Bill C-48 (Historical)

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

Income Tax Act

[Charles Caccia, Liberal, Davenport, ON]

Madam Speaker, one has to note the enthusiastic and overwhelming support for Bill C-48 by that great philanthropic party, the Canadian Alliance. The official opposition is very much inclined to support the bill, as was shown yesterday in the vote at report stage.

That party is opposed to Kyoto. That party by and large is opposed to social security reform. That party is opposed to strong federalism. The fact that the official opposition supports the legislation is a source of some suspicion. We would not want to prejudge it just because the support of the official opposition is there, but there are three very good reasons to reject this legislation and I will outline them one by one.

Bill C-48 aims at reducing taxes for the oil and gas industry. This raises the question, is the industry in trouble and does it need some help? If it were the textile industry, the shoe industry, or some industry in difficulty across the country one would understand, but why apply this form of tax relief to an industry which is consistently posting large profits and is likely to post large profits in the decades ahead? That is the question.

This brings me to the heart of the first reason. The industry has free access to natural resources which are extracted from underground. It extracts a resource which belongs to the people of Canada. This resource also belongs to the next generation of Canadians, and hopefully to generations to come. The time limit available for the exploitation of this resource is not that long. In return for this free resource the industry pays taxes. Those taxes go into the system that permits governments to do the good things that they do for the public from pensions to airports to other services which keep this country together and functioning.

Bill C-48 would reduce the taxation rate from 28% to 21%. The present rate of 28% has been justified over the years as a form of payment by this industry to the Canadian public. The idea of reducing the taxation rate from 28% to 21% is a good reason why the bill should not be supported. The tax rate should not be reduced.

There is another reason and it can be spelled out in one very short word. That word is Kyoto. It is important to briefly explain Kyoto because it has now become a buzzword that implies so much.

Canada, by virtue of ratifying that accord last December by a vote here in the House, which was opposed by the official opposition but supported by all other parties, is now committed to reducing greenhouse gas emissions. These are the gases produced when we burn fossil fuels, from petroleum to oil to gas and to coal. All the fossil fuels produce gases when burned.

Canada is committed to a reduction of 6% by the year 2012, which actually seems to be very little, based on our emissions in the year 1990. But because of the increase in our economic activity this needed reduction is not just 6%; it is estimated by our scientists that we need a reduction in the range of some 23% to 25%. It is a major undertaking, a major engagement, and not an easy one. Therefore, what follows is that if we pass any form of legislation in this House, we would want to pass legislation that facilitates, that makes easier, the achievement of the Kyoto goals.

Here instead, and this is the second reason for considering this bill not worthy of support, we are putting forward a measure that will make it more difficult to achieve the goals which the Government of Canada has set for itself by way of the ratification of the Kyoto accord last December, by way of a vote in this House of Commons.

The parliamentary secretary, when he spoke earlier on the bill on behalf of the Minister of Finance, made no reference to Kyoto and how the bill would affect the achievement of Canada's goal. This lack of reference to Kyoto disturbs me very much, because at least an explanation ought to be given as to why this measure is possible in the light of the commitment to the Kyoto ratification and the heavy engagement by Canada in reducing its greenhouse gas emissions. This bill instead is introduced as a measure to facilitate this particular industrial sector, with no reference, however, to the overall government commitment.

For this second reason, and there is a third one, I submit to you that this bill should die in the Senate. It should die because it runs counter to and opposes the achievement of a goal set by the Government of Canada and counter to its policy, which was decided by the entire government and by this Parliament by way of the vote I referred to earlier. Bill C-48 is an emanation of just one department, the Department of Finance. It is not the policy of the Government of Canada as a whole and, since it runs counter to that policy, it ought to be rejected for that reason alone.

Because as we can see, we have on the one hand the Government of Canada doing the right thing in ratifying the Kyoto protocol. It was a good measure. It was a good decision. In addition to that, the Government of Canada is investing over $3 billion, as of the year 2000, toward the implementation of Kyoto in order to achieve that distant and rather difficult goal. But then on the other hand, we see here a proposition in this bill that is aimed at reducing taxes on the oil and gas industry. This measure makes no sense, because it would stimulate and accelerate emissions of the greenhouse gases we want to reduce in order to achieve the Kyoto objectives.

Evidently the Department of Finance does not know that a major objective of this government is to cut greenhouse gas emissions.

Bill C-48 should not, therefore, be allowed to be approved in the other chamber because it is not in the public interest and because it runs counter to a key government policy.

Now we come to the third reason why the bill should be rejected. The reason is related to the depletion of global oil and gas reserves. What I am going to relate to everyone in a moment is the result of consultations with the International Energy Agency in Paris, which is an agency devoted to the study of energy and its production and the resources that are available to the global community.

According to the International Energy Agency, there is a depletion point called the “mid-depletion point” of reserves for oil, which is identified at the year 2020. In other words, in about 17 years we will reach the midpoint in the exhaustion of the global oil reserves. After that, one may want to ask, how much time is left? We are told by the same International Energy Agency that there are sufficient reserves for another 20 to 25 years. That brings us to roughly the year 2045. That is when our young pages will be in their mature years; they will probably have children and they will be looking forward to retirement.

This is the horizon being described by the International Energy Agency: by the year 2020 we will reach the mid-depletion point for oil and by the year 2045, roughly, we will exhaust the oil reserves. It could be 2050, but it is impossible to determine at this stage. There may be technological breakthroughs, yes, which may extend the depletion point perhaps to the year 2060, but we are definitely approaching within this century a point when the oil reserves will be depleted and we will reach the last drop of oil, so to speak, for use by mankind of this very valuable resource.

How does it look for natural gas? We are told that the mid-depletion point is a little better. It may not be 2020; it could be around 2050. But it is not very clear whether this calculation is accurate. It could actually be reached sooner rather than later.

To compress this particular report from the International Energy Agency, what we can say with a degree of certainty is that in about 50 years we will have reached the depletion point for oil as well as for gas, give or take perhaps a few years depending on technological advancement and the ability through technology to use better and more efficiently this specific resource so as to make it last longer. That is probably the whole purpose of having efficiency programs and efficiency research in the coming years: to make the resource last not for one or two generations but perhaps three.

However, as I mentioned earlier, the resource will be exhausted within a few decades. Therefore, we have to start planning for that time.

What is the conclusion, then, from this quick tableau I have painted for members in looking at the future? Looking at the future is always a very dangerous exercise, as we know, because one might be terribly wrong, but I do have to rely on the experts. On behalf of the public, we as politicians have to listen to the experts because they are the ones who spend their lifetimes on these matters.

It seems to me the conclusion would be that if anything we should be slowing down the exploitation of oil and gas resources rather than accelerating it. That is the logic of it all. We should not do as the official opposition, which is famous for its shortsighted policies, would do. We should not accelerate the process and produce more. Therefore the bill is out of sync. It does not fit into the long term picture that we are trying to come to grips with. That is our task as elected officials.

To conclude, there is also an economic consideration, that is, when we reach the midpoint for gas and oil around 2020 or 2025, this very same oil and gas will command a higher price on the market than it commands now because the supply will be reduced. Therefore, the returns will be greater for future generations if we postpone the exploitation of this resource for their time rather than taking advantage of it now. I hope we can see the economic logic of this kind of reasoning.

There are many reasons converging to force one to conclude that a measure to reduce the taxation of this particular sector is not desirable.

