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Mr. Ken Epp (Elk Island, Ref.): Mr. Speaker, it is an honour to enter into debate on the motion of the day by the Bloc Party.

It is interesting that it should use its day for this particular topic. It is illustrative of one of the things which is wrong with the country. The very fact that we have in the House a large number of members whose set goal is to remove themselves and their part of the country from the rest of us shows that there are some problems and that we as legislators ought to be paying attention to them.

There is no doubt in my mind that if this federation were to work properly, we would not be here debating these kinds of questions.

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Bloc Members have raised an issue which is on the minds of many people in Canada, fair taxation. They have done it in a very specific case and with respect to an auditor general's observations. The issue they are drawing attention to is a very important one, that there is unfair taxation.

During my short time as member of Parliament, this being my first term, I have listened to a large number of people from across the country, but primarily in my own riding of Elk Island. One thing I hear often is that people are no longer content to allow half of their earnings or more to be spent on their behalf by people who do not listen to how that money should be spent. Over and over we hear individuals and small business people talk about the taxation system and how it is a great detriment to their personal welfare or the well-being of their business. It is onerous. It is too heavy a burden for the people of this country. It is based on a false supposition that there is someone in far away, distant Ottawa, a politician or bureaucrat who knows better how to allocate those funds that they have earned than the people do.

That is the large assumption which has been made by successive Liberal and Conservative governments, and we are shackled by it. We have come to the point where too many of us are struggling to make ends meet. Meanwhile our taxes must be paid. We will end up working into the middle of July for this thing called tax freedom day, the day when finally we can begin to earn for ourselves and our families.

I admit that some of the tax money is used for good purposes. I would not deny that. I am very happy to be in this country. I am very grateful that we have a good infrastructure system in this country. Our highways are very good by international standards. We have excellent communication facilities and our taxes go to pay for all of that.

That is not the question. The problem is the large amount of waste, the large amount of money which is spent on programs which do not carry the support of the majority of citizens but are foisted on us by a bureaucrat or politician in a distant city. Consequently, I hear more and more disgruntlement and discour-

agement with the way the government is managing its affairs. People are overtaxed and they are getting tired of it.

How should we react to this? According to members of the official opposition party today taxation should be fair. I agree with that component. There should should be no large amount of earnings which would go untaxed while other earnings are taxed at excessive rates.

Not very long ago someone told me that he is now in some financial and employment difficulty. He said that if had been able to pay less in taxes over the last number of years he would have had a nest egg put away which would have helped him through a difficult time. Instead, because of high taxation over the years his personal nest egg is much less than he would like it to be, and so he is thrown on to government programs. Unfortunately the government, with its continued policy of overspending and borrowing, adds to the load of taxpayers and our taxes keep rising and at the same time we experience the downsizing of the very government programs which were supposed to be provided by the taxes that we are being asked to pay, I should say coerced to pay.

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The bottom line is that in areas like the Canada pension plan, UI which is now called employment insurance, premiums over the years have gone up a lot. I know in the last year or so there has been a small turn downward in the UI premiums and that is a very commendable step but it is too tiny a step.

In other areas we are asked to pay a great deal and there is a decreasing assurance that the government programs we have paid into will actually deliver for our needs. I do not believe that this is at all the real nub of the issue for the members of the Bloc in terms of their wanting to separate, but I believe it adds to it.

I believe that if we in Ottawa were to run our fiscal affairs in such a way that government overspending was eliminated so that this government like all other governments in Canada would have a defined goal of living within its means, then there would be much less of a cry by provinces like Quebec that say: ``We do not want to swim with you guys anymore, we want to go it on our own''. It would be just too expensive for them. Whereas the way it is right now, being part of this confederation is an increasing burden for many of us.

I appreciate the members of the Bloc. I do not know if that will be misunderstood so I need to explain. I am actually very grateful they are here. It is a reflection of the fact that we have a free democracy. I wish they were not here for the reasons they are here, but each one of them as far as we know was properly and democratically elected. They have as much right to be here as any one of the rest of us.

What we really need to do is to get to the root of the problem. Why did the people in Quebec elect them? Why were they sent here? It is inescapable that they were sent here because of the fact that Quebecers increasingly perceive that Ottawa is not doing for them the job they want done.

When we come to this whole question of taxation and government spending, certainly one of the areas is that taxation should be fair. The government has the right to tax us and by common consent to provide programs that Canadians want and the taxation load should be made as equal as possible for all of the members of the taxpaying public. I believe there are some 13.5 million taxpayers in this country. Each one of them has a vested interest. They are shareholders in this country so to speak, in this company called Canada. They deserve and have a right to demand that the money be spent carefully.

In saying something else about the tax system, whether we recognize it or not, taxes and taxation are a very inefficient way of looking after people's needs. Generally when people spend other people's money, the amount of accountability goes down. I have observed that around here since the time of my election. I have certainly seen it by observing the way even senators and members of Parliament spend money. It is easy to spend money which is not your own. It is more difficult to spend your own.

This is one of the reasons I am a firm advocate of a free enterprise system and a system which permits us to meet each other's needs through private enterprise and private initiative. I remember way back when I was just a youngster there was not this proliferation of government programs. In fact the generation in which I grew up was one in which most people would deny the help that was offered to them by government because of a large amount of personal pride and self-sufficiency, at least in the part of the country in which I grew up, out in the west.

In those days when someone had a problem we who had the ability to help would help in the way in which we could. I remember as a youngster one of our neighbours was unfortunately killed in a farm accident. My dad was one who helped organize the neighbours. They immediately went to help this newly widowed lady do her harvest. They did her harvest first and then they did their own. They could afford to do that because at that time there was enough money left over despite the taxes. Sure, times were not easy on the farm but they had the financial ability to help someone in need.

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I have experienced this personally. Acquaintances of mine have fallen into hard times and I wished that I could have helped them more than I did. Unfortunately, what with the municipal taxes, the provincial taxes, the federal taxes and GST, by the time all these taxes are removed from my earnings and after I meet the basic

necessities of life for my own family, the amount of money I have left to give charitably to people who are in need is greatly diminished.

Now my way of helping people is to say: ``Let us go down to the government office and see what kind of assistance is there for you''. That is wrong. I am very distressed about it. We have allowed governments at all levels to take over from us as individuals the expression of compassion which we as Canadians value.

I hear expressions especially from the Liberal side that they do not want to cut these social programs because they are compassionate. If that is really true, if the government were to reduce its involvement in those compulsory programs which we have no choice but to support, then each one of us individually could do so much more. We could help people in a much more genuine way than a government department somewhere trying to help people in a wholesale way with reduced budgets.

The last issue I want to talk about in my little time here is the question of debt. I am always reluctant to give the Liberals great accolades when they have not done the job adequately. Usually what I say is when we were elected in 1993 and when all this present batch of Liberal MPs were elected, we understood that the deficit, the amount of government overspending, was around $35 billion or $40 billion a year. It was in that range.

It is interesting how whenever there is a change of government the last year of the previous government is always tremendously bad and then it gets better. I have often wondered how that happens mathematically under accounting rules.

We had a large deficit. Now we have a deficit which has been reduced and everybody is cheering: ``We have reduced it to $27 billion''. Unfortunately, I do not believe this is being properly communicated to Canadians. There are a lot of people who think that our debt and deficit problems are solved with this Liberal government. Unfortunately, that is not true.

What has happened is that the government has reduced the rate at which we are going into debt. We are still adding $100 billion to the debt during the term of office of this government. We have added approximately $10 billion a year to mandatory interest payments. Those payments are not going down because the debt is still increasing. That means that next year our interest payments are going to be even higher than they were last year. Even though the debt is increasing at a slower rate, it is still increasing. The amount we owe is going up, up, up.

It is becoming urgent that through proper and fair taxation techniques and through the reduction of government involvement in programs which Canadians do not support that we downsize government. It is urgent that we return to the people of Canada the autonomy that comes when they can spend their own money for purposes they themselves choose rather than for purposes that are chosen by someone else.

I encourage the Liberal majority government on the other side, all those individual backbenchers to really exercise the authority they have as elected members of Parliament. I would like to see them throw off the shackles of party discipline and really hold their own government accountable in areas of deficit reduction. It is shameful that after four years we still do not have a definite date on which it is planning to say: ``We will not be borrowing next year. No more borrowing''. Would that not be a wonderful day?

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I should not mention my son, so I will not, but it is as if when he got a speeding ticket for going 80 in a 60 zone he said to the officer that from now on he would only go 75. It would not wash. If the speed limit is 60, he should be going 60. It is not sufficient to reduce it just by a little bit. It is the same thing with the borrowing. It is not acceptable until our borrowing has stopped, until our budget is balanced and our deficit is zero. That is the only acceptable goal.

I do not know why this government has been so unwilling to state a definite target date to aim for on that and to actually reach a goal that it has set instead of these wishy-washy, floating, moving targets that the government may reach if everything goes well and if it does not go well it will happen more slowly. I am distressed with that and the politicking that goes on while Canadians in general are going into debt and are being asked to pay $500 a month per taxpayer just for interest. That is not acceptable.

In conclusion, I am someone who is committed to doing my part in government. It is incumbent on all of us to spend the taxpayers' money as though it were held in trust, to spend it as though it were our own, to be careful and frugal. It is incumbent on all of us to do everything we can in order to eliminate the deficit, to stop the borrowing, to start reducing the amount we owe, reducing the amount of interest that is payable, reducing taxes and giving that boost to the economy that would provide jobs and dignity to people who are currently unemployed. Our country would be in so much better shape.

Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I would like to ask some questions and make some comments on the speech by the hon. member for Elk Island.

There is this concept, which is also part of the motion we are debating today, that somehow the Canadian taxation system is not fair. In fact I heard the hon. member start off with that in the first part of his speech.

I would just like to comment on the fact that recent statistics, if we study them, show that the top 30 per cent of Canadian taxpayers are paying 66 per cent of the total of all taxes in this country. We have a system in Canada which is called progressive taxation so that the more one makes the more one pays. The reality is that our system has been regarded as fair and progressive from years back. It is also part of the Bloc motion that we are somehow taxing the

poor and letting the rich off. This just is not borne out by the statistics of reality.

I would like to address some of the issues that have been brought forward by the Bloc motion and which have also been mentioned by the hon. member.

Our system of taxation is based on voluntary compliance. What voluntary compliance means is that 13 million taxpayers agree to file their tax returns every year and have them assessed by Revenue Canada.

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This is a process which is accepted in western democracies. It is a very efficient system. In a sense it is based on the honour system. There are some internal controls and some checks and balances but basically it is run on the good wishes and goodwill of taxpayers.

There is one big feature about that. When people file their tax returns they believe they are confidential. I would like to take the opportunity to read the section of the Income Tax Act which addresses this matter. I would be interested in the member's comments on it.

It states concerning the provision of information in section 241: ``Except as authorized by this section, no official shall knowingly provide or knowingly allow to be provided, to any person any taxpayer information, knowingly allow any person to have access to any taxpayer information or knowingly use any taxpayer information otherwise than in the course of the administration of the enforcement of this act, the Canada Pension Plan Act and the Unemployment Insurance Act''.

The purpose of this is to give people assurance that when they send their information to Revenue Canada that it is confidential.

This matter that has been brought forward by the Bloc today, and I would be interesting in the member's comments-

The Speaker: I wonder if the hon. member would perhaps let the hon. member for Elk Island answer some of the questions that have been raised. I would not want it to be all questions and no answers. I will go to the hon. member for Elk Island and if we have time I will come back.

Mr. Epp: Mr. Speaker, I guess in principle we have a reasonable tax system in this country. I would agree with that.

It is not working the way it ought to work. As the hon. member mentioned, and I hope I heard him correctly, there are a lot of people, at least our perception is so, who earn an awful lot of money who pay little or no tax. Then of course there are those people who make very little money who pay little or no tax, but the bulk of the tax burden is on the middle wage earner and we pay dearly.

