchans?
Mr. Murray Cardiff (Parliamentary Secretary to Solicitor General of Canada: Mr. Speaker, all Hon. Members of this House welcome the announcement of a new penitentiary in the Province of Newfoundland, I am sure. The problem is that the Hon. Member would like to have it in Buchans, given his newfound love for that area.
I just want to tell him again that the Commissioner of Correctional Services Canada established a site selection committee from among his officials and various sites were considered, including Buchans. The Commissioner recommended Harbour Grace and the Solicitor General and the Government accept that recommendation.


BUCHANS FACILITIES
George Baker: Mr. Speaker, last week a swimmer from Buchans won four medals in the Summer Games because they have a swimming pool in Buchans. They have the best hockey players because they have an indoor arena there. They even have a curling club. All those facilities are contained in Buchans, Newfoundland, not Port
Cartier or in Harbour Grace, or in Bell Island where the NDP want to put the penitentiary. They are in Buchans, Newfoundland, not New-found-land as the Hon. Member says.


Mr. Murray Cardiff (Parliamentary Secretary to Solicitor General of Canada):: Mr. Speaker, as a central Canadian I apologize to the Hon. Member for my mispronunciation. As 1 said before, we would all love to have the penitentiary in our ridings but a federal penitentiary requires a community infrastructure for support. This includes access to court facilities, hospitals, medical and psychological doctors, emergency services such as police, fire and national defence. That required infrastructure exists in the St. John's region and exists in Port Cartier.


Sheila Maureen Copps: What about Buchans?


Murray Cardiff: Buchans is a wonderful community. I am sure they are proud of their skating rink, their curling rink and all those other facilities. I would be proud of them if they were in my village as well. My village is the size of Buchans, with a population of 1,000. We are all proud of our communities like that.
Let us also note that the site for the correction centre is served by a population of about 12,700 people.
I want to make one further comment. The previous government announced a site in Windsor, not Buchans, in August, 1984.


RAILWAYS
Abram Ernest Epp: Mr. Speaker, my question is directed to the Minister of State for Transportation, whom I am pleased to see in the House today in the fullness of his powers as Minister of State.
In his response to my questions about the effect of the railway subsidies paid under the Western Grain Transportation Act, the Minister said that my concerns are also the Government's concerns.
The subsidies appear to be encouraging diversion of grain from Thunder Bay and the St. Lawrence Seaway, with the railways as the chief beneficiaries. The taxpayers are being ripped off while economic activity is being seriously distorted.
Will the Minister of State assure my constituents in Thunder Bay, particularly unemployed grain handlers and others involved in the trade, that the review of the Western Grain Transportation Act by the National Transportation Agency which he referred to yesterday, as I was pleased to hear, will be open to people directly involved in the trade? Will he ensure that the agency will hold open hearings, and will have hearings in Thunder Bay and other key points in the grain transportation system?
August 26, 1988


Hon. Gerry St. Germain (Minister of State (Transport)):: Mr. Speaker, as I pointed out to the Hon. Member yesterday, certainly we are concerned about the plight of the port in Thunder Bay. I have received representations from the port officials and the shipping industry in that particular area. There is no question that we are truly concerned, and I will take his representations seriously in regard to the National Transportation Agency. As he knows, it operates at arm's length from my Ministry. However, his representation will be taken seriously. I am sure the officials of the National Transportation Agency are hearing this message right now.


REQUEST FOR COMPREHENSIVE REVIEW
Abram Ernest Epp: Mr. Speaker, the Minister, who appreciates that we are concerned about the way in which the railway subsidies may distort economic activity in this country, may not know that a permit was issued on July 29 to a foreign owned bulk carrier to carry 15,000 metric tonnes of grain from Vancouver to Montreal. With that kind of evidence of odd patterns of behaviour in transport, will the Minister assure all of us that the review by the National Transportation Agency on the way in which the Grain Transportation Act is being operated will touch on every aspect of the movement of grain, and ensure that that transportation system works fairly to the interest of Canadians in every part of the country?


Gerry St. Germain: Mr. Speaker, inasmuch as I will do what I can in my role as Minister to ensure that the best interests of Thunder Bay are looked after, like all other ports in Canada, I will carry forward his request. However, we cannot confuse the situation which has arisen and causes concern with the drought situation that has impacted on grain shipments right across the country. I think we have to be fair not to confuse the two. The plight of the port is one matter, the drought conditions that have brought about problems in the shipping industry and grain movement industry are another. Let us not confuse the two. We will certainly look after it. We are concerned about it and are dealing with it.


REGISTERED RETIREMENT SAVINGS PLANS
Miss Aideen Nicholson (Trinity):: Mr. Speaker, my question is directed to the Acting Minister of Finance. On August 19, the Government announced that the new tax rules concerning retirement savings will be delayed for another year, primarily because tax lawyers and accountants have said that this is the most complicated tax legislation ever seen in Canada. Will the Minister explain to the House why the Government did not
Oral Questions
accept the advice of the Institute of Chartered Accountants three years ago on simplifying the reporting requirements?


Thomas Hockin: Mr. Speaker, the answer to the Hon. Member's question is long and complicated. Basically, it is because of the effectiveness of consultations that the Departments and the Ministers had with various groups interested in tax assisted retirement savings, pension plans and the like. The Government is trying very hard to make sure there is equality and fairness in the different ways of saving for retirement and in the different ways of having tax assistance for that retirement. In order to do that, we want to make sure that money purchase plans, defined benefit plans, RRSP's and so on are treated somewhat equally and fairly. The Minister has found in his consultations that he can improve his program by giving himself a little more time.


REVENUE ACCRUING TO GOVERNMENT
Aideen Nicholson: Mr. Speaker, the delay obviously means a revenue gain for the Government because people are not able to increase their RRSP contributions until 1990. Does the Minister have a figure for the amount the Government proposes to capture by this delay?


Thomas Hockin: Mr. Speaker, I do not have a figure, but I will try to get one for the Hon. Member. As a matter of fact I am not entirely sure that there is a revenue savings from this. My understanding of the system is that it is pretty well a neutral effect, but I will try to get her that answer.


PENITENTIARIES
Hon. Bob Kaplan (York Centre):: Mr. Speaker, yesterday in Question Period the Solicitor General, talking about the new penitentiary which is to be located in Harbour Grace, indicated that a site selection committee had been set up for an investigation of a number of sites, under the direction of the Commissioner of Corrections. I asked that a copy of that report be made public because it was news to the House that there had been such an investigation.
My question is directed to the Deputy Government House Leader who said he would look into it. Will it be made public? Furthermore, in connection with the decision to put a penitentiary in the Prime Minister's constituency at Port Cartier, was a similar process followed? Did the Commissioner of Corrections investigate a number of sites in the Province of Quebec to select the best one, as the Solicitor General claims was done in the case of Newfoundland?

August 26, 1988
Oral Questions


Hon. Doug Lewis (Minister of State and Minister of State (Treasury Board)):: Mr. Speaker, the difficulty with the question is that part of it is procedural and part of it is directed toward the Solicitor General. As I indicated yesterday, there is no requirement in the rules that reports be tabled in the House when they are referred to by a Minister in an answer. We undertook yesterday to discuss this with the Solicitor General. That undertaking is still good. I will take the matter up with him.


SELECTION OF PORT CARTIER SITE IN QUEBEC
Robert Phillip Kaplan: Mr. Speaker, for my supplementary question I will ask the part that the Minister of State characterized as political. In the case of Quebec, where the decision was made to put the penitentiary in the Prime Minister's riding, was a similar process followed? Was the Commissioner of Corrections asked to establish a committee to review a variety of sites across the Province of Quebec before selecting Port Cartier? If there was such a study, will it be made public?


Douglas Grinslade Lewis: Mr. Speaker, in the process of asking the Solicitor General the first question, I am certainly prepared to ask him the second question.


ENVIRONMENTAL HYPERSENSITIVITY AILMENT
Margaret Anne Mitchell: Mr. Speaker, I have one question to direct to whomever is speaking for health and welfare today. I did give notice to the Minister's office so I hope for a positive response. My question concerns environmental hypersensitivity, which is a multi-system disorder usually affecting the nervous systems of persons who are sensitive to some foods and chemicals and environmental agents.
On August 3 the Human Rights Commission wrote to the Minister expressing the hope he would express publicly his sympathy for the plight of persons such as Chris Brown who suffer from this very serious ailment. What action has the Minister taken? And will the Department of National Health and Welfare undertake a public awareness campaign, as well as research, to assist in avoiding and treating this serious and little known ailment?


Pierre H. Cadieux: Mr. Speaker, first I want to thank the Hon. Member for giving notice of her question. I am informed that my colleague, the Minister of National Health and Welfare, is monitoring the situation and will report back to the Hon. Member upon his return.


Mr. Deputy Speaker:: We will have one question from the Member for Windsor West and then the Member for Winnipeg North Centre will close Question Period.


DANGEROUS SUBSTANCES
Hon. Herb Gray (Windsor West):: Mr. Speaker, my question is directed to the Acting Minister of the Environment. Yesterday another Minister acting on behalf of the Minister of the Environment talked about how the Department of the Environment maintains a register of dumping sites for PCBs in Canada. Has the Government put in place a national program to inspect immediately all sites for the storage of PCBs of which it is aware to ensure they are safe and that there is no risk of a disaster equivalent to that which took place a few days ago at Saint-Basile-le-Grand taking place at these other sites with great risk to the health and safety of large numbers of Canadians? Can he tell us if such a plan is under way right now? If not, why is such a plan not being carried out?


Pierre H. Cadieux: First, Mr. Speaker, unfortunately I have to repeat myself on this question. The prime responsibility with respect to storage and handling of PCBs is a provincial responsibility. With respect to the information as to where those sites are situated, yes, the federal Government has as registry of such sites. I am informed that with respect to Saint-Basile-le-Grand the federal Government is putting everything into place to co-operate with the provincial Government in question right now, not only to deal with this particular situation, but I am sure to ensure that future situations like this do not occur again.


STORAGE OF PCBS IN UNSECURED SITES
Cyril Keeper: Mr. Speaker, my question is on the same subject. The Minister has been saying that PCBs are primarily a provincial responsibility. We have in Winnipeg an unsecured boxcar with PCBs in it and the provincial Government says it is a federal responsibility. There are also PCBs at the Ottawa International Airport.
I would like to know from the Minister how many unsecured PCB sites there are across this country that fall directly under federal responsibility, which are just sitting there waiting to explode? And why does the Government just have guidelines instead of regulations that are enforceable?


Pierre H. Cadieux: Mr. Speaker, with respect to the information which has just been given to the House by my hon. colleague- for instance, he said there are PCBs at the Ottawa Airport-I also noted yesterday that the Leader of the Hon. Member's Party said there were PCBs at Dorval Airport, and PCBs are not there.
August 26, 1988


Mr. Deputy Speaker:: The last question. The Hon. Member for Winnipeg North Centre.


REQUEST THAT GOVERNMENT ACCEPT RESPONSIBILITY
Cyril Keeper: Mr. Speaker, the Minister did not answer my question and did not tell us how many PBC storage sites there are in the country.
Mr. Speaker, the technology to eliminate PCBs exists. The Government said it was waiting for the private sector to move. Why does the Government not take its responsibilities and do something by showing leadership in putting this technology to work to protect the public against such disasters?


