House of Commons Hansard #29 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was gst.
SupplyGovernment Orders
The Acting Speaker (Mr. McClelland)
Before the hon. parliamentary secretary has a chance to respond, I remind hon. members to address each other through the Chair.
Tony Valeri Liberal Stoney Creek, ON
Mr. Speaker, I cannot profess to be a rider of horses. I am not quite sure what the hon. member was talking about in terms of reins. I will put those comments aside and try to deal with the facts.
If the hon. member is saying that in Atlantic Canada the provinces are earning more revenue now that the taxes are harmonized, compared to prior to the harmonization, the Atlantic provinces would not qualify for compensation. His statement is incorrect. The provinces Atlantic Canada because of harmonization are earning less government revenues.
If the member is saying that Atlantic provinces are earning more money today because of harmonization than they were prior to harmonization, that is incorrect. The reason assistance is being provided to the Atlantic provinces is that harmonization has brought some structural change to the Atlantic provinces. As a result of that structural change they were to experience a greater than 5% reduction in the retail sales tax. That is why they are receiving assistance.
Rick Casson Reform Lethbridge, AB
Mr. Speaker, I heard some comments from the hon. member opposite that I liked and that surprised me.
He said that high taxes were killing jobs. It was great to hear that from across the House. We have been saying that for a long time and we know it. The small businesses I have talked to complained about filling out one set of tax forms. If it is taken from two to one, what is the difference? They are still filling out a set of tax forms. It is still taking their time. They still resent having to be a tax collector for the government.
When they had meetings a consensus was brought to bear that businesses wanted a harmonized tax system. Was a question put to them on whether they wanted a tax at all? Was that ever raised? They were to have harmonized taxes. Did they want two taxes or one tax? What do we do about the GST which the government promised to get rid of but is still in place?
We talk about increased revenues for provinces and the federal government. Where is that revenue coming from? It is coming out of the pockets of families and businesses. The emphasis should be on putting the money back.
You have commented on the consensus and I want you to elaborate on that—
SupplyGovernment Orders
The Acting Speaker (Mr. McClelland)
I remind hon. members, once again, that we must address our comments to one another through the Chair. It tends to keep the level of debate more controllable.
Tony Valeri Liberal Stoney Creek, ON
Mr. Speaker, I will respond to a number of the points made. I thank the hon. member for the question and for his comment that he agrees with a number of things I have said.
On the actual forms that need to be completed with respect to the GST or harmonized sales tax, there is no question I did a fair amount of work on the small business sector in the House during the last session. Regulatory burden and compliance burden were big issues for the small business community. As a result one form was eliminated by those provinces that harmonized, which provided for some reduction in the burden of compliance.
As well, I believe it was announced recently by the revenue minister that there would be a reduction in the period of time small businesses would have to remit sales taxes to the federal government. If they are earning less than $30,000 they are exempt. Over that amount they can now go to a quarterly period rather than having to remit it on a monthly basis. Again this speaks to the reduction in the burden of compliance.
With respect to the pressures in terms of axes there is no question that as the finance committee went across the country taxes were an issue that spoke to the competitiveness of the country. The finance minister has said over and over again that when the government and the country can afford to provide substantial and sustainable tax relief to Canadians they are committed to doing it. At the initial stage a very targeted tax relief will be provided for those most in need.
Odina Desrochers Bloc Lotbinière, QC
Mr. Speaker, the motion moved by my party today shows once more that the Liberal government continues to deal with Quebec on a different basis.
Despite repeated demands from the Quebec government, it systematically refuses to grant any compensation for tax harmonization in Quebec. Its repeated rejections of legitimate Quebec demands have been condemned time and again by Bloc Quebecois members and the Quebec finance minister, Bernard Landry, who has to deal with a $2 billion shortfall. In a similar situation, maritime provinces received $1 billion. Thanks to that money, the governments in these provinces, especially New Brunswick, are now better able to compete with the other provinces and with Quebec.
