Mr. Speaker, sometimes we hurry through our days without pausing to give thanks to people. While I listened to that amazing speech just past, it occurred to me again that because much to my regret I am unilingual English I would not have understood a word of it if it were not for the interpreters. I think they did a fine job in translating not only the words of the hon. member but also the emotion with which he spoke. I would like to thank and congratulate the interpreters.
We are here today to discuss Bill C-82, which would permit the government to introduce the $2 coin. When we come to the question of the $2 coin, of course when we hear of the savings that will be made it looks at first glance like an excellent idea and one we should wholeheartedly support. However, in the Reform Party we are accustomed to asking questions about these initiatives of the government. We always begin by asking what it will cost and what the net effect will be to the taxpayer.
We were sent here, all 52 of us, primarily on the platform of fiscal responsibility and the desire to balance the budget. We need to get into perspective how totally inadequate the initiatives and priorities of this government are. Here we are in the closing days of this session and this government is invoking closure and extended hours in order to put through all of this really important legislation before we are all sent home to our constituencies to do our work there.
Among all the things the Liberals have deemed to be a high priority, we have this $2 coin. Of course anyone hearing the member from the government speak earlier would have said this is indeed important; we are going to save $254 million. We could make it sound like even more by saying a quarter of a billion dollars. Instead of saying we are going to save that over 20 years, we could say we are going to save a billion dollars in 80 years. That would make it sound much more significant.
The fact of the matter is that this government speaks of this as such a huge priority, which will keep us here late at night debating and voting on these issues, as if this is going to save the country. Frankly, I wish it could. I really do. I would then be so strongly in favour of this motion that I would just say let us go for it, let us get it done, let us not wait until tomorrow, let us pass it and get it under way.
However, we need to ask what the real effect is. We need to be aware of the fact that in proportion to the total indebtedness of this government, this is really, although I hesitate to say it, a drop in the bucket. I suppose we could say it is a drop in the ocean. Unfortunately, we are taking as a priority this one little drop and allowing the big one to slip away from us. While we are worried about the cup of water that spilled off the cupboard, as the people in southern Alberta would know firsthand from their experiences, the basement is full of water from the flood. This is what the relationship is in our debt's picture.
It is very important for all members and all Canadian citizens to be aware that this saving of some $254 million over 20 years comes down to about $12.7 million per year. If we also consider that every day we are increasing our indebtedness by about $110 million, then we become aware that the saving of $254 million over 20 years is just a little over the amount by which we are increasing our indebtedness in two days. That is a shame. I hope this is not unparliamentary, but I think this is a crime.
I am not accusing the government of committing a crime, but it is derelict in its duties. It is not focusing on the picture of having to balance the budget and get government spending down in a real way.
As a matter of fact, as the House will hear in the next few minutes, this savings the government is getting is really a form of a hidden tax, as I will show in the next few minutes. The savings that are derived are so derived by increasing the costs to taxpayers, and thereby the real saving to the government is simply a form of taxation on the already overburdened taxpayer.
The question we need to ask and have answered is, as I have already indicated, why this should be such a high priority. Even though it is a significant amount of money to any individual, in balance with total government spending it is not significant enough. We ought not to be chasing this rabbit when we should be out hunting bear.
There is a big challenge out there, and we are being detracted by something glistening on the side of the road. We are being detracted while our country is going into the ditch.
I would like to ask a few questions and talk a little about the answers the government has given to some of the questions. It is important for us to become aware of what is happening here.
The first question: What is the total plan of the government in terms of currency? We are told that for the present, at least for the next five years, this is probably the only change it is going to make, with four coins being changed at the same time. Again we need to be aware that the change in metal content to the nickel, the dime, the quarter, and the 50-cent piece has nothing to do with the bill. It is just being done at the same time.
If we are going to add a $2 coin, it is wise to do it at the same time so all the coin recognition systems in coin operated machines will not have to be changed twice. It can be done all at once. We must commend the government for deciding that if we are going to make a change, let us do it all at the same time. However, we should ask whether we should be doing it at all. Is it really a saving to the taxpayer? My contention is that it is not. Here is my reasoning.
If one divides the total savings projected by the government, the $12.7 million per year over 20 years, one does not have to be a math whiz to compute this. There are approximately 29 million Canadians. Using round numbers, quite clearly we are going to be saving less than half a dollar for each one of the 29 million Canadians. As a matter of fact, it is very close to 44 cents.
