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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 26 - Evidence

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OTTAWA, Thursday, April 24, 1997

The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-92, to amend the Income Tax Act, the Income Tax Application Rules and another Act related to the Income Tax Act, met this day at 11:05 a.m. to give consideration to the bill.

Senator Michael Kirby (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, Bill C-92 is essentially a bill emanating from the 1996 budget. As usual, it amends several acts.

We have as witnesses this morning Mr. David Dodge, the Deputy Minister of Finance, and Mr. Barry Campbell, Parliamentary Secretary to the Minister of Finance. In addition, there are several other finance officials here prepared to come to the deputy's assistance if he needs it.

I suggest that we begin, Mr. Dodge, with whatever brief or opening comments you have.

Mr. David A. Dodge, Deputy Minister, Department of Finance: Honourable senators, it is a real pleasure to be here with you today to discuss Bill C-92. As you noted, the presentation of the bill, while it has had favourable receipt, was somewhat delayed, and certainly it was not our intention that this delay take place. What we normally try to do is put drafts of the tax legislation pertaining to a budget out some time in June before Parliament rises for the summer break with the intention of coming back usually after Thanksgiving with the legislation. We did not put a draft of this one out last June because technically it was a rather uncomplicated bill, unlike many of the bills that we must present. Our intent was to come forward in October with the bill.

Given that provisions in the bill relate to amendments of sections in the act which were under revision in the technical bill, we had to get the technical bill into the house before we could put this bill forward. For various reasons, largely because of the clogged calendar in the house, we did not get that in until the beginning of December, so this did not get tabled.

This is not a practice of which we are proud, and so on behalf of the department and my minister, we do apologize for the rather late receipt of this bill.

However, there are important initiatives in the bill, and I will catalogue those. There are several important initiatives effecting the resource sector, including significant improvements in terms of the treatment of flow-through shares. There are also measures designed to keep the level of special tax assistance for the labour-sponsored venture capital corporation in line with the realities and other measures which affect a broad range of Canadians.

First, in particular, the bill will enhance the sustainability and the targeting of tax assistance with respect to RRSPs. As you know, the bill proposes that the limit will be frozen at $13,500 through the year 2003, then increased to $14,500 in 2004, and subsequently to $15,500 in 2005. There are comparable adjustments to the other limits.

Second, and quite importantly, the age limit for maturing RPPs and RRSPs will be reduced from 71 to 69 with some appropriate transition provisions.

Finally, to try to assist people who have been unable to use their RRSP room in their younger years, what we have done is removed the seven-year limit on the carry forward of unused room.

There are several measures in the bill to increase tax assistance to students. I will not go through those. In the legislation you will be receiving sometime following this budget, those particular measures are further enhanced.

Third, an extremely important element of Bill C-92 is the taxation component of the new child support rules. Specifically, the bill provides that child support paid under a court order or written agreement after April 1997 not be deductible by the payor nor included in the recipient's income. These are important changes and are the counterparts to Bill C-41, which has already been through the Senate.

Finally, there are important provisions to improve the position of the charitable sector by increasing from 20 per cent to 50 per cent the annual limit on the amount of a taxpayer's net income available for tax-assisted charitable donations. Again, this is another area that we have built on subsequently in the 1997 budget and will be the subject of further legislation.

To sum up, Bill C-92 targets important tax assistance to education, to children, and to the charitable sector while enhancing the fairness and effectiveness of the system in a range of other areas.

Mr. Barry Campbell, Parliamentary Secretary to the Minister of Finance: I would add to the deputy's comments that I am pleased as Parliament Secretary to the Minister to be with you today before this committee on this important bill. We will be happy to answer questions.

With respect to timing from the moment the bill was tabled in the house, we proceeded expeditiously, with the cooperation of all parties, to pre-study of the bill before the committee. Hearings proceeded extremely quickly before the Standing Committee on Finance, and the bill was back to the House in record time. While the deputy minister has explained the delays that got the process going, I want to ensure members of your committee that we did everything in our power at the house to get the bill to you as fast as possible.

Senator Angus: Senator Stewart and I have an ongoing issue with respect to timing.

The Chairman: In which case you are on the same side of the issue.

Senator Angus: We are on the same side of nearly every issue involving matters of principle. This is a concern to us; there is no doubt about it. Here we are on the eve of the dissolution of Parliament, and suddenly there is a plethora of legislation. I cannot tell you how many phone calls we have received in the last few days for scheduling. The Senate does not know whether it is sitting or not. It is chaos.

We had an example in the past week with Bill C-82, which is a major piece of financial legislation. The bill is an inch or so thick. We were called in and told there would be no witnesses because if we wanted the good stuff in the bill, we better not point out the bad things in the bill and make representations, which makes a mockery of the whole process.

That is one aspect that has to do with the political expediency, but there is another. Senator Stewart and I are particularly ad idem on this issue, and it has to do with budget bills and consequential legislation. Once the Minister of Finance completes his statements in the House on budget night, these matters affect the financial markets. They affect individuals in a very major way.

I think you mentioned, deputy minister, that the budget was introduced sometime in February 1996. Is there not some way that we could deal with this in a different fashion? Each time there is this great expression -- it will not happen again -- there is an election. Here there has been no election. Mr. Martin brought in his budget. It had its good points and bad points, but it was the budget, and I do not know how we can do it better. I would like to hear from you on that because I know you are concerned.

Mr. Dodge: Senator, I wish I had a complete answer to that question. We are struggling always to get the draft of the bill out before Parliament rises for the summer. We think that the draft process is, generally speaking, the right way to go because it is very important that legislation have an exposure to the community at large before Parliament is asked to deal with what are inevitably many technical issues. Our practice is to get that out before Parliament rises for the summer.

Senator Angus: Do you mean following a budget?

Mr. Dodge: Yes, following a budget. The budget is normally in February and the draft legislation follows in June. We always try to have that introduced in the House around Thanksgiving to allow adequate time for it to be passed prior to the next budget. That is the basic issue prior to Revenue Canada actually having to collect the tax the following April.

We think it is a reasonable schedule, providing for a reasonable amount of input from the professional community before a bill actually is introduced in Parliament because none of us likes to have long rafts of technical amendments either at second reading in the House of Commons or when the bill is studied in the Senate.

This bill is rather simple as tax bills go, and so we skipped the draft last June on this because the motions were rather clear and are reflected very much word for word in the bill before you.

However, our problem came in the fall. I take responsibility for this. The drafting was predicated on the prior introduction of the technical bill. When we came forward with the technical bill in October, it was our plan to introduce it and then a few days later introduce this bill. We found that we had a couple of unanticipated problems which delayed the technical bill; hence, this bill was delayed.

There is no excuse for that other than the fact that we had not anticipated the problems in the technical bill. Generally speaking, although not always, these bills are absolutely independent, so the order of introduction does not matter very much. This year it did, and quite frankly, senator, we got caught a bit.

Senator Angus: That is a very candid response, and it probably goes a way to cutting off my questions. I appreciate your frankness, Mr. Dodge. However, on the other hand, I would like to probe a little more.

You referred to motions. I take it those are the ways and means motions. Could you explain that process a little more because I think we need to demystify the legislative process. In a sense, you have a budget. It is then in effect without the enabling legislation or the substantive legislation which enacts it. What is its status in the meantime?

Let us say we do not pass this bill today. Let us say it gets stuck in the good old banking committee and Mr. Chrétien holds his press conference on Sunday morning at 11 o'clock. What happens?

Mr. Dodge: Then the bill is not in effect. The legislation must be passed by Parliament and receive Royal Assent for the Department of National Revenue to make assessments in respect of the 1996 tax year. The bill must be in effect to do that.

This is a rather unusual year, but on May 1, as you are aware, the new child support regime is supposed to kick in. The guidelines were included in Bill C-41 predicated on the fact that Bill C-92 would be passed. Hence, we have an unusual problem surrounding May 1 this year. Normally what would happen is if the tax bill was not passed by April 30, Revenue Canada would simply stockpile the returns that were affected by a provision in the act, and final assessments would not be issued.

All the work gets done. People file on that basis, but as you will have noted with this year's returns, there are a couple of places where Revenue Canada has flagged that this is the intent of Parliament. They are requesting taxpayers to file on this basis, but final assessments can only be completed once the legislation actually is passed.

Your second question related to the nature of the ways and means motion.

Senator Angus: What is the legal effect in the interim period?

Mr. Dodge: I probably should ask Mr. Jewett, the assistant deputy minister from our legal branch, to come to the table. I will explain it in lay terms.

Senator Angus: That will be sufficient. We have great respect for Mr. Jewett.

Mr. Dodge: Essentially we have a convention stipulating that tax measures on the income tax side will be applicable as of the date of tabling of a motion. That is purely a convention, but it is a long-standing convention.Obviously, if Parliament does not finally pass a bill and give it Royal Assent, then any money collected under that will have to be refunded to the taxpayer. Similarly, with respect to any relief that is afforded, the tax would be exigible. This is purely by a long-standing convention that, as anything, is to come into force as of the day of the tabling of a motion. In fact, national revenue and taxpayers are expected to comply on that basis. It is conventional and it has worked pretty well over the years.

The conventions with respect to the Excise Act and the Excise Tax Act are slightly different. Generally speaking, since it is corporations that remit tax, what we have done is followed up very quickly with a piece of law. Again, that law will be retroactive to the date of the tabling of the motion. It is formally a notice of motion. It will be retroactive to that. Corporations have complied, although not always with respect to excise tax matters and sales tax matters. We have had instances where they withheld payment until such time as the law was passed.

