CONTENTS
Tuesday, October 24, 1995
Mr. Mills (Red Deer) 15731
Bill C-93. Consideration resumed of motion forthird reading 15733
Mr. Mills (Broadview-Greenwood) 15751
Division on motion deferred 15760
Mr. LeBlanc (Cape Breton Highlands-Canso) 15761
Mr. Leroux (Shefford) 15762
Mr. Harper (Calgary West) 15763
Mrs. Ringuette-Maltais 15763
Mr. Martin (LaSalle-Émard) 15765
Mr. Martin (LaSalle-Émard) 15765
Mr. Martin (LaSalle-Émard) 15765
Mr. Martin (LaSalle-Émard) 15766
Mr. Martin (LaSalle-Émard) 15766
Mr. Martin (LaSalle-Émard) 15767
Mr. Martin (LaSalle-Émard) 15767
Mr. Martin (LaSalle-Émard) 15768
Mr. Martin (LaSalle-Émard) 15768
Mr. Martin (LaSalle-Émard) 15769
Mr. Martin (LaSalle-Émard) 15769
Mr. Breitkreuz (Yorkton-Melville) 15770
Bill C-99. Motion for second reading 15771
Mr. Mills (Broadview-Greenwood) 15771
Mr. Mills (Broadview-Greenwood) 15793
Bill C-329. Motion for second reading 15793
15729
HOUSE OF COMMONS
Tuesday, October 24, 1995
The House met at 10 a.m.
_______________
Prayers
_______________
ROUTINE PROCEEDINGS
[
Translation]
Mr. Peter Milliken (Parliamentary Secretary to Leader of
the Government in the House of Commons, Lib.): Mr. Speaker,
pursuant to Standing Order 36(8), I have the honour to table, in
both official languages, the government's response to 11 petitions.
* * *
Hon. André Ouellet (Minister of Foreign Affairs, Lib.): Mr.
Speaker, I am honoured to commemorate, in the name of the
government, one of the most important events of the century: the
creation of the United Nations Organization on October 24, 1945.
Fifty years ago, the first signatories of the UN Charter, including
one of Canada's greatest prime ministers, Mackenzie King,
gathered together in San Francisco to work out their vision of hope
for humanity.
Amid the ruins of a devastated world, our predecessors firmly
believed that, for the sake of humanity, they had to build a better
future. They also knew that peace and development were not a
matter for a few countries but one for the whole planet and all its
peoples.
Today, as we contemplate the achievements and turmoil of the
past 50 years, one thing is clear: the UN is a universal organization,
not only because almost all the countries of the world are members,
but because it is involved in all fields of human activity.
From peacekeeping and peacemaking to education and the fight
against poverty; from human rights and development to the
environment, human health, refugee assistance and programs to
promote economic stability and growth; from democratization
efforts to initiatives to share technologies and improve food and
agriculture, Canada can be proud of the progress made by the UN
in improving the fate of millions around the world.
(1005)
But we can also be proud of our contribution to these efforts. We
Canadians were among the first to sign the charter. It was also a
Canadian, the late lamented John Humphrey, who wrote the first
draft of the Universal Declaration of Human Rights in 1948.
[English]
It was my predecessor, Lester B. Pearson, who helped usher the
UN into adulthood. Among his valuable contributions to the UN,
none was more visionary than his proposal to help set up the first
peacekeeping operation in 1956 during the Suez crisis. Since then,
more than 100,000 Canadians have served in over 30 peacekeeping
missions around the world, without mentioning our contribution to
the Korean war. Today I want to pay tribute to those who have
served and those who have died in the service of peace and in the
service of the United Nations.
Canada has worked through the UN to fight for the rights of the
poor and the underprivileged, to promote respect for the
environment and to push for disarmament. We have consistently
been one of the largest suppliers of food aid. We have assisted in
missions to monitor elections in many parts of the world.
The International Civil Organization is based in Montreal. The
Food and Agriculture Organization was founded in Quebec City
and just last week celebrated its anniversary by holding a major
conference there.
Canada has played a leading role in the international atomic
energy agency as well as in many other UN specialized agencies.
We have served on the security council in every decade since the
UN was created and we have recently declared our intention to run
for a security council seat for the 1999-2000 term.
[Translation]
And last year, Canada announced that it would nominate the City
of Montreal as the future home of the Secretariat for Biodiversity.
[English]
As we stand here today at the beginning of the next chapter in
UN history and on the threshold of the 21st century, I am pleased to
state that Canada remains firmly committed to the United Nations
system. I pledge our continued support for the UN's goals.
15730
I had the honour of addressing the United Nations General
Assembly in New York last month. I outlined what Canada
believes should be the UN's main priorities for the years ahead.
This government believes the UN should pay particular attention
to three main objectives: preventive diplomacy, rapid reaction and
peace building.
All of the components of the UN system must help identify and
resolve tensions before they generate into conflict. When
preventive diplomacy efforts fail, the UN must be able to intervene
quickly and effectively on the ground.
In New York I tabled Canada's report on how to increase the
UN's rapid reaction capability. I was encouraged by the positive
attention given to our recommendation.
Alongside these efforts, the UN must continue its ongoing work
of peace building and articulate the visions of development centred
on the individual and one that balances the economic and social
agendas for the purpose of improving the well-being of society.
Just as the world has undergone many changes since 1945 and
has had to adapt to new requirements, modern technology and
fiscal restraints, so must the United Nations greet its future with a
strategy for revitalization to meet the challenge of the next century.
Those challenges often arise quickly and harshly. Canada will
continue to hold out its hand to the UN to help ensure that the
general assembly, the security council and indeed the whole UN
family are best able to meet the needs of the future in a
co-ordinated, efficient and fiscally responsible manner.
(1010)
The UN has accomplished great things in its first 50 years. There
have of course been set backs. We can make the UN better,
however we cannot hope to make it better when some countries do
not pay their dues. Countries can pay their dues and they should
now. That is not to say that we cannot reform the scale of
assessments to reflect current economic realities. We should and
without delay.
The UN at 50 should take stock of what it has done, how it has
done it and how it can do things better in the future. We must look
back and reflect on the spirit that carried the architects of the UN
forward. Their vision was bold. Their challenges were great.
Today we are faced with universal problems that threaten the
achievements of the last 50 years. Unlike 50 years ago, we have a
proven universal mechanism that can help us meet those
challenges. Let us make it stronger and better. That is the challenge
for the years to come.
[Translation]
Mr. Stéphane Bergeron (Verchères, BQ): Mr. Speaker, I am
proud to have this opportunity today to speak on behalf of the Bloc
Quebecois on this fiftieth anniversary of the founding of the United
Nations Organization.
The Minister of Foreign Affairs gave a relatively appropriate
picture of the past achievements of the UN, the challenges facing it
today and the role played by Canada.
In my comments on this anniversary, I would like to focus on
two main issues which I feel are fundamental and which may have
been purposely avoided by the minister.
First, the matter of promoting human rights and democracy.
Second, since this is the era of globalization, I would like to discuss
that very typical characteristic of the UN, its universality. The
UN's membership includes nearly 200 countries, 28 of which
joined since 1990.
First, human rights and democracy. As I listened to the Minister
of Foreign Affairs say how proud he was, and rightly so, of
Canada's contribution, adding that it was a Canadian, the late John
Humphrey, who wrote the first draft of the universal declaration of
human rights in 1948, I could not help thinking of this
government's lax approach to promoting human rights and
democracy.
Considering that this government has refused to commit itself to
recognizing the results of the referendum to be held next week in
Quebec, it is somewhat surprising to see the minister holding forth
at the United Nations and recalling the UN's achievements in
promoting human rights and democracy.
That takes some nerve, I must say. And coming from a
government that has decided from now on to focus exclusively on
business interests and literally to turn its back on promoting human
rights and democracy, it is downright embarrassing.
The late John Humphrey must be turning over in his grave today.
The Bloc Quebecois has strongly criticized and condemned
Canada's abdication of its historic responsibility for human rights
and democracy.
Before I finish my comments on this first point, I will read one
of the most interesting recommendations made by the Bloc
Quebecois in the dissenting report of the Special Joint Committee
reviewing Canadian foreign policy. The Bloc Quebecois
recommended that the Department of Foreign Affairs and
International Trade and CIDA, working in co-operation with NGOs
and business corporations, draw up guidelines to give concrete
expression to the key components of Canada's foreign policy
respecting democracy and human rights.
Among other things, these guidelines could include a mandatory
framework for analysing situations involving gross and reliably
attested human rights violations. They were to be formulated as
15731
soon as possible and made public no later than the UN's 50th
anniversary celebrations scheduled for October 24, 1995. But
October 24, 1995 is today, and what is the government tabling?
Nothing, nothing tangible on promoting human rights and
democracy. What an opportunity lost by Canada.
(1015)
These guidelines were to serve as inspiration for new legislation
and regulations to govern the transactions of the Department of
Foreign Affairs and International Trade, CIDA, NGOs and business
corporations with states belonging to the international community.
We felt that Canada's foreign policy, as it concerns democracy
and human rights, should be more consistent and absolutely honest
and open, so as to maintain the respect and prestige Canada had
acquired, which a sovereign Quebec would certainly have been
able to perpetuate.
Today there is every indication that this will be the case if
Quebecers vote in favour of sovereignty on October 30. More than
ever before, and this is again borne out today, it is high time that
Quebec was finally able to participate fully in international
politics, realize its aspirations and defend its own interests. Faithful
to its democratic values of openness and tolerance, Quebec fully
intends to stress greater concern for humanitarian aid and equality
among nations.
This brings me to my second point, the universal aspect of the
UN and the lessons to be learnt. I would like to refer now to several
quotes from the secretary general of the United Nations' speech on
nationalization and globalization at the first conference of young
leaders, May 24, 1992.
The timely words of the UN secretary general are even more
timely today. He said: ``In order to enter into a relationship with
another, we must first be ourselves. For that reason, the first
prerequisite for the proper globalization of our modern life is a
solid sense of identity. Excessive or misunderstood globalization
might result in the creation of a kind of cultural soup, one uniform
culture, which would do nothing positive for the world''.
A sound sense of identity. Such was the message of the secretary
general of the United Nations. This in fact is really the code for
access to the world, a body of cultural references. According to the
secretary general, the United Nations is that body of cultural
references.
Now, what is the situation concerning cultural identity and
cultural reference for Canada and Quebec? English Canada, we
agree, needs solid anchor points in order to cope with the invasive
American culture. Quebecers, on the other hand, base their identity
on Quebec first and foremost. Therein lies Canada's whole
problem; it is based on the assumption of a single nation, with one
and the same culture, the so-called Canadian culture.
This denial of the existence of Quebec as a historically
constituted nation disavows the existence of two founding peoples.
Canada is, therefore, having serious problems defining itself. It is,
in fact, a country still in search of an identity. Its existential
problem is that it is torn in two directions by a dual identity.
Recalling the words of John A. McDonald at the time Canada was
created: ``We have created Canada; now we must create
Canadians'', we in Quebec are saying ``We have created
Quebecers; now we must create Quebec''.
To return to my main theme, the concept of the nation-state: a
nation is, first and foremost, a shared desire for a shared life. It is
the first step toward universalism. Universalism itself, therefore, is
nourished by nation states. The secretary general's speech
illustrated the value of another underlying principle of universality,
and that is sovereignty. He expressed it as follows: It is the art of
making unequal powers equal. Without state sovereignty there is a
danger of chaos, a danger of destroying the very instruments of
international co-operation''.
(1020)
He continued as follows: ``A world in order is made up of
independent nations, each open to the other, respecting their
differences and their similarities''.
This is one of the most essential messages, perhaps the most
essential one, we can glean from the United Nations Organization,
that great international institution which embodies these essential
values more than any other body. This is why we believe that a
sovereign Quebec will be able to participate fully in international
life in its own right, bolstered by a solid identity, a solid anchor
point, a single and unique cultural reference. Then it will be able to
communicate with other nations, with the universal, to use the
terms of the UN secretary general. It will do so by assuming its fair
share of the obligations imposed upon it by its allegiance to the
values of democracy, peace and justice.
There is no doubt whatsoever that this is the spirit within which a
sovereign Quebec will assume its responsibilities on the
international scene. Since Quebec is faithful to these values, there
is no doubt in our minds that the United Nations will open its doors
wide to us the day after our accession to the status of a sovereign
state.
[English]
Mr. Bob Mills (Red Deer, Ref.): Mr. Speaker, 50 years ago the
charter of the United Nations mapped out many high principles.
These were noble aspirations but the reality of the UN has not lived
up to that dream.
For decades the UN has remained incapable of acting forcefully
to achieve those principles. The primary problem is that it cannot
adequately finance its operations. If the UN is to respond to the
many global problems which exist it must have sufficient resources
to do the job. Since it has not been doing its job effectively, it is
15732
difficult for the UN to take the moral high ground and pressure its
member states to pay up.
What is required is major reform and the sooner the better.
Without this I cannot blame some of those in default for not paying
their bills. Why invest in an operation that is so bureaucratically
top heavy, inefficient, and many times ineffective?
A further problem with the UN is the inefficient way the
specialty agencies operate. Studies have found significant
overlapping and duplication of work, limited responsiveness as
well as a lack of transparency. In these agencies the UN has a tough
time getting its job done. Certainly this is something that has
created a number of institutional obstacles.
There are many areas where the UN should be improved and
overhauled for the 21st century. To begin and most important,
Canada must insist the UN eliminate the duplication and waste
which contributes to its ineffectiveness. If the UN is ever to recover
from its current crisis, this is an absolute prerequisite.
Furthermore, Canada must take a proactive and constructive role
in reforming the UN so that it can better live up to its original goals
of collective security, freedom, justice and human development.
Canada is a respected player in the UN and we can provide
effective leadership in the reform process. This will be extremely
important going into the 21st century.
We must also strengthen the UN to attack the root causes of
conflict, lack of democracy, poverty, abuse of human rights,
intolerance and the uncontrolled spread of military technologies. In
addition, many of the environmental problems which have emerged
over the past several decades cannot be remedied without effective
international co-operation. A revitalization of an effective UN
would greatly help in all these areas.
The minister mentioned peacekeeping. This is a very important
duty of the UN in which Canada has played no small part.
Canadians attach a great deal of importance to our country's
peacekeeping tradition but times have changed and peacekeeping is
becoming more perilous and unpredictable. Therefore, this
Parliament must establish clear criteria to make sure that our scarce
peacekeeping resources are used where they can be most helpful
and not used where conditions are unacceptable. We must realize
that Canadians cannot participate everywhere. Our men and
women in uniform have served the cause of peace very honourably
for years and we are very proud of them.
(1025)
Never again should our troops be left to twist in the wind, as
happened in Bosnia, while the government in Ottawa failed to
remove them for months and months from a dead end mission
where the mandate could not be carried out properly.
In conclusion, the UN faces many challenges over the coming
years. If this 50th anniversary celebration is to mean anything, then
we must address these challenges head on. The UN will not survive
unless it becomes effective, accountable and transparent in all of its
activities. These are the changes that we need. These are the
changes that the Reform Party will support.
* * *
Mr. John Godfrey (Don Valley West, Lib.): Mr. Speaker, I
have the honour to present the ninth report of the Standing
Committee on Industry entitled ``Performance Benchmarks for
Small Business Financing by Banks: A Progress Report''.
I am particularly pleased to draw the attention of the House to
the fact that this report is supported by members of all three
political parties on the committee.
The report follows up on the committee's second report to the
House ``Taking Care of Small Business''. It sets out a framework
for banks to report their small business loan statistics to the
industry committee on a quarterly basis. This data will allow the
committee to track the performance of the banks in their
relationship with small and medium size businesses and to select
specific benchmarking issues for future investigations.
The committee will hold meetings with the banks to discuss this
report and related matters during the week of November 6.
Mr. Jerry Pickard (Essex-Kent, Lib.): Mr. Speaker, I have
the honour to present the 10th report of the Standing Committee on
Agriculture and Agri-Food which deals with Bill C-61, the
agriculture and agri-food administrative monetary penalties bill.
After very fruitful discussions with departmental officials and all
others concerned, I am proud to report the bill with several
amendments.
I also would like to thank all committee members for their
co-operation, and the staff and departmental officials who
expedited the discussions very well.
* * *
Ms. Susan Whelan (Essex-Windsor, Lib.): Mr. Speaker,
pursuant to Standing Order 36, I wish to present four petitions that
have been signed by the constituents of Essex-Windsor.
The first petition has over 2,400 signatures and is from members
of the CAW local in Windsor. They urge the government to
15733
implement an emergency surtax on the profits of banks and other
financial institutions to pay off the deficit.
Ms. Susan Whelan (Essex-Windsor, Lib.): The second
petition calls on Parliament to act immediately to extend protection
to the unborn child through amendments to the Criminal Code.
Ms. Susan Whelan (Essex-Windsor, Lib.): The third petition
deals with the social issue regarding same sex relationships.
Ms. Susan Whelan (Essex-Windsor, Lib.): Finally, Mr.
Speaker, I would like to present a petition on behalf of my
constituents concerning gun control.
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker,
pursuant to Standing Order 36, I wish to present a petition which
has been circulating all across Canada. The particular petition has
been signed by a number of Canadians from Moose Jaw,
Saskatchewan.
The petitioners would like to draw to the attention of the House
that managing the family home and caring for preschool children is
an honourable profession which has not been recognized for its
value to our society. They also state that the Income Tax Act
discriminates against families that make the choice to provide care
in the home to preschool children, the disabled, the chronically ill
or the aged.
The petitioners therefore pray and call on Parliament to pursue
initiatives to eliminate tax discrimination against families that
decide to provide care in the home to preschool children, the
disabled, the chronically ill or the aged.
Mr. Chuck Strahl (Fraser Valley East, Ref.): Mr. Speaker, I
will present several petitions today. They have come in over the
summer and this fall and are from people in British Columbia.
(1030 )
The petitioners say that over the last 10 years Canadian
taxpayers have invested millions of dollars in infrastructure at
Canadian Forces Base Chilliwack. The Canadian taxpayer will
have to absorb any loss incurred by shutting down CFB Chilliwack
and replacing that infrastructure elsewhere. This is the last army
base unit in B.C. and the only military base in the lower mainland
and in the entire British Columbia region. Due to its favourable
climate CFB Chilliwack is able to provide optimum year round
training.
Therefore the petitioners are calling upon Parliament to
re-examine the closure of CFB Chilliwack to see if perhaps it
should not stay open.
Mr. Peter Milliken (Parliamentary Secretary to Leader of
the Government in the House of Commons, Lib.): Mr. Speaker, I
ask that all questions be allowed to stand.
The Speaker: Is that agreed?
Some hon. members: Agreed.
_____________________________________________
15733
GOVERNMENT ORDERS
[
English]
The House resumed from October 23 consideration of the
motion that Bill C-93, an act to amend the Cultural Property Export
and Import Act, the Income Tax Act and the Tax Court of Canada
Act, be read the third time and passed.
The Speaker: When Bill C-93 was last before the House the
hon. member for Mississauga East had 28 minutes remaining for
debate. Therefore I now recognize the hon. member for
Mississauga East on debate.
[Translation]
Ms. Albina Guarnieri (Parliamentary Secretary to Minister
of Canadian Heritage, Lib.): Mr. Speaker, the tax incentives
provided in the Cultural Property Export and Import Act are for all
Canadians and not only for the wealthy.
The act has been in effect for almost 20 years, that is since 1967.
It has evolved and it must continue to do so in order to encourage
Canadians to keep within the country those objects that are part of
our heritage. The more Canadians are aware of the existence and
purpose of this legislation, the more they donate interesting
property related to our heritage.
Indeed, we notice an increase in the number of gifts made to
public institutions and authorities responsible for keeping such
property and making it accessible to ordinary citizens, the rich as
well as the poor, now and in the future.
Economic considerations are not the only reasons underlying
this bill. It is also important to make sure that our cultural heritage
remains here in Canada. When the original legislation was passed,
it did not include any deterrent to prevent the sale of Canadian
cultural property on the free market. Consequently, Canadians have
forever lost many important elements of their culture and heritage.
These objects were sold abroad and have become the property of
public and private collections throughout the world. This is a major
and permanent loss of heritage for Canadians.
15734
Cultural and heritage institutions in Canada have a long and
proud history.
[English]
Our first museums had an educational purpose: to organize and
transmit knowledge in the natural sciences. For example, the first
known museum in Canada dates back to 1831, when the Halifax
Mechanics Institute opened a public museum and reading room.
Later came the establishment of the arts museums. By 1903 Canada
had 21 museums. Today our museums are respected and renowned
worldwide.
[Translation]
The Canadian Museum of Civilization is one of those renowned
institutions which attract visitors from all over the world. People
come here to admire its distinctive architecture. But what would
that magnificent building be without its collections? Without their
artifacts, works of art and books, our museums, galleries and
libraries would only be empty buildings, rooms and walls.
Bill C-93 will ensure that the collections of Canadian museums,
art galleries and libraries are up to date, diversified and exciting.
(1035)
Canadians are increasingly interested in their heritage. They
expect the government to play a role in developing heritage
collections. Bill C-93 is an attempt to meet these expectations.
An article in The Ottawa Citizen in October 1994 described the
importance of gifts of cultural property for Canadian museums.
Here is the story of one such gift.
Ainslie Loomis was a university student in 1939 and regularly
visited Britnell's bookstore in Toronto. One day, while browsing
through a box of old books, she came across an album of
photographs entitled The Antiquities of Cambodia, which had been
published in 1867. The price was marked as $2.25, but Britnell's
dropped it to 75 cents. In 1993, and now living in Brantford, she
gave the album to the National Art Gallery of Canada; it was worth
$10,000.
The article went on to explain that the National Gallery of
Canada came into being through gifts of works of art. At its
creation in 1880, the National Gallery's collection comprised only
donated works.
Leanora McCarney of Hull, Quebec, has been giving works of
art to the National Gallery for 15 years. She says that when they
travel abroad they see galleries with entire wings full of donated
works. She does not believe Canadians are in the habit of donating
works the National Gallery. She hopes to start a trend, because she
feels people should understand that what is involved is their
heritage.
In making it easier for people to donate cultural property to
museums, galleries and libraries, the government will perhaps
make Leonora McCarney's wish come true.
The implementation of measures, like Bill C-93, to consolidate
our museum, gallery and library collections has an effect on other
sectors of the economy besides the arts and culture. Cultural
tourism is a flourishing part of the tourism industry.
On the whole, the tourism industry brings in nearly $30 billion a
year and employs over 600,000 Canadians in 60,000 tourism
related industries.
In Canada, recent trends indicate most tourists visiting Canada
want a cultural experience different from their own. The
Department of Canadian Heritage is trying to improve heritage
tourism in Canada.
Many examples may be found in Canada of the contribution
cultural tourism makes to the local economy, while promoting
people's awareness of cultural values and encouraging their
participation.
Thus the activities proposed at the Musée de la civilisation in
Quebec City are an excellent way to approach culture, community
development and cultural tourism.
Opened in 1988, the museum promotes experience on a human
scale with a collection of over 80,000 pieces illustrating life in
Quebec.
(1040)
The leadership role of this museum in the city's cultural and
educational development is widely recognized. This museum is
now regarded as an essential tool for promoting public
participation in cultural heritage activities.
[English]
Clearly museums, galleries and libraries are not elitist shrines or
ivory tower domains for the happy few. They are democratic,
diverse institutions open to all citizens. They make a vital
contribution to the cultural and scientific life of the community. In
Canada, museums, galleries, archives and libraries are resources
and inspiration to people of all communities, backgrounds, ages
and abilities.
To all Canadians our museums, galleries and libraries represent
our authentic and irreplaceable link with our history, culture and
heritage. Successful passage of Bill C-93 will help to ensure that
these institutions remain vibrant temples of the human spirit, a
strong presence for all Canadians to inspire us and reflect who we
are.
[Translation]
I cannot emphasize too strongly the importance of this bill, this
legislative jewel, for the future development of Canada as a nation.
The Cultural Property Export and Import Act is currently the only
15735
legal mechanism available in Canada that promotes conservation,
thus helping to define our heritage. Again, this incentive to
establish and protect Canadian culture is only an incentive and not
a tax deduction or loophole. This incentive in the form of an
individual tax credit is available to all Canadians.
Its scope was broadened in 1992 to include artists by
encouraging them to donate their creations to designated
institutions interested in collecting their work. I do not need to
explain to you that artists are among our poorest fellow citizens, at
least financially. This tax incentive provides us with a way,
however small it may be, to allow major works by living artists to
enter the public domain, where they will help inspire and educate
citizens much better than if they remained hidden in the artists'
workshops.
The Cultural Property Export and Import Act plays another very
important role: encouraging Canadians to espouse philanthropic
principles, to think about future generations, to seek today what
may become a national treasure tomorrow, and to collect works of
art.
Those who argue that cultural property donations can only come
from the rich are completely mistaken, to say the least. In fact,
some of the greatest collectors in the world had very little money at
their disposal and sometimes even went without food in order to
buy works of art.
(1045)
We need more of these people in our country, people who can
recognize what is of aesthetic value, people who can have a passion
for history or, even better, people who can understand the scientific
and technical symbols which define us as a nation.
This bill is designed for those who feel it is their civic duty to
keep alive our heritage as a young country, and it seeks to welcome
objects which are symbolic and representative of our country. To
promote the making of collections and to stimulate a philanthropic
spirit is the least that the federal government can do to ensure that
our heritage remains accessible to all Canadians.
Our country is still very young. It is less than 150 years old. We
have a duty to develop existing private and public collections, so
that our culture can thrive and be the envy of other countries. More
importantly, this will allow Canadians to be fully aware of their
place and identity as a nation.
Given the current economic context, it is particlarly appropriate
for us to take all possible measures to keep our cultural treasures in
Canada, and to encourage the public to think twice before selling
abroad family objects brought here by their ancestors over a
century ago, not to mention a masterpiece by Riopelle bought 25
years ago for next to nothing.
We are talking about Canada's heritage but, more importantly,
about the preservation and development of that heritage.
I am convinced that everyone in this House should support this
wise piece of legislation.
[English]
Because the arguments are sound I encourage all members of the
House to support the bill, which is based on sound logic and makes
good sense for the country.
The Speaker: I wish to inform the House that pursuant to
Standing Order 33(2), because of the ministerial statement,
Government Orders will be extended by 23 minutes today.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, I am
rising to speak to Bill C-93 and I will argue today that not only is
this piece of legislation flawed, this whole act is completely
unnecessary. I am quite amazed at the lengths to which the
government has gone to introduce this type of legislation for what
appears to be not a problem at all or at least a very minor problem. I
will argue the legislation has caused far more problems than it
could ever hope to solve.
I quote from a Revenue Canada pamphlet called ``Gifts and
Income Tax'':
The Income Tax Act and the CPEIA provide tax incentives to people who
want to sell or donate significant cultural property to Canadian institutions.
The Canadian Cultural Property Export Review Board-is responsible under
the CPEIA for certifying that an object is of ``outstanding significance and
national importance''.
When an object of this nature is donated to a designated Canadian institution
or public authority, and is certified by the CCPERB, the donor does not realize a
capital gain. For purposes of the tax credit, the donor can claim the FMV of the
gift up to the total amount of tax still payable after claiming any credits for
charitable donations and gifts to Canada or a province.
(1050)
When that legislation was originally brought in I believe in
1977, right from that time we have had all kinds of problems with
people trying to take advantage of that legislation.
I quote from a newspaper article, March 24, 1995, in the
Montreal Gazette:
Tax avoidance schemes under which unscrupulous art donors obtain bloated
write offs for works given to public galleries and museums are on the rise across
the country, the Canadian Museums Association warned yesterday.
These dubious donations have become so rampant in recent months that
Ottawa might shut down the program under which tens of millions of dollars of
art is donated to Canadian public institutions each year, said John McAvity,
executive director of the 2,000-member association.
Warning members to be more vigilant against such schemes, McAvity said:
``The donations in question appear to be motivated purely by tax avoidance
15736
considerations rather than philanthropic reasons-These donors appear to be
neither serious nor knowledgeable collectors or even known to the museums''.
Under the scheme, which dates back at least 20 years, a donor buys a work of
art for well below the artist's usual fee. The donor would then have the work
evaluated for four or five times the amount he had paid for the work, donate the
piece to a gallery, museum or registered charity and write off 100 per cent of the
evaluated amount, art experts explained.
At the heart of the donation issue is the concept of fair market value.
Michel Rolland, president of a firm that facilitates art donations to public
institutions, said that if a client was able to obtain a work of art for well below
the usual going rate then the client has made a shrewd investment.
But a Revenue Canada brochure states that ``the generally accepted meaning
is the highest price, expressed in terms of money, that the property would bring
in an open and unrestricted market between a willing buyer and a willing seller
who are both knowledgeable, informed and prudent, and who are acting
independently of each other''.
In other words, if you were willing to only pay $2,000 for a work of art then
you should in all likelihood only get a tax receipt for $2,000, said Robert Kerr, a
Montreal chartered accountant who writes for the Gazette.
After five or so lean years many artists are desperate to sell their work at
almost any price, said Thérèse Dion, a local art consultant.
Rolland's Art-Transit Int. Co. has paid Montreal artist Catherine Widgery 20
per cent of the usual price for her work. ``If it is a $10,000 work, I get $2,000'',
she said.
Similarly, a copy of an Art-Transit artist's contract obtained by the Gazette
shows that some artists are paid only 18 per cent of their usual rate.
``It seems like a win-win situation'', said one Montreal artist who did not
wish to be identified. ``Museums are happy to get things free. Artists are happy
because they have a bit of money in their pockets. So everybody is happy. What
is not kosher is that a client is buying it (a work) at below its value, but getting
the write off for a different amount''.
Still the artist added ``I find the whole thing a bit fishy, but everybody's doing
it''.
According to the documents obtained by the Gazette, Art-Transit's
warehouse contained, as of January 26, a total of 7,241 works of art.
These include works by several artists.
The documents also show that some of the artists have enormous quantities of
works with Art-Transit: Guiangoldo Fucito is listed as having 494; Francine
Larivée has 440; and Claude Paul Gauthier has 485.
(1055 )
The point is that while some people say it is a win-win situation,
it is good for the artists and it is good for the people getting the
write offs. It is profoundly unfair to taxpayers who are granting
these people a write off for the full appraised value of the art work.
In this case it is art work that was bought for $2,000 but that
according to the appraisal is worth $10,000 and therefore the write
off is $10,000.
This thing is nothing but a huge rip off. We are talking about
over 7,000 works of art in one company alone where this is being
done. I have no idea what the value is but it has to be astronomical.
This is not fair. This is a rip off.
Previous to 1977 when this legislation came into place people
donated works of art, artefacts, sculptures, whatever, because they
wanted to give them to museums. They did it for altruistic reasons.
They are philanthropic. They did not care about the write off.
There were museums previous to 1977. There were art galleries.
There was lots of art in them. According to this article, since before
1977 we have had this problem with these scams. It would be bad
enough if that were all there was to it. This tax credit is far richer
than one can get if one donates to a regular registered charity.
If one donates to the food bank all one can do is donate up to 20
per cent of total income which is the most one can get a deduction
for. However, if an art dealer or someone savvy who knows the tax
law can work this deal they can actually write off their entire tax for
a year by donating these so-called works of art. To me that is
unbelievable.
A gentleman from an art gallery came in front of the Canadian
heritage committee in Hamilton. In his judgment most people
would give out of the goodness of their heart but there are some
people who are on to this. He said it was probably the wealthiest
people who would make the biggest contributions to the art
galleries and take advantage of this situation.
What we have is a tax avoidance scheme, in my judgment, that
permits the wealthiest Canadians to get away with paying little or
no tax. That is profoundly unfair.
In the last budget the government was talking at length about
how we had to have tax fairness. My hon. friend across the way is
nodding. This is not tax fairness. This is not in alignment with any
kind of taxation system that treats people the same way. Absolutely
not.
Why are we fooling around with legislation like this? We should
be rolling this legislation back. We should be bringing in flat tax or
a single tax or a proportional tax, a tax system that treats people
equally. We certainly do not want one that treats people who donate
art better than people who give to the food bank or to the Salvation
Army or to the cancer society. That is ridiculous. How can we
justify that? That is absolutely out of the realm of anything that
makes sense.
I am sure people are wondering how much this costs Canadians
every year. Last year there was something like $60 million in tax
deductions handed out. Depending on people's tax situation, it
could amount to as much as the full $60 million in actual loss to
the Canadian treasury if people did not donate to anything else and
it consumed absolutely all their income so they did not pay any
income tax at all. That is not realistic, and I recognize that.
However, suffice it to say that people did avoid paying millions and
15737
millions of dollars in taxation because of this scheme. That is not
fair and that is not right. We should have a transparent system.
(1100)
Just before the last election there was a bit of a furore in the
newspapers about former Prime Minister Mulroney donating his
personal papers to the National Archives. Someone said they saw a
figure of how much of a tax break he was to get. The gentleman
subsequently said he had made an error and he did not know why he
quoted that figure. That is not the point. The point is that we have
no idea how much people get in terms of a tax break for the
donations they make. These things are protected through the
Income Tax Act. We have a situation where people are making
donations and we have no idea how much they are being appraised
for because that would violate their privacy. Is that the best system?
It was not very long ago that someone at the National Gallery of
Canada decided it was a good idea to buy ``The Voice of Fire''. It
was an American art piece. It was three stripes. It cost
approximately $1.8 million. People went absolutely berserk, and
rightfully so. In my judgment it was a complete waste of money.
If we visit the gallery and look at the comment book, people
have said over and over again: ``The emperor has no clothes''. I
think Canadians feel that way too. The point is that we know how
much money we paid for that piece of art, but for these other things
we do not know how much revenue we are forgoing when we
purchase them. That is wrong. It should be out in the open. We
should know how much we are paying, either through a tax credit
or directly for items that are purchased on our behalf by our
government. That is how an open democracy should work.
The legislation is completely contrary to that. That is why we
should not be fooling around with the amendment to the legislation
but should instead be repealing the whole bill. It is absolutely
ridiculous.
I want to talk about some of the specifics of the legislation. The
legislation offers an appeal process over and above the cultural
export review board. If people do not feel they are getting a fair
price from the review board for their donation they can ultimately
appeal it to Revenue Canada. If memory serves, that was the
situation prior to 1993 or 1991, I have forgotten which. At any rate
we would be returning to that situation.
I question whether we should have the review board at all. It is
another layer of bureaucracy. How are the people appointed to the
review board? They are appointed the same way everyone else is
appointed to government boards. They are appointed on the basis
of who they know. They are appointed because of their
connections. It is quite conceivable that a former prime minister,
such as Brian Mulroney, could donate papers and have the decision
made on the value of those papers by people he appointed to the
board. It is ridiculous.
A few times the National Archives of Canada has gone to the
board and the board has said this is the value of the former prime
minister's papers. We never find out what it is, but those people
who may indeed have been appointed by the prime minister are
making those judgments.
(1105)
This appeal process will allow us to go to Revenue Canada and
ultimately I suppose to the tax courts. However, our sources tell us
that we have approximately 6,000 cases before the tax court today,
6,000 backlogged cases. Why are we bringing more stuff to these
people? Why are we bringing more decisions for them to make? I
would think there are more important things for those people to be
doing than arguing about the price of somebody's dinosaur fossil or
their three stripes on a piece of paper, their so-called art.
I make another point about the legislation. I believe the
legislation, which goes back to 1977, and the art bank, which falls
under the purview of the Canada Council, have worked against
artists. They have hurt artists by flooding the market with all kinds
of art and alleged art that has no business being out there in the
marketplace today. We have something like 18,000 pieces of art
stored in warehouses today, stuff that is supposed to be in the art
bank.
