House of Commons Hansard #127 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was benefits.


Parliament of Canada ActGovernment Orders

12:20 p.m.

Some hon. members


The House resumed from September 24 consideration of the motion that Bill C-48, an act to amend the Income Tax Act (natural resources), be read the second time and referred to a committee.

Income Tax ActGovernment Orders

September 25th, 2003 / 12:20 p.m.

Canadian Alliance

Monte Solberg Canadian Alliance Medicine Hat, AB

Mr. Speaker, it is my pleasure to rise and address Bill C-48 today. To remind people what the bill is about, it has to do with amending the Income Tax Act to lower the corporate rate for resource sector companies from 28% to 21% over a period of years.

I want to say at the outset that my party is strongly in favour of this. This affects the oil and gas and mining industries. We have been advocating this for a number of years. In particular, my friend who is the Alliance natural resources critic, the member of Parliament for Athabasca, has done an outstanding job of championing this idea.

In fact, I have to say we are disappointed that this has not happened before now. It is something for which people have been arguing for a long time, because without these cuts until this point Canadian businesses have been put at a severe disadvantage. I will say more about that in a moment.

I will also comment for a moment on the direction I am going to take my speech. A number of people have stood up and talked about the relative advantages and disadvantages of cutting the corporate rate versus dealing with things such as depletion resource allowances and that kind of thing. I will not get into that. I will allow others to deal with those issues.

I do want to deal with the issue of cutting corporate taxes in general. I want to argue that when we delay the implementation of a reform that cuts corporate taxes, what we are really doing is delaying an improvement in the productivity in our country. We are ultimately delaying a rise in the standard of living for all Canadians. I argue that the government has been far too lackadaisical when it comes to addressing the issue of cutting the corporate tax rate for oil and gas and the mining industry in particular and for businesses in general. The government has taken too long and it has not gone far enough.

I will expand on this. First of all, over the last number of years, as people may know, the mining industry in Canada has been on the rocks, as some people like to say. It has been in big trouble. It has had a lot of challenges. One of the reasons for this is that there are many other jurisdictions out there in the world that provide much better tax treatment of revenues from mining than Canada does.

We have all kinds of regulations in place that make it very difficult sometimes for these companies to make a profit, whereas they can go to other jurisdictions such as Chile, for instance. Many of them have gone there, where they are doing their exploration, spending tremendous amounts of money and employing all kinds of people, because it makes sense for them to do that given the incentives that are in place in Chile versus in Canada. And it is not just Chile but other countries around the world. Chile is a good example, though, one that is often cited by the mining industry.

Therefore, we are very concerned that the government has not taken the issue very seriously. In fact, even now we are just going to phase in these cuts and not bring them in very quickly. We deplore that. Again, I argue that when this is done it is denying Canadians jobs. What it does is deny Canadians the ability to raise their standard of living.

I am not alone in saying this. I want to point out that there was a great article in the National Post the other day by Jack Mintz. Many people know who Jack Mintz is, of course. He is the head of the C.D. Howe Institute, a professor of economics who has written extensively on corporate taxation. He has prepared a report for the government in the past, urging the government to be aggressive in reducing corporate taxes. The government did not listen. It has been very slow in doing this. The government has not gone far enough.

When the government does not go far enough and quickly enough, it allows other countries to surpass us. As Mr. Mintz pointed out in his article the other day, that is exactly is what has happened in the world in the last number of years.

Mr. Mintz pointed out that it is not only the gap between Canada and the United States that is growing in terms of our standard of living, and it has grown a long way, but our output per capita right now is about $37,000 a year. It is $12,000 behind that of the United States. It is unbelievable. We remember that we used to have a standard of living that was higher than that of the United States a generation ago. But because of poor public policy decisions on the other side of the House, we have seen our standard of living decline and decline and, I am afraid to say, the gap continues to grow.

It is not just the United States. Some people do not like us comparing ourselves to the Americans. That is fine. We do not have to do that, because it is not just the United States that we are falling behind. Listen to the list of countries that have surpassed us in the last number of years because they have made better public policy decisions, particularly with respect to corporate taxation: Ireland, Iceland, Denmark, Norway, Sweden, Switzerland, and the Netherlands. They have all surpassed Canada in terms of standard of living because of better public policy choices. One of the biggest choices they made was to cut the corporate tax rate to make themselves more competitive.

I would like members to think about that for a moment, because a lot of those countries are countries that a lot of people would say are socialistic. Some countries even call themselves social democratic nations, countries like Sweden. But they made that decision because the evidence was so overwhelming that cutting corporate taxes and taxes that impede investment and impede productivity leads to higher standards of living. They were able to admit, and in some cases swallow their pride, I suppose, that the market does have some answers to improving quality of life for people. They dramatically cut those corporate taxes.

Let us look at a country like Finland, a country that like Canada is at the very northern part of a hemisphere. Some people would ask what particular advantages a country like that would have when it comes to attracting investment. There really are no natural advantages; the advantage they had was to make the right public policy choices. When they cut their corporate taxes they attracted tremendous amounts of investment. Companies like Nokia and Erickson have sprung up in Finland and in other Nordic countries that have made the same public policy choices.

What has the result been? Sweden was almost ruined when it went through a terrible financial crisis, but it finally smartened up and recognized that by making smart public policy choices one can dramatically improve the standard of living of the people one represents. That seems to be lost on this government and that really is a great shame. It is a great shame because not only does it mean depriving all kinds of Canadians of a higher standard of living, but it is a great shame because we are uniquely positioned in the world to take advantage of that massive market directly below us, the biggest economy ever in the history of the world, the United States.

Some people worry about us becoming overwhelmed by the United States. I see it differently. I see it as a great opportunity to mine the United States and to utilize its market for the advantage of Canadians. We are not doing that because we do not have the right public policy in place.

Unfortunately our government thinks it is wise to go slow in reducing corporate taxes and to only do it to a point, to where it would be 21%. By the way, Ireland just dramatically turned around its economy, and when it first cut corporate taxes it cut them to 10%. That attracted just unbelievable amounts of investment to the point where Ireland, with 1% of all the population in Europe, was attracting 20% of all the new investment in Europe. It was getting 20% because it was enlightened about how businesses make decisions about where they want to invest. Ireland of course has undergone an amazing transformation. In fact, Ireland is an inspiration to me about what can be done to help people if the right public policy choices are made.

I know I have given this speech about Ireland many times before in this place, and members are probably bored with it, but I always get excited when I talk about it. Just to remind people, Ireland in the mid-1980s was a basket case in many respects. It had terrible unemployment, big deficits and all kinds of problems. It finally decided though, after years of doing it the wrong way, that it would do a few important things. It would control its spending, get its continual labour problems in hand and it would finally cut taxes to attract investment.

Ireland tried for a long to do it the other way, where it thought it could build big government and look after people without worrying about whether anyone wanted to invest there, but it found that it did not work. In fact, it worked the opposite way. Things became worse for people.

Ireland had an amazing transformation. Ireland for 150 years, as we all know, had exported people. Its population went down and down. We all know about the Irish coming to America, Canada, Australia and going all over the world because they could not find jobs in Ireland. However when Ireland made those changes people started to come back. Today Ireland is a magnet for people who want to be successful, to start businesses and find jobs. People from all over the world are going back to Ireland.

I have a friend who lived in the little community in which I live, in Alberta, for a while. He was born in Canada. David Sarutawri is his name and he married an Irish girl. He was an accountant. He and his wife decided to go back to Ireland to pursue the great opportunities there because they were enlightened about public policy in Ireland.

