FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, November 18, 1998

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[English]

The Chairman (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this afternoon.

As everyone knows, in accordance with the order of reference of the House of Commons of Tuesday, October 27, 1998, the committee today commences consideration of Bill C-43, an act to establish the Canada Customs and Revenue Agency and to amend and repeal other acts as a consequence.

It is a please to have with us today the Minister of National Revenue, Mr. Herb Dhaliwal.

Welcome.

Hon. Harbance Singh Dhaliwal (Minister of National Revenue): Thank you very much, Mr. Chairman. I'm at your disposal. If you want me to start at this moment, I'd be happy to.

The Chairman: You may begin, Minister.

Mr. Harbance Singh Dhaliwal: As always, it's a pleasure to be here.

[Translation]

I know that the members of the committee are very busy and must review a large number of issues from budgets to banks.

[English]

It makes me especially grateful that you have scheduled such an early consideration of this bill. My intent today is to keep my remarks brief even though the legislation before you is significant. The fact is, I'm more interested in responding to your questions and concerns and giving you more time for that purpose.

Since this government's election five years ago this month, Prime Minister Chrétien has placed priority on renewing and modernizing our federation. Bill C-43 honours a Speech-from-the-Throne commitment. It honours a budgetary commitment by the Minister of Finance and it honours a campaign commitment made by the Prime Minister.

Canadians rightly expect members of Parliament to work together to eliminate overlap and duplication among federal, provincial and territorial governments. Canadians want governments to work together for their citizens. They don't want to build parallel systems across this country.

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This is also typical of what we heard just recently at the B.C. summit in British Columbia where businesses told government they want us to reduce red tape. They told us that they spend too much time and money dealing with government. I believe we should let businesses do what they do best—run their businesses, not do paperwork for government.

Canadians also expect us to introduce up-to-date methods of service delivery. They expect us to rise to the imperatives of the age of technology and the age of global competition. Most importantly, they expect us to recognize that there is only level of taxpayer and that it makes good sense to have only one tax collector.

The creation of the Canada Customs and Revenue Agency meets those expectations. The Canada Customs and Revenue Agency is all about fairness. I strongly believe that fairness must be the ongoing, day-to-day goal for any minister of national revenue.

That's why I launched the fairness initiative on which we again consulted far and wide. We've asked the Conference Board of Canada for an objective analysis of the information received. Following that, I intend to issue a fairness action plan.

Bill C-43 is also about our government honouring its commitment to “get government right”. It is an integral element of a redefinition of our government's role and a review of its programs to determine how to provide the kind of government that will best serve Canadians.

Bill C-43 represents a commitment to strengthen the Canadian economy and economic union. It represents a commitment to continuing to work with provinces to develop and establish innovative joint endeavours, mechanisms and institutions. Following up on those commitments, the government came forward with a comprehensive proposal to make our tax, customs and trade administration more efficient, more flexible and more service-oriented.

We came forward with an agency premised on fairness, partnership, accountability and modern know-how, but we did not presume to know how to best reach those goals. After putting this proposal on the table, we did three important things. The first was to consult, the second was to listen and the third was to act on what we heard.

Mr. Chairman, you know that we issued two reports on consultation, which I am sure all members of Parliament received and gave their input to.

And for even a third time, we went back to the provinces and the territories, to members of Parliament, to tax experts, to customs and trade professionals and organizations and to many of the gamut of clients served by Revenue Canada. We established a special advisory committee to provide ongoing comments, and we received input from close to 10,000 of our employees.

The result is that this bill before you is vastly superior to the original proposal, and I want to take this time to thank the many Canadians who have helped me to take a solid concept and transform it into a sound bill.

Bill C-43 provides for a uniquely Canadian model for customs and revenue administration, a model rooted in a non-partisan public service, a model based on partnership with provinces, a model respectful of our Canadian parliamentary traditions, a model premised above all on fairness for Canadians and service for Canadians.

What came through loud and clear to me during our consultations was that Canadians do not want to see Revenue Canada privatized. They don't want the creation of some totally independent body. What Canadians do want is to safeguard ministerial accountability to their democratically elected members of Parliament.

The agency's board of management will, however, play an important role for Canadians. It will bring a client-oriented approach to the provision of services and a more progressive and businesslike approach to management. As well, operational accountability will be less diffused.

Be sure, though, that the Minister of National Revenue will remain totally and fully accountable for the agency's policies.

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However, the authorities for management and administration, which are now shared among the Treasury Board, the Public Service Commission and other government departments and agencies, will be united under the new agency.

If Parliament should choose to support this bill, I am convinced that the new agency will offer tangible and far-reaching benefits for Canada and for Canadians.

The agency will streamline and simplify the tax process. That is, of course, something that every single Canadians taxpayer would more than welcome.

The agency will provide the flexibility to improve customs services. That's no small matter when we recall that one out of every three jobs in Canada is due to our international trade.

The agency will reduce compliance costs for business. There will be a lot fewer headaches caused by unnecessary mountains of paperwork.

We have made a very serious effort to reach out to the provinces and territories. They will have the opportunity to nominate 11 of the 15 members of the agency's board of management. This bill is about providing more options to the provinces, about giving them alternatives that can better serve the public interest.

All Canadians would dearly love to see a single window for all tax collection and this agency offers the provinces an opportunity to pursue that end.

The creation of the agency will lead to modern management practices that meet the needs of the real world. It takes a split second to transfer funds from St. John's to Victoria. The power of computers is doubling every 18 months. E-commerce is growing rapidly. And yet it can take up to twelve months to hire a government auditor. We simply have to modernize that system. We need to be able to attract and retain key personnel. We have to design faster and fairer staffing procedures so that we can compete with the private sector. We need a system that can keep up to the pace of our ever-changing world.

The agency is not just about how government organizes itself. It is a very important means to an end, and that end is better service to Canadians.

With all these benefits flowing from the new agency, there is one other big plus. The agency will save money for Canadians. I know you'll hear from the independent experts on this point, but there are potential annual savings to Canadian businesses of well over $100 million, and the administration costs to government can be cut by tens of millions of dollars.

I'm not claiming that this legislation is the solution to all our problems. I understand that a number of unions oppose this bill and I know that change is difficult. I know that employees worry about their future. That's completely understandable.

I have nothing but the highest respect for the women and men who work at Revenue Canada. They do essential work, not always popular work, and they do so with seriousness and dedication. It is my view that the new agency will offer considerably more opportunities for employees to expand their personal horizons and to move ahead. The fact is that the creation of new services for the provinces can lead to more jobs, not fewer.

Last year, my senior officials signed a document of intent with our unions to work together to develop key components of a new human resources system. Since then, some union representatives have withdrawn from the process. Nevertheless, several employee-union-management design teams have developed recommendations for the human resources system of the new agency.

I would very much like to see all the unions involved in this process. I am committed to creating a win-win situation for everybody involved, and I firmly believe that the establishment of an agency will do just that.

Above all, this bill is about service improvement, better service among governments and by governments and smarter service for individual taxpayers and a vast range of Canadian organizations.

This bill is also about giving Canadians what they want. The Canadians we consulted were adamant that the Minister of National Revenue retain a stewardship role. I want to assure you that I will still be responsible and answerable to you, the members of Canada's Parliament, and to the Canadians you represent.

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Whenever a member of Parliament wants me to inquire into the fairness of how a specific case is handled, I will still do so and respond to you. And when something needs to be fixed or a policy change is required, the minister will still be fully accountable.

Let me just review the accountability mechanisms, because this is very important for Canadians. As I said earlier, under this bill the minister will still be fully accountable. The Auditor General continues as the auditor general for the agency. There is a five-year legislative review by a parliamentary committee. There is a corporate business plan that is to be submitted by the minister to the Treasury Board for approval. There is an annual report which will tabled by the minister in Parliament. The Public Service Commission can periodically review and report on the agency's staffing program.

Let me be clear. This bill ensures that my responsibility for guaranteeing fairness and improving service does not stop with the passage of this bill.

Throughout the development of the bill, I have benefited from the advice of a strong advisory committee. As we move through the transition to agency status, I intend to continue seeking this kind of advice, with a particular focus on improved service. This includes our service to individuals and businesses every day, our service to all Canadians in ensuring the public interest is protected, and our service to other levels of government.

Our stakeholders have told us they want their system to be user-friendly and transparent. They said they want it to be fair, where fair means equal and efficient treatment. And they want us to minimize the costs of compliance by working with provinces to simplify tax administration across the country.

Mr. Chair, should Parliament vote to adopt Bill C-43, fairness, accountability and service will be at the heart of all the efforts of the new agency. The fact is that this agency will represent a positive step forward in the way our government operates. It will act as a catalyst to build partnerships and to create alliances.

I am quite excited about rising to the challenges of the modern era and seizing the opportunities of the information age. I picture a single, virtual office window for federal and provincial tax as well as customs administration, a system which every other country would recognize as the world's finest, a system which every Canadian would be proud to call the globe's finest and fairest. This bill is a major milestone in that direction.

Mr. Chairman, may I again say thank you to you and our colleagues from all parties for affording me the courtesy of an early appearance on the legislation?

With those comments, I put myself in your hands, Mr. Chair.

The Chairman: Thank you very much, Minister, for your introductory remarks. We will now go to the question-and-answer session. It will be a 10-minute round and we will begin with Mr. Jason Kenney.

Mr. Jason Kenney (Calgary Southeast, Ref.): Thank you very much, Mr. Chairman.

Thank you, Minister, for your presentation and appearance before us here today.

First of all, Minister, you said in your presentation that Canadians want a single tax collection agency. While I know that your department is engaged in fairly extensive internal consultations within Revenue Canada, within the government and indeed with some private sector tax practitioners, my first question is this: how extensive have your public consultations been on this? How many public meetings have you sponsored? How many ordinary Canadians have made submissions on the desire for this? Have you conducted any public opinion polling or focus group testing or research of that kind to assess public support for the concept of a single tax collection agency?

Mr. Harbance Singh Dhaliwal: First of all, let me say there has been consultation. There has been consultation with members of Parliament and consultation with business groups, and I have travelled from one end of this country to the other to talk to Canadians about the agency.

As I pointed out earlier, we issued public documents. There was the first report that we issued to organizations across the country and into which we got input. The second report, which we also issued, had input from across the country. I've talked to provincial ministers across this country and asked for their consultation.

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I've even talked to you. When I talked to you one of your concerns was that in the old arm's-length approach you wanted to see political accountability. That was one of the areas you were concerned with. You wanted more political accountability.

