Alex Shepherd

[Banking, October 31st, 1995]

Mr. Speaker, my question is for the Secretary of State responsible for International Financial Institutions.

The banks of this country are holding customers' cheques for final clearance often for weeks. Everyone knows the banks within our system clear their cheques within 24 hours. The United States banks are required to pay up after 72 hours.

What will the minister do to stop the banks from profiting from this practice at the expense of average Canadians?

[Small Business Loans Act, October 25th, 1995]

I thank the hon. member very much for the question.

First, the whole concept of a guarantee creates the opportunity for the bank to loan money that clearly it would not loan on its own accord. I note in the legislation that in fact we have actually lowered the loan guarantee from 90 per cent to 85 per cent. If we simply look at the growth and the volume within the small business loans program in the last three years, there is no question that there has been a demand, and a demand that has been satiated, if you will, by financial institutions.

Clearly, the program is on a success course and it continues to be on a success course. In fact it was the government's orientation to say this was very successful and we want it to expand, we want it to grow more, we want to make sure there is more money available for small and medium sized businesses; but at the same time, we also want to make sure we are not going to be on the hook for it.

One of the complaints of this program has been that a lot of the money was getting out to businesses that could have possibly financed loans without the Small Business Loans Act; in other words, possibly banks were misusing the program or possibly larger companies were getting the benefits of the program and they did not really need it. By lowering the guarantee aspect of this loan, we will also be ensuring that we direct it at the very new and emerging small and medium sized businesses.

[Small Business Loans Act, October 25th, 1995]

Mr. Speaker, the member for St. Albert keeps going over this. Repetition is a great educator, so hopefully he will listen a little bit more this time.

First of all, there is nothing terribly unusual. This program has been set up in the best interests of small and medium sized businesses.

Let us look at the other side of it. What will we do if in fact the government did not try to recover this bad debt loss? What does it mean? Does it mean that we do not have a program, period? We know it has been very successful. We know that using this system has assisted many and has probably created thousands and thousands of jobs in Canada.

Maybe the member wants the government to fork out $100 million a year in loan losses. Is it the responsibility of Reform Party members to tell the Government of Canada to cut spending, get its act together, and if it wants to give away $100 million on loan losses that is fine by them?

There is nothing unusual about cost recovery programs. They happen in the business world every day. Here we have the government acting like a business, creating opportunities for small business but at no cost to the taxpayer.

[Small Business Loans Act, October 25th, 1995]

Mr. Speaker, I would like to thank the member for Broadview-Greenwood. I have always been interested in what he says. We do not always agree 100 per cent of the time, but basically our orientations are in the right area, which is to increase capital for small and medium sized businesses.

The member is absolutely right. Banks in this country have forgotten just what they were doing. Banks originally started off many centuries ago investing in ideas. They invested in people's grey matter. They invested in their ideas about making life better and increasing people's standards of living. I have noticed that banks now invest in financial transactions. Our banks in North America are very oriented toward paper currency transactions. Indeed, I think if we were to study the balance sheets of most of our banks we would see a high percentage of their assets being held in government securities, et cetera. This has become a linkage in the global environment.

The reality is that these debts and financial instruments do not do anything. They do not create any more jobs. They do not create or take a piece of technological science and turn it into something useful.

What do we see in North America? We see people like Bill Gates, who had to work out of his garage to get his ideas going. People have to go and find others who will give $50 to buy so many shares and maybe later on some of that will come back. The banks say that sounds pretty wild.

I have a specific example of this in my own riding. I had the pleasure only last week of congratulating an entrepreneur for winning the Canadian woman entrepreneur of the year award in the area of export. This woman many years ago was my client. She was making strips of fur and putting them on strings. I must admit that even to me it sounded ridiculous at the time. What she did with that was to create a reversible fur coat. I went to various banks for her, and they said: "What are you going to give us as security, strips of fur? Get out of here." Do you know who finally picked up this account? It was a bank from England, not a Canadian bank.

