DEBATE ON SECOND READINGS

Bill 63--The Statute Law Amendment (Taxation) Act, 1996

Madam Speaker: To resume second reading debate, on the proposed motion of the honourable Minister of Finance (Mr. Stefanson), Bill 63, The Statute Law Amendment (Taxation) Act, 1996 (Loi de 1996 modifiant diverses dispositions législatives en matière de fiscalité), standing in the name of the honourable member for Rupertsland (Mr. Robinson).

Is there leave to permit the bill to remain standing? [agreed]

Mr. Steve Ashton (Thompson): I wish to speak very briefly on this particular bill, because it is ironic that we are debating this bill, which deals retroactively with one of the biggest tax scams we have seen in this province for quite some time. It has been called the Quebec shuffle, part of that ill-fated plan of the government to work with those very civic-minded individuals who wanted to continue their ownership of the Jets and maintain it here in Manitoba, and I say, civic minded, because we saw one of the most incredible tax scams that we have seen in this province, something that is just absolutely unbelievable.

It is interesting because today we dealt with another tax issue, another major potential tax problem for this province, and that is related to the Manitoba Telephone System. This government does not even have a tax ruling, and, to put it in perspective, in Alberta, AGT received a tax ruling based on the $6 increase, which is $1.1 billion less than what they had estimated--$1.1 billion.

An Honourable Member: What is a billion or two?

Mr. Ashton: What is a billion, I guess, as the member for Kildonan says, seems to be the buzzword of today's corporation.

This government has not even got a tax ruling. It gets even worse because they also apparently, and we can thank the Financial Post for this, over the next few weeks the rating agencies are expected to complete their analysis of MTS. They do not even know what the credit rating of MTS will be under a private company and what they will have to pay for debt capital as an independent company without a government guarantee.

Madam Speaker, this is incredible. This government expects us to be sitting in committee dealing with Bill 67, to be voting on the sale of MTS, when we do not know what the company is going to pay in terms of its debts. We do not know what the tax liabilities are. Not only that, we will not even see the prospectus according to this government until two days after this bill is passed through the Manitoba Legislature.

Madam Speaker, I ask you this question, would anyone, except maybe this incompetent group across the way--just imagine yourself as an individual. Once again here, as somebody is coming, first of all you get a real estate agent, three real estate agents come to your house and they say, well, I am going to do something for you. I am going to advise you on whether you should sell your house.

An Honourable Member: What if you do not want to sell the house?

Mr. Ashton: The Premier says, what if you do not want to sell the house? What the Premier should have done here--you know, a Premier should know, though. I am using the analogy of MTS. The people of Manitoba do not want him to sell the house, but this government has said, well, give us some objective analysis on whether we should sell the house, the real estate agent is here.

Now, guess what the real estate agents, in this case the investment brokers, said. Guess what. Do you think they said no? Do you think they said, oh, it is not a good idea? Guess what they did. They said, sell the house. But it gets even better. Let us imagine the Deputy Premier there standing in the front doorstep of his house talking to these three real estate agents. I wanted to create this image here because this is actually what is happening.

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You know what the Deputy Premier and the Premier have said in this situation? Do you think they have said, well, I want full details, what is going to happen, and the rest? You know what, he stands there and says, well, that sounds like a good idea. In fact, I was probably thinking of doing that anyway. Forget about the rest of the family, they will find somewhere else to live, but we are okay. All right.

Guess what. Guess what deal the investment brokers came up with. Actually, what we are going to do first, we will give you a rough idea. We might make this amount of money, but we have a deal for you. We are going to sell it, but you get to keep half the mortgage. If you are lucky enough, we might rent it back to you at a reasonable rate. That is what is happening with MTS here. We are going to be maintaining the debt. More than half the debt is going to be maintained by the Province of Manitoba, and we are going to count on this private company to pay it back. [interjection] That is right. They will throw in a bridge.

You know, this is what is happening. This government now, on top of that--let us use the House analogy--does not even know what the costs are going to be, does not even know the sale price, does not even know the sale price. But do not worry, they are going to trust those real estate agents, those objective people who have come in and decided that, jeez, we could sell one way or the other, but we are going to sell it off here. This is absolutely incredible. Nobody in their right mind would do this if they were looking at selling their house or their car or anything, and now we have the government expecting us, members of the Legislature, and the people of Manitoba to decide upon the sale of MTS when it is absolutely clear this government does not even know the tax liabilities, the impact on rates because of the debt rating that is going to happen and the ability of the company to raise. We do not know what is going to be put in the prospectus. We do not know any of that information, but we are still supposed to vote to sell MTS.

That is absolutely not acceptable to the opposition and we are speaking, I can assure the members opposite, on behalf of all Manitobans because the people of Manitoba do not accept that this government has any right to sell off MTS. That is why symbolically, as it is on this bill which deals with another Tory scam, the scam that we saw just a few months ago of the Quebec shuffle on the Jets, we want to adjourn this House until we get to the bottom of what is happening with the other scam, the sale of MTS.

That is why I move, seconded by the member for Kildonan (Mr. Ashton), that the House do now adjourn.

Madam Speaker: It has been moved by the honourable member for Thompson (Mr. Ashton), seconded by the honourable member for Kildonan (Mr. Chomiak), that the House do now adjourn. Agreed?