Pierre H. Cadieux: Mr. Speaker, with regard to the site list, as I said a little earlier, it exists, and I am informed that it will be made public next week.
Mr. Speaker, with regard to the technology, its development has been an initiative of the federal Government, through the National Research Council. The leadership is already there, Mr. Speaker.



ROUTINE PROCEEDINGS


Richard Grisé: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to eight petitions numbered as follows: 332-5222, 332-5229 and 332-5232 to 332-5237 inclusive.
[Editor's Note: See today's Votes and Proceedings.]



Andrew Witer: Mr. Speaker, it is my privilege to present to the House today a petition on behalf of Canadian citizens who oppose the Memorandum of Agreement signed between Canada and the U.S.S.R. dealing with gathering evidence on alleged war criminals, on the basis that the agreement pertains only to Nazi war criminals and not all war criminals, contrary to what the Government promised in its response to the report of the Deschenes Commission of inquiry.
The petitioners call upon the Government to renegotiate the agreement to reflect the prosecution of all war criminals.


QUESTIONS ON THE ORDER PAPER
Richard Grisé: Mr. Speaker, I ask that all questions be allowed to stand.


Mr. Speaker:: Agreed?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: The Chair received notice this morning of a request pursuant to Standing Order 29(1) from the Hon. Member for Ottawa Centre.


Michael Morris Cassidy: Mr. Speaker, I filed with you this morning a request, pursuant to the provisions of Standing Order 29, that after Routine Proceedings the House be adjourned for the purpose of discussing the current PCB emergency in Quebec. You know the situation, Mr. Speaker.
[ Translation]
. . . you followed the situation in the press and on television, showing that thousands of people have been evacuated in the Saint-Basile-le-Grand area; there is contamination not only with PCBs but also with dioxins and furans, which are a result of the fire at the depot, in that area. It is indeed an environmental bomb that has just exploded there. Also, Mr. Speaker, there are thousands of similar depots in the rest of Canada which may also become environmental bombs if immediate action is not taken.
That is why we believe that the House should urgently debate such questions as whether the Government is prepared to give assistance, and what kind of assistance. Because this may have consequences, not just in the short term. It may mean rebuilding a house. The damage is not visible, but it may last until.. . perhaps farmland will never again be usable. What is the true situation, the risks for Canadians elsewhere? Could we have an inventory with an assessment of the dangers for people in the rest of Canada? Is the federal Government aware of violations of federal regulations or directives regarding PCB storage?

August 26, 1988
Income Tax Act and Related Acts
We are informed that there is now a technology developed by the National Research Council, but we wonder whether this technology will be usable very soon.

I am concerned about the fact that the commercialization of this technology could take years when we have thousands of disposal sites which are a present risk and that the federal Government should be prepared to move now.
For these reasons I believe that we should debate this matter as a matter of urgency now.


Mr. Deputy Speaker:: The Hon. Member for Ottawa Centre (Mr. Cassidy) gave me written notice of his request for an emergency debate under the provisions of Standing Order 29 earlier this morning.
I have given his request long and careful consideration, for 1 am well aware of the seriousness of the PCB accident at Saint-Basile-le-Grand. I was there myself yesterday and personally know many of the people affected.
However, after a detailed study of the relevant Standing Orders and precedents I regret to advise the Hon. Member for Ottawa Centre that his request does not meet the requirements of the Standing Orders and cannot be allowed at this time.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Wilson (Etobicoke Centre) that Bill C-139, an Act to amend the Income Tax Act, The Canada Pension Plan, the Unem-ployement Insurance Act, 1971, the Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977, and certain related Acts, be read the third time and passed.
Raymond Garneau: Mr. Speaker, when you saw it was eleven o'clock and time for Question Period, I had finished part of my speech, pointing out that increases in indirect taxes and income tax by the Conservative Government during the past four years had resulted in additional revenues of $11 billion for 1988-89 alone. I also said that, allowing for certain adjustments made as a result of tax reform, the net increase in taxes resulted in additional revenues for the Government of almost $9 billion for 1988-89. In fact, without these massive tax increases, the Conservative Government's deficit would be between 36 and 37 billion dollars, and this after six years of economic recovery!
Mr. Speaker, the facts I just mentioned, which are supported by the Budgets brought down by the Minister of Finance
(Mr. Wilson) in the last four years, are a clear indication that this Government failed to act on the commitments it made to Canadians. Both the present Minister of Finance and the Prime Minister (Mr. Mulroney) promised they would not increase taxes and would reduce the deficit by cutting expenditures. That is not what they did, and without the massive tax increases, the Conservative Government's deficit would be $4 or $5 billion more than it was during the last full year of the Liberal Government's administration, a Government this Conservative Party has loudly criticized.
Mr. Speaker, in concluding, I would like to comment on two aspects-first of all on the impact that certain tax reform provisions may have on economic growth-and I will then finish my speech on a more general note.
Mr. Speaker, this Government which claims to encourage capital formation-research, development, investment in industrial and commercial sectors that create jobs-has introduced tax reform proposals that are likely to discourage high-risk investment. The Government's goal should have been to encourage and promote investment in the higher-risk sectors of research and development, including specific technologies developed by university researchers and research centres. This is vital to the long-term health of our economy.
Instead of promoting capital formation and investment, the Minister of Finance has implemented measures that will make the task of prospective investors even more difficult and hazardous.
For instance, why will capital gains, from now on, be taxed more heavily than dividend income?
Mr. Speaker, the 1971 tax reform stemmed from the study of the Carter Commission which had produced a white paper paving the way for public consultation leading to the inclusion of a new element in the 1971 reform, the capital gains tax. Capital gains being subject to inflation it was decided to tax one half of these gains at the taxpayer's marginal rate. Well, Mr. Speaker, we all agree that worldwide conditions have evolved in recent years and countries like England and the United States changed their approach. For one thing, the British chose to tax capital gains at 100 per cent, but they came up with an indexation formula under which the tax would apply only to real gains and not to those due to inflation. I think this is a very commendable approach and, in our context, I would agree that capital gains become fully taxable if we were to devise that kind of indexation formula.
As a matter of fact our own finance committee made that suggestion to the Government when they said: If you are not prepared to proceed with full reform and tax all capital gains while implementing an indexation formula to account for inflation, you should settle for only two thirds instead of three quarters, otherwise you would be taxing capital gains at higher marginal rates than those applicable to the dividends people get from their investments.
August 26, 1988

Why did the Minister completely ignore this unanimous recommendation from the finance committee and similar views expressed by the many observers who gave evidence before the committee? 1 have no idea. One thing for sure, however, is that henceforth it will be a lot more iffy and less profitable to invest in high-risk ventures than to buy shares in very stable no-risk companies because dividend payments will be taxed at lower rates than riskier deals involving capital gains, particularly when such investments prove to be very worthwhile and very profitable.
Mr. Speaker, this is why 1 believe the whole question of capital gains taxation has to be reconsidered. For example, as I said earlier we operate under a system where a once-in-a-lifetime $100,000 capital gains tax exemption is allowed. After that, three quarters of any amount in excess of the limit will be taxed at rates higher that those applicable to dividends. This sounds totally irrational to me. I would suggest that the $100,000 exemption is nothing more than a band-aid approach and an election gimmick, not a sound tax policy under which income is taxed on the same basis-be it capital gain or dividend or interest income-which is the objective the Carter Commission was aiming at. Once again, that is why we Liberals, as 1 have said in the Finance Committee with the concurrence of other Members of that committe, suggest that capital gains be taxed 100 percent, but with an indexation formula which would eliminate gains due to inflation, so that real gains would be taxed at the taxpayers' marginal rate. In that case, we should also change the present dividend taxation formula to ensure that taxation rates would be the same for interest and dividend income, etc.
Mr. Speaker, I want to conclude my remarks by saying that the Conservative Government did not give us a tax reform that is fair to low and middle income Canadians. I said earlier that the net result of four years of this Conservative Government, tax reform included, is that the middle income taxpayer with two children will have to pay $1,200 more each year in taxes while the person who earning over $100,000 will pay $3,500 less. If that is what the Conservative Government and the Conservative Prime Minister call tax equity and social justice, I do not want to have anything to do with that kind of justice.
Yesterday, we were told that the Government could not afford greater tax fairness. It cannot index the child tax credit, it cannot index the disability tax credit, it cannot make tax credits refundable for low income people, because it does not have enough money. Mr. Speaker, how come the Government does not have enough money to bring more fairness to the tax system while it has plenty of money to make all kinds of preelection promises such as those we hear about day after day.
I do not understand why the Government does not have money for fiscal equity, but it does have money for all sorts of promises that it is announcing day after day which will cost a lot of money.
Income Tax Act and Related Acts
I read an article on Tory spending in The Toronto Star on August 6, written by Carol Goar, entitled: "Tory spree hits $14 billion". When one reads the article, one realizes that in the month of June the Government announced $5 billion of new spending. If that is added to the other announcements made since that date, the total reached the amount of $14 billion. Why does the Government have money for those things, including nuclear submarines and many other types of new spending? The amazing thing is that all those announcements are for the coming year. They will not affect this fiscal year but will affect the fiscal year after the general election. The Government is announcing new spending. It states that it will not affect the deficit and will not affect the public debt, but it will be spent over the coming five, six, seven years. Somewhere, some day, some how, some taxpayers will have to foot the bill.
That is why I am suggesting that, under the Tory administration, the financial decisions made by the Minister of Finance (Mr. Wilson) are contrary to the speeches he was delivering before the election in 1984. Since the Tory Government has been in power the public debt has increased from $176 billion to more than $300 billion. That is over 40 per cent in four years. The Tory Government has added more debt to the public in four years than the Governments of the last generation.
Without the huge increase in taxes, the deficit under this Government would be around $36 billion or $37 billion. We recognize that the world economy has been very good over the last five or six years. This recovery started before the Tories took over power. If we consider the real numbers, taking into account the good economic conditions in the industrial world for the last five or six years, and taking into account the situation in this country, the deficit would be $36 billion or $37 billion without those huge tax increases.
What would be the situation if we had to face another economic crisis of the type that Canada had in 1980-1981 and the beginning of 1982? That crisis did not only occur in Canada. It was the same in the United States, Europe, and Japan. It was a world-wide crisis. If, in 1989-90 we have to suffer a similar crisis, and the rate of growth of the economy instead of being 2.8 per cent to 3 per cent comes down to 1 per cent, .5 per cent, or even minus 1 per cent, as we faced in the worst part of the crisis, how will we face the situation with the huge deficit that has been built by the Government during the years of prosperity?
It is a question that all taxpayers will have to study very carefully and be in a position to tell the Government, when the time comes, that the Tories have not met their promises, and that the Minister of Finance, instead of managing the deficit with a better managing of the expenditure side, has succeeded in cutting the deficit only by huge tax increases. This is contrary to the promises, and this is why the Government will be defeated when it has the courage to call a general election.

