That, in the opinion of this House, the government should introduce legislation to protect public servants who report wasteful spending, illegal activities or any other incidents which threaten the integrity of the government of Canada.She said: Mr. Speaker, I am pleased to speak on Motion No. 263. Given the importance of this issue and the need to hear from as many members as possible, I ask for unanimous consent of the House to share my 20 minutes with the member for Ottawa West.
The Speaker: Is that agreed?
Some hon. members: Agreed.
Ms. Beaumier: Mr. Speaker, we are fortunate to have in Canada a public service which is the envy of the world. It is not overstating the fact to say that our public service is of the highest calibre.
Despite the severe cutbacks and historic change that the public service is currently enduring, Canadians continue to enjoy service from among the best and the brightest. However, the public service cannot maintain its tradition of excellence if the professionals who make up this body are not empowered toward excellence.
This means not only providing the best training and support, it means providing protection against those who do not aspire to the high standards met daily by the majority of public servants. It is the first step in the creation of a regime which empowers those committed to excellence to have a method of dealing with those who are not.
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This motion is designed to address the absence of any legislated protection for public servants who report any fraudulent activities, suspected or otherwise. As members well know, public servants in Canada do not enjoy any special protection from reprisals should they report any fraudulent activity on the part of their superiors. We lack the mechanisms necessary to ensure safe reporting of an investigation of such activities.
All too often, the only course that public servants feel they have open to them is to report their concerns to the media. Yet the media is often unable to act until after an abuse of power has occurred because it really is not news until it happens.
This is a problem that we need to address in a twofold manner. First, we need to construct an investigative regime which will protect the identity of the reporter. Second, we need to create a climate where individuals who contemplate such activities know they simply cannot get away with this kind of behaviour. The way to achieve this second objective is to be very effective in our treatment of the first.
I have worded this motion in very broad terms because parliamentarians from all parties, academics, interested organizations and, of course, public servants should have a say in the creation of this legislation. It is particularly important to hear from public servants to determine the shape this whistle blower legislation should take. It is the public servants who must feel that any such regime affords them the kind of protection to be effective.
The auditor general, in his 1995 annual report, stated that about one-third of public servants believe that their job security would be threatened if they were to report a conflict of interest involving a superior or senior manager.
I have been approached on several occasions by constituents who are public servants with reports of suspected abuse in their departments. My action in these instances was to report the suspected abuse while preserving the identity of my constituents. I have done this and their concerns were investigated. However, I was not happy with the process or lack of process to adequately deal with these complaints. It appears that the fox minds the hen house.
I am quite confident that my experience is not unique among members of Parliament. The experiences of my constituents are certainly not unique. We need whistle blower legislation.
There is a lack of balance in the current accountability regime. Under the terms of the Financial Administration Act, public servants are required to report any suspected fraud or face a fine of up to $5,000 or five years in prison. However, there is no protection for those who act in compliance with the Financial Administration Act. We need to balance the requirement to report abuse with
protection for whistle blowers who act in accordance with the law and in the best interests of Canadian taxpayers.
The legislation which this motion proposes the government introduce would serve two functions. First, it would provide protection for public servants who feel reprisal if they report abuse and it would function as an incentive for public servants to follow the letter of the Financial Administration Act and report any suspected fraud. It would also have an additional, very important effect: to create a chilly climate for fraudulent behaviour.
Although it would be up to the government to create the legislation, I would hope that process would include extensive public hearings to ensure that we are able to create effective whistle blower legislation.
The testimony that would come from these hearings would greatly assist the government in creating an effective whistle blower regime.
There has been some excellent work done in Canada on this issue. Two initiatives in particular deserve mention. In 1986, the Ontario Law Reform Commission released a position paper calling for the creation of an office of special counsel whose purpose would be to receive allegations of wrongdoing from public servants. The OSC would launch an investigation, if warranted, while ensuring the confidentiality of the complainant.
In 1994, the Professional Institute of the Public Service of Canada released a series of recommendations as part of its document entitled ``Lifting the Silence''. The institute recommended the establishment of the office of the ombudsman assigned to a function similar to that of the proposed OSC. The office of the ombudsman would also have the authority to ensure that corrective action is taken. We should draw on this work and other initiatives in this area in creating the whistle blower regime.
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My colleague, the member for Portneuf, has introduced Bill C-318 on this issue. I appreciate his concern with this issue and I know that he is sincere in his efforts to address the very serious lack of whistle blower legislation. Unfortunately, I am not convinced that his bill would create an adequate whistle blower regime. The problem lies in the fact that he has prescribed a pivotal role to the office of the auditor general.
Under his proposed legislation the auditor general would investigate all complaints and the public servant in question would be protected from reprisal by the auditor general. I raise this bill because some would argue that this is a very natural role for the auditor general. I think that we have to be very cautious in this regard. If we were to review the literature on the auditor general among academics and practitioners we would find a real concern with the direction that office is currently taking.
We often forget that the office of the auditor general was initially created for a very specific purpose, to conduct probity audits: that is to ensure that government money is being spent the way the government has said it is spending money. This has evolved into what is known as a comprehensive audit where the auditor general is making many value judgments on the manner in which the government funding is spent. The function of the office has become far more politicized and has gone far beyond its intended scope.
To assign a role to this office which includes investigating allegations of fraudulent activity of all kinds and protecting whistle blowers would represent a fundamental new responsibility. I am not ruling out such a possibility in the future but I think that we should consult with and examine the office of the auditor general before assigning such a role.
Finally, as a member of the Liberal Party of Canada, I am introducing this motion to ensure that the government fulfils a 1993 election commitment to introduce whistle blower legislation. At an Ottawa press conference held on September 9, 1993, a one page document was released which contained a commitment to create an effective whistle blower regime. That document reads in part: ``Public servants who blow the whistle on illegal or unethical behaviour should be protected. A Liberal government will introduce whistle blowing legislation''. It is important that this commitment be kept. The legislation is long overdue.
[Translation]
Mrs. Dalphond-Guiral: Mr. Speaker, I rise on a point of order. If you were to seek it, I believe you would find unanimous consent to have the recorded divisions scheduled for this evening on the amendment of the hon. member for Saanich-Gulf Islands, and on the motion of the official opposition tabled by the hon. member for Shefford to be deferred until tomorrow, after Government Orders.
The Deputy Speaker: Does the official opposition whip have the unanimous consent of the House?
Some hon. members: Agreed.
The Deputy Speaker: Could the hon. member succinctly explain to the member for Brampton what this is about, or does the member for Brampton now understand? It was explained to her? Very well.
[English]
Is there unanimous consent to move the motion?
Mr. Jackson: Mr. Speaker, I did not hear what happened.
Ms. Catterall: Mr. Speaker, I have just been made aware of this motion. I would like an opportunity to confirm that consultations have taken place. Would the member mind withdrawing it for the moment and perhaps we could come back to it after the debate proceeds, since I am the next speaker?
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The Deputy Speaker: There are actually two parts to it. One, there has to be unanimous consent to hear the motion and, second, to pass it. We have basically gone through the first step but not the second. We will get back to this question in 10 minutes.
[Translation]
Ms. Marlene Catterall (Ottawa West, Lib.): Mr. Speaker, I am pleased to take part in the debate on the motion tabled in the House by the hon. member for Brampton.
The motion proposes that legislation be introduced to protect public servants who report wasteful spending, illegal activities or any other incidents which threaten the integrity of the government of Canada.
This means that such legislation could include appropriate sanctions against public service managers taking disciplinary measures as a form of reprisal against employees who disclose serious wrongdoing by their employer.
[English]
This proposal, like most legislation that comes before us, particularly in the area of wrongdoing, is not intended for the 99 per cent of people affected by it who act properly, who look always to do that which is right, fair and just and a responsible use of taxpayer money. However, like all laws that come before us, they are designed for those few who would choose to abuse a privilege, to act with disrespect or harmfully or viciously toward other members of society or toward their responsibilities.
A few years ago the previous auditor general suggested that we should set up a snitch line so that public service employees could call up and report abuses in their departments by other employees or managers. I was not terribly in favour of that because it sounded too much like repressive regimes around the world that have turned their citizenry into a nation of spies against their friends, relatives and co-workers.
However, I do think we want to encourage and, as my colleague from Brampton has said, the Financial Administration Act requires, members of the public to report any incident of abuse of public resources and to suffer consequences if they do not. On the other hand, employees are reluctant to do that because of fear of suffering the consequences through loss of a job, through the lack of opportunities for promotion and training. In other words, they fear suffering real and significant consequences in their own careers and advancement.