Mr. Chairman, we responded to those consultations. We responded to the views of Canadians across this country when they said tax collection and customs are very important for Canadians, when they said they wanted a minister to be responsible and fully accountable to Parliament. And those changes have been made.

Mr. Jason Kenney: Minister, I do—

Mr. Harbance Singh Dhaliwal: I know that you asked a question earlier, but let me read a letter for the record, Mr. Chair, addressed to me. It's from the finance minister of New Brunswick. He says:

Thank you for the package updating me on the status of the Canada Customs and Revenue Agency proposal.

I appreciate the information and I am confident the Agency will fulfil your government's commitment to improve service to Canadian taxpayers and the provinces.

I want to reiterate New Brunswick's full support for this initiative.

This was signed by Edmond Blanchard, the finance minister of New Brunswick.

Mr. Jason Kenney: Again, Mr. Minister, my question was, how many individual Canadians have you consulted and in what way? You've talked to other politicians, provincial governments, tax practitioners and people in your own department, but in your statement you said that “all Canadians would dearly love to see a single window for all tax collection”. I have to say that I'm sceptical about this, to say the least, because I haven't heard from a single Canadian who would “dearly love to see a single window for all tax collection”.

I've received dozens, probably hundreds, of letters and other communications from people opposed to this idea. I have appeared at several public forums across the country and on open-line talk shows and I haven't heard from a single one of these Canadians who you claim are unanimously in favour of this. So again, my question for you is not about what kind of consultation you engaged in with the provinces, your department or practitioners. Rather, what kind of consultation did you engage in with ordinary Canadians?

Mr. Harbance Singh Dhaliwal: As I said to you earlier, I travelled across the country, and when I travelled across the country I talked to ordinary Canadians. I met ordinary Canadians at a variety of functions. I've spoken on the agency at every event that I go to, whether it's a chamber of commerce event or any other event. I've spoken across this country for the last two years. I meet thousands of Canadians as I travel and make speeches to small groups and to large groups. I speak to ordinary Canadians every day. I've spoken to thousands of employees of Revenue Canada as I visited as many locations as possible.

Too, I would also hope that members of Parliament, when they were given some of the information, spoke to their constituents and had meetings and discussed this with them. I've travelled across the country as opposed to polling and other things. I can't say that it has been a priority for me to go and get polls, but I've been talking to Canadians, business people, chambers of commerce across the country, and members of Parliament from my party and other parties. There has been a two-year consultation on this process.

In fact, you've been saying that maybe we've been waiting too long and you expected this earlier. When you spoke in the House you were asking why it took me so long to bring this to the House. That's because we care about Canadians and what they think and we want to consult with them.

Mr. Jason Kenney: I don't suppose that has anything to do with the fact that you had opposition from people in the finance department and not exactly overwhelming support from the House leader's office to make this a priority.

Mr. Minister, you've indicated that your officials have estimated through a report you acquired that the cost saving from a single tax collection agency could be in the area of $220 million. Correct me if I'm wrong.

Isn't it true that the estimated cost saving is predicated on the participation of all of the provinces? And furthermore, isn't it true that at least the province of Quebec has been absolutely unequivocal in its desire not to participate, that the provinces of Ontario and Alberta have been negative about this idea, to say the least, and that several other provinces have been at best indifferent? Mr. Minister, how do you plan to achieve these cost savings if the larger provinces in particular do not participate?

Mr. Harbance Singh Dhaliwal: That's a very good question.

Mr. Chairman, there was a study done by the Conference Board of Canada on what savings there would be if we had this national collection agency and the provinces let us collect some of their taxes. The biggest saving is compliance cost to business. The lower saving is for administration.

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The savings will vary, depending on which province and how much taxes we collect, but one thing I've said is that this is about earning the business of the provinces. We don't expect that as soon as this agency bill passes we'll have provinces signing contracts the next day and saying, “Please collect all our taxes.” This is about creating options for provinces. It says we are building a vehicle which creates options that do not exist today.

I was in business before I got into politics, and I know how I pulled my hair out doing business with different levels of government, with overlap, with duplication, with all those things that exist. I've been there. If we can reduce that, there's a huge saving for business. We are a trading nation, and if we can reduce those costs we can build a more productive economy and ensure that our business people are more competitive.

It's a step-by-step process. Some provinces—I've read the letter today from New Brunswick—fully support it. Other provinces, like Quebec, for example, say no. Quebec said it's only interested in collecting its own taxes.

Mr. Jason Kenney: You'll admit, then, that the estimated cost saving of $220 million simply can't be—

Mr. Harbance Singh Dhaliwal: Well, if you—

Mr. Jason Kenney: —given the lack of desire to participate of some of the larger provinces.

Mr. Harbance Singh Dhaliwal: If you take out Quebec—and this is something I'm sure the Conference Board will have people here to speak to—I think, off the top of my head, that it's $100 million in compliance costs and some tens of millions of dollars, I think, with the other.

But let me point out something, and perhaps when the Conference Board of Canada comes before you, you can ask this question. We just signed an agreement with Nova Scotia to look at collecting their WCB. And the representative there from the Canadian Federation of Independent Business was saying that they've been pushing for this for years and that it was good to see government listen. It was Mr. Peter O'Brien. They were saying they have to put up this cash—upfront—at the beginning of the year and at the end of the year they have to see what their payroll was. If it's off, there's a 20% penalty. They figure that businesses are going to save hundreds of thousands of dollars as a result if we collect their WCB.

Now here's something that wasn't thought about at the Conference Board of Canada. They didn't look at what the savings would be if we collect WCB. They had some fundamental basic questions on the corporate tax and the provincial sales taxes, but there are other opportunities we can create for Canadians and for provinces.

So this is a step-by-step process. In regard to the provinces, I've met with them. I've talked to the finance minister of British Columbia. She thinks it's a good idea. I've talked to the Saskatchewan finance minister. And another thing is that all the finance ministers met last year and I presented the revenue proposal to them. We agreed on a set of guidelines as to what we could collect as a revenue agency.

So unless you have letters saying they're not supportive... I know the provinces are pretty vocal and if they don't like something—

Mr. Jason Kenney: Actually, we do have letters—

Mr. Harbance Singh Dhaliwal: —I'm sure, Mr. Kenney, that they'll be writing to you and telling you not to support this.

Mr. Jason Kenney: Yes. But I—

Mr. Harbance Singh Dhaliwal: And I read you one letter I have from New Brunswick. You perhaps have others. If you have them, perhaps you want to table them.

Mr. Jason Kenney: I'd be happy to—

The Chairman: You'll have to wait for the next round, Mr. Kenney.

Mr. Jason Kenney: —go to duelling letters here.

[Translation]

The Chairman: Mr. Desrochers.

Mr. Odina Desrochers (Lotbinière, BQ): First of all, I wish to let you know that my colleague Gilles Perron and myself are going to share the time allocated to the Bloc. Mr. Perron is the official BQ National Revenue critic. I will ask three or four questions after which I will yield the floor to him.

Mr. Minister, the opposition parties are against the proposed agency. Yesterday, the unions forcefully decried the setting up of such an agency. Most large provinces are against it. Your department officials really don't seem interested in taking that into account. What do you base yourself on? Why are you so intent on this agency? What's the urge?

[English]

Mr. Harbance Singh Dhaliwal: First of all, it's totally not true when you say most provinces are against it. I just read you a letter from the province of New Brunswick. And I just stated earlier that we just signed a service agreement with the province of Nova Scotia—

[Translation]

Mr. Odina Desrochers: I said most provinces.

[English]

Mr. Harbance Singh Dhaliwal: Let me finish, please.

Mr. Odina Desrochers: Yes.

Mr. Harbance Singh Dhaliwal: We just signed a service agreement with the province of Nova Scotia. As well, we're looking at collecting their WCB. We signed a letter of intent to explore what opportunities exist with that.

I've met with finance ministers across the country. I just stated to you that when the finance ministers met last year I presented the revenue agency to them and we agreed on a set of guidelines as to what taxes we could collect. I've been out there talking with them and consulting with them.

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Sure, they're not going to sign on the bottom line. What we've said is that with the agency we're creating a new option whereby, on a cost-recovery basis, we could go to the provinces and ask them if there's any opportunity to collect their PST, to collect the corporate tax. Just remember, we are at this time, depending on which province, collecting on average 50%—

[Translation]

Mr. Odina Desrochers: Do you have written documents?

[English]

Mr. Harbance Singh Dhaliwal: For some we collect more, for some we collect less. But we have a very good relationship with the provinces—

[Translation]

Mr. Odina Desrochers: Which provinces have already signed, Mr. Minister? Which provinces have committed themselves to sign?

An hon. member: None of them.

[English]

Mr. Harbance Singh Dhaliwal: I just read a letter here from the Minister of Finance for New Brunswick, and if you want me to repeat it, I will. He said, “I want to reiterate New Brunswick's full support for this initiative.”

[Translation]

Mr. Odina Desrochers: Yes, I know that, Mr. Minister, but we are only talking about intentions here. Do you have a written commitment? Has any province officially committed itself? Has any province signed a memorandum of understanding with you? Do you have anything concrete apart from a letter claiming New Brunswick's intentions?

[English]

Mr. Harbance Singh Dhaliwal: I think this is where your misunderstanding is. We're building a vehicle that creates options for provinces and we're discussing with them what options are available. I did not go to them and say that I wanted them to sign on the bottom line, to sign on as part of the agency, so that soon as the agency was formed they would let us collect all the taxes the next day.

This is about creating options. It doesn't force the provinces to do anything. It's not mandatory upon the provinces. These are options. We consulted with the provinces and they said yes, that they thought this was the right direction. In fact, many of them from the west said that they'd been looking for this type of option. With the Atlantic provinces, in fact, part of the agreement signed with the finance ministers was a condition that when there was harmonization we move to an agency. This is part of what they wanted as well.

Many of the provinces have requested an agency. They recognize that it makes good common sense to have one tax collector. Just imagine if every province collected all of its own taxes. How much of a burden would it be for business? They would have to write a cheque for everything, for every single province, if they have businesses across the country. It makes good sense. Business has recognized that. Canadians recognize that. They recognize that we can give better service to them, that we can cut overlap, duplication and red tape if we have one national tax collection agency.

[Translation]

Mr. Odina Desrochers: Well, I personally think that the agency will make things worse.