Every one of us, even without being able to go into the tax records of others, can think of examples of people who are very well off. I remember when my wife and I were first married, which is now over 35 years ago, we had a reasonable mid-sized car, some borrowed furniture when we were first married, and I had to pay my taxes. In fact, it was deducted from my earnings every month. I was making a little over $400 a month and $35 a month, as I recall, went to the tax man.

We developed a friendship in the new town in which we lived where there was a couple who were very well off. He drove a large luxury car. They had a beautiful home with all the newest furnishings. He told me that he did not pay any tax ever because he was a successful businessman. He was able to write all of this off. I objected to it at the time. I said I did not think that was fair. He said: ``I'm only using the tax rules. I am not doing anything illegal''. There is one example.

A much more recent example has to do with the MP pension plan. When Reformers came here, we said and we were directed by our voters, that the members' pension plan is too rich. It costs the taxpayer too much relative to how much we personally put in. On principle we said we wanted out.

The day I went to do my payroll stuff when I was first elected I asked: ``Can I opt out of that plan?'' I was told that I could not. Two years later the government tinkered with the legislation and included in it a small window of opportunity for those who felt strongly about it to be able to opt out. The unfairness was that for two years we were cut out of RRSP room because we were forced to be in this plan, but when we got the money back we had to pay income tax on the whole amount and were not allowed to roll it into an RRSP equivalent to that same amount. That is an unfairness in the tax system. I think it is a very serious unfairness to me personally. There are many others who would not share that great concern.

There are those inequities. They need to be fixed up. I really believe that the motion before us is an indicator of an unfairness in the system where some individuals can earn large amounts of money and through one method or another can avoid paying their fair share of tax on it. That needs to be corrected.

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The Speaker: We have about a minute left, perhaps about 30 seconds, for a very brief question.

Mr. Shepherd: Mr. Speaker, I do not think he really addressed one of the questions I posed to him. The Bloc Quebecois is talking in its motion about revealing taxpayers. How does the member feel about the Bloc's attitude about revealing the identity of taxpayers as they also proposed in their motion before the finance commit-

tee? In other words, expose taxpayers to possibly a witch hunt much like Nixon did in the United States when he chased after political enemies. Does he agree that is an acceptable process?

Mr. Epp: I certainly agree with the hon. member that confidentiality in the tax reporting system is valuable, particularly for businesses.

It guards commercial security and information which I think is right. But I still believe it would be quite fair for us as ordinary Canadians-I still consider myself to be one-to know exactly what we need to do in order to earn large amounts and not to have to pay tax on it.

The only group I know of that can really get away with it right now-I hate to repeat this-are members of the MP pension plan. I have made some calculations. The amount one would have to put away in order to provide that is several thousand dollars a month. In all practicality it is a deferred income scheme. It allows MPs to take part of their earnings now and receive them later at which time they would be taxable. That is not available to other Canadians.

The question the Bloc has raised today is an issue based on the same principle. Here is something that is available to one group of Canadians. Why is it not available to another group of Canadians? That is the part that we would like to see clarified.

Hon. Jane Stewart (Minister of National Revenue, Lib.): Mr. Speaker, let me say how much I welcome the opportunity to discuss this motion as it has been presented to the House and to shed light on the real and substantive issues that the case before us demands.

The members of the opposition have really gone out of their way to distort the issues, to confuse the Canadian public. What they forget to say time and again is that this decision was a decision made by the former government, the Tory government in 1991. It was brought to our attention by the auditor general and now we have to deal with it and ensure that the integrity of the tax system is maintained and improved. That is what the opposition forgets to talk about.

The other thing it forgets to talk about is that we did take action. When the auditor general brought this to our attention we responded immediately to the issues and presented them to the finance committee for review. It is a very public body with members from all the elected parties in this House that represent this country from coast to coast to coast.

The opposition members forget to talk about the fact that we have actually acted on the results of that committee report, that we are making changes, that we are committed to having a fair and equitable tax system.

The thing they continue to talk about, the myths they continue to perpetuate are these. They think that if they keep repeating the words family trust and scandal over and over again they can make something out of nothing. But in fact this topic has nothing to do with family trusts, nothing at all.

I sat on the finance committee with the member who proposed this motion, the member for Saint-Hyacinthe-Bagot. When we focused specifically on the issue of family trusts, we heard witnesses, we talked to experts, we listened to testimony, reviewed the implications and made recommendations to the Minister of Finance how we should change family trusts in this country. The Minister of Finance read that report, as he reads all the reports of the finance committee, and in fact went further than our recommendations to deal with that particular tax strategy.

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In fact, the government, in response to the issue of family trusts, has eliminated the election to defer the 21 year deemed disposition rule which was introduced by the Tory government. It is gone. It is not part of the legislation any more. We did that. It is gone.

In addition, the government eliminated the preferred beneficiary election for trusts. This ensures that trust income cannot be arbitrarily allocated to a beneficiary instead of being taxed at the trust level just because the beneficiary is at a low marginal income tax bracket. That has all been changed. Family trusts have been dealt with.

I was part of the committee. The Bloc member who has proposed the motion to the House and who keeps talking about family trusts was there as well. He knows that these changes have been made. I want to assure Canadians that they can have confidence in the system and that that tax loophole does not exist for the advantage of the wealthy any more.

In addition to making the changes to family trusts, the government has gone even further in terms of increasing the fairness of the tax regime. In fact, we have tightened the rules on tax shelters. We have improved our large business audits. We have eliminated the $100,000 capital gains exemption. We have introduced draft legislation to strengthen the reporting of world income in order to prevent the use of offshore tax havens and the evasion of taxes.

The Minister of Finance mentioned last week that he has implemented to date 30 different improvements to the Income Tax Act to make it more fair and equitable. That is the kind of government we are. We are improving fairness to ensure that all Canadians have appropriate opportunities to make their contributions and to benefit from the taxes which they pay.

This is not about family trusts. I cannot say that more emphatically. What this issue is about is how we tax the property of Canadians who emigrate and how we tax the property of people

who are not Canadians but who hold Canadian property. It is about the thing we call taxable Canadian property, that is, and let us be clear, property that remains taxable in Canada even though the owner may not live here and may not reside in the country. Taxable Canadian property is an extremely complicated notion. It is an extremely complicated aspect of the Income Tax Act.

As the Minister of National Revenue, I received the report from the auditor general on this topic. As I read the chapter I took it very seriously. I met with the auditor general for three hours to go through, line by line, his concerns as written in the report. We began by talking about his concern of how the department ruled on the issue of taxable Canadian property. He talked to me about the fact that he understood the complexity of the legislation. He understood that, in fact, it is very unlikely that any law had been broken. He was asking whether or not the ruling was reflective of the intent of Parliament when it drafted the legislation.

He was not suggesting anything inappropriate. He was not suggesting anything illegal. He was suggesting that in the ruling we may have highlighted something which needed to be drawn to the attention of the House for its consideration.

That is particularly an issue for the Minister of Finance. It is an issue of policy, not of administration. I met with the Minister of Finance and suggested that an appropriate response to the auditor general in this regard would be to send this part of the Income Tax Act to the finance committee for a full and open review. That is what we did.

I would like hon. members to understand that this was the first time in 25 years that this part of the act had been reviewed. It was timely. It was appropriate. The finance committee reviewed it in its fullest context. They had expert witnesses who are credible internationally look at the circumstances, to review the decisions. Six out of the eight said there was nothing inappropriate in the decision, that the ruling was correct as the law is written.

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The finance committee looked at it and asked: ``Is this really the way we want things to work in Canada or should we make changes? Is it time to make changes? Should we clarify our intentions?'' Members of the committee made some very clear suggestions to the Minister of Finance that he is now reviewing and considering and will act on in due course.

There was a second concern which was raised in the auditor general's report relating to this topic. The concern spoke directly to my responsibility as the minister of revenue. He talked about the way in which the ruling proceeded. He gave the dates, the timeline. He indicated that he was confused about where and when and by whom the decisions were made. As I read the report I was extremely concerned.

In the course of the three hour discussion I had with the auditor general I asked him if he was suggesting that there was political interference in this case and was he asking me to investigate political interference. He responded: ``I have no reason to doubt the integrity of your department''.

We went on and discussed the issues he was concerned about. He was concerned that there was no documentation which directed my attention to how the decision was made. It was not clear, not full in its nature. We must have that kind of documentation if we are going to have a fair, open and transparent system. I immediately agreed with the auditor general and I immediately directed my officials to ensure and build a new plan of action to be implemented immediately to ensure that documentation of all our decisions was clear, full and made available when requested. That was an area of real concern.

The auditor general expressed his concern about consistency, highlighting the particular example of the matter where an opinion, not a ruling, was given in another part of the country on a similar topic at a different time which was different than the ruling in 1991. He indicated some concern about the consistency of decisions within my department. Again I agreed and said that we must have consistency. Canadians must be able to rely on the rulings. No matter where they are they must get the same answer from the department when a similar question is asked.

As a result and subsequent to 1991 the department has made very credible changes to the way we operate, primarily using technology so that all the rulings and opinions are listed in a data base which can be accessed. Now any department officials who are making rulings can refer to the data base, see what decisions had been made in the past and ensure that there is consistency and integrity in the responses given to Canadians.

Third, he was concerned about the transparency of our decisions. He was concerned that we made decisions and then did not publicize them for the broad benefit of all Canadians. We changed that some time ago. Our concern originally was with the integrity of confidentiality which we must maintain for all Canadian taxpayers. We must ensure that every individual's details and circumstances remain with us and are not exposed to broad public review. When we get these rulings we have to sever them and present them publicly in a way so that there is no connection between the individual tax filer and the decision. We have found ways of doing that and we have implemented that strategy in our day to day process.

When we look at the issue there are really two sides to it, one of policy which was dealt with very effectively by the Finance committee. It has made recommendations to the minister and he is considering them.

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The second area was administration. The finance committee decided on its own to look at those issues, to hear from witnesses, to talk to the auditor general, his assistant, the deputy in my department and the deputy of finance to talk to them about that system of decision making. Their conclusions were the same as those of the auditor general. In fact, the auditor general when questioned in the public accounts committee said: ``I have never had the occasion or the need to ever question the integrity of senior officials at Revenue Canada'', a reiteration of what he told me. In the finance committee the assistant auditor general said: ``We have seen no evidence of bad faith and we have seen no evidence of wrong doing''.

Committee members heard that testimony and reported to me as the minister that they saw no evidence of scandal. The only people talking about scandal reside in the opposition. All they talk about are these two things, family trust and scandal. They are not part at all of the discussions presented to me by the auditor general.

I would like to take the opportunity as we are discussing the integrity of the tax system to tell members a little more about what we are doing in Revenue Canada to respond to the needs and the wants of Canadians. Most recently, my department is undertaking the largest re-engineering project in Canadian history. There are 40,000 employees in 800 offices across this country engaged in a structural change that will bring together two very separate organizations.

Traditionally in my department the tax side was distinct, the customs side was distinct. They had their own deputy ministers, their own policies and procedures, their own penalties and interest, their own publications, all quite separate. As a result of changes made by my colleague, the former minister of revenue and now the Minister of Transport, we have redesigned our whole department. We have brought the sections together under one administration and that is contributing to a savings of $300 million to the Government of Canada and the taxpayers. Together we are providing a system that is going to give the Canadian public a real competitive advantage.

I was in the United States in March and met with 500 exporters and importers. I said to them that they had to understand that in Revenue Canada I have responsibility for what is effectively their IRS, their customs administration and their trade administration. They sucked in their breath. They could not believe it. I said yes, and you could not do that in the United States but because of the way we have organized ourselves, because of our size we could bring and house these separate entities together so that our citizens can contact the government more effectively and efficiently.

This whole issue of horizontal management becomes real and alive. Canadians no longer have to call and someone says ``I am sorry, that is someone else's business''. In my department everybody can respond to those issues: a single window. That is what

Canadians want. They want effective government, a government to respond to them as citizens, to provide that service, and that is what we are doing. It is a tremendous challenge but the employees of Revenue Canada are rising to that challenge.