What the member for Brampton is trying to do is ask that we look at legislation that would ensure that kind of punitive activity cannot take place because a public service employee has exercised his or her legal responsibility and duty to the country by reporting wrongdoing.
It recognizes that whistleblowing can be in the public interest and particularly if wasteful spending or illegal activities or even the integrity of the government itself is at issue. We are all interested in any proposal that would lead to improvements in the way government programs are delivered. It would lead to greater efficiencies and effectiveness and to the elimination of waste, mismanagement or misconduct. That is why I had some regrets that the motion before us is not votable. We want to try to foster that attitude in the public service where employees feel free to suggest better ways and feel free to come forward with knowledge about how public money is being wasted or used illegally.
Right now there is no mechanism to protect them. There are a number of measures in place that certainly provide opportunities. The grievance process in the public service, as part of legislation, is certainly one such mechanism whereby people who feel that they have been wrongly denied opportunities, perhaps for doing something that was their public duty to do, can certainly complain. But that is a long, onerous and often damaging process. It is a very confrontational process.
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The harassment policy prevents an employer or manager from treating employees in an abusive way. This would certainly be the case if retaliation for the exposure of wrongdoing were involved.
The hon. member for Brampton is not alone in having dealt with constituents who know of wrongdoing or who suspect wrongdoing in the public service who are afraid to come forward to make a complaint to correct the waste and abuse of public resources.
I do not believe that legislation such as this would be a blanket answer. Legislation cannot protect against the bad will and malicious nature of some people. I say that emphasizing that laws such as this are written for a very small percentage of people who do not behave in a proper manner, either in their personal lives or in their work as public service employees. Legislation such as this would be irrelevant to 99 per cent of public servants, perhaps more.
We have to look at how legislation such as this might affect other obligations of employees. For instance, confidentiality is an obligation of all federal public servants by virtue of the Official Secrets Act and the oath or affirmation of secrecy taken by public servants upon entering the service.
It is not a simple matter. I do not pretend that legislation could necessarily guarantee protection. However, it is an issue which Parliament should look into. Can we ensure that our employees feel perfectly comfortable when they identify serious faults and perhaps illegalities in coming forward in the public interest and making that information known? Unless the information is known, nothing can be done to correct the situation.
A number of other jurisdictions have taken such measures. We have a number of models which we could consider. This is something which employees of the public service have been asking of government for some time. I compliment the hon. member for Brampton for bringing forward this motion today.
The Deputy Speaker: The opposition whip, I understand, wishes to defer the two supply votes from today after Government Orders to tomorrow after Government Orders.
Did I hear a no?
If I understand her correctly, the hon. member simply wishes to defer the vote on the two supply motions scheduled for today to tomorrow after Government Orders.
I realize that the hon. deputy whip has not had time to speak with her colleagues. Does she wish a further deferral of the putting of this question to the House?
Ms. Catterall: We are prepared to deal with it now, if you wish, Mr. Speaker.
[Translation]
The Deputy Speaker: Is there unanimous consent in the House for the hon. opposition whip's proposal?
Some hon. members: Agreed.
(1125)
Mr. Richard Bélisle (La Prairie, BQ): Mr. Speaker, as its name indicates, Motion M-263, presented by the member for Brampton, would protect public servants against reprisals for having, confidentially and in good faith, reported certain abuses by federal public servants.
This motion does not set a historic precedent as such. Our neighbour to the south, the United States, is increasingly favouring legal protection for employees who blow the whistle on unlawful practices. Whistle blowers in the American civil service are afforded some protection under the Civil Service Reform Act.
From state to state, in the U.S., protection varies considerably, with some states having legislation that covers both private and public sector employers, some having legislation that covers just one of these sectors, and yet others having legislation aimed only at certain specific problems or industries.
In many countries, particularly in the Commonwealth, there is more specific legislation concerning such areas as employment, health or the environment, that protect employees against reprisals to which they might be subject for availing themselves of the rights conferred on them under such legislation.
Ontario is the only province in Canada that has brought in legislation to provide general protection for whistle blowers in the public sector. The 1993 public service and staff relations amending legislation contains a part IV dealing with protection for whistle blowers. Although the bill received royal sanction on December 14, 1993, this part IV is not yet in effect, and since the Conservatives came into power in that province, no one knows when it will be.
All bills comparable to Motion M-263 presented to date in the House of Commons have shared the objective of protecting federal public servants who make allegations of wrongdoing by their employers.
Since 1987, there have been four such legislative measures debated in the House. I would like to list these: Bill C-229 by the former Conservative member Bill Vankoughnet; Motion M-57, by the former Solicitor General of Canada, the Hon. Bob Kaplan; the motion by the former Conservative minister, the Hon. Alan Redway, and finally Bill C-293 by former NDP member Joy Langan.
In addition to these legislative measures in the House of Commons, several organizations have made submissions, or indicated their agreement in principle with a bill such as the one proposed by today's motion. Those publicly stating the necessity of such a measure include the Public Service Alliance of Canada, the Professional Institute of the Public Service of Canada, and the Auditor General of Canada.
On the other hand, certain political parties have taken a stand in this debate on ethics in the public service. The Liberal Party of Canada, the New Democratic Party and, of course, the Bloc Quebecois, have stated their intention to propose or support such a measure. As for the Reform Party, they have been endlessly stating since their election that they will support any measure aimed at eliminating waste by government institutions.
The doggedness of the Public Service Alliance of Canada in promoting such a legislative measure is certainly undisputable. On a number of occasions, it has criticized the situation and recommended passing a bill proposing the same objectives as Motion M-263.
In November 1994, in its document ``In the public interest'', one of the recommendations the Alliance made was:
That the Government of Canada pass legislation aimed at protecting members of the Public Service who disclose government wrongdoing, reprehensible practices and waste.
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In a press release dated May 12, 1995, the Alliance stated that speedy passage of the bill on whistle-blowers promised by the Liberal government during the election campaign would go far towards resolving the ethical dilemmas facing federal public service employees.
On May 11, 1994, the Bloc member for Portneuf tabled Bill C-248 in this House for first reading.
On June 19, 1996, the hon. member for Portneuf tabled Bill C-318 for first reading.
We feel there are a number of reasons why the auditor general should be allowed to receive and investigate complaints referred to as whistle-blowing.
The auditor general is by law responsible for the internal audit of the federal administrative apparatus. The auditor general is also known for his professionalism and the relevance of his reports.
Finally, the auditor general's office operates at arm's length from the government and politicians, which gives it a certain status and impartiality.
Considering the number of bills tabled previously by members of all parties; considering the election promises made by the Prime Minister and his Liberal colleagues regarding the introduction of such a measure; considering that all other political parties support such a proposal; considering that the unions are unanimous in their support for a tool including provisions that would allow whistle-blowing; also considering the number of government agencies that recommend this type of legislation and, finally, the urgent need for increased transparency and integrity in federal institutions, we should support Motion M-263.
For all the reasons just mentioned, the Bloc Quebecois will support the motion tabled in the House by the hon. member for Brampton.
[English]
Mr. Bill Gilmour (Comox-Alberni, Ref.): Mr. Speaker, I am pleased to address Motion No. M-263 brought forward by the member from Brampton. Motion No. M-263 asks:
That, in the opinion of this House, the government should introduce legislation to protect public servants who report wasteful spending, illegal activities or any other incidents which threaten the integrity of the government of Canada.Clearly Canadians want and expect their government to conduct their business openly and honestly and that is what this motion is about.
The principles of this motion are similar to the principles of the Reform Party. The Reform Party has always advocated transparency in the federal government and the elimination of waste in public funds. As a result, Reform members have asked this government to introduce whistle blowing legislation in the past. For example, the Reform member for St. Albert asked the President of the Treasury Board to introduce legislation to protect whistle blowers. We have yet to see this legislation introduced in the House.
Public servants must not only be allowed but also encouraged to report practices that would cause a specific and substantial danger or prejudice to the public health, safety or welfare, or entail wasteful or unjustified public spending. Employers should not be allowed to discourage, suspend or impose financial penalties on any employee who makes a disclosure. Public servants must be protected against employer reprisals in retaliation for disclosures that are made in good faith.