By acting this way, the Liberal government, even when it tries, through its federalist propaganda, to sell the merits of the best country in the world, is clearly trampling all over Quebec by hiding behind the smoke screen of a financial model that results in inaccurate calculations by the finance minister.
Whatever financial method the finance minister is using, we know how he views the province of Quebec, a unique province that, since 1993, has been hit by drastic cuts, the sole purpose of which is to discredit the Quebec government.
Had it not been for the tactics of the Liberal government, the Government of Quebec would have already presented a balanced budget to the people of Quebec.
The Minister of Finance is hard-headed, or he seems to have problems understanding our arguments. Last December, two Quebec government ministers once again demanded that Quebec receive $2 billion in compensation for harmonizing its provincial sales tax with the GST. It should be remembered that Quebec harmonized its sales tax on its own and without any financial assistance. Quebec businesses bore the financial costs of this reform.
Last May, in his speech, the Quebec Finance Minister reminded us that on April 26, 1996, the Liberal federal government announced with great fanfare the signature of memorandums of understanding with three Atlantic provinces, whereby their respective sales taxes would be harmonized, effective April 1, 1997, at a combined rate of 15%.
The reason for this decision by the federal government, according to the Minister of Finance, was to compensate the financial losses borne by these three provinces. At the same time, he announced an adjustment assistance program whereby close to $1 billion, that is $423 per capita, would be paid as compensation. But nothing for Quebec, as the federal government showed once again that it could not be fair to Quebeckers.
When he tabled his budget in the National Assembly, the Quebec Minister of Finance strongly condemned this action by the Liberal government. I would like to quote Minister Bernard Landry:
The adjustment assistance program gives the three Atlantic provinces a competitive advantage over Quebec. Because of this compensation, these provinces are able to reduce their sales tax rate by 4 percentage points and to give businesses full rebates on their input taxes. Because of the federal government's financial assistance, they can make their tax system more competitive, without having to increase their other taxes and without reducing input tax credits for businesses in order to finance the cost of harmonization with the GST.
After many requests and months of waiting, Quebec finally received from the federal government, in August 1996, the detailed results of its analytical grid used to review Quebec's request. We are attempting again today to bring the federal Finance Minister to admit that his calculations are incorrect.
I will quote again Minister Bernard Landry:
By considering only the sales tax revenues of the provinces that have opted to harmonize with the GST and not the complete tax burden, the adjustment assistance program fails to consider the provinces' global tax policy. In this way, this program unduly benefits the Atlantic provinces, which have the highest sales taxes in Canada.
This is what their renewed federalism, their more flexible federalism, is all about, complete with the homeland of the French language and, more recently, the unique character of Quebec and Quebeckers which nine other Canadian provinces now want to recognize. This is how the federal government wants to define the unique character of Quebec.
I do not want to fight over figures, but let us take the time to see how the Liberal government behaves in its dealings with Quebec.
The conflict between Quebec and Ottawa arises from the fact that compensation is calculated based upon an economic model and some kind of simulation. The federal government has tried to estimate the amount to the losses the Atlantic provinces and Quebec will incur during the four years following the harmonization. This simulation is applied to all provinces and only takes into consideration the sales tax revenues.
By using only the sales tax revenues instead of the total provincial tax base to determine if the provinces deserve any compensation, Ottawa is treating the provinces and Quebec in the most unfair way possible.
It is obvious that the federal Minister of Finance is unjustly penalizing the provinces for their previous fiscal choices. Indeed, eligibility for federal compensation depends on the way the provinces choose to structure their taxes. The more a province relies on sales tax to generate revenues, the more a change in that tax rate is likely to produce major revenue losses, and the more that province is likely to receive federal compensation.
The adjustment assistance program is arbitrary since it does not take into account the fiscal realities in the different provinces and in Quebec nor their actual financial capacity to harmonize their sales tax.
The compensation requested by the Government of Quebec is very reasonable. I remind you that the compensation paid to the Atlantic provinces equals almost $1 billion, which represents an average of $423 per inhabitant while the compensation demanded by Quebec represents $273 per inhabitant.