People are going back there in droves. Today Ireland is a tremendous success. It is running massive surpluses. It is able to invest the money back from its surpluses to the point where Ireland now provides free university education for everyone.

That is what a country can do if it builds its tax base big enough.

Now that Ireland has its corporate taxes down, its personal income taxes down and has cut its capital gains taxes, people want to invest there. It is very exciting, but it is not just there. It is all those other countries. The Netherlands is a great success story, again, because it made the same kinds of changes.

We have to do the same sort of thing here in Canada. I mentioned a minute ago that we are uniquely positioned. I think we are. Canada has not only massive natural resources, which are almost the envy of the world with the exception of possibly Russia, but we probably have more natural resources than any country in the world. There are massive oil and gas deposits in my friend's riding, in Athabasca. My riding has a tremendous amount of natural gas. People might not be surprised to hear that when they hear me speak and say that there is a lot of gas there.

However we have tremendous amounts of gas in Alberta and in my riding. We have massive forests. We have all kinds of mineral deposits. I would argue that we have hardly even touched the surface when it comes to finding these resources. We have a tremendous resource when it comes to our people. Our people are well educated.

I want to point out that I really applaud the provinces for doing a wonderful job of educating Canadian young people. As the House may know, I think it was the OECD that just pointed out that Canada has done extraordinarily well versus the rest of the world when it comes to educating young people. I want to point out that is a provincial responsibility, just to remind people that the provinces do a lot of things very well and they should take a bow. We are recognized around the world for our ability to educate our young people.

Obviously there are problems in some provinces and that kind of thing but, by and large, we do a very good job. Therefore we have a well educated workforce. They go on to university. We have a great resource in our well educated people.

Finally, we have a great resource in the sense that we have access to the massive market in the United States. We have a free trade agreement with the United States, which is so important. I want to remind the House that it was the government that campaigned against that free trade agreement in 1993 and fought against it in 1988, but we will set that aside for the moment and just say that we have access to the United States today.

We cannot blow that access because one of the advantages we have in Canada is if companies want to set up business and have access to the North American market very often in the last number of years they would come to Canada because we had a lower cost of doing business. The economy in the United States was so hot that it drove up the cost of doing business there, so people would come to Canada and set up. They would do that because then they could access the markets in the United States because we had that open border. It was very simple.

However after 9/11 the border began to close down. It has become more difficult to move goods and services back and forth across the border. We need an extra advantage to attract businesses to Canada. I want to argue that this extra advantage is lower corporate taxes, or at least it is one of the things we can do and a very important thing to do. If we were more aggressive in cutting that, all that investment would come to Canada. With that investment comes all kinds of jobs and with all those jobs comes incomes to provide for families and, ultimately, the government of course exacts its pound of flesh and gets it back in the form of higher and higher revenues.

The NDP seem to think that if corporations are doing well that is a bad thing. I want to dissuade people from thinking that way. What are corporations in the end? Corporations are people. Is it wrong for people to do well? When a corporation does well and employs tens of thousands of people, then tens of thousands of people do well. That is not a bad thing. It is a very good thing.

People want to know about all the owners who are getting wealthy. Who are the owners of businesses? They are people who own mutual funds. People who have RRSPs invested in mutual funds, they own a bunch of big companies and we want them to do well. We want that money for retirement. In the end the government gets the money back. When we redeem our RRSPs the government gets a chunk through taxes.

What we want is to make the economy bigger and bigger where everyone benefits. Do members know who else benefits? It is not just the shareholders, the workers and consumers who have more choices in the products that are provided. Third world countries also do better because these companies purchase goods and services from third world countries. How about Africa which needs all the help we can give it? These companies can then go and purchase goods and services from places like Africa and help those people.

There are many advantages to pursuing this but I am afraid the government has, to some degree, bought into the rhetoric of class warfare that somehow suggests that if a company does well--and “company” is always an ambiguous term and people always imagine the guy from Monopoly with the monocle and the top hat, Daddy Warbucks, the guy driving the Rolls-Royce--then somehow everyone else does less well. If he gets money, then it must come out of my pocket.

However that is not how modern economies work. It is not a set pie. The pie gets bigger and bigger and therefore every piece of the pie gets bigger and bigger, including the pie for workers, for shareholders, for everyone, government included.

Finally, if I have not been persuasive to this point let me make this final argument. When an economy underperforms, who suffers the most? Is it the guy with all the skills and talent, the guy who comes from the wealthy family? No. It is the people who live in remote regions of the country, people who do not have an education, people who have been left behind for whatever reason. They are the ones who cannot get a job, so we have a moral obligation to make sure the economy runs at capacity. However the government has not put the public policy in place to make sure that happens.

The member for LaSalle—Émard, who will be the prime minister, has failed to provide any kind of vision along those lines that will ensure that people at the low end of the income scale will be able to get jobs down the road. He had 10 years as the finance minister to provide that vision but failed to do it. I want to caution people to be skeptical when they consider whether or not the man who will be the new prime minister has the right vision for the economy in this country.

In closing, I have made my case that this country needs to be more aggressive when it comes to getting those corporate taxes down. I hope the Liberals will listen to that and we will see it in the next budget.

Income Tax ActGovernment Orders

12:40 p.m.


Larry Bagnell Liberal Yukon, YT

Mr. Speaker, I am delighted to stand today and speak to Bill C-48, an act to amend the Income Tax Act (natural resources).

When I heard last week that the bill would be coming forward I specifically asked to be on the speaking list because the bill will be good for my constituency and for resource extraction in Canada. As members know, the resource industry is part of our history and part of the foundation of our nation, and it certainly should be on a level playing field with other industries.

This is a very exciting bill. I was delighted that the member for Medicine Hat, who does economic analyses for the Alliance, was strongly supporting the bill. I quite enjoyed his analyses. I think it helps to show what a tremendous asset these improvements will be for Canada.

I want to speak briefly about my own constituency. As the House knows, the world's greatest gold rush in August 1896, which started the European economy, is part of our history in Yukon. It has been a resource based economy, to a large extent, for 100 years, resource based and tourism. At that time the world was in a great recession and the gold rush in Yukon actually helped pull Canada out of that recession. The resource industry has been very important in my riding's history.

If I have time left at the end of my speech, I will give a bit more of the history of my riding.

However I first want to talk about the broad overall aspects of the bill and the benefits that it would provide for the nation.

First, it certainly would help the investment climate in Canada, which I am sure we all appreciate. It would improve the international competitiveness of the resource extraction industry in Canada. A previous speaker mentioned that to some extent. It would help the development of Canada's resource base and, of course, Canada has a remarkably rich and precious resource base.

The other bases are people and the knowledge based economy. However, in concert with that, we have to continue what has always worked for us. It would be a shame if we were actually importing these resources from other countries when we are so wealthy in the first place, and not paying off the national debt but importing things we already have here if we did not set up a reasonable tax regime, which is what the bill intends to do.

The bill simplifies the taxation for the resource based oil, gas and mining. I will explain a little later how it is very complex at the moment and a little arbitrary. However the bill simplifies that, which is one of the reasons I think there is so much support for it.

