Jim Silye

[Excise Tax Act, December 3rd, 1996]

Mr. Speaker, I thank the hon. member for his intervention. I will try to answer his comments about my misleading the public and that the auditor general did not qualify his observations in his signing off on the financial statements.

I agree with the hon. member. He did not make a reservation on it because he said: "Substantially the changes and effect that would occur that year might happen but the significance would happen and those looking at the Government of Canada from afar would be able to recognize that that is the intent of the government". However, he did make it clear and spent a lot of effort in pointing it out to us, notwithstanding that he did not make a reservation on it and signed off.

The point is that if we start allowing politicians to do things with financial statements that go to the edge of generally accepted accounting principles, integrity is at stake. When you go against the history of 126 years in Parliament, which has never been done before, of taking something that has not been consummated, that may lead to a deal down the road and charge it off to prior years-

[Excise Tax Act, December 3rd, 1996]

Mr. Speaker, I will clarify. I thank the hon. member for the correction. I did kind of ad lib. The word bribe is not in the report.

Here are his startling concerns: "The inclusion of transitional assistance of $961 million in the 1996 deficit and accumulated deficit represents a departure from both sound accounting practice and the government's own accounting rules. In my opinion the transitional assistance of $961 million should be included in the deficit subsequent to the 1995-96 fiscal year. Failure to comply with generally accepted practices resulted in an overstatement of the annual deficit and accumulated deficit of $961 million".

The transitional assistance of $961 million has been recorded as a liability at March 31, 1996 and as an expenditure, a resultant increase in the deficit for the 1995-96 fiscal year.

As I said at the outset of my intervention this afternoon, this agreement does not come into effect until April 1, 1997, two fiscal years later, the year ending 1997-98.

Is this bribe or transitional assistance, as the government prefers to refer to it, a liability as of March 31, 1996? Clearly this is not the case because according to generally accepted accounting principles and the government's own rules: "Financial obligations are recorded as liabilities if the underlying event occurred prior to or at year end". It did not occur prior to March 31, 1996 and it did not occur at year end March 31, 1996. In fact, it is occurring now. Agreements are being signed now and they will take effect April 1, 1997, which is the next fiscal year, not even in this one ending in 1997.

Also: "Transfer payments are recorded as expenditures when paid and when the recipient has fulfilled the terms of a contractual transfer agreement". Clearly this is not the case. They have not fulfilled the terms of the contractual agreement. The auditor general agrees with me because he states in the Public Accounts:

"Eligibility criteria had not been met by the three provinces by March 31, 1996 and, accordingly, the $961 million of compensation should not have been recorded in the accounts at that time. Although the government is committed to compensating the provinces once agreements are signed, the $961 million is not payable until the agreements are signed".

The government and its officials hung their hats on memorandums of understanding. Mr. Speaker, I know you were an outstanding lawyer when you where practising and know the terms of law very well. You and I both know that letters of agreement, memorandums of understanding have a certain way of sometimes changing. That is why the auditor general is right. That is why generally accepted accounting principles cannot be departed from. Shame.

The integrity of government financial statements is at stake. This action on harmonization impairs the integrity of the process. Shame. Shame on the finance minister, the deputy finance minister, the President of the Treasury Board, the secretary of the Treasury Board and the receiver general and the deputy receiver general, who have all compromised some integrity, walking a fine line on interpreting generally accepted accounting principles and prior government practices, setting a new precedent just to help the Liberals fulfil a self-serving political promise and to help the finance minister bury the high cost of harmonization in a prior year ending in 1996 just because the government had bettered its deficit target and done better than it had projected in that year. Therefore this was a good time to bury it, hide it and then forget about it and we will not have to record this transition cost, this bribe, this enticement, whatever anybody wants to refer to it as. This is nothing more than political self-serving and I say shame.

I have given examples and testimony to prove conclusively that this feeble, partial, half-hearted effort of replacing the GST with something that is revenue neutral is not. I quote from the red book. I am trying to interpret legitimately, accurately what the Liberals now say they promised door to door.