I will conclude briefly, as my time is up. It is therefore in Canada's interests to exploit carefully its natural resources and to make them last as long as possible. In this particular type of industry today, the earnings are high. We can see them in the business section of newspapers. The profits are also high. So then the question arises, why reduce taxes? Why forego a revenue that is estimated by some writers at $260 million? Why move in a direction that is counterproductive and out of sync with the overall approach of the Government of Canada? The approach has been a good one, namely, ratifying Kyoto, which is the basic, fundamental and most difficult sustainable development issue we have ever encountered and which is standing before us as a very difficult challenge to overcome.

[Bernard Bigras, Bloc, Rosemont—Petite-Patrie, QC]

Madam Speaker, it is with great pleasure that I listened to my colleague from Drummond. She spoke rather eloquently to a number of aspects of Bill C-48.

I am thinking in particular of the fact that this bill reconfirms and renews the Canadian policy of financing the oil and gas industry in Canada. This $250 million exemption for the oil industry only confirms what was announced. We must remember that throughout Canadian history, major oil companies have received substantial benefits and funding for structuring development projects.

Just think of the Hibernia project in eastern Canada, which was developed using the taxes of Quebeckers in a polluting sector, when the hydroelectric system in Quebec was developed using the taxes of Quebeckers, and only theirs. No funding came from Ottawa. At the same time, Ottawa was funding polluting projects and granting exemptions to the oil industry. That is totally unacceptable.

I am having a hard time understanding certain members opposite. I am thinking of the hon. member for Abitibi—Baie-James—Nunavik, among others, who is supposed to be defending the interests of the regions, his region and riding in particular; he can see that, indirectly, this bill is very unfair to the mining industry.

In this respect, I question the sense of duty, responsibility and commitment of some parliamentarians in this House, whose sole duty—especially as MPs representing the regions, and remote regions in particular—is to defend the interests of their regions. Some members do not even stand up in debates as important as this one, and will very likely vote in favour of Bill C-48. We have a duty in this House, and this duty is to, at the very least, condemn the lack of responsibility of colleagues who think they are defending the interests of their ridings.

I would therefore like to know what my. hon. colleague thinks of these Liberal members who are supposed to represent the interests of Quebec, at least they often claim to be defending the interests of their region; yet they are about to vote in favour of a bill that creates unacceptable inequities affecting industry sectors such as mining while they sit there and say nothing. The only time they will stand up in the House will be to vote for Bill C-48. What does she think of the attitude of these members?

[Pauline Picard, Bloc, Drummond, QC]

Madam Speaker, that really takes the cake.

This is the second time that I speak on this bill, so I know it. I also know it because I took part in the work of the committee and in the clause by clause study.

Despite the progress that has been made, Bill C-48 is still unacceptable to us, in the Bloc Quebecois.

The main irritant in this bill is nothing less than the $250 million gift the Liberal government and the future leader of that party are on the verge of giving to major oil companies.

People who are watching us must fully understand what the bill means. The government wants to provide a $250 million tax cut to Canadian oil companies. This is an untimely gift, since we read in the newspapers yesterday that the current Minister of Finance is warning the provinces that they will not receive the health funds that they were expecting from the federal government.

Today, the same minister is saying that he will not put one cent more into the equalization system. The Minister of Finance has started to set the stage for the economic update that he will be tabling next month. How can the Minister of Finance talk about situations that have had a bearing on the economic performance of his government, while at the same time supporting a bill that would mean much less money flowing in the consolidated revenue fund?

What are the Liberal government's real intentions? There is no money to finance health care in the provinces, but there is money to give to the oil companies. This two-headed government does not have priorities anymore or rather its priorities are not the same as those of Quebec and the other provinces. Why is the Minister of Finance not giving Quebec the financial instruments that it needs to carry out its responsibilities?

The Minister of Intergovernmental Affairs, the great provincialist, said earlier this week:

The Government of Canada is doing its best to help the provinces live through difficult times.

The best his government can do seems rather limited. In fact, it only does its best when it is a question of continuingg to build a centralizing government that is literally crushing the other governments within Confederation. Such an attitude is an argument for rejecting Confederation in favour of Quebec sovereignty.

The Liberal government in Ottawa is willing to give a gift worth $250 million to the oil companies, which rack up huge profits, while it is hinting that it might not have enough money to give to the provinces for health care as promised. Such arrogance is beyond words.

If the Liberal government goes ahead with its plan, Quebec stands to lose $472 million. Investing in health care benefits Quebeckers and Canadians as a whole. On the other hand, Bill C-48 will only benefit oil companies. There is no sense of proportion. I hope that the member for Témiscamingue, the member for Abitibi—Baie-James—Nunavik, or both, will understand that by voting in favour of this bill they are going against the best interest of their regions.

The comments made Tuesday in the House by the Minister of Finance on Bill C-48 are not consistent. During question period, the minister said that he had to deal with a slowdown in the Canadian economy. How then can he agree to forfeit $250 million in revenues?

The Liberal government, both the current government and the parallel government headed by the member for LaSalle—Émard, is financially strangling the provinces. That way, they give themselves leeway to then invest in areas under provincial jurisdiction.

The provinces are bled white, forced to their knees, and money is rammed down their throat to meet the needs of their people. Then the government creates programs, lots of programs, and eventually withdraws from them. This is how it has been since 1993 when I first came here. That is how this government behaves. It creates programs and interferes in areas of provincial jurisdiction. It creates needs, and then it withdraws. This is what I call arrogance.

All of the provinces are headed for a deficit. Liberals can criticize the PQ's management, but the facts speak for themselves. The PQ was not the government in Manitoba, British Columbia or Ontario. Yet, these provinces are running a deficit. Liberals should change their tune or find new speech writers.

By providing a tax reduction for an industry that does not need it, Bill C-48 shows how leeway the government has.

While Liberals in Ottawa give to the rich, they continue to take from the taxpayers. This is further evidence of the existence of a fiscal imbalance. However, the people across the way continue to deny it. The intergovernmental affairs minister, the finance minister and all those yes men sitting on the back benches continue to deny the existence of a fiscal imbalance.

There actually is a fiscal imbalance, and it is a brutal reality. We can see its impact throughout the country. The Bloc Quebecois has been condemning this situation for quite some time, whatever certain reporters claim. The PQ also did it in Quebec City, the ADQ also recognized this reality and the whole civil society agreed with the Government of Quebec.

The best part of all this, however, is that sovereignists on one side, and Jean Charest's provincialists on the other, agree to condemn the fiscal imbalance. The current Liberal finance minister of Quebec, Yves Séguin, headed a commission that came to the conclusion that there was a fiscal imbalance and that it had existed for years.

When the Liberals were elected in Quebec, they tried to convince the public that things would change and that relations would improve. It was total hogwash. The fact of the matter is that a change in leadership, whether in Quebec City or in Ottawa, will do no good. The would be leader or parallel prime minister continues to deny the existence of a fiscal imbalance.

The Bloc has always taken an active part in parliamentary debates, and it also makes every effort to properly inform the public about all issues.

Today's newspapers have published a letter on Bill C-48 signed by my colleagues for Rosemont-Petite-Patrie and Joliette. If I may, I would like to quote excerpts:

Since 1970, the federal government has contributed more than $66 billion in direct grants to the hydrocarbon industry (oil, gas and coal), notably with the Quebec taxpayers' dollars. This huge sum of money has allowed Alberta and Ontario to develop highly polluting oil and coal industries. In the meantime, Quebec developed its hydroelectric network, a type of clean energy, and did not receive a dime from Ottawa. This is just one more example of how Ottawa ignores Quebec's interests.

