John Herron

[Budget Implementation Act, 1999, May 6th, 1999]

Mr. Speaker, I am pleased to rise to speak to the 1999 budget and to address some of the concerns which the government has failed to address.

The principal issue that I want to address is that there has not been meaningful, broad based tax reduction, which the country desperately needs to grow our economy in order that we can be more competitive and, yes, more productive. As has been pointed out in the last number of days and weeks, Canada indeed has a productivity problem, which is largely due to the fact that our society is overtaxed.

It may come as a shock to Liberal members that personal income tax as a percentage of our gross domestic product is 18% higher in Canada than in the United States. Corporate taxes are 17% higher than they are in the United States. And we wonder why growth in our economy is stifled compared to what we see in the United States.

There is another price that this country pays for its high tax regime. More and more often our best and our brightest, the best young minds that we have in the country, are faced with a shocking fact. They are likely to finish an undergraduate degree owing $25,000 to $30,000. They are faced with decisions. Where do they seek opportunity? Where will they get paid more? Where will they get taxed less? Where can they have the best quality of life?

I am very proud to say that I still believe the best quality of life is found within the borders of this great country that we call Canada. However, we are going to lose more of our best and our brightest if we do not provide them with a tax regime which makes it competitive enough for them to stay here. I am saying, quite simply, that we need to lower taxes to end the brain drain.

I also want to point out what small business has pointed out time and time again. I would like to refer to a document from the Canadian Federation of Independent Business which indicates where small business feels their concerns were missed in terms of the excessive, extraordinary payroll taxes that we pay in this country. This government takes in over $6 billion more annually through the EI fund than the program actually consumes. That money belongs in the pockets of the Canadian taxpayers. It is plain and simple.

The CFIB also indicated where the concerns of the younger generation have been missed. As a younger person and a younger member of the House, I can say that the younger generation is very concerned about this. We have a $600 billion national debt which has been run up over the last 30 years. Now we are asking the younger generation to bear the burden of that debt. We owe it as parliamentarians on all sides of the House to make prudent investments to begin to pay down the national debt. It is our moral obligation.

There are other reasons for us to pay down the debt. As long as we have an enormous debt, as we do today, we will pay over $45 billion annually to service the debt. We will always be threatened with high taxes. We can never lower taxes unless we eliminate the causes of high taxes, and the principal cause is the national debt.

We need broad based tax reduction. Government members stand in question period, day in and day out, and say “We have lowered taxes”. I know people who are capable of lowering taxes. If there has been any growth in this country over the last decade it has been largely due to our export driven economy. Why is that? Where did that growth come from? It came from the free trade agreement of 1988, which was expanded by the NAFTA in 1993, which the Liberal Party opposed.

The government likes to take credit for balancing the budget. I would like to make it very clear that it was the Canadian taxpayers who made sacrifice upon sacrifice in the last number of years to get our fiscal house in order. It has been quite an ordeal. It has been a 15-year work in progress. I applaud Canadian taxpayers because they made the sacrifices to balance the budget.

Getting our fiscal house in order and once again having growth in the economy of this country is largely due to the Ontario government of Mike Harris. Since its election in 1995 it has lowered taxes and has made a commitment to balance its budget by the year 2001. If Mike Harris and Ernie Eves had not started the economic engine of this country again, that being the province of Ontario, nobody would have balanced the budget, not even this finance minister. That is very clear.

I would also like to point out where the real fiscal leadership in this country came from. From the political perspective, it clearly came from the provinces, first and foremost. I know it hurts, but it was the Progressive Conservative Government of the province of Alberta, led by Ralph Klein, which made a very firm commitment to pay down the debt because it believed it was wrong to burden the younger generation with it.

Gary Filmon, the Progressive Conservative Premier of Manitoba, also brought forward initiatives to balance the budget. He is the senior statesman of the provincial premiers in terms of the balanced budget legislation that he brought forth.

Again it comes down to the growth that has been created by the province of Ontario, which has been driven by the export sector and the lower tax regime.

