The House resumed consideration of the motion.
:
Mr. Speaker, I was fortunate to have the opportunity just before question period to share some thoughts on the calling into question a number of issues with respect to the Minister of Finance, whether it is the motion before us today or the official opposition motion bought forward last week. Today, I would like to provide a different insight.
I was on the opposition benches, both in Ottawa and in my home province of Manitoba, for just over 20 years. I understand the role of opposition. We want to be constructive in our criticism and in opposition we are more inclined to look at where the government could improve itself in policies and so forth. I would argue that the opposition day motion today goes far beyond that for a couple of reasons.
Each and every one of us, including you, Mr. Speaker, will recall that when we were elected to this beautiful chamber, representing literally thousands of Canadians, there was a responsibility for us to establish communication with the commissioner's office. Forms need to be filled out and declarations were made to the commissioner. We also look for advice on what we need to do to follow the law, to be in sync with our obligations and to disclose our investments. I have done it to the very best of my ability. I do not have much, but I do have some.
I fulfilled my obligation to the best of my ability, as I know the has done, as have members in the opposition. It is important to recognize that Mary Dawson and her office do not only handle cabinet. They are responsible for each and every member of the House of Commons. I suspect we will likely find there are ongoing investigations of some sort, or questions being posed by the commissioner's office to opposition members as well as government members.
When that contact is made and a member gets a recommendation from the commissioner, there is an expectation the member will follow the advice and recommendations of the commissioner. After all, that is the law. It is the very same law Stephen Harper had in place. When Stephen Harper was prime minister of Canada, his cabinet followed the very same process that this government's cabinet has followed. It is not only the government members. Even back then, it included opposition member as well, including me. We all had to follow the law.
From what I understand, the commissioner's office, directly or indirectly, has met with all 338 current members. There is a reason we have that. It is because at times it gets so politically charged in the House that it is somewhat hard for the opposition, and periodically even the government benches, to not be overly biased.
In my two years on the government side, time after time opposition members have united against the Minister of Finance. Virtually from day one, from Bill , to budgets, to all forms of announcements, they have attacked the Government of Canada through the Minister of Finance, as well as the Liberal caucus as a whole.
I do not know if it was Winston Churchill who commented that Parliament and democracy were quite messy at times. Some have said it is a blood sport. Churchill went on to say something to the effect that it is still the best system in the world. I believe that to be the case, that we do have a fantastic system, the parliamentary process. However, there are certain aspects of the parliamentary process that we want to be truly independent. We have established officers of Parliament to ensure that independence.
One of those is Elections Canada itself. All Canadians are aware of Elections Canada and its fine work for all of us. That institution is known throughout the world for contributing so much to the well-being of democracy, not only here in Canada but outside of our borders. It has an independent officer of the Parliament of Canada. The commissioner is independent as well. We have an Ethics Commissioner who is independent, meaning that he or she should not be influenced by the government of the day, the Conservative Party or the New Democrats. That is the way it should be.
That is why it is really important that throughout this debate Canadians understand no violation has taken place by the , despite the many assertions being made by the members opposite. The minister himself has made it very clear that to appease the concerns that are out there, he is prepared to divest himself of his personal finances in certain areas and to put other things into a blind trust. He sought the advice and recommendations of the Ethics Commissioner, and has followed that advice, as well as any recommendations provided to him. Moreover, he has seen fit to go over and above that in order to establish the right perception, which is important, because he wants to ensure that we can move on in the best way we can to what this government has said is its first priority since day one in office.
From a media outlet I found an interesting clip with respect to the member for , the person who introduced today's motion. From what I understand, the member across the way, the person who has now decided to attack the , is reported to have said that if there's a silver lining in this controversy, it is that it might push the government to close loopholes in the Conflict of Interest Act. With that sort of a comment, even the NDP recognize there is nothing illegal taking place and that the has done virtually the same thing that every member of the House is obligated to do. The member is suggesting that maybe we should be changing the Conflict of Interest Act. I would much prefer to have that sort of a discussion, rather than the character assassination that we have been witnessing by both the NDP and the Conservatives and, I would ultimately argue, the undermining of the independent office of the commissioner. That is what I have been witnessing from both opposition parties. I say that because whenever the Conservatives or the NDP have any hint of an opportunity to be critical of this , they have jumped all over it every time.
If we ask ourselves what the Government of Canada's priorities are, there is a litany of things that we have done to reinforce how important Canada's middle class is and those aspiring to be a part of it.
The Conservatives are so out of touch with what Canadians want and the NDP seem to so want to buy into the Conservative spin and the issues of the day that they vote together. Their opposition motions are now following each other's. I would suggest they are going in the wrong direction. One of the things that Conservatives have demonstrated over the last two years is that they continue to be out of touch with what Canadians really and truly want and expect of government. Instead, as I say, every opportunity they get, they are critical of the .
I would like to go through some examples, and then argue, using these examples, that we have a joint opposition that is out of tune with what is important in the everyday lives of Canadians. We can start from day one of the government. Our who made a commitment to Canada's middle class that we were going to put Canadians as the number one priority. I believe it was Bill that provided a tax cut for Canada's middle class. It was incorporated into the budget bill.
There was a great debate on that first budget. If members followed the debate at that time, we had Conservative after New Democrat stand in their place, being nothing but critical of the . The Conservative and New Democrat members criticized the government for giving a tax break to Canada's middle class, the most significant tax break in generations focused on the middle class, while at the same time increasing the taxation of Canada's wealthiest 1%. That is not an attack on the 1%, but rather it is saying that Canadians, including the constituents I represent, want a sense of fairness in taxation policy. In that very first budget, Canadians got to see a significant redistribution of wealth and responsibility in taxation. It was a fairer reflection of what it is that Canadians wanted to see. That is one of the reasons we got the mandate that we did.
Let us look at what happened immediately following that. Whether it was a Conservative member of Parliament or a New Democrat member of Parliament, they jumped all over it and criticized the government. In fact, all members need to do is read the Hansard. The difference between the two did not matter, because it was hard to tell the parties apart at times they were so close together. We saw both parties voting against the tax break for Canada's middle class. They voted against the tax on Canada's wealthiest 1%.
There were other initiatives in the budget that tried to deal with the economic conditions of Canadians. An example of that would be the Canada child benefit program. No surprise, because once again both parties voted against it.
The brings forward something and we have the joint opposition being critical of the minister. On that particular point, I must say that it was the budget that ultimately ended millionaires' ability to receive the Canada child benefit, and gave more money to those individuals who had less. It literally lifted thousands of children out of poverty. I wonder if their criticisms were of the merits of the bill or if they had something personal against the .
What about the guaranteed income supplement program? It is the same principle at play. What did the opposition parties do? We have to conclude that they just do not support the , because when he made that change they were critical of the minister. It is hard to believe they voted against an initiative that would lift thousands of seniors out of poverty in every region of Canada.
The is the one who leads the way. Let us go to the summer. Last summer, the Minister of Finance went out to all the regions. We had members of Parliament charged with the responsibility of listening to what their constituents had to say and report back. I am proud to say that Liberal members of Parliament did just that. From the initial announcement to the opening of consultations with Canadians, we saw tangible results from Liberal members of Parliament. They went into their constituencies and worked hard and effectively to improve and bring forward a fantastic tax change program that would make the system fairer. Once again we have the Conservative and NDP members screaming at the whenever they have the opportunity to do so.
I see that I only have a few seconds left, so let me suggest to those who are following this debate that the Conservatives and NDP members have clearly demonstrated that they do not like the Minister of Finance. I can tell everyone that the advice of the independent office of the Ethics Commissioner is what the Minister of Finance is following, and he has made a commitment to continue to follow any such advice and recommendations by that office. He has even gone further, as shown by some of his personal actions.
