That, in the opinion of this House, the government should continue and enhance its efforts to address the underground economy, which costs Canadians anywhere from $23 billion to $156 billion in lost revenue and wages, by working with other levels of government, industry and unions in developing a plan of action, which includes a national education campaign and increased enforcement.
Madam Speaker, Reformers came to this place stating that they would do things differently, but as we see you have to keep order and I thank you for it. When we do go to the trouble of making speeches and working hard it is nice to be able to make them and for our constituents to hear.
I am pleased to speak to my Motion No. 243 calling on the government to enhance its efforts to combat the underground economy. My motion asks that the government consider a plan of action which includes a national education campaign and increased enforcement.
As part of my work as chair of the national Liberal caucus committee on economic development I recently chaired a subcommittee which studied the issue. I was pleased to have the opportunity to work with the hon. member for Brampton, the hon. member for Vaudreuil, the hon. member for St. Catharines and the hon. member for Lambton-Middlesex who is here and will speak later to the motion.
We made a number of recommendations to the Minister of Finance prior to the 1997 federal budget and we entitled our report "Our Future at Risk". The effects of the underground economy truly place our future at risk. What is perceived by some as an anti-GST activity is in fact costing every Canadian in lost revenues for social programs, deficit reduction and worker benefits.
What is attractive to some because of what they perceive as an unfair tax system is unfair to the honest tax paying Canadian. The underground economy places our social services, our deficit reduction efforts and our very future at risk. It is easy therefore to complain about taxes and to try to avoid them. Certainly our taxes are high. However it is important to remember that taxes support health care, education, social services and public pensions.
When we participate in the underground economy we are not taking money away from government. We are taking services away from the sick. We are taking education away from our children. We are taking pensions away from our elderly. Revenue Canada believes that the causes of the underground economy includes high taxation, the perception that government does not spend its money and efficiently, the GST, and the perception of unfairness in the taxation system.
No one really knows how much the underground economy actually costs Canadians, although it is estimated somewhere between 2.9 per cent and 3.5 per cent of GDP to anywhere around 10 per cent to 20 per cent of GDP. Whether we accept the low end or the high end, government must take a more active role in combating the underground economy.
One of the most important efforts that can be accomplished immediately is education. Canadians are unaware of the actual costs of the underground economy. Many do not appreciate that it places our future at risk. Certainly no one enjoys paying taxes.
However government must work to ensure all the money owed to it is collected. We could only imagine the benefit that would be accomplished if suddenly the money lost in the underground economy were used to pay down the deficit, used to fund hospitals, used to support post-secondary education, used for our police and used to support our infrastructure. That money rather than the irresponsible promise of tax cuts could do what we need to do much faster.
Combating the underground economy will ensure tax fairness. By offering support to the honest taxpayer it will ensure the preservation of our social programs. It will speed the deficit and debt reduction demanded by Canadians in Guelph-Wellington and in every other part of this great land.
A number of federal government departments are actively working on the problem. I commend the work currently being accomplished by the Department of National Revenue under the leadership of the current minister and the former minister, the hon. member for Victoria. Eight hundred additional auditors were announced in the 1996 federal budget. The work of the department has yielded more than $1.7 billion in additional revenue for the government since November 1993, revenue that would have been lost without these efforts.
Human Resources Development Canada has undertaken a study and the Department of Finance continues to look for ways to protect the integrity of the tax system.
One of the most important ways we can combat the underground economy is through partnerships. I am fortunate to have in Guelph-Wellington a number of concerned individuals and groups, especially the building trades that are ready and able to work with government and others to help reduce the effects of the underground economy.
The federal government must work with all levels of government, industry, labour and others to find new and innovative solutions. There are, for example, a number of key associations that are directly affected, including the Canadian Jewellery Association, the Canadian Dealers Association, the trade unions, chambers of commerce, the Canadian Automobile Dealers Association, local construction associations and tourist associations.
To anyone who says that the underground economy does not affect individuals, let them speak to people like Joe Maloney and Phil Benson of the building and trades department. They know that some of their members are unemployed as a direct result of underground economic activity. In these cases the underground economy hurts us two ways. It takes away legitimate government taxes and contributions for the Canada pension plan, workers' compensation, income taxes and employment insurance. It also places the worker, someone willing and able to work, on employment insurance, adding burden to the EI system.
There is also the toll that a monetary value can never replace. It takes away the dignity of work that the individual feels when he or she is contributing to supporting themselves or their families.
Every time someone paves a driveway, installs new windows, repairs the car or gets their hair cut through the underground economy they may very well be taking a job away from a friend, a family member or a neighbour, and a job necessary to provide support for a family.
There is a human face to the underground economy and there are no simple solutions to ending the underground economy. No one has the answer that would solve this problem. Any effort requires teamwork. That is why I am suggesting a Team Canada approach to solving the problem.
Like my community of Guelph-Wellington we have to work together in order to seek solutions and, most important, to find answers. In Guelph-Wellington our problems are solved through co-operation. Recently, for example, we needed a CT scanner for the General Hospital. It was purchased because hundreds of Guelph-Wellington residents, supported by the generosity of our corporate community, worked together to raise the necessary funds for equipment that will save lives.
