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37th PARLIAMENT, 2nd SESSION

Standing Committee on Finance

EVIDENCE

CONTENTS

Tuesday, May 6, 2003

1535

The Chair (Mrs. Sue Barnes (London West, Lib.))

Mr. Charlie Penson (Peace River, Canadian Alliance)

The Chair

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette (Joliette, BQ)

1540

The Chair

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP)

The Chair

Mr. Charlie Penson

Mr. Bryon Wilfert (Parliamentary Secretary to the Minister of Finance)

1545

The Chair

Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.)

The Chair

Mr. Charlie Penson

Mr. Nick Discepola

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

1550

The Chair

Mr. Tony Valeri (Stoney Creek, Lib.)

The Clerk of the Committee

Mr. Tony Valeri

The Clerk

Mr. Tony Valeri

The Chair

Mr. Gary Pillitteri (Niagara Falls, Lib.)

The Chair

Mr. Charlie Penson

Mr. Nick Discepola

Mr. Charlie Penson

The Chair

Mr. Bryon Wilfert

The Chair

Ms. Pauline Picard (Drummond, BQ)

The Chair

1555

Mr. Charlie Penson

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

1600

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

1605

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

1610

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Mr. Roy Cullen (Etobicoke North, Lib.)

1615

The Chair

Mr. Pierre Paquette

The Chair

Mr. Pierre Paquette

The Chair

Mr. Pierre Paquette

The Chair

Mr. Tony Valeri

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

1620

The Chair

Mr. Charlie Penson

The Chair

Mr. Nick Discepola

Mr. Charlie Penson

Mr. Nick Discepola

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Jim Little (Officer, Operational Policy, Department of Human Resources Development)

The Chair

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

Mr. Jim Little

Mr. Charlie Penson

The Chair

Ms. Judy Wasylycia-Leis

1625

Mr. Jim Little

Ms. Judy Wasylycia-Leis

Mr. Jim Little

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Mr. Pierre Paquette

The Chair

1630

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Peter DeVries (Director, Fiscal Policy Division, Economic and Fiscal Policy Branch, Department of Finance)

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Peter DeVries

1635

Mr. Charlie Penson

Mr. Peter DeVries

Mr. Charlie Penson

Mr. Bryon Wilfert

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

1640

The Chair

Mr. Charlie Penson

Mr. Peter DeVries

Mr. Charlie Penson

Mr. Peter DeVries

The Chair

Mr. Philippe Batani (Economist, Agriculture and Fisheries, Department of Finance)

Mr. Charlie Penson

Mr. Peter DeVries

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

1645

Mr. Bryon Wilfert

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Mr. Pierre Paquette

Mr. Bryon Wilfert

Mr. Brian Willis (Senior Chief, Sales Tax Division, Tax Policy Branch, Department of Finance)

The Chair

Mr. Roy Cullen

Mr. Brian Willis

1650

The Chair

Mr. Charlie Penson

Mr. Brian Willis

Mr. Charlie Penson

Mr. Brian Willis

Mr. Charlie Penson

Mr. Brian Willis

Mr. Charlie Penson

Mr. Brian Willis

Mr. Charlie Penson

Mr. Brian Willis

The Chair

Ms. Judy Wasylycia-Leis

Mr. Brian Willis

1655

Ms. Judy Wasylycia-Leis

Mr. Bryon Wilfert

The Chair

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Ms. Judy Wasylycia-Leis

The Chair

Mr. Brian Willis

Ms. Judy Wasylycia-Leis

Mr. Brian Willis

Ms. Judy Wasylycia-Leis

1700

Mr. Brian Willis

Ms. Judy Wasylycia-Leis

Mr. Brian Willis

Ms. Judy Wasylycia-Leis

Mr. Brian Willis

Ms. Judy Wasylycia-Leis

The Chair

Mr. Bryon Wilfert

The Chair

Mr. Roy Cullen

1705

Mr. Bryon Wilfert

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

Mr. Bryon Wilfert

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Ms. Annie Carrier (Chief, First Nations Taxation Section, Tax Policy Branch, Department of Finance)

Mr. Charlie Penson

Ms. Annie Carrier

1710

Mr. Charlie Penson

Ms. Annie Carrier

Mr. Charlie Penson

Ms. Annie Carrier

The Chair

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

Ms. Annie Carrier

Mr. Pierre Paquette

Ms. Annie Carrier

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

Mr. Pierre Paquette

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Gérard Lalonde (Senior Chief, Finance Canada, Tax Legislation Division, Tax Policy Branch, Department of Finance)

1715

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Gérard Lalonde

1720

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Roy Cullen

The Chair

Mr. Roy Cullen

The Chair

Mr. Charlie Penson

Mr. Roy Cullen

The Chair

Mr. Charlie Penson

Mr. Roy Cullen

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

1725

Mr. Gérard Lalonde

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

The Chair

Mr. Charlie Penson

1730

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

Mr. Charlie Penson

Mr. Gérard Lalonde

The Chair

Mr. Charlie Penson

The Chair

Mr. Pierre Paquette

The Chair

1735

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Charlie Penson

The Chair

Mr. Bryon Wilfert

The Chair

Mr. Charlie Penson

The Chair

CANADA

Standing Committee on Finance

NUMBER 055

2nd SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, May 6, 2003

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mrs. Sue Barnes (London West, Lib.)): Welcome, everyone.

Today the order of the day is Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003. It is clause-by-clause consideration, and we have the Parliamentary Secretary to the Minister of Finance, Bryon Wilfert, appearing. With him are Mr. Roy and Mr. DeVries. There are other senior officials in the room who may be called upon. They will introduce themselves at that time if necessary.

Mr. Penson has a point of order.

Mr. Charlie Penson (Peace River, Canadian Alliance): Madam Chair, the issue I want to raise is one of timing in terms of when we received the amendments. I'm not sure when other members received theirs, but we received ours about forty minutes or half an hour ago. These are fairly in-depth amendments in many cases that want to change sections of the bill, replacing line so-and-so with line...and we just haven't had a chance to analyze it.

I think in fairness, Madam Chair, the committee needs to have more notice on the amendments. It takes time to understand what these mean and how they change the bill. I'm not very happy with this part of the process. I think we need more time.

The Chair: Mr. Penson, I think that's not so much a point of order, but I do take your point. This committee, unfortunately, doesn't have a rule in this regard. Perhaps we could consider doing a rule. The materials were received by you and by me today because the people putting forward amendments only gave them to the clerk today too. We got them out to you as we received them.

I suggest we work slowly through them. We have officials here. As we get explanations, we can ask all the questions we need to of the people here.

Mr. Charlie Penson: Madam Chair, just to follow that up, this is a committee of itself. We can decide our own rules in that regard. I'd be interested in hearing how the other members on the committee consider this. I don't think it really does justice to the process to get a package like this and not really have time to work through it properly. I suggest we should come back on Thursday after we've had time to consider this.

Let's hear from the other members and see what they have to say on it.

The Chair: Who else wanted to speak?

Mr. Paquette.

[Translation]

Mr. Pierre Paquette (Joliette, BQ): I would like to say that we are doing our best, but as you know, the legislative counsels are very busy. So it is very difficult for us to get the amendments early enough to be able to send them to the clerk of the committee, so that members of the committee can have them at least a few hours if not a few days before the committee's meeting. I would like to make it clear that it is not being done deliberately; the problem is that it is difficult to obtain the services of the legislative counsels.

For example, I am waiting for an amendment that has not been finalized. I entirely agree with Mr. Penson; we should postpone the committee's meeting for a few hours, in order to be able to fully understand the scope of the amendments that are being submitted to us.

I want to reiterate the fact that if my amendments have only been given to members of the committee at the beginning of this meeting, it is not because of ill will, but because the resources of the House are limited.

¹ (1540)

[English]

The Chair: I appreciate, Mr. Paquette, that you have said this has not been done deliberately and you have acknowledged that some of these things came to us today.

Ms. Judy Wasylycia-Leis.

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you very much, Madam Chairperson.

I'm just getting familiar with this committee. I'm not sure about all its history and traditions. It is a little different from some other committees I've sat on in terms of the whole process around amendments and time taken to do clause-by-clause. In the case of a Budget Implementation Act, I understand that the time is more contracted in terms of the whole process.

I did take some time to do some amendments. I know some of them weren't finalized until yesterday. Some members, of course, wouldn't have had a chance to review them, and I hope for them to be given serious consideration.

Madam Chair, is it possible for us to perhaps devote time today to hearing from the officials, going through some general areas of questioning, and then be ready to start on the clause-by-clause at our next meeting? Is that at all a consideration? That way we could handle both the need to proceed with the bill and also give members time to reflect on the proposed amendments.

The Chair: To my knowledge, there are not a large number of amendments on this bill. In fact, there are only 19 amendments in total, and there are clauses for which no amendments are coming at all.

I would suggest that seeing as we have all of these people here from the department, we could move through the bill and, as we get to any amendments, see if there is any difficulty before we jump to affecting everybody in this room by cancelling a meeting that has been called for.

I do remind members that the name of the legislative counsel was given out. We gave it out at the very first meeting of this committee, which was prior to the last break. So that is not to fault the legislative counsel or the members. I know they've been working through, and I also realize, Ms. Wasylycia-Leis, that there was no ill will on your part on getting these things in today.

With respect to Mr. Paquette, if there is some point where you have one more amendment that's not yet ready, we'll have to deal with it. We can postpone it until the end and see what happens, if that's okay with you.

Does that seem a reasonable way to approach this? You're the two parties with the amendments here.

Perhaps I can hear from everybody else. The chair recognizes Mr. Wilfert and then Mr. Discepola.

Mr. Charlie Penson: Madam Chair, I have a point of order. Is Mr. Wilfert here as part of the committee or is he here as part of the department today?