We have been on a movement in the last three years to reduce taxation in Canada. In the year 2000 we reduced the corporate tax rate to help us be more competitive with the rest of the world, as outlined by the previous speaker. However at that time we did not reduce that tax on the resource based sector, that sector that is so important for my constituency and much of Canada, because they had a particular credit, which I will outline later, that did not allow the reduction in the main corporate tax base, as all the other industries in Canada had. Since that time there have been many calls from industry and Canadians to reduce that tax rate. Heeding those calls, we are proceeding with that today.

We did something else in this whole regime to improve our competitiveness. There used to be and still is partly a capital tax. That particular tax was a disincentive to business in the sense that if one owned anything, whether one made any money or not, one was taxed on it. If it were over $10 million one was taxed at .225%. That is a severe disincentive to investing in this great nation and therefore will be reduced from 2003 to 2008.

A half an hour ago I talked to people in the industry in my riding and they echoed some of what I am saying now. They wanted to make sure that anything that helps level the playing field between resource extraction, which is so important to my area in the north and the rural parts of Canada, and manufacturing is put in place, which is exactly what the bill would do. They made the point that mining, in particular, has huge upfront costs, maybe millions or even billions of dollars, for development, pre-development and exploration, that other industries do not have.

In the scheme, which I will outline in a minute, there are provisions such as the 10% tax credit on grassroots exploration and pre-production base. This only applies to base and precious metals and diamonds, so it will specifically help that aspect of the pre-development, which involves very expensive costs to this industry.

For those who are watching and who do not understand exactly what we are doing, I will try to explain it in a simple way, although it is a bit complex because there are a number of elements to the bill. I will try to outline it in a simplified way so that it is more understandable than it may be in some of documents people might have received.

In the main part of the bill we will be balancing the corporate tax for resource extraction businesses, like mining and oil and gas, to be comparable to other industries. If people live in a part of the country that has these types of industries, at the moment they are disadvantaged because in 2003 we reduced the corporate tax for businesses down to 21% but we left mining and oil and gas at 28%. Therefore, we will reduce that to level the playing field. This year it will 27%; next year it will be 26%; in 2005 it will be 25%; in 2006 it will be 23%; and in 2007 will be down to 21%, the same as the rest of industries in Canada.

Regarding the provision which I mentioned before, the reason we could not do it was because of an existing deductible, a 25% resource allowance, for mining, which helped. The problem with this deduction was it was a bit arbitrary. Other deductions came before and after that so companies would have to try to figure out their business plans when they invested to get the best deductions. It was a arbitrary because it was based upon income. That deduction did not make a lot of sense nor was there a lot of fairness to it. Therefore, we are removing that deduction to balance this off. In 2003 they will only get 90% of that; in 2005 it will be 75%; in 2005 it will be 65%; in 2006 it will be 35%; and then in 2007 that deduction will no longer exist.

There is also more good news for our industries in this respect because the industries also pay royalties to the Crown, the Crown being primarily the provinces and the territories, or they pay something similar called a mining tax. Once again this is a cost of doing business for mining and oil and gas and it can make them less competitive. Therefore, we will give them a deduction for that in the new regime. That will start out this year. As I said, everything is phased in to try to moderate the effects of this bill on industry and on Canada so there is no big disruption. The first year it will be 10%. The second year they will be allowed to deduct 25% of that; in 2005 it will be 35%; in 2006 it will be 65%; and in 2007 it will be the whole 100% of all those costs.

Finally, there is another tremendous credit for the industry. That is a 10% tax credit on grassroots exploration and pre-production base. This is only for base metals, precious metals and diamonds. Of course there are tremendous upfront costs in the beginning with no return. If we want development in Canada, someone has to invest and put down the risk of that, and this tax credit will assist that.

When we add all these complicated provisions together, most of which are in favour of the industry, what is the result for a particular mining or oil company? In general, in the vast majority of the cases, they will be better off. If they do new exploration in Canada, which is what we are trying to promote in the development of the sector in a reasonable, environmentally sensitive way, then they will be better off with these provisions.

If there is critique of this, the odd company may have made its discoveries long ago and it is carrying on with its investments at the status quo, collecting its royalties. In those situations they are less well off, but in general the Government of Canada will make a substantial contribution on balance to help this industry, which is just fine by me because it is a major industry in my riding.

The bottom line in this is a great news story for Canada. The previous speaker talked about the United States and competitiveness. I will give hon. members some sample figures to see how it helps us with our closest and main competitor in this industry.

I will give a couple of examples. Other figures are available, but these are the statutory tax rates for these corporations. The tax rate for oil and gas in Alaska is 41%, in Texas it is 35% while in Canada it is 42.1%, which makes us less competitive. Our taxes are a tad higher than Alaska and quite a bit higher than Texas. After the bill comes into effect, our taxes will be 30.1%, which is far more competitive than either of those areas.

In the mining sector the Nevada statutory rate is 35% while Canada's rate is 41.1%. Once again we are at a slight competitive disadvantage. After the bill comes into effect, ours will be 30.1%, which is a great competitive advantage for Canada. I hope we will see the results of this in the coming years.

My riding desperately needs development and in other northern parts of Canada it is sometimes very hard to find jobs for rural Canadians. They live in some of the most beautiful parts of Canada and would like to stay there. This will be a great advantage to them.

If I had time I would give hon. members a brief history of the resource extraction in my community, in my riding, which is the entire Yukon Territory, just so they would know how important this might be for my riding.

For 100 years, it has existed in the modern, European type of economic existence. Of course first nations people have been living there for thousands of years, doing quite well, preserving the environment in a great way and living responsibly off the land. In the European type of economy, which has existed for the last 100 years, there have been two industries. One of course is tourism, which explores the beauty of Yukon. It is one of the most beautiful spots in the world and I hope all hon. members will come to visit. To date the tourism industry has been weighted to the summer months, although we have some beautiful dog sled tours, skiing, hiking and events in the winter, but there are not as many tourists in the winter.

Mining has also been the greatest producer of the gross territorial product over the 100 years. We have had a wealth of mineral resources with over 50,000 claims in Yukon. Of course, they are under strict regulations to be mined responsibly with environmental sensitivity. In a way that is why I take some offence to other countries because some of them do not have the things that we accept as necessary in Canada, which may be some of the reasons why companies go there. However under this regime, they will not go to the United States because of a lack of tax competitiveness.

After the gold rush, the gold resourced in Yukon was by placer mining. This type of gold is found in the stream beds. It is fine, like sand almost. Then a few nuggets, such as on my Yukon pin, are found below the bottoms of streams, right on the bedrock level. Placer mining still exists today in British Columbia and Yukon. It is a great boon to our economy because one simply washes sand to get the gold out and it is an easily saleable commodity.

Over those years a lot of other base metals have been found. Precious metals, silver and gold, have been found. Not long after the gold rush started, a silver mine area was established near the great towns of Keno Hill, Elsa and north of Mayo. The mines have been there pretty well since the gold rush. I believe those claims are up for sale now, so if people would like to invest in a silver mine and come north, I hope they will look at those opportunities.

We also had one of the world's largest zinc mines in the great town of Faro. In fact I think it was the largest open pit lead zinc mine in the world. Unfortunately, it ran out of the highest grade part of its ore, but there have been others like Kudz Ze Kayah and other lead zinc deposits. There are a lot of undeveloped deposits still that could help lead to jobs. In turn that would provide revenues to Canada which could then be put it into health care, education and all the other things that governments need to do.

There was also a copper mine right within the city boundary of the city of Whitehorse. We just recently started a tiny hobby train, Miles Canyon railway train, to go around and show the history of the copper mines and the mining belt in the area.