August 26, 1988
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Michael Morris Cassidy: Mr. Speaker, the Eion. Member for Laval-des-Rapides (Mr. Garneau) spoke about the next election. It is clear that the Minister of Finance (Mr. Wilson) and the Minister of State for Finance (Mr. Hockin) have already gone off to fight the next election, together with some 208 of their colleagues. Frankly, I regret that fact when the Opposition acts responsibly on a matter such as tax reform, and acts as we have had to, to expedite a Bill that we think is unfair, wrong, and unjust. Nonetheless we understand if this Bill is not sent through the House in the next couple of days, taxpayers, businesses, companies, and individuals will be faced with a period of prolonged uncertainty, and quite possibly not know until the beginning of 1989, whether or not the new or the old tax system applies for the tax year 1988. On your behalf, Mr. Speaker, I want to express regret that the Minister of Finance and the Minister of State for Finance feel so insecure about their constituencies that they have chosen to go there at this time.
I want to talk a little about the process under which we considered tax reform in the finance committee, and I want to talk about the whole question of fairness. For the New Democrats that is the fundamental question in this whole question of tax reform. When my time expires, if Hon. Members wish to ask me some questions on that, I would be happy for them to do so.
I wish to speak first about the finance committee. It is at the leading edge of parliamentary reform. It is a strong and able committee, and members co-operate. Despite his right-wing tendencies, the Chair of the committee works, perhaps in an unusual way but in a way we tend to find sufficiently fair that we can co-operate. As a consequence, the finance committee has contributed a great deal to the process of tax reform since June 18, 1987. We have had lengthy sessions and hearings. In fact, we have done a great deal of the work of the Finance Department and of the Government for them.
What has come out of that? What I can see is that a number of areas have seen changes in the tax reform because of the work done by parliamentarians from all Parties to improve tax reform proposals of the Government, or in order to try and eliminate some of the most egregious and objectionable portions of that Bill.
For example, the whole proposal that all farmers be put under a form of accrual accounting, which was absolutely unacceptable to commercial farmers across the country, has been removed. I believe that one of the reasons was the recommendations of the finance committee. Through amendments, we have been able to improve the provisions for automobile expenses for those who are self-employed and individuals who use their automobile for business purposes. There was an element of injustice in that issue on which many people spoke to us.
The Government finally had to back down on its decision to eliminate the flow-through share mechanism as a means of encouraging economic development in areas such as northern Quebec, northern Manitoba, and northern Ontario. That was because of the efforts of communities across the country and also because of the efforts of the finance committee. Dare I say
that it was also because of the efforts of the New Democrats who have always indicated that, where a tax measure has obvious benefits in terms of being productive and can also be designed in a way that is not unduly expensive, it should be gone through with and not be rejected out of hand. It was for that reason we were prepared to work with the committees to ensure the maintenance of the flow-through shares, despite the initial opposition of the Government.
Likewise, a new set of incentives has been brought forward in order to help to encourage the Canadian film industry. This is another area where the Government proposed amendments that would have been crippling to the continuation of that industry. We were able to get some movement in terms of the construction industry and small development firms. We were able to get some movement in order to roll back the decision of the Government to basically disallow many research and development expenditures for tax purposes. We were able to get a modest increase in the child exemption tax credits, but only for the third and subsequent child. Those are some areas where the committee was helpful.
It bothers me-and it is a bit like today-that when the finance committee met there was not a minister nor a parliamentary secretary there. All we had from time to time were officials. Many times we did not have them. There was basically an executive assistant, middle level political official from one of the Minister's offices keeping an eye on things and no more than that. There was no one who could negotiate or discuss with the committee and say: "Yes, I understand what you mean" or "I don't know where you guys are at" and make us clarify our concerns. As a consequence, the finance committee, whose work I believe deserved respect, was like dealing with a black hole. We put in our recommendations and hoped something would happen but in the end in many cases nothing did.
Let me give you some examples. The committee recommended that business meals taken if a person were out of town on business for more than a day should not be penalized as is the case with other business expenses. That was not acted upon. We recommended an alternative minimum margin tax on financial institutions that would have brought in $500 million a year in extra revenues and would have enabled financing of a number of constructive recommendations which the finance committee made.
The Government turned around and increased marginally the capital tax, a measure which everybody agrees is antiquated and I do not think exists in any other industrialized country in the world. The committee recommended that the Government should seriously reconsider its proposals on antiavoidance. They are unworkable and likely will result in years of litigation. We were acting on that on the recommendations of the Canadian Bar Association and the Association of Chartered Accountants with their great expertise.
August 26, 1988

We were convinced that this Government and the previous government suffered in particular because of a lack of vigorous and aggressive enforcement coming from the Revenue Department. We saw that that needed to be fixed but the Government did not see it that way. Instead, it has embarked into what I believe is unchartered territory.
The New Democratic Party had further suggestions which were also rejected. I recall that during the great debate between the Leaders during the 1984 election campaign the present Prime Minister (Mr. Mulroney) eventually had to accept that there should be a minimum tax on people who were wealthy. How effective was that tax, Mr. Speaker? It was not effective at all. In fact, we have information that after the minimum tax is in place something like 5,000 taxpayers will continue to pay no tax at all. Some 40 or 50 of them with incomes over $250,000 a year are totally tax free and the Government sees nothing wrong with that.
The New Democratic Party proposed that there should be a minimum tax on corporations. We have suggested consistently that this was not a bad idea. After all, such a tax exists in the United States under the tax reform proposed and put through by the Reagan administration. But, did our Government act? No, Mr. Speaker. What are the consequences? Sixty thousand profitable Canadian corporations will not pay taxes every year because the Government is not prepared to impose a minimum tax. That measure alone would have brought an increase in corporation taxes in Canada of $2 billion a year.
The one regret I have with the finance committee is that we did not look at the rates. We did not look at the fundamental unfairness and the injustice of the tax system as proposed by the Conservatives. I want to put on record what the Government's own figures show it has been doing to average Canadians since taking power in 1984.
In the quarterly economic review the Government reports that in 1984 direct taxes received as revenues by the federal Government amounted to $37.5 billion. By 1987, that amount had risen to just under $56 billion, an increase of 44 per cent. At the same time the economy grew by 24 per cent. In other words, personal tax revenues have been growing under this Government twice as fast as the economy.
What about corporate taxes? There the situation is rather different. In 1984, the federal Government had $11 billion of revenues from corporations. That amount had shrunk by 1987 to $10.5 billion, a decrease of $800 million. While the economy was going up 24 per cent, while personal tax revenues were going up by close to 50 per cent, what was happening with the Conservatives' friends in corporations? They were paying less taxes. When we in the New Democratic Party suggested that there should be a minimum tax on corporations, what did the Government say? It said that it would be unworkable, wrong, would stifle initiative, would decrease investment and would put the economy out on its ear. I have not noticed that happening in the United States where the Americans have had
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a minimum tax on corporations for many years. This Government rejected the minimum margin tax on banks and financial institutions. It rejected a minimum tax on corporations. It rejected fair taxation on corporations. The consequence is that average Canadians are having to make up the difference.
What do I mean? When the Conservatives took power they told us that they were going to clean up the fiscal house of the Government of Canada, that something needed to be done, and that deficits of $28 billion or $29 billion were too high. But, what is the anticipated deficit for 1988-89? It is $28 billion or $29 billion. It has not changed at all. The Government's spending has gone up. Taxation has gone up, up and up, but the Government has turned around and given favours to the corporations. It has given out the huge capital gains exemption to personal taxpayers who are very wealthy, and it has failed to put the fiscal house in order.
If the Government were to be consistent with its principles put forward in 1984, a fair tax system was needed that took from companies, that took from wealthy people, and then if the Government felt there was a priority, that took from ordinary people as well in order to ensure that its goal of bringing the deficit under more reasonable control would be achieved.
But the Finance Minister is a hypocrite. Three years ago he had principles. Now he has shown that his principles are for sale if the Conservative Party wants to get back in power. Over the course of the last few months we have seen a contract for new tanks, a contract for nuclear submarines worth $12 or $14 billion, in fact all kinds of new contracts in the military area.


Mr. Turner (Ottawa-Carleton):: Mr. Speaker, I rise on a point of order. 1 hate to interrupt the debate but I just heard the Hon. Member for Ottawa Centre (Mr. Cassidy) call the Minister of Finance (Mr. Wilson) a hypocrite. My understanding of the rules in this House is that to call someone that is totally unacceptable. I respectfully request that he withdraw immediately.


Michael Morris Cassidy: Mr. Speaker, I noticed you did not rule on that but if the Hon. Member for Ottawa Carleton (Mr. Turner) would prefer, I will say that the Hon. Minister of Finance said one thing when he came to office and he is certainly acting in a different way now. If anyone cares to check the dictionary he or she will find that that description is like the word that I have been asked to withdraw from the record.
I remind Members, as well, that in 1984 the Finance Minister said in this House of Commons:
"-interest rates must be as low as can reasonably be attained ... Monetary policy must ease the burden on monetary policy and contribute directly to increased confidence and to lower interest rates".
Now the Government has told the banks that they can raise their interest rates. The prime interest rate has gone up by 1.5 per cent in the course of the last seven or eight months, and the banks have served notice that they will continue to increase rates. The Government, when we challenge it, says that it endorses the policy of the Governor of the Bank of Canada, that of a high interest rate policy and a tight monetary policy.

August 26, 1988
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Mr. Speaker, Canadian men and women were expecting fairness from the tax reform. They were expecting a fair tax system, a system where low-income earners would be paying according to their ability to pay, and the high-income earners, the affluent, corporations would also pay according to their ability to pay. Is this what we are achieving with this tax reform? The answer is no. In effect, the Government mainly is granting concessions to the very rich. They give an average $4,165 yearly tax reduction to people with yearly income of $100,000 and over.
But the small taxpayer earning $15,000 a year only gets a $140 yearly tax reduction. The number of taxpayers has been reduced by some 850,000. But that same Government has added one million taxpayers over these last four years!
Mr. Speaker, I would remind you that since 1984, Conservatives raised the cost of oil and gas. They raised the Unemployment Insurance premium. They increased the sales tax in November 1984. They raised the sales tax in 1985. They pushed the sales tax up in June 1985. They increased the tax on the sales tax in February 1987. They changed the tax categories in June 1987. They increased the oil tax by one cent a litre in February, 1988.
They have come up with increases, increases and increases to the point where the average family, people with two children and $35,000 yearly income, experienced a tax increase of $1,300 a year, and this tax reform now gives them back $300. On the average, the average family with a $35,000 yearly income pays $1,000 more taxes in 1988 than in 1984. Such is the tax reform! Who profits from it? The rich, corporations, people with capital gains. This is not introducing fairness into the tax system, the kind of fairness we were expecting.
Mr. Speaker, I have noted on a number of occasions that the Government now gives a child tax credit of only $65 per child, a tax reduction to people with dependent children in the order of $65 per child, as compared to people without children.
Mr. Speaker, at the same time, a tax deduction of up to $7,000 or $8,000 a year is made available to those who have RRSPs. There is a lack of social justice when someone with a child gets a $65 tax credit while someone else with no children can contribute to an RRSP and get a tax break of up to $1,000 or $1,500 because he can deduct his contributions to a maximum of $7,500 a year.
That is the kind of social justice which the Conservative Government stands for. We believe that the tax system should ensure that government revenues are levied not only efficiently, but equitably. Mr. Speaker, the market leads to unequal and unjust situations, and one of the functions of the tax system is to balance things out.
Mr. Speaker, that is the reason why we have been relentlessly asking the Government to put in place a tax system which is fairer than the one we now have.
We believe, for example, that the tax burden on small businesses should be less than that on large businesses. Yet, we notice that the average tax burden borne by small businesses in Canada is just about equal to that borne by Conrad Black and his enterprises and by all other major companies. In fact, major companies continue to benefit after tax reform, from billions and billions and billions of dollars of what are known as tax expenditures. That means that they never have to pay tax, because they do not have to declare that their profits are taxable at all. That should change, and that is a failure of the test of fairness.
We wanted a tax system that would be simple, but tax reform is this huge Bill. It is about that thick. It will take legions of tax lawyers years to master what is in the Bill that we have been dealing with in committee over the course of the last few weeks. That is not fair. We should have a tax return which is no more than six or eight pages long that the average Canadian can fill out. When these people in the gallery make up their tax returns next year, they are going to have to contend with a tax return which is 80 or 100 pages long, and that is not fair.
We had thought that every kind of income should be dealt with on an equitable basis. I see that my time is just about up, but I know that my hon. friend from Vancouver East (Ms. Mitchell) has one or two questions which would allow me to talk about the injustices that would occur among individual families, depending on their levels of income.
I want to conclude by saying that I regret that, when the Conservatives had the chance to bring in real fairness in the tax system, they failed to do so. Yes, they gave us tax credits, but then they turned around and gave the money back to the people who benefited from the tax credits rather than giving it to people on modest and low incomes. They had an option, they had a choice. The Prime Minister (Mr. Mulroney) and the Minister of Finance could have ensured that average Canadians were dealt with fairly in the tax system, instead of being too much imbued with the idea that they should remain faithful to their supporters in business, their supporters among wealthy Canadians. They forgot the need for fairness among average Canadians.


