Finance Minister Ralph Goodale has reiterated his government’s commitment to dealing with the perceived tax leakage from income trusts.

Goodale’s first budget, brought down last March, proposed measures to limit the size of investment and the degree of participation by pension funds in business income trusts. Pension funds haven’t been big players in this business because of liability concerns. But, governments in Ontario and Alberta have introduced legislation to resolve these concerns, clearing the way for these securities to be used by pension funds and in indicies.

“Pension funds play an important role in Canadian capital markets. And their unlimited participation in business income trusts could significantly impact government revenues due to their tax-exempt status,” Goodale said Tuesday in a speech to the Public Sector Pension Conference in Regina.

However, the limits proposed in the budget brought a huge outcry from the pension industry, and in mid-May Goodale agreed to suspend the proposed limits to allow adequate consultations to take place. “I will provide further details about the consultation process later this summer. In the meantime, we will continue to monitor developments in the income trust market,” he said. “Once our consultations with industry representatives and other governments are complete, we will bring forward proposals which, I hope, will take fairly into account the interests of all stakeholders.”

Goodale also stressed that public debt reduction remains an important fiscal objective, especially in the face of an aging population. “With more people relying upon social programs and with fewer active taxpayers, we will need to be very careful about our fiscal flexibility and sustainability. Simply stated, the more old debt we are still carrying in five and 10 years, the less able we will be to respond to the growing needs of all those retired baby boomers,” he said.