That, in the opinion of the House, the government should take action to promote the intergenerational transfer of farms by implementing the following measures: (a) increasing the allowable capital gains deduction for agricultural property from $500,000 to $1 million, exclusively for transactions as a result of which a farm remains in operation; (b) extending application of the rules governing rollovers to all members of the immediate family under 40 years of age; (c) setting up a farm transfer savings plan that would enable farmers to accumulate a tax-sheltered retirement fund; (d) make the rules governing property ownership more flexible so that young farmers can obtain a larger share of a residence held by a company and use their registered retirement savings plan to acquire an agricultural enterprise; and (e) transfer a recurring envelope to the government of Quebec and the other provinces for encouraging young people to go into farming
She said: Mr. Speaker, as hon. members are no doubt aware, the population of Quebec, like that of Canada and the rest of the western world, is rapidly aging. The generation that built modern Quebec, from the Quiet Revolution until the present day, is fast approaching retirement age. It is therefore our collective duty, and I am sure we agree on this, to pass the torch to those come after us, so that Quebec may continue to develop its potential at least as much as it has over the past 40 years, if not more.
If that philosophy of passing the torch to future generations is valid for all spheres of economic, social, cultural and intellectual activity in modern Quebec, it is all the more so for agriculture.
In 2005 do we still need to prove how important agriculture and feeding the country's people are to all of the countries of the world? There is a close connection between the regions of Quebec and its major urban centres; while the latter represent industrial, commercial and cultural productivity, the former represent food self-sufficiency and the source of life. Most human beings today lead materialistic and urban lives, but they still need to eat three times a day, and always will.
It is in that perspective of continuity of working the land that we must look today at the question of the future of agriculture in Quebec and Canada.
I myself am a farmer. I have worked in this field for the last 25 years, apart from the last two which I have had the privilege of spending in the company of my colleagues here. It is primarily as a person involved in the field of agriculture that I decided to actively enter politics under the banner of the Bloc Québécois. Our 2004 election platform was and still is relevant to the major challenges that Quebec will have to face in agriculture. It is this important challenge and this questioning concerning the next generation of farmers that I come to present in the House of Commons, in the hope that we can find some solutions and societal choices that demonstrate intergenerational solidarity, for the love of our farming community.
When the economy is bad, the first to be discouraged are the job seekers just starting their careers. They are what is commonly called “the next generation”. This phenomenon is even more pronounced in agriculture. Whereas the economic cycles of recession and expansion follow each other almost naturally, farming has had difficult times for too long. Market globalization has enabled farms on the other side of the planet to compete directly with our local producers. Of course, this globalization trend has had certain advantages. It must be acknowledged, however, that the world of agriculture is not as flexible as the electronics or automobile industries. You need land and heavy machinery to produce a harvest. Furthermore, there is no question that this is the only field of production that is dependent with such uncertainty on climatic conditions. With one thing affecting another, the next generation of farmers is not knocking down the door.
The key word has been uttered: “uncertainty”. Our ancestors saw farming as a safe investment marked by stability, but can the same be seriously said today?.Unfortunately, the vocation of agriculture is demanding more and more financial, physical and human resources in order to face growing uncertainty. It is our duty as elected representatives of the people to find solutions that will permit the farming industry of Quebec and Canada to continue to work for the years to come.
The next generation, these young people to whom we have handed down a love of agriculture, needs help. In order for their ambitions to become tangible reality, they need some clear proposals and real solutions to real problems. I shall start, therefore, by drawing as accurate a picture as possible of the agricultural realities.
First, a general comment: there are fewer and fewer farms in Quebec. Between 1996 and 2001, which was a time of economic growth, the number of farms in Quebec fell by 10% to 32,000. In some traditionally agricultural regions, such as the Lower St. Lawrence, the number of farms decreased by as much as 50%. At its annual convention in 2004, the Union des producteurs agricoles adopted the objective of not falling below this historic floor of 32,000 farms in Quebec.
In addition, farmers' incomes are far from increasing at the same rate as the size and value of their farms. According to some studies, the value of one acre of arable land rose from $606 in 1981 to $1,600 in 2001.
The average assets of Quebec farms rose from just under $700,000 in 1997 to $1.12 million in 2002. But net average income of farmers rose only from $34,000 to $39,000 in this same period. That is a considerable concern to the generation that will replace them over the next few years.