That woman today employs hundreds of people. It is a small business in my riding that has given jobs in basically a rural area. Her product is shipped all over the world, mainly to Japan and Southeast Asia. She is creating jobs and hard currency exchange for our government and our country without the support of banks.

Yes, the member is absolutely right. This whole attitude in our banking system has to change. We have to get on board and support our small and medium business sector.

[Small Business Loans Act, October 25th, 1995]

Mr. Speaker, I am pleased to speak on Bill C-99, an act to amend the Small Business Loans Act.

I believe it is the responsibility of governments to create an environment in which businesses can flourish. This is where most of our jobs will be created. On the history of job creation in Canada in the last year, 90 per cent of all new jobs have been created by small and medium size business. It is interesting to focus on this because this is small business week. Of these 200,000 jobs, one-quarter were created in the province of Quebec; 48,000 new jobs were created by small and medium size businesses.

I talked about creating an environment in which these businesses can flourish. There are two aspects that create a stable environment in which small and medium size businesses can flourish and be effective in their operations of creating new and challenging jobs for a new generation of Canadians.

These two areas are access to capital and access to stable markets. The area of access to capital deals pretty much with the meat of this bill. We have been told time and time again by some of our critics that we must make government more efficient, that we must find ways of cutting costs.

The bill recognizes the federal government was in the position of picking up bad debt losses created by lending practices, loaning to some of these businesses which obviously failed.

There is nothing unusual about that. It is not a calamity. It is not a disaster. The loan loss rate within that program was somewhere between 2 per cent and 4 per cent. This is quite normal in the banking industry.

Basically the Small Business Loans Act attempts to create a federal government guarantee which encourages financial institutions to loan to small and medium size businesses.

Some may ask why these institutions do not do it without the guarantee. Most of these loans were for capital projects. Our financial institutions for a variety of reasons have become very much short term lenders. They lend on the strength of things like accounts receivable and inventory, things they believe they can quickly liquidate.

When a small business is setting up it needs manufacturing equipment, possibly delivery vehicles, whatever the case may be, equipment that has a long and useful life, but it also clearly takes a long time to pay off a loan based on the income flow from that.

Banks have not always been as active as perhaps they should. Small or medium size businesses, which are sometimes emerging businesses, also have instability to some degree in their financial records.

Quite often banks, being very conservative lenders, are looking for a long track record. Our emerging industries today do not necessarily have a long track record. Consequently they may have one or two-year financial statements and so forth but the banks are very cautious. They would rather loan to governments than to businesses.

It has been necessary for the government to recognize there are inequities within our capital markets and create a program that will attract financial institutions to loan to small businesses to get them established and create jobs.

It is no small miracle that the government can claim some responsibility for these 200,000 new jobs created in Canada in just the last year because at the same time we have witnessed the increase in the small business loans program. This program loaned $500 million prior to 1993. That moved up to $2.5 billion in 1993-94 and to over $4 billion in 1994-95. That kind of tremendous growth shows the demand in the small business sector for this kind of lending.

If we take our loan loss provisions of 2.5 per cent roughly and move them through that increase in volume we will see it is possible the government could be facing loan losses of $100 million.

What has the government done? It has recognized it should do, not unlike what any financial institution would do, and build that cost into the lending provisions. Essentially it has created a fund as part of the application fee, a new 1.5 per cent fee added to the cost of borrowing this money and then it is spread out over the term of the loan in order to provide for as much as $100 million of loan losses.

All banks do this. All financial institutions carry on this way. It is not unusual. I am surprised the third party takes some exception to this. Small business people understand it. We realize even when we go to our local supermarkets to buy consumer goods that within the cost of purchasing are things like theft. There are other provisions for products that go bad and so on. That is the normal course of business.

I commend the government for getting its economic house in order by recognizing, as small business people do, that it cannot be responsible for all small business ills. The government has created a situation in which small business can get access to capital. That is really the whole point of the Small Business Loans Act, to provide access.

