Alex Shepherd

[Woman Entrepreneur Of The Year, October 16th, 1995]

Mr. Speaker, I would like to draw the attention of the House to an award that was presented on the weekend to the woman entrepreneur of the year. This award is an initiative of the University of Toronto Faculty of Management and it counts organizations such as the Financial Post among its sponsors.

For the category of international competitiveness, my constituent, friend, and client, Paula Lishman, was the recipient. I have known Paula for many years. Her intuitive designs in reversible furs are respected throughout the world.

Paula exemplifies the fight of small and medium sized businesses, and women in particular in the country to get established and win the confidence of the financial community. Trading internationally and creating meaningful jobs in Durham and in Canada have been the results of her efforts. I know about her struggles because I was her accountant and sat with her on the other side of many bank managers' desks.

Paula's perseverance in the face of adversity is a lesson for all small and medium sized business operators. I am proud and happy that Paula Lishman has earned the recognition she so justly deserves.

[Royal Bank, October 5th, 1995]

Mr. Speaker, the Royal Bank is our largest financial institution. It is part of the general banking industry that has been requesting increased access to other financial service sectors within our country so that, as it says, it can more effectively compete in a new globalized trading system.

Canadians have paid the price of reduced competition in the securities business and now there is the possibility of encroachment into the area of insurance.

This bank now chooses to display the flag of the United States in some of its branches.

While I understand this is a promotional campaign, Canadians are nevertheless insulted by this intrusion of foreign symbolism into what has been until now a historically Canadian institution. This is especially true since it has been Canadians who have paid the price in many countless ways of supporting it.

[Explosives Act, October 5th, 1995]

Mr. Speaker, I am very pleased to enter the debate on Bill C-71, an act to amend the Explosives Act.

When I read over the act I notice some very specific benefits for Canada, specifically in the area of vapour detection. Our government is very interested in promoting scientific and technological devices to expand our knowledge base and to increase employment. It is very interesting that Canada is a world leader in this type of technology.

I am very pleased to speak in favour of the bill. I note this is a UN convention. It basically restores our commitment to the United Nations and to other countries to detect plastic explosives and prevent their exportation throughout the world.

There have been a few classic examples of plastic explosives being used by terrorists both in and out of Canada. Many of us can remember the Air India disaster and numerous other cases where terrorists have used plastic explosives and the death and dismemberment of many innocent people has resulted. The bill basically addresses that issue with the objective of detecting and stamping out the use of plastic explosives for that very purpose.

It is necessary that the bill be brought into place to recognize our commitment to the United Nations and to recognize the need to deal with terrorist activities. I note that Canada is also a producer of plastic explosives, but the main consumer of them in Canada is our own military. I understand the Canadian military has approximately a 10-year supply of plastic explosives. I am very happy to see that we have made a provision in the act for a 15-year moratorium to allow the inventory of unmarked plastic explosives to be brought down while the new replacements have this detection device included.

I can remember being in Heathrow International Airport where they use canines and detection devices to control the exportation of firearms and dangerous substances. We have developed a whole technology to do that. The world does that very well. However we must always be on guard for the development of new types technology. Plastic explosives and small component devices can be exported very easily.

In conclusion I support Bill C-71 and the effect it will have in the industrial sector in creating jobs for Canadians.

(Motion agreed to, bill read the third time and passed.)

[Mining Exploration And Development, October 4th, 1995]

Mr. Speaker, it is a pleasure to enter the debate on Motion No. 292 in the name of the hon. member for Timiskaming-French River who from time to time is my seatmate. I am sure his constituents in mining communities such as Kirkland Lake, Cobalt and Haileybury are very proud of his initiatives in the House in support of the mining sector.

Over time as Canadians became more involved in the service sector they have forgotten some of their roots that go back in our history over the last 200 or 300 years. The mining sector was a very important part of it.

We all consume goods and products that come out of mining. We are either consumers or work directly in mining or do both. Invariably during the day we consume some products that actually started off in the mining sector.

I will refer to some of the statistics: 4.2 per cent of our GDP is accounted for by the mining sector and 14.6 per cent of Canada's entire export trade is related to the mining sector. It directly employs 327,000 people. These are some of the positive statistics and I will now refer to some negative ones.