With respect to the Excise Act, those remittances are made as the cigarettes fall off the end of the line or as the booze comes out of bond, and we have had absolute cooperation from the producers in these areas over time.

Senator Angus: You indicated that in this case the laws or the issues that need the legislation are stand alone and that when you draft ways and means motions, they generally address the substance of each and every item in a legalistic way.

I have a problem, and I think Senator Stewart probably will want to follow up. Rather than waiting until the fall to have the legislation after a February budget, could these provisions not be ready at the time of the budget? I realize there are often last minute things to be dealt with during the latter part of February and during March. This is the problem. Invariably, I have noted that you have cobbled on new things in addition to the budget.

What happens is we get into this box where we feel as if we are being remiss in our duties as senators in terms of not being able to give a bill real scrutiny. Today we are faced with the clock ticking, and it is ridiculous.

Mr. Dodge: Senator, we, more than any one else, appreciate the problems to which this gives rise. However, suppose we got the draft legislation out at the end of April or sometime in April rather than our target at the moment, which is mid-June. I could not recommend to Parliament that we not go through the draft bill stage.

The draft bill stage is enormously useful in most years because a number of the things we are doing are quite complicated, and we cannot be always sure that the drafting we have laid down absolutely hits the intent of the motion. That is why we have adopted this practice. Quite frankly, it serves everyone well -- Parliament, the taxpayer and ourselves. Even under the best of circumstances, I would not see these bills normally being dealt with by Parliament until the fall of the year following the budget simply to allow enough time for consultation on the technical issues in the community.

Senator Angus: Even though they are in the financial markets in effect? Take flow-through shares as an example.

Mr. Dodge: That is correct. Generally speaking, other than straight, ordinary, everyday technical changes, we make changes because we find that the drafting of the law has caught someone in a way which was not the policy intent of the law. We must leave it out there in draft form long enough so the various interested parties can have a go at it and make representations back to us. Otherwise, the parliamentary process would be dragged out over a fairly lengthy period of time. Our view is that we are always better to come with a bill that requires as few technical amendments as possible when we come to Parliament, but Mr. Jewett is the chief drafter who has done it for many years.

Senator Angus: Do you agree with his description of the ways and means motions and convention and the way they work?

Mr. M.L. Jewett, Q.C., Assistant Deputy Minister and Counsel, Department of Finance: Yes, I do. The notice of ways and means motions tabled on budget night are fairly general, as Mr. Dodge has pointed out. It is relatively rare for them to be tightening subsequently. Usually they relieve something we found which was not intended to be caught.

Your comments and questions are certainly well taken. You may recall in the 1985 discussion paper put out by the then Minister of Finance. It canvassed the possibility of a provisional collection of taxes act which would in effect have forced tax measures to be passed within six months of a budget. That disappeared into a black hole. There was virtually no support for that kind of measure that would force it on.

Largely for the reasons Mr. Dodge has put forward, I think there is a need for consultation with the professional community. If you get the kind of schedule that we have laid out as desirable and if one can hold to that schedule, it is a reasonable way to proceed.

Senator Angus: Does the Canadian Tax Foundation agree with that process when you talk about the industry?

Mr. Jewett: A joint committee of the Canadian Bar Association and the CICA, the chartered accountants, participated in that process. Yes, you would find they were quite supportive of that. They are certainly supportive of the principle of getting out draft legislation so they have an opportunity to comment.

Mr. Campbell: From my perspective as the former Vice-Chairman of the Standing Committee on Finance and continuing on as a member of that committee, in support of what Mr. Dodge said a moment ago, given the consultation which results in the finalization of a technical bill, when the bill gets to our committee, it is rare for there to be any amendments other than technical or translation. All the wrinkles have been ironed out by that time. It is very useful to us on the finance committee as it is to you on this committee.

Senator Angus: There has been discussion academically in recent years, if not politically, about why this system has persisted. It clearly does not work well. I am talking about waiting for one frosty evening a year to put everything in one bundled package, whereas in other jurisdictions, notably south of the border, these kinds of policy measures involving fiscal changes are brought in over a period of time. It provides for a much more developed hearing and investigation into pros and cons. Have we considered that and are we close to something which is more workable?

Mr. Dodge: First, when we talk to our American colleagues, they wish that they had a system such as ours. They often run into huge problems when Congress gets tied up with something else and the tax legislation gets tied up. Basically, they have a much messier situation on their hands than we do. Most countries look to us as having a reasonably good practice.

Second, there is quite a bit of difference between Canadian tax law and U.S. tax law. We have a convention whereby we do as much as we can in law and, by comparison, rather little through regulation. It may not seem that way, but compared to the U.S. tax code, for example, they have this much law and this much regulation. In comparison we have this much law and this much regulation. It is quite a different system.

Philosophically, we have argued always that it is important on these matters for Parliament to have a go at it. It cannot be all done behind the scenes with regulations. That means that our laws tend to be quite thick.

Another problem you will have noted is that changing a piece of law often requires a lot more law than what was there because there is an enormous transitional provision, and that is clearly spelled out. Therefore, the law does tend to get very complex. However, it is important that laws be thought through and brought to the scrutiny of Parliament -- hence, the tradition we have followed.

To streamline this practice, we have moved over the last decade from a system of using only one bill to a process of using two bills: the technical bill, which tends to be the fatter one, and the budget implementation bill, which tends to be the slimmer one. We think that is a good process.

Maybe we should go to having more than one technical bill a year. However, that strains the consultation exercise because with the joint committee, as Mr. Jewett mentioned, we have a very intensive process of going through bills line by line with the CICA and the Canadian Bar Association in an attempt to get it right.

Is there a better way? One always hopes there is a better way. Certainly when one goes to the tax foundation and sees literally thousands of people out there earning $300, $400 and $500 or more an hour, one wonders whether that is the best allocation of national resources, taking all of that talent and pouring it into the tax system. However, that is the mechanism we have developed.

As deputy minister and former ADM of the Tax Policy Branch, I have felt that it is important for Parliament to have its say on as much of what we are doing as they can and that the public and the interested parties have appropriate time to make their input.

Senator Angus: In conclusion on this line of questioning, can we assume safely that Bill C-92 only deals with budget matters, or are there other deals?

Mr. Dodge: In fact, it does not quite deal with all of the budget matters. As you know, you will be dealing later on today with Bill C-93. Given that we made some changes in the 1997 budget, some of the things that originally would have been in this bill are in that bill, in particular related to the working income supplement provisions.

Senator Angus: There is not anything in this bill which is not directly related to the 1996 budget.

Mr. Dodge: There is not supposed to be.

Senator Angus: We usually hear after the fact that you let the XYZ Company deal slip through.

Mr. Dodge: No. The one thing in this bill which actually antedates the 1996 budget is the foreign income reporting provisions.

Mr. Jewett: Which was in the 1995 budget, and it was not intended to be legislated immediately.

The Chairman: That is a wonderful segue into where Senator Stewart is coming from since there is a 1995 budget provision.

Senator Stewart: My first question is really a comment. I am objecting to the use of the word "convention". You will all remember a certain constitutional decision in 1981 which now has legal effect. I question whether the practice with regard to the notion that taxes are payable as of the delivery of the budget has legal effect. This is a legal, constitutional question. Certainly the court seems to have decided that a convention is a term in the law whereas a practice is not, and I think what we are dealing with here is a practice, not a convention.

Mr. Jewett: There is no question that it is a practice. It is not a convention in the constitutional conventional sense, no.

Senator Stewart: I am sure you know the history that there was such a practice in the United Kingdom, and some cantankerous gentleman decided that Her Majesty's government was wrong. He went to court and eventually proved that Her Majesty's government was wrong. Was it 1913? I have forgotten the name of the case. They then brought in their Provisional Collection of Taxes Act to deal with the problem. That leads me to my first question.

Under the Provisional Collection of Taxes Act -- I believe it is 1913 -- there is laid down a timetable for budget bills in the Parliament of the United Kingdom. The deputy minister made reference to that earlier. As I recall, unless the budget bill has cleared the House of Commons or has become law, the Parliament Act, 1911, has an effect here perhaps. Unless it has cleared either the House of Commons or Parliament itself before the end of August, then it does not go forward and ceases to have effect. It has effect initially as of midnight budget day, but if the bill which eventuated from the budget has not been enacted before a certain date -- I believe it is sometime in August -- then the provisional collection is rolled back.

You told us, Mr. Dodge, that in Canada we seem to require a lot more time than that. Why is it that the British read faster? Why can their tax professionals read their notice of ways and means motions or their draft bills faster and can react more quickly to the treasury than their counterparts in Canada?

Mr. Dodge: In part, it is for the reason I talked about with respect to the U.S. law. The British, like the Americans, put a lot less of their tax details in law and a lot more in regulation.

As we know in the ways and means motion, we can put down a general motion. It is quite clear as to the intent of what is supposed to go on. Everyone more or less understands it, but then it is very difficult to get the precise law around that. We do that in law rather than in regulation. The British, like the Americans, tend to do a lot more in regulation, which makes a big difference.

Senator Stewart: I will accept that answer at least for the time being.

I guess you cannot put too much detail in the notice of ways and means motion as Mr. Benson found out; is that correct?

Mr. Dodge:You can.

Senator Stewart: Was his experience that the bill had to be founded on the notice of ways and means motion?

Mr. Dodge: That is right.

Senator Stewart: The motion was so detailed that when they went to draft the bill, the department found itself in real trouble.

