Mr. Speaker, I am pleased to rise today to speak to the motion before the House, put forward by the member for Saint John and seconded by the member for Burin—St. George's.
I regret that the motion is empty and meaningless and would compel the Liberal government to do essentially nothing to help the shipbuilding industry that it is not already doing through the discredited technology partnerships Canada program and the failed research and development tax credit system.
I will address both of those issues further, but I would like to first address what the Reform caucus had hoped for with this motion.
I had hoped to introduce an amendment to the motion. While I know this is no longer possible, I would like to read the motion into the record:
That this House calls on the government to develop a new national shipbuilding policy that includes broad based tax relief for all Canadians and a commitment to pursue better access to international markets, particularly American markets, through equitable trade liberalization.
The amended motion would have called on the government to specifically address high taxes as the primary cause for low productivity and slow economic growth in the shipbuilding industry. It would have addressed the unfair trade practices exempt under NAFTA which effectively exclude Canadians from participating in a $1.1 billion U.S. shipping market.
Once again I would like to take the time later in my speech to address the issues of taxation and the serious problem of inequality with the U.S. However, to ensure that the members of the House understand the Reform Party's position on the motion, I will quote from the Leader of the Official Opposition. He stated:
The Official Opposition believes that tax relief and the expansion of Atlantic Rim trade are the keys to job creation in Atlantic Canada, and we will vigorously represent those views on your behalf in parliament.
The Leader of the Opposition made these remarks, which are embodied in the proposed amendment, on October 16, 1998. The remarks made by the Leader of the Opposition are not that much different from the remarks made by the hon. member for Fundy—Royal in 1997 when the Tory motion on shipbuilding was debated in the House. The member insisted he was not interested in subsidies but deregulation and improving Canadian access to international markets, in particular U.S. markets. Therefore, the motion would have been consistent with the Tory shipbuilding policies.
My questions for the Tory members of the House are: Why does the motion not address the issue of high taxation; and, why does it not address the important issue of trade barriers and trade discrimination?
Broad based tax relief for all Canadians is needed to ensure that shipbuilding and all other Canadian industries survive. It is that simple. It is so simple that even the Minister of Industry is beginning to understand this.
Tax relief is not part of the Tory shipbuilding plan. The Tories have consistently called for loan guarantees similar to those provided by the United States which has several federal assistance programs. Financial assistance is provided in the U.S. through the federal ship financing program, capital construction fund program and the maritime security act. Loan guarantees force the taxpayer to take on a financial liability that banks and venture capitalists consider to be too risky. This is an unacceptable burden placed on taxpayers.
The Shipbuilding Association of Canada argues that there has not been a single default under the U.S. federal assistance program. This begs the question: If default rates are this low, why does the government need to provide incentives for banks and venture capitalists to provide capital for shipbuilding projects?
What is needed is real competition in the financial service sector so that banks are compelled to compete for medium and high risk loans. Lack of competition in the Canadian financial services banking sector has made banks complacent about funding any medium to high risk ventures. Furthermore, broad based tax relief would leave more money in the pockets of Canadian consumers and entrepreneurs. This would lead to greater savings and higher corporate profits which can then be reinvested into the shipbuilding industry.
Why do the members of the Progressive Conservative Party not care enough about tax relief, particularly tax relief for Atlantic Canadians, to make it part of their shipbuilding plan?
On the issue of access to international markets for Canadian shipbuilders, the Reform Party supports the pursuit of equitable trade liberalization policies as an essential part of our industrial policy. In this instance, we are very concerned with what appears to be unfair trade practices with the United States with respect to the 1920 Merchant Marine Act currently exempt from NAFTA.
The 1920 Merchant Marine Act, commonly known as the Jones Act, legislates that cargo carried between U.S. ports must be carried aboard ships that are U.S. built, U.S. registered, U.S. owned, U.S. crewed and repaired and serviced exclusively in the U.S.
This legislation was exempt from NAFTA and without amendment it effectively prevents Canadian shipbuilders from building a ship that could be used in the United States' domestic trades while allowing U.S. shipyards the right to sell to the Canadian market new or used ships and barges duty free. The legislation effectively excludes Canadians from participating in a $1.1 billion shipping transportation market.
In order to be completely forthright in this debate, I believe the members of the House must also recognize the provisions in place currently protecting the Canadian shipbuilding industry.
Under Canada's Coastal Trading Act, the owner of a ship built or purchased abroad must pay a 25% tariff to have it flagged Canadian and operate in Canadian domestic trade. Also, the Canadian government policy dictates that government fleets must be renewed and repaired in Canada.
While we must recognize these trade barriers, it is clear that they do not cause the same material damages to the U.S. shipbuilders as the Jones Act does to the Canadian manufacturers. Canadians must appreciate, however, that trade liberalization efforts will bring these protectionist government policies under closer scrutiny. We cannot call for freer trade and then also call for protectionist policies.
I offer this point to my colleagues as a word of caution. Canada has many barriers to trade and the Liberal government looks like it will continue to violate the spirit of global trade liberalization. We must be aware of this before we tackle trade disputes like the one I have just addressed.
I will conclude my remarks by saying that the Tory motion succeeds in that it brings attention to the need to address the lack of Liberal vision for the shipbuilding industry. Sadly, it makes no specific policy recommendation.
On the plus side, there is nothing in the motion that is outwardly objectionable to Canadian taxpayers because there is nothing in the motion at all. Although it fails to address the primary cause of our deteriorating shipbuilding industry, which is high taxes and unfair trade practices, the motion before the House has the qualified support of the Reform caucus.