Debates of Oct. 4th, 1996

Competition Act

[The Acting Speaker (Mr. Kilger)]

Unanimous consent is not granted.

[René Canuel, Bloc, Matapédia—Matane, QC]

Mr. Speaker, I want to thank the hon. member opposite who introduced Bill C-267, because when Liberal members and the government introduce something worthwhile, you may rest assured we intend to support them.

It is true there is a serious problem, and we must have the ability to defend the weakest against the multinationals. The price of gas must be regulated. I would have thought that the big oil companies would allow fair competition with independent gas retailers. In the past few months, especially this summer, I noticed that this competition is entirely unfair.

What do the big oil companies want? They simply want to get rid of the independents, and this is a tragedy for Quebec and the Maritimes. In the past few months they have been intent on closing down independents and possibly getting rid of them altogether. They have already caused many to disappear this way, and they would like to get rid of them altogether.

Of course the consumer may think this is wonderful. If I go to the gas station and I can pay 20 cents less for a litre of gas, I most certainly will take advantage of this. However, we know perfectly well that in a matter of months or years, the multinationals, since

they want to control everything, will strangle the consumer as they strangled the independents.

Well there must be some kind of control. This attempt to knock out the independents is another illustration of the harmonious concert of converging interests, practices and prices that unites the big oil companies: Ultramar, Shell, Petro-Canada, Esso, and Imperial Oil in Quebec. They are refiners, wholesalers and retailers. The big oil companies have broken the unspoken rules of a market in which the big oil companies were prepared to live with competition from the independents.

Formerly, the system worked. Independents could, from time to time, sell gas a little cheaper and provide better service. When the big oil companies saw this happening, they wondered what they should do, and they said: "O.K., let us get rid of them." This summer, Ultramar was particularly ferocious in the ensuing price war.

The independents, who were losing enormous amounts of money, could not keep up, and some with fairly high mortgages had to close their doors. I call that disgusting, unfair, and monstrous when they want to get rid of the little guy in order to control the market.

Over the years, independents, as they are usually referred to, gradually increased their market share from 20 or 25 per cent, and for us, especially in rural areas, in my riding of Matapédia-Matane, it was wonderful. They were not just selling gas but provided all the other services you can get at a gas station, never mind those people who believe that capitalism and a free market are each other's corollary. Personally, I do not think that is true at all.

The government must protect those independent retailers. The presence of efficient independent companies alone assures Quebec consumers a fair and equitable price for petroleum products. If they disappear, if the large oil companies take over, then consumers must beware. These large corporations will set the prices according to their fancy and we will have to pay or walk.

The issue is even worse for the independents. There are 300 distributors in Quebec selling gasoline and heating fuel and 2,423 retailers established mainly in the regions and serving their respective communities. When a community has no more gasoline, no more school, it might as well shut down.

Moreover, it accounts for 10,000 semi skilled or non skilled jobs. This means that many young people with no education or very little education can find jobs, and good ones at that. It accounts for $200 million in salary, 82 per cent of which in the areas around Montreal and Quebec City. The commercial spinoffs-convenience stores, machine shops, etc-throughout Quebec are on the order of $164 million.

The disappearance of healthy competition and the resultant increase in prices are jeopardizing consumers' protection. Again, the goal of multinationals is not only to recover the portion of the market they have lost over the past decade to more efficient independent distributors-and we know they are more efficient because of the many services they render-but mostly to eliminate them altogether so as to have maximum control over the retail market.

In Quebec, we have a situation where for more than a decade regional development and local entrepreneurship are at the heart of economic development. When independents disappear, life becomes very difficult in small communities. The performance and efficiency of some 2,423 gasoline and heating oil independent distributors in Quebec are the living proof of that. The independents must be able to earn a decent living without necessarily turning into multinationals. I say, "Good for them", as they can still earn a decent living.

In addition to increasing their market share from 15 per cent in 1984 to 31 per cent in 1993, they saw the average number of litres sold per station rise by 31 per cent between 1991 and 1995, thus confirming their economic presence in rural communities.

Yet, after five years of price wars against the multinationals, which unfairly control the profit margins of all gas station operators in Quebec, that province's independent businesses find themselves economically vulnerable. They are powerless to stop the fair market value of their businesses from eroding.

Meanwhile, unfortunately, the multinationals more than compensate for the losses arising from this planned retail price war by increasing their consolidated profit margins through their integrated refining and petrochemical operations.

In their case, they can absorb losses through their refineries, since they are not mere retailers. Because they have more options, they can do a lot better than others.

This situation allows them to fix prices, high prices, knowing full well that, even if they incur losses for a year or two, they will make up for these during years, even decades, and that, in the end, they will be richer.

Independent retailers are quite willing to face competition, because they know they can provide additional services. They know it and they have demonstrated it by cornering a very respectable share of the market. In fact, their share of the market was increasing and this is what hurt the multinationals, which then decided to eliminate independent retailers, who were surviving because they could provide more services while still making adequate, albeit lower profits.

The government must indeed introduce a piece of legislation that will enable everyone to operate in a free market, where the competition is fair, unlike what we have seen for a while now.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, I am honoured to enter into the debate. But because I believe it is semi-useless without being able to actually make a decision on it, I would like to ask the House to reconsider and to once again make Bill C-267 a votable motion. I would ask for unanimous consent.

[The Acting Speaker (Mr. Kilger)]

The House has heard the request of the hon. member for Elk Island. Is it the pleasure of the House to make this item votable?

[Some hon. members]

Agreed

[The Acting Speaker (Mr. Kilger)]

It is agreed.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, that is good news. I would like to commend the member for Ontario for this initiative. I suppose we are all affected by the price of gasoline, not only those who own vehicles. There are many people across the country who are dependent on fuel in vehicles in order to bring all the goods and services to them in order to enjoy their standard of living.