Mr. Dodge: We have had that problem from time to time. Hence, general motions are used. From time to time, though, as you are aware, we use highly specific motions where we have a highly specific problem we are trying to deal with.

Senator Stewart: Let us go to the history of the situation in which we now find ourselves. You tell us that you would have gone ahead with this bill in the fall, and presumably expeditiously, if it had not been because of the need for the technical bill first. When was that technical bill introduced in the House of Commons? When did it get to the point where you could introduce this bill?

Mr. Dodge: We had intended to put the technical bill in around Thanksgiving and to follow immediately with what is now Bill C-92. It was only at the last minute in October that we found a glitch in the technical bill, so we had to delay it. Then we had further delays in introducing the bill because a terrible jam of legislation went through during the period of late October. Therefore, we did not get the technical bill tabled until about December 2.

Mr. Jewett: December 5.

Mr. Dodge: Then we followed two days later with this bill.

Senator Stewart: When did this bill pass the House of Commons?

Mr. Jewett: The present bill?

Senator Stewart: Yes.

Mr. Jewett: About a week ago.

Senator Angus: April 21.

Senator Stewart: It was in the House of Commons from early December until April.

The reason I am pursuing this line of questioning is because I suspect the problem may not be in the Department of Finance; it may be in the procedures of the House of Commons. I will be more specific. I may be wrong on this, but it used to be that the House of Commons worked a long day. They were able to work after dinner. That is when people were stronger than they are now. Then they introduced their compulsory holiday weeks and their timetable. I think this is the truth of the matter. The problem is not in the Department of Finance, entirely at least. Most of the problem relates to changes in the way the House of Commons does its business. I am sure that they will adduce good reasons -- Mr. Campbell is panting to do so -- for making the changes which were made, but I think that is the problem.

Mr. Campbell: As someone who spent 15 years on Bay Street, I can tell you that I work a lot harder in the House of Commons than I did on Bay Street. I do not accept that suggestion.

Senator Angus: For one-tenth the pay, I might add.

Mr. Campbell: You cannot suggest seriously that we do not work a full day. We proceeded quite expeditiously with this legislation. I do want to add one thing, lest I sound like Pogo, that I have seen the enemy and it is us.

One of the additional problems we ran into with this bill is the extensive debate that went on in the other places we referred to in Bill C-41 which might have had some implications on this bill, Bill C-92. The delay in Bill C-41 was extensive.

Senator Stewart: Was that the technical bill?

Mr. Campbell: No, it dealt with child support. The extensive discussions that senators felt appropriate for that bill also gave us some pause in dealing with the bill in the House. Until that was dispensed with, we had reason to not proceed in the House, and we proceeded expeditiously when that had been addressed. I think the system is working very well.

The Chairman: Indeed, there may well be a linkage between Bill C-92 and Bill C-41. Therefore, for this one unique case, you may have a rebuttal to Senator Stewart's argument.

I cannot resist pointing out that this committee has to sit at 6 o'clock tonight to deal with Bill C-37 and Bill C-93, neither of which have predecessors. Therefore, while your response may be relevant to the direct bill we are talking about, I do not think it comes close to addressing the general process question that Senator Stewart raised.

Mr. Campbell: We have proceeded in a more normal time frame on the Budget Implementation Act, Bill C-93. The deputy minister has explained why Bill C-92, in particular the technical measures, was delayed. However, Bill C-93, which deals with budget implementation, is proceeding just about at the proper pace.

The Chairman: What about Bill C-37?

Mr. Campbell: It is a tax treaty bill.

The Chairman: It has been lying around over there for at least six months.

Mr. Jewett: That is true.

The Chairman: One can deal with the substance of each individual bill. The sense of this committee is that there are two problems. One is the inability of the House to manage its affairs in anything like a reasonable order. Those of us who have had business careers have often wondered how rapidly our companies would go bankrupt were we to manage them the way the house is managed.

I do think there is an assumption on the part of government members in the house, including ministers, regardless of party -- this was absolutely true from 1984 to 1994 as well -- that the Senate is an afterthought and will deal with bills whenever the house tells it to do so. I would have hoped that between the HST bill, Bill C-41 and several others, that that myth has at least been dispelled.

There has been a frustration on this committee because we deal with business issues, and we believe it is important to get business issues right. We deal with them in a non-partisan way. I cannot recall a bill that deals with business policy issues that this committee has ever had a partisan vote on. We frankly resent frequently being told to dispense with things quickly because it happens to meet a timetable which we were not involved in setting.

Mr. Campbell: In my term, I have been extremely mindful of the need to get matters to the Senate to allow adequate time for study. I can assure you that I have fought, as no doubt my predecessors have fought, for House time to get finance bills moving ahead. I am a member of the Standing Committee on Finance of the House of Commons, so I understand the predicament that your committee finds yourself in. We tend to forget at the house finance committee that we are one of several committees fighting for our legislation.

While finance bills take up some 30 per cent to 40 per cent of the House time, we must compete for that time on various occasions with other priorities and pressing matters before the government of the day. It is an ongoing fight.

When we have matters before us, we sit as a committee and deal with them in the house morning, noon and night if required. However, it is a bit of a struggle and a tug of war with other ministries over priorities. We will continue to try to get things to you as soon as possible.

Senator Kenny: When this committee decides to defer this bill, perhaps this message could get through and consideration might be given to introducing some of these bills in this place rather than in the other place.

You do not have to look at me so seriously, Mr. Dodge.

The Chairman: Senator Kenny makes a point I would like to put on the public record for consideration down the road. This is less true for tax bills. I understand why they originate in the other place. However, for bills such as Bill C-82, the knowledge base of this committee is such that it might make more sense to have the initial screening of that bill done in this committee and then go to the House rather than the other way around. That is something we ought to think about doing. I understand you cannot do it with tax bills, but with the institutional-type bills, first, we have more time, and, second, the knowledge base of the committee on all financial institution issues is extensive, as you know.

Senator Kenny: We want them to fix the log jam.

The Chairman: The process would be expedited substantially if we did it in that order. That ought to go back to the Department of Finance as a thought for changing the process for the future.

Senator Stewart: That is a very important point. A lot of non-political legislation could start in the Senate. I am told that next fall, if there is an election call soon, the Senate will have virtually nothing to do for at least three or four weeks. In parliamentary terms, that is wasted time.

Mr. Dodge: Certainly with respect to the financial institutions bill, I think the suggestion is a good one. I can remember reaching back quite a way that the real discussion and the real committee work on FI bills took place in this committee, not in the House committee.

Senator Kenny: Was that pre-study?

The Chairman: No. Back in the days when Senator Hayden was the chairman of this committee, almost all financial institution bills originated in this committee. When they passed the Senate, they went to the House and were dealt with quite expeditiously.

Mr. Dodge: I am sorry if I was looking askance because the tax bills we have relate to a different procedure. We must start those in the House, but financial institution bills and tax treaty bills can start in the Senate. I take on board what you said because it is the way we used to do it.

Senator Hervieux-Payette: Perhaps I can complete the historical data of my colleague.

My colleague Yvon Pinard, who was then the Leader of the Liberal Party in the 1980s, changed the sitting hours in the House.

Senator Stewart: As he said, he wanted to be able to put his feet up in the evening.

Senator Hervieux-Payette: No. He wanted to take care of his children and his family. At that time, I had three children and a family. I thought it was an excellent idea. In the Norwegian parliament, Madam Brundtland and her colleagues finish at 4:30 p.m. because they have to take care of their families. If the work is done in an orderly fashion and they start earlier, they may be able to end their day like normal human beings. There are two schools of thought now since there are more women and mothers in the House.

After the Thibodeau case, it was obvious that you would change the tax law and that you would collect more taxes, because normally the one paying for the maintenance of the children is the person who has more money. Madam Thibodeau appears to be a very reasonable and intelligent woman. I believe she would not have gone to the Supreme Court except that as the government collected more money in taxes, she trusted the government to redistribute more money to the children than the spouse. That was the only rationale I could see.

The only assurance custodial parents would like to have is that our government will give money back to them and those in need of support rather than paying down our debt. Is that assurance absolutely covered by the whole package of bills related to this matter?

Mr. Dodge: Senator, it will be covered by the bill that you will be dealing with later on today. Bill C-93 contains changes to the working income supplement. As far as we have done the calculations -- that is, to the year 2004 -- that single bill will turn back to children or to families with children more than the additional revenues that we will collect.

Second, you will be asked to deal with an increase in the child tax benefit, which will add about $600 million a year in refundable credits for low income families with children.

Yes, it is absolutely true that much more will be going back to low income families with children than the government will gain from the measure contained in Bill C-92.

Some people under Bill C-92 will definitely end up paying more tax. They will generally be the better-off families, but children as a whole will receive considerably more support than under the existing regime.

Senator Hervieux-Payette: Where do the provinces stand on this? Some of the criticism we see is that the provinces may not adjust. Will they adjust their income tax acts to take care of that? Will they continue to deduct or not deduct? Will we have a similar system at both the provincial level and the federal level?

Mr. Dodge: As you know, the income tax base for nine out of the ten provinces is exactly ours, those ones under the tax collection agreements. The province of Quebec, while it moves separately, generally has exactly paralleled the measures we have taken.

In respect of the support for children in lower income families, the province of Quebec and the province of British Columbia have been the two leaders. A number of provinces now are moving relatively quickly. I believe at this point and time, only the provinces of Ontario and Nova Scotia have not signalled their intentions as to exactly how they will make the system work, although in spirit, they have said that they are coming along. The other eight provinces are either all the way there or very well advanced.