In view of the fact that the average age of Canadian farmers is 50, that 35% of Quebec farmers are over 55, and that about 12% of farmers intend to retire next year but 26% of those have no one to take over, there is an urgent need to take action in order to ensure the survival of the agricultural way of life in Quebec and Canada.
As we know, youth is not necessarily synonymous with wealth. One of the basic problems highlighted by the three facts I just outlined is that it is difficult if not impossible for our young people with agricultural ambitions to acquire the basic tools of the modern farmer unless substantial help is forthcoming. Government inaction, reinforced by market forces, will have no other effect than to concentrate agricultural wealth in just a few hands, that is to say, to create “mega-businesses” and “super-farms” that will only discourage small farmers and lock them into a vicious circle leading to the loss of their agricultural heritage and the inevitable end of any possibility of renewal.
That would be the end of a middle class of farmers, the end of family-owned farms on a human scale. That is what we have to avoid for the sake of the future of farming in Quebec and Canada. In order to increase the chances that farmers will be successful, we have to prevent extreme market forces from encouraging only the mammoth operations with their tendency to monoculture at the expense of small farmers and the healthy diversity of their crops.
The Government of Quebec understands the problem. La Financière agricole du Québec has a financial support program for aspiring farmers that provides several different kinds of assistance, including establishment capital grants between $30,000 and $40,000 for students with a degree in agriculture, secure rate establishment loans, in which La Financière caps the interest rates on the first $500,000 that a start-up farming operation borrows, and many advisory services.
For its part, the federal government provides preferential loans, advisory services and a few tax measures that can facilitate the transfer of the family farm from one generation to the next through Farm Credit Canada. But this is not enough. In contrast to the United States, Great Britain and even Quebec, the federal government does not provide any direct, unconditional grants, such as the establishment grants for example.
It is mainly in regard to the federal measures that my party and I wish to elaborate and further enrich the discussion today in order to analyze how we could contribute to the objective established by Quebec farmers, namely preserving 32,000 farms on all the agricultural land. The federal government must do its fair share.
In order for this ambitious objective to be achieved, an additional 400 young people will have to set themselves up in agriculture in order to create 900 to 1,100 new farms a year, according to figures provided by the UPA. In order to do this, there are three critical areas on which we will have to focus: taxation, savings and cooperation.
The tax problem is related to the problem of selling and buying a farm. When farmers are ready to retire, the financial problem is not as much that taxes are due on the sale of their property as the difficulty of finding a purchaser whose offer is close to the market value of the farm. Since the market value of farms has increased substantially—as we just pointed out—and there are not very many purchasers in the next generation because of a lack of resources and financial supports, farmers have to dismantle their farms, more often than not, which forces them to pay more taxes and does nothing to help transfer the farm to future generations.
In order to increase the benefit of transferring a farm as opposed to dismantling it, would it not be advisable—and this is the Bloc Québécois's first proposal regarding taxation—to increase the allowable capital gains deduction for agricultural property from $500,000 to $1 million for the sale of a farm operation to another farmer?
This would allow farmers who sell their property to avoid having to pay too much in taxes because of a lack of potential buyers, and it would also encourage hesitant young people to go into farming.
In other words, since taxes paid on transactions would decrease, this measure would allow the seller to dispose of his assets at a lower price while guaranteeing him the same amount of money and encouraging young people to go into farming. Basically, if we want to encourage, from a taxation point of view, the transferring rather than the dismantling of agricultural property, we have to increase the gap between the rates that apply to transfers and dismantling respectively. Some conditions could be set. For example, the proposal in the case of a farm that remains in operation could be set at 75%. This would have the effect of preventing speculators from taking advantage of the system.
Moreover, as we know, unlike other taxpayers, a person who operates a farm can, without paying taxes, transfer directly to his children and to the children of his children some of his agricultural property. In order to encourage a larger number of young people to go into farming, why not extend the application of the rules governing rollovers to other members of the immediate family under 40 years of age? If we did that, some brother, sister, niece, nephew or cousin would very likely be interested in taking over the family heritage.
Two simple measures that could provide a win-win situation for both the purchaser and the vendor.
The second problem, as we see it, after taxation, is savings for farmers. If we want to attract newcomers to farming, we have to be able to encourage them to plan for their retirement, despite the numerous investments and expenses they will run into for starting up and running their business. Since a farmer's income fluctuates and they are not all able to contribute to an RRSP, why not set up a farm transfer savings plan to allow farmers to build up a tax-sheltered retirement fund? The governments could make a contribution, like they do for registered education savings plans. Such contributions could be conditional on maintaining the farm.
