An Act to amend the Income Tax Act (natural resources)

This bill was last introduced in the 37th Parliament, 2nd Session, which ended in November 2003.


John Manley  Liberal


This bill has received Royal Assent and is now law.


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

February 2nd, 2012 / 6:15 p.m.
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Laurin Liu NDP Rivière-des-Mille-Îles, QC

Madam Speaker, I continue to deplore the fact that the government does not have a balanced approach to economic development. During question period on November 29, 2011, I pointed out that it is completely possible to create good-quality jobs while investing in clean energies. I also asked the government why it stubbornly refused to follow in the footsteps of a number of our trading partners that have created jobs by investing in the green economy.

Since 2006, the Conservatives have invested heavily in supporting the oil industry. For instance, there was an accelerated capital cost allowance for oil sands investment that will last until 2015 and, as another example, the preferential tax treatment in Bill C-48 that gives oil companies $1.7 billion in tax gifts each year.

The reality is that the government listens only to the oil companies. The Minister of Natural Resources showed which side he was on when he described the aboriginal people, ecologists and other Canadians who are concerned about the future of their environment as radical opponents of the authorities.

The statutory review of the Canadian Environmental Assessment Act is another example of this government missing an opportunity to better reconcile economic development and environmental protection. The Standing Committee on Environment and Sustainable Development is currently reviewing the federal environmental assessment process. The purpose of the review is to determine whether these assessments make it possible to reconcile economic development and sustainable development. It is, therefore, a crucial study. Yet, the Conservatives have done everything in their power to undermine this study by limiting the duration of committee business. Only 11 committee meetings have been dedicated to hearing witnesses. One single environmental group appeared: the Sierra Club. One single aboriginal group appeared: the James Bay Advisory Committee on the Environment.

We are currently drafting a report on the environmental assessment system, despite the fact that the Environment Commissioner and several ministers and federal organizations heavily involved in these assessments have not yet been heard. Nevertheless, over the course of the committee meetings, most of the witnesses from industry have said that they want an environmental assessment process that is more credible in the eyes of local communities. A solid environmental assessment process makes projects socially acceptable. On the other hand, an environmental assessment process that is not credible undermines public confidence, which can hamper the development of the project.

The government's hastiness is all the more worrisome given that the Minister of Natural Resources and the Prime Minister are talking about amending the Canadian Environmental Assessment Act right in the middle of consultations regarding Enbridge's Northern Gateway pipeline project, which would cut through an ecologically fragile area. Moreover, by calling Canadians who are concerned about the environment radicals, the Minister of Natural Resources has further discredited himself. In my opinion, given the wealth of scientific knowledge about climate change, it is those who deny the existence of climate change who are the radicals.

The NDP's vision is simple: we must reduce our reliance on the carbon economy. We are convinced that, by redirecting the earth's resources towards a green economy, we will protect our environment and create thousands of good, sustainable jobs here in Canada. Will the government be inspired by this vision as it prepares the upcoming budget?

Fairness at the Pumps ActGovernment Orders

May 10th, 2010 / 12:50 p.m.
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Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, Bill C-14 is obviously important, but frankly, only relatively so. For the next 20 minutes, I will try to clearly explain the Bloc's position. I may not go into every detail of Bill C-14, but I will describe the Bloc's concerns about the Competition Act and the fact that successive governments have done nothing. And, of course, I will describe the Bloc's response to this bill, which is Bill C-452. I will also briefly explain a comprehensive strategy for dealing with increases in the price of petroleum products.

As the parliamentary secretary said earlier in his speech, the government introduced its bill to protect itself and consumers against negligent retailers. “Negligent” is putting it rather mildly. There will obviously be mandatory inspections, but they will be much more frequent. The government is talking about increasing the number of inspections from 8,000 to 65,000. The bill would also authorize the minister to appoint or designate professionals to conduct these inspections. In addition, there would obviously be fines that could be quite high, especially for repeat offenders. Of course, the government says that it is doing all this to protect the consumer.

Has the government, as usual, conducted an impact study of its bill to compare it to what is being done to manage or monitor gas prices at the pump? Naturally, there will be costs associated with all that. Inspections are not free, of course, and retailers will likely be stuck with the bill in the end. I imagine that retailers' costs will go up substantially, all to save consumers about $20 million, which is the estimated difference between the prices. That may seem like a lot of money, and it is, but how many litres and how many consumers are we talking about? Are all the costs of implementing Bill C-14 really worth it? I do have to say, though, that when consumers are hurt, it is our duty to try to make things right.

So I will say right away that we support Bill C-14 in principle. But it does not directly address collusion problems, like the ones that recently came to light in Quebec, nor does it effectively prevent sudden gas price hikes.

The Bloc Québécois still believes that the government needs to work toward offering an effective response to rising gas prices by passing the Bloc's Bill C-452. This bill would strengthen the Competition Act and create a petroleum monitoring agency.

The Competition Act still does not allow the Competition Bureau to conduct an inquiry of its own accord. It has to wait until it receives a complaint before launching an inquiry. The Bloc Québécois also wants the government to establish a petroleum monitoring agency to scrutinize gas prices and to deal with attempts to collude and unjustified price hikes.

According to tools devised to measure how much this is costing consumers, the suggested figure is $20 million.

According to the April 2009 gas consumption data that I found, that $20 million corresponds to one-tenth of a cent per litre of gas purchased in Canada. The cost of gas varies from 90¢ to $1, but it always includes a decimal that people rarely look at. However, oil companies adjust their prices to a tenth of a cent, which represents an amount much higher than the $20 million per year those tools suggest.

Overall, a one-cent difference adds up to $200 million per year, not the $20 million they are trying to correct for.

The Minister of Industry introduced Bill C-14 at first reading on April 15, 2010, claiming that it will protect Canadian consumers from inaccurate measurement when they buy gas. The proposed bill would make retailers more accountable by imposing regular mandatory inspections of measuring devices, such as gas pumps.

The penalties that the courts can impose under the Weights and Measures Act will increase from $1,000 to $10,000 for minor offences and from $5,000 to $25,000 for major offences. For consumers who feel they have been wronged, this might lead them to believe they have increased protection thanks to their hallowed and benevolent government. This is just more smoke and mirrors to trick consumers who believe they are being protected from additional costs, when the government is not doing enough to protect them when it comes to gas prices.

I am going to skip the other possible fines, because I would like to get straight to the point. The new section 29.28 in the Electricity and Gas Inspection Act allows the Minister of Industry to disclose the names and addresses of people convicted under this legislation.

If the retailer can show that he did due diligence and did everything to ensure the accuracy of his equipment, his name will likely not appear on the list of those whose equipment is defective in terms of measuring the volume. We need to determine how this measure will be applied, because any retailer could wind up on that list, even by mistake.

A clarification has been made to establish that violations of this legislation are not actually offences and therefore not subject to the Criminal Code. The individual would not have a criminal record following a conviction.

If convictions are frequent, can they be subject to a prison sentence, in cases of repeat offences, of less than two years, since they are not criminal offences? Once again, the provinces and Quebec are left to pay for this. With respect to offences, recidivism and imprisonment, Quebec will have to pay, no matter what it costs to send someone to prison for less than two years.

The Bloc's main concern is that every time the price of gas skyrockets, the government invariably says the same thing, that its hands are tied because the Competition Bureau has found that there is no collusion between the oil companies to set the price of gas and therefore there is no problem.

It is always the same answer. It is never the oil companies' fault and when the Competition Bureau conducts an investigation it always comes to the same conclusion: there is no collusion.

It would be rather surprising to see representatives of all the major oil companies openly sitting around the same table at a big restaurant. It is not likely to happen. It may be more difficult, but there must be a will to find a solution.

