Mr. Speaker, I am pleased to rise to enter the debate on Bill C-49. This bill would implement the provisions of the budget that the Minister of Finance brought down on December 10, 2001, a budget that was cast in the midst of unprecedented uncertainty, with an economy that was in a slow down and, of course, it was post the terrible events of September 11.
The finance committee, of which I am a member, travelled across Canada on a prebudget consultation exercise and listened to what Canadians had to say. I am very pleased to say that the Minister of Finance and the government listened to the priorities that Canadians reflected in the consultations that we undertook. Basically, there were four main areas that Canadians talked to us about. There were other areas of course, some very specific, and other proposals but there were many common themes. These themes centred on four major factors.
First, Canadians told us that they wanted the government to respond to the national security agenda. They wanted the Minister of Finance to provide the funding that was necessary to assist Canada in dealing with the threat of terrorism that presented itself so horribly on September 11.
Second, they wanted the government to protect the $100 billion tax cut that was introduced in budget 2000 and the economic update in the fall of 2000, the largest single tax cut in Canadian history.
Third, they wanted the government to protect the $21 billion invested in health care and post-secondary education, an historic agreement that was reached by the government, provinces and territories. A further $2.5 billion was dedicated to early childhood development. Canadians told us they wanted us to protect those investments in health care, post-secondary education and early childhood development.
Fourth, Canadians told us that, after all the hard work that had gone into eliminating the deficit, they wanted us not to go back into deficit at all costs.
Those were the main themes that were presented to us as we travelled across Canada. As I said, there were other proposals, propositions and concerns but those were the major themes that were expressed by Canadians.
I can say that our Minister of Finance and the government listened. The minister protected the tax cut in the budget that he delivered on December 10. The government will not be going into deficit this year or for the next two or three years at least. He protected the investments in health care and also provided $7 billion in funding for the national security agenda.
The national security agenda will encompass a range of things. It will include money to deal with the needs of CSIS and the RCMP, as well as the needs at our borders for the Canada Customs and Revenue Agency to improve the movement of goods and people across our borders in a secure and efficient manner.
The budget will also provide additional funding for the Department of Citizenship and Immigration so that it can improve the processing of applicants for immigration as well as refugees. It will do a number of other things but those are the essentials. It will provide a significant amount of funding to achieve those ends.
I am very happy to speak to some of the detail in the budget because I know there has been a lot of discussion in the House and in committee on the provisions of the airport security fee for example. I for one, and I know the feeling is shared by many of my colleagues on both sides of the House, am sensitive to the fact that the airport security fee, which is $24 for a round trip and $12 for a one way ticket with no stops, should be monitored very carefully to ensure that the small communities which are accessible only through short haul flights are not jeopardized. A $12 or $24 tax on an airfare of $100 or $200 is a very significant amount. We want to ensure that this is monitored carefully.
The fee may end up being too high because the data, that the government had at the time when it had to come up with the tax, was fragile. Looking at the post-September 11 events we were presented with a situation leading into a budget in November where we had to firm up certain assumptions with respect to air travel. One can imagine the situation that put the Minister of Finance in where he had to guesstimate as best he could the air traffic volumes that would be going through this upcoming fiscal year.
The minister sought advice from Transport Canada and the airlines and got whatever information he could. However he was estimating under difficult circumstances. Therefore the airport security fee at $24 for a round trip was developed. That fee will cover the cost of improving security at 90 of Canada's main airports. There will be better equipment and more trained people to process people going through airports.
One of the points that is sometimes lost in the House is that members opposite say it is a fixed fee and therefore for someone travelling on a $100 or $200 ticket that is a huge percentage and is a tough thing to face. Granted that can be a challenge but we need to remember another thing and that is if individuals are going through airport security it does not really matter if they are travelling from Toronto to Vancouver or from Victoria to Kelowna, the same amount of effort is required to process them through security. Basically it is a fixed cost.
We cannot always look at these things in strictly economic terms. There have been discussions and proposals that the airport security fee be based on what we call ad valorem or a percentage of a passenger ticket amount so that, for example, on a longer haul in absolute terms the airport security fee would be higher.