We have oil and gas in the area. We have some capped gas at a place called Eagle Plains, which is up near the Arctic circle. We have no pipeline to get that out yet so there is not as much development as one might think, but we are working on that as well. Also gas in the southeast part of the Yukon near the Kotaneelee Field is already being shipped through existing pipelines. Of course, we have a forest industry in Yukon which is a resource development, but it is certainly not as big as mining.

I was outlining this not only, as my colleague said, as part of a commercial so members will all come to our beautiful part of the country to work in mining and to enjoy the spectacular tourism, but also to show how important this bill is to our people. We have the second highest unemployment rate in Canada at the moment and this type of fairness would be exceptionally helpful to our industry.

I want to close by reacting to a comment that the previous speaker made about Canada's standard of living. I do not think standard of living is totally based on a corporate tax rate. Standard of living is based on all the things that are important whether it is health care, family or community. I think most people would agree that we measure the greatness of a nation by how it deals with those most in need.

The United Nations has measured Canada for the last years as among the top several nations in the world. I do not think we have much for which to apologize. This will help our industry, an important part of our history. However in the long run what we choose in values are things that are not only environmentally sound, or part of the modern new economy, or on the leading edge of knowledge and technology. Rather we will make the choices that provide for the poor, the weak, the lonely, the hungry and for our diverse country. That way we will continue to build this great nation, and this bill will help immeasurably.

Income Tax ActGovernment Orders

1 p.m.

Canadian Alliance

Dave Chatters Canadian Alliance Athabasca, AB

Madam Speaker, I enjoyed the member's speech. It was excellent because the member's riding of course is very natural resource dependent, as mine is. I thought it was a very good speech aside from the advertising part of it. It was pretty good up until the last, then he really blew it, in my opinion.

He clearly did not get the message that my colleague from Medicine Hat was pointing out, a message that he should know in his part of the world. That is the fact that if we cannot attract investment and cannot create development, particularly in our part of the world, in the natural resources sector, we do not have the capacity to look after the poor and the hungry, health care, education and all the rest of that. The message that we are sending is that the level of corporate taxation is so important to the ability of a country, or a province or territory to provide services to its members. Therefore, I am disappointed with the last remarks.

Overall, I could not agree more with all the arguments that the member made about the value of the bill and what we are trying to do. However all those issues and arguments were valid in the year 2000. His government and the now leader of the Liberal party, the soon to be prime minister, apparently could not see the value of those arguments back in the 2000 budget when they cut the corporate tax rate from 28% to 21% for everyone but the resource industries. Therefore, I have to ask the member this. Why could the then finance minister not see then what he can see now in the arguments he has presented?

Income Tax ActGovernment Orders

1:05 p.m.


Larry Bagnell Liberal Yukon, YT

Madam Speaker, I think the member and I agree on virtually everything.

The first point was his chiding disappointment in my advertising. He may be disappointed but I can say I will not get a single call from my constituents in the Yukon who vote for me saying that they were disappointed that I said what a marvellous and beautiful part of Canada it is.

I agree with the member on competitiveness. I totally agree with him on the question of how we can pay for social programs, education and health care if we do not have a good economy. That is why this bill is headed in that direction. That is why we made the $100 billion tax cut, the largest in our history. It was to help competitiveness so that the jobs are in Canada and we can contribute to the things that are important to our nation.

The last question was why it was not in the 2000 budget when the other corporate tax was reduced and why it was put off for three years. I mentioned it in my speech but maybe I did not make it clear. The reason that this had to be negotiated longer is that there is the 25% resource allowance which did not make a lot of sense but somehow had to be removed in the very complicated tax scenario that I outlined.

This industry has a different set of deductions and rules. To sort it out with the industry there was extensive consultation to come up with the model.

I am sure we all would have preferred it earlier but I think by leaving it until later and getting the industry on side with its input was just as important and it will phase in to the betterment of us all.

Income Tax ActGovernment Orders

1:05 p.m.


Pauline Picard Bloc Drummond, QC

Madam Speaker, I am pleased to speak today in the debate on Bill C-48 to amend the Income Tax Act regarding natural resources. This bill will undoubtedly cause a lot of grumbling, because it also concerns the tax rate for the oil and gas industry. It is a very complex bill, but I would like to get people interested in one aspect that everyone understands and is familiar with, the oil and gas industry.

If this bill is passed, the oil and gas industry will see its tax rate drop significantly. I can already hear the reaction of people in the riding of Drummond and, I think, of people throughout Quebec and Canada, as well as of a number of associations that defend the rights of consumers and taxpayers. They will certainly not be happy to hear that there is a plan to significantly reduce the tax rate for big oil and gas companies.

The government's decision to grant oil and gas companies a significant reduction in their tax rate is unusual, to say the least. It is very special, indeed. Looking at the situation, we see that the “poor” oil and gas companies really need a significant reduction, with the astronomical profits they have made in recent months. The government even gave them an income tax credit of $250 million. In the meantime, the price of gasoline was going up at the pumps. I am sure the whole population was grumbling. And they even told us about these tremendous profits in their annual reports.

The last budget contained new provisions giving these companies $250 million in tax credits. That takes a lot of nerve when there are still 1.5 million poor children in Canada, and when the pensions of senior citizens have not been indexed—in fact, $3 billion has even been taken away from them. There is also the employment insurance fund which has been pillaged to the tune of $45 billion. Income tax rates for taxpayers are still very high, and $250 million in tax credits is being given to big oil and gas companies who are making a profit. It is incredible.

We can understand why the government is giving suffering industries a tax break. There are some major industrial sectors in Canada and Quebec that require assistance. But we cannot understand giving it to sectors turning a profit, such as the oil and gas companies with their sky-high revenues.

In his February 2000 budget, the Minister of Finance announced his intention to reduce the statutory corporate tax rate applicable to resource income. He wants to lower the rate from 28% to 21%, which constitutes a 7% reduction over five years.

If we look at the resource sector overall, taking into consideration other allowances applicable to this sector, the effective rate is not 28% but 22%. Setting the figures and percentages aside, the truth comes out. CAmagazine , the official magazine of the Canadian Institute of Chartered Accountants, recently reported,

From a federal tax perspective there will be winners over the phase-in period. The winners will be companies with high royalty rates, such as oil and gas producers operating in Western Canada.

The Bloc is not the one saying this; these people are not members of the Bloc. This is the Canadian Institute of Chartered Accountants saying that, over the phase-in period, some companies will be winners when it comes to federal tax, and that these winners will be companies such as the oil and gas producers.

The magazine goes on to state that,

However, in such provinces as Saskatchewan, Manitoba, Quebec and the Maritimes... the elimination of the resource allowance deduction for companies that benefited from the resource allowance results in an increase in the overall effective rate.

Ultimately, these measures will benefit all economic sectors. However, in the short term, some sectors will be winners and others losers. The winners will be the companies working in the tar sands, oil and precious metals. The losers will be companies in natural gas, potash and diamonds.

Consequently, the hon. Liberal member who preceded me should take a closer look at this issue. I know that there are diamond mines in the Yukon and that this bill, far from helping the industry he represents, will not benefit diamond mines.

Hughes Lachance, senior tax director with KPMG, says that if it were only for the first two provisions of this legislation, the oil companies would be losers. But these are not the only changes. For oil companies, the royalties they have to pay to the provinces or the crown amount to large sums of money. In 2007, they will be allowed to include in their expenses 100% of the royalties paid to the provinces. For the mining industry, where royalties are generally low, this third provision does not significantly reduce the tax burden.