Margaret Anne Mitchell: Mr. Speaker, indeed I have a question. In fact, I wish I had time for a lot of questions to the Hon. Member who has worked so hard in this whole area of finance and tax policy. I would like to congratulate him for the work that he has done, not only in speaking out so strongly with the use of such eloquent words but also in his alternative proposals which are outlined in our New Democratic report on tax reforms.
August 26, 1988

1 would like to ask him, since social policy is indeed my special interest, for his views on the relationship between the tax system and social policy, if the Member heard that question.


Michael Morris Cassidy: I certainly did.


Margaret Anne Mitchell: Also, how might tax reform be used more effectively to achieve goals of social policy, not that this Government has really defined what those goals are? I would like him to comment on that and, in particular, on the whole question of fairness for families, for older people, and for children. I think we would both agree that these people have not really been a priority in the Government's planning.


Michael Morris Cassidy: I want to thank the Hon. Member for Vancouver East (Ms. Mitchell) for her question. I want to point out to her, to the Government, and to the Member for Ottawa-Carleton (Mr. Turner) who seems to be the one member of the Government taking some interest in this matter that the tax system as it is proposed is not fair.
I will give some examples. There is a partial deindexing on average Canadians, and that means that year after year the tax rates people will pay on increases in incomes are going to go up. The brackets are partially deindexed, the rates are partially deindexed, the tax credits are deindexed, so that every year the value of the child exemption and the child tax credit will go down by 3 per cent. That means that the Government has proposed to impose a permanent continuing tax increase that will of course be of most harm to average Canadians. We believe that the personal tax system shall be fully indexed to inflation for average families. That is surely an expression of social policy.
The Government believes that average families should pay more taxes every year than previous years. We do not think that wealthy Canadians should get tax breaks while ordinary Canadians pay an awful lot. We have cited the fact that a teller in the Royal Bank who may be raising one or two kids on her own has, in many of the last five years, paid higher tax than the Royal Bank itself. It is the same case for many other institutions.
We have argued that the child exemption tax credit should be substantially increased, that the tax system should take account of the costs for families of raising kids, and that of course is also excluded from the Government's tax measures. It gives more precedence to people investing in RRSPs than it does to people investing in the future of Canada by raising children.
We have said that there should be every effort to ensure that families living below the poverty line should not have to pay tax. The Government is going to tax people up to $5,000 below the poverty line.
The final point is that we had to move heaven and earth to get this Government off the idea that it was going to tax the food which poor families have to buy every week in order to keep body and soul together. That is what it wanted to do, and
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it was not until the people of this country, led by my Party and by other Members of Parliament, spoke up and said that that will not wash that the Government finally took that away. However, its idea of tax fairness was to tax food as part of its new sales tax proposals.


Sheila Maureen Copps: Mr. Speaker, while we are on the subject of tax credits, I wonder if members of the NDP would not agree that included in this legislation should be a move to block the NDP tax scam whereby municipal candidates in places like the City of Toronto, candidates who have no business doing so, are getting federal tax credits funnelled by the federal NDP. Does he not feel that this NDP tax scam should be blocked and that this particular legislation would be a good place to do that?


Michael Morris Cassidy: Mr. Speaker, I am surprised to hear that from the Hon. Member for Hamilton East (Ms. Copps). I am accustomed to hearing it from the Hon. Member for York East (Mr. Redway).
I did some research and found out that one of the candidates for alderman who ran in the last municipal election in Ottawa put down on his records that most of his campaign funds came from one of the local Conservative riding associations. That is certainly indicative of where the Conservatives are that they would have done that.
This is a measure we should look at, but I think we should also look at the fact that the Conservatives and the Liberals alike have gone on year after year accepting corporate tax donations and trying to maintain that they stand for the little guy, while in fact they are beholden to the large corporate taxpayers. The only difference between the Liberal Party and the Conservative Party is that the Liberal Party has been less effective in getting those donations and that is why it is now $5 million in debt coming into the forthcoming election campaign.
That, too, is a tax scam which I believe should come to an end. I believe that corporations should not be entitled to get that kind of reduction. They should not be giving to maintain the two old Parties in power, and on this front, the Liberals are just like the Conservatives except that they talk like New Democrats when they are in opposition.


Sheila Maureen Copps: Mr. Speaker, along the line of the Hon. Member's suggestion for refusing corporate donations, I am sure he would agree that he should refuse union contributions. My brother, for example, is forced by way of union deductions to donate to the NDP. Of course the Hon. Member would agree that that is wrong and would want to see all union dues free to go to the Party of the individual's choice as opposed to the Party of the choice of the management of the union.


Michael Morris Cassidy: Mr. Speaker, I think we are straying a bit from the third reading of tax reform. I agree, however, that legislation that would stop corporate contributions should also stop contributions from other organizations including trade unions. My leader has indicated that as well.

August 26, 1988
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I want to assure the Hon. Member for Hamilton East, however, that a union like the steelworkers' union which is a responsible union in the Hon. Member's area and which does support the New Democratic Party is conscious of the fact-


Sheila Maureen Copps: Unsuccessfully, I might add.


Michael Morris Cassidy: The Hon. Member for Hamilton Mountain (Ms. Dewar) would indicate that it is very successful. It is very conscious of the fact that some of its members may not wish to contribute and does not make a political contribution on behalf of those members who choose to be excepted. This leaves an area of doubt as well.
I want to return to something else we think is unfair. The Conservatives continue to allow an exemption of $100,000 for capital gains income. They are taxing capital gains at only three-quarters rather than at the full rate beyond that front, and that is wrong. Just as I said, the Liberals and the Conservatives are very much alike. Who was it just yesterday who proposed in this House that the proposed rate of tax on capital gains be reduced? It was members of the Liberal Party trying to benefit their friends who get capital gains by reducing the rate of inclusion of capital gains and by cutting the tax on capital gains to two-thirds of regular rates from the three-quarters proposed by the Conservatives.


Margaret Anne Mitchell: Mr. Speaker, I would like to return to the question of taxes as they affect families. Perhaps the Hon. Member could briefly summarize, for those of us who have studied this some months ago and are perhaps a little fuzzy on it, what the Government has done in removing tax exemptions for spouses and for children. It sounds as if this is a progressive measure, but as I understand it, only about 50 per cent of the value of that family allowance is given back through credits to compensate for this. In effect, it has really taken away much more from families.
I am talking about all families now. It is taking away from a whole generation of Canadian children, regardless of income. This has not been replaced by other measures.


The Acting Speaker (Mr. Tremblay (Quebec-Est)):: I would ask the Hon. Member from Ottawa-Centre (Mr. Cassidy) to be very brief, because his time is almost up.


Michael Morris Cassidy: Mr. Speaker, the Hon. Member is aware of the fact that when two people have a child, their expenses go up sharply and their income goes down significantly because of the need for child care. Often one of them wishes to spend time with the child as well. Yet the credit for the first and second child is $65 a year under the Government's provision, just equal to the tax that will be payable on the family allowance. The family allowance will be deindexed and then the Government has another refundable child tax credit but only for people earning less than $25,500 per annum. The consequence is that a family with an income of $30,000 or $40,000 a year will bear substantial costs. They are carrying out a societal responsibility as well as something which is their personal
privilege and pleasure in raising kids, but the tax system will hardly recognize those extra costs for those people. That, I believe, is bad social policy. Middle income families with children have virtually no distinction in the tax system from middle income families without children in the recognition of the cost they bear in carrying out the vital function in society that is raising children.


Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, I would like to make a brief intervention on tax reform and the environment. I must begin by observing that the Government has been very regressive in its approach to taxation. It has raised federal sales taxes and extended their application into the environment as well.
In his 1985 Budget, the Minister of Finance (Mr. Wilson) removed tax exemption status from insulation materials, heat pumps, solar heater panels, furnaces, wood burning stoves, wind deflectors and generators, and windmills. As a matter of fact, since 1984, the Minister of Finance has consistently ignored the environment while at the same time the Minister of the Environment (Mr. McMillan) continues to spin his rhetoric about the integration of the economy and the environment.
If the Government is serious about the economy and the environment, and if it is serious about its endorsement of environmentally sustainable development, as the Minister said a year ago, then it missed a golden opportunity in Bill C-139, and I will explain this. There is in this reform package nothing for industry, for manufacturers, for farmers, or for developers of natural resources that would encourage, accelerate, or even facilitate initiatives aimed at protecting the environment, saving energy and using it more efficiently, reducing pollution or even allowing Canada to become a leader in the production of pollution control equipment, moving us from the present exploitative economy to a sustainable economy, the sustainable economy that we are all seeking at home and abroad. Therefore it is unfortunate that this Bill does not contain any of the following measures which would represent perhaps a modest beginning on the road toward ecological tax reform.
Let me elaborate for a moment. Take the recycling industry, be it oil, metals, paper, or anything else. Anyone in the business should be given at least the same if not better treatment than the virgin material producers who at the present receive a more favourable tax rate. A case in point is the Canadian Association of Re-refiners who recycle oil. Because of the temporary low world oil price situation it is hard to recycle oil at competitive prices. The role of the rerefiners is extremely important from an environmental as well as the energy perspective. Yet their pleas have fallen on deaf ears and there is nothing to be found in this Bill that recognizes the role of those who are in the recycling industry, including the re-refiners.
August 26, 1988