These measures were forward in the House before, as mentioned by my colleagues both on the Liberal side and the Bloc side, by the Bloc member for Portneuf as Bill C-248. The fact that this issue has not been deemed votable both times it has been brought forward before the House makes it rather clear that the government does not want to see whistle blowing legislation before this House.
Before the last election the Liberals promised to introduce whistle blowing legislation. In their approach to the public service the Liberals promised: ``Public servants who blow the whistle on illegal or unethical behaviour should be protected''. That is pretty clear. ``A Liberal government will introduce whistle blowing legislation in the first session of the new Parliament''. Well guess what. The first session has past, we are into the second session and there is still no whistle blowing legislation.
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Many other countries are far ahead of Canada in this area. For example in the United States they have the false claims act. Under it whistle blowers receive 25 per cent of the savings of any whistle blowing event that they unearth. Over the first six years of operation of that act 407 lawsuits were filed and 37 were settled for a total of about $147 million in savings. The average whistle blower received $400,000. England has similar legislation. I believe this is the crux of what we are talking about here, protection at the same time as incentive.
The Americans saved $147 million by people within their departments saying there was waste and showing that there was waste. The incentive was there. Twenty-five per cent of the savings that they identified went into their own pockets. It works very well. The government saves on the one hand, the employee picks up on the other hand and the protection is there. It would be worthwhile to look at some of the practices followed in other countries to draft a plan of our own.
We also have on the books existing legislation that makes it necessary for this government to introduce whistle blowing legislation. Such an act is necessary because at the same time that our Financial Administration Act states that a public servant who fails to report suspected fraud can be fined up to $5,000 or sent to prison for up to five years, there is no corresponding protection for whistle
blowers who act in accordance with the law. Clearly we require a balance.
The government knows full well that there is waste and abuse in the public service and the introduction of such an act will bring many of these wasteful practices under control. This type of bill would help restore the credibility of the government and the politicians who are, to a certain extent, responsible for public service waste and abuse.
As my colleagues have mentioned before, the auditor general has covered this. He emphasized the need for action on this issue in his 1995 report. The auditor general wrote: ``Canadians are concerned about integrity in government and they have the right to expect the highest ethical standards in their governments. Leadership by members of Parliament, ministers and deputy ministers is critical to maintaining ethical standards and performance in government''.
The auditor general went on to say: ``If Canadians do not trust their governments to act ethically, governments will find that their actions have less and less legitimacy and effectiveness. Thus we believe that it is important to discuss the ethics in government and to take action to maintain and promote ethics within government''.
The Liberals promised in their red book to restore honesty and integrity to government yet their actions speak otherwise. If we had honesty and integrity, we would not need Motion No. M-263. We would not need to waste this House's time asking the government to follow through on its election promise. However as it is, there is a need to protect public servants whose efforts to ensure honesty and integrity in our institutions are threatened by their government. Thus we need this legislation.
It is ironic that on the one hand we have a Liberal backbencher pushing to fulfil a Liberal promise yet on the other hand cabinet is acting to undermine the Liberal member's efforts. This is not a partisan issue. It is simply common sense. It is in the best interests of Canadians and the federal government to introduce this legislation.
In conclusion, I support Motion No. M-263. I believe that there is broad support for this motion within the House. We have heard it from the Liberal side, we have heard it from the Bloc and Reform. As such I would ask for unanimous consent in this House that this motion be deemed votable.
The Deputy Speaker: The hon. member is seeking unanimous consent that the matter be made votable. Is there unanimous consent colleagues to have this matter made votable?
Some hon. members: Agreed.
Some hon. members: No.
The Deputy Speaker: Colleagues, I hear a no and therefore it cannot be made votable.
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Mr. Ovid L. Jackson (Parliamentary Secretary to President of the Treasury Board, Lib.): Mr. Speaker, I am pleased to participate in the debate today on the motion tabled by my colleague, the hon. member for Brampton, advocating legislation to protect public servants who report wasteful spending, illegal activities or any other incidents that threaten the integrity of the Government of Canada. The term whistle blowing has been used to describe such activities.
While the matter of legislating whistle blowing protection has been given a thorough airing in this House in the past, it is useful to bring it forward on occasion to see if the issues are real, if there are current mechanisms in place to assist public service employees who are fulfilling the legitimate requirements of their jobs, and if these mechanisms continue to provide the required degree of comfort for employees. It is useful as well to look at the experience of others in the area of whistle blower protection.
In Canada within the public service context, whistle blowing is rather loosely defined as making public disclosure of practices or actions related to fraud, mismanagement or waste. It is interesting to note that the current motion also includes a reference to items which threaten the integrity of the Government of Canada. It is very important for employees within the public service and in the private sector to have pride in their jobs and in their organization. Also I feel strongly that employees want to identify in a positive way with their employment and with their employer.
The issue which arises is what to do when an employee sees situations involving potential waste or mismanagement, or from a more positive perspective, when that employee sees a way for improving job efficiency or effectiveness. The concern is with those mechanisms that are available should the recommendations or suggestions not be welcomed or addressed.
I looked at some of the United States experience in the area of whistle blower protection legislation. As a bit of background, whistle blowing protection was legislated in the United States with the 1978 Civil Service Reform Act and in 1989 with the Whistleblowing Protection Act. It was designed to provide protection against adverse employment actions for employees who blow the whistle.
The 1989 legislation allowed employees to appeal to the Merit Systems Protection Board to seek redress for alleged acts of retaliation such as reassignments and ratings. As a follow-up to determine the effectiveness of the legislation, the United States
government conducted employee surveys in 1983 and in 1992 with a number of interesting findings.
Survey data showed that from 1983 to 1992 fewer employees said they had personally observed or obtained direct evidence of one or more illegal or wasteful activities involving their agencies. However of these employees, an increased percentage said that they had reported the illegal or wasteful activities. There was also an increase in the percentage of employees who said they had experienced reprisal or threat of reprisal for having reported an illegal or wasteful activity, but there was a decline in the more serious forms of reprisal.
From the perspective of increasing efficiency and effectiveness it was noted that while a smaller percentage of employees reported seeing examples of illegal or wasteful activities, of those who saw them a much larger percentage were willing to report them. Some employees chose not to report for a number of reasons, primarily because they believed nothing would be done to correct the activity, or they feared retaliation. Of course, when employees do share information about problems they see, the receivers of this information must be receptive to the information and must be willing to work with the employees toward problem resolution.
The United States report reached the conclusion that agencies need to focus their efforts on creating an atmosphere in which employees and managers alike see the value both in identifying problems and in working together to resolve them and that threats associated with disclosing illegal or wasteful activities must be diminished. The report concluded that this can be done only by empowering employees with the control and the right to help make changes in the workplace.
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Suggestions for improvement included the following. Agencies should emphasize organizational change and improvement. Agencies should examine their processes for selecting supervisors and managers to ensure that they are choosing management teams with whom employees will feel comfortable sharing information concerning illegal or wasteful activities. Agencies should ensure that employees understand the kinds of problems about which they should share information, how the information will be handled and what safeguards there are against reprisals. Agencies should actively solicit employees' views and give employees feedback concerning those views.
This leads to an interesting comparison with the approach within the Canadian public service. In terms of the Canadian approach, we think it is important that the government of the day works with the public service in a co-operative manner, and I feel a spirit of trust must be felt as we look to ways of eliminating waste and achieving effectiveness.
At this time there are mechanisms within the public service to allow employees to bring to the attention of senior management any concerns they may have regarding illegal activities which they consider beyond the bounds of propriety. As well, there are a variety of mechanisms to protect employees from arbitrary disciplinary measures including the well established grievance and adjudication process.
The Public Service Staff Relations Act allows employees to grieve any perceived injustice or wrongdoing where there is no recourse provided in law. The Canadian Human Rights Act protects employees from discrimination and the Privacy Act provides a measure of protection as well.
In addition to the legislation provisions, the harassment in the workplace policy adopted by the Treasury Board for all public service employees specifically forbids harassment for any reason whatsoever, including specifically abuse of authority. It provides a simple mechanism that allows employees to bring their concerns to the attention of a neutral third party. In addition, the powers of the press and the public service employee unions have been influenced. The press and the unions have demonstrated a continuing interest in keeping government employees and public organizations on the straight and narrow, as we are all aware.
A fundamental principle of management in most successful organizations is that the employees are accountable for their performance to their senior managers. Fair play on the part of employees and superiors is an equally important element. There are in place remedial measures and available avenues of appeal that work efficiently to deal with abuses of authority. There are also sanctions in place to prevent, avert or penalize proven dishonourable conduct, criminal actions, waste, extravagance, discrimination or abuse of trust.