Some Honourable Members: Agreed.

Some Honourable Members: No.

Madam Speaker: No?

Voice Vote

Madam Speaker: All those in favour of the motion, please say yea.

Some Honourable Members: Yea.

Madam Speaker: All those opposed, please say nay.

Some Honourable Members: Nay.

Madam Speaker: In my opinion, the Nays have it.

Formal Vote

Mr. Ashton: Yeas and Nays, Madam Speaker.

Madam Speaker: A recorded vote has been requested. Call in the members.

Order, please. The motion before the House was moved by the honourable member for Thompson (Mr. Ashton), seconded by the honourable member for Kildonan (Mr. Chomiak), that the House do now adjourn.

Division

A RECORDED VOTE was taken, the result being as follows:

Yeas

Ashton, Barrett, Cerilli, Chomiak, Dewar, Doer, Evans (Brandon East), Evans (Interlake), Friesen, Hickes, Jennissen, Mackintosh, Maloway, Martindale, McGifford, Mihychuk, Reid, Robinson, Sale, Santos, Struthers, Wowchuk.

Nays

Cummings, Derkach, Downey, Driedger, Dyck, Enns, Filmon, Gilleshammer, Helwer, Lamoureux, Laurendeau, McAlpine, McCrae, McIntosh, Mitchelson, Newman, Pallister, Penner, Pitura, Praznik, Radcliffe, Reimer, Render, Rocan, Stefanson, Sveinson, Toews, Vodrey.

Mr. Clerk (William Remnant): Yeas 22, Nays 28.

Madam Speaker: The motion is accordingly defeated.

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Mr. Neil Gaudry (St. Boniface): Madam Speaker, I was paired with the member for Turtle Mountain (Mr. Tweed). If I would have voted, I would have voted for the benefit of Manitobans.

Bill 63--The Statute Law Amendment (Taxation) Act, 1996 (continued)

Madam Speaker: To resume second reading debate, on the proposed motion of the honourable Minister of Finance (Mr. Stefanson), Bill 63 (The Statute Law Amendment (Taxation) Act, 1996; Loi de 1996 modifiant diverses dispositions législatives en matière de fiscalité).

Mr. Tim Sale (Crescentwood): Madam Speaker, Bill 63 is a statute law amendment bill which is normally details that are being brought before the House to amend the smaller and finer points of our taxation system. Usually such bills do not attract wide-spread attention, and, in most cases, they are passed reasonably routinely by the House because they simply serve, for the most part, to implement a budget which has already been passed by this House.

But, Madam Speaker, this bill is an exception to this rule, and I hope the honourable Minister of Finance is paying attention to the issues that are being raised, because he knows they have been raised not only by the members opposite him but by many in the professional community.

Bill 63 has a clause in it which purports to deal with the so-called Quebec shuffle. The Quebec shuffle is a relatively simple mechanism in which there is the option on the part of companies locating in Quebec to value their assets differently for Quebec tax purposes than they value them for federal tax purposes. Quebec makes this opportunity available because it has not yet complied with general anti-avoidance rules which were put in place in the mid to late 1980s by the federal government.

The federal government assured all provinces that the GAR rules would have the impact of avoiding the kind of interprovincial shuffling which goes on when companies take advantage of the fact that in Alberta and Ontario, it is also possible to gain tax advantages by locating assets in those provinces for various tax purposes, but that particularly in Quebec it is advantageous to do so. Most companies that are moved for tax purposes at the point of asset disposal or change in ownership make use of the Quebec rules, Madam Speaker, although there are a number that do make use of the Alberta rules as well. Now these are well-known measures. We are assured by tax lawyers and by accountants and by legal professors that these are very well-known measures of avoidance.

They are also very serious measures which are worthy of a bill unto themselves. I would ask the Finance minister to recognize and to acknowledge that, indeed, he has had advice to this effect. The Finance minister has received advice from the Chartered Accountants of Canada, the Chartered Accountants of Manitoba and their associations, and from the Manitoba association of tax lawyers. He has correspondence from those three bodies which, unfortunately, he has not seen fit to share with this House. In the correspondence, the professional people involved in those professions urged the minister to take much more seriously than he apparently does the overall impacts of this legislation. Madam Speaker, I am told by members of the professional associations involved and by members of the tax lawyers committee that they have made very strong presentations to the Minister of Finance (Mr. Stefanson) urging him to present the Quebec shuffle, anti-avoidance rules for Manitoba, as a separate piece of legislation as they believe it ought to be.

The reasons for their concern are manifold. Specifically, the minister has proposed that he will undertake retroactive tax legislation. Now, this kind of legislation, Madam Speaker, has generally been found by courts to be lawful, to withstand challenges in court, and so tax lawyers have told the Finance minister--and I suppose his own officials have told him--that this legislation will likely stand up if it is challenged. There is indication, however, that it is likely that it will be challenged. Therefore, if it is like most tax legislation that is challenged, we will all be significantly older before the word on the law is any clearer, because typically such challenges take some years to wend their way through the tax labyrinth of the federal government.

Madam Speaker, first of all, it is at least possible, and some whom we have consulted indicate that it is likely, that this legislation will be challenged delaying significantly its implementation. Secondly, retroactive legislation should always be approached with great caution. It is rather like Humpty Dumpty who, in falling off the wall, gets himself rather messed up, and all the king's horses and all the king's men will have a great deal of difficulty putting Humpty back together again.