If we can save $12.7 million per year, should we not be doing that? My answer would be yes, if it were a true saving. However it is a fairly safe assumption that every Canadian would use a coin operated machine a minimum of five times a year. If that is true and if the cost of retooling machines in order to recognize the new coins is included in the new cost to the vendors, say at a nominal rate of 10 cents per purchase-a 90-cent chocolate bar going up to $1, which would be typical and we can probably expect that-then for every person who uses a machine more than five times per year, which is a safe assumption, it is going to end up costing more. They will pay less in taxes but more in services. Right off the bat the equation is counterbalanced. The saving disappears when we look at it from the point of view of the taxpayer.
In addition, there is the scenario that there is going to be an accrued value here because with the old $2 bill the banks were permitted to return the surplus currency for a credit. I remember reading somewhere that the total value of being able to return the currency to the Bank of Canada, even at 5 per cent interest, worked out to a benefit of approximately $80 million per year.
There is a saving there to the government because under the rules of the banks coinage is not eligible to be returned to the bank when it is in surplus. The banks have to hold it. Consequently, there is an $80 million cost there that will go to the banks.
I suppose we should not perhaps worry about that too much, because the banks would then have an opportunity in some tangible way to contribute to our government's coffers. It would be an indirect tax, which would require no bookkeeping or anything. It is just an expense, for which they could no longer get reimbursement.
However, the banks, like other businesses, are there to make a profit and retain their earnings. Undoubtedly they will recover that cost as one of their additional costs in other ways, which again will come out of the pocket of the consumer. There is a saving to the government, which will be taken out of the consumer's pocket in another form.
Then we heard about the issue of seigniorage. This of course is very important. The difference between the value of the coin and the cost of its production is really quite significant. These new $2 coins are projected to cost around 16 cents each to produce, but of course their face value is $2. Therefore the difference, $1.84, is seigniorage. For every coin that is produced there is $1.84 benefit to the government. Here again the government's briefing notes to us included the fact that this is a large benefit to the government and they are expecting around $400 million of seigniorage.
Let us ask ourselves the question. If we can do that by producing some 244 million coins and we can give a benefit to the government of almost half a billion dollars, the temptation arises to ask why we do not produce about 10 times as many of these coins. If we did that we could pay off $5 billion worth of the government's debt. Maybe we should do a hundred times as many coins and pay it all off. Then we would not have to pay any interest.
The fact is that the seigniorage is another form of tax. The government issues a coin to a bank that pays $2 for it to the government. That is true. That is currency, which is really a representative value of each citizen's proportional share of the assets of this country. That is really what it is, because the coin in itself does not have the value. It is not a gold coin that is worth $2 in metal. It has a couple of components in it. It is nickel and things like that. The total value of the coin is 16 cents. So the coin has no inherent value. Hence, in a way very similar to our printed currency, it is a promissory note. It is a coin of value against the assets of the country.
If you increase the number of coins, then really you simply divide the value of the country among all the citizens. You would say that is done with the $2 bill right now. That is absolutely correct. If we take the $2 bills out of circulation and put the $2 coins into circulation, then there is no difference. The fact that we claim seigniorage on it is a magical rabbit trick, which tries to tell people that we now have more value to the Canadian government when we do not.
I would like to talk a little about the changes that should be made to this bill.
As was indicated at the time we started to debate the bill today, we tried to introduce an amendment because we were concerned, as were all members of the committee. I hasten to remind members of the committee that we shared a concern regarding the implementation of the new currency. Even though it is outside the concern of this bill and outside the study of the committee, we were concerned about the implementation and the introduction of all the new coins: the new dime, nickel, quarter and 50-cent piece. Very few coin machines recognize the 50-cent piece. Most of them recognize nickels, dimes, quarters and loonies.
When the new coins are introduced every one of them will require a coin recognition system for the three new coins. Two nickels, two dimes and two quarters will have to be recognized by the machine because they have different weight properties. Just that change would require an alteration to the mechanism that recognizes coins for all coin operated machines.
In addition, the machines have to recognize the new two-dollar coin as well as the old loonie. Whereas the old ones had to recognize only four coins, the new mechanism will now have to recognize eight different coins.
It is important to recognize that this change is a very costly one. There are some devices out there right now which, with a minimum of adjustment, will be able to accommodate the new machines. We have heard in committee testimony some estimates as low as $70 per machine. However there are many machines with mechanisms that will be obsolete. Individual owners of the machines will either be forced to replace them entirely or simply take the machines out of business. In some instances perhaps the individual will simply stop the business of coin operated machines.