Employees are expected to inform their supervisors of any seeming impropriety and to suggest ways of improving public service actions. Recourse to internal channels where available and likely to be effective is required so that problems may be resolved internally.
The employee must consider whether that alternative is appropriate, not because the truth should be hidden but because internal remedy may be the most effective. There is an important message for internal managers here. Employees, according to a United States survey, are more likely to disclose issues in the context of where the issue is likely to be addressed.
For all the complexity of the government, the incidents that put employees in particular difficulties are remarkably few and far between. Existing mechanisms have been shown to be capable of dealing with them. New legislation in the area might well open a gulf between the employees and management, one which does not exist now.
The Deputy Speaker: There are no further members wishing to speak. The hon. member for Brampton is entitled under the rules to give a short summary of the debate if she wishes to do so.
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Ms. Beaumier: Mr. Speaker, I have listened to the debate and I think that all members are in general agreement that the legislation is necessary. I am just hoping that the government will take this as a lead to enact some sort of hearings for this legislation.
I have had a number of personal experiences with people reporting abuses. I do not find that even for a member of Parliament there is a satisfactory way to address these issues. Public servants are intimidated by talking to members. Often in a department one public servant will not even meet with a member alone. They want someone else there with them as a witness to protect themselves in case the member makes a complaint. They want their own jobs protected.
I have been a public servant. We have some of the most dedicated, hard working people in the public service of Canada. Unfortunately, the only things ever reported in the news media are the abuses long after they have occurred. I do not think it is fair to the public service to be tarred with the same brush by the perception being created out there by these odd stories.
I would like to encourage the government to proceed with fulfilling its commitment.
The Deputy Speaker: The hon. member is perhaps not aware of the fact that the proposer can sum up only if nobody else wishes to speak. Perhaps the hon. member could call it a point of order. He is not entitled to speak once the proposer has made a final summary.
Mr. Silye: Mr. Speaker, my point of order would be a matter of debate, and so I will sit down.
[Translation]
The Deputy Speaker: Since no other member wishes to speak and the motion is a non-votable item, the time provided for the consideration of Private Members Business has now expired and the order is dropped from the Order Paper.
[English]
Ms. Catterall: Mr. Speaker, may I suggest that the House be suspended until noon.
Some hon. members: Agreed.
(The sitting of the House was suspended at 11.54 a.m.)
That in relation to Bill C-70, an act to amend the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the Income Tax Act, the Debt Servicing and Reduction Account Act and related acts, not more than one further sitting day shall be allotted to the consideration of the report stage of the bill and one sitting day shall be allotted to the third reading stage of the said bill, and 15 minutes before the expiry of the time provided for government business on the day allotted to the consideration of the report stage and on the day allotted to the third reading stage of the said bill, any proceedings before the House shall be interrupted, if required, for the purpose of the order, and in turn every question necessary for the disposal of the stage of the bill then under consideration shall be put forthwith and successively without further debate or amendment.Some hon. members: Shame.
The Deputy Speaker: Is it the pleasure of the House to adopt the motion?
Some hon. members: Agreed.
Some hon. members: No.
The Deputy Speaker: All those in favour of the motion will please say yea.
Some hon. members: Yea.
The Deputy Speaker: All those opposed will please say nay.
Some hon. members: Nay.
The Deputy Speaker: In my opinion the nays have it.
And more than five members having risen:
The Deputy Speaker: Call in the members.
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[Translation]
(The House divided on the motion, which was agreed to on the following division:)
Cannis
Catterall
Chan
Clancy
Cohen
Collenette
Collins
Cowling
Culbert
Cullen
DeVillers
Dhaliwal
Discepola
Dromisky
Duhamel
Easter
Eggleton
English
Fewchuk
Finlay
Gaffney
Gerrard
Godfrey
Goodale
Graham
Guarnieri
Harb
Harvard
Hickey
Hopkins
Hubbard
Irwin
Jackson
Jordan
Keyes
Kilger (Stormont-Dundas)
Kirkby
Knutson
Lee
Lincoln
Maloney
Manley
McCormick
McKinnon
McLellan (Edmonton Northwest/Nord-Ouest)
McTeague
McWhinney
Mifflin
Mills (Broadview-Greenwood)
Minna
Mitchell
Murphy
Murray
Nault
O'Reilly
Pagtakhan
Peric
Peters
Peterson
Pettigrew
Phinney
Pillitteri
Proud
Reed
Regan
Richardson
Rideout
Robichaud
Rock
Scott (Fredericton-York-Sunbury)
Serré
Simmons
Speller
St. Denis
Steckle
Stewart (Brant)
Stewart (Northumberland)
Szabo
Telegdi
Thalheimer
Torsney
Ur
Valeri
Vanclief
Volpe
Zed-108
The Deputy Speaker: I declare the motion carried.
Mr. Benoît Sauvageau (Terrebonne, BQ): Mr. Speaker, I am pleased to rise to speak to the motions in Group No. 3 put forward by the Bloc Quebecois concerning this part of Bill C-70. Because this bill is very substantial, the amendments have had to be grouped.
I am pleased to rise today to express my opposition to Bill C-70, as my colleagues have done before me. As has already been said repeatedly, this bill is a hodgepodge of amendments to the GST, a rather thin and tasteless soup.
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One of the aims of this bill is to harmonize the GST and the provincial sales tax of three maritime provinces in exchange for a paltry compensation of $1 billion based on some particularly obscure calculations.
First off, I would like to point out that there would have been no debate on Bill C-70 had the Liberal government kept its election promises. In the last election, the Prime Minister promised to totally eliminate this federal sales tax. However, far from eliminating it, the government now wants to harmonize it, as it puts it, to better hide it. In addition to not fulfilling his election promise, the Prime Minister told Canadians and Quebecers he had never promised to eliminate the GST.
Canadians were probably not watching the right television channel when the Prime Minister said: ``We want to scrap the GST; we want to abolish it; we want to eliminate it''. Canadians were probably not reading the right newspapers when they read, written
in black and white, during the election campaign, statements made by the Prime Minister and his Liberal colleagues saying: ``Yes, we will scrap the GST''. Canadians were probably not tuning to the right radio stations when the Prime Minister, his ministers and other members opposite said: ``We will abolish the GST; we will scrap it''.
Today, we are told: ``You misunderstood''. And we misunderstood them in both official languages. This is all about respect.
Now, we all know what to make of the Liberals' promises, including future ones, because they will promise us the world again. We have proof that the Liberals are unable to fulfil their commitments. To make things worse, the Prime Minister was disrespectful to a citizen on the national television network when he told her: ``No, we did not lie; this is what we meant, but we did not state it correctly''.
Not only did the Prime Minister and his government renege on their word, they are now proposing a bill hastily thrown together, a bill that will cost us one billion dollars in compensation to just three maritime provinces. What a nice pre-election gift. They probably need it badly in that part of the country.
I will not discuss in detail the technical aspects of Bill C-70, but I have to point out the government's incompetence in this matter, and its lack of respect for the opposition and for Maritimers, who were not given an opportunity to be effectively consulted and heard.
Before Christmas, the Minister of Finance tabled a bill that has close to 300 pages. He tabled it just before the Christmas recess, giving the opposition 24 hours to review this technical piece of legislation and to prepare for debate at second reading. The purpose was obviously to prevent the official opposition from finding flaws in the bill. Unfortunately for the Liberals, there were flaws and there are still many. In fact, the government botched its work to the point that the Liberals themselves tabled over 100 amendments to their own bill. Their excuse is that they worked so quickly and did such a poor job that they did not have the time to read it over and so they have come up with 100 amendments to remedy matters.
The government has been moving full steam ahead with Bill C-70 so that the public will forget the GST fiasco before the next federal election. It shows, because this is a bad bill and the government is proving it by introducing so many amendments. Not only is Bill C-70 bad, but it is unfair, because it makes no provision for compensation to provinces that have already harmonized their provincial sales tax with the federal tax.
Oddly enough, the only province that has already harmonized its sales tax with the federal tax is Quebec. That is right, once again the Liberal government is thumbing its nose at Quebecers, by refusing to give them the money to which they are entitled. The Government of Quebec calculates the amount at $2 billion. If you work out fairly what Quebec should receive in light of what was handed over to the maritimes, this is the amount owing. We are not asking for a handout or anything extra, we are asking for what is owed us.
