EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 18, 1995

.0932

[English]

The Chair: Can we come to order? We are now going into clause-by-clause on Bill C-76. By unanimous agreement we're going to start with part IV, on fiscal arrangements and other matters.

Mr. Parliamentary Secretary, I take it you will be leading us through this.

Mr. David Walker (Parliamentary Secretary to the Minister of Finance): Yes. Could you give me just one minute, Mr. Chair?

.0933

.0937

The Chair: Mr. Walker.

Mr. Walker: I just wanted to seek some comments from Mr. Loubier and the Reform Party.

On the Financial Administration Act, on the first part leading up to the Fiscal Arrangements and Other Matters - up until clause 29 - I didn't have any changes except for one small technical one. We agreed to reverse the order. I'm just saying to you that I didn't have much to discuss on those, but if you still wanted to reverse the order we can.

Mr. Silye (Calgary Centre): Is there a reason we didn't start at the beginning?

Mr. Walker: We made a deal with these. I'm just saying to you that in the first part I didn't really have anything much to do. We can start with the other stuff.

Mr. Chairman, we'll do as agreed.

The Chair: We have an agreement by unanimous consent -

Mr. Walker: No, we'll do it your way.

[Translation]

Mr. Loubier (Saint-Hyacinthe - Bagot): Yesterday, he agreed to start with the part on Canada Health and Social Transfer...

The Chair: That is what we will do.

Mr. Loubier: And then, we will take everything from the beginning again.

The Chair: Exactly.

Mr. Loubier: So, it's okay.

[English]

The Chair: The agreement by unanimous consent is we start with clause 30. We do the Fiscal Arrangements and we will be out of here and everything looked after by 5 p.m. at the latest.

I propose that we start with clause 30. Are there any amendments to clause 30?

On clause 30 - References to Minister of Human Resources Development

Mr. Walker: There is an amendment. The amendment is to clause 30 in the French version only. The name of the minister responsible is done incorrectly.

The Clerk of the Committee: Would you read the motion?

Mr. Walker: I move that the French version of clause 30 of Bill C-76 be amended by striking out line 30 on page 17 and substituting the following:

[Translation]

In the French version only: «du ministre du Développement des ressources humaines vaut».

[English]

The Chair: Is it a technical amendment?

Mr. Walker: It's a technical amendment.

Clause 30 as amended agreed to

.0940

Clauses 31 to 36 inclusive agreed to on division

On clause 37

Mr. Silye: On a point of order, I'd like to address clause 37.

The Chair: Fine.

Mr. Silye: I have a concern that basically, this forces the provinces to engage in advertising for the federal government, or that there is a bit of propaganda there. I move to strike the clause completely.

The Chair: Is there any other further discussion?

[Translation]

M. Loubier: What is the amendment, Mr. Chair, as we have nothing in writing and all of a sudden he catches up by surprise? For the past two weeks he's not been attending the committee's meetings and now here he is with last minute amendments. What's the whole idea?

The Chair: You were not present yesterday when we discussed the amendments?

Mr. Loubier: No. But they have not been here for the past two weeks and, they have not moved any amendments but now out of the blue they come in this morning with these kinds of amendments.

The Chair: He is who entitled to move amendments at any time. Is there any further discussion or can we vote on...

Mr. Loubier: What is the amendment?

[English]

Mr. Campbell (St. Paul's): Without adding to the commentary just made about participation or deliberation, does the hon. member have an amendment to propose to this clause? He's made an observation on it. Is there an amendment that he's proposing? We're in the clause-by-clause stage here.

The Chair: The rules apparently require that if you want to make an amendment, it must be in writing.

Mr. Silye: How much time will you give to put it in writing?

The Chair: With unanimous consent we could waive that rule in the interests of expediency. You could propose it orally. We will vote on it. I therefore accept your -

[Translation]

Mr. Loubier: No, there is no unanimous consent.

[English]

The Chair: The clerk wishes to advise us all.

The Associate Clerk of the Committee (Mr. Normand): If the hon. member wishes to remove clause 37 from the bill, then all the committee has to do is vote against clause 37. Otherwise it becomes an expanded negative. So the question would be: shall clause 37 stand part of the bill? The committee can divide and vote against it. The question before the committee is: shall clause 37 stand part of the bill.

The Chair: That makes a lot of sense, doesn't it. It didn't occur to me.

Would that be okay with you, Mr. Silye - recording your dissent to clause 37 on the basis that you stated?

Mr. Campbell: He wanted to strike that clause of the bill. Voting against it, if he were to be successful, would have that effect.

The Chair: Without trying to speed up too much, on that basis, I put the question: shall clause 37 carry?

Clauses 37 and 38 agreed to on division

Mr. Silye: I guess I'm a little confused with the process here.

The Chair: I am too.

Mr. Silye: Yes. We're going through clause-by-clause. Somewhere you're telling me that if we had any amendments to make to these clauses they should have been filed with this committee at a certain time. I didn't think that was necessary.

The Chair: No, apparently the procedure is that if you want to propose an amendment today it should be in writing. But I think members are prepared to be very tolerant about that type of approach and if you don't have them in writing but want to suggest them, I think we could at least entertain the suggestion that they be made.

Mr. Silye: I have two more points, Mr. Chair. We do have some that are in writing, etc., but for each clause that comes up, is that the point where you express a concern and then you vote on division?

The Chair: Yes, that's all.

.0945

Mr. Silye: So, I can interrupt and say my concern with this clause is -

The Chair: Sure, interrupt, absolutely.

Mr. Silye: - and then go ahead, and as Mr. Campbell said, vote against it, and then we go ahead.

The Chair: Yes.

Mr. Silye: I would like to point out that I have a concern with clause 38. We believe this gives the cabinet too much arbitrary power and discretion in deciding how much to withhold, and when and why transfers should be withheld. More significantly it allows the cabinet to withhold any federal funds, not just the CHST funds. That's the way we interpret it. This is the same problem with clause 39. So before we get to it, I won't speak to clause 39, because it's the same concern.

I think when the government is providing funding for health or education, or whatever social program, if the provinces don't comply with the rules of that program, then it's those funds, and those funds only, that should be withheld. The federal government should not get the right to withhold funds for other programs where the provinces are following the rules.

I think there's a problem with this clause and it should be addressed. If it could be fixed I would like to hear the government tell us why this is not a concern for them.

[Translation]

Mrs. Lalonde: I had something to add concerning clause 37, but as things go so quickly, you've certainly already heard the arguments against it. It is important though to emphasize that although the government on the one side asks for a bit more flexibility that in clause 38, after clause 37, it reads: ``direct... in respect of each default''. That means that each default is in fact decided on a totally arbitrary fashion by the ones enforcing the law which actually makes it a real decree because no one will ask the courts to make a judgement on this and, and this clause gives incredible latitude to the government.

Clause 38 which follows clause 37 states that the government of the province ``shall give recognition to the Canada Health and Social Transfer in any public documents, or in any advertising or promotional material, relating to insured health services and extended health care services...'' - while we know perfectly well that extended health services are not systematically funded... And with the Canada Health and Social Transfer, the rationale of the former legislation is entirely changed because the government drastically reduces its cash contribution in three areas.

So, each default may lead in turn to a reduction in the cash contribution. This is extremely serious, because the provinces now have to negotiate with the government without the benefit of any foundation because it says: ``Each default''.

It is true that there is a procedure, but the government has full discretionary power and, once again, since the cash contribution is being reduced, it becomes, in my opinion, outrageous in view of the previous section.

The Chair: Thank you, Mrs. Lalonde. Mr. Walker.

[English]

Mr. Walker: These particular items, paragraphs 38.(a) and (b), already exist in the Canada Health Act and are consistent with action the federal government has taken for the last decade.

The Chair: Is there any further discussion?

Clauses 38 to 47 inclusive agreed to on division

.0950

[Translation]

Mr. Loubier: Mr. Chairman, I would like to speak to this clause, if I may.

The Chair: You will have to excuse me, Mr. Loubier, but Mr. Walker has the floor.

[English]

Mr. Walker: I have government amendments here. Would you like to introduce the government amendments or would you like Mr. Loubier to speak? It's up to you; it's your choice.

[Translation]

Mr. Loubier: I am introducing my amendments.

[English]

The Chair: Present your amendments as we -

[Translation]

Mr. Loubier: I will present my amendments.

[English]

The Chair: The rule will be that for any clause where you have an amendment, bring it in. If I'm going too quickly, please slow me down.

Mr. Walker: Mr. Chair, this is a detailed change which has been circulated to the committee, so I'll go through it very carefully.

The Chair: Are we talking about clause 48?

Mr. Walker: Yes. I move that clause 48 be amended by striking out lines 3 to 7 on page 24 and substituting the following....

I'm wondering, Mr. Chair, if I could stop. Does the translator have a copy of the amendments to read through?

The Chair: Couldn't we distribute written copies of this?

Mr. Walker: They were distributed to the -

The Chair: Do we have written copies? Okay, everybody has one. Thank you.

Mr. Walker: Mr. Chair, could I just ask as I go through this...? Mr. Loubier, too. As a point of process here, what would you like to do? This is a clause of the bill where the wording in French is different from the wording in English, and I want to make sure everything is clearly understood. I will do the reading in English and if you wish, I'll have Mr. Bissonnette, who's with me, make sure it's read clearly into the record in French, because there are some differences.

If you have any particular concerns that it's not drafting.... The difficulty is it's not drafting by word but it's drafting by longer elements. So it's substantively the same, but the words that appear in the legislation are different.

The Chair: I have only one suggestion, Mr. Walker. Perhaps you could read the French as well, because you're so good at it.

Mr. Walker: I would normally do it, but I haven't read it before. I will read it. I don't mind doing it, it's just that normally I have an opportunity to -

Mr. Loubier: And I will read in English.

Mr. Walker: Let me start, then. I move that clause 48 of this bill be amended by striking out lines 3 to 7 on page 24 and substituting the following:

portability and accessibility and the provisions relating to extra-billing and user charges.

This is done to clarify the five conditions of the Canada Health Act and the two provisions under it that are used to enforce the act.

(c) maintaining the national standard set out in section 19 that no period of minimum residency be required or allowed with respect to social assistance.

This clarifies the residency requirement that comes from the Canada Assistance Plan and is now in the new bill.

and promoting any shared principles and objectives that are developed pursuant to subsection 3 with respect to the operation of social programs other than a program for the purpose referred to in paragraph (b).

Secondly, I want to amend by striking out line 24 on page 24 and substituting the following in 1(d):

that could underline the Canada Health -

.0955

The Chair: ``Underlie.''

Mr. Walker: ``Underlie'', I'm sorry. I never did well in grade 1 either.

Are those all the changes? Guillaume, do you want to go through the French stuff so it's clearly understood? Oui, okay.

[Translation]

Mr. Guillaume Bissonnette (Department of Finance): According to the French text, it is moved that clause 48 of Bill C-76 be amended par subsitution, aux lignes 30 à 38, page 23, et aux lignes 1 à 22, page 24, de ce qui suit:

13.(1) Sous réserve des autres dispositions de la présente partie, il peut être versé, à chaque province, pour un exercice, une contribution au titre du transfert canadien en matière de santé et des programmes sociaux aux fins suivantes:

a) financer les programmes sociaux sur la base d'arrangements provisioires en permettant aux provinces de jouir d'une plus grande flexibilité;

b) appliquer les conditions et critères nationaux prévus par la Loi canadienne sur la santé concernant notamment la gestion publique, l'intégralité, l'universalité, la transférabilité et l'accessibilité ainsi que les dispositions concernant la surfacturation et les frais modérateurs;

c) appliquer la norme nationale énoncée à l'article 19 prévoyant qu'aucun délai minimal de résidence ne peut être exigé ou permis en ce qui concerne l'assistance sociale;

d) promouvoir les principes et objectifs communs élaborés en application du paragraphe (3) à l'égard de programmes sociaux autres qu'un programme visant les fins énoncés à l'alinéa b).

[English]

The Chair: Almost as well done as Mr. Walker would have done it. Thank you.

[Translation]

Mrs. Lalonde: May I ask a question about the translation?

The Chair: Of course, Mrs. Lalonde.

Mrs. Lalonde: The French reads ``promouvoir les principes et objectifs communs'' and the English ``any shared principles''. Do you think this is the right translation? ``Any'' means ``tout'' in the singular.