Madam Speaker, many of the deals which made use of Alberta, Ontario or Quebec were done in the late 1980s, early 1990s and right up through to the present day. Many of them involved companies which no longer exist. A number will have involved estates. Some will have implications for personal trusts. Others will have implications for pension plans and the beneficiaries of pension plans who hold assets in companies which have been disposed of using the Quebec shuffle and the Alberta version--I guess it would be the Alberta square dance or Quebec shuffle.

So, Madam Speaker, in going after the unlamented owners of the Winnipeg Jets to get the assets which should properly have been sold in Manitoba, this government is opening up a can of worms which may have very large volume in it. This is not a small can. This is one of those big commercial catch cans that has many, many worms in it.

Now, the requirement, of course, will be on Revenue Canada to investigate back to the 1991 implementation date of this tax legislation for the 1991-92 year and, in some cases, back to 1988 to discover what deals might have been done which might have implications for Manitoba's capital gains tax revenues. The government has been warned by many of its supporters--I do not know of a lot of tax accountants and tax lawyers who are supporters of any party other than the Conservative or Liberal Parties--have been warned by their supporters and by professionals in those bodies that they are treading on very dangerous ground with this legislation, but they are doing it because they are horribly, horribly embarrassed.

Madam Speaker, here is a government which was so enmeshed with the Winnipeg Jets that they had signed an interim operating agreement in 1991, that it put in place an interim steering committee which quarterly audited the Winnipeg Jets operation, that it had a securities commission reviewing the prospectuses and draft prospectuses and memorandums of offering all during 1994, '95 and '96 in increasing numbers as the panic around the Jets escalated.

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This is a government which, through The Freedom of Information Act, finally, after a great deal of work on the Ombudsman's part, was revealed to have thousands and thousands of pages of documentation on this team. Yet some day last June the Finance minister (Mr. Stefanson) awoke from a long sleep and said, my goodness, the assets have shuffled off to Quebec, the old shuffle off to Buffalo, but, in this case, it was Quebec. Well, this is really a tragedy.

What an irony that, just as children were breaking open their piggy banks on Peter Warren's flatbed, the owners of the Winnipeg Jets were petitioning their lawyers in Montreal to establish companies so they could avoid Manitoba taxes. These fine, upstanding corporate citizens in whose interests Manitobans were asked to sacrifice and with whom the government of Manitoba did many a dance were quietly hiding their assets in the province of Quebec.

Is it not a fine irony that just as les Nordiques went to Denver, les Jets went to Quebec? So Quebec did not actually lose a hockey team; they just had one they did not know about, and Quebec's hockey team last year played in Winnipeg, but it really was Quebec's hockey team. I guess that is kind of a quid pro quo; they lost the Nordiques, they got the Jets. The Nordiques won the Stanley Cup. The Jets are the desert weasels, or is it the Phoenix Coyotes? I am not sure which.

This is a tale that could only be written by someone with a great sense of humour or a great sense of tragedy. Bill 63 has in it legislation which by any precedent should be separate legislation in this House. It should go before committee so that people can tell the government what the likely implications of this kind of retroactive tax legislation is.

Now, Madam Speaker, we will vote for this legislation, because we believe in closing corporate loopholes. We believe in a tax system that is fair and treats everyone fairly and equally. We believe in Manitoba assets and Manitoba companies being taxed under Manitoba law when that is appropriate, so we will support the legislation. But let there be no doubt that we are watching through this legislation a tale of incredible incompetence on the part of this government and its advisers, that such assets should move to Quebec without their notice, that a well-known tax loophole known to this government for many years should be used by unscrupulous business people who want to maximize their return on their capital investment while stealing from the piggy banks of Manitoba children and calling themselves leading citizens in company with the Premier (Mr. Filmon) and his Finance minister (Mr. Stefanson).

This is a tragic piece of legislation. It should be separated into at least two bills. It should go before public committee for hearing. It is not simply a statute law amendment.

House Business

Hon. Darren Praznik (Deputy Government House Leader): Madam Speaker may just want to check at 4:30; there may be a willingness not to see the clock if she canvassed the House.

On House business, as well, I would like to announce that we would like to call the Standing Committee on Industrial Relations, I believe is the correct title of that committee, for Monday evening to commence at 6:30 to consider Bills 50 and 73. I believe both those bills are being taken through by the Labour minister (Mr. Toews). I believe, to date, there are 14 presenters on one particular piece of legislation. I am calling it today in the interest in ensuring there is sufficient time to inform those presenters so that they can govern themselves accordingly to be in attendance.

I believe the opposition House leader (Mr. Ashton) concurs in that, so I would like to make that announcement, as well, this afternoon.

Madam Speaker: First of all, is there leave for the Speaker not to see the clock at 4:30? [agreed]

The Standing Committee on Industrial Relations will meet Monday, November 4, at 6:30 p.m., to consider Bills 50 and 73.

Committee Changes

Mr. Edward Helwer (Gimli): Madam Speaker, I have some committee changes.

I move, seconded by the member for Sturgeon Creek (Mr. McAlpine), that the composition of the Standing Committee on Law Amendments for Thursday, 6:30 p.m: the member for River Heights (Mr. Radcliffe) for the member for Minnedosa (Mr. Gilleshammer).