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When the provincial premiers got together in Jasper last August, they reached an agreement that all provinces should be treated equitably by the federal government. All provinces including Quebec, since it is still part of Canada for a few years to come, are to benefit equally from the agreements regarding the harmonization of sales taxes, which naturally includes compensation.
On December 13, 1996, Quebec ministers Bernard Landry and Jacques Brassard officially requested $2 billion in compensation for having harmonized Quebec's sales tax with the federal sales tax. Since that time, the Liberal government has refused to compensate the Quebec government for this harmonization.
It is worth pointing out that Quebec harmonized its sales tax in 1991, on its own and without financial assistance. The costs of this harmonization were considerable, and part of those costs were borne by Quebec businesses. Moreover, Quebec businesses are still paying the price, and are not even reaping the benefits the harmonized tax will offer, as proposed in Bill C-70. The bill neglects to even mention Quebec.
As for the three Maritime provinces, they will benefit fully and considerably from the harmonization of their sales tax with the federal tax. Unlike the Quebec businesses, those in the Maritimes will be fully reimbursed for input taxes, without the increase in taxes Quebec businesses had to absorb. One of the best proofs of the Maritimes' new advantage is the poaching by New Brunswick's Premier McKenna during Team Canada's latest trip to Asia. During this trade mission, Premier McKenna approached Quebec and Ontario businesses to get them to move to New Brunswick by pointing out the advantages of harmonizing their sales tax with the GST.
The federal government is therefore using some of the Quebec taxpayers' money to finance unfair and unethical competition by the Atlantic provinces. We are also paying for the tax cuts promised by the Government of New Brunswick, while such a luxury is out of reach for us in Quebec. Unfortunately, the harmonization of sales taxes by the Maritime provinces will cost us more than just the $1 billion over the next four years. The reduction in sales tax from 19 per cent to 15 per cent will mean that Quebecers and all Canadians will be contributing more in equalization payments to the maritime provinces.
Furthermore, the federal government is guilty of a total lack of transparency and fairness in this matter. There is no way at the moment to justify the $1 billion the maritime provinces are going to get. The reason is simple, unlike the practice, the standards and method of calculation used to establish the amount of compensa-
tion remain hidden and under wraps. This is unacceptable. The government is being neither professional nor honest in this matter.
Now, a quick word in closing on Bill C-70's supposed elimination of tax on books. Another snow job by the Liberal government in an effort to hide its mistakes. Bill C-70 provides for the elimination of taxation on books purchased by literacy and teaching institutions only. This is a start, it is true. We recognize that. However, it is thanks to the unrelenting demand of Quebec, which, by the way, has eliminated sales tax on all books.
In conclusion, the Bloc Quebecois opposes Bill C-70 and its plan to harmonize the GST with the sales tax of the maritime provinces. This bill is jerry-built and based on nothing more than political and partisan considerations. The Liberal government is attempting to mislead the public with this bill and make them forget the empty promise of eliminating the GST, but people will not be fooled and will still remember in a few months' time.
[English]
Mr. Keith Martin (Esquimalt-Juan de Fuca, Ref.): Mr. Speaker, it is a pleasure to speak to Bill C-70 and the third group of amendments on harmonizing the sales tax in the maritimes.
We have hard much about how the harmonized sales tax is unfair and complex. I am going to get into some solutions to the GST that the government could employ in order to give all businesses a leg up against competitors in other parts of the world.
The government had an enormous opportunity when it came into office three and a half years ago to finally help Canadian businesses to become competitive with their counterparts in the world. Instead the government has taken an entirely different approach other than business as usual. It has done the exact opposite and complicated our tax structures.
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The most recent example is the HST. This sales tax does not make the taxation system simpler. It does not provide an impetus for the private sector. It does not create more jobs. It will do the exact opposite. It will cost jobs. There are some very sad examples of this, particularly since this affects the maritimes. It is supposed to help the maritimes but will actually have a devastating effect on many businesses.
Who is this going to affect? It will cost more for children's clothing, books, auto repairs, gasoline, home fuel. It is not the rich who pay for this but the poor on fixed incomes who really pay. Let us look at some real life examples of businesses on the east coast that are going to be affected by this.
The Canadian Real Estate Association claims that the increasing cost of a new house in Nova Scotia or Newfoundland will be over three and a half thousand dollars. The GST harmonization in New Brunswick will cost almost 80 jobs in Moncton and Buctouche. There are other examples in New Brunswick. There is a 50:50 chance of other store closures in the Greenberg chain and a loss of over 70 jobs in places such as Atholville, Shediac and Moncton. This tax will not alleviate the strain and duress that Canadians from coast to coast feel. It will make things worse.
The Canadian Federation of Independent Businesses made it very clear that harmonizing the sales tax is good but that it has to conform to certain criteria. It stated that a properly harmonized tax is good, but it has to be one sales tax across the country at a lower rate than the present rate. It must have one set of rules, one set of audit procedures, a single remittance requirement and one tax collector.
The HST proposal that harmonizes the sales taxes will not do that. It violates the principles put forward to the government by the business community through the Canadian Federation of Independent Businesses. It said to the government: ``Here are some good solutions. Take them and use them''. What did the government do? It ignored them and went in the opposite direction.
I am sure many members will empathize with me. Before I got into this business, as a member of the public I often wondered why in the world did governments continue to propose solutions that have little or no relevance to what is actually going on in the trenches? I am no closer to answering that question today after three years in this House than I was before I got into this business, and that is sad.
It is a disgrace and a shame that we have repeatedly failed the Canadian public by not putting forward good, effective solutions to the problems that affect us. In no other realm have we violated the trust of the Canadian public more than in the field of economics. This opportunity to harmonize the sales tax was a great chance but a failed opportunity on the part of the government.
Some very good solutions could be put forward, but first I will talk a bit about the GST. I will not discuss the fact that the government violated the public's trust on this issue because that has been spoken about before. Once again I plead with the ministers of revenue and finance to please simplify this tax or eliminate it. It is a complicated tax. I do not know if they really understand the incredible stress and burden it places on the small independent businesses that are trying their hardest to eke out an existence. These businesses are getting it in the teeth and the simplification or the elimination of the GST would be a welcome respite for people who are the underpinning of our economy and the true creators of jobs in Canada.
This tax is not applied fairly. In the medical field, the GST is not applied fairly at all. Physicians are actually singled out and treated unfairly by this tax. I will show members how.
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Medical services are designated as tax exempt under the Excise Tax Act. Physicians, on the other hand, are denied the ability to claim a GST refund for purchases such as medical equipment and medical supplies that are necessary to deliver quality care.
Why did the government not support motions put forward by my colleague from Medicine Hat to make that issue fair for all medical personnel? Why are physicians being singled out? Only the government knows that. It is unfair and discriminatory to this group of individuals.
I would like to discuss some things we can do to try to improve the economy in our country. The first thing is to look seriously at introducing a simple, flat tax. The flat tax tells people that the harder they work, the more they are going to keep. Our present taxation system tells the Canadian public the more they make, the more the government is going to take from them.
That is a very serious problem because it takes away the incentive to go out and strive harder. A flat tax with a greater margin of exemption at the bottom takes out the lowest socioeconomic groups from paying taxes and puts more money in their hands.
My colleagues in the Reform Party have proposed that and we have the flat tax in our fresh start platform. It shows ways that the government can actually put more money into the hands of all Canadians, but in particular those who are poorest in our society. I encourage the government, once again, to take a look at that. Frankly, I am not very confident that it will take the initiative.
The complexity of the tax structure absolutely restrains, restricts and compromises the ability of the private sector to go out and be as aggressive as it can be.
Government regulation, in fact government over regulation, must be diminished greatly. If I was a private business person considering opening up a business, I would think very carefully about not doing it because of the level of government over regulation. Three levels of government are the hoops that many business people have to jump through, and that acts as a huge restraint on maximizing the great ideas that they have economically.
We must also deal with education. We need a much stronger education system and it needs to be brought into line with what is taking place in the global economy and what the needs of our country will be in the 21st century. Currently students, faced with an over 20 per cent unemployment rate, are having great difficulty earning the funds to get themselves through school. Almost two years ago Reformers suggested an income contingent loan replacement plan which would provide more funds to students going to school.