Senator Hervieux-Payette: For you, it is almost a done deal. In Quebec, that is the normal situation, but on this particular question, you do not have the answer yet.

Mr. Dodge: They have already paralleled. With respect to the other nine provinces, as legislators, you do it for them in a sense.

Senator Hervieux-Payette: You mean that they have adopted the bill we have not adopted yet.

Mr. Dodge: Quebec has.

Senator Hervieux-Payette: That is important for me. Madam Thibodeau is from Quebec, and I had hoped the similarity would be there.

Ordinary people look at us and see that we must adopt several bills in several committees in order to finalize the whole package. It sounds complicated and I think it is complicated. I am not asking for your comment. I am just saying to my colleagues that we must pass three or four bills just to implement a measure, which must sound odd to the ordinary person.

Mr. Dodge: There are basically two bills, Bill C-41 and Bill C-92. The provinces must do the exact equivalent of what you did in Bill C-41, but they do not have to do what you are being asked to do in this bill because we are doing it for them, with the exception of Quebec.

Senator Austin: I should like to ask Mr. Dodge some questions in two different areas. One relates to charitable donations and the other relates to the foreign reporting of assets.

Senator Austin: I have received submissions relating to the area of charitable donations. I was looking for the reply that I think your department may have made to this, but I cannot find it. It is the case of well-to-do people who have been making charitable donations and endowing charities for health research. They are looking for stretch-back entitlements in order to receive an incentive to give even more money to those charities. Is there a stretch-back provision in this bill relating to charitable donations?

Mr. Dodge: No. In this bill, you are seeing modest first steps. In the bill that will eventually come forward to implement the 1997 budget, you will see much more action in this area. In this particular bill, the steps are really rather modest. This bill represents the mere footings, if you will, of the changes on the charitable side.

Mr. Campbell: Senator, I am wondering if you were referring to the stretch proposal which some charities were promoting to encourage increased giving year over year.

Senator Austin: Yes.

Mr. Dodge: Sorry. I thought what you were talking about was that we had been under some pressure when we made these changes to allow them to go back to cover donations that were made previously.

The so-called "stretch proposal" was one we examined extraordinarily carefully. Quite frankly, as with many of the proposals that try to adduce incrementally, not just in the tax system but incremental behaviour whether it is incremental hiring on the other side, they have some very real problems. The real problem in the stretch proposal is that it would induce some rather strange behaviour on the part of individuals that would not necessarily give the charities any more, but would certainly reduce tax revenues for the government.

Senator Austin: Would it not necessarily give the charities a larger flow of cash?

Mr. Dodge: No, not necessarily. What would happen is people would arrange their affairs differently. I am not saying you would not get more for the charities, but the amount you could get would be very modest. The tax cost to the treasury, because of the way people would rearrange their affairs, could be quite high.

As we try to work through these things, one must be sure that the incremental effect is worth the total cost. The total cost to the treasury would have been very high relative to a very modest, if any, incremental effect.

We looked at it carefully and considered various ways that we could construct it. Mr. Horner spent many hours trying to figure out ways to construct the law so that it would accomplish the goal of the charities because we had no quarrel with the goal of the charities. However, to construct the law to do that was not possible.

Senator Austin: On the issue of foreign reporting rules, my understanding of the system is essentially that no new taxes are being contemplated, but a set of penalties is being put in place in order to encourage the reporting of foreign income by Canadian tax residents. Has this been a problem? I suppose the fact that you have the provision means you think it is a problem, but could you give us some idea of the nature of the problem you think you are dealing with?

Mr. Dodge: I can give you precisely the nature of the problem. The problem is a rather simple one. We, in Canada, for relatively high-income people, have a tax rate which in most provinces is somewhere in the low- to mid-50-per-cent range. Given that and the fact that there are a number of so-called "tax havens" around the world, there is great temptation to move capital off shore, park it in a very low-rate jurisdiction, and not report here in Canada.

Many honest taxpayers are not doing things necessarily for tax evasion purposes. You do not get T-5s from a property which is abroad. Many people when doing their taxes simply box up their T-4s, T-5s and T-3s and send them off to their accountants. That is what happens. Some degree of under-reporting is absolutely due to carelessness. Some is just outright evasion and is intended to be that way.

First, it is very unfair to the taxpayer who pays his or her taxes in good faith in Canada that some individuals may be collecting income and not paying taxes because that income is accruing abroad. In fairness, we said, let us just ask people whether they have foreign assets. We are not going in and requiring T-5 reporting on that foreign asset, but we want to ask them whether they have it. To the people who are inadvertently not reporting, that will jog their minds to the fact that they must report that income even though there are no T-5s in their box of slips.

Second, for those who are wilfully trying to evade taxes, it will make it considerably more difficult to do so because it will not just be a non-reporting, it will be a false reporting in terms of the assets.

After considerable agonizing, we decided that this would be the least onerous way to get at a problem, the size of which we did not know, but where there was suspicion among taxpayers in general that there was a problem. We instituted this as much to allay the suspicion of the taxpayer, who in good faith is paying his or her taxes properly, as to raise a whole lot of revenue.

Now, it is a problem. Recently, I spent a number of days in B.C., and I know the problem in the Vancouver community. I have just come back from three or four days in Hong Kong. I spent more time talking about the Canadian tax system than I did about the great buy that our bonds were, which was the job I was over there to deal with.

We probably have to do a little bit more work, especially among Canadians who have come to Canada with assets abroad. We must convince them that they are not the target. They are not being singled out here. The real targets are the people suspected of having assets abroad and who are not reporting income.

Senator Austin: Your real target is a Canadian who has made a great gain in net worth in Canada over a lifetime, who has so arranged their affairs that the assets are out of Canada, and while they retain residency, they are not reporting the income on those assets. What you have caught up are individuals with a high net worth who have been encouraged to move to Canada, who have made their money somewhere else, and who are now, under this policy, either discouraged from coming or encouraged to leave because they are subjecting a great deal of wealth to a Canadian tax system which, in their opinion, has not earned it.

Mr. Dodge: Or potentially doing so.

Under our provisions, there is no problem for the first five years. We must be honest here. Taxpayer morality in other countries has not traditionally been at the level we enjoy here in Canada. Many friends and relatives of people who have come to Canada from abroad with sufficient assets suspect that this is a real grab by the Government of Canada and suspect that it is aimed at them rather than being aimed at the problem I talked about earlier on.

Mr. Campbell: There is another side to this which are other Canadian residents who look at people coming to Canada for all the good reasons that people come here and say they are already treated differently than residents of Canada. I am referring to the immigrant trust possibilities that the deputy minister spoke to.

To pursue and respond favourably to some of the proposals that have been made to further carve out additional special treatment for new residents of Canada would lead us to the untenable position of having different tax rules applying to different residents of Canada. Other Canadians would find it difficult to understand why two residents living across the street from each other had a different treatment with respect to their worldwide income.

Senator Austin: It happens all the time, Mr. Campbell, that different Canadian taxpayers are treated quite differently depending on their circumstances. I do not think it is a methodological problem to handle this issue. It may be one of political philosophy, but otherwise I do not see how that common concern of Canadians is to be justified.

Mr. Campbell: If two Canadian residents, one recently coming to Canada and one who has been here a longer time, have different treatment with respect to foreign income, I suggest that would not be the principle we would normally uphold.

Senator Austin: They have different treatment with respect to domestic income. The tax act provides all sorts of incentives for tax credits or deductions, so if you have a higher level of income, you are treated differently than a person with a lower level of income. I do not see the philosophical difference.

Mr. Campbell: They are all treated the same with respect to the same income. You are right in that there are different treatments depending on the source of the income, but that is open to everyone.

Senator Austin: We could dance on the point of a pin here for quite a long time.

Canadians do compare their tax treatment to the tax treatment of Americans. Could you outline for us how Americans are treated in terms of worldwide income and particularly how worldwide assets are treated, which are not just cash assets or treasury bill assets but property and other assets?

Mr. Dodge: I cannot do that in detail. I will give you the general and then we might ask Mr. Farber to come to the table.

The principle is that when you are a resident of a jurisdiction, whether it is Canada or the United States, you pay taxes in that jurisdiction on the basis of your worldwide income. Then we have the various treaties, which you are familiar with, to ensure that we do not end up with double taxation. The basic principle is that if you are a resident of Canada, you pay tax in Canada on your worldwide income; if you are a resident of the United States, you pay on your worldwide income. In the United States, they go further and base their system on U.S. citizens. Our system is much more traditional and in line with the practices of virtually all countries.

In terms of getting at that income and how much do we dig abroad, we have -- forceful is not the word I want to use -- less capacity to dig abroad than does the IRS in the United States. That in part is simply an issue of economies of scale. We have quite good capacity within the United States because of arrangements between the IRS and Revenue Canada, but when you get out to other countries the capacity is far less.

The Americans, simply because they have the scalability, have been more assiduous historically than we have. Even with what we have done this time with respect to foreign asset reporting, it is still true that we are not as strong and capable in adducing that foreign income as is the U.S.

Senator Austin: Is that your justification for the penalty structures you have introduced here that the Americans do not have?

Mr. Dodge: Justification is a strange word.

Senator Austin: Justification in public policy for the penalty structures that are introduced here.

Mr. Dodge: Let me put it differently. We have less force on the ground abroad to ensure compliance than do the Americans. Our way of trying to adduce this compliance without being capable of mounting that sort of force on the ground --

Senator Austin: -- is to introduce this penalty structure.