Mr. Loubier: All.

Mrs. Lalonde: No ``any'' doesn't mean ``all''. It means each or every.

The Chair: What do you think?

Mr. Bissonnette: Mrs. Lalonde, it is our view that legally, the meaning is exactly the same, i.e. to promote the principles agreed upon when the Minister for Human Resources Development has completed his consultations.

Mr. Loubier: I have a question before we begin discussing the amendment. The total 26.9 billion dollar social transfer entitlement is 2.5 billion dollars less than expected. Isn't that right, Mr. Walker?

[English]

Mr. Walker: That's right, not for this current year but for next year; for the next fiscal year.

[Translation]

Mr. Loubier: Will the new 26.9 billion dollar Canada social transfer be a portion as of next year based on what the provinces receive this year under established programs financing and the Canada Assistance Plan?

[English]

Mr. Walker: Yes, that's right.

[Translation]

Mr. Loubier: If we consider cash transfers and apply Quebec's share which is 27%, that means that Quebec would face a shortfall of $650 million next year. Twenty seven percent of $26.9 billion is $650 million.

Mr. Bill Murphy (Department of Finance): Yes, except you should be factoring in all of the transfers and not just the cash transfers.

.1000

Mr. Loubier: No. I'm talking about cash transfers. If we consider that Quebec gets 27%, and that Mr. Walker has just confirmed that there will be a $2.5 billion shortfall next year, then 27% of $2.5 billion means $650 million less in cash transfers for Quebec. I'm talking about cash transfers...

Mr. Murphy: Okay.

Mr. Loubier: ...the total transfers that the federal government controls.

Mr. Murphy: Based on the total transfers through CAP, the Canada Assistance Plan and established programs financing, Quebec will get 27% of the new CHST in 1996-1997. But this is 27% of total transfers, which includes the cash transfer.

Mr. Loubier: In other words, 27% of $2.5 billion equals $650 million less for the government of Quebec starting next year. That's what I wanted to have confirmed, Mr. Chairman.

The Chair: How about doing your calculations some other time?

Mr. Loubier: No, you don't need a calculator to figure out what 27% of $2.5 billion is, it's obvious.

However I would like to come back to Mr. Walker's amendment. The matter of the transfer has been clarified.

Mr. Murphy: We're looking at about $625 million which is close to 650.

Mr. Loubier: Yes, that's close to 650.

Mr. Murphy: I would like to talk about the amendment itself, Mr. Chairman.

If you consider the history of this amendment, not since 1964, but rather over the past two weeks, you will note that following speeches by my colleague for Mercier, by the leader of the Official Opposition and my own speech, the Minister of Finance took it upon himself to state in the House of Commons that he would be moving amendments to the clause concerning the CST, in order to accomodate Quebec's reticence about broad national standards being introduced coast to coast with regard to health and social programs.

In so doing, the Minister of Finance took everyone by surprise, because it isn't very often that a minister suddenly moves amendments on the floor of the House of Commons to legislation that is being studied in the standing Committee on Finance, without prior notice.

We listened to the prepared amendments, which I think was wise on our part. We had tried to obtain a copy of the amendments two days before, from the Minister's office, but to no avail.

When we did receive written copies of the amendments, we saw that not only did they ignore Quebec's rejection of national standards, especially if transfers are conditional on such national standards, but that in comparison with the first draft, these amendments were almost worse than what we had first objected to. Let me explain.

Let's take subsection 3. It says: ``The Minister of Human Resources Development shall invite representatives of all the provinces to consult and work together to develop, through mutual consent, a set of shared principles and objectives for the other social programs referred to in paragraph (1)d) that could underlie the Canada health and social transfer''.

The term other social programs refers to post-secondary education and welfare.

Our first question is what is meant by ``mutual consent''? You only have to look back at the history of the relationship between Quebec, the provinces and the federal government, and in particular over the past three years, to see that very often agreements reached between 7 out of 10 provinces representing 50% of the population has been enough to constitute mutual consent. This has been common practice in federal-provincial relations and in the relations between Quebec and other provinces.

.1005

If that indeed is what is meant by mutual consent as it applies to subsection d), that is to shared principles and objectives, then Quebec's concerns are not met, since seven out of ten provinces representing 50% of the canadian population can, through mutual consent, set down the principles and objectives pertaining to the application of subsection (3). That isn't much of an improvement, Mr. Speaker. In fact, it's worse than the first draft which read: ``If necessary, pan-canadian parameters will be established''.

If you look at the beginning of this amendment, it says ``a Canada health and social transfer may be provided for the purposes of etc, etc. One of the purposes is to promote any shared principles and objectives that are developped, pursuant to subsection (3), with respect to the operation of social programs, other than a program for the purpose referred to in paragraph b)''. This takes us back to the first version, and it means that the federal government could refuse to transfer all or a portion of the Canada social transfer to Quebec if it refused to apply the shared principles and objectives, especially in the case of education.

It is therefore impossible for us to support this amendment, just as we could not support the first one.

Those are my comments and you can rest assured, Mr. Chairman, that Quebec is extremely sensitve when it comes to this issue, just as it was in 1981 when we experienced the federal government's strong arm tactics in which the current Prime Minister figured prominently.

Of course, we can understand that throughout our public hearings on Bill C-76, witnesses from elsewhere in Canada all said that they wanted national standards for social programs and education. But only witnesses from outside of Quebec said that.

You will remember that during our hearings, all of the Quebec organizations that appeared before us and particularly those involved in education said that they were against national standards.

It comes back to the distinct society, whether you like it or not, and whether or not it was rejected in 1990 and in the Meech Lake agreement. It is a deeply rooted distinctive characteristic and, I repeat, a very sensitive one in Quebec.

This has nothing to do with our friendship with our Canadian friends, but when we read that the Canadian provinces can through mutual consent develop the shared principles and objectives that will apply across Canada and in Quebec, then this would affect the future of Quebec's education system which is the very basis of Quebec society. You haven't necessarily given much recognition to the people of Quebec over the past decades or even years, but our education is the cornerstone of what makes us a distinct society, and of our culture...

You can come up with any wording you like, but as long as you mention nationally based principles and objectives, Quebec will flatly refuse to go along. The official opposition, here, will definitely object very loudly.

Mrs. Bissonnette from Le Devoir who is known for her fine analytical mind, has concluded after careful consideration of Mr. Martin's amendments in the House of Commons, that this will do nothing to change history, and that it was still the government's intention to establish national standards and force the provinces and Quebec to abide by them. Yet these principles will have been developped by others and without regard for Quebec's aspirations.

My colleague, the member for Mercier, now has a few things to add.

The Chair: Madame Lalonde.

.1010

Mrs. Lalonde: Our understanding of the first version of this legislation was at first contradicted by all the learned Ministers or senior officials who kept saying «No, that's not what it means, it means more flexibility»...

However, we were pleased to see that before trying to pull one over on the Leader of the official Opposition, the Minister of Finance had to announce amendments to the legislation, in a rather unusual way.

I haven't been at this job for very long, and I don't intend to stick around for very long either - yet I have never seen a minister announce amendments before making a speech in the House so as to be able to say: «You didn't get it right because this is what it means». That is what happened.

I thought that if the government along with its learned scribes really wanted to show some flexibility then they would be very careful and that if that is what they meant politically then that is what they would say.

To my surprise, after careful reading of the text I concluded that the contradictions in the first version had been carried over to the second and were even greater.

If you read the section preceeding subsections a, b, c and d carefully it says that the transfer may be provided to the province for the purposes of... what are these purposes? Well, there are four of them and we know that it is the government that decides how they are determined, as this is set out in the preceeding clause. There are four purposes:

- a) establishing interim arrangements to finance social programs in a manner that will increase provincial flexibility;

- b) maintaining the national criteria;

- c) maintaining the national standards; and

- d) promoting any shared principles and objectives that are developed, pursuant to subsection 3, with respect to the operation of social programs, other than a program for the purpose referred to in paragraph b.

It clearly states that only health care is excluded. We go on to read in clause 53 what the other social programs are: post secondary education, social services and social assistance.

It follows then that an amount will be provided for the shared principles and objectives...

When we were studying the first version of the legislation, we asked several times whether this flexibility meant that Quebec would have a veto? We wondered whether unanimous consent would be required?

If what was meant was that were Quebec to disagree, then the principle would not apply and that Quebec would not receive the corresponding amount, then you would have been able to put this into words with all the learned scribes who surround you.

However, this carefully worded extract gives us no reason to believe the Quebec would have a veto. Furthermore, since it is one of the criteria that must be met in order to avoid penalty, we are now sure that our initial understanding of the text is indeed what is meant.

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We came here to protect Quebec's interests and, as the person responsible for the Human Resource Development file, I was told that the Cabinet decided in favour of flexibility.

I have found no such flexibility, either in the first version, or in their second, more polished and supposedly well thought out that was presented as the definitive position of the government.

This is hardly an ouverture to Quebec; in fact, this commitment, with less money, to promote shared principles and objectives, including post-secondary education, pays little attention to some specific needs. That indicates that one is going to try at all costs to elaborate these shared principles and objectives.

I repeat: ``The cash contribution in respect of the Canada Health and Social Transfer that may be provided to a province for a fiscal year for the following purpose:''.

Allow me to insist upon the fact that subparagraph a) does indicate that there be interim arrangement to finance social programs in a manner that will increase provincial flexibility.

In no way can that be considered as an opening to Quebec, Mr. Chairman. It is most regretable, especially as the Human Resources Developoment Minister has an absolutely free hand as far as mutual agreements are concerned.

Thank you.

The Chair: Mr. Silye indicated that he wanted to say something.

Mr. Loubier: Then you will come back to me.

The Chair: Yes.

[English]

Mr. Silye, please.

Mr. Walker: With the indulgence of Mr. Silye... we didn't read the total amendment into the record, and the part of the discussion taking place right here concerns the wording and the change of a particular point.

The Chair: Go ahead and read it in.

[Translation]

Mr. Bissonnette: I will now read the last subparagraph of the amendement: ``The transfer shall consist of a) a federal income tax reduction in favour of the provinces...''

[English]

The Chair: Excuse me, the translation is not working.

Mr. Walker: This particular part is only in French.

Mr. Silye: I want to make a point here. I understand that the amendment is going in in French because it has to be different for some reason or other, but why can't the simultaneous translation be given to me -

The Chair: It can be.

Mr. Silye: - so I can get a sense of whether it is the same in English?

The Chair: I agree with you, Mr. Silye, we should have simultaneous translation for everything.

Could we go back and start that again, please?

Mr. Silye: No, the translator just said they can't simultaneously translate a legal provision.

Mr. Murphy: Page 24 in the bill is where that reads right now.

Mr. Silye: Yes, I have both in front of me here, but -

Mr. Murphy: At the top of page 24, about line 8, item 2, starts with ``The Canada Health and Social Transfer.'' Guillaume will be reading down to the end of line 25. So he will be reading proposed subsections (2) and (3) into the record in French.

The Chair: Are you satisfied, Mr. Silye, with this approach?

Mr. Silye: Okay, go ahead. Thank you. Sorry for interrupting.

The Chair: Can we go at it again? Thank you.

[Translation]

Mr. Bissonnette: I'll start again:

The transfer consists of:

a) federal income tax reduction in favour of the provinces that would enable the provinces to impose their own tax measures without a net increase in taxation and;

b) a cash contribution not exceeding the amount computed in accordance with section 14;

b) cash contribution not exceeding the amount computed in accordance with section 14. That completes the amendment. I apologize... There is another page.

.1020

The Minister of Human Resources Development shall invite representatives of all the provinces to consult and work together to develop, through mutual consent, a set of shared principles and objectives for the other social programs referred to in paragraph 1 c) that could underlie the Canada Health and Social Transfer.

[English]

The Chair: Mr. Silye, you had something to say.

Mr. Silye: Yes, thank you. I really appreciate the comments of the two Bloc members, and listening to their arguments, I realize we share some of the same concerns with this clause, Mr. Walker.

It's probably the clause that will be interpreted by different people, lawyers and everybody, in a lot of different ways, whether they're federal or provincial. It's a clause that will create a lot of splits. It's a clause that will create a lot of discord accoss this country when it comes to arguing over what is the definition, or the real meaning of mutual consent.

