Rahim Jaffer

[Trade, May 27th, 1999]

Mr. Speaker, this government's own competition expert has criticized this government's abusive anti-dumping duties. He says that they restrict competition, jack up prices and hurt the welfare of all Canadians. Because of this criticism, Canada's trade tribunal has now been told to start paying attention to the impact these duties are having on average Canadians.

When will the revenue minister review the trade tribunal's past decisions and reverse those that the Competition Bureau says will hurt the welfare of all Canadians?

[Competition Act, May 26th, 1999]

Mr. Speaker, I am pleased to speak to Bill C-235.

I applaud the efforts of the hon. member for Pickering—Ajax—Uxbridge. He is a passionate and tireless champion for what he believes is right. He is rare among the members of the Liberal caucus in that he is prepared to stand on principle even when he stands alone. That takes both integrity and courage.

However, this legislation is not about the hon. member for Pickering—Ajax—Uxbridge. Despite the respect and admiration I have for the member and his commitment to his constituents, I cannot ignore that the legislation before us would shackle Canadian industries and punish Canadian consumers.

As members of this place know, this legislation would prevent a company that is both the producer and the retailer of a product or service from selling the product or service at a retail price that is below its own wholesale costs and the wholesale costs charged to its retail competitors.

The purpose of this bill is to prevent vertically integrated companies from using their corporate structure to compete against their non-vertically integrated competitors on price. It was intended to address the alleged problem in the gasoline retail industry where vertically integrated companies are accused of attempting to squeeze independent gasoline retailers out of business by offering consumers a retail price that is below the wholesale cost paid by independent gasoline retailers.

It has been argued that vertically integrated fuel companies can incur a loss at the pump that non-vertically integrated companies do not because the vertically integrated companies can make a margin on their wholesale price that allows them to remain profitable.

It is often the case that gasoline retailers will lose money at the pumps during price wars where prices fall below wholesale costs. This situation has fuelled innovations like car washes, food services, mechanical services, and the list goes on. In other words, competition in the retail gas industry involves more than just gasoline.

In an attempt to address the alleged problem in the gasoline retail sector, the bill will unintentionally regulate all vertically integrated companies. The impact of this legislation therefore would extend the intended scope. It would place controls and regulations on vertically integrated companies that would not apply to non-vertically integrated companies. A non-vertically integrated company with deep pockets could use this legislation to compete with its vertically integrated competitors by selling its product or service below cost while its competitors would be prevented by law from doing the same.

On a practical level below cost selling, or the practice of offering a retail price that is below the wholesale price, occurs every day in the business community. When inventory is cleared or a new product is introduced to the market, this price is typically set below the wholesale cost.

Additionally, companies providing a charitable service may offer a product or service at a cost that is below the wholesale price. For instance the federal government is currently engaged in partnership with the private sector to provide Internet access to Canadian schools. This partnership would be deemed illegal if the proposed amendments to the Competition Act were adopted.

I would like to take the time to address the economic arguments upon which this entire bill rests. Predatory pricing, below cost selling, is an attempt to drive competitors out of business. It is an extremely rare and unsustainable practice.

Businesses that internalize the cost of manufacturing a product or delivering a service in order to provide consumers with a price discount incur a serious opportunity cost. While their competitors are spending capital on innovations, they are spending their capital on subsidizing the cost of their own product or service. This is an unwise business approach with no long term viability. Subsidizing the price of a product will mean that eventually a company will drain its resources and be left with a product or service that is outdated. Consequently it is rarely practised.

Additionally, competition laws in Canada and the U.S. punish those companies that attempt to compete aggressively on price while others may aggressively compete on innovation or superior service with impunity. Companies that invest their profits in innovations for instance are forced to incur a short term loss in order to attempt to capture a larger market share by providing a superior product or service in the future. Strictly speaking, this is a form of short term below cost predation but competition law does not preclude it. It is okay to spend money to make a product better but not to make a product cheaper.

The Competition Bureau has investigated the predatory pricing situation presented by the author of Bill C-235 and has determined that the impact on consumers will be detrimental. I was very impressed by the presentations made by the commissioner of competition and am now much more confident that the Competition Act will not be used as a tool to regulate Canadian business, strangle the Canadian economy and punish consumers.