In that same vein, we could also amend the rules of the Home Buyer's Plan so that a young farmer could use his existing RRSP to acquire the farm, which would usually come with a home. This fourth measure would be feasible only if the maximum HBP withdrawal were increased.
Finally, after the taxation and savings that will help young farmers socially and economically, we feel that it is important to set an objective right away in regard to cooperation between farm organizations and government stakeholders. The effect would be to channel their activities in a more coherent way toward the renewal of the farming generations.
Since Quebec and the provinces are the levels of government closest to the farming world in regard to funding and services that promote the renewal of agriculture, it seems reasonable to suggest that the federal government should transfer a recurring envelope to the Government of Quebec and the other provinces to help the next generation of farmers.
The Government of Quebec could use this envelope for a number of next-generation-related purposes: extending the availability of the start-up subsidy; improving interest rate protection and increasing eligibility ceilings; providing more generous grants for young people who are starting up a farm; and setting up some sort of structure such as a single window providing information on farms without a next generation and young farmers without a farm.
It is possible to have a voice, to ensure that there will a next generation of farmers. But to ensure a future for farming and our youth, it is imperative for government to take action. We cannot just let things slide. The people have given us not just a mandate to represent them but also the power. And the power means the opportunity to use the means at our disposal to take action and influence the course of events. It is up to us, as the political stakeholders, to do what is necessary to ensure that the path from the farm to the fork is not closed to future generations.
Mr. Speaker, I appreciate the opportunity to participate in this debate. I would assume that all members would agree with the objective underlying the motion which is to support young Canadians who decide to work on the family farm and to take on that generational challenge.
In fact, I too come from a line of farmers. I am the first generation that has not gone into farming. To his dying day, my father thought I was a failure for going to law school instead of the family farm. Fortunately, he died before I entered politics because that would have confirmed his opinion that I was in fact the family failure.
The motion as it is worded is just simply not supportable. To put the motion in context, I would like to outline first of all what the Government of Canada is already doing and then talk about why we think that there are individual problems with the motion itself.
Currently, the Government of Canada provides considerable support for intergenerational transfers of family farms through both existing agricultural programs as well as through income tax measures. Intergenerational transfers of family farms are facilitated through the comprehensive agricultural policy framework. My friend across the way raised the issue that it would be difficult to negotiate that if we were to pursue the latter part of the motion.
These transfers are delivered by Agriculture and Agri-Food Canada in partnership with the provinces and territories. One would have to presume we would have to get the cooperation of all of the other provinces and territories or the formula that my friend referred to in order to accommodate the particular wording in the motion. There is also Farm Credit Canada which provides access to affordable financing options for farmers to buy farms and equipment that they need to make a living.
However, today I would like to focus on the tax measures that support farmers with particular reference to tax matters that facilitate intergenerational transfer of farms.
In the area of income tax, the current rules already allow family farms to be transferred on a tax deferred basis to members of the immediate family and that is, a farmer's spouse, children, grandchildren, or great-grandchildren. That is the wording of the legislation. By deferring the taxation of capital gains on the farm until such time as the farm is actually transferred out of the family, this measure greatly facilitates the intergenerational transfer of farms. This is the major concern of the mover of this motion, that it is difficult to move the farm from one generation to the next.
I would submit however, that paragraph (b) of her motion is more restrictive than what is currently in the Income Tax Act of Canada insofar as there is no restriction with respect to age. I would reference members to paragraph (b) which says: “extending application of the rules governing rollovers to all members of the immediate family under 40 years of age”. Under 40 years of age is not a restriction that is put into the Income Tax Act of Canada as it currently reads. On one interpretation of her motion, she would actually restrict the intergenerational transfer of farms. I am not sure that she intended to do that.
I would add that the current tax deferral mechanism applies regardless of the value of the farm being gifted and the number of children benefiting from the gift. As all members may appreciate, that is an extremely generous measure not available to any other sector, not to fishermen, not available to people in the forestry sector, not available to construction, and not available to people in manufacturing. We have as a point of public policy tried to facilitate the intergenerational transfer of family farms because of their unique value to our society.