When the departmental officials briefed our party on this, they told us the legal interpretation of proposed section 13(3) is that it would be possible for the federal government to unilaterally impose national standards, as we have in health care, on all the social programs as well. Yet in proposed paragraph 13(1)(a) of clause 48 it says:

establishing interim arrangements to finance social programs in a manner that will increase provincial flexibility;

I believe the French version will say the same thing. I see them nodding their heads, so that's good.

Then you go to the new paragraphs (c) and (d) as read into the record. There's a conflict there because paragraph (d) indicates that the federal government is going to impose their rules, their social guidelines, their standards.

So it is not clear to me. It seems as if paragraph (a) is there for the Minister of Finance to get up and say, we're doing this to increase flexibility, and then for the Minister of Human Resources Development later to say, I have the right to impose national standards because of this clause here. There's a conflict there. Which is it this clause is intending to define?

What is the intent of this clause with respect to the cooperation they're seeking with provinces? Are they asking unanimous provincial consent? Does it have to be unanimous? Is it the 7 out of 10 rule, as Mr. Loubier has pointed out? What does it really mean? It is not clear, and with the bank of lawyers we have working for the government, why can't this clause be made clearer so that simple people like me could understand what is the intent and meaning of this? There are two conflicting intents.

I would like to have that point addressed by you and your group, Mr. Walker. What is the intent, and then based on that intent, do you agree or disagree that there's a conflict between proposed paragraph 13(1)(a) with 13(1)(c) as amended, the new one? That's one concern that I have.

A lot of the points the Bloc members made with respect to the rights of Quebec and their concerns are the very same ones that are shared in Alberta. I think all provinces are concerned about the heavy hand of the federal government and what are the rules when it comes to giving out money and how are they applied. I submit that this argument the Bloc made in defence of Quebec can be submitted for all the provinces.

I don't want to see clause 48 brought in as an excuse by any cabinet minister to set national standards unilaterally without the consent or cooperation of provinces.

.1025

I would like to see how your department, Mr. Walker, is going to clarify any disputes when it comes to the justification for saying, here's the money we're going to give you for whatever social program we're talking about, social program X, Y or Z; you get this money, and this is what we expect you to do. For instance, in six years the money is going to be phased right out to zero on education, yet these standards, these rules and regulations will still be there. The federal government is not giving any money. The provinces are bound to do something they agreed to do when they were getting money, and when they're not going to get money they still have to live by those rules.

I would like to have you address those points. I think I've made it relatively clear. I don't want to be redundant now and repeat myself.

Mr. Chairman, if I'm not satisfied with the answers, I would like to have the right to question them again on the answers.

[Translation]

Mr. Loubier: Maybe Mr. Walker could answer the questions of the members of the Reform Party, and I will come back later.

[English]

Mr. Walker: I'll try to respond to the remarks of the three opposition critics. If I inadvertently leave out some point, I'd be more than happy to clarify it. We've covered a lot of territory.

Going back to Mr. Loubier's point about the minister's statement in the House a couple of weeks ago during the debate initiated by your party on opposition day, I'm sorry if we gave the impression that we were presenting the amendments in the House. We always intended to present the amendments in committee. The minister was reviewing the spirit of those amendments. What we wanted to clarify was the intention of this part of the act, which I've characterized elsewhere as being perhaps the most significant change in social policy in this country - federal and provincial - since the Canada assistance program came into place in the 1960s.

Whenever you're dealing with such an enormous change, you obviously are going to get people worried about specific wording, the intent of the government, and the flexibility of other governments. So I'd like to make a general statement and then get into some of the specific remarks.

At this time, the intent of the federal government is to provide for a transfer to the provinces to maximize the flexibility of the provinces in delivering social services in particular. We have retained, under the Canada Health Act, the right to enforce the five characteristics of the Canada Health Act, and we clearly state that again in the act. That has been, at times, a mutually healthy relationship with the provinces, and as we note from the headlines, there have been times when the federal government has had to exercise its authority under the act to make sure the act was in fact enforced the way they wanted it.

In social policy the federal government has decided that at this time there is only one particular criterion they would like to ensure, and that is the one of residency. As a person moves about the country, no provincial government can deny access to social assistance based on residency. Other than that, there are no punitive measures and therefore no legislative tools for the federal government to impose what it wishes on the provincial government in the delivery of its social services. There's nothing in this bill - by mutual consent.

In this transition year we have legislated - which is very rare in federal legislation - a minister of the Crown, the Minister of Human Resources Development Canada, to begin discussions with the provinces to find what ways they have in common. We have been careful to say - and that was the intent of the minister's statement in the House two weeks ago - that we will not impose these values, these goals, and these principles upon any province, and that any of these principles and goals will be reached by mutual consent.

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[Translation]

The Chair: Thank you Mr. Walker.

Mr. Loubier: Mr. Chairman, I also like to engage an articulate and intelligent discussion, but the answer that Mr. Walker just gave us on the matter at hand is totally unsatisfactory.

If the effective intent of the federal government is not to establish Canadian standards for all social transfers, including postsecondary education, why does it want to reach those goals by mutual consent, without defining what it means by that?

Why should these shared principles and objectives that the provinces will have to promote be reached through mutual consent, when Mr. Walker claims it is not the government's intent to impose its views on the provinces?

I'll tell you - as we suspected before - that based upon what we heard during the hearings on bill C-76, Canadians outside of Quebec won't end Canadian standards. But in Quebec, we don't want any Canadian standards.

So, nine provinces out of ten - or seven provinces, if you prefer - and the federal government will not find it too difficult to reach that mutual consent. But what will happen to Quebec? How will Quebec feel about all this? Once more it will feel alienated.

Remember, in 1981 we in Quebec really got a slap in the face. Quebec. It was easy for the nine Canadian provinces and the federal government to agree on the patriation of the Canadian Constitution in spite of the objections of the Quebec National Assembly. It was very easy. Quebec was always depicted as the guilty party, the one out of step; and that is why we're drawing an analogy with the 1981 stab in the back.

The one primarily responsible for those constitutional dealings in 1981 was Mr. Jean Chrétien, our current Prime Minister. Therefore this is bad for federal-provincial relations, and it is bad for the relations between Quebec and the other Canadian provinces. That is going to contribute to Quebec's alienation.

If Quebec decides to resist to a mutual agreement between the majority of Canadian provinces and the federal government, what will happen? Like in 1981, Quebec will, once more, be cut off? We will feel alienated and those mutual agreements, transmogrified into principles, how can we promote them?

Mr. Chairman. It is a very serious concern. I quoted Mrs. Bissonnette a moment ago, and this is exactly what she said: ``What will happen if Quebec refuses to let his postsecondary education system be blended into a pancanadian system and if it fights the emerging consensus? If it results into its isolation, as in 1981, when Mr. Chrétien presided over the great Constitutional manoeuvers, we know from past history what will happen, Quebec will be excluded, as in 1981.''

Quebec runs the risk of being shut out a second time and on top of that, if it does not promote the shared principles and objectives that will develop elsewhere, especially in the field of education, it will be financially cut off. And that, Mr. Chairman, take it any way you like, is unacceptable to Quebec.

I can tell you that at the report stage we will move major amendments to that particular section and we will force the Quebec members of the Liberal Party as well as the independents to commit themselves on that matter for which there is a consensus in Quebec.

We are eagerly waiting to see what will be the reaction of members such as Mr. Martin, Mr. Chrétien, Mr. Discepola who is here, to our proposed amendments. If the federal government had really meant business with its amendments and if the Minister of Finance had not done what he always does, that is a frame up exercise, then he would have said that it required the unanimous consent of the provinces or that the provinces could vetoe the application of pancanadian standards or very simply, that Quebec could opt out. That is not at all what we find here, on the contrary.

The Chair: Thank you, Mr. Loubier.

[English]

Mr. Silye: Mr. Walker, with all due respect, I ask that you define ``mutual consent''. As I was listening to your response, I did not hear a definition. You chose to try to assure us here in the committee and the public, obviously, that you do not, nor does your government, intend to allow this to be interpreted so that the government can impose national standards on any provinces.

.1035

Without that definition, your verbal promise is one thing, but a verbal promise through time often gets forgotten and it's imperative that your verbal promise not to impose national standards becomes a written promise.

One of the ways that could be done very quickly and easily is just by changing the word ``mutual'' to ``unanimous''. That way, nine out of ten provinces won't be telling Quebec what to do. Quebec will have to agree. Nine out of ten provinces won't be telling Alberta what to do. Alberta will have to agree.

So if your intent really is as serious as you indicate, then I see no reason why you shouldn't listen to some advice that would make your verbal promise a written promise by agreeing to change the word from ``mutual'' to ``unanimous''.

I would ask Bloc members to consider that during the course of this debate today and while we're still on this clause to see if in fact they would agree to support that, and I'd ask government members to also look at the sincerity in the intent of that clause and agree that this would clarify the situation. The government is just asking for trouble if it doesn't define in the bill what mutual consent really means.

We already have, Mr. Chairman and Mr. Walker, an example based on the briefing we received that your departmental officials have indicated to us that they interpret this clause to mean - and they told us this - that the federal government does have the legal right to impose national standards. Therefore you have told us that is not your intent.

You do want to defend the five principles of the national health act, and we support that. We have no problems with that. We're talking about the future. We're talking the future of social programs, to which and for which certainly in the next two years your government is responsible.

The concerns of both opposition parties here is that it's not clear enough. We're asking for clarity. We're asking for the elimination of confusion and I don't see why we can't put bills and words into bills that will eliminate future disagreements between federal governments and provincial governments.

Anticipate that there's going to be a different of opinion. Anticipate that some government some day might want to impose something unduly on a province. We have to anticipate that, and in terms of that anticipation, we have an opportunity now to eliminate that future problem. We can do that now. We can do it here.

I make my point. I know what your intent is. It's honourable and I respect that, but what really stays behind, Mr. Chairman, when all our chatter is finished, is that ``through mutual consent'' stays in this bill and it's not clear. You're asking for trouble. The government's asking for trouble.

We already have a difference of opinion between your departmental officials and what you just said, and there's a conflict. I would really implore all members of this committee to seriously consider a definition of mutual consent or removal of the word ``mutual'', replacing it with ``unanimous'', so that Quebec does not have to worry about standards being imposed on it on any new social programs.

That's my submission, Mr. Chairman.

The Chair: You made your point very clearly, Mr. Silye.

[Translation]

Mrs. Lalonde: b) reads ``...maintaining the national criteria and conditions in the Canada Health Act". Well, the title of the act has been changed. The new title is to be found in section 33: An Act relating to cash contributions by Canada and relating to criteria and conditions in respect of included health services and excluded health services. So complementary health services are mentioned in the title. However, as I understand it, these complementary services are not subjected to the five standards and to the two principles. Are we to conclude that they will be, from now on? It may have been overlooked in the title.

.1040

Mr. Murphy: If I understand clearly, you would like to know whether it is right to mention the Canada Health Act in section 123b), since the title has been modified?

Mrs. Lalonde: No, this is the premise on which I based my question. I drew the conclusion that since extended services are included in the title...

Mr. Murphy: They are included in the long title. However the short title remains the Canadian Health Act.

Mrs. Lalonde: Subparagraph b) states: ``maintaining the national criteria and conditions including the other changes''. Does it mean that the principles apply to extended services? Think about it, maybe you will say no.

Mr. Murphy: There is abolutely no change in the intent of the Canada Health Act. None.

Mrs. Lalonde: But it's written.

In a sense, those contradictions are politically understandable. I travelled throughout Canada with the Human Resource Development Committee. Everywhere, except in Quebec with one or two exceptions, we were constantly asked for ``strong national standards''. This request was presented here by groups working for disadvantaged people. In Alberta as well they kept asking for strong national standards.

I believe that Liberals have always been fierce defenders of strong national standards. However, those are new political deals. On the one hand, you have Quebec; on the other, there are increasing pressures in other provinces for more flexibility. However, the two groups' motives are different. Considering the federal cuts, it is a most pressing matter.

I can understand that this contradiction within the act is due to the difficult political situation in which you are.

That being said, the bill remains full of contradictions. It could not possibly be interpreted in a different light. Yet, I understand that in a large part of Canada, there is a desire for shared principles and objectives. Since we keep harping upon the fact that we are a people and a nation, we want standards, but we want to be the ones to define them.