:
Mr. Speaker, it is always a great honour to rise in the House to represent the people of Timmins—James Bay.
Over my last 14 years in Parliament, I have seen all manner of scandals. I have seen scandals that were just plain idiotic, tawdry behaviour, and scandals that were not really scandals at all, just that sometimes people made mistakes and had to account for errors in judgment. However, they were still accountable to the people of Canada. What we are talking about today in terms of a conflict of interest with the , to me, speaks to the cynicism of the government and its approach to ordinary working Canadians who work hard and play by the rules.
The conflict of interest we are seeing with the is that, as the privatized pension king of Canada, he had a very clear financial interest in changing pension legislation. When he was presented as the finance minister for this Parliament, he did not explain to Canadians that he had set up—how would one even describe it—this numbered company that he moved his dividends and profits into, which maintained his connection to Morneau Shepell, the privatized pension operation of Canada.
What we hear from the Liberals is that this is a separate account and not really something that he had control of. It is the same as folks back home putting $100 into a cookie jar, being asked if they have $100, saying no, the cookie jar has $100, then being asked who owns the cookie jar, saying they do, being told that means they have $100, and them saying no, it is in the cookie jar. However, we are not talking about $100. We are talking about millions of dollars of direct benefit for Morneau Shepell.
I want to talk about three issues. The first is the Barbados tax haven that the has interest in and has been negotiating treaties for without recusing himself. The second is the issue of Bill , which he brought forward without explanation or any prior public consultation, that would benefit the investors at Morneau Shepell, and the third is the one before us today across Canada, the abominable treatment of Sears workers. We were all shocked and appalled when we heard that Sears executives attempted to cut off the financial, dental, and medical rights of Sears pensioners as Sears was facing bankruptcy and, at the same time, paying $9.2 million to its executives. That kind of pension theft is not only legal in Canada, but executives get corporate bonuses for doing it.
I have been attacked on Twitter by the Liberal trolls who said that this was no bricks and mortar issue, it just went the way of the dodo. Sears was a top-notch corporation that was run into the ground by the hedge fund operator Eddie Lampert, who pretty much lost $10 billion of value. One does not cry for corporate bandits like Eddie Lampert and his crew, because as Sears was getting into trouble, its hedge fund operators basically loaned $500 million to Sears through taking 46 key properties as collateral assets. If Sears went down, those hedge fund operators walked away with the property. Therefore, they are sitting pretty.
We approached the and asked him to change that loophole to protect the pension rights of Sears workers. That is not asking for anything special. It is asking to ensure that when people have paid into a pension for their whole lives, it is not at the back of the line when creditors come, that it is considered part of the credit that has to be protected. The finance minister will not do it, and we did not know until October 17 that Morneau Shepell was getting the contract for the Sears workers. Is there a direct link? The direct link is that the dividends go to Morneau Shepell investors, of which the finance minister is one. That needs to be explained to Canadians.
I am deeply concerned about Bill , because in 2013, as the head of Morneau Shepell, the current talked about the role that Morneau Shepell played in moving towards targeted benefit plans and how there was a need in Canada to change the legislation to benefit the investors of Morneau Shepell. When he became finance minister, he introduced Bill C-27, which was the legislation to do just that. What is striking about Bill C-27 is that there were no prior public consultations or public meetings. Therefore, who gave the advice to the finance minister to change legislation that would have an enormous impact on the company that he and his father helped found?
Bill is a clear conflict of interest. It is a conflict of interest that touches Canadians who are worried about the future of their defined pension benefits across the country. It is a right of Canadians to believe that parliamentarians will put the interests of the public ahead of their own pecuniary interests. That is the whole question of conflict of interest.
In the case of the , bringing forward legislation that would have a direct benefit to his company without recusing himself is an abuse of his role as a minister of the crown and needs to be explained. It is also an abuse of the House, because we did not know that he was receiving dividends from Morneau Shepell throughout this period.
To note, I will be splitting my time with the member for .
Now we find out about the Barbados tax havens. The is signing a tax treaty with Barbados. I know Barbados sounds like a great place for sand and hanging on the beach, but it is notorious as a fiscal paradise for companies that do not want to pay their share. What is really disturbing about Barbados is that we found out that Morneau Shepell is involved down there. There is a direct financial interest. The minister did not recuse himself. How could he be working on a treaty with a place that is a notorious fiscal paradise when Canadians are paying their fair share and they are looking to the for accountability?
I know my friends in the Liberal Party are in trouble on this issue, because whenever the Liberals are in trouble on a file, they start throwing out the term “middle class”. In fact, they say the “middle class and those wanting to join them”. Folks back home, if they were in some of kind university drinking game, where every time the Liberals said that in a speech they had to take a shot, they would be bombed at the end of the first five minutes.
I guess the grew up in a different middle class than I grew up in. His middle class is going after dentists and farmers. His middle class is going after people who are suffering from diabetes. His middle class is going after employee discounts at restaurants in order to tax them. Meanwhile, the one first promise that the minister broke was the $840-million corporate stock loophole that would protect 8,000 insiders on Bay Street. He reassured Bay Street that he would have their back.
Right now the Liberals are saying that they are doing all of this for the middle class. They are setting up a tax haven treaty with Barbados for the middle class. The is attacking the pension rights of Canadians across the country, through Bill , for the middle class. Of course, the Sears workers, well, they are out of the middle class altogether.
It reminds me of when the Liberals were caught out on the Saudi arms deal. They were dealing with House of Saud to help the middle class. That was the . On their abandonment of electoral reform, he said we had to do it to protect the middle class. Cash for access was the golden one, where Chinese billionaires were paying $1,500 to meet with the Prime Minister. He was asked, “What could you possibly be meeting with Chinese billionaires about that was not a conflict of interest?” He said that they were talking about the middle class. Imagine that. Imagine that is what billionaires talk about.
This is about abuse of public trust. This is about a who has broken the trust of the Canadian people and who owes an apology to this House. This is about a government that has to retract Bill , because it is a clear conflict that will benefit the insiders of the Liberal Party and not Canadians.
We need to have some clarity. Canadians need to have trust that the government they elect is not going to be just looking after the interests of their friends on Bay Street but is going to pay attention, finally, to the Canadians who work hard, pay their taxes, and play by the rules, unlike the government.
:
Mr. Speaker, I would like to thank my colleague for sharing his precious speaking time with me, allowing me to address the House concerning the motion before us today that we have been debating since this morning.
We have heard opinions from both sides of the House, but the Liberals have yet to say anything impressive in defence of the . Rather, they have tried to change the channel. They have tried to take the focus off the problem at hand. For my part, for the 10 minutes allotted to me, I will stick to the motion before us.
The first part of this motion sets out the facts regarding the matter at hand, namely, the situation with the finance minister and his company, Morneau Shepell. The minister led us to believe that he had placed his shares in Morneau Shepell in a blind trust when in fact he had never done so. His story was even corroborated by his Liberal caucus colleagues. The minister had many opportunities to clarify this situation. Everyone believed that he had placed his holdings in a blind trust. The media reported that such was the case, and the minister even allowed his own company to believe that that is what he had done. When the truth came out, everyone saw that he had not in fact put his holdings in a blind trust. The minister had never bothered to set the record straight since being sworn in two years ago. Everyone believed that he was telling the truth about his holdings. The first part of the motion points out the discrepancy, which the never bothered to clarify.