But now, In addition to harming Quebec's interests, the help Ottawa has provided the oil industry goes against both the spirit and the letter of the Kyoto protocol, as well as its objectives. That is what the Liberals and the member for LaSalle—Émard have done by voting for Bill C-48, a bill that provides a $250 million tax break to Canada's major oil companies.

After debate at second reading, an article in the Ottawa Citizen on October 1 condemned the hypocrisy of this government, which, on the one hand, supports the Kyoto protocol and boasts about making the environment one of its priorities while, on the other hand, it blithely supports the development of polluting energies.

I will paraphrase what Matthew Bramley, an environmentalist with the Pembina Institute, was quoted in the Ottawa Citizen as saying that, to be truly equitable, “you'd make the polluting sectors pay more to compensate for the damage they do”. Instead, we have a government that wants to reduce the burden for the oil industry, which is an attitude, understandably, that will be well received by Albertans.

Mr. Bramley predicts that the new Liberal leader will not change anything, since he will need to entice voters from the west.

I have a number of questions and I would like to hear what the member for LaSalle—Émard has to say.

How can the Liberals and their future leader claim to be concerned about the environment and, in the same breath, make sure that the big oil companies enjoy such advantages, while this industry is drowning in profits and ravaging the environment? Why is that $250 million per year not being offered to the wind power or hydroelectric industries, which produce clean energy?

I am eager to see the member for LaSalle—Émard come out of his burrow to answer our questions. There are more urgent things to do than organizing parties with his supporters and there are issues on which he should speak. The public ought to understand what an immense slump it is going to find itself in, with a future prime minister whose decisions have a direct effect on the bank accounts of his businesses.

Bill C-48 is an illustration of the patent conflict of interest in which the member for LaSalle—Émard finds himself. One of his companies carries coal; it works with the petroleum industry. Worse still, the future prime minister is himself a stockholder in an Alberta oil company. That is too much. I hope that the hon. members on the benches opposite will wake up and see reason.

I talked very little about the consequences of this legislation on the mining industry. This bill does not treat mining companies equitably and undermines the Government of Quebec's efforts to revitalize this industry. This should worry the people of Abitibi-Témiscamingue, a mining region that just elected a Liberal member who voted in favour of legislation that directly contradicts the interests of his own region. This should worry those who think that a Liberal member in Ottawa can defend Quebec's interests. In fact, the Bloc Quebecois is defending Quebec's interests in Ottawa, whereas the Liberals are defending Ottawa's interests in Quebec. Bill C-48 is proof of that.

Representatives of the mining industry came before the Standing Committee on Finance to express their opposition to this legislation.

Pierre Gratton, the Vice-President of Public Affairs and Communications for the Mining Association of Canada, indicated that several provinces had established their tax rates according to the federal system implemented in 1974. He said that this bill will increase the taxes of certain companies.

We heard the comments of Frédéric Quintal, spokesman for Essence à juste prix, who told the committee that:

With this accumulated debt of over $500 billion, can our government afford a tax gift to the richest industry in Canada? We are not talking here of an industry in difficulty, not the Canadian beef, softwood lumber or airline industry, but the richest industry.

Then, in response to our questions in connection with what he said about the tax relief to the companies never making it down to the pumps, and thus having no effect for consumers, he added:

No, it will just mean additional profits or the oil and gas companies, three of whom—Esso, Shell and Petro Canada—have in the first six months of 2003 already gone 242% over the net profits for the entire year, twelve months, of 1999. And that was already considered a very good year. I feel I must point this out.

So that is the situation. On the one hand, we have a government complaining about having to bear the brunt of an economic downturn, which allows it to continue to maintain a stranglehold on the provincial governments, while on the other hand we have that same government wanting to give a tax break to the huge, and hugely wealthy, oil and gas companies.

In conclusion, since this bill is not in the best interests of the entire community; since this bill blocks the efforts being made by Quebec to make mining investment more attractive; since this bill moves us far away from the principles of the Kyoto protocol as far as environmental protection is concerned; since this bill ipaves the way for the parallel prime minister to win over the west, I, as a Quebecker, a member of a party defending the interests of Quebec in this House, and a sovereignist, am opposed to this bill.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Madam Speaker, I wanted to raise a point of order on a matter of interpretation. The hon. member said we were not there, at committee. That is incorrect. We cannot be everywhere at once, and there are many committees of the House of Commons. Often, Bloc Quebecois members travel around the world and cannot attend committee. We do not mention it in the House. They are travelling. I am the only member not to have travelled abroad. I want to make that perfectly clear.

The hon. member mentioned the $250 million for oil companies. Well, let us talk about oil and this $250 million. There are two provinces in Canada with an energy authority These authorities set the floor price for oil. We cannot talk about oil without talking about the people who put regular gas in their vehicles. As we know, recently in Ottawa, gasoline has been selling for 66.4¢ per litre, while in the Abitibi, it is selling for 74.9¢; in Kuujjuaq, regular gas is selling for $1.22 per litre. Who established an energy authority for oil in Quebec? The PQ did, when it was in office. It should not have. It should have gone the way of the free market instead. Our gasoline price would be closer to Ontario's 66.4¢, instead of 74.9¢.

Let us look at the bill as it stands. The Bloc Quebecois contends that we did not adopt the amendments put forward. There are no amendments before the House at this time. Bill C-48 is. We all have respect for the Quebec Mining Association, the Mining Association of Canada and prospectors. We win some and we lose some; it is 50-50. But the hon. member mentioned rates. The Bloc said, “We support the mining association for 20%”. That is incorrect; what the Bloc proposed was 10%, then 14% and 20% thereafter. They should switch gears, because we are not debating amendments today.

I support the legislation in order to get at least 50%.

[Pauline Picard, Bloc, Drummond, QC]

Madam Speaker, Bill C-48 has been under review for a long time and witnesses have appeared before the committee, representatives from the mining industry, among others. The most frustrating thing about this bill is that it gives $250 million to the major oil companies.

When the mining associations appeared before the Standing Committee on Finance to talk about their problems and needs, I am sorry to say that the members for Abitibi—Baie-James—Nunavik and for Témiscamingue were not there. Today it is all well and good to—

[Some hon. members]

Oh, oh.

The people trying to interrupt me ought to ask themselves this: How much is it going to cost the taxpayer? We know that year one will cost about $100 million, and the others $35 million. It will come close to $1 billion, all told.

I understand that this is not firearms, or sponsorships, but money is important. We know that, if the government sits down with the Mining Association of Canada in the nest few years, it can come to the House of Commons with an order in council to improve it. This is a start, a half-measure compared to the Bloc Quebecois proposal, of 10% only the first year, not 20%.

This sets the facts straight, and it is important to do so, because no amendment has yet been proposed. I support the bill because we must not lose it. We must at least gain what the government is proposing. It is new, and important.

A careful examination of the record will show that we have always supported the Mining Association of Canada, the Quebec Mining Association, and the prospectors of Quebec. Bill C-48 will impact small mining operations and major mining companies differently.

The small mining companies are resource extraction industries that do not do any mining exploration. This is a grey area, as it were, because some small companies operating a mine could still be considered small mining companies. Five percent is a good start, even if we would have liked to get 20%. We are going to work in that direction with this Minister of Finance and with the next one.