You are talking about working in partnership with the provinces and I would like you to give me more details. You're telling me about the Maritimes but despite all the respect I have for those provinces, what about the biggest ones, Quebec, Ontario, British Columbia and Alberta? What is their position regarding your proposal?

[English]

Mr. Harbance Singh Dhaliwal: I've had two meetings with the Alberta finance minister. I've had meetings with the B.C. finance minister. In fact, with five of the provinces, we agreed to set up a working group to see what options were available for us to look at as we move into the new agency. I'm very confident that those working groups will identify those areas that we can work together on.

As you know, Canadians are tired of governments fighting with each other. They want all levels of government to work together in the best interests of Canadians. And this is part of building a vehicle whereby we have those options available in order to work together in the best interests of Canadians and Canadian business people to get rid of overlap and duplication.

There would also be more accountability. For example, 11 of the seats on the board will be nominated by the provinces so that they'll be participating—which they haven't been before. And they've said it in the past: “You're collecting a lot of our taxes but we're not getting any say.” That's what it is. We're having the provinces participate.

I haven't received a letter from any of the provinces saying they don't want to participate. Maybe others have. But in my discussions with them it has been said that they want this direction.

[Translation]

Mr. Odina Desrochers: But none of them told you that it was ready to commit itself.

[English]

Mr. Harbance Singh Dhaliwal: If you have letters from the provinces... The provinces aren't quiet. They're happy to speak up when there's an issue before them that they don't like or wouldn't like to see.

[Translation]

Mr. Odina Desrochers: I would like to ask you a last question before yielding to my colleague.

Given the fact that you are still negotiating and that you did not yet get the agreement from most provinces, I will ask you the same question again: why are you in such a hurry to put this agency together as you have not yet established a partnership with the provinces?

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[English]

Mr. Harbance Singh Dhaliwal: As I said earlier, we didn't ask the provinces to sign the on bottom line in order to have us collect all their taxes. We have to earn their business. We have to create a vehicle that creates those opportunities to work together with the provinces.

But we have consulted with them, not once but twice. I've met as many of the finance ministers as I could to get their views on what they would like to see. I've had letters of support not only from the province of New Brunswick but also, I believe, from the province of Nova Scotia, and there are my own discussions with them. I'm confident that we have their support. Obviously if you have other information you should share it with the committee.

[Translation]

Mr. Gilles-A. Perron (Rivière-des-Mille-Îles, BQ): Good afternoon, Mr. Minister.

I'm really not at ease with the government's new way of doing things: they are obsessed with forming agencies be it in the agricultural sector or in transportation with NAV CANADA.

To me, it is unhealthy for a department as essential as the Department of Revenue, your department... You know it, Mr. Minister, since you have been in business. What's important when you're in business? Accounts receivable. Accounts receivable must be paid for one to have money. This is the role of the Department of Revenue, in this government, to get cash receipts. Why do away with that role? Instead of creating a new agency, why not refurbish the existing vehicles?

You presently have agreements with the province of Quebec to collect money. The federal collects all business taxes while the provincial government collects individual taxes. A large number of services are exchanged and things are fine. If you want to create a one stop-shop, give the provinces the power to operate it. You said yourself that you were more than satisfied with the way the province of Quebec collects the GST for you.

We've done experiments that were successful. Instead of jumping into the forming of a new agency, why not expand on existing experiments, Mr. Minister?

[English]

Mr. Harbance Singh Dhaliwal: Thank you very much for that question. I guess your question is, why not let Quebec or the provinces collect all of the taxes?

Mr. Gilles Perron: The provinces.

Mr. Harbance Singh Dhaliwal: Now this would be very interesting. I think the business community would be very interested in hearing that proposal, because if a business is doing business in 10 different provinces that means there would be 10 different ways of collecting taxes. They'd have to fill out 10 different forms when they do business. They'd have to write 10 different cheques. Each province would have their own way of collecting taxes. That's not the type of Canada we want. We don't want parallel systems built in every province across the country. I don't believe—

[Translation]

Mr. Gilles Perron: Mr. Minister, allow me to interrupt you for a second. You also want harmonization.

[English]

Mr. Harbance Singh Dhaliwal: Let me finish, please.

The Chairman: Monsieur Perron, is it possible to allow the minister?

Mr. Harbance Singh Dhaliwal: I don't believe that people are interested in filling out more forms. I don't believe business are interested in doing that. I don't believe that people are interested in filing two corporate tax returns and two income tax returns and filling out two forms for sending in their taxes. They're interested in filling out one form.

Just think for a moment. If we let every province totally collect all its own taxes, are we creating more paperwork, more bureaucracy and red tape for them than if we have one national tax collection agency? Maybe you should talk to some of the business people and see, especially those business people who do business in different provinces.

Also, let me comment on electronic commerce which, as all of you know, is something that's going to be a new challenge. There will be goods sold between provinces on the Internet. When one business sells goods from one province to another on the Internet, who is going to be responsible for collecting those taxes? There are going to be jurisdictional concerns as more business is done on the Internet.

If we simply say that each province should collect its own taxes or, as you say, that each province should even collect all the federal taxes, that means businesses will have to deal with 11 different jurisdictions as to how they apply the taxes as opposed to one. In my view, that's not the way to build an efficient and productive economy. That's the way to build in more costs for business and to increase the cost of our products, and that will ensure that we're not competitive in the international community.

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[Translation]

Mr. Gilles Perron: But you are fighting to harmonize all taxes across Canada Mr. Minister. We have nothing against the harmonization of those taxes. We could have the same tax system without you having to spend a couple of billion dollars like you had to in order to harmonize the sales tax in the Maritimes Mr. Minister.

[English]

Mr. Harbance Singh Dhaliwal: The agency said that it can provide service on a cost-recovery basis. That's quite different from harmonization. Harmonizing is something that the finance minister and the tax administration discuss. What we're saying is that this gives us options to do things that couldn't be done before.

Under the Tax Collection Agreements, if a province harmonizes, the federal government pays for the cost of the collection of that tax. What we're saying is that you don't have to harmonize if you don't want to, but we can provide a service for you to collect your taxes, at cost recovery, without harmonizing. Harmonizing is something that the finance department deals with. That's theirs. We're not concerned about that. What we want to do is to provide for provinces a service that did not exist before, options that did not exist before, which they can do on a cost-recovery basis.

For example, in the province of Quebec, the former government agreed to have Quebec collect the GST, and we pay the province of Quebec to collect it.

An hon. member: No.

Mr. Harbance Singh Dhaliwal: That's right. We pay for it. They don't do it for free.

So what we're saying is, why not give options to other provinces that do not exist now, through the Revenue Agency? My view is that if we have one national tax collection agency we would all be better off, but it would be on a cost-recovery basis.

Let me give you one more example of a benefit. This is a real-world example. The province of British Columbia decided to add the B.C. family bonus as a benefit they wanted to deliver to their citizens, for which they would have had to build a whole new infrastructure, with all new software. It would have cost them tens of millions of dollars to deliver a $400 million benefit. They came to the federal government, to National Revenue, and we were able to deliver that program for a little over $2 million because we already had the infrastructure.

Now what would have been better? To let that province develop that benefit? Then Alberta develops its own and New Brunswick develops its own... No. After B.C. did it, Alberta came to us and asked, “Can you deliver this benefit for us?” And New Brunswick came to us and asked. And of course we were able to deliver that benefit at a much lower cost because we had already developed the infrastructure.

Otherwise we would have had a system built in B.C., another system built in Alberta, another system built in New Brunswick—systems that did the same thing. Is it good for the country to build these duplicate parallel systems? I say no. And Canadians are tired of that. They want governments to work together to get rid of the overlap and duplication and provide better service to Canadians.

The Chairman: Thank you, Minister. Thank you, Mr. Perron.

Mr. Discepola.

[Translation]

Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Mr. Minister, I think that I must first congratulate you because the bill that we have here, as you said yourself, is far from being the same as the one that was presented to us a few months ago or last year.

Notwithstanding the fact that when I arrived here, in the political arena, they were pretending that the reason why the province of Quebec should separate was to eliminate duplication, I can understand the Bloc Québécois. It is in its best interest in fact to demonstrate that...

I understand their position which is to always get more even if it's not in the best interest of Canadians, including Quebeckers. I am thinking here about the blood agency; it made no sense to create their own agency, Héma-Québec, which poses safety problems.

That is why I want to congratulate you. We must not forget that we are not representing the provinces here today, but Canadians. You and I as business people understand the situation of Canadian businesses which are overburdened with all the forms required by different governments.

Instead of congratulating you and saying well done because you are starting to lighten the paper burden for businesses and are helping them becoming more competitive all over the world, they are criticizing you.

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It is not justified on my part, Mr. Minister, but I have reservations. I will use the Quebec system as an example to express the subject of my concern.

We all know that around the month of May or June, I think, someone searched the files of Revenue Quebec and made public what was found. The premier of Quebec...

[English]

He just shoved it under a carpet as if it were nothing important. But I think there's nothing more important than the security of a system that collects personal information such as tax information on behalf of Canadians, on behalf of employers and employees.

I would like to know from you what guarantees you have that if we transfer this to an agency the privacy and security of Canadian taxpayers' information is going to be assured beyond a shadow of a doubt. Because I think if there's one strength that Revenue Canada has, it's the assurances that have occurred in the past.

Maybe I should ask all my questions. Or do you want to go one-on-one?

Mr. Harbance Singh Dhaliwal: Thank you very much, Nick. I think that's a very good question. Privacy is very important for Canadians. They have to be assured that their privacy is protected. And even though we have a board in this agency, one of the things we have done is that only the Minister of National Revenue can look at anybody's file. Only the minister. No director on the board could ask to look at or get information on a file—only the Minister of National Revenue.

We'll still be accountable to the Privacy Commissioner. The agency will be fully accountable to him and we'll comply fully with the Privacy Act. We value that very much. I want to assure you and all members of Parliament that nothing will change in terms of protecting the privacy of citizens, because that's very important.

It's fundamental. Canadians trust that the information they give is held in private and that only through legal means could we ever share that. And the legal means are that only the Minister of National Revenue could look at any person's file. Not even the board members who will be appointed could look at any individual files.

Mr. Nick Discepola: You also state that 11 of the 15 board members are going to be appointed by the provinces. What happens if one province doesn't subscribe to the system? Will they still have board representation? And if so, why?