To move from principles to practice, one of the concerns that has been raised with me is the question of valuing foreign assets, particularly with such an aggressive penalty structure for not being accurate in reporting. There are numbers of people who say they have no idea what those assets are worth, nor can they get financial information which would tell them with any accuracy what they were worth. I wonder if you have had those representations and how you intend to handle questions of foreign valuation.

Mr. Dodge: First, we allow people to report a cost which should take care of some of that.

Senator Austin: Not necessarily with my investments.

Mr. Leonard L. Farber, Director General, Tax Legislation Division, Department of Finance: With regard to the penalty structure itself, when the foreign income reporting rules were first put out in their draft form, the penalties were larger at that point in time than they end up in this bill. There was a fairly extensive period of consultation with many members from the Vancouver area and right across Canada. Through the course of the consultation, many of the issues being put on the table here today were certainly discussed at that point and time.

The penalty provisions have been dramatically cut back in the bill. A due diligence test has been put in so that where the information is incapable of being obtained by the taxpayer for whatever reason, that due diligence test will absolve them of that penalty. As well, the penalties have been reduced dramatically from 10 per cent to 5 per cent to ensure that there is no sense of an onerous penalty in that regard.

As the deputy minister just indicated, cost is something taxpayers would know about. Valuation in terms of fair market value would be a different question, and there was no intent to with regard to these rules to force that kind of a valuation issue on taxpayers.

Senator Austin: Is the penalty on cost?

Mr. Farber: To the extent that it is not reported, yes, the penalty provisions are on the cost of the property that is not reported.

However, as the deputy minister indicated, this is not a revenue-raising measure; it is a compliance issue. Without a penalty, there would be no need to comply.

Senator Austin: The suspicion on the part of many Canadians is with the word "yet". That is the underlying concern. I do not expect you to handle that.

Finally, you have had many representations with respect to the threshold. Can you give us any guidance as to how you intend to deal with the threshold issue?

Mr. Farber: There are many representations with regard to the threshold. The $100,000 threshold was chosen as a level that by most standards people would regard as not an unreasonable level. The types of thresholds that we were being requested to consider were thresholds 10 to 15 times that amount, which by any standard of asset ownership in Canada is certainly well beyond what average Canadians hold in their portfolio of assets and certainly would exempt virtually everyone from these rules. The $100,000 threshold deals with those assets which are earning investment income. It does not deal with condominiums, art, recreational properties or things of that nature. Those things do not have to be reported. It is purely the kinds of things whereby you are by law supposed to report on a worldwide income basis. From that perspective, I believe $100,000 is not an unreasonable threshold.

Mr. Dodge: I think it is fair to say that initially the community, especially the Hong Kong community, felt that this would get at the apartments, and so on, that they owned with their brothers and sisters.

Senator Austin: And maybe rent.

Mr. Dodge: The lawyers in Hong Kong from very good firms had not always made it clear enough to people that that was not to be included.

W have been trying to get the information out. I will not claim that we have done it all perfectly, and we will continue to work at it.

There is a lot of misapprehension, and it is really in the misapprehension that many of the problems have occurred, especially former residents of Hong Kong and Taiwan.

Senator Austin: I want to end by thanking Mr. Campbell for his letter to me of April 9 on foreign reporting rules, which I think rather ably defends the department's point of view.

The Chairman: Are you going to table that letter?

Senator Austin: It is available for tabling.

The Chairman: With respect to the new system for treating child support payments, I understand the public policy rationale. Essentially what the proposals in this bill do is overturn the Thibodeau decision. That is the net effect of what it does. I am curious as to the nature of the public policy rationale. The non-custodial parent now will pay more tax and that tax will be redistributed by the government through to the working income supplement and other programs, such as the child tax benefit program.

This is shades of the 1950s and 1960s when government thought that it always knew better. The idea that was that government would collect and handle redistribution. I thought in the 1990s that that philosophical approach had been finally put to rest. I am curious that it is coming back in this bill, and I wonder if someone would comment on the public policy rationale.

Mr. Dodge: There are really two back-to-back issues here. One is the issue of getting more money to lower income families with children. That has been an important thrust of the government, particularly in the current budget. It is certainly something we want to continue to work with the provinces to encourage. Trying to get more money into the hands of these lower income families is very important. The problem is that in order to put more money into their hands, in the end you will have to raise it from somewhere else in the system or not lower taxes. There is a redistribution issue to try to get money into the hands of lower income families. That issue is there, is very important, and goes well beyond the particular issue we are dealing with in Bill C-92.

With respect to Bill C-92, the rationale for collecting the tax from the payor and not having the income taxable in the hands of the custodial parent is a relatively simple one, and that is that the money is intended to support the child. In many cases, it has been difficult for the custodial parent in terms of paying the tax, even though if you take the custodial and non-custodial parent together, they might have been better off in the sense that less tax in total is exigible under the existing system.

There was a strong feeling in the community that it was important that the custodial parent not pay tax on child support payments. That gave rise to additional money or will give rise over time to additional money for the government as it is phased in. The government has undertaken to turn all of that and more back to the support of children.

The Chairman: Typically when we run redistribution programs, we run them by collecting from all taxpayers and redistributing to a specific group. This proposal says we will redistribute to a specific group, namely, low income taxpayers, but we will only collect from non-custodial parents in the sense that that is where your added revenue is coming from. It is not coming from the broad tax base. My gut tells me that is probably adding insult to injury in the sense that the non-custodial parent already does not have the children, and you are telling them that their responsibility is to pay for their children, which they absolutely ought to do, and to pay for the children of others who are low income children and need support.

You are saying to a subset of the population that you ought to pay for a broad-based social program, but I cannot think of a case in my 27 years in government where I have seen that principle put in place. Can you explain that to me?

Mr. Campbell: The redistributive element you have focused on, which is certainly worthwhile discussing, is not the driving feature here. What drove this change was a decision by the government that the present system was not working to benefit those who were supposed to benefit most from it, which is children. Given the confusion in the way awards are granted with the tax effect being taken into account sometimes and sometimes not, the conclusion was reached that it was not working and a new system was required so that children would get the benefit of the support they were entitled to.

The Chairman: I have heard that argument. I happen to think it lacks a huge degree of veracity. I understand making the argument.

My question is this: How does getting increased tax revenue from non-custodial parents benefit the children who the non-custodial parent is supporting? There is a leap of logic here with which I have a huge difficulty.

Mr. Campbell: The driving force being the benefit of children meant reversing the current system. That resulted in some additional tax revenues. We certainly could not as a government not be concerned about where those tax revenues went. I am not disagreeing with you necessarily, except with your focus and the way you are coming at the problem. This is not a redistribution program. The effect of reversing the current tax treatment results in increased revenues which are redirected for enforcement and for the benefit of children. However, the driving force is not that. It is to make sure that children are better off.

The Chairman: Logically, since the redistribution element is a by-product, why did you not then give the custodial parent and the non-custodial parent the option of who declares the income or alternatively who will take the tax deduction? If the purpose was not to generate the revenue, which was a by-product of what went on, why would you not have given them the option in a way that would have -- since Mr. Campbell's objective is to help children -- put the maximum amount of money directly or indirectly in the hands of children?

Mr. Dodge: I can give you the two, pure, public policy reasons why as a deputy minister I could not have recommended that.

First, obviously that gives rise to pure, adverse selection, and people appropriately under that law would arrange their affairs in a way effectively to split their income.

The Chairman: That I understand. I understand that the loser would be the Consolidated Revenue Fund, but since the objective of this was not to generate revenue for the Consolidated Revenue Fund in the first place, as both of you have stated, what is wrong with that?

Mr. Dodge: The objective was not to give it up either, which that system would have done.

The Chairman: All right.

Mr. Dodge: Second, on public policy grounds, I find it extraordinarily difficult to say that divorced parents or separated parents have the advantage of income splitting while we absolutely deny it to married parents. That would be a very strange position to be in. To avoid that particular problem, the next step would take you all the way to family income reporting. That is an issue worthy of debate.

Virtually every country that has family income reporting as a basis is looking enviously at Canada and trying to move back towards individual reporting, which is clearly much more consistent with today's world than it might have been years ago.

The Chairman: Since you do not want to give people a choice -- and this is probably a question correctly for Mr. Jewett -- would it be legal for divorced parents to sign a legal agreement amongst themselves which deemed all of the support to be spousal support, thereby making it tax deductible to the non-custodial parent and thereby avoiding Mr. Dodge's problem?

Senator Angus: Even though it is for the children.

The Chairman: Call it all spousal support, take the tax deduction and maintain the status quo.

I see a lot of puzzled heads.

Mr. Jewett: I will not give tax advice to the committee, but whether it is legal or not, I think it would be ineffective. If nothing else, the general anti-avoidance rule would probably cover that because it was done to obtain the tax benefit.

The Chairman: It might be legal but you would find another way of preventing it. Is that a layman's translation of what you said?

Mr. Jewett: It may be effective as between the parties; it may be a legal contract. I do not think it would be effective for tax purposes.

The Chairman: My basic disagreement is I actually believe children will end up worse off under this system that they were under the existing precisely because now there will be less revenue in the hands of the custodial parent. This works against the stated objectives as outlined by Mr. Campbell.

Mine is an unprovable assumption and so is yours. However, I think evidence in the next two or three years may show that I am closer to the truth.

Mr. Dodge: This is a terribly difficult issue. We spent a lot of time working with taxpayers and groups of taxpayers to see how they would react to the choice issue. Mr. Horner and his people conducted a lot of that work. It might be worth taking one minute for him to tell you the results of that work.

