Thank you very much.
That was yet another insightful historical intervention, not on the Beatles, but one the correct name of the party that was in Parliament at the time. I very much appreciate that. Nonetheless, the result of their joining the vote to defeat the government resulted in Canadians actually having to pay the tax anyway and a Liberal Party surprisingly promising one thing in an election and doing another. That's the one thing I know Canadians depend on. It's like saying we're going to balance the budget and not, and then saying in 2022 we're going to balance the budget and then six months later we're not.
There are many other things I could talk about that happened between 1980 and 1984. We could talk about the fact that between 1980 and 1984, once Pierre Trudeau was back in, we didn't have a goods and services tax in Canada. We had something called the manufacturers' sales tax. I'm sure everyone here is familiar with the manufacturers' sales tax, especially the young people in the room. But if you're not familiar with it, there was no tax on sales like you see now on your bill. Back then what we had was a tax only on things that were manufactured, but it wasn't once the thing had been manufactured; It was a tax on every level of the process of manufacturing. Between 1980 and 1984 that tax rose 7% to 14% on all manufactured goods.
If you were manufacturing something and you bought a piece of wood to manufacture it, you paid a 14% tax on it. Then if you bought a saw to cut it, you paid a 14% tax on that. Then if you cut that into something that then got made and sold to another company for that company to turn it into part of, say, furniture, it got taxed again. All through the system it got taxed 14%. It wasn't visible. Nobody knew it existed except for Parliament and people in Parliament. That government almost doubled the hidden tax in four years.
Yes, it's true, and that tax continued to exist from 1984 to 1988 during the first term of the Mulroney government, although his government signalled in an economic blueprint released in 1985 that they were going to restructure the economy and look at trade rules around the world. There was no free trade anywhere in the world. There was not even a WTO. There were some rounds of GATT, but there wasn't much going on in free trade. There were 10 or 12 tax brackets back then. They had to look at that. There were issues with the inefficiencies of the sales tax as we were moving from the manufacturing economy to a services economy. That's why in the 1988 campaign the Conservative government said, "You know what? We're going to get rid of the 14% manufacturers' sales tax". That was the election on free trade, a unique concept in the world at the time. They said they were going to get rid of the 14% manufacturers' sales tax and cut it in half down to 7%, and make it fair across the whole economy so that manufacturing wouldn't be unduly penalized versus the services industry, because we have a competitive economy. The tax actually got reduced, but the most important thing that was done was that, unlike the Liberal manufacturers' sales tax, the goods and services tax was made visible.
Believe it or not, I as a young fellow with a lot of hair would sit in as a staffer at some of those cabinet meetings. In the way staff sit behind us here today, I would sit in on some of those cabinet meetings where they discussed whether or not it should be made visible. It was a big political debate because, politically, why would you remind people every time they bought something that you had imposed this tax? That was the beauty from a political perspective of increasing the manufacturers' sales tax, because you could increase it and nobody would know, no consumer would know it because was just buried in the price. But if you made the goods and services tax visible, then you would be accountable to the people who elected you if you decided to increase it or decrease it.
A good public policy choice was made after an extensive debate to say that we're going to do the right thing, because even though perhaps the current government doesn't realize they won't be in power forever, we realized that unfortunately we wouldn't be in power forever, and we weren't. If future governments wanted to change the goods and services tax, doing os would have to be visible to Canadians. They would have to be held accountable, like this committee tries to do, to Canadians for changing one of the most fundamental things of a democracy, taxation. Whether the Crown did it before we had a Westminster system, or whether you had the American Revolution over taxation and the Boston Tea Party, taxation is a fundamental thing, particularly when you want to have taxation without representation. Indeed, you can't have representation if you don't know the tax exists.
The GST was made public and visible and it was not a good thing for the Mulroney government for its reputation with people. All of a sudden people thought, “What's this? Why are we getting a new tax?" It wasn't a new tax; it was a replacement tax at half the other rate, but they thought they had a new tax.
The government paid a political price for that, amongst other things. Trying to bring Quebec into the constitutional family, through the Meech Lake accord and the Charlottetown accord, also had an impact among the public. Doing “big things”, as the Prime Minister's mandate letter asks ministers—to do the “big things”—was what that was about. It was trying to make sure Quebec was part of our Canadian family along with “big things” like doing the right thing and making sure future governments would be held accountable for any changes in the sales tax that we would collect as a government or would be responsible for as a government.
Do you know what? It worked. It has been a financial bonanza, far beyond the thoughts of what our humble minds could envisage at the time we brought it in, in terms of the amount of revenue, because as the economy grows, the revenue to the government grows because people spend more.
On top of that, guess what. Nobody has increased the tax. That visibility has kept at bay what was happening before. In fact, some may recall that one of the greatest prime ministers we ever had, Stephen Harper, actually reduced the tax by 2% from 7% to 5%. What happened afterwards was puzzling because this goes to the whole issue of accountability and visibility. For efficiency, many of the provinces, over the years, have managed to combine their provincial sales tax with the federal sales tax in something called the HST, or the harmonized sales tax. The harmonized sales tax was for administrative efficiency. It also allowed provincial governments to expand the number of goods and services that their provincial sales taxes were on, because the GST was the broader one, so it increased revenue.
What a number of provinces did, except for Alberta.... In most provinces, the combined provincial and federal sales tax, between the GST and the provincial tax, when harmonized, was 14% to 15%, except in Alberta where they have no provincial sales tax. Alberta is the only province today that has seen the benefit, in a long term, of Stephen Harper's reduction from 7% to 5% of the GST.
In my home province, when the NDP were in power, that's what happened. The one term and only term NDP government under Darrell Dexter, who I consider a friend, decided to take up the room and to increase the provincial sales tax from 8% to 10% keeping the HST at 15%. Nobody in Nova Scotia got to see the benefit of that reduction in tax. I think, if I stand corrected, a lot of other provinces thought that was a great idea, because we could hide our tax increase and not get the blame for it.
Again, it goes to the issue of this subamendment to the main amendment about accountability of ministers. If you don't know the tax is increasing, it's pretty hard to hold them to account. That's why the final sentence of this page, on page 16, says, “It is concerned solely”—that is the public accounts committee—“with the economy and efficiency of government administration, and it tables reports”—the public accounts committee—that “are answerable to Parliament”. In the same sense...oh, I'm sorry. I went back to page 15 from 16. It's almost like I was a Liberal. I counted backwards.
I'll read that sentence again. “It is concerned”, the public accounts, “solely with the economy and efficiency of government administration, and it tables reports on ways to improve managerial and financial practices and controls in departments. A member of the official opposition chairs this committee.”
This is to MP Lawrence's question earlier just to make sure that we understand the role of public accounts versus the role of the finance committee. Public accounts oversees and makes sure that, where the government says in its estimates that it will spend the money, it only gets spent there. Unlike the habit of the Department of Fisheries and Oceans to—