I move, seconded by the member for St. Vital (Mrs. Render), that the composition of the Standing Committee on Public Utilities and Natural Resources for Friday, November 1, at 9 a.m: the member for Gladstone (Mr. Rocan) for the member for Gimli (Mr. Helwer).

I move, seconded by the member for St. Vital (Mrs. Render), that the composition of the Standing Committee on Law Amendments for Saturday, November 2, at 9 a.m., be amended as follows: the member for Niakwa (Mr. Reimer) for the member for Lakeside (Mr. Enns); the member for Fort Garry (Mrs. Vodrey) for the member for Portage la Prairie (Mr. Pallister).

I move, seconded by the member for Sturgeon Creek (Mr. McAlpine), that the composition of the Standing Committee on Public Utilities and Natural Resources for Saturday, November 2, at 9 a.m., be amended as follows: the member for Steinbach (Mr. Driedger) for the member for La Verendrye (Mr. Sveinson); the member for Lac du Bonnet (Mr. Praznik) for the member for Morris (Mr. Pitura); the member for Emerson (Mr. Penner) for the member for Sturgeon Creek (Mr. McAlpine); the member for Brandon West (Mr. McCrae) for the member for Gladstone (Mr. Rocan).

I move, seconded by the member for St. Vital (Mrs. Render), that the composition of the Standing Committee on Law Amendment for Monday, November 4, at 9 a.m., be amended as follows: the member for Ste. Rose (Mr. Cummings) for the member for Assiniboia (Mrs. McIntosh); the member for Kirkfield Park (Mr. Stefanson) for the member for Pembina (Mr. Dyck); the member for Charleswood (Mr. Ernst) for the member for St. Vital (Mrs. Render).

I move, seconded by the member for Riel (Mr. Newman), that the composition of the Standing Committee on Public Utilities and Natural Resources for Monday, November 4, at 9 a.m., be amended as follows: the member for Morris (Mr. Pitura) for the member for Kirkfield Park (Mr. Stefanson); the member for Gimli (Mr. Helwer) for the member for Ste. Rose (Mr. Cummings); the member for River Heights (Mr. Radcliffe) for the member for Lac du Bonnet (Mr. Praznik); and the member for La Verendrye (Mr. Sveinson) for the member for Brandon West (Mr. McCrae).

Motions agreed to.

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Mr. Leonard Evans (Brandon East): I am rising to speak on Bill 63, which I believe is standing in another person's name, but after speaking we are prepared to have it pass so that it can go to committee stage. Thank you, Madam Speaker.

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Madam Speaker: Okay. Just one moment, then. Is there leave to not allow Bill 63 to remain standing in the name of the honourable member for Rupertsland (Mr. Robinson)? [agreed]

Mr. Leonard Evans: As usual, a statute law, a taxation bill is one that is an omnibus bill containing many items on various matters of taxation, and indeed this one is no exception. We finally did get from the minister rather extensive committee reading notes, which helps to explain the various provisions.

Many of the provisions, of course, are very minor, and that is what is supposed to be in this bill, that is, minor adjustments to tax laws. But, as my colleague for Crescentwood (Mr. Sale) has very well outlined in a speech a few moments ago, this bill does contain a very important item, an item of policy that has been debated at length in this province, and that is the government's handling of the whole Winnipeg Jets issue.

It is just incredible that no one seemed to know that this company or indeed, I suppose, any companies could do what it has obviously done, and that is to shift assets to avoid paying taxes in the province of Manitoba. The question is going to be raised, I am sure, when it goes to court whether we can pass retroactive legislation. That is the real question. I, for one, want us to be able to collect this money. I do not think there is any disagreement on either side of this House, but the very real question is whether this is a possibility, because it is retroactive. So this remains to be seen, but it is regrettable that we have exposed ourselves in this sense. It is regrettable, the whole Winnipeg Jets issue has been one of great debate in this province, and while we all wanted the Winnipeg Jets, it is a matter of how much people are prepared to pay in keeping a privately owned hockey team.

As the Leader of the Opposition has said, we seem to be ready to privatize publicly owned assets and assets which serve the public of Manitoba, yet we are willing to get into some form of public arrangement for the private companies where we should not have any business, frankly. At any rate, it remains to be seen what will happen with this particular tax item with the so-called Quebec shuffle episode.

(Mr. Marcel Laurendeau, Deputy Speaker, in the Chair)

The bill contains, as I said a moment ago, a lot of miscellaneous measures, some of which are very technical. They are not controversial. They are amending some existing tax law. They are making provisions for miscellaneous adjustments. For example, we do not oppose this payroll tax refund for workplace training as being eliminated for workplace training costs incurred after April 2, 1996. These amendments will help to mitigate the tax impact for small corporations in the year they become an associated group. In other words, there is a limit under which you do not pay any payroll taxes, and when small companies are gathered together and are formed into one larger group, they then become subject to taxation. What this particular amendment does is to not exempt them from that taxation, but it does not click in, the taxation will not click in, will not become operative until the time they become, the precise part of the year in which they become, associated or amalgamated.