Let me draw to your attention another area, that of habitat retention. You would hope to find in a tax reform Bill some creative ideas about co-operation with the provinces so as to reform the present system of land taxation so that land taken out of production is no longer taxed or at least taxed at a lower rate. Senator Sparrow in his 1984 report entitled Soils at Risk made a similar point in his recommendations.
A measure such as that recommended, which I echo today, would be good for the ecology in a number of ways. First, it would help to rehabilitate top soil and help retain and where possible even consolidate or expand the amount of land available for wildlife habitat and wetlands preservation. This kind of reform is badly needed in order to move in that direction. Not a day goes by without a request arriving in this House concerning the desirability of preserving a piece of wetlands in areas for wildlife habitat and the like.
I would also like to bring to your attention the importance of accelerated depreciation from an ecological point of view in any tax reform Bill. Here we must stress that the definition of pollution control equipment has been left far too restrictive and in some cases is even counterproductive. For example, if you have improvements made in a plant or changes made in an industrial process, those improvements and changes are not given any sort of tax break. Take a paper mill, for example, where changing a process from chlorine to oxygen bleaching, which means you are then able to reduce the release of dioxins into the environment, does not qualify under our present system for any tax break. All we are asking for is tax considerations equal to those given to add-on equipment.
As to the period over which the depreciation should apply, again if the Government is really serious about environmentally sustainable development, then the tax write-off should be 100 per cent over one year.
Let us look briefly at the federal sales tax. Here again the definition of pollution control equipment is far too restrictive. It must be rewritten. It is badly in need of liberal treatment. In the case of the investment tax credit, another important area which needs to be reformed and urgently so, the concept should apply to investments in pollution control or pollution prevention. We need, in other words, attractive incentives for investment in this critical area.
This brings me to the final point, namely that related to flow-through shares. As you know, the Minister of Finance recognized the value of flow-through shares for the mining industry. Why did he not broaden this incentive through the tax reform Bill to encourage development of a domestic pollution control industry? The long-term idea would be to finance the transition from the present exploitative economy to an ecologically sustainable economy by providing industry with the cash flow it needs to make the transition. It seems to me that ecological tax reform would facilitate the launching of the process towards environmentally sustainable economic growth; a marriage, if you like, of the economy with the environment.
Ecological tax reform, I submit, is now a must if we really want to start on the road as defined a year ago, in April of
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1987, by the World Commission on the Environment and Development, better known as the Brundtland Commission, and in the fall of last year by the National Task Force on the Environment and the Economy. It was in its report that the Task Force dealt with informed decision-making, with leadership, with round tables, with conservation strategies, with international responsibilities, with communications and education, and the follow-up. I submit to you it is time to begin to practise the ideas contained in that report.
Reform of the tax system from an ecological point of view is what we urge the Government to do if it is really committed to sustainable development and to ensuring that the environment and the economy are no longer treated as they are now, to our own peril, as separate entities.
Mis. Margaret Mitchell (Vancouver East): Mr. Speaker, I just wanted to make a few further comments and repeat some of the things I said last night with respect to fairness and unfairness in the tax system, and the major need for reforms which will benefit families.
First, I believe very strongly, as does my Party, that you cannot have fiscal or economic policies in isolation from social policies. Ultimately, the beneficiaries of any of these measures must be the people of Canada. People are our resource and tax measures are the means by which we try to equalize income. We should be trying to equalize incomes more fairly and provide a floor of social programs such as the family allowance program and the old age pension which provide security and health for all our citizens. That is what we are so proud of in Canada. I believe Canadians, regardless of their politics, regard this as a very basic and essential rate that must not be tampered with by tax reform or the trade policy that the Government is trying to implement.
Family benefits through the tax system and other social programs like the family allowance are the means by which we recognize not only the important contribution parents make to raising children, but the need and obligation as a society toward children. These benefits are not simply charity to families who happen to have kids. Single people and couples without children who are taxed as single people are not simply giving charity to people who happen to have kids. All of us have an obligation toward the next generation of Canadians. We are all responsible for contributing to the cost of raising the next generation of Canadians. It is the responsibility of all of us to contribute to child care and to other benefits which go to families.
The same is true for senior citizens and the cost of old age pensions. All taxpayers in Canada should recognize that they are only reaping rewards for themselves because it is the children who are being reared now with the kind of care that is needed who will pay for their old age pensions and care when they reach retirement age. The family benefit system is a mutual give and take that we as a society believe in.

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We believe tax policy should be a mechanism for pursuing social objectives. While the Conservatives would have liked to remove family allowance altogether, public opinion would not allow them to do so. Instead, the Conservatives partially deindexed the family allowance so that its value decreases every year.
Members will recall that the family allowance was introduced in tough times, primarily to compensate for the cost of rearing children. It was hoped that the family allowance would increase over the years, at least in an indexed fashion, in order to keep up with the cost of rearing children. Those parents who are fortunate enough to have higher incomes would, in turn, pay some of that back through the tax system. The family allowance is a very important concept of which I believe Canadians are proud. It shows that we put children high on our priorities, as we should.
As I said, the Conservatives wanted to do away with family allowance but because of public opinion they were forced to deindex there-


Frank Oberle: What nonsense!


Margaret Anne Mitchell: -which is a very sneaky way of taking money away from children and mothers in particular, since the cheque goes to mothers. In many cases, that is the only cheque that mothers get in higher income families.
Since various governments, including the Liberal government, allowed the family allowance to be reduced over the years, this necessitated the introduction of the child tax credit, which, during the Liberal regime, was targeted toward low and average income families. It reached marginal families and families above the poverty level.
The child tax credit was first deindexed by the Liberals, thereby reducing its value. Of course, the Conservatives would never consider reindexing the child tax credit.
As a result of reducing the income level for eligibility for the child tax credit, the Conservatives have created two classes of poor in Canada. There are the poor who do not have enough income for their children to be raised to meet their needs adequately, and there are the very poor, on very low incomes, who are the only people now eligible for the child tax credit under the Conservative regime. The income level for those eligible for the child tax credit will go down every year because it is not indexed as it should be.
While the Conservative Government talks about families and children, when it comes to doing something tangible they would rather put billions of dollars into nuclear subs than maintain an indexed child tax credit for poor kids. The Minister of National Health and Welfare (Mr. Epp) and the Minister of Finance (Mr. Wilson) never once responded to the concern we have raised day after day in the House that one in five children in Canada are poor. That is disgusting. It is deplorable and disgraceful.


An Hon. Member:: Kids want their parents to have jobs.


Margaret Anne Mitchell: The Conservatives are complacent about jobs. The unemployment rate in Vancouver East is still very high. Many people are unemployed, particularly single mothers and young mothers and fathers who are unable to get into the job market. Those Members should not be so smug and patronizing.
Considering the lip service the Government has paid to lower income families, one would have thought the Government would have fulfilled its commitment. The House will recall how the Government talked about those in greatest need. It has barely maintained the same kind of income level for those people through family benefits. It has not introduced any kind of reforms that are needed in a society where there is a fair taxation of higher income people and corporations in order to pay for social programs that benefit everyone. Of course, the Conservatives have feared to tread on the toes of their friends, the corporations and financial institutions. They will not adequately reform tax policies to tax adequately those institutions so that more money would come into government coffers to provide those things that are the right of families, particularly the young generation.
The Government has not introduced reforms to tax higher incomes adequately. I believe my colleague stated there are at least 40 to 50 families earning over $200,000 who pay no tax at all. What kind of tax reform is that? There is no measure that requires corporations to pay fair taxes.
The Government has retained the $100,000 exemption on capital gains tax which allows quick flips by real estate speculators and millionaire investors. We want to see that exemption retained for farmers and family farms, but there is no need for losing that tax money from capital gains as it is applied to others. The Government has had a very ineffectual minimum tax. There has been no minimum tax on corporations and financial institutions. My colleague also said that this means the loss of $2 billion to the Treasury. We need that $2 billion to improve family allowances and child tax credits and to ensure that families and parents raising children have a fair deal. I include middle-income families as well because they are the ones who carry the burden of our social programs under this Government. Of course, the poorest families are the victims.
What this country really needs, of course, is a new Government, one which will have a clear statement of social policy, which will define the social rights of Canadians, and which will allow Canadians to have incomes above the poverty line. Canadians should have the right to affordable housing no matter where they live. They have the right to education and employment opportunities for young people and a universal health care program which would not be allowed to erode.
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We need to be sure to retain the security of older people from hunger, worry and insecurity in their old age. Of course, it is only because grey power was so strong and because they have such voting power that they were able to rebuke this Government and insist that old age pensions be fully reindexed. I think it is shameful that the Government did not do the same thing for children. I know that many of those grandparents very much wanted the same kind of reindexation for the child tax credit.
The financial and tax policies of the Government must be used to fulfil these kinds of objectives. Seniors should not have to fight to retain indexed pensions. This should be a constitutional right. Children should have fully reindexed family benefits. Poor Canadians should not be used as political tokens in the way this Government tends to use them. They should have the right to a decent life with a decent income. I am tired of the kind of patronizing attitudes and comments of this Government and those Members sitting opposite. They say they are going to look after the needy, and the needy are families with two children who are perhaps earning $10,000, or $12,000 a year when the poverty line in Canada is well over $20,000. The Government refuses to respond to those needs.
The Government says, sure, it has taken away a few things with one hand but it has given marvellous tax credits with the other and everyone is much better off. That is not true at all. 1 would like to give a few examples of the impact of Conservative budgets and tax reform from 1984 to 1988, and we must look at these in a cumulative way. Members present remember back in November of 1984 when there were increases in oil and gas prices, unemployment insurance premiums and sales tax, which totalled $352 extra in taxes on families. In 1985, there was the elimination of the federal tax reduction, a modification to indexing on taxes, a cut in the family allowance payments, increased taxes on cigarette and alcohol, sales taxes were broadened and gas taxes were increased. Members will remember that at that time the Conservatives added $512.50 on average to taxes on families. That was in 1985. In 1984, tax increases totalled $352, and in 1985 they totalled $512.
In June of 1985, the Government increased gasoline tax to pay for reindexing the family allowance, to correct something it should not have done in the first place. That additional gas tax cost families and others $50. On February 26, 1986, the Budget of the Minister of Finance put a 3 per cent surtax on families. There was a sales tax increase on cigarettes and alcohol. There was another $340 added in 1986. The Government could not stop. In 1987 it broadened the sales tax base on cigarettes and airline tickets, and that added another $80. Take note, Mr. Speaker, we are getting close to an election so some of these things are going down a little bit, but the cumulative effect is there because those other taxes are still being paid by families. In 1987, the Government changed tax categories, another subtle way of affecting families. This may have helped some families a bit so we can reduce the amount by $310. But that does not nearly cover the previous taxes.
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In 1988, tax on gasoline increased, which added another $500. Take a guess, my friends. What do you think was the cumulative increase on taxes as a result of this rotten Conservative regime? The Conservatives talk about tax reform and that families and children are important. But for an average family with an income of $35,000, which is not a high income, a family with two children, and children cost a lot to raise these days, especially if they are teenagers, the total increase in taxes was $1,074.50. What kind of positive tax measure is that? Why is the Government picking on families?
The tax reform really gave many more benefits, as I understand it, to adults who are paying taxes as single people, childless couples or single people, than it did to parents who are raising children. Those same parents are paying this kind of additional tax, and there is, of course, this hidden sales tax that will be imposed. I certainly hope the citizens of Canada begin to understand that this is another very sneaky and despicable way of giving people some tax benefits prior to an election and then whacking them with a very subtle form of taxation to increase the price of goods after the election. I hope Canadians are aware that this is the kind of trick the Conservative Government is playing and will not vote for that Party in the next election.
In closing, I would like to say that we believe very strongly that we must have a real reform of tax policy so that it is fair to all Canadians. We must be fair to families with children. We must maintain the present floor of social programs, and we should tax back more fairly from those who have all the resources and income and benefits of this rich country of ours in order to give more to the those who do not have the same kind of benefits in a fair way and as a social right.


