Mr. Speaker, I am pleased to rise I suppose on the bill. I am displeased that the bill represents the 75th time that the government has invoked closure or time allocation since it came to power in 1993, abusing that very significant power to limit and shut down debate in this place more than any other government in Canadian history.
This is parliament. Parliament is derived from the French word “parler” which means to speak. It is the place where the representatives of the common people speak to issues that affect the common good.
For the government to, for the 75th time, prohibit members from speaking on behalf of their constituents and to the national interest on matters of grave concern, such as the budget implementation bill, is yet more unfortunate evidence of the government's growing arrogance and contempt for our conventions of parliamentary democracy.
Bill C-49 seeks to implement the provisions announced in the budget of last fall. First, I will direct my comments to that budget, then to the bill and then specifically address the air transportation tax which I raised in question period moments ago.
The government seems to have no limit in its ability to pat itself on the back for its alleged self-proclaimed success in fiscal policy. However, as we see from even yesterday's contentious remarks of the Deputy Prime Minister, Canada's economy and our standard of living has not in fact made progress under the government in the past 18 months, nor indeed in the past nine years. Canada's productivity and standard of living, its tax rates and its public debt have all taken a turn for the worse. Taxes are up and productivity is down; debt is higher and our competitiveness is down; unemployment is twice the rate here as it is in the United Kingdom; labour productivity grows here at half the rate as it does in the United States.
Over the past 15 years we have lost 20% of our standard of living and the average Canadian family now has a standard of living one-third lower than that of an average American family. We are becoming poorer as a nation as a result.
This ultimately is reflected in the devaluation of our currency which has lost 25% of its value since the government took power in 1993, going from nearly 79¢ in 1992 to the current trading level of around 63¢.
What does the government do? Does it take responsibility? Does it provide us with an action plan for reducing taxes and reducing debt to increase incentives for capital infusion and productivity? Does it do those things? No. What it does do is blame the private sector, the very engine of economic growth in this mixed economy. It blames the private sector for not investing enough.
In the words of the Deputy Prime Minister, “It is up to them, it is up to the private sector, it is up to companies to increase Canadian productivity”. He said “They must make the investments”.
There is a reason Canadian companies are not making adequate investments to include productivity in areas of research and development. It is because we have created an entire economic structure that mitigates against those kinds of investments. We have some of the highest corporate income taxes in the developed world. We have the highest marginal income tax rates among the seven largest economies of the world, the highest income tax to GDP ratio in the G-7. We have the second highest level of public indebtedness in the G-7, federal and provincial debt, at about 80% of gross domestic product, and the third highest in the OECD.
All of these things mean that it is harder to raise capital, which ultimately is the fuel that drives a free market economy, in Canada than it is in our major economic competitor, the United States and many other emerging economies, like the United Kingdom, Ireland and New Zealand, countries that used to be far down the list in terms of productivity and standard of living but which have in the past decade leapfrogged Canada.
I do not really think this is a partisan point because some of the senior members of the government opposite have admitted that there is a problem. The Deputy Prime Minister has been quite outspoken about this and even the Minister of Industry, in his recent innovation paper, has admitted there is a problem, but they do not seem to have a grasp on the solution. The clearest evidence of that was the budget, which the bill before us today would implement.
Remarkably, the government framed the budget at a time of economic and security crisis, post-September 11, a time of recession and drag in the economy. Instead of making the difficult decision to get its priorities straight and re-allocate resources from wasteful and low and falling priority areas to the urgently high priority areas of national security, defence and economic growth, the government did not do that. It failed when it came to getting its priorities straight. In fact it increased overall program spending in that budget by 10%, the largest program spending increase we have seen in the federal budget since the disastrous years of the mid-1970s, a government in which the Prime Minister was a senior minister.
We believe the government missed an enormous opportunity in that budget. It provided no plan for debt reduction over the next five years and eliminated the modest $3 billion to $5 billion contingency and prudence reserves it had originally established for debt reduction. It made minimal investments in national security, such that CSIS and the RCMP will not even be back up to their 1993 funding levels in real inflation adjusted terms after taking into account the cuts imposed on them in 1995. The defence department of course is left out in the cold while Canada will continue to have the second lowest defence expenditure as a percentage of national income in NATO, second only to the tiny duchy of Luxembourg.
Every organization, from the Conference of Defence Associations all the way to the NDP and the Auditor General of Canada in between, have called for an immediate injection of at least $2 billion as an increase in the base budget of the Department of National Defence to bring our military up to a minimal level of operational effectiveness. The government failed the test in its budget to provide for that in the new security environment and, unfortunately, missed the ball completely on tax reduction.
The government implemented some modest tax cuts 18 months ago but this year Canadians will be paying higher taxes than they did last year, particularly in payroll taxes because of the massive 12% increase in CPP premiums which far outstrip the measly 5% reduction in employment insurance premiums.
The decade of economic drift will continue because the government failed to get its priorities straight.
I will turn now to some of the specific provisions of Bill C-49 but I will come back later to the air transportation tax and the air transportation authority.
As I have said before, the official opposition supports the provisions of the bill that deal with extending employment insurance benefits to parents of ill children. We commend the government and the finance committee for having adopted our long standing recommendation to change the provision surrounding the gifting of stock shares to registered charities, and we support that.
However, we have very serious concerns about the Canada strategic infrastructure fund, a $2 billion potential pork barrel slush fund. We have seen in the past how the government has misadministered programs of this nature, how it has provided grants for bocce courts, canoe museums and luxury boxes in hockey stadiums that do not represent real, hard, meaningful infrastructure to improve our economy but rather represent pork barrel projects.