I would also like to pay tribute to the government which was in power between 1984 and 1993 in terms of the tax reform which it initiated. If it was so wrong, why has the government not changed it? If free trade was so wrong, why has the government not changed it? Mr. Speaker, I know that you know the answer, being the very learned gentleman that you are. The reason the government has not changed it is simply because it works.

I believe it is imperative that we take some initiatives to invest in the future of the country.

It was a sin for the government to get its fiscal house in order by hacking transfer payments by more than 30%. Those transfers pay for our priority programs, such as health care, post-secondary education and social services. The government is not going to do anything. It is passing the burden of the problems to the provinces. I am very happy to say that the provinces met the challenge.

There are some investments to be made. I want to highlight one priority, the student debt level. It is a sin for an undergraduate to finish a degree today with a debt of $25,000 to $30,000. Why is that? Because the government slashed transfer payments by over 30%—

[Supply, May 3rd, 1999]

Mr. Speaker, I rise on a point of order.

Given the amount of respect I have for the House and this institution, I want to make sure we have as co-operative a relationship as we possibly can. Having said that, I would be free to take a brief moment to tell the member the difference between a subsidy and a tax incentive. I would be willing to help him.

[Supply, May 3rd, 1999]

Mr. Speaker, I would like to pick up on some of the comments made by my hon. friend and colleague from Lévis.

This is a very serious issue. We need to ensure that we are debating the merits of the initiatives which were put forth by the member for Saint John and seconded by the member for Burin—St. George's. All members from all parties spoke about this issue. I do not think we need to overly attack the intentions of different members. The member from Lévis has worked very hard on advancing this particular file.

The member's comments during his speech were dead on in one regard. The future success of the shipbuilding industry in Canada is through the export sector in addition to domestic repair and new ships which will be built to replace the aging fleets in the Great Lakes. In order to do that, an export financing regime is needed to be competitive.

The Americans have had a regime entitled title IX which they extended in 1985. Previous to 1985 they were not a player in exporting ships internationally. Almost overnight they started to show up on the order book in the United States.

This is something we should be very embarrassed about, but a company in Canada, Secunda Marine, had to make a financial decision on where it could get the best ship at the best price. All it came down to was the financing. The price was competitive but in terms of having access to capital and lease financing that was cost competitive, it made a choice to have a ship built in the United States. Courtesy of what? Courtesy of title IX, the same financial vehicle which we are asking the government to address. That is my first issue. Why do we not actually look at something that works and adopt it?

I have a second question for the hon. member. The membership of the Liberal Party of Canada voted overwhelmingly to adopt the very wording of today's motion. The previous Liberal member who spoke said that there are lots of motions and things that they vote on at conventions, inferring that it does not necessarily mean something is going to happen to them.

I know the membership and the policy initiatives of the Progressive Conservative Party of Canada. I believe Reform speaks to this as well. The membership of the Progressive Conservative Party of Canada owns the principles and policies of our party. It is incumbent on us to follow through with them, to visit them and to bring them to the House of Commons. They are not something out of a feel good group therapy session for our party members. That is what the Liberal Party of Canada obviously feels this to be if the Liberals are going to vote it down.

If I were a member of the Liberal Party of Canada, and thank goodness I am not, I would have voted on issues and policy directives and then have come to Ottawa and voted on a particular initiative actually to find out that they cared less if it passed or not. Are you going to actually respect the membership of your own party?

And what is wrong with adopting a title XI regime?

[Supply, May 3rd, 1999]

Mr. Speaker, I have a couple of comments and questions for my hon. colleague. I am left somewhat confused by his position with respect to shipbuilding. Maybe he can help me work it out.

He is saying that the EDC is actually supplying sufficient support to the shipbuilding industry and that the federal government is essentially doing the best it possibly can with respect to the industry.

Why would a candidate who actually ran in the riding of Lévis in the last election in 1997—I was a candidate and I know, Mr. Speaker, you were a candidate in that same election—make as one of his fundamental planks that we needed to have a new revitalized shipbuilding policy if everything was fine the way it was?