Our educational system must reflect the needs of the 21st century. Therefore, closer co-operation between the private sector and the education system is essential if we are going to maximize the needs of our country and the needs of our students. The ICLR program would enable more money to be available for students to get the training required. We also need a far greater input into job training in the work force.
Much to my dismay, I have learned that our country is one of the lowest in all developed countries in investing in their workers in developing the trades and the educational systems they will require along with the skills to be aggressive in the 21st century.
In closing, if the government was to have a flat tax, decrease the complexity in our taxation system, have a strong educational system, decrease the tax burden on Canadians and simplify the tax structure, we could provide enormous input, incentive and impetus to our private sector. As a result, we would create more jobs and have a more secure future for all Canadians.
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Mr. David Chatters (Athabasca, Ref.): Mr. Speaker, I am pleased to rise today to voice my opposition to Bill C-70. It is a thinly veiled attempt by the government to fulfil a red book promise to eliminate or redefine the GST.
I never fail to be amazed at the attitude of the government which has changed from such a short time ago when it was in opposition. I clearly remember the debate which went on in this place and in the other place when the former Conservative government brought in the GST. I remember the debate which went on in the other place for hours and hours, day and night, and the Liberal outrage over the proposed GST. The debate caused emotions which at times almost led to physical violence. All sorts of strange manoeuvres were employed to filibuster the bill, yet a couple of years later the Liberals who now form the government have completely flip flopped and seem to be defending this very unpopular and unfair tax in the interests of all Canadians.
When we read some of the debates from the last Parliament we see the Liberal comments which were voiced every time the Conservatives invoked closure on a bill. The Liberals howled and shouted their outrage. Now they are on the other side and they invoke closure on a regular basis. It is almost a daily order of business. There is a lot of hypocrisy in that kind of action.
The imposition of the GST had a lot to do with what happened to the Conservative Party in the last election. It will probably have somewhat the same effect on the Liberal members from Atlantic Canada in the next election if they do not start speaking up and representing the views of their constituents on the harmonized version of the GST. It has all the same problems and faults which the original GST had when it was imposed on Canadians, except
those problems and faults are now magnified. Instead of a 7 per cent tax we are looking at a 15 per cent tax.
The whole concept was sold to Atlantic Canadians on a bill of goods which said they would be better off, that the provincial tax would be lower and that it was the best thing since sliced bread. Atlantic Canadians are quickly coming to realize that the picture is not quite as rosy as the one they were sold.
The provincial sales tax was a tax on goods. Now it has become a tax on goods and services. On top of the billion dollar incentive which was given to the Atlantic provinces by the rest of the Canadian taxpayers to induce them to enter this agreement, the base of the tax will be hugely expanded compared to what was covered by the provincial tax. It has become quite evident to Atlantic Canadians that their cost of taxation will be substantially higher than it was with the two tax system.
On top of that, there is the fundamental dishonesty about trying to bury the GST in the price of the goods so that every time an Atlantic Canadian buys a good or a service they will not be reminded of the hated GST. That it is hidden in the price does not seem to be a very upfront and honest way of trying to make this whole controversy go away and make Canadians forget the most hated tax in Canadian history.
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On top of that, a number of well known organizations have exposed the cost of this harmonized tax to Atlantic Canadians. It is certainly going to kill jobs in a major way. It is going to put expansion plans of a number of fairly major retail chains on hold. It will not only cost in investments but it will also cost jobs for Atlantic Canadians.
Of course we can go back to the whole issue that has been plaguing this House for the last three and a half years, which is the difference in what the Prime Minister and other Liberals promised during the campaign and what they have delivered since the election. The recent town hall meeting brought to light very clearly the difference between the two. The expulsion of the member for York South-Weston has certainly exposed the fraud in this whole issue.
There is no doubt that the promise to eliminate the GST after the election, because it has been such a very unpopular tax with Canadians since its implementation, had a very major impact on the number of seats the Liberal Party gained in the last election. Doing a flip-flop and turning its back on that promise will have a major impact on the next election. I do not even think this attempt to harmonize the tax will cover the failure to fulfil that promise by this government.
We in the west and even those in Ontario, the largest province in Canada, have shown little interest in joining in this effort to harmonize the tax for the same reasons that now, after the faults have been exposed, Atlantic Canadians are rejecting it. In Alberta where we have no provincial sales tax, the implication of a blended tax is of little interest to Albertans and would do nothing but cost a substantial amount of money.
Alberta, Ontario and British Columbia are the three provinces that are not even willing to talk about the proposal. It appears that even the provinces of Saskatchewan, Manitoba and Prince Edward Island are quickly backing away from having any input into the whole proposal. It is simply no better than the GST which Canadians have been rejecting for so long.
It is understandable why the provincial governments of some of the Atlantic provinces did fall into the trap set by the federal government to get them into this scheme. It was simply because of the billion dollars which was put up by all Canadians through their tax dollars to bribe them into becoming part of the scheme. There is also the very complicated issue of tax credits where one tax is applied on top of another tax and the province receives a rebate in those instances. One can see how it could be appealing to a provincial government if in fact it is looking after its interests instead of the interests of the people it represents, the people of the Atlantic provinces.
While it might have more appeal to the governments in the Atlantic provinces, certainly for the same reasons as for all other Canadians it has little appeal to Atlantic Canadians. That is probably one of the reasons the Liberal government refused to hold public hearings on this issue in Atlantic Canada.
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Certainly, considering the implications of this bill and the tax the government is proposing, it would only be natural that the committee would have travelled to Atlantic Canada to hold public hearings and hear the opinions of all Atlantic Canadians but that just was not to be. I find it quite curious that this government would not have been willing to go there to hear the opinion of those most affected.
We oppose the GST in its entirety and we oppose this bill to harmonize the GST, but to somehow neutralize at least some of the problems with it we introduced a number of amendments. It will be realized that with the imposition of closure on the bill the Liberal government is not interested in hearing any amendments to improve the bill any more than it is interested in hearing any more debate on the bill.
The Deputy Speaker: I am sorry to tell the hon. member that his time has expired. The hon. member for Cumberland-Colchester.
Mrs. Dianne Brushett (Cumberland-Colchester, Lib.): Mr. Speaker, it is a privilege to stand before this House today as a
member from the Atlantic region to talk about the Atlantic region. I wish to clarify the point that some of the members from the third party have referred to it as the maritime region when in fact we are talking about the Atlantic region of Canada. The harmonized sales tax is indeed an issue for intelligent discussion in this House.
The member indicated that members of the finance committee did not go to the Atlantic region because we were afraid to hear what the people might have had to say. That is not the case. We were in the Atlantic region in November. We held hearings across the country on the GST and we had open discussions. We even had political leaders from other parties attend our hearings here in Ottawa. It was the generous availability and the invitation of members of the finance committee that brought them to Ottawa.
Some key points in the harmonized sales tax that are being missed are really valuable. A point of fact is that on average, a Canadian consumer and in fact a consumer in the Atlantic region visits the grocery store approximately two times each week. In the items the average consumer will buy, approximately 40 per cent of them are taxable. What this means in the Atlantic region is a reduction of that tax through a harmonized process. In Nova Scotia alone that reduction is almost four percentage points. In the other Atlantic provinces, such as Newfoundland, it goes down even much further. In fact consumers at the grocery store will see a benefit in a reduced tax of up to four percentage points at the minimum in buying approximately 40 per cent of their goods on average twice a week in the average consumer pattern.
There is another important point. I talked to farmers in Atlantic Canada this very morning. The Nova Scotia Federation of Agriculture and the Canadian Federation of Agriculture are very pleased with what this tax will do in the farm sector. Barns and new silos are being built across my constituency already. This is in the event that when the tax comes into place on April 1 these farmers will get a rebate of 15 per cent on all capital expenditures.
Let me tell this House that Ontario farmers are now saying: ``Why can't we have this in Ontario?''. That is the message which is coming from the farm sector in this country. They want what Nova Scotia, Newfoundland and New Brunswick are getting in the farm sector. This 15 per cent tax credit looks a heck of a lot better to the average farmer than does a 7 per cent GST rebate.
When we talk about the input tax credit, the 15 per cent input tax credit that is available to all manufacturing sectors in the harmonized zone is a benefit to the Atlantic region. Why is it a benefit? Because it will sustain those who are manufacturing and creating long term jobs in our area.
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This is the real benefit to our harmonized tax and the single tax system. Why is it a benefit? People have been asking us what to do in terms of simplifying tax. We have heard the hon. member speak about a flat tax here today. This is not about a flat tax and this is not part of this reform. It is about a harmonized tax.