Michael Morris Cassidy: Mr. Speaker, I was tempted to comment on the need for an election now, since a number of Hon. Members have rediscovered the House of Commons temporarily, and suggest we all leave here today, go to the front door, catch the green bus, go to our offices, get our material, go to the airport or to our ridings if they are close, and start the election campaign even if the Prime Minister (Mr. Mulroney) is not ready. Given the fact that you, Mr. Speaker, stand so close to the Governor General, I would have thought you could give us the sanction to do that. We do not need the Prime Minister. He is dithering his way away from a fall election.


Mr. Dick:: Why do you not call it time now and go home as you suggested? Call it three o'clock.


Michael Morris Cassidy: We do need a date. If you, Mr. Speaker, would like to meet with me behind the curtain, I could suggest a couple of dates to you. However, I will not make that suggestion. I simply want to ask the Hon. Member for Vancouver East (Ms. Mitchell) to comment on whether or not the $200 credit which is to be given to children under seven years of age in the tax Bill is an adequate substitute for a national program of day care which will meet the needs of Canadian families with young children.

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Margaret Anne Mitchell: Mr. Speaker, I am very glad my colleague brought me back to the realities of the child care program that was proposed by this Government. We will be working on this in committee next week while everyone else is going to go home to get ready for the election. I think there is no question at all. As I have said many times in this House, the $200 tax credit for homemakers who are looking after children full time, whether be it a father, a mother or people who use informal baby-sitting arrangements where they do not have tax receipts, is not in any way recognizing either the costs or the contribution of that parenting time. It is an insult, as I have said over and over again. It would have been better to reindex the family allowance and improve the child tax credit. Incidentally, this new child care credit just goes to low-income families. Let us not misunderstand it. It only goes to the poorest of the poor, that category to which the Government seems to limit giving benefits.
[DOT]	(1330)
The rhetoric that the Minister of National Health and Welfare has used is that it gives families a choice. That is absolute rot. It does not give any kind of choice. A mother or father who is in the workforce who has a young child cannot afford to stay at home if they only have $200. Most of them are working because they have to work.
The Government has not brought in any parental leave policy either which would allow parents to have at least the first six months at home with the baby. That is something which is important to starting a life in the right way for a child. Parents should have the choice in that area.
As far as providing child care services is concerned, of course the Government does not want to do that. The amount of money that it has put into the child care side of things for day care spaces will result in less growth than if it leaves the situation as it is under the Canada Assistance Plan. Furthermore, it caps it off at the end of seven years. Thus at the end of seven years we can forget it, there will not be any more spaces.


Mr. Deputy Speaker:: Resuming debate with the Hon. Member for Saint-Leonard-Anjou (Mr. Gagliano).
[DOT]	(1340)


Alfonso Gagliano: Mr. Speaker, I am pleased to participate in the third reading debate on tax reform and, at the outset, give some background to the issue since this debate is coming to an end.
First of all, Mr. Speaker, the Minister of Finance (Mr. Wilson) had stated in 1984, that a tax reform was unnecessary, adding that he had a few changes to introduce which, indeed, he gradually initiated as the opportunity came about.
Of course, one has to remember his first budget where he extended to everybody a $100,000 capital gain deduction not
only on Canadian ownership, not only as an incentive to develop the Canadian economy and create new jobs, but to anyone owning for instance a property in Florida, which could be sold in order to buy a new one or make new investments in another country, and yet the owner would have qualified for this deduction.
At last, Mr. Speaker, the Government realized it had made a mistake. The Opposition had repeatedly declared that such a move would not produce the economic benefits the country needed, it would not have generated the new jobs Canadians were expecting in order to earn their living. Finally, the Government used tax reform as a pretext to save face and reconsider this unrealistic and unbelievable measure. Therefore, under that tax reform they propose a lifetime, $100,000 deduction, while raising the taxable portion of capital gains from 50 per cent to two thirds in 1988, and to 75 per cent in 1990. We can therefore state that those $100,000 become zero. This is a complete about-face from this Government, which put its whole economic strategy behind that $500,000 deduction, stating it wanted to give a signal, a clear and specific direction to all Canadians that, let us say, under a Conservative Government such was the economic approach-there should be incentives for people to invest. But now, less than two years later, Mr. Speaker, they changed the whole picture, they made not a 90- but a 360-degree turn.
Of course the Minister provided somewhat the reason why initially he stated that we needed no tax reform, and then announced one later-it is because our neighbours down South decided to have a tax reform.
Mr. Speaker, they decided in the United States to have a tax reform. They achieved this because they agreed on the principles; they set up parameters, and then they said: Let the officials implement them. Here, we are having a tax reform, and after each clause, each proposed change, there always is a cost analysis-how much that costs, should we repeal such or such a provision, or should we introduce another. So, they completely lost sight of the major goal, which was to have a kind of tax reform that would remedy every inequity in the tax system. We can give clear examples of this, Mr. Speaker, almost everywhere in the legislation.
But 1 would like to refer especially to the self-employed. There is in Canada an increasing number of self-employed. But now, the tax reform proposed by this Tory Minister of Finance is attacking that whole group of workers who, having lost their jobs, went into business as self-employed. The first thing he does, the Minister says: We arbitrarily repeal 20 per cent of automobile expenses, 20 per cent of entertainment expenses. And then he says: We are going to propose a free trade agreement with the United States, because you owe it to yourselves to become more competitive in order to sell Canadian goods on the American market.
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Let us take the case of a company that must sell its products in the United States and that must be competitive. But the Government says to its salesmen: From now on, you can only deduct from your income tax return 80 per cent of your actual automobile expenses, 80 per cent of your travel and entertainment expenses. It is unacceptable to urge people to be more dynamic in their sales efforts, while reducing the tools they need to do so.
What about small businesses, Mr. Speaker, which, from what we hear from the Ministers, have been well represented and supported by this Governement? Every time they speak in this House or make a speech in some part of the country, they say that small businesses create 80 per cent of the jobs. That is right. This sector creates 80 per cent of all jobs; in fact, almost 99 per cent of all new jobs are created by these dynamic small and medium-sized businesses. And now, the only tax rate which is changed in this tax reform is the tax rate for the small manufacturing businesses. How can you have such a dynamic sector in our economy, one which creates so many jobs, and use the tax reform to increase its tax rate from 10 per cent to 12 per cent, instead of encouraging it?
That is another fine example of a turn-around from the Minister of Finance. A year ago, he presented tax proposals for Canadian corporations in which, just like the Government had done for several decades, he offered a reduced tax rate for all manufacturing companies, large and small. Now, in this tax reform, he keeps the reduced tax rate for the large corporations, but increases the tax rate for the small firms. It is incredible, Mr. Speaker, how a Government, in four years, can change its economic policies, right and left, completely changing its mind!
Moreoever, the Governement is proud to have proposed, in this tax reform, a capital gains exemption of $500,000 for the incorporated small companies. But what about all the registered companies? Even the incorporated companies, Mr. Speaker, as I am sure you will understand, being yourself a lawyer. You know very well that, for small businesses, sales of shares are few and far between. Most of the time, they sell assets. Therefore, if the tax reform proposal to give a $500,000 life exemption does not apply, the whole idea is a sham and does nothing to lighten the tax burden of small businesses.
They say they are reducing the capital cost allowance. But that reduction applies not only to big businesses, but also to small ones whose tax rate automatically goes up because of this. What a way to help small business! When one considers that more than 90% of Canadian businesses are small businesses, that the 20% reduction in car, entertainment and travelling expenses will also apply to them, one concludes that tax reform does not promote but hinders economic development in Canada.
Another injustice in the tax reform is the acceleration of tax deduction remittances. From the outset, this Government has tried to convince Canadians that it could reduce and was gradually reducing the deficit. An analysis of this Government's accounting principles in its four budgets and in its tax reform reveals that there has been no real deficit reduction. The Government has done nothing but twist the
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accounting rules and, each year, on March 31st, try to make us believe that it has reduced the deficit by one or two billion dollars.
In 1986, Mr. Speaker, the Minister of Finance introduced the accelerated remittance of source deduction system. Instead of sending the monthly remittance before the 15th of the following month, businessmen must now send in these remittances twice a month or every two weeks. This announcement was made one month before the end of the fiscal year ending March the 31, so that this new accelerated remittance of source deduction rule would bring in $2 billion every fortnight. Now the Minister of Finance uses this trick to convince all Canadians that he had reduced the deficit by as much as $2 billion when in fact he had not reduce it by a single penny because these $2 billion which he received 15 days in advance, he would have received 15 days later as he had done every year.
The following year, he introduced the accelerated remittance of the sales tax. Now, all businesses, big and small, must remit their accelerated sales tax on the 21st day of each month, even if it means making the necessary re-adjustment the following month if the amount is not correct, since the whole system operates on an evaluation basis. This means another billion dollar. Beside imposing on small businesses an enormous amount of additional paperwork, he tried to convince Canadians that he had reduced the deficit by as much as $1 billion. What has really caused the tax reform to go bust? Well, he has now changed even the quarterly remittances. The very word "quarterly" means that they must be done every three months. These remittances should be made at the end of every three month period. Now this Tory Governement has ruled that these quarters will no longer end on the 30th or 31st day of the third months, but on the 15th day of that month.
From now on, Canadian taxpayers, self-employed workers, senior citizens and lower income people who are not working but living on small investment income or interests will be required to remit their dues every three months on the 15th. Mr. Speaker, I cannot find the words: It is no longer a quarter because the three months are not completely over. Perhaps the Minister of Finance will eventually come up with the proper name but because of this tax reform, our senior citizens who are now visiting in large number my hon. friends in their riding offices are already having a lot of trouble trying to balance the figures for their quarterly remittance, because the money was sent two or three days too late or reached the department one week later because of our poor postal service. They come and show us their documents with penalties of $1.09 or $1.05 and ask us what they are all about.
Mr. Speaker, we are now going to make life even more difficult for people living on fixed income with only the Canada Pension Plan and the Old Age Pension, plus a few thousand dollars of interest income from their hard-earned