Knock, knock. Hi, I am the member for Broadview-Greenwood. I will replace the GST with a tax that is revenue neutral, that will take as much money out of pockets as it does now and then we never worry about the GST again. That is what the Liberals said they promised. I believe with the examples I have given I have pointed out how misleading, hypocritical and self-serving have been their remarks for a period of four years.

This is an important issue. The GST is a bad tax. In and of itself it can be good in terms of consumption taxes. But when it was introduced the Liberals in opposition argued against it, as they should have. Now that they are the government they promised to get rid of it. They have not. They have entrenched it.

Most everyone acknowledges that the GST has been the biggest cause of the growth in the underground economy. How is it then that by entrenching a 15 per cent tax is going to eliminate the growth in that economy and eliminate the activity within that economy?

The Liberals brag about how this is a step in the right direction, how this will replace the GST and be revenue neutral. We will still have the high cost of administration of the GST type of tax that we had. Reformers feel that the government should get out of this domain altogether, leave it to the provinces. The $15 billion net revenue required should be put into a simplified tax system featuring a dual rate. That is how to raise that revenue. That is simplifying it. That is eliminating the GST. That is making it revenue neutral. That is solving the problem.

[Excise Tax Act, December 3rd, 1996]

Mr. Speaker, I rise today to address or undress this government on its proposed legislation for a harmonized sales tax and to streamline the GST under Bill C-70.

First, I have a little humour that might put this in perspective. A good friend of mine in Calgary, Martin Struthers, is a travelling salesman in the clothing line. He told me that he ran into a lot of Liberals over the summertime on the golf course. They were playing with a particularly cute golf ball that had the logo of the current Deputy Prime Minister on it. When he asked the Liberals why they were using this golf ball they said: "Well if we use this golf ball, we are free to change our lie any time".

On November 29, 1996 the government boldly issued a press release announcing that three Atlantic provinces, Nova Scotia, New Brunswick and Newfoundland and Labrador, had agreed to harmonize the GST and provincial sales tax effective April 1, 1997. The effective date is important. It is next year, not this year. I will come back to that later on in my speech.

The finance minister is quoted as saying: "This proposed legislation represents another step toward an integrated national sales tax system for Canada". I stand before this House to state unequivocally that this comment by the finance minister is misleading, that the steps he has taken to harmonize the GST are hypocritical and that this whole exercise is nothing more than politically self-serving by Liberals at its worst. These are the three arguments I wish to address and I will do so under those titles: misleading, hypocritical and politically self-serving.

Under misleading, it is misleading that the rest of the country will not participate in the harmonized sales tax system even though the finance minister says that this is leading toward it. P.E.I. dropped out. Ontario has said to take a hike. Alberta wants the net effective rate that the Atlantic provinces get, which is 5.5 per cent. His whole claim that he is moving forward contradicts the facts.

Take Ontario. Why would Ontario comply when it has already indicated that it would cost Ontario consumers another $2 billion in goods and services with a combined rate? Why would Mike Harris want to punish Ontarians just to play politics with the 99 Liberals who are doing very little for Ontario, other than downloading their problems in health care, education and welfare, increasing taxes through the elimination of certain loopholes and tinkering with the corporate rate structure?

On top of that, the government's share of the billion dollar bribe to entice the three provinces to participate is going to cost $400 million over three to four years.

It is misleading for it to claim it is making progress when only three provinces out of ten are participating.

The finance minister has failed to get the other provinces to participate. Why? It is a tax increase on consumers. Even the department of finance of Nova Scotia, one of the participants, in its analysis of May 1996 revealed that the net effect of the harmonized sales tax burden on consumers would increase by $80 million.

Retailers, especially national retailers in the region, claim that their extra costs to retain a dual system of taxation for those stores within the three provinces and for those outside will cost them $27 million.

The government claims, in defence, that businesses will pass on any portion of their savings achieved through harmonization. Excuse me, based on what prior evidence? There will be a $107 million increase to consumers in Atlantic Canada. That is what will happen through a reflection of price increases. A billion dollars has been taken from the federal coffers, from the rest of Canada, to transfer the system.