We have this legislation that encourages art galleries to go ahead
and purchase these things because the money is not coming out of
their budgets. All they are doing is going to the people at the export
review board and saying: ``We think this is pretty good. Put an
evaluation on it. The guy is going to give it to us. Whether or not
we hang it on the wall now or at any time in the future is really
irrelevant, because it does not cost us a thing''. They are not
working with a budget. They can bring in as much of this stuff as
they want. The only ones who pay are the taxpayers.
The people in this article say it is a great scheme and everybody
wins. It is win for the art gallery and win for the artist, but it is big
time lose for taxpayers who are out millions and millions and
millions of dollars in revenue. There are no safeguards built in to
ensure the galleries and the museums are using their power to do
this responsibly. There is no check in place to make sure that
happens.
This is horrible legislation. I would argue that before 1977 we
had very good art galleries. We were able to hold on to our works of
art. We were able to maintain different pieces of important cultural
15738
property because people ultimately gave these things to our
institutions over a period of many years. We know they did that.
Surely this new legislation encourages some people to use the
system by taking advantage of the tax credits. Also, the legislation
encourages us to keep not only Canadian art but American art and
artefacts and foreign artefacts of all kinds as well. People are using
this to say this is to keep Canadian culture in Canada. We should be
accurate here and say that it is also used to buy all kinds of foreign
art.
The fact is that people gave art before 1977 to these institutions.
In trying to encourage people to give even more we have opened up
a Pandora's box. We have allowed all kinds of people to milk the
income tax system, to take advantage of it to the point where we
now have the Montreal Gazette writing articles about it. We really
have what amounts to a tax avoidance scheme going on, which
obviously costs taxpayers millions and millions of dollars. That is
ridiculous.
We have that problem. We have the problem that it is not
transparent. We have people donating but we never know how
much money they get in the form of tax deductions for their art. We
have an export review board that could be appointed by people like
the Prime Minister, who will end up passing judgment on things
they want to give. We have a problem with the art market being
flooded because of this type of incentive, this kind of screwy
incentive we have here. We have all kinds of problems with this
extra bureaucracy and extra cost to solve what was a very minor
problem.
(1110 )
Instead of proposing an amendment that will send this to the tax
courts where there is a backlog of 6,000 cases, why do we not just
do away with the whole thing? Let us just do away with it. Then we
can get rid of all these problems. We will not have the Montreal
Gazette writing nasty stories about all the scams that are being
worked to take advantage of the situation.
We will not have, on the one hand, people in our party and in the
Liberal Party campaigning to simplify the tax system and, on the
other hand, the government working against that concept by
providing tax incentives for the wealthiest of Canadians to take
advantage of this system and avoid paying tax. That is crazy. It is
so unfair it is unbelievable. I cannot believe the government, the
minister, the parliamentary secretary and members across the way
are arguing for this type of legislation.
I hope people take the time to write some letters about this. I
hope they take the time to contact their MPs and ask how this can
be fair.
Let me conclude by saying that although this is a fairly
innocuous piece of legislation, when people find out about it they
will not be pleased. They will say that when the government spoke
in the last budget about achieving tax fairness they believed the
government. Now the government is turning around and proposing
legislation that is exactly contrary to that. I hope the government
will realize that and stop the bill before it goes any further.
Ms. Guarnieri: Mr. Speaker, I rise on a point of order. I wonder
if I could have unanimous consent to seek clarification on some of
the member's comments.
The Acting Speaker (Mr. Kilger): The Chair can only ask for
unanimous consent. The first three speakers have 40 minutes
without questions or comments, but with unanimous consent the
House can do whatever it so chooses. Is there unanimous consent?
Mr. Mills (Broadview-Greenwood): Agreed.
Mr. Solberg: Mr. Speaker, I rise on a point of order. I would be
happy to do that and I will ask my colleagues to consent to do that.
However I have to disappear for a radio interview at 11.30 a.m. I
have to get back to my office. If we could do this in five or six
minutes it would be great.
The Acting Speaker (Mr. Kilger): We will have to. I have to
stay within the 40-minute constriction as much as possible. I would
hope that certainly would happen.
Ms. Albina Guarnieri (Parliamentary Secretary to Minister
of Canadian Heritage, Lib.): Mr. Speaker, when the member
referred to the gifts and income tax book he was rather selective in
his reading. I wonder why the member did not bother to inform
Canadians on how cultural property is actually certified. I wonder
if he would be willing to read into the record exactly how they are
certified, just so that he does not mislead Canadians into thinking
that it is a free for all for everybody and anybody can give anything
to any cultural institution.
Would he be willing to read the paragraph on page 18, so as not
to mislead Canadians, and the first two paragraphs on page 19, so
that Canadians are fully informed? As usual, I find that the Reform
Party is rather selective in what it chooses to read out of transcripts.
I reassure the Reform Party that it will secure its place in
museums beside the extinct species, with the dodo bird and the
dinosaurs.
The member's discourse is somewhat limited in nature. When he
was quoting from Mr. McAvity, who is executive director of the
Canadian Museums Association, he was very limited in the quotes
he chose. Mr. McAvity went on to say that they are the voice of
2,000 museums.
Mr. Gilmour: Mr. Speaker, I rise on a point of order. The
member opposite was asking a question. The whole purpose of
interrupting the proceedings was to ask a question of my colleague.
This is not a question. This is a statement.
15739
(1115 )
The Acting Speaker (Mr. Kilger): I thank the hon. member for
Comox-Alberni for his intervention. It is certainly in the spirit of
unanimous consent knowing that we do have some restriction given
the statement by the member for Medicine Hat that he had other
obligations when they accepted the unanimous consent.
Without further ado I would simply ask-
Ms. Guarnieri: I have a point of order, Mr. Speaker.
The Acting Speaker (Mr. Kilger): All we are doing at this point
is using up valuable time. I simply ask the parliamentary secretary
if she could possibly put the question so I might allow a reasonable
amount of time for the member to respond.
Ms. Guarnieri: Mr. Speaker, Mr. McAvity, who represents
2,000 not for profit museums in Canada, said: ``We are very
pleased to be here today in support of these amendments. The
museum community has been patiently waiting for these
amendments for several years''. He went on to say: ``This
legislation was universally applauded by Canadian museums as it
brought our community in line with those of many other western
nations whose governments have been supporting the enrichment
of public collections through similar legislation for years''. Mr
McAvity went on to say even more resoundingly that the Canadian
Museums Association came before the committee to voice its
wholehearted endorsement of these amendments.
Given all of the above, does the hon. member think he has more
expertise than those individuals to judge what is good for Canadian
museums? I thank the hon. member for his patience in allowing me
to put the question.
Mr. Solberg: Mr. Speaker, I think the hon. member was taking
advantage of my good nature a little bit, but that is okay.
I will acknowledge that there are a couple of paragraphs on
pages 18 and 19 that do explain fairly specifically that the export
review board has to judge an object to be of outstanding
significance and national importance because of its close
association with Canadian history or national life, aesthetic
qualities and value in the study of the arts or sciences in order to be
eligible to be designated for a tax deduction. The fact is that $60
million worth of those are designated every year. That is a
tremendous amount of money, as the hon. parliamentary secretary
would know.
The parliamentary secretary was asking me about Mr. McAvity
and the museum association and was pointing out that the museums
like the legislation. Of course they do. They have unfettered access
to all kinds of things with no budget. They do not have a budget.
The museums can basically say: ``We would like that work of art or
that artefact. We will take it to the review board and get it to tell us
what it is worth and whether it is significant. When the board does
that, then we get it''. It is that easy.
The only one who pays is the taxpayer. It is certainly good for the
artist or the person who is donating it because he or she gets that
big tax credit. It is certainly good for the museums. Why would
they have any problem with this? They probably love this stuff. It is
profoundly not good for taxpayers who have to take it in the pocket
every time one of these donations is made.
The Acting Speaker (Mr. Kilger): I thank all members who
participated in this extension of the debate for their co-operation.
Mr. John Harvard (Winnipeg St. James, Lib.): Mr. Speaker,
before I get into the main body of my speech, I would like to
proffer a couple of comments relative to what was said by the hon.
member for Medicine Hat.
I did not listen to all of his speech but I did hear a chunk of it. On
two different occasions he described the legislation as being
horrible and innocuous. I would think the hon. member would find
some disparity between those two adjectives, innocuous and
horrible.
After listening to him I suspect he probably thinks the legislation
is more horrible than it is innocuous despite the fact that this is
anything but sweeping legislation. It really is what we might call a
technical bill to put back into legislation a review and appeal
mechanism, something that was inadvertently left out in 1991.
(1120 )
Again, in commenting on observations made by the hon.
member for Medicine Hat, it is quite clear he believes that the free
market system can do the job. At one point in his speech he said
that we just do not need this kind of legislation at all. He was not
only referring to providing an appeal mechanism or a review
mechanism; he was talking about the entire system of public
support for donations of Canadian heritage to museums.
We would have to be dreaming. We would have to be in full
flight of fantasy to believe the museums would do as well without
this legislation. Without this incentive, without this kind of
legislation, many of the donations to the museums across the
country, and we are talking about more than 2,000 institutions,
would dry up. This was forcefully put to the committee of which I
have the honour to chair by witnesses a few days back.
Let us not fool anybody. This legislation is absolutely necessary.
The comments by the hon. member for Medicine Hat truly reveal
what the so-called Reform Party feels about supporting cultural
institutions and specifically museums. Reform members simply do
not support public support at all which is wrong headed. It is a
mistake and is not something that is shared by the Canadian public.
I listened to the hon. member and he seemed to plead on behalf
of taxpayers, as if he spoke for all taxpayers. While many
15740
taxpayers believe they are overburdened, and in some cases they
are, most taxpayers are quite enlightened and support this kind of
legislation. They appreciate museums. They appreciate cultural
institutions. They support artists of all kinds. They want to reach
out and help Canadians in the cultural field. They accept that this is
what this legislation is doing.
This is certainly recognized by the museums. If it was not
helpful the museums would be saying that, but that is not what their
witnesses were saying. They came to the committee and said this
legislation is needed and is supported.
This wanders perhaps a little off the bill, but this bill has
something to do with preserving Canadian heritage. Everyone
knows as well as I do the crisis this country is going through right
now. We all know the crisis this country faces and we have a
heritage. We have a tremendous history. On Monday we want all
Canadians, not just Quebecers, to appreciate this heritage, this
history, this land, this great nation. That is what this country is all
about.
This cultural property bill is just an infinitesimal part of the
efforts of preserving Canadian heritage. I feel very, very strongly
that come Monday Quebecers will show that they are going to
preserve Canadian heritage in a much greater way through the
ballot box rather than through the mechanism of the cultural
property bill.
The hon. member for Medicine Hat said he has no idea as to the
tax expenditure involved in this kind of legislation. The tax
expenditure is in the neighbourhood of about $60 million. Again, it
is fully supported by Canadians.
(1125 )
Getting to the main body of my presentation today, we have
debated the merits of the Cultural Property Export and Import Act
long and hard.
Some time ago the hon. member from the official opposition
clearly understood that the lack of an appeal process in relation to
determinations of fair market value by the Canadian Cultural
Property Export Review Board was the result of an unfortunate
oversight. That is really what it is, an unfortunate oversight.
Bill C-93 is a technical bill. As such we must remember that its
purpose is to restore a right that was lost when the determination of
fair market value was transferred from Revenue Canada to the
review board. We are correcting an error. We are removing a
mistake that was made four years ago.
The act is even more important and necessary today than when it
came into force in 1977. That is because it is fast becoming the
only source, and I emphasize the only source, through which
institutions can hope to continue acquiring cultural property for
their collections. That has to be borne in mind throughout this
entire debate.
With little or no acquisition funds, museums are now having to
focus on donors to build their collections. Canada is therefore
greatly in need of a means to encourage people to collect important
examples of our national heritage with the ultimate aim of
voluntarily donating to custodial institutions.
The Cultural Property Export and Import Act must be cherished
and developed to ensure that the level of collecting of important
examples of our heritage continues to increase, not to decrease.
That is important.
In the 19th century the function of private collectors gained a
new level of importance in the face of the spread of public galleries
and museums throughout the world. While the impressionists and
post-impressionists were to some extent barred from official public
exhibitions, their work was nonetheless being bought by private
collectors with or without the mediation of dealers. These works
ultimately found their way into public collections only after their
position had been established by the art market created by private
collecting.
This collecting spirit was not relegated just to contemporary art,
but also to the diversity of products created throughout the world. It
is thanks to the collectors of the last century and continuing
through to today that the public has ultimately been led to an
appreciation and understanding of those objects that have come to
embody the trends and symbols which define the psychology and
history of our development as a civilization.
Collectors are the seers, the wise men of our times. They are the
individuals who have foresight enough to recognize what is and
what will continue to be of outstanding significance and national
importance for generations to come. Custodial institutions for
decades now have developed a strong rapport with collectors
working alongside them as they collect, often with the ultimate
intent to give to the public.
We are seeing in Canada today collectors who have built up
strong collections who, rather than automatically giving to the
public through public collecting institutions, are faced with the
choice of selling those collections for a handsome capital gain or
donating them to designated institutions in return for a cultural
property tax certificate. However, knowing the limitations of the
cultural property determination process and the fact that there is no
recourse to appeal the Cultural Property Export Review Board
determination, we have witnessed several cases already where
collectors are opting to sell their collections rather than holding
themselves hostage to the bureaucratic process. It is very important
to keep that in mind. If we are to respect and encourage the intent
of our collectors to give to the public domain, we must find ways to
15741
ease that process. Establishing a system of appeal to the Tax Court
of Canada would be a very important step toward encouraging the
concept of making donations in our country, a step that the donors
as much as the institutions are anxiously awaiting. That also has to
be borne in mind. This is not only important to the institutions and
the art community, it is important to the donors. In fact it is
important to all Canadians.
(1130)
Over the past few years, the Canadian Cultural Property Export
Review Board has been the object of press articles focusing on the
board's reduction of proposed fair market values in applications for
certification of cultural property for income tax purposes. These
stories, by the way, refer to a small proportion of all certification
applications. The review board has responded by expressing the
challenge of determining fair market value in these economic times
where the markets in which cultural property circulates are
extremely weak.
It is therefore crucial that the mandate for determining fair
market value rests in the hands of experts who are knowledgeable
about the twists and turns, the ups and downs of the marketplace
and who know how to relate often conflicting trends in the
marketplace to the cultural property applications it has before
them. This is a very intricate business and it cannot be left to rank
amateurs. If the job is going to be done properly it has to be left to
knowledgeable people, people who are experts and people in whom
we have confidence. This has been thought out and taken into
account.
Mr. Mills (Broadview-Greenwood): Integrity.
Mr. Harvard: Yes, as my good friend from
Broadview-Greenwood pointed out, people of integrity are also
important.
Speaking of people and integrity, the current review board
consists of 10 members, the maximum number allowable under
current legislation. These members represent the myriad of players
who are actively involved in the process of preserving cultural
property in institutions or public authorities who are designated to
do so.
Let us go through this. Two of the members are contemporary art
dealers. Four members are or were employees of designated
institutions who have expertise in archival material, Canadiana,
contemporary and Inuit art. One member is an accountant, another
is a lawyer and the remaining two members are members of the
public at large. Several of the members who sit on the board are
also collectors who are fully aware of the dynamics that come into
play between institutions that collect and collectors who become
donors.
This not something that has been slapped together. This has been
thought through very well. When we take into account the
composition of the 10-member board we can appreciate the kind of
thought that has gone into making up the board.
In my opening remarks I referred to comments made by the hon.
member for Medicine Hat. That same member at second reading of
the bill expressed concern that a board appointed by the
government and consisting of members who represent the
community it serves could be-to use his words-too cosy, leading
to a scratch my back and I will scratch your back situation. That
kind of assumption places subjectivity over expertise and suggests
that human beings are by nature incapable of assessing their peers
objectively. I think he has underestimated the capabilities of people
and perhaps even their integrity.
(1135)
We are not talking about amateurs, we are talking about
professionals, professionals that value and wish to maintain their
professional integrity. Further, as is the case with all professional
organizations, the Cultural Property Export Review Board has a
strict code of ethics to avoid any conflict of interest.
I might add that the transfer of determining fair market value to
the board in 1991 was not an arbitrary move, but rather the result of
the realization that such determinations can best be made only by
individuals who are actively involved in the environment in which
cultural property circulates.
The appeal process which the bill proposes will ensure the full
use of the expertise available on the board. It is intended that given
the thoroughness with which the first stage of the appeal process
would be handled through a request for redetermination by a
subcommittee, most issues with determinations of fair market
value would be resolved and that requests for a further appeal to the
Tax Court of Canada would be minimal. In other words, we do not
see the two-stage review process being used on every occasion. We
believe in most cases that all questions will be settled after the first
go-around. Very few of these cases go to the Tax Court of Canada.
It is important to keep that in mind. We are not interested in a
prolonged process where both stages are used up on almost every
occasion. We do not think that will happen.
The second stage of the appeal process necessitates that the
donor make an irrevocable gift to the institution. Only the donor
would be able to request an appeal to the tax court up to 90 days
after the redetermination process is completed. Again we are not
talking about people who are in the game for frivolous reasons.
They are serious donors.
As with anything new, the first and second stages of the appeal
process will be subject to trial and error before an efficient and
workable system is developed. In other words, we can see this
system, to some extent, maturing. One would hope that after the
system has been used for a number of years, it will be more
efficient and more mature. I believe that is a safe assumption. As
with most processes, over a period of time after they have been
used again and again, do get better.
15742
The museum community, as have donors and potential donors,
has been anxiously awaiting the appeal process since the original
announcement was made by the Minister of Canadian Heritage in
November 1994. It was looking for the announcement up until
then. It was cheered by that announcement. It has been looking
forward to the legislation. It has been looking forward to the
passage of the legislation and it has been looking forward to this
kind of debate. With a little luck it will be given royal assent in
the very near future.
(1140 )
Over the past year and a half the review board has established
positive working relationships with Revenue Canada and Justice
Canada to ensure that donations of cultural property are made in
the spirit of the act, that is, with a philanthropic end in mind. The
board is to be highly commended for the effective action it has
taken to discourage the use of the tax incentives under this act as a
tax avoidance measure.
Let me point out the kind of regime that has been set up to
prevent misuse of donations. Not any Tom, Dick and Harry can
come along with any kind of alleged piece of art and give it to an
institution and get a tax break. It is not as simple as that.
I want to draw attention to a couple of paragraphs from a
pamphlet entitled ``Gifts and Income Tax''. The Canadian Cultural
Property Export Review Board may rule that an object is of
outstanding significance and national importance because of at
least three criteria: close association with Canadian history or
national life; aesthetic qualities and value in the study of the arts or
sciences.
This is important. To be eligible to have cultural property
certified, an institution or public authority has to be designated by
the Minister of Canadian Heritage. The institution or public
authority has to have this designation before formally accepting
one's gift if one is to receive the maximum tax benefit.
The designation procedure ensures that the institutions and
public authorities receiving cultural property are competent,
classified, and maintain and preserve cultural property. Designated
institutions are also required to make one's gift available to the
general public for education, research or display purposes.
I point that out because when I was listening to the hon. member
for Medicine Hat, he left the impression, at least with me, that this
was a kind of loose set-up that could be exploited by people who
really do not want to give pieces of Canadian heritage for
philanthropic purposes but just to get a tax break.
I assure the hon. member for Medicine Hat and all Canadians
that it is not as simple as that. There is a regime. There is a
framework. It will have to be followed correctly and properly if
pieces of art are to be accepted and where tax certificates are
provided.
I am told that the board has implemented measures to target
suspect donations and to make determinations so that supposed
donations made with an anticipated profit are unable to receive
substantial financial gains. The board has been working closely as
well with the Professional Art Dealers Association of Canada to
ensure that all appraisals coming before it are fully substantiated
with demonstrable sales of comparable works.
As there are fewer tax incentives available to taxpayers today,
the board is taking every measure possible to ensure that the tax
incentive to donate under the Cultural Property Export and Import
Act cannot be used as a loophole. The great importance of this act
is the continuing development of our national heritage, and it
merits extreme vigilance. The Canadian Cultural Property Review
Board, I reiterate, is to be commended for its efforts thus far.
(1145)
This brings me back to those people for whom the Cultural
Property Export and Import Act is intended, the donors, the
institutions and the public; three major groups in this equation and
we should not forget that.
The purpose of the act is to encourage and ensure the
preservation in Canada of important examples of our heritage in
movable cultural property. Without acquisition funds to fulfil their
mandates to collect cultural property, designated institutions must
rely on donors.
As I said at the beginning of my remarks, as much as we respect
the marketplace, it is a dynamic place and we would not want to be
without it for one minute, sometimes it comes up a little short.
When it comes up short we as politicians have to recognize that. In
this case we have recognized it because the museums, the
institutions, cannot rely on the marketplace through some magical
process providing the donations that are so required by these
institutions.
It would be nice to believe that the marketplace could wave a
magic wand but it cannot, any more than the Leader of the
Opposition can. We cannot rely on a magic wand in this case. We
have to rely on well thought out legislation which will do the job
for the institutions, for the donors and for the public at large. We
think this legislation does it.
I remind Canadians that without an appeal process that ensures
recourse for determinations of fair market value of cultural
property for income tax purposes, donations to the country's public
institutions will become paralyzed and so will our heritage.
Canadians do not want that, not for one minute. That is why we
have this legislation. We as Canadians, the public, would suffer if
this were to happen, this paralysis I was referring to.
15743
At a time when museum attendance has been steadily increasing
and contributing to the economy of Canada through cultural
tourism, we cannot afford to abandon our duty to continue to
inspire our people to partake in the cultural harvest of our nation.
Museums are more popular today than ever before. Perhaps this
has something to do with the fact that our country is getting older.
It is 128 years old. We have a lot of heritage; heritage that has been
captured by our artists, heritage that expresses Canada in all of its
manifestations. We have a duty to encourage artists, to support
donors, to support designated institutions so that this heritage in art
form is preserved and protected because we will be a stronger
country for it.
(1150 )
Imagine for a moment what future generations of Canadians
would think of us if we were oblivious to these facts, if we ignored
these facts, if we let these precious pieces of heritage slip through
our fingers, allowing these precious pieces of heritage to be
squandered. They would condemn us. They would assess us very
harshly. However, we would not have to wait for the evaluation or
the assessment of history. I think our contemporaries would treat us
very harshly.
Canadians know what this country is all about. Canadians know
what our heritage is all about. They also know what it takes to
preserve that heritage because they know a country is not here for
just today, tomorrow, next week, the week after, the month after or
the year after. Like so many countries, Canada is here for a long,
long time. In recognition of that we have legislation to support our
artists, our donors, our institutions and the public at large.
I think all Canadians, all taxpayers, support this. They will not
share some of the criticisms we have heard of the bill. Of course no
legislation is perfect. As long as human beings are what we are,
imperfect, we will often create imperfect legislation. However, I
think we have done a good job on this. Certainly the institutions
have told us that. The museums have told us that. They came before
the committee and praised this legislation. They praised the
minister. They praised all of us in the House and they want the job
done. They do not want this frivolous talk, this carping from the
other side of the House.
Criticism for criticism's sake does not make any sense. If you
have something worthwhile to say, say it. To stand up on your hind
legs, to carp and to criticize just to fill the air does not make sense.
I think the opposition does us a disservice when it grandstands,
when it indulges in that kind of talk. We want responsible debate.
In some cases we have fallen short of the goal of responsible
debate.
Canadians support the legislation and they want it done. That is
all I have to say and I hope we can have this legislation passed as
quickly as possible. Canadians want it.
The Acting Speaker (Mr. Kilger): We will now move to the
next stage of debate in which members will be entitled to
20-minute speeches subject to 10 minutes of questions or
comments.
Mr. John Maloney (Erie, Lib.): Mr. Speaker, I am very pleased
to rise this morning on Bill C-93, an act to amend the Cultural
Property Export and Import Act, the Income Tax Act and the Tax
Court of Canada Act.
The Cultural Property Export and Import Act came into force on
September 6, 1977 together with certain complementary
amendments to the Income Tax Act. The purpose was to preserve in
Canada significant examples of Canadian heritage through the use
of a system of export controls, tax incentives for private
individuals who donate or sell cultural objects to public
institutions, and assistance to institutions in purchasing cultural
objects under certain circumstances. Bill C-93 would affect only
the use of tax incentives. It is an amendment to the original act.
(1155)
The legislation will establish an appeal of decisions of the
Canadian Cultural Property Export Review Board to the Tax Court
of Canada. This bill is being sponsored by the Minister of Canadian
Heritage and it is his responsibility through the Department of
Canadian Heritage to develop, implement and promote cultural
policies that will enable Canadian creators to flourish and Canadian
consumers to enjoy and benefit from a wide variety of cultural
products.
The federal government clearly has a role in the development of
policies and programs designed to encourage the production and
preservation of Canadian cultural materials.
In the area of heritage policies and programs the Department of
Canadian Heritage provides support and assistance to museums
across the country while at the same time ensuring that our national
institutions, including the National Archives, the National Gallery,
the Canadian Museum of Civilization, the Museum of Nature, the
Museum of Science and Technology and the National Library,
function in an environment conducive to giving Canadians
maximum access to our cultural heritage.
Culture is fluid, always changing and must not be looked on as
something rigid or something around which barriers or parameters
can be built. Culture is diverse. Customs that may seem strange to
one culture will often be part of the daily life of another.
It is for these reasons that it is important these cultures are
reflected in the collections of our museums so that others will be
exposed to them, will learn from them and will in turn understand
them.
The Cultural Property Export and Import Act already serves as a
vital instrument to protect Canada's diverse cultural heritage by
building strong public collections. Bill C-93 will serve to
strengthen this legislation and will help to ensure the history of all
Canadians is preserved for future generations.
15744
The amendments contained in Bill C-93 should not be reviewed
in isolation but rather as part of a comprehensive policy for
preserving our heritage. Historic sites, parks, museums,
monuments and historic buildings are all symbols of what makes us
unique as Canadians. Their preservation is essential as both
reminders of the past and sign posts for where we are going in the
future.
Part of the greatness of our history and our heritage rests with
not only the deeds of past generations but with national treasures,
the artefacts, works of art and personal objects they created. By
preserving and displaying these objects in museums the past can
continue to live in the present.
The influence of American television, movies and printed
materials can blur the distinction between Canadians and
Americans and cause us to forget the great achievements of
previous generations of Canadians. The preservation of our cultural
property and museums, archives and libraries ensures the
continuation of a distinct Canadian identity.
According to the Canadian Museums Association there are over
2,000 museums in Canada. These museums range from small,
seasonal, one person operations to medium size facilities, as we
have in several communities in my riding of Erie, to great urban
museums such as the Canadian Museum of Civilization, the Art
Gallery of Ontario, the Glenbow Museum and the Montreal
Museum of Fine Arts.
All of these museums enjoy national and international
reputations because of one reason, their collections. Great
collections do not occur by accident but instead develop from
careful nurturing and the generosity of donors and benefactors who
believe in the importance of preserving Canada's patrimony for
future generations.
Critics of Bill C-93 like to say tax incentives for donations of
cultural property are tax loopholes for the rich. In saying that they
are ignoring the rigorous standards museums, archives and
libraries apply to get at these acquisitions. Our cultural institutions
do not frivolously accept people's junk and offer them tax
incentives. If that were the case the contents of my garage would
make me a rich man. On the contrary, they make conscientious
professional judgment about what objects or collections are worthy
of certification because they are, in the words of the act, of
outstanding significance and national importance.
(1200 )
I mentioned earlier that there are over 2,000 museums in
Canada. To be eligible to apply to have objects certified as cultural
property and therefore made eligible for a tax credit, a gift must be
made to an institution that has been designated under the act. But
not just any organization that operates a museum or calls itself a
museum is eligible to be designated. I am informed that there are
only approximately 300 designated institutions in all of Canada.
Only a fraction of those 2,000 museums in Canada are even eligible
to apply to receive the tax benefits offered by the legislation. That
small number of designated institutions is an indication of one of
the safeguards that was built into the original legislation and is
further enhanced in the bill now before the House.
To be designated a museum, archive or library, it must be a
non-profit corporation and have as its principal activity the
acquisition and preservation of cultural property. It must also have
a collection that interprets and displays to the public. It must have a
professional staff and it must be open to the public on a regular
basis. This means that before an institution is even able to apply to
obtain a tax credit for an object that it wishes to bring into its
collection, the institution must demonstrate that it has the ability to
preserve that object in perpetuity. The institution must then apply
to have the object certified as a cultural property by the Canadian
Cultural Property Export Review Board.
Again, the tax credit is not automatic just because a museum or
other institution is designated and wishes to add an object to its
collection. It must be demonstrated that the object is of outstanding
significance and national importance and that it fits within the
acquisition mandate of the institution. After that, arm's length
appraisals for the fair market value of the object must be obtained.
These are provided by evaluation experts who have no association
with either the recipient institution or the person donating the
object. Again there is a safeguard in the system.
The appraisals are reviewed by the Canadian Cultural Property
Export Review Board and it determines the fair market value for
income tax purposes. The review board is composed of experts in
all aspects of cultural property: museum personnel who are
knowledgeable about its significance and the means to preserve it
and dealers and collectors who are active in the marketplace and
know the prices at which objects regularly sell.
Establishing the fair market value of cultural property or any
other commodity is more of an art than a science, and it is
inevitable that disagreements will occur. In 1987 in the Ontario
high court a judge wrote in his ruling that fair market value was a
notional or hypothetical concept, an opinion arrived at by evidence,
assumptions, calculations and judgment in the absence of an actual
transaction. In such a situation it is obvious why there may be
disagreement about the fair market value of a particular object.
Responsibility of the review board to determine fair market
value can at times be very onerous, particularly when dealing with
unique objects and donations to a wide range of institutions. The
experts on the review board recognize this. That is why they fully
support the two appeal processes established by the bill. They
15745
understand that it is important for donors of cultural property and
recipient institutions to be able to request a thorough review of
their decisions through the redetermination process and, if
necessary, through an appeal to the tax courts of Canada.
The present law enables the review board to redetermine the fair
market value of an object if additional information becomes
available. To date this system has worked well, but there have also
been cases when donors have felt that further consideration of the
information that had been provided was required or that additional
emphasis on salient facts was needed. This was not possible if a
redetermination could only take place when additional information
had been provided.
Bill C-93 removes the requirement that additional information
be provided before a redetermination takes place. This means that
the review board will be able to revisit its decision at the request of
a donor or recipient institution with or without the provision of
additional information.
We believe it will be difficult to design a first level of appeal that
is fairer or more equitable than this one.
(1205 )
If after a redetermination the differences between a donor and
the review board still have not been solved, the donor must
complete the gift, if he has not already done so, and may then
appeal the determination of fair market value to the Tax Court of
Canada. This is an important point, because at the time the appeal
is made to the Tax Court of Canada the donor will have made an
irrevocable gift to the museum, archive or library. He will no
longer be the owner of the object. The cultural heritage of Canada
will therefore have been enriched regardless of the tax court
decision about the object's value.
What will be at issue in an appeal to the tax court will be the fair
market value of the object for income tax purposes. The question of
outstanding significance and national importance will have been
resolved, and the donor will have made the gift in the knowledge
that the fair market value of the donation remains an issue.
Again, those concerned about fairness in the tax system and
whether rich people are benefiting from a tax loophole will
appreciate that the process, by its very nature, guarantees that the
tax system is fair and that it will not be abused.
If donors are prepared to make a gift with the full knowledge that
they may receive a tax credit for less than they believe an object is
actually worth, they are clearly not being motivated by money or
profit when they make a donation. If that is their only concern they
can withdraw the gift, sell it on the open market, and no tax credit
will be given. This system is a win for all involved.
The amendments in Bill C-93 not only reinstate a previous right
of appeal but improve on it by establishing two processes that will
permit an open dialogue about the fair market value of an object.
We believe the ability to discuss fair market value, a concept that
involves evidence, assumptions, knowledge and the exercise of
judgment, will lead to better appraisals provided to the review
board when it makes its initial determinations. This in turn will
lead to a limited number of requests for redeterminations and in all
likelihood to only a few appeals to the tax court.
Bill C-93 is being strongly supported by museums, archives and
libraries, by collectors and donors of cultural property, by dealers
and appraisers, and by the review board. I urge all members of the
House to support the bill. The amendments are technical in nature
and respond to strong concerns expressed by the heritage
community. Their passage into law should be seen as part of the
ongoing commitment of the Government of Canada to ensure the
preservation of Canada's cultural heritage. This will benefit the
culture and heritage of my riding of Erie. This will benefit the
culture and heritage of the finest country in the world, Canada.
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, I rise
to make a comment on this important piece of legislation, Bill
C-93, an act to amend the Cultural Property Export and Import Act,
the Income Tax Act and the Tax Court of Canada Act.
I congratulate the member for Erie for laying out the provisions
of Bill C-93. I want to explain to Canadians in very straightforward
language what those provisions mean. It is extremely important for
Canadians to note, as was expressed by the member for Erie and by
the previous speaker, the member for Winnipeg St. James, that this
is not a bill that is directed, as Reform would paint it, to somehow
provide benefit to the rich. To demonstrate that, I did a little
calculation of what the implications might be.
If taxpayers were interested in making a contribution of a book,
an artefact, et cetera, to a museum, library, et cetera, and the
contribution were deemed to have a fair market value of $1,000,
assuming their original cost of acquiring it many years ago may
have been $100, under the current tax act if they were to sell that
artefact to a museum they would realize a capital gain of $900. Half
that capital gain is taxable. Reform is saying this is a rich man's
scheme, so let us assume the highest marginal rate, in which case
they would pay tax of $225 on the taxable capital gain. That means
that the net cash to the owner of the artefact would be $725 on the
sale to the museum of the $1,000 artefact.
15746
(1210)
The legislation provides a tax credit to the donor of the artefact.
If that artefact is shown to have a fair market value of $1,000, the
tax credit would be 17 per cent on the first $200 and 29 per cent on
the balance. In total, the tax credit or the reduction of taxes
otherwise payable would be some $266.
It really comes down to a matter of cash. A straight sale would
generate $775 to the taxpayer who sold the artefact to a museum. If
a tax credit system is used, the donor only gets $266. In that regard
it is clear that those who are prepared to donate to our cultural and
heritage institutions assets of value that have been determined by a
rigorous process of review and assessment would be receiving in
real cash terms substantially less than if they had sold them
directly.
If we are talking about true value, as the hon. member for
Winnipeg St. James spoke of so well, since our cultural institutions
have very little or no real cash to acquire assets this is really the
only way to allow them to acquire those assets. It allows those
institutions, the libraries, the archives, the galleries, et cetera, to
remain current in terms of the cultural and heritage artefacts and
documents that are available. It allows them to be competitive. It
allows them, as the hon. member for Winnipeg St. James indicated,
to continue to attract Canadians and visitors from around the world
to visit our cultural and heritage institutions.
It should be clear to Canadians that in Bill C-93 the mechanism
of a tax credit allows our Canadian institutions to acquire these
items at substantially less cost than if they had to buy them at their
fair market value. Considering also the tourism value that is
generated through our cultural and heritage institutions, there is no
question that the bill provides a very advantageous arrangement for
all Canadians.
The hon. member for Erie might want to amplify or comment on
the benefit to Canada that will be generated as a result of the
provisions of Bill C-93.
Mr. Maloney: Mr. Speaker, my colleague from Mississauga
South put forward in a very clear and concise manner the benefits
of the tax credit to the cultural industry, as opposed to the loss of
taxes. The difference is minuscule.