The Competition Act has major shortcomings that prevent the Competition Bureau from initiating an investigation. Any investigation has to be requested by the department or initiated as the result of complaints. On May 5, 2003, when Konrad von Finckenstein, the then commissioner of competition and the current chair of the CRTC, appeared before the Standing Committee on Industry, Science and Technology, he pointed out the shortcomings in the Competition Act. He said:

...while the bureau's mandate includes the very important role of being investigator and advocate for competition, the current legislation does not provide the bureau with the authority to conduct an industry study.

There was some borrowing from Bill C-452, and equivalent measures were put in place as part of the January 27, 2009 budget implementation act. However, these new provisions still do not give the Competition Bureau the authority to investigate on its own initiative. A complaint is still required before an investigation can begin.

In 2003, the Standing Committee on Industry, Science and Technology concluded its study on gas prices by making two recommendations to the government: create a petroleum monitoring agency and toughen up the Competition Act.

In 2003, the Standing Committee on Industry, Science and Technology also spelled out the changes it wanted to see made to the Competition Act. The Bloc Québécois was adamant that the government respect the committee's recommendations.

In October 2005, shortly before the election, the Liberal government finally agreed with the Bloc's arguments and, as part of its federal plan to help alleviate the impact of high gas prices, introduced Bill C-19 to amend the Competition Act. It strengthened this act by raising the maximum fine for conspiracy from $10 million to $25 million and broadening the Competition Bureau's authority to investigate, which would have allowed it to inquire into an entire industry sector.

However, the government bill ignored these recommendations from the Standing Committee on Industry, Science and Technology: reverse the burden of proof to deal with agreements among competitors and to determine whether there is a conspiracy—the objective of this was to make it the responsibility of the party wishing to enter into an agreement to prove the ultimate social value of that agreement—as well as allow the Competition Tribunal to award damages to parties affected by restrictive trade practices, where applicable.

The Bloc Québécois had proposed numerous amendments along these lines.

Bill C-452 would address the shortcomings in the measures put in place under the January 2009 budget implementation act, Bill C-10

The Competition Bureau needs true investigative powers. Bill C-452 would give the Competition Bureau the authority to carry out real investigations into the industry, if warranted, on its own initiative, something it is not currently permitted to do because it must receive a complaint first.

If this legislation were passed, the Competition Bureau would be much better equipped to take on businesses that try to use their dominant position in the market to fleece consumers.

We could implement a comprehensive strategy to deal with price hikes of petroleum products. For some time now, the Bloc Québécois has been pressuring the government to take action to address the rising cost of petroleum products.

We recommend a three-pronged approach. First, we must bring the industry into line. That is the goal of Bill C-452, which gives teeth to the Competition Act. We should also set up a true monitoring agency for the oil sector.

Second, the industry must make a contribution. With soaring energy prices and oil company profits, the economy as a whole is suffering while the oil companies are profiting. The least we can do to limit their negative impact is to ensure that they pay their fair share of taxes. The Bloc Québécois is therefore asking that the government put an end to the juicy tax breaks enjoyed by the oil companies.

Third, we must decrease our dependence on oil. Quebec does not produce oil and every drop of this viscous liquid consumed by Quebeckers impoverishes Quebec and also contributes to global warming. The Bloc Québécois is proposing to reduce our dependence on oil. All the oil Quebec consumes is imported. Every litre consumed means money leaving the province, thus making Quebec poorer and the oil industry richer.

In 2009, Quebec imported $9 billion worth of oil, a reduction because of the recession. In 2008, oil imports totalled $17 billion, an increase of $11 billion in the five years between 2003 and 2008.

At the same time, Quebec went from a trade surplus to a trade deficit of almost $12 billion, not to mention that the increase in Alberta's oil exports made the dollar soar, which hit our manufacturing companies and aggravated our trade deficit. The increase in the price of oil alone plunged Quebec into a trade deficit. It is time to put an end to the tax holiday for the oil sector.

In 2003, the Liberal government, supported by the Conservatives, introduced a vast reform of taxation for the petroleum sector. Although the oil sector had special status under the Income Tax Act, with its Bill C-48 the government reduced the overall tax rate for oil companies from 28% to 21% and also introduced many tax breaks, including accelerated capital cost allowance and preferential treatment of royalties.

This made taxes for Canada's oil sector more advantageous than in Texas. As if that were not enough, in the 2007 economic statement, the Conservatives presented additional tax reductions for oil companies, which would bring the tax rate down to only 15% by 2012. These tax breaks will enable Canadian oil companies to pocket close to $3.6 billion in 2012 alone. The Bloc Québécois thinks that these measures for the oil companies are unjustified. That it why it is proposing that we eliminate handouts to the oil companies.

I was saying that the long-term solution is to reduce our dependency on oil. We must invest considerably in alternative energies; allocate $500 million per year over five years to green energies; launch a real initiative to reduce our consumption of oil for transportation, heating and industry; introduce incentives of $500 million per year over five years to convert oil heating systems; develop a plan worth $475 million per year over five years for electric cars.

By 2012, 11 manufacturers plan on releasing some 30 fully electric or rechargeable hybrid models. These cars will be more reliable, more energy efficient and much cheaper to operate than gas-powered models.

Bill C-14 is intended to save consumers $20 million. As I was saying earlier, $20 million corresponds to one-tenth of a cent per litre of gas. Therefore, just one cent per litre could save $200 million per year. Furthermore, we must strengthen the Competition Act.

Competition ActPrivate Members’ Business

March 13th, 2008 / 6:50 p.m.
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Claude DeBellefeuille Bloc Beauharnois—Salaberry, QC

Mr. Speaker, it is my great pleasure today to speak to Bill C-454, which was introduced by the Bloc Québécois member for Montcalm. First, I would like to congratulate my colleague on his excellent work and on this initiative to bring this important issue back to the House of Commons. It has not lost its relevance over the past few years with the price of gas at the pump now hovering around $1.15.

Bill C-454 is being read for the first time in Parliament, but I want to remind some of my colleagues from other parties that it is inspired in large part by Bill C-19, which the Liberals tabled shortly before the 2005-06 elections, and which the Conservatives decided not to reintroduce. Of course, it has been rewritten and improved, but it is, in essence, the same. If I were to provide a broad outline of this bill, I would summarize it by saying that its purpose is to strengthen the Competition Act.

First, it gives the Competition Bureau the power to conduct its own inquiries into the oil industry. Currently, the bureau can do no more than undertake general studies that have no consequences.

In the course of conducting such inquiries, it can summon and protect witnesses. If it could not do so, it would very likely never be able to prove anti-competitive practices.

Lastly, when companies want to enter into agreements with their competitors, they will have to prove that these agreements are in the public interest. The bill also significantly raises the amount of fines, from $10 million to $25 million.

That said, exactly what need is this bill trying to meet?

Prices of petroleum products are rising steadily, and we want Quebeckers to have a way of finding out why this is happening, who is benefiting and, most importantly, whether this is reasonable.

The first major problem that is affecting everyone to different degrees is the rising price of crude oil. This is having a direct impact on the price per barrel, which is fluctuating today between US$100 and US$110 and has increased by 230% since early 2004.

This in turn is affecting the price of heating oil, which is on the rise. It has averaged about 90¢ since early 2007 and has gone up by more than 50% in the past two years. I want to remind the House that according to Statistics Canada, approximately 500,000 Quebec households in Quebec still heat with oil or another liquid fuel.

The increase in the price of crude oil is also driving up the price of gas, which, understandably, has raised the public's ire for the past several years.

For a number of years, in fact, old records have fallen repeatedly as the price of regular gas has regularly reached new highs. Fluctuations aside, the price of gas in Quebec is going up steadily; it was 71.3¢ in May 2002, 94.4¢ in May 2004 and $1.10 in May 2007. Since the beginning of the year it has fluctuated between $1.09 and $1.18.