So this is a very minor amendment, but the point is that this government has failed the people of Manitoba on a very important policy promise they made back when the now Premier (Mr. Filmon) was Leader of the Opposition. The Premier, when he was in opposition, stated, and I heard him with my own ears on more than one occasion, that a Conservative government would totally eliminate the payroll tax, the Health and Post-Secondary Education Levy, as it is referred, but it is still there. Yes, the exemption level has been raised, which we support. Fewer companies may be paying this tax, but nevertheless it is still an important tax.

I do not have the numbers with me, but I think it is close to $200 million. It is a lot of money, and I predicted at the time that the Premier, when he was Leader of the Opposition, was making this promise, and also the former Minister of Finance, Mr. Manness, on many an occasion, I said, you will never do it. You will never eliminate the payroll tax, given the fact that the Manitoba government needs the revenue and given the fact that it does provide us with a new source of revenue which is not only beneficial, but a new source of revenue from the large corporations and from large federal Crown corporations that were not providing us with this revenue previously.

Nobody wants to hurt small business. In fact, when we brought in the Health and Education Levy, we did provide for exemption of a lot of small businesses, and I am sure, over the years, this limit would have been raised because no one wishes really to penalize the smaller or medium-sized companies. However, the limit has been raised, but the fact is that that tax is very much alive. I simply point out and remind honourable members opposite that they have failed to live up to a very important election promise that they made in 1988.

There is another area that I am concerned about in this particular bill, Mr. Deputy Speaker. That is the one with reference to personal care home fees. There are technical amendments here that affect individuals, including a restriction on Manitoba tax reduction claims in the year of a personal bankruptcy; well, that is a different issue. But there are other amendments related to changes in the rules governing the property and cost of living tax credit programs to clarify their application in regard to personal care home fees, and then I am concerned about that this particular amendment will provide the basis for the government to reduce assistance to those residents of personal care homes, in particular, as we stated, the cost-of-living tax credit and the property tax credit.

Both of these credits were made available by a previous Schreyer NDP government to personal care home residents, and it helped them financially over the years. Now we are seeing an amendment, and it is not clear. One cannot tell precisely what will happen from this amendment even though there was an explanatory note provided by the minister. I would read it here if I could just put my hand on that particular page. But, having read the explanation, we are still not clear as to the impact. It refers to personal care homes--here it is. Section 5(1.2) limits personal care home costs claimed as a rent equivalent for property tax credit purposes to one-half the portion of per diem charges not claimed as a medical expense.

As I would understand that, it lowers what is deemed to be rent paid in a personal care home. That is an estimate that has to be made, but if you do that, then you might be reducing the property tax credit and the cost-of-living tax credit available to those particular residents. On that matter, Mr. Deputy Speaker, I am particularly concerned at what the government has done over the last few years in terms of personal care home fees, because I found out in my constituency that the rates charged personal care home residents were raised to such an extent that those people living on the basic government Old Age Pension and Guaranteed Income Supplement were now being charged to such an extent that they only had about $1 or $2 a day left for their personal expenses.

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We have to remember that when you are in a personal care home, yes, you have a bed, you have accommodation, you have meals provided, but you still have the responsibility for buying your own toothbrushes, your clothing, medical aids, dental work. [interjection] Yes, you have grandchildren or great-grandchildren coming in. You might like to buy them a little bit of candy or something. There is no money left for these people. It was to the point where that particular category could apply for welfare. The government had reduced the disposable income left for those people to such an extent that they were considered under provincial allowance rules, the social allowance rules/regulations under the Minister of Family Services, to apply for welfare.

In fact, I wrote to every resident in a personal care home in Brandon East pointing out that, yes, the rates had risen, but if you are in this category, you should inquire with the administrator or your family to see whether or not you can apply for welfare or provincial assistance. In fact, Mr. Deputy Speaker, many did.

I recall being told later, about a year or so later, that this one gentleman who is very active in the Salvation Army--that is beside the point, I guess--[interjection] Yes, I was playing my accordion for a seniors group there. We were having a singsong at the local Salvation Army Citadel. At any rate, the point is that he said thanks very much, Len, for telling me about this because my mother was in that category. She was really having a difficult time, and now she gets about $100 a month welfare. Well, I said to myself, this is crazy. I mean, one branch of government is jacking up the rates to personal care home residents to such an extent that they can go to another branch of government and get some financial assistance to offset the situation they were being put in. I mean, this is not logical, and I do not think any member of this House wants to see that or would like to put those people in that particular bind or in that particular position. Nevertheless, that is what happened. I do not know exactly where people stand today, [interjection] but the fact is it is worse after Bill 36, my colleague from Burrows (Mr. Martindale) said.

So those people that are very vulnerable, that depend on the public through their government to provide them with security and safety and a healthy environment, we are actually penalizing. That, to me, is not acceptable.

We give a lot of lip service to helping people who are elderly and who are deprived and disabled. So we give all this lip service, but in reality, we really socked it to them. This government has socked it to them by raising those rates to an incredibly intolerably high level. I am concerned that this particular part of The Statute Law Amendment (Taxation) Act will put another turn of the screw, in other words, reduce, for those who may qualify, the availability of the tax credits for property tax credits and for the cost of living tax credit. We can discuss this in more detail in the Committee of the Whole when we do this section by section and try to get a clarification, but I do not think it is good news for residents of personal care homes.