I served on the industry committee which produced the report "Taking Care of Small Business". Over and over we heard from small and medium size businesses that their major concern and problem was access to capital; not so much the cost of the capital but the access.

In some of the provisions we talk about increasing the lending interest rate from prime plus one to prime plus three. Emerging businesses do not like to pay more interest than they have to but realize that a 1 per cent or 1.5 per cent increase in interest rates is still well worth it to them to get this seed money to get themselves established.

When I talk about access to capital it is interesting also to note capital markets. What has happened with our debt and deficit situation is many governments are competing in the marketplace with small and medium size businesses for capital. This is why we have to get our debt and deficit under control and why I am happy the government is very much on that course and on a target to effect that.

In Quebec a referendum is due next week. Quebec borrows something over $70 billion. That is the size of its debt right now. Interestingly, 54 per cent of it is financed outside of Canada. It seems odd that we are going through the process of a referendum in Quebec which costs $66 million, as stated in La Presse recently. By extrapolation almost $35 million of the cost of the referendum will have to be borrowed from people outside of Canada to ask the people of Quebec whether they want to be an independent country. It seems ludicrous.

That is the problem of the capital markets. I would like to address the issue of markets. Clearly, the small business man or woman is not just looking for capital for machinery. He or she needs a market to serve.

There has been much talk about the globalization of our economy and the need to have easy access to markets. Indeed, agreements like the North America Free Trade Agreement and the GATT address that cause.

A recent study by the OECD on the whole aspect of small and medium sized business is very interesting. The European Union and other members of the OECD are very interested because all these countries recognize that small and medium sized businesses are going to be the employers of the future. In a recent report, I believe from October 1995, they said: "Sudden national economic growth will be enhanced if government policies are co-ordinated and targeted so that they strengthen and reinforce regional and local systems. This should improve the conditions that encourage new and small firms."

While we are talking about these markets, once again we are talking about a debate that is going on in the province of Quebec that would basically balkanize those markets, would create barriers to markets, would make the markets much smaller for these 48,000 people who are employed in small business in Quebec, because a nation defines its markets within its political boundaries and operates within those political boundaries to its own best interests.

I am trying to say that the bill is very much a necessity and should be supported. More importantly, some of the debates that are going on within our country today are simply ludicrous. I am talking specifically about the referendum in Quebec. It will create more barriers for small and medium sized businesses. The ability to create new and challenging jobs within Quebec and to some extent in the rest of Canada is going to be adversely affected by that process.

In conclusion, I would like to say that I am very supportive of the bill. I am certain that the small business community is also very supportive, understanding, and respectful that the government has taken the initiative to continue this program to increase the volume that is available to small businesses. I am sure we will see creation of more new jobs within our economy in the near future because of it.

[National Horse Of Canada Act, October 24th, 1995]

Mr. Speaker, I am pleased to enter the debate on Bill C-329 to recognize the Canadian horse.

I must admit I am not knowledgeable about horse breeding. One of my constituents brought the bill to my attention. As I read over the history of this horse in Canada, I realized it is part of our identity, part of our cultural history. The member from the Reform Party who went into great dissertation about the irrelevance of the legislation, I believe, misses the very important point that cultural identity is what makes a nation.

Looking at the history of this horse, in 1665 it originally came from the royal stables of King Louis XIV. It was situated in New France. During that time the breed strengthened and became larger until 1759 at the time of the collapse of New France.

It is interesting to study political economics. It is something I have always been fascinated with. There is always so much concern about what happened on the Plains of Abraham in revisiting our history of those days. If we were to study the history of New France prior to the Wolfe-Montcalm battles, we would discover an economy that was rampant with inflation, high debt and high unemployment. It is interesting that these are some of the very problems we have today.

After the collapse of that economy, many French speaking people of New France left the province. They went to Manitoba.