In addition to tax rules that accommodate farms that are given to children or are left to them in their wills, tax rules exist to address the needs of farmers who may be unable, for financial or other reasons, to give a farm outright to their children. In these situations, selling the farm to his or her children could provide needed funds for a farmer's retirement. In cases such as these, the farmer already has a $500,000 lifetime capital gains exemption applicable to the sale or other disposition of the farm property.
However, because most farms, certainly if it is a family farm, are owned by more than one person, usually a husband and a wife, the $500,000 lifetime capital exemption is in fact more like $1 million capital gains exemption. In any situation where a farm is jointly owned, whether by a farming couple or two siblings, each owner has, individually and uniquely unto that owner, a $500,000 lifetime capital gains exemption.
So, for example, if a farming couple purchased a farm jointly in 1975 for $300,000, the proceeds on a sale of up to $1.3 million would be exempt from tax if both the husband and wife apply their lifetime capital gains exemption to the sale proceeds. In fact, by the time we adjusted cost base, the gross up on expenses and things of that nature, $1.3 million would probably work up to $1.5 million without a great deal of work on the part of the accountant. That, by any standard, is a very generous tax relief measure.
This motion proposes to raise the $500,000 per person limit to $1 million. However it is important to note that increasing the limit from $500,000 to $1 million would mean increasing the exemption to $2 million for jointly owned farms and would benefit only about 5% of farm sales in each and every year. Effectively, although I am not sure that is the intention on the part of the mover, the bill would benefit the upper 5% of farm sales while effectively having no impact on the other 95%, probably the more vulnerable farms. That is, the existing limits already accommodate 95% of the farmers who already sell their farms. I am not quite sure what would be accomplished by supporting this motion.
I would ask hon. members to consider whether a new tax measure that provides additional preferences to the richest 5% of farmers in Canada is really warranted, considering that such a measure would represent a cost to the average Canadian taxpayer. There is no free lunch in the tax business.
I would like to highlight another tax rule that relates to the taxation of capital gains that may benefit children who cannot afford to pay their parents the entire sale price agreed to for the family right away. In such circumstances, each parent is entitled to defer taxation in respect of the capital gain when the amount is not payable until after the end of the year. The effect of the measure is to allow for the payment of any tax on the capital gain on the farm over a period of 10 taxation years, if that is how long it takes for the child to pay for the farm. This is twice as long as the period of deferral allowed to any other taxpayer. So, again, we are preferencing farmers over all others.
This motion also proposes that the government set up a farm transfer tax savings plan that would enable farmers to accumulate a tax sheltered retirement fund. The lifetime capital gains exemption that I discussed earlier already facilitates retirement planning for farmers, as does the existing registered retirement savings plan system. In this regard, RRSP limits have been increased substantially.
We have the lifetime capital gains exemption, we have a tax deferral arrangement, which pushes it off for 10 years, and they can shelter their money into RRSPs, up to $22,000 a year, by the year 2010. Farmers can take advantage of RRSP arrangements just like any other taxpayer and defer their tax on their capital gains.
Providing farmers and not other Canadians with additional retirement savings opportunities would be unfair, considering that virtually all workers face the challenges of planning for their retirement.
I have outlined the major tax measures that relate most directly to the motion put forward by the hon. member. However there are many tax measures and others that assist with managing their cashflow, including cash based accounting, deferral of income, full deductibility of costs for land, as well as flexibility inventory accounting. All these measures favour farms.
I submit to the House that this motion cannot be supported and that it is, in some respects, a regressive motion rather than a progressive motion. While there are certain attractive elements to the motion I would submit that the preferences that are already enjoyed by the farmers by virtue of the public policy of the government are quite considerable and I urge hon. members not to support the motion.
Mr. Speaker, I thank the member for Châteauguay—Saint-Constant for the thoughtful resolution that he has brought forward today.
I cannot help but refer of course, as members tend to do in this chamber, to my own family's background, which is, with my brother now in place on the farm, a fifth generation farm family. I have some very strong feelings emotionally about this resolution and believe at its heart it is good. It certainly has some technical aspects, which the minister's back-up over there has alluded to, but despite that fact I think there is more good in it than bad.
I would like to begin with my own personal experience on the issue of transferring farm assets. As the oldest in our family, when I graduated from high school my parents gave me a watch as a gift. When my sister graduated she was given a car. When my brother graduated he was given the farm. That is farm estate planning. That is how some families divide farm assets.