When I bring my family to Ottawa there is nothing better than
visiting the various museums. It is an interesting way to spend a
day. Many people come to Ottawa to do that. They should be
encouraged to do it, but not only in Ottawa. In my community of
Erie there are small museums which are expanding. It certainly
provides enjoyment for all people, not only in the riding of Erie but
for the tourists who visit us.
The bill can only amplify and increase the benefits we must
ensure our cultural community has, not only for ourselves but for
future generations.
I had a conversation with the German ambassador to Canada last
week. I was asking him about the reunification of East and West
Germany. He said that one of the concerns they have is bringing
their art objects back from countries such as Russia, where they
were carted away during the war.
(1215 )
Preservation of heritage and culture is important to all countries
throughout the world. We must not let it happen in our country
where we just cut it off as the Reform Party has suggested. It will
flounder and die.
Mr. John Loney (Edmonton North, Lib.): Mr. Speaker, I am
pleased to have the opportunity again to speak in support of Bill
C-93, an act to amend the Cultural Property Export and Import Act,
the Income Tax Act and the Tax Court of Canada Act.
As members will recall, the purpose of the bill is to establish an
appeal of decisions of the Canadian Cultural Property Export
Review Board to the Tax Court of Canada. Members will also
recall that this is the reinstatement of a right that had previously
existed. I repeat that it is the reinstatement of a right that had
previously existed but was lost when the responsibility for
determining the fair market value of certified cultural property was
transferred from Revenue Canada to the review board.
Some people have incorrectly called tax incentives for donations
to museums, art galleries, archives and libraries a tax loophole for
the rich. While some wealthy people do benefit from these credits,
there are also many people who donate important objects of
Canadiana that have been in their families for generations.
According to the Canadian Museums Association, over 60
million people visited museums in Canada last year. As part of
their experience of visiting a museum, these 60 million people
were able to view objects that are now in public collections because
of the tax credits available for donations. Without these incentives,
many of these donations would not have been made and the objects
would have instead been exported and sold to museums in other
countries.
If Canadians and visitors to Canada are not able to learn about
our past by visiting museums, the damage to our history and to our
identity as Canadians will be immeasurable. Museums, art
galleries, archives and libraries are not just warehouses full of
objects that never see the light of day. On the contrary, they are
lively centres of education and learning where one learns about the
past through objects that have been preserved for the present and
future generations.
The idea was perhaps most eloquently stated by Sir Arthur
Doughty, Dominion Archivist of Canada from 1904 to 1935, when
he wrote about archival documents: ``Of all the nation's assets,
15747
archives are the most precious. They are the gift of one generation
to another. The extent of our care of them marks the extent of our
civilization''. These words apply equally to the holdings of
museums, art galleries and libraries.
Tax incentives that offer partial financial compensation to a
donor of cultural property are a small price to pay for the
preservation of our national heritage. Through these tax credits, the
Government of Canada is able to assist institutions to continue to
acquire and preserve significant cultural objects when acquisition
budgets are shrinking or non-existent.
It is also important to consider these amendments in the tradition
of tax incentives as a means to encourage charitable donations.
Income tax exemptions for donations to educational institutions,
hospitals and churches have been included in the Income Tax Act
since its passage in 1916.
In 1930 these exemptions were extended to registered charities.
Tax exemptions for donations to educational and charitable
institutions including museums, archives and libraries have
therefore been a fundamental principle of the tax policy since
income tax was first introduced.
(1220 )
In recent years, the Income Tax Act has been amended so that tax
credits now extend to gifts to non-profit organizations that provide
housing for senior citizens, Canadian amateur athletic associations,
Canadian municipalities, the United Nations and its agencies, and
registered national art service organizations. As this list indicates,
tax credits are part of an overall fiscal strategy to encourage
donations to a wide range of organizations.
Institutions designated pursuant to the Cultural Property Export
and Import Act, that is institutions that have demonstrated they
meet legal and professional requirements for the preservation of
our cultural property, are both educational institutions and
registered charities. Tax credits for donations to these institutions
are therefore not new but instead are consistent with the history of
giving in Canada.
It has also been suggested that tax credits for donations of
cultural property are a waste of taxpayers' money because donors
are able to get rid of works of questionable importance. This
suggestion demonstrates a lack of understanding of the collecting
practices of Canada's custodial institutions and of the
professionalism of Canadian curators. It also implies that every
object acquired by a museum, art gallery, archive or library is
automatically certified as a cultural property for income tax
purposes.
I would like to address each of these points in order, as an
understanding of these issues is key to understanding the
importance of the tax credits available for gifts of cultural property.
First, with respect to the acquisition mandates and practices of
Canadian custodial institutions, it must be understood that these
institutions are established with a specific mandate to acquire and
preserve defined types of objects. Museum curators must therefore
carefully select which objects they are going to acquire and must be
able to demonstrate how they fit into this acquisition mandate.
They do not accept just anything or everything. In fact, I have been
told by senior museum curators that they turn down as many offers
of gifts as they accept.
Second, museums, archives and libraries are staffed by
professional personnel who are acknowledged experts in their
subject areas. They know what is culturally significant and what is
not. They know what should be preserved and what sometimes
unfortunately, must be allowed to perish or be exported. They are
also keenly aware that their institutions cannot preserve every
example of even important cultural objects. In short, professional
judgment is applied when decisions are being made about what
objects are worthy of being added to the permanent collection.
Third, there seems to be an assumption that when an object is
chosen for inclusion in a public collection it is somehow
automatically certified as cultural property and therefore is eligible
for a tax credit. Again, this is a fallacy. Just as professional
judgment is applied to what will be required, it is also applied when
deciding if an application for certification as cultural property for
income tax purposes should be submitted. In short, only a fraction
of the objects that are acquired in any given year receive a tax
credit.
To be eligible for certification, an object or a collection must
satisfy the criteria of outstanding significance and national
importance found in section 11(1) of the Cultural Property Export
and Import Act, which states:
(a) whether that object is of outstanding significance by reason of its close
association with Canadian history or national life, its aesthetic qualities, or its
value in the study of the arts or sciences; and
(b) whether the object is of such a degree of national importance that its loss to
Canada would significantly diminish the national heritage.
It is clear from these criteria that only truly significant objects
are eligible for certification for income tax purposes. The decision
is not made arbitrarily but rather according to specific legislative
requirements that are applied uniformly to all objects that are
considered for certification by the review board. It is also worth
noting that the decision as to whether an object is of outstanding
significance and national importance is made by a board composed
of people who are active in the cultural community.
(1225)
The Cultural Property Export and Import Act requires that
review boards be comprised of people who work in custodial
institutions, people who buy and sell cultural property, or people
15748
who actively collect objects that are important to Canada's cultural
heritage. The review board is therefore a board of experts who are
knowledgeable about both the significant and fair market value of
cultural property.
When the previous government decided to transfer the
responsibility for determining the fair market value of cultural
property from Revenue Canada to the Canadian Cultural Property
Export Review Board it did so without consultation. Members of
the review board were not consulted. Dealers and collectors of art
and antiques were not consulted. Custodial institutions were not
consulted.
In the course of implementing its new mandate, the review board
sometimes lowered the proposed fair market value of cultural
property. While this was inevitable and had also been the practice
at Revenue Canada, the result was that some donors felt that their
donations had been undervalued. When they attempted to appeal
the board's determination, it was discovered that the right of appeal
that had existed under the Income Tax Act had been lost.
In response to the concerns raised, consultations then took place
with members of the review board, dealers, donors and
representatives of the institutions that collect cultural property.
Their response was unanimous: The right to appeal review board
decisions was necessary to ensure that the system continued to
work fairly.
Bill C-93 is a manifestation of the will of the people. It is not
something that was dreamed up by this government, nor is it an
expansion of existing tax incentives for the donation of cultural
property. It is instead the reinstatement of a right that was lost in
1991. It is also a tangible demonstration that this government
listens to the people of Canada and is prepared to move quickly to
correct imbalances and inequities in the tax system.
There has been much talk from members of the third party about
fairness in the tax system yet they oppose a bill that is just about
that, fairness. The current system with the lack of an appeal of
determination of fair market value has been characterized by many
people as being unfair. The establishment of not one but two appeal
processes will restore fairness to the system. It will ensure that if
donors believe they have a legitimate dispute with the review board
they will be able to pursue it first with the review board and, if
necessary, in the tax courts.
Donations to museums, archives and libraries involve a
triangular relationship between the donor, the recipient institution
and when certification as cultural property is required, between the
donor and the institution on one hand and the Canadian Cultural
Property Export Review Board on the other. This relationship is
one of mutual respect and co-operation in the preservation of
Canada's heritage in movable cultural property. This relationship
must also include a mechanism for dispute resolution if and when
the participants cannot agree about the value of the gift.
The appeal process of determinations by the Canadian Cultural
Property Export Review Board proposed in Bill C-93 will permit
any donor of cultural property who disagrees with a review board
determination the opportunity to pursue this first with the board
and if necessary ultimately with the Tax Court of Canada.
The amendments proposed in the bill should be viewed as a
guarantee of the donor's right to natural justice through an appeal
to the judicial system if that is warranted. These amendments
should also be viewed as a reinstatement of a right of appeal that
was lost in 1991 when the responsibility for determining fair
market value was transferred to the review board.
(1230 )
We believe it is important that the decisions of government
boards and agencies be subject to appeal because even in the honest
exercise of judgment, differences of opinion can occur. An open
and transparent process with respect to determinations by the
review board is essential and the right to pursue the matter in the
courts, if no other resolution can be found, is consistent with both
the Canadian legal system and the concept of natural justice.
As Canadians we have the privilege to live in a country with
many cultures. The material history, the cultural property of many
diverse groups that make up Canadian society must continue to be
preserved for the benefit of all Canadians. I believe the
amendments contained in Bill C-93 will help to ensure this happens
and will only improve the already unique Canadian approach to
protecting cultural property.
In conclusion, I would urge the support of the House for Bill
C-93.
[Translation]
Mr. Dan McTeague (Ontario, Lib.): Mr. Speaker, I listened
carefully to the comments by my dear colleague, the member for
Edmonton North.
[English]
This is a very innovative bill. I have had a chance to review both
the comments and some of the supporting documentation provided
by the minister of heritage.
I am interested in the comments that my colleague from
Edmonton made just a moment ago. In Ontario riding we have
many museums and a number of people have donated artefacts over
the years. It may come as a surprise to the House that Ontario
riding was the riding and the county after which the rest of the
province was named in 1867. Previous to that it was Upper Canada
and Canada East.
I have a very simple question for the member. Perhaps he could
explain to the House some of the significant impacts the bill might
have in the area like Edmonton where I know there are many
people of various backgrounds who moved there over the years.
15749
[Translation]
Particularly the francophone community in that part of the country.
[English]
Mr. Loney: Mr. Speaker, in response to the hon. member's
question, Edmonton and northern Alberta in particular are areas
where the descendants of many cultural and ethnic groups coming
from many different countries settled, particularly as he pointed
out the francophone community.
The amendments in the bill will give the descendants of the
people who settled the west, particularly after 1905 when it became
a province, the opportunity to pass on to the province, which is now
their home province, some of things that their parents,
grandparents and possibly great grandparents brought not only
from eastern Canada and other parts of Canada when they settled
that part of the country but also from their countries of origin.
Mr. John O'Reilly (Victoria-Haliburton, Lib.): Mr. Speaker,
I am pleased to speak in support of Bill C-93, an act to amend the
Cultural Property Export and Import Act, the Income Tax Act and
the Tax Court of Canada Act.
Throughout Canada publicly funded organizations and
institutions are being forced to re-evaluate their mandates, their
operating procedures and their very reasons for being with
increasing costs and reduced levels of financial support from both
the public and the private sectors. The existence of many of these
institutions is being debated. In my riding of Victoria-Haliburton
it is a great worry for many cultural organizations.
The cultural sector in Canada has developed through a
combination of public funding, private funding and volunteerism.
In order to meet the targets to reduce the deficit the government
believes all institutions that receive public funds must become
more self-sufficient.
However, government is not going to just cut them adrift. Instead
it will develop structural measures to assist them through this
transition period. Tax credits, whether to assist in the development
of a distinctively Canadian film industry or for the donation of
cultural property to designated institutions such as those available
through the Cultural Property Export and Import Act, are the one
way the government is able to help through that transition time. It
must be remembered that heritage institutions and related activities
also contribute to the economy of Canada. The impact of heritage
institutions and their activities are increasingly having beneficial,
economic impacts on communities across Canada. A recent Nova
Scotia study, for example, noted that the economic impact of the
six major museums in that province significantly exceeded the
direct expenditures associated with the operating of the facilities.
(1235)
Similarly, data available from a series of studies conducted in
Alberta show that spending by visitors to historic sites averaged
$50 million annually. These same studies have demonstrated that
museums such as the Tyrrell Museum in Drumheller are often the
top tourist attractions in a region.
Much of the activities of museums, archives and libraries also
support research, knowledge and public education. The research
conducted by the staff of these institutions often leads to seminal
discoveries and the effect of this can have impact in other areas
such as the production and dissemination of CD-ROMs and
publications.
Exhibitions also educate the public, create employment and
contribute to cultural tourism. Visitors who travel to other cities to
view exhibits, stay in hotels, eat in restaurants, shop, attend events,
take tours and spend money in a variety of sectors of the economy
because they travel to a city or town to visit a museum.
The recent exhibit at the Art Gallery of Ontario of impressionist
paintings from the Barnes collection, is an excellent example of
this and has provided concrete proof of the contribution cultural
institutions can make to the economy.
During the three and one half months this exhibit was on display
in Toronto, almost 600,000 people visited the Art Gallery of
Ontario specifically to see this exhibit. According to an economic
impact study that was conducted afterward, almost $75 million was
spent in the province of Ontario on trips or excursions that brought
these visitors to the exhibit. This $75 million expenditure created
ripple effects throughout Ontario's economy that resulted in the
production of $137 million in goods and services.
In addition to these impressive statistics, the Barnes exhibit
produced employment and the amount of taxes associated with this
event totalled almost $22 million for the municipal, provincial and
federal governments.
While these almost 600,000 visitors went to this cultural
institution to see an exhibition they also had the opportunity to
view works from the permanent collection of the Art Gallery of
Ontario. The same is true for visitors to any other museum, art
gallery, archives or library. Some of the works on display from the
permanent collection would undoubtedly have been acquired as a
result of the tax incentives offered by the Cultural Property Export
and Import Act contained in Bill C-93.
This represents another side of the economic impact of cultural
institutions. The idea that the foregone tax revenue that results
from a donation of certified cultural property is somehow lost
15750
money is simply not true. In the first place, the work of art or the
artefact that is being donated to an art gallery or a museum will
either have been with the donor's family for generations or it will
have been purchased by the donor at some point in the past and is
now being donated to a public collection.
If, in the case of a work of art, it was bought through a
commercial gallery or an auction house, an open market
transaction occurred. Money changed hands during that transaction
and taxes were paid to governments both in the form of sales tax
and income tax paid by the art dealer or the auction house.
Similarly, these objects, often of great cultural significance,
were purchased with after tax dollars, that is, with the disposable
income of the donor. It is important to remember that a donor of
cultural property is not reimbursed dollar for dollar for the fair
market value of the donation. Instead a donor receives a tax credit
equal to 17 per cent of the first $200 and 29 per cent of the fair
market value beyond that. Simple mathematics indicate that the tax
refund, the forgone revenue the donor receives is only a fraction of
the fair market value of the object.
If a person buys an object with after tax dollars, donates it to a
distinguished institution and then receives a tax credit for 29 per
cent of the fair market value of the object, it is difficult to see how
anyone can fault that individual. They will also have donated it to a
public institution where it becomes part of Canada's cultural
patrimony that is accessible to everyone.
(1240)
Members of the third party have objected to tax credits for
donations but they have not yet addressed the purpose and intent of
this bill. Tax credits are not the issue. In any event, I believe I have
adequately demonstrated that tax credits for donations provide an
incentive and a modest acknowledgement of a donor's generosity.
They do not, as stated earlier, even come close to reimbursing an
individual and in fact can contribute to significant revenue gains in
a variety of areas of the economy.
It is perhaps worthwhile reminding hon. members that the
purpose of this bill is to establish an appeal of decisions of the
Canadian Cultural Property Export Review Board to the Tax Court
of Canada. It establishes two types of appeal: the right of review of
a determination by the review board itself and then, if necessary,
the right to appeal to the Tax Court of Canada.
This need for the right of appeal is not new however but a
re-establishment of the right of appeal that was inadvertently lost in
1991 when the responsibility for determining fair market value was
transferred from Revenue Canada to the review board. There has
been concern that the right of appeal would simply add to the
backlog of cases to the tax court. We do not know if this will
happen but every effort has been made to ensure that it does not.
The redetermination process will allow the majority of
disagreements to be settled directly with the revenue board.
Is the possibility of adding a few more cases to the workload of
the tax court a reason to deny someone that right of appeal when
they disagree with a decision that directly affects them? Is this a
reason to open the reinstatement of right that was lost and now
denies some individuals natural justice through their inability to
appeal to the courts? I believe not.
It is also questionable if the reinstatement, and this must be
emphasized, of a right of appeal will lead to an increase in appeals
to the Tax Court of Canada. This right to appeal existed before
when the responsibility for fair market value resided with Revenue
Canada. Therefore, it seems reasonable to assume that the tax court
is in a position to resume this responsibility.
People from every province and territory have made donations to
institutions designated under the Cultural Property Export and
Import Act and people from around the world are now able to share
in the enjoyments of the works of art, archival collections, books
and artefacts that are preserved in public collections as a result.
These cultural institutions both preserve Canada's heritage in
movable cultural property and make a significant contribution to
the economy. Culture is not a frill enjoyed by only a few people but
a valuable economic activity as well. To ensure that it continues to
play this vital dual role, our museums, archives and libraries must
have vibrant collections that will both contribute to knowledge and
attract attention and visitors.
The tax incentives offered by the Cultural Property Export and
Import Act are an important means to ensure that the donations of
significant cultural property will continue. Without a right of
appeal, as contained in Bill C-93, some donors will feel that they
have no recourse if they disagree with a decision of the Canadian
Cultural Properties Export Review Board and they may not be
prepared to make a donation.
The appeal process will contribute to the preservation of
Canada's cultural heritage collections of international stature. Both
activities are important to Canada as a nation. I encourage all
members of the House to support Bill C-93.
Mr. Peter Milliken (Parliamentary Secretary to Leader of
the Government in the House of Commons, Lib.): Madam
Speaker, I have a question for the hon. member. I congratulate him
on a very able speech.
The member must know that at second reading of the bill the
members of the Reform Party voted against it. Some of us were
kind of surprised at that because the bill does something to promote
Canada's culture. It does quite a lot to promote Canada's culture I
would suggest, particularly the culture that is contained in
Canada's museums and art galleries.
15751
Does the hon. member agree with me that the Reform Party
policy on this matter is inappropriate and that Reform Party
members should be supporting the bill since they must recognize,
as we do, that culture is an extremely important part of Canada's
political, economic and social life?
(1245)
The culture represented by Canada's art galleries and museums
is a very significant part of our heritage.
Mr. O'Reilly: Madam Speaker, I thank the member for
Kingston and the Islands for his question. It is a very interesting
one. I could not imagine not being in support of the bill.
Museums, art galleries, archives and libraries in every province
and territory benefit through the receipt of donations of cultural
property as a result of these tax credits.
I recently sent a collection of postcards, with no value or tax
incentive for me, that I received dealing with western history,
particularly in the province of Manitoba. It was sent in the 1800s to
my riding of Victoria-Haliburton.
I came across it in a collection and managed to pick it up for very
little and I donated it to the Canadian Heritage Museum in
Manitoba. It sent me a thank you. I should have asked for a receipt
but I did not feel the collection had a lot of value.
The collection significantly added to the heritage, the culture and
preservation of culture in western Canada. It is very important for
an eastern Ontario member to be concerned with western Canada
and with the culture of western Canada, with the preservation of the
culture in western Canada.
I have a lot of trouble understanding why the Reform Party
would not support such a bill. I know quite specifically that the
areas those members represent have gained from Liberal members
such as me, the member for Kingston and the Islands and the
member for London-Middlesex.
Somewhere along the line we have donated without any tax
receipt. The collection I donated was postcards, but it was
invaluable. I should have had it appraised. I felt it should be in a
museum and was something people should be able to enjoy. It is
preserved forever instead of being thrown in the garbage or kept in
some personal collection where it is not seen.
I also collect guns, much to the dismay of a number of people
here. The gun bill is still in the other place. I have a gun that was
carried by an army doctor in the first world war. I guess we would
call it an oxymoron that doctors were issued handguns in the first
world war. I have had recent discussions with the museum in
Lindsay to donate that gun. If I am lucky enough to get a tax receipt
for it, that would be fair. It is the only one of its kind registered in
Canada and therefore should be preserved so that the public can see
it.
Even going into the law and order issues Reform Party members
seem to stand for, I cannot imagine why they would be in any kind
of discourse with the bill. It is necessary. It will help preserve our
culture and our heritage, a very important part of the fibre of our
country.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, I am happy to speak in support of
Bill C-93, an act to amend the Cultural Property Export and Import
Act, the Income Tax Act and the Tax Court of Canada Act.
The bill, as previous members mentioned, establishes two
processes. The first gives the donor or the recipient institution the
right to request that the review board reconsider its initial
determination of fair market value.
If after receiving a redetermination from the board the donor is
still not satisfied, he or she may take the second step of appealing
the board's decision to the Tax Court of Canada. The fair market
value of cultural property certified by the review board is eligible
as a tax credit of 17 per cent on the first $200 and 29 per cent on the
balance over $200. The donor can claim the fair market value of the
gift up to the total amount of his or her net income and there is no
tax payable on any capital gain resulting from this gift.
(1250)
This is a technical bill, as was mentioned by colleagues earlier.
The objective is the preservation of Canada's cultural heritage.
I understand from a tax policy point of view where Reform
members are coming from. They have a system of tax reform not
unlike my own approach, a single tax system in which they want to
flush out from the entire tax act of Canada all the preferences given
in the various sectors.
However, until we as a government get involved in total tax
reform we cannot deprive sectors of our economy vital to the
economic soundness of the country the opportunity of growth and
participation in the economy. This is where the Reform Party is
short sighted.
If we say to the artists, the cultural community, that we do not
want to give them the opportunity to participate in the tax act
through tax credits, we cannot say no to them without having the
same approach for the energy sector, the forestry sector, the
tourism sector and so on. I am philosophically supportive of where
Reform members are coming from but they cannot oppose only one
sector.
Until we get a commitment from the House for total tax reform
we have to continue to do these tax credits on a sector by sector
15752
basis. Otherwise we will be punishing one community while other
communities get a free ride. That is wrong.
Do we want to punish the cultural community and let the very
wealthy people have the ability to send their kids to ivy league
universities where they get tax credits or estate tax redemptions of
up to $600,000 on property in the United States? It does not work.
I want to come at the bill from another point of view, what
cultural properties contribute to the tourism sector. I will give a
specific example of a museum in Toronto which I know the
Speaker is very familiar with, Canada's Hockey Hall of Fame. This
is an example of a museum that celebrates the cultural soul of the
country, hockey.
About three weeks ago I had the opportunity of going through
the Hockey Hall of Fame. I was absolutely blown away by the
historical relics on display, with the feeling one gets as one goes
through the hall of fame and looks at the history of hockey, its
contribution in terms of job creation in hockey, the celebration of
those magical moments in great Stanley Cup goals and so on. One
walks out of that building with a sense of pride which I cannot
describe on the floor of the House.
(1255)
There is another feature to this museum on which we are not
dwelling. It is relevant to all museums, all cultural property
establishments across Canada. These are tourism assets. The
spinoff we bring to our community when we celebrate and package
our cultural properties is phenomenal. What industries are affected
by these tourism assets? We are talking about hotels and
restaurants. We are talking about replicas of these assets
manufactured in small craft shops. These cultural property assets
and historic museums exist right across the country.
I have been glancing through ``On the Road to Quebec'', a guide
to the sightseeing attractions in Quebec. We are on the eve of a very
important decision in our country. As I was going through this
guide I could not help but feel emotional about some of the great
cultural and historic sights and assets in Quebec. There is a litany
of sights, tourist attractions and properties that celebrate the great
history and the great contributions Quebec has made to Canada.
Just going through those assets in Quebec right now alone makes
the bill worthy of merit.
I believe many Canadians right now are listening to these
debates in the House because we are going through a very fragile
time in our country's history. Many members are receiving calls in
their offices by people concerned about the referendum on
Monday. This is no secret. There have been many newscasts on
television and radio and many newspaper articles stating that
things are very fragile right now.
To Canadians not living in Quebec, if ever there was a time when
they could celebrate the great cultural assets in Quebec, try to
travel this weekend to Quebec to visit and celebrate some of these
great Canadian cultural assets all over Quebec, especially in the
outlying regions. We have great centres where our history and
cultural assets are celebrated. This would be the weekend for
Canadians, if they could find the time, to go and visit these centres,
these communities and these small hamlets. While they are there
they can go to the local manor, the local inn, stay for the weekend,
talk to the community and express to them our hope and our wish
that on Monday they vote for Canada.
(1300)
If a lot of Canadians did something like that, they would be
making a great contribution in making themselves feel comfortable
in another region of their country, and probably the Quebecers
would welcome it. It has been my experience that the hospitality
that Quebecers show, especially to people from outside their
province, is first class-the restaurants, the inns, all the activities
that go on in Quebec.
I want to reflect for a second on the experience you and I have
both had, Mr. Speaker, as fathers whose sons played in the Quebec
pee-wee tournament, another great celebration we have in our
country. Young boys from all across Canada go to Quebec City
every February, a majority of them unilingual English, and play in
the Quebec pee-wee tournament. One of the unique features of that
Quebec pee-wee tournament is the fact that each and every member
of the teams from across Canada lives with a family in a home in
Quebec City.
We both know, Mr. Speaker, that there is a very special feeling, a
very special emotional attachment that stays with those young men
when they finish that tournament and come home to their
communities right across Canada. This tournament, which has been
going on for almost 80 years now, has been one of the unique
experiences young boys celebrate. It is a substantial and concrete
example of hockey as a cultural instrument pulling people together
in the country.
I have absolutely no difficulty in supporting the bill before the
House today. If our culture is strong, if our culture is celebrated in
every aspect, our ability to galvanize and stay as a nation increases.
In my mind, over the last few years we have had too little
celebration, too little promotion of our history, of our culture and
all those things that bind us as a nation.
As I mentioned the other day in the House, we have become so
preoccupied and so focused on deficit and debt reduction that we
are actually melting away some of the glue that has been holding us
together as a community and as a country. When we see cultural
instruments as just another expense and in the name of deficit and
debt we have to cut, we have missed the whole point.
15753
(1305 )
The celebration and support of culture is an investment in the
community. It is an investment not only in an economic sense but
also in a spiritual sense. If we were to spend more time celebrating
that aspect of our cultural heritage, we probably would not have
some of those parochial thought processes that seem to be so
apparent today taking over the agenda.
I repeat that I celebrate the bill. I support the bill. I appeal to all
Canadians who are looking for something to do this weekend to
travel to Quebec and look at the great Canadian cultural properties
that celebrate not just the heritage of Quebec but the heritage of
Canada. It is those kinds of discussions, one region to another, one
community to another, that ultimately will lead, I hope, to a great
victory for Canada on Monday.
The Acting Speaker (Mr. Kilger): That is a bit out of the norm,
but while I would not this day or any other day compromise the
integrity or impartiality of the Chair, I want to associate myself
with the member for Broadview-Greenwood, particularly his
memories of our young boys going to Quebec City for the Quebec
pee-wee hockey tournament. I thank him for including me in that
statement.
Ms. Roseanne Skoke (Central Nova, Lib.): Mr. Speaker, I rise
today to support and address Bill C-93, the legislation that
establishes an appeal for a decision of the Canadian Cultural
Property Export Review Board to the Tax Court of Canada.
The purpose of the bill is to amend the Cultural Property Export
and Import Act with consequential amendments to the Income Tax
Act and the Tax Court of Canada Act to establish an appeal of the
determinations by the Canadian Cultural Property Export Review
Board of the fair market value of certified cultural property.
In December 1991 the responsibility for determining the fair
market value of cultural property donated to designated Canadian
museums, art galleries, and libraries was transferred from Revenue
Canada Taxation to the review board. The review board assumed
this new responsibility at its meeting held in January 1992. No
provision for appeal of review board decisions was included in the
legislative amendments, despite the fact that the right of appeal had
existed when this responsibility was with Revenue Canada.
Donors and custodial institutions expressed serious concerns
about the lack of an appeal process. The Department of Canadian
Heritage, in co-operation with the review board, then undertook a
series of consultations within the community about the need for an
appeal process. As a result of these consultations it was agreed that
legislative amendments should be prepared to establish the right of
appeal to the Tax Court of Canada.
The bill establishes two processes. The first gives the donor or
recipient institution the right to request that the review board
reconsider its initial determination of fair market value. If after
receiving a redetermination from the board the donor is still not
satisfied, he or she may take the second step of appealing the
board's decision to the Tax Court of Canada.
It is appropriate that the bill is receiving third reading today,
October 24, because today marks the 50th anniversary of the
United Nations. It was 50 years ago today, within a few months of
the end of World War II, that the United Nations formally came
into being when its charter took effect. The United Nations has the
difficult mandate of maintaining international peace and easing
global suffering.
(1310)
We are also approaching the end of the United Nations world
decade for cultural development. Launched in 1988, this decade
will conclude at the end of 1997. The purpose of the world decade
for cultural development is to promote activities that enhance the
cultural components of development and undertake research and
pilot projects that focus on the relationship between culture and
development.
Through agencies such as UNESCO, the United Nations
Educational, Scientific and Cultural Organization, the UN also has
responsibility for literacy, education and contributions to scientific
and cultural development around the world.
Canada has played an active role in the work of both the United
Nations and UNESCO and is recognized internationally for the
work it has done to protect the cultural property of developing
nations. During the 1960s Mexico and Peru in particular, but many
other southern and central American countries as well, experienced
heavy losses of cultural property through illicit trafficking. Their
appeal to UNESCO for a method to stop this led in 1970 to the
UNESCO convention on the means of prohibiting and preventing
the illicit import, export and transfer of ownership of cultural
property. This convention, while it deals with measures to prevent
the import, export and illicit transfer of cultural objects, places the
onus on each country to develop their own measures to protect and
preserve their cultural heritage.
To join the international movement to protect cultural property
Canada passed the Cultural Property Export and Import Act in
September 1977. The purpose of the act is twofold: first, to ensure
the preservation in Canada of significant examples of the nation's
cultural, historic and scientific heritage; and, second, to protect in
Canada the legitimate interests of foreign states concerned with the
preservation of their cultural property.
These objectives are accomplished by the following features of
the act: first, the establishment of an export control list of defined
categories of cultural property, which restricts their export without
15754
a permit; second, the establishment of the Canadian Cultural
Property Export Review Board to review applications for export
permits and applications for the certification of cultural property
for income tax purposes; third, the establishment of income tax
incentives for gifts or sales of cultural property to designated
Canadian institutions; and, fourth, procedures for the recovery and
return of foreign cultural property that has been illegally exported
from its country of origin.
In 1978 Canada became a signatory to the 1970 UNESCO
convention on the means of prohibiting and preventing the illicit
export and transfer of ownership of cultural property. The
convention, which contains measures to prevent the illicit import,
export and transfer or ownership of cultural objects, places the
onus on each signatory country to develop its own legislation to
protect and preserve its cultural heritage and to establish measures
to facilitate the return of illegally exported cultural property to its
country of origin.
The Cultural Property Export and Import Act contains
provisions whereby it is a criminal offence to import into Canada
cultural property that has been illegally exported from a country
that is a signatory to an international cultural property agreement.
Protection of another country's heritage is not sufficient if we do
not protect our own. Canada therefore put into place export
controls to regulate the export of cultural property from Canada. It
is imperative that we discuss here today the control system. It
should be noted that any object that is more than 50 years old and
made by a person who is no longer living is subject to export
control. For such objects, a cultural property export permit must be
obtained before they can leave the country.
(1315 )
The Canadian cultural property export control list provides a
detailed description of the classes of objects that are subject to
control. It divides cultural property into seven categories or groups
of objects. The first is objects recovered from the soil or waters of
Canada. The second class is ethnographic arts. The third is military
objects. The fourth is decorative art. The fifth is fine art. Sixth is
scientific and technological objects. The seventh is books,
documents, photographs and sound recordings.
To apply for a cultural property export permit, the exporter
submits an application to a permit issuing officer who determines if
the object is included in the controlled list. If it is not, the permit is
issued forthwith. If it is included in the list, the permit issuing
officer refers the permit application to the appropriate expert
examiner.
The expert examiner must then determine if the object meets the
criteria of outstanding significance and national importance found
in section 11 of the act which reads as follows: ``The object is of
outstanding significance by reason of its close association with
Canadian history or national life, its aesthetic qualities or its value
in the study of the arts and sciences; and whether that object is of
such a degree of national importance that its loss to Canada would
significantly diminish the national heritage''.
It should be noted that if the expert examiner advises that the
permit not be issued, the permit officer advises the applicant
accordingly. The applicant either retains the object in Canada or
appeals the expert examiner's decision to the Canadian Cultural
Property Export Review Board.
The review board then hears the appeal and either overrules the
expert examiner or affirms his recommendation. If the review
board overrules the expert examiner, the permit is granted
immediately. If the board agrees with him, a delay period of
between two and six months is established.
There is an incentive system. The act establishes the Canadian
Cultural Property Export Review Board which consists of nine
members plus a chairman. It is composed of two representatives of
the public at large, including the chairman, and four members each
from the curatorial and dealer collector communities. As such, the
board is an independent body of individuals with a recognized
knowledge and interest in Canadian heritage.
The work that occupies most of the board's time is not export
control. The certification for income tax purposes of cultural
property donated to Canadian institutions is of primary concern.
At the time of passage of the Cultural Property Export and
Import Act, the Income Tax Act was amended to provide an
exemption from the payment of capital gains tax for gifts or sales
of certified cultural property. In addition, the value of objects or
collections that have been determined to be of outstanding
significance and national importance is eligible as a tax credit up to
100 per cent of net income instead of up to 20 per cent of net
income that may be claimed as an exemption for charitable
donations.
Prior to these amendments, capital gains tax was payable for
gifts in kind. Only federal and provincial government institutions
could offer tax credits up to 100 per cent of net income.
From 1977 to 1990 the review board had only an informal
advisory role in the determination of the fair market value of gifts
of cultural property. In 1990 the responsibility for determining the
fair market value of certified cultural property was transferred
from Revenue Canada Taxation to the review board. This was
confirmed by legislative amendments to both the Cultural Property
Export and Import Act and the Income Tax Act in 1991.
No provision was made for appealing determinations of the
review board. The right of appeal contained in the Income Tax Act
was then lost. The need for an appeal process was identified and
acknowledged in 1993. By establishing the right of appeal,
potential donors will be assured that if they are dissatisfied with the
15755
review board determination, they will have recourse to the Tax
Court of Canada.
With the agreement of the Tax Court of Canada, the appeal to the
tax court has been made retroactive to January 1992. That provides
all donors who have made a gift since the right to appeal was lost
and who wish to pursue an appeal with both the opportunity and the
legal right to do so.