That would mean that people travelling on longer trips would subsidize the cost of those travelling on shorter hauls. There is an argument for that I suppose but there is also an argument to say that if one is presented with a fixed cost then the people who choose to travel, the users, need to understand that there is a cost of processing them through measures that Canadians look to in terms of the standards of excellence and diligence that are required to make sure that people getting on aircraft are indeed secure. That is the reality.
Some ask why that fee would not be abolished completely and be borne by general taxpayers. A good part of the $7 billion that I mentioned earlier for security measures is being borne largely by the taxpayer in general, as a whole. However the feeling of the government was that for the user fee, for the tax, it should be focused on those people who choose to travel.
It is a very small part of the total security cost that the government has absorbed and all Canadians, including those in the gallery and in the House today, are absorbing. This is a very small element of the national security agenda that is being passed on to users.
The Minister of Finance indicated clearly that this situation would be monitored very carefully to determine whether the fee was too high, in other words, whether it was more than was needed to pay for the additional cost of security, as that was the only thing this tax would be used for.
If members opposite would read the budget papers they would see that the revenue that comes in from this airport security fee over five years, if it matches the cost over the five years, would be incurred by the government to increase security at airports.
Of course the costs are higher in the first year because there is the purchase of equipment and the training of individuals who will have to be in these situations. Therefore in the first year the costs are higher than the revenues, but over the five years the whole account balances out.
This is not a money making exercise but an attempt by the government to match revenues to be brought in with the cost of improving security at our airports so that passengers can travel safely and securely. That is what it is about.
If after six months, or a year or two, the government becomes aware that the fee is too high and it is more than what is needed, I am sure that it would review it. The Minister of Finance said quite categorically that he would review the fee and if necessary bring it down. If it has the effect of jeopardizing communities that rely on these short haul routes then that is something I am sure the government would also review.
However there are no easy solutions. For easy answers members opposite would be on this side solving everything in one easy moment. These are tough and difficult times.
The bill would implement another element to establish the authority that would oversee these security measures. It would have 11 board of directors, a broad range of people. There was an amendment considered by the Standing Committee on Finance that would put a representative from labour on the board. I supported that because, as I said in committee, when we go through security at airports we all have various experiences.
For example, the other day I had a pair of little scissors that we use to trim the hair out of our noses or whatever. They went through the screening and the person asked me to unzip my bag. They were taken out and confiscated.
It is a hard thing to take. I have had people tell me, I have never checked it myself but I am sure it is probably true, that one can actually walk from outside the security area and buy a pair of these little nose scissors in one of the convenience stores. I do not know. I have not tried it.
The point is that there are a lot of people who are working in security. They probably see things and have some wisdom and experience to share. I think that if they fed that to a board rep we would probably get some good enhanced decision-making by the authority.
The Minister of Transport has said that he would absolutely make sure that whoever goes on the board would have a knowledge of labour and who are plugged in to labour because this is a resource that we should be tapping into. Why do we avoid it? I do not understand but there are only so many board seats available. I suppose it comes down to that.
I do not know if members read a book that is old now called “Managing by wandering about”. It was written by a former chief executive officer of a corporation. Instead of being stuck in his office with all the trappings of power, fame and all that, he went out and walked around. He visited people at machines, in the warehouse and people who were keeping the cardex of the inventory in the warehouse. He kept wandering around. He said he got more answers about the business than by sitting in meeting upon meeting with all his management staff and executives, and others.
The point is we should reach out to these people. They have a lot of experience. They see a lot of things right at the job site of which we should be taking advantage and I think that our government understands that.
The bill would implement some other important items that were included in budget 2001. One is the Africa development fund, a half billion dollars that would go toward assisting those countries in Africa that have dedicated and committed themselves to good governance and have a respect for democracy and human rights.
Africa is a very complicated place. I know my colleague sitting here has, for many years, worked diligently and forcefully in understanding Africa, so I feel somewhat humbled by speaking on Africa in this House.
We have some significant challenges. We want to help Africans help themselves but by the same token we want to ensure that they are committed to good governance, transparency, accountability and fighting corruption.
