Mr. Speaker, I will be splitting my time with the member for Medicine Hat. I agree with all of those things that make Canada such a wonderful place to live but I still appreciate a dollar that is worth more than 62 cents.
I will not go into all of the issues that my colleagues have been over and over in the four days of debate on the budget because they have done a good job of exposing the weaknesses in this budget. However, I do want to talk about a couple of things from the perspective of my position as official opposition natural resources critic. There were issues relating to the area of natural resources that were not in the budget but should have been.
I was disappointed that the government did not move to address the truly unfair system of corporate taxation that is discriminatory against the mining and oil and gas industries. Currently the mining and oil and gas industries pay a 28% corporate tax rate whereas, as part of the Liberal government's five year $100 billion tax reduction plan, all other corporations are enjoying a phased in reduction in corporate tax rates to 21%. According to the budget figures released last year by the finance minister the cumulative corporate savings would amount to $10.1 billion by 2004 when the rates of other businesses are lowered to 21%.
Canada is the third largest producer of natural gas in the world and the 13th largest producer of crude oil. The oil and gas trade exports account for half of Canada's trade balance. The $42 billion oil industry, which employs more than 525,000 Canadians, pays an average of $2.5 billion in annual federal income taxes. In 2000 the industry invested $23 billion in exploration and development, often with a lead time of up to five years before it could expect any return. The oil industry is the largest single private sector investor in Canada.
The mining industry is one of the few Canadian industries that operates in all provinces and territories. New investment will bring significant economic benefits to all mineral producing regions and urban centres across the nation. In 2000 the mining and mineral processing industry contributed $28 billion to Canada's GDP. Direct employment by the industry exceeds 400,000 and Canada is one of the world's largest exporters of minerals and mineral products. In 2000 exports amounted to $49 billion representing 13% of total exports.
In 2001 the mining and oil and gas extraction industries, which includes the oil sands mining, was forecast to invest more than $30 billion on construction machinery and equipment representing roughly 16% of forecast capital investment in Canada. These two industries bring massive investment, jobs and secondary benefits to Canadians. It is in our best interest to ensure the health of the industries. However, the Liberals made their priorities clear in the last budget by not including the mining and oil industries in the group eligible for the reduced corporate tax rate.
I urge the government to remember the fable of the goose that laid the golden egg. A villager and his wife had a goose that laid a golden egg every day. They supposed that the goose had some great lump of gold in its insides to produce the eggs and in order to get the gold, they killed it. Having done so they found to their surprise that the goose was no different from other geese. The foolish pair, hoping to become rich, deprived themselves all at once of the gain of which they were so assured day by day. There is a parody there to what the Liberal government has done and is doing to the natural resource industries over time.
A lower tax rate in the oil and gas industry alone would cost the federal treasury about $400 million by the end of 2004. The government claims that due to the recent economic turndown, it is unable to cut taxes and forego that kind of revenue. However, the government is well known for hoarding taxes and to finance extra spending on the efforts of two key industries in Canada while all other corporations enjoy a lower tax rate. That is plainly discriminatory.
If one asks the government its rationale behind the decision one would no doubt hear that the finance department believes that energy companies get tax breaks not available to other economic sectors and that these breaks effectively bring the tax rate of the resource sector down to 21%.
What is conveniently not mentioned is that while it is true that energy companies have a 100% deduction for eligible exploration and development expenses, accelerated write-offs for certain capital assets and accelerated capital cost allowance and resource allowance, these industries face massive initial capital investments with no guarantee of return, and often the return is not seen for extremely long periods of time.
Without other tax benefits companies could not afford to invest in projects such as the Athabasca oil sands, Hibernia and other natural resource projects. These eventually bring billions of dollars to both investors and the government. The resource allowance is simply a proxy for the royalties that companies pay to the provincial governments. It is a business cost not a special tax treatment.
I must admit that I find it curious that the finance minister claims there is simply no room in his budget to give resource industries a break yet he was able to find $260 million with which to start the government's wind energy initiative. I cannot help but wonder if all that hot air contributes to the wind program.
Recently in Fort McMurray the finance minister pledged that if the current system is found to be unfair it would be changed. I call on the finance minister to follow up on his promise and do the right thing. The truth is that without a more stable and fair corporate tax system investors in the resource industries will be scared away. In this of time of increased U.S. demand for reliable energy sources, the government owes it to Canadian resource companies to ensure their competitiveness and survival in Canada and worldwide.
I turn my focus now to the government's climate change plans. Canada is considering one of the most expensive undertakings since World War II, the Kyoto protocol. Yet, this huge commitment is not seriously considered in the most recent budget. The Liberal government is considering ratifying the protocol either by the G-8 meeting in Kananaskis in June or at the meeting in Johannesburg in September 2002.
Business and environmental groups have been raising their voices in protest in the last few months. They are saying that the government has no idea how to achieve its target eight years before we are supposed to have our greenhouse emissions down to 6% below 1990 levels. The commissioner of the environment indicated that at the moment we are 17% over 1990 levels.
Lately the government has been travelling across the country asking businesses to tell it how it should meet its own promises under the Kyoto protocol. It is asking others to do the work for it.
While the environment minister says over and over that implementing Kyoto will cost between 0.1% and 1% of Canada's GDP per year. Added up we are looking at between 3% and 8% GDP loss by 2010. A 4% GDP loss is approximately $40 billion or $1,100 per person. It is a huge expense for combating a problem for which we still do not have a real solution. The government often talks of all the health benefits of reducing greenhouse gases but atmospheric carbon dioxide has never been considered a health risk.
We want to see a more aggressive action on air pollutants that have been demonstrated to have a negative affect on human health, such as air particles and ozone, but these should be targeted separately and not together with carbon dioxide. Referring to carbon dioxide and water vapour as atmospheric pollution is dishonest and smacks of a hidden agenda.
If the government is so serious about ratifying Kyoto why were the costs of implementing Kyoto not taken into consideration? Where are the numbers that say Canada will lose up to 1% of its GDP next year by implementing Kyoto? Where are the considerations of economic leakage where certain sectors that are heavily hit by regulations under Kyoto leave Canada and go to other countries such as the U.S. and Mexico where they are not under the same constraints? The government will continue to say it will not impose a carbon tax but the emissions permits or carbon caps that it is considering are just a carbon tax by another name.
Some sectors that produce more greenhouse gases such as the energy sector will be hit harder than others. They will be constrained to pay more for the right to emit carbon dioxide and other greenhouse gases.
Is this tax fairness? Will this keep these businesses in Canada or will it drive these companies out of Canada to other countries not bound by Kyoto, such as the United States, which is refusing to ratify, citing the economic damage the agreement will cause?