All across the country people are dismayed at the cost of gasoline. Just the other day I told someone that had the government not pushed us into the metric system I sincerely doubt that we would be very excited about the cost of gasoline because it would be in the neighbourhood of $2.40 a gallon. I believe most of us would say that is excessive. We would object to that high price and yet that is approximately what the price is. By the way I think it is considerably more, probably about 80 per cent more, than the cost per gallon in the United States. Then of course, we would have to make adjustment for the difference in the dollar and the size of the gallon. But there is a tremendous difference in the cost of gasoline.

It is a shame that gasoline should be so highly priced. Living in the very harsh climate which we have in the north part of the northern hemisphere, we are really dependent on fuel and the energy it provides. We are also a very sparse country. It is not easy for us to get around without a vehicle.

I want to share a personal story with the House that I hope members will find interesting. Some 26 years ago we moved into the country about 20 miles from the nearest town.

When I lived in the city I used my bicycle to go to work. It was a 6.8 mile trip every day. I always felt good about using my bicycle. I saved pollution from entering the atmosphere and I saved costs. Believe it or not, I was able to travel about one-third of the width of the city of Edmonton in about the same time as I could if I used Edmonton's so-called rapid transit system. I was in very good shape in those days. Members think I am probably still in good shape, it is just that my shape has changed. It was also very good exercise and a great thing to do.

When we moved to the country I drove my bicycle but once because it took too long. It was a two hour trip each way and I did not have four hours a day. I wish now that I would have kept it up because I would have been in such fine condition. Unfortunately I bought a two wheeler with a motor and it does not take that much energy to shift the gears on a Honda motor bike.

Getting back to the price of gasoline, one of the reasons I used this motor bike to go to work after we moved to the country was the cost of fuel. In those days we had vehicles that were not quite as energy efficient as they are now. I bought a little motorcycle that delivered for me some 100 miles per gallon. I was able to save a great deal of money even in the days when fuel was only about 20 to 25 cents a litre by using my motor bike instead of my large car.

Since then gasoline has gone up in price so it is now between 50 and 65 cents a litre across the country. I was totally appalled in Saskatchewan recently to see the prices there were edging close to 62, 63 cents per litre in some places. That is excessive.

We must recognize that is a damper on our economy. We must recognize that the high price of fuel makes it less easy for our businesses and individuals to be competitive with the rest of the world.

Although the member for Ontario has fine intents in limiting the way fuel companies can cause the price of gasoline to fluctuate, I must come back to a theme which is very dear to my heart. What is the cost of gasoline? Where does the total cost come from? Whether we like it or not, a very large part of the cost of gasoline is due to taxation.

I made a little chart a little over a year ago, and the prices have changed somewhat, but I do not think the percentages will have changed that much. The price of fuel by the time it reaches the retail level is made up of approximately 30 per cent, crude cost, about 25 per cent federal tax, about 25 per cent provincial tax, between 20 per cent and 25 per cent refining and marketing costs, profits, and then there is retail margin for the retailer.

I do not know if members realized that provincial tax is around 25 per cent, although it varies from province to province. In Quebec it is around 36 per cent. Federal tax varies from province to province as a percentage of the total price because the total price varies from province to province, but it is around 25 per cent federal tax.

I object that this government, like governments before it, uses fuel as a source of revenue. I really do not believe that taxing fuel, which is such a necessary commodity in order for us to compete on a worldwide scale with our industry, with our agriculture, with our tourism, is justified or valid. We should not be taxing fuel as a source of revenue. It should not be singled out from other products for additional taxes.

Approximately $4 billion per year is taken out of our economy and put into government coffers through the federal sales tax on gasoline.

I have to add another thing. When it comes to gasoline, the federal government has displayed an odd characteristic in that it is adding a tax to a tax. After the federal sales tax is added to the gasoline which would bring the price in most provinces to around 50 cents, then it adds the GST. The government actually charges GST on the total price, which means the government is charging GST on the federal sales tax. It is unconscionable to force Canadians to pay taxes on the taxes they pay with money they have earned on which they have already paid income tax.

In that regard, I did a little computation. Follow this. I earn $3.33. My marginal rate of income tax, both when I was an instructor at the college before I came here and now, is about 50 per cent but overall I used 40 per cent. From the original $3.33, I pay 40 per cent or $1.33 in combined provincial and federal income tax. That leaves me with $2. I go to the pump to buy gasoline. The total provincial and federal sales taxes is around 50 per cent of the price at the pump, which means if I buy $2 worth of gasoline, I pay another $1.

What I got was $1 of gasoline in my tank. That is the worth of it, with $1 being tax and $1.33 being income tax that I paid in order to have the $2 when I went to the pump. In total, I earned $3.33. In order to buy $1 of gasoline, I paid $2.33 in tax. That is not acceptable. It is too high a rate.

While the member's bill is well intentioned, the much more important thing for us to do as parliamentarians is to bring government spending under control so that we can reduce our demands on the taxpayer's purse and reduce taxes. I would begin with a reduction in the fuel tax. What a tremendous boost that would be to our economy. What a job builder that would be. What a relief it would be to Canadian families who find it difficult.

I have appreciated the opportunity to comment on this bill.

[The Acting Speaker (Mr. Kilger)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mr. Kilger)]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. Kilger)]

I declare the motion carried. Accordingly, the bill stands referred to the Standing Committee on Industry.

(Motion agreed to, bill read the second time and referred to a committee.)

[The Acting Speaker (Mr. Kilger)]

It being 2.15 p.m., this House stands adjourned until Monday next at 11 a.m., pursuant to Standing Order 24.

(The House adjourned at 2.15 p.m.)