Mr. Speaker, it is a pleasure to speak to the bill and specifically to talk about the future of Devco and some of the problems in Atlantic Canada. I have been listening with interest today to some of the debates by people who live in the area. I respect much of what they have had to say, especially the parts that dwelt upon the work ethics and the good character of the people of Cape Breton.
I used to work in the logging industry and always thought that was pretty tough, but from the times I spent going down in mines to have a look at them and so on I was very impressed with the hard work and the good work ethics of people who work in such situations. There is not much doubt about that. The members who are closely associated have been speaking on that. Their tributes to the people in their ridings are well taken.
Obviously we have to be concerned about those workers and those people, but let us do it without doubting the hard work and the work ethics of the people in the area. The bill does not bring that into question. The question is not about whether or not these people are hard workers. Obviously they are. It is a tough life and it is a tough type of work.
We are wondering about and debating today the best way to create long term wealth for the people in this area. What is the long term answer? Is it to continue along the path that has been set out before them with Devco for the last 33 years? Is it in the best interest of both the workers in the area and of Canadian taxpayers in general to subsidize this industry to the tune of a couple of billion dollars?
I would argue that it is not. It has nothing to do with how hard they are working. It has to do with the quality of the coal they are mining and the impossible situation they are in. They will never be able to make money in that pit. It will never happen. It cannot happen.
As I was preparing my notes I thought of the situation in British Columbia where successive governments propped up an area of my province called Cassiar. We can all tell stories of what happened in Cassiar, but the similarities are fairly consistent with what is going on with the people affected by the closure of Devco.
Cassiar was propped up year in and year out for political reasons. Millions upon millions of dollars were sent into that area in an effort to prop up the local economy, to keep the mines open, and so on. It just did not work. It was a good effort and it was a good heartfelt concern for local workers.
The sad fact is that at the end of the line when finally the subsidies ran out not only did the workers lose their jobs. That happened, but because they had been strung along so long with the process of a never ending supply of government grants coming their way that when it finally shut down they not only lost their jobs. They lost everything. They lost their homes, their businesses, and what they felt was their future. They lost it all because it was an unsustainable level of government subsidies. It was just a matter of time until it was cut off.
I cannot remember how long Cassiar was subsidized, but it was certainly in excess of 20 years. When they finally pulled the subsidies it was a harsh pill for locals to swallow because of the huge disruption not only in their work lives but in their overall lives. Most of them had to move away.
I do not think we can make the case that continuing subsidies at the level we have been used to in Devco's case is sustainable in the long run. There are 1,100 workers involved. There are hundreds of millions of dollars in losses in a single year. We cannot sustain that level of subsidies. It is just not possible.
The question needs to be asked: When is it appropriate to subsidize a business? When is it something federal or provincial governments should entertain? There is a very short list of circumstances where government subsidies are appropriate.
I think first of a natural disaster. When the floods hit the prairie provinces and completely wiped out the crops in quite a large area it affected prairie farmers through no fault of their own in a one time disaster situation. They deserved our help. It was not their fault. It was nothing they did. Flooding is not a routine yearly problem. They deserved some help from us to tide them through that natural disaster. An earthquake would be another example where the government could step in and say that this is an odd situation with very severe economic hardship.
Another example is when there is systemic and long term inappropriate foreign subsidies that distort the trade situation. That is not the case with the coal industry. That is not why this mine cannot make money. It has to do with the quality of the coal, the access to markets and so on. It is not the workers. It is the fact that they are in an untenable economic situation that cannot be sustained. Again, it is not appropriate to subsidize it.
Why then has the government over the last 30 some years continued to subsidize this industry even when it seems to be hopeless? It is because successive Liberal and Conservative governments have felt that the best way to secure a vote in eastern Canada, in Atlantic Canada, was to throw money into subsidy programs. If it was working for unemployment reasons then every person in Atlantic Canada should have two or three jobs because they have spent like crazy in one bad government decision after another which has not resulted in increased employment.
Unemployment has been the highest in Atlantic Canada throughout my lifetime because the government subsidy programs the Liberals and Conservatives have been so in love with have guaranteed that their industries remain inefficient and uncompetitive for generations on end.
They do not diversify. They do not build the infrastructure necessary. They do not get into the business of the 21st century because they are looking for the subsidies of the 19th century. That is why they cannot break out of the endless circle of government subsidies combined with high unemployment.
When I was in Atlantic Canada last there was a headline in one of the Atlantic magazines: “Government Subsidies: Toxic Waste for Atlantic Canada”. That is what they called it, because wherever the subsidies went they showed an absolute corresponding increase in unemployment the more subsidies the government put into an area. Is that not ironic? We would think we were helping people by giving them money. We would think that if another $100 million could be thrown into this area surely everybody would have a job, but absolutely no correspondence could be shown between high government subsidies and high unemployment. That is the case.
People around the world have been able to break out of this syndrome. It can be done but it takes some leadership and some vision on the part of the government. The inappropriate government subsidies have to be cut when governments start to pick winners and losers in the free market system. They have to give generalized tax relief to allow businesses to thrive in a free market system. Unless we are willing to throw money at the free market system indefinitely—and we are seeing today that is not possible—the alternative is to lower taxes, lower bureaucratic red tape and allow businesses to thrive on their own.