Do we see any similarities between some of these things and some of the debates that are happening in our House today? The Canadian h orse typifies Canada itself, often struggling against tremendous forces of nature and social situations, sometimes

becoming almost extinct, and from the brink of that extinction fighting back, becoming stronger, becoming more proficient.

I often like to view art. The members of the Reform Party do not seem to have much interest in art. If we go to the National Gallery we will see a number of paintings there by Cornelius Krieghoff. Cornelius Krieghoff of course was not a Quebecer, but he painted at the time of New France. In those pictures you will constantly see the Canadian horse. That is very much part of our cultural identity. That is also why it is very important that this nation continue to exist, because we have something very special to protect. A horse clearly cannot run on three legs. The Canadian horse is not just part of Quebec; it is part of all of Canada.

As a previous speaker has mentioned, there is quite a breeding operation not far from the Hill, in North Gower. When I read the background of this horse, that also rang a familiar bell with me, because the last time I went horseback riding was in North Gower.

In conclusion, in looking at the struggles this horse has been through, it is very appropriate that he is called the Canadian horse. More important, it is incumbent upon us in this House to look at those things that make us a nation rather than those things that divide us.

The struggle for Canada in this part of North America has not always been easy and has often been met by trials and tribulations and indeed death. Often our concern in this country was to protect ourselves from the Americans south of the border through wars and now even the consistency of cultural identity in Canada. We continue to resist the imposition of American culture in our society and we continue to strive for the dominance that is Canada's culture. This horse is a symbol of that.

I am very happy to support this bill. I want to remind some of my colleagues in the House that we must always fight for a united Canada.

[Small Business Loans Act, October 24th, 1995]

Mr. Speaker, I will try this one more time. The member talks about its being a simple concept. Indeed it is a very simple concept.

In his hometown I am sure there must be an insurance broker who in his daily operations will have a provision for doubtful accounts. It is a fact in the course of doing business. That insurance broker will say: "It is a normal operation that I will lose 2 per cent to 3 per cent of my accounts receivable every year. If I were so perfect as to have a 0 per cent, I would be a very unusual business; I would be a business that did not take any risk". Small business is about taking a certain degree of risk.

Those bad debt losses within that business are shared and borne by all the other customers by definition. Therefore there is nothing strange or unusual about the government's orientation to this and I am really quite surprised the member does not understand it.

Have I made it any clearer for the member?

[Small Business Loans Act, October 24th, 1995]

Mr. Speaker, I was somewhat astounded by the discussion of the member for St. Albert about the aspect of guarantees somehow being circulatory moneys that small business has to pay in order to support these loans.

Most of us understand the concept of bad debts. I understand the member is an accountant. We all understand that small businesses have accounts receivable and usually make provision for bad debt losses. Indeed, bad debt losses under the Small Business Loans Act have been very small. I think they average out at about 2 per cent.

The member does not seem to understand that in order for the government to protect itself from bad debt losses it needs to find a method to recover a certain amount of cash flow from successful loans. This is no different from any other normal business operation. These are the things I thought the Reform Party would applaud the government for because it is taking a business approach to lending.

The member does not seem to be able to understand the whole concept. It seems to elude him that somehow we are taking money from one pot and putting it into another at the behest of small business operators. Quite frankly, it is normal business practice and something for which the government should be applauded.

The member talked about creating jobs. This program has been around for a considerable length of time. We are now fine tuning it, allowing it to expand. The jobs the member talks about being created by the small business environment, in fact, were assisted by this program. Some of the great jobs he spoke about which have increased over the last number of years have been as a result of the small business loans program.

The member also talked about infrastructure spending and how it is a terrible waste of government money. If we look at the public assets and the whole concept of why there is public administration in the country, it is to build certain public assets that for whatever reason businesses did not want to build, such as airports, roads, sewer systems, et cetera. The member does not seem to understand that is still a commitment of government in most places in the country and it does create jobs.

I would like to ask the member whether he understands fully the concept of guarantees and of making provision for guarantees?