In Guelph-Wellington solutions are found when labour, industry, politicians and citizens work together to find them. There is no doubt that the underground economy is fuelled by a lack of trust for the way that governments spend money. Certainly there was some justification in the lack of confidence in the way taxpayers' dollars were managed.
In the nine years prior to the election of the Liberal government Canadians watched Conservative finance ministers make 33 projections of deficits. We also watched them be wrong 33 out of 33 times. Canadians watched the debt nearly triple in those nine years. All of that has changed. Confidence has returned. There is still much work to do but sanity has returned to the management of the federal government treasury. Canadians can be confident that their money is being spent on their priorities and that we are no longer sacrificing our future by overspending.
The present finance minister has listened and we are now spending within our means. A balanced budget is in sight and the debate will soon change from how much is the annual deficit to where do we apply the surplus.
I ask those who participate in the underground economy because of mismanagement to reconsider. We have turned our finances around. We have listened. Their money is being spent building the greatest country on earth.
Combating the underground economy will require building on partnerships. Once Canadians realize it is in our best interest-and I mean each and every Canadian-to ensure tax fairness we can begin to eliminate the problem. Partnerships must include all levels of government, industry, labour, community associations and individual citizens.
The industries most affected such as the building trades are the first to want to volunteer for any effort that will be successful in reducing not only the underground economy but also unemployment and underemployment among their members.
Ultimately the underground economy has a human face. It causes hardship among hard working, able workers whose jobs are taken away because some Canadians choose to avoid paying taxes. All honest taxpayers must participate in any effort to end the underground economy.
As our colleague from Hillsborough, Prince Edward Island, said to me in a letter as we were preparing the report of the subcommittee on this issue, "we should not just increase enforcement but we should address the underlying causes of the underground economic activity".
The underground economy is caused by attitude as much as anything else. We all remember when drunk driving was either accepted or we chose to close our eyes to the problem. It was a slow process to change attitudes. Groups like Mothers Against Drunk Driving that has a chapter in Wellington county helped to raise awareness to the level where drunk driving is no longer acceptable. None of this happened overnight. These efforts took time but we are now living in a society where driving drunk is not tolerated.
So it is with the underground economy. Ending the problem will not be done overnight. Vigilance must prevail. A long term strategy is required. Patience is necessary.
One of the more successful tools we have to reach out and inform is education. Some people may offer simple solutions. Certainly any promise of across the board tax cuts may be attractive in the short term but tremendously unrealistic in the long run.
I have urged both the Prime Minister and the Minister of Finance in their roles as leaders to speak on the issue. Many Canadians are simply unaware of the size of the problem. Some believe their participation in the underground economy does not really make a difference because they are only one person. They fail to understand that when their participation is joined with that of others the problem becomes compounded. Others see the whole issue as too complex and too overwhelming to comprehend.
Recently the government of the province of Quebec undertook a major education campaign. The campaign focused on the fact that participation in the underground economy took away from our children's future. In one of the television ads we see a number of people hunched under a table making financial transactions. At the end of this long table we see a child sitting alone. The message is simple. The child receives none of the benefits of underground economic activity. Simply put, it is another message that our future is at risk.
As I said earlier, we need a Team Canada approach to the problem. Nothing could be more positive than a poster at a building supply depot from the Canadian Construction Association. A message sponsored by a local chamber of commerce or a reminder at a company bulletin board would have a positive effect.
Again, I ask that we remember the example I gave about drunk driving. It took persistence on behalf of a few to change the minds of many.
I want to touch briefly on the issue of the cashless society. There is no doubt that our system of paying for goods and services is changing.
Shop at most stores in my community and someone can probably pay by cash, credit card, cheque or perhaps Interac. Guelph is also home to Mondex, a fascinating cashless experiment. Certainly this will have an impact on the underground economy. Debit cards like Interac are traceable like a cheque. Transactions can be followed.
There is no doubt that the cashless society, whether it be a Mondex system or something even more fascinating will in the next few years change the way we purchase goods and services. I urge the federal government to monitor this situation closely.
The cashless society should benefit any effort to reduce the underground economy. I hope we work with those implementing this future technology for efforts that will discourage underground economic activities.
This issue is complex. We argue over the size of the underground economy and we can debate over which sectors are most affected. We can search for solutions. However, one thing is clear. As long as Canadians participate in the underground economy, they place our future at risk. It is easy to believe that we are avoiding the GST or simply not giving the government more money to mismanage.
However, participation in the underground economy does not hurt the government. It has a negative impact on government services and it increases the deficit and the debt. Participation in the underground economy takes beds out of hospitals, teachers out of schools and puts veterans' benefits in jeopardy.
It further burdens our children whose share of the debt increases each time someone avoids paying taxes. It prevents governments at all levels from offering all the services to taxpayers that they can and it puts honest, hardworking men and women on the unemployment line or makes them turn to social assistance in order to feed themselves and their families.
We must all work together to end this problem. A lack of confidence in government and its ability to spend money wisely and efficiently was perhaps a reason. We have turned the corner.
Participation in the underground economy only makes the situation worse. It hurts every single Canadian, particularly those most vulnerable.
Governments must reach out further to find partners, work on solutions and end this problem which clearly places our future at risk.