(1320 )
Determinations of fair market value are now being made by the
members of the review board, people with professional expertise in
the various domains of cultural property who are also active
participants in the various marketplaces where it is sold. These
same people already experience an expertise in a quasi-judicial
capacity, that of hearing appeals when export permits have been
denied. It is only appropriate and sensible therefore that they
assume the additional responsibility as they are experts in the
subject matter with experience as an appeal board.
An open and transparent process both at the time the review
board determines and if necessary redetermines the fair market
value of cultural property is essential. The right to pursue the
matter in the courts if no other resolution can be found is consistent
with both the Canadian legal system and the concept of natural
justice.
As we celebrate the 50th anniversary of the United Nations, let
us remember that Bill C-93 is very much in the spirit of everything
the United Nations stands for. The Cultural Property Export and
Import Act has its philosophical roots in the activities of the United
Nations because it both protects Canada's heritage and allows
Canada to become a signatory to the 1970 convention.
Bill C-93 is about fairness and natural justice, two principles that
are fundamental to the United Nations. On this the 50th anniversary
of the United Nations, it is only appropriate that all members of this
House support this bill.
Mr. John Richardson (Perth-Wellington-Waterloo, Lib.):
Mr. Speaker, over the past few years a number of donors and
custodial institutions have felt uneasy about the arbitrary decision
making upon which the value of the goods donated to a museum or
an art gallery were executed.
In the mind of the member for Central Nova, are the protocol and
processes that will allow for due process and the laws of natural
justice to take place incorporated in the bill?
Ms. Skoke: Yes, Mr. Speaker. An open and transparent process
at the time the review board determines and if necessary
redetermines the fair market value of cultural property is essential
and the bill provides for that. The right to pursue the matter in the
courts if no other resolution can be found is consistent with both
our Canadian legal system and our concept of natural justice.
Ms. Susan Whelan (Parliamentary Secretary to Minister of
National Revenue, Lib.): Mr. Speaker, I would like the hon.
member to expand very briefly on cultural property and the
valuation and benefits to society in her area in particular. Could she
expand on the benefits they receive?
I agree with her wholeheartedly that reinstating the right of
appeal is necessary. I want to commend her for her comments
today.
Ms. Skoke: Mr. Speaker, cultural property valued at
approximately $60 million is donated to Canadian institutions each
year. In my riding we have the Nova Scotia Museum of Industry
which is a very new facility. It is one which is relying on cultural
property donations. We look forward to hearing from anyone in
Canada who wishes to make a contribution to our industry, science
and technology museum.
Mr. Paul Szabo (Mississauga South, Lib.): Mr. Speaker, I too
am pleased to have the opportunity to speak in support of Bill C-93,
an act to amend the Cultural Property Export and Import Act, the
Income Tax Act and the Tax Court of Canada Act.
I also thank my French teacher, Madame Paré, for allowing me
to interrupt my class to come to the House to speak on this
important bill. To Madame Paré I say:
[Translation]
I thank you for being patient with me.
(1325)
[English]
On Friday, October 20, the Ottawa Citizen carried a story with
the headline: ``Museums, historic sites become hot ticket''. The
story notes that museums and historic sites across Canada have
been attracting more visitors and even a little more money.
A Statistics Canada study also discovered that 12,000 full time
and almost 20,000 part time employees worked in heritage
institutions in 1992 and 1993. In addition to these paid employees,
over 54,000 people volunteered their time to work in these same
heritage institutions. These people are all working for one purpose
and that is to ensure that Canada's heritage is preserved and that it
is preserved in public institutions where it will be available for the
enjoyment of all Canadians.
Few collecting institutions today have any funds to purchase
objects for their collections. As a result, they must rely on
donations. The tax incentives available for donations to custodial
institutions that have demonstrated they meet professional
standards is one way in which the Government of Canada is able to
15756
provide assistance to ensure that their collections continue to
reflect Canada's heritage.
Donations to registered charities are eligible for tax credits,
although the total value of gifts to charity in any one year cannot
exceed 20 per cent of net income. Donations of cultural property
that have been found to be, in the words of the act, of outstanding
significance and national importance are eligible for a tax credit up
to 100 per cent of net income and are exempt from the payment of
capital gains tax.
That does not mean they receive a tax refund equivalent to the
fair market value of their donation. Non-refundable federal tax
credits are based on 17 per cent of the first $200 of value of the
donation and 29 per cent of any amount above that. When the
exemption from capital gains tax is added to this, the best possible
tax treatment a donor may receive is a refund equivalent to 50 per
cent of the fair market value of the object or collection they are
donating.
A donation to a museum means that a donor is donating both
significant cultural property and 50 per cent of the fair market
value to the institution. It would be more profitable to sell an object
in the open market than to donate it to a cultural institution. Tax
credits are a fiscal measure that provide an enticement and an
acknowledgement of the importance of the donation, but they are
not meant to represent financial compensation.
I will give a very brief example. I know that many Canadians
who are watching the debate really want to know whether or not
this is some sort of a scheme for rich Canadians, as the Reform
Party would like to characterize it.
If a taxpayer had an object of art with a fair market value
appraised at $1,000 and that object of art cost only $100 when it
was acquired many years ago and the taxpayer sold that object of
art to a museum for the $1,000 fair market value, it would generate
a $900 capital gain, half of which is taxable. On that capital gain,
even at the highest marginal rate, $225 in income tax would be
paid. That means the net proceeds to the donor would only be $775.
If we compare that to the tax treatment that is being afforded to
the donor under Bill C-93, the donation of the $1,000 artefact
would generate a tax credit of 17 per cent on the first $200, or $34,
and 29 per cent on the remaining $800, or $232. In total, the cash
value of the refund to the taxpayer would only be $266. That should
be compared to the $775 they would have received had they sold
the object outright.
In brief, what it really means is that the libraries, archives,
museums and other cultural and heritage institutions of Canada are
able to acquire for substantially less very important artefacts and
cultural and heritage items for Canada. It is much more than they
would be able to afford by paying the fair market value in cash.
(1330 )
Approximately 1,100 applications for certification for tax credits
are received annually with a total fair market value of
approximately $60 million Canadian. Because this is a tax credit it
results in foregone revenue of approximately $25 million to $30
million annually. However, when compared to other tax incentive
programs this is a very small amount of foregone revenue and has
an impact far beyond the dollar value of the cultural property that is
being preserved.
Much of the cultural property being donated because of these tax
incentives would otherwise be lost to Canada, as it would be
exported and sold on the international market. By keeping these
objects in Canada and in public collections they become part of
Canada's heritage.
Approximately 300 institutions in every province and territory
of Canada have their collections enriched each year because of the
existence of these tax credits. The Cultural Property Export and
Import Act therefore plays an important role in the development of
heritage collections in Canada. It encourages donations of
significant pieces of our patrimony to the people of Canada through
public collections and these donations are forever for our
enjoyment and for the enjoyment of our future generations.
The legislation was meant to promote private donations as a
means of indirect government support when acquisition funds
could not be sustained. Many Canadians are unaware of the
important role played by private collectors in the preservation of
our national heritage. Objects formerly from private collections
now enrich our public museums, just as the great museums of the
world have been supported by private individuals for centuries.
In Canada we have our own unique examples: the donation of Sir
William Van Horne to the Musée des beaux-arts de Montréal; the
Zacks bequest to the Art Gallery of Ontario in Toronto; the
collection of Lord Beaverbrook, now proudly displayed in the
Beaverbrook Art Gallery in Fredericton; Dr. Norman MacKenzie's
collection, which forms the basis of the collection of the
MacKenzie Art Gallery in Regina; the magnificent and diverse
collection of the Harvey family, which is now in the Glenbow
Museum in Calgary; and the generosity of the Koerner family to
the Museum of Anthropology in the University of British
Columbia.
These museums now house the collections of their benefactors
and founders. Some even owe their existence to these private
individuals who had a passion for collecting a strong sense of
Canada's history. Because of their generosity and their decision to
enrich our heritage these works are now preserved and will be
15757
appreciated by future generations of Canadians as they appear in
exhibitions and are made available for research purposes.
Government has a legitimate role to play in these transactions
and must facilitate the movement of cultural objects from the
private to the public sector by taking reasonable steps that will
encourage philanthropy.
Without the tax incentives offered by the Cultural Property
Export and Import Act, collectors would cease to make donations
to museums, archives and libraries and would instead sell their
collections to the international market.
There is a perception that it is only wealthy Canadians who have
objects or collections to donate to our museums, archives and
libraries and that only the wealthy benefit from the tax credits for
donations of cultural property. This is simply not true. It is not true
because of the reasons outlined by the hon. member for Erie, the
hon. member for Central Nova, the hon. member for Winnipeg St.
James and the hon. member for Broadview-Greenwood, all who
so eloquently spoke on behalf of this bill and on behalf of Canada's
cultural heritage.
As a result, museums in Canada, from the smallest local
historical association museum in rural Canada to the major
collecting institutions in Vancouver, Toronto and Montreal are the
product of a collective belief. The Cultural Property Export and
Import Act and the tax incentives it offers for donations nurtures
that belief and contributes to a shared vision of Canada.
In 1991 the Income Tax Act and the Cultural Property Export
and Import Act were amended so that the responsibility for
determining the fair market value of certified cultural property was
transferred from Revenue Canada Taxation to the Canadian
Cultural Property Export Review Board. Through an oversight the
right of appeal that had existed in the Income Tax Act was not
transferred at that time. As a result this right was inadvertently lost.
Bill C-93 will reinstate the right of appeal that existed until 1991.
That is what the bill does. It reinstates the right of appeal that
existed before 1991.
(1335)
It does not extend the existing tax benefits for donations of
cultural property nor does it make any fundamental changes in tax
policy. The appeal of determinations by the Canadian Cultural
Property Export Review Board proposed in Bill C-93 will permit
any donor of cultural property who disagrees with a review board
determination the opportunity to pursue this first with the board
and, if necessary, with the Tax Court of Canada.
The amendments proposed in the bill should also be viewed as a
guarantee of the donor's right through natural justice to an appeal
to the judicial system that it is warranted. The decision to transfer
the responsibility for determining fair market value to the review
board was made in haste and without consultation with the people
it affected the most, the recipient institutions and donors.
The government learned from the mistake of previous
government and has consulted widely with the donors, museums
professionals, dealers and members of the review board. During
this consultative process we learned that many collectors were
discouraged from making donations because they did not wish to
become involved in a process they had perceived to be unfair.
The museum community is very pleased with the approach that
has been taken with this bill and is convinced an appeal is
necessary to ensure that donors will continue to support their
institutions by making donations of cultural property.
The bill establishes two appeal processes, one that involves a
reconsideration of all the relevant information by the review board
and another that involves a formal, legal appeal to the tax court.
The bill goes even further to ensure fairness with the agreement of
the Tax Court of Canada. The appeal to the tax court is made
retroactive to January 1992. Every donor who has made a gift since
the right of appeal was lost and who wishes to pursue an appeal will
have both the opportunity and legal right to do so.
The amendments proposed in Bill C-93 are extremely important
because they offer a remedy to a situation that need not exist and
should not exist. The right of appeal is a fundamental right and the
bill proposes to re-establish a right that was lost through an
oversight. These are technical amendments but are critical to the
continued preservation of Canada's heritage.
That concludes my formal remarks on the bill. I am very happy
to stand in support of Bill C-93. I reiterate the rationale for the bill
which is the reason I am here speaking to the House. The debate
that has been going on, particularly by the opposition, the third
party, has tended to paint those who donate cultural and heritage
artefacts to our institutions as people who are doing something
wrong, people who are rich, people who are taking advantage of a
situation.
In the example I outlined to the House it is very clear that in
terms of cash in their pockets, those who have made that wonderful
gesture to contribute part of Canada's heritage to libraries, to
archives and to museums are doing it for much more than cash in
their pockets and for substantially less than they would otherwise
receive should they have sold those artefacts for fair market value.
I compliment the parliamentary secretary and the member for
Mississauga East for her excellent work on getting the bill through
the House. I know of nobody that is more fiercely loyal and
supportive of the Canadian cultural and heritage institutions. She
has demonstrated that with her work in the House and by her
extensive travel across the country promoting Canada.
15758
Mr. John Maloney (Erie, Lib.): Mr. Speaker, I have one brief
question for my friend from Mississauga South who was an
accountant in his former life.
The bill before us responds to the concerns of the artistic donor
and custodial community with respect to review board procedures
as well as to concerns that donations of cultural objects are
sometimes made for the purpose of tax avoidance. In his
experience as an accountant has he seen widespread use of the
legislation for the purpose of tax avoidance?
(1340)
Mr. Szabo: Mr. Speaker, I thank the hon. member for Erie for
his important question. As a chartered accountant, having operated
a practice for over 25 years, I must admit that I have not seen any
reports or cases come before the courts with regard to problems of
donations of cultural property.
The process outlined in the bill is a rigorous, independent one by
people who are in the business of cultural and heritage artefacts and
items. The process is meant to ensure fairness and equity in our tax
system for Canadians who wish to make donations of cultural and
heritage property. Because of that rigorous process there is no
question in my mind that the determination of the values for tax
purposes is fair and reasonable and represent fair values for all
Canadians.
Some members have described this process as a win, win
situation. It is win, win for all parties. Museums and other cultural
institutions will be able to acquire for the enhancement of their
collections important artefacts and objects of art for the enjoyment
of all Canadians at substantially lower values than they would have
to put out should they have to purchase those at fair market value.
That alone creates a situation of leverage. That leverage situation
means that we get much more for the dollar. Donors of cultural
property are not getting cash out of the deal. They are not getting,
whether it be directly or indirectly through taxes on the transaction,
more by the tax credit method. In fact, they are getting less. They
are getting less than they would otherwise.
It is fair to say that people who come forward and donate, and the
figure is some $60 million a year, are not doing it because they are
out to get something out of the system. They are, in fact, putting
back into the system much more. It is a tremendous expression on
behalf of Canadians who have been fortunate enough to acquire
assets and objects of art that they are prepared to contribute to
Canada, so that all Canadians can enjoy our wonderful heritage.
It is timely that we are talking about cultural and heritage
artefacts. No province could be more proud of its cultural heritage
and its contributions to Canada than the province of Quebec. At
this point, as a member and as a Canadian, I would congratulate it
for the wonderful contribution it has made to the Canadian culture
and heritage. It is an outstanding example of what we can do as
Canadians together. For that we should all be thankful.
Mr. John Richardson (Perth-Wellington-Waterloo, Lib.):
Mr. Speaker, I would like to ask a question of the hon. member, but
he has disappeared.
The nature of Canadians is to give and support institutions
within their communities, both at the lower level and to the senior
levels of the museum chain. A country is known by its culture, not
by its material aspects, and what it leaves behind for the world.
Little by little the artefacts have been gathered together by small
museums at the local level, the provincial level and the national
level.
(1345 )
Does the hon. member feel strongly that the bill will ensure that
those who give those valuable artefacts whether to museums or to
art galleries would be given fair compensation under the rules of
the Income Tax Act as the bill is presently written?
Mr. Szabo: I thank the member for the question and the
comment.
Fair compensation is a relative term. For some Canadians fair
compensation has to do with money. Bill C-93 provides for a tax
credit mechanism with regard to the treatment or the non-treatment
of capital gains. The donors are really getting only about 50 per
cent of the equivalent of the fair market value. The donors are not
getting in monetary terms fair compensation.
When $60 million worth of artefacts are donated to Canada it
must mean there are a lot of Canadians prepared to make those
contributions so that all Canadians can enjoy the cultural and
heritage artefacts we have.
Their compensation is knowing we live in the best country in the
world and that we want to share it with all Canadians and with all
who visit our great country.
Ms. Susan Whelan (Parliamentary Secretary to Minister of
National Revenue, Lib.): Mr. Speaker, today we are continuing to
debate the merits of the Cultural Property Export and Import Act.
When the act came into place in 1977 the time was ripe for
lengthy debate on the measures necessary so that the symbols of
our cultural heritage were not only recognized but preserved. In
1977, 10 years had already passed since Canada celebrated its
centennial and it was time to take a hard look at who we are as
Canadians, what we are as a country and consider what Canada
could possibly become in the next 100 years.
The Cultural Property Export and Import Act was brought into
force very much in keeping with the spirit of encouraging the
development of our nation not simply for nation's sake but as a
nation that can hold its own beside its neighbour to the south and
among its neighbours that make up the world; to encourage the
15759
development of a nation we call Canada, which peaks the interests
of other nations.
If we consider today is the future, 30 years into the next 100
years of our existence as a nation, where do we stand today? We
stand as a nation that can and does attract people from all over the
world either to visit this country or to invest in it. Canada as a
nation is respected around the world. Foreigners are impressed that
despite our geographical vastness we are holding strongly together.
Despite the diversity of our cultures we are keeping together.
Despite the disputes we have had and will continue to have we are
growing stronger together.
As we celebrate the 50th anniversary of the United Nations we in
Canada are celebrating our commitment to developing all of those
aspects integral to civilized nations.
Standing here today debating the merits of the Cultural Property
Export and Import Act makes us sound like cultural barbarians; to
think that we have to justify measures that have been in place for
almost 20 years, measures that confirm our commitment to work
with the United Nations to stimulate cultural growth, academic
excellence, scientific achievements, beauty and peace and
harmony.
How can we begin to presume that accomplishments and
achievements can take place in a vacuum where the means to create
awareness of progress are non-existent. Imagine our nation without
our museums, art galleries, archival institutions. Imagine our 2,000
museums without collections that live and breath and grow to
reflect who we are and how we are placed in the context of the rest
of the world.
(1350)
Imagine our nation without any symbols, without the pride our
people can take in these symbols and share with our neighbours.
Human nature is about interaction, linking history, the arts, science
and our personal impressions, and sharing these linkages with our
friends and colleagues so that we continue to learn, continue to
seek, continue to live and continue to exist.
Let me point out some examples of symbols of our national
heritage which thanks to the provisions of the Cultural Property
Export and Import Act are now being preserved in Canada and,
more important, are being exhibited to the public for the world to
see and from which to learn.
In 1992 the Art Gallery of Ontario was successful in repatriating
to Canada a magnificent painting by Franklin Carmichael, one of
the founders of the Group of Seven, with the assistance of a grant
provided under the terms of the very act we are here discussing
today.
To give a sense of the importance of this painting, the Group of
Seven in their day were regarded by the public as radicals, off the
wall, artists who produce works of questionable artistic merit. As
recently as the 1920s Canadians found the bold and confident
landscapes painted by the Group of Seven what we might call too
difficult. Imagine that, a Group of Seven painting being too
difficult at a time when the rest of the world has already gone
beyond landscapes, when impressionists had already been putting
challenging images on the canvas for the past 50 years.
Nonetheless, Franklin Carmichael was a central figure in the
development of the decorative symbolist wilderness landscape that
actually led to the formation of the Group of Seven.
The painting the Art Gallery of Ontario succeeded in bringing
back from England is a brilliant example of the kind of radical
painting in Canada in the 1920s that Carmichael was so
instrumental in bringing to public attention. Here was one painting
that was so instrumental in giving the Group of Seven public
recognition. This painting has therefore become a symbol of how
one object, one artefact, can have such an impact on the further
development on how the public perceives art.
To see this painting hanging in the Art Gallery of Ontario today
is only one example of how important it is for us to open our minds
and our hearts to those who have the courage to introduce us to new
ways of doing what we as citizens have been doing since we were
born. To have access to the formative symbols of the past is integral
to the definition of the present and to the assurance of the future.
In the bill the establishment of an appeal should be viewed as a
reinstatement of the right of appeal that was lost when the
responsibility for determining fair market value was transferred to
the review board in 1991.
These amendments will ensure that donors who disagree with the
determinations of the review board will have the right of appeal to
the courts and will not be denied natural justice.
The announcement of the establishment of an appeal process was
received positively by donors, museums, art dealers and the media.
These legislative amendments therefore enjoy a high level of
public support.
The amendments are technical in nature and respond to strong
concerns expressed by the heritage community. Their passage into
law should be seen as part of the ongoing commitment of the
Government of Canada to ensure the preservation of Canada's
cultural heritage.
Further, I think of the Art Gallery of Windsor, of the many
functions in my riding and in the neighbouring ridings in Windsor
and Essex county, Art by the River in Amherstburg, Art in the Park
in Windsor and many other charitable events. I know of the many
dedicated volunteers who assist in these events and other displays
of our culture. I also know the thousands of people who visit them
benefit from the culture and the experience.
15760
The Art Gallery of Windsor has now moved into a shopping
centre. At first it was met with large opposition but now it is in
the shopping centre and thousands of people are visiting it.
More and more young Canadians are having the opportunity to
see these displays of culture. More and more people are benefiting
from what is being recreated in this act, continuing to be allowed
their contributions worth up to $60 million a year open to all
Canadians in public institutions, institutions that promote our
culture and our heritage.
(1355 )
During the summer when I was in Jonquière I had the
opportunity to visit a display in Chicoutimi by a local artist. We
have to remember how important it is to all of Canada to encourage
Canadians to understand and benefit from the cultural aspects and
to continue on. We are only in the 30th year of the next 100 years.
There are 70 more years to go. I know that in Windsor and Essex
county we continue to do that on a regular basis.
Art in the park, for example, started small and has grown to such
a large capacity it is now offered it in the winter as well. Thousands
of people come through on Saturdays and Sundays and take the
opportunity to purchase art. Many people in the local community
have now taken and used art as a fundraising activity. Donations of
art are used for auctions and other activities. It is important that we
re-establish the appeal rights that were lost. The right of appeal
should never have been lost. Unfortunately the last government
decided that as a Canadian citizen one did not have that right of
appeal.
We in this government believe that the right of appeal in all
subjects is very important. No one should be denied the right of
natural justice. When they do donate something they should be
given their true value in the amount of effort and donations. I
believe the value is many times more than the fair market value
actually is of the object because thousands of people will come to
see these objects in years to come and will all benefit from them
and will go on from there.
Hopefully Windsor and Essex county can be a model for what is
happening now and into the future.
The Acting Speaker (Mr. Kilger): Is the House ready for the
question?
Some hon. members: Question.
The Acting Speaker (Mr. Kilger): Is it the pleasure of the
House to adopt the motion?
Some hon. members: Agreed.
Some hon. members: No.
The Acting Speaker (Mr. Kilger): All those in favour of the
motion will please say yea.
Some hon. members: Yea.
The Acting Speaker (Mr. Kilger): All those opposed will
please say nay.
Some hon. members: Nay.
The Acting Speaker (Mr. Kilger): In my opinion the yeas have
it.
And more than five members having risen:
The Acting Speaker (Mr. Kilger): Call in the members.
And the bells having rung:
The Acting Speaker (Mr. Kilger): Pursuant to Standing Order
45, the division on the question now before the House stands
deferred until 5 p.m. tomorrow, at which time the bells to call in the
members will be sounded for not more than 15 minutes.
_____________________________________________
15760
STATEMENTS BY MEMBERS
[
English]
Mrs. Brenda Chamberlain (Guelph-Wellington, Lib.): Mr.
Speaker, the people of Guelph-Wellington are proud to be
Canadians. They look forward to a no vote on October 30.
Last year over 1,000 Guelph-Wellington residents signed a
petition urging the Leader of the Opposition not to promote
separatism when travelling abroad. Many other constituents have
contacted my office expressing their hope in a united Canada and
reminding Quebecers they are an important part of our country.
(1400 )
Members of the Bloc and the separatists in Quebec like to
remind us of what is wrong with Canada. In Guelph-Wellington
we like to remember and celebrate what is good about living in the
best country in the world.
Guelph-Wellington residents know that Canada is great. We
urge Quebecers to remember that the United Nations considers us
to be the best and to vote no on October 30.
* * *
Mr. Philip Mayfield (Cariboo-Chilcotin, Ref.): Mr. Speaker,
the Privacy Commissioner of Canada estimates that Canadians
have their names crunched through various computers, back and
forth across the continent, about five to ten times a day. He further
estimates that the buying and selling of personal information is a
$300 million a year industry. This is a serious threat to the privacy
of Canadians.
The Information Highway Advisory Council released a report
last month pointing to the need for legislation ensuring personal
privacy in the growing area of information technology. The
Government of Quebec has led the fight to protect personal
15761
information by regulating the selling of name lists. Quebec's bold
Bill 68 is designed after similar legislation in western European
countries.
This Thursday Bill C-315 will be introduced in the House for
second reading debate. Bill C-315 accurately reflects the growing
need to protect Canadians' control of their personal information.
Members of the House will have the opportunity to debate the issue
then. I look forward to participating in the debate on Thursday.
* * *
Mr. Julian Reed (Halton-Peel, Lib.): Mr. Speaker, as the
referendum date draws near I would like to acknowledge a package
received from a grade 13 politics class at Mayfield Secondary
School in the riding I serve. Not only have over 450 students signed
a petition stating the importance of Canada's unity, they have also
put together a video cassette in which they have voiced their
concerns over the referendum as well as their love of the province
of Quebec. This is being sent to a secondary school in Quebec.
All Canadians are concerned about the Quebec referendum and
its long term effects on Canada. Canada is not whole without
Quebec, and it would be in everyone's best interest that Canada
remain united.
We should realize that all Canadians, from the youngest to the
oldest, have an enormous stake in the country. Our youth are
concerned. They have every right to be. The rest of their lives
hangs in the balance of the referendum. Canada's youth should not
be overlooked or disregarded.
* * *
Mr. John English (Parliamentary Secretary to President of
the Queen's Privy Council for Canada and Minister of
Intergovernmental Affairs, Lib.): Mr. Speaker, today, October
24, is an anniversary that celebrates peace over war and unity over
division. Fifty years ago 31 nations from around the globe ratified
the UN charter. It was on that day that Canada and other
like-minded countries sought to ensure the peace and security that
had proven so elusive to their generation.
Today every Canadian from Quebec to Newfoundland to British
Columbia can take pride in the accomplishments of Canada within
the UN as exemplified by prominent Canadians like Lester
Pearson, Major General Roméo Dallaire and Mr. Jules Deschênes
at the World Court in The Hague. All have helped to build a strong
and flourishing reputation for Canada.
The UN espouses the principles of unity and co-operation. As we
approach an uncertain time in our own history, let us remember
how we as Canadians have promoted such principles. October 24
marks an opportunity for all of us, from coast to coast, to reflect on
what a united country can achieve and what a divided country will
certainly lose.
* * *
[
Translation]
Mr. Francis G. LeBlanc (Cape Breton Highlands-Canso,
Lib.): Mr. Speaker, on Sunday, I took part in the official opening of
CKJM, the new community radio station that has just gone on the
air in Chéticamp and the Cape Breton Highlands.
This is the conclusion of five years' work by Normand Poirier,
Angus Lefort and Daniel Aucoin and many other volunteers, who
wanted to give Acadians in the area their own community radio as a
means of local development. Their efforts were backed by the
Government of Canada and strongly supported by the 5,000 or so
listeners in the station's coverage area.
The opening ceremony was followed by a show featuring a
variety of local musical talent. The show proved the point, if proof
is required, that French language and culture are very much alive in
Chéticamp, Grand-Étang, Saint-Joseph-du-Moine and many other
places in Nova Scotia.
The Acadian people here have roots, language and culture in
common with the francophones of Quebec. They fervently hope
they will continue to have a country in common after October 30.
* * *
Mr. Benoît Sauvageau (Terrebonne, BQ): Mr. Speaker, Claude
Cheysson, former French minister of foreign affairs and former
commissioner of the European Community confirmed yesterday
that the European Union could sign a free trade agreement with a
sovereign Quebec. Mr. Cheysson thus recognized Quebec's special
position between North America and Europe.
(1405)
Free trade agreements will soon be signed between the European
Union and Mexico and Tunisia. The idea of strengthening Quebec's
position as a special European partner in North America is
particularly attractive.
So, as Quebec enjoys special ties with its North American and
Latin American partners, could it be that Canada alone has yet to
comprehend the virtues of partnership? The Government of Canada
has been trying unsuccessfully for some time now to sell the idea of
15762
a free trade agreement between NAFTA and the European Union.
Perhaps a sovereign Quebec will succeed where Canada has failed.
* * *
[
English]
Mr. Herb Grubel (Capilano-Howe Sound, Ref.): Mr.
Speaker, last weekend my wife and I visited Montreal, where her
family lives and where she grew up as a francophone and raised her
own children.
When we crossed the bridge back into Ontario her heart was
heavy and the tears flowed. She is Canadian and Quebecois. She
does not want to be anything else.
[Translation]
As a Canadian by choice myself, I do not want to lose my
country. For goodness' sake, Quebecers, say no to the song of the
separatist sirens. Your hopes for a strong and powerful Quebec may
be met within Canada.
[English]
We Reformers in the west know what they want. We want the
same. We want a smaller, less intrusive federal government.
Together we can have it. Together we can get rid of the arrogant
centralists with their failed visions. Together we will build a new
Canada.
* * *
[
Translation]
Mr. Raymond Bonin (Nickel Belt, Lib.): Mr. Speaker, the
honours and advantages Canadian citizenship confers upon
Canadians are too numerous to list. Our country is a model for the
international community and the envy of hundreds of millions of
people.
Canada could not have become the great country it is without the
will and determination of the women and men, in Quebec and in the
other provinces, who have worked unceasingly to attain the
common goal of constructing a country in our image.
The wonderful thing about Canada is that it allows all of us to be
proud of our status as Canadians, while not preventing us from
being proud at the same time to be francophones, anglophones, and
Quebecers.
This coming October 30, the people of Quebec will renew with
pride their confidence in, and attachment to, Canada by voting no.
* * *
Mr. Réginald Bélair (Cochrane-Superior, Lib.): Mr.
Speaker, Quebec is now one of the world's most modern and most
industrialized societies. Quebec's expertise is widely recognized in
a number of sectors and its products are increasingly sought after
throughout the world. The people of Quebec enjoy a considerable
standard of living, education is universal, and health care is one of
the jewels in our crown.
The Quebec of today owes its success to the quality, ingenuity
and determination of generation after generation of Quebecers. All
of these accomplishments, all of this progress by Quebec, have
taken place within the Canadian federation.
This coming October 30, Quebecers will refuse to compromise
what it has taken them centuries to build. They will choose Canada;
they will vote no.
* * *
Mr. Jean H. Leroux (Shefford, BQ): Mr. Speaker, the Minister
of Finance is feeding the uncertainty on financial markets by
claiming that sovereignists do not want a sovereign Quebec to
continue using the Canadian dollar. However, there is absolutely no
doubt that a sovereign Quebec will continue to use the Canadian
dollar and that it is in the interests of both Canada and Quebec to
maintain a currency union.
A sovereign Quebec will continue to use the Canadian dollar
and, as the Minister of Finance himself pointed out, it cannot be
prevented from doing so. A sovereign Quebec will also assume its
fair share of the federal debt. If the Yes side wins, Quebec and
Canada will be well-advised to start negotiations immediately on
the sharing of the debt and federal assets.
The finance minister of Canada has a responsibility to contribute
to the stability of the markets and to refrain from spreading doubt
and uncertainty the way he is doing now.
* * *
(1410)
Mr. Mauril Bélanger (Ottawa-Vanier, Lib.): Mr. Speaker,
Canada is proud to join all other nations in celebrating the 50th
anniversary of the birth of the United Nations Organization.
We take particular pride in marking this anniversary, since
Canada was directly involved in the founding of the UN. To
Canada, the UN is an example of co-operation and openness.
It is no easy task to bring together daily some 200 countries with
widely divergent interests and ask them to work on finding and
developing ways to improve the lives of the people of this planet.
Like the UN, Canada has always appreciated the advantages and
potential of a relationship built on tolerance and the acceptance of
diversity.
Today, Canadians are gathered together to wish a long life to the
UN and to a united Canada.
15763
Mr. Stephen Harper (Calgary West, Ref.): Mr. Speaker,
during the referendum campaign, I had the opportunity to travel to
Quebec, where sovereignist posters showing possibilities through
symbols are everywhere.
I do not understand these ads.
One poster, for example, seems to convey the message that, if
Quebecers vote Yes, peace becomes possible. But we already have
peace. Vote No and it becomes a certainty.
The posters say that a Yes vote would make the Canadian dollar a
possibility. Vote No and it becomes a certainty.
Vote Yes and the economic union becomes a possibility. Vote No
and it becomes a certainty.
Vote Yes and NAFTA becomes a possibility. Vote No and it
becomes a certainty.
Why trade certainties for possibilities? It will be up to Quebecers
to decide, and to live with the consequences.
* * *
Mr. Ronald J. Duhamel (St. Boniface, Lib.): Mr. Speaker, we
are only a few days away from the referendum. Quebecers will
soon have to decide whether or not they want to leave Canada.
Before making a decision, they should know that Canadians
from the other provinces do not want Quebec to separate. Quebec is
more than just one province among others. It is the very source of
our history, our culture, our identity.
Through its politicians, its thinkers, its reporters, its artists, its
athletes, its entrepreneurs, its trade unionists, Quebec has always
been closely linked to Canada's development.
On October 30, Quebec will say No to Canada's break-up and
decide to carry on its exciting adventure with its Canadian partners
and to continue to shape this society, which is the envy of all the
people in the world.
* * *
Mr. Stéphane Bergeron (Verchères, BQ): Mr. Speaker,
yesterday, on the American television network CNN, French
president Jacques Chirac reiterated his country's intention to
recognize Quebec as a new state, if the Yes side wins next
Monday's referendum.
This statement by the French president fully supports the
comments he made on January 26, when he was a presidential
candidate, namely that: ``Should Quebecers decide to achieve
sovereignty, France should certainly be among the first to tell
Quebec that we are on its side''.
There is no doubt that if Quebecers vote yes on October 30, the
international community, headed by France, will take note and
recognize Quebec. That recognition will take place as soon as the
National Assembly proclaims Quebec's sovereignty, after formally
proposing, in good faith, a new partnership to Canada.
* * *
Mrs. Pierrette Ringuette-Maltais (Madawaska-Victoria,
Lib.): Mr. Speaker, with the referendum coming very soon, I want
to quote a statement which, in my opinion, reflects what a majority
of Quebecers think of Canada.
The quote is as follows: ``I am among those who believe that
Canada is not exclusively about failures. We did not live together
for 125 years only to make mistakes. One of the great Canadian
achievements is that we have cared about the poor and that we have
tried to share our wealth. We set up social programs which are
among the best in the world, and that must be preserved''.
That very pro-federalist statement was made by none other than
the Bloc Quebecois leader, on June 18, 1993.
(1415)
Quebecers are well aware of the merits and benefits of Canada.
On October 30, they will choose to remain a part of that country by
voting no.
_____________________________________________
15763
ORAL QUESTION PERIOD
[
Translation]
Mr. Michel Gauthier (Roberval, BQ): Mr. Speaker, Premier
Clyde Wells of Newfoundland has entered the referendum
campaign to set the record straight for the No side. It is out of the
question that Quebec's status as a distinct society should be
recognized constitutionally. Meanwhile, the Minister of Finance
declared this morning that the distinct society clause should be
enshrined in the Constitution.
Of course my question is directed to the Minister of Finance.
Could he tell us the government's position on the issue of distinct
society? Is it the position he, as the finance minister, took this
morning or is it the one taken yesterday by Mr. Clyde Wells, whose
position is known to be very close to the Prime Minister's?
Hon. Lucienne Robillard (Minister of Labour, Lib.): Mr.
Speaker, on this side of the House our position is quite clear. We
have always said, in fact the Prime Minister himself has said that
he supported the concept of distinct society in the past, he supports
15764
it today and is prepared to support it tomorrow. The Prime
Minister of Canada himself made that statement in this House. Is
that not clear enough?
Mr. Michel Gauthier (Roberval, BQ): Mr. Speaker, since the
Minister of Labour was gracious enough to answer the question, I
will ask her another one.