At the same time, oil companies have posted record sales for a number of years. But that is not all. Oil companies' net profits have also skyrocketed in recent years. The oil industry's net profits rose from $17.6 billion in 2003 to $20.2 billion in 2004 and $35 billion in 2006, a 100% increase.

What is more, with respect to the increase in costs, if we compare the price of regular gas in Quebec today with the price in 2004, we find that the retailer mark-up has remained stable, taxes have remained stable and even gone down in proportion to the price of a litre of gas, and the increase in the price of crude oil accounts in part for the increases.

But lately, the constant fluctuations in gas prices cannot be explained by crude oil prices; they are attributable to the obscene profits made by the refineries.

Is this situation intentional? We do not know, because the Competition Bureau does not have the tools it needs to conduct a serious and complete investigation. But one thing is for sure: the structure of the oil industry encourages spikes in gas prices, and is conducive to abuse. That is why the industry must be monitored, hence Bill C-454.

As members know, I am the Bloc's natural resources critic, and it is part of my duties to learn about the oil industry. That is precisely what the Standing Committee on Natural Resources did for several months last year, as part of an important study on the oil sands industry. Over the course of about 30 meetings, we heard from some 100 witnesses, many of whom came from the oil industry.

I listened to and questioned these witnesses carefully, and although our conclusions can be found in the committee's report, I would like to share how these testimonies touched me personally.

When I was listening to these professional lobbyists, I was deeply struck by the excesses of the industry, with its echoes of the gold rush.

People in the oil industry came to talk to us, they explained the challenges, confidently predicted the future, easily came up with rational solutions to complex problems in their heads, but were so detached from the effects caused by their industry, that it literally took my breath away.

As everyone also knows, I am a social worker by training, and if I wanted to draw a parallel with a type of clientele, I would say we are dealing with an industry that has a very hard time regarding itself objectively or engaging in any self-criticism, and above all, we are dealing with an industry for whom the end justifies the means and that is always right. It has a bit of a superiority complex, which places it above other things and makes it prone to over-ambition and exaggeration, often in a shameless manner.

In the case of the petroleum industry, the excessiveness of the financial stakes—we are still talking about billions of dollars—and the current importance of their products, which are practically essential to the functioning of society, create this cavalier attitude that often lacks any moral or ethical sensibility. I could give so many examples that I could easily keep the House busy until tomorrow, but let us look at just one, more recent and very typical example.

On Monday, March 10, the Minister of the Environment presented his solutions for climate change problems—a plan whose flabbiness will surely go down in history. One of his proposals is carbon capture and storage by the oil industry. Speaking through a task force that delivered a study to Natural Resources Canada, the oil industry responded that it refuses to invest great sums of money in this technology because of the uncertainty surrounding its large-scale commercialization.

And as if that were not enough, the task force, composed of one academic and four industry representatives, went even further. Try to listen to this without being too surprised: is a very difficult proposition for individual private sector players to commit additional hundreds of millions of achieve a public good...for which it may not be compensated with an adequate (or any) return on investment.

In any context that statement would be unacceptable, but in the current climate change crisis, it is totally irresponsible and insulting. This method would force private companies to contain their pollution.

The members of this task force act as if they are doing us a favour. They are completely disconnected from reality, so much so that they add even more. As François Cardinal reported in La Presse on March 11, the report recommends that the federal government allocate $2 billion immediately and that both levels of government provide “stable financial incentives”.

I would like to remind hon. members that the oil industry made $35 billion in profits in 2006. And these people are talking about the impossibility of investing in the public good unless profit is involved?

I also want to point out that in addition to $66 billion in direct subsidies from the federal government between 1970 and 1999, this industry is currently benefiting, through accelerated capital cost allowance, from tax measures such as former Bill C-48, under the Liberals in 2003, and from tax cuts announced by the Conservatives in the economic statement of November 2007 of up to $1.5 billion annually.

In the coming year alone, the oil industry will receive a $1.18 billion gift. In total, for the 2008-13 period, roughly $7.8 billion will go into the pockets of the oil companies through various measures implemented by both the Conservatives and the Liberals.

Yesterday I received a phone call from a constituent from Saint-Bruno—Saint-Hubert, who said that her heating costs have increased by 50% in two years. She thought that was totally unacceptable.

Bill C-454 is needed to help people like that and to supervise the oil industry more carefully. We hope the bill will be adopted.

The EnvironmentOral Questions

February 7th, 2007 / 2:25 p.m.
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Gilles Duceppe Bloc Laurier—Sainte-Marie, QC

Mr. Speaker, this is absolutely false. We are trying to save the small investors he made promises to, promises he is now reneging on. That is what we are trying to do. This is what he should do: change his mind about the millions of dollars he is saving the oil industry, with measures such as Bill C-48, which he supported and is now maintaining.

Will the Prime Minister act so that a carbon exchange can be put in place to reward industries that have made an effort and that have attained or are attaining greenhouse gas emission reduction targets? Those that have made no effort, such as the oil companies, must pay. This is called the polluter-pay principle.

Will he stop supporting his friends, the oil companies?

Budget Implementation Act, 2006, No. 2Government Orders

October 25th, 2006 / 5:20 p.m.
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Yvan Loubier Bloc Saint-Hyacinthe—Bagot, QC

Mr. Speaker, I remind the hon. member NDP member that they too supported the budget. This is somewhat strange, speaking of marriages.

Speaking of failed marriages and odd couples, I remind the hon. member that a little less than a year and a half ago, the NDP joined the corrupt Liberals. In the midst of the sponsorship scandal, they supported the Liberals and they supported their budgets, which included measures that were never fully implemented after the Conservatives won the last election.

The bill that they supported—I believe it was Bill C-48—was incredibly vague. The Liberal government did not even have to fulfill its promise. The NDP supported the corrupt government of the former Prime Minister on measures that did not include any commitment. They made a big deal about it during the last election campaign. And now, how many of them are here? Talk about credibility.

Message from the SenateOral Question Period

November 7th, 2003 / noon
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The Speaker

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bill: Bill C-48, an act to amend the Income Tax Act (natural resources).

Income Tax ActGovernment Orders

October 21st, 2003 / 5:30 p.m.
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The Acting Speaker (Ms. Bakopanos)

It being 5:30 p.m., the House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-48.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

The Income Tax ActGovernment Orders

October 9th, 2003 / 4:35 p.m.
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Jacques Saada Liberal Brossard—La Prairie, QC

Discussions have taken place between all parties and there is an agreement to re-defer the recorded division requested on Bill C-48 until the end of government orders on Tuesday, October 21.

The Income Tax ActGovernment Orders

October 9th, 2003 / 4:05 p.m.
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Serge Cardin Bloc Sherbrooke, QC

Mr. Speaker, this is the second time that I have spoken to Bill C-48. The first time was at the second reading stage, and today we are debating the bill at the third reading stage.

First I would like to thank my colleagues who took part in this debate, namely the member for Joliette, the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, the member for Drummond and the member for Champlain who has taken part in this debate with a lot of passion over the last few hours.

I would say that the debate today has gone in a different direction. When we first started to talk about this bill, there were two easily identifiable aspects, namely energy and mining. In my last speech, I started to address the environmental aspect, but today I was pleasantly surprised to see the member for Davenport and the member for Lac-Saint-Louis bring the environmental dimension into this debate.

I also heard comments from other members, one being I think the secretary of state, who said that the cuts were good for businesses, for development, for employment, and so on. It is almost as if the government were saying that it would reduce taxes on cigarettes or alcohol, but it does not because it must invest in anti-tobacco campaigns, saying that people must quit smoking because it is not good for their health, and it continues to collect taxes on alcohol, saying that people must drink responsibly.