So, all you're doing is show the contradictions that exist in the act, but in fact, you want to remain totally free to apply these principles as you wish. That is what I had to say.

The Chair: Mrs. Lalonde, Canada has always been a wonderful country, but the going was never easy.

Mrs. Lalonde: We know it better than anybody.

[English)

Mr. Walker: I'll just start with Mr. Silye's comments about official briefings.

The government communicates its position on legislation through the speech by the Minister of Finance in the budget and through his speech in the House. On the definition of mutual consent, I suggest that you go back to his speech in the House two weeks ago, where he was quite clear in the meaning of mutual consent.

Over the years, as you know, there have been several constitutional battles in this country about the lack of clarity in our amending forumula. One of the reasons we stayed away from words such as ``unanimity'', ``majority'' and so forth is that this is not a constitutional thing.

With all due respect to my colleagues from Quebec, I think there is an equal number of people in all parts of this country who are very concerned about the human condition, poverty, and making sure we do the right thing. The federal government, through the Canada Assistance Plan, in fact worked with the provinces to make sure these objectives were achieved.

.1045

The intent of this act is to increase the flexibility of provinces to deliver the services they feel are most important to their citizens and to provide a financial basis for doing this to ensure that provinces and all regions have the capacity to deliver these services.

By mutual consent, the intent is to clearly indicate that the federal government is not interested in imposing programs in this area on the provinces. We feel there's a lot of goodwill amongst all provinces to ensure that the two levels of government work closely together to ensure a proper distribution of income and a proper delivery of services.

The role we have chosen at this stage is to provide a financial basis and to give the provinces the opportunity and the freedom to develop the programs they think are most responsive.

I think the act is quite clear on this intent, contrary to what the opposition says. Goodwill has been shown by the federal government. The public statements by the minister and by the government are in support of that.

[Translation]

Mr. Loubier: Mr. Chairman, I want us to be clear. I think that in the past 15 months we have shown ourselves to be a little more sensitive to the human condition than the government has been since it brought down it's first two budgets.

We are not the ones who cut 7.5 billion dollars in transfer payments to the provinces; we are not the ones who also cut 2.5 billion dollars this year out of the unemployment insurance fund; I think we have to pay attention to that sort of thing. What we are saying is that the Bill does not suit Quebec at all, even if it suits the rest of Canada.

If you are incapable of transposing this reality, the Canadian duality as it has been known historically into a bill, this country has a real problem.

That was by way of introduction to the fact that last night we heard from some Ottawa people; we heard from some social organizations and we were able to have a compassionate discussion with them about the human condition, a much more passionate discussion than any the members opposite can hold.

I would add that the problem only arises in relations between Quebec, the Canadian provinces and the federal level. We are going to fight this. The human condition is not going to change in spite of your speeches; nor will the fact that you are the ones who have cut social programs and shown no humanity or compassion, over the past 15 months, toward those who are experiencing economic and social problems in our society. So, before giving anyone any lessons in respect and compassion for its neediest members, please have a look at what you are doing in your own backyard.

But that is not the issue. The problem arises because your amendment is not satisfactory, as compared to the original text; it does not solve the fundamental problem Quebec is having in any way, and we are going to fight this bill. We are not satisfied by all of the answers we have heard from you, Mr. Walker, Mr. Silye, and the others, not satisfied at all.

Mrs. Lalonde: May I add something?

The Chair: Yes.

Mrs. Lalonde: I want to say to Mr. Walker that a flexibility were really the intent pursued here, paragraph d) would have no reason for being here, because it reads as follows, and I am repeating myself: «a... transfer may be provided... for the purposes of». But if you use the reduced federal contribution in order to promote the shared principles and objectives that is not the same as saying that the central government will act as a catalyst. The provinces will get together at the government's behest and each will go in the direction chartered by the government in the decisions it makes.

Those two things are very different, even if you refer to Mr. Martin's speech, where he said that flexibility was clearly intended. However, the first version of the clause was so unclear that it had to be changed, and the second, more thought out version is no clearer than the first with regard to that flexibility.

I will repeat what I said: If you use the reduced subsidies in order to promote principles, you are doing far more than acting as a simple catalyst. This is in fact more upsetting that what we had under the FPE, because here you are saying that we will seek to establish common principles and objectives for post-secondary education.

.1050

To add to what Mr. Loubier was just saying, I would like to explain that we can be just as concerned as others about poverty and human misery in Quebec, but we may want to spend the same amounts of money in different ways. One has only to look at countries that devote approximately equivalent amounts to social expenditures. They do not necessarily spend their money in the same way, because of their different cultures, family organizations, etc.

You may have compassion and exercise in different ways; the means you chose do not have to be the same, necessarily. The cultural factor is the primary factor. The Japanese do not manage their economy like the Germans, nor do the Germans manage theirs like the French. There is nothing wrong with looking at national differences.

I want here to emphasize that difference and if you really want to be a catalyst, this is not what is coming through in here. Furthermore, other provinces may have other priorities and other thoughts on the matter and that is another, different political issue.

If you think you are going to score points in Quebec by using subsidies to promote principles involving post-secondary education, you are probably right, but we should be pleased because that will be to our advantage.

[English]

Mr. Walker: Mr. Chairman, I can't think of a particular piece of legislation that would offer more freedom to a province than the one we have drafted here. We are asking for the support of this committee.

Look at the ability. I agree with you 100% that people try to attack the problems of poverty in a localized area - sometimes it's a community group in downtown Montreal, sometimes it's an aboriginal group in northern Manitoba - and there needs to be a lot of flexibility to respond.

I was listening very carefully to the House of Commons yesterday during Question Period when one of your colleagues asked the federal government, through the Minister of Human Resources Development, to do more to help workers in a textile industry and to support the activities of the provincial government. Sometimes it requires shared efforts to achieve our common objectives.

Thank you.

[Translation]

Mr. Loubier: My colleague has just underlined an important point. As long as we're in a federal regime, we're going to do what we can with what we've got and we're going to work within the system to safeguard our onw interests. That much is obvious, and we aren't going to be shy about it. Every year Quebeckers pay $29 billion in taxes and income taxes to the federal government.

The Chair: If I were in your shoes, that is exactly what I would do.

Mr. Loubier: Thank you for your support.

[English]

The Chair: I have the feeling we're ready to vote on the amendment.

[Translation]

Mr. Loubier: I would like a recorded vote on the amendment.

The Chair: Madam Clerk, a recorded vote.

.1055

Amendment agreed to: seven yeas, five nays

[English]

Clause 48 as amended agreed to on division

Clause 49 agreed to on division

On clause 50

[Translation]

Mr. Walker: I move that the French version of clause 50 of Bill C-76 be amended by striking out line 26 on page 26 and substituting the following:

``ministre'' Le ministre du Développement des ressources hu-

[English]

We've made a mistake on the title of the minister, so it's just changing his title.

Amendment agreed to on division

Clause 50 as amended agreed to on division

On clause 51

Mr. Silye: May I make a comment? On clause 51, as with clause 50 - and I waited until we got to clause 51 - I'd like to make the same objection and point out the same flaw with these two clauses, 51 and 50, as with clause 38. They give the cabinet too much authority with respect to determining what is or is not a violation of this new social transfer, and the concern is it allows them to withhold any federal transfer, not just a specific transfer for a specific social program.

If the federal government concludes there's been a violation...we've asked for, and obviously we're not going to get, but we wanted a clearer and more transparent definition of what can be considered a violation of these standards as well as limits to what transfers can be withheld for the said violations.

I would like to have Mr. Walker address that last comment of mine as to why we cannot have a more transparent definition of what is considered a violation of these standards and, as well, the limits as to what transfers can be withheld for these violations.

Mr. Walker: This is not changed from the original act, the Canada Health Act, and it's our opinion that it's quite clear to both the provincial and the federal governments what those violations are, and that is why there have been from time to time conflicts with the provincial governments.

Mr. Silye: But, Mr. Walker, there will be new standards set. There will be new agreements written.

Mr. Walker: Not under the Canada Health Act that we anticipate.

Mr. Silye: Okay, I just wanted to put in my objection. Thank you.

Mr. Walker: Mr. Chairman, when we finish clause 51.... I've made an error. I had actually two changes in clause 50.

The Chair: Yes, that's my fault. Would you be good enough to go back. You want a technical amendment.

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Mr. Walker: It's a technical amendment.

Finish clause 51 and I'll go back to clause 50.

The Chair: On clause 51....

[Translation]

Mr. Loubier: No. That's fine.

[English]

Clause 51 agreed to on division

The Chair: Going back to clause 50, I forgot there was a technical amendment of which we were given notice.

[Translation]

Mr. Walker: Mr. Chairman, this is the same thing as the previous amendment concerning the minister's title. It's on page 16.

The Chair: It's the same thing as what we had suggested...

[English]

Mr. Walker: I'm sorry, it's on page 28.

[Translation]

Mr. Loubier: Your minister doesn't develop anything.

[English]

Amendment agreed to

Clauses 52 to 54 inclusive agreed to on division

On clause 55

The Chair: Mr. McClelland, welcome to our committee. It's good to have you.

Mr. McClelland (Edmonton Southwest): Thank you very much, Mr. Chairman. It's a pleasure once again to be joining the esteemed finance committee.

Mr. Chairman, I'd like to put on the record our position on clause 55. We interpret this as allowing the government to take back tax points from Quebec, that is, to remove tax points from Quebec. Our position is that this moves in exactly the opposite direction that it should.

Rather than to have the authority to take back tax points from Quebec, we feel that the federal government should move to give the other provinces the same latitude that Quebec now enjoys. I think it would be the right move. That's the position we would like to have on the record. Would anyone like to comment?

Mr. Walker: [Inaudible-Transeditor]...the specialists in this area.

The Chair: Thank you, Mr. McClelland.

[Translation]

Mr. Bissonnette. No, I'm sorry; Mr. Loubier.

Mr. Loubier: I would like to put a question to Mr. Walker on that topic. According to clause 55, Quebec's special tax abattement is considered a cash transfer, as was the case before the introduction of C-76. As of 1999, when the Canada social transfer cash contribution disappears, will the government of Quebec find itself in the rather unusual situation of having to reimburse the federal gvoernment for over contributions made under Quebec's special tax abattement? Is that the meaning of that clause? Could you explain it to me?

Mr. Bissonnette: There's absolutely nothing new in that clause. The tax abattement is simply repositioned; it is the same as the one that existed previously.

Mr. Loubier: But there is something new. The Canada social transfer cash contribution will disappear in 1999; that is new. That new aspect means that as of 1999, if one goes by the provisions of clause 55, the Quebec government is going to have to give back a part of the tax abattement it enjoys under the special tax abattement provisions.

Mr. Bissonnette: Sir, if I might be allowed to continue... Quebec's tax abattement continues to exist as such. It is simply relocated to the new Canada social transfer structure and it continues to operate exactly in the same way as it did in the previous structure in so far as any eventual overpayment is concerned; should Quebec's special tax abattement and other tax points ever exceed the amount to be paid to Quebec federal legislation provides, and always has provided, that the government of Canada may recover the difference to ensure that Quebec will continue to be treated exactly like the other provinces.

Mr. Loubier: But according to the budget, the Canada social transfer cash contribution will disappear in 1999 and it would seem to follow that the Quebec government will have to begin reimbursing with the one hand what it obtains with the other through the tax abattement.

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Mr. Bissonnette: We cannot predict when that situation might arise, for several reasons. Firstly, beyond 1997-98, the government has not set the size of the future Canada social transfer; secondly, no decision has been made as to the way in which the Canada social transfer will be devided up among the provinces on an on-going basis. Should the hypothetical situation you referred to arise, all of those things will be affected. Thus, because those decisions have not yet been made, it is impossible to predict now when and whether that hypothetical situation might arise.

Mr. Loubier: But that situation is plausible and could arise around 1999.

Mr. Murphy: We cannot say whether that will be the case without knowing what each province, including Quebec, will receive on the basis of the new formula as of 1997-98.

Mrs. Lalonde: This is about another provision: clause 55, subclause 29. There is something new, where it says:

The Government of Canada... by virtue of this Act ceases to be under any obligation, except as provided in this Part, to make any contribution or payment to a province for financing social programs as provided under Part V.