When the Minister of Labour says before this House and before
all Quebecers who are listening that the Prime Minister is prepared
to include in the Constitution the principle of a distinct society, is
she referring-and this is my question-to the Charlottetown
version preferred by the Prime Minister, in other words, a
meaningless concept subordinate to the equality of the provinces
and rejected by all Quebecers, or is she referring to the distinct
society concept in the Meech Lake Accord, which the Prime
Minister opposed? Which version is it, Madam Minister?
Hon. Lucienne Robillard (Minister of Labour, Lib.): Mr.
Speaker, which distinct society is the hon. member for Roberval
talking about? Is he talking about the distinct society of Meech
Lake, which Mr. Parizeau said at the time was an empty shell? Is he
talking about the distinct society of Charlottetown, which the hon.
member and the Bloc Quebecois refused to endorse?
Is he talking about that distinct society? Is he talking about the
distinct society Mr. Parizeau referred to last week, when he said:
``To hell with distinct society, I want the separation of Quebec''?
What is he talking about? We on this side are willing to state quite
clearly that Quebecers are a distinct society in Canada.
Mr. Michel Gauthier (Roberval, BQ): Mr. Speaker, today, this
is a very serious question, a question to which I would appreciate
an answer, not this beating around the bush by the Minister of
Labour in full view of the whole province of Quebec.
My question-I will give her a second chance, and I would
appreciate an answer-is this: Would the Minister of Labour be so
gracious and so kind as to tell Quebecers who are listening, when
she says she supports a distinct society, does she support a distinct
society as defined in Charlottetown, which was rejected by all
Quebecers, or does she support the distinct society defined in the
Meech Lake Accord? Which one is the Minister of Labour, as a
minister of this government, referring to when she says she
supports this concept? We would like to know.
(1420)
Hon. Lucienne Robillard (Minister of Labour, Lib.): Yes, Mr.
Speaker, we have a very serious decision to make. It is serious
because on October 30, we decide whether or not we will break up
Canada. That is what we are all going to do on October 30.
When I hear the hon. member for Roberval, it sounds like he is
saying: ``Madam Minister, put the distinct society in the
Constitution and we will forget about our referendum''. I do not
think that is what he meant. But the fact is that between now and
October 30, we want Quebecers to think carefully. We know we
have a distinct society in Quebec, and we are proud of it. We are
also proud to be Canadians, and that is why we will say no on
October 30.
Mr. Gilles Duceppe (Laurier-Sainte-Marie, BQ): Mr.
Speaker, yesterday the premier of Newfoundland, Clyde Wells,
said he considered that Quebec was indeed a distinct society but
that there was no question of its having any particular status or real
powers. These words killed the hopes of the no side, and especially
of Daniel Johnson and Pierre Paradis, who are still begging the
Prime Minister of Canada to commit himself to including this
concept of a distinct society in the constitution.
Will the Minister of Labour admit that the government of
Canada could not include the notion of a distinct society in the
constitution, even if it wanted to, because there will always be the
likes of Clyde Wells, Frank McKenna and Roy Romanow there to
tell us to forget about any ideas of a distinct society?
Hon. Lucienne Robillard (Minister of Labour, Lib.): Mr.
Speaker, I have never heard a worse example of twisting someone
else's words. Never.
Clyde Wells has acknowledged that Quebec is a distinct society.
Mike Harris has acknowledged that Quebec is a distinct society.
Why twist these facts on the eve of such a serious choice, a choice
that concerns all of us, Quebecers and other Canadians both? What
is going on? What is going on with the yes side? Are they running
short of arguments for selling us on their option of Quebec's
separation?
This week is a week of great significance and we must reflect
upon the meaning of this vote, and not allow Quebecers to think
that they will still wake up Canadian the next morning. This is
where the importance of the October 30 vote lies. I would like to
see the yes side at least have the courage to tell Quebecers openly
what their option is on October 30.
Mr. Gilles Duceppe (Laurier-Sainte-Marie, BQ): Mr.
Speaker, at least now we know that the Minister of Labour shares
Clyde Wells' definition of a distinct society, as does the Prime
Minister. Fine then. It goes over very well here in the House, but far
less well in Quebec, as the minister is aware.
The people who are getting worried at this point are Daniel
Johnson and Pierre Paradis, not those in the yes camp. Those in the
same camp as her, her former colleagues if she can still remember.
Would the Minister of Labour have the courage to be frank with
her friends in the yes group, her former colleagues, telling them
that should there be a no vote on the referendum the predictable
outcome of the 1977 constitutional negotiations will again be a
resounding failure, as the good buddy of the Prime Minister, and
15765
the new-found buddy of the Minister of Labour, the ineffable Clyde
Wells, has clearly stated?
Hon. Lucienne Robillard (Minister of Labour, Lib.): Mr.
Speaker, should there be a no vote in the referendum, you will see
this country continue the transformation it began 30 or more years
ago. And judging by how the people of Quebec have fared within
this country over the past 30 years, we have every right to be proud
of who and what we Quebecers are. This has been accomplished
within the Canadian federation. We have always played a lead role
in that federation. And after the no, we shall still be there,
continuing to transform this country.
* * *
(1425)
[English]
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, in the past two days the value of the Canadian dollar has
dropped by a cent and a half, interest rates have jumped
alarmingly-the bank rate went up by 1 per cent today-and
Canadian stock markets have witnessed the worst times they have
had in eight years. The separatists are getting a foretaste of the
economic consequences of their position.
Would the finance minister tell Canadians in plain terms what a
vote against federalism on October 30 would mean for their bank
accounts, their mortgages, their jobs and their economic future?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, there is a direct
correlation between lower interest rates and a higher quality of life.
Lower interest rates mean higher retail sales, therefore a stronger
domestic market. It means more construction. It means more job
creation. It means heavily indebted governments will have more
money to spend on the needed social programs.
Markets react very negatively to political uncertainty. I cannot
think of greater political uncertainty than arises out of those who
would threaten to break up a country.
Some hon. members: Hear, hear.
Mr. Martin (LaSalle-Émard): To answer the member's
question, it will lead directly to higher mortgage rates, lower job
creation rates, lower retail sales and less money available to
governments. In the case of the people of Quebec it also means
tremendous uncertainty over the fate of the economic union and
over the fate of their creating relationships with the United States.
[Translation]
The fact is that a country cannot be destroyed without grave
consequences for its people and their lifestyle. Those who deny the
consequences of separation deny the truth.
[English]
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, the separatists have been trying to downplay the economic
consequences of the instability of the past few days. They have
been trying to chalk it up to federalist fearmongering but money
markets are not easily swayed by emotion or scare tactics. As the
minister says, they react negatively to instability while they react
positively to stability, certainty and positive initiatives.
My supplementary question is for the Minister of Finance. Will
the minister tell the House what positive steps can be taken to
restore the faith of investors and lenders in the future of Canadian
federalism?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, fearmongering is the
result of those who espouse an option and who are afraid to tell
their people the consequences of the option they are espousing.
Some hon. members: Hear, hear.
Mr. Martin (LaSalle-Émard): However, there is a very clear
way. It is the only way to reduce this uncertainty. There is only one
way to reassure the markets and that is to unequivocally vote no on
October 30.
Mr. Preston Manning (Calgary Southwest, Ref.): Mr.
Speaker, it seems to me there is one other thing that disillusioned
Quebecers and sceptical money markets are both missing, which is
the good news that Canadian federalism is going to change for the
better. Canadians want it to change, the provinces want it to
change, reformers in all political parties want Canadian federalism
to change for the better.
Quebecers can develop their language, their culture, their
resources, their destiny within that federation. They do not need a
yes vote and they do not need constitutional lawyers to guarantee
that federal security.
Will the finance minister make it clear the federal government is
open to substantial positive changes within the federation, changes
that do not require constitutional change, so that a no vote can
mean both no to separation and no to the status quo?
(1430 )
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, I have been attending
federal and provincial finance minister meetings over the course of
two years. I can say that without any exception at every single one
of those meetings,
15766
every finance minister representing his or her province or territory
has expressed fundamentally the need for change in the way in
which governments relate to each other, the way in which our
economy works and the way in which we approach the next
century.
Right across the country, in Quebec most certainly but also in
western Canada, Ontario and Atlantic Canada, there is a deep
desire for change, progress and improvement. We have seen that in
the way the government has acted. Every single government
department has begun to change the way in which it operates
focusing only on the most essential.
We are seeing it in our new trading relationships and in fact the
minister is rarely here. Canada is in the process of opening new
trading relationships right across the country. I take that back; the
minister is always here in spirit.
It is seen in the way the government is working with small
business and the great degree of flexibility.
[Translation]
One thing is very clear: we have a choice on October 30 between
progress and change for our country or a backward step, as
represented by the Yes side.
* * *
Mrs. Pierrette Venne (Saint-Hubert, BQ): Mr. Speaker, my
question is for the Minister of Finance.
The Premier of Quebec and leader of the Yes side clearly
expressed his intention to continue to use the Canadian dollar once
Quebec achieves sovereignty. He also committed a sovereign
Quebec to assuming its share of the enormous Canadian debt.
Does the Minister of Finance not believe that he too should be
clear and, rather than allow uncertainty to pervade the financial
community, he should indicate that he has in fact prepared a plan
``B'', should the yes side win on October 30, as it likely will, which
he has stubbornly refused to confirm up to now?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, the only thing that is
clear in what the separatists say about the use of the Canadian
dollar is their ambiguity.
A week ago, the Leader of the Opposition said, at the Ahuntsic
CEGEP, that he wanted a separate Quebec to use its own money. A
year ago, in Portneuf, he asked what point there was in separating if
Quebecers were not going to have their own money. In L'Actualité,
where it appears in black and white, the Premier of Quebec said
that keeping the Canadian dollar was simply a ruse, that he wanted
a Quebec dollar. So who is speaking the truth? The Leader of the
Opposition today or the Leader of the Opposition last week?
Mrs. Pierrette Venne (Saint-Hubert, BQ): Mr. Speaker, that is
totally false. The Leader of the Opposition did not say that.
Will the Minister of Finance admit he has a responsibility to
make a commitment that, the day after a yes vote, he will argue in
favour of negotiations beginning quickly with Quebec to reach a
partnership agreement, as the interests of both parties dictate?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, we have said
repeatedly that Canada's interest would be to protect its rights
within NAFTA. And, in order to protect its rights within NAFTA,
Canada could not sign a special agreement with an independent,
that is, separated, country. It is not that Canada would not, it is that
Canada could not.
Second, is the member saying that the Leader of the Opposition
was incorrectly quoted on Canada AM, was incorrectly quoted in
Portneuf and that the leader, the Premier, was incorrectly quoted in
L'Actualité when, in each instance, they said clearly that they
wanted to give up the certainty of the Canadian dollar for the
uncertainty of the Quebec dollar?
* * *
(1435 )
[English]
Mr. Art Hanger (Calgary Northeast, Ref.): Mr. Speaker,
convicted murderer John Lee received an out of court settlement of
$12,000 after suing Correctional Service Canada because he was
beaten up in jail. Lee's victims, Mrs. Tutin and the rest of the
family, received no compensation and are demanding an
explanation from the justice minister why he received this out of
court settlement.
Why is the justice minister giving money to murderers?
Hon. Herb Gray (Leader of the Government in the House of
Commons and Solicitor General of Canada, Lib.): Mr. Speaker,
the individual in question sued Correctional Service Canada for
negligence after being seized as a hostage by other prisoners and
beaten with an iron bar.
He sued for $60,000. When the case came to court, there was a
pretrial conference and the presiding judge strongly urged that the
case be settled. The case was then settled for $12,000 of which
about $8,000 went to the inmate's lawyer.
This was a step that was taken in light of the advice from the
presiding judge. The court indicated that a settlement was in order
and this is what happened.
15767
Mr. Art Hanger (Calgary Northeast, Ref.): Mr. Speaker, by
this action the minister tells an outraged public that crime pays.
There is no justification for rewarding John Lee, a murderer. It is
disgusting. A victim's rights must be paramount, yet again the
victim's family is forgotten. Justice is when the criminal pays for
his crime.
Why does the minister make crime such a profitable business for
lawyers and criminals, yet ignores the pain and isolation of the
victims?
Hon. Herb Gray (Leader of the Government in the House of
Commons and Solicitor General of Canada, Lib.): Mr. Speaker,
Correctional Service Canada is mandated by the law to carry out
the sentence imposed by the court. The courts have held on many
occasions that if there is negligence in the way that it is done, then
there is a cause of action for negligence.
That is what happened in this case. The inmate was taken as a
hostage. He was beaten with an iron bar. He sued for $60,000. The
settlement that was advised as a result of a pretrial conference by
the presiding judge was not $60,000; it was $12,000.
There is no reward for murder or for acting illegally. It is simply
a matter of following the precedents in previous cases.
* * *
[
Translation]
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr.
Speaker, my question is for the Minister of Finance.
The Canadian dollar and the stock market are now on a
roller-coaster ride as a result of various national and international
factors.
Will the Minister of Finance admit that the financial markets'
first source of uncertainty and concern about Canada is the
enormous size of its deficit and its growing debt, which will exceed
$600 billion next year?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, the last budget was
very well received by the international markets. Interest rates have
fallen since then. The question we must ask is this: What will occur
in four or five days? It is very clear that the referendum debate has
had an enormous impact on savings, on our way of life, on job
creation in this country.
Mr. Yvan Loubier (Saint-Hyacinthe-Bagot, BQ): Mr.
Speaker, the Minister of Finance has a short memory. Two weeks
after he tabled his budget, the Bank of Canada rate reached a high
of 8.6 per cent, which was higher than the current 7.65 per cent
rate, because that budget was poorly received and because
government finances were in bad shape. That is the main factor, as
Moody's recognized in January.
How can the Minister of Finance give such answers when the
Governor of the Bank of Canada himself declared on October 12,
1994: ``It is only because of the high debt and deficit levels that
political uncertainty has become another concern''?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, if one listens to
currency traders and the other parties involved, the cause of the
problem becomes very clear. The hon. member and his separatist
colleagues are only doing this in order to dodge the real issues, as
their option will create political uncertainty, which will lead to
economic uncertainty. The hon. member should say that he is in
fact endangering Quebecers' and Canadians' savings, jobs and
economic development.
If this has nothing to do with recent events, why has the gap
between Quebec and Canada savings bonds increased so much in
the past few weeks? It is because the Quebec government refuses to
accept its responsibilities, which involve managing for its own
people?
* * *
(1440 )
[English]
Mr. Jack Ramsay (Crowfoot, Ref.): Mr. Speaker, my question
is for the justice minister.
The justice minister recently accused the Ontario solicitor
general of pandering to the gun lobby. I have evidence which
strongly suggests that the minister is pandering to the Canadian
Gun Coalition.
Did the minister provide the Canadian Gun Coalition with copies
of letters addressed to him supporting Bill C-68 without the
consent of the authors?
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, if anyone is pandering it is
members of the third party who see, for some reason which escapes
the rest of us, some purpose in pursuing this subject at a time when
the majority of Canadians and the House of Commons have
spoken. We have already enacted legislation to act on the public
will.
As to the question which the hon. member puts, I will take the
matter under advisement and investigate the facts. I do not have a
factual answer at this moment. I will find one and I will furnish it to
the hon. member.
Mr. Jack Ramsay (Crowfoot, Ref.): Mr. Speaker, I have in my
office a package containing a number of letters addressed to the
minister from the city of Gloucester, the city of Nepean and so on.
15768
These letters were sent along with a covering letter signed by
Wendy Cuckier of the gun coalition to all Ontario MPPs.
Would the minister explain as soon as possible how the Canadian
Gun Coalition obtained these letters which were addressed to the
minister?
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, so desperate is the hon. member for
anything to argue in his cause, so profoundly devoid of merit is his
position on this issue, that he is now pretending to find in the
commonplace events which he described some reason to become
righteous and indignant.
The fact is that people, organizations, cities and governments
across the country have written to me in support of the gun
proposals. My office is flooded with faxes and letters in support of
Bill C-68. Those people who write in support of the legislation
either expressly or implicitly authorize and urge me to spread
around their position so that everyone might know the extent to
which these proposals are supported.
* * *
[
Translation]
Mrs. Pauline Picard (Drummond, BQ): Mr. Speaker, my
question is for the Minister of Finance.
Yesterday, in reference to Canada's future, the minister said that
the No side was the one promoting change, as evidenced by the new
Canada social transfer.
With this surprising statement, is the Minister of Finance telling
Quebecers that, following a No vote on October 30, Canada's
proposed change would be the implementation of the social
transfer through which Ottawa will, over a two year period, deprive
the provinces of 7 billion dollars, including 2.5 billion in the case
of Quebec?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, first, the figures used
by the member are not valid.
Second, the Canada social transfer will provide the provinces
with a great deal of flexibility to innovate and find their own
solutions to problems.
This initiative truly shows the flexibility of the federal
government regarding the involvement of the provinces in social
programs. Indeed, what we see here is a fundamental change of
attitude for the federal government and for the country, and the
member opposite should congratulate us.
Mrs. Pauline Picard (Drummond, BQ): Mr. Speaker, are we to
understand that the Minister of Finance believes that tomorrow's
Canada is simply a matter of Ottawa deciding and the provinces
paying, as confirmed by the establishment of the new Canada
social transfer?
(1445)
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, our attitude is
reflected in the statements made by the premiers of the other
provinces, who not only recognized Ottawa's flexibility but also
recognized that the country as a whole wants changes and wants
co-operation between the provincial and federal governments, and
said so.
Whether the issue is harmonization with the minister responsible
for public service renewal, harmonization in regional development
or discussions on human resources, all the other provinces are
co-operating to improve life for Canadians.
One government refuses to co-operate and will not look for
solutions to help its population: it is the separatist PQ government
in Quebec.
* * *
[
English]
Mr. John Cannis (Scarborough Centre, Lib.): Mr. Speaker,
my question is for the Minister of National Defence.
It seems that budget cuts are threatening the existence of the
Queen's York Rangers, a Canadian reserve unit with a 250-year
history. A special commission will report in the next few weeks on
the future of Canada's reserves.
Could the minister confirm that no decisions with respect to the
future of the reserves will be made before the commission reports?
Hon. David M. Collenette (Minister of National Defence and
Minister of Veterans Affairs, Lib.): Mr. Speaker, the Queen's
York Rangers is but one of many distinguished regiments that have
contributed much over the years to Canada's security with long and
noble traditions going back, in the case of the Queen's York
Rangers, to the time before Canada became a country in assisting
the British in the American revolution.
This heritage is vital to Canada's military preparedness. Earlier
this year when we were discussing the rationalizations taking place
in national defence I asked Hon. Brian Dickson, former Chief
Justice of Canada, to chair the commission on the reserves but in
the meantime gave instructions to the department not to effect any
changes that would have an impact on reserve regiments until such
time as the commission has reported and the parliamentary
committee of the House and the Senate reviews the commission's
conclusions.
15769
Mr. Chuck Strahl (Fraser Valley East, Ref.): Mr. Speaker, my
question is for the Minister of Industry.
Two years ago the minister promised regulatory reform to help
industry in Canada. Last December he tabled a report in the House
in which he offered specific changes to the mining industry in order
to help it some time in 1995.
Will the minister table those reforms now, soon or can the
mining industry expect something in its stocking by Christmas?
Hon. Anne McLellan (Minister of Natural Resources, Lib.):
Mr. Speaker, the Minister of Industry and I are working very
closely with the mining sector to ensure an efficient regulatory
system.
Last Thursday my department organized in co-operation with the
Mining Association of Canada a regulatory reform workshop
which brought together representatives of the Minister of
Industry's department, the Department of the Environment, the
Department of Fisheries and Oceans, and the Department of
Transport.
Very constructive recommendations came out of that day-long
workshop which we will be working on to ensure that the
regulatory regime supports and does not interfere with a viable,
productive mining industry.
Mr. Chuck Strahl (Fraser Valley East, Ref.): Mr. Speaker, I
think the day-long workshop is already a two-year workshop. We
need action more than just words.
New regulations being considered by the environment
department have scared officials within the Minister of Natural
Resources' own department so badly that they have leaked a
75-page memo to the press saying, among other things, they are
scared to death of what this will do. It may harm the Canadian
economy, inflame federal-provincial relations and may even affect
Canadian sovereignty.
Will the minister table that 75-page memo in the House and does
she share the concern of her officials?
Hon. Anne McLellan (Minister of Natural Resources, Lib.):
Mr. Speaker, let me assure the hon. member that neither my
officials nor I are scared in relation to what I think he is referring
to, the recommendations of the standing committee on the
environment.
My commitment as Minister of Natural Resources is to work
collaboratively, co-operatively with my colleagues, the Ministers
of the Environment, Industry, Fisheries and Oceans, and Transport.
At this point I am willing to go on record to the minister that
working together we will ensure a regulatory regime that supports
the mining industry.
[Translation]
Mr. André Caron (Jonquière, BQ): Mr. Speaker, my question
is for the Minister of Finance.
Despite the efforts made by the government to keep bad news
under wraps until the day after the referendum, we know that
unemployment insurance and old age pensions will be affected
considerably by federal government cuts.
(1450)
When the Minister of Finance states that a no will make it
possible for Canada to continue to evolve since change is already
underway, as he says, is he giving us confirmation that Canada will
continue to evolve along the path of cuts to education, health,
unemployment insurance, old age pensions on which it has already
set out?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): Mr. Speaker, first of all the
Minister of Human Resources Development has indicated very
clearly with respect to the whole consultation process on
unemployment insurance that it is far from finished, but that our
objective is employment insurance, i.e. getting Canadians back to
work. That is, moreover, the goal of his reform.
On the other hand, concerning old age security, the Prime
Minister has already stated very clearly here in the House that the
federal government will never, never do anything to compromise
the economic security of our seniors.
Mr. André Caron (Jonquière, BQ): Mr. Speaker, will the
minister admit that the federal government's choice to transfer its
enormous deficit to the provinces by cutting Canada social transfer
payments promises nothing positive for the future if Quebec were
to say no, for Ottawa will be the one to set the national standards
and Quebec will have to manage as best it can to apply them, with
consequences one can well imagine for social programs?
Hon. Paul Martin (Minister of Finance and Minister
responsible for the Federal Office of Regional
Development-Quebec, Lib.): First of all, Mr. Speaker, with
respect to the Canada social transfer, it is very clear that the
national standards involved are the principles of health insurance,
to which Quebecers strongly subscribe. Secondly, a great deal of
flexibility has been built in to allow the provinces leeway for
innovation and for tailoring their programs to their own population.
As for dollar figures, the difference between today and the first
year will be $350 million, or less than 1 per cent of Quebec's
revenue.
15770
[English]
Mr. Garry Breitkreuz (Yorkton-Melville, Ref.): Mr.
Speaker, I would like to get back to the issue of gun control which
the justice minister says enjoys such wide support.
Opposition to Bill C-68 continues to grow: 100 per cent of the
chiefs in the province of Saskatchewan are opposed, 85 per cent of
the RCMP in Alberta, justice ministers in four provinces and
territories.
Does the justice minister not realize he is destroying the trust
people have in the criminal justice system by forcing through a law
that a large segment of society, including the police, does not
support?
Hon. Allan (Minister of Justice and Attorney General of
Canada, Lib.): No, Mr. Speaker.
Mr. Garry Breitkreuz (Yorkton-Melville, Ref.): Mr.
Speaker, last Thursday the Ontario Provincial Police Association at
its annual meeting voted on a motion to not support Bill C-68, the
gun control bill. That motion passed nearly unanimously.
We have been saying all along that the frontline police do not
support the justice minister's bill and yet he repeatedly says he is
bringing in the gun registration and that the police requested it.
Now that it is obvious the police oppose gun registration, will he
act on the wishes of the police even though they conflict with his
personal views?
Hon. Allan Rock (Minister of Justice and Attorney General
of Canada, Lib.): Mr. Speaker, it is telling that on an occasion
when the rest of us are engaged in debate on important matters of
the future of Canada, when we speak of the economic future of
Canada, indeed the future of the confederation, the hon. member
for Yorkton-Melville rises to ask questions about the right to bear
firearms. It is fitting.
If I must address the substance of his question, the group to
which he referred forms part of the Police Association of Ontario
which represents all the frontline officers in Ontario. The Police
Association of Ontario forms part of the Canadian Police
Association. I was present on March 30 of this year in Ottawa when
the Canadian Police Association, the national group of frontline
officers, debated and voted on Bill C-68 and I was there to see it
support the bill.
(1455 )
I was in Markham, Ontario, on August 14 this year when the
Police Association of Ontario voted in support of Bill C-68. I was
in Regina in late August when the chiefs of police voted in favour.
The police of this country are behind this bill.
Mr. Ted McWhinney (Vancouver Quadra, Lib.): Mr. Speaker,
my question is for the Minister of Foreign Affairs.
Has the minister seen the text of remarks on the Quebec
referendum attributed to French President Jacques Chirac in New
York yesterday? Is the minister in a position to comment now on
those remarks?
Hon. André Ouellet (Minister of Foreign Affairs, Lib.): Mr.
Speaker, I looked at the transcript of President Chirac's remarks
yesterday.
At the outset I want to say it was far from the endorsement the
hon. member for Verchères was pretending at the beginning of
question period.
President Chirac said: ``If the referendum is positive the
government will recognize the fact''. In other words, the French
authorities will arrive at the same conclusion as everybody else,
that they obtained the majority. That is all.
[Translation]
President Chirac's policy on Canada and Quebec is one of
non-indifference and of non-interference, as has always been the
case with him and with the French authorities.
* * *
Mr. René Laurin (Joliette, BQ): Mr. Speaker, my question is
for the Minister of Industry. In July, the Social Sciences and
Humanities Council implemented a new policy on funding for
research periodicals, which would cut funding to French language
periodicals in half.
Will the Minister of Industry confirm that, as the result of the
Social Sciences and Humanities Council's new policy, research
periodicals in French will bear the brunt of most of the cuts,
whereas the ones in English will escape them for the most part?
[English]
Hon. Jon Gerrard (Secretary of State (Science, Research and
Development), Lib.): Mr. Speaker, it is important to recognize the
important role the Social Sciences and Humanities Council has
played in social science and human research. This role is well
recognized from coast to coast.
In looking at how it deals with the fiscal situation the council has
drawn on its experience and has made very careful, fair and peer
reviewed decisions for the best interests of Canada.
15771
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, many
people are employed making commercials and videos and that kind
of thing for businesses and advertising agencies.
Unbelievably the CBC has recently announced it will be going
into direct competition with these private sector audio and video
production houses, specifically in Toronto. It is actively today
trying to steal their clients. Clearly this is a violation of the CBC
mandate.
Why is the minister allowing the CBC to kill jobs in downtown
Toronto? Why are Toronto MPs not standing up in outrage about
this? Why in the world are we allowing the CBC to kill these
businesses which pay the taxes that actually fund the CBC?
Ms. Albina Guarnieri (Parliamentary Secretary to Minister
of Canadian Heritage, Lib.): Mr. Speaker, the hon. member does
not have to convince the House the Reform Party does not support
public broadcasting. The hon. member can lip-sync my answer by
now that the CBC is in charge of its own management and makes
its own decisions to the best of its ability.
The hon. member should well know that on the committee we
have been looking for ways the CBC can look for new efficiencies.
That is exactly what it is doing.
* * *
Mr. Len Taylor (The Battlefords-Meadow Lake, NDP): Mr.
Speaker, my question is for the Minister of Industry.
Since the release last June of the environment committee's
proposal to overhaul and update the Canadian Environmental
Protection Act, some industry officials have said the committee
proposals are a threat to the country's investment climate, costly to
implement and grounded on shaky science.
(1500 )
It is important these myths be dealt with.
Will the minister join with his colleague, the Minister of the
Environment, who is expected to respond positively to the
committee's impressive set of recommendations and take the
opportunity to turn Canada into an international leader in green
legislation or is he going to accept the arguments of some of the
officials in his department and back away from the committee's
critical recommendations on pollution prevention?
Hon. John Manley (Minister of Industry, Lib.): Mr. Speaker, I
can really do no better than to associate myself with the remarks of
my colleague, the Minister of Natural Resources. In responding to
an earlier question she made it clear that we in government believe
that both sustainable development and economic growth are
important parts of our mandate as government.
As we prepare the government's response to the standing
committee's report, we will ensure the concerns of the
sustainability of development are front and centre.
I remind the hon. member that when the Department of Industry
Act was introduced in the House it contained a mandate to pursue
the objectives of sustainable development. That was a mandate I
sought to add to the old industry, science and technology
department act. I am proud to say that I was able to introduce it in
the Department of Industry Act.
* * *
The Speaker: Colleagues, as you are all aware, today is the 50th
anniversary of the United Nations. We have in our galleries today
some 17 Canadian recipients of the United Nations Association of
Canada Medals of Honour recognizing their outstanding
contributions to the UN.
Some hon. members: Hear, hear.
_____________________________________________
15771
GOVERNMENT ORDERS
[
English]
Hon. Herb Gray (for the Minister of Industry, Lib.) moved
that Bill C-99, an act to amend the Small Business Loans Act, be
read the second time and referred to a committee.
Mr. Dennis J. Mills (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, even before the red book came into
being during the last election, the Liberal team in opposition made
a commitment that if we were to be given the trust of the people
after that election, the small and medium size business community
would be the centrepiece of any policy development that would be
part of our agenda.
(1505 )
We believed in opposition and we believe now that the greatest
hope Canadians have for putting other Canadians back to work
rests with the small business community. It is the small
businessmen and women who, in many cases with very few
resources, created, through their own ingenuity, creativity and
sweat and toil, products and services that grew not only into
businesses but became a very important and vital ingredient in the
economy of this country.
When we were elected about two years ago we started
immediately to deal with the number one difficulty that small
businessmen and women had in trying to meet their objectives
which was getting access to capital.
15772
It is very important for me to recognize the critic for the Reform
Party. One of the very unique experiences that we had in the
industry committee was the fact that we worked as a team. We
have many differences with the Reform Party. I for one do not
feel as committed as they are to their attack on the deficit and
debt. I find their approach too radical and too swift. However, one
issue which we have consistently agreed on is the fact that small
business is the hope of this country when it comes to putting
Canadians back to work. It was because of our teamwork that we
have been able to move an agenda forward on the access to capital
front.
The amendments in Bill C-99 before us today, which is an act to
amend the Small Business Loans Act, are from feedback we have
received from the men and women in the House who have been
working on this issue. They are the result of feedback we have had
from industry and the banking community. They are also the result
of the feedback and the success we have had with the Small
Business Loans Act.
Some members will recall when we were in opposition that the
then Conservative government initiated, in its last budget,
amendments to the Small Business Loans Act. At that time, we
supported those amendments because we believed that they were
instruments for trying to break up the hardened attitude that many
people in the financial community had toward taking risks with
small businessmen and women.
This bill is not meant to be a cure all for the difficulties that
businessmen and women are having. It is a bill where we told the
financial community that we would develop an act in Parliament
where 90 per cent of the risk that it takes on a small business
project, up to $250,000, the Government of Canada would
guarantee if that business should fail.
Since the Small Business Loans Act started, over many years, it
has been used to help just under 500,000 small businesses in this
country. Many people have had, through this act, the opportunity to
take a shot at their dreams, create jobs and ultimately help create
the economic fabric of this country.
(1510)
When the Government of Canada is guaranteeing such a large
amount, the number one question obviously is what is the down
side for the taxpayer.
Until two years ago, on a loan float of about $3.5 billion, the loss
to the crown was approximately $26 million. A loss of $26 million
on a $3.5 billion float is pretty respectable. In the last year and a
half, the float has increased considerably. The float right now is
closer to about $8 billion. On that float, the estimated losses are
approximately $100 million.
Because of that increased loan loss, that $100 million, and
because of our commitment to fiscal responsibility, the government
has decided to listen to the Reform Party, to listen to the banks and
others. It has decided that the act has to be redesigned in a way
where those costs are recovered.
The essence of this bill deals with a new formula so that those
loan losses can be covered. Essentially the three components in the
bill to recover the loss on that rather large float would be the
following: the major elements would be first, a reduction in the
minister's liability to pay a loss on any business improvement loan
from 90 per cent to 85 per cent. The second point is the
establishment of an annual administration fee and a restriction on
the passing on of the fee to borrowers except through interest rates,
the establishment of a claim processing fee and the granting of
authority to make regulations respecting the release of security
taken for the repayment of any business improvement loan.
What we have done is this. Previously the guarantee was 90 per
cent. It has been reduced to 85 per cent. If this is the way that the
Small Business Loans Act can continue to be viable so that it is not
going to be a drain for the taxpayer or a strain on the treasury or
something that would generate too much nervousness with officials
in the Department of Finance, then I naturally support all these
amendments. These amendments are all good, solid amendments.
The most important thing that the Small Business Loans Act did
was this. Because all of us worked together on the Small Business
Loans Act, it led to another journey that we all went on in the last
two years. That journey happened in the industry committee where
the Bloc Quebecois, the Reform Party, and government members
all worked together on this total review of the difficulties that small
business men and women were having in accessing capital.
Members would probably recall that almost a year ago, the
committee published virtually a unanimous report ``Taking Care of
Small Business''. That report dealt with all of the various
experiences men and women were having when dealing with
financial institutions.
(1515)
All of us in this House heard over the last few years story after
story after story of the difficulties many of our constituents were
having in dealing with the various banks or other financial
institutions. It was through that feedback that we became united in
dealing with this issue.
Some of the key recommendations in the report are now being
implemented. As of the end of this month there will be a common
quarterly reporting chart and statistics on the whole thrust of each
individual financial institution's lending to small business by
sector, by gender, by municipality and the size of the loan. That
kind of accountability is going to change the whole bank culture
and attitude toward small business.
15773
That has been the biggest accomplishment of our committee. We
have made a very strong impact in causing the men and women
who are managing the banks to reflect and review the way they
have been dealing with business. Not big business. We all know
that whenever big business wants a $500,000 or a $3 billion loan
the banks trip over themselves trying to lend those larger
businesses the money. In the past few years some of those loans the
banks were tripping over each other to give to the larger businesses
ended up coming back in their faces, or part of them came back in
their faces.
We were not really concerned with the larger corporations. We
respect the larger corporations and the job creation contribution
they make to the community, but we were concerned with the small
business community and the fact that the small business
community represents virtually all of the new job creation that is
happening in this country. I believe and I know many members
opposite believe that those quarterly accountability sessions are
shifting the attitudes of the banks.
Ultimately, it does not matter what side of the House we sit on,
we are here for one reason. We are here to get the economy of this
country going again. The economy is only going to start going
again when collectively we can work at creating an environment
where business can flourish and give men and women the dignity
of a job. That is the most important thing we can be working on
today.
It is no secret that there are just under three million men and
women who do not have work. I cannot imagine getting up in the
morning and not having a job to go to. Many of us here have been
blessed with the fact that not only do we have a terrific opportunity
to serve our country right now, but we have also had the
opportunity to work throughout our careers. Very few of us have
felt the pain or the assault on our dignity of not having a job. That
assault on dignity is the toughest thing a man or a woman can face.
Our number one responsibility is to assist in creating an
environment where business can take those risks and chances to get
the economy going. That is why we on this side of the House,
supported by members opposite as well, believe that whenever we
can pass an act of Parliament that will improve on creating more
jobs, even if they are minor improvements, then we are on it right
away.
(1520)
It is important that a bill like this does not take a long time to go
through the House. That is why it is important to work together. If
we can work together and get the proper amendments in this bill,
then this kind of cohesion gives confidence to the marketplace and
the people who execute this bill, the banks.