Mr. Harbance Singh Dhaliwal: First of all, the 10 provinces and the territories will nominate 3 individuals. Out of those individuals, we, as the federal government, will pick the members, and they would be appointed for a three-year appointment as a Governor-in-Council appointment. There's a time limit for giving us those names. If they do not provide those names within a time limit, then we, as the federal government, can appoint any individual we feel could represent them on the board.

And let me say in regard to the members on the board that their responsibility is to the agency. That's their fundamental responsibility in being on the board: to serve the agency, not the interests of any province. That's what their fiduciary responsibility is.

So we as a government appoint them. They will be Governor-in-Council appointments and they're appointed at pleasure.

Mr. Nick Discepola: On the question of the services, obviously if it's a government agency, a government service, the Official Languages Act is respected. I want to know what guarantees there are that minority language rights—anglophone rights in Quebec as well as francophone rights outside Quebec—would be protected and respected thoroughly in the event that this agency is as proposed.

Mr. Harbance Singh Dhaliwal: We asked the justice department to give us legal advice on whether the agency would have to comply fully. We've been told yes, that under the legislation, the Official Languages Act, we would fully comply.

But I understand that in other bills they have wanted to firm that up to ensure it with absolute certainty, and certainly I would be open to any amendment that confirms that. Our legal advice is that our legislation has to comply with the Official Languages Act.

I just want to make one more point, which you're very familiar with, Nick—technology. Technology has changed the way we do service. In regard to electronic filing, 25% of Canadians now file their tax returns electronically. And if they file them electronically we're able to improve this service rapidly.

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But to carry out those programs, a huge amount of money is required for development as we move into technology. It can be in the tens of millions of dollars. Now, if each province is spending its own money in development, it's a lot of wasted money.

If we have one tax collection agency across the country that can develop programs so people can send their tax returns right from their own Internet, so people can pay their GST right from the Internet... Those are the types of programs we want to develop. But it doesn't serve anybody when provinces are each trying to develop their own and spending tens of millions of dollars to take advantage of the new technology. We need to make sure that we use Canadian taxpayers' money as efficiently and as productively as possible and provide the best service. Technology is also going to help to do that.

As you know, we have e-file and telefile. People can do it over the telephone. We hope to develop a system with corporate tax returns. If anybody has seen corporate tax returns, you know they can be inches thick with paper. We'd like to have those sent to us electronically. We'll save on paper, we'll save on time, and all Canadians will benefit.

But it costs tens of millions of dollars to develop the software, the technology and the privacy protection. All those things cost money. If we can develop it on a national basis we'll be much better off than if the provinces try to develop it individually.

Mr. Nick Discepola: Last, Minister, I understand the rationale behind most governments—and countries, as a matter of fact—modernizing their delivery of services, with the model most are choosing being the agency model. It makes sense. When the government, for example, is competing directly with private enterprise, it makes sense that the government should get out of there. When private enterprise can deliver the service more efficiently, then it makes sense to go to that structure.

You stated in your speech that you are making valiant attempts, it seems to me, with the human resources area, incredible attempts to try to modernize the system. My question is, are we maybe not pre-empting by introducing this legislation to create an agency versus giving this attempt, at least, enough time to allow you to try to modernize the system within Revenue Canada? Why do we have to go to an agency structure as opposed to enhancing the changes you want through Revenue Canada as the structure exists now? What are the benefits of going to an agency structure that I'm not aware of?

Mr. Harbance Singh Dhaliwal: Well, the overall central agency is made to serve 80 different departments, so every time people want to do something, it's the overall larger picture. We are an organization that has special needs. We want to make sure we have the flexibility to have the tailor-made solutions we need. We have a labour force that changes because we have peaks and valleys in our system.

We need to make sure we have the flexibilities, both administratively and otherwise, so that we have the type of human resources that can respond to our needs as an organization, not as it does for 80 different departments. It makes sense for some, but we need to make sure we can respond.

In regard to the human resources area, our employees have said it doesn't work. We have to respond to our human resources needs, not a year from now when we need auditors, not six months from now, but in a few weeks. We hire a lot of part-time people during the peak time. We need to make sure we can respond. Sometimes when we want to hire someone, the time period expires.

So we're working with the unions. There are a number of unions—not all—working with us to design a human resource framework that can respond to the employees' needs and the organization's needs so we don't get caught up in complex and litigious situations when somebody wants to get a promotion or we want to hire someone or we want to change something.

So we're designing now, and I think it's a real opportunity for our employees, for us an organization, to build the type of human resources that can respond to the needs of the agency and respond to Canadians. We must have the administrative flexibility to be able to do that. And I think, through the agency, we will do that.

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Let me give you just a simple example. The finance minister of B.C. called me up and said she liked what we were doing on the baby bonus cheque, that it was great, but she asked if we could we make a small change for her. I said sure, that it didn't seem like a problem and said to my staff that the B.C. finance minister wanted a change on the cheque she delivers. They said we couldn't do that and I asked why not? They said it would have to go to the Treasury Board minister and the Public Works minister.

So something that was a very simple thing, which should have been done in a very short period of time, resulted in me having to go to my other colleagues and then them having to make the changes in order to make a minor change for the B.C. Minister of Finance.

So if we really want to serve the provinces and respond to their needs, we must have an organization that can respond quickly to those needs. That's why I think the agency is important.

Mr. Nick Discepola: What's the protection for the employees during the transfer period?

Mr. Harbance Singh Dhaliwal: The employees will be getting a two-year guarantee. All indeterminate employees will be given a two-year guarantee for their jobs and all the term employees will be guaranteed for their contract.

But let me state for the record that this is not about a downsizing exercise. We're not moving to the agency because we want to reduce staff. This is about providing better service. In fact, we're one of the only departments that has continued to hire. We will make sure...and I think there isn't any other government department now under the new agreement that gives them a two-year guarantee. We're providing that two-year guarantee of employment to them.

Mr. Nick Discepola: That's fair.

And it's nice to see that for a change a minister is taking notes on that conversation on a plane as opposed to the other way around.

Some hon. members: Oh, oh.

The Chairman: Mr. Gallaway and Mr. Pillitteri, you'll be splitting seven minutes.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): Thank you, Mr. Chair.

I just have a couple of questions. Firstly, minister, you refer to potential savings to Canadian businesses of over $100 million. How do you arrive at that figure?

Mr. Harbance Singh Dhaliwal: This is not a figure we arrived at. It is not something that came out of my department. It was an independent group, the Conference Board of Canada, that went out and studied and asked what the saving would be to business if we had one national tax collection system; they asked what the saving to business would be and what the saving in compliance costs would be.

But I am sure they'll be coming before you, so you can ask them that question.

Mr. Roger Gallaway: My next question is, would you then table with this committee a copy of that study?

Mr. Harbance Singh Dhaliwal: I think the committee will have it or I certainly will make it available for everyone.

Mr. Roger Gallaway: All right. Secondly, I want to ask you about this question of who's in and who's out. Has Mr. Eves, as the Ontario treasurer, talked to you? Has he agreed to participate in this process?

Mr. Harbance Singh Dhaliwal: We received some correspondence from Mr. Eves saying they're in favour of anything we can do to reduce overlap and duplication, that they'd be very interested in that. Frankly, I have not had a one-to-one discussion with them. We've traded correspondence with them, but in the finance ministers' meeting which took place a year ago, Mr. Eves had an opportunity to put forward his objections to the agency. He certainly did not do that and I'm certainly not aware of him not being supportive of the agency.

Mr. Roger Gallaway: I want to ask you, then, because this involves Canada Customs workers, in what provinces does the federal government collect taxes for the provinces?

Mr. Harbance Singh Dhaliwal: In all taxes or in duties? Because—

Mr. Roger Gallaway: No, it would only be provincial taxes when one enters the country.

Mr. Harbance Singh Dhaliwal: We collect income taxes for every province—

Mr. Roger Gallaway: No, I'm only talking about border crossings.

Mr. Harbance Singh Dhaliwal: Border crossings? I think that changes. For some provinces we do and some we don't. We can get that list for you as to which provinces we collect for. Are we talking about collecting the PST at the border?

Mr. Roger Gallaway: Yes.

Mr. Harbance Singh Dhaliwal: We can get that list for you. I certainly couldn't—

Mr. Roger Gallaway: Is it more than one province, do you know?

A voice: Yes.

Mr. Harbance Singh Dhaliwal: Yes. I've been told it's more than one province.

Mr. Roger Gallaway: Is it more than...? I'm playing 20 questions here...

A voice:

[Inaudible—Editor] perhaps five...

The Chairman: I can ask the—

Mr. Harbance Singh Dhaliwal: The officials will be here to answer that, but there are a number of provinces in which we collect it.

Mr. Roger Gallaway: I take it, then, that there is no role in this agency for the province of Quebec—if I'm following this—at the moment.

Mr. Harbance Singh Dhaliwal: I had the opportunity to meet with the minister from Quebec because I wanted to make sure we consulted with all the ministers. At that time, she said she was not interested, but she was interested in talking to me about collecting all the federal taxes because she said that's a very efficient way of collecting taxes, that it doesn't serve for both of us to be collecting taxes—but they would like to collect all the taxes. So under this Quebec government, at this time, no, but I can't predict for any future governments.

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Mr. Roger Gallaway: My final question, Mr. Chair, is, then, other than the province of Nova Scotia with respect to workers' compensation premiums, who is in?

Mr. Harbance Singh Dhaliwal: I've had discussions and, like I say, we have working groups with other provinces.

Mr. Roger Gallaway: I mean in the—

Mr. Harbance Singh Dhaliwal: I've talked to the Minister of Finance in B.C., who said she's very much interested in looking at us collecting the provincial sales tax. Of course, in the Atlantic provinces, we collect a lot of their taxes—80% of their taxes are already collected.

I think there are going to be other opportunities. There's corporate capital tax in B.C. There are health taxes. There are all sorts of taxes out there that the provinces collect and that we might have an opportunity with.

But if you ask me if I have a signed contract with any of the provinces, I'd have to say no. We do have a signed intent to look at WCB for the province of Nova Scotia. But what we have to do is develop a pilot project, and if it works for that province, then we can go to other provinces and say we have a pilot project on collecting WCB for Nova Scotia and this is how it has worked and this is how we're able to collect the tax.

Some of these things are going to be a step-by-step process. We have to earn the business. We have to make sure the provinces have confidence. There will be accountability with the provinces as well, because the commissioners will have to meet on a yearly basis with the provinces to ask them how we are doing. We are doing work for all of the provinces, some more, some less. We want to make sure we serve the provinces well. Part of this is good provincial participation.