The commissioner of competition stated succinctly that the Competition Act is intended to protect competition and not competitors. Those companies that are not vertically integrated may find themselves at a disadvantage to those companies with a superior corporate design. However, it is not the role of government to intervene in private sector decision making.

Small businesses have always struggled to survive against large businesses. They do so by providing a superior product or service, by finding niche markets not properly served by larger competitors, or by building a reputation for a certain service. It is not easy but the government should not be in the business of protecting competitors from competition. The Competition Act instead must serve consumers.

The creation and maintenance of competitive markets is of the highest priority for the Reform Party, make no mistake about it. However, we have a fundamental disagreement with the author of this bill and with big government solutions to market failures.

The key to competition is free trade. We must work to create contestable markets. Companies that succeed in driving their competitors out of business by providing consumers with a product they want at a price they find reasonable will not subsequently raise prices if a contestable market exists.

Yesterday at the Standing Committee on Industry I attempted to address the issue of creating contestable markets to ensure domestic competition but every Liberal member of the committee rejected my proposal. We are attempting to use the Competition Act to address problems in the market that should be solved through trade liberalization.

Let met give the House an example. It involves Norm Wallace of Wallace Construction Specialties Limited. As a result of a 1998 CITT decision, Mr. Wallace has not been able to get access to a supply of jacketed pipe insulation at a price that would allow him to be competitive because a punitive 70% anti-dumping duty has been levied against those companies that import this product from the U.S.

The vertically integrated Canadian producer-retailer of this product, Manson Insulation, now has an effective monopoly in this market and refuses to supply Wallace Construction Specialties Limited with this product. Manson Insulation is arguably in violation of the abuse of dominant position and the refusal to deal provisions of the Competition Act. The cause of the problem however is the CITT anti-dumping policy which falls outside the direct jurisdiction of the Competition Bureau.

Competition and free trade are interconnected. The threat of competition will force businesses to behave as if they have numerous competitors. The number of actual competitors in the market is a very poor indicator of the intensity of the competition. There are hundreds of farmers in Canada yet these farmers do not actively compete against each other. There may be only two cellular phone providers in an area but they compete vigorously for business. It is therefore wrong to suggest that if small business loses out to larger vertically integrated companies consumers will pay more.

The Reform Party is committed to small business. We have never moved from the resolve to lower taxes and remove the regulatory barriers that hinder the success of small businesses. Small business is the backbone of our economy but there may be products and services that are better provided by large companies, just as there are business ventures that can only be managed by small organizational structures. The Reform Party is therefore reluctant to give government the power to protect businesses from competition at the expense of the Canadian consumer.

I come from a small business background. I know firsthand how difficult it is to compete. Canadian small businesses only survive due to long hours and hard work. Instead of punishing small businesses with more government regulations, let us reward them with tax relief and deregulation.

[Motions For Papers, May 26th, 1999]

Mr. Speaker, I would like Motion No. P-54 to be called.

Motion P-54

That an Order of the House do issue for copies of all documents, reports, memos, letters, correspondence, minutes of meetings, and notes used by the government to substantiate its claim that the Patented Medicine Prices Review Board is responsible for driving down drug prices.

[Supply, May 3rd, 1999]

Mr. Speaker, on the issue of the recommendations, I know the official opposition would have been happy to see within the motion some of these recommendations coming from the industry so we could see exactly where the Tories wanted to go with the motion. That is really all we were asking for. We know the spirit of the motion is a positive one and that is why we are supporting it.

On the issue raised by the hon. member, the official opposition has always been committed to creating fairer tax incentives for everyone. We obviously want a simple tax system that would be more competitive and equitable to all industries in being able to write off certain parts of their industries that deteriorate in value and so on.

Although I know the hon. member is concerned about that specifically with the shipbuilding industry, we in the official opposition have said that is something we would look at right across the board. Although shipbuilding is one of the more important industries in the area the hon. member comes from, we know there are various industries across the country where inequalities within the tax system cause them to be less competitive. That is what we would like to address across the board.