From 1991 to 1992, 150 companies in Canada reduced their worldwide expenditures in our mining sector by 30 per cent. There were reductions of expenditures from $430 million to $302 million. In 1987 Canadian companies spent 81 per cent of their exploration budgets in Canada. By 1992 that had declined to only 61 per cent. As the previous member mentioned, ironically Canada and Canadian companies are now the biggest investors in Chile. Over 40 companies are involved.

What is happening to our mining sector? Our own companies are leaving. Why is that? In one word it is taxation in spite of interjections by members of the third party. It was surprising when I heard the hon. member from the third party talk about flow through shares. I have listened to that party constantly talk a flat tax or tax changes which would eliminate flow through shares. We can

see that Reform Party members are basically speaking out of both sides of their mouths at the same time.

Taxation has created confusion. When people are investing in industry, confusion is one thing that forces capital to leave the country. Capital likes certainty and taxation and administration in Canada have created tremendous confusion. With that an outflow of capital has been created.

Mining is a very significant capital intensive industry. Within the industry each job represents $100,000 of investment in capital. Many of the taxes the mining sector faces have nothing to do with income. Once again in spite of the intervention by the member from the third party, many of the taxes relate to provincial jurisdiction and not federal. A more mature attitude would be to realize that tax administration in the mining sector is outdated, outmoded and in dire need of change.

Let me explain some of the taxes so members will understand why the mining sector is having such difficulty. First there is a significant insidious tax, what I would call a capital tax. Many industries in Canada are subjected to it. Basically a capital tax is just that: a tax on the capital invested in a business.

Perhaps that sounds reasonable to some people, but when we take it to the next step we discover that a capital tax also involves a tax on employed capital like bank loans. For instance, the more debt one has, the more taxes one pays With a capital intensive industry like mining clearly this is a very retrogressive tax. The tax is administered by provincial jurisdictions.

I have had some discussions with my colleagues in the Bloc. The problem across the country is that there are all kinds of tax administrations in each province. It is very difficult for a multinational corporation to understand the best place to run a mine based on tax administration in an individual province.

Another aspect that has created great consternation and a great deal of uncertainty in the mining sector has been the whole concept of a resource allowance. Let me try to explain resource allowance in a very short period of time.

The provincial governments levy what are called royalty taxes. Royalty taxes are somewhat closer to a profit type tax because essentially they are oriented on production. There are royalty taxes in the oil and gas sector. There are royalty taxes in the mining sector, basically based on the amount of extraction that takes place.

What the federal government attempts to do is to try to make some kind of recognition that mining companies are subject to these royalty taxes. Some people might ask: Why not simply allow them as a tax deduction? Some people have suggested that as a way to amend the taxation of mining companies.

The problem we have, and getting back once again to the speaker from the Reform Party, is that each province calculates royalty taxes differently. There is a different administration in British Columbia, Alberta and Saskatchewan. There is a totally different one in Ontario and also in Quebec.

What the federal government attempts to do is to develop a formula which will allow some kind of methodology of calculating what would be a uniform royalty tax across all mining sectors. The problem is it has become so unbelievably complicated to calculate what a resource allowance is.

We have had the spectacle of the Gulf case. That company was able to argue effectively under the tax laws for a totally different interpretation of resource allowances than did the federal government. The federal government's bottom line was a loss of over $1 billion worth of tax revenue.

This has created further consternation within the tax administration system and it is continuing to be a problem. Mainly it is a problem because governments cannot sit down together and work things out in a reasonable and harmonious fashion.

That is not the end of the problems of the mining sector. There are all kinds of other non-profit taxes which take place within the mining sector. The hon. member has mentioned gasoline taxes because he basically likes to criticize the federal government, but we also have other forms of taxes, not the least of which is energy taxes.

The mining sector is a huge consumer of electricity. Most of these electrical utilities are administered by provincial administrations. Quite frankly, I believe they have been mismanaged over the years. At one time Canada had a very attractive energy rate making it a cheaper place to undertake mining in North America. That competitive advantage has been lost over the last 20 years through what I consider to be different types of practices and basically mismanaging that resource. As a consequence, our mining sector faces some of the highest energy rates of any mining operation in North America.

This reminds me of a story. I was once in the jungles of Peru, long before I started this job. Somebody asked me: "When I look at Canada, a big huge country, the third largest country in the world geologically, a small but well educated population, why is it that Canada cannot manage its resources effectively and be a world leader?"

I come back to this debate. We are seeing how people within governments, no matter what public administration is involved, whether it is federal or provincial, are basically out to kill the golden goose.