We do not have to go far south from Atlantic Canada to see the juxtaposition between a high subsidy and high unemployment zone, which is unfortunately our Atlantic provinces. We do not have to go that far south to a physical environment that is not much different to see that the unemployment rate is much less, the employment rate is much higher and the standard of living starts to increase.
We could even go further south, Georgia for instance, and see what it did. It was once the basket of the United States economy. I have a clipping entitled “Atlantic Canada should take a financial lesson From Georgia”. The head of the program was in charge of giving out research funds. He could help people research and he could do R and D work, but he was not allowed to give out any government subsidies in Georgia.
He was commenting on the comments of the former Liberal Premier of New Brunswick, Frank McKenna, when he called on an end to subsidies to Atlantic Canada after he retired. I respect Frank McKenna somewhat because he did have his head screwed on straight. He knew the long term answer was not increased government subsidies because they are always subject to patronage, always subject to abuse, and they always picked winners and losers in a marketplace where they have no business being.
Mr. McKenna saw how Georgia, Ireland and other places around the world with high taxes and high regulatory government regimes had turned it around almost overnight by reducing taxes, reducing regulatory red tape and allowing businesses to thrive based on the free market system.
I think there is hope for Atlantic Canada. One day it will rise from the high unemployment situation it is in. It will not be because of government subsidies. It will not be because people are buying votes with a guarantee to keep a mine or a certain sector open. It will be because they will get their act together on the tax issue. People like Frank McKenna will come forward asking for an end to this arbitrary subsidy program and move toward a free market system.
That is not to say the public does not have an interest in it or that governments cannot have an interest. I think there will be an increasing need for public-private partnership whether we are talking about ports, airports or facilities of different sorts. We will be looking increasingly at public-private partnerships. Of course public money will be involved. We will also be looking for private money because we will need more money than we could ever possibly spend out of the tax purse. We will need private investment to make things shine in Atlantic Canada.
We will need to sort out basic things in Atlantic Canada as in the rest of Canada like the fallout from the Marshall decision as an example. It did not take very long for the Marshall decision to ripple right down into the Sable Island gas issue. It took only a couple of weeks after the decision for another appeal board to strike down the consultation side, on whether or not they consulted enough on the pipeline for the Sable Island gas project. The board said that they had not consulted broadly enough with the Mi'kmaq people, that consultation was inadequate and that they had to start over again. They better get that settled.
Atlantic Canada has a very bright future. Its greatest export over the last generation has been its young people. It has a chance to repatriate not only those young people, but to woo people from across Canada and around the world if it has a vibrant economy.
Not only Sable Island gas, but the new gas discoveries are going to be the basis of a new, broadened and more productive workforce. It will not be based on government subsidies but on the fact that it will have access to materials, natural resources and the technology that is all part of the modern natural resource industry.
It is going to have to quickly settle this jurisdictional problem of whether we have equal access to natural resources, or whether we have access based on ethnicity or race. That issue has to be settled. I am not saying it is absolutely one way or the other. I am saying that the government should not leave that open as it is right now. The federal government has basically abdicated its role and shrugged its shoulders.
The Minister of Indian Affairs and Northern Development has said that he thinks it means open access to all natural resources, including wood products and access to the mines in Atlantic Canada. That is quite a statement, but I do not think the people in Atlantic Canada, who are looking to finally break out of this high unemployment and high subsidy business they have been in for years, think that is the way. They want this clarified.
People in Atlantic Canada want to see where we are heading as to the allocation of natural resources. They want to see whether we are going to divvy it up based on ancestry or based on the need to access the products equally among all Canadians. That will have to be settled in Atlantic Canada. Once again that will do more to take that uncertainty out of the system which will allow the free enterprise system to do its part. Hopefully in my lifetime, and hopefully within the next decade, it will result in a reversal of the sad fortune Atlantic Canada has been facing for quite some time now.
In case people are wondering why I am so hip on this idea that grants, loans and so on should be given based on need rather than on political expedience, I will refer to a couple of newspaper articles which were written back in 1993, the year I was first elected. The articles extensively quote the Prime Minister who is in his home town. He talked about government grants. This is the problem with them. In general they do not go toward the purpose originally intended.
The Prime Minister said “You vote for the Liberals, Saint-Maurice wins with Jean Chrétien”. What did it mean? An October 1993 article reads “At each public appearance in the region, Wednesday night and yesterday, the Prime Minister reminded them that he will probably have enormous clout as Prime Minister to pull the government strings. He said `When the dossier for Saint-Maurice lands on a cabinet minister's desk, need I say more', he says to rounds of laughter during the meeting”. That is a nice make work project. When a dossier lands on his desk or a minister's desk. And it says across the top that this is for Saint Maurice. “Need I say more, it is a done deal. It is going to be good for Saint Maurice”. Why? Because they need it? Because it is based on objective criteria? No. It is based on buying votes.
Here is a headline: “I'm not a traitor, says the Prime Minister, I am Santa Claus”. That is an interesting concept for a prime minister. I do not think he is a traitor, but he said that he was Santa Claus and that he had the answer. “If you know me” says the big guy, “I can get you some grants. When it comes across my desk, it is a done deal”. When I first saw that, I thought that may be pushing it. Maybe that would not really happen. Maybe he was just joshing.
Let me run down a list of what happens with government grants when the Prime Minister is allowed to pull the strings.