As to the present situation in the mining sector, the fiscal aspect is not the only important thing to consider. I just received a report dated September 2003 concerning the mining industry in the Abitibi-Témiscamingue area. I hope that the Bloc members have a copy of it handy because it is the last document that we have received. It is a document written by Luc Blanchette, a well-known economist from the Abitibi-Témiscamingue region, explaining what is happening in that sector.

The fiscal angle is not everything. We know how important the mining industry is for the economy of Abitibi-Témiscamingue, of the whole northern region and of Nunavik. We also know the economic and environmental context in which it is operating.

Moreover, the low prices of metals have caused the temporary closure of some mines or the postponement of some mining projects. We all know what is happening now. Some mines are closing and others are opening. New projects are being developed. But what can we, together with the opposition members, do in the long term?

The revival and mineral exploration in northern Quebec, in Nunavik and in the Abitibi-Témiscamingue region will come about through better defined mining zones, mapping and the search for economical sites. The investments made in 2003 will no doubt depend on the price of the metals in demand and will certainly be influenced by the price of gold and, as we know, the diamond situation.

What matters most are the consequences of that politico-economical context, which have been apparent since 1988. They did not suddenly crop up today because of Bill C-48. The very first year, instead of accepting 10% or 14%, the Bloc Quebecois should have asked that we follow up on what the Mining Association of Canada had requested and that we go for 20%. They too accepted a halfway compromise. When this government came to power, the amount was already down to 5%.

Among the consequences that we have seen since 1988, there is a 46% decline in labour and a 44% decrease in the number of hours paid by the mining industry in Abitibi-Témiscamingue. We know that, in Quebec, although the impact on employment was still significant, it was not as great, with a 33% reduction in the number of hours paid and the number of employees.

Given that approximately 20% of all mining operations in Quebec take place in Abitibi-Témiscamingue, the decrease observed at the provincial level is probably due to the poor performance of the regional mining industry.

What do we do now? I will be supporting Bill C-48. I come from a mining area and I used to be a miner myself. It is good to have gained something. It is also something new. Reducing the tax rate applicable to corporations was not an issue before. But it is important, just as it is for the corporations to set up their headquarters in our region instead of Montreal or Toronto, where they are currently located.

We have to work with the current government and the governments to come to find solutions and improve the situation. We will see how things go in year one of the implementation of this bill, which provides for rates of 5%, 7% and 10% for the next five years. These rates could increase in every budget. In the next budget, the government might raise it to 10%, as the Bloc Quebecois asked for in committee. It could happen. We just have to wait and see.

What is important right now is to help our mining companies. Some companies are closing down in our region and more could do so in Abitibi-Témiscamingue in the months to come.

We need to go forward, work hard and work together. We cannot have our cake and eat it too, and the picture drawn by the renowned economist, Mr. Blanchette, reflects the real situation in the mining industry.

Members of Parliament do not create jobs. It is important also to think about the miners who work underground. The PQ government never agreed to set up a retirement plan for miners. If we can introduce tax credits for mineral exploration activities, then we should be able to help the miners who work underground. The PQ made that promise during the 1973 election campaign, but never kept it. The government should address this issue and think about setting up a pension plan for miners who need it when mines close down.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Madam Speaker, I am honoured to speak on behalf of everyone in my riding, of the miners, mining companies and small mining businesses throughout the vast territory of Abitibi-Témiscamingue, Chapais-Chibougamau and James Bay, and on behalf of the James Bay Cree and the Inuit in Nunavik. The riding covers about 850,000 square kilometres in Quebec and is the biggest mining riding in Canada.

I listened to the Bloc Quebecois member who said that noboby had had spoken out. I find this passing strange, because I have documents from the finance minister dated February 2002. It is the answer of the hon. member for LaSalle—Émard to one of my letters. Back in 2002, I asked for a reduction in the general tax rate of mining companies.

We knew that the tax rate for small businesses was supposed to drop from 28% in 2000 to 21% in 2004. This goes to show that we are concerned about the same issues.

Coming back to the mining industry, a story by Juliane Pilon was published in La Dépêche , a paper belonging to Jacques Aylwin, under the title “Decline in the Abitibi-Témiscamingue mining industry”. It said that rates go up, then go down, and may well remain low. That is what we should be promoting.

The Mining Association of Canada wrote us to enlist our support for an amendment to Bill C-48. I note, however, that none of the proposed amendments has been adopted and the Bloc Quebecois did not get anywhere in committee. The Liberal member who spoke earlier has summarized the entire situation very well as far as what the mining association was calling for is concerned. The same thing is happening back home.

If, however, we examine the facts, we know that the federal government is proposing a new rate: 5%, then 7%,10%, 10% and 10% until 2007. The mining association asked us to support 20%.

I listened carefully to the Bloc Quebecois member for Joliette, who said that they too support the Mining Association of Canada. What I find strange is that this is not what they proposed in the standing committee. Their proposal was 10% the first year, followed by 14% the second, and 20% thereafter. I find it odd that the Bloc Quebecois did not call for 20% right off the bat, instead of going from 10% to 14% and finally to 20%.

[Joe Comartin, NDP, Windsor—St. Clair, ON]

Madam Speaker, I wish to thank my colleague from Windsor West for his questions. I will try to deal with them as efficiently as I can.

The vote on Bill C-325 last night was a tragedy from the perspective that it lost by only three votes. It was 99 to 96. We were recommending income tax deductions for emergency workers and people who provide emergency services to protect us from fires. Most of them come from rural areas. The government opposed it. Overall there were a number, and I will give them credit for it, of members from the government side who voted in favour. It brought us really close but did not quite get us over.

It is a pittance compared to what we are talking about in Bill C-48. Our estimate is that probably over the first five years of these incentives it will be at least a billion and probably closer to a billion and a half dollars. In terms of those emergency workers, I do not know if we would have got up to a few million in terms of the break we were trying to give them and in effect saying to them that as a government, as a Parliament, as their elected leadership in the country, we prize what they were doing for us. The message they got yesterday was obviously that we do not.

We are going to hear if the Deputy Prime Minister and Minister of Finance says that he cannot afford the money that has been promised to the provinces for health care when he makes his financial statement in November.

We look at that and see that we cannot find that $2 billion, but we can find this for a very profitable industry. We then say to the minister that this industry is a polluter and that it should be paying its share. It should not be getting tax breaks. On the other hand, the government will say it cannot find money for health and will stick it to the provinces. They will have to find ways to deal with all the health problems that have been specifically created as the result of the burning of fossil fuels. It is terrible policy making on the part of the government.

As for the consumers getting the money, it is obvious they will not. There have been any number of other times when these tax breaks have been given and incentives provided, but did we see a reduction to our cost at the gas pump or the cost of home heating fuel? The obvious answer was, no. We did not get any of those breaks. The government stayed with the companies with their high-paid executives and money going to the shareholders.

On Kyoto and the marketing issue, I am really happy to hear that question because I have not had the opportunity to raise it in the House. We had the Kyoto announcement of spending about a billion dollars at a press conference attended by the Prime Minister, the Minister of Industry and the Minister of the Environment.

We have this retrofit program. The government has set aside $75 million. Everybody in the country who knows anything about it has told the government it is nowhere near enough. It also set aside $45 million to educate Canadians. That is an insult to Canadians.

Canadians led the fight dragging and kicking the government behind it to finally ratify Kyoto. We had people in the country in the ratio of 65% to 75% saying they were convinced that we had to ratify Kyoto and they finally got the government to do it. Now, is the government going to tell them what they have to do to implement around retrofit programs in their own homes and conservation? They do not need the education.

