I am afraid the transport minister has disappointed us, Mr. Speaker, in not answering our questions.
I find it very peculiar that a policy which will very seriously impact the airline industry, the ostensible purview of the hon. Minister of Transport, should have been invented, implemented and defended by the Minister of Finance with virtually no reference to the transport department, which is responsible for this. We even sought to have the Minister of Transport appear before the committee, but the new whip-appointed chair of that committee, who has turned what was a normally thoughtful and businesslike committee into a partisan gong show, refused to allow us to call the Minister of Transport to ask him some very serious questions.
However, I did have an opportunity at committee to ask one of the minister's senior officials whether the Ministry of Transport had conducted any impact studies on the consequences of this $24 round trip air security tax. Lo and behold, the transport department, apparently responsible for airline policy, has not even, according to that witness, done a single study on the potential impact on the airline industry in Canada. This is unbelievable and doubly unbelievable because Department of Finance officials admitted at committee that it had not engaged in any economic studies about the impact of this enormous $24 tax.
I also found it instructive that the Minister of Transport began by essentially saying that the finance minister had no choice at budget time but to introduce this $24 tax, that he had no alternative but to be prudent with tax dollars. I do not know how it is prudent with tax dollars to collect an additional 2.2 billion of them. If the finance minister wanted to be prudent he could have and would have reduced spending in low and falling priority areas and in wasteful government spending, areas that have been identified by this opposition, by the auditor general and by many external critics, and he could have reallocated those resources to finance new security measures, including new airport security measures.
Instead, the finance minister could not and did not identify a single red cent of reallocated public spending in his budget, so I find the transport minister's argument of budgetary prudence just a little hard to take. I am glad he has admitted that the bill is pretty seriously flawed, because for a minister to say that there may be some unevenness with the application of this new tax is so serious that he is basically saying they will try to change this in six months. He is basically saying “trust me, I am going to lobby the finance minister in the next six months not to completely crater the Canadian airline industry, just wait, be patient”. Anybody with objections, including the hon. member for Hillsborough in P.E.I. who was prepared to vote for one of our motions to cut the transport tax in half, is pulled out of committee and read the riot act by the finance minister and the whip. The non-commitment he was given was that in six months the government will take a look at it. In six months it may be too late. It may not be a review; it may be a post-mortem.
That I draw from the testimony of every industry witness who appeared before committee even though a number of witnesses were not permitted to appear as the whip's representative in the chair attempted to jam the bill through with absurd and undue haste.
The Canadian Airports Council said that the “current fee structure will create disproportionate price increases on short haul and regional flights--unfairly penalizing smaller carriers who provide these services”, e.g. WestJet. The council also said:
--the proposed $24 charge is a significant disincentive to air travel at a time when the price of an air ticket is already significantly inflated by an array of fees and charges for air navigation, fuel taxes, federal and provincial sales tax, and self-financed airport improvements.
The Canadian Chamber of Commerce as well was not given an opportunity to appear before us with live witnesses for questioning because of the way in which the whip ran these hearings, but it stated in a written submission that:
The one-way cost of the Air Travellers Security Charge of $12, represents almost six per cent of the average price of a one-way domestic ticket sold in Canada in 1999.
It went on to state that “If a one per cent increase in ticket prices represents a one per cent decrease in passenger travel”, an estimate which it attributes to the Air Transport Association of Canada, “then the average air traveller security charge of six per cent will have a significant effect in terms of the number of air passengers”.
Captain Kent Hardisty from the Air Line Pilots Association stated:
The proposed legislation does little but create an expensive bureaucracy that will be unresponsive to the insights and interests of the people on the front lines of aviation security.
He also stated that the $24 surcharge:
--will be particularly crippling to short-haul domestic carriers such as Air Canada Regional and WestJet. We find it ironic, to say the least, that legislation intending to improve security of air travel in Canada could assist its very demise...We therefore recommend that the entire security charge scheme should be abandoned in its entirety.
Randall Williams of the Tourism Industry Association of Canada stated:
This tax will hurt an industry still recovering from the September 11 terrorist activities and the economic slowdown...The traveling public does not support this tax. Combine this with the major administrative and logistical difficulties this tax will create for the air industry, travel agents...it is clear that a user-pay system to offset costs for security and policing is inefficient and a terrible precedent.
Finally, under questioning I put it to Clifford Mackay of the Air Transport Association of Canada that the government says it will not try to run a surplus with the new $2.2 billion tax. The government claims that it will reduce the fee at some indefinite point in the future if it finds that expenditures have not expanded to consume the combined revenues. However, Mr. Mackay, a former senior official in this government, knew as well as I did that this was complete nonsense. He stated:
The problem with the model we have is...it's unlikely--and I spent 20 years as a senior government official--that you will get the response, “No, reduce our revenues because we don't need any more money”. I'm not saying this to be derogatory to federal public servants. Frankly, they try to do their job well, but it's not a normal occurrence around this town...The implementation of this new tax or charge...is frankly extremely complex. We've spent hundreds of hours trying to figure out how to do this. It's not going to be easy.
There were two hours of testimony and many more witnesses before the committee, including those from WestJet. WestJet, being the only profitable airline in Canada and which is the only hope for competition in this monopolistic environment, told the committee that its business will be severely jeopardized. Why? Because of, as the minister puts it, the uneven application of this tax.
A passenger who has a $100 fare ticket from Kelowna to Vancouver or Edmonton to Calgary with WestJet, on a discount, low cost, short haul flight, will end up paying the $24 round trip tax, but someone who is flying on a business expense account on Air Canada, a full service carrier, from Halifax to Vancouver, on a $4,500 J class fare will pay a $24 round trip tax. In other words, this tax, I believe, has been surreptitiously designed to benefit the monopoly airline in the country and drive out of business the successful element of competition which is the only hope for a competitive airline industry in this country.
We know that the government is planning to bring in more revenues from its tax this year than it plans to expend in security fees, so why is it going to take a six month review? The transport minister already has admitted that this approach is flawed. Members of his government were willing to vote against it at committee, were willing to cut the fee in half in one of our amendments and were seriously willing to consider other opposition amendments until removed from the room. We had one case on that committee where the member for Hillsborough announced his intention to support and therefore pass our amendment to cut the security charge in half. When the question on that motion was called and on the floor, about to pass, the whip's representative in the chair gaveled the meeting to a close and we had a missing person's case on our hands which turned out to be a mugging, because he came back and had been given his marching orders.
These are modest amendments which would undo the damage of the bill and they ought to be passed. Government members should vote freely on this as its members were unwilling to in committee.