I am even more confused about a particular initiative. I know most Liberals sometimes get things a little mixed up or confused. The enter convention hall of the Liberal Party of Canada indicated as one of its policy initiatives that it was imperative the federal government take progressive steps to establish a new, revitalized shipbuilding policy for the country. They voted on that. The actual wording of the amendment we put forward today is very constructive. The entire Liberal Party of Canada actually voted at its congress to go ahead and do this.

If the candidate, the Liberal Party of Canada membership, the premiers, the shipbuilders association and the shipowners association all say that something has to be done, and labour is on side as well, I would say the member might want to take a look at it again and say that not everybody is happy with the so-called shipbuilding policy he put forward.

[Supply, May 3rd, 1999]

Mr. Speaker, I know the minister is concerned about not getting into the subsidy war. That is not where the world economies are actually headed. I concur with him on that particular point.

There are initiatives we can take that are clearly not from a subsidy driven perspective. I will point out a couple of them. One is that he could talk to his colleague in international trade and commission a very small team of maybe two or three persons to actually work on establishing some form of a bilateral accord with the Americans with respect to penetration into the U.S. marketplace on certain types of ships.

It could be on the Gulf of Mexico where there are some troubles in terms of drilling rig apparatus or shipshape hauls that we have developed for the Terra Nova project. There is something we could do from a very task oriented perspective and leave it there, let it work and let it hammer it out. That is one initiative I would point out.

Second, he made a comment that Revenue Canada leasing regulations combined with accelerated depreciation could be a very expensive initiative. Given that there are no ships made today whatsoever using this formula, creating some economic activity and some tax revenue is certainly better than no tax revenue. I argue that we cannot afford not to do it. If we combine that with the fact there are social costs to the individuals who will be without work and whom we may actually have to support in a different initiative.

The wording we chose today is the exact wording tabled under the Liberal Party of Canada's policy initiative. I would be very surprised if there were not members on those backbenches and even in cabinet who supported that initiative. Why would the minister not support this initiative today?

[Industry, May 3rd, 1999]

Mr. Speaker, I will ask the Prime Minister once again: If the shipbuilding policies that the government currently has in place are so good, why has the employment level in coastal communities where there are shipyards plummeted to barely one-third of what it was previously?

The Prime Minister was once a member of parliament for an Atlantic province. When will he convene the Secretary of State for International Financial Institutions, the Minister for International Trade, the Minister of National Revenue and the Minister of Industry so that a statement can be made that something has to be done regarding the shipbuilding industry in Canada?

[Shipbuilding, May 3rd, 1999]

Mr. Speaker, my question is for the Prime Minister. There are a number of individuals other than those in the opposition parties who are not happy with the government's treatment of the shipbuilding industry. All 10 premiers are not on side, labour is not on side, the shipbuilders association is not on side and the shipowners association is not on side.

When asked which minister is responsible for the file, the Minister of National Revenue said “Not mine”, the Minister for International Trade said “Not mine”, the Secretary of State for International Financial Institutions said “Not mine” and the Minister of Industry said “I do not want it”. When will the Prime Minister act to get these ministers together so they can sort it out and get it right?

[Supply, May 3rd, 1999]

Mr. Speaker, I think the issue we are troubled with, and this has been a very troublesome debate in this regard, is that the initiatives that have been discussed have been supported by an unprecedented level of individuals. As I stated, all of the premiers supported financial initiatives as well as other initiatives at St. Andrews in 1997.

I really am at a loss to explain what the problem is, other than to say that we need to have some political leadership on the file.

I reiterate that this is a public policy initiative that was tabled at the conventions of the Liberal Party in 1993 and 1998. It is the very same wording. I am sure that every member of the House said that this was an issue which we have to re-visit. In fact, the member from Lévis said that this was a priority of the government as well. If it is a priority, then let us do it. A priority is something on which there is an intent to follow through.

A government that has too many priorities, by definition, has no priorities. What we are asking of this caretaker government is that it engage and do something with the industry. We have put forward four initiatives. The government should show the people that it is sincere about addressing this issue.

Governments have a role to support a tax regime when two regional economies have an indigenous advantage. We have ports, we have an ocean and we have access to those markets. All we are looking for is sound and viable access to our markets through trade and taxation regimes.