This is going to be another one of those boondoggles. It is going to be money going to the friends of the government to run absolutely useless education programs, promotional programs for conservation and doing retrofitting. It is not necessary. The dollars that need to be spent on that are probably a small percentage of the $45 million that has been set aside.

[Joe Comartin, NDP, Windsor—St. Clair, ON]

Mr. Speaker, as I prepared some notes for my talk today, I could not help but feel like I was sort of in a surreal situation.

We have this bill before us which will give further tax breaks to the fossil fuel industry, the mining industry, the concern there being, particularly from my perspective, the coal mining industry. It would reduce the tax level and give a tax credit over a period of years. We have to juxtapose the bill before us for third reading today with what is going on in this country and in the world.

I come from an area of the country where we have major health problems, a great deal of which are directly related to the burning of fossil fuel, whether it be exhaust from cars or the coal-fired plants in Ontario and, more specifically, in the midwest of the United States that ends up being dumped into my area.

We also have to put it into the perspective of the Kyoto agreement, which the Canadian people finally pressured the government into ratifying at the end of last year, and, in the context of that, the overall natural environment of the country. We know from lots of studies, but most recently just in this last week from the Conference Board of Canada, how badly we stack up compared to other countries around the globe.

The Conference Board of Canada did an assessment of the 24 leading industrial countries in the world. Where do we stand on carbon dioxide, the direct result of the burning of fossil fuel? We stand 24th out of 24. We are dead last. We are also near the end in a whole bunch of other greenhouse gases. We are in the 21, 22 and 23 range in each one of those areas.

What we hear of course, and I think we heard it from one or two speakers on the government side, is that we have to keep doing this to keep the economy going. The Conference Board of Canada is not exactly a flaming environmentalist organization, but it makes the point, and I quote from the report that was issued this past week:

Environmental progress need not come at the expense of economic gains, as many believe....

The board goes on to say in a summary:

Many of the countries that lead the environment list also make the top 12 in the economy category.

What it is saying is that there are countries around the globe, in that 24 grouping of the top industrialized countries, that have a high performing economy, that do well for their people, that have high incomes and a corporate world that does well, and at the same time protect their environment. We do not have to play one off against the other. With good economic policy, with progressive, forward looking economic policy we can accomplish both. We can take care of our natural environment. We can take care of the physical health of our population, and at the same time run a vibrant, strong, healthy economy. The two are not mutually exclusive at all. That is the Conference Board of Canada talking.

Back to the context. We have Bill C-48 which would give more breaks to the fossil fuel industry, and we have it in that context of just how poorly we are doing as an industrialized country around the globe.

Let us look at the specifics of what we are doing. This week the Green Budget Coalition came forward and made a presentation, as it has every year for the last seven or eight years, to the finance committee and, in fact, indirectly to the finance department, on how we green our economy and, more specifically, how we green our budgetary process.

I will quote some of the statistics in its brief that it left with the committee where it talks about fossil fuels and takes a slice of the history. The brief states:

Cumulative direct Government of Canada spending on fossil fuels between 1970 and 1999 totalled $40.4 billion. In addition, $2.8 billion in federal loans to fossil fuel industries have been written off since 1970, over and above direct spending.

We are at $43.2 billion over the last 29 years and that has continued for the last four years, bringing us forward to the kind of incentives we are now increasing to that industry.

The brief juxtaposes it again to put it in some kind of context. It states:

For the period 1987 to 1998, total government support for energy investments totalled $4.3 billion for non-renewable energy and only $118 million for renewable energy.

That is a travesty when one looks at those results that we see all the time, the reason we needed to ratify Kyoto and the numbers that we see from the Conference Board of Canada.

I will repeat that: $4.3 billion over that 11 year period from 1987 to 1998 for non-renewable energy, all of it going to the fossil fuel industry and the nuclear industry, and only $118 million for renewable energy. Whether it be wind, solar, current, wave or even hydroelectric, it was only $118 million, which is just a little over $10 million a year. In the same period of time billions and billions went to the non-renewable energy sector.

In the brief there is a whole policy on to how to deal with budgetary matters, how to green the budget and how to green the economy from a tax, tax incentive, subsidy based, taking all those into account.

In spite of the previous reports the coalition has filed with that committee and with the finance department, as we heard from the parliamentary secretary today, I do not think he even understood the work it has done. I think that is a fair categorization of the response I received from him at that time.

Let us put into perspective how the fossil fuel industry has performed. It was interesting to listen to my colleague from the Conservative Party. I have no apologies to give as a member of the NDP on protecting jobs. Let us look at this industry. Since 1990 this industry has terminated the employment of some 80,000 people.

I know some members will jump up and say that we are just worried about union jobs. Very few of those were union jobs. The vast majority, about 60,000 or three-quarters of them, were as a result of the shutdowns of small companies, retailers in the oil and gas industry. The industry just put them out of work and took them over itself.

Those were small employers with five, ten or twenty employees, either full time or part time. Industry just wiped out 60,000 jobs in that sector, but what is being done? The government is continuing with a government policy to subsidize that industry.

Let us take a look at the consequences of these measures of reducing the effective tax rate from 28% to 21% and giving that 10% tax credit. Just three of the big oil companies, not all of them, but Petro-Canada, Shell and Esso, have already forecast that they will save $250 million a year. That is how much of a tax break the government is giving these companies. Over the five year period, it will be some $1.25 billion. That is how much the savings will be just for those companies.

These companies are already making profits. If we look at their profit for this year we will see that these companies are making profits. One company's profit is $100 million. One is up to $200 million. In fact, in some cases those are quarterly profits. We will see much higher ones over the course of this year, especially when we add on this subsidy.

What does all this get us? As consumers, have we seen rates go down at the gas pumps? It is almost a joke to raise the question given what has transpired through the summer and the early fall. We have seen the price of fuel go up dramatically at the pumps. For those who are on fixed incomes, the price of home fuel in particular has gone up by a tragically high amount.

We do not see those benefits passed on to the consumer. Do consumers benefit from these tax breaks? No. Does the environment benefit? Obviously not, given what is happening, nor does human health in this country. Are we somehow giving an advantage to the renewable energy sector? Again the answer is no.

Bill C-48 is being shoved through the House with the government and the official opposition supporting it in the face of that reality I have just detailed.

I will cover one more point which I heard again from the government side as some justification for this: that we have to be internationally competitive. Let us look at the result. Let us look at the effect of these tax breaks for this industry. In regard to our closest competitor, the United States of America, specifically the state of Texas, and the effective current rate of tax for the fossil fuel industry, right now our tax rates have us about 5% below the state of Texas. That is right now, before Bill C-48 is passed.

If Bill C-48 passes the industry would effectively be paying 41% in Alaska and 35% in Texas. In Canada we would be down to 30.1% across the country. This is effectively where it will end up.

Therefore, we cannot argue that this is a competitive advantage bill, that this policy somehow will make us more competitive, because we already are in that situation. Right now we are competitive with our major trading partner.

This would not help us with a competitive advantage internationally. It would not help consumers. It would not help the environment or our personal health, and it certainly would not enhance the production of energy from renewable energy sources.

It begs the question, why are we doing this? It was interesting to read the newspaper article by Susan Riley last week in the Ottawa Citizen . The headline was, “While you're not looking, Big Oil is set to get a big tax break”. As opposed to a number, the editorializing in that headline is pretty accurate.