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, I noticed the member reading from a piece of paper. I guess it is the hymn book of the Reform Party. I suggest that Reform members start going back and actually looking at the whole structure of taxation in Canada.

I could not believe my ears when he said it is a difficult tax, it is not simple. Then he turned around and made the statement that is so simple it is hard to get in here. I cannot quite understand his philosophy.

I am going to repeat one more key statistic. It comes from their favourite Fraser Institute. Sixty-three per cent of all income taxes in Canada are paid by the top 30 per cent of taxpayers.

It does not matter what the Reform Party members want to argue, they are not going to change that statistic. Realistically, when you start saying you are going to let the lower bottom people off, fine, I understand that.

There are some problems with that because you create a wall of taxation. It keeps poor people in debt. It keeps people down because they have no the way to make progress. As soon as they earn an extra dollar, they are hitting the 23 per cent tax rates. That is the philosophy of the Reform Party. Keep the poor people poor and while we are at it, let us shift the tax burden from the very wealthy, which that party represents, to middle income earners.

That is not going to fly. It is not going to fly out west and it is not going to fly down here either.

[Excise Tax Act, October 17th, 1995]

Mr. Speaker, I am pleased to enter the debate on Bill C-90.

Some members have suggested that Bill C-90 is part of the other side of our budgetary commitments. Our budget in 1995 stated it would reduce spending by $7 for every $1 of revenue increase. Unfortunately, this bill deals with the revenue increase side of that. Needless to say, most people do not like the idea of tax increases. I do not think anybody does.

One aspect of the bill reports a 1.5 cent per litre tax on the cost of gasoline. I think we are mature enough to admit that it will hurt people, small and medium-sized businesses that use gasoline in their business, commissioned salesmen and so on. We also realize that Canada has one of the lowest retail prices for fuel in the world. We are still very much the recipients of a very cheap fuel program in Canada.

I would like to address other aspects and areas that some of my Reform colleagues talked about today when they asked when we are going to get our spending under control. I do not know where the Reform Party has been for the last two years, but I have seen some tremendous changes in cost reductions of the federal government in the area of the civil service in particular, with 45,000 civil servants being cut from expenditure programs. I have watched the Department of Natural Resources be cut in half. There have been the bills to privatize CN Railway. There have been bills that deal with the government's commitment to its shareholding of Petro--

Canada. It goes on and on. There has been all kinds of evidence of cutting.

The trick about cutting, of course, is that it has to be done equitably and fairly. The whole object of program review has been to go to each department of government to try to find those areas where it is possible to cut while at the same time maintaining the very important aspect of our social fabric, the underpinning of our social network in Canada.

I am very proud to be a part of a government that took that kind of approach to deficit and debt reduction. I look at some of my colleagues, especially those in the province of Ontario, and often wonder whether they have gone through that kind of thought process and whether in fact we have properly dealt with some of the people who can least protect themselves in society.

It is interesting to note that the Auditor General of Canada two weeks ago tabled his report, in which he questioned whether Canada's level of debt was sustainable. What does that mean? Quite frankly, if you were running a corporation, there is a level at which the debt structure compared to the income structure is so onerous that you can no longer continue and you become insolvent. Indeed, some people have suggested that if we apply that test to the country we may well discover that Canada may be an insolvent nation, unable to pay off our debt. Our debt is increasing due to interest rates. As long as interest rates exceed the level of growth in the economy, we will continue to have an accumulation of debt and we will have to cut even deeper into the expenditure side of government.

Some people think we are in an endless situation. However, the government, particularly the Minister of Finance, has taken a specific course of action to reduce the debt to three per cent of the gross domestic product. That is not an end in itself. I have heard the minister say over and over again that with the concept of two-year rolling targets in fact we will continue to focus on reducing the debt on a year-by-year basis and go beyond the three per cent of GDP target.