Another area that is a federal concern is payroll taxes. I do not have to tell most members that the increases in UI rates and

Canada pension plan rates have had a tremendous impact on the mining sector because it is capital intensive and also uses a lot of labour.

I believe the various governments sat down in November 1994 and signed an agreement, the Whitehorse Mining Initiative. I will read one section of that concerning the area of taxation: "to establish a tax regime that is seen to be simple, pragmatic, fair, including an overall greater reliance on profit-based taxes as opposed to non-profit-related taxes and charges". I think this is a great objective. And I note this agreement has been signed not only by our Minister of Natural Resources but most of the provincial natural resources ministers. Of course the problem is we have a lot of talk going on but we do not have much action.

In conclusion, I am very supportive of the motion by the member for Timiskaming-French River that has brought this to our attention. I could go on and on about how tax administration should perhaps be different in this country. I believe we must move forward quickly to address the concerns of the mining sector.

[Land Mines, October 3rd, 1995]

Mr. Speaker, my question is for the Minister of Foreign Affairs.

The subject of banning land mines was recently discussed at an international conference in Vienna. In view of the fact that land mines that are now being discovered in Bosnia have a similar design and technology as those manufactured here in Canada, will the minister give the House his assurance that no land mines are now manufactured in Canada? More important, will he assure this House that this technology has not been exported outside of our borders?

[Canada Transportation Act, October 2nd, 1995]

Mr. Speaker, it gives me great pleasure to enter into the debate on the Bill C-101, amendments to the National Transportation Act, now called the Canada Transportation Act.

The bill is to be referred to committee after first reading. I believe opposition members as well as the public in general will have ample opportunity for input into how the bill could possibly be amended in other ways. This shows the dedication the government has toward making the system of government more open and more visible by allowing people to be directly involved in legislation that affects them.

This is basically another bill that realizes that governments should be steerers and not rowers of the economy. What do I mean by that? Basically most people have come to the conclusion that the government should act as a referee, a regulatory agency, but not be directly involved in the actual operation of businesses.

The Oshawa Municipal Airport is in my riding. I am constantly reminded the airport is operated by the city of Oshawa and why that is not the best interest of the local economy.

I will deal with two aspects of the legislation, both of which deal with air travel. It is surprising that previous speakers thought this was entirely a railway bill. In fact it involves all sectors of transportation in Canada, not the least of which is air transportation.

I cannot underestimate the value of the whole transportation sector to Canada. Canada is the third largest country in the world geographically and yet we have one of the smallest population bases. It does not take long to realize that transportation has a major impact on how we develop our country.

I should like to talk about the north which we seem to have ignored. We have mostly spoken about transportation systems that occur in the southern parts of our country. In a recent study the

Royal Bank discovered that Canadians were the second wealthiest people in the world if we take into account natural resources.

I do not have to tell members or other Canadians that we cannot quite see where that fits into our bank account at the end of the week. Very few of us feel that we have been able to access those resources so that we spread the wealth across the country. The transportation sector is one major aspect of why in some ways Canada has not been able to access all its natural resources to the benefit of all its people.

Industries such as tourism, metal extraction and forestry are big factions that use the transportation networks. Due to the regulatory burdens that often occur in this area, northerners often feel victimized by the transportation sector. Let me illustrate this by a very simple analogy.

Last summer I visited Kenora which some people do not consider as being north. Certainly it is in northern Ontario. I was surprised to discover that the cost of air fare to and from Kenora was twice as much as it would have cost me to go to London, England, and back. When I saw the bill come up for debate, I was very interested in why such things occur.

I discovered a very interesting aspect of the old National Transportation Act. Basically it divided Canada in half and not consistently in half either. It took the 50th parallel from Newfoundland to the Ontario-Manitoba border, then took the 53rd parallel in Manitoba and Saskatchewan and the 55th parallel in Alberta and British Columbia and created a designated area. What did that mean? It means we treated businesses in the northern part of our country differently than we did in the southern part.

Here are some of the aspects of competition that occurred in the airline areas in northern Canada. A test was used called reverse onus. Basically it allowed interested parties such as air carriers and communities to argue that the licensing of new services could lead to a significant decrease or instability in domestic service already provided.

Basically this meant a barrier to new carriers that wanted to compete with existing airlines. It also created in my mind artificial monopolies. Many people in the north suspect that these artificial monopolies acted as impediments to transportation in northern regions.

Bill C-101 serves to do away with that aspect. It allows the competition that exists in the southern parts of the country to apply in the north. Hopefully this will eventually result in lowering air fares to some of our northern communities.