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savings, by telling them: We know that you are used to make your remittance on March 31, July 30, September 30 and December 30, but from now on, you will have to make the remittance 15 days earlier, that is on the fifteenth of the month. Mr. Speaker, that is why we have this whole complex paper work instead of simply reducing ...
Mr. Speaker, when we looked at this clause, this new proposal by the Conservative Governement at the finance committee, even Conservative Members told us: This is nonsense! Why make life more difficult for our people, our senior citizens just for that! Why the change? Why not leave the quarterly remittance as it now stands and as people know it, that is at the end of the month?
When I suggested to the finance committee that this new clause should be withdrawn, even the Conservative Members agreed with me and it was withdrawn. Mr. Speaker, when the Minister's officials became aware of what was going on, they surely got mad and at supper time they visited one by one the Conservative Members of the committee and persuaded them that it was not good for the Governement, that there would be a loss of $20 million because of this. So that the Minister of Finance would not have been able to boast next year, assuming he is elected, of having lowered once more the deficit by $1 billion. So they reconsidered the clause, they voted again on it, they reintroduced it here and yesterday evening they did not have the courage to rise and to withdraw it. That is fiscal reform for you! From a fiscal reform that was supposed to be fair and equitable across the board, we now find ourselves in this slump of red tape so much so that nobody understands anything anymore.
Mr. Speaker, unfortunately the debate ends today and we have to accept a tax reform which does not make sense, one which complicates things instead of solving problems.
There is another point I want to raise. The Government had promised a comprehensive tax reform, one that would not deal with income tax alone. In his budget presentations however, the Minister has always acknowledged that it was not this aspect but rather the federal sales tax which was causing the most problems and that consequently, a complete overhaul of the sales tax was necessary. Where is this comprehensive reform of the sales tax?
When he introduced his tax reform, the Minister of Finance told us that it would be done in two stages: first, income tax reform, and that is what we have seen so far; and second, the following year, federal sales tax reform. In terms of the federal tax, where do we stand now? The Minister is talking about a multi-stage sales tax, about a national sales tax and about a value-added tax. Whatever form it takes, we will still have taxes and more taxes and the Governement will still be gouging the taxpayer.
Can you imagine that the Minister of Finance has even comtemplated a sales tax on food? The Opposition Liberal members reacted by launching a petition campaign and succeeded to some degree in having it changed but there is no
guarantee that the Minister will not bring it forward one day. Because of all these petitions, because of the fight put on by the Liberal members of the Opposition, the Conservative members themselves came to oppose the Finance Minister on the issue, saying that it made no sense to go as far as taxing food, the very bread and butter of the people, Mr. Speaker! That was totally unacceptable. However, that did not stop the Minister of Finance from bringing in more taxes.
Over the last four years, he has managed to get more than $20 billion from the taxpayers in additional tax revenue and today, he wants us to believe that he has succeeded in reducing the deficit through all that creative accounting of his, Mr. Speaker.
We cannot support this tax reform because it does not meet the economic needs of Canadians, for there can only be one social justice. In its tax reform, the Government has abolished the $1,000 deduction for investment income which was precisely intended to give a break to people with modest savings, people on fixed incomes and senior citizens earning modest interest income.
Mr. Speaker, the Government is now doing away with this deduction. And surely, there are other people who did not need it who have also taken advantage of it. But at least, the Minister could have introduced a rule, since the first tax level under tax reform is 17 per cent, allowing people in need, the elderly with a minimum interest income, to have at least a deduction, a tax credit of $170. I think that he would thus have protected those in need and made tax reform fairer and more progressive.
You are indicating to me that I have little time left, Mr. Speaker.
The whole question of day care ... He gave tax credits for the other personal deductions, but he does not give a tax credit for child care expenses because it is not a personal expense but an employment-related expense. Someone with an income must deduct expenses from it. In society today, Mr. Speaker, day care is not an expense to earn income. It is a personal need. Mothers and heads of one-parent families work because they must to make ends meet, not because they want more money. That is what this Conservative Government thinks of social justice! It has no understanding of what social justice means in Canada. I am sure that when the Prime Minister has the courage to call an election, Canadians will remember.


Abram Ernest Epp: Mr. Speaker, I appreciate the opportunity to join in this debate at third reading on Bill C-139, an amendment to the Income Tax Act and other legislation related to it.
Fair taxation is one of the most important issues before the nation. This Government has made a great deal out of its carrying through tax reforms. As I want to demonstrate in a
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few moments, there has been little real reform in any dramatic way. There has been a lot of tinkering in various places to make the Income Tax Act a more and more bulky piece of legislation which requires a great deal of investment of personal time for accountants and those dealing with tax law in order to provide accurate advice to clients. I do not doubt it has also made the life of people in the revenue Department more difficult rather than easier.
There has been a great deal of tinkering with the system in an attempt to improve it. If one looks at the over-all picture that results from this tinkering, there can be no doubt that the so-called reform on which the Minister of Finance (Mr. Wilson) has been working, particularly in the past year or so, is not an improvement in the Canadian tax system as far as fairness of taxation for Canadians in middle and lower income groups is concerned. It certainly brings the Government more revenue in certain areas, but it is not a move toward fairer taxation, particularly in the weeks, days conceivably, months at most, before an election campaign starts.
Fairness of taxation would surely be the most important concern a government would have in mind as it expects to be speaking to voters to ask for their support. I think that would be particularly the case for Conservatives who like to make a great deal about their sympathy for their constituents, for individuals, the family and so on. The brute facts that face us when we look at income tax and other tax changes which the Government has made since the fall of 1984, provides no basis for real confidence on the part of Conservative Members of Parliament or those who are candidates and would like to be elected to this House. There is no basis for confidence that they will get the support of most of their constituents.
Some of these changes may fly well on Bay Street and in similar areas where Canadian financial power is centred and where the wealthy of this country are most active, but outside of Bay Street and the country clubs of Canada, I would be certain that the changes the Government has made will not impress Canadians. It will give Canadians absolutely no reason to give up their general aversion, whatever may be true in the Province of Quebec and conceivably in Alberta. Conservatives do not understand the interests of ordinary Canadians, of families, and the result of electing Conservatives once every generation-perhaps a little more frequently than that-is to remind ourselves why we should not do that. Every once in a while those who like to change from the Liberals, when they become completely intolerable, to the Conservatives, rather than looking at those who are really concerned about their interests, are taught again that Conservatives do not understand the needs of ordinary Canadians.
In focusing these comments, I want to say that it is advisable not to get lost among the trees when dealing with the forest of taxation. It is the easiest thing in the world to be taken off into the minutiae of the system, which inevitably accountants and tax lawyers have to understand and which the revenue Department has to administer, but for us to get into
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detailed consideration of some of those things can take us away from the large picture, which is, I think, what Canadians as individuals and their families want to see.
Something of the danger of this getting lost in the minutiae was true last night when we were debating a variety of amendments to Bill C-139 and when the Minister of State for Finance (Mr. Hockin) became involved in some responses to comments that I had made. He suggested that my argument for a reduction in the small business rate for real small businesses from 12 per cent to 10 per cent, not for all the so-called private corporations, including the Eaton's enterprise across the country, but for real small businesses, is somehow a terribly regressive step, something that might have some plausibility, but after all, progressivity of taxation has always been a matter of taxing in terms of the ability to pay.
Our assumption pretty well based in the realities of business activities is that small businesses are much less profitable as smaller incomes have a lesser ability to pay. Therefore, a small reduction in taxation from 12 per cent to 10 per cent for them is surely not an inappropriate proposal for a New Democrat to make when the brute reality of the corporate tax system is that the larger corporations use those credits, those who have the means to get involved in taking advantage of all the possibilities of investment credits-and I use that in the lower case "i" and "c" very definitely-the whole complex of encouragement that the Government offers through the tax system to corporate activity.
To argue that small businesses should have a slight reduction in taxation when large corporations, banks and other enterprises in this country conceivably pay no taxes at all, seems to me to be just one of those pieces of sophistry, to use the word the Minister likes to throw about, that one would expect the Minister of State for Finance would use in trying to defend in this House and before the voters and taxpayers of the country the things which this Minister of Finance has done to us time after time ever since the economic and fiscal statement of 1984.
Some changes, some of them quite important, have been made. I can think of one which is much easier to understand than the really complex changes the Minister of Finance has made more recently. The cancellation of the scientific research tax credit which the previous Liberal Government brought in is perhaps the most exciting attempt ever to encourage investment by the business community. It got to be such an exciting opportunity to invest that all kinds of fraud artists got into the game. Any government would have had to shut it down fairly soon. Certainly the Minister of Finance deserves credit for doing so after having recognized that there are certain boondoggles and dubious provisions in the tax system, dubious from an economic and sound fiscal position, but what are we actually left with in terms of the over-all realities of federal revenues?

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While listening to my colleague, the Member for Ottawa Centre (Mr. Cassidy), who leads in financial matters in our caucus, 1 was profoundly impressed by the figures that he put forward, and I want to pull several of those comparisons out of the national statements which were published a couple of months ago by the Department of Finance itself. These are truly startling figures, which indicate the lay of the land, if you will. These are the kinds of figures that tell us, whatever the trees may look like, whatever kind of trimming is taking place in one area or planting somewhere else, what the forest is actually like.
What do we find? From 1984 to 1987, the increase in direct tax payments to the Government by individuals has been from $37.5 billion to $53, practically $54 billion. As my colleague said, this is an increase of 44 per cent in total revenues that the Government of Canada receives from individual taxpayers across the country, a 44 per cent increase in payments by individuals at a time when the gross domestic product of Canada increased by only 24 per cent, by about one-quarter. The increase in revenue ran up towards 50 per cent, a 44 per cent increase.
What happened in another area of revenue receipt for the Government, that area of taxation, of direct taxes paid by the corporations of the country? What do we find here? As my hon. colleague said, there is actually a decrease in the amount of tax paid, from something over $11 billion to less than $10.5 billion from 1984 to 1987.
What needs to be emphasized here in the forest of taxation as they used to prevail and as they exist now, is that the forest of individual tax payments has grown enormously while the forest of corporate tax payments to the Canadian Government remains smaller and smaller, relatively speaking.
There was a time when the corporations of Canada paid as much in direct tax to the Government of Canada as individual taxpayers do. That now seems to have been a long, long time ago, but when you go back a quarter of a century and a bit more and you find yourself in that era, you see that the forest of corporate direct payments to the Government is just about as luxurious as this overgrown forest of payments by individuals. But gradually the proportions changed to two to one, and three to one.
When we reached direct payments in 1987 of $54 billion by individuals, and of $10.5 billion by corporations, we were beyond five to one in the proportion. There is the large sense of the way in which the tax system is being applied. There is the evidence of how very little real reform there has been in the finances of this country on the taxation side.
I would note that if we add the indirect taxes which the federal Government receives as well, and note that those have grown from $18 billion in 1984 to $23 billion, which is an increase of some 30 per cent in indirect taxes, we have
measures there of the way in which the sales tax and the excise tax arrangements of the country have been made so much more onerous, so much heavier for individuals and for families in Canada as a result of the activities of this Minister of Finance.
These are certainly clear evidence of a lack of genuine reform, of real progress towards tax fairness, when we note that this is the situation just preceding a two-stage reform of our tax system in which the Minister of Finance has made minor reductions in personal income tax, belatedly, this summer-and they were proposed a year ago. They began taking effect in July of this year-this is perhaps less the sword of Damocles hanging over the ruler than it is an enormous boulder or, if you will, a rock slide on a mountain which is trembling over us.
We are not quite sure how wide it is going to be. We do not suppose that the Minister would have the courage to tax food, but we are never quite sure with this Government. The number of broken promises to this Government's credit is very large, and with assurances after an election, who knows? The trade deal is the largest evidence that you could attack something in an election campaign, before and during it, and then go ahead and do it afterwards. That kind of lack of faith that is so destructive of the democratic system leaves all of us far from certain that in the Minister's plans to tax every transaction in this country, every exchange in dollars, every purchase of services, to take in every cent he can get, to increase the burden on individuals in the country, he is not going to apply it food too.


Michael Morris Cassidy: Shame.