Basically, this overrides the other acts; they no longer apply. That is what this means. Then, in so far as the funding of social programs is concerned, the four provisions listed in clause 53 would apply.

Mr. Murphy: That can be explained by the elimination of several definitions we no longer need. For instance, we no longer refer to the Canada Assistance Plan, nor to established program financing. Thus, it is no longer necessary to refer to authorizing instruments. That is the only reason behind these amendments.

Mrs. Lalonde: Nevertheless, it is still couched in very strong language. It says:

The Government of Canada... by virtue of this Act ceases to be under any obligation, except as provided in this Part, to make any contribution or payment to a province for financing social programs as provided under Part V.

Before, we had the EPF for health and post-secondary education and the CAP which covered social services and social assistance. I understand that. Those are the four elements in that part. So, basically, the bill says that the government is no longer under any obligation to make any contribution except for the Canada social transfer.

Mr. Murphy: The only purpose behind that clause which has existed for a long time and which we are keeping and changing as the need arises is to provide greater certainty. What happens is that total entitlements are calculated for any province that does not have a tax abatement, total entitlements under the EPF and the CHST. Then the tax transfer is substracted and the amount of the resulting cash transfer is arrived at. In the case of a province which does have a tax abatement or tax abatements, we resort to Part VI of the Act, subsection 27, under which total entitlements must be considered, minus the abatement, as well as the tax transfer each province receives, and the result is the cash transfer.

And finally, the explanation you asked for. Subclause 29 states that the formula applies in the case of a province that has a tax abatement. In Part VI of the Act, the calculation is not done twice, first with the abatement, and then without it. We are told that for greater certainty, the calculation will only be done once, under Part VI, that is all.

.1110

[English]

Clauses 55 to 57 inclusive agreed to on division

Mr. Walker: Mr. Chairman, this ends that section. The next section is short. There are a couple of short sections. Did you want to do them and go back to the first?

The Chair: Mr. Hoeppner.

Mr. Hoeppner (Lisgar - Marquette): Mr. Chairman, I have to attend a subcommittee meeting too. Could we do the transportation issue first? Would that be objectionable?

The Chair: To start with, I was going to suggest that if we can't do these in two minutes, we'll go right on to the transportation. Okay?

Mr. Hoeppner: I'd appreciate that.

Mr. Campbell: Mr. Chairman, is there an amendment on clause 59?

The Chair: I'm sorry, there is an amendment to clause 59.

Mr. Walker: Mr. Chairman, we'll start with clause 57. In clauses 57 and 58 there are no amendments. I have an amendment in clause 59 that I didn't want to miss.

Clause 58 agreed to on division

On clause 59

Mr. Walker: It's a technical change. In clause 59, at the very top of page 33, we're striking out ``of those signatures''.

Amendment agreed to on division

Clause 59 as amended agreed to on division

Clauses 60 and 61 agreed to on division

On clause 62

The Chair: We're into discussion on this.

Mr. McClelland: Yes.

The Chair: I'm in your hands...to accommodate Mr. Hoeppner. If it's going to take more than a minute, we'll go back to the Western Grain....

Mr. McClelland: Mr. Chair, I'd merely like to put something on the record.

The Chair: Okay, fine.

Mr. McClelland: Mr. Chairman and members of the committee, PUITTA, the Public Utilities Income Tax Transfer Act, was the single part of the budget that to me was the most discriminatory, unfair and punitive to a specific region of the country. I'm talking about Alberta and Nova Scotia. To me and many Albertans, Mr. Chairman, this is absolutely wrong. It's the bastard stepchild of the National Energy Program. It's everything that's wrong with the central government looking at the regions of the country without sensitivity.

For members of the committee who may not be aware, there are two provinces in this country that have private utilities. All other utilities in this country are public utilities.

This clause, which is going to deleted, had the effect of putting all utilities on an equal footing because the public utilities do not pay taxes one government to another. This bill ensures that privately owned utilities in Canada pay a tax that the public utilities don't have to pay, which in turn puts the businesses operating in Alberta and Nova Scotia, using private utilities, at a decided disadvantage.

It is a tax of $200 million, 80% on the people of Alberta and 20% on the people of Nova Scotia. Every single household in Alberta will be paying approximately $60 extra tax to the federal government this year specifically as a result of this.

It's not fair, it's not right, it's punitive, it's aimed at a specific area of the country, and it's wrong. At a later date I would ask the committee to reconsider this bill. I recognize now that it's going to go forward on division. We talked about it before, but I want on record in this committee that this amendment is absolutely wrong.

Thank you, Mr. Chairman.

The Chair: Thank you. Do you want to respond?

Mr. Walker: Yes, if you don't mind.

.1115

Mr. Chair, this has been an issue that the Government of Canada has moved slowly on. This is not the first change in the taxation rate on the utilities abatement. In fact, it applies to three provinces. It also applies to Newfoundland. In not all cases have the savings been passed on to consumers as they are in Alberta.

Similarly, what we are doing is making the tax treatment of these utilities parallel to the tax treatment given to them by the provinces.

Mr. McClelland: Mr. Chairman, it's none of the federal government's business what the provinces want to do with that money that is in the provinces. If the federal government is looking for fairness and equity, then tax the public utilities. Why on earth would the government then decide in fairness that they're going to take away the fairness to the three provinces, Nova Scotia, Newfoundland and Alberta? It's wrong.

Your response, with respect, my hon. colleague, doesn't wash. It's a whitewash; it's skating. I just want to put on the record that this is absolutely wrong. You can skate around it all you want, but you cannot escape the fact that this is aimed at Alberta and, preferably, Nova Scotia and Newfoundland. It's not right.

Thank you, Mr. Chairman.

The Chair: Mr. McClelland, I think you've made only one mistake. I think it's $249 million as opposed to $200 million.

Mr. McClelland: Thank you, Mr. Chairman.

The Chair: Perhaps you could bring this up on our pre-budget discussions next fall.

Clauses 62 to 73 inclusive agreed to on division

The Chair: Do schedules I and II fit in here now?

Mr. Walker: Mr. Chair, may I ask the indulgence of the member from the Reform Party? What time do you have to leave?

Mr. Hoeppner: I should have gone 15 minutes ago.

The Chair: We have been asked to take a five-minute break and go directly into grain transportation. Shall we leave the schedules for now?

Mr. Walker: Yes.

The Chair: A five-minute break.

.1118

.1125

The Chair: Order, please.

Okay, we're going to part III, Transportation Matters.

Shall clause 11 carry?

Mr. Fewchuk (Selkirk - Red River): On transportation we need to solve an issue right now. We need a witness, anyway.

The Chair: Jean, would you like to be a witness?

Mrs. Stewart (Northumberland): Are we doing agriculture?

The Chair: We don't know whether it's agriculture, transportation, or all of the above. Where's my clerk?

I tell you, we're on our own. No government officials, no ministers, no cabinet.

Mr. Walker.

Mr. Walker: We're ready to proceed with the transportation section, starting with -

The Chair: Clause 11 on page 9. An amendment, Mr. Walker?

A voice: No.

Clauses 11 to 17 inclusive agreed to on division

Clause 18 agreed to

Clauses 19 to 22 agreed to on division

The Chair: Shall clause 23 -

Mr. McClelland: Mr. Chairman, hang on here, please. Let's go back to clause 21, if we may.

The Chair: Yes.

Mr. McClelland: My colleague may have something to say here.

Mr. Hoeppner: We get up to clause 29 on that issue, right? That's where I would like to make some interventions.

The Chair: Excellent, go ahead. Thank you, Mr. Hoeppner.

Mr. Hoeppner: Do you want to go to clause 29 now, or do you want to progress to it?

A voice: Just let's progress to it.

Mr. Walker: A change in clause 22, which appears on the back of the schedule of payments - do you want to deal with it now, reference back to it, or do you want to -

The Chair: I am in the hands of the committee.

Mr. Hoeppner: Is that about short lines? Let's deal with it now.

The Chair: Let's deal with the short lines right now then before Tom Payne kills us.

Mr. Walker: Okay. In clause 22, at the back of your book there is the actual schedule of payments to go with this. Mr. Chairman, in response to a wide concern of the committee and expressed clearly for the record by Mr. Speaker, the critic from the Reform Party, we wanted to respond to the needs of the short-line operators, particularly one from Alberta, Mr. Tom Payne, who is a witness, that we have increased the basic rate by approximately 10¢ as one of the ideas suggested. It is our understanding this satisfies the need he has.

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Mr. Hoeppner: That's the information I have.

Mr. Walker: Is that fine with the -

Mr. Hoeppner: I think Mr. Payne was here and I think he agrees with that schedule.

Mr. Walker: Okay. Mr. Chair, that's on pages 44 and 45 and is attached to proposed section 22 of the act.

Mr. Hoeppner: How much of an increase per tonne does that give? Can we turn to an official?

The Chair: We understand it's 10¢.

Ms Mary Ellen Cavett (Counsel, General Legal Services Division, Law Branch, Department of Finance): The average length of haul is increased by 10¢ a tonne, to $31.82.

The Chair: It's my understanding that members from the Bloc, the Reform Party and the Liberals unanimously support this amendment.

[Translation]

Mr. Loubier: No. If we disagree with the overall concept, we cannot agree on the amendments.

[English]

The Chair: Oh, okay.

Amendment agreed to on division

The Chair: I think the Reform Party wants the record to show they support this amendment. Let the record so reflect.

The Clerk: Have we agreed to schedules I and II also?

The Chair: Mr. Walker.

Mr. Walker: We're changing just the one schedule, Mr. Chair. So when you carried the motion, I think you carried them all. In other words, there were amendments to only the one schedule, schedule III.

The Clerk: No, we have to carry them one by one.

Mr. Walker: Okay. The other schedules don't appear in the act, Mr. Chair. You understand that we make reference only to schedule III.

The Clerk: Yes.

The Chair: So schedule III is amended as set forth.

Mr. Walker: Yes.

The Chair: We're at clause 22, which was agreed to on division.

Clauses 23 to 28 inclusive agreed to on division

The Chair: On clause 29 -

[Translation]

Mr. Loubier: I would like to say a word, Mr. Chairman.

[English]

Mr. Walker: Clause 29?

The Chair: Any further amendments? No.

[Translation]

Mr. Loubier: The Secretary of State is all mixed up this morning.

[English]

Mr. Walker: We now turn to schedule II in the back of the bill for an amendment. We move that clause 29 of the bill be amended by adding to line 13 on page 47 the following:

and conditions So it's not only ``criteria'', but ``and conditions''.

Mr. Hoeppner: What does that mean, Mr. Chairman?

Mr. Walker: Spoken like a true farmer.

[Translation]

Mr. Loubier: Do I gather that you strike out the following provision:

...le ministre effectue les paiements de transition en deux versements.

[English]

Mr. Walker: No. We're just adding the words ``and conditions''.

[Translation]

Mr. Loubier: «Critères réglementaires et conditions»?

[English]

Mr. Walker: This is on page 47, and in 4(1) under the words ``Paiements de transition'', on the last line, adding the words ``and conditions''. Criteria, for example, refers to proof of ownership in this and conditions can refer to, for example, the owners-tenant agreement.

[Translation]

Mr. Loubier: I would like to ask a question, Mr. Chairman. What does it change to subclause 4(1)?

[English]

Mr. Walker: There has been a wide-ranging discussion in the farming community about the payment and how it's paid to the farmers, particularly those who are not owners, but who, for example, are tenant farmers and whether the money will actually reach these particular farmers.

Proof of criteria, for example, would be showing the government that you are in fact the landowner, a land transfer document, or something like that. Conditions refers to, for example, an owner-tenant agreement that has been signed.

.1135

Mr. Hoeppner: A tribunal, Mr. Walker? Is that it?

Mr. Walker: Yes.

Ms Cavett: When we get to the amendments to clause 6 of the Western Grain Transition Payments Act, you will see there is a motion of amendment to provide:

The Minister of Agriculture will make regulations prescribing conditions be met by an applicant-owner...to receive a transition payment, one of which is that the owner and his tenant have reached a suitable or equitable arrangement.

You're right. If no agreement is reached between these parties, my understanding is Agriculture Canada is proposing that there will be an arbitration process whereby they can reach some agreement as to how the transition payment should be divided, if it is divided at all, between the owner and the renter.