In the Standing Committee on Finance we had companies in Ontario that manufacture goods for this nation say to our committee: ``We will be looking at the harmonized zone. There is an incentive in that for us to even look at relocating to a harmonized zone because a simplification of a single tax, no tax on tax, is beneficial to the manufacturing sector and to the long term sustainable sector of our society that will keep our economy employing young people and generating an economy that will sustain us as we move into the 21st century''.
A controversial point in this whole debate is a tax in pricing. Those who are making the most noise regarding tax in pricing are the multinationals and the internationals. When they come to Atlantic Canada they have told us that they do not benefit from the 15 per cent input tax credit because they do very little infrastructure in the harmonized zone. They have cashiers and people who work at the front line who stock shelves but the money for the most part is simply in employment wages and it leaves the region in the benefits from the sales. My invitation to the multinationals, if they really wanted to get the maximum benefits from the harmonized sales tax, was to come to the Atlantic region, to the harmonized tax zone and set up basic infrastructure, develop the long term sustainable businesses that will generate our economy.
For several decades now, maybe even a century, we have lost a large part of our economy. We have been an underprivileged region accepting large transfer payments. That is not because we want to, that is not because we are hard workers and that we do not have large numbers of entrepreneurs. I can give the history of my own businesses. We had put money where our mouth was and started a scientific company that has since went on to the stock exchange to become a very successful international company. We wanted to manufacture in the Atlantic region. We wanted to hire young scientists to create jobs and to be sustainable so that we would not have to be that have not province and have to take those transfer payments that we have depended for so long.
Some of the hon. members are advocating that this is not good news for the Atlantic region because they would like to continue for us to be that transfer receiving province and dependent on the provinces that are more sustainable economically. This is a chance for us to change that pattern.
There are comments from APEC, the Atlantic Provinces Economic Council, that this harmonized tax is good news for the Atlantic region. There are comments from the CIBC this morning saying the Nova Scotia resale sector was strong in 1996 and the introduction of the harmonized sales tax is expected to further increase sales.
The harmonized tax does many things for our region but above all it allows us as Atlantic Canadians to have a stronger resource sector, a stronger manufacturing sector and to develop those jobs that can be sustained through a modern global competitive economy, and that is what we want. There will be some costs associated with the transfer of new cash registers or change over but these are minimal to the benefits of the overall 15 per cent harmonized tax and that 15 per cent input tax credit.
I could go through sector by sector, whether it is fishing, farming or manufacturing, but all those sectors in our economy, the building supply sector, the grocery store sector, have invited us to push forward with this harmonized tax and to make it forceful and make it strong. As I indicated moments ago, talking to our farmers this morning from the Nova Scotia Federation of Agriculture, they are pleased with this. They are being told from the Ontario farmers they would like to have the same thing. I expect that farmers in Ontario, a strong, vibrant part of our economy, will put the push on the government there that it join in and get a harmonized tax as well.
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To display some of the myths about this whole tax is that it is a two package deal. It is a harmonized tax at the manufacturing and business level and it is a tax in pricing at the consumer level. The reason it is a package deal is want the consumers of the Atlantic Canada and of our nation to eventually receive this through put in the reduction of prices of a tax in pricing. When we see a commodity on a shelf, whether cat food, dog food, lumbering supplies or whatever, we will know that the price which is marked on the shelf is the price we will pay when we go through the cash and exit the store. That is the benefit-
The Deputy Speaker: The hon. member's time has expired.
Mr. Jim Silye (Calgary Centre, Ref.): Mr. Speaker, I rise today to address Bill C-70.
However, I would like to make a correction on the facts that were just presented by the member from Cumberland-Colchester. She indicated that the HST-BST committee had gone to Atlantic Canada, when in fact it is not true. That was a prebudget consultation hearing that went to Atlantic Canada. For her sake and the sake of my colleague I would like to clarify that the Reform Party member was correct when he said that the committee did not go to Atlantic Canada, nor did it receive people from there at the hearings.
I would like to refer to a document I got permission to quote quite liberally, from Mr. Mitchel Gray who writes for the Canada Taxpayers Federation, Alberta division. He calls this weekly commentary paper ``Let's Talk Taxes''.
It is ironic that my little newsletter that I put out through the House of Commons two or three times a year is called ``Let's Talk''. I like the title. I will stray from time to time but I will give him credit for the gist of the commentary on this issue.
The same people who told us they would scrap, kill and abolish the GST are bringing in legislation now to harmonize the GST, to include the GST in our lives forever with this harmonization in three provinces of Atlantic Canada.
Harmonize is a nice word. Aside from its soothing musical connotation it implies a sense of unity, togetherness and co-operation. When applied to the GST, however, harmonization means coercion, confusion, cost and cover-up. Here is how Mitchel Gray describes these four words, and I concur with his views.
Coercion. Part of the harmonization plan would force businesses to hide the new harmonized sales tax, HST, which our party prefers to call the blended sales tax, the BST, in a price of the product or services being sold.
Shopkeepers who make a mistake and sell a product without including the tax in the price would face fines, jail sentences or a permanent criminal record. That is right. It is off to the gulag. With all these g words these days, between gonads and gulag, we are getting an education in this House.
It is off to the gulag for those brave souls who would reveal how much tax Canadian consumers are paying. When I say gulag I am not kidding. While rapists and robbers can be granted conditional or absolute discharge by a judge under sections 763 and 737 of the Criminal Code, pops down at the corner store will be excluded under these sections and will rot in jail for not including the HST/BST in the price of a chocolate bar. We will need a magnifying glass in case the tax inclusive price is not the right size it is supposed to be. This gets very confusing.
Confusion. It is probably confusing enough to have a combined provincial-federal sales tax in three of Canada's provinces, two separate sales taxes in six provinces and one sales tax in one province.
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If members need more confusion, how about this. The HST/BST legislation will exempt some items from the hidden tax rule and allow businesses to show both the tax inclusive and tax exclusive prices as long as the former is displayed. I think people are confused already. I will go real slow in the next part.
Shoppers could conceivably be faced with four different prices for the same marked down item. I will go real slow for the Liberal members because I know this is intended to simplify, clarify and make it a lot easier for people to understand-
An hon. member: Consumers are more intelligent.
Mr. Silye: -the original price with the tax, the original price without the tax, the sales price with the tax and the sales price without. The next point is cost.
An hon. member: Just to complicate it for the Reform.
Mr. Silye: At least this party does not go along like a herd of sheep and follow the democratic dictatorship that we have elected. When the backbenchers of this Liberal government go back and face their constituents they will have to answer why they are bringing in more taxes, new taxes in a region that is subsidized by the rest of Canada after the finance minister calls it pan-Canadian. We will see how pan-Canadian it is after this is fleshed is out in about 10 or 12 months after this tax has been in place.
Companies will have to develop dual inventory. They will have to have two pricing systems, computer and advertising systems in order to accommodate this change. It will be confusing and it will be costly. It is a shame that a government cannot look at a plan and implement it all across Canada rather than just doing it piecemeal in one part of the country only.
In addition to the direct costs there is the cost of lost jobs. A card company and Woolworth, as my colleague has previously mentioned, will be forced to lay off hundreds of people with this increase in costs or pass it on to consumers. That is what we have been arguing all along.
It makes no matter if someone can deduct this as input costs. It is a 15 per cent deduction. Come and create the jobs. What matters is whether this benefits the Canadian taxpayer, the Canadian consumer. The answer is unequivocally no. Take a look at what is being done here.
A tax is being increased on a lot of goods and services in these provinces. Yes, the overall combined tax is lower in those provinces, but Canadians have to pay $974 million to do that. It is a prepayment to get a tax reduction in one part of the country at the expense of the other part of the country. Then what happens to the people in that part of the country?
Are they going to be better off at the end of the day? I submit no, because when they buy their goods and services they will be paying 15 per cent on a lot of goods and services they were not paying on before. Their out of pocket costs will go up and when those consumers find out, the premiers, the politicians in those provinces are going to be in deep goo-goo, sticking to the g alliteration.
The final word I have to say is cover-up. Hiding the HST and BST will allow Ottawa to cover-up future rate hikes. That is the danger in this legislation. Other countries have combined a value added tax with a local sales tax to have just one tax. Governments then go on and raise it from 5 per cent to 10, from 10 to 15, from 15 to 18. It just gets easier and easier to raise the tax.