It is misleading to state that the Reform Party supports harmonization. In the Standing Committee on Finance, of which I was a member and one of the co-authors of the report, when the government was looking for a GST replacement we indicated quite strongly that if the government was going to harmonize it had to harmonize on a national basis, with all the provinces, at the same time, and make it revenue neutral, with the widest possible base, providing the lowest rate. That has not been achieved. Other provinces will not participate. We clearly stated in our executive summary that harmonization cannot be fully endorsed. Talk about being misquoted and taken out of context.

Therefore we oppose the harmonized sales tax in its present form. If the government would bring us something which is for all of Canada we would consider it.

It is misleading to claim that this will save money when it will cost the rest of the provinces close to $1 billion, $961 million to be exact. We call it a bribe to compensate the provinces for the lost revenue of the lower PST and to entice them to participate.

That is very misleading. Who is going to compensate the other provinces, entice them or bribe them? Where is the money going to come from to provide the lost revenue for the other provinces, such as Saskatchewan, as the member previously mentioned?

This move is also hypocritical. I will touch on this point briefly. When in opposition the finance minister said: "I would abolish the GST because the manufacturers sales tax is a bad tax, but there is no excuse to repeal one bad thing by bringing in another". That appeared in the April 4, 1990 edition of the Montreal Gazette .

On March 17, 1990 in an interview with the Calgary Herald the finance minister said that the GST is a tax which discriminates against the regions and that he would get rid of it if possible. However, he said it would be difficult to do that if the federal tax becomes integrated with provincial taxes: If it becomes integrated'', which the government is now bragging about,with provincial taxes'', which it has just done, ``we will never get rid of the GST. We will never replace the GST''.

He further said that another alternative would be to look at alternative consumption taxes that are not regressive and do not penalize the regions of the country.

We are talking about the hypocrisy of the finance minister's statements. The hypocrisy lies in the fact that he has acted exactly opposite to what he said in opposition and opposite to what his personal beliefs are. He has entrenched the GST instead of getting rid of it. He has also introduced a taxation system which penalizes the non-participating provinces to the tune of $961 million. He is making seven provinces pay for lower tax rates in three provinces and basically penalizing the rest of the country just to integrate a bad tax, which he said he would never do. His deal is with three provinces that have Liberal premiers, three provinces that may soon have three Conservative premiers once this ripples through the economy of those three provinces.

We do not need to remind everybody what happened in P.E.I. My colleague from Wild Rose has already pointed that out. That Liberal premier lost his job thanks in great part to the federal Liberal government and its action in this regard.

I believe it is also hypocritical to argue that the Liberals have a pan-Canadian view of Canada because they are taking from the richer provinces and giving to the poor. Is this a new definition now of equalization payments where seven provinces are paying for ten, a complete reversal of the current equalization system where three provinces pay for seven?

It seems to me there is hope for Reform's fresh start platform. We suggest that we should review the equalization payment system and have maybe the top five provinces paying the bottom five and have a little competition in there which would be a better approach to a new vision for a better Canada.

Finally, I also feel that the harmonized sales tax is politically self-serving. We all know the promises from the Deputy Prime Minister, the Prime Minister to the finance minister and a whole bunch of other MPs during the campaign about what they said at the door and also what is in the red book. They have not even kept their red book promise because this is a partial and it is not even revenue neutral and any way you cut it they have broken their promise.

We all know about the member for York South-Weston who has quit over this because of principle. We all know about the member for Broadview-Greenwood. What these people campaigned on and what they delivered are two different things.

In order to limit the damage and in order to continue the myth that they are solving and keeping their red book promises they have introduced this GST harmonization at a huge cost to the country, at a great disservice to the premiers of those three provinces who

were hoodwinked, bribed and misled and where the Atlantic residents will see their cost of living go higher.

The finance minister has admitted that he failed to deliver on his promise to scrap the GST. The Deputy Prime Minister admitted they have not delivered on their promise and quit subsequently. She never promised that she would run again but she did and she got re-elected.