Mr. Hoeppner: That clarifies my question, but I'd like to go back to clause 29 when we're finished with this, if the Bloc is finished with it.

[Translation]

The Chair: Do you agree?

Mr. Loubier: I have more to say regarding clause 29.

The Chair: We have already done clause 28.

We'll have discussion on clause 29 then, Mr. Hoeppner.

Mr. Hoeppner: I'd like some clarification on the definition of farmland. I know this has been quite a divisive issue on schedule II, clause 29, where it says farmland is defined. You've added in there, or it says, ``and land that was in summer-fallow during [the year] on which an annual crop of grain was cultivated during 1993''.

In my area there's been quite a dispute - and I would like to hear your comments on it - that this payment is there to help compensate for devaluation of land. So my people are telling me that forage land is going to be devalued in exactly the same way as as grain land.

I guess the government is saying to us that they will not accept forage as a cultivated crop, but then you go to summer-fallow and you say ``where grain was grown in the previous year''. To rotate your forage on your grain rotation, you have to summer-fallow forage.

Are you again discriminating against the forage growers? They will be growing grain on that for the next four or five years, and the land will be devalued. So what is the text or what is the idea behind this?

Mr. Walker: As a westerner, I'm smart enough never to answer a question on agriculture. So I have an expert to do it.

Mr. Hoeppner: Mr. Chairman, this is why I wanted some clarification.

Mr. George A. Brackenbury (Director, Consultation and Planning, Staff Relations Division, Human Resources Branch, Treasury Board Canada): The decision was taken to use the same definition of grain as we have under the Western Grain Transportation Act currently. So if it's an annual crop of grain, which includes most of the crops - we are including it in terms of the purpose of payment - that does not include forage.

In the case of summer-fallow, where we are including summer-fallow land that in 1994 was there but the previous year was using grain, we're in effect recognizing that land was in grain production.

Now, it is also true that many people have come and said the value of their land they had in forage is also affected to varying degrees. The decision was taken at the time of the budget. The minister has considered it and he's talked with many people. With the money we have, we are to include forage land that was not directly benefiting from the program but does have some indirect benefits in that it keeps higher land values. We would be diluting the payment we have. The judgment was that we would not amend the bill in order to include more land through this program.

That does not preclude provinces, such as Alberta, who wish to go ahead and produce additional programs to make a payment on forage land, which might occur and might occur in each of the provinces. But that would be separate from this program.

Mr. Hoeppner: Where does your philosophy fit in? We are supposed to diversify.

Now the people who have diversified and helped the grain farmers are going to get hit again because their land is going to be devalued in the same way as the grain land was. That's causing quite a bit of friction in the farm community.

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Mr. Howard Migie (Director General, Western Grain Transportation Review, Department of Agriculture and Agri-Food): The payment is based on 1994 land use. Whatever happens next year, if people want to go into forage with special crops or anything, that won't affect the payments either positively or negatively.

The payment itself is historical. It's neutral with respect to future land use. It will be the market that will decide in the future.

In terms of the past, the direct beneficiaries were those who were delivering grain to the elevator. There were some indirect beneficiaries in the form of people who moved into forage, and their land is affected; but, in terms of the amount of money available, it was felt that it would be better not to dilute it by adding more land. However, that does not preclude the provinces from doing something outside this program.

Mr. Hoeppner: So you're comfortable with that. The people who have helped us diversify and helped the grain farmer are going to take another shot now. Is that the Liberal philosophy?

Mr. Migie: I'm not here to answer that line of questioning.

Mr. Hoeppner: I just want that clarified for the record, because I don't know that.

Mr. Walker: I'll answer for the Liberal philosophy, which is always based on fairness to everyone. We think this is the fairest way to proceed.

Mr. Hoeppner: Well, that clears my conscience on what our amendment will look like at report stage.

Mr. Walker: Okay.

Mr. Hoeppner: Thank you very much.

Mr. McClelland: I'm not a farmer, but I do have some sense of what's going on here and I would like to put this in my words. I hope that I have this correctly. If I don't, I would ask the committee to correct me.

We've been trying to get people out of grain farming or to reduce the amount of grain in production because of the fact that we produce about 80% more than we can use internally. We have to export it and we haven't been making a lot of money on exporting. So we've been trying to get people out of grain production.

As a result, farmers who have gone out of grain production have not benefited by various programs, but have seen their land value decline because if you take some land and reduce its value, then the land adjacent to it also goes down in value. Just because one quarter section was in grain and another was in forage, if one section goes down then the adjacent section is going to go down.

For the record, it would seem that if we're making these decisions based on the long-term value of land, then we should be looking at land in general and not at whether or not the land was in a specific crop.

To me, as a non-farmer, it doesn't make any sense to do that. If you're selling widgets and you reduce the value of the widgets on your shelf, all the other widgets go down in value because everything is related to the value of the widget.

The other point I would like to make is this. If, in the normal crop rotation, a piece of land in grain went to forage and then to summer-fallow, what would happen there? It's still in the normal grain rotation.

Mr. Hoeppner: Yes, but they're being discriminated against.

Mr. McClelland: I think that should be very clearly put on the record, and I do so as an urban person looking at this from the perspective of fairness. Even if it is more difficult for the government to achieve it, it should still be done.

The Chair: Mr. Loubier, did you want to add something?

Mr. Loubier: Mr. Chairman, I will not only speak for the Quebec farmers, but for all farmers throughout Eastern Canada, i.e. Ontario, Quebec and the Maritimes.

Let me tell you that the discussions about the Crow's Nest Pass agreement is almost as old as the Canadian Constitution. The first time I've heard about it was in 1978. Since then, I took part in the second debate of importance on that same topic, in 1982.

At that time, Mr. Eugene Whelan was the federal Minister of Agriculture, of a Liberal government, but it was Mr. Ouellet who was mainly dealing with this question for Quebec. And again, today, there is a fundamental problem with this, in clause 29 of Bill C-76, that of compensation payment.

.1145

We had the opportunity of discussing it last night, and, for the benefit of those who are here today, the elimination of the Crow's Nest Pass subsidy is more serious that it seems at first glance. We are talking about an East-West balance that has developed since 1897, and which means that a comparative advantage also evolved, for grain production in the West and for animal production in the East.

If that equilibrium is broken, as the bill proposes to do, there will be consequences, not only for Western producers but also for producers in Eastern Canada, especially those in Quebec. I will explain what I mean. By eliminating the Crow's Nest subsidy, with the increase in transportation costs, the opportunity cost for shipping grain toward the various export points also increases. Normally, that would exert downward pressure on local grain prices. If my most recent estimates are correct, they are talking about a decrease in the West in the price of fodder grain - grain available for animal consumption - of $8 to $15 per metric ton.

Thus, at the outset, the abolition of the Crow rate will be a brutal shock to the competitive equilibrium between grain production in the West and animal production in the East. Eight to $15 per metric ton is not a negligible sum and could have stimulated animal production in Western Canada.

That is the first such shock to break the historical balance that had been established. The Crow rate had been introduced precisely to develop grain production in the West and it had made Western Canada the bread basket of the world up until the end of the 1970's. Today, that competitive balance is being broken. Agriculture production in Eastern and Western Canada is being badly shaken by this.

Aside from badly undermining the incentive to animal production in the West, there is also the $1.6 billion compensation provided for in clause 29 of Bill C-76. That compensation will be paid to Western producers who own or rent arable land, and is not targeted only to grain producers who have exported grain, on a historical basis. Often, the last five years are used, and the worst and best years are removed from the calculation, which means that only three years are taken into account. The $1.6 billion compensation will not only be distributed to exporting producers who have used the Crow rate.

That causes a problem at the outset because we have just transformed a compensation fund set up following the elimination of a subsidized transportation rate that targeted exporting producers specifically. We had just transposed that compensation so that it now affects all Western Canadian producers. So what are we actually doing in this way? This is no longer compensation fund to soften the blow of the disappearance of a transport rate certain specific Western producers benefited from, but a $1.6 billion subsidy to encourage the development of animal production in Western Canada, in two payments.

The other problem is that this tax-free compensation is really worth $2.2 billion. Mr. Chairman, when I consider the problems inherent to the payout of the subsidy, and when I consider what is happening in Eastern Canada, a fourth problem must be added to the others. That problem is one of equity.

As I mentioned in the beginning of my presentation, the Crow rate subsidy established a balance, historically speaking. You have just broken that balance between Western grain production and animal production in the East. By breaking that equilibrium, by giving a competitive advantage of $8 to $15 per metric ton to grain producers by reducing local grain prices, and by adding the $2.2 billion subsidy based on arable land surfaces and not only on shipments by traditional exporting producers who exported because of the Crow rate, you are neglecting the impact that the elimination of that rate and the upsetting of the competitive balance may have on Eastern Canada.

I feel that impact will be much more serious than people think for Ontario, Quebec and the Maritime provinces.

.1150

Quebec alone will lose between $24 and $46 million per year because you have broken the competitive balance between the Eastern provinces and the Western provinces, according to a study - bearing only on Quebec - carried out by Dr. Garth Coffin of Macdonald College.

According to the most recent information, negotiations with the Eastern provinces would result in Quebec getting a single $10 million payment to compensate the shock caused by the elimination of the Crow rate and the absence of any significant compensation for Eastern Canada. That is far from sufficient, as it seems Quebec's loss would amount to $24 to $46 million a year.

The problem is the same as in 1982. There seems to be a lack of equity in the compensation to be paid out to Canadian producers to compensate them for the upset of the competitive balance caused by the elimination of the Crow's Nest Pass subsidy.

It seems that we are going to repeat the 1982 debate. Yesterday, we again heard from the Union des producteurs agricoles du Québec who came here to present that very analysis. They put their finger on the problem by emphasizing the fact that we should not be using federal money - if you are federalists, and I think that most of you are - i.e. money that comes from the taxes and income taxes paid by all of the Canadian provinces, Quebec, Ontario and the Maritimes among them, to provide subsidies to Western Canada so that the West can then directly compete with Eastern Canada in the area of animal production.

There is going to be a problem if changes are not made along the way to allow for a proper compensation of producers in Eastern Canada, those in Quebec particularly, following the disappearance of that balance. For those who are skeptical about the effect of that disequilibrium, we saw a good example yesterday involving what has happened in Alberta. In Alberta there is the Crow Benefit Offset Program and it has been noted that that program has minimal effects as compared to the elimination of the Crow rate, and yet there has been a 10% increase in pork production in Alberta.

So, there is a problem there. For those who remember, in 1982 there was a coalition formed for the survival of the agrifood sector in Quebec, which got together with both an Ontario and a Maritime coalition; together, they managed to get the then Liberal government to back off. The government decided to not pay Western producers compensation of more than $700 million based on the size of cultivated land surfaces.

This year, the difference with 1982 is that Quebec, Ontario and Maritime provinces' agricultural producers, faced with the disappearance of the Western grain transportation tariff, decided that they would grant a concession, and accept that the subsidy be paid out directly to Western producers, on certain conditions. The main conditions were the following: firstly, that compensation was to be given to producers who had benefited from the Crow's Nest Pass rate and were directly affected by the elimination of the transport subsidy, rather than to all of the owners or tenants of arable lands in Western Canada; secondly, fair compensation was to be paid to Western producers; thirdly, the Minister of Agriculture's commitments to that effect were to be translated into action and reflected in the bill that has been submitted to us, which is not the case.

I would like Mr. Walker and the officials to tell me that there is still hope that discussions between the Minister of Agriculture and Eastern Canada producers will be revived, in order to make sure that there will be fair compensation and that $1.6 billion will not, as the bill's provisions stipulate, be paid only to Western producers, as well as the payout of an insignificant diversification fund. We are talking about $10 million for Quebec.

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For all the reasons I have mentioned, we are going to oppose these provisions in the Bill which do not take into account whatsoever the analysis I just made.

[English]

Mr. McClelland: We should put on the record the fact that the Reform Party supports the removal of the Crow benefit in general. By and large, we think it's a step in the right direction by the government. It's long overdue. Our concern is that it has to be done fairly and has to be done to all sectors of the economy so that not just one sector finds its subsidy pulled out from underneath it.

