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EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, June 11, 1996

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[Translation]

The Chairman: In accordance with Paragraph 106(3) of the Standing Orders, the Clerk has received a request, dated June 5, and signed by four committee members, to hold a meeting on Chapter 1 of the Report of the Auditor General of Canada, tabled May 7.

For the benefit of everyone here, I will read this letter.

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It is signed by members Benoît Tremblay, Yves Rocheleau, Elwin Hermanson andJohn Williams.

The English version of the same letter was also signed.

Hearing the comments of colleagues with respect to this request to hold a meeting would be in order.

Mr. Tremblay.

Mr. Tremblay (Rosemont): Given what occurred during the last meeting, it is clear that we have requested this meeting on Chapter 1 to bring the Liberal majority to its senses. We would imagine that they have had time to consult their members.

During several discussions, it was stated that people should be available to attend the meetings of the Standing Committee on Finance. Tomorrow, the Deputy Minister of Revenue Canada will be available since he will be appearing before the Standing Committee on Public Accounts to discuss Chapter 11.

How can one explain to the people that this deputy minister, who was in this position back in 1991 and is still there today, is available to examine Chapter 11 but not Chapter 1? The decision made with respect to Chapter 1 is of concern to him; he, along with others, made an undocumented decision that may, as a consequence, result in the loss of several hundred million dollars. You would like to postpone studying this motion until the fall.

We are being clear. We are trying to make the Liberal majority understand and accept the fact that we must proceed immediately with the review of Chapter 1, pursuant to the motion that was adopted by the entire committee, which clearly stated that priority should be given to the examination of Chapter 1, and that this was urgent. Moreover, the member from Brome - Missisquoi said so in the newspapers. He issued a press release to repeat this message. However, it would appear that urgent means that this hot topic will be dealt with in October.

We must stop wishing for the situation to cool down. The Standing Committee on Public Accounts wants to review the Auditor General's Report for the precise reason of going further, and going further in public. I fail to understand why, once again, we are being denied an opportunity to review Chapter 1. Any further refusal to study this chapter would truly be tantamount to denying the role and the mandate of the Standing Committee on Public Accounts.

We have been given a fundamental mandate. I believe that the Liberal majority is obviously now waging an attack against the very status of the Standing Committee on Public Accounts. I would like to give you an opportunity to overturn this decision and I am making you a proposal in this respect. I have been assured that both Mr. Minto and Mr. Elkin are available next Thursday.

Therefore, Mr. Chairman, I move that the Chairman of the Standing Committee on Public Accounts convene a meeting, to be held next Thursday on June 13 at 9 o'clock, with Mr. Minto and Mr. Elkin from the Office of the Auditor General of Canada appearing as witnesses, for the purpose of studying the transfer of family trusts as revealed in Chapter 1 of the Report of the Auditor General of Canada dated May 1996.

The purpose of this motion, that I could amend so that the time suits certain individuals, is clear.

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Discussions were held between committee members and whips. This is an opportunity to overcome some stubbornness that didn't make sense.

In the short term, the most important chapter which will clarify things for Canadians is Chapter 1. This chapter casts doubt on the credibility of the tax system for Canadians. We have an opportunity to study it now while people are available.

Mr. Chairman, I request that you convene this meeting.

The Chairman: We have heard the motion. Mr. Telegdi has requested an opportunity to speak.

[English]

Mr. Telegdi (Waterloo): Mr. Chairman, I really wish that we would try to divorce the workings of the committee from blatant politics. Unfortunately, in the last number of meetings we've really got bogged down and got precious little done. So when the member talks about being counter-productive, I think that what has happened in this committee has been totally counter-productive. The May 8 date gets mentioned. What doesn't get mentioned is that it was before it took over the agenda of the finance committee of Parliament.

It went to the finance committee of Parliament because a great deal of pressure was applied by the official opposition to have it become a major topic at the finance committee of this Parliament. This is fine, and we agreed to it because it is the finance committee that deals with changes in legislation on that particular issue. If there were still questions, then certainly this committee could deal with other parts of it, particularly the actions that were carried on under the mandate of a previous government, which I might mention was not a Liberal government.