Today the auditor general in his report completed a whole chapter talking about our administrative consolidation. He praised us for the approach we have taken. He praised us for the contribution that change is going to make to the fairness and effectiveness of the system, for the return to the taxpayer. He indicated that our activities should be a model for other departments and agencies.

It is a pleasure for me to receive that report and to say to the employees who are in the service of the Canadian public in my department, thank you. You are making a difference to the way this government responds to Canadians, to the way we are serving the Canadian public. It is real and it is tangible.

More specifically, there are other things that we are doing on the revenue administration side.

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Members will know that different tax regimes were developed individually in their own silos, the personal tax structure, the corporate tax structure, the consumption tax structure; all separate, all with their own penalties and interests, all with their own management teams.

We are breaking that down as well so that we can now look at a Canadian citizen, a Canadian business as an entity. They do not have to deal with Revenue Canada with four business numbers. We can look at them in total. Their tax positions can be understood completely by us.

That is a real competitive advantage. It is a responsive, positive change in the way of doing business. On the customs side, the same thing is happening. Very effectively, we are now moving to understand that we have to facilitate effective trade to let the good things pass through our border quickly and efficiently. But by golly, to keep the bad things out, firearms, drugs, people we do not want in our country, we have to have a smart border.

Our strategy is to maximize the potential of our employees, to use new technologies, to build partnerships with the private sector and yes, with other levels of government and other governments to provide Canadians with the most competitive revenue and customs administration they can possibly have.

I am very proud of the work of my department. I am very proud of the response that my department took to these issues directed to us by the auditor general. I want to make clear to the Canadian public that the opposition is full of political huffery and puffery on this item.

Again, it is not about family trust. We have dealt with that effectively. It is not about scandal. There is no indication of scandal. What this is about is our government's taking efficient, effective, immediate action when concerns are drawn to our attention. It is about a government that believes in the fairness and equity in the tax system.

It is a government that believes it can make a difference and will make a difference. It will provide Canadians with the tax regimes they deserve.

Mr. Philip Mayfield (Cariboo-Chilcotin, Ref.): Mr. Speaker, I very much appreciate the comments of the minister. There is another side to this. She mentions there are two sides to the argument. I intend to follow that for just a moment.

We have listened to the minister and other members of the government side speak of the due diligence they have paid to this problem in the revenue department. We have heard the chairman of the finance committee mention how they have called witnesses. They have invited the opposition parties to call more witnesses. They have looked at it as thoroughly as they could in depth.

There has been a lot of talk, talk, talk about this issue. I am pleased they are coming to some resolution. The issue is not entirely family trusts. In my mind the issue related to that which is perhaps more important is government accountability. To whom is it accountable?

There is a disturbing trend. For example, as legislation is being amended I hear members of the legal community saying that one of the concerns that they have is that the government is seeking less and less accountability in rather small and obtrusive ways.

For example, little words like ``shall'' are being modified to ``may'' where there is less accountability, and phrases like ``in the opinion of the minister'', which is not challengeable in any court because how does one challenge someone's opinion?

Relating to the issue of revenue generation and family trusts, and going one step beyond that, I have seen how the government has looked carefully over a long period of time at this issue, but there are other instances also.

For example, when a farmer took a truckload of grain across the border, he was taken to court. There is nothing wrong with that. When the judge said there is nothing wrong, the regulations were changed in a flash. It did not take weeks and months and years. The government acted immediately.

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Another example: Shortly after this Parliament convened after the election, we were confronted by a crisis of smuggling tobacco products. What happened? The government acted very quickly by lowering the duties collected on tobacco products and dealt with the smuggling problem in this manner. It acted very quickly. The consequence of that however is there are thousands of young people now involved in smoking. They have taken up this highly addictive habit and face years of suffering trying to get away from it. The medical costs of caring for them later on have not been calculated but they will be high.

The difficulty is not simply family trusts, it is government accountability and to whom it is accountable. Is it willing to be accountable to the law as all citizens are, or is it seeking to be less and less accountable? It is my contention that this is the case.

In this instance the Liberal government has spent a long time talking about the issue. I will be interested to see exactly what the outcome is. Hopefully it will be that large family trusts will not be able to leave the country without paying due taxes as the rest of us do.

The government is quite properly looking to claim all legitimate revenues. Forms are being sent out to people to tell stories about other people who may not be paying their taxes, who may be escaping their taxes through the underground economy. Are we asking our citizens to be stool-pigeons while other people are quite legally removing their money from the country? There is a matter of fairness that Canadians really object to.

These are the concerns which I have as I talk about government accountability. I ask the minister if she would please respond. Is the government prepared to be accountable in all areas, or simply in the areas where it is most convenient for it?

Mrs. Stewart (Brant): Madam Speaker, let me say that yes indeed the government is prepared to be accountable in all aspects of its responsibilities. When we talk about accountability I would like to share with the House something else we have done in the department which responds directly to the member's concerns.

It is only fair when we ask Canadians to open their books to us as we collect their taxes and look at their position, that we do the same. As a result of that I have asked my department to take the time to prepare on the basis of an internal audit, reports for this House, for members opposite and for their constituents on the different programs we take responsibility for.

Most recently we did a full report on the tax filing year that indicated the positives, the fact that people are getting their refunds much faster now as a result of E-mail and other changes to our system, that we have implemented new strategies like E-filings, telephone filings which make sense to Canadians and respond to them. At the same time this report identified areas of weakness where we have to make improvements and respond more directly to Canadians.

Most recently we have issued our second report, a report on the child tax benefit. The hon. member may be interested to know that the newest line of business in Revenue Canada is providing benefits to Canadians, returning revenues back to Canadians as appropriate: the issue of the child tax benefit and the GST credit for example. We have done a review of our child tax benefit program and strategy. We have found aspects that are very positive about it, but aspects that yes indeed we have to improve.

These are the kinds of measures this government is taking to respond to the concern of the hon. member in the area of accountability.

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Mr. Ken Epp (Elk Island, Ref.): Madam Speaker, we are privileged to have the minister here responding to the motion and answering questions. I thank her for her very lucid communication. I commend her for her style of speaking.

She indicated that this particular issue which has been brought up by members of the Bloc has been solved by her department, that the loophole has now been closed and that it is no longer permitted. I presume if the same attempt were to be made now, the tax revenue would not be forgone by the Government of Canada.

Was there an attempt made to reassess the tax payable on the amount that was taken out of the country?

Mrs. Stewart (Brant): Madam Speaker, I should clarify a couple of things.

The concerns of the auditor general were really two. One dealt with policy: the issue of taxable Canadian property; how we apply it; how we should not apply it. The other was the issue of deemed disposition and when taxes should be paid on Canadian property.

Those issues were reviewed by the finance committee and recommendations were given to the Minister of Finance, whose purview it is to deal with the policy of the Income Tax Act. He is currently reviewing them. As he does, I have in my department maintained a moratorium on rulings of taxable Canadian property. It is only appropriate and prudent that we give the minister time to make those considerations and ensure that the issues do not come before my department simultaneously. We want to ensure that the intentions of the members of the House and their concerns about this particular aspect are reviewed, given a full airing by the minister and then, when he makes his decisions, we will again return to the normal process of rulings, given the changes to any legislation.

Beyond that I would say we have taken further action on the administrative side. Very clearly the auditor general and the committee were concerned about three things: the transparency of our decisions; the consistency of our decisions; and the documentation which we have in our files around all the decisions we make. I am glad to confirm to the House and to all Canadians that we have taken action in all three of those areas, as I indicated in my speech. I believe that should add comfort and assure the integrity of our taxation system.

[Translation]

Mr. Pierre de Savoye (Portneuf, BQ): Madam Speaker, it is a pleasure to address the House this afternoon on the controversial topic of family trusts, and, more particularly, of the auditor general's report.

There is no getting around the fact that it was very ill-considered of the finance committee, which is obviously controlled by the Liberal majority, to have criticized the auditor general and his report, because the auditor general is an institution that must, at all times, be above criticism.

I appreciate the fact that the minister recognizes that the auditor general is doing a good job. Beyond the fact that I know that the minister is the soul of honesty, I must say that the scheming that has come to light in her department and that she says she is trying to rectify, is not going to encourage the public to have great confidence in the federal revenue department.

Beyond the technical considerations the minister laid out earlier, the fact still remains that the average citizen does not necessarily have great confidence in the federal tax system. If you met a businessman anywhere in this great land and you asked him whether he was treated fairly by the tax system, I am not sure you would find him very enthusiastic. On the contrary, he would point out a number of situations that he finds disgraceful, a number of measures that he finds unfair.

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And even if we were to give him a technical explanation for certain situations, he would be no more convinced.

When average citizens, the men or women who work five days a week, who have families to raise, file their tax returns at year's end, do they think they are being asked to pay their fair share of taxes, or do they think they are being asked to pay more than the more fortunate members of society?

So you can understand that when the auditor general tells us that a rich family, with the help of what is known as a family trust and by means of tax provisions permitting money to be moved out of the country, has used these tax rules to shelter a sum of two billion dollars from taxes, average citizens do not understand. They do not understand why the act allows something like this to go on while they must pay every last cent of taxes they owe.

You will agree with me that they have reason to worry. The legislative tax measures that are in place and that are administered by Revenue Canada cannot be justified solely from a technical

point of view, but must also demonstrate respect for this country's citizens, whatever their income.

Basically, the problem is that people who have money are able to get the technical expertise they need to find legal ways to save on their income tax. Technically speaking there may be nothing wrong, but the fact remains there is something distinctly immoral about this.

The average person is not in a position to say, with a big smile, that everything is okay because it is legal, because all the rules and regulations have been observed and the experts said it was all right. How can you make it morally acceptable to someone who earns a modest weekly wage and pays provincial and federal income tax of up to 20, 25, 30, 35 or 40 per cent and more, that someone can take two billion dollars, transfer it to the United States and not pay a cent of income tax? That is hard to swallow.

For the benefit of the minister, I will tell you about a letter I received a few days ago. It was from a woman in Saint-Raymond, in the riding of Portneuf, a woman with a family, who last year had a job under a program managed by Human Resources Development, commonly referred to as DEPS and section 25s.

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I hope the minister will listen for a few moments, because I think the situation will interest her and help her understand why some people feel the family trust issue is particular shocking.

This woman, who worked under a job readiness program of Human Resources Development for many months, hired a babysitter so her children would be looked after at home. Instead of paying this person under the table, thus making her work illegally, she paid her a reasonable amount so she agreed to give her name and this woman from Saint-Raymond could claim child care expenses as a tax deduction. In other words, she acted like a law abiding citizen so she could claim this deduction.

But there is a problem because the money to pay for her salary comes out of the Unemployment Insurance Fund. So she is not entitled to this deduction. So, imagine, this woman who spent more to avoid hiring someone illegally was denied the deduction to which all other workers who have a job are entitled.

There are numerous technical reasons, and the minister will agree, for which this woman is not entitled to that deduction but fundamentally, morally, and I hope the minister is listening carefully, that woman feels very angry and frustrated and is disappointed by a tax system she finds unfair.

That is what is outrageous. On one hand, the auditor general tells us that a wealthy family was able, through a family trust and with rules on taking money out of the country, to shelter $2 billion. This is three times the cost of the disaster in the Saguenay. That is a lot of money. Three times the cost of the disaster in the Saguenay: $2 billion.

On the other hand, this woman I just talked about is losing the equivalent of $1,000. I realize my time is running out but I believe I have demonstrated that what is outrageous is not that some things are legal but that the law has more consideration for the rich than for the poor.

I hope the minister will be able to address this situation as soon as possible.

Mr. Michel Guimond (Beauport-Montmorency-Orléans, BQ): Madam Speaker, I am pleased to speak to the Bloc Quebecois' motion on this allotted day, particularly as I am Chairman of the Standing Committee on Public Accounts.