It works if the farm can be kept in the family and if there can be balance for other farm heirs and keep children loving one another and provide for the parents or the family members who are retiring. If a family can do those three things it has a good farm estate plan. If the family cannot, it does not.
Unfortunately, for many farm families cash is a big issue. As is the way of Liberal members who are in their ivory towers, most of them, unfortunately, are out of touch with rural situations. As the member alluded to in his comments, if farmers want a proper retirement income they should just buy RRSPs like everyone else. He does not understand the nature of farming or of farmers very well.
The principal investment that farmers make of course is back into their farms. It has been that way for years and, unfortunately, it has been increasingly necessary for it to be that way as the return on investment in the farming community over recent years has lessened. I could quote the statistics but I will not.
However there is less cash available. Many farmers are land rich, implement rich, seed rich or whatever but they are cash poor. Before I came to this place I was a chartered financial consultant by profession and I worked with farm families on establishing plans for the transference of their assets. I can speak with a little authority on the fact that this is a motion which will assist. It is not perfect and it does not pretend to be perfect, I am sure, but it does address a number of important issues. I think it is important that we appreciate that and support the resolution for that reason.
A 1994 study by StatsCan revealed that farmers invest a higher proportion of their savings back into farm assets than they do into RRSPs. That is no surprise to any of us who come from rural backgrounds. Therefore for many farm families their farm capital represents the bulk of their retirement funds.
There are a couple of aspects to this proposal that I would like to address. The first is the issue of capital gains.
The Liberal member, as is the tendency, unfortunately, defended the status quo rather firmly. However the status quo when it comes to the issue of the $500,000 capital gains exemption is not a status quo that deserves to be defended. That level has not changed for over a quarter of a century but farm assets have and farm values in terms of fixed assets, such as land, not uniformly but in general across the country, have appreciated in value so that now with regard to the capital gains exemption what once was exempt is not.
Therefore we need to address that change. The way to do that is to increase the capital gains exemption. I think that is an excellent idea and one that deserves support.
In doing a little research I always concern myself with what these proposals cost as does the Conservative Party. We want to make sure these are achievable measures that will work. However we also want to make sure that they fit into the context of our overall finances. I should mention the actual cost that this motion would incur if this measure were adopted.
We know that the Department of Finance estimates say the fiscal cost currently of the $500,000 lifetime capital gains exemption for farm property is about $220 million for 2004. It follows then that if we increase the exemption to $1 million, the maximum fiscal cost would be approximately that same amount of $220 million.
The member opposite said in his comments that this would only impact on a very few and used the class warfare thing, the rich farmers out there. The reality is quite clear to us from rural communities. We understand that farmland values have increased significantly in many areas across the last quarter century and that this is really catch-up is it not? This is really restoring the original measure and restoring the intent of the original measure.
I know this because the member very often speaks more for the Department of Finance than he does for the people of Canada. He certainly does not speak for the farm people of Canada. I know that he has raised the issue of preferential treatment for farmers. I know that the finance department would dearly love to do away with the $500,000 capital gains exemption entirely. I know, as a member of the finance committee, that we have been privy to some indications that is the attitude of members of the finance department and, I am afraid, given the increasingly urban nature of the diminishing number of Liberal members in this chamber, quite appreciably increasing in their ranks as well, the attitude that farmers should just pay like everyone else.
I will tell them this in a straightforward manner. I think they need to realize that the number of farms is diminishing and it is increasingly so across the country. It is in no one's best interest to have no one living in the communities between Montreal and Quebec City. It is in no one's best interests to have a half a dozen farmers living along the highway between Portage la Prairie, Manitoba and Regina, Saskatchewan. It is in no one's best interests to depopulate the rural parts of our country. It is in everyone's best interests to keep family farms in the hands of people who love the land, have an attachment to it and have a sincere desire and an appreciation for the quality of life and rural communities and a rural environment. That is in everyone's best interest.
Unfortunately, with the government we see too often a disrespect and a disregard for that reality. I think that is a shame.
I say by way of illustration that right now in this country there are fewer farmers under the age of 35 than there have ever been. Right now most farmers are over 50 years of age. In the next 15 years that number will appreciate considerably and over a third of farmers will be beyond retirement age in just a very short time.
How are they going to retire? Because they depend on the land and the farm assets that they manage, they are going to retire by selling those assets. Unfortunately, what that means is a further consolidation of farms and a further depopulation of the rural communities.