Mr. Bryon Wilfert (Parliamentary Secretary to the Minister of Finance): I'm very flexible, but I would point out to you, Madam Chairman, that I share Mr. Penson's unhappiness at some of the amendments arriving within the last 45 minutes.

I went through this last year, and I thought, Madam Chairman, we had brought in a 24-hours'-notice rule. I had raised this issue last year to have it corrected. So I share Mr. Penson's concern.

Ms. Wasylycia-Leis, I would not support your view. In fact I did come before the committee before the break and answered questions for two hours. All the officials were here and all of those members who attended could have asked questions of them.

Obviously I'm at the pleasure of the committee, but beyond that, Madam Chairman, given that all the relevant officials are here, and given the fact that there were only two witnesses who came before this committee on many of the items--I've noticed there were no objections or amendments to many of the items, certainly not from anyone before the committee--I'm prepared to proceed.

¹ (1545)

The Chair: The chair acknowledges Mr. Discepola, please.

Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Thank you.

I'm also prepared to proceed. My question was more for Mr. Penson or Ms. Wasylycia-Leis. When did they get their amendments in? What is the problem? It seems to me it's more procedural than anything else. It has nothing to do with the committee.

Therefore, in my opinion anyway, it would be in your interest to get those amendments to all committee members as soon as possible if you want the support thereof. But it's pretty hard for us to support amendments coming in at the last minute.

The Chair: I will confirm that there is no rule in this committee. But I certainly believe it's a good idea that we institute a 24-hour rule for future clause-by-clause--or whatever amount of time this committee, in its wisdom, feels is appropriate.

Mr. Penson.

Mr. Charlie Penson: Mr. Discepola, we don't have any amendments, but there are 19 amendments before us today. I just think, in fairness, we need time to consider them. We have to go through the act.

The first amendment I see on my list, from the NDP here, says that clause 8 should be amended by adding, after line 7 on page 6, the following.... It takes time to work through and realize what the implications are of these 19 amendments. And I don't think it's fair to this committee that we start considering these this afternoon until we've had time to give them some serious thought. I don't think it's doing the process justice.

So I believe we should come back on Thursday, after we've had time, and start through the clause-by-clause process, as we need to do, and we'll know what all of this means as a result of having had some time to consider it.

Mr. Nick Discepola: Why weren't these amendments provided to us earlier? That's my argument.

Mr. Charlie Penson: Well, I don't know the answer to your question. I just know we have a problem. We got them forty minutes ago.

The Chair: From the chair's point of view, since it's me who has to rule on the admissibility of these amendments, I can tell you from the last time I've gone through this that some of these may or may not be admissible amendments and some of that may or may not be dealt with in that manner.

I would suggest, as there are a lot of people who have shown up today, that we can at least try to work through some of them. Many clauses have no amendments. At the very least, perhaps it would be useful to deal with those.

Mr. Paquette.

[Translation]

Mr. Pierre Paquette: I would like to comment the Parliamentary Secretary's remarks, when he implied that we did not send our amendments in advance out of negligence. This morning, I sent two amendments to the clerk as quickly as I could. In any case, I have received these amendments from the legislative counsel on Monday and I had asked for them a long time ago. Anyway, the researcher could attest to the fact that we have contacted him on several occasions to try to craft the most consistent amendment possible.

I do not want to give the impression of having wanted to present the committee with a fait accompli. There are some limitations to the resources of this House, with regard to the services of the legislative counsels. And this situation is extremely difficult. Our repeated requests to obtain amendments in advance often fall on deaf ears.

Yesterday, I was in my riding—we do manage to do some work in the ridings, at least we do in the Bloc québécois—and it was not possible for me to sign them in order to table them with the clerk before this morning. So I was a bit shocked with the way the Parliamentary Secretary has described the situation.

I want to remind everyone that we have done the best we could. The clerk had received two of the amendments that we are proposing this morning. Perhaps he should have circulated them; I am not yet sufficiently familiar with the committee's practices in this regard. However, as Mr. Penson has said, if we were able to analyze the amendments in advance, our work would be more valuable then if we expedite the matter because we are anxious to get it over with.

I know that government members are capable of disposing of issues quickly. However, I believe that if we are to hold an intelligent debate, we must have a few hours in order to read the amendments and then do the work seriously, clause by clause.

¹ (1550)

[English]

The Chair: Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): I would be of the opinion that since we have a full committee here today we should start our work. You have 9 clauses out of 128 clauses of this bill that we need to consider amendments for, so I certainly wouldn't be supportive of walking away from today without accomplishing anything and coming back and starting all over again.

The task at hand is not that great. That's my first point.

The second point I would make is that if in fact the committee decides not to proceed because they feel they cannot support these amendments because they just received them--and I'll go to the clerk on this one to clarify it from the procedural standpoint--a lot of these can be dealt with at report stage as well. Am I correct?

The Clerk of the Committee: No.

Mr. Tony Valeri: Because now that they've been tabled in committee they must be dealt with in committee?

The Clerk: Yes.

Mr. Tony Valeri: The point I'm making is we're talking about 9 clauses out of 128. We're here, so I'd like to get going on this bill, because Thursday might not be a better day for me or for someone else around this table. We have officials here, we have members here. I say we start the work of the committee to deal with this clause by clause.

The Chair: I'm going to take two more interventions here and then....

Go ahead, Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you, Chair.

Having been here ten years, this is not the first time we've received amendments on the same day as we're doing clause-by-clause. I think we've already wasted 25 minutes. Let's go ahead and start this bill. Those who are putting amendments forward could argue their case and we could vote on it.

The Chair: Yes, Mr. Penson.

Mr. Charlie Penson: I want to pick up on Mr. Wilfert's earlier comment when he talked about believing there was maybe a 24-hour timeframe. The issue was discussed as a problem last year. I understand that it wasn't resolved, but the intent there certainly was that we needed 24 hours in order to consider this. It was raised last year, as he said.

I'd like to ask the department officials--I'm not sure when they received these amendments, but I assume it wasn't much before us--are they able to look at these--

Mr. Nick Discepola: They wouldn't receive the amendments. It's not up to them.

Mr. Charlie Penson: It seems to me there needs to be some time to consider these. If we're going to do an adequate job, surely there needs to be some reasoned discussion on them and we need to know what they mean and how they fit into the context of the bill.

The Chair: I would like to not spend too much more time.... I will allow Mr. Wilfert--your hand has been up--and then Ms. Picard a small intervention. Then I'm going to make a decision.

Mr. Bryon Wilfert: Madam Chairman, I would agree with Mr. Valeri that we should move forward, particularly on those areas where we do not have amendments.

I want to again reiterate to Mr. Paquette in no uncertain terms that it works both ways. The fact is in order for me to do my job, I have to have the amendments in a reasonable time. I respect the difficulties that you may have had, but the fact is in order for me to do my job, I have to have that information before me, and the fact is I did not, for whatever reason. I'm not suggesting anything other than that they didn't come.

Madam Chairman, it's not a very good way to do business, and in my view I think we need to move on. We've constituted this meeting. We have much where there are no amendments, and where there are amendments I am sure the officials who are here today will be more than happy to respond effectively to any questions that are put forth by the committee members.

The Chair: Madame Picard.

[Translation]

Ms. Pauline Picard (Drummond, BQ): Madam Chair, I was a little bit troubled, not to say shocked by the fact that we are being told that we have been discussing this matter for a long enough time and it was time to dispose of it.

I would like to remind government members in this committee that it is often the opposition members, either the Bloc québécois or the Canadian Alliance, who do the preparatory work and ensure there is a quorum. We want to assert our rights and their response is that there are time constraints.

Thank you, Madam Chair.

[English]

The Chair: With that, I think it might be in order, with the officials here today, that we start with the ones there are no amendments on, deal with those first, and see how far we can go, because there are no amendments being tabled on these clauses, as I understand, and at least we could get to that stage, because there are many.

Mr. Penson, go ahead, sir.

¹ (1555)

Mr. Charlie Penson: Yes, Madam Chair, I would like to move that the committee adjourn and come back on Thursday, after we have had time to consider these 19 amendments and how they affect the bill. I think we can do a more thorough job at that time.

The Chair: That's a non-debatable motion so I will take a second to see who has signed in here and then I will call for the vote.

You wanted a recorded vote? Go ahead, Mr. Clerk.

(Motion negatived: nays 9; yeas 7)

The Chair: We'll continue.

Pursuant to Standing Order 75(1), consideration of clause 1 is postponed. Then we go to clauses 2 to 7, where I see no amendment.

Ms. Judy Wasylycia-Leis: Under clause 2, medical equipment, I wanted to ask--

The Chair: On clause 2 you wanted to ask a question. Go ahead, Ms. Wasylycia-Leis.

(On clause 2--Payments to trust - equipment and training)

Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.

I'd like to ask a couple of quick questions on this clause dealing with diagnostic and medical equipment, since it has been a controversial program in the past and a major focus of the inquiry into the future of health care, particularly the Romanow commission.

My first question is on the overall level recommended by the government, which is $1.5 billion over three years. Was there a reason why the government did not decide to accept the Romanow commission recommendation, which was actually to expend that amount over two years because of the critical shortage, the waiting lists, and the concerns in the field currently?

Mr. Bryon Wilfert: Madam Chairman, I did answer these questions again before the break, but I will reiterate that again this is what the Prime Minister and the premiers agreed to, the $1.5 billion, for acquiring the diagnostic and medical equipment and related staff training. That was in the agreement.

º (1600)

Ms. Judy Wasylycia-Leis: Thank you, Madam Chair.

I don't know if it's a point of order or not, but I would like to indicate to Bryon Wilfert that regrettably the finance committee meets at exactly the same time as the public accounts committee meets. Some of us are on several committees at once and some of us are holding several critic areas, so it wasn't possible for us to be everywhere where we should be. I would think that if all our questions must be condensed into one two-hour period for the entire Budget Implementation Act, it hardly speaks well of the process.