[Supply, May 3rd, 1999]

Mr. Speaker, the hon. parliamentary secretary and I worked collaboratively and had very co-operative debates on this issue back in October 1997. I will admit that he has a sincere interest in terms of advancing this file.

The motion calls for the commitment of the government as a whole to address the issue.

We are not even going to argue what particular initiatives have to be taken. We have put forth some very constructive suggestions and we are challenging the government to say “This is what we are capable of doing”, as opposed to “This is hands off. What we have now in terms of our national shipbuilding policy, in terms of tariffs, in terms accelerated depreciation is all we are going to do”.

As far as rail car initiatives are concerned, whatever is competitive for the rail car industry should be afforded to the shipbuilding industry as well. However, it has to be done by revising Revenue Canada leasing regulations concurrently with accelerated depreciation.

[Supply, May 3rd, 1999]

There is no pursuit. We have heard comments as to why the Jones act was exempt from the free trade agreement in 1988 and 1993. That is the kind of rhetoric that has been put forward. Everybody in the House understands that the free trade agreement is the fundamental cornerstone of our economy today in terms of augmenting our trade with the Americans. We have over $200 billion worth of trade with the Americans. Previously it was only $80 billion. However, we were not able to get this one particular industry into the trade agreement.

The government has been in power for over six years. It has not once taken the opportunity to look at improving this. Rather, it has put the blame on the previous government. Not once has the government said that it would be a very good initiative to set up a trade component sector by sector. The parliamentary secretary mentioned that it is imperative that we take a sector by sector approach. Why do we not set up a trade component, go to the Americans and negotiate a bilateral accord on certain types of ships? Maybe they would be drilling rigs. Maybe they would be ocean going tugs. We have not taken an initiative to penetrate the Jones act.

I will outline very briefly what we are considering because my colleagues have done a fabulous job in terms of the initiatives put forward by my friend and colleague from the neighbouring riding of Saint John, the member for Chicoutimi and the member from Lévis. There are a number of members who really believe this is something we need to do.

We need to develop a loan guarantee program similar to the American title XI, which has been in effect since 1936. Do members know how many loan defaults there have been since 1936? Since 1936, under this very prudent criteria, with the federal government guaranteeing the loans, there have been zero loan defaults. Absolutely none. Why are they scared to look at something that works and implement it in our country? I know there are people listening to this at home and in the House who cannot fathom why that initiative has not been taken.

I believe that Reform agrees with me that this country is overtaxed. Why do we want to tax an industry so that it has no chance of competing? What we are advocating is to revise the Revenue Canada leasing regulations concurrently with accelerated depreciation. That would lower taxes. We do it for rail cars, computers, trucks and other industries.

I ask my colleagues again: Why would they not want to take that initiative if it is done for other industries? What do they have against this cutting-edge, high tech, modern industry?

We should revise Revenue Canada leasing regulations to make them similar to the title XI loan guarantee program.

I will give the government a bit of credit in this regard. It has taken some steps with respect to the Export Development Corporation. However, I would argue that it should look at doing that for the domestic market as well.

I have talked about the need to have a bilateral accord in terms of the Jones act. This comes down to three fundamental principles. First, we have to be able to establish a marketplace. The marketplace is threefold domestically. The ships which exist on the Great Lakes today are aging and will be need to be replaced or refitted. We need to ensure that we have a competitive indigenous industry to take advantage of those opportunities.

The second market would be to go after a bilateral accord with Americans, which I just pointed out.

Third, we could compete with the EU if we provided the appropriate tax regime.

The last point, which I cannot fathom, comes downs to political leadership. This is not a debate about what needs to be done; this is purely a debate about who is going to get the job done. The Minister of Industry should be an advocate for this industry. If he does not want to be the quarterback, then I suggest he step aside and let someone take over who actually cares about the industry.

I am suggesting that the Minister of Industry step aside and let the Prime Minister be the quarterback of this initiative so that he can bring the Minister for International Trade, the Minister of National Revenue and the Minister of Finance on side to get the individuals in this industry working by opening markets, lowering taxes and re-establishing the industry.