Mr. Keith Horner, Senior Chief, Tax Analysis, Personal Income Tax Division, Department of Finance: We did meet in focus group settings with groups of custodial parents, of payors, of single parents who did not receive child support, and with intact families. We tested different systems and reactions to different parts of different systems with them because we had our own ideas of what was good, including an elective system which we were prepared to look at as a possibility.

We found virtually unanimous support for only one system, which was the no deduction, no inclusion system. It was quite startling to us.

One of the concerns about an elective system was that the payment of child support and the negotiation of it arises in a very difficult negotiation situation. The idea of adding a further complexity and difficulty to that situation was an enormous concern to custodial parents.

Other countries such as the United States and several European countries already have a no deduction, no inclusion system. We are moving to what is the normal among OECD countries now.

The Chairman: We use international comparisons to show how unique we are in cases where it is Canada's interest to be unique, and where we can come in under the cover of other countries, we are happy to do that too. I discount the argument both ways.

Senator Angus: Foreign property has been an area in which we have had a lot of submissions since the March 1996 budget. Listening to your responses, you have revised, for example, the penalties. You listened to representations from more than just the Vancouver group. What changes other than the penalties have you made as a result of these submissions?

Mr. Farber: On the corporate side, there were fairly extensive foreign reporting requirements for foreign multinationals operating out of Canada. In that regard, we had many of the same types of criticisms as we did from individuals about the inability to get the information or not knowing what that information could be because that foreign income reporting extended down to second-, third- and fourth-tier corporations which are subsidiaries of multinational corporations.

In the context of the consultations we engaged in with the joint committee, the tax executive institute, and a number of business groups across the country, we moved off the complete reporting that we originally required and only required the foreign affiliate reporting with regard to the first tier of foreign affiliates. We did that so subsidiaries below the first tier would not be caught up in the context of this foreign reporting. That was found to be very acceptable. They found that they could comply with it in the normal course of information gathering that corporations do.

Senator Angus: What about on the individual side?

Mr. Farber: There were two other aspects. One was the delay in reporting for the first year. This gives more time, particularly for new immigrants contemplating coming to Canada. There was a concern that the implementation date was too early and that they had to come into Canada and have some sense of understanding the rules. Hence, the implementation date was delayed.

As well, there was an indication that the government would review the $100,000 threshold after 1998 to see whether it meets with the requirements and whether it is too high or too low. We wanted to get some basis of reporting, and we would review it at that point in time. That seemed to find a lot of favour in the community.

Senator Angus: One of you mentioned earlier about the five-year rule.

Mr. Dodge: The immigrant trust.

Senator Angus: How does that work?

Mr. Farber: New immigrants to Canada have a right to put their foreign assets into an immigrant trust. The income from that for assets held off shore would not be reported in the worldwide income reporting system for the first five years they are resident in Canada.

The idea behind this originally was to give these immigrants the opportunity to settle in Canada, to become citizens of Canada, and then when that five-year period expired, those assets would become part of their normal reporting of worldwide income like all other Canadians.

Senator Angus: Was that in the original budget proposal, or was that a refinement introduced after representations?

Mr. Farber: Neither. That has been there for quite a long time.

Senator Angus: On Bill C-93 and the 1997 budget, as you indicated to Senator Austin, you got further into the charitable donation area. In particular, I am thinking of accrued and unrealized capital gains and the ability to have relief from a capital gains tax if you give the appreciated amount to charity. I understand it was presented in the context that we will try it out for five years or for three years. Can you explain the mechanism and how that works?

Mr. Dodge: The proposal deals with gifts of appreciated capital property where that can be well determined, such as stocks and bonds traded on exchanges. On making a gift of that property, the donor will have to take into income only one-half of the taxable gains that otherwise would apply. We said that we will have this apply for five taxation years.

Senator Angus: But they get a tax deduction for the appreciated amount of the gift; is that correct?

Mr. Dodge: They always had that.

Senator Angus: But it is not a deemed realization.

Mr. Dodge: At the moment, if I were to give 100 shares of a stock worth $100 a share, I would be giving $10,000. If I bought that stock at $10 a share, I would have to pay capital gains on the $9,000 of appreciation. I would get my recognition of the $10,000 as a charitable gift, but I would have to pay.

Senator Angus: Full tax?

Mr. Dodge: Well, tax on 75 per cent of the $9,000.

What we have said now is that you get your $10,000, but you only have to pay tax at one-half the normal rate. In effect, you would be including in income 37.5 per cent of the $9,000 rather than 75 per cent.

This is costly to the treasury.

Senator Angus: This stimulates giving.

Mr. Dodge: We want to ensure that it stimulates giving and that the giving it stimulates is fairly distributed across charities. One of the things that we have worried about is that it will all go to a certain type of giving and make giving to establish a business school or a university very much more attractive than the giving that supports the United Way and these broader-based charities.

We have said that it is there for five years. As we approach the end of the period, we will review the experience to see whether it ought to be extended or whether we return to the existing system.

Senator Stewart: Could the witnesses identify the clauses in the bill to which this discussion on charities relates?

Mr. Dodge: The bill we will deal with tonight, senator, does not have the tax provisions in the budget. It basically includes the expenditure provisions of the budget.

You will deal with this particular issue from the 1997 budget when you deal with the tax bill from the 1997 budget. It is not before you at the moment.

Senator Stewart: That I understand. What clauses in the bill eventuating from the 1997 budget are relevant?

The Chairman: We will get that and ensure that it is on the record.

Senator Kelleher: Since we are dealing in this bill with the 1996 budget, I would like to be reminded as to the rationale of the government in freezing RRSP contributions so far into the future.

You have been talking here this morning about fairness in the tax system. Being self-employed -- I suppose I am not purely self-employed being a senator <#0107> and given the concerns about the Canada Pension Plan and the need to secure one's future, I am concerned that I would be very limited in what I could put aside. Yet if I were working for a large corporation, I can secure a very large pension from my company which is not possible for me when I am self-employed. Given these concerns, I would like to know what is the rationale of freezing the size of these contributions so far into the future. Has the government been driven by the fact that you think it would cost too much money and hence would hurt your revenue stream?

Mr. Dodge: Perhaps I could deal with that question in three chunks. First, you said that the system disadvantages the self-employed person as opposed to the person working for a large corporation.

Senator Kelleher: This is the perception I have.

Mr. Dodge: All of the changes we made in 1991 were designed to stop that. A large corporation has no more access to the tax system for delivering a higher retirement income than does the self-employed person. They can do it through an RCA, but there is no tax advantage to doing it. They have to pony up the full 50 per cent cash on the barrel-head to cover the taxes as they establish the RCA. It is not a question of an imbalance between the self-employed individual and the pensionable employee working for a corporation. I want to make sure that that point is clear.

We have extended the ceiling on the amount of contribution for a much longer period than had originally been contemplated and hence the ceiling on the amount of tax-assisted pension that can be built up.

Why have we done that? Largely in a time of constrained resources, the question is, with limited resources, do you want to put them into allowing people with three, four or five times the average income in the economy to have more room to build up retirement savings, or do you want to concentrate your efforts on the average Canadian? We chose to constrain the higher income people to ensure that the more modest income people have full access to building up as much pension as they can.

With respect to the relatively high limits, if we go back to 1976, I guess the limit was effectively at about eight times the average salary and now we are down to about two times the average salary. Part of the rationale is that we accounted for things on a year-by-year basis. It was a use-it-or-loose-it proposition in terms of making contributions.

This had been criticized quite soundly because people who have fluctuating incomes, which is often the small business person, could not make contributions in some years but then could never make that up. Hence, we first moved to a seven-year period, and now we have moved to a lifetime period.

For the business person who in his or her 20s, 30s and early 40s is having to plow every nickel back into building the assets of the business and it is only in the last 15 or 20 years of his or her career or his or her business life that the real opportunities to make contributions are there, by moving to a lifetime system, even though the annual limits are low, the amount of room that person will have over those last 15 years of business life to make contributions will probably be far greater under the system we have put in place than it was under the annual system or even under the seven-year system. We think it is fair in that regard.In the medium term, it allows less revenue cost to the federal government.

Finally, by moving to the lifetime system for the person who had large fluctuations over their life, we have evened out the ball game. Nothing is perfect in this world, but that is the rationale for doing what has been done.

The Chairman: Seeing no other questions, I would like to thank officials of the Department of Finance and Mr. Campbell for being here this morning.

Honourable senators, our next witness is Ms Elisabeth Beattie. She has submitted a brief to the committee. Given the relative shortness of time, we will append Ms Beattie's brief to today's proceedings and let her simply comment on her brief.

Senator Austin: Will someone from the Department be here to respond to Ms Beattie's comments?

The Chairman: Yes, Mr. Jewett and Mr. Farber will be around for a few minutes.

Mr. Jewett, I know you and your officials have agreed to meet with a number of groups who are concerned about this. It would be helpful if you would stay.

Ms Elisabeth Beattie: Thank you very much for giving me the opportunity to speak. I was not expecting it, but I am grateful nonetheless. I am also grateful that the brief will be appended to today's proceedings because obviously I do not have enough time to cover it all.

By way of introduction, I have been a single parent since 1980. I have three children aged 19, 22 and 24. I have academic training in taxation, which is perhaps a little bit different for custodial parents speaking on this issue. My experience on the issue has come primarily from managing my own affairs, doing my own tax returns, and learning how to deal with money and squeeze as much out of limited resources as I possibly can in a context of financial uncertainty.