This bill is not executed by the government. After it is passed by
this House this bill will be implemented by the financial
institutions in Canada. The bank managers make the decision as to
whether or not that taxpayer guarantee should be given to a small
business man or woman. The implementation of the act is totally
delegated to the financial institutions. Because of this guarantee
those bank managers can take a bit more risk. Ultimately that is
going to assist in getting the economy going.
The small business sector represents the greatest hope we have
for putting Canadians back to work. It is going to accomplish that
once the proper environment is put in place. Also, the small
business man or woman does not tend to create a lot of bureaucracy
and therefore can be more efficient when operating a small
business. They tend to have much closer relationships with the men
and women who work with them. The family-like environment
which happens in a small business in many cases generates the kind
of activity that allows creativity to flourish, that allows
productivity, which allows business to create better products at
better prices.
That is ultimately the reason our exports are going to be our hope
as well. In the last few months our exports have been holding the
economy together. Many of those exports, for example in the
automotive sector, came from small and medium sized
corporations. Some of them are organized in larger institutions but
many of them are small, individual plants with a maximum of 30 to
50 workers.
We have to stop thinking of small business in the traditional way
it has been thought of in this Chamber. For many years in Ottawa
most of the attention was given to the larger businesses. The larger
businesses had the resources to come to Ottawa and lobby their
MPs or they had the resources through accountants and lawyers to
do the work on the basic grants and support systems that were in
place. Larger businesses had the resources to get their tax credit put
into the tax act because they could afford to lobby the various
departments including the Department of Finance.
(1525)
In the last two or three years we have discovered that a lot of
these larger businesses with all the great contributions they have
made in terms of job creation and research, are not creating the
same kind of economic thrust. Now it is the small business
community. Many of us have had to reorient ourselves, go back to
basics and reacquaint ourselves to try to understand what the small
business community really needs.
Even though I frequently talk about access to capital, there are a
couple of other things the government is going to have to address as
well. We have to take up the challenge to reduce the paper burden
and red tape. How many times do we hear that small business men
and women are spending more time pushing paper and government
forms than on their own businesses? We have become a nation of
paper pushers. We have to realize that along with access to capital
we must reduce the red tape and paper burden.
15774
The Department of Industry, the Department of National
Revenue and the Department of Consumer and Corporate Affairs
have been working very hard in the last few months trying to
create a one-all form. They are trying to organize various forms
for business. They are working on a system that will be on one
form, a simplified system for business reporting on various aspects
of government responsibility.
That is also another realization we have come to accept and
support as a result of our continued campaign on the access to
capital front. In other words, that journey on access to capital has
led to the realization that reducing the paper burden is something
we must also work on very diligently.
The last thing I will touch on in terms of policy is where small
business is crying out for our attention, which is the whole area of
tax reform. Small business is telling us that the tax system is
complex and inefficient. Many of them argue it is not fair.
As a government we are committed. Our red book stated quite
clearly that the whole GST regime we fought so vigorously against
in opposition is something the government has to address in its
mandate. There is absolutely no way any Liberal member of
Parliament could ever expect to go back on the campaign trail to
get re-elected unless the whole issue of the GST is dealt with.
My goodness, in opposition we fought against the GST to the
point that it nearly caused a riot in the other place. We challenged
the government because of the complexity, the paper burden and
the inefficiency of the GST. We on this side of the House are
working very hard on total tax reform. It is a very complex issue to
dismantle an entire structure the previous government set up. As
the Prime Minister would say, it is not a matter of saying ``poof''
and it is gone. It has to be done responsibly, in a way that will not
create a bigger problem than already exists.
(1530 )
We believe that dealing with the issue of tax reform is central to
the requirements of small businesses and their ability to work in an
environment that allows them to maximize their potential. Bill
C-99, an act to amend the Small Business Loans Act, is another
example of where the government is fine tuning by working with
small businesses and the financial institutions and dealing with the
financial markets, the currency traders, who have control on our
interest rates and our dollar.
There is an issue I wish we could one day debate in Parliament.
With the various challenges we take on in the House, whether
related to industry, social programs or fiscal responsibility, deficit
and debt with all the cutbacks, I would say the one challenge that
we as a House of Commons have yet to face is the challenge of how
we work with these currency traders who are essentially running
most of the central banks of the world. These unaccountable,
unelected currency traders move literally a trillion dollars a day,
pushing paper, playing the derivative games. I have referred to
them before as the private casinos in the financial institutions of the
world. These men and women who move that currency around in an
unaccountable way are affecting our interest rates, which in turn
affect the investment activity and the job creation activity.
I do not know how we can call ourselves a sovereign nation when
we think of the fact that we have essentially lost control of our
currency. We are sitting here as elected people, but every day we
bow down to the currency traders, asking what the dollar is going to
be, what the interest rates are going to be.
Do the men and women in this room have anything to do with
what goes on with those currency traders? No. Those currency
traders are controlling the agenda. No matter how fiscally
responsible the government is in the House, they could say that it is
not good enough. Then suddenly they give us another squeeze and
drop our dollar or cause a jerk in interest rates.
I would love to have a debate in the House one day on how the
currency traders of the world manage their affairs and what their
accountability is-not unlike the challenge we took up two years
ago when we said that we wanted to see what was going on with the
financial institutions in the country and what they were doing with
small business. These financial institutions were not initially
receptive to our exchange, our views and our attempts to try to
make their attitude and their culture more responsive to business.
However, because we worked together I believe we now have a
constructive relationship with the banks. I now believe those banks
are actually starting to enjoy the growth and the improvement they
are experiencing in their small business relationships.
I would like to put to the House that an even bigger challenge
would be how we could take on the currency traders of the world so
we can once again get control of our economic agenda.
In closing my remarks on the bill once again I thank members
opposite, members of the Reform Party and members of the Bloc
for working with us on these amendments so we can hopefully get
them through the House before the end of the week.
This is probably the last time I will be on my feet before the
referendum vote on Monday. I appeal to those small businessmen
and women who hopefully are watching or are participating in this
debate to think between now and next Monday about anything they
can do to help make sure this campaign for Canada is won.
(1535)
I personally believe that one of the things small entrepreneurs
can do, because they have flexibility, is maybe find a bit of time to
get into their vans, cars or trucks and take their families to visit our
great province of Quebec this weekend.
15775
When I was a small businessman I did a lot of business in
Quebec, and I never had any difficulty doing work in that great
province. I believe that one of the ways we can make sure Quebec
votes for Canada on Monday is to make sure that a majority of
those people, especially in the outlying regions of Quebec, feel
comfortable with those of us who are outside Quebec.
I know it is a precarious moment right now. Things are very
tenuous. However, I think the greatest asset we have in the country
is people from one region of the country talking to another, one on
one, not through television ads. I respect these rallies, but the best
way to bring togetherness is when people sit down and have a
constructive, warm and caring relationship.
I do not think it is too late to make a tremendous turn in those
numbers we all read in the newspapers right now. I believe the best
way to turn those numbers is by making sure this weekend, if one is
from Ontario and maybe planning on driving north to a cottage or
east down to Buffalo or Niagara Falls, to travel instead to the
outlying regions of Quebec. Together, when we talk about all the
assets we have as a whole nation, we will end up staying together.
Thank you very much, Mr. Speaker, for giving me the
opportunity to speak on the bill. I pray God that next week
everything is all there for Canada.
[Translation]
Mr. André Caron (Jonquière, BQ): Mr. Speaker, I welcome
this opportunity to speak on behalf of my party to Bill C-99, an Act
to amend the Small Business Loans Act.
The parliamentary secretary made it very clear that small
businesses play a very important role in the Canadian economy
and, of course, the economy of Quebec. Both the government of
Canada and the government of Quebec have set up programs to
support small business, because one of the problems facing people
who want to launch a small business is the financing.
Often these people are very keen and have interesting ideas, and
if governments do not find ways to support them, their ideas often
remain undeveloped and the business never materializes. Both the
government of Quebec and the Canadian government have taken
steps to provide assistance to entrepreneurs.
Of course there are private investment funds in various
provinces including Quebec, such as the FTQ's Fonds de solidarité
which has some impact in this sector. However, the parliamentary
secretary said that today in Canada a total of nearly $8 billion is
invested under this program, which is an indication of its
importance.
(1540)
Another indication is the fact that the program is popular among
entrepreneurs. In our riding offices, we often see people with good
ideas who decide to ask their member of Parliament for
information on programs that could help them start a business.
Canada has legislation, the Small Business Loans Act, which
was adopted several years ago. This legislation has made it
possible to lend money and start businesses. The bill before the
House today proposes a number of amendments to this legislation.
Originally, the purpose of this legislation was to provide
guarantees for bank loans to entrepreneurs who wanted to start a
business. This guarantee could vary from 85 to 90 per cent, and in
fact varied from year to year.
The cost to the Canadian government is what it costs someone
who wants to guarantee loans. If the individual's business is not as
successful as he expected, if he goes bankrupt, then the government
of Canada has to pick up the loss incurred by the banks. In 1992,
these losses totalled $44 million. The maximum was changed in
legislation adopted in 1993 and a number of provisions were
changed as well, so that in 1995-96, the government of Canada
could be faced with picking up a total of as much as $100 million in
losses.
Considering the current state of federal finances, it is
understandable that the minister should be concerned and that the
debate on small business in the Standing Committee on Industry
had to consider this aspect as well.
That is why we have a bill before the House today. The purpose
of the bill is to reduce the maximum for guarantees provided by the
federal government. The maximum would be reduced from 90 to
85 per cent of the loans approved. By reducing the maximum, the
government of Canada is of course reducing its responsibility for
amounts to be paid in case of bankruptcy.
There is of course a corollary to all this: if the guarantee is less
extensive, people with higher risk projects that may be more
innovative will have more trouble obtaining guarantees. This is not
unusual, and if the banks are unwilling to take the risk, some
projects may be rejected.
In fact, the 85 per cent rate goes back to before the amendments
in 1993. It is of course an area where the government could save
money. We hope there are no business people with clever and
brilliant ideas, who are refused loan guarantees because of this
provision.
Also, an important aspect of this provision concerns us in the
Bloc Quebecois considerably. With the amendment, the ceiling
could be lowered even further, should the government decide to
15776
regulate it lower. As one of my colleagues was saying earlier, for
the moment it is at 85 per cent. It could drop to 60 per cent. It could
drop to 50 per cent. We really do not know.
What is of concern in all this is that the government is giving
itself the option in the bill before us to lower the ceiling by
regulation. Government by regulation is reprehensible. I think the
House of Commons has to take measures to ensure that the bills
passed are good for the country. I think, when legislation gives the
government the option to decide things of this importance by
regulation, we are running the risk of hurting the country's business
people.
(1545)
There is also another provision in the bill that causes us some
concern. Basically the aim of amendment in the bill is to have
moneys paid by the Minister of Finance in the event of a
bankruptcy absorbed some other way. In other words, the Minister
of Finance does not want to see the $100 million planned for this
year back again next year. Another way for the government to
ensure that losses are cut or even eliminated is for the program to
be self-sufficient.
My colleague, the Parliamentary Secretary to the Minister of
Industry, said it well: ``How are we going to go about recovering
costs?'' Administrative measures will be taken. An annual
administration fee will be charged. There will also be a claim
processing fee.
The bill provides that these administrative fees are not to be paid
directly by the business people. It does provide that they can be
paid by the business people indirectly. In other words, the interest
rates on loans could be raised to cover the administrative fees that
the banks would have to pay.
This means doing rather deviously or hypocritically what cannot
be done directly.
I would like to think that government finances are important, but
the program's efficiency is going to be reduced by this measure. It
will be reduced, because the banks are not going to go out of their
way for business people. By definition, the banks want to be
profitable and they charge the highest interest rates the market will
bear.
As a result, entrepreneurs will have to bear higher costs in order
to meet program requirements. This is one measure that causes
serious concern among the members of the Bloc.
There are some items that we would certainly have liked to see
included in the bill which are not there. The Parliamentary
Secretary to the Minister of Industry has said that the measures
proposed in the bill were discussed in the Standing Committee on
Industry and are contained in its report tabled in October 1994:
Taking Care of Small Business.
Although the Bloc was considerably involved in the drafting of
this report and endorsed the bulk of its recommendations, it made a
number of comments, in the form of recommendations,
amendments or notes, which we felt improved upon the proposals
for making the Small Business Loans Act more efficient and
effective. One of these proposals was that ``the Small Business
Loans Act ought to provide guarantees for small business operating
capital loans. To implement such a measure, the government
should carry out a cost analysis of such a program and take a
responsible fiscal approach''.
We know that the loan guarantee given is intended to help
businesses meet expenses related to very specific aspects such as
buildings and equipment, but not working capital. The problem is
that, in recession conditions and crisis situations, and as a result of
certain changes in the Bankruptcy Act as well, there are many
small businesses which need financing for their working capital for
a time, but they cannot take advantage of the act as it stands to
obtain either financing or a guarantee of financing.
(1550)
To improve the way we help our small businesses, the Bloc
Quebecois would have favoured an amendment saying that the
operating capital of a business could also be financed with a
government guaranteed loan under the Small Businesses Loans
Act.
There are a number of things we find disturbing in this bill. I
mentioned the reduction in the maximum rate, which means fewer
businesses will have access to the program or those that do may
have to meet more requirements. Second, there is the matter of
administration fees which we think will be passed on to businesses
through an increase in the interest rates they will have to pay. And
third, there are aspects that are not covered by the legislation such
as the financing of operating capital.
That is why the Bloc Quebecois will discuss the bill in
committee, and propose amendments that will probably be along
the lines of the comments I just made.
I would like to make a few more comments as I conclude my
speech. This may annoy some government members who will
probably think that I am not on topic or other members who will
say: ``Duplication and overlap, here we go again. It is the same old
sovereignist or separatist refrain from the Bloc''. In any case, as I
mentioned in my introductory remarks, in Quebec we have a
number of programs with substantially the same objectives. Take
the Paillé plan, named after the present Minister of Industry, which
also provides for loan guarantees. Take what is being done by the
Société de développement industriel du Québec. Since I became a
member of Parliament, I noticed that many constituents who want
to start a business are told to go to the provincial office and the
federal office. In fact the situation is not quite clear. Often there is
out and out competition.
15777
Who is responsible for this competition or overlap? I do not
want to get involved in all that, but I simply want to point out
that there is some overlap that is counterproductive. It does not
do the entrepreneurs any good because they often do not know
where they stand. And when governments at the provincial and
federal levels do not belong to the same party, people often believe
that if they go to one government, the other government will be
annoyed and that will get them in trouble. I myself have never
noticed that since becoming a member, but there are people who
think they can play one government off against another or people
who think there may be difficulty applying to one level of
government when application or representation has also been
made to the other government.
So I think that, when measures such as this are before the House,
we should note-and I am not saying criticize, but we should at
least note-that there are overlaps, which could hurt business
people and the government's budget.
The same taxpayers, whether they are from Quebec or Canada,
are helping to fund these programs through their taxes. And I really
think a number of people use this sort of competition to try to get
the best out of both programs. I think, in the long term that
governments put themselves in situations where their expenditures
under these programs will increase because of the competition,
because of the overlap and because people try to take advantage of
the opposition or even the competition between governments.
With bills like this one, it is important to point out problems of
overlapping created by such programs.
In concluding, I would like to make one comment. More and
more in the business community in Quebec and Canada, in the
government and even in the Liberal Party, which did not follow
such policies in the past, we are hearing talk of how the
government should step aside, and the people who go into business
should take on their responsibilities.
(1555)
There is a movement to re-establish the laws of free competition,
to promote globalization, to pare down the size of government. The
Minister of Finance is often seen to support such ideas.
When the time comes to make cuts in social programs, in
education, in unemployment insurance, we hear ``the government
is overspending, it is too costly, the government must interfere less
and less in the economy''. On the other hand, when we come to
bills like this one, when we realize that when it comes down to it
the government is guaranteeing eight billion dollars worth of loans
this year, and I think that the legislation allows up to $12 billion.
We realize that the neoliberal discourse of the governments was the
same; it is the Liberals this time, but it was the same thing when it
was the Conservatives. I cannot see much difference in practice
between the policies of the former Conservative government and
those of the present Liberal one. They both took a neoliberal
stance, calling for government to withdraw from the economy, but
yet when we get down to practicalities, to instances where
according to the very theories they espouse the government's
presence might be questioned, then we see that they are continuing
the same kind of intervention as before.
Not that I condemn such intervention-the Bloc Quebecois is in
favour of a healthy government involvement in economic
affairs-but, on examining the bill and everything that goes with it
and looking at what the Small Businesses Loans Act has done in the
past, despite the fact that it has been extremely effective and much
appreciated by entrepreneurs, I am forced to conclude that the
government is saying that cuts must be made, the government must
withdraw. In situations like these one realizes that not only is the
government not withdrawing but it is even becoming increasingly
involved.
A few years ago there were $2 to $3 millions in loan guarantees
annually, and this year the figure will be $8 billion. Perhaps, the
way things are set out, the figure next year will be even higher.
There is one big question mark: the government is acting in such a
way that it will not cost anything on the budget. All the better, one
might say. It is the banks and the entrepreneurs who will pay, but
basically it is the government which gives the guarantees but wants
to arrange things so that it will cost nothing. In the long run, the
businesses themselves pay, because of the interest rates charged on
the loans.
One wonders really what purpose these programs serve. This
morning I was looking at the industry committee's report ``Taking
Care of Small Business''. Experts appeared before the committee
stating that there was no certainty that business started up under the
projects in question would not have started up anyway.
I heard, in fact I listened carefully to the speech made earlier by
the Parliamentary Secretary to the Minister of Industry. He talked
about a lot of things, but I would have appreciated it if he had tried
to be more specific about the rationale underlying this bill. Is it
effective? Is it true that about three-quarters or at least half of the
businesses that were started with the help of this legislation would
have been started in any case? What use is a program that
guarantees loans but which basically does not cost the government
a penny? We could say this is wonderful, it does not cost the
government a penny, but on the other hand, if that is true and if the
impact is neutral, why is the government involved in this kind of
program?
Do not get me wrong. As a member for the Bloc Quebecois, I
will debate the bill in committee, we will ask questions and we will
propose amendments, but I am very disappointed that a
government that wants to make cuts everywhere and has not done
so in
15778
this sector although, according to its ideology, it probably should,
has introduced a bill like this one.
I am very disappointed when a government introduces a bill
providing for measures that, as was pointed out in the standing
committee, were ineffective, and in the presentation given by the
parliamentary secretary is incapable of proving otherwise.
(1600)
One wonders what the government is doing. Basically, it extends
legislation, changes maximum guarantees and tinkers with details.
Personally, I think this kind of legislation is effective and that the
government has a role to play in the economy, but I would have
liked to see the people who administer or claim to administer
billions of dollars of taxpayers' money be more consistent and
more credible when they introduce bills like this one.
We will probably vote against the bill, considering my
comments on this legislation, but once again, in concluding, I am
inclined to be rather wary of a government that again is asking us to
extend and restructure a bill, although it is incapable of
demonstrating the bill is effective and produces the desired results
for entrepreneurs and the Canadian economy.
I will conclude my speech after comments that have indicated I
am somewhat disillusioned with a government I thought would be
more consistent in the way it manages the affairs of state. After two
years as a member of the House of Commons, one becomes
increasingly convinced there will have to be some major changes
made in Canada, starting with the Canadian federation-or with the
government that now claims to head that federation.
[English]
Mr. Werner Schmidt (Okanagan Centre, Ref.): Mr. Speaker, I
stand to enter the debate on Bill C-99, a bill to amend certain
sections of the Small Business Loans Act.
I want to pay particular tribute to the parliamentary secretary to
the Minister of Industry for his very kind remarks and his
description characterizing the industry committee that dealt with
the report ``Taking Care of Small Business'', which was tabled
about a year ago, and also some of the recommendations in the
report, some of which are included and recognized in the bill.
I would like to follow up on some of the suggestions he made
about the significance of small business in the economy of Canada.
It is not a secret to us or anybody who follows the economy of
Canada that approximately 80 per cent to 85 per cent of the new
jobs created in Canada are created by small business. When it
comes to the Small Business Loans Act it is precisely that sector of
our economy that this act addresses. In my opinion, these
amendments are not sufficient. They do not go far enough and
some of them are virtually counterproductive.
We must recognize that in the new economy that is developing,
the important issue and the characteristic of a business is the ability
to apply knowledge in a way that will provide for new services,
new products, and particularly the application of new technology
and the most recent discoveries of science. It is very clear that in
the globalization of the economy and in the international
competition that is developing it will become increasingly
significant that the science and the technology of a nation will
become a determining factor in that particular competitive
environment.
One critical factor in developing the ability to transfer
knowledge and apply it to new products or new ways of processing
and doing things will require a skilled and very knowledgeable
workforce. That does not come by accident. It comes as a result not
only of good technical schools and good universities, but begins in
primary school, kindergarten to grade 12. It is here that we need to
change our educational system so that it will become far more
geared to science and technology, and particularly the science area,
and that we all become sensitive and recognize that it is really
science that is going to make the difference in the next century.
(1605 )
We also know from past experience that it is the small business
that is most able to apply this new knowledge, because it is not
fettered with all this bureaucracy. It is not fettered with all these
regulations and things that are internal and the internal politics that
stand in the way of new ideas and adapting to change. We need to
develop that kind of awareness and recognize that it is the small
business group that is going to be the leader in this particular area.
The whole idea of small business rests on entrepreneurship.
Unfortunately, today in this country we have what is known as
bureaucratic entrepreneurship. We all know what that is. That
means that a bureaucrat sees how many more bureaucrats he can
get under his supervision. That will mean that his salary and power
will increase. Therefore, the entrepreneurship is one of developing
larger and larger departments. We have a very well developed
entrepreneurship orientation, ability, and skill level in that area.
However, we do not have that same level of expertise, that same
skill, that same fully developed attitude in the developing of
entrepreneurship in business and the application of knowledge to
produce new products and adapt to new processes in developing
those products.
Right down into the kindergarten level, all the way up through
the universities, we need to develop this attitude, this orientation
toward entrepreneurship. The Small Business Loans Act is directed
precisely to that area. We must recognize that the Small Business
Loans Act is not a new idea. It has been around since 1961. It has
15779
been amended many times. It was designed in the original instance
to provide for innovation to our economy in Canada.
I want to hearken back to a moment ago when we talked about
developing entrepreneurship, the skill and so on. We now need to
recognize that it is this legislation that initially was designed to do
just that. We should look at some of the provisions of this particular
piece of legislation and ask ourselves whether the new amendments
will facilitate or will stand in the way of that kind of development.
We all know that small business has as its major impediment to
further growth and development, very often in its initial
establishment, access to capital. There are two kinds of capital to
which business requires access. One is equity capital, which
establishes the machines, the facilities, and those kinds of things.
The other is loan capital. There are two kinds of loan capital.
Usually it is centred around operational capital, which allows the
business to operate from one day to the next. We discovered in the
last year that even though everybody says there is all kinds of
capital available, we have story after story of business telling us
that it is the access to capital that is its stumbling block. It is not
getting the access it needs.
I want to draw to the attention of the House some of the elements
that came to our attention when we studied this problem in the
industry committee.
With the amendments that were implemented in 1992, the loans
provided under the Small Business Loans Act increased
dramatically. Between 1993 and 1994 the number of loans grew to
42,500 from 13,000 in 1992. The new lending reached almost $2.5
billion and averaged $58,500 per loan, from a previous average of
$37,000 per loan.
There was a sad note in the evidence that was heard before the
committee. A 1988 study concluded that two-thirds of the loans
would have been made even without the government guarantee,
which at that point was at 90 per cent. Since the revisions, however,
Mr. Al Cotton of the Toronto Dominion Bank told the committee
that 75 per cent of the bank's small business loans would not have
been made in the absence of the guarantee. Shortly after his
presentation, Mr. Kluge of the Canadian Imperial Bank of
Commerce stated that most SBLA lending would have been
granted in the absence of the program, but that in certain high risk
sectors, such as new restaurants, the guarantee was important.
(1610 )
We were left with a dilemma. Here we had two bank officials
from two of the major banks, one saying that the loans would not
have been given without the guarantee of the loans act, another
bank official saying that they would have been granted. It becomes
a real dilemma. Did this loan act really produce the kind of result
desired or did it not?
Mr. Mitchell: Sure it did.
Mr. Schmidt: My worthy opponent says of course it did. He
comes from one of the banks that was not represented by those
other two, so I suspect he would agree.
The cost of administering the program exceeds two per cent of
administration, which is another problem. At the present time the
Small Business Loans Act tacks onto the loan a two per cent
administration fee, which becomes part of the principal and can be
amortized over the length of loan, or I suppose the individual can
pay it off up front if he wishes to do so. In any event, the two per
cent is not sufficient to cover the loss or the administration of the
loan.
The third point is institutional loans. Under this provision it
suggests the loan level is rather high in this way of doing business
between financial institutions and their various lenders. I want to
draw the Haines-Riding study into this a little later in my remarks,
when I will get into this in more detail.
I now want to go on to the specific provisions of this act as it is
before the House today. The first of these is the reduction of the
government's liability from 90 per cent to 85 per cent. In other
words, the loan guarantees are now no higher than 85 per cent of
that loan. That is one provision.
The second provision, which we should all pay very special
attention to, says that future changes to the rate of the liability of
government are transferred from Parliament to cabinet. This means
that in the future the liability that will be incurred by this
government and will rest upon the shoulders of every Canadian
who pays taxes will be decided not by the people's representatives
but by the cabinet. I think that is an abrogation of democratic
responsibility. I want to take very strong exception to this. In fact I
want to introduce right here the notion and the statement that the
Reform Party will not support this bill on the basis of that provision
alone. Unless an amendment is made to withdraw that provision
and that transfer of power from the Parliament to the cabinet, we
will oppose this bill, even if we would agree with everything else in
the bill. We do not agree with everything else, but that is sufficient
in my opinion to oppose the bill in its entirety.
Why do I take such a strong view of this? This is a democratic
country. This country is based on the principles of democracy,
which means that the people in this House who are elected to
represent the Canadian people have been elected to look after the
best interests of those people who have elected us. That means we
should represent them as honestly as we possibly can, and do so
fairly, justly, and equitably. That is what I was elected to do.
15780
This kind of amendment takes away the right of
parliamentarians to represent their people on the floor of this
House. That is wrong. It is wrong in principle. The time has come
for us to take very strong exception to this kind of amendment.
We all know that within the platform, the philosophy, and the
principles of the Reform Party of Canada we stand for precisely the
ability to represent our people. We want more free votes in this
House. We have had some examples of free votes in this House,
and the government is to be commended for those few instances.
However, the government is to be severely chastised for those
moments when its members did exercise their free vote and were
punished for doing so. That is a fault, a blemish on this
government's record in terms of its democratic principles and the
application of democratic decision making.
(1615)
We talk about a referendum. There certain instances when every
person in Canada should exercise their right directly and
immediately not only at the time of exercising a ballot in favour of
a particular person but also in favour of major social, ethical or
moral issues on which they feel very strongly and about which the
majority should decide what the issue in Canada ought to be.
One which has been well publicized is capital punishment. We
go on from there as well. There is the other place, the Senate of
Canada, and we believe there is also responsibility that it be
democratized; that the individuals who sit in that chamber to
provide and exercise sober second thought be elected and that they
fairly and accurately represent the various regions of Canada so
there can be fair representation not only by individuals but by the
various regions of Canada as well.
Therefore within that framework of deep philosophic orientation
we oppose the provision in this bill which would amend the act in
such a way that the power moves from the House of Commons, the
Parliament of the country, to the cabinet.
Another provision is the application of an annual fee of 1.25 per
cent to the administration of a loan, the outstanding balance, paid
by the lender. It is very interesting how this fee is to be
administered. It is to be paid by the lender and the lender may not
recover the cost of that 1.25 per cent except through an increase in
interest rates.
It is interesting what the act does. The earlier limit on the interest
rate was 1.75 per cent above prime. The amendment proposed says
the new limit is 3 per cent above prime. It does not take a
mathematical genius to add 1.75 and 1.25 and come up with 3,
which now means very clearly that the bank or any lending
institution may increase its interest rates 3 per cent above prime
and thereby recover its full 1.25 per cent. That is what this
provision is.
Another provision provides for a claims processing fee. When
we ask the various department officials how much that fee will be,
when will it be applied, under what conditions will it apply, will it
be a standard fee across any loan, will it make any difference, they
say they do not really know because they have not yet decided
whether they will apply such a fee.
Why does the act have this provision in it? They might want to
recover certain costs associated with claims. That is very
interesting but it begs the question of what kinds of conditions must
a lending institution meet in order to avoid being assessed a claims
processing fee.
There is absolutely no provision in the act that would suggest the
parameters, the guidelines, the details under which a claims fee
would be applied. It is dangerous when we have open ended
legislation of that kind when nobody knows how much, nobody
knows under what conditions, nobody knows under what
guidelines it will be applied.
I was absolutely astounded when I read this. When we got the
briefing, it sounded very different. When I went back to the actual
act I discovered that really the slant was quite different. I want to
read this exactly as it is written. Section 4(1)(e.1): ``The minister
may prescribe the terms and conditions on which a lender may
release any security, including a personal guarantee, taken for the
repayment of a business improvement loan''.
(1620 )
We were told in no uncertain terms that this dealt with
guarantees, the actual phrase being personal guarantees. I can see
where a small businessman getting started who becomes a little bit
desperate will actually provide a personal guarantee. He will say:
``Here is my house and my personal effects. I will stand good on a
personal basis for this part of the loan''. When half the loan is paid
the lender says he will now take the personal guarantee away.
That is only one small part. It includes the release of any
securities, which includes anything else. It could be a facility, a
building, equipment, land, a variety of things. If there is a loan
outstanding of $250,000 and half of it is repaid, that is a $125,000
liability. If at that point the lender can now release security, where
is the security left for the balance of that loan? I can see the
understanding that it goes to the personal guarantee because the
building is probably worth the $125,000, but if the lender cannot
take that off too and the act allows him to do that then I ask myself
what kind of protection there is for the Government of Canada on
the hook for the guarantee of 85 per cent of that loan.
So much for a review of the particular provisions. There are
some issues we should be aware of. I referred earlier to the
Haines-Riding study from Carleton University in Ottawa. It makes
some very interesting observations. I think we should go back into
history a little. The Small Business Loans Act up until this point
had a ceiling of sales of $2 million; in other words, a business that
15781
had sales of more than $2 million would not qualify for the SBLA
loan. Under this act now that level is $5 million.
The Haines-Riding study shows very clearly that businesses with
sales of $2 million or less have a much lower failure rate when it
comes to the repayment of loans than those with sales between $2
million and $5 million. The differential between those loans is a
failure rate increase of 14.7 per cent. That is pretty significant.
We need to combine that with the increase in the amount of loans
outstanding as well. In the past the maximum SBLA loan one could
have was $150,000. That has now increased to $250,000, which
means, although we cannot say for sure, if the size of the business
and maximum loan has increased we can conclude the loss rate will
increase proportionately. Therefore if it costs $100 million now on
an annual basis to run this program what will it be under the new
provisions? I think the answer is very obvious. It will be higher
than it is today.
That brings us into a very serious conundrum. On one hand we
have an act that is supposed to build and encourage businesses. It
will do that in a variety of cases. It should then generate more tax
revenue and things of this nature which would then increase the
economy of Canada and everything would roll along more
smoothly than it did before.
The maximum of the SBLA loan ceiling has now moved from $4
billion to $12 billion, a threefold increase. If it now, under the $4
billion ceiling, runs at $100 billion, what will it do under the $12
billion? If the proportion remains constant it will also be a
threefold increase. We cannot afford that.
The national debt is somewhere around $560 billion, growing at
about $1,000 per second. About $45 billion to $60 billion is paid
out in interest, much of which is foreign currency denominated.
With the Canadian dollar being where it is today, can anyone
imagine what this is doing to our social programs? That is why we
are in trouble with the health care system. That is why we are in
trouble with transfer payments. That is why we are in trouble with
welfare payments. That is what makes this kind of bill
questionable.
(1625)
Yet people say they were told at the beginning that 80 per cent to
85 per cent of the new jobs are created by small business. Right.
Should we not encourage small business? Right. Should not our
government programs to the greatest degree possible be
self-financing? Right. This bill is supposed to do all those things.
If it does that, then we can support that. However, we still want
to go back to the earlier point I made about this democracy. That is
absolutely at the heart of this issue and we cannot, we dare not
allow that to get in the way of implementing this bill.
I want to address one final point, competition. I want to read a
very extensive point made very effectively by our study on small
business. We were told by Mr. Doug Robbins of Robbinex that
financial institutions are increasingly using the Small Businesses
Loans Act-get a load of this-to finance assets, for example cars
and trucks, that are able to obtain financing without a government
guarantee.
Data provided by the Scotia Bank on its small business lending
portfolio show that SBLA lending is more heavily concentrated in
areas of transportation by as much as 25 per cent than the bank's
total small business lending portfolio in which transportation and
communication lending represents only 6 per cent. The
representatives of Newport Credit and the Canadian Financing and
Leasing Association, specializing in asset based financing, told the
committee they are having difficulty competing with lenders who
benefit from government guarantees.
Since when has the government become that great and wonderful
arbiter to determine winners and losers in the marketplace? The
government has no business getting into this area. If a business
cannot succeed in the marketplace it should not be there. That is the
part that bothers me more than anything else in a bill of this kind,
this orientation. We need to recognize this is not a simple, easy
answer to our economic problems.
The committee received conflicting views on the future of the
Small Businesses Loans Act as well. It was suggested the act be
expanded by extending it to working capital. Neither the Small
Businesses Loans Act nor this bill does that. It was also suggested
that it be restricted by focusing on rapidly growing business that
enhances the country's knowledge base and generates skilled
employment, which we already talked about.
With increase lending comes increased taxpayer exposure. We
have already dealt with that. This amendment, although it goes part
of the way, does not go all the way. It should go further.
The committee suggested we reduce the percentage of
government guarantee, which has been done, reduce the percentage
of assets that can be financed, and reduce the maximum loan
amounts, which the bill does not do. In fact it goes in the opposite
direction. It doubles the exposure that would have been happening
under the act as it is now.
The bill has numerous shortcomings like releasing securities,
any kind of securities as well as personal guarantees. We need to be
very clear and an amendment is needed in this area.
This bill also increases the liability of government even though
the minister stood up in the House and said the bill, because it is a
self-financing or a cost liquidating kind of a program, does not
increase the liability of government. I dare suggest the experience
will show that it does increase the liability of government. If it does
15782
not increase the liability of government then I ask the minister
whether there is any need for a program of this kind.
Let me emphasize once again that the most serious flaw in the
bill is that it disenfranchises parliamentarians. It moves the
authority to make decisions and obligations on behalf of the people
of Canada from the House to the cabinet. That is wrong.
Democracy must never be denied.
I reiterate that unless that provision is removed from the bill we
will oppose it.
(1630 )
Mrs. Brenda Chamberlain (Guelph-Wellington, Lib.): Mr.
Speaker, I am pleased to have the opportunity to speak to Bill C-99,
an act to amend the Small Business Loans Act and to share with the
House the concerns and hopes of small business owners and
managers throughout Guelph-Wellington.
At this important time in Canadian history I remind all
Canadians that it is the hope of small business people in
Guelph-Wellington, their families and their employees that
Canada remains united. They recognize the imperfections of our
confederation, but they realize, as we have in the past, that we can
continue to evolve to make our country always stronger. They are
confident that a united Canada, one that includes Quebec as an
active member of our nation, will continue to be regarded
worldwide as the best country in the world in which to live.