The Minister of Finance estimates that, once fully implemented, the overall program will cost him $260 million in uncollected taxes. A very large portion of this tax relief will go to the oil companies.

The impact of this bill on the oil and gas industry will actually be a 12% income tax decrease. That is incredible. Let us take a look at the consequences.

According to the Mining Association of Canada:

[when] all is said and done, the disappearance of the Resource Allowance will likely result in higher taxes paid by the mining industry, even if we are able to deduct provincial royalties and mining taxes.

The association states further that the federal government is undercuttingthe good work by Quebec and the provinces to make mining investmentmore attractive. I hope that the people opposite heard this. The Bloc Quebecois is not the only one saying that Quebec's efforts are undermined, so is the Mining Association of Canada. As I indicated earlier, not many of their members are likely to be card carrying members of the Bloc.

As for the oil and gas companies, they are no worse off. Let me quote statements from the oil companies themselves:

Petro-Canada, on page 1 of its quarterly report to shareholders for the second quarter, says:

Petro-Canada announced today second quarter earnings from operations of $455 million, which include a positive adjustment of $96 million for Canadian income tax rate changes.

Shell Canada, in its quarterly report to shareholders for the second quarter, says:

Shell Canada Limited announced July 23,2003, second-quarter earnings of $178 million... Earnings included a one-time benefit of $54 million from a future income tax revaluation following announced income tax changes.

Esso Imperial, in its quarterly report to shareholders for the second quarter of this year, states:

During the second quarter of 2003, tax rate reductions enacted by the Federal government and the provincial government of Alberta and settlement of various tax matters benefited results, mainly in the resources segment, by $109 million.

In other words, the three major oil companies are announcing additional future profits of $250 million. These reductions in the future taxation of corporate profits already earned are a one time occurrence.

I would also like to discuss the mining sector in this connection. The federal government implies that the new tax structure being proposed will be simpler because it will rationalize the way it is observed and applied, encourage investors, make the Canadian mining sector more competitive, and support investment, innovation, productivity, economic growth and job creation in Canada.

The mining industry does not feel that the tax reform program is fully achieving those objectives. Spokespersons for this sector indicate that the provisions for gradual reduction announced in the 2003 budget are too complicated and will be hard to implement.

The planned 21% tax rate will apply to revenues from non-resource activities in 2004, while for resource-related activities it will run until 2007. As a result, during the period from 2003 to 2005, the difference between the resource and non-resource tax rate will be: 3% in 2002, 4% in 2003, 5% in 2004, 4% in 2005, 2% in 2006 and finally 0% in 2007.

The Mining Association of Canada believes that the difficulties arising out of the 2003 budget and Bill C-48 demand a prompt solution, involving the federal government along with the provincial and territorial governments.

The association also feels that the proposed changes to federal income tax impact heavily on numerous mining activities in Canada and will add to the combined federal, provincial and territorial tax burden on companies, thereby affecting their bottom dollar.

A simple solution, proposed by the Canadian Mining Association, which benefits producers of minerals and metals, would be to keep the resource allowance deduction while reducing the federal corporate income tax rate from 28% to 21%. This measure would eliminate the difference between the federal resource and non-resource tax rates without necessarily changing the provisions for revenues collected under the territorial and provincial tax systems.

I know that this is very difficult to follow because this is a very complex bill. It will also be very complicated to implement. This is not fair to taxpayers. Take the oil and gas industry for example; every day taxpayers have to use their cars and they see the price of gas climbing. These are often people who earn average or low incomes and who do not benefit from the same tax credits that the oil companies do. However, the oil companies play with the price of gas and eat into low-income families' budgets. Working people or parents often have to travel to their job by car and have to pay for gas, but they cannot benefit from tax credits.

Yet, companies are granted huge tax credits, like the one we saw recently. These are tax credits to the tune of $250 million. And their tax rate should be cut significantly again? There is something illogical about this bill and that is why the Bloc Quebecois is voting against it.

Income Tax ActGovernment Orders

1:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, it is with pleasure that I rise today to speak on Bill C-48. Tax reform is an issue that I am always interested in speaking on. We see continued evidences of tax tinkering from the government, a one-off ad-hockery sort of approach to dealing with taxation, but no overall strategy to improve Canada's competitiveness, to make Canada a northern tiger as opposed to a northern kitten, and to make Canada a magnet for capital and the best minds and the brightest minds in the world.

We support the direction of this legislation. We have some concerns about the increase in the effective tax rates on the mining industry. Any increase in taxes on industry in Canada is a concern for us because all sectors in Canada are overtaxed. In the old days the government could get away with that, but today in a hyper-competitive global environment high taxes no longer just redistribute income: high taxes redistribute people and capital. So we do support reducing the taxation on resource based industries and standardizing the tax treatment of industries in the resource sector. This goes back to the Mintz report on business taxation in Canada.

In fact, I remember that when the Mintz report actually came out it was my recommendation and the recommendation of my party that the government move to implement the recommendations of the Mintz report without a lot of delay. The Mintz report is probably one of the most erudite and intelligent studies of the Canadian business tax system that has ever been conducted. It provided a very important road map on how to build a more competitive tax system in Canada.

The government often speaks of Canada having lower corporate taxes than the United States. That is just patently false. If we were dealing only in statutory rates we are closer, but the United States is far more competitive than Canada in terms of effective tax rates, corporate tax rates and taxes on investment.

If we go beyond that and look at some of the national economic success stories in the last 10 to 15 years, most of them have been based on governments that were willing to embrace significant and broad based tax reform, not just tax relief, which is often done based on politics, not on public policy parameters, but tax reform based on creating greater levels of investment.

Of course, greater levels of investment lead to greater levels of productivity. Greater levels of productivity lead to higher standards of living and to an increase in the government's ability, of course, to afford the social investment that people demand and need.

Ireland is probably one of the best examples of a country that has turned its situation around. I come from Atlantic Canada and I very much understand its situation, based on generations of Atlantic Canadians leaving Atlantic Canada and going to other parts of Canada seeking opportunities. Ireland was a lot like that for a long time, in fact for generations. Now, for the first time in a long time, children of expatriate Irish in other parts of the world, in Canada or the United States as an example, are returning to Ireland. In fact, people are going to Ireland seeking opportunities, largely based on the Irish government's dramatic, significant and innovative tax reform package, which led to one of the most competitive corporate tax regimes anywhere in the world.

There is no better tax reform in terms of its ability to attract investment and improve productivity, prosperity and the standard of living than corporate tax reform, reform of taxes on investment and capital. Ireland had a 92% growth in its GDP per capita over a 10 year period. During the same period of time, Canada had a 5% growth in GDP per capita. The Irish standard of living has grown beyond that of Canada. It is shocking. Twenty years ago Ireland was an economic basket case and today it is truly a Celtic tiger. It has set an example of what can be done if governments take some risk and present some bold public policy, particularly on the tax reform side.

Some of the ideas that I would like to see the government embrace in a tax reform package include eliminating personal capital gains tax in Canada. There was no capital gains tax in Canada prior to 1971 with the Carter commission and the implementation of the capital gains tax. The original capital gains tax was designed to replace the inheritance tax, but eliminating the inheritance tax and replacing it with the capital gains tax made Canada a great place to die but not a great place to live.