In that article, a couple of members of Parliament are quoted as saying they were under tremendous pressure. One is from the government side and one from the official opposition and they say they have been under tremendous pressure since the year 2000 to get these breaks for the oil and gas industry.

That is really the answer to my question about why we are doing this. We are doing it because the industry asked for it and because, since the second world war, whenever big oil has asked for a break, it got a break.

That has resulted in the situation we have in my home community, where we have high rates of cancer and other high rates of illness and disease directly related to the consumption of fossil fuels. It has resulted in the international need for Kyoto to get those reductions we need in the emissions of carbon dioxide into our atmosphere. It has resulted in very high energy costs, whether for home heating fuel or to power our motor vehicles.

It is a policy that has failed from every aspect. What Bill C-48 is doing is perpetuating the economic system that is the underpinning for that industry.

It is time for this government and this House to take seriously our responsibilities under Kyoto and to take seriously what we are hearing from environmentalists and progressive economists about what we can do to reduce those subsidies to the fossil fuel industry, to phase them out. Because we have to do that. We do not have enough oil and gas to continue our consumption beyond somewhere between 2030 and 2050 at the rates at which we are consuming now. We simply cannot do it. The supplies are not there, anywhere in the world. We need to change that policy. We need to phase out that industry.

In order to do that, we must have a comprehensive policy initiative in the tax field. We cannot do this just by signing on to an international protocol like Kyoto. We do have to do that, but then we have to implement. That does not mean just starting a retrofit program, which we need to do in Canada, and not just doing a conservation program, which we also need to do. In addition, what is sorely lacking in the Kyoto plan, and we see that with the bill, is any concept from the government about understanding the need to reform our tax structure. We have to reduce the incentives provided to the fossil fuel industry, on a gradual, phased out basis, and replace them with incentives, tax breaks and subsidies for the renewable energy sector.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, the most intelligent thing I have said was that the government historically has not been very successful in managing other portfolios. It has not been very successful in managing departments. The list is endless. There are too many other things that we could add to the list, but Bill C-48 is not one of them.

I stand on behalf of my colleague from Kings--Hants on this piece of legislation. The Progressive Conservative Party will be supporting Bill C-48 simply because of the equality that is necessary in the sectors.

It is absolutely vital that we continue exploration in the oil and gas industry. It is absolutely vital that we encourage that exploration to continue. Bill C-48 is a way of doing that.

It is absolutely vital that the revenues that are generated are part of Canada's economy, part of our GDP. Our quality of life depends on it. I know the NDP would like to nationalize just about everything that we have, but that is not philosophically the way we should be going in this country. Bill C-48 will make it more fair with the tax rates that will be put into place.

We in the Progressive Conservative Party will be supporting this piece of legislation.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Now I am even getting heckled from the government side, Mr. Speaker. However those members should be our friends on this issue because Bill C-48 has to go through.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, I am pleased to speak at third reading of Bill C-48. My colleague the member for Kings--Hants has had carriage of this piece of legislation. He is now with the finance committee somewhere across the country and it has fallen to my delicate hands to take it to the next stage.

Our party will be supporting Bill C-48. I appreciate that the members from the Bloc, and certainly the member speaking after me from the NDP, have different philosophical positions with respect to business management and labour. Certainly their philosophical positions will come out in their opposition to this piece of legislation. The NDP and the Bloc make no bones about it that they are not friends of industry. They are not friends of business. They are not friends of being able to generate the economy in the natural resources sector.

I appreciate my colleague from the Bloc helping me in protecting Manitoba with respect to this legislation. He indicated many times that Manitoba would be the net loser should this bill go forward. I do not agree with that. I believe in competition. My province of Manitoba has certainly seen the benefits and the opportunities in the mining sector. It sees the benefits and opportunities certainly in the natural resources sector. As a matter of fact, the majority of Manitoba's GDP is from natural resources, whether it be agriculture, mining or forestry. We see that there are advantages.

As a matter of fact, Manitoba has put in quite a number of changes to its own tax system, tax rate and royalty system to encourage mining. We have some very large mining operations in Manitoba with Inco and Falconbridge. We want to continue to be able to compete in the world market. In order to do that Bill C-48 corrects some of that inequality.

We were somewhat dumbstruck when it was brought forward in the 2000 budget that there would be a reduction in the general corporate income tax rate from 28% to 21%. We were actually thunderstruck when we found out this did not include the natural resource industry. Oil and gas, minerals and mining were excluded from the 2000 budget. I do not know whether the NDP at that time stood up and said wow.

There is a huge industry that has been neglected. Bill C-48 brings that back into line. There is an equity issue that has to be resolved and Bill C-48 resolves it by adding the mining sector to the reduction in the tax rate from 28% to 21%.

There are other issues with respect to the legislation. There are phase-outs. Certainly the 25% phase-out is going to have some concerns. My colleague from the Bloc spoke to that. Manitoba will have a reduction in revenue streams because of that tax reduction.

That may be true, but we also have enough foresight to recognize that there should well be revenue streams or revenues increased by encouraging exploration, by encouraging mining operations to come into Manitoba, northern Manitoba specifically, and by encouraging these industries to not only explore but process the raw materials they extract from the earth. This is what we were built on and this is what we want to continue to do. We want to encourage that so there will be more union jobs developed in Manitoba, so union jobs can be increased in the sector that this is trying to assist. Bring equity back into the system.

I hear somewhere in the background the member from Windsor suggesting perhaps that is not the case. As I said at the outset, there are philosophical differences. I believe in the private sector developing economy. I believe in that. Also I believe that profit is not a dirty word. That may send them into apoplectic shock, but the fact is there has to be profit in a sector.

There has to be profit in an industry in order for that industry to reinvest in itself and reinvest in its employees, in their training and their pension plans. That is what the economy is all about. I do not have to lecture the member for Windsor West on economics 101, but I do have to lecture the member and say that the inequalities in the industrial sectors do not bode well for Canadians.

We do have tough competition in the oil and gas and the mining sectors. We have competition offshore. China has some very strong advantages compared to us. The labour costs in China are substantially less than they are in Canada. We have to compete in the way we can and that is obviously in our tax rates. We cannot take from the industries so often that they are not able to reinvest back into this area.

I appreciate the Bloc's position on most of the issues. The Bloc members are suggesting that there will be revenue losses. I appreciate the Bloc trying to protect Manitoba, but we really do not need that protection. We can look after ourselves.

More than that, I am sure the Bloc's concern is more about the federal-provincial jurisdictional issues as it always is. Obviously the Bloc has some difficulties with the federal government getting involved in any kind of provincial jurisdiction. This is one of those areas. When Bill C-48 becomes law, it will be necessary for the federal government to work with the provincial governments to ensure that the resulting provincial revenues are redirected to the affected mining industry.

Basically, my good friends in the Bloc are telling the federal government not to step on Quebec's jurisdictional toes. In fact, this is a federal responsibility. Bill C-48 is a federal responsibility in setting tax rates for the industry. It is up to the government to set those rates.

There is never any perfect legislation. We certainly know the government is not perfect; that is an understatement. We know there could have been amendments--

[Pierre Paquette, Bloc, Joliette, QC]

I never called the member a liar, Mr. Speaker. I believe you can attest to that. I said I did not understand why we did not hear the member for Abitibi—Baie-James—Nunavik and the member for Témiscamingue publicly demand, as I am doing, a simple amendment to Bill C-48 to increase the pre-production mining expenditure tax credit from 10% to 20%.