Our view is that all sectors of the economy, including the agricultural sector, keeping in mind that farmers are the stereotypical entrepreneurs in this country, start all over again every year, hoping that things are going to be good. We feel that the agricultural community, as in all communities and all industries in Canada, should be market-driven and not subsidy-driven. That's the only way we are going to end up having efficiency in our country so we can be efficient internationally.

So while we support this, I must speak in diametrical opposition to our colleagues from the Bloc. We have other subsidy problems in our country that we are going to have to deal with down the road that are going to be very difficult, including dairy subsidies. The question is not to maintain subsidies; it is the gradual, careful elimination of all subsidies so that we have market-driven economies, not subsidy-driven ones.

Mr. Hoeppner: I just wanted to add a few remarks to that so the Minister of Agriculture and his parliamentary secretary will take note of it.

Because of the WGTA, we have been subsidizing the raw products, but not the finished products, the value-added products. This has definitely been killing plants and the processors in the province of Manitoba. This has given an edge to the processors of vegetable oils in the east.

So we're supposed to diversify. We want to work without subsidies, but we want a fair shot at it and we want to have those value-added industries in our province, because that's where we will save on transportation costs, that's where we will become efficient and very competitive on the world market.

So we are willing to bear the brunt. Let's do it fairly and everybody will be happy in the east and the west. That's my point, Mr. Chairman.

Mr. Walker: Some very interesting remarks have been raised here. The critic for the Bloc Québécois is a researcher in this area and I respect his comments. He has a very complete understanding of the agricultural field.

Whenever you remove a subsidy as large as the western grain transportation subsidy, which was over $600 million a couple of years ago and is still over $500 million now, there's no doubt that you cause dislocation and relocation.

One of the interesting observations I'd like to add to the debate is that, as I've talked to different groups in the last three or four months, there's been a wide range of opinions as to exactly how this is going to impact in western Canada. I would say to you, quite fairly, that it's going to range in the sub-regions across each of the provinces. Some people are quite enthusiastic about the changes and others are quite nervous about them. Whether you're a grain producer or a different type of farmer in the west, you have a different perspective on the benefits.

Consequently, it's quite obvious that these changes had varying impacts across the rest of the country, in Atlantic Canada and in southern Ontario and in Quebec, and people will be adjusting to the cost of other farmers and other product lines and deciding how best to change their own operations.

On the question raised by the official opposition on the taxation, the $1.6 billion does represent in its purest form a $2.2-billion benefit if it's considered to be in a tax/non-tax status.

I'd like to point out two things. First of all, given what the industry originally thought was needed in terms of a $7-billion pay-out, this is a rather modest contribution to the amount of change they will have to go through. Secondly, with the amendments we're presenting today, the tax status varies with the person who's receiving the money. So some people are in a taxable status and others are not, so the $1.6 billion no longer stretches into $2.2 billion.

Thank you, Mr. Chair.

.1200

The Chair: Thank you, Mr. Walker.

I suggest we have amendments to clause 29.

Mr. Walker: I have indicated one amendment. Just to make sure we have all the amendments to the same clause and people understand it, I have read into the record that clause 29 be amended by striking out line 13 on page 47 and adding the words ``and conditions''. That's the one we discussed already.

The second amendment -

The Chair: Could we deal with the first one?

Mr. Walker: Sure. I'm sorry.

The Chair: I've just been told by my experts here how to run this thing, and I always listen to the experts.

Amendment agreed to on division

Mr. Walker: The next amendment refers to the tax treatment, given the amendment we have just approved. It's that clause 29 be amended by striking out line 29 on page 47 and substituting the following:

cant after the payment is received; and by striking out line 36 on page 47 and substituting the following:

spect of an outlay or an expense; and

(c) where, pursuant to an equitable arrangement referred to in paragraph 6(c), a portion of a transition payment received by an applicant is paid to a person or partnership that is leasing farmland from the applicant, that portion paid to the person or partnership is deemed to be an amount that is required to be included in computing the income of the person or partnership from a business for the taxation year of the person or partnership in which it is received and the amount so paid is deemed not to be a transition payment received by the applicant for the purpose of paragraph (a) or (b), as the case may be.

The Chair: Would you like to repeat that in French, Mr. Walker?

[Translation]

M. Walker: Yes, after the meeting.

[English]

The Chair: Is there any discussion?

Amendment agreed to on division

The Chair: Are there any further amendments, Mr. Walker?

Mr. Walker: Yes, there's one other amendment dealing with the same clause: that clause 29 be amended by striking out lines 16 and 17 on page 48 and substituting the following:

transition payments;

(c) conditions to be met prior to receiving a transition payment, including the condition of an equitable arrangement, must be made by an applicant in respect of any person who or partnership that is leasing the farmland that is the subject of the application for the transition payment; and

(d) how interim and final transition pay-

So it's dealing with the payment of moneys.

The Chair: Is there any discussion?

Mr. Hoeppner: It sounds to me as if this Liberal government really wants to put the producer out of business. They're going to give the landowner the payment as non-taxable, and as soon as the producer gets a bit of value out of it, it's taxable.

I just received stats from the Wheat Board for the Advance Payments for Crops Act telling me that farmers are already $100 million behind and that they're getting into financial troubles. Now the little money that's going to be dealt to them through this act is going to become taxable and brought back into the system for the government.

I think it's totally unfair and I don't know how they can justify that. If we want to do away with the producers, let's eliminate them and let somebody else import the food. That's my suggestion to this committee.

The Chair: And we'll get Dingwall to pave our farms.

Mr. Hoeppner: Yes, something like that.

Some hon. members: Oh, oh!

The Chair: I understand.

Mr. Hoeppner: You just tell me how much of a transportation system we will need if we don't have farmers around to produce grain.

.1205

Mr. Walker: It is taxable in the hands of everyone, but it's just that some people have no tax consequences.

The Chair: Is there any other discussion?

Amendment carried on division

The Chair: Are there any further amendments?

Mr. Fewchuk: I have a question. The question is directed to you, Mr. Walker, and the department.

An amendment has been proposed to remove the possibility of the automatic appeal of the maximum provisions at the end of the five-year transition period. The amendment would leave in place the obligation of the government to review the efficiency provisions at the end of the fifth year period. In clause 21 and on pages 14 and 16, what is the approach to those proposed amendments?

Mr. Walker: Those are very interesting amendments. I know that as recently as yesterday the Minister of Agriculture was in detailed discussion with shippers over this question. We'd like to take a little bit more time to consider the exact approach to make sure this act is absolutely perfect. There's another opportunity at report stage to amend the act further, if we feel this is necessary. We'll report back to the committee and to the House at that time.

The Chair: When do you envisage report stage, Mr. Walker?

Mr. Walker: I would assume it would be the week when we come back. If the work of the committee is finished, we'll be proceeding in the House immediately thereafter.

Mr. Hoeppner: I'd just like to follow up a bit on Mr. Fewchuk's concern. The WGTA gave us this inefficient transportation system. We are now going to throw the whole mess back on the farmers again. That's why it irks me that this little bit of money is going to be taxable again. How are we going to rebuild our system from the little income that farmers have? We're 10 years behind the U.S. system right now. The elevator companies and the railway companies are not going to rebuild the system unless they can extract that money from my grain.

How, for God's sake, are we going to keep the farmer alive if we continue to keep hammering him? That's why I would like to see this government do something about the whole transition payment. If this is going to be taxed back to the producer, why stay on the farm? Go on welfare. It's a lot better.

Let's use some common sense. When 48% of the net farm income today comes from off-farm jobs, how are we supposed to survive? Have some common sense! Look at this issue. It's the WGTA that put us into this mess. Now we're supposed to clean it up on the backs of the farmers again and, as a farmer - not just as a politician - I violently object to that. I think we should do something. As a farmer who wants to keep his family on the farm, I say we should do something. For God's sake, let's look at this and redo the whole mess.

The Chair: Could I also ask about the dehydrators of alfalfa who came before us and said that by inadvertence they are left out of access to the $300 million fund. Does anybody have an explanation for that? If you want to adopt that as your question, I'd be happy to let you.

Mr. Hoeppner: This is just another point why I'm concerned about the way this payment is being handled. There was very little input from farmers or processors. So now we're asked to adopt this bill. It's going to be ruination, as far as I'm concerned.

The Chair: I just want to find out what happened to the dehydrators. I've got some of their grass in my office.

Mr. Migie: The alfalfa dehydrators will be receiving funds from the $300 million. That's not part of this bill, but there is $300 million over a period of a year, which the minister has indicated will be available for adjustment with respect to Canadian Wheat Board pooling, branch line abandonment. He has also indicated that by the end of June we'll be deciding about the first year or two in terms of how that will be spent. There's no agreement, by any means, as to the amount, but there are indications that will certainly be part of the $300 million.

The Chair: So they're not cut out of that? There's a possibility they could participate in that fund.

Mr. Hoeppner: But this $300 million was supposed to be there for a transitional period to help us revamp the transportation system, to have some time for it to become efficient. Now the dehydrators want some money out of it. Who else is qualifying then? That's why I said originally it should include forages and producers instead of landowners.

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But I can't change the bill. I'm not the government. I can see that $300 million just dwindled away to nothing and we will still have a transportation system that isn't nearly up to step with the U.S. How are you going to keep it going?

The Chair: We are making major changes in a lot of areas, and quite frankly, it is highly possible we haven't made the changes properly, or there'll be unexpected results. I think all of us from all parties will be prepared to come back and reconsider the effects.

Mr. Hoeppner: I think we should.

The Chair: I think the fact that you're going to be monitoring this very closely will give us a very good handle on it.

Mr. Hoeppner: I appreciate that very much.

Schedule II as amended agreed to on division

On clause 29 - Transition Act

Clause 29 agreed to on division

On clause 2

Clause 2 agreed to on division

On clause 3

Mr. McClelland: I would like to put on the record that we're concerned with clause 3 insofar as some employees will be declared surplus and will be paid for six months' work without doing any work at all. Would you care to comment on this? Is that in fact saying that people who are declared surplus will have six months severance?

Mr. Walker: If you give me a second I can get a full answer on that. Officials from Treasury Board are all here.

Mr. Brackenbury: Basically, I think that situation should never arise, because the six-month notice period is six months prior to the work ending. Therefore there will be work up to that point. It shouldn't occur that somebody gets paid for not rendering any service.

Clauses 3 to 6 agreed to on division

On clause 7

Mr. McClelland: We are concerned that this clause splits the accountability of public servants between two ministers, that is the public servant could delegate some of the powers of one minister to another public service in another department. However, the government is planning to amend this clause and remove that possibility. Therefore we support the government amendment.

Mr. Walker: I move that clause 7 be amended by striking out line 11 on page 7 and substituting the following therefor:

tion, authorize any other person under their jurisdiction of is part

Clause 7 as amended agreed to on division

On clause 8

Mr. McClelland: We're concerned that the employment equity programs will be to further the goals of employment equity during this period of downsizing insofar as rather than downsizing just on a strictly person per person or fair basis, the goals of employment equity or of affirmative action will be accelerated as a result of the downsizing. Recognizing that the downsizing will take place, we think the downsizing should take place without specific intent to further the aims of employment equity. Let the downsizing reflect the situation as it is today. Do not use downsizing as a means of accelerating employment equity programs.

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Mr. Walker: I'll just take it as a matter of comment.

Mr. McClelland: Thank you.

The Chair: Shall clause 8 carry?

Mr. Walker: There was a change in the wording in clause 7 in the French version. I believe Mr. Loubier has had it explained to him and the clerk.

[Translation]

Mr. Walker: There's a change in the French version. Mr. Loubier proposed that clause 7 of Bill C-76 be amended by striking out lines 9 and 10 on page 7 and substituting the following:

subdéléguer les pouvoirs qu'ils ont reçu à leurs subordonnés ou à toute personne appartenant à la Fonction publique du Canada.

[English]

Amendment agreed to on division

Clauses 8 to 10 inclusive agreed to on division

[Translation]

Mr. Loubier: I would like to add something. We requested the President of Treasury Board and the Minister responsible for Public Service Renewal to make public the program evaluations, broken down by department, which support the decision to lay off 45,000 federal public servants.

So far, our request has not received any favourable answer. So I've decided to file today a motion which you already supported two days ago in order to force the Minister to make this report public.