I am speaking up on behalf of people who cannot speak up on behalf of it. These people do not have easy spokesmen out and around the community. There are certain groups in our society, invariably the poor and the people with very little income and people who are handicapped, whose voices are often not heard, and as a result, they are hurt by government policies. We do not realize it, and yet the reality is that they are being financially, in this case, hurt and it has a great bearing. If you only have a dollar or two a day, that in this day and age is not adequate.

Mr. Deputy Speaker, there are other parts of this bill, as I said, very technical in nature. A large part of it deals with motive fuel taxes, and there is reference to retail sales taxes affecting interprovincial trucking and how these matters are calculated. Those items are really not controversial, so I have nothing really to say about them in second reading. I would just, in closing, reiterate what my colleague for Crescentwood (Mr. Sale) has stated, and that is that it is not acceptable that we have had this possibility of this Quebec shuffle and that it is something that is simply--well, it is definitely going to be challenged in the courts as retroactive legislation which has no application.

An Honourable Member: We hope we win, though.

Mr. Leonard Evans: The Minister of Natural Resources (Mr. Driedger) says, we hope we win. I hope we win, too, because, goodness knows, we need the money. This item is so important it should not have been included in this bill. There should have been a completely separate bill on this item so that there would be more attention to it and it could be debated perhaps more fully than it can be in this particular legislation.

I realize that we have certain time limits here, so I am not going to continue further, although one could discuss other items and the policy spin-offs from them, including clarification of definition of revenue sharing with the municipalities, other items regarding income tax and how they impact on our people. I have figures tabulated by a national taxation research agency showing that Manitoba has the highest tax rates for low-income people in the country, and it may be unbelievable, but it is true. When it comes to the people in the lowest category of income, according to The Income Tax Act, Manitoba has the highest rate of income tax. So there are these items that we could spend some time on if we were not around the closing portion of the session. But, as I said, there are some parts of the bill that we have no problem with and certainly would be supporting.

So, with those few words, Mr. Deputy Speaker, we are prepared to see this bill go to Committee of the Whole.

Messages

Hon. Darren Praznik (Deputy Government House Leader): On behalf of the Minister of Finance (Mr. Stefanson), I would like to table the message from His Honour the Lieutenant Governor that accompanies this particular piece of legislation.

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Mr. Gary Kowalski (The Maples): Mr. Deputy Speaker, I would like to put a few words on the record, on behalf of our caucus, before this moves to the committee stage to hear representation from the public.

From my understanding, this bill contains amendments to five different tax laws: The Corporation Capital Tax Act, The Health and Post Secondary Education Tax Levy Act , The Income Tax Act, The Motive Fuel Tax Act and The Retail Sales Tax Act.

This bill has already made it into the media since it closed what has been called the Quebec loophole. By incorporating their company in Quebec prior to sale, corporations can avoid paying tax in Manitoba. The Winnipeg Jets owners pulled this move, and this bill is something like damage control for the government. This bill is retroactive, however, and this is generally not seen as a good move. One would also question why this loophole was not closed earlier.

Part 1 of this legislation is a housekeeping amendment that is an attempt to make the definition of the fiscal year clearer.

Part 2 of this bill concerns tax exemptions for health-related corporations. In essence, it offers a tax break in what seems to be an effort to encourage such corporations to merge.

Part 3 covers The Income Tax Act, making some minor changes to bankruptcy provisions and the definition of principal residence.

Other changes also include the 10 percent education benefits promised during the election. This section also contained the Manitoba tax avoidance section that goes back to 1991. This section closes the Quebec loophole.

Part 4 allows the oil and gas industry to take advantage of tax-free coloured diesel fuel for mineral exploration. Currently farmers have this advantage.

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Part 5 contains changes to The Retail Sales Tax Act. This change will affect the auto sales industry the most. Amendments brings the act up to date, including fleet vehicles and the formula for figuring out the tax rate. Amendments also cover interprovincial sales, geophysical survey of mining equipment, again getting another tax break into this legislation. We welcome this bill to move forward to a committee, so we can hear representations from the public.

Thank you, Mr. Deputy Speaker.

Mr. Deputy Speaker: Is the House ready for the question? The question before the House is second reading of Bill 63. Is it the will of the House to adopt the motion? Agreed?

Some Honourable Members: Agreed.

Mr. Deputy Speaker: Agreed and so ordered. Private Members' Business.

An Honourable Member: It was agreed not to see the clock.

Mr. Deputy Speaker: Where do you want to go to?

An Honourable Member: 60, 41.

An Honourable Member: Bill 17 and Bill 41.

An Honourable Member: 17 first, please.

Mr. Deputy Speaker: I am sorry.

Bill 17--The Government Essential Services Act

Mr. Deputy Speaker: On the proposed motion the honourable Minister of Labour (Mr. Toews), Bill 17, The Government Essential Services Act (Loi sur les services gouvernementaux essentiels), standing in the name of the honourable member for Inkster (Mr. Lamoureux), who has 29 minutes remaining.

Is there leave for this matter to remain standing?

Some Honourable Members: No

Mr. Deputy Speaker: No? Leave has been denied.

Is the House ready for the question. The question before the House is second reading of Bill 17. Is it the will of the House to adopt the motion?

Some Honourable Members: Agreed.

Mr. Deputy Speaker: Agreed and so ordered.