Mr. Bryon Wilfert: In fact, Madam Chairman, again, I made available all the department officials to brief members of the opposition at the time as well. So it wasn't just within those two hours.

The Chair: We have some of the officials here today if you would like to speak to them.

Ms. Judy Wasylycia-Leis: I would hope that the committee is here for the purpose of vetting concerns, receiving questions, and discussing alternatives. I would like to explore that a brief moment further in terms of how the $1.5 billion over three years will be able to meet the need in the system today and what is the contingency plan of this government with respect to a serious shortage of up-to-date diagnostic equipment and trained staff right across Canada.

Mr. Bryon Wilfert: Madam Chairman, the $1.5 billion over the next three years builds on the $1 billion already allocated in the 2000 budget. Again, the accord also deals with issues dealing with accounting and reporting provisions. In fact they've been strengthened, so there will be more accountability in terms of where that money was spent, because I know there were clearly issues raised after the 2000 budget.

The Chair: Are there any further questions on clause 2?

Ms. Judy Wasylycia-Leis: I have a final question to deal with the accountability. I know there has been a decision to place this money in a special fund and to ensure proper allocation based on specified needs. Is the government confident that in fact there will be reporting accountability and transparency in terms of dollars set aside for diagnostic services and equipment, or is there still the problem of some provinces not fully reporting expenditures in these areas?

I know there has been a shift in the way the program is delivered and structured, but I've not yet received the evidence to suggest that we now have full accountability for those dollars so that in fact money doesn't go to, as we had in New Brunswick, buy a lawnmower.

Mr. Bryon Wilfert: Madam Chairman, the member raises an excellent point, and I would point out to the member that as part of the first ministers' agreement, the moneys will be transferred to a trustee once this Budget Implementation Act is passed. The transparency and accountability, which all first ministers agreed to, is on the public record, and I am sure that members of this committee, members of Parliament generally, and certainly the public, will put their feet to the fire on that accountability aspect and we'll avoid the problems the member mentioned.

Ms. Judy Wasylycia-Leis: I appreciate that.

How will Parliament be informed of expenditures in this program, and on what basis?

Mr. Bryon Wilfert: I believe annual reports will be made available, which certainly you'll have an opportunity to review.

Ms. Judy Wasylycia-Leis: So there will be an annual report from this particular trust fund via the Minister of Health, or through another mechanism?

Mr. Bryon Wilfert: On individual expenditures, they will be released on a province-by-province basis.

Ms. Judy Wasylycia-Leis: Are you saying reporting will be done on the basis of our ability to track down provincial reports, as opposed to a coordinated reporting mechanism through the federal government and to Parliament?

Mr. Bryon Wilfert: The agreement calls for each province to release those figures on an annual basis, and again, because that is a public declaration, I would suggest that they will be held accountable to do so.

º (1605)

Ms. Judy Wasylycia-Leis: Will there be any attempt to develop and fine-tune the reporting mechanism so that in fact Parliament will be informed directly, perhaps through an office envisaged by Roy Romanow pertaining to health services?

Mr. Bryon Wilfert: Madam Chair, the agreement stands. I have nothing to add.

The Chair: Ms. Wasylycia-Leis, do you have any questions on any of those other clauses, before clause 7?

Ms. Judy Wasylycia-Leis: I have lots of them.

We're not doing clause-by-clause; we're doing--

The Chair: No, but if there were no other questions on that, I would route clauses 2 to 7, because there are no amendments from clauses 2 to 7.

Ms. Judy Wasylycia-Leis: I did have a question that might have been asked before at the committee but which I feel would lead to further information. I know Mr. Wilfert is going to say this is part of the premiers' accord or the first ministers' accord, but I do want to get a further clarification about the actual discrepancy between the funds transferred under the accord and the budget and this bill, versus the transfer cash recommended by Roy Romanow and the fact that there is what I would call a Romanow gap of about $5.1 billion or $5.2 billion.

Notwithstanding the fact that this was in the accord and therefore it's in the budget, my question is still, why didn't the government accept the Roy Romanow recommendation and ensure that in this budget of 2003, that recommendation was accepted and pursued?

Mr. Bryon Wilfert: My answer still stands. It was a collective agreement. I guess you'd have to ask the people who attended the meeting why they did not. But it was a collective agreement, and as I'm sure the member knows, there is give and take.

On the agreement, all I can do, with respect, is to comment on what is in the budget. I cannot comment on what is not in the budget.

Ms. Judy Wasylycia-Leis: All right, then, based on what's in the budget, based on just cash transfer, not tax points, what is the percentage share by the federal government of health care spending in Canada today?

Mr. Bryon Wilfert: That would depend on the province, with equalization, but it also includes tax points, and in fact the provinces recognize tax points. On average, we could ballpark it somewhere between 38% and 42%, but quite honestly, it depends on each province, including equalization and other factors.

I would not be able to pinpoint that directly, but I think that gives you a fair assessment.

Ms. Judy Wasylycia-Leis: Actually, I said notwithstanding revenue from tax points and notwithstanding equalization, what is the value of the cash transfer by the federal government to the provinces as expended over this period of time in question--

Mr. Bryon Wilfert: Over five years?

Ms. Judy Wasylycia-Leis: --and what share does that bring the federal government up to?

In fact, I ask this question because it has been a point of contention for many years when we've debated the future of health care. In fact, Roy Romanow, in his report, was very clear that this government should once and for all stop trying to put everything but the kitchen sink into this formula and simply look at the question of cash being transferred from the federal government to provincial and territorial governments.

So I'm trying to get a handle on, with this new agreement and as reflected in this budget, what is the value of the cash over these years, and what is the partnership by the federal government in the formula?

Mr. Bryon Wilfert: Again, Madam Chair, in my view, you cannot separate cash transfer payments and equalizations. It's as simple as that. The provinces don't; I don't know why you would.

º (1610)

Ms. Judy Wasylycia-Leis: Madam Chair, I think this is a new twist on the part of the government. At no point have we, in the past, lumped in the cash transfers for health care and equalization.

Equalization is a program--

Mr. Bryon Wilfert: You're talking about tax points. You didn't want to include tax points. You didn't want to include equalization.

Ms. Judy Wasylycia-Leis: I am talking about recognizing that the equalization program is there for a specific purpose--

Mr. Bryon Wilfert: Which we agree.

Ms. Judy Wasylycia-Leis: --and serves a need, and it has to do with equalizing conditions between the provinces on a general basis.

The question of cash for the health care system is what I'm referring to and trying to determine what the value of that transfer is at the end of the agreement in question and what percentage share can one give to the federal government, because in fact we are talking about a system that once, maybe for a short period of time, came into being on the basis of a fifty-fifty partnership.

We know over the years the formula has changed. The cash transfers dropped, and in fact before this budget, by all accounts, we were at about a 15% to 16% federal share in our health care system.

My question is, based on this proposal before us, what does that translate into as a percentage of health care spending in the country today? Is it still 16%?

Mr. Bryon Wilfert: It's still the answer I gave two minutes ago.

Ms. Judy Wasylycia-Leis: So, Madam Chair, is the member saying the government cannot tell us or won't give to this committee the value of the cash being transferred to provinces and territories?

Mr. Bryon Wilfert: Part 2 amends the Federal-Provincial Fiscal Arrangements Act to implement a $16 billion health transfer, a $2.5 billion CHST supplement, and to create two transfer mechanisms.

I am not going to go down the road, with all due respect, to separate transfers in terms of cash, tax points, and anything else. It's not my job to debate the health care act with the member.

The Chair: Mr. Wilfert and Ms. Wasylycia-Leis, at this point we are on clause 2, and the questions and the answers should directly relate to clause 2.

Mr. Cullen, you had a question?

Mr. Roy Cullen (Etobicoke North, Lib.): Just to jump in and try to comment on a comment made by Ms. Wasylycia-Leis a moment ago, my understanding is the fifty-fifty rule really has been misunderstood. The fifty-fifty rule related only to insured services. So that included the hospitals and medical practitioners, but it was not 50% of all health care expenditures in Canada.

That's often quoted as some bargain that was struck years ago, and that wasn't the case. It was 50% of insured services, which is hospitals and, at that time, medical practitioners. It was quite a bit less than 50% of the total health care costs under that jurisdiction.

Secondly, I find it interesting that the member would ignore for some reason the tax points that were introduced in 1977 in contemplation that the provinces were closer to the health care system and the delivery and administration of that system, and they could actually take that tax room, which I think was around 11% or 12% or 13% on personal and 1% or 2% on corporate, something in that order, and direct that funding to health care, to post-secondary education, and to social programs.

To the taxpayer, it was a totally invisible transaction. Suddenly, now, they were just paying more to the provinces and less to the federal government. So to ignore that in the equation...perhaps you're doing it for another reason, but I think while we all know how important cash is--cash is very important--for the Government of Canada just to say they're not even going to worry about these tax points, that this was just sort of another thing that happened I think is faulty in its logic and doesn't really recognize the importance of that move by the Government of Canada in 1977.

The fifty-fifty formula is often quoted, but it was really not part of the deal at that time.

º (1615)

The Chair: Thank you very much.

I know colleagues are trying to be helpful to each other. I anticipate we're going till around 5:30 p.m., and I think we can use this time usefully on non-contested or non-amended clauses.

I'm going to take Mr. Paquette's question. I certainly don't want to stop any questions, but at the end of the day we are going to have to all do this work together and we can move forward.

Mr. Paquette, do you have a question on clause 2?

[Translation]

Mr. Pierre Paquette: No.

[English]

The Chair: Okay, I'll call the question on clause 2.

[Translation]

Mr. Pierre Paquette: We will not do as a block sections 2 to 7?

[English]

The Chair: Oh, I'm sorry, I was going to do that. That is my mistake. I will clarify that. I just called clause 2, but actually it's clauses 2 to 7.

