Brian Fitzpatrick

[Supply, March 22nd, 2005]

Mr. Speaker, yesterday I had the pleasure of participating as a member of the finance committee on fiscal imbalance. The committee met in Regina. I want to commend the Bloc member for Saint-Hyacinthe—Bagot who chaired the committee. He did an excellent job, and it was a very good meeting.

We met with the Premier of Saskatchewan, Mr. Calvert, Brad Wall, the leader of the opposition in Saskatchewan, and with a very fine individual, Ian Peach, who is the chair of a policy think tank in Saskatchewan. Basically the thrust of the meeting was to discuss horizontal fiscal imbalance, namely, equalization. It was a positive meeting. I think every member on the committee who heard Premier Calvert, Mr. Wall and the other individual was convinced when they left the meeting that there was a great injustice in the equalization formula as it pertained to the province of Saskatchewan.

Virtually every elected official in the province of Saskatchewan understands that Saskatchewan is not being treated fairly in this arrangement. There is no western lens with regard to equalization when it is applied to the province of Saskatchewan.

The Minister of Finance has said that Saskatchewan is being treated differently than Newfoundland and Labrador and Nova Scotia because Saskatchewan is a have province. There are numerous experts in the country, the Conference Board of Canada, Professor Courchesne and others, who have said that by just about every commonly used objective measurement of fiscal capacity Saskatchewan is anything but a have province.

In fact, Professor Courchesne says that by emphasizing non-renewable resources, Saskatchewan is in the strange position where, with a declining net per capita income, it loses equalization payments and becomes a poorer province through equalization. That is not the intent of section 36 of the Constitution Act. Other provinces have rising net per capita incomes and are receiving equalization.

I created a simple chart on Manitoba for the last 10 years. Over the last 10 years Manitoba has had a $1,500 higher per capita income than Saskatchewan, but the average difference in equalization payments in that period was $915 million in favour of Manitoba. It underscores exactly what Professor Courchesne is saying. This formula is just plain wrong. The Minister of Finance and members on the opposite side should understand that the equalization formula creates major problems for the province of Saskatchewan.

There are many sound reasons why non-renewable resources should be removed from the formula. Time does not permit me to deal with all of them, but I want to target a few of them. I would recommend that people read Professor Courchesne's paper on this issue. I would also recommend they read the Atlantic Institute for Market Studies. It has done some excellent work in this area. If anyone really wants to find out the injustice in Saskatchewan's case, one only has to read some of those articles.

This is simply bad policy. That is the first reason. It creates a major disincentive to develop a resource. In the past, some of the oil that was been developed in Saskatchewan had been clawed back at 127%. There is no sound economic reason for even trying to drill to find oil if it is going to be clawed back at 127%. It is a disincentive for development. Why develop the resource?

I will use the example of Newfoundland and Labrador as well. It is on the verge of developing a nickel mine in Labrador, the Inco project, which should be a big boost for Newfoundland. Newfoundland could lose as high as 90¢ out of every dollar that it receives from the nickel production in Labrador. One really has to question the merits of developing resources when the equalization formula has a huge disincentive for developing them.

There is a second reason why we should not include non-renewable resources. They are capital assets. One of the academics used the analogy of a baker. A baker makes his income from making bread and selling it, but if he starts selling off his ovens to pay for his operation the baker eventually will be in trouble.

There is even a flaw in that argument. The baker's oven is sold to somebody else who can make bread, but when we sell oil and gas they are converted into energy and are permanently gone. We will never get them back. That is a sound reason for rejecting this inclusion in the formula.

It is double taxation. I asked the premier of Saskatchewan why we would develop these resources if we were going to get clawed back at 100% or higher. He said we would create employment, increase our corporate fiscal capacity in the province and broaden our property tax base, but the point of the matter is that all of those items are already caught under the equalization formula. Every one of those economic benefits is already caught and what we are doing is getting into double taxation, which is wrong. It is a doubling up on these things.

There is another reason why we should not be clawing back non-renewable natural resources at 100%. The reason is very simple. It is out of sync with modern economic theory. Capital is never taxed at these levels. Most capital does not attract any tax whatsoever under tax policy; it is only capital gains that does. The Minister of Finance should fully understand that. Also, it is only at half the rate.

The understanding of economic theory is that capital has to be treated a lot differently from income as it is at the foundation of an economy. Under this formula we are talking about a 100% clawback on capital. It is just plain wrong.

What we want in Saskatchewan, and what I think is wanted in every province, is for provinces to be able to develop their economies around their resources and to in the long term become true have provinces. All we are asking for in Saskatchewan is the same privilege that Alberta had back in the 1950s and 1960s when it could develop its non-renewable resource base and become in all respects a true have province. I think this current formula creates a major barrier for Saskatchewan to overcome.