The Chairman: Thank you, Minister. Thank you, Mr. Gallaway.

Mr. Pillitteri.

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

Mr. Minister, I represent a riding bordering the United States. We certainly have a lot of border crossings; it's the highest in Canada. Years ago, customs was part of the immigration department, then turned around and became part of the revenue department; it felt somewhat like they were being tax collectors. That was their feeling. I certainly do not agree with that. They were comparing themselves to the Americans south of the border and I surely don't like to see that happening in Canada.

Under this new agency, do any changes occur to those individuals performing the service of customs officer? Specifically what I worry about is any delays among them; instead of taking 10 seconds to 15 seconds for every person is crossing, which is very crucial... Does this in any way alleviate some of the problems in crossing the border into the United States?

Mr. Harbance Singh Dhaliwal: First of all, thank you very much. I've had the opportunity to visit the crossing with you.

Certainly customs is very important because of the trade. No two countries have the same amount of trade in goods passed across our border as we do. More than 100 million people travel across our borders, so it's very important to have a modern, efficient customs program.

Right now we have a consultation process, a blueprint on customs. It's about looking at customs, about what kind of customs we want in the future. How can we use technology? How can we work with the Americans to improve the movement of goods and services across our borders?

We have a number of pilot projects right now. One is the CANPASS program, which is about allowing citizens to get a pass so they don't have to see a customs officer. I've asked our department to look at having a national CANPASS program so people can have a card that they can use at any border crossing, whether it's on land or at airports. We're using technology called transponders, with which people can drive through. We know the goods and the drivers going through and we do spot checks on them.

Technology is going to play a very important role in the movement of goods and people. Also, it's going to help us deal with the safety and security of citizens, because we can concentrate on those high-risk travellers and high-risk areas by making sure the low-risk travellers are able to get CANPASS or transponders—and there are other ways of doing it.

As we move to the agency, I think we can respond better to the needs of customs and make sure that we have the type of customs operation that responds to the needs of our stakeholders. That's what the blueprint is all about. It's a consultation process with all our stakeholders, with the exporters, with the importers, with the tourism industry.

• 1620

All we're saying is, “Let's work together and see what kind of customs we want for the future. Let's look and see what technology can provide us with, how we can work with our neighbours, and what we can do in the international community.” Because there's no use having free-trade deals if goods can't move or get held up in a warehouse for two months. That doesn't help anybody.

Customs is going to be very important to us as we move to the agency, and that's why we have this blueprint discussion going on right now. We hope have to have an action plan within the next six months to make sure that we have the customs we want for the next millennium.

Mr. Gary Pillitteri: Could I finish up with that?

The Chairman: Sure.

Mr. Gary Pillitteri: In regard to moving to an agency, there are some concerns, again with respect to that border; there are drugs and there are certainly hundreds of guns that have been confiscated. Does moving to an agency in any way impair the safety of Canadians?

Mr. Harbance Singh Dhaliwal: Absolutely not. The customs will operate as it is.

As you know, we did recently change and pass a law for customs officer powers so that they can work more closely with the police and detain those individuals involved.

Maybe it's drunken driving. If they were seen and they were clearly over the limit, we now have the new power to detain them and call the police. If they have a stolen vehicle, if there is a kidnapping, we can now, with the new changes we've made in customs powers... I don't see any changes that would in any way be negative for customs. I think this can only be positive.

The Chairman: Thank you, Mr. Pillitteri.

We'll now hear from Mr. Nystrom, followed by Mr. Brison.

Hon. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you very much, Mr. Chair.

I'd like to welcome the minister to our committee today. I want to ask him questions similar to what Roger Gallaway asked in terms of the advice the minister is getting and so on.

Maybe I'll start off by saying that the only definite commitment you're saying you have now is from Nova Scotia with WCB.

Mr. Harbance Singh Dhaliwal: New Brunswick.

Mr. Lorne Nystrom: New Brunswick. I'm sorry.

It's with WCB, workers' compensation. Couldn't that be done under the existing structure in Revenue Canada?

Mr. Harbance Singh Dhaliwal: Right now we don't really collect taxes on a cost-recovery basis because most of the major taxes we collect are harmonized. What happens now when provinces want us to collect their taxes is that they generally go to the finance department and they go under the Tax Collection Agreement. And the finance department basically says yes, if you want to harmonize, we'll talk to you.

When they harmonize under the Tax Collection Agreement the federal government pays the cost. As we do for income taxes across the country, with the exception of Quebec, we collect all the personal income tax. We collect the corporate tax, with the exception of Ontario, Quebec and Alberta. We do that now, but it's mostly under the Tax Collection Agreement. I'm sure officials can give you more details, but that's my understanding.

Mr. Lorne Nystrom: Yes. My understanding is that you could do this now under the existing structures.

Mr. Harbance Singh Dhaliwal: I guess we could go to the finance department and ask them to let us directly negotiate with the provinces. We have not, in the past, gone to the provinces and said, “Geez, come to us. We'll charge you a cost-recovery cost and therefore let us collect your taxes.”

The other thing is, as we collect more taxes for the provinces, in those provinces where we're collecting 80% they're saying, “You're collecting 80% of our taxes but we get no say. We're not getting any say in it.” Now they're able to appoint someone to the board. In fact, some provinces are saying to us that we're still a federal agency, still controlled by the federal government and still appointed by the federal government, that we didn't go far enough.

Mr. Lorne Nystrom: Yes.

Mr. Harbance Singh Dhaliwal: We have to balance that. Some provinces say we didn't give them enough involvement. Some of my own colleagues tell me, “Geez, you've let 11 out of your 15 members be nominated from the provinces.” So this was a balance we struck.

Mr. Lorne Nystrom: In terms of balance and so on, you appear to be a pretty congenial fellow, a pretty co-operative fellow. You said you've had a lot of advice from an advisory committee and you've heard from employees and so on. In your speech today, you said the bill before us now is “vastly superior” to the original proposition.

• 1625

So I wonder if you would have any objection to the finance committee doing what parliamentarians should do, consulting the public on this? We should be consulting, I would think, some of the provincial governments in this country. We should be consulting some of the communities that are border-crossing communities; I can think of Windsor and maybe your own area in Vancouver and so on.

This is a pretty massive change and it seems to me that we should be having some public hearings on this and consulting some of the people around the country. Would you have any objection to that?

I think you're a great democrat. Shouldn't we have some parliamentary democracy and move this committee out of Ottawa and do some short hearings? If you can improve the bill just by talking to people yourself, maybe we can offer some pretty good suggestions as well. Would you object to that?

Mr. Harbance Singh Dhaliwal: First of all, Mr. Nystrom, I've been consulting for two years. We had two reports that went out—

Mr. Lorne Nystrom: Shouldn't we consult for a few months? That's what I'm saying. You can do it for two years. Shouldn't we do it for a few months?

Mr. Harbance Singh Dhaliwal: Let me finish.

I've done my consultations across the country, with Canadians and with members of Parliament. One of the major ideas that came out of that was more political accountability. Now, I'm certainly not here to advise the chair, who is a very capable and able chair—

The Chairman: Thank you.

Mr. Harbance Singh Dhaliwal: —as to what consulting he should do. That's up to the chair.

Mr. Lorne Nystrom: That's not my question.

Mr. Harbance Singh Dhaliwal: I know that's all he does. He consults all day long. So I'm sure he'll be able to make that decision with the advice of his colleagues—

Mr. Lorne Nystrom: He loves meetings.

Mr. Harbance Singh Dhaliwal: —as to how much consulting—

Mr. Lorne Nystrom: I just want to make sure that you don't object to it, that's all. Because the chair loves having meetings—

Some hon. members: Oh, oh.

The Chairman: All of them.

Mr. Lorne Nystrom: —and he's underworked.

Mr. Harbance Singh Dhaliwal: Mr. Nystrom, we have a record of consulting committees of this government, and to some people—

Mr. Lorne Nystrom: So you don't object, then?

Mr. Harbance Singh Dhaliwal: —we should be acting more often, because we're here in the House too much, we're consulting too much, we're spending too much time consulting with Canadians, so—

Mr. Lorne Nystrom: We're dealing with a pretty big issue here.

Mr. Harbance Singh Dhaliwal: —we need to have the balance. I'm certainly not one who will be against consultation. I think consulting with Canadians is very important.

Mr. Lorne Nystrom: Okay.

Mr. Harbance Singh Dhaliwal: I've done my part in consulting. I'm sure you'll do your part.

Mr. Lorne Nystrom: Excellent. So you agree with that, then. Because I'm wondering why you'd come to us with a proposition for a very radical change, a very major change, without at least a letter of understanding from some of the provinces. Would you consider putting a pause on this bill until you have at least half the provinces indicating in writing that they're willing to join the agency?

It's a fairly big change. Whenever we've had a major change in the past that affected federal and provincial agreements, we always had an agreement in place beforehand, before we proceeded. I'm just wondering why you haven't done that. All you have is the Workers' Compensation Board in New Brunswick. I've talked with the Ministry of Finance in Saskatchewan and they're not sure whether they'll sign up. Sure, they're saying positive things to you, but they haven't made any commitment to you. I know that for a fact. I hear Ernie Eves is not exactly excited about this in Ontario. Quebec's not excited about it; in fact, it won't participate. So why would you proceed?

It's sort of like a half-baked omelette, Mr. Chairman. Why would you come here with a half-baked omelette? Now, maybe you go back to the drawing board, give us time to consult as a parliamentary committee and bring some input, bring some of the provinces on board, and we'll have a package that's “vastly improved” again. Would you consider putting a bit of a pause on this while we do that?

Mr. Harbance Singh Dhaliwal: First of all, I believe you may not have been here when I read a letter from New Brunswick—

Mr. Lorne Nystrom: I heard about that and—

Mr. Harbance Singh Dhaliwal: —which reads, “I want to reiterate New Brunswick's full support”—

Mr. Lorne Nystrom: And you've mentioned that several times—

Mr. Harbance Singh Dhaliwal: —“for this initiative”—

Mr. Lorne Nystrom: And I respect New Brunswick, but—

Mr. Harbance Singh Dhaliwal: —and Nova Scotia as well.

Mr. Lorne Nystrom: Okay.

Mr. Harbance Singh Dhaliwal: Nova Scotia as well, where we've signed a service agreement and we're looking at a question of WCB.

Mr. Lorne Nystrom: That makes two.