I believe it is our duty, when we have the floor, to put things in perspective, so that our listeners can understand what we are talking about.

On May 7, 1996, the Auditor General of Canada, Denis Desautels, tabled a report. Under an Act of this Parliament, the auditor general is expected to submit three reports each year. In this report, one chapter in particular caught our attention, not only the attention of the official opposition but also that of all the members of the Standing Committee on Public Accounts.

Let me explain. I am talking about Chapter I, entitled ``Other Audit Observations''. This is a kind of catchall, not so much in terms of its content but because it contains a variety of observations.

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This chapter described two particular cases. The auditor general had examined two particular cases relating to the transfer of assets from one family trust to another family trust in the United States. The figure was astronomical. The principle would also have been unacceptable had the figure been smaller, but the very fact that it was a tax-free transfer of $2 billion made it even more so.

The Standing Committee on Public Accounts met, as it does each time the auditor general tables a report, and as it did today, in fact. In committee, we try to determine which priorities we should look at, study and call witnesses about.

You will understand that the official opposition wanted to study these two family trusts quickly, I must stress this fact, right from the beginning, as the Chairman of the Standing Committee on Public Accounts, the only committee to be chaired by a member of the opposition. The rules of our democracy entitle the official opposition to chair that committee which acts together with the auditor general. This committee monitors the government and the

different departments to ensure, for Canadian taxpayers, that their taxes are being spent efficiently. In fact, such is the role of a state where taxes are collected. We pay the taxes and we make sure that we get our money's worth.

We wanted to examine this issue on a priority basis and that is why we, in the official opposition, decided it warranted further debate in the House, because we were unable to find out in detail what really happened in these events we now call a scandal. This term was not necessarily chosen by the official opposition. The Parliamentary Secretary to the Minister of National Revenue said that the government members do not like to hear us using the word ``scandal'', but we are not the ones who first used this term. It was first used by neutral and independent reporters who happened to examine the case. We could quote Martin Leclerc, from the Journal de Montréal and the Journal de Québec; we could quote Gilles Gauthier, from La Presse. They are not in the pay of a specific party. They were the ones who said this situation was outrageous, that it did not make sense.

We can tell you that, again today, as a result of delaying tactics, the official opposition is not in a position to do its job properly because, as we speak, we cannot find out what really happened.

As my colleague, the member for Portneuf, was saying earlier, we have a few questions of our own. Why, when it is time for two rich families to transfer, tax free, $2 billion, are all the officials, all the senior officials at Revenue Canada available to meet with them, help them win their case and proceed with the transfer?

This is what worries us about the 1991 decision. It was handed down on December 23, 1991. If there are questions or comments later on, I already know that Liberal members will say: ``This did not happen while we were in power, it happened under the Conservatives''. Quite true. Nice try. Indeed, the Liberals were not in power in 1991, but they will not be able to get away with what was made public today by the auditor general in his report. Revenue Canada is going to have to account for $630 million worth of tax evasion. The auditor general mentioned that this is due to a lack of auditing of major oil companies and the tobacco industry; $630 million in 1994-95 alone.

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This means that the Liberals' argument that they were not here in 1991 still holds. However, what practical steps have they taken to close the door?

The Liberals want us to stop reviewing chapter 1 of the auditor general's report, claiming that the Standing Committee on Finance has already done so. They want the Standing Committee on Public Accounts to work on something else. I know some members here in this House could say: ``Yes, but the committee agreed to hold only one meeting on family trusts''. Maybe the Liberal majority members are smarter than I, but, as I said to the Standing Committee on Public Accounts, I do not feel that one single sitting is enough to shed light on what really happened on December 23, 1991.

Because we, the members of the official opposition, have always believed in the institution personified by the Auditor General of Canada, we also find it unfortunate and deplorable that the Chairman of the Standing Committee on Finance and member for Willowdale tried twice to discredit, to corner, to trip up the auditor general and his colleagues. He never assumed such an attitude towards the Deputy Minister of Finance, Mr. Dodge, or the Deputy Minister of National Revenue, Mr. Gravelle. This is what we call double standard. Instead of showing some respect for the Office of the Auditor General of Canada,an independent and democratic institution that has no political ties, he chose to play party politics.

The member for Willowdale is well-known for the way he conducts the proceedings of the Standing Committee on Finance. As Chairman of the Standing Committee on Public Accounts, I do not need the member for Willowdale and Chairman of the Standing Committee on Finance, telling me what to do.

The fundamental issue is the issue of the accountability of senior officials. This is regrettable, but I must tell you that the question of accountability of senior civil servants will not be studied by any parliamentary committee. The Standing Committee on Public Accounts, of which I am a member, will not be able to do it in one single sitting any more than the Standing Committee on Finance did. In a democratic society, it is of considerable concern when people are not accountable for their actions and their decisions.

We will never know neither the circumstances which led to the transfer out of Canada of $2 billion, tax free, nor all the reasons surrounding these improprieties. I am not the one mentioning improprieties in this context, it is the auditor general.

To conclude, if we go beyond this case, it is the whole process of external audit of the government which has to be reviewed. Maybe Liberals are longing for the time when they were in opposition. They were more aggressive then, more lively, perhaps, and they will probably be there again after the next elections. The only committee chaired by an opposition member is being side-tracked despite its formal mandate to study the auditor general's report. The auditor general is under attack and will not have any forum to defend his indictment of this government, if the Standing Committee of Public Accounts is not able to shed light on this question.

I will conclude by saying that this is a frontal attack on the principle of government accountability to Parliament.

[English]

Mr. George S. Baker (Gander-Grand Falls, Lib.): Madam Speaker, I listened carefully to the hon. member from the Bloc. In its position as the official opposition to the Government of Canada, the job of the Bloc is always to hold the government accountable. Its job is to ensure that any legislation coming before the Chamber will be accountable to the people of Canada. In particular, its job is to watch the public purse. In particular, the Bloc motion states that the government is opening the door to other capital transfers that will deprive the federal government of hundreds of millions, and possibly billions, of dollars every year.

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I cannot understand the Bloc political party. Only a year ago the transfer of money across the border to the United States was under discussion in the committees and in this Chamber. Changes were suggested to the tax treaties between Canada and the United States. The general public has to understand that these are reciprocity agreements which apply to Canadians and Americans.

A suggestion was made by the Senate banking committee in the form of a bill that came to this Chamber eventually. This political party was asked to pass judgment on a major change in tax policy that would mean a reduction in the withholding tax on multinational corporations that sent their money from their subsidiaries to their parent company in the United States. Do you know what the Bloc said, Madam Speaker? The Bloc said on page 14707 of Hansard that it was a wonderful thing because now our capital could freely flow into the United States.

I ask the hon. member to justify his position in view of what he is saying today. Here is what was said at page 15541 of Hansard: ``The bill does not specifically say how many millions and billions of dollars are at stake in this protocol. We do not know which country, Canada or the United States, will benefit the most from this tax liberalization protocol but we support these proposed tax changes''.

How does the hon. member support the position of the Bloc when it supported the movement of capital out of this country and at the same time put in the words of this motion today and present this picture to the people of Canada?

[Translation]

Mr. Guimond: Madam Speaker, in Quebec, when the Canadian Broadcasting Corporation gives us the time programs will start, it always says ``one hour later in the maritimes''. That is confirmed by the statements of the hon. member for Gander-Grand Falls, one hour later in the maritimes, but he did not make any relevant comment on the issue.

I would like you to ask the Speaker if he would be kind enough to send me the page in Hansard where I spoke on this bill. I cannot recall saying what the member says I did. It could just be my

memory, but I really do not recall saying that. But there is one thing I remember saying and I have repeated it. What we want, and the hon. member did not understand that, is to shed some light on what really happened on December 23, 1991.

[English]

I will mention to the hon. member that I worked 14 years for Abitibi-Price. That company had a paper mill in Grand Falls, Newfoundland, in his riding. I ask the member, when he returns to his riding this weekend, to ask the paper maker, the guy who works in the boiler room, the guy who works in the chip mill if they accept the fact that the rich can move $2 billion U.S. without paying income taxes. Is it normal, is it acceptable to the paper maker in the Grand Falls mill?

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Mr. Barry Campbell (Parliamentary Secretary to Minister of Finance, Lib.): Madam Speaker, it is a pleasure to be sharing my time with the hon. member for Renfrew-Nipissing-Pembroke, the dean of this House.

It is time to ask what is really going on here. What is the real motive behind the Bloc Quebecois' fascination with this issue?

When smart people do odd things, it ought to make a person suspicious. I am just a little suspicious about the motives operating here.

It cannot be that the Bloc wants to embarrass the previous government. That is a rather bizarre thing, not that I object.

It cannot be that the Bloc believes that the government has not acted on the auditor general's recommendations because it has done so. First, there was a moratorium on additional tax rulings; second, a referral to the finance committee; third, a very serious piece of work from the finance committee and, from that will undoubtedly flow action on the recommendations of that committee.

This fascination of the Bloc cannot be because its members think we have not responded in a timely fashion. We have.

The fascination cannot be based on some perception of interference or wrongdoing in the decision making process because the auditor general has admitted that there was no such thing.

The fascination with this issue cannot be because there is something wrong in taxpayers seeking advance tax rulings on complex transactions. As they well know, the auditor general in previous years has reviewed and praised the advance ruling process.

If the taxpayers in question wanted to do something untoward, wanted to get away with something, they certainly would not have

come to Revenue Canada and asked for a tax ruling. I suggest that they would have done it.

One of the reasons the auditor general praised the tax ruling process was that it provided, if you will, a heads up to Revenue Canada about transactions and actions out there so that Revenue Canada would be right up to date on the things that were happening. This taxpayer talked to Revenue Canada. He or she did not have to do that.

The fascination of Bloc members can be understood. It is not for any of the reasons above. It is because of who they believe the taxpayer is. Maybe it is someone rich, they say. Maybe it is an anglo. Maybe it is an ethnic. We can draw a lot of lessons from their fascination with this issue.

What lessons can we draw from the way the Bloc has handled this matter about the kind of society it would build in Quebec? Let me tell members. Based on its performance on this matter, its members would build a society in which being successful would bar a person from fair treatment.

They would build a society in which there would be no taxpayer confidentiality. They would build a society in which envy would be the basis for policy, a society led by accountants that envy, bookkeepers of offence, measurers of science. What kind of economy would be left in Quebec in that environment?

What kind of society would they build? Based on the Bloc Quebecois' minority report on this issue, I will say what kind of society it would be building: a society in which expertise and experience is dismissed if someone's opinion disagrees with its ideology.

In their minority report, Bloc members dismiss out of hand the seven out of eight tax experts who appeared before the committee and concluded that the opinions Revenue Canada provided, based on the law and regulation as it then was, were incorrect.

What kind of society would they build? It would be a society in which your opinion would be unassailable if you agreed with their ideology. They cite Professor Brooks, the other of the eight who supported the Bloc's position and disagreed with the seven other experts.

His opinion, of course, was unassailable but the other experts, in the Bloc member's opinion, had a conflict of interest. How convenient.

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What kind of society would Bloc members build? A society in which minorities in Quebec might hope to be tolerated but never be quite equal. We are all minorities. It just depends where you draw your borders.

What kind of society would it be? It would be a society led by historical revisionists recasting and perverting history for their own ends. The francophone history in Canada is not one of shame but one of which to be proud. It is one of building a great country together, of opening a continent. What do they want to do? They want to lock francophones up in Quebec.

What kind of society would they build? It would be a society in which someone else is always responsible for the problems: the anglos, the rich, the ethnics, the federalists. Who will they blame if they go it alone?

It would be a society built on an insecurity so severe that they, the separatists, attempt to insulate themselves from criticism, labelling those who have criticized them as sellouts or part of some great overarching conspiracy, a society where government would decide when to suspend the rule of law, and the rule of law is all that stands between us and tyranny.