If we are going to have an equalization program in the country, why not have an equalization program that has strong incentives for provinces to become true have provinces? It seems like this formula is bent and determined to keep certain provinces as have not provinces in perpetuity.

There are a lot of reasons why we would want to remove non-renewable resources from this formula for the province of Saskatchewan. I want to raise one further one. All these things are cyclical in nature. I remember when oil was $11 a barrel. I remember when potash was in the tank and other items were in the tank. This is just about the only engine we have in Saskatchewan right now. The prices are high right now, but two years from now we could be back in the tank on this whole deal.

Why a government would want to have 11 out of 33 of the tax bases focused on non-renewable resources defies imagination, because that creates a volatile equalization formula and it is extremely harsh for the province of Saskatchewan.

I want to conclude by proposing an amendment to our motion. I move:

That the motion be amended by adding the following:

and that it include a transition adjustment to equalization in order to provide compensation to provinces that would not benefit from the extension of the expansion of benefits.

[Foreign Credential Recognition Program, March 10th, 2005]

Mr. Speaker, the parliamentary secretary said something that is correct. The equalization formula should measure fiscal capacity.

In this current year Manitoba is receiving $1.4 billion in equalization payments and Saskatchewan is getting $77 million. I am sure he can understand the huge disparity between them.

When we look at per capita income, Manitoba is $1,500 higher than Saskatchewan. The average family of four gets basically $6,000 more in income. Next year the growth is projected to be $1.6 billion in equalization payments for Manitoba. For Saskatchewan it is $88 million. Both of those provinces have about a million people. By most indicators Manitoba is slightly higher than Saskatchewan and has a better fiscal capacity than Saskatchewan has.

There is something seriously wrong with that formula. I wish the minister and the parliamentary secretary would understand the essential flaws in putting so much emphasis on non-renewable resources.

[Foreign Credential Recognition Program, March 10th, 2005]

Mr. Speaker, it is a pleasure, on behalf of the constituents of Prince Albert, to speak to the matter of equalization.

Prior to the last election campaign the Prime Minister made a very major commitment to the province of Saskatchewan and western Canadians. He said that since 1867 there has been a perception that Ottawa has too often favoured parts of eastern Canada while ignoring the interests of western Canada.

Unfortunately, the Prime Minister said that there was a good deal of reality to this sort of perception. He promised that under his administration this matter would be addressed, that this would not happen under his new government. He basically said that if he could not address that perception and that reality in western Canada, he would see himself as a failure as a Prime Minister. He went on to say that he would literally move heaven and hell to make sure that western Canadians felt that they were being treated fairly in this Confederation of Canada.

The Prime Minister recently eliminated the energy revenues from oil and gas from the equalization formula for two Atlantic provinces, the provinces of Newfoundland and Labrador and Nova Scotia. I am not critical of that. I think many commentators have said that non-renewable resources should be removed from that formula because it causes more problems than it helps.

The unfortunate part of that decision is that the Prime Minister is dealing with a national program. That promise was made in Newfoundland. It was made in respect to a national program, equalization. It was made in the heat of an election campaign. When he made that promise he was not only making that promise to Newfoundland and Labrador and Nova Scotia, he was making that commitment and promise to every Canadian and every province in the country.

What did the Prime Minister do after the election? He did the very thing for which he was critical. He made a change to a program that addressed a concern in the eastern part of the country while ignoring any sense of justice by applying the same principle to provinces in western Canada, in particular, the province of Saskatchewan. This is a serious injustice.

This is what an independent commentator had to say on the question of equalization. Tom Courchene, a professor in Ontario, said that the formula has had an absolutely brutal effect on the province of Saskatchewan. He said that it has the effect of actually making Saskatchewan poorer. Let me give an illustration. When Saskatchewan receives a dollar from light crude oil, it actually loses $1.20 in equalization payments. Theoretically, the province would be better off shutting off the taps and not producing oil and gas.

It is a very punitive type of formula and it is most unfortunate. When we compare the provinces of Manitoba and Saskatchewan over a 10 year period, we see that the annual difference in equalization payments between those two provinces is $800 million, and Manitoba, by all objective indicators, has a higher fiscal capacity than Saskatchewan. The cumulative effect on Saskatchewan is terrible. It is very unfair and the Prime Minister has broken another promise.

[Supply, March 10th, 2005]

Mr. Speaker, the member kept referring to the “dynamic” and “aggressive” program this government has in enforcing laws to deal with organized crime. I have a lot of difficulty with those comments.