Mr. Harbance Singh Dhaliwal: And I've had two meetings with the province of British Columbia, with Mr. Andrew Petter and Joy MacPhail, to make them aware of it. I've had a meeting with Mr. Cline, I believe, the finance minister of Saskatchewan—

Mr. Lorne Nystrom: Eric Cline? Yes.

Mr. Harbance Singh Dhaliwal: I've met with him on this issue as well. I've met with Mr. Stefanson as well. I've been meeting finance ministers across the country. They are very supportive. In fact, they also met together when the finance committee met here. We in fact agreed to the guidelines—to the guidelines!—as to what the agency could collect. Now, I'm sure—

Mr. Lorne Nystrom: No, you—

Mr. Harbance Singh Dhaliwal: —Mr. Nystrom, that the provinces are not very shy. If they didn't like it, I'm sure the provinces of British Columbia and Saskatchewan would be wanting to phone you and tell you. When they dislike something or they don't want the federal government to do something... I'm sure they're not going to be shy if they don't think this is good for the country or good for the provinces and I'm sure they're going to say it openly.

I've been consulting with them for the last two years to get their views and we've made the changes that they wanted us to make. They wanted more political accountability, just like members of Parliament. We've made the changes from what was originally an arm's-length approach to one that has full accountability to Parliament—

Mr. Lorne Nystrom: Specifically—

• 1630

Mr. Harbance Singh Dhaliwal: —and full accountability to the Minister of National Revenue, where the minister can give directives to the board, and it still comes under the Auditor General. We still have the Auditor General for the agency. All those things, the accountabilities, that are there now still continue, as I said in my speech.

Mr. Lorne Nystrom: Specifically, when can you come before this committee and tell us you have a majority of the provinces that have signed on in writing?

Mr. Harbance Singh Dhaliwal: Well, Mr. Nystrom—

Mr. Lorne Nystrom: No, let—

Mr. Harbance Singh Dhaliwal: —as someone who knows the history about the health care that was developed in this country, you know that if we waited for every province to accept everything we do—

Mr. Lorne Nystrom: We didn't—

Mr. Harbance Singh Dhaliwal: —we might hold our breath for a long time, so I didn't ask the province to send it in writing to me, to say that the support... I have no intention of it. I didn't go to them and say, “Sign on the bottom line.”

Mr. Lorne Nystrom: Yes, I—

Mr. Harbance Singh Dhaliwal: We have to earn their business. We have to make sure that we can provide service for them, and it's a step-by-step process. I don't think we're even prepared to say, the day after this passes, “Let us collect all your taxes because we're prepared.” This will be a step-by-step process. We have to prove ourselves. We have to earn the business of the provinces. After all, there will be a cost recovery for them as well.

Mr. Lorne Nystrom: I remind you of your history, Mr. Minister. The Liberal Party promised medicare in 1919 and didn't deliver until 1965 or 1966, so it took a long time. They didn't deliver until the provinces were there. The last province that had to come on board was Ontario, because of the size of the province. I remember that very well from reading my political history.

Mr. Harbance Singh Dhaliwal: So, then, all the provinces weren't in on the first day.

Mr. Lorne Nystrom: They had a majority in on the first day it came on. Ontario was there and Saskatchewan was there. The majority of the provinces were there, as you will see if you check your Canadian history. Otherwise, this thing wouldn't have flown. You used the example of medicare. That didn't go until the majority of the provinces were there representing the overwhelming majority of people in this country. If you want to use that as the analogy, why wouldn't you do the same thing here and make sure?

I'm interested in making this thing work if it's going to happen. Let's just make sure that all the provinces are there. If they're so enthused when they talk to you privately, why don't we call some of the ministers before the committee? Why don't we go out and consult some of the people in the regions? Why don't we get some letters from them to you, an understanding that they're going to sign on to this agency, before we do it? Or else why would we bother?

Mr. Harbance Singh Dhaliwal: Well, Mr. Nystrom, I'm sure that if you call up the minister of B.C. or the minister of Saskatchewan... I'm sure you can contact them directly to find out their views. My communication with them is that they're very supportive of this. They think it's the right direction and—

Mr. Lorne Nystrom: They won't put it in writing at this stage.

Mr. Harbance Singh Dhaliwal: We have other letters we can provide for you from other finance ministers, but certainly I take their word for it when they tell me they think we're going in the right direction. They think this is a good thing for the country. And they're very open to discussions as to what more we can do to advance the existing relationship we have. And we have a very good relationship, but it varies from province to province. Some we collect more from and some we collect less from.

I've said right from day one that I didn't ask them to sign the on bottom line. All of them have a different relationship at this time and they'll progress at different rates as well. Some provinces want to collect more, and there's one province, Quebec, that will not collect. So we'll have a different relationship with each of the provinces, but these will develop and evolve.

The Chairman: Thank you, Minister. Thank you, Mr. Nystrom.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chair.

Thank you, Mr. Minister, for appearing before us today.

I get a lot of feedback from constituents, and it's more than anecdotal that Revenue Canada is currently not necessarily accountable enough to Canadians and that in fact Canadians do not feel protected from heavy-handed policies. And right in your notes today, in your speech, you said that “operational accountability will be less diffused”, i.e., more concentrated.

You said that:

the Minister of National Revenue remains accountable for the Agency's policies; however, the authorities for management and administration—which are now shared among Treasury Board, the Public Service Commission, and other government departments and agencies—will be united under the new agency.

You do say there will be an opportunity and an ability to provide directives to the board, but in your own words, “the operational accountability will be less diffused”.

I have significant concerns about that. It seems to be part of a continued declining role of accountability to Parliament by national institutions, part of the emasculation of MPs and ministers in terms of being able to represent the needs of Canadians directly to these institutions. I think it's a disturbing trend. I'd appreciate your feedback on that specific point first.

Mr. Harbance Singh Dhaliwal: Let me respond. First of all, accountability is very important. One of the major changes I made to the original concept was to have strong political accountability. That was not in the first concept. It was first seen as a very independent arm's-length agency.

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My consultations across the country showed that people want strong political accountability, so the minister will retain all its legislative authority. The minister retains that.

Number two, let me explain “less diffused” for you. There are some things that are done by Treasury Board, some by Public Works, some by another government department. What happens to a lot of those responsibilities? For example, in negotiating with the employees, Treasury Board negotiates. What “less diffused” means is that some of these responsibilities that come under different government departments will now be under the agency, like, for example, negotiating with our employees. That would be part of the responsibility of the board.

Mr. Scott Brison: The authorities for management and administration will still be with the new agency. You'll have perhaps some ability to have input on policy, but really, it doesn't seem like... Will your input to administrative issues or specific cases be diminished? Yes or no?

Mr. Harbance Singh Dhaliwal: No, absolutely not. If a member of Parliament comes forward to me, Minister of National Revenue, and says he or she has a problem with a case—as you know, many of you come to me often—I have the power to investigate on your behalf, so that role will not change. And it's only the Minister of National Revenue who will be able to get information on a specific file to protect the privacy of Canadians.

Right now I delegate my authority to my officials all the time. In the same way, I will be delegating my authority as well. It's done right now. The board of management will deal with the human resource policy and with facilities management and there'll be more accountability.

Let me give you an example, Mr. Brison. I travelled across the country and went to some of our operations. I remember going to one building. A large part of the building was not utilized. And as a businessman wearing my business cap, I said, “Here's a big part of our building not utilized. Why is that happening?” They said, “Well, we have peaks and valleys, Minister. We use this area when it's a peak, but we don't use it the rest of the year”. And I said, “Well, as a business person I would either rent that space out or rent the extra space for our use.” I asked our managers why they weren't utilizing that space better and the response was that it wasn't part of their budget, that it was really Public Works' budget.

So that accountability isn't there because it's diffused in Public Works. We get the building from them without paying any rent, so our managers aren't as motivated to make sure that those facilities are... Public Works has that responsibility.

Now it will be on our manager to make sure we're energy-efficient, to make sure we use our facilities to the maximum and all—

Mr. Scott Brison: The logical corollary of your argument is that for all government departments you could achieve significant economies of scale by moving in this direction. Is that what you're suggesting?

Mr. Harbance Singh Dhaliwal: No, I'm not suggesting that, because we have some unique needs. We're a very large government department. We have more than 40,000 employees.

Mr. Scott Brison: So is the Department of Health.

Mr. Harbance Singh Dhaliwal: We have special needs and we want to have administrative flexibility to make sure we can respond to our special needs and our employees and our clients, and we want to have those solutions tailor-made.

For example, we have peaks and valleys. We hire a lot of people during tax time and we don't need them after a certain period of time. Those special needs require tailor-made solutions instead of overall government solutions. I can't comment on other departments and what they do, but certainly I think we would have greater accountability under one agency.

Mr. Scott Brison: I remain sceptical relative to the accountability. I do feel that currently there may not be enough and that in fact it would be exacerbated by this move.

I can see your point relative to the economies of scale and the cost of technologies. I guess the irony is that the case you made today is very similar to the case made for bank mergers before this committee relative to the cost of technologies and the importance of economies of scale. The reception you have received from the members opposite is very different from what the bank chairmen received in the past weeks, but I guess that's not a surprise for anyone.

You have not had a one-to-one discussion with the finance minister of Ontario, Ernie Eves, about this?

Mr. Harbance Singh Dhaliwal: We've requested it, but we've not had a one-to-one meeting with him. We've exchanged letters on this issue.

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Mr. Scott Brison: Does it not strike you as odd that you have not had a meeting with him, finance minister of Canada's most populous province, Ontario, to discuss this agency, and that you still purport to have relationships with the provinces that would enable this to fly?

Mr. Harbance Singh Dhaliwal: Yes, well, Ontario is one province. There are nine other provinces and territories in this country. On my part, I've made every effort to meet with every one of them. I certainly can't comment on whether there were schedules we couldn't meet or a whole variety of reasons as to why. I certainly can't respond as to why we've been unable to, but I certainly have made efforts to do that—

Mr. Scott Brison: But isn't it—

Mr. Harbance Singh Dhaliwal: He has responded in writing and we did have this discussion during the finance ministers' meeting where the agency was on the agenda—not the last one, but the one prior to that—so they had an opportunity to comment on and give their views of the agency, and in fact, we agreed on the guidelines as to what taxes the agency could collect.