They would also build a society where it appears, based on the separatists own actions and statements, that there is collective responsibility. The Jewish community is responsible for Mr. Galganov, but the separatists and the francophone community are not responsible for Mr. Parizeau's comments about ethnics, for Mr. Landry's treatment of ethnics or Mr. Villeneuve's comments.

I am pleased to have had this opportunity to participate in this debate but I weep for Quebec, for the decent, hardworking, fair, open people of Quebec who are demeaned by the behaviour and attitude of the separatists as we have seen in this debate and in so many other debates.

I have confidence in the people of Quebec. They will never allow themselves to be led down the garden path to the narrow, stifling, miserable future the separatists have in mind for them.

[Translation]

Mr. Maurice Bernier (Mégantic-Compton-Stanstead, BQ): Madam Speaker, I listened to my colleague from St. Paul's comments on the motion before us today. It is hard to believe that the hon. member for St. Paul's can make such insulting comments not only about Bloc members but about all Quebecers.

This shows-as the people listening to us will realize-how the Bloc was justified in putting forward the issue of family trusts, how this hurts the Liberal government across the way, how they are not defending the interests of taxpayers in Canada and Quebec. It is the interests of those who contribute to their election fund they are looking after.

In 10 minutes, he managed to talk about the experts he claims the Bloc Quebecois is denigrating. He forgot to say that the experts who appeared before the finance committee were invited by the committee chairman himself and that these experts come from firms that, as we said before, contribute generously to the Liberal Party's coffers.

When someone as credible as the auditor general came before this committee to shed light, to tell the truth, he was harassed. They would have fired him if they could, because he had dared to tell the truth.

Then the hon. member for St. Paul's paints everything with the same brush. This is called condemnation in-

An hon. member: In absentia.

Mr. Bernier (Mégantic-Compton-Stanstead): Not in absentia, as my colleague said, but they are trying to link people who are not linked in any way. He criticized Mr. Parizeau for the comments he made the night of the referendum; he also criticized Mr. Landry's comments and those made by Mr. Villeneuve, which were condemned by everyone in Quebec.

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Our colleague's remarks were dishonest and, if he is an honourable man, he will withdraw them.

He should tell us why someone who is so pure, so intent on finding the truth, is not asking his government to disclose all the facts on the family trust matter. This is what the Bloc Quebecois wants, what the auditor general wants, what the people of Canada and Quebec want: to shed light on the huge amounts of money leaving the country without a penny in tax being paid, as we have been saying for the past three years. Year after year, they cut over $5 billion a year from the programs aimed at the unemployed.

That is what we want to know. We do not want to be treated as the hon. member, who talks through his hat more often than not, has treated us.

[English]

Mr. Campbell: Madam Speaker, I will be brief. I think members can express views on either side of this side. The hon. members for the opposition never hesitate to speak their minds and provide us with their interpretation of facts, history and reality. I think we are entitled on this side to do the same. If they do not like how it sounds or how it feels, I cannot help that.

I might add one other item to my list of what sort of society they might be talking about. That is one where one's professional competence and professional ethics are attacked if one does not agree with their opinion because that is what they are doing with respect to the experts before the committee.

I remind the hon. members that one expert was invited by the Bloc Quebecois, which was entitled to have as many others as it wanted. It could only come up with one.

This issue is about taxpayer migration. This government has dealt with family trusts in the last budget to the extent that family trusts impact this issue of taxpayer migration. I think the finance committee has done an excellent job of addressing those concerns.

Mr. Leonard Hopkins (Renfrew-Nipissing-Pembroke, Lib.): Madam Speaker, as I rise to speak on this motion today I am really amazed with its content. It has been some time since I saw a motion in this House that is worded in the way this one is today. It is really trying to get at rulings that were made in 1985 and 1991 relating to the immigration of taxpayers and the distribution of Canadian trust property to a non-resident beneficiary. It is also very much about migration taxation.

The opposition motion today tries to convince people that the doors are open for other transactions to leave the country and they talk of this in terms of hundreds of millions and even billions of dollars. This is an absurd assumption. What they are trying to do is create a perception of a loss of tax dollars. The finance committee has brought an excellent report into this House and found no such transactions taking place.

As I have said, this is an absurd assumption. Are billions of dollars leaving the country tax free? The answer is a clear and unequivocal no. Revenue Canada is not aware of any similar transactions since 1991, and the finance committee confirmed it found no indication of large revenue losses or tax planning opportunities that occurred because of the 1991 ruling.

The minister of revenue, as she said today, has placed a moratorium on any such rulings in this area of the Income Tax Act until such time as the government plugs the loopholes.

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The hon. member for Beauport-Montmorency-Orléans indicated today that the Liberals would be blaming this on the Tory administration. The Canadian public has already passed judgment on the Tory administration. It did that on October 25, 1993 in the general election. Therefore we do not have to pass it on to it, it was there during its time. However, there was no evidence found of wrongdoing on the part of tax department officials in this ruling. That is in the report that the finance committee brought into this House.

I want to emphasize that the Minister of National Revenue has stated that we have a moratorium on any such procedures until the government plugs the loopholes. This is in effect a freeze on all procedures, and no decision to let money out of this country can be taken while that moratorium is on. How do we get fish out of a lake when the lake is frozen? We have to drill a hole. But the finance minister and the Government of Canada are saying they are going to plug the hole. The Bloc can try as it likes but it will not be able to drill a hole in the ice on that lake and get the fish out. The Government of Canada is going to review these tax laws which have not been reviewed for 25 years. It has already taken many measures in this regard.

Therefore let us not get carried away with the idea that something terrible is going on today because the finance committee, the auditor general and other officials, six leading auditors of this country, have said there was no wrongdoing. The Department of National Revenue says that nothing has happened since 1991.

If they are trying to put a hole in the Liberal armour in Quebec, they will have to try harder than this. The people of Quebec are smart enough to know they are not being led down the garden path by tactics such as this. Just reading that motion is the worst bedtime reading anybody could possibly have.

The government has stated on the floor of this House that the problem today is how to treat capital gains when someone, an immigrant, a person, a trust, a company or a partnership wants to leave Canada. That is the question. That was the auditor general's main point. The majority finance committee report of the House endorsed it by saying action must be taken. The Minister of Finance said: ``We agree and we intend to take action''.

At another place in Hansard on September 20, the government said that the majority finance committee report was very thorough in the way it dealt with this point and that the government intends to take action. The Minister of Finance, on behalf of the government, said: ``We wanted to shed some light on the matter and the majority report of the finance committee did so, and we intend to act''.

It becomes very clear that the motion which the House is debating today has been placed on the Order Paper by the official opposition as an example of straight crass politics, and that is why it does not mention the positive approaches that have been taken by this government to update the Income Tax Act. The average Canadian needs the facts surrounding this issue and they are getting them. They do not need the kind of political rhetoric portrayed by this motion.

I repeat that a moratorium has been placed on all rulings with respect to taxpayer migration until the government has introduced legislation and taken other steps to plug the loopholes. It wants to study the finance committee report in depth.

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Let us compare ourselves with other countries. In the House we are always downgrading ourselves in many ways. I want to compare Canada's tax laws with those of other countries.

Our tax laws are tighter than those of other G-7 nations. Our tax administration system is the most highly respected of any today. It is pure speculation that money has been lost. There is no evidence from any source that money has been lost.

It is another matter when we come to a debate such as this to examine the issues in their full complexity, not just in simplistic statements such as those stated in the motion today. It is another matter to examine the actions of hardworking and dedicated officials in the context in which those actions occurred.

It is very easy to criticize somebody, talk about the good and the bad, put people into categories of heroes and the villains. But that is why it is absolutely necessary to explain the whole issue on the floor of the House. It is quite another matter when we consider that one of the central issues we are examining today relates to the highly complex and frequently uncertain area of the tax treatment of taxpayers who migrate.

Chapter 1 of the auditor general's report issued on May 7 of this year raised issues related to income tax rulings and in particular Canada's tax policy as it relates to persons who become or cease to become resident in Canada.

The fact that these concerns dealt partially with family trusts should not obscure the fact that the principal issue in this matter is the tax rules relating to taxpayer migration.

I think this is something which is very relevant. It has been said that the period since the end of the second world war will be regarded by historians as the twilight of the nation state and the dawn of the single world economy.

According to Webster's Dictionary the term globalization did not even exist until 1944. Today it is the defining watchword of our modern world. Yet surprisingly tax rules relating to taxpayer migration were not enacted by Parliament until 1971 and have not been significantly reviewed in the 25 years since they were enacted.

[Translation]

Mr. Ghislain Lebel (Chambly, BQ): Madam Speaker, I am somewhat disappointed with the remarks made by the hon. member for Renfrew-Nipissing-Pembroke, whose career as a politician is coming to an end. I am sad to see him make remarks that can only bring shame on parliamentarians.

I wonder if the hon. member, as a former chair the Standing Committee on Public Accounts and a senior member of this House, with 36 years of service, could tell us what message he thinks he is sending the Canadian people with remarks like that. When he chaired the public accounts committee, would he have let the auditor general's report be torn to pieces along with the auditor himself, who simply did his job and nothing more?

Why was this issue, which was before the public accounts committee, referred to the finance committee, an obscure committee controlled by the Liberals? The Liberals are the majority on the finance committee. Right there, there is cause for concern, there is something fishy.

A member with 36 years of experience in politics just does not lend himself to this kind of thing. Either he stays put or, better yet, he stays home because these goings-on were downright unacceptable. He mentioned experts, tax experts, the same experts who participated in the making of the December 24, 1991, decision.

(1700)

In what way were the rules of law adhered to and the wish to get to the bottom of this issue respected, this issue raised by the auditor general, who, thankfully, is not working for the Liberal Party but as an agent of this House.

They shot the messenger with red hot bullets to shut him up. They tried to discredit him. Why is the ruling party doing that? Could it be that the auditor general has uncovered something he was not supposed to uncover? Did he express suspicions he should not have expressed? What need was there to attack the auditor general and deal with this matter on the quiet in a finance committee controlled by the Liberals, who are, as we know, the major players on these committees?

Does the hon. member, who has 36 years of experience in politics, take pride in what he is trying to have Quebecers and Canadians alike believe? He should not have a hard time convincing them, seeing that the scandal was revealed by sovereignists, members of the Bloc Quebecois. It is easy to convince the Canadian public, terrified of the BQ, that it was a bad thing the BQ uncovered. But the auditor general is not a member of the Bloc. He is probably the man with the highest moral authority in all of government. This is the man that they have tried to tear to pieces for possibly putting his nose in something he should not have put his nose into.

I urge the hon. member to make amends and acknowledge the fact that the Standing Committee on Public Accounts should have given the matter full consideration, reported to this House and recommended an enquiry.

[English]

Mr. Hopkins: Madam Speaker, I just want to say to the hon. member that it is quite obvious that I got through to the true intention of the Bloc Party in the House of Commons today when he turns around and makes a personal attack on me. My hide is thick. I can take that. But I can also dish it out.

I am going to say to him today that the Auditor General of Canada has always had the highest respect from the member for Renfrew-Nipissing-Pembroke.

I have no hesitation in saying that it was this government which took the initiative. It was not the Bloc. Do not stand and say that the Bloc took the initiative. The Government of Canada took the initiative and referred the matter to the finance committee of the House of Commons and the finance committee brought in the report.

[Translation]

Mr. Claude Bachand (Saint-Jean, BQ): Madam Speaker, first I wish to inform you that I will share my time with my colleague from Chambly, so I have ten minutes for my speech.

My first three words in the present debate are: shame, shame and shame.

I listened to the hon. member for Renfrew-Nipissing-Pembroke and I totally disagree with the chronology that he just described. I have the course of events written here, showing how cynical the government's methods were.

First of all, on December 23, Revenue Canada issued its ruling, that is to say, officials held discussions leading to a decision. In his report, the auditor general mentioned that at least four meetings were held that day. This was already preferential treatment for the kind of companies, or rich families we are discussing today.