It seems to me that we had some kind of agreement up to the last meeting. I note thatMr. Tremblay is not a member of the committee or an associate member of the committee. I invited him to become one of the two, but the fact of the matter is that he showed up today at 4:25 p.m. The Reform member showed up at 4:22 p.m., not being much interested in the previous deliberations that went on here. Basically, as we're going to be going public, on air, they wanted to put certain things on the record.

So let's be very clear that I believe we accomplished precious little at the last meeting, but what we did accomplish was that we were going to try to salvage something so we can have something to show for the 12 chapters that we got from the Auditor General in the May 1996 report and have some kind of output by this committee, which unfortunately has been filibustered for much too long.

I reject totally what Mr. Tremblay said. We had a resolution that passed in committee the last time, and it was that we would be looking at...as the first item of business in the fall session.

I again invite Mr. Tremblay to become either a regular member or an associate member of the committee so he will have some standing, because certainly he bears some responsibility for the lack of output that we're going to have on this report by the Auditor General.

I really wish that partisan politics would not dominate this committee.

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I mentioned before that it was the official opposition that pushed to have this become a top priority at the finance committee. In practical reality we have much more work assigned to us by the Auditor General's report than we can ever accomplish. It doesn't make any sense to be duplicating the work of another committee.

I would hope that gross partisanship is reserved for the House, particularly during Question Period. Particularly in this committee, which is so very important in making sure that Canadian taxpayers get value for their tax dollars, we should try to do a conscientious job and try to divorce it from politics.

I think this committee works best when you can have the various members of the committee working towards a common goal. It has happened before and I hope it will happen again. We should leave partisanship outside the door before we come into the committee and take some responsibility for the amount of work we actually get done in terms of reviews, because it has not been a good show.

[Translation]

The Chairman: Before turning the floor over to Mr. Paradis, I would like to remindMr. Telegdi of what I told him last week. It is my role to chair, and as chairman to ensure that the procedural rules are respected. I would respectfully remind you, Mr. Telegdi, that the committees are an extension of the House of Commons.

As is the case in the House, it is forbidden to comment on our colleagues' absences and times of arrival. Since I have been in the chair, this is the second time that I have asked you to refrain from saying that Mr. Williams arrived at 4:22 and that Mr. Tremblay arrived at 4:24. I am sure that if these individuals arrived at 4:22 and 4:24, they had reasons for doing so. Like you, I am convinced that, as members of Parliament, they had very good reasons for being busy elsewhere. It is not up to us to make comments about when they arrive and leave. A proverb says: "People who live in glass houses shouldn't throw stones". An English equivalent must exist. Therefore, Mr. Telegdi, I would ask you to refrain, in the future, from commenting on our colleagues' time of arrival.

Since we are being broadcast, I will tell you now that I will not be able to chair this committee tomorrow because I have a commitment in Quebec City. That being said, you will not be able to make comments about my absence. I will now turn the floor over to Mr. Paradis.

Mr. Paradis (Brome - Missisquoi): Mr. Chairman, at the outset, I would like to mention that we have prepared for tomorrow's meeting with the Auditor General, which will deal with income tax evasion. This is an important topic.

Earlier we discussed the GST. I am pretty sure that we do not collect a large portion of the GST in this country. If this is true, that means that a lot of tax money has also slipped through the cracks because, generally speaking, someone who doesn't pay GST rarely declares income to the tax people.

This is another important and topical chapter, because GST is an everyday thing. I will try to make a link between what I'm saying and what our colleagues from the Bloc are trying to do. I am trying to underscore the importance of these debates and to give them their due consideration.

Secondly, I would like to repeat the content of my press release which our colleague from the Bloc, Mr. Tremblay mentioned. In my press release I congratulated the Auditor General for the excellent work he had done in the chapter on family trusts. I repeated my congratulatory message publicly and I would like to quote from my text, which states: ``Integrity constitutes the very basis of our country's tax system and the very basis of the Liberal government program''.