In the energy sector, we know that oil causes a lot of pollution. There are “catastrophic” consequences for the entire planet. We are talking about the environmental aspect, but maybe I should go back to the financial aspect, both on the energy side—oil—and on the mining side.

Recently, I read in the June 28, 2003 issue of the Trois-Rivières Nouvelliste an article by Hubert Reeves, who painted a very sad picture of the state of the earth. In his most recent book published in March 2003, the astrophysicist and philosopher Hubert Reeves voices his concerns about the behaviour of governments. They always have their eyes on the next election instead of managing for the long term; this is especially true of this Liberal government. Governments can look like a chicken without a head. You do not know where it is heading. It goes all over the place, darting every which way and leaving a trail of blood behind it. Currently, it is even worse, there are actually two chickens going here, there, and everywhere

While the government is lowering taxes on oil companies, the earth is hurting. Its health is getting worse. We have learned over the last few months, or even the last few years, that the most important element in our society is health. Of course, if we want to be healthy, we must live in a healthy environment on a healthy planet. Otherwise, in a few years we will have to post a sign saying “Earth for sale, garage sale”.

Mr. Reeves said also that there are indeed solutions, starting with the development of clean, renewable energies. So the money that is given to the oil companies could easily be used to develop clean and renewable energies, even though Mr. Reeves acknowledges that it would take major investments on the part of politicians and business people who manage the day-to-day affairs of the nation with short-term profits as their goal.

But on this planet, we must work together with the earth and in the same direction. We should not be afraid of investing. If we do not do it, who else will do it?

Mr. Reeves said that in the end, it is every citizen's responsibility to act; indeed by doing such things as recycling domestic waste each one of us as an individual can help stop the degradation of the planet. Again, all that money, some $260 million, which is left in the pockets of oil companies, could be invested elsewhere.

The member for Lac-Saint-Louis also talked about fossil fuels in terms of reserves.

He was talking about a 50-year horizon, of course, but it depends on our sources. If we ask Mr. Bush of the United States, he would probably say 200 years. I imagine that one of his reasons for going into Iraq was that there are reserves that have not been found or exploited.

However that may be, looking at our current consumption in North America, that is, Canada and the United States, Mr. Reeves says that we use 12 times as much energy as necessary. In Western Europe, it is 5 times more, while one-third of humanity is well below the norm.

It is this over-consumption that must be reduced in order to alleviate energy constraints. Therefore, we could use that $260 million for advertising, to persuade people that we should stop using petroleum fuels the way we do today, for moving about and staying warm.

We know that there are many kinds of renewable energy already at hand. One of the major sources will always be the sun. Mr. Speaker, I know that you must absorb a lot of sunshine in order to be able to cast so much light on our deliberations. That is why you inspire me.

Of course, in the context of sustainable development, I believe the government would have been better off to take these sums of money and reinvest them in awareness and research. We have heard a lot about wind power today. I think I have already remarked that some of the hon. members on the other side of the House do not know yet whether it is the wind that turns the vanes or the vanes that make the wind. But one thing is certain, we know that it is a source of renewable energy that should go on forever. Certainly, there are mechanical aspects and of course, there is always some maintenance, but it is still renewable energy.

Some might say that it is less than good for the visual environment, but at least we can breathe it in. And any over-supply will always refresh us.

I must return to the basics of this bill. It is a fiscal bill. A few years ago, the government decided to reduce corporate tax rates from 28% to 21% for all industries except, of course, the petroleum and natural resource industries.

Others had also wondered about the principles of justice and fairness with respect to corporate income tax rates. What kind of justice and fairness are we talking about when we basically do not want companies to increase their sales?

No restriction policies were set, but a rate existed. The income tax rate was lowered to help the rest of the economy. However, surely the legislator realized at the time that decreasing oil companies' taxes might have a less pleasant or positive impact on the entire energy sector and, of course, on the environmental sector.

To make up for reducing taxes from 28% to 21%, the 25% allowance was also eliminated.

In this context, the oil companies would have lost out in all this tax reform. Nonetheless, it is now known that there might be deductions for royalties. Look at Petro-Canada, for instance. If I am not mistaken, the government is still a shareholder and indirectly will receive a larger return on its investments if it pays less tax.

Let us look at Petro-Canada: in 2002 Petro-Canada received $227 million in royalties. If it maintains the same level of royalties in 2003, it will have saved nearly $7.5 million.

So, when they talk about going from 28% to 21%, with the 25% allowance eliminated, the oil companies would definitely have taken a hit. Naturally, tax deductible royalties are being reintroduced.

As has been said several times today, the Minister of Finance also estimates it will cost close to $260 million once the reform is fully implemented. Something does not add up: reform will be fully implemented over five years, from 2002 to 2007.

If the oil companies' earnings are any indication, things are going much faster than expected, and much faster for some than for others. In its quarterly report to shareholders, Petro-Canada had announced second quarter earnings of $450 million. That includes a $96 million adjustment related to changes in the corporate tax rate.

Shell Canada reached almost the same figure, because all our accountants use the same generally accepted accounting principles. Shell was entitled to the same tax treatment as other companies. There are deferred taxes, but I am not going to launch into a lesson on that subject, because it is quite technical.

Also in the second quarter, Shell Canada reported, on July 23, 2003, profits of $178 million. These results include a one-time benefit of $54 million from a revaluation of future income tax on profits followingannounced changes to income tax on profits.

So that is about $150 million for these two companies: Petro-Canada and Shell. We must not forget Esso-Imperial. In its report to shareholders for the second quarter, the tax rate reductions enacted by the federal government and the provincial government in Alberta and settlement of various tax matters benefited results, mainly in the resources segment, by $109 million.

So we have $150 million, $109 million and $250 million. In August, the newspaper headlines read, “Oil and gas companies get lucrative gift from Ottawa”.

We learned that the oil and gas companies were getting $250 million. Around the same time, people were emptying their wallets to put gas in their tanks because of the pump prices.

As a result, the public has a strange view of the federal Liberal government; it is like two chickens whose heads have just been cut off and are running all over the place.

These oil and gas companies announced their profits and the $250 million tax cut, and the government told us that, ultimately, it will be $260 million; so we can presume that this will increase to a quarter of a billion and perhaps soon a half a billion dollars. This money is going to the oil and gas companies; the mines have been left out, because they are in a very different situation.

The mining industry is facing serious problems. Simply reducing the tax rate from 28% to 21% or simply eliminating the tax credit and adding the deductions for royalties was too little for most of the mining industry.

Since mines were penalized quite heavily, it was decided that a new 10% tax credit would be established for eligible mineral exploration expenses, but this applies only to metals and diamonds. This does not apply to the oil and gas industry iin any way.

I was talking earlier about generally recognized accounting principles. Indeed, in CAmagazine , which is the official magazine of the Institute of Chartered Accountants, we read the following:

From a federal tax perspective there will be winners over the phase-in period—companies with high royalty rates, such as oil and gas producers operating in Western Canada...However, in such provinces as Saskatchewan, Manitoba, Quebec and the Maritimes, the elimination of the resource allowance deduction for companies that benefited from the resource allowance results in an increase in the overall effective rate.

The government also talked today, possibly to make up for this shortfall, about bringing this up to 20%. Then, my colleagues from the Bloc Quebecois were accused of suggesting a 10%, 14% and 20% increase, I think.They were accused of this and were almost called every name in the book. Frankly. They suggested roughly the same increase rate or increase increment that the government is suggesting with regard to the 10%, and in the same way.

In the long run, these measures are expected to be profitable for all sectors of the economy. In the short term, however, some sectors will win and others will lose. Among the winners will be businesses working in tar sands, petroleum and precious metals. I have just heard someone say that tar sands are easy to work without excessive pollution. We probably have not been reading the same environmental analyses.