This Liberal government, should it be so lucky to enforce a harmonized sales tax all across Canada, will then be in a position to raise this tax forever.
This cover-up is nothing more than trying to keep a promise that it never intended to keep in the first place. Those members said they would scrap the GST, abolish the GST, and now they have done the very thing that they argued against in this House of Commons when they were in opposition.
This is not about money. This is not about creating jobs. This is about integrity and honesty in politics. I am embarrassed to have to say the politicians on that side, now in government, especially the cabinet ministers, are now saying things opposite to what they did over here.
When the minister of defence was on this side he said the GST should not be tax included, that tax should always be obvious and clear. Now he is favouring a hidden tax.
When the finance minister was on this side he said if you combine a provincial sales tax with a goods and services tax, you will entrench the GST forever. For a party and two people who ran on the platform to scrap, abolish and get rid of the GST, to entrench it in our lives forever, to guarantee that it stays with us forever, is hypocritical, duplicitous and is not serving the general public.
They should be ashamed of changing their minds and doing exactly the opposite once they get over on the other side. This piecemeal, ad hoc legislation is not good for Canada. It is not the solution. If we are going to do something and we want to have one tax, then let us just have one tax but have it as low as possible, have it all across Canada and not force companies, businesses and consumers to listen to this confusion all the time.
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We oppose this legislation because it is being done for the wrong reasons. It is being done just to keep a promise that has been long broken and should be buried. The minister of heritage quit over this. She admitted that the promise was broken. The finance minister admitted the Liberals broke their GST promise. It is only the Prime Minister who will not admit he broke his promise to abolish the GST.
For political and not economic reasons the Liberal Party should reconsider this bill. It should look at it and say: ``We should not go ahead. Tax inclusive pricing is divisive, there is a lot confusion. Let's back off on this. Let's wait and see if we can convince all the other provinces to come on board''.
I will leave the government and the Liberal backbenchers with this thought. Answer this question: If the HST is so good, why have the other provinces not jumped on board and proclaimed the wonderful advantages and benefits of this ridiculous Bill C-70?
Mrs. Brushett: Mr. Speaker, I rise on a point of order to clarify a point. The hon. member for Calgary Centre indicated that we did not go to the Atlantic region in January. That is a fact and true. The finance committee was there in November. We invited anyone in the region to come to Ottawa for the hearings and paid their-
The Deputy Speaker: The hon. member is engaging in debate.
Mr. Roy Cullen (Etobicoke North, Lib.): Mr. Speaker, I am very pleased to speak again on Bill C-70 because I believe it is good policy and good legislation. In the world of politics and government we have to deal with the art of the possible. We often are not fortunate enough to have perfect solutions to everything but I believe the HST comes very close to that.
I would like to correct the member for Calgary Centre on one point. The premier of Ontario is quoted as saying-I do not have it in front of me now-that the harmonized sales tax would be the best thing Ontario could ever do. It is on the record. However, in the interim he has been involved in the politics of this issue and he does not want to move on it. We are finding that with so many issues.
Ms. Augustine: His Reform friends.
Mr. Cullen: Exactly. His Reform friends are influencing that deliberation.
I am pleased the member for Calgary Centre acknowledged that he got some material from someone who has to be respected. Unfortunately we often hear a lot of rhetoric from the other opposition party. We wonder if it would be attributed to the Fraser Institute or to Newt Gingrich or if they would make the same kind of attribution that the hon. member so rightly did.
I want to discuss tax included pricing. The opposition parties are creating a lot of confusion and debate around this point about which I will provide some clarification. At the time the GST was first promulgated under the Conservative government, I thought if they were going to bring it in they should have it out front and centre so that people could see it. That was a reasonably honourable thing to do.
However, if people opposite were frank with themselves they would acknowledge what we are now hearing from Canadians, myself included on this point. When Canadians go to the cash register they are continually surprised when tax is added on to their items. A $100 item becomes $115 dollars. Canadians are fed up with that.
Contrary to what the member opposite says, the HST will not be hidden. It will be on the receipt. If you travel to Europe or other places you will see the taxes are included on the bill and also on the sticker price. We are moving to what many other countries have moved to, and the tax will be there and visible for all eyes to see.
In Atlantic Canada we are reducing the GST component of the HST so why would we want to hide it? Why would we want to hide a tax we are reducing? It makes no sense. It argues the point quite well that we are not really trying to hide a tax; we are trying to respond to what Canadians are asking for from sea to sea.
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I would like to comment briefly on the origins of the HST. When the GST was brought in, the manufacturers' sales tax was eliminated. Many Canadians, myself included, did not factor that in very heavily at the time. Independent surveys showed that the manufacturers' sales tax on white goods and big appliances in most cases was passed on to the consumer. We have lost the benefits of the manufacturers' sales tax.
When we campaigned in 1993 we said that we would do everything we could to replace the GST because it was not a popular tax. We looked at a whole range of options. The red book said that we would harmonize the GST and make it simpler and more equitable. The HST will do that.
An aspect which is sometimes forgotten is the notion of the embedded PST. That is a term which deserves an explanation. When Atlantic Canada moves to the HST, the whole tax collection and remittance system will become a value added type tax.
Those Canadians who have small businesses, medium sized businesses or who work in the accounting offices of big companies know how the GST works. They take all the GST they have paid on the goods they have purchased, deduct that from the GST they have charged to customers and remit the net. Essentially it is a value added tax.
When the tax is harmonized in Atlantic Canada, the provincial sales tax which is currently in the cost of goods that businesses buy will be relieved. Therefore, the cost of the goods which are produced by those companies will be reduced. The result will be that the companies in those provinces will be more competitive.
Some of the Atlantic premiers, such as Frank McKenna of New Brunswick, are very aggressive when it comes to developing and attracting business. They know that the harmonized sales tax will position their provinces very well. In fact, Quebec has moved along a similar avenue.
In Ontario the Harris government is doing nothing because it likes to play politics. We have run into that on a whole range of issues, such as CPP reform, but that is an issue for another day.
If we faced reality in Ontario, the taxes could be harmonized. Instead of a 15 per cent tax there would be a 14 per cent tax. Perhaps in the future it could be reduced even more. In doing so, businesses would be more competitive. Things would be simpler for businesses. Right now they fill in the GST forms and then they fill in the PST forms. It is very complicated. People spend their time filling in forms when they should be focusing on expanding markets or developing new opportunities. When the tax is harmonized there will be one form to complete and one cheque to remit. With the new tax commission things will be simplified even further.
Some Canadians might say: ``What does that do for me?'' If businesses in Ontario and the other provinces are more competitive, it is good for all of us. Their businesses will grow and they will be able to hire more people. They will be able to expand their markets. Some of those benefits will flow to consumers. We have independent research which shows that happened after the GST was implemented a number of years ago.
If we had the perfect solution we would eliminate all taxes. This debate has gone on and on and we are left with looking at what are the practical alternatives. The HST is a practical alternative. In addition, it will create some real benefits for people in Atlantic Canada. If other provinces would follow suit they would realize the same benefits.
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We all know that if the tax is harmonized in Ontario there will be some difficulty because consumers will now have to pay this harmonized tax on services at a higher rate than they paid before. That is the reality.
What do we do? Do we go dig a hole and lose ourselves in some of those facts? Or do we say that it will to be better for industry. Businesses will be more competitive. They will be able to compete better with Atlantic Canada and Quebec in world markets.
Exports are what it is all about. Growth in the economy has come through exports. If businesses are not competitive, even within our own provinces, then we are going to have some difficulties. I think Ontario should take the lead of Atlantic Canada and Quebec and harmonize the tax.
The member for Calgary Centre talked about the fact that people who do not comply with this law would be sent to jail, debtor's prison and all this sort of rhetoric. I do not think the hon. member was around for the debate subsequent to that announcement. There was some legitimate confusion among Canadians about people being thrown in jail and the way in which people would be charged under summary convictions or under various areas of the Criminal Code. The fact is that people will not be thrown in jail.
I find it ironic that Reform Party members, who stand up and talk about law and order and crime and punishment and who go on and on about the underground economy, the minute the government stands up and says: ``Look, if you are start fiddling around with your HST, we are not going to throw you in jail but, yes, we are going to take it very seriously. We are going to treat that as a pretty serious-
The Speaker: As it is almost 2 p.m., we will proceed to statements by members.