Thank you very much for your assistance, Mr. Paquette.

[Translation]

Mr. Pierre Paquette: Perhaps your gratitude will be somewhat diminished when you hear that I request a recorded vote on sections 2 to 7.

[English]

The Chair: We're going to have a recorded vote on clauses 2 to 7.

(Clauses 2 to 7 inclusive agreed to: yeas 9; nays 4)

(On clause 8)

The Chair: It is amendment NDP-1, and after that we have.... Do you want to go to the non-contested clauses only?

Mr. Tony Valeri: Yes, if we could go to all the non-contested clauses first and then come back to those where there are amendments.... I think you can group them.

Mr. Charlie Penson: I have a question to ask the officials.

The Chair: There's a question I would have to address on clause 8, on admissibility, so we may be able to dispose of it. I'm at your disposal. I'm quite prepared just to do unamended clauses at this point in time.

(Clause 8 allowed to stand)

The Chair: If we're doing that, I want to be very careful that we're in the right area.

We will be grouping clauses 9 to 16.

Do you want a recorded vote again, Mr. Paquette?

[Translation]

Mr. Pierre Paquette: I am still being a good boy; I accept that we deal with blocks of sections.

[English]

The Chair: It's as you wish, Mr. Paquette. So we're going to a recorded vote.

Mr. Charlie Penson: I have a point of order, Madam Chair. I don't want to be grouping clauses 9 through 16. Clauses 9 through 14 would be fine for us.

The Chair: Okay. Do you have amendments coming in or do you have questions?

Mr. Charlie Penson: I just have a different vote.

The Chair: Oh, I see. Thank you.

We'll group clauses 9 to 14, and we'll go with a recorded vote.

(Clauses 9 to 14 inclusive agreed to: yeas 10; nays 3)

º (1620)

The Chair: Now, can we group clauses 15 and 16?

Mr. Penson, I'm in your hands here.

Mr. Charlie Penson: I have a question on clause 16.

The Chair: There is a question from Mr. Penson to the officials or the parliamentary secretary.

Yes, Mr. Discepola.

Mr. Nick Discepola: I have a point of order, please. Could we go through all the ones we agree on first, as Mr. Valeri suggested, and then come back to all the ones...? If anybody has a question, simply put it off.

Mr. Charlie Penson: No.

Mr. Nick Discepola: Why?

Mr. Charlie Penson: It's too complicated.

The Chair: Okay, so can we do the vote on clause 15 then.

(Clause 15 agreed to on division)

(On clause 16)

Mr. Charlie Penson: Yes, on the employment insurance compassionate leave clause we're dealing with here, I'd like the officials to indicate how self-employed workers and contract workers will be served for compassionate leave in this kind of situation.

The Chair: Could you give me your name, sir, please?

Mr. Jim Little (Officer, Operational Policy, Department of Human Resources Development): I'm Jim Little, the acting senior director of policy and legislation development.

The Chair: Thank you, and your answer?

Mr. Jim Little: This leave applies to those people who can qualify for employment insurance. If you are self-employed, generally self-employed persons are not covered. It's intended to cover those who are in an employer-employee relationship. Contract workers could be covered if they're in an employer-employee relationship, as opposed to being self-employed contractors.

Mr. Charlie Penson: Could you expand on that a little? How would that happen?

Mr. Jim Little: When you use the term “contract worker”...you can be hired as an employee on a contract for a period of time, or you could be like a construction person who might be a contractor who is hired to do a job. That type of contract worker is a self-employed person. So that's the distinction.

Mr. Charlie Penson: So there are instances where that contract worker would be able to qualify.

Mr. Jim Little: If they're in an employer-employee relationship....

Mr. Charlie Penson: How is that defined?

Mr. Jim Little: That's generally the case where the employer has control over the working conditions, the hours of the employee. That would say they are an employee as opposed to someone who has control over how they do their work, when they do it, and that type of thing. It's the control of the work relationship that is largely--

Mr. Charlie Penson: Would that not be an employee, then, as opposed to a contract worker?

Mr. Jim Little: Which would be?

Mr. Charlie Penson: The contract worker whose contractor has control over the working hours and the working conditions...my understanding is that it's a fairly fine line in there. Where do you decide whether it's an employee or actually a contract worker?

Mr. Jim Little: We would look at the circumstances in every case, in terms of what the relationship is. Then, in consultation with the Minister of the Canada Customs and Revenue Agency, who would be asked to rule on whether or not it was an employer-employee relationship or self-employment, we look at all the circumstances of a given case and the relationship, as we're talking about, and then we decide. You're right, the line may not be perfectly obvious at first. We have to look at the details.

Mr. Charlie Penson: Would it be possible to give the committee the conditions under which that would be met?

Mr. Jim Little: We could make a note of that and get back to the committee.

Mr. Charlie Penson: Thank you.

The Chair: Yes, Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: On the same point, I'd like to try to put this in the context of the changes that were recently announced with respect to SARS in the Toronto area. I think the rules were changed so that people who weren't normally eligible for employment insurance would be able to benefit from the package that was offered. So in fact we were able to get around this whole question of self-employment and contract relations and so on by recognizing the circumstances.

My question is, couldn't we do the same in the case of compassionate leave, since we are dealing with dire circumstances, serious issues, extenuating matters? Couldn't we apply that kind of approach to this situation?

º (1625)

Mr. Jim Little: In the SARS situation there were two types of payments being made. The first had to do with the regular employment insurance benefits, where you had to be an employee, pay the contributions, and qualify. For those people, we said, if you meet the conditions for the special benefits, the 600 hours and you're either sick or in quarantine, we will waive the two-week waiting period and pay you immediately. So they had to meet the regular conditions of being an employee and having contributed.

The other element is the possibility of the grant that the Liberals announced last week for people who did not qualify as self-employed people or could not qualify for EI because they didn't have enough hours. That's a grant. It's separate and apart from the employment insurance fund.

So if you were trying to do a comparable relationship for the compassionate care, it would be introducing an element of people who have not been employed in the workforce or have not qualified, mainly because they're self-employed. So it would be a different type of situation.

The parallel would be those people who qualify for employment insurance, and in a SARS situation we've established the claim the same as they would for any special benefits, but pay them immediately by waiving the waiting period. So it would be a fundamental difference in the way we pay the special benefits if we covered self-employed people in terms of the compassionate care.

Ms. Judy Wasylycia-Leis: This is my last question on this whole area and whether or not it's feasible to approach this from another perspective, given the fact that we're dealing with circumstances that affect families everywhere. Some may be working full-time, others may not, and others may be working part-time and not meeting the hours but still have these traumatic situations to deal with.

Is it possible to say one could support a broader program than the one in this budget by drawing on the surplus from the employment insurance program, even though I know that has gone into general revenue? Would that money be sufficient to meet the task at hand? Would it be feasible to say, since that money was collected through the employment insurance program, it could therefore be used in terms of meeting this kind of situation among families and workers across Canada?

Mr. Jim Little: As an official, I can certainly speak to what's in the bill. I believe that's a broader policy issue for the government, and I'd be unable to reply.

Ms. Judy Wasylycia-Leis: Thank you.

Maybe Mr. Wilfert could answer that question, this whole issue of the EI surplus and why not use--

Mr. Roy Cullen: SARS is not part of the bill.

Ms. Judy Wasylycia-Leis: I know it's not part of the bill, but we are talking about programs that--

Mr. Bryon Wilfert: Madam Chairman, it depends on what line of questioning you're going to allow.

The Chair: Yes, and we have some relevancy.

I think, Ms. Wasylycia-Leis, we have to stick to the bill when we're at clause-by-clause. This is certainly permissible when we've been meeting with officials here and we've had time for witnesses.

Unless there are any more questions regarding clause 16, I believe we are now ready to call the question.

(Clause 16 agreed to on division)

The Chair: I will stand down clause 17 because there are some amendments.

[Translation]

Mr. Pierre Paquette: In fact, amendments to section 17 are being proposed.

[English]

The Chair: Yes, we are going to stand them down because they have amendments.

There are no amendments on clause 18.

(Clause 18 agreed to on division)

The Chair: I will stand down clause 19, and then we'll go through clauses 20 to 43.

Is that okay as a block, Mr. Penson?

º (1630)

Mr. Charlie Penson: I'm good from clause 20 to clause 30.

The Chair: All right. I will take as a block clauses 20 to 30 inclusive.

On division, Mr. Paquette?

[Translation]

Mr. Pierre Paquette: I request a recorded vote.

[English]

The Chair: You want a voice vote? Fine. We will do a voice vote for clauses 20 to 30 inclusive.

Mr. Charlie Penson: Is he speaking of a recorded vote?

The Chair: Yes, a recorded vote.

(Clauses 20 to 30 inclusive agreed to: yeas 9; nays 4)

The Chair: Now we are at clauses 31 to 43 inclusive. Can I do that as a block?

I'm going to let Mr. Penson check his list for voting purposes.

Mr. Charlie Penson: Madam Chair, I have some questions on clause 31.

The Chair: Okay. First let's take your questions on clause 31.

(On clause 31)

The Chair: Go ahead, Mr. Penson. You have the floor.

Mr. Charlie Penson: The question I have for the officials has to do with the Auditor General's recommendations on foundations. As you know, the Auditor General made a lot of recommendations. How is it that just these have been picked up? There are only portions that have been picked up in terms of being in the act. What was the rationale?

Mr. Peter DeVries (Director, Fiscal Policy Division, Economic and Fiscal Policy Branch, Department of Finance): With respect to the ones that are in the budget bill, there were a whole bunch of changes to address the various concerns raised by the Auditor General in the budget per se. Most of those changes will be done through changes to the funding agreements for the various foundations.

With respect to these three foundations, however, there were clauses in the act that were established by Parliament as to what would happen to the funds, the remaining funds in these foundations upon windup or dissolution. So the government had to change the legislation with respect to these three foundations in order to ensure that if these three foundations were to be wound up or dissolved, then the minister could request that the funds be returned to the CRF.