That is what is my release. I must point out that the family trust issue brought to our attention in the Auditor General's Report occurred back in December of 1991. You'll therefore understand that this occurred during that previous government's mandate, that is the Conservative government which was in power in December of 1991. As my press release points out, we should deal with these facts because Canadians are entitled to understand what occurred on December 23 and 24, 1991, just before Christmas. They are also entitled to be informed about this 180 degree turnabout in the file.

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However, I fail to understand the logic of the Bloc québécois, which at times appears to act like an offended virgin. The Bloc québécois rightly stated in the House, immediately following the tabling of the Auditor General's report, that it was essential that we plug this hole immediately to prevent billions of dollars, if indeed we are talking about billions, from leaving the country.

It was consequently agreed that the Standing Committee on Finance would immediately look at what measures were required to plug the holes, if this proved necessary, to prevent people from taking money out of the country without paying taxes. This is what the Standing Committee on Finance did and is continuing to do.

Since I keep informed about the meetings of the Standing Committee on Finance, I can tell you that they'll be meeting tomorrow in order to examine this issue in an effort to plug the hole and will hear a round table of experts: Allan Lanthier, Ernst and Young of Montreal; Wolfe Goodman, Goodman and Carr of Toronto; David Smith, Davis, Ward and Beck of Toronto; Guy Fortin, Ogilvy Renault of Montreal; Rob Spindler, Coopers and Lybrand of Toronto; Ken Laloge, MacKay and Partners of Kelowna, and others.

The Standing Committee on Finance continues to proceed as it should, namely, it has given top priority to determining what measures should be taken to plug this hole. What happened in 1991 is over and done with; it is the past, it has been cast in stone, it will not change and it will always be there tomorrow, the day after tomorrow and in the weeks and months that lie ahead. Last week, a motion was adopted to review Chapter I on family trusts when the House resumes sitting in September.

We should be aware of the fact that the House will be adjourning in just over a week. In one week, we will not be able to hold an ad hoc meeting. Basing myself on the first day of testimony, I do not believe that we will be able to deal with an issue of this magnitude in one day. I think that we will have enough on our plate for more than one day.

Further to the motion adopted last week to postpone, until September, the study of family trusts dealt with in this chapter of the Auditor General's report, I'm wondering whether or not this motion is in order. Didn't we resolve the question raised in the request signed by the four committee members, last week? I will leave you to ponder this question.

The Chairman: Thank you Mr. Paradis.

[English]

Mr. Williams.

Mr. Williams (St. Albert): Thank you, Mr. Chairman.

Before I commence my remarks, I'd like to ask the clerk about his opinion, which he gave off the cuff at the meeting last week, that Standing Order 106(3) meant we could only discuss the matter versus having the matter dealt with at committee. Is that still his ruling?

[Translation]

The Chairman: Further to the tabling of this letter last week, the clerk informed me of his interpretation, an interpretation that I double-checked and that he too double-checked. I believe that Mr. Tremblay's motion is in order.

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The committee must call a meeting, but cannot decide to call witnesses. If this were to happen, we would be infringing upon the right of the government, which is in the majority. If four members of the Opposition were able to control the agenda of every committee by submitting such letters and by calling witnesses, the majority sitting on these committees would become totally invalidated.

Therefore, the interpretation of paragraph 106(3) does not give us any choice. We must call a meeting to determine the subject of the session. This is the meaning of the motion tabled byMr. Tremblay: that at the meeting that they call today, we will determine a specific date and the witnesses who will appear in conjunction with the examination of Chapter 1.

We will vote on this motion.

Mr. Paradis: I would like to understand something, Mr. Chairman. Was today's meeting called as a result of the letter you received or is this an ordinary meeting during which we consider the letter?

The Chairman: No, no.

Mr. Paradis: I just wanted to be clear on this.

The Chairman: I'm referring to paragraph 106(3) because we discussed this issue last week. You'll understand that I'm not stating this in order to comment on your absence.

M. Paradis: I understand you.

The Chairman: We understand each other.

Mr. Tremblay: You should have read the blues.

The Chairman: I'm going to scold you for not reading the blues to understand what we've just discussed.

Mr. Paradis: I read the blues concerning the motion adopted to conduct the study in September.