The second part of the motion deals with the fact that the minister used a loophole in the Conflict of Interest Act. I can confirm that there is indeed a loophole, not because I used it like the finance minister, but because I heard witnesses talking about it when they appeared before the Standing Committee on Access to Information, Privacy and Ethics, which I chaired for two years.
The Ethics Commissioner appeared before the committee to present her recommendations following her five-year review of the Conflict of Interest Act. That happened in 2013. The next review will take place in 2018 and will be a good opportunity to close the loophole that we are talking about today.
In 2013, the commissioner made over 70 recommendations to update the Conflict of Interest Act. Those recommendations apply to ministers and public office holders. They do not apply only to ministers, but also to some senior officials in the Canadian public service. These public office holders must obey this law. In 2013, the commissioner pointed out a number of problems with the act and proposed ways of making it more effective and updating it to reflect changes in technology.
In her report, she clearly states that the wording of the act specifies direct control, saying that a minister cannot have direct control over a company’s shares. She says that, according to the language, a minister could have indirect control. She raised this question as if she were a visionary who could see that infringements of the act might occur. A public office holder may decide to comply only with the letter of the law, that is, to avoid exercising direct control over a company’s shares, without complying with the spirit of the law.
I can just see the and his army of lawyers and accountants going to the Office of the Conflict of Interest and Ethics Commissioner and asking a lot of questions, and being told that he cannot exercise direct control over shares, but that he can exercise indirect control over them.
His advisors and lawyers tell him that the only thing to do is to register a company without bothering to give it a name. He can just give it a number, then register it in Alberta where corporate income tax rates are lowest. He can register all of Morneau Shepell’s shares in his company. Thus, he will be the sole shareholder of a numbered company in Alberta.
His lawyers are very smart, and we must give them credit, because their job was to find loopholes in the act, and that is what they are paid for. They did what the minister asked. He asked them to find a way of allowing him to control his shares while complying with the letter of the law.
They told him that they found the solution, that all he had to do was register a company. That is what he did and, for two years, he has had us believe that his situation was in order and that he had even placed his assets in a blind trust. Of course, the blind trust would respect both the letter and the spirit of the law, although this raises questions in any case, because, at the end of his term, the minister can always put the assets back in his name.
There are some misgivings about blind trusts, but that would have at least complied with the spirit of the law. However, the minister decided to do something else, and that is why he is being asked today to apologize to the House. He put himself in a conflict of interest or in a situation strongly suggesting a conflict of interest.
If any ethics professors are looking for the perfect example of a situation that suggests a conflict of interest, I think this situation with the Minister of Finance is ideal.
The minister is still in control of his shares in a large Canadian company, Morneau Shepell. This company sometimes deals directly with the Government of Canada. In general, it specializes in pension administration.
The company's value even increased when the Minister of Finance, who still had control over his holdings, introduced a bill that was good for his company. We are not the ones who came up with the idea that Bill would benefit his company. He said so himself in 2013 that a bill like this could benefit his company and would be the ideal thing for the company's growth and positioning. He said that in 2013 when he was still part of the family business. We did not come up with the idea that he profited from this. We can simply look at the numbers and see that this was indeed the case. The market responded favourably when the bill was introduced even though it had not yet been passed.
As soon as the bill was introduced the markets responded favourably because investors felt that there was a potential for growth for Morneau Shepell.
The minister personally profited from the increased value in his company when he introduced the bill. Imagine what things would look like if the bill had passed.
The bill is still on the order paper, but it has not yet been passed. However, we can just imagine how much this company would profit from the bill passing.
Who benefits in the end?
The Minister of Finance does.
However, he finally gave in to the evidence and acknowledged his mistakes by changing his financial situation with the Conflict of Interest and Ethics Commissioner as a result of public pressure. He did not seem thrilled to do so. He had probably worked out some elaborate strategy to maintain control, but under pressure, the minister finally decided to change his situation.
He did so because he saw that he had no other choice.
I mused earlier about the minister and his lawyers before the Conflict of Interest and Ethics Commissioner, and I can also imagine another scenario, one where the Prime Minister called him and told him to sort this out or find another job.
I would say he did not have much choice. To suggest today that he did so willingly and because he wants to serve Canadians would be to take us for fools. I hope he apologizes so that we can turn the page on this once and for all.
:
Mr. Speaker, even the opposition members agree that our plan is working, with their enthusiasm in hearing me speak in this House.
We are now the fastest-growing economy in the G7 by a wide margin. In the second quarter of this year, the economy grew by an impressive, strong 4.5%. Over the last four quarters, our economy has had the fastest growth rate since early 2006. In the two years since we came to office, 400,000 jobs have been created. In fact, in the last 12 months, nearly 90% of the jobs created were full-time jobs.
These pieces of great news are no accident, and the hon. members know that well. We laid the foundation for this economic growth the moment we took office. The first thing we did when we were elected in 2015 was raise taxes on the wealthiest 1% of Canadians while reducing them for the middle class. We are very proud of that decision. Single individuals who benefit from this tax cut are saving an average of $330 each year, and couples who benefit are saving an average of $540 each year. Our government has made child benefits more generous and better targeted to those who need them the most, with the new Canada child benefit lifting hundreds of thousands of children out of poverty. Since July 2016, nine out of 10 Canadian families with children have been receiving more in child benefits, tax-free, than they did under the previous government.
We also expanded the Canada pension plan to ensure that Canadians are better off financially in retirement. The strengthened CPP will provide more money to Canadians when they retire so they can worry less about their savings and focus on enjoying time with their families. Strengthening the CPP will increase the maximum benefit by about 50% over time, giving retired Canadians a more dignified retirement.
The next step in our plan was to lower the small business tax rate from 11%—
:
Mr. Speaker, I thank the member for bringing that up as well. He is a good friend of mine. I would like to thank you, Mr. Speaker, for your firm but fair decision.
The next step in our plan was to lower the small business tax rate from 11% when we came into office in 2015 to 10% in 2018, and then to 9% in 2019, while moving forward on proposals to fix a tax system that is inherently unfair to the middle class. The along with the made this intention clear last week during an announcement in Markham, and I certainly support it. To support this change, our government is also taking additional steps to ensure that Canadian-controlled private corporation status is not used by high-income earners to reduce their personal income tax obligations rather than supporting small businesses and job creation.
After announcing our intention to move forward with these proposed changes in budget 2017, the launched a consultation to hear from Canadians on how to fix the system so that it works for the middle class. As a result of the feedback that we have heard from small business owners, we will not be moving forward with measures relating to the conversion of income into capital gains.
During the consultation period, we heard from business owners, including farmers and fishermen, that the measures could result in several unintended consequences, such as in respect to taxation upon death and potential challenges with intergenerational transfers of businesses. Our government will work with family businesses, including farming and fishing businesses, to make it more efficient and less difficult for them to hand down their businesses to the next generation.
In the short term, our government intends to simplify the proposal to limit the ability of owners of private corporations to lower their personal income taxes by sprinkling income to family members. The vast majority of private corporations will not be impacted by the proposed income-sprinkling measures. Only an estimated 50,000 family owned private corporations sprinkle income, which represents only a fraction, 3%, of Canadian-controlled private corporations. In all cases, our changes will support small businesses, the middle class, and their contributions to the economy. We know that small businesses are the backbone of our economy and will do everything to help them grow.
Colleagues, in this day and age in which there is so much misinformation, it is crucial that we set the record straight and stick to the facts, which is what we are trying to do here today. From the very beginning, we have been perfectly clear about our intentions and our commitment to make sure that as our economy grows, the benefits go to the middle class and those working hard to join it, and not just to those who have already been successful.