We have no idea how many machines are out there. We are talking about food vending machines, pop machines, cigarette vending machines and lottery machines. By listing the machines I am not indicating in any way my approval of them but they are out there. We also have telephones and parking meters.
I know there was some giggling on the other side when the member from the Bloc was listing these items. That represented a lack of concern for all businesses, and there are many of them, that make their livelihood in this way.
I received a letter from a person in an adjoining riding to mine. I assume he felt he would perhaps get a little better hearing from me than from his Liberal MP. Perhaps he wrote to me because I was on the committee and in opposition. It was not Edmonton Southeast; it was a different riding adjacent to mine and with a Liberal representative. We can all figure it out if we know the geography.
The person said that he was in this business. He had a number of coin operated machines and because of his business he had a number of change making machines, machines which were geared up to making change for a two-dollar bill, a five-dollar bill and a ten-dollar bill. He said those machines would have to be changed. Either he would have to change his vending machines to recognize the two-dollar coin or he would have to change his change making machines to recognize the two-dollar coin. He also said it would cost a minimum of $750 each to alter the machines. This was how he made his living.
The total cost of his small family business was $138,000. He said: "This is a tremendous cost to me. If you just dump it on me it is far more than I can afford to take in one year". Among all other considerations for going slowly on making these alterations that is another reason. He would have the opportunity to amortize the cost over a greater length of time without incurring huge interest costs.
We talked earlier today about lending money to small business people. I am sure he would have to borrow the money if this measure were implemented quickly. There is a cost that is very real and it is a large amount of money to him.
There is another reason for giving a little better time line. Businesses cannot produce overnight the new coin identification devices. There must be time for research and development. We heard in committee testimony that the mint had not submitted true industrial quality samples of the coins. That is rightfully so because it has not been approved by Parliament. They need to get all the coins. They need to have all the nickels, both the dimes and both the quarters. The loonie stays the same but they need the new two-dollar coin. They need samples of the four new coins before they can begin their research and development into the design of the new mechanism.
After that they have to build a prototype and go through sufficient testing to ascertain that those coin recognition devices are accurate and dependable. The last thing we want to do is to arrange the affairs of the country in such a way that the recognition devices of all business people who directly depend
on our coinage system and its acuity, size and weight will not clearly discriminate between them.
Let me explain that. There are two kinds of errors the machines can make that are both very detrimental. The first error is that of not recognizing a legitimate coin. If a customer goes to a machine wanting to make a purchase and his new quarter and new two-dollar coins are rejected, he gets upset. We are told by people in the industry that when people submit a coin which is rejected several things happen. First, some of the rejections result in jamming so the person does not get the product or his coin back. Therefore the mechanism must be very reliable in recognizing legitimate coins. It must not jam. It must recognize them and accept them.
Another thing that frustrates the customer is if he submits the coin and it goes straight through to the coin return pocket. He wants the machine to accept the coin because he wants to buy the product, whatever he is after. If he cannot get it because the machine will not accept the coin, he will probably kick the machine. The industry people told us that in committee. They say their coin recognition machines must be highly reliable because if they fail to recognize legitimate coins their machines are subject to a lot of vandalism.
We would not want to impose that on people who depend upon the Canadian government's coinage system. That is why they have to be given ample time to research and develop coin recognition machines.
As I said there are two types of errors. One is failing to accept a legitimate coin. The other is failing to reject an illegitimate coin. That is every bit as important. Coin recognition devices must also have the ability to recognize a slug from the electrical department or a washer or something that is not a legitimate coin. The devices must reject those or the merchant will be ripped off. The devices must be very reliable.
It is not realistic for us to pass Bill C-82 at the end of June and give the government the right to introduce these new coins in early 1996. That is less than a year away. It is just over six months away. That is not adequate and the industry has told us so.
I will not make several pejorative statements to the government. I will rather try to appeal to its common sense and concern for the business people that we have heard expressed often. I am challenging the government to put actions to its words. I appeal to its business sense and to its sense of caring for Canadian people. That is what we are here for.
A very legitimate concern is that the coin recognition systems have to be developed. They have to be brought into production. As I said that requires a research and development phase, a testing phase of the prototypes and then full production. After that the devices get shipped out. In some cases they will be retrofits for existing mechanisms. In other cases they will be actual replacements. The merchants will have to take the old device out of the machine and replace it completely with a new one. Sometimes that will involve changing from some of the old mechanical devices to the new electronic devices. It may mean wiring changes. It can mean all sorts of different things. In some cases it will mean the changing of the solenoids that actually operate the delivery systems.