On October 1, 2003, the Mining Association of Canada presented a brief to the Standing Committee on Finance. It was not six months ago or six years ago. It was last Wednesday. The president of the association, Mr. Peeling, came to implore us to make this change; it does not eliminate all the unfairness, but it is the compromise the Mining Association put forward. The only ones who supported the amendment were the Bloc Quebecois members. In the end we got the support of the Canadian Alliance members when they understood what was at stake.

On the Liberal side, one member supported us and another one said—and I can understand him to a point—that he agreed in principle with the amendment, but that he was concerned we might lose the bill. I cannot see how we could lose a bill at this stage, if everybody agreed on a very simple amendment to Bill C-48 and if we had the support of the Liberal majority.

For our part, we work for our people in the regions. I never said the member was a liar. I would have liked him to publicly state his position on Bill C-48. He might do it in the next few minutes. He may have looked at the changes requested by the Mining Association of Canada and the Quebec Mining Association.

People at Cambior approached us. I was secretary general at the CSN and I toured mines in the Abitibi-Témiscamingue region and across Quebec. I know this situation well. It does not prevent me from still standing up for our regions and our mining sector.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Mr. Speaker, I have listened carefully to the comments by the hon. member. Some things are true, but I cannot agree with what he has said about us, the Liberal members from Abitibi and the resource regions. I understand that some resource regions have only tobacco growing; others have mining. I am a former miner, myself.

In my remarks, I want to comment on the fact that he said no one has intervened. I have here a letter dated February 21, 2002, in which I told my government, the former finance minister, the Liberal member for LaSalle—Émard, that it was necessary to consider the same sort of reductions for small and medium-size businesses as for other sectors. It was necessary to reduce the general corporate tax rate from 28% in 2000 to 21% in 2004. As for small and medium-size businesses, it is very odd that the Bloc is not discussing what was happening in these companies, that no one took the differences between various industries into account. On the other hand, when we discuss natural resources, these members say we do not stand up for our constituents. We know that there is always room for improvement in bills.

I have here some notes from my friends in the mining sector. They point out the difference between junior and senior mining companies and explain the repercussions of Bill C-48. The issue is this: we know that we must improve the tax system not only for the large, senior companies, but also for the junior companies and small mining corporations.

Still, to go from that to saying that we have not intervened; I am sorry, but this is a false debate at the expense of our resource regions. Because in these regions, when there is no more ore, there is still a problem with respect to the price of metals. Today, our problem is the issue of the rising dollar.

One point is very important: we do intervene. I do not want anyone to say to me that we do not intervene; you are not aware of the letters we write to the minister. We work from within; we work in our ridings. We do not see these hon. members in our regions and our mines very often. I used to be a miner. We do not often see them around Chapais-Chibougamau, or even in Val d'Or. I understand that this bill needs improvement, but it is a first step and I am satisfied. Some things must be amended, but we have to work together.

If they are going to call us liars and say we are doing nothing, they can go to the devil.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, first I would like to congratulate the member for Calgary Southeast on his frankness and also on his good command of the French language.

I am pleased to speak to Bill C-48 because the government is now trying to bring the House to adopt legislation that we feel is not fair for the majority of our natural resources industries, especially in the mining area.

I appreciate the fact that it is quite a technical bill, but it seems to me that if we take a close look at it, it soon becomes obvious that it needs to be amended. Unfortunately, the Liberals did not want to listen to reason in the finance committee.

In fact, in the mining sector, it is not only Quebec that is hurt by Bill C-48, but also Ontario, Manitoba and the Atlantic provinces. It is very hard for me to understand that hon. members representing ridings in Ontario, Manitoba and the Atlantic provinces are not examining this bill to see how it will hurt the mines in their ridings, their regions or their provinces, just because it is rather technical. This is a bill that can be improved; I will return to that later. Passage of Bill C-48 will lead eventually to some mines being closed and jobs being lost. Perhaps some communities will break up because a mine is often the only reason for a community's existence.

As we know, Bill C-48 restructures taxes in the natural resources sector. The argument put forward by the Liberal government—and even by the Canadian Alliance, I have noticed—is that Bill C-48 restores equity between the natural resources sector and other sectors of the economy. Thanks to the former finance minister and future prime minister, the other sectors have enjoyed a tax reduction in the 2000 budget, which lowered the tax rate from 28 to 21% over five years.

And that is the positive aspect of Bill C-48. Now the natural resources sector, like all the other sectors, will benefit from the same reduction, although somewhat later. On that score, I agree completely with the hon. member who preceded me. Thus, Bill C-48 would lower tax rates from 28% to 21% over five years.

The reform of corporate tax structures in the natural resources industry was delayed because it is a special kind of taxation. There is not just the rate of tax on profits. There are also a number of taxes imposed through royalties, for example. That was why the ex-minister of finance and future prime minister delayed the tax reform for natural resources.

They tell us they held consultations. But this consultation must have been, like so many others done by this government, more public relations than true consultation. Thus, we find ourselves with a bill that is totally unfair and unacceptable to a certain number of businesses in the natural resources sector.

Bill C-48 cuts the tax rate from 28% to 21%. As I mentioned, this is the good part of the bill, and the Liberals and the government refer to it repeatedly. But there are three other measures in Bill C-48. We must consider the net effect of this reform, not just one part of this bill.

I want to talk about the three other measures. Other than the tax rate on profits dropping from 28% to 21%, the bill will phase in a deduction for provincial royalties, related to the use of non-renewable resources. This is a new deduction. However, and this is the third measure, the current 25% resource allowance will be eliminated.

The allowance allows natural resource companies to deduct 25% of their profits, on the extraction portion of their activities, prior to paying income tax. This 25% tax credit on resources would be dropped and they would instead be able to deduct provincial royalties.

The fourth measure is a new tax credit for qualifying pre-production mining expenditures, applicable solely to diamond mining and base metal mining.

So, as I mentioned, we cannot talk only about the first part of the reform, to reduce the tax rate from 28% to 21% over five years. The net effect of all four measures must be taken into consideration.

However, according to the Mining Association of Canada, supported by the Quebec Mining Association Inc., Bill C-48 will increase the effective tax rate of many mining companies. I am not saying that the entire industry will suffer as a result of Bill C-48, but the effective tax rate of a large segment of this sector will increase under the proposed reform in Bill C-48.

Mature mines will be harder hit simply because these mines typically pay relatively low royalties in comparison to what other natural resource sectors pay, particularly oil and gas companies.

This is easily understood. There has been competition between the provinces, as well as between Canada and other countries, which has led the provincial governments to reduce their taxes or royalties. As a result, this sector pays lower royalties to use non-renewable resources, and will not benefit from Bill C-48. However, oil and gas companies and the like will benefit greatly.

I can readily understand the member for Calgary Southeast saying, “There are oil and gas companies in my area, and they will benefit from this, so I am not looking any further than that”. But I think that, if we really want this House to represent all of the interests of Canada and Quebec, we must consider the big picture.

Because the oil and gas companies pay a lot of royalties, they will benefit from Bill C-48, while a number of the mining companies, particularly the mature mines, will be disadvantaged by this reform.

Proof of this was given by the Minister of Finance himself, when department officials and the parliamentary secretary appeared before the Standing Committee on Finance. We were told that in all the reform was going to cost the public purse $250 million once it was fully operational.

I have some doubts about that figure. I asked them to tell us the calculation method used for that evaluation, and I am still waiting for the answer.