Among those who stand to lose are the natural gas, potash and diamond industries. However, Hugues Lachance, senior tax director with KPMG, says the following:

With the first two provisions in this bill, the oil companies would be losers. But these are not the only changes. The petroleum industry pays substantial provincial and crown royalties. In 2007, they will be able to include 100% of these provincial royalties as expenses. Still, for the mining industry, where royalties are generally small, this third provision of the bill does not lighten their tax burden very much.

The bill's actual impact will be that the Canadian oil and natural gas industry will be paying lower taxes than in the states of Alaska or Texas. The 2002 tax rate in Canada the rate is now 42.1% and, with the federal government proposals, the rate will drop to 30.1%.

So we can see there is a marked improvement for the oil and gas companies, at the expense of the environment and sustainable development of course. This is nothing new. Government investments in oil and gas are enormous. I would remind hon. members in closing that this is why they have had enough. It could all be terminated, with the money invested instead in sustainable development and renewable energy sources.

In the past 30 years, Canada has put $66 billion in direct subsidies into oil, gas and coal, all forms of energy that are directly responsible for climate change. Quebec taxpayers have therefore each put $27,000 into hydrocarbons, while we ourselves use hydroelectric power, which is non-polluting. We will, consequently, be voting against Bill C-48.

The Income Tax ActGovernment Orders

October 9th, 2003 / 3:35 p.m.
See context


Brian Masse NDP Windsor West, ON

Mr. Speaker, I am glad to participate in today's debate on Bill C-48. I think it is important that we talk about the decisions made in the House which affect the actual economy of the country, not only in the short term but in the long term. That is what the bill is about. It is a very serious issue: a decision on how to spend our resources.

There is a series of things governments do to develop the strategies, the tools and the tool chest to move forward with pragmatic programs and services in developing the economy and our communities. Part of that is taxation. Another part is service fees. Another part is through assets we have acquired, and there is also revenue generation.

The bill is very important, because at a time when we are faced with so many different challenges and problems, we will witness anywhere between $1.4 billion to $2 billion in assets disappearing over the next five years. That revenue stream is so critical when we are missing the opportunity to participate in renewable forms of energy. Right now we are focusing on a tax cut for the oil and gas industry, and for others as well, but I will focus on that one. It does not take into account the planning that is so desperately needed.

It is frustrating to stand in the House and hear that there is not enough money for SARS, for the workers or for the economy in Toronto and other areas that were affected by SARS. Not just Toronto was affected. Tourism was affected in other places because they were tarred by the same image as Toronto. People thought all of Canada had SARS.

Then there are our war widows. Canada has 23,000 war widows and we do not have the resources to provide money for them, but we can have money designated as a tax cut for the gas and oil industry.

We all know about hurricane Juan in Atlantic Canada, forest fires in B.C. and Alberta, and BSE. They are all examples of very significant environmental issues that also require assets from the federal government, assets that have not been streamed to the people who need them.

But the government can find the time and the political will to move toward a tax cut to an industry that has serious repercussions on the people out there. It is a very good industry in the sense that all of Canadian society has embraced the oil and gas industry. We understand the effects it has. It has done some very positive things, but at the same time we are paying some prices. My community of Windsor and Essex county is. Because of environmental contaminants, many of them related to dioxins, toxic materials spewed out into the rivers and lakes causing environmental degradation and human health concerns, my community of Windsor and Essex country has some of the highest rates of cancer, respiratory diseases and birth defects.

Now here we are, giving an industry a tax credit when we know we still have some of the worst and dirtiest gas on the planet. I have used the example of the Oakville refinery. Petro-Canada is closing it down because it would rather produce dirty gas until 2005 and then import oil from Europe and distribute it under its flag. Even though it will be another company's gas, it will just re-brand it as opposed to investing in a plant to produce clean gas and energy products to make sure we have independence.

I believe that the recent Conference Board of Canada report card on Canada's health says a lot. The conference board itself is an organization that is not necessarily seen as being the most solid in terms of the environment. It looks at a multitude of different things. It very much takes a cautionary approach to the environment. The title of the actual Globe and Mail article about it was, “Canada's latest report card has disappointing marks”. I will quote a section of that article:

Compared with other leading industrial countries, Canada scores high marks on an economic front and does moderately well in areas of education and innovation. But its performance on a range of health and social measures falls short of many other countries and Canada is well down the list for its environmental efforts.

That is important to note, because right now we know that those social, health and environmental rankings can actually be improved with the movement to renewable energy, provided that we have the assets to do so. Without those assets, if we diminish our reservoir of capital and our ability to act, then we will have limited choice and limited options. I think a good example is the $250 million per year going into wind energy. That is deficient by far in terms of what we can achieve.

That is an interesting issue because when the wind energy project in Toronto was completed, it cost just over a million dollars for the actual wind generation capacity to be completed. However, it cost over $100,000 to ship that unit from overseas because we do not produce them here. There is an example to show that if we had an industrial strategy and a committed, strong sense of purpose and conviction on the part of the federal government, we could create that factory here in Canada.

We could create a commitment among provinces and municipalities and have other tax incentives that help consumers and help business by producing the renewable energy forms if we make it affordable. I believe that is where the incentive should be. If we really want to talk about how it can affect workers and how it can affect the economy, then this money could be used to lower other types of taxation, which we would all enjoy, and at the same time we could meet our national goal of Kyoto.

It is something that this country has put a stamp on in terms of the world. We were one of the last people to sign it. The government was dragged kicking and screaming into it by the Canadian public, but it was done.

We can actually be a leader. I think it is a positive thing to do, and not only for our current situation, because it gives hope and instills in people the idea that we can take control of our environment and have sustainability. We can also clean the air and provide an opportunity for our youth to have the things that we are so desperately losing. We are desperately losing in regard to some of the health factors and some of the pollution issues that we lack resources to fix. Once again, this is a significant loss to the federal coffers for an industry that is going to create some problems for all of us as its product is used.

That is something that I think is important to note. It is really critical when we have long term commitments to something that we have the resources. That is not happening with the government. I am concerned that the government will not follow through with the Kyoto accord in terms of providing the right resources to make it successful. This loss of revenue stream is very important.

I will return to the Conference Board of Canada and its spotlight on Canada and the environment as reported in the Globe and Mail . I note this in particular:

Canadians take pride in their country's beauty and resources, but have been “lulled into a false sense of security about the state of our environment”, the board says. Canada placed a dismal 16th among 24 countries whose data were examined.

“Yes, we have abundant resources...but we are not managing them well enough”.

That is the comment. I think that is clear. Because of the natural beauty we have in this country, the size of Canada, its diversity, not only of its people but its topography, and the ability to be on an ocean, on lakes, and in forest areas, I think we sometimes take for granted the things that we do not see.

This tax cut is for an industry which obviously has played a very pivotal role in creating jobs and in being part of the Canadian drive to be successful, but at the same time it has a byproduct that a lot of people pay a price for. That byproduct is the pollution that is created and affects human health.

Even the OECD has recognized that environmental pollutants and toxins and their effects on human health has become not only an environmental issue in itself but an economic issue. The OECD is actually rolling out some more policy platforms in order to have the confidence and also, more importantly, to address the issue. Quite frankly, an area like ours has the Great Lakes area of concern because of the pollutants and the toxins we have been subjected to. For example, that has caused a situation where we have higher rates of learning disabilities among children.

That ends up not only putting a health factor on a child, but it ends up putting a burden on the family to be productive in society. They have to deal more with those special family instances. If there are no social programs there because the programs have been cut back over the years, then it hurts their participation in the economy and it makes more people dependent.

We have to balance these things out. It is not about trying to gouge an industry. The industry has done well in getting support from the federal government over the years. It has had a successful history of lobbying for money and resources and actually was in a partnership as a crown corporation at one point in time.