If we can take some steps today in supporting this resolution to support families staying in a place they love, that they appreciate and where they will invest and provide the prudent stewardship we need, I think that is a wonderful thing to do. I think it is a good and healthy thing for us to do for this country.
I want to share a couple of anecdotes because I think these are illustrative of the challenges that farm families face. I knew a family in a small community called Rathwell, which is in my riding. It is about a half an hour south of Portage la Prairie, which is my hometown where our farm is. When I came across this circumstance it was touching. What happened here was that a farmer in his late sixties suffered a heart attack and passed away. The family went together to read the will and the will read that everything was to be divided equally among three. His wife had predeceased him and so his three children shared that estate equally.
What was the estate? It was what he had spent his life doing, his farm. It went three ways: to his daughter who was married to a dentist in Victoria; to his son who lived in Toronto and is a computer executive; and the other third, I think members have guessed it, to his son the farmer. His son was a farmer. When his dad passed away this man, a friend of mine, lost not only his part, his best friend, his mentor but he lost his farm.
Today, we can take steps to ensure that this does not happen again. Rollover provisions and retirement savings programs that are available to farmers who do not have the income to qualify, in many cases to contribute to RRSPs, are a positive step.
I congratulate the Bloc member. Although the Bloc's separatism is abhorrent to me, I congratulate it on this positive step. This is a worthwhile motion to support and I thank him for bringing it forward.
Mr. Speaker, I consider it a privilege to speak in favour of the motion.
I would like to thank the Bloc member for Châteauguay—Saint-Constant for her work on this motion. It is a very important motion.
It is very important for the people here who do not come from a farming background to know this. We must keep our farms for our family members.
I come from the village of Stoney Point in Ontario. I look at my family, the Comartins. They are trying very hard to keep the farm in the family. But every year, it gets harder. There are problems with other people, especially syndicates that want to buy up these farms and have more money to do that.
In addition, there has been constant incursion by urban and suburban pressures to sell the farms. I have heard several speakers talk about the love that people have for the land and the importance of that attachment. That is personal. One might ask if we as legislators have to be concerned about that. For the cynical, we may say no.
There is a much more important reason why we have to protect the family farm. We simply cannot allow the production of our food supply to be more concentrated in fewer hands. That is the pattern in Canada and across the globe. We have to fight against this pattern. The government needs policies to prevent this from happening.
It was interesting to listen to the Parliamentary Secretary to the Minister of Finance arguing that the capital gains provisions protected family farms. We had those same capital gains provisions back when I started practising law in 1973. Those provisions have been around unaltered for over 30 years. Land values have increased. The cost of living has increased dramatically in that period of time, but those capital gains provisions have not been changed at all for more than 30 years.
I acknowledge the work that has been done by the member for Châteauguay--Saint-Constant in drawing this to our attention. It is one of the reasons why I believe all members should support the motion, a motion that the government should look very closely at implementing.
Similarly, with regard to extending the provisions beyond the limited number of people who can benefit from inter-family and intergenerational exchanges of the property, it is important that be broadened.
I come back to my family. I look at those members of the family who are committed to the farm and are willing to stay around. They are not always children, but oftentimes they are nephews and nieces, sometimes grandnephews and grandnieces who are committed to the family farm. They want to farm, but they need financial assistance and policies to make that possible. The pressure of the competition is quite phenomenal. That is true not just in my home area but right across the country.
Another point on the capital gains issue is this. The parliamentary secretary made the point that it was not $500,000 but $1 million because both spouses were entitled to the farm. This shows a real lack of knowledge on his part. In the vast majority of cases intergenerational transfer occurs after one of the parents has passed away. Therefore, we are only talking about one capital gain, not two. In most cases the first parent who dies is the male. The spouse may stay on the farm for a few years after his death. The double capital gains provision is of no help in protecting the surviving spouse from those implications.
I know there are only a few words in the motion with regard to this, but the provisions that would expand the ability of owners to use the land provisions to protect themselves, which would not affect their RRSPs but it would their transfers, is a good idea. It is creative and it is one that the government could easily follow.
The parliamentary secretary made the comment that nothing is free. The government is quite prepared to make substantial tax benefits flow to oftentimes major corporations and multinational corporations. Many times that tax benefit does not even stay in Canada. That money flows out of the country, mostly to the United States but also to Europe and the far east.