The Chairman: We're obliged to call a meeting when four members of Parliament request that the standing committee meet.

Mr. Tremblay: We must try to force the government to come to its senses.

The Chairman: This is what we are doing.

Mr. Tremblay: If people don't want to, it is pointless.

The Chairman: ...to decide what subject will be dealt with during this meeting.

[English]

Mr. Williams: Mr. Chairman, we have it clear. Thank you very much.

Thank you, Mr. Paradis. You have it clear as well.

[Translation]

Mr. Paradis: Mr. Williams, I would like the chairman to conclude the explanation that he was giving me. I was making a point of order.

[English]

Mr. Williams: The chairman was perfectly clear in his point of order, Mr. Paradis, and you know exactly what he said. The fact that we're discussing it...

This meeting is a regular meeting of the public accounts committee and this was one item on the agenda. That's it.

[Translation]

Mr. Paradis: Is Mr. Williams chairing, Mr. Chairman?

The Chairman: No, no.

Mr. Paradis: Mr. Williams, are you the chairman?

The Chairman: I believe that I provided you with an explanation and that you understand.

Mr. Paradis: I appreciate your conclusion, but I would point out to Mr. Williams that you are still the chairman.

The Chairman: I am happy to note that the government still acknowledges my authority.

So, Mr. Williams.

[English]

Mr. Williams: Thank you, Mr. Chairman.

After all that long and serious debate, I have to reiterate once more, Mr. Chairman, that as the public accounts committee, this committee's role is to hold the government accountable. That is why you, as a member of the official opposition, are the chair.

Regardless of what Mr. Paradis and Mr. Telegdi state regarding last week's motion, let them also recognize that this committee passed a motion some weeks ago saying that chapter 1 of the Auditor General's report of May 7, 1996 was the first order of that particular report. In fact we had actually called witnesses and were dealing with the issue, Mr. Chairman, because that was the agenda that was agreed upon by this committee, which included Mr. Paradis and Mr. Telegdi.

When they found out that it may become a little sensitive to the government, all of a sudden we started finding that roadblocks were thrown in our way and that the role of this committee to examine the Auditor General's report, which is the mandate of this committee, was thwarted by the government. There's no question about that, Mr. Chairman.

This committee's responsibility is to hold the government accountable, and we recognize that through the fact that you, as a member of the official opposition, are in the chair. Therefore, letMr. Paradis and Mr. Telegdi acknowledge that the politics is coming from their side of the table, not from this side of the table. We would have been more than glad to deal with the other reports without the filibusters.

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I can think about the household goods moving report, Mr. Chairman. When I put forward several suggestions in addition to the report prepared by the researchers, for additional changes,Mr. Telegdi tore shreds off me and basically said the proposals I was putting forward were absolutely out of order and out of line. Yet at a subsequent meeting, because the report did not reflect the wishes of Mr. Telegdi, he wanted to withdraw the entire report instead, because he had not done his homework. He had not put forth what he wanted to see in the report.

That is why the lack of preparation, the lack of professionalism, the lack of being prepared and being prepared to put forth ideas properly, is causing this committee to be as ineffective as it has been for these last few months.

[Translation]

The Chairman: Mr. Williams, I apologize for interrupting you, but are your next comments...

[English]

Mr. Telegdi: This is a point of order, Mr. Chairman. ``Lack of preparation, lack of professionalism'', as was pointed out by Mr. Williams, is completely out of line. I expect you as the chair to rule on that.

[Translation]

The Chairman: Before Mr. Telegdi interrupted me, you were in the midst of a very beautiful oratorical outpouring, Mr. Williams, but I was about to say that your comments were out of order.

[English]

Mr. Williams: I haven't finished yet.

[Translation]

The Chairman: I was about to state that you were out of order because your comments referred to the infamous report on the moving of household goods. I couldn't see where you were coming from or where you were going with respect to the subject dealt with in Chapter 1.

[English]

Mr. Williams: The link was in reference to precious little being done by this committee, and it was made by Mr. Telegdi.