Bill C-99 is part of our ongoing effort to reduce the deficit, fulfil
the promises we made to Canadians two years ago and provide the
support that is necessary to enable small business to grow and to
create jobs. I congratulate the Minister of Industry and the Minister
of Finance who have directed and focused our efforts to strengthen
small business in Canada. The Minister of Industry visited my
community last year. He was welcomed by small business people
who encouraged him to continue his initiative of providing support
and assistance to them, so that they can continue to build a strong
community in Guelph-Wellington and elsewhere.
Small business people in Guelph-Wellington, when talking to
me, remind me that they have hope in our future. They talk to me as
women and men who have taken risks in order to build a life for
themselves and their families. They are creating jobs in my
community and in every riding across Canada. They look to us, the
federal government, to assist them in that important responsibility.
The Small Business Loan Act is part of our efforts. Since 1961
more than 420,000 loans, totalling over $15.5 billion, have been
made to small businesses. These loans have helped small business
gain access to capital for start-up, expansion and growth. The
program's success lies in its ability to serve as an economic
development tool and as an example of public sector and private
sector co-operation.
Guelph-Wellington recently hosted, through the efforts of
small business leaders like Catherine Billings, Anne
Redfearn-Grobbo, Richard Zinck and Valerie Poulton, Community
Spirit '95, a small business expo, which brought together business
people to exchange ideas, share expertise and celebrate the
successes of small businesses in Wellington county. The message
that I received at Community Spirit '95 and wherever I meet small
business leaders is: We need government to get out of the way
where it causes us unnecessary burden; to listen to us when we have
ideas for our future and to provide the assistance necessary for us to
weather uncertainty and to expand our resources when we want to
create jobs and strengthen our achievements. The Small Business
Loans Act program allows every small business in
Guelph-Wellington whose revenues do not exceed $5 million
annually to ask for that assistance.
Small business people in my community understand the
seriousness of our financial crisis. They know that deficit spending
is not the way to sustain our economic future. They are concerned
about taxation and they want the government to manage its money
as well and as carefully as they manage their own money. They
recognize the need to reduce expenditures and to refocus spending.
The Minister responsible for Public Service Renewal visited
Guelph this fall where he spoke to representatives of small business
about the program review that will redesign government. They
welcomed the change because they support our efforts to spend
what we have and not to mortgage our future.
Recently, the Small Business Loans Act program has suffered
tremendous losses for the government. Assuming continuation of
the historic losses that have occurred over the past few years, the
annual program cost would increase by over $100 million. Clearly
this is a threat to the future of the program. The potential cost of the
program given these circumstances, and the government's need for
deficit control required that the program be brought to full cost
recovery.
(1635)
The federal government included an examination of the Small
Business Loans Act in its program review process. During the
months of October and November 1994 the review included
extensive consultations with major stakeholders, representing
lenders and those who borrow. As part of our efforts to encourage
more participation by members of Parliament, the
recommendations of the industry committee and the small business
working committee
15783
were also taken into account. All stakeholders supported the move
to full cost recovery.
Small business people in Guelph-Wellington know that in
order to survive as a nation we will have to choose. They have told
me that we can no longer afford the luxuries and excesses of the
past. As they have had to do in their businesses, they have asked me
to work for them to make decisions on what is important to us and
for our future and to concentrate on what will make us strong again.
They do that in their businesses each and every day and they
welcome a federal government that from the day of its election in
October 1993 does the very same in order to secure a strong future
for this country.
As part of our efforts we have introduced a new 1-1/4 per cent
annual administration fee on each lender's average outstanding
balance of the Small Business Loans Act made after March 31,
1995. We have also announced that the maximum interest rate that
a lender can charge under the program has been increased by 1-1/4
per cent.
Bill C-99 also includes changes which will complete the move to
full cost recovery and improve the administration of the program.
These changes will mean that the Small Business Loans Act will be
better targeted toward small business which really needs its help.
These changes go hand in hand with our efforts to improve access
to loans to small business by our financial institutions. While we
aim at cost recovery, our commitment to strengthening the future
of small business in Canada is unchanged.
Small business recognizes the need for co-operation. Each and
every day in Guelph-Wellington small business leaders rely on
distribution, transportation and communication in order to survive.
They have called on me to bring a message to Ottawa. Let us work
together: government, industry and labour to get the job done.
In Guelph-Wellington we know the importance of listening and
working together to build a stronger community. This summer,
Wendi Bacon of the Royal Bank Business Centre brought me
together again with the leaders of financial institutions throughout
my riding. We discussed the concerns of small business people,
their frustrations in obtaining capital and their suggestions for
strengthening their relationship with the banks.
Everyone recognized that there is more to be done. But it was
also an opportunity to review what has happened in the past two
years and to remind ourselves that we have met with some success.
Also this summer I had the opportunity to meet with small
business people, leaders like Phil Greenway of Danby Products and
Dwayne Mott of Orbex Computer Systems who reminded me that
they want deficit reduction and they demand that the government
plan carefully, consult extensively and act responsibly.
Community leaders like Michael Henry, general manager of the
Guelph Chamber of Commerce, Ralph Macdonald of the
Rockwood and Eramosa Township Business Association and Mike
Lazarakos of the Guelph Small Business Association, bring
together business and government in order to work out solutions
and most important, to listen to one another in order that we
improve and enhance small businesses in Guelph-Wellington.
Small business leaders throughout Canada have told the
government that the primary lending issue for them is access, not
the cost of financing. We believe that by making the Small
Business Loans Act self-sustaining, these changes will ensure that
access will continue.
(1640 )
In the past two years I have participated in the ground breaking
of a new Purolator facility, welcomed the Minister of Industry as he
visited Skyjack and Linamar, walked with the minister of
agriculture as he toured Semex, visited countless businesses and
congratulated our business leaders on their successes.
Guelph-Wellington supports its businesses and it celebrates their
successes.
As a former small business manager I share the frustrations of
individuals, couples and partners who have a dream and who work
hard to establish that dream in a business of their own. I also share
the fulfilment and know how enriching owning, operating and
working in a small business can be.
I am excited to tell small business owners, managers and
employees that the federal government recognizes that it must
create a better environment for jobs and growth in the small
business sector.
We have eased restrictions on internal trade, proving to the world
and to ourselves that federalism works. Removing these barriers is
good news to many of the businesses that sell products and provide
services to other parts of Canada. This is welcome news to
Sleeman's Brewery, which knows that various provincial liquor
boards practise selective listing policies. Mackinnon Transport
should welcome this initiative. It is aware that transportation
regulations differ from province to province. D&J Construction in
my riding saw new opportunities because construction procedures
are different from one province to another. Trodat Canada, Clear
Choice Manufacturing and Autosparks are companies that have
told me that our patchwork of regulation standards and various
provincial laws are unacceptable to them and to their employees.
We have also opened doors through exports. Canada is a major
exporting nation. By forging partnerships with the provinces and
working as Team Canada we have built a new approach to selling
Canada to the world.
Nipponia Export Limited of Puslinch is one example of this
success. During a recent trip to Brazil it sold 200 cattle in a deal
worth almost half a million dollars. The University of Guelph
re-signed an agreement with a university in Chile. Valcom Limited
15784
recently negotiated joint ventures and recruited distributors at
Telecom 95.
The message from the business community of
Guelph-Wellington is loud and clear: we can compete, we can
produce and we can succeed.
Bill C-99 is not the sole solution to the concerns raised to me by
my constituents. It is a part of our strategy to further our
commitment to our future. It is legislation which fulfils promises,
makes government more accountable through cost recovery and
strengthens the relationship that exists between government and
business.
We have more to do. Together we must address the problems of
the GST and we must eliminate the underground economy. I am
proud to be working with union representatives in Wellington
county to give suggestions to the Minister of Finance and the
Minister of National Revenue to address an underground economy
which costs us revenue and costs us jobs. The underground
economy does no Canadian any good. With it we prolong the
deficit and we prohibit Canadian men and women from their
responsibility of providing for themselves and their families. At the
same time the people of Guelph-Wellington look forward to the
government fulfilling its promise to replace the GST. We will do
that.
We know that it will require all 10 provinces and the federal
government to work out a solution to the GST which will make it
fairer and simpler and ease the administrative burden on business.
Again, my constituents have provided me with suggestions which I
have been pleased to forward to the Minister of Finance.
The government remains strongly committed to small business
as the main engine of economic growth in Canada. We have been
told repeatedly and we are listening. The best that we can do for
business, large and small, is to get the deficit under control. The
changes that are included in this legislation are a step in the right
direction. The user-pay system which is being adopted will mean
that it is no longer a contributor to the government's deficit.
(1645 )
The changes ensure that the Small Business Loans Act will
continue to be an important public policy tool to foster the growth
of small businesses in Canada.
In Guelph-Wellington we like to celebrate our success. We
believe we have a workforce that is second to none because we live
in the best community in Canada. We know we can accomplish
much when we all work together, stay positive, and keep focused.
The enthusiasm evident throughout Guelph-Wellington is there
because we want to succeed.
Two years ago the people of Guelph-Wellington helped to elect
a Liberal government with a mandate for change. I say to my
Quebec colleagues that the best anniversary present we can
imagine is a united Canada committed to change, change that will
result in jobs and growth for Guelph-Wellington and in all 295
ridings in this great country. As part of that mandate, Bill C-99
deserves our support.
Mr. Andy Mitchell (Parry Sound-Muskoka, Lib.): Mr.
Speaker, I appreciate having the opportunity today to talk about the
Small Business Loans Act. Obviously as a government and as a
party we believe the small business sector plays an important part
in the economy.
The last time statistics were compiled, in 1993, showed that
911,700 businesses in this country had fewer than 100 employees,
which is actually 99 per cent of the businesses that operate in
Canada. So we can see the importance of the small business sector.
In fact that number represents a 30 per cent increase in the number
of small businesses in Canada over the previous 11 years. Not only
is small business an important part of our economy, but it is an
increasingly important part of our economy.
These small businesses with fewer than 100 employees-some
are micro-businesses, with between one and three
employees-account for 44 per cent of the jobs in Canada. More
important, small business accounts for the vast majority of the new
jobs being created in this country today. As a government, we
recognize that.
We as a government understand that we need to assist the small
business sector, that we need to create a climate, an environment
within which the small business sector can operate successfully, so
it is able to be profitable. By being profitable they are able to create
employment, which is the bottom line. We want to ensure
employment is created. Our government has done that in a number
of ways. It has done it in terms of our fiscal policy. It has done it
because we have addressed Canada's fiscal deficit and we have
worked as a government to bring some economic order to this
House.
By the end of this fiscal year we will have come close to
reducing the annual deficit by half. In the last budget the Minister
of Finance had a plan that would see our expenditures reduced by
19 per cent. The public service is being reduced by 14 per cent. We
are bringing economic revitalization to this country and we are
bringing some sanity to our economic house, but we are doing it in
a way that recognizes that behind every expenditure line on the
government's expenses there are real people, real Canadians. We
are determined to do this economic exercise in a fair and equitable
way for every Canadian.
The second area we have worked in to create a favourable
climate for the small business men and women of this country is on
15785
the regulatory regime under which they have to operate. There is no
question that if we overburden the small business men and women
with regulation after regulation they spend more time doing that
than they do taking care of their business, creating wealth and jobs.
Already this government has eliminated 250 regulations that
have served their purpose and are no longer applicable, and we
have amended another 300 plus. We are very cognizant of the need
to refine our regulatory regime and we are working every day to
make sure we are protecting the interests of Canadians where those
interests need to be protected by regulation while at the same time
making sure we do not do it in a manner that overburdens the small
business sector.
(1650)
We come to the third component of our strategy for small
business, which is the issue of access to capital. The Small
Business Loans Act and the bill we have in front of us, Bill C-99,
deal very much with the whole issue of access to capital.
I, along with some colleagues here in the House, sit on the
industry committee of the House of Commons. That committee has
worked now for close to two years on this very issue of access to
capital. We have worked with the private sector in this country,
with the Canadian chartered banks and with others to try to ensure
that they take measures that will ensure that there is increased
capital to the small business sector. To some extent, we have met
with some small successes.
The banks looked at much of what we said and agreed that there
needed to be a code of conduct that clearly outlined the relationship
between the small business sector and the financial institutions. In
effect, that code is now in place in all of the banks. It defines things
like if a person is turned down for a loan they have to be told why.
They have to be given the reason. They have to be told alternatives.
It talks about when a loan is called and the amount of time that has
to be given in order to do that. It is helping to take some of the
surprises away. I was glad to see that was the recommendation of
the industry committee and that the chartered banks followed that.
A second thing they have done is put in place an alternative
dispute resolution system, the ADR. Basically it is a mediation
process. It gives small business men and women who have a
relationship with a bank and who are not happy with what is
happening with that relationship the ability to appeal what is going
on to an independent panel. This is a positive step. It was long
overdue. I was pleased to see that it was with the initiation again of
this House through the industry committee that the banks are in fact
doing that.
We still have many challenges. One of the things that we know
as parliamentarians is that in order to evaluate whether or not there
is sufficient lending to the small business sector, whether there is
indeed proper access to capital, we need to know exactly what is
being lent and how much that is either increasing or decreasing.
One of the things we have worked on in the last four to six months
with the chartered banks is in fact that they will provide statistics
on how much they are lending. And that is not just a gross amount
of how much they are lending, but broken down by region, by
industry, and by a number of other factors, so that we as
parliamentarians and representatives of the Canadian public, and in
this particular case the small business community, can in fact tell
whether or not small business is experiencing a credit crunch.
One of the greatest difficulties we had in examining this issue in
the last two years is we did not really have access to good statistics.
We had a lot of anecdotal evidence, and when we called the banks
they often said that was the exception rather than the rule. By
insisting that we get these statistics, by insisting that this
information be provided to us, we will have an opportunity to see
not the exception to the rule but in fact what the rule is and whether
in fact there is more capital out there available to the small business
sector.
Complementing the private sector and their lending to small
business, the government also has a role to play. The bill we are
talking about today, Bill C-99, is one of several components of the
government's interaction with the small business community in
terms of access to capital. We have the Business Development
Bank, formerly the Federal Business Development Bank of
Canada, which lends to small business, we have the business
development corporation that used to be part of the human
resources development department and now is part of the industry
department, which is lending to small business in rural areas, and
we have something that is a very important project, something
called the Small Business Loans Act.
I am probably one of the few if perhaps not the only member of
this House who has actually used that program as a lender-not as
a borrower but as a lender. I can say unequivocally that in the 20
years during which I operated in a private financial institution, this
program helped provide capital to the small business men and
women of Canada. Indeed, there were incremental loans that
happened as a result of the existence of this program. It was not
simply a duplication. It was not simply providing loans that would
have otherwise been made. It actually allowed for loans to be made
under this guarantee program that otherwise would not have been
able to take place.
(1655)
It is an important program. It can really help people in very
meaningful ways. For instance, if you are a long-distance trucker
and you want to buy your rig-they sometimes cost well over
$100,000-this program will help finance that. It will finance that
type of equipment up to $250,000. It will allow somebody to get
into business who might not otherwise have been able to.
15786
If you are a retailer, one of the things you have to do when
opening a retail shop is the leasehold improvements in the
business. This program allows for financing of leasehold
improvements. That is a tough thing to get financed in the private
sector. Through the Small Business Loans Act, a lot of people who
otherwise might not have been able to get the credit to do that,
who otherwise might not have been able to open their shops, are
able to. It is because of this program and the good this program
is doing.
If you are a manufacturer, ofen you have to go out there and buy
the equipment. It might be a stamp machine, a conveyer belt, some
sort of equipment. Again, this program can help that business do it.
This is not, as one of the members of the Bloc mentioned before,
a duplication of an existing program in Quebec, the Paillé program.
It is not a duplication of that. That program provides credit up to
$50,000. This program provides it up to $250,000. That program is
for start-ups. The small business loan is for start-ups as well, but it
also allows us to finance existing business expansion. That is an
important source of new wealth creation, an important source of
new job creation. Not only are we helping start-ups, but we are also
helping existing businesses find capital for their expansions.
In addition, the Small Business Loans Act has a longer
amortization than the Quebec program. They have a relatively
short amortization of three years, whereas under the Small
Business Loans Act you can amortize up to ten years. For the small
business person who is starting off with a new business or with an
expansion, it is important to have that longer amortization so that
their payments, at least in the beginning, can be relatively low and
their cashflow can be reserved for expansion and to keep the
company going in what usually are the most difficult years, either
at the start-up or after they have just had an expansion.
I want to talk a little about the cost of this program. I believe
government has a role in creating an environment for small
business. I believe government has a role in certain circumstances
to assist directly, such as in the Small Business Loans Act. I also
think it is important that we do this in a way that is revenue neutral,
that recovers costs and is not going to place a large burden on the
Canadian taxpayer.
We have seen this work. The Federal Business Development
Bank, now the Business Development Bank of Canada, has for
many years worked on a mandate of cost recovery. It has to
structure its programs, its guarantees, its collateral, its fees, and its
interest rates so that it recovers cost. It works, and it is proven that
it works.
This SBLA program now is moving along the same basis. It is
going to be a cost-recovery program. There is always going to be a
certain amount of loss that is going to be created with any loan
program. If you lend money, you are going to have a certain
amount of loss. The objective as a prudent lender is to make sure
there is a provision for that loss and there is the revenue to carry
that.
I know that one of the members opposite talked about the great
liability that was going to be incurred by the government through
this program. In a five-year timeframe this program is going from
$4 billion to $12 billion. That is $8 billion more capital for the
small business men and women of this country. That is important to
remember. It is happening over five years.
(1700 )
The potential liability is 10 per cent of $12 billion. To suggest
that is the true liability of the government, that that is what is at
risk, is like going to a chartered bank and saying that the risk is the
total loan portfolio. Of course we do not say that. We do not
suggest to any lender that the risk is the whole loan portfolio.
What lenders do, what we are doing as a government and what
the Department of Industry and the Minister of Industry are doing
is figuring out through prudent assumptions that the loan loss
history is likely to be based on historical data and on economic
performance. It is the same thing the banks do. They make a loan
loss provision and as a government we ensure that the revenue
stream is sufficiently large enough to cover potential losses.
In reality it is not a burden on taxpayers. It is a cost recovery
program that ensures capital is provided to the small business
sector.
I will comment on a couple of things that were said about how
we will go about recovering the costs. The program has always had
a 2 per cent fee that is paid up front. It can either be paid in cash or
it can be amortized over the length of the loan.
In doing that examination and trying to ensure that it is a cost
recovery program, it was determined that additional revenues
would be required. Therefore a new fee was put on, an
administration fee of 1.5 per cent.
One of the members of the Reform Party was complaining that
the administration fee was being passed through not as a direct fee
but rather through the interest rate. A small business person will
prefer that it happens that way because the fee will be paid on a
declining balance, as opposed to the full amount at the time it was
borrowed. In reality the fee will be less, because it is on a declining
balance calculated through the interest rate, than if the 1.5 per cent
was paid up front.
The minister acted prudently and in a way where business people
can have some control over their fee based on the speed at which
they pay back the advance. That was a good way of doing it. The
minister structured it so that the banks pay the administration fee.
Then they have the option to collect it from their clients. I hope the
15787
chartered banks, as part of their commitment to helping the small
business sector, would absorb a part or all of that fee.
When the plan was originally amended back in 1993 the
maximum rate was 1.75 per cent, but the banks charged prime for
the most part. They were anxious for the business. They went out
there and they got it. Even though there was a maximum rate they
did not charge it. They charged prime.
Now that we have added another 1.25 per cent or 1.5 per cent to
allow for the fee and put the maximum rate up to 3 per cent, I do
not understand why all of a sudden it was not good enough to
charge prime or prime plus a half or prime plus one. They seem to
be jacking up the rates to the maximum. I do not think that is what
they should be doing. They have to take care of their profits. They
have to take care of their shareholders. However I believe they
have a responsibility to the small business community, and one
way they can show that is by absorbing a portion of the fee.
The way they have structured the fee is appropriate. It allows for
small business people to save some money through their declining
balance.
In summary, it is a good piece of legislation. It is an act that has
been in place for many years. It has helped a lot of small
businessmen and women. There are many businesses today. All we
have to do is walk down Main Street in my hometown of
Gravenhurst or any other community in my riding, and I dare say in
any community in any member's riding, to see businesses
operating today that would not be operating if this loan program
did not exist. It does its job. It creates and helps small businesses. It
creates and helps employment.
Not only does it do that. With these amendments it will do it in a
way that will not cost the taxpayers of Canada anything because it
will be a cost recovery program. I applaud the Minister of Industry
for the bill. I applaud the Minister of Industry for the changes. I
know they will be good for Canada.
(1705 )
Mrs. Dianne Brushett (Cumberland-Colchester, Lib.): Mr.
Speaker, we all know that small businesses exist throughout
Canada, both in rural and urban centres.
In Atlantic Canada, small business is the backbone of the
economy. It sustains the economy. The majority of small
businesses, whether they are in Nova Scotia, New Brunswick or
Quebec, is owned by local people employing young people and
older people. The businesses have been there a long time, are part
of the community and are sustainable.
My question is for the hon. member from Parry
Sound-Muskoka. From his experience in the lending side of
financial institutions and his experience with the Small Business
Loans Act, could he elaborate on the value of small business to the
Canadian economy to ensure the money stays in Canada for
Canadians and provides a sustainable economy that supports our
future?
Mr. Mitchell: Mr. Speaker, I will try to be as brief as I can.
The hon. member makes the excellent point that small
businesses tend to create employment locally, tend to purchase
locally and tend to form part of the local economy. The profits
earned from those businesses are retained within the community as
opposed to going elsewhere.
As someone who was involved in economic development
initiatives in a rural area, organizations would look for the big hit.
They would look for the big 500 to 600 person plant to come in and
create employment. Those days are long gone. That is just not in
the cards any more, or if it is it is a rare occasion.
We have to build the local economy one small business at a time,
one job at a time, and this act provides an important tool to allow
that to happen in rural communities.
Mr. Murray Calder (Wellington-Grey-Dufferin-Simcoe,
Lib.): Mr. Speaker, last summer I had the opportunity of driving
around with the member for Parry Sound-Muskoka. We were on a
little mission called the access to capital for small business task
force.
Over the past two years I have been here, I have seen that the
federal government only has the capability to create the
atmosphere for the creation and the enhancement of small business.
We do not have the money any more to throw at jobs because of
deficit reduction, et cetera. One thing we have done is establish the
small business centre in Toronto to cut through the red tape.
Bill C-99 is only one part of the overview. The Federal Business
Development Bank and business development corporations play
very important and crucial roles in the formation and enhancement
of small business.
Could the member give us any information on what is being
done with them to improve that part of the overview?
Mr. Mitchell: Mr. Speaker, I will address a couple of examples
the member mentioned. One is northern Ontario where we have a
regional development fund called FEDNOR that is able to provide
funding for small businesses.
One way to be creative is to combine the money from FEDNOR
with the money available from the Business Development Bank of
Canada. If FEDNOR is able to provide funding to cover
contingencies, for example losses of 5 per cent, the Business
Development Bank of Canada can lend with a higher risk profile.
We are looking at taking approximately $500,000 from FEDNOR
and levering that
15788
through the Business Development Bank, or through a private
financial institution, up to $20 million.
Government has the ability to use some creative tools in the way
it finances and uses some of our programs. It is the same with the
Small Business Loans Act that we are talking about in Bill C-99. It
can work in conjunction with other credit facilities provided by
private lenders. The term credit can be covered by the Small
Business Loans Act and the bank or the private institution can
come along and be happy to provide an operating credit. In a lot of
cases we work in conjunction with various programs.
(1710)
Mr. Walt Lastewka (St. Catharines, Lib.): Mr. Speaker, I take
this opportunity to congratulate the hon. member for Parry
Sound-Muskoka for his efforts on the bill. As part of the industry
committee and as part of various task forces, he has travelled
widely in Canada to receive information from small businesses.
Actual consultation with small businesses is an area that has
been overlooked in the past. They do not have a large staff or a lot
of money to spend carelessly. Every penny they spend in their
budgets is very important to them.
My question to the member concerns communication and
information to small businesses once the bill is passed. It is very
important that the consulting process and improvements continue
to go forward. Getting the information out to the many small
businesses around the country is very important. The member
might want to comment on that.
Mr. Mitchell: Mr. Speaker, I thank the hon. member for the
question because it makes an excellent point. Not only is it
important to have the programming. It is also important that the
small business sector knows the programming exists and how to
use it.
One initiative of the government, the Minister of Industry, is the
single window approach to providing information so that instead of
having to go to maybe five or six different offices to gather all the
information, small business people can go to one location to talk to
an individual and learn the various programming aspects they need
to know to help their small businesses. There are many vehicles for
doing that. It can be done through chambers of commerce. Most
communities have a chamber of commerce. It can also be done
through economic development offices.
The idea of a single window approach to provide information to
the small businessmen and women is one that we recognize as a
government to be important and are working on to ensure it takes
place.
Mr. Philip Mayfield (Cariboo-Chilcotin, Ref.): Mr. Speaker,
it has been a pleasure for me to participate in the work of the
Standing Committee on Industry. With a businesslike attitude
committee members have gone about their work for the benefit of
all Canadian small businesses and of assisting them in competing
in the world economy of today.
I was particularly appreciative of the comments of the
Parliamentary Secretary to the Minister of Industry regarding his
concern for the amount of red tape, the paperwork and the
difficulties with taxes faced by small businesses. It is with this kind
of attitude we approach many of the difficulties our business
people are facing with a view to assisting them to make our
Canadian economy as competitive, as viable and as profitable as
any in the world.
Small business is the cornerstone of the Canadian economy
today. Using a definition of small business being a concern with
less than 100 employees, there are about a million small businesses
registered in the country. This means that small business makes up
nearly 99 per cent of all business enterprises in Canada. Small
business accounts for about 60 per cent of the economy's private
sector output. These are substantial figures.
As well, small business entrepreneurs presently create eight out
of ten new jobs. In a day when we depend on new ideas being
translated into new jobs, and new products and new services being
translated into a larger market share of our highly competitive
business world, we do not need to argue the value of small business
to the Canadian economy. Rather we need to learn how to
encourage entrepreneurs to develop new ideas and new products.
(1715 )
As a nation Canada has historically been highly creative. We
have learned how necessary it is to adapt to both the economic and
physical environments. However, we have been less successful in
taking our ideas and inventions from the laboratories and
basements of entrepreneurs and getting them into the national and
international marketplace.
It was extremely educational for me before I was even on the
committee to attend some of the hearings and listen to the
difficulties small business people were having in securing loans,
securing the capital they needed to get their ideas and concerns off
the ground. In some instances there were business people with
many orders in their order books, ready to sell but with no money
to work to produce the product. One very significant reason for this
lack of success has been the shortage of loan capital, of equity
capital, available to someone to take a well developed idea or an
advanced product prototype and make it a commercially viable
asset of the Canadian economy.
So often we have heard stories of how someone had this great
invention but after years of struggle to get it marketed they finally
15789
gave up and went to the United States where there was capital,
resources and an invitation waiting, all that was necessary to make
it a marketable product. These are sad stories, sad because they tell
of a loss to our country not only of the product, but more important,
the loss of the people who took what they had and left.
The Small Business Loans Act was an initiative by the federal
government in 1961 to help remedy this situation. By and large this
has been a successful intervention by the government. The Small
Business Loans Act has provided a 90 per cent government
guarantee to banks, credit unions and other lenders who make loans
to small business people. Loans that are properly made and placed
under the umbrella of this act will not be a write off to the lender if
they are not repaid.
The Small Business Loans Act guarantees loans made to small
business interests that qualify. There is an interest by government
for which I want to offer some congratulations in supporting this
sector of our economy. Today about $6 billion in loans to small
businesses is guaranteed in this manner. Under these proposed
amendments to the act, the amount of money available with this
government guarantee would substantially increase.
However, in the real world where not everything works out or
goes quite as, planned there are some aspects of the Small Business
Loans Act that do need updating from past experience. There need
to be corrections; there need to be some changes.
The amendments brought forward in Bill C-99 are being
proposed by the government. One of the problems the government
faces is there is about a 5 per cent failure rate in these guaranteed
loans. Estimates are that without some means of recovering these
losses, this loan guarantee program could cost the government in
the order of $100 million each year which would be an
unacceptably high cost. To its credit, the government is proposing
amendments to the act to rectify this problem.
One amendment would reduce the size of the loan guarantee
from 90 per cent to 85 per cent. In this move the government quite
properly is telling the money lenders that they have to bear some of
the risk in lending to small business enterprises. This should not
make a significant difference in the willingness of lenders to make
loans under the Small Business Loans Act for in many instances,
lenders have already said that they are including fully secured loans
under this act when it is hard to explain why this need is there.
A second amendment which I support is the establishment of a
1.25 per cent annual administration fee that can be passed on to the
borrower in the interest rates that are applied. It has already been
said that this would increase the premium on the interest rate to
about 3 per cent, which is significant. After listening to people
looking for capital, it seemed to me that more often it was not the
interest rate which was so important to them but the fundamental
access to capital which they needed.
(1720)
It is my opinion that it is completely in order for the borrower to
bear some of the cost of this guaranteed loan program. The
borrower is perhaps the one who will benefit most from it. When
the lenders are competing with one another for loans, the interest
rate is always a negotiable matter. Therefore, when competition is
keen and the lender really wants to get the money out into the
marketplace, the borrower may get the benefit of a loan interest
rate which is significantly lower. I do not have the same difficulty
with this amendment as do some other members of the House.
A third amendment which Bill C-99 would make to the Small
Business Loans Act would allow a borrower who has repaid
one-half or more of the loan to be released from the personal
guarantee held by the lender. This would not leave the loan
unsecured by any means. The collateral and physical assets held by
the lender would remain in place until the loan was repaid.
Often a loan is made to a partnership and over time the
partnership may dissolve. In an instance such as this, where a
former partner is no longer part of the business, there may not be a
strong desire to stay and there also may be a serious financial need
to free the guarantor of the burden which he has taken on. These
amendments would conditionally allow that to happen. They would
also allow a borrower in some way to separate his or her corporate
and personal interests.
My interest here is not to add more burden or more risk to the
government. Far be it from that. However, with the withdrawal of
the personal guarantee, the borrower is free, which allows more
opportunity for the expansion of business and of commercial
activity.
There is an amendment regarding a claims processing fee which
is troublesome for me in that it is poorly defined. How would it be
implemented? When would it come into place? These amendments
need careful attention and further revision before they can be
supported.
Bill C-99 has one essential flaw. The bill gives the Minister of
Industry the power to make future regulation changes without the
consent of Parliament. The Minister of Industry will argue that this
transfer of power allows the department to act more expediently in
response to the rapid rate changes of the financial markets.
Parliament could transfer every policy change away from the
elected members to senior bureaucrats and ultimately to cabinet
ministers. Then we would not be called a democracy, would we?
This trend by the Liberal government is a very serious challenge to
the authority of Parliament.
15790
This portion of Bill C-99 must be amended to respect the rights
of Canadians to have future regulatory changes soberly examined
by their elected officials and not left in the hands of the executive
or the bureaucrats. Without the amendment of this portion of the
bill the Reform Party cannot give its support to this otherwise
sound piece of legislation.
There are over 4.2 million Canadians employed by small and
medium size businesses in Canada. The Canadian Federation of
Independent Business recently surveyed their membership on job
creation. Catherine Swift, vice-president of the organization,
recently claimed that small firms and new businesses are the ones
which have created all the new jobs over the past couple of years.
This is an accurate claim. In the 1980s, 85 per cent of new jobs
were created by small and medium sized businesses. This trend is
continuing to grow as more and more Canadians explore the
possibility of starting their own businesses.
(1725)
The Liberals must make good on an election promise they made
in their red book. They promised ``to focus on small and medium
sized businesses because they can and must be the determining
factor in turning around what has so far been a jobless recovery''.
By creating a more efficient financing model for small businesses,
the government is becoming more responsible for the development
of small and medium sized businesses in Canada. The long term
financing of these businesses becomes even more assured with
these cost recovery amendments.
The minister needs to amend Bill C-99 to give Parliament the
right to make future regulation changes. Parliament must not give
this power away. This is necessary because losing the right to make
future changes could in the long run harm not only the democratic
process but even the small business loans program itself.
Members of Parliament are elected to examine programs such as
this one in the interests of their constituents. To lose that ability
would be inexcusable. I encourage the Minister of Industry to cease
seeking such executive control. With this aspect of the bill
eliminated, the small businesses of Canada can get to work and
access a plan that is working well and could be improved on to
make its viability assured even during these highly competitive
times.
Mr. John Williams (St. Albert, Ref.): Mr. Speaker, I am
pleased to rise to speak on Bill C-99, the amendment to the Small
Business Loans Act.
The summary of the bill concerns me. The bill states: ``This
enactment amends the Small Business Loans Act with the objective
of moving the small business loans program to full cost recovery''.
I thought that the whole concept of the Small Business Loans Act
was for the government to try to provide some underlying
guarantee of picking winners and losers, because let us face it, it
has been in that business for a long time, through grants, subsidies,
contributions and giving away money by the millions and billions.
As an aside, did you see my waste report where $11 billion in
grants and contributions are given away by this government every
year?
Getting back to the bill, the concept of the Small Business Loans
Act was to provide a guarantee to higher risk businesses that had
the potential to generate jobs and economic growth. The
government was prepared to underwrite that program to try to
foster development. It is not a bad idea, although we Reformers
always felt that a dollar in the hands of an investor was far better
than a dollar channelled through a bureaucrat and back into the
economy. Nonetheless, the government is now going to channel
this money through the bureaucrat back into the economy on a full
cost recovery basis. The first question which comes to mind is:
Why are we doing this?
Mr. Mills (Broadview-Greenwood): That is not the bill.
Mr. Williams: Bill C-99, an act to amend the Small Business
Loans Act, is the one I am talking about. That is the bill that is on
the agenda at the moment. My hon. colleague from the Liberal
Party says that is not the bill. I am quoting right from the bill. Does
he not know what we are talking about right now and what the bill
says? The bill states ``small business loans program to full cost
recovery''. Let us talk about this full cost recovery.
The government has lots of power. It is going to establish an
annual administration fee to collect money from the lenders, put it
in a pocket and it is going to restrict the lenders from passing on the
fee to the borrowers, except through interest rates. The government
is going to say to lenders: ``We are going to charge you an
administration fee of maybe 1 per cent or 2 per cent of the amount
of money that you are lending out. You are prohibited from
charging your borrower an administrative fee but you may include
it as a mark-up on your interest rate''. Remember full cost
recovery.
(1730)
The lenders will have to pay to the government 1 per cent or 2
per cent of the total money they lend out. The government will take
this pool of cash and reimburse the lenders who make bad choices
because they are the ones who are going to collect the guarantee
from the government.
I scratch my head trying to figure out the logic because I cannot
find any in this particular bill. It says that the government, by
skimming money off the prudent, intelligent lenders who made
intelligent, prudent investment decisions are required to pay a
premium to the government so that it can build up a pool of cash to
reimburse the lenders who made poor and irrational decisions. It
does not make sense. We are penalizing good and competent
lenders and subsidizing incompetent lenders. The poor business-
15791
man does not get one nickel's worth of a break because this is on a
pooled cost recovery basis to the government.
I cannot understand the logic. That is why the Reform Party says
that a dollar in the hands of an investor, a businessman, an
entrepreneur, a consumer, is far, far better than a dollar in the hands
of a bureaucrat. The amendments to this act are living proof of the
justification of Reform Party policy.