One of the biggest stock frauds that ever happened in the history of stock markets was not in the United States. It happened in this country with Bre-X, when there was “gold in them thar hills” in Indonesia. That was back in 1996. Billions of dollars were lost by legitimate investors throughout the world and in this country. From what I can gather, to date nobody has been charged.

The U.S. is in the business of dealing with Bernie Evers. The Enron people are going to jail. Martha Stewart just got out of jail. But Bre-X happened in 1996 and nothing has happened, from what I can see, so when the government talks about its “aggressive” program in dealing with organized crime, quite seriously I am scratching my head.

I do have a question for the member. There is a major investigation being conducted on the oil for food program, which involved the United Nations and Iraq. It looks as if billions and billions of dollars were illegally diverted from that program and into the pockets of UN officials and Saddam Hussein.

It looks as though powerful people in Canada may have been involved in this program. The crimes were committed outside Canada, but some of the chief benefactors could be inside Canada. It is fraud and corruption to the highest level to subvert a program like the oil for food program.

I would ask the member of the government to enlighten us on what aggressive policies and laws the government has in place to make sure that the people in this country who would have benefited from this illegal billion dollar kickback scheme would pay a very heavy price in this country. I would like him to enlighten us.

[Supply, March 10th, 2005]

Madam Speaker, this motion intrigues and fascinates me. I am trying to think of some scenarios to which it may apply.

Let us imagine a government, through its powers and political operations, receives kickbacks from an advertising program, and I use that as an example, and we discover that much of the money flows back into the political operations of that party. Let us also say that the main players on both sides are convicted of a criminal offence.

Let us say it was the Liberal Party of Canada, just as a hypothetical. In effect, would it mean that the law would seize all the moneys and property of the Liberal Party of Canada and put a reverse onus on the Prime Minister of Canada to show that these moneys were not proceeds of crime?

[Canadian Livestock Industry, March 8th, 2005]

Mr. Speaker, seven days before the border was to open, the government decided to deal with the intercontinental ballistic missile issue. We had had months and months to deal with that issue, but it seems that the government decided at that very sensitive period of time to make that announcement.

It is not just the R-CALF case. The U.S. Senate brought in a motion to close the border to Canada and passed it and some of the rhetoric was related to this. We had a breakdown in communications between the Bush administration and the Prime Minister over that issue. To me that is what poisoned the whole thing. The timing of that announcement could not have been worse. I am not saying it is the cause of all the problems but it certainly did not help.

I wonder if the Bush administration is appealing the R-CALF decision as vigorously as it would have otherwise. I am wondering if the Bush administration is going to be as enthusiastic about a veto to cancel out any motions that come out of the Senate and Congress to close the border. That seems to be what the mood is. We need the Bush administration very strongly on our side on this issue, but it seems to me the government struck a thumb in the eyes of that administration seven days before the border was to open. There should be some accountability on that side of the House.

[Supply, February 22nd, 2005]

Mr. Speaker, it is my understanding that foundations carry out government policy, independently and at arm's-length from the government. Could the member enlighten me as to what government policy the Trudeau Foundation carries out?

[Supply, February 22nd, 2005]

Mr. Speaker, last week in the public accounts committee I asked the Auditor General a point blank question. Last week in the House of Commons the Prime Minister, Mr. Dithers, said that the foundations had a lot of transparency and accountability and that there was absolutely no problem with Parliament or anyone else finding out what was going on in the foundations. When I asked the Auditor General whether she shared Mr. Dither's enthusiasm, she said “absolutely no”.

Liberal governments, I would say for 30 years, have been undermining the role of government. We can argue that back in the seventies there was restructuring in this place that concentrated power in the Prime Minister's Office and undermined every member of Parliament from carrying out his or her duties.

We now have another Liberal government, under the charter, that backs off from making major policy decisions and allows the courts do it. It hides behind that. Now it is trying to farm out the functions of Parliament to foundations.

I have two questions for the President of the Treasury Board. He said that independent auditors were reviewing the books. I would remind him of Enron. Andersen Consulting was doing audit and consulting work for the same outfit which ended up destroying the organization because it was in absolute conflict of interest.

The government is doing extensive consulting work with major auditing firms that are also doing audit work. I would like him to respond to that clear-cut conflict of interest in the context of Enron and good governance.

[Supply, February 22nd, 2005]

Nobody said that.

[Equalization Program, February 15th, 2005]

Mr. Speaker, with answers like this, is it any wonder that whooping cranes are becoming more common in Saskatchewan than federal Liberals?

Saskatchewan's per capita income is $5,000 below the national average. Saskatchewan has the longest surgical wait list in the country. Saskatchewan has the second highest out-migration of citizens in the country and farmers in Saskatchewan are facing some very serious challenges.

What does the government have against the province of Saskatchewan?