With respect to the funding arrangements, however, the other provisions will be put in place.

Mr. Charlie Penson: Okay. I think that answers my question. Thank you.

I'd just like to deal with clauses 31, 32, and 33, Madam Chair.

The Chair: Okay, I'll block clauses 31, 32, and 33.

(Clauses 31, 32, and 33 inclusive agreed to on division)

The Chair: Can we do a block with clauses 34 through 43 now?

Mr. Charlie Penson: Clauses 34 through 40 are okay for me, but I have a question, Madam Chair.

The Chair: On which clause?

Mr. Charlie Penson: Let me find out which clause it is.

Basically it deals with most of the clauses, clauses 34, 35, 36, and 37. It has to do with the foundation funding, Madam Chair.

I'd like to ask the finance officials why there are provisions for continuing to allot money to these foundations when they haven't spent their past budgets, when the money is still sitting there that has been allocated to them in the past. It seems to me that was another one of the Auditor General's concerns, and I'd like an explanation.

Mr. Peter DeVries: With respect to most of these foundations, Madam Chair, they have committed large portions of their funds already.

With respect to Genome Canada, they have committed about 100% of the funding that the government gave them in previous budgets.

With regard to the Canada Foundation for Innovation, I think they have committed well in excess of 75% of the funds that had been given to them. For most of these foundations, the moneys have been committed, although they may not have already been spent. So the government decided to provide them with additional funding so they can carry on their work.

º (1635)

Mr. Charlie Penson: Mr. DeVries, isn't that one of the Auditor General's concerns? Isn't that one of the areas she identified as a concern, that even though the money may have been committed, it's still sitting in the foundations?

Mr. Peter DeVries: The Auditor General's concern is with regard to how the government accounts for these funds on its own financial statements. There is quite a bit of debate within the accounting community as to how these funds should be accounted for. There are no clear-cut rules or guidelines with respect to that. There is a great deal of grey area and professional judgment that is used. The government's perspective is that the element rests with control. The government does not have control as to how these moneys are spent. It has given that function to the board of directors of those foundations, and as a result, once the moneys have been transferred to these foundations, then it should be recorded in the government financial statements.

Mr. Charlie Penson: I understand that, but I think the concern is that the foundations themselves--the board of directors of the foundations--are not answerable to parliamentarians in the same way the department is. That's the concern that I think the Auditor General has.

Mr. Bryon Wilfert: Madam Chair, parliamentary approval for the purpose of funding through direct legislation for those foundations is significant, hence the requirement for the foundations to produce an annual corporate plan to the minister. They are also required to present annual reports with relevant performance, which again Parliament will be aware of, as well as audited financial statements and evaluation results. Also, Mr. Penson, they have to conduct independent evaluations, present them to the minister responsible, and make them public. There are also provisions for the intention in all funding agreements in the event the minister responsible feels there have been deviations. And overall the minister is responsible, Mr. Penson, for the discretionary cover of unspent funds in the foundation.

Again, all this information is made public both to Parliament and to the public at large, and of course any of those foundations can be called before the appropriate standing committee as well, where they can be questioned.

Mr. Charlie Penson: I understand your answer. I don't agree with it, and I'll be voting no on this clause, Madam Chair.

The Chair: We are grouping then, just for clarification, clauses 34 through 40.

[Translation]

Mr. Pierre Paquette: I request a recorded vote.

[English]

The Chair: Okay, a recorded vote on clauses 34 through 40.

(Clauses 34 to 40 inclusive agreed to: yeas 9; nays 4)

The Chair: I'm going to block clauses 41 through 43. Is that fine?

(Clauses 41 to 43 inclusive agreed to on division)

Mr. Charlie Penson: Madam Chairman, I don't think I have a problem with the vote, but I would like to ask a question.

The Chair: I will allow you to ask a question--one question--but the vote still stands.

Mr. Charlie Penson: These things are moving along pretty fast, Madam Chair. Do you want me to send you notice of the ones I'm going to be asking on?

The Chair: I did ask you if it was okay to group those and go ahead.

Mr. Charlie Penson: It was okay to group them, but I still had a question on them.

º (1640)

The Chair: Go ahead. I'm allowing your question.

Mr. Charlie Penson: It has to deal with farm credit. My understanding from the officials is that this allows farm credit to expand the amount of money they loan to agribusiness. Correct me if I'm wrong, but in a case where there are problems with repayment of these loans to agribusiness, who picks up the cost there? Is it Farm Credit as a crown corporation, or does this debt come back to the government through the Government of Canada?

Mr. Peter DeVries: I will try to answer that one.

The Farm Credit Corporation will be required to operate in such a way that it can manage the various risks that could happen if there were defaults. However, with respect to the Farm Credit Corporation, as with respect to all crown corporations, they are consolidated on the government's financial statements, so they will have an impact on the government's financial balance, if you want to look at it that way, in the event there are major defaults. But it would be the Farm Credit Corporation that would be responsible in order to ensure that it manages its books in such a way that it is a viable operation.

Mr. Charlie Penson: Mr. DeVries, you understand that this whole farm credit operation has expanded a lot from the days when they were just loaning to farmers to buy land. We're talking about agribusiness now, and there are some pretty big loans involved. Is it Farm Credit's responsibility to collect in the event that there's a default, or is it treasury's? Whose responsibility is it?

Mr. Peter DeVries: It would be Farm Credit's responsibility. But I'll defer to my colleague.

The Chair: Mr. Batani.

[Translation]

Mr. Philippe Batani (Economist, Agriculture and Fisheries, Department of Finance): Good afternoon. The margin of Farm Credit Canada has been increased in the framework of the additional $20 millions that have been allocated to Crown corporations. These $20 millions are specifically dedicated to venture capital investments and this amount will be managed by the Corporation. Any loss will be absorbed by the Corporation. So these losses will not be the government's responsibility. There is a provision ensuring that all the venture capital invested by the Crown corporation is its responsibility.

[English]

Mr. Charlie Penson: How does that square with your answer, Mr. DeVries?

Mr. Peter DeVries: I believe it is consistent with my answer. All I was saying, adding to that point, is that the Farm Credit Corporation is consolidated in the government's overall financial statement. So whatever happens on their books also happens on the government's overall books. But the FCC is responsible for ensuring that it collects on these defaults.

The Chair: Thank you very much.

I'm going to stand clause 44. We'll group clauses 45 to 63 inclusive. We'll wait for Mr. Penson.

While we're doing that, Ms. Wasylycia-Leis, did you have a question on something in this package?

Ms. Judy Wasylycia-Leis: I have a question on clause 46.

The Chair: We'll take that question.

(On clause 46)

Ms. Judy Wasylycia-Leis: Well, I think it's clause 46. The question is really just generally around the issue of whether the government did consider making a steeper hike than is indicated in this budget. In the past there have been concerns about smuggling when the prices go up. Is that a problem? Has there been any noticeable increase? Could the government have gone even higher in terms of the price of tobacco and cigarettes?

Mr. Bryon Wilfert: Madam Chair, on the first issue, not to my knowledge. On the second issue, all the relevant agencies I know were contacted with regard to the issue of smuggling, and the result is the legislation before you.

Ms. Judy Wasylycia-Leis: If there has been no noticeable increase in smuggling, would it not make sense, from a cost-benefit analysis, to increase the tax on cigarettes in order to try to curb the sale of tobacco products and deal with growing health costs because of tobacco addiction?

Mr. Bryon Wilfert: That is the intent of this legislation.

Ms. Judy Wasylycia-Leis: Was there any contemplation given to a steeper tax increase?

º (1645)

Mr. Bryon Wilfert: Not to my knowledge.

Ms. Judy Wasylycia-Leis: Is there a program in place to review this and to continually find ways to increase the price of tobacco, so that we can move on this serious issue in a much speedier fashion?

Mr. Bryon Wilfert: The government is always reviewing the concerns that the member raises, and with good reason. As I said in the past, in another life I worked on a Break-Free All Stars program with the Ministry of Health, to try to curb or prevent seven- to eleven-year-olds--if you believe it--from smoking. This is certainly a top priority and an issue that the government continues to review.

The Chair: Thank you.

Mr. Paquette had a question and then Mr. Cullen.

[Translation]

Mr. Pierre Paquette: Still on part 7, concerning the amendments dealing with tobacco products taxes, just as everybody, I am well aware of the fact that we must do all we can to reduce the harmful effects of tobacco and that taxation is one way of doing this. On the other hand, one of the results of these campaigns, when they are effective, is a decrease in the take up of tobacco.

You must be aware that in the Lanaudière region, we have lost more than 50% of orders from large cigarette companies. There are some 50 yellow tobacco producers in the Lanaudière region, especially in Joliette and Saint-Thomas, whose orders will go down this year from 7 million pounds to 3 million pounds, if I am not mistaken. Obviously, some of them would like to grow other crops.

In this strategy for the disappearance of tobacco consumption, is there a specific reconversion program that would allow tobacco producers to grow other crops such as asparagus, for example. However, when you plant asparagus, you can only do the first harvest after four or five years.

We also know that presently, people are using more herbs, either for personal care or for cooking. These farmers used to do plant drying. That could be a possible avenue for going over to other crops.

Is the government considering giving tobacco producers who would like to get out of this market the means to go over in other crops?

[English]

Mr. Bryon Wilfert: Madam Chairman, Mr. Paquette raises a very important point, and I believe Agriculture Canada has programs to that effect. My knowledge of agriculture you could put on the head of a pin, so I would ask Mr. Willis to respond. I'm sure Mr. Willis could tell you, but I know that program is available.