[Supply, May 3rd, 1999]

Mr. Speaker, I commend the hon. member for his comments and his brief question. I know that within the industry committee the hon. parliamentary secretary is always open to discussing various issues. Shipbuilding has been one that has come up on the table which we have been looking at and planning to deal with in the future. Hopefully, we will be able to address some of the issues in the Jones Act that were left out during past trade discussions.

Instead of blaming past governments or looking at past records, especially when it comes to shipbuilding, we should be looking at ways to make shipbuilding more competitive and become an industry that can survive on its own. We should start moving away from areas of subsidies, such as the technology partnerships Canada program. Right now the World Trade Organization is ruling that a lot of subsidies are illegal. We must look at ways to get the shipbuilding industry moving through tax relief.

When we look at the issue of tax credits, we basically have some of the highest tax credits in the country for the shipbuilding industry when we look at our R and D and tax breaks. However, we still have the lowest spending per capita when it comes to the shipbuilding industry, specifically in the overall basic R and D spending and investment in those areas, even though we spend a fair amount in research and development.

We have to address those key problems. I think trade liberalization is the key, but we must also balance that with tax policies.

[Supply, May 3rd, 1999]

Mr. Speaker, I am pleased to rise today to speak to the motion before the House, put forward by the member for Saint John and seconded by the member for Burin—St. George's.

I regret that the motion is empty and meaningless and would compel the Liberal government to do essentially nothing to help the shipbuilding industry that it is not already doing through the discredited technology partnerships Canada program and the failed research and development tax credit system.

I will address both of those issues further, but I would like to first address what the Reform caucus had hoped for with this motion.

I had hoped to introduce an amendment to the motion. While I know this is no longer possible, I would like to read the motion into the record:

That this House calls on the government to develop a new national shipbuilding policy that includes broad based tax relief for all Canadians and a commitment to pursue better access to international markets, particularly American markets, through equitable trade liberalization.

The amended motion would have called on the government to specifically address high taxes as the primary cause for low productivity and slow economic growth in the shipbuilding industry. It would have addressed the unfair trade practices exempt under NAFTA which effectively exclude Canadians from participating in a $1.1 billion U.S. shipping market.

Once again I would like to take the time later in my speech to address the issues of taxation and the serious problem of inequality with the U.S. However, to ensure that the members of the House understand the Reform Party's position on the motion, I will quote from the Leader of the Official Opposition. He stated:

The Official Opposition believes that tax relief and the expansion of Atlantic Rim trade are the keys to job creation in Atlantic Canada, and we will vigorously represent those views on your behalf in parliament.

The Leader of the Opposition made these remarks, which are embodied in the proposed amendment, on October 16, 1998. The remarks made by the Leader of the Opposition are not that much different from the remarks made by the hon. member for Fundy—Royal in 1997 when the Tory motion on shipbuilding was debated in the House. The member insisted he was not interested in subsidies but deregulation and improving Canadian access to international markets, in particular U.S. markets. Therefore, the motion would have been consistent with the Tory shipbuilding policies.

My questions for the Tory members of the House are: Why does the motion not address the issue of high taxation; and, why does it not address the important issue of trade barriers and trade discrimination?

Broad based tax relief for all Canadians is needed to ensure that shipbuilding and all other Canadian industries survive. It is that simple. It is so simple that even the Minister of Industry is beginning to understand this.

Tax relief is not part of the Tory shipbuilding plan. The Tories have consistently called for loan guarantees similar to those provided by the United States which has several federal assistance programs. Financial assistance is provided in the U.S. through the federal ship financing program, capital construction fund program and the maritime security act. Loan guarantees force the taxpayer to take on a financial liability that banks and venture capitalists consider to be too risky. This is an unacceptable burden placed on taxpayers.

The Shipbuilding Association of Canada argues that there has not been a single default under the U.S. federal assistance program. This begs the question: If default rates are this low, why does the government need to provide incentives for banks and venture capitalists to provide capital for shipbuilding projects?

What is needed is real competition in the financial service sector so that banks are compelled to compete for medium and high risk loans. Lack of competition in the Canadian financial services banking sector has made banks complacent about funding any medium to high risk ventures. Furthermore, broad based tax relief would leave more money in the pockets of Canadian consumers and entrepreneurs. This would lead to greater savings and higher corporate profits which can then be reinvested into the shipbuilding industry.