We really should take a serious look at eliminating Canada's capital gains tax, not reducing it or tinkering with it but eliminating it. That would unlock an immense amount of capital. Capital gains tax serves to lock up capital, to prevent the flow of capital to the most effective opportunities. It hurts productivity because investors are compelled to make decisions based on tax reasons and to hoard money into static investments that may not make sense from an investment or a business perspective but simply make sense from a tax avoidance perspective.

We would unleash incredible entrepreneurial potential in Canada if we actually went beyond the U.S. instead of always just trying to catch up with the U.S. in key areas. In the capital gains area, if we actually went beyond the U.S. and eliminated the personal capital gains tax in Canada it would have a tremendous impact on Canada's economic growth and prosperity and the environment for entrepreneurs and investors here.

I would also suggest that it is a good time for us to consider what Roger Martin, the dean of the Rotman school of business at University of Toronto, has proposed, and that is allowing a 100% capital cost allowance write-off at the time of the investment. That would create huge incentives for companies to invest in productivity enhancement and provide a huge advantage for Canadian companies over American companies. Currently because of our treatment of capital cost allowance we are compared to the U.S. That is one of the reasons why the United States still has a significantly lower effective corporate tax rate environment: because of our uncompetitive capital cost allowance system in Canada.

I would go further. I would suggest that we eliminate corporate welfare from Industry Canada, HRDC and regional development programs and use that money to reduce corporate taxes nationally, but also in a targeted level in the regions. I will give some examples.

I come from a region where there is a program called ACOA, the Atlantic Canada Opportunities Agency. ACOA has a $447 million per year budget. Total federal corporate taxes in Atlantic Canada are $380 million. We could actually eliminate ACOA and eliminate federal corporate taxes in the region, which would leave us with provincial corporate tax rates in the 12% range, which coincidentally is about the same as Ireland's. When we really ask ourselves the question of which strategy would have the greatest capacity to create economic growth, prosperity and opportunity in Atlantic Canada, 500 ACOA bureaucrats driving around Atlantic Canada trying to tell people how to start small businesses or the most competitive corporate tax environment in North America and one of the most competitive in the world, the answer is self-evident.

We ought to take the same approach with all regional development programs in Canada. Instead of bureaucrats and politicians trying to select between winners and losers, we should allow the market to identify the winners. That kind of approach would unleash the entrepreneurial potential of our regions. It would in this case allow Atlantic Canada to pay into equalization in the not so distant future which would be good for all of Canada. It would create a tremendous level of growth, prosperity and opportunity.

This is an important discussion right now because one of the topics we are talking about in this sessions is the reform of Canada's EI system. We should move toward individual EI accounts. We should allow Canadians to build up capital within their own individual EI account if they do not draw from it frequently or perhaps do not draw from it at all. For instance, if a Canadian were to pay into his or her own individual EI account, after 10 years of paying into it and not drawing out from it, he or she would receive a statement every year of that EI account balance. It would go up incrementally each year. It would grow over time.

People could withdraw from their accounts to upgrade their skills educationally. That would address the very real issue of underemployment. Underemployment is growing in Canada and is as significant an issue as unemployment. The ability to withdraw from an EI account to upgrade skills, to take a course which is needed to go from underemployed to fully employed would be good for Canadian productivity.

Currently, government funding is available for people to upgrade their skills if they are already drawing EI, but not if they are actually working and want to upgrade their skills and need that little bit of help. For example, some people in their 30s, 40s or perhaps 50s are at a stage in their lives where they are stuck in a career rut and they want to improve their lot and that of their families. There is nothing that the government will do for them from a funding perspective to facilitate that unless they are actually unemployed and drawing EI. This would help in that regard.

Alternatively if people did not draw from EI to upgrade their skills or only rarely drew from EI during their careers, they would have a little bit of capital in their EI accounts which upon retirement they could roll into their RRSPs. That would be a reward system in many ways for Canadians who work hard and do not draw from the EI system. It would be an EI system that works for Canadians who work. That kind of incentive and that kind of reward based system would help significantly.

Going further, we should eliminate the capital tax completely. Currently the government is phasing it out over a period of time. We have the budgetary capacity to eliminate the capital tax immediately. All of this can be done without creating a deficit. We are committed, as are Canadians, to running government deficit free, to living within our means. It is going to involve not just tax reform but part of it will also involve considering the size and the effectiveness and the role of government, what the federal government should focus on, what it could do effectively and what it should not be trying to do.

It seems ridiculous to me that we have a federal government that cannot provide a coherent foreign policy. It cannot manage a military effectively or fund a military. It cannot from a trade policy perspective protect Canadians' interests by protecting our trading relationship with the richest market in the world. The same government that cannot handle things such as the military, foreign policy and trade policy which are clearly in the federal domain is trying to run the education policies of the provinces and trying to micromanage the health care systems of the provinces.

The federal government should focus on those areas. This could mean taking a more aggressive approach in dealing with the Americans on the BSE issue, or working toward a Canada-U.S. security and economic partnership which not only addresses perimeter security issues but goes further to harmonize our regulatory burdens between the two countries and also as part of it addressing the ambiguity around resource pricing and subsidies and replacing it with clarity to avoid a lot of those types of trade disputes. If the government really focused on those federal domain areas, it would not have time to focus on trying to micromanage the affairs of the provinces.

The government, through HRDC, must stop the incredible intrusion into the private sector across Canada. An incredible amount of waste exists through small and large scale corporate welfare. The government could target some of that money toward tax reduction and tax reform in lockstep. The government must address some of the waste in government.

The fact that a ministerial assistant spent $28,000 on food over a period of a year is shocking. That individual ought to have been named by the Canadian Restaurant Association as the political staffer of the year which is probably the only award he ought to receive. Canadians have to live within their means and pay taxes. They work hard and are having trouble just maintaining their standard of living and that of their families. It is shocking for them when they see that kind of egregious waste in government.

We need to find ways to not just in an ad hoc manner tinker with our tax system but reform Canada's tax system, reform Canada's regulatory system, address the waste in government and reconsider the role and effectiveness of government in key areas.

Every one of us in the House regardless of our political party ought to be considering ways that we can improve productivity, prosperity and the standard of living of Canadians.

We cannot afford to dilly-dally and dither while other countries are embracing bold innovative approaches to economic growth and economic reform. Canada is a relatively small country on the edge of the largest market in the world. We have the opportunity for Canada to become a true northern tiger. We must make Canada a magnet for capital, make Canada a magnet for some of the best and brightest minds in the world and to allow Canadians to have an unprecedented level of economic growth.

Free trade is a policy to which my party is unequivocally committed. It has created incredible wealth and prosperity for Canadians. We need to go further in a post-NAFTA environment and strengthen our trading relationship with the United States. As a principle we must look toward a true Canada-U.S. security and economic partnership. At the same time we must revolutionize our tax system and regulatory burden so that Canadians not only have access to the richest market in the world but they have a tax system and an economic environment that makes it an advantage to be Canadian as opposed to a disadvantage.

All Canadians want to live here, but we ought to be building a tax system that makes Canada not just a good place to live but the best place to invest and grow companies and businesses. Regardless of where they are in the world, we should allow them to make Canada the location of choice within North America.

Income Tax ActGovernment Orders

1:40 p.m.

Oak Ridges Ontario


Bryon Wilfert LiberalParliamentary Secretary to the Minister of Finance

Madam Speaker, I listened to the hon. member's comments. I do not know whether he was auditioning the fiscal platforms for the next election, but I can tell him that while he talked about taxes and the importance to Atlantic Canada, before the House today is Bill C-48 which concerns the resource sector. It is very important to Atlantic Canada and very important for companies that are going to be investing in Atlantic Canada and throughout the country.