Abram Ernest Epp: The 10 per cent telecommunications tax is in fact a nice indication of the kind of unfairness that this Government has put into the system.
I had an interesting exchange some months ago with the chair of the Finance Committee-the Member for Mississauga, I believe it is, or is it North?-that the tax on long distance telephone calls is primarily a business expense. Since the businesses are getting cheaper telephone calls, why should they complain if they have to pay something more in the way of a new tax? Fie completely failed to recognize that in regions of the country, isolated areas such as northern Ontario, and even there, for people outside a city such as Thunder Bay longdistance calls are the stuff of everyday life. In addition, it applies to people who can live a full and happy life in Toronto without ever having to worry about long-distance calls. I have constituents who routinely, partly in terms of business such as perhaps a dairy, face long-distance telephone bills of $150 or $200 a month. For those people to have to pay 10 per cent every month of that entire long-distance telephone bill is just an indication of the kind of unfairness that Michael Wilson has put into the tax system.


Michael Morris Cassidy: Shame.
August 26, 1988


Abram Ernest Epp: The fact that the Government refused to cap, to put some kind of a ceiling on this, to say that it surely would not be fair for anyone to pay more than $5 to $10 a month, maybe that is even high, is insensitive of the Government. Five dollars a month, after all, is $60 a year in new taxation for people who have to make these calls time after time. For there to be no recognition of these differences in Canada is just an indication of how insensitively this Government has been guided in these areas by a Minister whose base is on Bay Street and who has practically no recognition, no sense at all, of where ordinary Canadians live.


Michael Morris Cassidy: Shame.


Abram Ernest Epp: I realize that my time is practically up and yet there is so much to be said about the way in which this Government has reduced the progressive nature of our income tax system, about the way in which the wealthy are the prime beneficiaries of the tax changes that have taken place. There is so much that could be said. I am grateful for the fact that my colleague, the Member for Ottawa Centre, has more time as the lead speaker on these matters in order to get those points out.
Ordinary Canadians, lower-income Canadians who got put on the tax rolls during this Government's terms of office, are now asked to be grateful because they are going to be allowed to get back off the tax rolls before the next election, know that they have been ripped off for three years by a government that does not have the good sense to tax the income where it is, whether it is in the hands of rich individuals or in large corporations, and to get the burden of the services of the Canadian Government spread over everyone fairly.
I realize that my time is up. I want to say that there is reason enough for us to vote against Bill C-139 to continue our opposition to the so-called tax reform and for the New Democratic Party to enter the next election campaign telling Canadians, "You want tax fairness, elect New Democrats in order to get it. You are not going to get it from the Conservatives and the Liberals who mostly built this system".


The Acting Speaker (Mr. Danis):: On questions and comments, the Hon. Member for Hamilton East (Ms. Copps).


Sheila Maureen Copps: Given the Member's comment about the NDP in tax matters, I would like to ask him whether he would be willing to introduce a measure to plug the NDP tax scam that is currently being carried out in most major municipalities across this nation, where NDP local candidates are using federal tax deductions to credit their campaigns. Would he be willing to plug that NDP tax scam?


Abram Ernest Epp: Mr. Speaker, this is a question that is designed to be embarrassing in a partisan way. It is suggested that New Democratic federal associations have used this means in Toronto. The question is whether other
Income Tax Act and Related Acts
Parties have used it and what other possibilities for financing activities exist like large corporate donations which are a small thanks to the Liberal Party for all the gifts that the corporate sector has received over the years.
These are nice questions. The law was passed by Liberals. The Liberals governed this country for most of the period during which the election financing laws were in effect. After the next election, we will see who forms the Government. I expect we will receive advice from the election expenses commission on what should be done. We will see who has the opportunity to reform the law and we will see, if the Liberals are elected, if they carry through the kind of reform the Hon. Member for Hamilton East (Ms. Copps) is suggesting.


Sheila Maureen Copps: Mr. Speaker, the Hon. Member did not answer my question. He may be aware that in the Province of Ontario, the Liberals do not run at the local level on a Party ticket. For a long time, the NDP has been running a tax scam, using taxpayers' money to get tax credits for municipal candidates. Would the Hon. Member be willing to move an amendment which would plug that NDP tax scam?


Abram Ernest Epp: Mr. Speaker, as I was saying, this is quite a partisan matter, not that there is anything wrong with that in this partisan Chamber of ours. To call it a tax scam is the kind of emotive language that the Hon. Member for Hamilton East, (Ms. Copps) likes to indulge in. If it were a scam, presumably the RCMP would have been investigating and laying charges. I have not seen that happen. I am sure that the Conservatives, who love New Democrats like brothers, would have been more than happy to instruct the RCMP to investigate that if it were the case.
Clearly a law is not being broken. Whether this is against the spirit of the law or not is a good question to be debated. We probably will not have the time to debate it adequately this afternoon, but I would suggest that the Hon. Member be precise in her language. The law has not been broken. If it had been, there would have been prosecutions.
New Democrats use the letter of the law to finance their efforts at the municipal level, and because income taxation is provincial and federal, there is no municipal tax. They use these provisions to strengthen the Party at the grassroots level in order to support efforts in federal election campaigns. If the law were to be changed to make it a scam, let the prosecutions occur afterward. In the meantime, the Hon. Member is trying to get political capital out of something her Party created.


Michael Morris Cassidy: Mr. Speaker, I believe that the time is just about up and that there is some general agreement that we will go to a vote in a minute, so I will ask a question of my hon. colleague from Thunder Bay-Nipigon (Mr. Epp) which sums up what third reading of this Bill is all about, the question of whether or not Conservative tax reform is really fair.
Does the Hon. Member believe that the Conservative tax reform is fair when it allows 60,000 profitable corporations to continue to pay no tax every year? Does he believe tax reform

August 26, 1988
Income Tax Act and Related Acts
is fair when it deindexes the brackets and the child credits and the other credits that are given in the tax Bill? Does he think the tax reform put forward by the Conservatives is fair when it gives an average of $4,165 in tax cuts to most people who earn over $100,000 a year and leaves those people paying less tax in 1988 than they were paying in 1984 while at the same time all other taxpayers will be paying more? The average family will wind up paying some $1,000 more in taxation in 1988 than it was paying when the Conservatives came to power back in 1984.
Does the Eton. Member think that tax reform is fair when it means that families earning as much as $5,000 below the poverty line should be paying taxes? Does he think tax reform is fair when the Conservatives seem to want to wait until after the election to drop the other shoe, bringing in a sales tax scheme with no guarantee that it will cushion average families against the regressive effect of the proposed national sales tax?


Abram Ernest Epp: No, I do not, Mr. Speaker. Because I agree with the Elon. Member that we should get out of here and get back to our constituents who want to take their turn at this Government as soon as possible, that is all I will say. The Hon. Member is absolutely correct. This is not fairness. Let's get out of here and give our constituents a chance to throw the Government out.


Cyril Keeper: Mr. Speaker, I appreciate the opportunity to put a question to my colleague. Does my colleague support the moves of the federal Conservative Government which, at the same time as increasing the tax burden on ordinary Canadian families by $1,500 over the last four years, has given tax writeoffs to the wealthy in the order of $100,000 in capital gains? I wonder if my colleague agrees with that approach that eases the burden on the very wealthy at the same time as it digs into the pockets of ordinary Canadian families.
I would also like to know if my colleague supports the actions of previous Liberal governments which, while in office, have consistently increased the tax burden on Canadian families while lowering the burden on corporations. The policy of making numerous tax loopholes available to corporations and wealthy individuals started with a Liberal Minister of Finance, and that led directly to increased burdens on ordinary Canadian families. I wonder if my colleague supports this Liberal favouritism for the wealthy and the Conservative favouritism for the wealthy, or is he prepared to stand up and speak out for some tax relief for ordinary Canadian families?


Abram Ernest Epp: Mr. Speaker, when a good colleague tempts me to stay here a little longer rather than getting back to my constituents, I do, of course, as a friend, concede to that.
I reacted to what the Minister of State for Finance (Mr. Hockin) said about a progressive tax system because there is nothing that my colleagues and I value more in a tax system than progressiveness. There is nothing that is more important to us than ensuring that taxes are paid by people in terms of
their ability to pay, the ability they have over and above paying for the basic cost of living.
The Minister of State for Finance talked about progressivity in a system that has become more and more regressive. Liberals ask questions about tax reform when they created the system that Conservatives have been tinkering with over the last four years. This has never been progressive in all these years. It gets worse and worse, less and less progressive, and I do not want to have questions thrown at us by members of either Party when our concern is for tax fairness.


Sheila Maureen Copps: Mr. Speaker, I will be very brief because I know people want to get out of here. However, there is only so much one can take, and on a Friday afternoon, I have about had it with the hypocrisy of a political Party that runs its own political tax scam in the City of Toronto. It is using a tax credit which was designed for federal Members to seek office in the federal Parliament. It is a shame. It is a scam and it is typical of the NDP policy.
On the one hand, NDP Members were totally against writeoffs. On the other hand, they did a complete flip-flop on flowthrough shares. NDP Members call for no loopholes and no tax deductions, but when the small mining community came to Parliament and said that flow-through shares were permitting the exploration and development that was important to the northern economy, the NDP in one day went from no-flow to go-flow.
As far as I am concerned, enough is enough. I know that we should have the vote, but I do hope that the NDP moves expeditiously to plug the tax scam that has been ripping off the taxpayers for the last number of years.
[DOT] (M20)


Michael Morris Cassidy: Mr. Speaker, I appreciate the fact that the Hon. Member was mercifully brief in her intervention.


Richard Grisé: Which you never are.


Michael Morris Cassidy: 1 want to point out that the NDP has the same privileges as every other Party under the election expense legislation introduced by the Liberal Government. If the Liberals wanted to ensure that the money was spent exclusively on federal election campaigns, it could have drafted the legislation to ensure that.


Mr. Minaker:: Two wrongs make a right?


Michael Morris Cassidy: I note that the official spokesperson for the Liberal Party has now indicated she is opposed to flow-through shares. She is opposed to economic development in mining communities.


Sheila Maureen Copps: Not at all.


Michael Morris Cassidy: I would point out as well that yesterday her Party advocated a reduction in tax on capital gains. That is
August 26, 1988

Liberal tax fairness. It is now time to concentrate on the tax unfairness of the Conservatives and have the vote.


Sheila Maureen Copps: Mr. Speaker, (a) the Liberal Party supported flow-through shares. It was the Liberal Party that introduced flow-through shares. For the Hon. Member to say the Liberal Party is opposed to flow-through shares is absolute balderdash; (b) the NDP is the only Party that I am aware of, unless there are others, which runs on a Party platform at the municipal level, and in the City of Toronto funds its local candidates through donations to the federal Party. These donations were intended for federal candidates. This is a tax scam. Whether it is a Tory tax scam or an NDP tax scam, it is a tax scam and should be renounced. I expect the Hon. Member to bring forward an amendment in that regard.


Some Hon. Members:: Question.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.
Income Tax Act and Related Acts


Mr. Deputy Speaker:: All those in favour of the motion, will please say yea.


Some Hon. Members:: Yea.


Mr. Deputy Speaker:: All those opposed, will please say nay.


Some Hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the yeas have it.
And more than five Members having risen'.
Pursuant to order made Thursday, August 25, 1988, the recorded division on the motion stands deferred until six o'clock Monday, August 29, 1988.
Is it the wish of the House that I call it three o'clock?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: It being three o'clock, pursuant to the order made on Monday, June 20, 1988, this House stands adjourned until Monday next at 11 o'clock a.m.


[Stage Direction]
The House adjourned at 2.23.
[Stage Direction]

Monday, August 29, 1988
[Stage Direction]
Prayers