Mr. Speaker, I am pleased I am not wearing my red suspenders this evening. I congratulate my colleague from Scarborough East for some thoughtful comments on the budget, on the state of the economy and on where we are going.
I want to specifically talk this evening about one page in this budget that I think is equally as telling and equally as important in laying out what this government thinks about turning the economy around and moving forward. It is page 127. While I certainly would agree with my friend and my colleagues who have spoken about the significance of a balanced budget and what that will do to the overall economy, what happened on page 127 will go an enormous way toward bringing fairness to our economy and increasing the revenue not only for the federal government but for the provincial government which we constantly hear talking about how it has been cut back and it is always moaning, at least in the case of the province of Ontario, which my friend has referred to.
The reality is page 127 of this budget will indeed put more money in the hands of Ernie Eves in the province of Ontario and all provinces. Perhaps even more important than that, it will put more money in the hands of average Canadians. The heading is Tax Fairness: Tackling the Underground Economy.
There have been studies done on the underground economy. We all know what we are talking about. If you do this for cash we will not pay the taxes. We will give you a special deal if we pay you under the table. We know this goes on. We also know, and I think we should admit, that a tax regime that is too high and does not put fairness into the system will drive the economy underground.
Page 127 in my estimation goes a long way toward tackling and fighting the battle of the underground economy. It goes on as follows:
Tax evasion through participation in the underground economy penalizes honest taxpayers. The federal government has a comprehensive strategy for addressing this problem. This budget announces additional measures to reduce the underreporting of income.
Federal departments and agencies will begin issuing information slips for contract payments made from January 1, 1998 as will federal crown corporations effective January 1, 1999.
The various associations involved in the construction industry have been concerned with competition from the underground economy for some time.
I might add that it is the construction industry that actually tackled the underground economy head on. It came united with the private sector, with the labour movement and with academia. It came united to this place and said it had a plan that will fight tax evasion in the underground economy. This was not something that was dreamed up in the finance department. It was not something dreamed up by a committee of parliamentarians. It came from the men and women who work in the industry on all sides. I really congratulate them for their foresight.
The budget page goes on:
In response to their concerns, the 1995 budget implemented a voluntary reporting system for the construction industry.
More recently, key industry associations, including the building and construction trade department of the AFL-CIO and the Interior Systems Contractor's Association of Ontario, have indicated that the reporting system to be effective needs to be made mandatory.
The private sector and the unions came forward and said voluntary is not working, they need this to be a mandatory reporting system.
In conclusion on this page:
Effective January 1, 1999, reporting of construction contract payments to Revenue Canada will become mandatory. The federal government will consult with industry to ensure that any industry compliance costs are minimized and the system is effective.
In perhaps a little more plain English what this simply means is that if contractor A wins a contract for $1 million and decides to sub it out to three contractors, B, C and D, for $300,000 each and pocket $100,000 for doing it, that is perfectly legal. We have no problem with that. What this budget change will do is ensure that contractor A must not only say that he has offloaded $900,000 worth of revenue but now in a mandatory prescription he must say who exactly he is paying it to.
Heretofore what would happen is that contractors B, C and D would have the option of taking that $300,000 in cash, maybe even discounting it and doing the work for $250,000 and avoiding taxes.
We are not just talking about a sales tax. We are talking about the ability to avoid employer health tax which would be an enormous loss in revenue to the provincial government here in Ontario. We are talking about an ability to avoid worker's compensation premiums, extremely important particularly in the construction industry.
What this does is give some security and some assurance to the men and women who work in the construction industry and let us face it, most are men but there are also more and more women coming into the business. It gives them the assurance that they need not worry about getting injured on the job and then finding out that their employer ducked the responsibility of paying the workers compensation premiums.
It really makes the entire process transparent. I think it is an enormous step to put this mandatory reporting system in place. I think we will see over time. Rather than simply guessing at the figures, I think we should monitor this and the people in finance should monitor this to see exactly what it does to the revenue base of this country.
It is my belief right across the country we will see an increase but we will also see greater protection for our workers. One of the reasons that this is important is there are tens of thousands of people who work in this business in the construction trades. Whether we are talking about carpenters, electricians, boiler makers, pipefitters, formers, we are talking about labourers, it is tens of thousands, hundreds of thousands of men and women across this country.
Until this change was brought in by the minister of finance in this budget, they were simply at the mercy of some of the companies. Not all of them were. I do not want to cast aspersions across a broad perspective or suggest that everybody in the construction business is avoiding taxes. I do not think that is true. I do not think that is fair.
This amendment came about as a result of the efforts of people like Joe Maloney with the Construction and Building Trades Council here in Ottawa. A number of people along with Joe, his colleagues, did their homework. They explained to us on this side of the house how important it was.
I know one of the concerns was that business would come out and say you cannot do this, it is more red tape for business. But ask a simple question. If a business does not want to disclose a contract that it just received the question is why. What is it trying to hide? What is it trying to avoid? There really is nowhere to hide in this. It is transparent and it is fair.
On the issue of what it means in our communities, let me just tell a little about my riding Mississauga West which is fundamentally a bricks and mortar economy. Certainly we depend on the auto industry, just like many other parts of this great country, and we depend on software companies. We are known for pill hill where all the pharmaceutical companies are, in the north end of my riding.
We are, if nothing else, a bricks and mortar economy and as the construction trades win a contract they then put into practice a process that leads to the development of new communities, industrial, residential communities. Out of that comes everything a family needs when it moves into a home, everything a business needs when it opens in a new industrial complex, and it goes on and on.
It is a snowball rolling downhill and it all starts with an amendment like the one on page 127 which brings fairness to the economy, which helps to fight the underground economy, ensure that employees, hardworking men and women in the construction trades, are protected, and ensure that government gets its fair share so that we can continue to provide the services Canadians want and indeed deserve.