I did not hear the member talk about the importance of the bill. I heard a lot about taxes and I would be happy to debate with him any time the fiscal record of this government versus the previous Tory government, but that is not the issue before the House today. The issue before the House today is to make sure that we are internationally competitive, particularly in the resource sector. I am sure the member is very supportive of the fact that this will mean additional job opportunities for people in Atlantic Canada in particular. I would like him to comment on that.

Income Tax ActGovernment Orders

1:40 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, I am impressed by the parliamentary secretary's ability to stand up and extemporaneously say something on an economic matter without a written text.

If he had been listening to my remarks, he would have heard my support for the tax measures that could improve from a tax competitiveness standpoint the way we tax resource based industries in Canada, and within Atlantic Canada as well. He also would have heard my concern about increasing the effective tax rate in some areas of mining. I have some concerns about any tax increase on any sector at all.

With regard to his reference to the previous government's record, I would gladly debate with him any time, anywhere, that government's record. It reduced the deficit as a percentage of GDP from 9% to 5%. At the same time it introduced a free trade agreement that created jobs, growth, opportunity and prosperity. His party campaigned against the free trade agreement. His government has benefited from the results of replacing the manufacturers' sales tax that hurt Canadian competitiveness and our manufacturing sector with a consumption tax which his party had committed to removing but failed to do.

I would love the opportunity to compare that government's record with his government's record in terms of his government actually expending valuable political capital to do what is right as opposed to always following the poll mongers. The previous government actually did the right thing from a principled perspective. It took risks and achieved a great deal on behalf of all Canadians.

Income Tax ActGovernment Orders

1:40 p.m.


Roy Cullen Liberal Etobicoke North, ON

Madam Speaker, I listened intently to the commentary from the member for Kings--Hants, but like my colleague the parliamentary secretary, I did not really hear any discussion about resource sector taxation. What I thought I heard was perhaps a speech that he gave at the leadership convention, or perhaps the upcoming leadership convention, or both. At an occasion like that he would be speaking to the converted within his own party, but in the House his statements have to stand up to greater scrutiny.

Our government has aggressively lowered corporate taxes and continues to do so to a point where Canada is extremely competitive. The member cited the case of Ireland. It is somewhat of a good story from Ireland, but what the member failed to describe to the House was the circumstances at the beginning of the Irish economic renewal. He described the Irish economy initially as a basket case and because it was an economic basket case, as a member of the E.U. it was entitled to massive subsidies.

The E.U. shifted massive amounts of funding for a whole range of projects, infrastructure. In fairness, the Irish government and the Irish people took advantage of that and have started to build from it. The vacant dockyards in Dublin have been made into a duty-free zone. That has caused some consternation in some circles about harmful tax competition and whether or not that constitutes a tax haven. We could take the member's argument to its logical conclusion and say there are no corporate taxes and that would be the most optimal solution. I do not think Canada is in a position to become a tax haven or a no tax zone. We are not even close to that.

I would like the member to acknowledge to the House the special circumstances that existed in Ireland notwithstanding its tax policies that came along later.

Income Tax ActGovernment Orders

1:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, I cited the Irish example in explaining regional taxation and regional development. In fact at their peak, E.U. transfers to Ireland only represented 8% of the Irish GDP. At their peak, federal transfers to Atlantic Canada have represented as much as 40%. When we consider the percentage of the Atlantic Canada economy that comes from the transfer system, it is actually far greater than what the Irish economy derived from the E.U. transfers.

On the national level when I talked about corporate tax reform and reduction done in lockstep, I addressed where a lot of that money would come from. A lot of it would come from corporate welfare programs currently existing in HRDC and Industry Canada and regional development programs as previously cited. It would be revenue neutral.

I am sure that the hon. member would agree that we would achieve far greater levels of economic growth if we actually created a more competitive tax system than by direct investment decisions being made by bureaucrats and politicians.

Income Tax ActGovernment Orders

1:45 p.m.


Bryon Wilfert Liberal Oak Ridges, ON

Madam Speaker, I would like to ask the hon. member, because I am still not clear, is the member's party in favour or against Bill C-48, very simply.

I realize that the member would like to extol the virtues of Conservative fiscal policy, which is sort of akin to asking an arsonist to give fire prevention lessons. However, this is about corporate tax rates dealing with the mining sector and oil and gas sector, and I am still not sure where his party stands. Is it in favour or not?

Income Tax ActGovernment Orders

1:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, the hon. member needs a hearing aid or something because he obviously was not listening. We are supportive of these changes in Bill C-48 and we have stated that.

The hon. member talks about tax policy. I will not question his knowledge of the tax system based on the expression of his views in the House today. I would accept the invitation to debate him any time on tax policy or the government record on the economy. I think that debate is great as long as both parties take some time to actually understand the issues.

On this side of the House, we have. We have taken time to understand tax policy in a way that is focused not on partisan bickering but is actually contributing in a constructive way to ideas that can build a more competitive, prosperous and productive Canada.

Income Tax ActGovernment Orders

1:50 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Madam Speaker, I was wondering whether you would cast your eyes to this side of the House. You gave the member opposite two chances before I got my first. But I appreciate being recognized now.

The member said so many things in his speech that I agree with that I sometimes wish we were in the same party. But maybe that is another topic.

I would like to mention one thing that he talked about, and that is EI and the scheme that we have. Right now the federal government is taking from workers and employers across the country in excess of $5 billion per year. That is money that belongs to these people and yet the government takes it, rolls it into general revenue and uses it for its own purposes.

He floated the idea of having individualized accounts, which is an idea I had over 10 years ago. I remember playing with this before I was even a member of Parliament.

If one were to have an individualized account and were fortunate enough not to have to use it, it would have an accumulated value at the end of one's working life of 45 years, some $580,000 in the bank as part of the RRSP.

Those were some of the ideas that I played with that never went anywhere, but I was curious about his ideas in that area.

Income Tax ActGovernment Orders

1:50 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

On the idea of individualized EI accounts, it would not simply grow based on one's contributions because, clearly, one's contributions would be used to top up those who draw more frequently. There would be a growth in one's account over a period of time if one did not draw or draw from the account infrequently. It would be as large an amount as the hon. member suggested, the $580,000, but it would represent a significant amount that would, over time, reward people for not drawing EI.

There was a study that I would reference for the hon. member in The Economist magazine in 1998. The Library of Parliament has the study which was conducted by a U.K. group of academics on this idea of individualized EI accounts.

Income Tax ActGovernment Orders

1:50 p.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, as I was preparing to speak on Bill C-48, I wondered where such a bill might have come from. In the journal of the Chartered Accountants of Canada, in an article by Neil Smith, who is a senior tax manager, core tax practice, with Ernst & Young LLP in Calgary, we read:

The release came on the heels of a significant lobbying effort by the resource sector for federal corporate tax rate reductions—

We might wonder whether the resource companies really were winners in this respect. For example, it is interesting to read extracts from oil company annual reports regarding their semi-annual performance. For example, on page 1 of Petro-Canada's second quarter report to shareholders, we read:

Petro-Canada announced today second quarter earnings from operations of $455 million, which include a positive adjustment of $96 million for Canadian income tax rate changes.

Therefore, these measures have already netted Petro-Canada $96 million in tax savings.