If we are looking at having to pay something for this, we will have to give something up. If we look across the whole spectrum, the family farm should be at the top of the list, not as we saw from the government and its willingness to give a billion to two billion dollars in tax breaks to the multinational corporations and the large profitable corporations in the country. It is not needed there. It is needed in the family farm. The provision that the member suggested is a very positive one.
I have some reservations with regard to a transfer of money to the provinces. I always worry when that is not quantified. The need for further assistance to the family farm for the transfer of ownership from this generation to the next and the one after that is so obvious. Even though I have some reservations about it the transfers to the province, it will not limit the support that I have expressed for the motion overall.
I want to finish with a couple of experiences I had as a member.
A about a year or two years ago, a delegation of farmers, mostly from the western provinces, met with our caucus. It was intergenerational. They made the point that has been made this evening about the age of the average farmer in Canada being in the mid to late 50s. It is probably approaching 60 now. Their fear was being unable to put in place the proper economic circumstances that would allow the next generation to acquire the family farm. There were probably 15 or 20 different families around the table. Every one of them had children and in some cases even grandchildren who were old enough to take on the farming responsibilities. Every one of them said that it would not happen. The economic circumstances were such that they were unable to do that. It was really sad.
The other one happened this summer. Our leader was in the riding and we met with farm groups. We heard exactly the same story from the county of Essex. About 10 different families were represented. It was a small meeting of some of the leadership. In every case there were serious reservations and outright expressions of impossibility of being able to transfer. For that reason, every member in the House should support the motion.
Mr. Speaker, I very much appreciate this opportunity to speak on the subject of this Bloc Québécois motion on the next generation of farmers.
Is there an area that affects the daily lives of people more than agriculture? Not only is it necessary for human survival, but it is one of most important sectors in our modern economies. How many of us realize that ultimately we are talking here about our food security, which is certainly the envy of many other countries.
The Bloc Québécois motion proposing measures to facilitate the transfer of farms within families is crucial at this time when we see a steep decrease in the number of farms, especially in Quebec. As representatives of the people of Quebec in this Parliament, we are anxious to defend the interests of our farmers. I am concerned first and foremost because I am the member for a major agricultural area, the riding of Lévis—Bellechasse. The motion that we are moving today is therefore all the more important to me.
For the last 15 years, the agricultural heritage of Quebec has been slipping away. There are only 32,000 farms left in Quebec, or 10% fewer than in 1996. It is a disaster. The Matapédia Valley and the Témiscouata, Rivière-du-Loup and Trois-Pistoles areas have lost around 50% of their farmers, while one dairy farm a week disappears from the Lower St. Lawrence. If this is not a catastrophe, there is no word for such a disturbing situation.
According to Statistics Canada, the average assets of Quebec farms rose from $700,000 to $1.1 billion between 1997 and 2002. We might think that this is quite a respectable performance. But we also learn that the net cash income of farmers has remained the same. Knowing that it generally takes $5 in assets to generate $1 of income, we can see that farms have become less profitable.
And yet, there has been a respectable increase in the value of farmland. Indeed, it has more than doubled, from $606 an acre in 1981 to $1,598 in 2001. On the surface that looks fine. But, on the other hand, one also needs twice the money to buy back the farm, something which is not automatic. As a result, purchase offers based on the market value of the farm are few and far between. Add to this the fact that today 35% of farmers are over age 55 and 26% of those who want to retire still have no successors. Closing down the farm looms inexorably on the horizon.
This is a major problem. That is why the first two elements of the motion tabled in the House are more than appropriate.
Indeed, is it not time to increase the capital gains deduction on farm property in order to restore the balance with the increase in land values? We suggest that this deduction be doubled, bringing it to $1 million. It should be noted that we accompany this proposal with an obligation to maintain the farm.
I have many more arguments to raise. What I am saying, then, is that one simple motion contains a set of incentives and facilitating measures that can encourage young people and families to become more involved in the keeping family farms alive, in Quebec and in Canada. At stake is not only the survival of an important sector of our economy, but the maintenance of an essential service to the public, a service that guarantees its daily food supply and long-term security.
Given the importance of the issue and the precariousness of the situation, I implore all my colleagues here present to vote in favour of the motion, in a concerted effort to resolve a major problem in our society, and so put an end to the undesirable fluctuations in the future of the Quebec and Canadian agricultural sector.
All of us know, in spite of our political differences, that this is of the highest importance.