The infrastructure fund is a potential boondoggle of pork. We are very concerned. The finance minister had originally proposed a fund that would be arm's length from politicians but the Prime Minister's Office did not like it. It grabbed it back and now the strategic infrastructure fund will be operating under the direct influence of the government in the person of the Deputy Prime Minister. We have learned from the past that we should avoid politicizing funds of this nature.
On the Africa fund, there is very little in terms of scrutiny or accountability. While we support in principle effective foreign aid, we do not support programs that are not properly accountable to parliament, which cannot be scrutinized by the auditor general and which do not fall under the aegis of the Access to Information Act. We are very concerned about some of the enormous waste that has actually fuelled corruption in developing countries in Africa in the past.
I will now turn my attention to the most contentious element of the bill, the $24 return trip tax on air travel. Immediately following September 11, we in the official opposition called for additional airport security measures, in addition to a whole suite of national security policies. We applaud the government for adopting our recommendation for air marshals. Originally it was not going to do that, stating that it was not the Canadian way, but it listened to public opinion, and we appreciate that. We also understand there will be additional air security measures and costs associated to that.
However, the question is, what would be the most efficient way of paying for those costs? This is very serious. It is quite clear to us and anybody who has looked at this, including the Air Transport Association of Canada, the Canadian Air Line Pilots Association, the travel agencies of Canada , the airlines themselves and the regional airport authorities, that this policy was designed on the fly without regard for the impact it will have on the airline industry.
Shockingly, at the finance committee, government officials actually admitted that they had not done an economic impact analysis of the consequences of the $24 tax. Imagine, a massive new tax on a specific industry already ailing, an industry without competition and an industry that has lost six airlines in the past seven years, is being assessed a new $24 tax which, according to the Canadian Chamber of Commerce and the Air Transport Association of Canada, could result in a reduction of air passenger loads by as much as 6%, and the government has not engaged in an economic impact analysis.
This is flagrant irresponsibility. The government does not know how negative the effect will be. It does not know whether or not short haul, low cost airlines, like WestJet, Canada's only profitable airline and its principal hope for long term competition in that industry, will survive this discriminatory prejudicial tax.
The transport committee examined the issue at some considerable length and the government, in its typical arrogance, ignored the advice of those parliamentarians, including Liberal members, when they recommended that additional airport costs be paid for by all stakeholders.
Recommendation 14 of the December 7 report of the Standing Committee on Transport to the House stated:
All stakeholders--including airports, air carriers, airline passengers and/or residents of Canada--contribute to the cost of improved aviation security. In particular, the amounts currently spent by airports and air carriers should be continued, with appropriate adjustments for inflation. A ticket surtax could also be implemented, and any funding shortfalls could be financed out of the Consolidated Revenue Fund.
The transport committee looked at this and said that the only way the additional security costs could be financed would be through a blended approach with the airport authorities, the airlines, the passengers themselves and the government's general revenues because airline security was not just an issue for the passengers on those flights. As my colleague for Port Moody--Coquitlam--Port Coquitlam pointed out, most of the people who died tragically on September 11 were not aboard aircraft.
We are implementing these additional measures precisely because airplanes can be used as weapons of mass destruction against civil society. We have a collective responsibility to increase security. We should finance it collectively.
Every witness who appeared before the finance committee regarding Bill C-49 opposed vigorously its provision for a $24 air tax. Neil Raynor, director of the Canadian Airports Council, said the council believes the “current fee structure will create disproportionate price increases on short haul and regional flights, unfairly penalizing smaller carriers who provide these services.” Raynor maintained that “acts of terrorism were acts against the state and government bears a major responsibility to fund the essential costs of policing and security.”
The Canadian Chamber of Commerce said:
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...If a one per cent increase in ticket prices represents a one per cent decrease in passenger travel then the average air traveller security charge of six per cent will have a significant effect in terms of the number of air passengers.
The Canadian Air Line Pilots Association said:
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...it 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--
The Tourism Industry Association of Canada said:
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.
The Air Transport Association of Canada said:
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.
Mark Hill, the vice-president of WestJet, said it would be prejudicial to his airline. He said:
Once the tax is implemented, we believe the traffic will evaporate off the short-haul routes. Once the traffic goes, we'll have to back out of some of our short-haul flying, and once that begins, the genie is out of the bottle, and it's very hard to stuff the genie back into the bottle once that happens.
The Canadian Automobile Association said the current fee of $12 on a one way ticket appeared high when compared to the U.S. fee of $5.
Even the Liberal member from Prince Edward Island said he was not in favour of the $24 fee. He said he invited the Department of Finance on two occasions to come forward with a detailed analysis justifying the fee and that on both occasions it failed to do so.
The $24 tax would be prejudicial. It would not be sensitive to price. If one flew from Vancouver to Halifax on a $4,800 business class ticket the $24 fee would amount to a .5% tax. If one flew on a $100 ticket from Edmonton to Calgary on, say, WestJet one would pay a total tax burden of 86% after all airlines taxes were factored in.
I urge my hon. colleagues opposite to listen to the facts, listen to the testimony and hear the concerns expressed by their own members about Bill C-49. It could be the death knell for airline competition in Canada.
I ask the government to reconsider the bill. It should look at the constructive amendments we have brought forward to amortize the costs of new infrastructure. It should bring in a pro rata fee to blend the costs the transport committee has proposed. These are not partisan recommendations.
Before the government implements the tax I hope it will seriously consider the fact that even the junior finance minister was not properly briefed about elements of the bill which would be prejudicial.