Mr. Scott Brison: There's a trend in part of federal-provincial relationships today—and the discussions that are occurring are focused around decentralization—that provinces will be playing a larger role in their own destinies and, in fact, there has been agreement with the feds, for instance, on transference of tax points. The provinces ultimately will have more control or want more control, both over their revenue collection side and their spending side.

This seems completely incongruent and inconsistent with that trend, particularly in terms of the negotiation process leading up to it, if in fact the finance minister of the most populous province in the country, Ontario, hasn't even sat down to discuss it. It doesn't seem like you should be here discussing this with us before you have a better commitment from the provinces, as Mr. Nystrom alluded to earlier.

Mr. Harbance Singh Dhaliwal: Like I said, I do have commitments from another province supporting the idea.

I've never asked them to sign a contract or on the bottom line or a memorandum, saying, “Here is a contract: sign and I'll collect all your taxes tomorrow.” That's not what my consultation was about. It was about developing a vehicle that they can agree with, that we can build together and expand.

I think we're recognizing that, for one thing, the federal government and all the provincial governments have been under fiscal constraints and they're all looking for a way to reduce overlap and duplication because Canadians are saying that. Canadians are saying they want better service and reduced overlap and duplication. They're saying they want governments to work together to provide better service to Canadians.

I gave an example earlier. We're providing, on a benefit side, the child tax benefit, for example, in B.C., the B.C. family bonus. After that program we delivered for them at a much lower cost than they could have done it at, Alberta and New Brunswick have also asked us if we can deliver that program for them. And we're doing that.

So we're recognizing that there are opportunities to work together with the provinces. This will create a vehicle to expand that relationship and take advantage of the opportunities that exist, particularly with the new technologies that are developing out there.

Mr. Scott Brison: You say in your notes today,

All Canadians would dearly love to see a single window for all tax collection and this Agency offers the provinces an opportunity to pursue that end.

I get a lot of concerns from constituents about taxes, and I hear Canadians say that they want lower taxes and a fairer and perhaps flatter and less complicated tax code. I haven't had one Canadian say to me that he or she wants a single window for all tax collection. I haven't heard that. In fact, I hear from a lot of Canadians who believe that currently Revenue Canada has the capacity to be sometimes heavy-handed and intrusive and very difficult to deal with in regard to their needs. I do not see this as responding to their needs. In fact, I see it as creating the risk that would actually potentially make it worse.

Mr. Harbance Singh Dhaliwal: First of all, let me say that we launched a fairness initiative not too long ago, where we got a consulting process going to make sure fairness is front and centre, because that is very important to me and it's very important to Canadians. As an organization, we need to be always vigilant about that, to make sure that we are fair to Canadians.

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That's why we have a consultation process going on right now, by an independent third party who is going to come forward, take all the recommendations, and tell us how we can be fairer to Canadians. That's very important to me as minister. That's going on already and we'll continue to move on that.

Let me give you an example. You were talking about the single window. In the past when businesses dealt with us, they had a number of different business numbers, one for GST, one for source deductions, one for export, one for the provincial government and one for PST. They might have had seven different business numbers to deal with the tax part of it.

What we did was to create one business number, and now we're going to the provinces and saying, “Why don't we develop a business with you as well so the business people have one number, a single-window approach?” Businesses are saying, “That's great. We want that. That's going to reduce our costs. That's going to reduce the overlap.”

We're working with the provinces to do that. There are many opportunities there and the single-window approach means they can go to one place and deal with their tax requirements. They can send it to one place. In the future, people can send their tax returns right on the Internet.

Now, in Quebec, because they have to fill out two tax returns, they're not taking advantage of going to a taxpayer and having it sent on the Internet. They have two tax returns to deal with. If they had one single window where they could send their PST and their GST, we would all be better off. That's what I mean by a single-window approach: one business number instead of five business numbers. That's going to help.

Mr. Scott Brison: What is the position of the CFIB on this? You say it's better for business people. What is the position of the Canadian Chamber of Commerce? What are they saying about this?

Mr. Harbance Singh Dhaliwal: Peter O'Brien, the representative of the CFIB, attended this meeting in Halifax and said that this is something the business community has been talking about a lot, that it's about time we did this, that it's good to see governments listening and provincial and federal governments working together to make it easier and reduce the overlap and duplication.

Mr. Scott Brison: So that's the CFIB's position on it?

Mr. Harbance Singh Dhaliwal: That was said by one of their representatives who was there. The CFIB position, I'm certain, may come before you or they may have a position. I'm only quoting the member and he was certainly quoted in the press as well when we signed with the Nova Scotia government.

Mr. Scott Brison: Was there any opinion from the Canadian Chamber of Commerce on this?

Mr. Harbance Singh Dhaliwal: I've met with many of the chambers of commerce across the country. I believe the Canadian Chamber of Commerce has also written and is very much supporting this. I certainly don't have a letter before me, but my understanding is that they've written, and I've met with many chambers of commerce across the country and they're very supportive.

Mr. Scott Brison: One thing that does give me some reassurance is your background in small business. I would hope that background would play a key role in what you're doing now. I come from a similar background. I do remain skeptical relative to the agency, particularly in areas of accountability. Time will tell.

But I would really like to see, as Mr. Nystrom suggested, the ability for this committee to do some hearings. Frankly, I don't think Canadians out there are aware of the massive nature of this change, and it would be too important a change to not have the type of broadly based consultation that is really necessary. This committee would be well positioned to do that.

Thank you, Mr. Minister.

Mr. Harbance Singh Dhaliwal: Thank you.

Can I just respond, Mr. Chairman? I think this is a very important point. I was in business for 20 to 25 years before I got into politics. I remember having to deal with the auditor who comes in to check the WCB, who was asking the same questions and going through the same books as the auditor for payroll deductions, the auditor for GST, the auditors for everything you can think of. There were four or five auditors asking the same questions and wasting the time of business people who should be spending their time running their businesses.

We could have one auditor go in to check the provincial sales tax and all the other things and, if needed, we could bring in a specialist. People think it doesn't make common sense to have five different auditors from the different levels of government to come and check the books and ask the same questions over and over again, wasting the time of the business people. We want business people to do what they do best: to run their business and not waste time with governments.

Mr. Scott Brison: One auditor may be able to inflict more pain more quickly and more efficiently on behalf of the federal government.

Some hon. members: Oh, oh.

Mr. Harbance Singh Dhaliwal: None of our auditors inflict pain. They're very nice people.

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The Chairman: Mr. Minister, I have a question in reference to an overall sort of framework of how decisions are arrived at in government.

I'm a firm believer that every decision we make here has to have a single focus, that is, to improve the standard of living for Canadians. The only way that is achieved is by increasing productivity and that is the reason why I have been advocating a productivity covenant with the federal government, where all decisions made take into consideration the impact on productivity.

I'm just wondering whether your decision to move ahead with this particular revenue agency would meet a productivity test.

Mr. Harbance Singh Dhaliwal: That's a very good question.

First of all, as I said earlier, we are a trading nation. One out of every three jobs in this country is due to trade. If we can make our economy more productive and more efficient, we can compete with the rest of the world. Our products can compete with those of other countries.

Governments don't realize that they create costs for business. Whenever they put in new regulations, new forms or additional work, that's a cost. Every businessman has to build it into his or her costs every time he or she has to spend time in dealing with government, in filling out forms.

We can help to build a more productive economy by reducing the compliance costs to business right across the country, by reducing the administrative costs for governments, by reducing the costs in developing programs to deal with the new technology. We can help governments do that. This is a great opportunity to really deliver for Canadians.

Everybody talks about how they want to get rid of overlap and duplication. We hear it in the House every single day. We hear it from the provinces every single day. They want to reduce overlap and duplication for business. They want to reduce the compliance costs. This is a real opportunity to take that rhetoric and put it into action.

It's a big change. It is a change, and sometimes it's better to leave things as they are, but I came to politics to make a change to help benefit Canadians right across this country. I firmly believe this is going to help business people and help Canadians, that it's going to develop a stronger relationship with the provinces, a relationship where we bring them back into the tent. I hate to see the provinces each collecting their own taxes. That is not going to benefit anybody. That is something that we're all going to pay a higher price for.

This vehicle, creating this agency, creates a great opportunity for us to work in a co-operative fashion with the provinces. I've been working with them. I've been meeting with them. I've been talking with them. They have been supportive.

Let's create that vehicle. Let's work in co-operation with government so we can reduce the compliance cost to business, provide better service for Canadians and take advantage of the technology that's out there. The technologies are changing. People are going to be doing more business on the Internet. We don't want to have jurisdictional problems across the country in the taxation area. We can do this by building an agency that works for all Canadians and for the provinces, and I am confident that it will do that, Mr. Chairman.

The Chairman: Minister, it seems to me that the change that you're asking for is in response, I guess, to the changes that are also occurring in the economy and in the way processes occur as well. If you were to tell Canadians what the benefits are of moving from the present state to the future state you outline in your document, what would they be? Can you can paint a picture for the people of Canada as to why they should be supportive of you on this particular project?

Mr. Harbance Singh Dhaliwal: They should be supportive because our fundamental purpose for doing this is to provide better service for Canadians. We want to ensure that when Canadians need service, if it's a small businessman paying the GST, for example, that we can work towards making sure they can take advantage of technology and pay it through the Internet, and if it's a person—as I said, technology—who sends in his tax return through electronic file where he gets their refund within seven to ten days as opposed to two or three months.

Now, to build so that we have those type of systems costs money, and we can develop those systems and better service if we work in co-operation with the provinces. At the end of the day, Canadians will be better off because we can provide better service for them. We'll be able to respond to our need to serve them better as an organization.

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If we need to hire more people, we can be more responsive and hire them within three weeks as opposed to within six months or within a year. If we need to, we can develop, together with the provincial governments, an information system so that if a Canadian needs a form he can go to the web site as they can now, but in an expanded way, and print it right on their printer. They won't have to call up Revenue Canada. They won't have to go down to their Revenue Canada office. They can do it right at their computer. If they want to pay their taxes directly, they can do it.

I think Canadians want better service and we, as a government, should provide them with it. One of the ways to do it is to make sure that we work in co-operation with both levels of government and give them options. For example, Mr. Chairman, if I said I wouldn't mind paying my property taxes through my source deductions on a monthly basis as opposed to having a big bill at the end of the year, we can provide that option if we move to the agency. We want to create more options for Canadians. We want to create more options for the provinces. And the way to do it is through the agency.

The Chairman: Thank you.

Are there any further questions?

Mr. Forseth or Mr. Kenney?