The only person who fails to admit that they failed to deliver on their election promise is the Prime Minister who is off around the countryside taking credit for all the global deals, thanks to businessmen who have been working hard for five years and thanks to the previous government that fought hard and implemented free trade and the North American Free Trade Agreement.

This harmonized sales tax is politically self-serving because they have told the Atlantic MPs to keep quiet. Why are they not speaking out on this and telling us how wonderful it is and how great it is? Why do they not go on the record and tell Atlantic Canadians that this is the best thing since sliced bread and there is no sales tax in the Atlantic provinces? It has disappeared. The ads are there. Defend that. I would like to see them defend that. I would enjoy listening to them defend that there is now no sales tax in these three provinces.

There will be businesses going under in the Minister of National Defence's riding. They have already shut their doors. These Atlantic MPs have been told to stay quiet. Where are they? How can all of them say this is a good deal in light of all the people who have come forward and said this is not a good deal, especially MMG Management Group which runs discount chains under names like Greenberg, Red Apple, MetMart and Metropolitan in New Brunswick where 79 jobs have already been lost due to this harmonization and a 50-50 chance of another 71 jobs being lost according to their own calculations?

The worst example of all that I have of political self-serving is contained in the Public Accounts, volume 1, pages 1.24 to pages 1.26. It talks about the whole financial aspect of accounting and also the auditor general's comments: "Responsibility for the integrity and objectivity of the financial statements rests with the government. The financial statements are prepared under the joint direction of the President of the Treasury Board, the Minister of Finance and the Receiver General for Canada in compliance with governing legislation".

The auditor general then gives his comments. Here are some of his startling concerns that he felt should be brought to the House and parliamentarians made aware of: "The inclusion of transitional assistance", which is the same debt word as bribe, "of $961 million in the 1996 deficit and accumulated deficit represents a departure from both sound accounting practice and the government's own accounting rules. In my opinion the transitional assistance of $961 million should be included in the deficit

subsequent to the 1995-96 fiscal year. Failure to comply with generally accepted principles resulted in an overstatement by the annual deficit and accumulated deficit of $961 million".

[Excise Tax Act, December 3rd, 1996]

Okay, I need clarification on that but I know there was something different. I do not want to put words in his mouth but I would like to know what it is he recommended at that time. I do know that he was against the GST.

In his speech the minister indicated that this was an improvement over the GST. How is it an improvement when the GST has not changed? All the inherent problems are still there. In fact that party during the election campaign promised to scrap, to kill, to abolish the GST and then tried to weasel its way out of that. But let us say to even replace the GST with something which is revenue neutral, the Liberals have failed on both counts.

On the first count, the Liberals did not scrap or replace the GST. In fact they have entrenched the GST into our lives forever because now they have harmonized it with a provincial sales tax and there will be no future provincial government that will ever want to give up that source of revenue, especially at the high rate of 15 per cent. All the inherent problems of the GST will still exist. Exempt or not exempt, zero rated, all these different rules will still be there and will still cause problems.

Second, during his speech the minister said that the new harmonized tax will not increase revenues for the government. We all know it decreases revenues for the provincial governments because of the drop in their PST. In their red book the Liberals promised they would replace the GST with something that was revenue neutral.

If what he said in his speech is true, that this is revenue neutral, no more revenue to the government, which means no less revenue to the federal government, it is going to cost the federal government $961 million as a payment to the three participating Atlantic provinces. It means that this new tax is not revenue neutral, it is revenue deficient and therefore it is going to cost the taxpayers money.

Finally, I find this to be somewhat like the minister of myth. The finance minister likes to brag about the ads on the Atlantic advantage. How can the provincial premiers say there is no sales tax when there is a GST which represents the goods and services tax of 15 per cent?

[Excise Tax Act, December 3rd, 1996]

Mr. Speaker, I would like to congratulate the Minister of Industry on his fine defence of the harmonized sales tax. I will make a few comments and ask a few questions along the way.