Mr. Brian Willis (Senior Chief, Sales Tax Division, Tax Policy Branch, Department of Finance): Madam Chair, a number of years ago there was a program specifically to buy out tobacco farmers and to take out of production some of the tobacco that was being produced. Some farmers did take advantage of it. Many decided not to, because it was, at that time, a very profitable business.

My understanding is that there are some programs, but I do not have the details of the current ones that are in place and what the agriculture department is doing on this front.

There have been some discussions and I know some representations were made.

The Chair: Thank you.

Mr. Cullen.

Mr. Roy Cullen: Thank you, Madam Chair.

I have a question also for Mr. Willis, picking up on Ms. Wasylycia-Leis' point. Some time ago the excise tax on cigarettes was changed so that it's now fixed right outside of production, outside of the manufacturing facility. As I understand it, it is an attempt to minimize the risk of smuggling. Especially with the excise tax going up and the cost of cigarettes going up and increasing the risk, I suppose, of smuggling, could you describe, for the committee, the type of risk that exists, the pressures that are there? Could you give us an indication of any kind of smuggling that you're tracking as we go and increase the excise tax with every budget?

Mr. Brian Willis: Madam Chair, there certainly are concerns about contraband pressures. What the government has been trying to do over the last number of years is balance the desire to reduce smoking and the need to avoid a return of contraband. Tobacco taxes have been increased regularly by small amounts, and more recently fairly substantially, at both the federal and provincial levels to try to achieve the health objectives that all governments have in mind of reducing smoking.

On the contraband front, there are a number of programs still in place.

Very substantial amounts of money were allocated to the RCMP and to the Canada Customs and Revenue Agency in the mid-1990s to control contraband, and those funds continue to be in place. We meet regularly from the finance department with officials from those agencies to monitor the levels of contraband activity. Their advice to us, at this point, is that they're seeing some renewal of contraband activity but that it is relatively minimal. Their main advice to us is that it's most important point for the government to move slowly and regularly and to monitor very closely the problems that are developing. That's in fact what has been done.

I will get back to the point of other measures that were put in place. In 2001 the government introduced a large number of additional measures that dealt with exports, sales to duty-free shops, tobacco imported by travellers, sales to ship stores, to ensure that the tobacco taxes were put on at the factory door on those products that were going to all destinations. By eliminating tax-free tobacco products largely--there are very few tobacco products that do not have excise taxes and excise duties--we've eliminated the source of non-tax products that caused many of the problems in the mid-1990s.

º (1650)

The Chair: Thank you.

Mr. Penson, please.

Mr. Charlie Penson: I'm wondering if anybody can tell us how much extra revenue has been gained this past year from the increase in excise taxes on tobacco.

Mr. Brian Willis: From the estimate in the documents, the most recent number we have is about $370 million at the federal level from the increases that are included in this bill.

Mr. Charlie Penson: I would like to follow up on the smuggling aspect of this. I wasn't quite clear. Have you noticed a decrease in smuggling activity as a result of this?

Mr. Brian Willis: No, there has not been a decrease in recent years. There was a very heavy level of smuggling in the early nineties. Taxes were reduced, heavy enforcement actions were taken, and there was a significant reduction in smuggling through the mid-nineties.

More recently there has been evidence of some growing level of contraband, but nothing of a serious nature. There's a certain percentage of product that is being diverted that is not being fully taxed and a certain amount of product that is being found by RCMP and CCRA agencies in their enforcement.

Mr. Charlie Penson: Mr. Willis, wasn't that the reason for the increase, to try to deal with the smuggling problem?

Mr. Brian Willis: Sorry, do you mean the reason for the increase in the tax rates?

Mr. Charlie Penson: Yes.

Mr. Brian Willis: The increase in the tax rates is really to try to decrease smoking.

The resources for enforcement and the controls that were put in place in terms of taxing all products were the measures that were put in place to reduce smuggling and to address that problem.

As tax rates are increased, obviously the pressure increases on this base. The amount of tax imposed by both federal and provincial governments--

Mr. Charlie Penson: I'm sorry. So by increasing the taxation there's actually a possibility of increasing smuggling?

Mr. Brian Willis: Exactly. As tax rates are increased, the incentive to smuggle or the incentive to divert product increases. It's very important that we avoid that.

The Chair: Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: This is my last question on this issue of taxing tobacco products. Over the last six years there has been a bill before Parliament, twice by Senator Kenny, making a recommendation for a corporate responsibility tax, so it would be a tax on tobacco companies. The revenue generated would be designated for youth programs and the prevention of smoking addictions.

At the time it went to Parliament it was ruled out of order in terms of the responsibility of Parliament. Then the government indicated that it would seriously study the issue, and it in fact struck a Liberal caucus committee to review the issue.

I'll ask the first part of my question to perhaps Brian Willis. Is this issue still alive and well in the department? Is it an active idea for the finance department? Is it still being considered?

The second part is to Bryon Wilfert. Is there any report from that committee about the feasibility and the advisability of this scheme proposed by Senator Kenny?

Mr. Brian Willis: In the package of tobacco measures that was introduced in 2001, the government allocated additional resources to help Canada undertake tobacco control programs. That funding was in fact very much in the same area as Senator Kenny was proposing in his bill.

The government's response to those particular proposals was in the direction of more broadly discouraging smoking. Senator Kenny was focusing primarily on youth smoking, which was just one part of the problem. The funding provided to the Department of Health was to address both youth smoking and all other users of tobacco products. That was done in the April 2001 tobacco tax measures and anti-smoking programs that were put in place at that time.

º (1655)

Ms. Judy Wasylycia-Leis: Are there any other further plans being actively considered?

Mr. Bryon Wilfert: Nothing other than what Mr. Willis has said....

The Chair: Okay, thank you very much.

Now, are those all the questions before I go through?

[Translation]

Mr. Pierre Paquette: I would like once again to request a recorded vote.

[English]

The Chair: Okay. We'll take a recorded vote. I want to make sure we're going from clauses 45 to 63 inclusive.

Is that okay with everyone?

Mr. Charlie Penson: We're going to clause 60, which deals with the tobacco section.

(Clauses 45 to 60 inclusive agreed to: yeas 12; nays 1)

The Chair: Now, can I block together clauses 61 through 63?

Mr. Penson, is there anything there?

Mr. Charlie Penson: Clauses 61 and 62 deal with bio-diesel. Let's do them by category.

The Chair: Okay, we'll deal with clauses 61 and 62.

(Clauses 61 and 62 agreed to on division)

The Chair: Mr. Penson, you have a question on clause 63?

(On clause 63)

Mr. Charlie Penson: This deals with the GST issue and school buses.

The Chair: I think that's clause 64, Mr. Penson.

Mr. Charlie Penson: Let me just check, Madam Chair.

Yes, I'm sorry. I want to deal with clause 64.

The Chair: Can we do a vote on clause 63, then?

You have a question on clause 63, Ms. Wasylycia-Leis?

Ms. Judy Wasylycia-Leis: Forgive me if this has been answered previously, but I'm just wondering about the estimated costs of the proposed fuel excise tax and the goods and services tax or harmonized sales tax changes. Is there an estimated cost that you can give us? I don't know who can answer that.

The Chair: Go ahead, Mr. Willis.

Mr. Brian Willis: Are you focusing on the diesel fuel, the bio-diesel? Is that the point?

Ms. Judy Wasylycia-Leis: That was a supplementary question. I was going to ask you about the effects the proposed change would have on the consumption of blended diesel fuel, but I guess I was trying to get a handle on the overall costs.

Mr. Brian Willis: On the costs of bio-diesel and the diesel fuel....

Ms. Judy Wasylycia-Leis: Yes, together.

» (1700)

Mr. Brian Willis: Initially, it's relatively minimal. This is a product that is just now coming to market. It's just starting to be developed. The expectation is that over a period of years the costs could mount to millions, in the $10 million range, but it will depend on market take-up.

Currently there is ethanol used in gasoline blends, and that runs at about $25 million per annum. But of course, as we move in the direction of ethanol being used in diesel fuel and as bio-diesel fuel is being developed, there are currently no plans in place. We've been told that there are companies planning to start doing these sorts of things, so it's very difficult to have a substantial estimate, but in the early years the cost is not likely to be significant.

Ms. Judy Wasylycia-Leis: Then a supplementary question would be a sense of the effect that this proposed change would have on the consumption of blended diesel fuel. Do you have any sense of the impact?

Mr. Brian Willis: I don't think we have a sense of the impact of the consumption of diesel fuel. It's rather that as you blend ethanol or bio-diesel into diesel fuel, assuming the same quantity is used, that there's that same demand in the market, you're starting to have an effect on reducing the greenhouse gases that are produced by burning those fuels. This particular measure is not expected to reduce the total quantity used, but rather to have a portion of that being a product that is more environmentally friendly.

Ms. Judy Wasylycia-Leis: I appreciate that. How do you measure the impact in terms of greenhouse gas emissions and how we, as members of Parliament, monitor the effectiveness of this in the context of the Kyoto accord?

Mr. Brian Willis: Madam Chair, that's a very tough question, and I don't think I have the expertise to respond appropriately to it. We would rely very heavily on Natural Resources Canada and Environment Canada to do that assessment.

From the analysis that I have seen, they have concluded that these various measures that encourage the substitution of ethanol and bio-diesel reduce emissions through a variety of different approaches.

First of all, in using a source such as straw or grain for producing the fuel, a product that is recyclable, that you can produce again, or in the case of wood chips, if you're producing ethanol from wood chips, you have a waste product, so you're getting a fuel from something that has no other particular uses.

So there are real gains in substituting those sorts of fuels for fossil fuel sources, but in terms of being able to give you a number on the quantity reduction in GHGs, unfortunately I am not able to do that.

Ms. Judy Wasylycia-Leis: My last question on this section is perhaps best directed to Bryon Wilfert.

The former Minister of Finance has just been in the news suggesting that in fact there isn't a detailed plan for implementation of the Kyoto accord that was said to be the case, and that in fact there needs to be some very specific plans with accountability and ways to measure the effectiveness of those changes.