We have had tremendous problems dealing with enforcement. I mention in the brief that a number of the enforcement measures in Bill C-41 were more or less propelled by my case. Unfortunately the bill did not do anything for us specifically, but I think it will do something for someone else.

I have lived this issue in its worst form, monetarily and socially. Because of that, I think I bring to it a useful perspective and a very practical approach.

Now if the government had hired me for a dollar a year, I will tell you what I would have done. My first recommendation would have been that if you apply one system across the board, then the current system is the one you should keep because it provides the greatest benefit to those in greatest need. This is not an issue where you can go one way and everyone wins.

The Chairman: For the record, when you say "the current system", you mean the system in which the custodial parent claims the income and the non-custodial parent claims the deduction.

Ms Beattie: Yes. I lived with this system for almost 20 years. I found it progressive and very sensitive to the needs of single parents operating in our economic and social environment. I will touch on that later.

The problems that were brought up of judicial inconsistency and complex tax calculations were really dead issues at the time this decision was made. In January 1995, the federal-provincial-territorial family law committee published guidelines under the deduction inclusion system. Much of the confusion surrounding this issue is people think that the tax change and the guidelines are automatically tied together. You can have guidelines under either tax structure. You are not wedded to one.

The issues which were brought up as reasons for doing this in fact were dead issues because the government decided to go to guidelines to take care of those problems of judicial inconsistency.

One-third of custodial parents were perhaps disadvantaged under the old system. I am calling it the old system now. However, certain aspects of the Income Tax Act mitigated any adverse tax consequences. The one that springs to mind is the RRSP contribution room. That is a huge consideration for single parents, and the capacity to have that and the deduction mitigates somewhat the tax consequences if you are in the same or an upper tax bracket.

The old system benefits people where there is a disparity, but certain custodial parents have a higher income than their former spouses. Ostensibly, they are punished by the old system because they do not get the income splitting. I believe the RRSP contribution room helped to mitigate anything.

The Chairman: The RRSP issue was that by increasing the income of the custodial parent since the RRSP limits are set as a percentage of your income, and since your income is higher if the support is deemed to be income, therefore your RRSP limit goes up as a straight percentage.

Ms Beattie: Child support is earned income.

The Chairman: Therefore you get a percentage of that child support eligible for an RRSP.

Ms Beattie: That would have been my first recommendation if they wanted to do something across the board.

My second recommendation would have been that any decision to opt out of that system should be left in the hands of the recipient custodial parent and that such an election be similar to informed consent. I say that because the new rules impose severe consequences on some people. In all cases the recipient bears the brunt.

The change in the tax rules, given that they are now guidelines, will not impact the support payors very much in terms of money because what would normally have gone to the kids will now go to the government. They will not keep the income splitting benefit anymore. Some of them did. In my case, that was not the case.

The consequences are really on the head of the recipient. That is why I would say that you give her the choice. I have not met a single parent who objects to having choice. It gives them power in terms of empowerment. They are controlling their destiny. They do not have someone else making decisions outside the house where you carry the can and they make the decision. In this case the government is making the decision. Many of us will be carrying the can.

The Chairman: I asked that specific question to Mr. Dodge and Mr. Campbell because I noticed you were sitting here. Their answer was that it would lead to advantages for divorced families because it would lead to income splitting, if they had the choice. That does not exist for married couples. What is your response?

Ms Beatty: I beg to differ. Married couples have plenty of income splitting strategies available to them, not the least of which is where the higher income spouse pays the expenses and the lower income spouse saves. That is a classic income splitting strategy. It is not the same as this, but I would also suggest that the income splitting was designed to cover any incremental costs associated with raising one set of kids in two houses. You have two beds, two houses and so on. It was intended to help minimize the drop in the standard of living.

As this is structured, you are treating divorced people as though they were married and totally ignoring the fact that they are no longer married and they are living in separate houses. The brunt of the capital cost will be on the recipient.

With respect to the severe consequences I talked about, the first one that really grates with me is the windfall to the government. The income splitting benefit disappears and the money goes to the government instead of the kids.

You can talk in terms of millions of dollars and so on. One of my appendices details what I think the windfall will amount to. However, they tend to forget that these things are impacting individual families. That is why I appended a document which details how this particular tax change would have impacted my child support and my family. It is all very well to say that because I used to be married to someone who earned $100,000, I have a wealthy family. A woman who comes out of divorce and is unemployable because her skills are outdated is just as badly off as someone equally unemployable who used to be married to someone who earned $20,000. It is a great levelling experience.

As shown on the work sheet I have attached, if the deduction inclusion tax rules remain, according to the guidelines that were published in 1995 under the old rules, I would have $32,000 after tax, taking the basic exemption and the equivalent to married.

If the new tax rules had been in effect at that point, because there are no taxes involved I would have $18,000. That is almost half. We struggled with $32,000. I had three children entering university at that point. The government would have taken from us almost $14,000 net to give to someone else. I would not be eligible for the working income supplement because for most of the 20 years I had to stay home. I had a child who was taught at home for several years. That is notwithstanding my education, notwithstanding my family who supported us in the main, and not withstanding that I used to be married to someone who earned $100,000. That is a huge amount for us to absorb. Fourteen thousand dollars would have gone to the government to be given to someone else.

That is the impact that this will have on individual families. The government can say that it all balances out. However, I am dealing with my household and I believe that the first responsibility for children lies with their parents. To the extent it is possible, child support should be maximized within the family first with government programs used to supplement. It makes no sense to put me into poverty.

I included that because people tend to forget that you are dealing with individual families. This is what will happen. My parents had to lift us out of the water as it was. The new tax rules would have made things impossible.

Not everyone will be eligible for the working income supplement or the child tax benefit because it is targeted to low income working families. I gather that the provinces are allowed to claw back the national child tax benefit from welfare families. Therefore, anyone with no employment income will suffer.

I believe the policy really is saying that children whose mothers have no employment income should be reduced to poverty without regard to their previous standard of living or their father's capacity to support them. This is a dramatic change from previous practice when courts attempted to minimize the drop in the standard of living which inevitably results from divorce, and the income splitting benefit helped to do that. In my case, the judge and the lawyer did their jobs. We got the income splitting benefit. Our awards were very close to the target of those guidelines, and even then we struggled.

In addition, the RRSP contribution room is gone. In the normal course of things, you would also lose your ability to deduct legal fees to enforce child support payments. Those are very severe consequences. Anyone opting for this new system has to know exactly what is going on because once you are out, you are gone. It is irrevocable under this policy.

Given that much of the difficulty people have with the system is due to optics, the government has to do a better job of educating people about what is happening and why the old system is good. A number of people for whom the old system would have been excellent do not understand how you can pay tax and end up with higher child support. It takes only half an hour to explain to single parents why the old system was a good one. I have yet to encounter a single parent whom I have advised who will opt for the new system. I believe this should be made optional.

There is also a precedent for flexibility in the sense that specific purpose payments such as medical and educational expenses are normally not included in income, but if there is an order that says they should be, they will be. There is that precedent.

I want to get back to the legal fees because no one brought it up at the House of Commons committee. No one seemed to be aware of it, so there was no opportunity to discuss it.

The department has apparently decided to amend the Income Tax Act so that expenses incurred in respect of child support payments can continue to be deducted even though you are not deducting the income. I suggest that certain people will take exception to that because it creates a nonsensical inequity between recipients. Operating under the old system, I include my income, and then I am entitled to the deduction.

The Chairman: You are claiming an expense against income you never received, according to the law.

Ms Beattie: It undermines what I think is a fundamental tax principle where deductions are linked to income inclusion. You do not get to deduct your mortgage interest because when you sell your principal residence, there is no capital gain.

I suggest that they are opening the door to demands from other special interest groups and maybe even some court challenges. Either it is income or it is not.

Mr. Campbell: Ms Beattie has been an articulate and passionate spokesperson for a particular point of view with respect to these changes. Her views are not shared universally. We heard Mr. Horner speak earlier about the extensive work the department did to determine what would address that which is wrong with the current system and how we might improve it.

I should like to focus on two things. With respect to the very last point on the issue of parent non-deductibility of legal fees, when Ms Beattie appeared before the committee, there was an extensive discussion about that. She pointed that out as one of the problems with this system. She said that when we went to this change, she would lose the deductibility she has enjoyed since this would not be income. The department has responded to her saying that she is wrong. She will not lose that.

The Chairman: To be clear, Ms Beattie understands that she can now deduct.

Mr. Campbell: Yes, and now she argues with the principle. I want to state for the record that when she appeared before the finance committee, she said that this was an unintended and unfortunate consequence and demanded that it be corrected. It was never going to be the case that she would lose that deductibility. That is apparently still not good enough.

The second point is with respect to RRSP room. This also was the subject of extensive discussion before the finance committee of the House of Commons. With regard to whether or not it is income to the spouse, we are talking about support for children. One could argue that it should never have been calculated as income to the spouse on which an RRSP calculation was made.

Mr. Horner may wish to speak to some of the other issues.

Mr. Horner: With me is Natalie Martel. The two of us have worked for some time on this issue.

I wish to respond to the comments Ms Beattie made. This is a very difficult issue. As she mentioned, there are people who are better off under a system of deduction inclusion, and there are people who are better off under a system of no deduction-no inclusion. This is not an easy choice to make. Always there will be some people who might be better off.