The residents in my community are saying that if they send $1 of tax to Ottawa and we send that to Africa, 40 cents of it ends up in some Swiss bank account of some corrupt leader and the other 60 cents goes to help the people. I am sure that is not acceptable to the people in the House and to the people of Canada. We need to ensure that our government is committed to those principles, that we would only support those countries in Africa, and indeed around the world, that need a helping hand and are committed to good governance.
We read in the paper about the various things that are going on in Africa and the troubling news out of Zimbabwe, but we cannot turn back our eyes from this hugely important continent. We need to help those people help themselves. This fund of half a billion dollars would be used for those purposes. The Prime Minister, in chairing the upcoming G-8 meeting in Kananaskis, has said that Africa would be a priority and that this fund would be used to assist those in need.
I have heard some Canadians ask, “Why are we helping them when we have difficulties and poor people in Canada?” That is true. However, as a government, we must take our responsibilities on a number of different fronts. We must ensure, as part of the global world in which we live, that we are playing our role helping others help themselves. That is why this is so important.
Another initiative that is encompassed in the bill before us today would put into play $2 billion of funding that would be earmarked for strategic infrastructure. These would be projects of national significance across Canada. They would depart significantly from the infrastructure programs that the government has put in place already.
There have been three of them and the amount of funding provided has been significant. The last round was approximately $3.7 billion. The federal government puts up money and that is leveraged with moneys from the provinces and municipalities. A whole host of projects are done, from sewer and water systems to cultural initiatives. However, that is a separate program.
The $2 billion announced by the government in budget 2001 would be used for larger projects. They would be strategic in focus and national in significance. This budget would allow for that fund to be set up. Originally, it was to be a foundation. That is how it was announced in the budget. The advantage of a foundation is that it provides a continuity of funding. There is no difficulty in terms of lapsed funds. There is a question of governance and of it being at more arm's length from the government. Some would argue that is a good thing.
The government, in its wisdom, decided to move that from a foundation into an annual appropriation. That would mean that members of the House, people who are elected by the citizens of Canada, would be able to influence the priorities that are established for these national infrastructure projects. The minister responsible is looking forward to working with members on this side and that side of the House for input into what those guidelines should be and what criteria should be applied to the various projects as these proposals come forward.
We need to invest in infrastructure. Not only is it sound public policy but it would create employment, economic activity and makes us more competitive. Many of the projects make us more competitive and some make us a better nation. I am very happy that the budget puts in place the funding required to implement the $2 billion of federal funding leverage with other funds over the next few years.
The budget also implements a number of other measures. What is often lost in the debate in the House, especially by the members opposite, is the tax holiday the Minister of Finance announced for small businesses. Their income taxes will be deferred for about a year. It is especially helpful to them in these difficult economic times in their cashflow management. That is a very significant measure that was incorporated into the bill.
I have other examples. I know there has been much interest and debate in the House about mechanics' tools. I know on this side of the House we have looked at a number of different initiatives. The initiatives that were placed before the House in the past basically did not differentiate between the tools used by mechanics and the tools used by people in other employment. If we had adopted some of those proposed measures we would have left the door open for people who work in offices to write off the cost of their computers, their palms or their research in motion gizmos.
Some would say that would have been a good thing. Any time we cut taxes it is a good thing for taxpayers but taxpayers pay us to manage the fiscal resources in the wisest and most prudent way possible. When we look at a tax measure and say that we will just deal with tools used by employees, and we do not restrict it or ring fence the issue, a term used by the Department of Finance, there could suddenly be a whole host of other implications such as someone who needs research materials for a job or needs to subscribe to publications, et cetera.
The problem with that proposition before the House in the past was that it could be as wide as it was broad and there was no way for the government to contain its exposure. When I say the government would contain its exposure, I mean on behalf of all taxpayers. Many people work as individual contractors, as entrepreneurs and in many different ways. If we had allowed this type of employment expense deduction it would have opened things up very widely. I certainly support the government's decision.
In budget 2001, the minister came out with provisions that would allow the deduction of mechanics' tools for apprentices if they were part of a recognized apprenticeship program in a province or territory. The amount they could deduct would be limited to the extraordinary costs they incurred and would be based on a certain percentage of income.