I cannot understand the government which talks about creating
jobs, jobs, jobs. I recall that was its slogan during the election. The
Liberals were going to spend $6 billion on the infrastructure
program. Let us take the money, channel it through bureaucrats,
lend it out or give it away to try and create jobs. It did not work.
The President of the Treasury Board appeared before the
government operations committee trying to justify the
infrastructure program. After spending $6 billion, by his own
admission he has created 8,000 permanent jobs. That works out to
$875,000 per job. He would have been far better off putting the
money in the bank, taking the interest and giving it to the people,
saying: ``Do not bother going to work'' because they would have
had a lot more money. Ten per cent on $750,000 is $75,000 a year
just by writing a cheque.
This type of policy is no good. It is not going to generate
economic growth. It is not going to do anything for the lender. It is
not going to make the lender more willing to give money to the
small businessman. It is not going to make the small businessman
accept any more risk because the successful small businessman is
now going to end up paying an insurance premium through the
lender into the government's pocket so it can bail out the guy who
does not make it. That is just another tax on the competent and the
successful small businessman who is trying to create jobs, pick the
country up and generate some economic growth so we have a
chance of digging ourselves out of the economic morass that the
Liberal government and the Tory government have put us into.
The government talks about moving from this House and into
cabinet the opportunity to make regulations. This is an affront to
the powers of this House. We have seen a continuous and continual
erosion of the powers we have in this House being passed over to
the executive, to cabinet. Pretty soon the House will be an
irrelevant debating society where we talk about these bills but have
absolutely no control whatsoever over them.
(1735)
If we approve this bill as it is being proposed, we are passing all
the authority to cabinet. What good is that? When will the bill
come back for public debate? When will we be able to find out that
this bill is not working, that it is not creating jobs, except
bureaucratic jobs? When? That is why this type of bill must be
opposed at every opportunity.
As Reformers we believe in having accountability and
responsibility. It is about time this Liberal government introduced
some cost benefit analysis to tell us what in its opinion will be the
outcome of the amendments it is proposing. How many jobs is it
going to create in the civil service? How much is it going to cost the
taxpayer? How many jobs will be created through this in the private
sector? How much tax revenue will it produce? How many new
jobs will it create in the small businesses that it intends to help?
Conversely, is this actually going to shut down jobs in the private
sector? That is going to happen as we find it detracts from the
motivation of small businessmen to borrow money through the
Small Business Loans Act. The whole concept is recognizing that
there are opportunities. A chance has to be taken. A risk has to be
taken.
That risk is going to be avoided because the government says it
does not have the money any more. It is going to skim the money
off the successful entrepreneurs, channel it through the lenders
back to use as write-offs on the bad loans and bad decisions. That is
a dreadful decision.
In the last decade small business has accounted for the largest
share of the net new job creation in the country. It employs almost
half the labour force. Small businesses create eight out of every ten
new jobs in Canada. They do it because of entrepreneurial spirit,
not channelling money through the bureaucracy back out in some
complex formula that Liberal members want to bring into cabinet
so they can change and modify it if they so desire.
Give entrepreneurs freedom from rules and regulations. Give
them freedom from red tape. Let them go out there and create jobs.
By giving them the motivation and incentive to do so,
unemployment will come down. New jobs will be created.
Additional taxes will be paid without any tax increase. The deficit
will come down. Our competitiveness will improve on the
international stage. We will have all these things by getting the
government out of the lives of small businessmen and women and
not into it more at their expense.
The Department of Public Works and Government Services has
found that small companies accounted for 79 per cent of the
suppliers to the federal government in 1993-94 fiscal year. At least
we are glad to see that the federal government recognizes that small
business provides products that compete with the best in the world
and are worth buying for the Government of Canada.
However, despite the excellent contribution small businesses
make to the Canadian economy, the Liberals have not come
through on their electoral promise to create a better environment
for small business to work in.
15792
I heard some comments from the other side of the House. I am
sure they were not too complimentary on our position but I hope
my remarks will cause them to think about the spirit of the bill.
I would love to talk to them afterward and find out how they can
see the logic and benefits in here.
(1740 )
These are the points I would like to make on this bill. I do not
think that when it gets into committee and we hear witnesses-the
banks that are going to be paying the fee to the government-that
they will be complimentary. Some small businesses that use the
program will be sceptical about why they should pay the premiums.
Therefore, I hope the government will give some serious thought to
redrafting the amendments to recognize that small business wants
to provide the motivation.
I agree with the idea that the government should be involved in
creating an environment for small business to create jobs. That is
great. But the underlying philosophy here is that the government
wants to be seen doing that but with the small businessman's
money. On that point, I totally and absolutely disagree.
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I was
somewhat astounded by the discussion of the member for St. Albert
about the aspect of guarantees somehow being circulatory moneys
that small business has to pay in order to support these loans.
Most of us understand the concept of bad debts. I understand the
member is an accountant. We all understand that small businesses
have accounts receivable and usually make provision for bad debt
losses. Indeed, bad debt losses under the Small Business Loans Act
have been very small. I think they average out at about 2 per cent.
The member does not seem to understand that in order for the
government to protect itself from bad debt losses it needs to find a
method to recover a certain amount of cash flow from successful
loans. This is no different from any other normal business
operation. These are the things I thought the Reform Party would
applaud the government for because it is taking a business
approach to lending.
The member does not seem to be able to understand the whole
concept. It seems to elude him that somehow we are taking money
from one pot and putting it into another at the behest of small
business operators. Quite frankly, it is normal business practice and
something for which the government should be applauded.
The member talked about creating jobs. This program has been
around for a considerable length of time. We are now fine tuning it,
allowing it to expand. The jobs the member talks about being
created by the small business environment, in fact, were assisted by
this program. Some of the great jobs he spoke about which have
increased over the last number of years have been as a result of the
small business loans program.
The member also talked about infrastructure spending and how it
is a terrible waste of government money. If we look at the public
assets and the whole concept of why there is public administration
in the country, it is to build certain public assets that for whatever
reason businesses did not want to build, such as airports, roads,
sewer systems, et cetera. The member does not seem to understand
that is still a commitment of government in most places in the
country and it does create jobs.
I would like to ask the member whether he understands fully the
concept of guarantees and of making provision for guarantees?
Mr. Williams: Mr. Speaker, I will be glad to respond to the
member who I understand is also an accountant.
The point I am trying to make is that the small business
community is being provided this guarantee courtesy of
themselves. It will have to pay for the guarantee. The successful
entrepreneur will pay higher interest rates to the bank, which will
in turn pay a fee back to the federal government, which will use the
pot of money collected to reimburse the lenders for the bad
decisions they make or for the loans that go sour and the small
businessman who does not make it. The successful businessman
will pay a premium to underwrite the bad debts incurred by the
lenders.
(1745)
This will no longer be an underwriting by the federal
government. It states ``loans program to full cost recovery''.
Therefore there will be no underwriting except a great paper war by
the federal government. That is the point I am trying to object to.
There is no guarantee by the federal government. It is only a
guarantee to be paid by the guy who wins to pay the guy who loses.
I know that up until now the federal government has picked up
the tab for the losers who have not paid back their loans, and the
winners have gone on to create jobs and build this economy. Now
they will to be asked to do that with another chain around their legs
as they try to climb up above high taxes, high interest rates which
will be even higher now because they now have to pay the federal
government, the high Canadian dollar and so on. How can we
expect them to compete? That is the idiocy of this bill.
Getting to the member's other point on infrastructure, of course
taxes pay for infrastructure. Of course we need infrastructure.
However, the promise at the last election was jobs, jobs, jobs
through the infrastructure program. The President of the Treasury
Board said: ``Six billion dollars netted us 8,000 permanent jobs''.
That, by simple math, is $750,000 per job, which is far more
expensive than any job costs in the private sector.
15793
Mr. Dennis J. Mills (Parliamentary Secretary to Minister of
Industry, Lib.): Mr. Speaker, I was listening attentively to the
member. I could not help but get frustrated when he kept referring
to the small business men and women who failed as losers.
I would like to know how the member would propose that the
banks, which administer this program, would chose who would get
these small business loans in a way that there would be an
absolutely perfect track record? What special insight or ability to
judge entrepreneurship, what special formula does the member
have that would allow him to never make a mistake on judging a
small business person's ability to absolutely be-
The Deputy Speaker: The hon. member for St. Albert.
Mr. Williams: Mr. Speaker, again the hon. member really has
not applied his mind to the subject matter at hand.
Bankers incur losses and bad debts every year, billions worth.
Their customers have to pay that through lower interest rates on
deposits and higher interest rates on loans and they are required to
make a profit in the meantime.
Let us take two lenders. One is a prudent lender who can make
solid investment decisions and the other is careless and reckless
and invests money not nearly as wisely. The one who is prudent and
careful and analyses the lending applications his or her losses will
be less. He or she may still have losses but they will be less.
Mr. Mills (Broadview-Greenwood): How do you know?
Mr. Williams: Because they are prudent and more careful and
analyse the applications. Their losses will be less. They will pay a
premium and will have to charge the customers the premium,
passing it on through the interest rates. The borrower will pay a
higher rate. The money will flow into the government coffers.
(1750)
On the other side there is the reckless lender who is not too
careful about the application he approves. His losses skyrocket. It
will not cost the reckless lender any more money because he is
reimbursed from the fund the government has. Now we are
separating the risk and the reward because the prudent lender who
analyses the applications will have lower losses, hence higher
profits, and the reckless lender will not suffer any consequence of
his recklessness with lending because he will be reimbursed by the
successful entrepreneur who borrowed at a different bank.
That is the whole point I am trying to make. We are just moving
this money from the successful borrower through the lender into
the government's pocket to subsidize and reimburse the lender who
makes the bad decisions, who lends the money to the business that
may fail. That is the point I am trying to make. It is fairly clear, it
is fairly simple and I hope the hon. member realizes that.
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I will try this
one more time. The member talks about its being a simple concept.
Indeed it is a very simple concept.
In his hometown I am sure there must be an insurance broker
who in his daily operations will have a provision for doubtful
accounts. It is a fact in the course of doing business. That insurance
broker will say: ``It is a normal operation that I will lose 2 per cent
to 3 per cent of my accounts receivable every year. If I were so
perfect as to have a 0 per cent, I would be a very unusual business; I
would be a business that did not take any risk''. Small business is
about taking a certain degree of risk.
Those bad debt losses within that business are shared and borne
by all the other customers by definition. Therefore there is nothing
strange or unusual about the government's orientation to this and I
am really quite surprised the member does not understand it.
Have I made it any clearer for the member?
Mr. Williams: Mr. Speaker, I will try to be brief and lucid. He
used the example of an insurance broker. If the broker has 2 per
cent or 3 per cent of his debts go bad which he has to account for,
that is fine and he builds it into his margin. However, the point I am
trying to make is why should he have to build into his margin an
amount of money which is channelled through the government to
reimburse his competitor across the street who may be reckless and
have a 10 per cent bad debt situation? That makes no sense.
[Translation]
The Deputy Speaker: It being 5.53 p.m., the House will now
proceed to the consideration of Private Members' Business.
_____________________________________________
15793
PRIVATE MEMBERS' BUSINESS
[
English]
Mr. Ian Murray (Lanark-Carleton, Lib.) moved that Bill
C-329, an act to provide for the recognition of the Canadian Horse
as the national horse of Canada, be read the second time and
referred to a committee.
He said: Mr. Speaker, I am very pleased to have my private
member's Bill C-329 reach the floor of the House of Commons
today. Unfortunately the bill has not been chosen as a votable item,
however it certainly represents a part of our history which deserves
to be celebrated.
The purpose of the bill is to bring appropriate recognition to the
Canadian horse, the official designation of the breed. I believe it is
a symbol of Canadian heritage. I believe we should take every
15794
opportunity to celebrate those aspects of our history which make
Canada unique.
There are several precedents for the kind of recognition I have
proposed for the Canadian horse. Some years ago Parliament
passed a bill which designated the beaver as Canada's national
animal. Recently we recognized hockey and lacrosse as our
national sports. That kind of celebration of our heritage is neither
frivolous nor unimportant. We need more symbols to add to the
rich tapestry which is Canada's history.
As we debate the bill today Canadians are watching with concern
the debate taking place in Quebec which is so important to our
future. When I introduced Bill C-329 I was well aware that the
history of the Canadian horse began in New France, now the
province of Quebec, and I believe if we embrace the goal of the bill
it would make some small contribution to national unity.
Alex Hayward, a Canadian horse owner who lives near North
Gower, Ontario, brought to my attention the idea of giving the
Canadian horse national status through a private member's bill.Mr. Hayward grew up with the Canadian horse and insists ``they
can do everything but dance''.
After researching this breed we did note in several documents
that the Canadian horse was declared our national breed by
Parliament on March 17, 1909. Unfortunately nowhere in the
debates of Parliament could this be verified. Therefore I set out to
bring some attention to a breed of horse which has worked our
lands as far back as the 1600s.
The introduction of the Canadian horse to Canada dates back to
King Louis XIV of France in 1665. The horses were delivered to
the governor of New France at Stadacona, now known as Quebec
City. King Louis felt a knight should not be without a horse, and the
horses were presented as noble gifts in order to keep his colonists
happy.
The exact breeding of this horse is unknown. It was not until 100
years later that accurate breeding records were kept by horse
breeders. However, historians believe that the blood lines are from
the Arabian, Barb and Andalusian stocks. In 1667 and 1670 further
shipments of this horse were received and their numbers reached
12,000 strong by the year 1760.
It has been noted that the Canadian horse was the first to clear
Canadian soil. This versatile breed cleared, ploughed and
cultivated the soil. In addition they were used as carriage, riding
and race horses. This small, swift, rugged and strong horse seldom
reaches 1,100 pounds and is from 14.3 to 15.2 hands high.
Therefore the average Canadian horse would be about five feet
high.
As the years went on France was constantly at war and was
unable to support its colony. For the next century and a half the
horses in New France were bred and multiplied, with no outside
blood lines changing the breed. However, when the British arrived
in the late 1700s they brought with them other breeds of horse.
Upon arrival of the British many French settlers moved on to
Manitoba and the United States and took their Canadian horses
with them.
The American civil war created great demand for cavalry
mounts. The Canadian horse was the right size and was well known
for its tough constitution. This made it well suited to the hardship
and rigours of war. Exports from Canada increased greatly and
prices were very high. Many horses were killed in the war and
those that survived never returned to Canada. By the late 18th
century these factors threatened the continuation of the Canadian
horse and so action was taken then to preserve this fine breed.
In 1885 a stud book was started to keep accurate records of the
breed and in 1895 the Canadian Horse Breeders Association was
formed. The federal ministry of agriculture maintained a breeding
centre from 1913 until the second world war forced its closure in
1940. The Canadian horse has supplied foundation stock to many
breeds, in particular the Morgan and the Standardbred. It has been
estimated that by 1850 half of the horses in Canada carried some
trace of Canadian blood.
In The Canadian Horse by Gladys Mackey Beattie the strength
and endurance of the breed are well described. There are recorded
instances of Canadian horses trotting from Quebec city to Montreal
and from Montreal to Cornwall, stopping only when their drivers
needed refreshment.
Another example was noted in the Breeders Gazette of Chicago
written in 1914: ``A wood merchant, owner of Canadian horse
weighing approximately 1,050 pounds, harnessed it on the same
pole beside another horse, 200 pounds heavier. The Canadian horse
always kept its harness traces well stretched and never showed as
much fatigue as its heavier mate. After two years of common work,
the heavy horse died. Questioned on the cause of this death, the
driver answered `It is the Canadian horse that made him die of
overwork'. Another heavy horse teamed with the same Canadian
horse died after a year and the Canadian was still in perfect
condition''.
(1800 )
We should also pay tribute to that small band of Canadian horse
breeders past and present, without whom this important part of our
heritage would have been lost. In this respect I would like to thank
Alex Hayward and his friend, the late Don Prosperine, from
Dunrobin, Ontario, which is in my riding of Lanark-Carleton.
Those two gentlemen decided in 1978 to become partners in a
project to breed the Canadian horse. They spent a year and a half
searching in Quebec for suitable specimens. From their beginning
with one stallion and two mares their stock increased to 28
Canadians. Don Prosperine's son, Frank, continues the family
tradition on his farm in Dunrobin where he has 18 Canadians.
15795
In conclusion, I want to thank those of my colleagues who have
shown an interest in this part of our heritage and who are taking
part in the debate today. I also want to thank the people from
across Canada who wrote their member of Parliament in support
of Bill C-329. Finally, congratulations to the Canadian Horse
Breeders Association as it celebrates its centennial this year.
Mr. Monte Solberg (Medicine Hat, Ref.): Mr. Speaker, I thank
the hon. member for his words on the Canadian horse. From what I
have read about this horse it seems like an outstanding candidate
for the title of national horse of Canada.
The hon. member has talked about the history of this animal:
how it came from France; its ability to stand up in Canada's cold
weather and the varied seasons; its strength and its intelligence. All
of those things are wonderful. It is a lot like Canadians in that
sense. For that reason I cannot say anything against the bill. I do
not have a problem with the Canadian horse or even with the
concept of having a national horse for Canada.
However, I am wondering, when we are six days away from a
referendum on the break-up of the country, why we are talking
about these types of issues. It is an issue which the hon. member
could handle in a member's statement or in a letter writing
campaign. There are ways of handling these types of issues.
Frankly, when we are bringing private members' business to the
House of Commons, it should be a little more relevant to the
national agenda. For crying out loud, in six days we are going to
have a referendum about the break-up of the country. That is the
type of thing members should be bringing to Private Members'
Business to discuss. There is no reason in the world we could not
have had a bill today regarding the devolution of powers and how
that might affect Canada and the possibility that Quebec would
remain in the country. There is absolutely no reason we could not
have had that debate.
All kinds of excellent legislation has come from private
members. That is the type of thing we should see in this hour.
We have a debt of some $560 billion and it is going up $90
million a day. It will be going up more now that interest rates will
be spiked as a result of all the uncertainty over the Quebec
referendum. To me, that is the type of thing we should reserve this
time for.
Last night on television I saw that a transit worker was stabbed to
death in Toronto. He was the first ever transit worker to be
murdered in Toronto. This Ontario member could have brought
forward legislation to deal with that type of thing.
I truly do not want to denigrate what the hon. member has done.
However, I believe that Private Members' Business should be set
aside for things which are more germane to the public agenda in
Canada. I know that Canadians are outraged at some of the things
which are going on and that nothing is being done. We cannot prod
the government to do it, so let us prod private members to do it. Let
us get them to bring forward the legislation.
There are 97 or 98 government MPs from Ontario in the House.
The hon. member brought forward a bill to make the Canadian
horse the national horse of Canada. Fine. But a lot more essential
legislation could have come forward to deal with the issues I have
just talked about.
(1805)
Would it not be great if a Toronto MP, along with 19 or 20 other
Toronto MPs, brought forward legislation to deal with crime. We
could point to the example of what happened in Toronto the other
night, where we saw that man stabbed to death on TV. It was
outrageous. We have to do something about those types of things.
We cannot continue like that.
In small ways almost every day we are seeing the erosion of the
rule of law, not the breakdown, but the erosion in a lot of ways.
Some people are becoming so disrespectful for the rule of law. Let
us have legislation to deal with that sort of thing.
Another thing we could be dealing with today and it would help
the hon. member and his cause, would be to see Parliament and
individual parliamentarians bring forward legislation through
Private Members' Business to free up MPs to vote the wishes of
their constituents on certain pieces of legislation. There is no
reason in the world that we could not have legislation like there is
in Britain today. They can defeat their own government's bill
without bringing down the government. In other words, there
would be a motion of non-confidence after defeating a specific
piece of legislation.
Imagine how Canadians would feel about their House if that is
what happened here. It would be astounding. It would be a
revolution. People would have new confidence in this place. As
politicians, I think members across the way would agree that we
have a vested interest in doing what we can to improve the very
poor reputation of politicians. That would go a long way to doing
that.
One thing we could bring forward is balanced budget legislation.
The situation today is that we are going in the hole approximately
$19 million a day. Every day that goes by we go into the hole a little
further. To me that is absolutely immoral when we consider the
effect it will have on our children.
I have two boys back home; one is seven and one is eleven.
Many members have young children. It is really immoral for us to
be living today at their expense. We must move quickly if we are to
be worthy of our title as parliamentarians to make sure that comes
to an end. We have to quit spending them into poverty down the
road.
15796
I do not want to talk for a long time. I want to say again that
Private Members' Business should be set aside for very important
issues, for issues that are important to the country as a whole.
I appreciate the argument that this horse is part of our heritage. I
also know and the member has noted that this horse was recognized
by cabinet I believe in 1909. I would argue that because of the fact
that the horse already has the title Canadian horse, because of its
proud history, we have certainly already given it a lot of profile. I
would argue that there are other ways, through statements under
Standing Order 31, through a letter campaign to other MPs,
through recognition by provincial legislatures and that kind of
thing that we could make the point.
I will conclude by thanking the hon. member for his initiative. I
also encourage members across the way, in my own party and in the
Bloc, to bring forward the best possible and most important
legislation they can think of when they deem it appropriate to bring
a bill forward through Private Members' Business.
[Translation]
Mrs. Pauline Picard (Drummond, BQ): Mr. Speaker, the bill
to provide for the recognition of the Canadian horse as the national
horse of Canada affects many Quebecers and particularly breeders.
It is therefore a pleasure for us to represent them by taking part in
this debate.
In perusing Bill C-329, we learn that the horse was sent by the
King of France, was invaluable to settlers in their efforts to survive
and prosper. We learn that the horse has a number of fine qualities,
including strength, endurance, intelligence and good temper.
We also learn that it was nearly lost at one point through
interbreeding and casualties in war. Allow me to add a few points,
because I believe it is important to understand the history of this
exceptional animal and see how it developed.
(1810)
The very first horse to touch the soil in New France arrived in
Quebec City on June 25, 1647. At that time it was called the
Canadian horse, and there were no horses in this part of North
America. The region's dense and broad forests effectively
prevented crossbreeding with other types of horses. There was no
possibility of interbreeding with the breeds of horse brought in by
the English and by the Spaniards in the south.
It was only after 1759 that export to the United States and
crossbreeding with other types of horse became a possibility, and
the numbers of the purebred Canadian horse began to decrease.
Sometime around 1880, faced with the real threat of the breed's
disappearance, people decided to act. Quebecers like François
Pilote, Édouard Barnard and, particularly, Dr. J.A. Couture, a
veterinarian, decided to ensure the species' survival by selecting
and breeding the best of the remaining horses. Dr. Couture, among
others, gathered in a breed book all of the subjects combining the
breed's distinctive characteristics to ensure their protection.
Thus, through this brief history, we can see that the Canadian
horse arrived and was bred in Quebec. Those who raised and
trained them were the inhabitants of what would become Quebec.
These same people took steps to ensure that this symbol of strength
and pride would not disappear from our continent.
In the light of these facts, it would be a good idea perhaps for any
future recognition of this horse as the national horse to contain
greater reference to Quebecers' contribution to its survival and
conservation.
Furthermore, since the government of Quebec is currently
considering a similar request, it seems more in keeping with
history that any recognition of this breed as a national emblem
should come from the Quebec National Assembly rather than from
the House of Commons.
[English]
Mr. Alex Shepherd (Durham, Lib.): Mr. Speaker, I am pleased
to enter the debate on Bill C-329 to recognize the Canadian horse.
I must admit I am not knowledgeable about horse breeding. One
of my constituents brought the bill to my attention. As I read over
the history of this horse in Canada, I realized it is part of our
identity, part of our cultural history. The member from the Reform
Party who went into great dissertation about the irrelevance of the
legislation, I believe, misses the very important point that cultural
identity is what makes a nation.
Looking at the history of this horse, in 1665 it originally came
from the royal stables of King Louis XIV. It was situated in New
France. During that time the breed strengthened and became larger
until 1759 at the time of the collapse of New France.
It is interesting to study political economics. It is something I
have always been fascinated with. There is always so much concern
about what happened on the Plains of Abraham in revisiting our
history of those days. If we were to study the history of New France
prior to the Wolfe-Montcalm battles, we would discover an
economy that was rampant with inflation, high debt and high
unemployment. It is interesting that these are some of the very
problems we have today.
After the collapse of that economy, many French speaking
people of New France left the province. They went to Manitoba.
(1815)
Do we see any similarities between some of these things and
some of the debates that are happening in our House today? The
Canadian h orse typifies Canada itself, often struggling against
tremendous forces of nature and social situations, sometimes
15797
becoming almost extinct, and from the brink of that extinction
fighting back, becoming stronger, becoming more proficient.
I often like to view art. The members of the Reform Party do not
seem to have much interest in art. If we go to the National Gallery
we will see a number of paintings there by Cornelius Krieghoff.
Cornelius Krieghoff of course was not a Quebecer, but he painted at
the time of New France. In those pictures you will constantly see
the Canadian horse. That is very much part of our cultural identity.
That is also why it is very important that this nation continue to
exist, because we have something very special to protect. A horse
clearly cannot run on three legs. The Canadian horse is not just part
of Quebec; it is part of all of Canada.
As a previous speaker has mentioned, there is quite a breeding
operation not far from the Hill, in North Gower. When I read the
background of this horse, that also rang a familiar bell with me,
because the last time I went horseback riding was in North Gower.
In conclusion, in looking at the struggles this horse has been
through, it is very appropriate that he is called the Canadian horse.
More important, it is incumbent upon us in this House to look at
those things that make us a nation rather than those things that
divide us.
The struggle for Canada in this part of North America has not
always been easy and has often been met by trials and tribulations
and indeed death. Often our concern in this country was to protect
ourselves from the Americans south of the border through wars and
now even the consistency of cultural identity in Canada. We
continue to resist the imposition of American culture in our society
and we continue to strive for the dominance that is Canada's
culture. This horse is a symbol of that.
I am very happy to support this bill. I want to remind some of my
colleagues in the House that we must always fight for a united
Canada.
Mr. Murray Calder (Wellington-Grey-Dufferin-Simcoe,
Lib.): Mr. Speaker, it is indeed a pleasure to have this opportunity
to speak on the bill before the House by my colleague from
Lanark-Carleton, Bill C-329, an act to recognize the Canadian
horse as the national horse of Canada.
The history of this breed is impressive. The Canadian horse was
introduced into Canada in 1665, when the King of France sent
horses from his own stables to the people in his North American
colony. The breed thrived and multiplied in its new home from 145
head in 1679 to over 5,000 in 1720, in that short period of time.
The history of the Canadian horse is also the history of Canada's
agricultural pioneers. These animals became an invaluable ally to
the settlers in their efforts to survive and prosper in their new
homes.
I want to talk about this for a minute, because I found it very
interesting. When the member from the third party was here he said
we should be talking about more important things in the House
right now. We have a motto on my farm back home. The motto is
very simply this: mindful of the past, planning for the future. It
goes to show members how important our history is to us in this
country. If we have no past, we really do not have much to look
forward to in the future.
(1820 )
In these days of tractors and modern machinery, when a farmer
goes out to plow his field he hops into a 100-plus horsepower
tractor that is pulling anywhere from six to ten furrows behind him
in an air conditioned cab. He is listening to the radio and the
markets as he is doing his job. However, back in the days of the
Canadian horse, a farmer went out and had a single furrow in front
of him, the horse in front of him, the reins around his neck, two
hands on the handles, and he went out plowing.
Today, with the equipment we have we can plow 15 to 20 acres a
day. Back then, a farmer plowing a field with a horse in front of
him could do two acres a day. Members might be interested to
know that for every acre he plowed behind a horse he had to walk
10 miles. For the farmer to do two acres a day he would walk 20
miles. I should be getting more exercise like this.
The horse has always been there. I come from Grey County in
Ontario. When the surveys of Grey County were first being done
there were two surveys. One was called Rankin and the other was
called Trainer. The distance from Owen Sound down to Hamilton is
about 150 to 180 miles. When these gentlemen were setting out the
surveys to lay out the townships and the roads and everything in the
early 1800s, which does not seem all that long ago, the fields were
not there. It was all covered with forests. These gentlemen came
with backpacks and horses from Owen Sound. They worked their
way down and set up food caches all the way through. They came
from Hamilton and worked their way up so they could start to do
these surveys. The surveys took quite a while.
When the surveys were done, of course, there was still a forest to
clean away so we could get into agriculture with open fields. The
horse was there again. The farmers were cutting down trees and
were using horses to pull those trees and stumps away.
This summer I was up in Collingwood, which is part of my
riding. They have a fair up there called the Great Northern
Exhibition. They show horses up there. It is part of our heritage,
our past. I watched and handed out trophies this year for the horse
pulls. It is a very competitive atmosphere.
In my own village of Holstein, we have a Santa Claus parade
every year. One of the prerequisites to be in that parade is to have a
horse-drawn float. There are Mennonites and Old Order
Mennonites in my area who use horse-drawn equipment, the horse
and buggy, the democrat. Maybe the pages do not know what a
15798
democrat is. It is a long wagon affair with a number of seats in it,
which a sizeable family can sit in. Some of these families have
eight to ten kids, all behind the horse.
In the Depression years our family lived on a farm. We had a
large stand of timber on the farm and we sold wood. How did we
get it to town? We hauled it with a horse. This was all part of
agriculture.
The Canadian horse is known for its strength and endurance.
There have been a number of historical accounts of the horse's
performance and ability to outperform animals of much greater
size. I am talking about Belgians and Percherons, horses of that
kind, which are sizeable horses when you get beside them. Never
get stepped on by one. I did when I was a child.
One story tells of a butcher who hooked his Canadian horse to a
buggy and travelled 250 kilometres from Quebec City to Montreal
in less than 12 hours, outracing the overnight steamer that was
racing against him to collect an unpaid bill.
There was another account from the Breeder's Gazette of
Chicago in 1914. I think the hon. member touched on this, but I
will say it again, because we have to show how good the Canadian
horse is. It is not very often that we in this House beat our own
drum on how good we are as Canadians. I think we should do it
more often. The Canadian horse is a good example. We have a
wood merchant who was the owner of a Canadian horse weighing
approximately 1,050 pounds. He harnessed it to the same pull
against another horse about 200 pounds heavier. The Canadian
horse was always kept in its harness traces, well stretched and
never showed as much fatigue as his heavier mate. After two years
of common work the heavier horse died. ``The question on the
cause of death'', the driver answered, ``is the Canadian horse made
him die of overwork''.
(1825)
That goes to show how good this breed is that we are trying to
recognize as something that is Canadian. Canada should be very
proud too because as a united country we are number one in the
world today. Again I have to stress the fact that my colleague from
the third party seems to miss this point. I find it unfortunate that he
and my Bloc colleagues they do not understand how good they
have it right now.
Despite its qualities the Canadian horse almost faced extinction
through inbreeding and neglect. In 1886 a few admirers banded
together to establish a breed registry or a stud book listing all the
purebreds.
In 1907 a second book was opened and the federal government
department of agriculture funded a panel of judges to survey
approximately 2,500 horses out of which only 969 were acceptable
and registered as foundation stock. That is how close we were to
losing the Canadian horse.
Between 1913 and 1981 the federal and Quebec governments
launched programs to maintain the breed. However, in 1976 with
only 383 Canadian horses left on record, once again the horse was
destined to disappear. This is what the hon. member across was
talking about, this resiliency of Canadians. We bounce back. We
will bounce back. We always do bounce back. The Canadian horse
is a good example of this.
During the past 10 years there has been a resurgence of interest
in the breed. People are rediscovering the little iron horse. Is that
not a great way of describing a symbol of Canada, the little iron
horse. It is a gentle hardworking breed, an intelligent,
multi-purpose horse. There are breeders in my riding of
Wellington-Grey-Dufferin-Simcoe that have written to me to
proudly describe these animals, which is one of the reasons I am
here today supporting the member's bill.
This bill provides us with an opportunity to celebrate this
uniquely Canadian horse. We owe much to it for its hard work in
developing this country and I encourage all the members to support
this bill.
Mr. Gurbax Singh Malhi (Bramalea-Gore-Malton, Lib.):
Mr. Speaker, I am very pleased to rise today to speak in favour of
Bill C-329, an act to provide for the recognition of the Canadian
horse as the national horse of Canada.
Since their introduction into Canada in 1665, the ``little iron
horses'' have served Canadians well. Not only were they used for
driving and riding but they were also used for clearing land,
cultivating and hauling. They may have begun their lives as
pampered pets in the royal stables of King Louis XIV but once they
were shipped to Canada they had to earn their keep.
The early history of the Canadian horse in some ways resembles
that of the colonists themselves. In her pictorial history of the
Canadian horse, Gladys Mackey Beattie notes that due to natural
selection, only the strongest managed to survive. The conditions
under which they had to exist gave them endurance found in no
other breed.
Over time the horses became smaller in size than the original
imports, but they were much more hardy, could thrive on meagre
rations, trot tirelessly through mud or snow by day or night,
matured at an early age and were long lived as well. Many stories
are told of the strength and stamina of the little horses who could
eat less but do more work than other horses almost twice their
weight, and they could run. The record books of the 1800s are full
of references to record times of the pacers and trotters descended
from Canadian horses.
15799
(1830)
The historian, Faillon, described the horse as ``small but robust,
hocks of steel, thick mane floating in the wind, bright and lively
eyes, pricking sensitive ears at the least noise, going along day or
night with the same courage, wide awake beneath its harness,
spirited, good, gentle, affectionate, following his road with finest
instinct to come surely to his own stable''. What fitting attributes
for a national symbol.
There is also another reason to recognize this uniquely Canadian
breed as our national horse, that is its need for protection and
encouragement. Throughout history, despite its strength and
stamina and sometimes because of it, this little horse has often
been in real danger of extinction. After 1670, the last year that
horses were shipped to Canada as gifts to nobility, the 40-odd
horses in New France multiplied. Their numbers reached 5,200 by
1720 and 12,000 by 1760. However when the British captured
Quebec in 1759 the fortunes of the Canadian horse began to
decline. British immigrants brought their own horses and bred
them to the durable little Canadians, depleting the purebred stock.
Many French Canadians packed up and moved away to
Manitoba or the United States, taking their horses prized for their
cross breeding qualities with them. From 1861 to 1865 thousands
of Canadian horses were shipped to the U.S. to be used as cavalry
mounts and pack horses during the American civil war. A great
many died in the war and those that survived never returned to
Canada.
By the end of the 19th century only a small number of pure
blooded Canadian horses were left. Despite breeding programs
only 383 registered Canadian horses were on record as of 1976, and
the future of the breed seemed pretty dark. Since the late 1970s
determined Canadian horse lovers and breeders who believe it is a
perfect all-purpose family horse have increased the numbers to the
point where the breed is no longer in danger of disappearing.
As gentle, relaxed and intelligent as they are, some breeders
believe they will be in greater and greater demand for tourist
activities from endurance trail rides to pulling visitors through the
narrow streets of our oldest cities.
However until now the horse that can ``do everything but dance''
has certainly not received the recognition and honour it deserves.
The little iron horse was an integral part of the lives of Canadians
more than 300 years ago, working alongside our first colonists and
doubling as carriage horses for the family and race horses on
Sundays and holidays.
All in all it is what J. G. Rutherford, federal veterinary director
and livestock commissioner, reportedly testified before a
parliamentary committee in 1909 when he said that it was ``the best
general purpose horse raised in Canada''.
It is high time we recognize it as Canada's official national horse
and I thank my hon. colleague from Lanark-Carleton for bringing
it to the attention of the House.
The Deputy Speaker: There being no further members rising to
speak on the matter, the time provided for the consideration of
Private Members' Business has expired and the order is dropped
from the Order Paper.
It being 6.35 p.m., the House stands adjourned until tomorrow at
2 p.m.
(The House adjourned at 6.35 p.m.)