So I guess the question to the government is, are there plans in the works to deal with those criticisms flowing from the budget to ensure that we have a concrete plan, an appropriate response for our commitment to the Kyoto accord?

The Chair: Mr. Wilfert now has the floor.

Mr. Bryon Wilfert: Madam Chairman, I don't comment on the former Minister of Finance. And as far as the plan is concerned, I think the Minister of the Environment handled that issue very clearly and succinctly in the House in December 2002.

The Chair: Mr. Cullen has a question on clause 63.

Mr. Roy Cullen: Yes, this is the one dealing with the fuel. This could go to the parliamentary secretary or whatever official.

In the budget plan on page 151, there was talk about other climate change measures and $1.7 billion over five years to support innovation and cost-effective measures, etc., and action to promote energy efficiency, sustainable transportation, and new alternative fuels in such areas as building retrofits, wind power, fuel cells, and ethanol would be considered.

I'm particularly interested in these hybrid cars, where they're part electrical, part fuel. As I understand it, they're available now, but the cost differential is quite significant, so the economics of buying one of these is not very positive.

I went to the office of the Minister of the Environment the other day to ask if there were any instruments under consideration. It could either be a rebate or a tax credit or some kind of GST relief to deal with these alternative fuel vehicles--hybrids, I guess they're called--fuel cell and gas, to get them on the road so that they can produce quite a bit less in terms of greenhouse gases.

Is there anything in the Department of Finance under review or any instruments that are being analyzed in the Ministry of the Environment to look at trying to bring the cost of these hybrid vehicles down?

» (1705)

Mr. Bryon Wilfert: I can only say, Madam Chairman, that the Minister of Industry released a very important document in April. That document refers to Canada, particularly fuel cell technology and what the Department of Industry is looking at and the cutting-edge work they are doing. And I know the Minister of Industry has certainly been involved, both at home and abroad, with regard to those issues.

As far as collaboration with the Department of Finance and the Department of the Environment is concerned, I cannot speak on that, unless the officials can. Certainly I would commend the member to the industry report, which was released, I believe, during the week of April 12, 2003.

(Clause 63 agreed to on division)

The Chair: I'm standing clause 64.

Mr. Charlie Penson: Is there an amendment on clause 64?

The Chair: Yes, there's a Bloc amendment on clause 64.

Mr. Paquette.

[Translation]

Mr. Pierre Paquette: I would like to say that I also have an amendment on clause 66. I take this opportunity to say that I would like a separate vote on sections 67 and 68.

[English]

The Chair: All right.

(Clause 65 agreed to on division)

(On clause 66)

Mr. Bryon Wilfert: Madam Chairman, excuse me. Mr. Paquette said he had an amendment on clause 66. I don't have it.

[Translation]

Mr. Pierre Paquette: I know. I said at the beginning of the meeting that I was still waiting for it. I will distribute them when we deal with the amendments. But I could distribute them right now.

[English]

The Chair: Is it duplicated to be handed out? Okay.

Is that your last amendment? It would be a good idea, then, if you could give it to the clerk and they can send it around.

(Clause 66 allowed to stand)

(On clause 67)

The Chair: Mr. Penson, you have a question on clause 67. Go ahead, sir.

Mr. Charlie Penson: Just so I have a clear understanding of the first nations goods and services tax, is it the intent that the GST collected by first nations would stay there and there would be no remittance to the federal government?

The Chair: Ms. Carrier.

[Translation]

Ms. Annie Carrier (Chief, First Nations Taxation Section, Tax Policy Branch, Department of Finance): According to this bill, any tax that is completely harmonized with GST will be paid on products bought on reserves by consumers. Indeed, these taxes will be remitted to the Native government, but it will be based on a consumption formula, just as in the Maritime provinces, where there is an harmonized sales tax. It will also be limited under a cap determined according to consumption.

In the bill, there is a part where it says that it will be done under an agreement. So the revenues will indeed flow back to the Native government according to a formula reflecting consumption on Native lands.

[English]

Mr. Charlie Penson: But isn't it true that first nations people living on reserve do not pay GST at the moment?

[Translation]

Ms. Annie Carrier: Presently, according to the statutory exemption provided for by section 87 of the Indian Act, Indians that are registered under the Indian Act are exempted from paying the GST on their goods on a reserve, but the products must be bought on the reserve or delivered on a reserve according to the administrative regulation made by the CCRA.

» (1710)

[English]

Mr. Charlie Penson: So this is a new tax for those people.

[Translation]

Ms. Annie Carrier: It is new for registered Indians from whom the Native government will voluntarily decide to collect this tax. These individuals will from now on pay a tax on goods that, presently, would be exempted. It is a voluntary tax. It will be up to the Native government to decide to implement it on its Native lands.

[English]

Mr. Charlie Penson: Okay. What sort of accountability process has been put in place, once they've realized this is a new stream of revenue?

[Translation]

Ms. Annie Carrier: It is the same accountability process as presently exist, namely that they must spend the money according to the Indian Act, which means by a band council vote or resolution. There is a whole accountability mechanism that is linked to these new sources of revenues.

[English]

The Chair: Are you finished with your questions, Mr. Penson?

Mr. Charlie Penson: Yes, I am. Thank you.

The Chair: I'll go to Mr. Paquette.

Mr. Paquette, I'm still waiting for those amendments so I can circulate them.

[Translation]

Mr. Pierre Paquette: We have heard that from First Nations members who have mentioned it to us, but I had not understood that it would force provincial governments to necessarily get on board in this—

Ms. Annie Carrier: No, it does not force provincial governments to do so. If the provinces want to pass a similar legislation to authorize Native governments to take over a provincial fiscal domain, they can do so, but this provision only deals with the federal part of the harmonized tax.

Mr. Pierre Paquette: So it does not have any effect on the Quebec sales tax.

Ms. Annie Carrier: Not at all, but it might be interesting for provincial governments to adopt a similar provision.

[English]

The Chair: Are we ready now? There are more questions in this area, so we would--

Mr. Charlie Penson: Can you go back and tell us which clause she is talking about?

The Chair: Yes. I'm going to start. We've stood down clause 66. We're going to do clauses 67 through 74 inclusive.

Mr. Charlie Penson: I have a question on clause 70, but I could go up to clause 69.

The Chair: So we're going to do--yes, Mr. Paquette.

[Translation]

Mr. Pierre Paquette: I would have liked to be able to vote separately on sections 67 and 68 of part 9. For the rest, we could deal with them as a block.

[English]

The Chair: I'm going to do clauses 67 and 68 together.

[Translation]

Mr. Pierre Paquette: I request a recorded vote, please.

[English]

The Chair: We will have a recorded vote on clauses 67 and 68.

(Clauses 67 and 68 agreed to: yeas 11; nays 0)

The Chair: On clause 69, is that a separate...? Mr. Penson?

Mr. Charlie Penson: I have a question on clause 70, I'm sorry. Clause 69 is fine.

The Chair: I'm going to do clause 69.

(Clause 69 agreed to on division)

The Chair: You have a question on clause 70, Mr. Pension. Go ahead, sir.

(On clause 70)

Mr. Charlie Penson: I would just like the officials to give us a thumbnail sketch, in plain English, of what this capital gains means. What's the intent here?

Mr. Gérard Lalonde (Senior Chief, Finance Canada, Tax Legislation Division, Tax Policy Branch, Department of Finance): What this amendment to the act does is remove certain limits on an existing rollover provision for capital gains. It has to do with the rollover for persons who have invested in small business corporations, who want to sell the shares from one small business corporation and buy shares in another small business corporation. There were limits of $2 million of original investment in the first corporation and $2 million investment in the second corporation. Those limits have been removed. So if you own shares in a small business corporation and you want to sell those shares, realize a gain at that point but roll the gain over into shares of a new small business corporation, you can do that and defer the taxation of capital gain.

» (1715)

Mr. Charlie Penson: Is there a time limit for when that has to happen?

Mr. Gérard Lalonde: Yes. You have to reacquire the shares I believe within 120 days after the end of the year in which you dispose of the original shares. So if I were to dispose of shares, say, in 2004, I would have to acquire replacement shares before the end of the first 120 days in 2005.

Mr. Charlie Penson: What's the minimum amount of time we're talking about here that that rollover has to take place?

Mr. Gérard Lalonde: A minimum amount would be four months. If you disposed of your shares on the last day of the first taxation year, you'd have 120 days into the second; if you disposed of the shares on the first day of the year, you'd have up to 16 months.

But of course the reason for the 120 days is because that's when you're generally required to file your return, or at least calculate your tax for the first year. So you'd have to know at that point whether you're claiming a rollover or not.

Mr. Charlie Penson: Mr. Lalonde, a number of members have been contacted by real estate boards talking about people who have rental properties and the fact that an owner of an apartment is not able to make that rollover. Would this deal with that kind of situation by changing that limit enough to accommodate them? Is that what this is intended to do?

Mr. Gérard Lalonde: No, this has to do with rollovers of gains realized on shares of small business corporations.

Mr. Charlie Penson: Let me just put a scenario to you. I own an apartment block that has 40 units, and I'm going to sell it, but I'm going to acquire one that has 60 units. They're telling me that right now there are no provisions for them, they have to pay capital gains, even though they're acquiring other properties in a similar category.

Mr. Gérard Lalonde: That's correct. In neither of those examples that you gave--what they sold or what they bought--are the property shares of a small business corporation, so these rules don't apply a rollover in those circumstances. This only applies to shares of small business corporations.

The Chair: Are we ready to go now? I believe we're at clauses 70 to 74 inclusive.

Mr. Charlie Penson: Clause 73.

The Chair: I can only go to clause 73, Mr. Penson?

Mr. Charlie Penson: Yes.

The Chair: Okay.