I seem to recall that when I served on the Standing Committee on Finance three years ago and we were looking at the GST replacement, I reviewed what the Liberals said when in opposition. I found that the minister was a member of the Standing Committee on Finance at that time, or at least a member of a group that submitted a minority report to the government of the day suggesting a solution to the manufacturers sales tax which was not a goods and services tax. It was not the GST. He opposed the GST. I seem to recall that he supported something completely different which was more along the lines of the single tax that the member for Broadview-Greenwood was proposing.

[Great Lakes Region Of Africa, November 18th, 1996]

Madam Speaker, does the hon. member know what the exact mandate is in Zaire? Does the member know how long the troops are going to be there? Does the member know what the ultimate costs are going to be? Under what terms and conditions will she consider this mission to be a success?

I understand the humanitarian aspect of it, but now there seems to be a lot of controversy over whether we should even be going. This was a Canadian initiative by the Canadian government, by the Prime Minister himself, and all of a sudden the borders were opened and a lot of the prisoners were let go. Now they are on hold and there was the big debate on Thursday.

It is nice and wonderful to be saying that we care and we want to help, which we do, but on what basis will the member consider this a success and still in light of the problems we have here at home, why do we not address some of those?

[Great Lakes Region Of Africa, November 18th, 1996]

Madam Speaker, I would like to ask the hon. member a question which arose today when I spoke to a group of over 100 university students in the West Block. They were here viewing Parliament and how it works. In the question and answer session one asked me: "How come we are spending so much money in other countries when we have such a high level of child poverty here in Canada and when we have our own problems here in Canada? Yet it seems we send more money elsewhere and do not look after our own here in Canada". I gave my answer and I would like to know how the member would have answered that question.

[Great Lakes Region Of Africa, November 18th, 1996]

Madam Speaker, I would like to pursue this a little further. We were told when troops were sent to Haiti that they would be there for six months. An extension would be asked for.

We do not know how long the troops are going on this humanitarian effort. So when I say ad infinitum, I want to know why parliamentarians are not given more information and why the government or the minister of defence does not establish what our role is in terms of the military and defence. Are we peacekeepers or are we more than that? Let us tool ourselves up for that.

It is very frustrating in my opinion to see us committing and stretching ourselves out and not really getting the recognition and

the credit that we could still be getting even though we do have the best troops in Canada.

How long will this be for now? Why are the troops not out of Haiti?

[Great Lakes Region Of Africa, November 18th, 1996]

Madam Speaker, I know why the hon. member supports this mission and I accept that. However, I would like to know how it is that our peacekeeping forces can be sent all around the world, ad infinitum, without a finite end to these efforts? I am talking about the bigger picture.

I suggest that our troops are only able, by their own admission, to take on two peacekeeping ventures at a time. This is a third one. They have two other commitments in Haiti and Bosnia. Are we not stretching these troops out too much? Are we not imposing a greater burden on them than we should be? How sensitive are we to their needs? We were told by the military that it only has the capacity, the money, the troops and the equipment to handle two peacekeeping missions at a time.

How does the member balance the military's admission of that fact with his support for this humanitarian effort? It will have to be measured on what criterion we think is just to make sure that the refugees are safe, have food and the basic necessities and that the rebels will not fire on them? How does the member rationalize us supporting this in light of the fact that our troops are being stretched to the limit right now?

[Great Lakes Region Of Africa, November 18th, 1996]

Madam Speaker, I would like to ask the hon. member for Rosedale a question after this brief commentary.

He indicates he would support UN participation and he supports this peacekeeping mission to Zaire. I commend him for that and I have no problem with that. My question is related to the armed forces we have, the role they play and how it just seems to be always a shifting and moving target. It is almost like how the finance minister talks about his deficit elimination tactics.

If we are to support peacekeeping efforts, if we are to support a military, why did the Liberal government, of which he is a member, reduce the defence budget and continue to support peacekeeping missions around the world? As my colleague from Red Deer said in the first speech on this issue today, every foreign affairs minister in the House of Commons says this is for a set period of time and we will have that problem solved. Why was the budget cut? What criterion does the member from Rosedale feel the government should set out for itself to define the role of this humanitarian mission? Under what terms and conditions will this member then feel it has been a success or a failure? If we do not know as members of Parliament what the terms are, how do we know if it is a success or not?