:
Mr. Speaker, I rise today to speak to the motion and to update this House on our work and the progress we have made in delivering on our promise to build a stronger middle class. As with all members of Parliament, the worked closely with the Ethics Commissioner when taking office. As we all know, the Ethics Commissioner is tasked with preventing conflicts between private interests and the public duties of all 338 members of the House of Commons.
Last week, the announced that he was going above and beyond the Ethics Commissioner's recommendations by establishing a blind trust for all assets held by him and his family. These steps are being taken by the minister so he can maintain the public's trust and so there are no distractions from his important work to strengthen and grow the middle class.
From the moment we took office, we have implemented changes that will benefit middle-class Canadians. One of the government's first actions was to cut taxes for the middle class and to raise taxes on the wealthiest 1% of Canadians. This middle-class tax cut has benefitted and will continue to benefit nine million Canadians.
We also brought in the new Canada child benefit, which has lifted hundreds of thousands of children out of poverty. As a result of the CCB, nine out of 10 Canadian families are receiving more in benefits than they did under the previous system. With the CCB, we have ensured that child benefits are more generous and that those benefits are better targeted to those who need them most. According to economists and the Governor of the Bank of Canada, the CCB has directly contributed to increased household consumption and effectively stimulated our economy.
Our government also expanded the Canada pension plan to ensure that Canadians have security after a lifetime of hard work. The strengthened CPP will provide more money to Canadians when they retire so they can worry less about their savings and focus more on enjoying time with their families.
As everyone can see from our actions, the principle of fairness is embedded in our efforts to strengthen and maintain Canada's middle class. It is clear to us that when we have an economy that works for the middle class we have a country that works for everyone.
Now, let us talk about small business. We all know that small businesses are the backbone of our economy. Small businesses are a key driver of Canada's economy, accounting for 98% of all businesses and more than 70% of all private sector jobs. In recognition of how critical small businesses are to Canada's economy, the government is taking action to help them grow, invest, and create well-paying jobs. Our recent announcements regarding small businesses will continue that work.
Last week, the announced the government's intention to lower the small business tax rate to 10% in 2018 and then to 9% in 2019. As a result, the combined federal, provincial, and territorial average tax rate on small businesses would go from 12.9% from 14.4%, by far the lowest in the G7, and fourth lowest among OECD countries. This lower rate will mean small businesses can retain more of their earnings to reinvest in and grow their businesses while supporting the creation of jobs.
The also announced the government's intention to move forward on proposals to fix a tax system that is inherently unfair to the middle class. Right now, the fact remains that we have a tax system that encourages wealthy individuals to incorporate. It leads to a situation wherein someone making $300,000 can save as much in tax as the average Canadian earns in a year. That is not fair and our government is determined to fix it.
We have listened to small business owners, professionals, farmers, and fishers during the consultation and are acting on what we have heard to avoid unintended consequences. That is precisely why we are moving forward with a simplified proposal to limit the ability of a small number of high-income owners of private corporations to lower their personal income taxes by sprinkling their income among their family—
:
Mr. Speaker, perhaps the hon. member missed the opening remarks of my speech when I spoke about the motion.
I will continue with the important work our government is doing in ensuring our system is fair and that personal income taxes are not being unfairly used to simply lower a family member's tax for people who do not work in the business.
The vast majority of private corporations will not be impacted by this proposed income sprinkling measure. Only an estimated 50,000 family-owned private businesses are sprinkling income. This represents only a small fraction, around 3%, of Canadian controlled private corporations.
In addition, the government announced it would not be moving forward with proposed measures to limit access to lifetime capital gains exemption or with measures relating to the conversion of income into capital gains.
During the consultation period, our government heard from business owners, including many farmers and fishers, that the measures could result in several unintended consequences, such as taxation upon death and potential challenges with intergenerational transfers of businesses.
In the coming year, our government will continue its outreach to farmers, fishers, and other business owners to develop proposals to better accommodate intergenerational transfers of businesses, while protecting the fairness of our tax system.
As we continue to make progress, we will also continue to carefully consider the submissions the government has received.
As I conclude my remarks, I want to reassure my hon. colleagues that our government's plan to grow and strengthen the middle class is working. Job creation has been robust since we came into power, with 400,000 jobs created. In fact, over the last 12 months, nearly 90% of the jobs created were full-time positions. In the second quarter of this year, the economy grew by an impressively strong 4.5%.
Over the last four quarters, our economy has had its fastest growth since early 2006. The fact is that the Canadian economy is the fastest growing economy in the G7. This is news of which Canadians can be proud.
The Government of Canada continues to work to create a healthy and growing economy in which businesses generate well-paying jobs and where the middle class and those working hard to join it have confidence that they can succeed.
:
Mr. Speaker, I am honoured to be sharing my time with the member for .
This is such an interesting discussion. The member lauded the performance of the , but I want to take us back to the mandate letter that was given to the finance minister by the . He called on him to respect the values of a government. It stated:
We have promised Canadians a government that will bring real change--in both what we do and how we do it....We have also committed to set a higher bar for openness and transparency in government....It is important that we acknowledge mistakes when we make them. Canadians do not expect us to be perfect – they expect us to be honest, open, and sincere in our efforts to serve the public interest....you must uphold the highest standards of honesty and impartiality, and both the performance of your official duties and the arrangement of your private affairs should bear the closest public scrutiny. This is an obligation that is not fully discharged by simply acting within the law.
In summary, to me, this meant that not only the letter of the law must be upheld; the Prime Minister asked his ministers to go well beyond the letter of the law.
The finance minister let the public believe, including his fellow Liberal MPs and Bay Street colleagues, that he had placed his assets in a blind trust and he let them continue to sustain that belief for two years without correcting the record. Instead, he has been in a position to profit from policies he has advanced as finance minister over that two year period. The finance minister let that untruth stand. He took action last week, two years too late. It seems the only reason he took that action was because he was finally caught.
The finance minister was directed to take the highest ethical path. Instead, the government is barely scraping by. The minister's self-congratulatory tone last week about his belated tidy up of his ethical lapse is totally out of line. He belatedly took action that he should have taken two years ago if he had followed the Prime Minister's direction or the Ethics Commissioner's secondary advise, and if he had any common sense or clue about how this would play out in public.
This is particularly troublesome, given the hard summer we have had in the small business and entrepreneurial community, being accused of similar ethical lapses and exploitation of tax loopholes.
Paul Williams, a constituents from my riding of Nanaimo—Ladysmith, wrote:
While I certainly believe in tax fairness, I do not support what the Finance Minister is proposing and the uncertainly and harm that will result. The changes being contemplated go against the notion of tax fairness. In essence, the changes being contemplated will single out privately held business owners--many of whom are middle-class income earners--treating them worse than publicly held and foreign controlled businesses.
I have hundreds of letters like this. The finance minister's proposal scared small business owners and it unjustly accused them of wrongdoing.
As it turns out, the real tax loophole exploiter was the finance minister, which really is the icing on the cake of a really bad four months in the government. His self-congratulatory air last week of suddenly dismantling a so-called tax fairness proposal, which he said back in July he would not change a word of, and had in fact already written the legislation, was also out of line. If he had done what a real legislator would have done, he would have said that it was a consultation and he would have asked people what they thought. He would told people not to be alarmed, that he might or might not do it. Now, all of a sudden, he says that he is willing to hear the advice and willing to keep his election promise on the small business tax cut, which he previously said he would cancel.
He is now dealing with legislation. He is going to accept the rules that our NDP parliamentary leader proposed on facilitating the transfer of intergenerational companies. Six months ago, the Liberals voted it down. Then last week they used it as cover for a real mess. That shows they really do not have the ear and the tone of the country.