Numbers talk and I submit that the Minister of Finance should be competent enough to recognize the difference between the Atlantic provinces and Quebec. Since the beginning of this session, the Minister of Finance seems to have forgotten a basic rule of etiquette which says that when asked a question, one must answer, and more importantly, one must tell the truth.
I sometimes wonder if the minister still remembers that rule. With all his empty answers, we come to question how serious he is. When we know that there was a 60% gap last year between his estimates and the actual deficit, we can easily see why he cannot really understand Quebec's situation.
I wish to take this opportunity to say that the political decisions of the Liberal government since it took office in 1993 are being criticized throughout Canada and Quebec. Poverty is on the increase, students are in debt and have no jobs, the EI reform is unfair to everyone, and social and health services have been hard hit. And the Liberal government dares to talk about a humane approach to finance. Enough is enough.
The Minister of Finance knows very well what the Government of Quebec intends to do with the financial compensation it is requesting for harmonizing with the GST. It will be used over a period of four years to cover the cost of input taxes for Quebec businesses.
In the riding of Lotbinière in Quebec, businesses would put this $2 billion to extremely good use by becoming more competitive on Canadian, North American and international markets. The Minister of Finance knows this, and that is why he is refusing to pay. Once again, he sits tight and Quebec pays.
Why? Because we are unique. There are many examples of the Liberal government's bad faith. Their centralizing tactics pervade their every action. The throne speech was very revealing in this regard, and the recent moves by the Minister of Health, as well as those by the Minister of Human Resources Development, with his youth strategy, represent serious interference in provincial jurisdiction.
It is all a numbers game. The federal government seems to have trouble understanding what Quebec is going through. As for the GST harmonization, in light of the actions of the present Liberal government, we have a very good suggestion. It was announced by the leader of the Bloc Quebecois, Gilles Duceppe, during the last election campaign.
At that time, Mr. Duceppe suggested to the Liberal government that an independent arbitration panel be created to resolve the impasse, which is very harmful to Quebec's economy. Quebec's Deputy Premier and Minister of Finance is prepared to challenge the federal finance minister's figures. The repeated refusals by the federal minister say a lot about the weakness of his government's arguments.
If the minister is so sure he is right, why is he hiding behind a series of vague and inexplicable refusals?
This is why all members of the House must vote in favour of this motion that could, once and for all, shed light on this shady business by the federal finance minister, who continues to shirk his responsibilities in this debate.
In conclusion, the behaviour of the Liberal government merely strengthens the argument that the only real solution to all Quebec's economic problems lies in sovereignty.
John Bryden Liberal Wentworth—Burlington, ON
Mr. Speaker, I think it is all very clear. The Bloc wants compensation for the GST for reasons that are not valid.
It must be remembered that the Premier of Quebec is the former leader of the Bloc Quebecois. When Mr. Bouchard was leader of the official opposition, he argued in favour of sovereignty. Before the referendum, he said that it was possible for Quebec to stand alone. He said that sovereignty was simple. Then there was the referendum.
Now, Mr. Bouchard is Premier of Quebec and has to deal with an unhealthy economy in that province. Unemployment is high, there are problems in the business sector, and Mr. Bouchard has made major cuts. I think Mr. Bouchard is looking to get money from the rest of Canada to pay for the cuts he made.
John Bryden Liberal Wentworth—Burlington, ON
Mr. Speaker, that is true. It is very simple.
I have a question for the member. Is it true that Mr. Bouchard is still the real leader of the Bloc and it is he who is leading the attack against the government on this subject?
Odina Desrochers Bloc Lotbinière, QC
Mr. Speaker, the 44 members of the Bloc Quebecois are mature men and women who do not need the founder of their party to hold them by the hand.
But to come back to the motion, why are we debating this motion today? It is very simple. We could talk about financial arguments, financial models, figures, billions and percentages, but the members opposite do not understand.
Yesterday, the Minister of Health was saying that things were clogged up. I have the impression that, on the issue of compensation for the GST, the members opposite are pretty clogged up. They have great difficulty understanding what they are being told.