That does not take away from the fact that we have to be able to mitigate the problems associated with it. That is what this money does. The money needs to be in the budget to mitigate those things. It is critical. The twilight of this industry is coming upon us. We cannot be burning fossil fuels forever. We do not have unlimited supplies, so we have to introduce more and different technologies.

Ford Motor Company was on Parliament Hill today showcasing its Ballard hydrogen fuel cell technology at the front doors of this building. That takes a commitment of resources from the government. A federal green auto strategy would be one of them. We just cannot do that without money.

If we know this situation is developing, we have to reintroduce new sustainable products that will offset that. Oil and gas is a very critical issue. We have discussed this issue at the industry committee. It is not a situation where we have an option about purchasing the product. Most people have to use this product in their daily lives, to commute to work, to do social activities or whatever it might be. We have a dependency on this product. It is part of our lives. It is part of our culture. If we do not introduce something else, or do not work toward that, we are going to be very vulnerable as a nation.

These funds that are being cut are going to jeopardize those opportunities. This is important to know because this is not like any other product; it is very different because of our dependency.

We all know the stories about gas prices going up. When I was a municipal councillor and gas prices went up, we did not have the money in our budget to pay the difference. Where could we get that money? We had to either tax more or cut other programs.

If we do not invest in a multitude of different environmental projects on sustainable energy, we will make ourselves more vulnerable to those fluctuations. Those fluctuations not only hurt municipal governments but they hurt businesses that need a sustainable price in order to predict what their costs are going to be. Reducing these tax measures in our budget will make us more vulnerable by not having the necessary consistency.

The Kyoto accord is tied to this. We send a poor message when we say that we are going to reduce our emissions, that we are going to look for cleaner fuels, but at the same time we say that we are going to reduce taxes on this type of industry which is going to have an impact.

We need funds to develop the alternatives, like a job to job transition strategy so that workers who are affected by a decline or changes in the industry will have other jobs, employment training, programs and services to make that transition. We need to have urban transit alternatives to ensure that we have mass scale transportation in the future. We need to plan for the proper infrastructure because this infrastructure takes decades to develop.

Our transit systems used to use electricity. The transit systems still in use in Toronto to a certain degree operate on the electrical grid but it was more commonplace before. In fact the city of Windsor had the first electric street trolley. Ironically the oil and gas companies actually purchased a lot of those systems and eventually put them out of business.

We need green tax reforms. We need incentives so that consumers can purchase products with reduced taxation. We need incentives that will get the cleaner technologies on the streets so people see those things. We do not need a big bureaucratic structure. What we need is a reduction in taxes or an elimination of different services.

We need to facilitate the introduction of green products into society. Another good example would be the home wind energy products. There are solar powered shingles which are not affordable right now because they are not in mass production. I believe these revenue streams should be dedicated to lowering those costs so consumers can get them on the street and they can make a difference.

We have done that to some degree with automobiles. Provincially there was a tax rebate for cleaner technology, hybrids. It is not enough because there is still about a $5,000 difference in price for a cleaner vehicle, so it is not close enough. We have to narrow that gap. How do we narrow that gap? We need to have resources.

That is why we should kill this bill. We should stop it from going through. We should send a message that these revenues will go to building a sustainable economy, one that is healthy. In that way we will send a positive message to the world that we are moving to cleaner technology.

The Income Tax ActGovernment Orders

October 9th, 2003 / 3:10 p.m.
See context


Clifford Lincoln Liberal Lac-Saint-Louis, QC

Mr. Speaker, this year there have been catastrophes of immense dimension in Canada. Forest fires of untold proportions raged throughout the summer in British Columbia and Alberta. We recently heard that the Ward Hut ice shelf off Ellesmere Island in the Arctic detached itself and broke up. This is an area the size of the island of Montreal which gives people an idea of its dimension. More recently in Nova Scotia, hurricane Juan created a path of tremendous destruction, uprooting trees that were 200 and 300 years old. What do those things have to do with Bill C-48? The relationship is simple; it is called climate change.

Yesterday during the vote on Bill C-48 my colleague from Davenport and I stood to vote against the bill. We did not do it lightly or lightheartedly. These were tough decisions which were not done joyfully. In fact we regret them intensely. However, as environmentalists, we feel very strongly that there is a total contradiction between the government's policy toward climate change and our commitments to the Kyoto protocol.

The objective of Bill C-48 is to further promote the non-renewable energy sector, mainly the oil and gas industry which is a huge contributor to carbon emissions. These changes directly contradict the recommendations of the OECD that preferential treatment for the non-renewable sector should be eliminated. The same recommendation was made in the 1998 report of the Minister of Finance's technical committee on business taxation.

The Department of Finance technical study dated March 3, 2003 justified additional tax cuts which led to Bill C-48. It is interesting to note that there was no reference at all to the environmental or social costs of extraction of resources.

I would like to quote some very startling figures. I can vouch that they are official figures. The Commissioner of the Environment and Sustainable Development stated that direct government spending on non-renewable energy has been $202 million a year. Over five years this amounts to $1 billion. Between 1998-2002, the oil sands tax expenditure was approximately $597 million, over five years. The oil and gas investment tax credit amounted to $128 million. Over five years this amounted to $640 million. Over the last five years approximately $2.9 billion has gone into subsidies to oil and gas, and Atomic Energy of Canada for nuclear power.

In 2000 the Commissioner of the Environment and Sustainable Development published a report on the energy sector. I would like to quote from section 3.86 in the conclusion of the report:

Two important ways to address climate change are using energy more efficiently and establishing a more sustainable mix of energy sources, which means a greater reliance on renewable sources. The federal government stated in its 1996 renewable energy strategy that it wants to increase investments in renewable energy. It has also said for many years that it wants Canadians to use energy more efficiently, and the Office of Energy Efficiency is currently promoting this goal.

It is also stated in section 3.68 of the same report:

The tax system does not give any preferential treatment to certain investments that improve energy efficiency.

In other words, we are loading the dice in favour of favourable tax treatment to the non-renewable energy sector, the fossil fuel sector, while not providing any favourable tax treatment to the renewable sector.

The same report mentions in section 3.36 the various types of federal support to the non-renewable industry the following:

Since 1970, the federal government has written off $2.8 billion of its investments and loans for energy projects in the non-renewable sector.

I repeat, $2.8 billion.

I get the very strange feeling that we are speaking out of both sides of our mouths. On one side we are talking about Kyoto and climate change, putting large amounts of money, $3 billion in the last two budgets, into energy efficiency, the reduction of fossil fuel consumption and a reduction of carbon emissions into the atmosphere. This is a good side of it. On the other side we are presenting Bill C-48 to promote the accelerated use of fossil fuel resources. It seems to me there is a total contradiction which I must say as an environmentalist I cannot support. In fact, this is exacerbated by the feeling that this is an industry with so much clout that it almost dictates policy.

The Prime Minister in relation to Kyoto wrote a letter to the oil and gas industry on July 25, 2003. One section of the letter states:

  1. Other environmental regulations: The “business-as-usual” reference for intensity targets will take into account future federal environmental regulations. A consistent approach across all federal policies will avoid imposing a greenhouse gas penalty on mandated actions to improve environmental performance.

This letter almost gives carte blanche to the fossil fuel industry to go ahead and continue putting out carbon emissions, that there will be a cap of 15% put on reductions so that it will not be too drastically affected and it will be able to certainly respect it. The feeling is that we are really saying one thing and certainly acting, through bills like Bill C-48, very much in the other direction.

My colleague from Davenport, who stood with me yesterday to show our disappointment, displeasure and disagreement with Bill C-48, was recently at the International Energy Agency in Paris. He asked a question about the state of the world's oil reserves. They told him that if no new reserves were identified, the mid-depletion point for oil and gas would be about 2020. Then there would be sufficient reserves for another 20 to 25 years. In other words, it goes to show that our oil reserves worldwide are being depleted at a huge rate, considering that transportation and all other uses of energy are multiplying manyfold.