We all know that the income of an apprentice mechanic is very low. At the same time the apprentice has to build up his or her tool kit by investing in tools. Therefore the bill would enact those provisions. It states that if one is an apprentice mechanic and part of an approved apprenticeship program in a province or territory, one can deduct one's costs up to a certain point of one's income, and in fact can carry the costs over. Let us say in the first year an apprentice has to buy a big chest and put a lot of tools into it. Because the apprentice's income is low, $24,000 or $25,000, he or she might be limited that year but would be able to carry the amount over. I think that is a fair way to proceed.
Likewise, we had to look at other trades. What about electricians, plumbers and carpenters? The government, through the Department of Finance, actually surveyed the various trades. It discovered in the data, which I think was available at Human Resources Development Canada and from various associations, that mechanics' tools were by far a significantly higher expenditure than the tools used in other trades. That is what the data showed and that is intuitively what one would think.
There is a question in all this. If one were a salaried employee of, let us say, Midas Muffler, why would Midas Muffler not supply the tools? However, it apparently does not. The rationale for that is that these tools walk, and I am sure tools do walk.
We have many situations in workplace environments where organizations, companies, whatever they might be, have to put in controls necessary to safeguard these tools, this equipment, these drugs, whatever they are. I am not sure that is a totally persuasive argument but the reality is that the people working at many of the shops are contract employees.
It is interesting to note that self-employed people can buy tools, set them up as a capital cost and the tools can actually be depreciated for tax purposes. Someone might ask why it would be different for a contractor versus an employee. The rationale is that a contractor, in most cases, has additional business risks.
If a person had one employment contract with one employer, the tax department would probably come along and say that the person was not really a contractor but an employee because the employee was taking his or her direction for the day to day work from the employer.
Since a true contractor has more business or personal risk than an employee, the income tax allows the contractor more latitude with respect to the tools he or she can claim as a business expense through a capital cost allowance.
Bill C-49 would implement the provisions to allow apprentice mechanics to deduct the extraordinary costs of tools against their employment income.
Bill C-49 has other very positive features, basically implementing the provisions of budget 2001. Tax incentives to encourage organizations to move from non-renewable energy sources to renewable energy sources is another feature in the bill. These are tax incentives for producers to move to renewable energy sources as opposed to non-renewable.
I think all of us in the House and indeed across Canada probably support the government in its efforts to reduce emissions and take us toward our Kyoto target of reducing greenhouse gases and cleaning up our air. This is one measure, in addition to the many other initiatives, that the government has financed over the last few years. In budget 2000 and in the economic and fiscal update, I think the government committed about $1.2 billion to cleaning up the environment. However, more has to be done. An issue before us is Kyoto and what that does. I am sure the government is examining that very carefully.
We know the United States is doing something but it is certainly not ratifying Kyoto. I for one believe greenhouse gases are a problem and I think most people in the House believe that as well. We need to deal with the problem but with the Americans dragging their feet, we need to be careful.
On the one hand, we want a sovereign, independent policy and we want to deal with the issues as we see them, but if we were to put restrictions or impose conditions on companies in Canada which were not prevalent in the United States, we could create some competitive difficulties for them and that could translate into jobs and economic activity. I am not sure how that will be factored into the equation but I know the government is seized with the issue and wants to ensure there is more data, more information.
Various organizations have said that the costs of implementing Kyoto are in the billions of dollars. We have another study saying that it will cost $500 million at most. The numbers are all over the page. What we need to do in the House, in fact it might make a good study for a committee of parliament, is look at the economic costs and benefits of implementing Kyoto and maybe look at the costs and risks of not implementing Kyoto to see how all those factors fit into the equation.
In conclusion, I believe the bill, which would enact the budget that was tabled by the Minister of Finance on December 10, should be supported by the House. It was an incredibly brave and courageous budget that was brought out in very turbulent times and meets the objectives that were presented by Canadians as we travelled across Canada. It is a well-crafted budget. As the bill would allow the government to implement the budget, I would ask members to support it.