Odina Desrochers Bloc Lotbinière, QC
In order to resolve this, we in the Bloc Quebecois have a revolutionary suggestion to make, an equitable suggestion, as follows: Appoint a representative of your government. We in the Bloc Quebecois will receive the Quebec representative and then these two will select a third person, and the three will see who is right. But I am convinced Quebec is the one that is right.
SupplyGovernment Orders
The Acting Speaker (Mr. McClelland)
The hon. chief government whip on a point of order.
Bob Kilger Liberal Stormont—Dundas, ON
Mr. Speaker, I believe you will find consent for the following motion:
That the members on the special joint committee created to review Term 17 of the Terms of Union of Newfoundland and Canada, from the House of Commons, be as follows: Claudette Bradshaw, Pierre Brien, Gerry Byrne, Elinor Caplan, Paul DeVillers, Michelle Dockrill, Sheila Finestone, Raymonde Folco, Peter Goldring, Inky Mark, Bill Matthews, Joe McGuire, Lawrence O'Brien, Rey Pagtakhan, Louis Plamondon, Werner Schmidt. And, that George Baker, Michel Bellehumeur, Norman Doyle and Jason Kenney be associate members of the said committee.
(Motion agreed to)
The House resumed consideration of the motion and of the amendment.
Martin Cauchon LiberalSecretary of State (Federal Office of Regional Development—Quebec)
Mr. Speaker, I am pleased to speak on this motion by my colleagues in the Bloc Quebecois.
Once again, however, allow me to point out the extent to which the people on the other side of the House are looking down the wrong end of the telescope or are failing to look at the other side of the coin.
The motion of the member for Mercier says, among other things:
That this House condemn the government for blatant unfairness to Quebec in the matter of the GST, the government having denied it compensation—
If ever a party failed to look at things objectively, if ever a party had the bad and annoying habit of acting and interacting only out of political interest, this is it and here it is doing it again in the motion by the hon. member for Mercier.
I might point out in passing that this approach does not serve the interests of the people they should be representing.
On the subject of the famous GST, it must be understood that its harmonization benefited Quebec as a whole. It must also be understood that, since harmonization in 1991, tax revenues have risen—and I have the figures here—from $5.11 billion in 1989-90 to $6.15 billion in 1991-92.
Across the way, they seem to be playing the victim game, but the figures speak for themselves and show that there has been substantial gain for the province of Quebec. On the subject of the rules of the game, the Government of Canada acted fairly. It intervened realistically. It also honoured the needs and the realities of each province when it intervened.
On the subject of fair share, the issue is the GST, but we could look further and more specifically at the issue of the Government of Canada's intervention in the whole of Quebec. I, myself, am responsible for issues of economic development.
My colleague tells me that my work is rather well received by the Bloc members. Thank you very much.
When there is talk of economic development, to paraphrase what the Bloc members have just said, I think that indeed the Canadian government is doing a respectable job, a job that meets expectations and requirements. Let us look at the figures.
Quebec businesses receive 40% of tax credits for research and development. I see that my colleagues are taking notes on this, so they must not have realized that. These figures are to the advantage of Quebec but there has been an attempt to conceal them.
Quebec businesses receive 33.5% of direct federal assistance for R&D and to date—an important point—57% of investments under the technology partnerships Canada program were paid to companies in the province of Quebec.
It must also be taken into consideration that, when we are talking taxes, it must be understood that the Canadian government also pays administrative costs to the Government of Quebec. And you will see, if you look at these, that we are far from being a government that does not pay the Government of Quebec its fair share.
Speaking of that contribution, what is involved is financial contributions for administration of the tax, an amount that has hovered around $100 million yearly since 1992-93.
I mentioned economic development earlier. The Canadian government is active in quite a few areas in Quebec, but if we focus only on economic development, I believe that once again, Quebec comes out a winner. Indeed, once again, Quebec is dealt with very fairly and equitably.
We in the Canadian government are committed to dealing with the province of Quebec equitably and, first and foremost, to ensuring that the development of the province's economy can continue.