The shareholders' report issued by Shell Canada Limited for the second quarter states:

Shell Canada Limited announced July 23,2003, second-quarter earnings of $178 million... Earnings included a one-time benefit of $54 million from a future income tax revaluation following announced income tax changes.

Petro-Canada apparently paid $96 million less in taxes, over the first few months of the year, which is a very short period. In the case of Shell Canada, that figure is $54 million. The same goes for Esso Imperial, which reported the following:

During the second quarter of 2003, tax rate reductions enacted by the Federal government and the provincial government of Alberta and settlement of various tax matters benefited results, mainly in the resources segment, by $109 million.

So, the three largest oil companies have declared additional future profits of $250 million. This is a direct consequence of the federal government's decision to lower the taxes applicable to oil and gas companies. They are not the companies suffering the most; they are companies that made astronomical profits in early 2003 and that introduced quite significant price hikes.

In the meantime, the federal government continues to collect 1.5 cents in excise tax per litre of gas. This tax is to pay down a deficit that has not existed since 1998. So, in a few short months, the oil and gas companies have pocketed hundreds of millions of dollars. It is not clear why they need this advantage.

Meanwhile, the federal government continues to pocket money because of a tax designed to pay down a deficit that no longer exists. We are talking about $2.8 billion in five years. No wonder taxpayers think this is ridiculous. Indeed, according to chartered accountants, the bill came “on the heels of a significant lobbying effort by the resource sector for federal corporate tax rate reductions.”

In other words, this government, which prides itself on helping the less fortunate and ensuring a better distribution of wealth, is granting $250 million in tax cuts to oil companies, and at the same time telling us it cannot give the provinces the $3 billion it owes them for health. This is a big problem. It shows an unacceptable lack of professional and political ethics. We cannot allow a bill to create this kind of situation.

Income Tax ActGovernment Orders

1:55 p.m.

The Acting Speaker (Ms. Bakopanos)

I am sorry to interrupt the hon. member. He will have 16 minutes remaining to conclude his remarks after oral question period.

Committees of the HouseRoutine Proceedings

1:55 p.m.

The Acting Speaker (Ms. Bakopanos)

Pursuant to order made Tuesday, September 23, 2003, the motion to concur in the 45th report of the Standing Committee on Procedure and House Affairs regarding membership of committees is deemed moved, the question deemed put and agreed to.

Pharmaceutical IndustryStatements By Members

1:55 p.m.


Bernard Patry Liberal Pierrefonds—Dollard, QC

Madam Speaker, the three Prix Galien awards were presented at a ceremony in Toronto on September 18. The Prix Galien are awarded annually to highlight the accomplishments of Canada's pharmaceutical industry and research community.

The Prix Galien Canada Innovative Drug Product Award, for the medication considered to have made the most significant contribution in terms of innovation, efficacy and safety, went to Gleevec, a product of Novartis Pharmaceuticals for the treatment of patients with chronic myeloid leukemia.

The jury selected Dr. Mark Wainberg, director of the McGill AIDS Centre and director of research at the Lady Davis Institute, Jewish General Hospital in Montreal, to receive the Prix Galien Research award.

The Prix Belleau-Nickerson went to Evista. This drug produced by Eli Lilly Canada belongs to a new generation of estrogen-like but non-estrogen-containing drugs. It is used to treat and prevent osteoporosis in premenopausal and menopausal women.

Congratulations to the prize winners.

Members of ParliamentStatements By Members

1:55 p.m.

Canadian Alliance

Paul Forseth Canadian Alliance New Westminster—Coquitlam—Burnaby, BC

Madam Speaker, recently we had votes which were not administrative but reflected basic societal structure and had moral implications for many in my community.

My electoral pledge requires me to engage the local marketplace of ideas and ultimately be guided by community consensus. That is our Canadian Alliance commitment to grassroots representative democracy.

We believe that a high level of citizen participation in the democratic consultation process is vital to ensuring the legitimacy of Parliament. MPs must ensure major issues receive a full and fair public hearing so that an informed democratic decision can be made by the community. Where an MP finds that a clear consensus can be obtained, it is his or her responsibility to vote accordingly over party or personal view.

I urge all parliamentarians to be better representatives and aspire to the higher standard of the Canadian Alliance Party.

Franco-Ontarian FlagStatements By Members

2 p.m.


Diane Marleau Liberal Sudbury, ON

Madam Speaker, the Franco-Ontarian flag is an emblem dear to the hearts of the French-speaking community of Ontario. Today is its 28th birthday.

It was on September 25, 1975 that the Franco-Ontarian flag was raised on a flagpole for the first time, at Laurentian University in Sudbury.

In 1977, the community adopted it as its official flag. In 2001, the Legislative Assembly, in a unanimous vote, recognized it as one of the official emblems of Ontario. Today, Franco-Ontarians fly it proudly in all corners of the province.

This flag symbolizes our pride and our membership in our community. It is an expression of the linguistic duality of Canada.

September 25 is an opportunity for all French-speaking Ontarians to show how much they care about keeping our beautiful language alive.

Beef IndustryStatements By Members

2 p.m.

Canadian Alliance

Philip Mayfield Canadian Alliance Cariboo—Chilcotin, BC

Madam Speaker, just when the Canadian public thinks things cannot get worse with the government's spending habits and department investigations, it is hit with another slap in the face. This time it is the beef industry.

Yesterday, when the government was given an opportunity to actually do something by supporting a motion regarding opening the U.S. border for our beef, what did the Liberals do? They voted against sending a delegation to Washington to get the border fully open to Canadian cattle.

The Leader of the Opposition did this in July. Why will the Prime Minister not do it now? What does yesterday's vote mean? It means that the Canadian beef industry will continue to lose $11 million a day in exports, with an added $7 million a day as the price of beef falls.

Cow-calf operators in this country are not covered by the latest compensation package, meaning a whole sector of that industry could be indefinitely, if not permanently, in decline. About 80% of this industry is dependent upon the United States market, and the Prime Minister and his party are content to fine dine in Ottawa restaurants while this vital industry is crippled.

Canadian Women's Soccer TeamStatements By Members

2 p.m.


Geoff Regan Liberal Halifax West, NS

Mr. Speaker, I want to congratulate the Canadian women's soccer team, which has given us some great moments of excitement and emotion.

Yesterday, during the team's second World Cup soccer match in the United States, it beat Argentina by a score of 3-0.

Congratulations, in particular to Charmaine Hooper who scored the first goal off a penalty kick, and Christine Latham who, late in the game, scored the other two goals in three minutes.

Saturday afternoon, Canada will face Japan to determine which team will advance to the quarterfinals. We have high hopes that our team will repeat its win.

Our Canadian athletes, no matter what sport they play, make us proud and are an example of perseverance. We encourage them to pursue their dreams and continue to do their best.

Human RightsStatements By Members

2 p.m.


Yolande Thibeault Liberal Saint-Lambert, QC

Mr. Speaker, it was a huge relief to learn this morning that Amina Lawal, who had been sentenced to death by stoning for adultery by the lower court, was acquitted by the Islamic appeals court.

This 32-year-old mother was found guilty in March 2002 of having a child out of wedlock. Her daughter Wasila is now nearly two.

I want to congratulate Pierre Brun from Lawyers Without Borders, who helped defend Ms. Lawal. Mr. Brun travelled to Nigeria to defend her right to a fair and just hearing.

His unfailing dedication and tireless efforts will serve as an example to others concerned with the right to life.