There are a number of tax bills before the House. There was some interesting debate on Bill S-9, which is the Canada-U.S. tax treaty. I do not want to speak on that bill, as we are debating Bill C-90, but some of the aspects that came out of that debate were interesting. The hon. member for Kamloops was surprised that the Reform Party had accepted some of the negative aspects of the Canada-U.S. tax treaty, those things that specifically appear to assist people in the higher income groups. I wondered why the hon. member felt that way, because he also seems to be interested in the concept of tax reform and some of the Reform Party's discussions about a flat tax. I notice that the hon. member is taking part in a conference to be held later this month that deals with that area.

I would like to talk generally about the concept of a flat tax. In my mind, it also represents a form of tax change and a shift of the tax burden within the Canadian taxation system.

A lot of things the Reform Party has come out with sound simple. Why do we not have a simple system? The income tax system to many people in Canada is complex. There is no question about that. I do know, however, that less than half of the population actually requires professional help in filing their tax returns. The average person can still file a tax return without the need of an accountant or a tax lawyer. The people who require tax assistance are usually those who are in the higher income brackets. They usually are trying to take advantage of certain tax credits and tax advantages which exist in the system.

The whole concept of taxation is also an element in fiscal policy. The government attempts to get aspects of the economy energized by using certain tax legislation which gives advantages to certain sectors as opposed to others. I would think members of the Reform Party would be quite aware of the oil and gas sector out west. It has been greatly assisted by a number of concepts, flow through shares and other kinds of tax driven investments which have encouraged exploration.

If we look at the history of a flat tax aspect, it is interesting to note that its actual birth occurred in England. At the time it was originally brought in, it was thought of as more of an income redistribution process. It actually entertained the concept of moneys flowing from the government back into the taxpayers' hands. It was used as a method of negative income tax. It was used as a method of doing away with the multitude of social programs that existed. It used the tax system to allocate these resources to people. People in the lower income bracket would actually be net receivers from the government, looking at a guaranteed annual income or whatever that means is. Of course people over a certain means would be the net payers.

Surprisingly enough that has changed appreciably. In presentations I have heard it is especially becoming very popular in the United States. It does not talk about redistribution at all. As a matter of fact it talks about flattening the existing tax rates.

In Canada we have three basic classifications of tax rates. A flat tax essentially would eliminate that and would create one rate of tax. At the same time, as I understand the proposal, it would also eliminate certain members from the lower income stream. In a sense it is like a two rate system. Some people would not pay tax and everybody else would pay a flat tax. It does not take a lot of arithmetic if we actually sit down and start figuring it out to know who is going to pay this tax.

Some people like to say that if we took away all the benefits, all the bells and whistles from the existing system there would be so much efficiency that we would not have to change the quantum of tax. The quantum of tax would be reduced and when the smoke cleared nobody would be paying any more taxes than they were before. Some people would be paying a little bit less and everyone would understand the system better. Therefore it would be an efficient system.

These are all great ways to sell something but the reality is it is not true. It is just not true. Right now, 63 per cent of all income taxes paid in this country are being paid by the top 30 per cent of income earners. That tells us right away that the system is progressive. That is to say, as one makes more money one pays more tax.

People in this House will say they can point to somebody who is a millionaire and did not pay any tax last year. There are situations like that but the reality is they are very rare. I will repeat it because it bears witness and deserves to be repeated, the reality is that on an ongoing basis 63 per cent of all income taxes in this country are paid by the top 30 per cent of the income earners.

What happens if we do tax flattening? There is only one assumption which is that we are going to allocate tax liability away from that top 30 per cent, not to the bottom 20 per cent who do not pay any taxes at all, but we are going to shift it to the middle class. I do not have to tell anyone that the middle class are fed up with the taxes they are already paying. They think they are paying too much. It is those people, the two income earner families that are going to be paying the expense of a flat tax situation.

The hon. member for Kamloops was amazed that the Reform Party would be supportive of the Canada-U.S. tax convention and some of the good things it was doing for the very wealthy in that treaty. At the same time I suggest it is the same element and the same people that this party is representing that also want the flat tax.