When I talk about helping and assisting Quebec, seeing that the province can develop further at the economic level, you will have guessed that I am referring to the federal office for regional development. At present, the work the federal office is doing in the province of Quebec is much appreciated by all stakeholders that we work with and are in contact with on a daily basis.
Our vision of economic development is one of respect, a vision that sticks to realities and needs. This is therefore a vision, which, like Canadian federalism, changes as needs change over time. Right now, our vision has to change, as the economy is changing. We are at the crossroads between two types of economy.
All players in the economic field have to start rethinking their way of doing things. The same goes, naturally, for private sector businesses, which now have to carve out specialized niches for themselves, better target their markets, seize every opportunity to increase their competitiveness and adjust to globalization.
And what goes for many players in terms of economic development also goes for the Canadian government. That is why, to take appropriate action in Quebec, we also introduced a change in our programming.
This all began in 1995. We consulted everyone, we consulted the business community, and the message was clear. People wanted us to revamp all our programming. They wanted us to be more in touch with the community and to reduce paperwork to a strict minimum. Above all, and this is the important point, people wanted us to make sure that the government was in a position to help businesses make the transition to the 21st century by adjusting to the new phenomenon of globalization.
The federal office of regional development understood the message and we took action, with a view to continuing to be able to give Quebec its fair share, but also to continuing to deliver all the services of the Canadian government to the public. We took action and created a new program, IDEA-SME, which is for regional small and medium size enterprises. So we are essentially talking about economic development in sectors of the new economy.
But we also developed tools for helping in special contexts, tools that give us maximum flexibility to meet these needs.
Here are some examples of this flexibility. Members will recall the problem of the dwindling groundfish stocks in Atlantic Canada. The federal office implemented the well known Coastal Quebec program, a program I had occasion to report on not so very long ago. The Coastal Quebec program was another example of a flexible government able to react in terms of needs as well as local urgency.
There is another example of action that is appropriate and that corresponds to the situation. You will have guessed that I am referring to the unfortunate events in Saguenay—Lac-Saint-Jean in July 1996. We intervened, along with all the other federal departments that were called in. The Federal Office of Regional Development for Quebec set up what we called the federal liaison office in Jonquière. And we worked in partnership with the other level of government and with the municipalities to ensure that, once again, the public would be adequately served and that its interests would be looked after. We left partisan politics behind, something the Bloc is incapable of doing.
Bloc Quebecois members are incapable of rising—
Martin Cauchon Liberal Outremont, QC
You see, they are yelling. They are incapable of rising to a level where, together, we could discuss the real needs of communities. Every time these people are involved in a issue, they get into partisan politics, and this is the major difference.
Actually, there are a number of differences and one of them is the ability of Quebec members sitting on this side to serve Quebec well, to care about its development and its population, in a positive context, in the context of the current federal system which—and I can already hear some grumbling from the other side—is evolving, which has proven to be flexible in the past, and which will continue to do so.
As regards the program we put in place in the Saguenay—Lac-Saint-Jean region, we worked in partnership—as we on this side of the House know how to do it—with the public's interests in mind. We also created a specific program in addition to the emergency measures taken. That program had a $50 million envelope provided essentially by the federal and the Quebec governments. This is yet another good example of co-operation.
I could speak for hours about the Canadian government's economic involvement in the province of Quebec. Again, speaking of an involvement that is focused on specific needs, I will of course mention the community development program. What a great program that has demonstrated its value locally for close to 20 years. What a great program that is aligned to fit in with local realities and that was ultimately designed to help us continue to serve not only well, but also better, the needs of the business community in the province of Quebec.
Of course, within the community development program, there are also, tied with all this, the community futures development corporations. There are 54 such corporations across the province.
Martin Cauchon Liberal Outremont, QC
They are in Abitibi also, as my colleague just mentioned. They offer investment funds, and in addition to everything else, they have an extraordinary team that people have access to, a team that knows what economic development is and that has a lot of experience.