At the time of his election, the finance minister owned two million shares in Morneau Shepell worth $32.1 million. Apparently, that holding, as of Friday, would be worth $42 million. That means he has profited over $10 million over the last two years as finance minister.
However, he did not put them in a blind trust. He did not sell them in an arm's-length transaction, as required, within 120 days of taking office. It has since been revealed that Morneau Shepell has a contract with the Bank of Canada worth more than $8 million. The was asked nearly 20 times about his million shares that he still owns in Morneau Shepell, worth $20 million, before he admitted that he would actually give an answer. Finally, he failed to reveal the corporation that houses his French villa. CBC maintains that the minister only disclosed that corporation to the Conflict of Interest and Ethics Commissioner just last month, after CBC discovered its existence, and, really, that is when he started to answer questions on it.
It is undeniable, when we turn to Bill , that if it were to become law, Morneau Shepell would significantly benefit in business and revenue, and as a massive investor, the would personally benefit from the passage of that bill. The minister brought that bill to Parliament. He could have had another member of the party do that, but, instead, he was the lead on it. This was done without consultation and certainly not with the support of constituents in my riding.
Morneau Shepell is a strong proponent and manager of the services related to target benefit pension plans, and could be just one of four firms in the country that would benefit from new pension administration rules if Bill becomes law. In fact, when the was at the helm of Morneau Shepell, it lobbied for increased use of target benefit pension plans and became the lead consultant for the Government of New Brunswick in exactly implementing this.
Five days after Bill was tabled, the value of shares in Morneau Shepell increased by almost 5%, which is an increase that could have allowed the minister to make as much as $2 million. This is really not a middle-class problem. At the very least, this is a striking perceived conflict of interest, since the minister was in a position to further his own private interests through his public duties as a finance minister.
Bill , as much as it benefits Bay Street, would significantly harm workers and pensioners.
Here is what residents of Nanaimo—Ladysmith have told me about Bill .
Pieter Terpstra from Nanaimo writes:
Please, say NO to bill C-27. I am a retired school teacher/logger/proprietor who relies solely on small pensions to survive. I do not want them converted to a target benefit plans. I spent my life working at many different jobs and it's wrong, for them to take away my security in my old age.
It's shameful that [the Prime Minister] promised to protect Defined Benefit Plans and now the government is considering this Bill to change that.
We also have a description of how harmful this is from Deborah Zellermeyer from Ladysmith. She writes:
Bill C-27 allows employers to convert good, defined benefit pension plans, which provide secure and predictable pension benefits, into a much less secure form of plan. Target benefit plans only aim to provide benefits, and they shift all the risk to active plan members and retirees.
Even Harper did not propose the bill, although he floated it, and the opposition was so strong.
The Ethics Commissioner said that she outlined the possible conflict when the met with her two years ago. She said that there is a loophole she thought should have been fixed, as had been recommended to the previous government as well. Therefore, as New Democrats, with our leader, Jagmeet Singh, we are trying to propose positive alternatives.
We want the Ethics Commissioner to launch a formal investigation into the . We want the finance minister to withdraw Bill . We want the Liberal government to take the advice of the Ethics Commissioner and close these loopholes so that no future minister ever stumbles into the same morass that the finance minister has, fulfill the promise that Liberals offered to voters two years ago, and restore some faith in the current government.
:
Mr. Speaker, as Jack Layton used to say, I rise more in sadness than in anger today and I resent very much comments that somehow the motion today involves, to quote the member from Hamilton, a “personal attack”. If one were to read the motion before Parliament today, one would understand that we are seeking amendments to avoid the situation that the found himself in.
Legislation in other jurisdictions, I will say, adds not just the term “conflict of interest” but “apparent conflict of interest”, which has been the standard, for example, in the province of British Columbia's legislation for decades. Had that section been in the act, I do not think we would be here, because most Canadians would accept that there is the perception that a reasonable person would have, reasonably well informed of the situation, that the minister has been in an apparent conflict of interest.
Whether the letter of the Conflict of Interest Act was broken, how many people could say with a straight face that the spirit of the act has not been broken? We want to avoid that in the future. Ever since the Sinclair Stevens scandal of many years ago, people have consistently sought for an apparent conflict of interest standard to be added to the legislation. When the ethics committee met in 2014 under the leadership of Pat Martin, it was accepted that there should be amendments to the legislation, and the Conservatives did none of it. After two years, the Liberals have done none of it, and here we are today.
If the had accepted the letter of the law and had simply told the Conflict of Interest and Ethics Commissioner that he would have a conflict of interest screen, then he would have had a staff member decide when he was or was not in conflict, whether that was adequate, and whether they were “controlled assets” because they were in a numbered company controlled by the member and then those shares were held by another company controlled by the member. If somehow Canadians thought that was just fine, surely the abysmal failure, error of judgment, of the minister has to be examined here today. That he is in an apparent conflict of interest that a reasonable person would have to conclude exists seems beyond doubt today.
However, even if it is wrong for a finance minister who regulates the pension industry, who gave a speech in 2013 concerning Morneau Shepell's work in New Brunswick, arguing for target pension plans instead of defined benefit plans, which clearly would benefit a company like his, and then introduced Bill in October of 2016, a bill that would make the world safer for companies like Morneau Shepell, what kind of judgment does the have in doing so? How can Canadians have confidence in the minister, even if the technical requirements of the Conflict of Interest Act, weak though everyone knows it to be, including the commissioner, that error of judgment stands apart.
That is what the NDP is saying today. It is calling for an urgent amendment to the Conflict of Interest Act. If Liberals do nothing but add what British Columbia has had for decades, that there should be an apparent conflict of interest where a reasonable person, well informed, looks at the situation and says there is a reasonable suspicion of conflict, that would be enough. Then the commissioner would be able to hold a minister to account where that standard was breached.
My province is no stranger to conflict of interest. That is the section that has been used countless times by commissioners in the past. That is the section that the commissioner and others have sought to have added for years, but yet nothing gets done. We find ourselves in this embarrassing situation today, a situation, according to Bloomberg News, where the minister himself called for legislation allowing target benefit plans in a 2013 speech on the company website of Morneau Shepell and then his shares rose 4.4% in the week after the legislation, Bill , was introduced, where the benchmark TSE composite index actually went down 0.2% during that period.
Canadians get it. This was a colossal error, unless the minister recused himself. After countless efforts to have him acknowledge or explain, I do not believe today we have had an explanation as to whether he recused himself, as the act clearly requires in circumstances of that sort. That is what is at issue. That is why we are here today.
Did he divest himself of the shares? Did he put them in a blind trust? Not really. Did people believe that he had done so, including his Liberal colleagues on Twitter? Yes, they did. However, suddenly, because The Globe and Mail reported that he did not do that, he decided it was time to clear the deck.
He owns a numbered company, which, as the commissioner quite properly says, is a separate legal entity. A corporation is different from the individual minister. I understand that. However, if he owns shares of a company that owns shares of a company that he controls, and he watched his shares go up by $2 million, allegedly, during that period, after he chose, as the minister responsible for pensions, to introduce pension reform, do Canadians expect that not to be something a responsible opposition would bring forward?
The the other day said that this is “petty politics”. This is somehow “gutter politics”. With respect, this has to be fixed urgently. That is what the tenor of this motion is. It talks about calling on the to apologize for breaking trust and about calling on the government to immediately close the loophole in the Conflict of Interest Act, as recommended by the Conflict of Interest and Ethics Commissioner, to prevent a minister from personally benefiting.
This is not about intent. This not about us alleging that this was or was not done knowingly. That is not what is relevant in the current conflict of interest test. The test is whether a reasonably well-informed person would think that it has caused a problem.