Why do the members of the Progressive Conservative Party not care enough about tax relief, particularly tax relief for Atlantic Canadians, to make it part of their shipbuilding plan?

On the issue of access to international markets for Canadian shipbuilders, the Reform Party supports the pursuit of equitable trade liberalization policies as an essential part of our industrial policy. In this instance, we are very concerned with what appears to be unfair trade practices with the United States with respect to the 1920 Merchant Marine Act currently exempt from NAFTA.

The 1920 Merchant Marine Act, commonly known as the Jones Act, legislates that cargo carried between U.S. ports must be carried aboard ships that are U.S. built, U.S. registered, U.S. owned, U.S. crewed and repaired and serviced exclusively in the U.S.

This legislation was exempt from NAFTA and without amendment it effectively prevents Canadian shipbuilders from building a ship that could be used in the United States' domestic trades while allowing U.S. shipyards the right to sell to the Canadian market new or used ships and barges duty free. The legislation effectively excludes Canadians from participating in a $1.1 billion shipping transportation market.

In order to be completely forthright in this debate, I believe the members of the House must also recognize the provisions in place currently protecting the Canadian shipbuilding industry.

Under Canada's Coastal Trading Act, the owner of a ship built or purchased abroad must pay a 25% tariff to have it flagged Canadian and operate in Canadian domestic trade. Also, the Canadian government policy dictates that government fleets must be renewed and repaired in Canada.

While we must recognize these trade barriers, it is clear that they do not cause the same material damages to the U.S. shipbuilders as the Jones Act does to the Canadian manufacturers. Canadians must appreciate, however, that trade liberalization efforts will bring these protectionist government policies under closer scrutiny. We cannot call for freer trade and then also call for protectionist policies.

I offer this point to my colleagues as a word of caution. Canada has many barriers to trade and the Liberal government looks like it will continue to violate the spirit of global trade liberalization. We must be aware of this before we tackle trade disputes like the one I have just addressed.

I will conclude my remarks by saying that the Tory motion succeeds in that it brings attention to the need to address the lack of Liberal vision for the shipbuilding industry. Sadly, it makes no specific policy recommendation.

On the plus side, there is nothing in the motion that is outwardly objectionable to Canadian taxpayers because there is nothing in the motion at all. Although it fails to address the primary cause of our deteriorating shipbuilding industry, which is high taxes and unfair trade practices, the motion before the House has the qualified support of the Reform caucus.

[Voisey's Bay Nickel Project, April 29th, 1999]

Mr. Speaker, I rise today to speak to the motion put forward by the hon. member for St. John's West. For those Canadians watching these proceedings on television, I would like to read the motion that is currently before us:

That in the opinion of this House the government should become actively involved in the Voisey's Bay nickel project, specifically to speed up the settling of native land claims and to expedite the completion of all environmental studies.

The hon. member certainly has more faith in the federal government than I have. I understand his frustration at the seemingly endless process of study and negotiations and more study and negotiations. However, I would never have thought I would hear anyone on the opposition side of the House looking to the federal government to expedite anything.

The victims of tainted blood have been waiting for over a year for compensation. We could ask them what they think of the government's ability to be expeditious. Newfoundlanders in particular have not been served well by the Liberal government. The TAGS program has been a disaster for Newfoundlanders and was a band-aid solution in place of real reforms of the cod fisheries.

The Hibernia project has been another Liberal failure. Not one oil manufacturing job will be created in Newfoundland as a result of the project.

Churchill Falls is another example. Newfoundland lost $1 billion a year as a result of a do-nothing Liberal government that refuses to give Newfoundlanders a fair deal.

The seal hunt has also been systematically destroyed by the Liberal bureaucratic red tape that has prevented the export of seal projects around the globe.

These are four good reasons why we should not invite the Liberal government to get involved in this project. Newfoundlanders are better served by negotiating on their own terms.

Furthermore, the Voisey's Bay project has been stalled and delayed, not because there has not been enough government interest in the matter but because there has been too much. This is no longer a business venture. It is a three ring political circus.