In regard to gas, the answer regarding the mid-depletion point was 2020, another 20 or 25 years. We are talking about results and targets that will fall in the lifetime of most Canadians. This is not something that is one, two or three centuries ahead. The mid-depletion is there, next door, in a few year's time. The depletion point for oil worldwide might be 2050.

What conclusion should we draw from this? The conclusion we should draw is that we do not say let us not use our oil resources. Of course not. We have to and we must. At the same time we are saying to the oil industry and to the government, surely a slower depletion rate would be far better for our economy and we could keep our reserves longer. At the same time, it would open the way for parallel stream which we must push with far more vigour.

We need a parallel stream of renewable energies, such as wind, solar, biomass and cogeneration. While we slow down the depletion of our oil reserves, we accelerate the pace of our renewable energies. When the oil reserves are depleted in 25, 30 or 50 years, we will have a thriving renewable energy sector such as is in the making in places like Germany and Denmark where wind power has become a very positive, constructive and important fact of life.

The Danes have made a policy to replace all their coal and oil energy with wind power in 30 years. It seems to me that we have to embark on an overall strategy, 25 or 30 years along, to put the accent more on favourable tax treatment in favour of renewable energies and to disfavour the fossil fuel sector so that it depletes itself far more slowly. Rather, we are doing everything to accelerate depletion and are giving more profits, subsidies and incentives to the fossil fuel industry.

I would like to quote from a text from Foreign Affairs of July/August 2003, by three highly credible Americans: Tim Worth, president of the United Nations Foundation and a former U.S. senator from Colorado; Boyden Gray, partner of Wilmer, Cutler and Pickering and served as counsel to former president, George H.W. Bush, the present president's father; and John D. Podesta, a visiting professor of law at Georgetown University Law Center and was chief of staff to former president, Bill Clinton. I recommend to my colleagues to read this article which is entitled “The Future of Energy Policy”.

I will quote from it. It states:

The time has come to craft a long-term, strategic approach to energy. A central feature must be public-private coalitions for change that bring together business, labor and environmental advocates. The first step must be to focus on what is important and define what needs to be accomplished. Three far-reaching, 25-year goals encapsulate America's long-term interests and should guide its energy policies.

First, America should address its dependence on oil by cutting U.S. oil consumption by a third, setting an example for the rest of the world and breaking the grip of the global oil cartel. Second, to take on the dangers faced by the world's climate, America should cut its carbon emissions by a third as a stimulus to a two-thirds global reduction by the end of the century. Finally, the United States should develop, deploy, and disseminate clean energy technologies and institute trade policies that can increase the access of poor people around the world to modern energy services and agricultural markets. Such moves will improve the lives of billions of people, stimulate economic growth and create new markets for American goods and services.

In the course of this article, it points out that in regard to energy, of which we consume far too much, of the six billion people in the world, two billion do not know what electricity is. We just flick a switch and put on our lights. We just get into our cars and they go. Two billion people in the world do not even have electricity.

In closing, I would like to also quote from the same article. It states:

A strategic energy policy will unite diverse political constituencies and forge common cause among stakeholders that are often at odds. The environmental community's objective is not to shut down coal, it is to shut down carbon; zero-carbon coal thus is something to agree on. The automotive and oil industries' objective is to not to prop up dictators in the Middle East or to sully the natural world, it is to provide a return to their shareholders; making fuels, cars, trucks and buses that are clean and profitable thus is something to agree on.

Most of all, a collaborative strategic approach holds out hope for ending dependence on oil, eliminating excess carbon dioxide emissions, and providing clean and reliable energy services and agricultural opportunity to the world's poor. The result would be to “hurry the future” by unleashing a torrent of innovation that will stimulate economic growth, create new jobs, improve productivity, and increase prosperity and security for the United States and the world.

These same words could apply to us here. It is not through bills like Bill C-48 that we will achieve this. With great forethought, a strategic policy that will look ahead and base itself on clean energies while depleting our fossil fuel reserves, which we need, with far less speed will achieve this.

I hope that many of my colleagues will join us in voting against Bill C-48.

Business of the HouseOral Question Period

October 9th, 2003 / 3 p.m.
See context

Glengarry—Prescott—Russell Ontario


Don Boudria LiberalMinister of State and Leader of the Government in the House of Commons

Mr. Speaker, I am very pleased to answer that question. I think it is an excellent question.

This afternoon we will continue with the debate on Bill C-48, the resource taxation measures. We will then turn to a motion to refer Bill C-38, the cannabis legislation, to committee before second reading. If this is complete, then we would follow with: Bill C-32, the Criminal Code amendments; Bill C-19, the first nations fiscal institution bill; and Bill C-36, the archives bill, if we get to that. There is some discussion going on about Bill C-36.

Tomorrow we will begin with Bill C-19, if it has not already been completed, and then go to Bill C-13. If we have not completed the list for today, we could as well continue with that.

Next week is the Thanksgiving week of constituency work. When we return on October 20, it is my intention to call Bill C-49 to begin; that is the redistribution legislation, for the benefit of hon. members. When that is concluded, we would return to any of the business not completed this week or reported from committee.

Thursday, October 23, shall be an allotted day. That is the sixth day in the supply cycle.

Income Tax ActGovernment Orders

October 9th, 2003 / 1:40 p.m.
See context


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, I am pleased to speak on Bill C-48, which concerns primarily the fiscal arrangements for gas and oil companies.

In preparing my speech for debate at third reading, I found a very convincing article in the chartered accountants' magazine by Neil Smith, Senior Tax Manager of the core tax practice with Ernst & Young in Calgary. I just want to read one sentence from this article, which refers to the bill before us:

The release came on the heels of a significant lobbying effort by the resource sector for federal corporate tax rate reductions.

Clearly, in relation to this bill, the big winners are the oil and gas companies. They have recorded significant profits over the past few years. As a result of this legislation, they will be able to pocket even more money since the government has decided to lower their income taxes. This is quite mystifying because, at the same time that the Minister of Finance is telling us that he needs money and that he might not be able to provide the provinces with the promised funds for health care, he is giving away $250 million in tax cuts to the oil and gas companies.

Here are a few examples of what the oil and gas companies are experiencing, to prove that they are not living under the poverty line.

Petro-Canada's quarterly report to shareholders for the second quarter states:

Petro-Canada announced today second quarter earnings from operations of $455 million, which include a positive adjustment of $96 million for Canadian income tax rate changes.

This is an initial impact of this new legislation, because it was implemented by a ways and means motion. Petro-Canada has already saved $96 million in the first quarter. As a result, Petro-Canada's taxes went down by $96 million. Petro-Canada is not about to go bankrupt; it does not have a problem with profits.

The oil and gas sector has recorded phenomenal increases in profits as a result of price increases. In early winter 2003, it was not certain that low-income and middle-income earners would be able to afford home heating oil. But Petro-Canada gets a little reduction in income tax worth $96 million.

In the case of Shell Canada, the quarterly report to stockholders for the second quarter, that is, the same period, says this:

Shell Canada Limited announces second-quarter earnings of $178 million... Earnings included a one-time benefit of $54 million from a future income tax revaluation following announced income tax changes.

In the case of Petro-Canada, there was talk of $96 million; for Shell Canada, it was $54 million less in taxes. The quarterly report of Esso Imperial, another company that is certainly not suffering, reads as follows for the second quarter of 2003:

—tax rate reductions enacted by the Federal government and the provincial government of Alberta and settlement of various tax matters benefited results, mainly in the resources segment, by $109 million.

Therefore, the three largest oil companies are declaring future additional profits of $250 million. During this time, there are people who will have trouble paying their basic expenses.