This was also done behind closed doors. Two days before Christmas, when everybody was celebrating, officials were called together four or five times to try and to see what could be done for friends. We will prove later that they were friends of the Liberal Party.

On December 24, they issued their ruling. When asked for a ruling or when a ruling is appealed, revenue officials rarely issue a ruling within 24 hours. That happened in the case discussed today.

In 1993, the auditor general ordered Revenue Canada to publish its rulings, because he realized that it did not publish its rulings regarding family trusts. I also totally disagree with the hon. member who spoke just before me, the hon. member for Renfrew-Nipissing-Pembroke, because family trusts have been in the Bloc Quebecois' platform since the very beginning, since its founding-and I was there-and also during the election campaign.

(1705)

We realized there was a major problem. The middle class and the poor were hit by all kinds of taxes and measures, while other Canadian families were benefitting from the government's generosity. We pointed this out from the very beginning and we started doing something about it, since we were elected in October. The hon. member can look at the record: the Bloc Quebecois' first questions in the early days of this Parliament related to the issue of family trusts, which was part of our platform.

Finally, on March 21, five years after the beginning of this saga, Revenue Canada made its ruling public. On May 7, the auditor general released his report, in which he alludes to a precedent that could cost Canadians hundreds of millions of dollars.

Following the release of the auditor general's report, the Bloc continued to ask questions. In a very unfair move, the government, rather than asking the public accounts committee, chaired by a Bloc Quebecois member, to review the issue, as should have been the case-although it would have been risky for the government-asked instead the finance committee to shed light on these events.

There is no surprise. The revenue minister often hides behind the report of the finance committee, because it was prepared by the Liberal majority of course, but she never talks about the minority report of that same committee. The minister claims the exercise was conducted according to normal practices.

Not so. The public accounts committee is the one that should have been instructed to examine the issue. And what did the finance committee do as soon as it convened? It asked experts to come and testify. My colleagues told you about this. I have the names of these experts.

The committee invited officials from Ernst and Young, Stikeman Elliott and Coopers and Lybrand. These are all tax consultants who give advice to rich Canadian families so they can avoid paying taxes to Revenue Canada. This is tantamount to putting the wolf in charge of the sheepfold. And this is what happened.

Once the report appeared, everybody said: ``This has been done democratically, the finance committee has reviewed the issue, there is no problem, experts were called on to give evidence.'' Nobody tells us that foxes were called to tell us how to mind the geese. As a result, we might never know where those two billion dollars went and what families were concerned. That too was disclosed, the names of the families. Again, those are presumptions. What is sure is that it happened and maybe it keeps happening right now. Yes they can talk about ice and holes in the ice that can be plugged.

In our opinion, that keeps happening and were it not for our colleagues' intervention, our colleagues for Saint-Hyacinthe, for La Prairie and for Beauport-Montmorency-Orléans, we would still be allowing fortunes to move out one way or the other. We would ignore it. That is not exactly how we want things to be done.

Earlier, my colleague for Portneuf talked about the importance-I would rather call it the appearance-of tax equity. Is there appearance of tax equity?

An hon. member: Not at all.

Mr. Bachand: Not at all.

Think about the blue-collar worker employed by the City of Saint-Jean who looks at his pay cheque on Friday and sees that a third of his pay goes to income tax and various other taxes, and who knows that at the end of the year Revenue Canada will show its claws if he contravenes the law. Can he phone Revenue Canada and ask for a ruling? Can he ask whether it is legal to do such a thing? We just got an answer this afternoon: no.

But if your name is Bronfman, if your name is Conrad Black-

Mr. Bernier (Mégantic-Compton-Stanstead): Or Paul Martin.

Mr. Bachand: -or Paul Martin, you can give a call not only to Revenue Canada, but also to the Prime Minister of Canada, and ask them for some kind of sweet deal.

Actually, what we would like to know is precisely what they are refusing to tell us. The young woman who is a white collar employee of the city of Saint-Luc or the bus driver working for the bus company in my riding are just fed up. They keep telling us they have had it with taxes, they are overburdened. How can a small family with a combined annual income of $45,000 and no tax loophole consider that the tax system is fair, when they hear about blatant inequities like the one being debated today?

The tax system should have the appearance of fairness. A principle of justice is that justice should appear to be done. Today, we do not even have a semblance of tax fairness.

(1710)

Even the finance minister dared to say: ``There is no problem with family trusts. I have my own.'' And we know it too. Bronfman and Conrad Black are sure to have one too, and their children will benefit from it for generations to come.

But what about the man on the street, the blue or white collar worker, the bus driver, the subway train operator, or the average worker in a company? Can they leave millions of dollars to their kids? I do not think so.

It is unfortunate that the hon. member for Nipissing has left, because the Liberal Party is so arrogant that it behaves as if it owns the House of Commons in a system where there are no rules to govern those who sit here. If it were not for the minimum rules we have around here, I think the Liberal Party would say that it owns the House of Commons and that it no longer wants an auditor general. Of course, because he does not always agree with them. But he is a watchdog; it is his role not to always agree with the Liberal Party.

The philosophy of the Liberal Party of Canada is quite simple: its members will continue to protect their rich friends. I think that we, in the Bloc Quebecois, will continue de protect the middle class citizens who are tired of being taxed and witnessing such unfairness. We will continue to protect the needy who are affected by the cuts, because, in order to balance the tax base and the budget, the government cuts programs for the underprivileged, taxes the middle class and turns a blind eye to all those rich families who flee the country with all their money.

This is not the philosophy of the Bloc Quebecois, but the philosophy of the Liberal Party of Canada. It will come back to haunt them in the next election. If they do not change their minds, the people will realize that such unfairness does not make any sense and the Liberal Party might meet the same fate as my hon. colleague for Renfrew-Nipissing-Pembroke wished upon the previous Conservative government earlier on.

It is all very well to have power, but not to the point where one becomes domineering and arrogant. The people will realize it some day. We sit here, in opposition, to make Quebecers and Canadians aware that they are much better served by an opposition party, by an auditor general who acts as a watchdog, as some kind of opposition, and wants to help the party in office to get back on track.

[English]

Mr. Philip Mayfield (Cariboo-Chilcotin, Ref.): Madam Speaker, I note that the member of the Bloc Quebecois does not take credit for raising this issue. It is the auditor general.

I would like to express my appreciation for his acknowledging that. The auditor general does have an extremely important role in holding the government accountable.

This issue raises for me the lack of accountability of this government and its intention to be even less accountable as we proceed through its mandate.

I think of the changes in legislation that are coming through where the government is seeking to have more discretion in its power as it governs. It is interesting how power seeks power.

There are little changes like changing in the legislation a ``shall'' to a ``may'', which leaves more discretion; a comment such as ``in the opinion of the minister'' in the legislation, which leaves no latitude for appeal.

There are a couple of issues that I would like to raise about government accountability in my own constituency. There is the appointment of returning officers. What is the accountability of the government in this?

In my constituency there have been two returning officers appointed by this government. As far as I can tell neither of them has had any public input.

As I read the qualifications, I read that the work is by nature impartial, non-partisan: ``The returning officer must conduct all business accordingly. Returning officers must abide by the government's conflict of interest code and Elections Canada code of professional conduct and must abstain from all activities of a politically partisan nature''.

(1715 )

Yet it is well known in my community that both people who were appointed-one has since resigned and the other remains appointed-are indeed part of the Liberal organization. Where is the accountability there?

I would also like to raise the issue of the Nisga'a treaty and the agreement in principle where a large portion of the province of British Columbia has been set aside without consultation of the people of British Columbia. Included in this agreement are educational matters, justice matters, infrastructure matters, commercial fishing matters. Where did the government include people in this? Where is the government's accountability to the people who elected it? This is the issue.

As we talk about family trusts, people are extremely nervous because of the way the Liberal government has gone about governing the nation, not in a fair manner at all.

[Translation]

Mr. Bachand: Madam Speaker, I am pleased to see that the Reform member shares our view on this matter. We rarely agree, but on the subject of the government's responsibility regarding this iniquity, we share the same opinion. For the record, though, I would like to say that the Auditor General released his report on May 7, but that this was part of the Bloc Quebecois' electoral platform in 1993 and that, by chance, we reached the same conclusions. Of course, when the Auditor General tabled his report, we agreed with it.

I want to give the Bloc Quebecois credit for this because it had already identified the problem. The fact that the Auditor General confirmed this, put us in agreement. We too have criticized the accountability of the government, which continues to hide behind committees that, until now, have been pretty phoney.

Mr. Ghislain Lebel (Chambly, BQ): Madam Speaker, honestly, I cannot say that I am happy to speak today on the motion tabled by the official opposition. This is not the first time that I have criticized apparent conflicts of interests, flagrant iniquities against ordinary taxpayers by the current government.

I need only mention the Pearson Airport episode. There was even one Liberal, alleged be the revenue minister's father, who said that there were plenty of apparent conflicts of interests and shady dealings that should be investigated. And this is not from a Bloc member but from the father of the current Minister of Revenue, a very well-known Liberal named Nixon, who had made that recommendation to the government. The government did not pay heed. It was as if he had not said anything.

I remember the then Minister of Transport, who said that it was no use to dig up such things. And yet, they dig up things when they

find a low income earner who defrauded unemployment insurance of $200. They will pursue him even into his grave. It is worth their while to dig up such things. But matters involving billions of dollars is only wheeling and dealing.

The Pearson deal is not the only example. Do the members across the way remember Power DirecTv? A decision was reversed even though it had been taken by the authorities responsible for overseeing these things. The Cabinet changed it. It just happened that there were people at Power DirecTv who were close to the Prime Minister and his entourage.

In the case of Ginn Publishing, they did not even wait for the lawyer's report to again return things to friends of the government party and its leaders.

I could go on and on. I remember a minister who was in Los Angeles at one time and who came to ensure that Canadians had truly taken control of a film distribution company. He was ready to swear and put in writing that this company was really a Canadian company.

(1720)

There are many examples, and everything leads us to believe that there will be others.

The Standing Committee on Finance. I was watching the Liberals pull out their hair earlier: the Standing Committee on Finance has decided this; the Standing Committee on Finance does not want to know anything, it does not want to find anything, as in the case of Pearson Airport. There is none so blind as he who will not see. This is the case of the Standing Committee on Finance. If the members opposite can convince other Canadians of this, it is their problem. But, as the member for Saint-Jean said, I am not sure they will not get their comeuppance royally in the next election, as other parties that have done similar but not such bad things as this, I would say. With some 177 seats, a government can devise laws benefiting the wealthy, and the opposition, official or not, can do nothing about it. That is what has happened in the three years since the government came into power. It is a shame involving everybody.

We come here to implore the common sense of independent experts, of six independent experts who probably were involved in a series of decisions, the one taken on 23 December 1991 in particular. They were at the party held on December 23, and we are asking them if, in their opinion, everything was done according to the rules. My colleague called that a just application of tax equity. The government is not even trying to give an appearance of clearness and cleanliness. It does not care. ``We are too strong, they will never dare to destroy us, because we are the ones who decide in the end.'' And even the Minister of Finance said: ``I do have a family trust.'' Indeed, and it is made up of taxable Canadian property. The day he sends his ships for a trip in the South with the intention of not bringing them back, how will we look, since he is the Minister of Finance?

That is almost what happened with the $2 billion. Can you imagine how much tax $2 billion represents? ``No, we cannot do it because this is a friend. Scratch my back, I will scratch yours''. That is how it works across the way.

At one point, Canadians will have to realize that they are being bamboozled as they have never been in the history of Canada. We have already seen governments making timid attempts, but today, we are seeing people taking the cash and laughing all the way to the banks-overseas. Two billion dollars! It does not make any bloody sense at all.

Still today, I thought that the haemorrhage had been staunched, but no. Today, we saw in the auditor general's report that there is still $630 million worth of loopholes of all kinds. We are not talking about petty thieves, but about big tobacco companies. It is all the same gang. When we dig a little bit, we can find the connections. People will attend a $3,000 a place fundraising dinner to have a look at the Prime Minister and have the opportunity to rub shoulders with him in the men's room.