(Clauses 70 to 73 inclusive agreed to on division)

The Chair: Do you have a question on clause 74, Mr. Penson, or is it just a vote?

Mr. Charlie Penson: I need a moment here, Madam Chair.

The Chair: That's fine.

Mr. Charlie Penson: Just to be clear, Madam Chair, we are not dealing with clause 75 because there's an amendment, but we're dealing with clause 74?

The Chair: Yes.

Mr. Charlie Penson: But aren't they interconnected?

The Chair: There's no amendment to 74.

Mr. Charlie Penson: I know, but let me just ask the question of the officials then.

(On clause 74)

On clause 74, you're talking about changing the wording to “feeding or dressing” themselves from the previous “feeding and dressing” themselves. I'm trying to understand how that is different from clause 75, which talks about replacing subparagraph 118.4(1)(c)(ii) with “feeding oneself or dressing oneself”. What's the difference here? What are you achieving in these two amendments?

Mr. Gérard Lalonde: You'll notice a number of similar amendments are made in other clauses as well with “feeding or dressing”. In the first set of amendments, the purpose is just to clarify that the tests are disjunctive. It's not that you have to have a problem with feeding “and” dressing, but it's feeding “or” dressing. So there is one set of amendments clarifying that, which also shows up in various other clauses in the bill.

» (1720)

Mr. Charlie Penson: What are you saying where it states feeding “oneself or” in subclause clause 75(1)?

Mr. Gérard Lalonde: I'm saying exactly the same thing that I was just talking about.

Mr. Charlie Penson: So you're just amending the two sections to be consistent with each other.

Mr. Gérard Lalonde: In fact, there are others. If I recall correctly, there's one in subclause 76(3) as well, which also refers to “feeding or dressing”. There are a number of clauses to verify that.

Mr. Charlie Penson: So you are just making it clear that it's feeding oneself “or” dressing oneself, as opposed to having them together.

Mr. Gérard Lalonde: That's right.

Mr. Roy Cullen: Mr. Lalonde, I just wanted to pick up on Mr. Penson's earlier question. In this particular clause 70, I'm not sure that the eligible small business corporation is defined here, but it's defined....

The Chair: No. We're on clause 74.

Mr. Roy Cullen: Weren't we doing it as a group?

The Chair: No, we've already passed clause 70. We're now on clause 74 only.

Mr. Charlie Penson: Let's hear what his concern is.

Mr. Roy Cullen: Does it deal with the tax-free rollover? Are we still on that?

The Chair: No, we've already voted on that.

Mr. Charlie Penson: What's your concern with that, Mr. Cullen?

Mr. Roy Cullen: I don't have a concern. I just wanted to clarify, because I think it deals with active income, not passive income.

The Chair: We do have some time limitations, so we want to go forward as much as possible, and not backwards. We'll try to do clause 74.

(Clause 74 agreed to on division)

The Chair: I will stand down clause 75.

For voting purposes, the next grouping is clauses 76 through 81. Does anybody have problems with this as a grouping?

Mr. Penson.

Mr. Charlie Penson: Can we just vote on clause 76?

(Clause 76 agreed to on division)

Mr. Charlie Penson: Madam Chair, just for clarification, the question I have is on clause 78. I'm okay with clause 77.

(Clause 77 agreed to on division)

(On clause 78)

The Chair: You have a question on clause 78. Go ahead, Mr. Penson.

Mr. Charlie Penson: I just want to be clear, Madam Chair, that we're talking about small corporations' tax rates moving up in terms of increments of $25,000 a year over four years. Is that right?

A voice: Yes.

Mr. Charlie Penson: They will go from $200,000 to $300,00 over four years. Is that right? Is that the rate determinant here?

Mr. Gérard Lalonde: The small business rate stays the same as it is now.

Mr. Charlie Penson: So it is just a matter of expanding that category.

» (1725)

Mr. Gérard Lalonde: That's right.

The Chair: Are there any other questions between clauses 78 and 81?

Mr. Charlie Penson: I have no questions, but I have a different vote on clause 80.

(Clauses 78 and 79 agreed to on division)

The Chair: Shall I do clauses 80 and 81 together or separately, Mr. Penson?

Mr. Charlie Penson: Separately, please.

(Clause 80 agreed to on division)

(Clause 81 agreed to on division)

The Chair: I'm standing down clause 82.

(Clause 83 agreed to on division)

The Chair: I stand down clause 84, which has an amendment.

We will go from clause 85 to 107 as a block.

Are there any questions about this block?

(On clause 85)

Mr. Charlie Penson: On clause 85, Madam Chair, I'd like to ask the officials what the rationale was for the phase-out of the capital tax as opposed to its elimination, and what consideration was given to doing only the one on the large corporations as opposed to the financial institutions.

Mr. Gérard Lalonde: On the phase-out, generally speaking, it is almost always the same answer, being a question of how rapidly you can introduce a policy within the fiscal framework. That's what we will do over five years.

On why we didn't address some other capital taxes, with all due respect, that's not in this bill. It's not a question about something that's in the bill. It's a policy of the government to reduce the large corporations tax, which was considered by some to be a silent killer of jobs. The government addressed that, but it wasn't a concern with the financial institutions tax. As I mentioned, it's not something in the bill.

Mr. Charlie Penson: I know it's not in the bill.

Can you give us any numbers on the phase-out of the capital tax for large corporations this year? What kind of revenue difference will that make?

Mr. Gérard Lalonde: Those numbers are indicated in the tax measures supplementary information. Of course, there is no impact this year in 2002-03. It will be $60 million in 2003-04 and $395 million in 2004-05.

The Chair: How many clauses can I group with clause 85?

Mr. Charlie Penson: You can group clauses 85 and 86. I'd also like to have a recorded vote on them.

(Clauses 85 and 86 agreed to: yeas 7; nays 4)

(On clause 87)

I have a question on clause 87, Madam Chair.

Can the officials tell us what the intent of the gifting is in clause 87?

» (1730)

Mr. Gérard Lalonde: I believe clause 87 deals with tax shelter identification.

Mr. Charlie Penson: It says it's the definition of a tax shelter, and it goes on to talk about gifting arrangements. I'm just wondering if you could give us a brief description of what you are trying to achieve here.

Mr. Gérard Lalonde: The existing law provides that you have to register as a tax shelter if you're promoting an arrangement where the total of your deductions in computing income will equal or exceed the cost of entering into the arrangement, or purchasing a property, within the next four taxation years. It deals with deductions in computing income, not deductions in computing tax, and therefore it doesn't pick up income tax credits.

Over the last few years schemes have been devised to promote things that would, in general parlance, be considered tax shelters, but they don't fall within the existing definition of a tax shelter because tax credits aren't taken into account. In particular, some of these arrangements involve transactions in which properties are acquired with the intent that you would turn around and gift those properties to a charity and get a charitable donations tax credit. Generally speaking, the amount you pay for is different from the amount you claim as being the fair market value of the gift property. That can generate a situation where the charitable donations tax credit can actually equal or exceed what you paid for the property. If it were a deduction, that would bring you into the tax shelter registration definition. That's what's being amended here, to ensure that the calculation takes into account tax credits in addition to deductions in computing income.

Mr. Charlie Penson: Just so I understand this, when a charity is benefiting from a donation of property or whatever is being given, the intent is that the person giving the property not be able to realize some kind of a tax saving in the process. Would you agree with that description, sir?

Mr. Gérard Lalonde: No.

This measure has to do with tax shelter registration and with the person promoting an arrangement.... Generally speaking, the way these things operate is you have a promoter who goes around and sells these arrangements to people, saying, “If you buy this thing from me and turn around and give it to a charity, I'll bundle it up in a package and you'll walk away from the transaction in the end with a certain tax benefit”. If I am trying to sell that package and promote it to you by saying you will get tax benefits in excess of what you paid to enter into the transaction, then I have to register that transaction with the CCRA and put them on notice that this is what's happening.

Mr. Charlie Penson: Thank you.

Mr. Gérard Lalonde: That registration doesn't mean the transaction works or doesn't work. It simply means you have to register it.

Mr. Charlie Penson: There's transparency there then, which is what you're getting at.

Mr. Gérard Lalonde: That's right.

The Chair: How many clauses can I group with clause 87, Mr. Penson?

Mr. Charlie Penson: You can group to clause 89, Madam Chair.

The Chair: Shall clauses 87 to 89 inclusive carry?

[Translation]

Mr. Pierre Paquette: I request a recorded vote.

[English]

The Chair: Okay, it's a recorded vote.

(Clauses 87 to 89 inclusive agreed to: yeas 10; nays 3)

The Chair: I'm thinking of going another 10 minutes.

» (1735)

Mr. Charlie Penson: Actually, I have to leave, and I think it would be a good time to call the meeting and come back on Thursday or whenever.

The Chair: Well, I have--

Mr. Charlie Penson: That's fine. I'm leaving. I have other commitments. The intent was to go to 5:30.

The Chair: We have to come back tomorrow.

I think there could be another five minutes.

Mr. Charlie Penson: We're not going to get finished anyway.

The Chair: Could you go another five minutes, Mr. Penson?

Mr. Charlie Penson: For what reason? We're not going to get finished, Madam Chair.

The Chair: No, but are we grouping something, or do you have some issues between grouping...?

Mr. Charlie Penson: I have to leave. I have other commitments.

The Chair: Okay. I've already pre-booked a room for tomorrow, room 705, at the Promenade Building, at 3:30.

Mr. Bryon Wilfert: It's clauses 90 to 107.

The Chair: Mr. Penson, did you have questions from clauses 90 to 107, or can we finish that block?

Mr. Charlie Penson: I'm just saying I have to leave. I thought we were going till 5:30, so I have other commitments, and we're not going to get finished anyway.

The Chair: Yes, it was called till 5:30, so we will adjourn till 3:30 tomorrow. Thank you.

The meeting is adjourned.