Mr. Paul Forseth (New Westminster—Coquitlam—Burnaby, Ref.): Mr. Kenney first.

The Chairman: This is a five-minute round and we have time for just two more questions.

Mr. Jason Kenney: Minister, how much has your department spent in the preparation and development of the proposed agency?

Mr. Harbance Singh Dhaliwal: I can't give you an exact figure. I'm sure when the officials are here they might be able to give you any figures you want, but I certainly don't think it's a very significant amount. It's quite insignificant. I'm sure when they are here they can give you more details as to what the costing would be, but certainly it hasn't been really significant—not for me to worry about. Everything we've done was within our budget.

Mr. Jason Kenney: I understand that your department is experiencing a cost overrun this year. Is that correct?

Mr. Harbance Singh Dhaliwal: No. I think under the supplementary estimates there is additional work that we are required to do, which we were given supplementary funding for, but only because there were additional duties that we were required to do as a result of changes in a variety of areas, for example, in the firearms area and the changes in that act. When changes come about, we get additional funding for those, but I'm sure the officials could give you more detail than I could.

Mr. Jason Kenney: Minister, one of the arguments that you and your officials have made, one of the rationales that you have presented, for this proposed agency is that it would create greater flexibility in employment practices, which would allow you, for instance, to pay senior auditors and computer technicians more, etc.

However, it's quite evident that amendments could be made to the current public service act and other statutes to give the current department under the status quo structure the same flexibility that you seek under the agency, so why is the agency necessary to obtain the kind of personnel policy changes which you would like to obtain? We have an opinion from the Library of Parliament, and the Canadian Tax Foundation has published a paper, both of which indicate that these changes could be made without moving to the agency, by staying as a department.

Mr. Harbance Singh Dhaliwal: First of all, if you read some of the union advertisements, they themselves admit that the present human resource framework isn't working; it isn't working for their employees or for us and we need to change. We need very fundamental change, which cannot be accomplished under the present regime. I don't believe it can and I'm certain the officials will very much agree with me.

The change we want to make in creating a whole new human resource framework—which we have sent design teams to look at, with employee participation, with some of the unions participating—will be a real fundamental change. We wouldn't be able to do that at present, because, obviously, government, the central agency, is there to serve 80 different departments. Their human resource framework is made to serve all of them, not to serve Revenue Canada's problems. We would not be able to make the fundamental change that we want to make.

Mr. Jason Kenney: By exempting Revenue Canada as a department from the current Treasury Board guidelines and the coverage of the statutes, you certainly could do that. It's not necessary to become an agency in order to effect those changes. They're just regular statutory changes. Essentially that's what you're doing in this legislation.

Mr. Harbance Singh Dhaliwal: Well, no. I wouldn't—

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Mr. Jason Kenney: What I'm saying is that you don't need a separate board and a commissioner and a new bureaucracy to exempt Revenue Canada's employees from the coverage of those burdensome personnel regulations.

Mr. Harbance Singh Dhaliwal: Well, I think the officials can deal with this further.

But if that were the only single thing... Now, the agency is about getting provinces on board; it's about human resources changes—

Mr. Jason Kenney: We've talked about that for an hour, Minister.

Mr. Harbance Singh Dhaliwal: But I don't agree with you. I don't think the fundamental change we want to make could be made just by making small changes to our obligations under the Treasury Board act or under any other act. I certainly don't agree with you there, but you may want to ask the officials more. You may want to ask them more on a technical basis about whether there are technical changes that could be made in the legislation. You might want to pursue that with them. My understanding is that these fundamental changes we want to make in the human resources area would not be possible.

Mr. Jason Kenney: I have no more questions.

The Chairman: Mr. Forseth.

Mr. Paul Forseth: Mr. Dhaliwal, both you and I represent constituents from the same city, and some of those constituents work for Revenue Canada. You've talked about streamlining, but when some people hear that from you they say that can be just smooth talk for stealth, for another agenda.

We want to pick up the theme of these employees. Some have said that this move really is just union-busting, contract-breaking, an exercise to act like maybe a Scrooge employer, to cut wages, cut benefits, abandon seniority lists and so on. So I want to hear this from you specifically: what are the carry-over plans for current contracts and categories in the new agency? What are your commitments to the union successorship? And I'll have a follow-up about the role of the Public Service Commission.

Mr. Harbance Singh Dhaliwal: First of all, as I said earlier, all of our employees will have a two-year guarantee for their jobs and we'll be respecting all the term employee contracts that we have at this point.

But as I said, this is not a downsizing exercise, so our employees shouldn't be afraid of that. This is about creating a new vehicle, not about downsizing. In fact, we're one of the departments that has continued to hire people. We're one of the few departments in this government that has continued to add employees, so it's really not about downsizing.

The employees themselves have said they'd like to see the human resource framework changed to better respond, for example, in terms of getting promotions, in terms of making sure that competency is an important factor in getting promotions. They themselves have said changes are needed and they're working with us to make sure we build that type of human resource framework.

Our human resources are very important to us. They're fundamental to us. I've gone across this country and visited our tax offices and talked to our employees. I've heard their views and I know that in the long term this will be in their best interests. They've been very supportive of moving to the agency.

So I don't buy that. I think the rank and file are very much supportive. They know this will work to their benefit.

The Chairman: Just a brief question, please, Mr. Forseth.

Mr. Paul Forseth: I have just a final comment. One of the other justifications you talked about was that day you went into this large facility and found all that blank space. You were referring to the flexibility you needed with staff, that you have peaks and valleys and sometimes there are large areas of square footage not being used. But if the government would simply obey the Auditor General's directions and go to full cost accrual accounting and modern standards of how you do things, you wouldn't have that kind of a problem. Just simply do what the Auditor General says and you would overcome that difficulty.

Mr. Harbance Singh Dhaliwal: I work very closely with the Auditor General. In fact, I make a point of meeting with the Auditor General when he has a report in order to talk about how we can improve our operations, and certainly what the Auditor General says is very important.

But you need accountability. This is about creating greater accountability, greater fiscal accountability and also greater flexibility for our managers in doing their jobs properly. This is about responding to the needs of our employees to make sure that we, together with our employees, build the type of human resource framework that can respond to their needs and to the agency's needs. That's what it's all about.

The Chairman: Thank you, Mr. Forseth and Minister.

Mr. Szabo, a final question.

Mr. Paul Szabo (Mississauga South, Lib.): Thank you, Mr. Chairman.

Thank you, Minister, for coming before us. As you know, the role of the opposition is to deliver blows that would tenderize a turtle and—

Some hon. members: Oh, oh.

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An hon. member: Pull your head in.

An hon. member: Where did you get that line, Paul?

Mr. Lorne Nystrom: I didn't know you were a turtle, Paul.

Some hon. members: Oh, oh.

Mr. Paul Szabo: I think it's important that you take the tough questions and continue to respond with the conviction that you've had. I give you credit for that.

The kinds of questions that are being asked of you now—and I'm sure you have heard them over last two years in your consultation—are probably in much the same vein we have experienced with regard to the MacKay task force report on banking: it's the whole issue about whether the status quo is an option. And, quite frankly, from what I've heard from you and from the materials your department has put out, I think your department has also said that the status quo is not an option, that things are happening quickly in terms of technology, etc.

I also know that your department has done a fair bit of work in terms of co-operating with the provinces with regard to the underground economy, with regard to sharing information. All of a sudden, I start to see some of the synergies that are possible with further levels of co-operation and consolidation of the important responsibilities proposed for the new revenue agency.

With that as a preamble, I would just simply ask you whether or not it is your judgment now, whether you continue to be convinced, based on all of the blows that have been delivered to you, that now is the time for Revenue Canada to move into the new millennium, to get its systems, its ship, in better shape to deal with the inevitable demands and challenges that are going to be placed on you?

Mr. Harbance Singh Dhaliwal: Thank you very much.

I very much agree that we have a very good working relationship with the provinces. Some were doing more work than others. Certainly this gives us a great opportunity to advance that relationship with the provinces.

I think it is a time where we need to review what we do, what our needs are. It's a time to build a type of government for the next millennium. Because it's going to change. We had the OECD conference right here not too long ago. By the year 2001, $400 billion of business will be done on the Internet around the world. Of that business, $13 billion of it will be done in Canada. There is going to be exponential growth in the business done over the Internet as people get more confidence in it and trust it.

There's going to be a huge change and we have to make sure we're ready for that new challenge. I've said there should be no new taxes. In fact, we should encourage people doing business on the Internet because people can do it more efficiently, anywhere in the world. But we have to protect the Canadian tax base.

It's going to create new challenges. Someone may sell a hat out of Quebec into B.C. over the Internet. Who's going to ensure that all the taxes are paid? There's provincial tax there. How are we going to ensure that the taxes are collected on a product being sold over the Internet to someone in B.C. who is buying a product in Quebec and has it mailed to them? It's going to create jurisdictional problems. What about someone doing business in New York through the Internet? Who's going to ensure that happens? We have to have a level playing field to make sure that the customer and the retailer in the corner store isn't disadvantaged because someone on the Internet buys the same goods.

The technology is going to create new challenges and we have to build a national tax inspection agency to deal with some of the jurisdictional problems, both within Canada and, as a government, in the international arena as well. The OECD conference was a very good conference and opened our eyes to some of the challenges we're going to have. Certainly this is an opportune time to make sure we stay ahead of what's going to happen in the future. We have to plan for it now.

The Chairman: Thank you, Mr. Szabo.

Minister, on behalf of the committee, I would like to express our sincerest gratitude to you for taking the time to explain to us the major points of your proposed legislation. I'm sure we'll talk to your officials about some of the specifics.

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But I did underline the message which basically says that in a world where forces like globalization and technology are ever-present, it's very important for government, the private sector and consumers to try to stay ahead of the curve. And I think that from what we heard today, I'm sure it's going to be a point of debate in this committee, but it is something that we will keep in mind as we discuss the relevant issues.

Mr. Harbance Singh Dhaliwal: Let me, Mr. Chair, thank all of you for your excellent interventions and your questions. I think your time to give me relief was just about right, because I was losing my voice.

But let me say that I'm happy to respond and work with any of the people here. If you have concerns you want to bring to my attention, I'm certainly willing to keep myself available to meet with you individually to respond to you or to provide you with more detail if you need it. You have my full co-operation.

The Chairman: Thank you, Minister. Take care of that voice because I think you'll be needing it.

Some hon. members: Oh, oh.

The Chairman: The meeting is adjourned.