Today we heard a little good news: the federal government has decided to extend the transitional employment insurance measures for the Lower St. Lawrence and the North Shore. It has taken a year of struggle by the Bloc Quebecois to win on this point, which will enable people to have two, three or four additional weeks of benefits.

As for the oil companies, they do not face this kind of struggle. The government gives them, in a public bill, an extraordinary advantage.

That is why the Bloc Quebecois thinks that, in the end, there is no choice but to vote against this bill. The oil and gas industry will see its tax rate decrease significantly, while the federal government did not tax this decrease enough. There is no economic incentive for such an action. This industrial sector is in good shape.

In the meantime, the mining industry in Quebec is being penalized. It will be penalized by this same measure. People in the mining industry are not satisfied with the bill, because certain measures are not to their advantage.

The federal government implies that the new tax structure will be simpler because it will rationalize the way it is observed and applied, encourage investors and make the Canadian mining sector more competitive. But the mining industry, which is going to have to operate under this structure, does not feel that the tax reform program is fully achieving those objectives. Spokespersons for this sector indicate that the provisions for gradual reduction announced in the 2003 budget are too complicated and will be hard to implement.

In other words, the government is ramming this bill through so that the oil industry will get its money as soon as possible, while the mining industry—this affects Quebec in particular—is coming up empty handed. We are not prepared to vote in favour of such a bill. We need to be able to study it in more detail and try to find amendments that will satisfy this industry.

The planned 21% tax rate will apply to revenues from non-resource activities in 2004, while for resource-related activities it will run until 2007. This is complicated, but what is important to note is that the mining industry is not satisfied and that this plan will not provide the desired advantage.

The Mining Association of Canada believes that the difficulties arising out of the 2003 budget and Bill C-48 demand a prompt solution, involving the federal government along with the provincial and territorial governments.

The text I read earlier on royalties and energy said that the publication of these documents followed intense lobbying by the resources sector in favour of reducing the federal corporate income tax rate, and clearly showed that this would be profitable for the oil companies. However, for the mining industry, the comment to note is the one about how from a federal tax perspective there will be winners and others who are neutral over the phase-in period.

There are complications in this bill which disadvantage the mining sector. Corrections absolutely must be made and perhaps the bill needs to be returned to the committee to be put in proper form.

The proposed changes to federal income tax have some serious repercussions on many mining operations in Canada. This translates into heavier tax burdens, federal, provincial and territorial combined, at the expense of net corporate income.

A simple solution, proposed by the Mining Association of Canada, which benefits Canadian mineral and metal producers, would be to keep the resource allowance deduction, while dropping federal corporate tax rates from 28% to 21%. This would do away with the difference between the federal resource and non-resource income tax rates, without any need to change the provisions for revenues collected under the territorial and provincial tax systems.

While debating this bill, we have seen the new Liberal member for Témiscamingue announce—out of inexperience only, I hope, and nothing more—that he is in favour of Bill C-48, which hurts the mining sector. If there is one part of Quebec where mining is important and where there has been lobbying in favour of rules to accommodate the administration of this sector rather than the opposite, it is Abitibi-Témiscamingue.

The Liberal member has already taken on the behaviour of the Liberal members here, which is to act as the representatives of Ottawa in their ridings, rather than representatives of their ridings in Ottawa. One of his first such actions has been to vote in favour of a bill that hurts his own riding.

This bill also does a disservice to Quebec because of its unfair treatment of mining companies. As I said, it directly opposes the efforts by the Government of Quebec to revitalize that industry. Quebec has made efforts, and those efforts have just been cancelled out by Bill C-48. We have no more positive results, no advantages.

We now see a member representing this area who is voting for such a bill. I invite the new Liberal member for Témiscamingue to do his homework again, to reread the bill and to go back and consult the mining industry in his area.

When we vote on this bill at third reading, the member will have an opportunity to make amends, to change his behaviour, to really defend his constituents, here, in the House of Commons, and not simply be the federal government's mouthpiece, and to take measures that are beneficial for his region.

As a communiqué said, “this will give pause to those who believe that a Liberal member in Ottawa can defend Quebec's interests”, and, in this case, we have shown once again that it is not possible. It is as though when they get elected as Liberal members here, they lose contact with their region. And because of the bubble of Parliament, the bubble of government, the specific interests that they may have, their strong desire to maintain a good relationship with the government, with the government members, with the ministers, they start behaving in ways that do not serve their constituents. This is a clearcut example.

Bill C-48 gives effect to a legislated federal corporate taxation rate for resource income. This rate would be reduced from 28% to 21%. This is actually where the real tax reduction lies for the gas companies, and it comes at a time when we did not need such a reduction in revenues.

This bill also eliminates the 25% resource allowance, while the deductions for Crown royalties and mining taxes will be allowed as expenses. We are therefore readjusting or recalibrating the situation. From what we have heard so far however, it seems that the main result has been to allow the gas companies to collect an extra $250 million. During this same period, benefits were not passed along to the consumer in the form of lower gasoline prices. For the year as a whole, there was no significant reduction in the price of gasoline. The ultimate result is that the taxpayers' money was taken directly out of the federal government pockets. This creates an added pressure for the government to fulfill its obligations and we now hear the government say, for example, that it is not so sure if it will be able to meet its commitments for health care services.

We are noticing that in various areas of federal responsibility such as military equipment, soldiers are not being provided with adequate equipment. In the meantime, the oil companies are getting this great gift. In my opinion, that is simply unacceptable. That is why the Bloc Quebecois will be voting against this bill.

Allow me to quote again an excerpt from the official publication of the Canadian Institute of Chartered Accountants, which says:

From a federal tax perspective there will be winners... companies with high royalty rates, such as oil and gas producers operating in Western Canada.

However, in such provinces as Saskatchewan, Manitoba, Quebec and the Maritimes, the elimination of the resource allowance deduction for companies that benefited from the resource allowance results in an increase in the overall effective rate.

This basically means a tax reduction for oil companies but a tax increase for mining companies. That is what the bottom line will be, in reality, for our economy. That is dangerous indeed. It seems to me that the government could have taken the time to develop a tidier bill, because there are many ramifications in terms of provincial taxation. It varies from province to province. A balancing act will be required. At present, nothing guarantees that the system will provide an adequate balance that really meets people's expectations.

We have before us a bill that does not deserve to be passed as it stands. That is why the Bloc Quebecois will be voting against it. It is unfair to society and the balance of our tax system. It is also unfair to the resource sector because the mining industry is being penalized, while the oil and gas industry is benefiting. This is an incomplete job, which does not meet the objectives. For all these reasons, the Bloc Quebecois will be voting against Bill C-48 at third reading.

Income Tax ActGovernment Orders

October 9th, 2003 / 1:40 p.m.
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Joe Comartin NDP Windsor—St. Clair, ON

Madam Speaker, would the member for Davenport agree with me that, if there is this type of technology available, it would be better to have tax incentives going in that direction than the blanket format that is contained in Bill C-48?

Income Tax ActGovernment Orders

October 9th, 2003 / 1:35 p.m.
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Joe Comartin NDP Windsor—St. Clair, ON

Madam Speaker, I compliment the member for Davenport, who is also the chair of the Standing Committee on the Environment and Sustainable Development, on his speech and the rationale he used in speaking against the implementation of provisions that are contained in Bill C-48.

I want to pursue the question my colleague from the Bloc just asked but in a somewhat different tangent. If one were to use the tax system by way of subsidies and incentives to advance public policy, does the member have any opinion as to how that could be used with regard to the clean burning of the fossil fuel in the form of coal? Does he think that is possible? Does he know of any specific incentives that the government could put into place to encourage either research, development or actual implementation of clean burning coal technology, if that in fact exists in his opinion?