Professor Lorne Sossin, the dean of Osgoode Hall Law School, when he testified in 2013 before the ethics committee, talked about lots of jurisprudence on the reasonable apprehension of bias test. It seems ironic that regulators are constantly subject to that reasonable apprehension test, which is whether a reasonable person would perceive a lack of impartiality, when a minister of the crown is not. This seems to be where we are today. That is why it is argued that this legislative change is so urgent.
When he testified before that same committee, British Columbia's conflict commissioner, Mr. Fraser, said that “if there is a suspicion or if there's a taint [of conflict of interest], then that's enough for an investigation.” That, of course, has occurred on countless occasions in British Columbia, but there is no such test in the circumstances here.
This is the problem of judgment that really needs to be addressed. Should the minister have recused himself? Yes, he should have. Should he have divested before he made decisions, as the regulatory minister for pensions, that had an obvious impact that would benefit him and his company, in which he held so many shares. Yes. Knowing that, and simply saying that because we have a conflict of interest screen, that is sufficient, suggests an error in judgment that Canadians have a right to have addressed today.
In summary, the NDP is asking for the Conflict of Interest Act to be amended. It is asking for the minister to finally apologize for breaking the trust and giving politicians of all stripes a bad name. Most significantly, it is asking to get this legislation fixed so we can join the 21st century, as other provinces and jurisdictions have, so this kind of conflict does not occur again.
:
Mr. Speaker, I will be splitting my time this afternoon with my friend and colleague who I sit with on the Standing Committee on Finance, the member for .
Before I begin my formal remarks, I want to discuss the concept of pensions in Canada. I had the pleasure of working in downtown Toronto for a number of years. I have an economics and finance background. I sat on the CICA user advisory council panel, which is the chartered accountancy panel, and provided continuous feedback for a number of years.
I also was a pension analyst at a ratings agency. I helped put together the annual study on pensions in Canada, how solvency ratios and pensions were performing, and what the coverage ratio was. With respect to pensions, we noticed over a number of years that the defined benefit pension plans of many firms were becoming fewer and fewer for various regulatory and economic reasons.
It was this government, under the current , the member for , who, working with the provinces, achieved an enhanced Canada pension plan. The prior government was unable to achieve that in 10 years. This is important. If we look at the Canada pension plan, it is transferable, indexed to inflation, people can move it from one job to another, it goes to all Canadians, and it is actuarially fully funded. It was our government, under this minister, that achieved that result. That is remarkable. That speaks not only to the character of the , but to him as an individual. He understands complex issues with respect to finance and economics based on his career. It also speaks to his ability to bring the provincial and territorial ministers around the table to reach an agreement for an enhanced CPP that will benefit millions of Canadians today and tomorrow. It will benefit my children and all of the children in this entire country. We should be proud of that.
When we talk about pensions, I know that members have thrown about words like “defined contribution plans”, “hybrid plans”, “target benefit pension plans”, “RPPs”, and “RRSPs”. We will have that debate. I would have that debate all day if I need to, with everyone here, all my colleagues. However, when it comes to the facts and substance, it was this government that sat down with the provincial and territorial finance ministers and got the job done. We need to be proud of that.
Before I go into my formal remarks, I had the pleasure to host the this summer in my riding of Vaughan—Woodbridge. We had a great tour of an apprenticeship program. We met with the carpenters union in my riding. We had a tour of its facility and saw the great work its members are doing in Ontario and across the country. We also had a chance to meet with the local business owners. We heard the praise from local business owners about what we are doing for the economy, how we are investing in infrastructure and the middle class, and creating good jobs that will provide the benefits for my kids and for future generations. That is the I know, a finance minister who cares deeply about what is going on in our economy and about the future of all Canadians.
I am pleased to rise today in the chamber to speak on the recently concluded consultation that our government undertook regarding tax planning using private corporations. However, before I speak about our plan to make our tax system fairer, I would like to talk about what has brought us to this point.
Since we formed government about two years ago, we have always been clear about our priorities. We said that we would strengthen and grow the middle class. That is why our first priority was to make our tax system fairer by raising taxes for the top 1%, so we could cut them for nine million Canadians, providing over $20 billion of tax relief over a four-year to five-year period. That is why we introduced the Canada child benefit, the CCB, lifting hundreds of thousands of children out of poverty and making a difference for millions of families across this country. By investing in our people and our communities, we have made important strides toward a fairer Canada, a better Canada.
Today the Canadian economy is resurgent. Everywhere we look there are positive indicators that tell us that the wind is in our sails. Since the fall of 2015, 400,000 new jobs have been created, most of them full time. That is a great thing. Our economy is now growing faster than any other G7 country.
However, we know that as our economy grows, we need to ensure that all of the benefits of economic growth that accrue are given to every Canadian, so that all Canadians feel they have a stake in this economy and this country, and that their standard of living is rising. All Canadians, not just the wealthy few, should experience the benefits and opportunities that come with an economy that is firing on all cylinders. Therefore, we cannot be indifferent when we find instances within our federal tax system that give some people an advantage and that others cannot access—
:
Mr. Speaker, I do like the word “tangent.”
I also like the fact that the has announced a number of additional steps, including establishing a blind trust for all assets held by him and his family. He is going above and beyond what is required and above and beyond what we want but he is doing the right thing and I applaud him for that. He is an individual for whom I have a lot of respect. He is an individual who has done a lot for his community. He has served on many boards, such as C.D. Howe, St. Michael's Hospital, and a number of others that benefit the broader community.
We cannot be indifferent when we find instances within our own federal tax system that give some people an advantage that others cannot access.
We have found that in some cases someone earning $300,000 with a spouse and two adult children can use a private corporation to get tax savings that amount to roughly what the average Canadian earns in a year. Such tax planning strategies are legal, but that does not make them fair. Tax fairness is a prominent issue for me. It is an important issue for our caucus. It is an important issue for all Canadians. I am glad to see our taking leadership with regard to tax fairness.
The need to level the playing field is at the heart of our current consultations on proposals to ensure equity in Canada's tax system while maintaining Canada's low and competitive business tax rates that support growth and job creation.
This summer the government put forward proposals that would address tax planning strategies that may be employed by wealthy and high income Canadians to pay less tax.
We inherited a system that encourages wealthy individuals to incorporate in order to pay less tax. That is a fact. This means someone making $300,000 can save about as much on tax as the average Canadian earns in a year, $48,000. That is not fair and we are going to fix it. Under the leadership of the , I am proud to say we are going to fix that. We are making changes to address tax advantages that only the richest individuals using high-priced accountants can take advantage of.
We have listened to small business owners, professionals, farmers, and fishers during the consultation and we will act on what we have heard to avoid unintended consequences.
I met with a number of tax experts in the riding that I represent and also with former associates who work in downtown Toronto on Bay Street, tax experts. I have listened to them and I have heard the unintended consequences that the consultation paper provided. I spent half of Labour Day and most of Thanksgiving Day on it.
We are listening, because that is what a government does. It does listen to its constituents and it does listen to stakeholders. That is what this government is doing.
We committed to reducing the small business tax rate in our platform and we followed through on that. By 2019, the tax rate will be down to 9%, saving businesses across this country up to $7,500, that they can use to reinvest in equipment, in salaries, in training, and so forth, whatever they choose to use it for.
That is why we see SMEs and formation rates for small business in Canada at robust levels. People have confidence in our economic platform. They have confidence in the and will continue to do so.
Right now there is upwards of $300 billion in passive savings sitting in private corporations not contributing to the fullest amount to the growth of the economy or business. Eighty per cent of this money is held by just the top 2% of the wealthiest corporate owners.
