Madam Speaker, we are here this afternoon discussing Bill C-65, the equalization bill.
One thing that concerns me in this bill is there seems to be no recognition of costs in creating the wealth, only more confusing ways of counting revenues. The federal government wants to know how much the final product is worth rather than simply count the number of logs after the fact. There might be some common sense there but it is hard to see how it will work in practice.
I am thinking about Saskatchewan's agricultural production and I wonder if there is any consideration for the greater input costs that go into producing the higher value crops. Presumably my province will be penalized equalization payments because our farmers will be earning more for pulse crops than they did for growing the straight grain commodities. The problem is that growing higher value crops is more expensive and there seems to be a disincentive to invest and innovate built into this approach to equalization.
We have no indication that this government is listening to the auditor general or the provinces that have an interest in removing disincentives. There is no argument that disincentives exist in this equalization scheme. We hear that from both sides. How else can we explain the fact that some of the highest sales taxes in this country are charged by the have not governments of Atlantic Canada through harmonized governance?
These provinces suffer from higher than average unemployment and lower than average incomes but their citizens are charged higher sales taxes than in Ontario and certainly in Alberta.
By overcharging on certain taxes these provinces suppress consumer activity but at least are not penalized equalization money because the revenues are below averages enjoyed elsewhere.
If anybody in this House is still under the illusion that higher taxes raise more revenues I invite them to look at the examples of the successes enjoyed by Ontario and certainly Alberta. We are aware that Ontario is looking at alternatives to the present equalization schemes because the world that existed when this system was first cooked up 40 years ago is now quite different.
Trade flows across North America and between us, European and Asian countries have undergone dramatic change. This bill seems to want to perpetuate a system that Canada has outgrown. In the meantime the government, despite promises going back to 1993, has failed to address billions of dollars lost through interprovincial trade barriers while it thinks up new ways to irritate the Americans and interfere with that important market.
The point is there are many ways to grow the national economy that do not include sending wealth through the bureaucratic meat grinder here in Ottawa. Wealth creation is not a zero sum game where if the government does not grab a share off the top and sends it to where it thinks it is needed that somehow no wealth would ever be distributed. That has never been a true picture of economic activity and we are still waiting for this government to grasp that simple economic concept.
The urge to tinker and micro manage the economy leads to some unfortunate distortions. Subsidies to have not provinces allow them to charge less in some areas than the cost of the service and conversely because have provinces are obligated to finance those subsidies they must collect more taxes than they might otherwise wish to. We know high taxes penalize low income Canadians, proportionately more than high income Canadians.
The fact that governments turn around and dish out the high taxes in the form of credits and social programs only begs the question why take it away from them in the first place. A C.D. Howe study showed that when the extra taxes are taken away from low income earners in a have province they are just as likely to end up in the hands of a higher income citizen of a have not province. This includes all services and is reflected in the fact that Alberta families earning $30,000 to $40,000 a year pay 9% more in taxes than they receive in government services while Canadians earning the same amount in a have not province, like Saskatchewan right next door, see anywhere from 2.4% to 15.4% more in return than they pay out. Where is the fairness? How does this constitute equalization?
If this was one country where Canadians were welcome to live anywhere within our borders then we could not tolerate policies that paid people to stay where jobs did not exist at the expense of people who sought out opportunities where they did. My province of Saskatchewan has seen its population stagnate or migrate over the years but I do not support policies that would encourage people to sit at home. Saskatchewan has tremendous potential and I would like to see that explored first. No one should be treated as a liability that their home province has to pay for, and that is what this legislation seems to do.
Clearly what we should be doing is looking at ways to unleash the potential of every province and region of this great country. We should be examining legislation that average Canadians can understand that is so clear that it does not need special exemptions and rulings, that focuses the benefits of any program on the people who need it most. I do not think there is a better definition of equalization than that.
The idea is to help those in need have the same opportunity as others, not move everyone to the lowest common denominator. We cannot guarantee the same outcome, and maybe that is what this government is going for.
As usual, we started out with simple intentions 40 some years ago and ended up with a tax code and gun registry that are totally unworkable. Billions of dollars are intended to accomplish certain objectives but the objectives end up being blurred. Accountability is sacrificed in the name of an ideal and the ideal ends up being overrun by events.
By all means let us agree that we want the whole country to enjoy the wealth we have generated within our borders but let us not keep our citizens from creating their own wealth on their own initiative.
We must remember there is only one taxpayer whether from Alberta or Newfoundland. The so-called have provinces must maintain higher taxes to pay their share of equalization which has an impact on poorer people of that province just so programs can exist to subsidize not so poor people in have not provinces.
Bill C-65 is really all about the federal government maintaining control of tax loads, to have a say in provincial affairs. As we know, he who has the money makes the rules, but in the end is that the best Canadian taxpayers can expect?