This question has been before the courts for a number of years and in the public policy forum. A federal-provincial-territorial committee led to the development of guidelines throughout the 1990s, leading up to the enactment of the guidelines this month. The committee consulted with groups such as family law lawyers and custodial parents through that entire period. There has been a long process in the development of this policy.

The final decision to go to a no-deduction, no-inclusion theory or treatment really came on the basis that the majority of custodial parents did not think the current system was beneficial to them or their children. We looked at other systems, as I mentioned earlier, including an elective system, and they were rejected by the majority of the people with whom we consulted.

There is an extremely strong perception that the existing system provides a tax break to the payor and an unfair tax burden on the custodial parent, who is treated differently than a married parent who does not have to pay tax on money they devote to their children, though there is a logical tax argument that when you treat the two units as separate family units, the existing system is appropriate. This is not a view shared by the great majority of custodial parents.

There is also strong concern by custodial parents that they have an extremely difficult time finding the resources at tax time to pay the tax bill. When they got money each month and they had children's needs, they would spend that money. We heard case after case of people trying to pay instalments on their tax bill from previous years with Revenue Canada, meanwhile making ends meet with the money they were getting this month.

Finally, returning to the elective system, when that was discussed with these groups, there was a real concern that they would be forced, under threat of violence or whatever, to do whatever was advantageous for the spouse -- the man in most cases -- and that this would not provide a benefit for them. This would complicate and increase the difficulty of getting an agreement. We were startled by how strongly it was rejected by custodial parents.

The Chairman: Mr. Horner and Ms Beattie, thank you for your comments. They were helpful to us. My suspicion is this is not an issue that will go away with the 1996 budget or this bill. Inevitably we will be back to face this issue again in a relatively short period of time.

Senators, can I have a motion to dispense with clause by clause on the bill?

Senator Kenny: I will give you the motion if you let me ask a question first.

It seems to me that people going through the process of a breakup are going through a very traumatic period. It is hard to image imagine how anyone going through a breakup will not be worse off financially.

What I do not understand is why the department would not want to opt for as many options as possible or a menu approach, if you will. Why do you have a one-size-fits-all approach?

Mr. Horner: That is the point that I made as I finished up, that we did canvass that idea.

Senator Kenny: I heard the canvassing part. I heard you say the overwhelming majority felt a certain way.

Is there something fundamentally wrong with saying you can choose between A, B, C or D?

Mr. Horner: What is different is that the choice is being made in the middle of a process marked by the fact that there is a breakdown of civility between the parties and extreme antagonism. That interferes with the idea of giving people options and making the decision more complex.

Senator Kenny: I accept that there will be a lack of civility. I am not sure why that would necessarily preclude options; however, there you are.

The Chairman: I am with you.

Senator Kenny's point is if you had a range of options including the option contained in the bill, that is still an option for the vast majority of what Mr. Horner speaks about. The only loser would be the federal Consolidated Revenue Fund. My suspicion is that that is a bigger driver of the decision here than has been necessarily put on the table today.

Thank you very much, Mr. Horner.

Is there a motion to dispense with clause by clause?

Senator Kenny: I so move.

The Chairman: Is there a motion to report the bill unamended, although I must say, with modest reticence?

Senator Stewart: We ought to do more than simply report the bill. The initial discussion we had this morning made it very clear that there is something wrong in the process. The problem is likely not in the Department of Finance but in the procedures of the other place.

Senator Kelleher: The Prime Minister's Office.

Senator Stewart: It is not the present Prime Minister's Office. It goes back to changes made in the rules of the House of Commons some time ago.

The discussion we have just completed is a practical example of the kind of problem that getting a bill like this at the last moment raises. It is new territory for me. I am beginning to see some lights. However, I am far from the end of the discussion. I feel very uneasy about the situation in which I find myself.

Senator Angus: I agree.

The Chairman: I am more than happy to go beyond reporting the bill unamended. I will enthusiastically take or support any other steps.

Senator Angus: Can we not amend it?

Senator Stewart: Perhaps what you ought to say is that there will probably be great reluctance in this committee to deal with complicated tax legislation which comes to us. Here we get into difficulties.

Senator Angus: We are presented with no choice. We are without the opportunity to exercise a diligent examination.

The Chairman: I will be happy to say that in the chamber, which is the most I can do. However, perhaps the most effective thing to do would be to write a letter to the key players in this system who would be the Government House Leader, the Minister of Finance and the leader's office to make it clear that we do not want to be put in this position again. I am more than happy to do that.

Senator Stewart: Try that. When that fails, we will have to try something else.

Senator Kenny: Has the committee not sent this message previously?

The Chairman: In fairness, just so we are clear, we sent the message back with respect to, not dissolution, but prorogation.

In fact, we held bills back. We did not deal with bills in June; we dealt with them in the fall. We held a bill back through prorogation.

Having initially established the issue of delay over the summer, which we then did because they gave us a bill on June 16 one year, we dealt with exactly the same problem and again had a bill that had to go through prorogation and start over. This is the first time we have faced this problem over dissolution.

Senator Kenny: Is there harm if this issue were to be delayed six months?

The Chairman: There is because it will require that this bill return to square one again as opposed to simply being delayed.

Senator Stewart: I reviewed the question of the status of tax proposals in 1969. That is how I happen to know about the British legislation. I remember a little about their process.

There was a difficulty in dealing with it in Canada in the way that it is dealt with in the U.K. As a result of the Parliament Act of 1911, the House of Lords is very restricted on money bills whereas the Senate of Canada is not restricted.

They could make a rule there which applied to their House of Commons, one which gave them a schedule up to which they could live. When we sought a comparable approach for Canada, we could not do it because of the Senate. Our powers are not restricted as they are in the United Kingdom.

Apparently, this question was looked at again in about 1985. We ought to return to this a third time. There must be some technique by which we can deal with this business of taxes being introduced which are, in good law, illegal until months or perhaps even years later.

The Chairman: I shall ask Dr. Goldstein, our researcher, to give us a report on that as soon as we come back in the fall.

Senator Austin: I share the committee's view that we are not being given our normal opportunity to examine tax proposals carefully which are controversial and need careful examination. However, I do not intend to agree that the committee not act on this legislation. These proposals have been discussed for so long and have been debated in other places. Tax certainty requires that we act; however, I agree that we give due notice.

If we are to examine the issue of time, we might review a different and somewhat revolutionary alternative to the parliamentary system of having the tax proposals that are embodied in a ways and means motion made as a white paper proposal, which would not have the force of law. It could then be debated, as is done in the American system, and finally engrossed in legislation after a period of debate. I do not intend to dwell there.

If this committee is interested in the expeditious handling of weighty measures of this kind, it is not without sin because we do have the ability to employ the pre-study technique. We do not have to wait until legislation grinds its dilatory way through the House of Commons. The pressure for drafting bills in the Department of Finance and the Department of Justice must be onerous, given the body of legislation for which they are responsible.

Mr. Chairman, I would ask that this committee pre-study technical and tax policy matters, not legislation as a whole. I served on this committee for many years prior to your chairmanship, and this process was a satisfactory way of giving the members of this committee the answers they needed in a timely way to deal with legislation when it actually came forward.

The Chairman: This is not the time to debate that subject. I am happy to agree that we should look at that when we come back in the fall. As you know, I have been an adamant opponent of pre-study for all kinds of reasons. However, if the committee were to decide to do a pre-study on the specific set of issues you pointed out, such as tax policy, perhaps that is a reasonable exception. I would be quite happy to consider that in the fall.

Senator Kenny: I would observe that pre-study is an anathema to the opposition side.

The Chairman: In fairness, there are members of the government who are not sure if the Liberals on this committee are on the government side or the opposition side.

Senator Kenny: Fair enough, and vice versa. That is fine.

The other concern I had, which is more a question of Senator Austin, is that in the system of pre-study that you had, did you have an opportunity to make the report public?

Senator Austin: The pre-study was in public; it was not in camera. We had witnesses.

Senator Kenny: Was the report you prepared issued in public as well?

Senator Austin: No, we did not issue a report.

Senator Kenny: That would be a major feature from my perspective.

Senator Austin: We did not issue a report, but our hearings and debates were public. We then waited for the legislation; however, we had pre-studied the legislation, which is what it is.

Senator Kenny: I follow that. My point is that unless this committee goes on the record with its view about the legislation, I would not be up for pre-study.

Senator Austin: I do not agree with that conclusion at all.

Senator Kenny: It is an institutional question.

Senator Austin: The purpose is to pre-study, not pre-conclude. A pre-study influences, let us hope, debate in the House of Commons and amongst the public. The legislation then comes to us. They are on notice. However, we do not make our own position inflexible and hard. It allows us to stay open to consider whatever else happens after our pre-study.

Senator Kenny: Do we need to report this bill now, or can we wait until this evening?

The Chairman: I need to report the bill now in order to have third reading tomorrow.

Senator Kenny: What about the legislation you get tonight?

The Chairman: We will deal with it on Saturday, as I understand.

Senator Kenny: If we are doing third reading on Saturday, could we not do this then?

The Chairman: Technically, we could. However, I should like to get rid of it at this stage.

Senator Austin: I should like to know why Senator Kenny is making the suggestion.

Senator Kenny: The committee has already sent the message once. The opportunity to rally troops in the other place might prove interesting.

The Chairman: Do I have a motion to report the bill as unamended?

Senator Austin: I so move. However, it is with the greatest reluctance because there is so much in this bill I do not like.

The Chairman: Is it agreed, honourable senators?

Hon. Senators: Agreed.

Senator Kelleher: We will go along with it.

The committee adjourned.

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