Let us look at the players already involved in this project. Inco Limited is involved. As it is the private sector company ready to take on the risk of the project it will be the one creating the wealth and the jobs. It will be the one jumping through the political hoops trying to please the various stakeholders involved in the project, many of whom have very legitimate concerns that must be addressed.

I applaud the patience of Inco's president, Scott Hand. It seems that Canadian entrepreneurs have unfortunately had to become politicians and spin doctors. That is the new cost of doing business in the Canadian economy and more federal intervention, as is proposed in the motion, is not the solution.

I take this opportunity to encourage Mr. Hand to continue to negotiate with the province. The Newfoundland people want this project, need this project, and are ready and able to make this project a success.

The Labrador Inuit Association and Innu nation are also involved in the negotiations, representing the interests of the first nations people in the area. They have been active participants in the creation of a 200 page study of the project that contained over 100 recommendations. On the basis of this report, it looks as if the Voisey's Bay negotiations may have been given a second life and a second chance.

The land claim concerns and benefit agreements brought forward by these groups are currently being considered by Inco. The environmental study has given the company a conditional green light to proceed.

The premier of Newfoundland is also involved in this matter. While Brian Tobin is working for the people of Newfoundland, I believe he can learn a lesson from Alberta about creating economic growth. In Alberta we are working to remove the barriers impeding economic progress and development. In Newfoundland they are erecting new ones.

If my hon. colleague from St. John's wants to be of some assistance to his constituents, and I know he does, he should ask Mr. Tobin a simple question: Is Newfoundland open for business? Nobody questions where Mr. Tobin's loyalties lie. I would however question his commitment to liberalizing the Newfoundland economy to encourage domestic and foreign investment.

The answer to the Voisey's Bay project and economic development in general is not further political meddling. We need to see the development of sensible and workable environmental policies that allow for sustainable economic growth.

Environmental regulations are another tax on Canadian businesses. While many of them are necessary, others are not. There is a balance that must be struck.

We also need to address the first nations land claim issues according to fair and equitable guidelines, but this must be done on a comprehensive basis so that it does not continue to be a never ending barrier to economic development in the country.

Politicians and lawyers have hijacked land claim issues and it is the grassroots Inuit or other aboriginals who have suffered. I once again applaud the author of the motion for allowing debate in the House on the Voisey's Bay project. However I do not believe he will find a solution through this arrogant and out of touch Liberal government.

[Member For York South—Weston, April 22nd, 1999]

Mr. Speaker, I am honoured to rise today in the House to pay tribute to the hon. member from York South—Weston on his third anniversary as an independent member of the House.

When the Liberal government broke its promise to scrap, kill and abolish the GST, it was this man who refused to be another Liberal sheep, bleating on cue.

When the Liberal whips forced their members to vote against the wishes of their constituents on the dreaded tax, it was this man who stood alone in the Liberal caucus and said “no way”.

When the Liberals decided they had no room in their party for a man of integrity, it was this man who successfully convinced his constituents that they no longer need the tired Liberal label.

That is why tonight I am proud to join the hon. member from York South—Weston and the hon member from Markham at the united alternative town hall meeting.

Tonight, we will mark the end of unaccountable, one-party dominance in the country and mark the beginning of a united alternative to an arrogant, out of touch Liberal government.

[Taxation, April 20th, 1999]

Mr. Speaker, we have seen no commitment from this government to reduce taxes at all. The finance minister has actually raised taxes over the past six years. Canadians are paying much more. That is why we have younger Canadians going to the U.S. and not staying. The talent is not staying in this country. Yesterday it was Nortel. Today we read that Newbridge cannot keep its talented employees here because they are paying too much in high taxes.

I would like the minister of taxes to stand in this House and tell these 150 companies why he thinks high taxes are helping their bottom lines.

[Taxation, April 20th, 1999]

Mr. Speaker, while the minister of taxes defends his high tax policies, 150 of Canada's largest companies are saying enough is enough.

The Business Council on National Issues told this government today that unless taxes come down, businesses are heading south. That is happening already. Clearly Canadian Beverages recently pulled the plug to go to the U.S. because according to its president the tax situation in this country is too tough to make a buck. Is this minister proud of the high tax policies that have made Clearly Canadian clearly American?