As we move forward, we will create a $50,000 threshold on investment income annually, or approximately $1 million in savings, to ensure business can continue to save for contingencies or future investments in growth.
Under our plan, 97% of businesses will see no tax increase on investment income. Changes will protect past investments and income from those investments.
We will also ensure that venture capital and angel investors are not impacted. We want to ensure that the next generation of innovation occurs here in Canada. The recent announcement in downtown Toronto with Google and Alphabet making their investment is literally going to transform the waterfront and create thousands of jobs—
:
Mr. Speaker, I appreciate the opportunity to participate in this debate.
I was not in the House last week or the two weeks before that because I was participating, along with parliamentary colleagues of all political stripes, in the prebudget consultations of the Standing Committee on Finance. We had the pleasure of criss-crossing this great country to meet with people and talk about their hopes, wishes, and aspirations for the 2018 budget.
During these consultations, I read in the newspapers that there had been quite a kerfuffle here in Ottawa, but it was good to be on the ground talking with people about their concerns. These concerns, I might add, did not always match up with what we hear in the House, which is unfortunate. I want to thank my colleague, the member for , for his comments. I appreciated his summary. As for me, I would like to briefly recap the issue before us.
Since his appointment, the has been working closely with the Conflict of Interest and Ethics Commissioner to ensure that all the rules are followed, both for him and for all parliamentarians.
The finance minister announced that he would not just follow the Conflict of Interest and Ethics Commissioner's recommendations but that he would go the extra mile in order to maintain the public's confidence as we continue our work to grow Canada's middle class.
The finance minister also announced that he would take additional steps. First, he is going to set up a blind trust for his assets and those of his family. Then, he will continue to work with the Ethics Commissioner and an administrator to turn over his family's assets related to Morneau Shepell in an orderly and appropriate manner. As an additional precaution, and this is a message to all parliamentarians, he will continue to use a conflict of interest screen to prevent conflicts of interest, unless the Ethics Commissioner tells him otherwise. There. I addressed the issue before us.
I do wonder, however, why we are even talking about such ridiculous issues. We all know that the is an honourable man who followed both the letter and the spirit of the Ethics Commissioner's recommendations. The fact that we are debating issues such as this one just shows that things are going well. The economy is growing. Things are going so well that the opposition parties were taken by surprise and they essentially had to make up some ethical issues. That is the real reason.
There has been a lot of good news regarding the economy, and I know it is hurting the opposition. Since December 2015, Canada's unemployment rate has been the lowest it has been in nearly a decade. That is impressive and incredible. However, that is not all. Over 400,000 jobs, most of them full-time, have been created since we took office. That is outstanding.
That is a great record for any government. We are proud to have made those accomplishments since this Liberal government took office in 2015. That is progress.
That is not all we have done. We have also helped the Canadian economy, something I could talk about at length. As my colleague from and often says, good news bears repeating. The Canadian economy is growing faster than it has in over 10 years. That is incredible, and it is in fact because of the measures introduced by the and adopted by Parliament. We adopted those measures, but there is a certain political party that never supported them. Unfortunately, that is its official position. That party was there when we decided to lower taxes for the middle class and raise them for the wealthiest 1%. Unfortunately, that party voted against those measures. I do not take any pleasure in saying this. That party voted against the Canada child benefit that we created and that lifted over 300,000 young people out of poverty. Lifting children out of poverty is a great thing. This is good news.
Our plan to grow the economy in a way that benefits the middle class and those working hard to join it has been successful. That is why we are where we are today.
It is too bad that the opposition decided to debate this motion because we could have talked about other issues that are extremely important, not just for the Canadian economy but—
:
Mr. Speaker, I will be splitting my time with the member for .
Today we are debating an NDP motion calling on the to apologize to the House and to Canadians for breaking their trust and calling on the government to close the loopholes he exploited in the Conflict of Interest Act, in order to prevent a minister of the crown from personally benefiting from their position or creating the perception thereof.
There are some people in this life who are clearly lacking in subtlety, and the Minister of Finance is unquestionably one of them. Fortunately, this gave us the chance to note that the minister had placed himself a situation that, at the very least, presented the appearance of a conflict of interest, that he had abused the trust of the House and the Canadian people, and that he had used a loophole in the Conflict of Interest Act for his own personal gain.
The Conflict of Interest Act clearly states that:
...a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests...
In the weeks following his election in 2015 and his appointment as finance minister, the minister suggested that he had complied with the Conflict of Interest Act, which, generally speaking, requires members to divest themselves of their shares or to place them in a blind trust if their duties could place them conflict of interest. However, we recently learned that this is not what the minister actually did. Instead, as we finally found out, the minister took advantage of a loophole in the Conflict of Interest Act to place his half of his shares in Morneau Shepell in numbered companies. In other words, the finance minister no longer holds shares in Morneau Shepell; the numbered company does. However, since he is the sole shareholder in the numbered company, this is just a matter of semantics.
The minister betrayed the trust of Canadians and the House by leading them to believe that he had followed the spirit of the Conflict of Interest Act when really he had made use of a loophole. The spirit of the act serves to ensure that those serving in the role of minister do not find themselves in a real or perceived conflict of interest. If he had truly been abiding by the spirit of the act, the minister would have placed his shares in Morneau Shepell in a blind trust or simply divested himself of all of his shares.
Instead, what he did was use a loophole to circumvent the spirit of the act and put himself in a position where he could personally benefit from the policies he implemented as the Minister of Finance. He did that for two years.
None of this passes the sniff test, especially since we are not talking about pocket change here. The shares in Morneau Shepell that the Minister of Finance directly or indirectly owns are valued at over $20 million as of October 20, 2017. It seems to me that any reasonable person standing to become finance minister that owns more than $20 million in shares in a company that bears his name would have seen a huge red flag with the word “danger” flashing in neon lights, and perhaps asked himself whether he should put all those assets in a blind trust so as to avoid the appearance of conflict of interest. That all seems like common sense to me.
There is more, however. On October 19, 2016, on the first anniversary of his election by the way, the Minister of Finance introduced and sponsored Bill , which would increase the use of target benefit pension plans. The Minister of Finance's former company, Morneau Shepell, is a strong proponent of target benefit plans and manages related services. Those plans are that corporation's bread and butter. Should Bill C-27 pass and come into force, the company stands to be one of only four corporations in Canada that would benefit from the new pension administration rules.
While the current finance minister was in charge of Morneau Shepell prior to being elected, the company lobbied for greater use of targeted benefit retirement plans and became the Government of New Brunswick's lead consultant in implementing its new pension plan.
The 's company would absolutely cash in by helping existing clients switch to targeted benefit plans and producing the annual actuarial valuations that would be mandatory under the new law. The current system requires them only every three years. That would generate even more business for his company. Clearly, as a major shareholder in his company, the minister would derive personal financial gain if this bill were to become law.
The worst of it is that the Minister of Finance is the one sponsoring this bill. Ordinarily, because he still holds shares in a corporation that would directly benefit from the legislation, he should have declared his interest and recused himself from any cabinet discussion of the bill. Instead, he celebrated his first year in office with the gift of bill sponsorship. That is a pathetic way for a Canadian finance minister to behave.
To top it off, within days of the introducing Bill , Morneau Shepell shares were up almost 5%. We can all agree that that is no coincidence.
I repeat:
...a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests...
We are no longer talking about appearances here. The Minister of Finance is in a direct conflict of interest, but he waited for it to be discovered and for the media to report on it before fixing the problem. On top of that, when he was elected in 2015, the value of the minister's shares in Morneau Shepell was $32.1 million. As of last Friday, as I mentioned earlier, his shares were worth $42.6 million, which means that his shares generated a profit of over $10 million in the past two years. If he still owns half of what he had in 2015, that means an extra $5 million in his pocket, while he is the Minister of Finance.