It is terrible to say, but when you are on the government's side, no threat of any kind can rattle you, not even from the auditor general. That man was demolished. It is as simple as that. If you do not like the message, just shoot the messenger.

Not only must laws be implemented in a fair and reasonable way, but they must appear to be implemented in a fair and reasonable way, just as with justice. We operate under the rule of law, like the justice minister said this morning, and the courts established the rule of law long ago. Not only must justice be administered, but it must appear to have been administered. But appearances do not matter in this case. Old chums received a little help, and I would not be surprised if not many family trusts were left.

A provision that was reasonable and, in a certain way, logical was used ill-advisedly, it was used in a way not intended originally. It is all a sort of institutionalized misappropriation of funds with the wealthy members of society, who make off with the money, the next one with his boats, no doubt, it is probably one of the last remaining, but an inquiry must be called.

(1725)

When the truth is what you want, you do what is necessary to obtain it. An independent inquiry, a royal commission if necessary, must be called, and independent experts brought in, not those who took part in the ruling. The RCMP should be involved, and the bank accounts of those who had anything to do with this ruling scrutinized closely.

When you want to find something, you look for it. In this case, they do not want to find anything, and so they are not looking. They are saying: ``This is just a bunch of separatists who have stumbled over something. Nothing to worry about. The people of Newfoundland, westerners and easterners will never dare to believe separatists, so the way is clear. We can have the rink to ourselves and do as we please''. That is what is scandalous about this affair, and the Liberals can tell me what they like, but it is not going to wash. It will not wash. Something stinks in this business and we will not let up until we find out what it is.

[English]

Mr. George S. Baker (Gander-Grand Falls, Lib.): Madam Speaker, I have just a few words on this motion put forward by the Bloc. In looking at this motion, I think it is first, a condemnation of the Tories and second, a condemnation of the Bloc itself. I say that because what the Bloc is talking about are family trusts.

Bloc members are talking about family trusts and trying to blame the Liberal government for a report given by the finance committee. Where they are wrong is in their accusations against the Liberal government. It was the Liberal government that brought in the capital gains tax on family trusts. It was the Liberal government that brought in the rule that would supposedly close the loophole created by forming a trust because a trust does not die. This was the problem facing Canada back in 1971. Prior to that, we had the inheritance tax in Canada. We had the estate tax in Canada, as in the United States today. It also has the capital gains tax.

We had the inheritance tax and the estate tax in Canada and along came a royal commission that recommended substantial changes, the Carter commission, but those recommendations were not followed at the time. I wish some of them had been but they were not. The Liberal government at that time brought in a capital gains tax that would affect family trusts at half the normal taxation rate of income.

When that was brought in a problem came up, as it always does when one changes the law. There were ways around it, especially for paying taxes. The way was found around it by putting assets in trust so that when somebody died you would not have to pay the normal capital gains tax that was imposed by the Government of Canada in 1971.

At that time the Liberal government, in order to close the loophole, said that at the end of 21 years, regardless, the taxes that would normally have been paid on the increased value of the assets would then become due in 21 years. That was during the Liberal administration, to close the loophole of wealthy people being able to hire very expensive law firms and accounting firms to get around the tax law.

(1730)

What happened? For 21 years assets had been put into a trust. On January 1, 1972 the new law came into effect and all of a sudden we are now in 1992, and guess what? That money would now be owed to the Government of Canada. It was estimated to be in the hundreds of millions of dollars.

I and other members of the opposition went through access to information and we discovered that expensive consultants were hired during the Tory regime to try and convince the government to lift that 21-year rule that the Liberals brought in, to make everybody pay up.

In looking at the correspondence to the then ministers of finance of the Tory government, you could see that a man who had $100 million in trust was going to have to pay $11 million in 1992. Another man who had $200 million might be liable for $15 million; another man with $70 million was going to have to pay $7 million. They were pleading with the Tory government: ``Don't let this happen. I do not want to have to pay all this money. After all I only have $100 million''. It almost made you want to cry. This was in letter after letter after letter.

Then came the consulting firms. We also received the surveys that were done by the consulting firms. I will not mention their names because if I do perhaps it will give them more business because they were very successful in changing the mind of the government of the day.

The problem became, what could somebody do with a family trust, with this magic 21 years coming up and the taxes having to be paid? Could it be rolled over? An anti-avoidance rule was brought it. A person had to go before a judge and prove that it was not being done to avoid taxes. All of these rules were there to prevent it from being done.

It is in that setting that we discuss these family trusts. A great many of them did not mind paying the taxes. From the documents that we received at that time from access to information some were quite willing to pay the tax. I recall one gentleman who owed $12 million writing to the agency that was trying to change the law saying: ``I have to pay $12 million but there is no problem''.

In 1985 the government of the day made a decision. The government has to be held responsible for what bureaucrats do. If the Department of Finance and Revenue Canada do something, the ministers and the government are held responsible. A decision was made.

(1735 )

In 1991 they moved $2.2 billion in this one instance across the border to the United States. If the purpose was to escape the 21-year rule, which I do not know if it was but I rather suspect it was not, they should not have worried at that time. They should not have worried because we had a government in power which, as sure as you are sitting there, Madam Speaker, was going to change the rules so that all of this money would not become due. That is the Tory way of doing things.

The Tories always supported, as the Reform Party does, the very wealthy in our society, the people who have loads of money and the people who they identify as keeping the economy moving.

A change was made. The change I am talking about took place on December 23, 1991. A couple of weeks later they actually removed the 21-year rule. In other words, all of these family trusts were supposed to pay taxes after 21 years. A decision of the Government of Canada said that all of this money which would have become due after 21 years would not become due until the death of the youngest member of the family.

That was the Tory government, the same Tory party that is trying now to regain power in Canada. They want to become popular across the country again, that same Tory party with those same Tory principles, the same as the Reform. Some people say the Reform Party is worse.

The Tory party said: ``All of that money is not going to come due now which the Liberals proclaimed''. The Liberals closed the loophole. The Trudeau administration brought it in. All taxes that are avoided will come due in 21 years. That is why it was called the 21-year rule.

At the last moment the Mulroney administration gave a reprieve. They said: ``Oh, no, you won't have to pay up''. At the last minute in 1992 they said: ``It's okay. You won't have to pay up because we are going to bring in a tax change and we are going to change it so that the money will not become due until the death of the youngest person in the family''.

The Tories were replaced by the Liberals. In the debate before the House today the Bloc say it pertains to family trusts. What did the Liberals do when they got in? It was the Liberals who closed the loophole. Along came the current finance minister and he changed the law again. The door that was opened up by the Tories has been closed. The Liberals said: ``You won't be able to do that any more. We are going to give you a few years until 1999 but at the end of that, no more''.

The Bloc stands in this Chamber on a motion and criticize the Liberals for creating loopholes on family trusts. It was the Liberals who closed them. It is this Liberal government and this Minister of Finance who have once again closed the family trust loophole.

(1740)

The second portion of the motion is an outright condemnation of the Bloc. The reason it is a condemnation of the Bloc is because that party is supposed to be the official opposition in the House of Commons. I am not supposed to be. Liberal backbenchers are not supposed to be. We have had, on occasion, to delve into the facts to take the place of the official opposition. Why did we have to do that?

The Bloc's motion talks about condemning the Liberals for something which the finance committee suggested. It condemns the Liberals for the tax free transfers of family trusts when it was the Liberals that closed all the loopholes. The Bloc is condemning the Liberals for what the Tories did and what the Tories would do again if they ever got back into power. If the Reform Party got into power the same thing would happen.

What did the Bloc do? I have gone over the record of that political party just to see the way it has treated the transfer of hundreds of millions and possibly billions of dollars every year. The Bloc claims that the Liberals opened the doors. It is an absolute total outrage.

What did the Bloc say about the transfer of funds across the border into the United States?

The Liberals took action on the transfer of $2.2 billion, which involved, as the auditor general said, secrecy. There was secrecy in Revenue Canada on the rulings. Let us not forget that if the ruling in 1985 had become public the tax auditors and the tax lawyers would have been on to it and all of a sudden Revenue Canada and the Government of Canada would probably have realized they had a problem.

What did the current minister for Revenue Canada do? First, she said that rulings will be made public. What did the finance minister do? The finance minister closed the loophole again, just as the Liberals had closed it before the Tories opened it up again.

We had a response from the finance minister. He is perhaps the greatest finance minister in the history of the country. The minister for Revenue Canada is doing a fantastic job. They responded in concrete ways. Not only that, I understand that there are perhaps even further measures going to be taken to ensure that this will not happen again.

There are two sides to the argument. People talk about the transfer of money across borders. It is the thing to talk about these days. The borders are opening up. Barriers are being dropped. Withholding taxes are disappearing, at least between certain nations in the industrialized world. We are into globalization. We are into a situation in which multinationals control over half of the trade in our world today. What we are doing is removing barriers.

(1745 )

What did the Bloc members say when the United States received what it wanted through the Senate banking committee? What did Bloc members say about the announcement on the withholding tax on dividends, that is, the payment from subsidiaries to their parent companies in the United States and from subsidiaries in the United States to their parent companies in Canada-not many of them, most of it goes the other way.

What did Bloc members say when the tax rate was dropped by 50 per cent, amounting to about $700 million? They said the same thing to that as they said to the other proposition that was in the same agreement which said that the tax on interest gained would be dropped from 15 per cent to 10 per cent. The tax on royalties, even copyright royalties would be bifurcated so that they could be dealt with individually.

What did they say with that great loss of revenue? The Bloc said: ``It does not specify how many millions and billions of dollars are at stake in this protocol. We do not know which country, Canada or the United States, will benefit the most from this tax liberalization proposal. We do not know, but we support it''.

What did Bloc members say when the Americans wanted, and we changed, the estate tax relief that was granted to a wealthy person in Canada who had property in the United States including stocks and bonds through a Canadian bond agency? What did the Bloc say when the suggestion was made that a tax credit would be given in Canada for somebody if they had a billion dollars worth of property in the U.S. and were subjected to the U.S. inheritance tax, estate tax?

What did they say? I have it here. The Bloc said: ``We are proud and happy to participate in this development in supporting this Senate proposal because it goes in the direction that we have always advocated. The only way to live side by side is to support legislation that will make more harmonious relations between the two nations''.

I will conclude. The Bloc members are frustrated. What are they frustrated about? They are frustrated about the popularity of this Liberal government. They are frustrated because we are the best performing economy in the industrialized world.

[Translation]

Mr. Antoine Dubé (Lévis, BQ): Madam Speaker, the member for Gander-Grand Falls, as we have come to know him, has often shown his support for the most disadvantaged, for the people of his riding, of his province. I have the utmost respect for him. His commitment to certain fundamental things with regard to social programs and unemployment insurance, and the fact that, several times, he expressed his disagreement with the government have forced him to remain a backbencher within the Liberal Party.

I know that an election will be called some time soon. One year or maybe less from an election, the member is trying, in the presence of his whip and other colleagues who are listening to him, to improve his image within the party because he wants to run again in the next election, which is perfectly normal.

Even though he likes us and often tells us so, why not pick on the members of the Bloc Quebecois a little. They have not said all they should have said about possible loopholes for rich people.

With respect to family trusts, he tells us that the matter will be resolved in 1999. We will have other arrangements then. What does that say? It tells wealthy families that they have another three years to prepare for the forthcoming changes.

(1750)

I will tell you that, as in the Pearson deal and many other instances, the bad things that the member says came from the former Conservative government, where some people benefited from certain advantages, are more often than not related to these wealthy families. Oddly enough, in these cases, the friends of the Conservative Party have become the friends of the Liberal Party.

Why is that so? One just has to read the report of the Chief Electoral Officer on political party funding. One can see that large corporations also contributed to the Liberal Party of Canada's funding, equally in most cases. This is less true of the Reform Party, which gets 80 per cent of its funding from private individuals. In the Bloc Quebecois, our funding comes solely from individuals, as is the case for the Parti Quebecois.