To come back to the matter being dealt with by the finance committee, Mr. Telegdi made reference to the fact that I didn't arrive here until 4:22 p.m. today. Let me say to Mr. Telegdi,Mr. Chairman, that this issue will be before the finance committee this afternoon. I will be at the finance committee tomorrow afternoon. I cannot be there and at Public Accounts tomorrow afternoon. Therefore, the briefing on chapter 11 is not very relevant to what I have been doing.

Yes, Mr. Telegdi raised the point that perhaps I had other important things to do. Absolutely. I wanted to be prepared for the finance committee tomorrow afternoon, Mr. Chairman. These are the types of things I take seriously. This issue is a serious matter, regardless of what happened in 1991 or any other date. The fact is that today the income tax system has been and is being seriously eroded, and it continues to be eroded. Regardless of the protestations of Mr. Telegdi and Mr. Paradis that the finance committee is going to fix this quickly or whatever, the point remains that the loophole that has been developed stays in existence today.

Through questioning at the finance committee, the deputy minister of finance and the deputy minister of revenue were forced to try to justify the ruling. I've said before they have gone through contortions to justify the ruling. They started to come up with interpretations of the act off the top of their heads to try to support their ruling. The Minister of National Revenue stood up in the House the same day and placed a moratorium on the advance rulings on emigration from Canada.

The point, Mr. Chairman, is that the Minister of Finance could at any time he so desires, including the day the Auditor General tabled his report in the House, state quite clearly and succinctly that this tax loophole was no longer available and taxable Canadian property applied to non-residents and non-residents only. That's all he has to say: that taxable Canadian property applies to non-residents - one sentence.

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The loophole that exists today, and existed yesterday and has existed since 1991 and will continue to exist while tax practitioners have the opportunity to walk through this hole that has been created while the finance committee continue to study it, is no argument whatsoever from the other side, because the Minister of Finance, by making one statement, one sentence, could close the loophole and the finance committee could study it for as long as they want.

The point is that this committee's role is being thwarted. The finance committee is not superior to the public accounts committee. There are two particular issues here. One is being studied by the finance committee under the mandate that's been given to them. As I mentioned, I am attending the finance committee on this particular subject, yet I know the finance committee will not deal with the issues that rightly belong in this committee, the public accounts committee, to examine the whys and the wherefores.

Last week when the debate got acrimonious -

Mr. Telegdi: Mr. Chairman, I have a point of order.

Mr. Williams: Mr. Chairman, I have the floor.

Mr. Telegdi: Mr. Chairman, I have a point of order. Quorum.

You have spoiled the committee again, Mr. Williams.

Mr. Williams: I didn't leave.

Mr. Telegdi: You came late and you've ruined the meeting. Once again, you are stopping the public business from being done. It's a continuation of the Reform filibuster.

Mr. Williams: I was not the one who left.

Mr. Telegdi: There is no quorum.

Mr. Williams: This meeting should last until 5:30 p.m., Mr. Chairman. The fact that quorum has been broken -

Mr. Telegdi: Quorum has been broken, Mr. Chairman.

[Translation]

An honourable member: Are we meeting here Thursday morning?

The Chairman: Given that a colleague has raised the matter of quorum, I must adjourn the meeting until the further call of the Chair.

At any rate, we would have had a problem voting on the motion in the absence of a quorum.

Mr. Tremblay: If it makes your decision any easier, I can tell you that, under these circumstances, you would have had a problem getting a quorum tomorrow. Sitting here to discuss Chapter 11 is out of the question given that the Standing Committee on Finance will be dealing with this important issue and, in addition, Mr. Gravelle, who is particularly concerned by this matter, will be present and available for the examination of Chapter 1.

We completely disagree with the Liberal boycott that is now under way.

The Chairman: In the absence of a quorum, I must...

[English]

Mr. Telegdi: Mr. Chairman, it was those people who were not here when this committee started, until 4:22 p.m. and 4:25 p.m. You mentioned it, Mr. Chairman.

[Translation]

Mr. Tremblay: There won't be a quorum tomorrow either, that is clear.

The Chairman: The Standing Committee on Public Accounts adjourns to the call of the Chair because of the absence of a quorum.

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