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.