The Chair: I would like to hear the opinion of the Parliamentary Secretary but as far as I'm concerned, I see no problem with that. I think it would be a good thing to ask the minister to appear before us and provide us with some explanations.

Mr. Loubier: No. What I want is that the evaluation report the minister says he has and which supports the series of actions stated in this section of Bill C-76, in other words the revamping of the Public Service and the lay-off of 45,000 public servants, be made public.

The Chair: I can ask the minister myself to provide us with this report.

[English]

Mr. Walker: When did you want it, Mr. Loubier?

[Translation]

Mr. Loubier: The motion that I will file sometimes today states: «at the earliest opportunity». But normally we should have already received it.

Mr. Massé was quite clear. The program evaluation broken down by department was based on six criterias which lead to the decision to lay off 45,000 federal public servants. So, if nothing was left to improvisation, then, let's prove it and have this famous report made public.

[English]

Mr. Walker: I think you have a very good point. I would hesitate even to ask the officials without talking to the minister. So let me talk to the minister and report back at the next meeting. I just don't have an answer for you because I've never discussed that with the President of the Treasury Board.

The Chair: Just to support Mr. Loubier, I see no reason why we shouldn't, as the finance committee, be able to ask for any records from ministers.

Mr. McClelland: I'd like to have a short comment on the record. I recognize that we've gone past clause 8, but this also has to do peripherally with clause 8.

When competitions are made within the public service for placement of surplus employees, we would like to have the Public Service Commission consider that these appointments should be made having used a closed competition, so that positions that become vacant would be filled by competition from those who are declared surplus, rather than just on a seniority list.

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This would ensure that there is a minimum of cronyism or backdoor-ism and that kind of thing...to try to keep it as fair as possible and to ensure that positions that are filled from the surplus pool are filled on the basis of merit.

Clause 10 agreed to on division

The Chair: As far as I understand from our clerks, that completes all of the bill.

Shall the title pass?

Some hon. members: Agreed.

The Chair: Shall the committee order a reprint for use at report stage?

Some hon. members: Agreed.

The Chair: Shall clause 1 carry?

Clause 1 agreed to on division

The Chair: Shall I report the bill as amended to the House?

Some hon. members: Agreed, on division.

The Chair: We have one more little item. We have a motion by Mr. Loubier, and then we have a motion by Mr. Campbell.

[Translation]

Mr. Loubier: Mr. Chairman, I would have liked to have the new version but unfortunately it is not yet available.

The Chair: It doesn't matter.

Mr. Loubier: So I will read the motion which was written following the appearance of the President of the Treasury Board.

Yesterday a question was asked to Minister Massé in the House concerning the report on program evaluations which support the decision to lay off 45,000 federal public servants. Here is our request and it reads as follows:

The Finance Committee requests that the minister responsible for Public Service renewal make public, at the earliest opportunity, the program evaluations, broken down by department, which support the decision to lay off 45,000 fellow public servants.

I want you to know that we're not asking for an executive summary. We want the complete evaluation, broken down by department, for all the positions and objectives of departments as well as the other criterias mentioned.

The Chair: I don't know if this information is to be public, but I see a problem with your motion.

[English]

Mr. Walker: I think as we said, we should approach the Treasury Board to find out exactly.... They are responsible to this committee, I believe, for coming to us.

The other departments report in the expenditure process to each committee. I'm not trying to deny the importance of the request. I just want to make sure we're not getting involved with the work of other committees. I would just beg off for that reason.

[Translation]

Mr. Loubier: When your colleague, Mr. Eggleton, appeared before our committee, I asked him three times whether he was ready to make this review public.

The first time, he bypassed my question. The second time he swamped it with a mass of considerations and the third time he finally admitted that the review report was not his responsibility but the minister responsible for Public Service renewals. He clearly stated that he was the one who had to find the report because he was the one who set up the six criterias and who conducted the comprehensive study, department by department, which led to the lay off of 45,000 fellow public servants.

This is why I now table this unequivocal motion so that we stop playing ball and that this evaluation be made public.

If it is not, we will have no choice but to conclude, the Canadians as well, that the lay off of 45,000 public servants was totally improvised and was not part of any restructuring plan nor any Public Service operation improvement plan.

I take the President of Treasury Board's word. It is Minister Massé who should make this document public.

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[English]

Mr. Walker: I don't want to get into a fight over this, because it's an important point. I just want to make sure people understand that departments proceed at a different pace. For example, the Department of Finance is just this month speaking with its employees and proceeding with its plan according to those six criteria. It's not done everywhere and that's why I wanted to approach the ministers again. If you're not satisfied, I'd certainly be happy to pass that motion. But that would be my preference.

The Chair: I'm going to put on the record that I personally gave my word - not that other people would vote for it - that I would support Mr. Loubier in this request.

Mr. Walker: Go ahead.

The Chair: What he's suggesting is that he approach them and find out what the actual state is before we vote on the motion, which would mean tabling your motion for a while. He will get back to you by tomorrow or next -

[Translation]

Mr. Loubier: No, Mr. Chairman, look -

The Chair: It's up to you.

Mr. Walker: It's up to you.

Mr. Loubier: Personally, I would prefer to table my motion, have it adopted by the committee and at the same time, Mr. Walker could take the necessary steps. As far as I'm concerned, I want the Finance Committee to express clearly what they want. If we are serious in stating that we want to improve the management of public service as well as the general performance of public finances, then I would like to be able to examine the evaluation report which is said to have been prepared so that we can rightly assess the value of your governmental action.

The Chair: I may be wrong, but I'm now under the impression that the Parliamentary Secretary would like to have the Liberals vote against the motion. So, if you would table it now it would be to no avail.

On the other hand, we could have a motion at our next meeting, after the break.

Mr. Loubier: Mr. Chairman - Come on, stop being cynical -

Mr. Chairman, I'm willing to wait until this afternoon. Mr. Walker, are you going to approach these people this afternoon?

[English]

Mr. Walker: Yes. A copy of the motion is -

with the clerk. So, yes.

Mr. Loubier: I am willing to wait for your information until this afternoon. I would just like to ask you a question: the fact that this motion is being tabled the way it is - when is the Finance Committee sitting? This afternoon?

The Chair: Yes.

Mr. Loubier: At 3:30 p.m.?

The Chair: Mr. McClelland.

Mr. McClelland: I would like to speak in general support of Mr. Loubier's motion. In conversations with many members of the public service there is a great deal of concern that the layoffs are going to be done in a very helter-skelter manner and the layoffs are going to be disproportionately large at the service and delivery end of the public service and disproportionately shallow at the management end. I think Mr. Loubier's motion would be a worthwhile exercise in seeing if much thought has been given to how this is going to be structured.

The Chair: As I understand it, by unanimous consent, this motion is tabled until this afternoon.

Mr. Campbell: Mr. Chairman, I would like to introduce a motion that calls upon the committee, pursuant to its powers under Standing Order 108(2) -

The Chair: Would you cite that authority for us, please, Mr. Campbell? You seem so familiar with it.

Mr. Campbell: I don't recall the exact provision, Mr. Chairman, but I think it provides us with unlimited power to investigate matters under our jurisdiction.

Pursuant to Standing Order 108(2), I would move that the committee adopt and thereafter present to Parliament a report titled its 16th report, which deals with implications arising from Bill C-76 and contains therein our recommendations with respect to matters arising out of that bill.

Mr. Loubier, speaking to the issue, I believe members have received copies now in both official languages. It's subject to a few -

The Chair: This was distributed to members at 9:30 a.m. today in English, and the French came in about noon.

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Mr. Campbell: Right. And there will still be some minor technical drafting changes that will be required before it is tabled.

Mr. Silye: - [Inaudible - Transeditor] -

The Chair: - [Inaudible - Transeditor] -

Mr. Silye: Would the concerns, for instance, of Mr. Hoeppner that were expressed this morning, the major concern about mutual consent in the definition, also be included?

The Chair: We hadn't proposed that.

Mr. Fewchuk: It was recorded earlier, wasn't it? I'm just asking the question.

The Chair: It's a fair question. My gut reaction is that it was on the record and dealt with within the context of clause 14. That would be reopening the whole thing of what happened on clause 14. Your objections were strongly and forcefully noted there. This, as I understand it, is more to deal with things which may come a little down the road.

Mr. Silye: I have a question then. Mr. Walker, what will be the timing of report stage? What do you plan to do? How fast or how - so that we can also prepare.

Mr. Walker: I would assume the committee's work on Bill C-76 will be reported to the House tomorrow on schedule and then it will be subject to the House leader's planning. So I would assume in the week we come back, which is the week beginning May 29, it will come up fairly soon.

Mr. Silye: We'll have sufficient time, though, to move motions, amendments, etc. We'll still have that 48-hour business.

Mr. Walker: Yes. I just say that in terms of your own planning it will come sooner than later because we still have to go to the Senate. This is a priority of the government, so we'll be doing it sooner than later.

[Translation]

Mr. Loubier: Mr. Chairman, I carefully read the draft of the sixteenth report of the Standing Committee on Finance and, on behalf of my party, I give you an intent to table this afternoon a dissenting position.

The Chair: What is the procedure in that case? This position can be attached to the report in the form of a minority opinion report.

Mr. Loubier: Yes.

The Chair: Will you be able to give us this minority opinion in one language or another by 3:30 p.m.?

A member: No.

The Chair: In one of the official languages or in both?

Mr. Loubier: I will give you my report this afternoon.

The Chair: At 3:30 p.m.?

Mr. Loubier: No, it will not be before the 3:30 p.m. meeting. At the earliest it will be 3:30 p.m.. Mr. Chairman, a few minutes ago I was carefully listening to...

The Chair: We'll try to accommodate you.

Mr. Loubier: You said earlier that we had received the draft of your sixteenth report in both official languages at 9:30 a.m.. Actually we received it in English at 9:30 a.m. and we only had it in French at 11:40 a.m..

The Chair: It's fantastic, isn't it?

Mr. Loubier: It may be fantastic but it doesn't give us too much time to react.

[English]

The Chair: Could I say something to you? I don't know of any committee that's had a more difficult bill to deal with intellectually. It dealt with the Western Grain Transportation Act, the public service, and federal-provincial fiscal arrangements. All parties have been able to bring in members of our own caucuses to supplement our regular forces to deal with these issues, and I think that's been a very useful procedure.

In spite of the complexity of these issues, we have been able to deal with an incredible number of witnesses in a month - actually five weeks of hearings. I think it's a tremendous credit to all parties that you have worked so hard and that you have grasped the issue so fundamentally and learned so many new areas of expertise and have been capable of dealing with the complexity of this issue.

I also want to say that when I listened to the debate on federal-provincial fiscal arrangements and transfers this morning, I felt the finance committee was the crucible for the essence of the debate about what our country is about. We don't all have the same vision, but it was presented in a forceful, articulate way. I felt extremely proud to be part of that process.

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I would like to thank all of you for the tremendous work you've put in: my colleagues who've sat here - policians hate sitting there and not saying things, but they did it in tremendous style; the opposition parties, who gave us so much; and the many witnesses who came forth from across Canada. I am very grateful to all of you for what I think has been one of the great efforts and experiences of a parliamentary committee.

Mr. Walker: On behalf of the government, I will add my word of thanks. It has been very productive. I think what struck me, too, was the questioning of witnesses and the great respect all members showed for witnesses. There are some pretty determinedly different views around this table, but I thought there was a very good process.

Mr. Campbell: Mr. Chairman, I would also like to recognize your extraordinary patience and ability in running our meetings. Not to try your patience at all, I would just like to suggest that we pass the motion I introduced, because I don't believe we have as yet passed it. I don't believe it requires a seconder.

Mr. Fewchuk: I second the motion.

Mr. Loubier: No.

Motion agreed to on division

The Chair: When shall I table it? Tomorrow, on division.

[Translation]

Mr. Loubier: Don't forget my dissenting opinion.

The Chair: I won't.

Mr. Loubier: All right. And it will be attached to the report?

The Chair: Yes, we will attach your minority opinion to the report this afternoon.

Mr. Loubier: All right.

[English]

The Chair: We have a meeting at 3:30 p.m. in room 112-N to consider Mr. Loubier's two motions, one dealing with his dissenting report to our sixteenth report; and a second one to deal with his motion about production of documents.

The meeting is adjourned.