If we start with the assumption that this figure is accurate, then 80% of that $250 million in tax cuts will, according to the finance department witnesses, go to the oil and gas companies. Imagine. The finance minister himself says that his reform will benefit the oil and gas companies first and foremost, and a mere 20% will go to all the rest of the natural resource companies combined. This is unacceptable.

According to the assessment made by Gordon Peeling, President and CEO of the Mining Association of Canada, overall, with Bill C-48, the mining sector as a whole will benefit from a tax cut of $10 million of that $250 million, or 1/25th of the entire natural resources sector tax reductions. In connection with that $10 million figure, there will be some losers and some winners.

Consequently, this reform is unfair. One of the negative effects of the proposed reform is that by replacing tax credits for resources with royalties instead, income tax rates will increase in several provinces for base metals and for some gold mining operations in particular, which are concentrated in northern Quebec and northern Ontario. It is hard to understand why Ontario MPs would support this bill without hesitation.

Manitoba and the Atlantic provinces will also be disadvantaged by this reform. I am not the only one who thinks so, and it is not just the Mining Association of Canada saying this. In the September 2003 issue of CAmagazine , there is an article by Neil Smith entitled “Energy Update”, and I quote:

All these provinces use federal taxable income as the starting point for the computation of provincial income and allow a deduction for the greater of provincial Crown royalties or resource allowance. For each of these provinces the loss of the resource allowance increases the effective rate as follows: Saskatchewan, 4.5%; Manitoba, 2.9%; Quebec, 2.25%; and Maritime provinces, 3.25% to 4%.

Association epresentatives from the association generally told us that the tax rates would increase by 3% in 2003, 7% in 2004, 10% in 2005, 19% in 2006 and 29% in 2007. And we are being asked to believe that this bill is fair to all natural resource sectors and all the regions in Canada. That is utterly untrue. Quebec and other provinces, in particular, will be disadvantaged.

The federal government will say that the provinces only have to adjust and lower their tax rates. But they should not lower their royalties, because they would put their companies at a disadvantage.

The Mining Association of Canada also said that even if tax rates were changed to take into account the reform proposed in Bill C-48, tax rates would still go up on an average by 2% in 2004, 2% in 2005, 4% in 2006 and 6% in 2007. That would make us less competitive than mining countries where the tax system is much more favourable.

Generally, across Canada, Bill C-48 will result in an effective tax rate increase from 40% to 43%, whereas in China, as you know, the tax rate on mining is quite low, I would even say symbolic. The tax rate dropped from 43% to 34% in Brazil, from 35% to 30% in South Africa, and from 29% to 25% in Finland.

So the government is telling us that by increasing the effective tax rate, especially on the base metal sector, we will increase the competitiveness of our natural resource industry. That is totally unacceptable.

To rectify such unfairness and economic nonsense, I put forward a simple amendment in the Standing Committee on Finance. It was of course rejected by the Liberals out of pure partisanship. I had the support of my Canadian Alliance colleague and I thank him for that.

My suggestion was a phased-in increase in the tax credit for pre-production mining expenditures from 10% to 20%—the fourth part of the reform—over a three year period. That would help reduce the negative impact of Bill C-48 I just talked about at some length, especially in Northern Ontario and Northern Quebec, where base metals are put at a disadvantage by Bill C-48. This would stimulate exploration and might put an end to the current downward trend with regard to our metal reserves. I will quote a few statistics in this regard.

From 1977 to 2001, Canadian copper reserves decreased by 61%; nickel reserves decreased by 44%; lead reserves decreased by 89%; zinc reserves decreased by 71%; and silver reserves decreased by 59%.

With a tax credit for the preparation of mining operations, we could offset the negative effects of Bill C-48 and redress the current drift toward the depletion of our reserves of minable metals.

This could help our regions. Mines are rarely found in the middle of an urban centre; normally, mines are located in outlying areas. Raising the tax credit for qualifying mineral exploration expenses would provide a stimulus to our regions.

The cost of that additional provision in Bill C-48 is estimated at $40 million. Given the surpluses accumulated by the federal government over the last few years, I think that $40 million is a very reasonable price to pay for ensuring equity in such a key sector as natural resources, and particularly the mining industry. Replacing one figure replaced in the legislation would have led to real reform. We proposed 20% instead of 10%, but the Liberals voted against that.

I cannot understand how the member for Témiscamingue, a recent newcomer to the House, can remain silent in the face of something so detrimental to the Témiscamingue. I cannot understand why the member for Abitibi—Baie-James—Nunavik, who is normally so talkative, does not protest against legislation that will be so harmful to the Abitibi mines.

If they are silent, it has to be because they are just yes-men who follow the party line. If they looked after their constituents' interests, they would put the necessary pressure on the government to amend Bill C-48 so that it does not hurt the mining sector, as the Mining Association of Canada and the Quebec Mining Association said it would.

Of course we know that this government heavily favours the oil and gas industry, and this is especially true of the former finance minister and future prime minister. One just has to look, for example, at the total amount of subsidies that this industry has received for its development over the last 30 or 40 years. We are talking here about $66 billion, whereas the hydroelectricity industry in Quebec received nothing, or practically nothing, for its development.

One just has to look also at the preferred status given to the oil and gas industry by the current Prime Minister's office in the form of guarantees with regard to the Kyoto agreement.

However, it is difficult to understand why members would not come to the defence of their communities, their mining industries and their workers. But I am not totally surprised because, since I have had the honour of being appointed to the position of finance critic by the leader of the Bloc Quebecois, there have been many cases where, unfortunately, common sense did not prevail.

In that context, I will remind members of the issue of the GST for school boards. A decision had been made by the courts, but it was reversed here through an act of Parliament. This was a first in Canadian parliamentary history. Quebec school boards were deprived of $8 million, and Ontario school boards were deprived of $10 million.

The fiscal imbalance has put the provinces in dire straits. Nine provinces out of ten will post a deficit next year, while the federal government will continue to rack up surpluses. The Minister of Finance tells us that these surpluses will not be as large, but even though they may not be as large as what the minister had hidden, they will still be very real.

We know that, from 1994 to 2001, this government cut $24 billion from the Canada social transfer, including $8.7 billion for Quebec alone. One third of these cuts were made at the expense of Quebec and the people of Quebec, while we account for only 25% of the Canadian population.

Take the excise tax of 1.5¢ per litre, for example. It was introduced by the former finance minister and future prime minister to fight the deficit. We have been deficit free since 1997, but the tax remains. This is money the government is taking out of the pockets of taxpayers, money that could be used for other purposes.

Let us consider how the government is handling the tax haven issue. It finds nothing wrong with these jurisdictions being used by citizens to avoid paying taxes in Canada. It is therefore not likely in the short term that Bill C-48 will be amended.

We will be voting against the bill at third reading, while hoping that this place will come to its senses as the election nears. Personally, for the well-being of our mining industry in Quebec, Ontario, Atlantic Canada and Manitoba, I hope that the government will change course on this issue, that it will use common sense and make one tiny little change to Bill C-48, raising the tax credit for preparatory activities for mining. We do hope the situation can be corrected.

However, as I said, in the current context, we cannot, in all conscience, support a bill that is fundamentally unfair, even though we agree with some of its provisions, such as the reduction in corporate tax from 28% to 21%.

Let me conclude by reiterating the hope that, on the side of the ruling party, on the Liberal side, members will speak out to have this situation corrected. As I said, it would be very easy. We could have a tax reform in the natural resource sector, one that would be really fair to all natural resource industries in all regions of Canada and Quebec.