The benefactors of this tax will be the very, very wealthy. It is not just me who is saying that. The U.S. Business News states that those people who earn in excess of $200,000 in the United States will be substantially better off with a 19 per cent flat tax. David Bond, an economist with the Hongkong Bank of Canada, says there will be significant income allocations of taxes with a flat tax. Most economists all over the world who have studied this will say that the flat tax is not viable mainly because it creates increased taxes for the people who can least afford them.

What is wrong with the tax system? Quite often people come along giving us solutions for the wrong problems. Yes, the existing taxation system in Canada is very complex. Does it need to be as complex as it is? No, it does not. We can get simplification in the system. Some of the simplifications are to stop fiddling and changing it every week. Every week we change some aspect of the income tax system. This constant change creates a situation where nobody understands it. If we just had a moratorium on tax changes perhaps we would understand it.

What is the main frustration people have with the taxation system? It is not so much the filling out of the forms as it is the rate of tax. People in this country are constantly referring to the fact that we have an underground economy. People will take their money to the Turks and Caicos Islands or wherever their favourite tax haven is to avoid taxes. That has nothing to do with the taxation system but it has to do with the rate and quantity of taxes we pay.

There have been countless international studies of every regime which has increased its taxes. There constantly was a correlation between an underground economy and tax evasion. The GST is another symptom of people avoiding taxes. The problem is the rate of tax. Canada's rate of taxation is the second highest in the OECD, just slightly less than that of France. When tax rates are as high as they are today we are also going to have tax evasion and tax avoidance.

Changing the system is not going to change the fact that we are bringing in about $123 billion in taxation. Our deficit and debt relationship do not allow us to change those numbers today. What we want to do of course is get on to a program of deficit and debt reduction so that somewhere after the year 2000 we can actually see a rationing down of tax rates. With that rationing down of tax rates it will create a greater confidence in our taxation system and hopefully domicile some of our lost tax revenues.

As a matter of fact I have often been a great supporter of asking the Turks and Caicos Islands to become one of our provinces. This was the subject of a debate in this House some years ago. I have been to the Turks and Caicos and have talked to some of those people. I think it would be a great thing. We could re-domicile all of those tax revenues that are now hiding down there.

The whole area of fiscal and monetary policy is very complex but the taxation system is still very much an important aspect of our fiscal tools to stimulate various aspects of the economy. The flat tax of course would eliminate that kind of manipulative approach to the economy and force the government to treat everybody much the same.

Is the forestry sector the same as the car manufacturer? Is the Saskatchewan wheat farmer the same as the Ontario beef farmer? I suspect they are not. I suspect the industries in this country, for example the oil and gas industry or the mining sector which rely heavily on capital intensive aspects of their businesses look at

rapid depreciation within their businesses which are all different and all unique.

We can say we do not want the mining sector and indeed that is what is happening in this country. The mining sector is going south. The mining sector says there are too many inhibitions to set up here in Canada and that it is cheaper to set up down in Chile. That is because of the tax regime. We have to remember how they got going. There were also tremendous tax incentives to get those businesses started. There is not any country in the world that does not use the concept of some kind of form of favouritism of various sectors it wants to promote.

Today we want to promote our science and technology sector. Our government is now giving something like $1 billion away in scientific tax credits. These scientific tax credits are to provide an underpinning that Canada will get into the science and technology revolution which we see creating jobs in the small and medium size business sector in Canada. Personally, I feel that those science and technology tax credits are misguided. They are not going to the small and medium size companies that really need them. A lot of that expenditure is being focused at the multinational level and larger corporations. It is not actually doing what we want it to do.

That is the kind of debate we need in this House. That is the kind of change to our tax system we need in order to fine tune it, so that it is working in the best interests of all Canadians and creating jobs. Simple solutions for complex problems are not going to do that.

This bill, of course which I support, is a money bill of the government and it is one necessary aspect of the 1995 budget. I am happy to be part of a government that continues on its commitment to meet its objectives which were laid out in that budget.