Bill 41--The Fisheries Amendment Act

Mr. Deputy Speaker: On the proposed motion of the honourable Minister of Natural Resources (Mr. Driedger), Bill 41, The Fisheries Amendment Act; Loi modifiant la Loi sur la pêche, standing in the name of the honourable member for Brandon East (Mr. Leonard Evans).

Is there leave for this matter to remain standing?

Some Honourable Members: No.

Mr. Deputy Speaker: Leave has been denied.

Ms. Rosann Wowchuk (Swan River): Mr. Deputy Speaker, I want to take a few moments to put some comments on the Fisheries Amendment bill. The fishing industry is a very important industry in our province and very important to the economy of many of our northern and aboriginal communities, and it is an industry that we must look after. Unfortunately, in my opinion, particularly in my constituency, when I look at what the government has been doing, there has been neglect in keeping this a sustainable industry.

The purpose of this bill is to transfer some of the regulatory powers currently held by the federal fisheries over to the province. The bill deals mostly with licensing requirements and enforcement. The concern we have, and a concern that has been raised with us, is what the implications of this bill are for First Nations people. The agreement the First Nations have with treaty rights is between the federal government and the bands, and when we have a provincial government now taking over some of the regulatory powers, it has been raised with us that there might be a concern for aboriginal communities.

An Honourable Member: The First Nations are excluded from this. That stays with the federal government.

Ms. Wowchuk: Now the minister tells us that the First Nations have been excluded from this, and I wish that message had been communicated to the First Nations to ensure them that was actually true, that they do not have any concerns with it, but when I look at the record of this government with communicating with the public, for example, we have had great discussions in the last few days about how this government has refused to travel out to rural communities and talk about the privatization of Manitoba Telephone, I seem to see a bit of spillover here.

If the minister is accurate and indicates that there are no problems for First Nations, I wish that his department had been in contact with the aboriginal communities and let them know what the intent of this legislation was, to give them that insurance, because that has been raised with us and there are people who are coming, I understand, from some of the First Nations communities, who are going to be making presentations when this bill goes to committee to address these concerns. So I hope that that would be accurate.

We must be sure that when we transfer powers from the federal to provincial governments, there is not interference because these agreements, these treaties that have been signed, are from First Nations to the federal government. Those people have been given the right to hunt and fish, and the provincial government should not be trying to limit what is covered under a treaty. Those would supersede.

But, Mr. Deputy Speaker, I also want to talk just briefly about the fishing industry in my constituency, that being on Lake Winnipegosis. As I have said, it is an important part of the economy in many communities, but the people on Lake Winnipegosis who fish for a living have had a serious downturn in their revenues, and when I meet with these people, they have given many suggestions about what should be done. They want to be involved with the government in resolving the problem and looking at ways that we can rehabilitate that lake, but they have not been getting a very good return for their efforts in the last little while. Part of it is that the stocks in the lake are so low, and the other fact is that this government has not done a very good job of restocking that lake in comparison to what they have done with restocking of the sport-fishing lakes. This is a commercial lake that has been sadly neglected.

Now the people of the area have put forward several suggestions in trying to upgrade the lake, and the government has put forward their suggestions. One of the suggestions that the government has put forward is to close down the summer fishing on that lake, and I have to tell the minister that that is not going over very well with the fishermen. The fishermen feel that shutting down the summer fishing season is only taking income away from one small group of people and not increasing the income for the winter fishermen.

I am very pleased that the minister is here and is listening to these comments because this is what the fishermen in my constituency are saying. I also want to alert the minister to the fact that the winter fishermen, a small group of fishermen, are proposing now to also reduce the net size. Now, they used to have a four-inch mesh on Lake Winnipegosis; it went down to three-inch; and now fishermen are proposing to go down to two-and-three-quarter-inch mesh. If the fish stocks are starting to come back, it is not going to help these fish stocks if we start to go for a smaller mesh.

So I want to tell the minister that his advisory committee, or some people on the lake, are making recommendations, and I understand that there is going to be a meeting this coming weekend--this Sunday, in fact--where the advisory committee will make a decision as to whether or not they want to go with the smaller mesh size, which is two and three-quarters inch. I hope that the minister will recognize that this is a bad move, will not do anything to help the fish stocks, and is not in the best interests of the community, is not in the best interests of the fishermen, is not in the best interests of the aboriginal people who try to make a living on that lake. I hope he will address that concern.

With those few comments--the other concern that we have with the bill is that this bill gives increasing powers to the minister over marketing and the ability for the minister to permit fishing without a licence at his or her discretion. That is very significant. When we think back to about what we heard over the last week about the fishing that was happening up north, and certain people had made allegations about the government giving permission for people to fish on lakes, and that is illegal, now this piece of legislation will make it possible for the minister to permit fishing without a licence at his discretion. That, I think, again, as we have seen in other legislation, gives the minister an awful lot of power, and I do not understand why the minister would want the ability to give permits to fish without these people having licences. Perhaps the minister, when we get to committee, can explain to us why he would want that kind of power, and I would hope that he would not use it to let people go into lakes which are in the far north where the aboriginal people are supposed to have control over the lakes. So we would have people from southern Manitoba going into the North and exploiting the resources that have been there for generations for people of the North to use.