We have to give industry time for the research, the development, the testing, the production and the installation. If we in the House believe that by snapping our fingers and passing a law it can be done overnight, it is not realistic. I appeal to members opposite to do it right.
I remember a colleague at the technical institute where I worked who used to have a little placard over his desk that read: "If you don't have time to do it right, when will you find time to do it again?" That is the issue here. If we do not do it right we will produce a lot of frustration and anger. Right now we are already facing that. Many small business people I talk to keep crying about the GST. A lot of the vending machine operators are in that category. They landed up picking up the tab for GST out of their own pockets. They were opposed to it. They are still opposed to it. They are saying: "The government said it would eliminate it and it is still here. When will that happen?"
There is already a deep anger across the country about the GST and other unfair taxes. If we add this frustration and difficulty for the same people again it will further erode the respect of people for the government and their willingness to participate in our economy through our voluntary tax system. Without that, the whole system would fail.
We need to make certain we do this right. If the government is going to go through with this despite my previous pleading that it is not economic and should not be done, then at least it should get the timing right. That is very important.
In my previous speech I asked the minister a number of questions. The minister was kind enough to give me a written response. In his covering letter he said: "Thank you for your letter". After the speech I received a phone call in my office. I was asked to submit my questions in writing and the minister would provide answers to them. He said: "I trust these responses will satisfy your concerns and that you will now be in a position to support Bill C-82".
Frankly I am appreciative of the minister and his staff taking the time to answer my questions. They covered about five or six pages.
I regret the answers are insufficient. For example, I asked what was the estimated total impact on the retail sector, including items such as cashier trays and coin counting machines. Basically the answer was that one year ago the industry estimated it would cost $25 million. Since then they have raised their cost to $80 million and the last line is: "The cost of adjustment will vary". In other words, the government does not have the answer. That is not good enough. Until we have those answers it should not jam this bill through.
I asked what the effect would be on the economy. Again, some answers were given but they were very general. No real work has been done. Consider the soft drink industry.
Again we urge the government to consider not having a new $2 dollar coin. If it costs too much to print $2 bills, just eliminate them. I know there are two sides to the argument of eliminating the $2 currency. We do this for values less than $1. If you look at our currencies for less than $1 we go from 1 cent to 5 cents. Why can we not go from a $1 coin to a $5 bill? It is exactly the same. I am not going to repeat myself but I insist it is absolutely the same. If you go from 1 cent coin to a 5 cent coin that is parallel to going from $1 coin to a $5 bill.
I am not going to repeat what I said in my previous speech. If anybody is interested in this I urge them to read it since I gave a really good, well thought out, well documented speech when this bill was debated previously. I raised the same point then that with the weight of these coins we are talking about the difference to a person of having to carry an extra one-half ounce. That is the difference.
Some members opposite may disagree. For a small fee I will give a math lesson after hours. I would have to ask the government to seriously consider that as an option. It would not cost a great deal to implement that change, only the cost of producing the currency. If we are going to stay with the $2 currency, there is one thing that was not properly considered: the use of a more durable substrate. That has not been studied.
The current $2 bills wear out very rapidly. That is because the quality of the paper provided is not adequate for the kind of circulation these $2 bills get.
We talked to suppliers of the substrate for the printing of the bills. They said with the new plasticized material they could produce a $2 note that could last two to four times as long and it would only cost marginally more to produce. Has that been studied as an alternative? As far as we know it has not and we think it should be.
We had many other questions. I would concede that some were adequately answered. When I asked if dropping the $2 denomination was considered, the government simply answered that eliminating the $2 coin was considered and rejected. It then went on to say that Canadians depend on the $2 note for a great number of their transactions. I believe that to be true because it is there.
However, if the next denomination in paper were $5 we would still only be required to carry four coins in order to produce the $4 and the next one would be the $5 and then we would have the change in between as well.
With all that being said, the message I want to give to the members opposite is one that is very clear. I appeal to their common sense to reject this bill but failing that, I would like to at least have it amended. The work of this Parliament is to pass good laws. Is that not our prayer at the beginning of each day: "Help us to pass good laws?"
However, included in that definition is that we must reject bad laws or we must amend bad portions of laws before we pass them so they will be good laws.
Therefore I move:
That the motion be amended by deleting all the words after the word "that" and substituting the following:
That Bill C-82, an act to amend the Royal Canadian Mint Act be not now read a third time, but be referred back to the Standing Committee on Government Operations for the purpose of reconsidering clause 1.
That clause is with respect to the issue of the timing of the bill.