Would the member, who supports the have-nots, who seeks political correctness, be in favour of correcting the impression of inequity in this whole issue? That is what the Bloc is asking for. Frankly, I ask the member if he can blame us for supporting the Auditor General of Canada when he says that there is a need to shed some light on what has happened and to inform the public.

How can he blame us for wanting to shed some light on something very obscure? If nothing is found, then so be it. At least the public will be reassured, as well as the 100,000 people that the Government of Canada is suing for unemployment insurance fraud in the amount of $100 or $200. Of course, the member for Gander-Grand Falls is not saying a word about that one year away from an election. Last year, he was talking about it. Why is he not talking about it this year? Is he so eager to improve his image within the Liberal Party? In that case, he will lose my respect.

[English]

Mr. Baker: Madam Speaker, the Bloc members at times, very rarely but at times, do show some indication that perhaps they want to make the government accountable, something other than their trying to figure out a way to break the country up. There are rare occasions.

That is why I bring to the attention of the hon. member, to the attention of the House, to the attention of the Speaker, and through the Speaker to the people of Canada that this official opposition really does not belong in the situation we are in. They stand up

here today and talk about tax changes and blame the Liberals, when it was the Tories who did it and would do it again if they ever got in office.

Then the hon. member does not like it. He does not like it because what I have taken out of Hansard is something which I could never understand but I do know why they did it. That is how the official opposition could turn around and approve and support it and say: ``Bring it on. We love it. It is just as good as sliced bread''. Massive tax changes that they were supposed to be objecting to.

They supported the very thing today they blame the Liberals for, for more flows of capital into the United States. They asked for more. Why? They asked for more because during the debate in the House where I took these quotations from they said that they were preparing for separation. Therefore they would like to have lots of ways of getting capital into the United States because they want to deal directly with the United States. That was the logic used. According to that logic they are not fulfilling their duties as the official opposition.

What the Bloc members are scratching about now is when they realized the Government of Canada has been so fantastic as to lead the industrialized world in economic growth, the member complains about contributions to the Liberal Party. The official figures show that Canada leads Italy, France, the U.K., Germany, Japan and the United States and stands all alone in economic growth for next year. At that rate one would expect the contributions to increase.

(1755)

Mr. Don Boudria (Glengarry-Prescott-Russell, Lib.): Madam Speaker, I heard the most eloquent discourse of our colleague from Gander-Grand Falls.

[Translation]

Mr. Dubé: Give him a good rating.

[English]

Mr. Boudria: It is hard to give anything else but a good rating to such a fine speech, and I thank my colleague across the way for bringing that up.

My colleague referred to the growth of Canada during recent times and the forecasted growth for next year. I wonder if he is aware that Canada's forecasted growth for next year in terms of employment is such that it is predicted it will exceed all the European G-7 nations put together. Is he aware of that? Is that not in itself testimony to the kind of leadership that has been given to this country by the hon. Minister of Finance?

There is an excellent proposition I want to bring to his attention. Next year Canada will have the lowest deficit to GDP ratio of any G-7 nation.

In terms of net cash requirements, there will not be any net cash requirements next year. We will not be borrowing any funds from abroad. We are in this enviable position thanks to the fine leadership of the Prime Minister and the Minister of Finance.

Mr. Baker: Madam Speaker, I want to add one thing to the excellent dissertation that was just given.

As the hon. member is aware, those estimates were not made by the Fraser Institute or the Canadian association of accountants or any Canadian organization. All of those estimates the hon. gentleman just gave were made in Paris. Who made them? Economists representing 27 nations in the world, the OECD. Twenty-seven of the nations in the developed world whose job it is to sit down and to realize the economic growth in the world and to promote those excellent standards and lo and behold Canada leads all the rest.

Mr. Don Boudria (Glengarry-Prescott-Russell, Lib.): Madam Speaker, I am pleased to participate in this debate. I was anticipating such an opportunity but I did not know it would come so quickly. I want to share my time with the hon. member for Gatineau-La Lièvre.

[Translation]

We have been hearing today that the members of the Bloc Quebecois want to denounce the government for all sorts of reasons that they have been telling us about. At the same time, in their speeches, the members of the Bloc Quebecois and also those of the Reform Party, the members of the opposition, have pulled out all the stops in a vain attempt to show that the government did not, in their view, act properly with respect to family trusts.

Nothing could be further from the truth. First, the member for Gander-Grand Falls gave a very good overview of the issue just now in his most excellent speech. Furthermore, it must be recalled that the question is not about family trusts, but about exporting assets when a Canadian decides to move out of the country. This is where the problem arises.

(1800)

It is the same problem, albeit with different amounts, whether we are talking about a Canadian who suddenly decides to move from Montreal to Boston, a so-called ordinary Canadian, or a wealthy individual who leaves a large Canadian city with all his assets, his millions and so on.

It is also important to remember that the controversy that has apparently shocked the member across the way, a former organizer for the Conservative Party, if memory serves-

Mr. Dubé: Me? Never in my life.

Mr. Boudria: The action that has so shaken the hon. members across the way took place in 1991, when Mr. Mulroney was Prime Minister of Canada. As the member for Gander-Grand Falls has

pointed out, the Canadian finance minister has done everything required, in order to plug this sort of loophole in future.

Second, we have heard about the moratorium announced by the revenue minister. Third, we have also heard that in future this sort of ruling will be made public.

[English]

Therefore we have seen that the government has been vigilant, notwithstanding the attempts of members across the way to demonstrate otherwise.

What we should note is that the auditor general did not say that the present Government of Canada had done anything wrong. He made no suggestion at any time to that effect. That has not been said by the members across the way. However, I think some members across have adopted the strategy that if enough mud is sent toward the government some of it is bound to stick and the objective will be achieved.

Maybe some of that is true, although I think it is holding Canadians in rather low esteem to try to use this strategy, but by and large it is not true and Canadians will see what those people across the way are up to.

There is also another interesting proposition when we are talking about money leaving Canada and going elsewhere. We all recall during the referendum of last year when the separatist provincial Government of Quebec attempted at the time to speculate on its own loss using provincial taxpayer money. In other words, what the government did at the time was it bought huge amounts of Canadian dollars and then resold them later, making money in the process and participating in an exercise that could be best described as betting on its own loss.

That was a rather strange thing for a separatist government to do. In other words, it went at it this way: ``We will surely lose so let us participate in this exercise and rake in the profit that will be created by moving money across the Canada-U.S. border in two different ways and in a very short period of time''. That was the exercise in which that government participated. In the flurry of activity that occurred at that time not much was said about it, but the fact still remains that it is true.

I have in front of me the Nesbitt Burns ``Economic Research Provincial Handbook'' produced by David Rosenberg, senior economist for Nesbitt Burns, dated September 1996, in which he describes the economic outlook of Canadian provinces. This is not designed to be a commercial in any way, but I really recommend this book to all colleagues because it is, after all, not published by the government. It is produced by an organization in the financial area and presumably when things do not go the way of the financial community it does not take too long to remind Canadians of its thoughts.

(1805 )

Here is what I read from the general overview. I will get into some of the provincial summaries a little later. In this document it states, from page 3, which refers to the economic growth of Canada:

Growth should be more conducive to an improved fiscal performance in both 1996 and 1997. The real GDP is expected to advance 2.9 per cent next year after this year's 1.8 per cent uptick, marking the second strongest gain this decade. Alberta will retain its growth leading status of the past five years, with 2.5 per cent growth this year, and 3.5 per cent next, while strong population gains should keep B.C. a close second at roughly 3.2 per cent in 1997.

Ontario's auto production and exports are on track for another record year-which will likely be surpassed in 1997-as assembly capacity is in the process of being dramatically enhanced. Parts makers and assemblers already invested more than $13 bln in new plants and machinery during the first half of the 1990s, and more investment is on the way. The new $300 million Honda minivan plant in Alliston, now under construction with production to commence in the fall of 1998, will have an annual capacity of 100,000 vehicles. Toyota is spending $600 mln to expand its Corolla production and its Cambridge facility. Chrysler is consolidating its entire North American production of LH line at its Bramalea plant, in conjunction with a $500 mln overhaul of its operations as the firm gears up to build the new line of mid-size sedans for the 1998 model year.

[Translation]

So, you see that the affairs of state are being well managed by this government, that the Minister of Finance, the Minister of National Revenue, the Prime Minister, and the whole cabinet, are doing an excellent job of managing the country's assets. Members may try to persuade the people of Canada to think otherwise, but, as usual, they are mistaken.

Mr. Antoine Dubé (Lévis, BQ): Madam Speaker, I would never be ashamed to admit to having been a Conservative Party organizer if I had been, but that is not the case and I would just like to reassure the government whip. I just wanted to clarify that. Moreover, I was a Nationalist Party candidate in Quebec in 1984.

The government whip then goes on to say that I was too critical, that the Bloc Mps have been too critical. Here we have one of the four ratpack members, the one whom, when they were in opposition, the media labelled as the most aggressive, almost harassing,

member of the bunch. In fact he ran after ministers, even trying to break up their press conferences and other such antics.

Now he takes a holier-than-thou tone, speaks quietly, no aggression. He is the House whip now, and adopts this manner because he would like to cool down the emotions of the hon. member for Lévis.

(1810)

This is the same hon. member who is heavily involved just now in collecting money for the poor souls accused by the director of elections for Quebec. They have been told that they spent money they ought not to have during the Quebec referendum last year. He is assuming that attitude, perhaps, to attract the sympathy of Quebecers, but they will not forget that.

Now, not knowing what more to say on the matter-he is probably tired, and has every reason to be-he starts to read a report that has nothing at all to do with today's question on economic growth. But let us talk about economic growth.

I have had the time to read another report, one that could well have worried the hon. member for Newfoundland just now, one which tends to show that investments are not very high in Quebec, among other things. Some say that the share of investments in Canada is only in the 11 or 12 per cent range, from its previous level of 17 per cent. This report indicates that 59 per cent of private investments are made in Ontario, his province.

The people in the other provinces ought to be really worried about this, since it means that all of the efforts of this government on the economic level are probably linked to the number of Liberal MPs in the province. In Ontario, practically all members are Liberals, so it flaunts the fact but does so discreetly so the other provinces will not notice. We all know this government has a very soft spot for Ontario.

I am from the riding of Lévis. When defence contracts are announced, MIL Davie is asked to tender its bid against another shipyard, but recently, when it was time to order army tanks, there was no call for tenders and the contract was awarded directly. People in other provinces have the right to hear about that.

The Bloc Quebecois, whatever members opposite may think about it, is the official opposition, and as such we condemn the treatment of family trusts. We did so during the last election campaign. We did not wait for the auditor general's report. We said this should be investigated.

At the very beginning, when the auditor general expressed its concerns about $2 billion that were transferred to the United States, all we asked is that the government shed some light on the question. The government whip can say anything he likes, but we in the Bloc Quebecois intend to keep insisting that this government

do everything that is necessary to clarify the situation around the transfer of $2 billion and that it take all necessary steps to ensure this does not happen again. We will not give up.

Mr. Boudria: Madam Speaker, I duly noted the accusations made by the hon. member across the way, who is condemning me for daring, with other Canadians, of course, to assist those who helped keep our country together last year. Last week, Bloc members accused us in this House of violating Quebec laws. The Bloc found us guilty even before the trial had started.

I see the hon. member for Saint-Hubert across the way. I think that, as a legal expert, she should talk to her colleagues and teach them that one is generally innocent until proven guilty, especially before the trial. The judge has not ruled yet, he has not even heard the case, but they have already found these people guilty.

I am not about to apologize for defending Canadians. This concert will be held on October 27 here in Ottawa; Canadians can all get tickets by calling Ticketmaster at 755-1111.

The Acting Speaker (Mrs. Ringuette-Maltais): It being 6.13 p.m., it is my duty to inform the House that proceedings on the motion have expired.

The House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

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