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With those few comments, Mr. Deputy Speaker, I know that one of my other colleagues may want to say a few words about this. We want to have feedback from the aboriginal communities; we want assurances that this legislation is not interfering with the treaty rights of First Nations; and we want explanations from the minister as to why he would want the power to be able to issue licences, permits to fish without licences. Thank you.

Mr. Eric Robinson (Rupertsland): Mr. Deputy Speaker, my comments are going to be very brief on this matter, The Fisheries Amendment Act, Bill 41. I must confess that I have not made myself totally aware of the bill, and I am trying to gain a better understanding of the contents of the bill and if there are, indeed, going to be implications with respect to treaty and aboriginal rights and First Nations people's aboriginal right or treaty right to fishing.

However, from what we have been able to ascertain in our discussions with First Nations representative organizations, including the Interlake Reserves Tribal Council and representative organizations that represent First Nations communities in Manitoba, particularly those First Nations communities that have a direct interest in this traditional economy have told us, in fact, that this bill gives a great deal of power to the province and also to the Minister responsible for Natural Resources. Their fear is that in referring it and comparing it to the 1930 Natural Resources Transfer Agreement, which was done after the treaties were signed, commencing with Treaty No. 1 in 1871 and the subsequent treaties, particularly Treaty No. 5, which encompasses a great deal of northern Manitoba territory, they feel that this may be a bill which gives, again, authority to the provincial government, where they feel that it infringes on the treaty rights of First Nations people, the First Nations people's treaty right to the fishery. Although the word is that this will not occur, aboriginal leaders and people and particularly fishermen are suspicious about this bill and its potential implications. My colleagues the member for Dauphin (Mr. Struthers) and the member for Interlake (Mr. Clif Evans), I believe, outlined some of the concerns and some of the real concerns that exist in Manitoba with respect to the fishing industry.

The way we understand this act is that it is going to consolidate and co-ordinate authority for the licensing and allocation of all aquatic organisms harvested in The Fisheries Act of Manitoba. Also, the act will allow the transfer of appropriate federal regulations from the Manitoba fishery regulations 1987 to provincial regulations. Now, as we understand it, the intent is to transfer administration and regulations and not to make changes to the regulations itself.

The second component, the way we understand it, of the legislation is to incorporate the authority to control leech harvest in the province. Apparently there is no specific authority to administer the harvest, and as interest continues to increase for the commercial harvest of bait leeches, the amendment will help manage the resource more effectively.

A couple of areas that we read in the briefing notes that were prepared for the minister include the powers that are given in the bill to the minister, including the issuing of a special sport fishing licence. A couple years ago we had a problem in northern Manitoba with the Gods River First Nation, where the First Nation people there wanted to exercise their treaty right and treaty and aboriginal right to have a fishing derby and were not allowed by this government, but they proceeded and practised their inherent right and their treaty right to embark upon a fishing derby and thus proceeded, as far as I understand.

So these are some of the concerns that are being expressed to us, and having met with the Norway House First Nation a couple days ago, the member for The Pas (Mr. Lathlin) and I were told in no uncertain terms that it is no longer acceptable where First Nations people are not given the proper consultation on matters relating to such bills as Bill 41, where aboriginal people--when we take Lake Winnipeg, for example, Mr. Deputy Speaker, where we have over 300 aboriginal fishermen and 11 nonaboriginal fishermen fishing that lake and aboriginal fishermen having to abide by zones and by areas and having to abide by these regulations.

So it is only understandable that First Nations people would be suspicious of any such legislation such as Bill 41. It makes all the sense in the world to me and my colleagues that First Nations and other aboriginal people would be suspicious of such legislation, although we are told that it is a companion to a federal legislation already in existence. So we are indeed looking forward to having representation from other aboriginal organizations, aboriginal leadership in the next few days until this House rises on next Thursday. So we indeed look forward to that.

In the meantime, Mr. Deputy Speaker, I believe I am the last that will speak on this bill from our side of the House, and we are prepared to pass it to committee and look forward to other comments. Thank you.

Mr. Deputy Speaker: Is the House ready for the question? The question before the House is second reading, Bill 41.

Mr. Gary Kowalski (The Maples): Mr. Deputy Speaker, just a few words to put on the record on behalf of our caucus. I understand, Bill 41, The Fisheries Amendment Act, that this bill is a transfer of regulations. No changes in the current legislation are being made. This act will consolidate and co-ordinate authority for licensing and allocation of aquatic organisms harvested under The Fisheries Act of Manitoba. This includes both commercial and sport fishing licence. This new act allows the transfer of appropriate federal regulations from Manitoba Fisheries regulations, 1987, to provincial regulations.

The second purpose of this legislation, according to the minister, will give him the authority to regulate the live bait industry in Manitoba. Specifically, the minister made reference to the new leech harvest. With sport fishing now a multimillion dollar industry, live bait such as leeches has become a growing industry. Anyone with a cheesecloth net and a willingness to get their feet wet can sell live bait on the roadside. Small places have been doing this for years without any impact on the environment. It is quite probable that a commercial harvest may be started.

So, Mr. Deputy Speaker, we are interested to see if the public have any concerns with this bill, and we welcome it going to committee for presentations by the public. Thank you.

Mr. Deputy Speaker: Is the House ready for the question? The question before the House is second reading, Bill 41. Is it the will of the House to adopt the motion?

An Honourable Member: Agreed.

Mr. Deputy Speaker: Agreed and so ordered.