When we speak of community futures development corporations, we speak basically of a team that has $82 million in assets. Annual investments in Quebec by CFDCs—and this is important when people talk about having a fair share, the numbers are there—are in the order of $23 million. So we can see that these people are active locally. These people carry out business with the local community. In fact, speaking of being active locally and of conducting business, we have developed recently—the Government of Canada in partnership with CFDCs—programs allowing to better focus on the needs of regions in Quebec.
Let me just mention the CFDCs youth initiative. This is basically a grants program with a budget of $6 million that is intended for young people up to age of 34 inclusively. The beauty of this program is that it was structured and designed by the CFDCs in co-operation with the federal office of regional development, to enable us to respond to the needs of young people in Quebec.
The unemployment rate among young people today is around 17%. The statistics are not very encouraging neither, in the area of keeping our youth in our regions. So this youth initiative is designed to keep young people in the regions and also to help them build their own businesses.
Another area we have developed, in addition to involvement in the community, is a new vision of economic development. This is essential because of globalization. I often hear other governments and even critics opposite speak about economic development and I notice that these people, when they succeed in forgetting party lines and when they deal with a particular issue, often base their premises on ideas from the past.
I have two minutes left. As I said, I could talk all day about economic development. To conclude, when we speak about economic development today, we must stop thinking in terms of geography and we must think instead in terms of networking to succeed in competing internationally, and that is what the globalization of markets is calling upon us to do. We must be capable of networking, not only on a national basis, but also on an international basis. This is a positive vision that can help Quebec.
In closing, when we speak of fair shares, I think you have proof in the few words I have just spoken that not only has Quebec received fair treatment as far as the GST is concerned, but when we look more specifically at the question of economic development, there again you have an example that speaks volumes about the services the Canadian government can render and the assistance the Canadian government already renders to all regions, all entrepreneurs. The purpose of so doing is, of course, to serve.
I and my fellow MPs for Quebec have the greater interests of their constituents at heart. As a result, we can built together, unlike what is happening within the Bloc.
Ghislain Lebel Bloc Chambly, QC
Mr. Speaker, it is odd to hear the Liberals singing the praises of the GST. I have been listening to them since this morning. These are the folks who, back in 1993, were carrying on so, promising to scrap the GST, you will recall. Even an influential minister of that party saw fit to tender her resignation over it, and to get re-elected shortly after on it.
The minister has just accused us of partisan politics. This morning, I heard a western MP accusing the government of having bribed, bought off the people of the maritimes with this $920 million supposedly given to the maritimes to harmonize their tax with the GST, because the shortfall was over 5%.
When a government, which alone knows the date the next election is to be called, goes around waving $960 million for fishers hard hit by the employment insurance reform, might we not assume that it is trying to bribe the public? Fortunately, this sort of tactic does not work particularly well. I would ask the members of the party in power who come from the maritimes to rise and speak to the topic of the day. I invite them to do so. We would like to hear what they have to say on the subject.
When the minister responsible for regional development tells us that this subsidy was awarded totally fairly, I would to know where he is getting his information from. What is this 5% based on, if it is not arbitrary? How can the Minister of Finance justify this 5%? Why not 8% or 2% or 1% or 14%. Where does the figure 5 come from and how can he justify it?
The minister makes me think of this. Suppose his car hit mine the day my employer announced I was going to get a raise. I ask him for compensation and he says “Well, no. You just got a raise, you can pay for the repairs”. This is his sort of reasoning. I would like him to tell us what justification there is for 5%.
SupplyGovernment Orders
The Acting Speaker (Mr. McClelland)
Before the hon. parliamentary secretary has a chance to respond I would ask the House to be careful throwing around terms like “bribe”. I was not here this morning. I do not know if the term was imputed to a specific individual that it would be proper. It happened earlier today, so let us not use that kind of word at least when this Speaker is in the chair.
Martin Cauchon Liberal Outremont, QC
Mr. Speaker, you can see the people on the other side are incapable of moderation. Their language alone forced you to intervene.
SupplyGovernment Orders
The Acting Speaker (Mr. McClelland)
The hon. parliamentary secretary is a very skilled orator and I am sure we all appreciate it. Thank you.