When the information was made public last week about his shares in the company bearing his name, it took us asking him nearly 20 times before he would finally confirm that he still has considerable holdings in Morneau Shepell, as though he had something to hide. This is like a kid who was caught with his hand in the cookie jar, with chocolate around his mouth, but who still denies doing anything wrong. This reminds of the time when one of my brothers was caught licking another brother's ice cream cone, and he said that his tongue simply fell on it.
This is not a matter of cookies or ice cream. We are talking about millions of dollars. When the minister finally held a press conference to announce that he would divest himself of his shares, the price of his company's shares dropped by $0.41 in the three following hours, costing the minister an estimated $410,000. It is easy to see why he hesitated to respond and do what was necessary to put an end to this situation, which was strongly perceived as a conflict of interest. How can the minister continue to try to lead us and Canadians to believe that he went into politics for the right reasons and that he is really working in the interests of the middle class and those working hard to join it?
How many middle-class Canadians earn $5 million in two years? We now see why the finance minister was reluctant to tax the wealthiest Canadians. I grew up in a family where my parents had to work hard to make sure that their children had everything they needed in life, and I want to thank them for that here. Thank you, Mom and Dad. I decided to go into politics to help families have the same opportunities that my parents gave me. We are not here to help the rich get even richer.
At the very least, the minister should apologize to Canadians and members of the House for betraying their trust and leading them to believe that he was carrying out his duties in the interest of the public, rather than in his own personal interest. Ministers have lost their limos for far less than this. The government must also immediately commit to eliminating the loophole in the Conflict of Interest Act to ensure that the sorts of antics we are seeing today never happen again and that the spirit of the Conflict of Interest Act can no longer be circumvented by semantics.
:
Mr. Speaker, it is a pleasure to rise today on this opposition day motion, presented by my colleague. The last bit of exchange was interesting. I hope Mary Dawson is listening to this, because it speaks to the arrogance taking place here in the way she and her office are being used by the government. The just got up and said, “...trust me, Mary Dawson...will be in touch.”
The , while espousing the independence of Mary Dawson, has just indicated that she is going to take action. He is giving a directive to this chamber and to the public in general about someone else. This is one of the most disturbing things taking place today. Some of the defence that has been taking place, the shield of the ethics office, which operates under legislation made in this House with the dominance of the Liberal Party and its ethical perversions over the years, still has not resonated that it actually has the capacity to deal with the conflict of interest in this chamber. The member opposite is now suggesting that Mary Dawson is going to contact every single member of Parliament, and to trust him, she is going to do that. The amount of arrogance in that is profound. It comes to the real problem we are talking about, the confidence and trust of the people.
The motion we tabled in the House of Commons is simply to live up to the Liberals' standards and ethics. It is almost like we have to apologize, and Canadians have to apologize that the Liberals dined out on this in 2015. They said they were going to be different than their own selves. In fact, we would often hear their own members contradicting each other on the electoral campaign, including the member for talking about other Liberals in the past and their past indiscretions in regard to ethics, standards, and behaviours, going back to everything from the Chrétien years to the most recent being the former prime minister, Paul Martin. He was called out for sailing ships with different flags so he could save on taxes, and not actually have the people serving on those ships get the same standards that Canadians deserve in their own workplace. That is reality. That took place. The former finance minister used ships of convenience and flags of convenience of his own registered companies to get lower working standards, lower wages, and avoid taxation for his home country. Shame.
What have they learned from that? They have learned nothing. We are apologizing for the fact that they campaigned that they were going to be different. They said they had changed this time. They were going to drink from the other glass, not the same one they had been drinking out of during the Chrétien and Martin years, with all those ethical breaches and standards they had in the past from Dingwall, to Gagliano, to all those things in the past.
Here we are. They have created their own mess because their own could not figure out a basic thing that all of us know: when something in front of us seems wrong, usually it is, and do the right thing. We have to stand here and apologize and basically call them out for the fact they have not lived up to what they promised to be.
The motion is crafted in a way to deal with the facts. The first one is “(a) after being elected to Parliament in 2015, led Canadians to believe that he had placed his shares in Morneau Shepell into a blind trust, while never having done so”. It was not someone else who led people to believe that. It was the .
I am so sorry that the promised to do something and he never did. I guess it is my fault. I guess it is my colleagues' fault. I guess it is Canadians' fault that he did not do what he said he was going to do. That is what we are talking about here. It was not thrust upon him. It was something he said. He willfully went to the public, built that trust, and said he was going to do that. He never did it.
The second one is “(b) used a loophole in the Conflict of Interest Act to place his shares in a private numbered company instead of divesting them or placing them in a blind trust”. What is important is, people have seen the key moments in modern history where there have been leaks about individuals using tax havens and loopholes, from the Isle of Man, to Bermuda, to Barbados, and other places.
People have had enough. They cannot get prescription drugs. They have a hard time paying the rent, are worried about the future, and their jobs are more precarious. At the same time, people in our own civil society are using the system that is supposed to defend them. This place, the House of Commons for the common people, has set in place a taxation process to be fair and equitable, and it allows people with an accountant and lawyer to skirt that. It is a cottage industry that has turned into an extreme example of the inequity in society.
This has to end. I hope people take this to heart, because this is the problem that comes with fairness. This system basically defends a colonial system of taxation of the poor versus the wealthy. We have created a system where the better an accountant and lawyer one hires, the less money one pays, even after paying them off, than the neighbour down the street who is trying to do a nine-to-five job and just wants to have 40 hours a week with benefits to make sure their child can go to school in the future. That is what is at odds here.
Look at the wording of the motion. Let us remind ourselves what a numbered company is, by its definition. A general definition states, “Numbered companies may include, but are by no means limited to, new companies that have not yet determined a permanent brand identity, or shell companies used by much larger enterprises for various purposes.”
Therefore, if one can afford a lawyer and a numbered company that does not have a permanent status, purpose, or anything, then one has the chance to shelter their money by using the tax laws, and those accountants and lawyers, to pay less taxes. It does not have to be a good idea or be innovative. No, not at all. It does not have to be any of those things. It could be a villa or something else that one dreams up or creates that then has a number to it.
Ironically, we talk in this motion about Bill , which is the next point on this, an act to amend the Pension Benefits Standards Act. That is a conflict of interest, at least on appearances. My goodness, how can we have a not even understand that recusing himself would be the number one thing?
There is another piece of legislation that has been forgotten in the debate today, which is Bill C-25. Bill looks at a series of different things that relate to not only pensions but also shareholders and the Corporations Act, to find out how shares can be hidden and sheltered. What the members on the other side did is to create a piece of legislation that buffered the real debate out of Bill C-25 for issues that are complicated, bearer shares and all these different things. They were just more ways to squirrel away the money if you are rich versus that of anyone else. It slid on through here and reinforced that this place is no longer the House of Commons, but a house that represents a taxation system for the few who can have accountants and lawyers.
That bill passed, and we had amendments on it to provide more clarity and transparency. However, what did we get? Why is it that the minister chose random numbers for personal interest? When one looks back at that in the history of time, again, it is about sheltering personal interests. Sheltering personal interests and using the law to do so should not have to be explained here, if one came for that reason. It should not have been taught.
Most importantly, as I conclude here, it is what the Liberals said they would do differently. They said they would be different than themselves. That is who they said they would be different from at that time.
I remember these things. We can go back and watch debates and check out the former Prime Minister Paul Martin and Canadian steamships. This is the second time coming.