Every once in a while we feel there is inappropriate business activity in the area of monopoly. This act also provides for a review of the fair pricing schedules of some of the airlines in the north, such that we could even affect a rollback if it were thought the monopoly that sometimes occurred due to the small number of users and smaller communities could be rolled back if gouging and price fixing et cetera had occurred.

Another aspect of the act which has not been mentioned to date is consumer protection. I am sure members are aware of the horror stories of people who travel south or even within our country. They buy airline tickets and show up at the airport on the day of reckoning and suddenly discover the airline has gone out of business. There has been no real mechanism for some of these people to get their money back. I am sure members are aware of horror stories of retired people who have saved for the trip of their lifetime to travel around the world and who discover they were jilted by the airline system for whatever reason and lost their money.

This legislation provides for a system whereby new carriers will have to be approved not only from a technical point of view as to whether they can fly planes but also from a financial one. These airlines will have to submit financial statements, et cetera, to show their fiscal ability to conduct their business. This can be nothing but good for consumers.

These two aspects as they affect air transportation in Canada are nothing but positive. It is one more step in the government's agenda of realizing we can do things better by making our regulatory framework simpler and more easily understood and, similarly, allowing small and medium size businesses to do what businesses do best, to compete in an open and fair market.

At the same time, the government realizes there is a need to protect consumers from possible unwarranted business activity and has put that in this legislation as well. There is an underpinning protection for the consumer and an ability to allow the industry to fully compete. Hopefully the benefits to this will be transportation at no financial risk to the general public. More important, hopefully it will reduce the cost of air fare in northern communities.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, I am still mystified by the economics. Why is it that a $1,000 painting that we can acquire for $500 is not a good one?

The member made the analysis between this kind of consumption of art work as part of our cultural history and identity with donations to charitable organizations. I am not clear at all on the member's point of view. Should we be raising the tax credit for charitable donations or should we be lowering the tax credit for works of art to 20 per cent? It is not at all clear what his analogy is and where that is taking us. Maybe the member could address that.

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, really. The everyday worker, the plumber, the electrician? In my riding we have General Motors workers. I did these people's tax returns for years and I do not ever remember them claiming a capital gains tax exemption. Be serious. Level with the people.

These people are supporting the professional class, lawyers, doctors and accountants. That is who they are talking about. They are not talking about the everyday person in the street.

Will the hon. member please tell us who he thinks is claiming the $100,000 capital gains tax exemption?

[Cultural Property Export And Import Act, September 25th, 1995]

Mr. Speaker, I am certain that not too many people will be paying for the Reform Party cultural document.

It amazes me to hear the hon. member mention this legislation is all for the wealthy and the rich and yet the same person turned around and defended the capital gains tax. The capital gains tax was purely directed to people of higher incomes. I can prove the people who received the benefits of that deduction were the higher income, wealthier people, the very people the Reform Party represents in the House.

There is a little problem with arithmetic here. The bottom line is anybody who is making a donation of, for example, $10,000 will get a $5,000 tax credit. It costs them money. This is not some kind of gift to the wealthy. They made a donation of their cultural property, be that the group of seven artists or Cornelius Krieghoff, so that it would stay in Canada and be the property of the people of Canada. This is something the Reform Party fails to understand.

The other thing that seems striking to me is that the Reform Party talks about getting rid of this and having a flat tax. I want to put things in perspective. The Reform Party does not want to admit this but the flat tax is designed to assist and help anybody who has an income of over $200,000.

The president of the United States with all of his analysts went through the whole concept of a flat tax years ago. He asked them to prove to him how it would not be the major system for people with over $200,000 income. It stands to proper reason that if we are trying to collect x dollars from the taxation system and there is a flat tax we will allocate taxes from the upper income groups to the middle income earners. That is what the Reform Party would have us believe. That is who the Reform Party is representing in the House.

The reality is the cultural products some people have are usually part of an estate. As part of settling that estate they give a good portion of these artefacts to the government through the museum system. These are things our museums would not be able to acquire. It is not a loophole, it is an incentive to keep those products in Canada.

How can he defend the capital gains tax system but not this system and how can he defend a flat tax system but not this system?

[Excise Tax Act, September 25th, 1995]

Mr. Speaker, I will be sharing my time with the hon. member for Hamilton-Wentworth.

A country is more than an economic unit somehow linked together by rivers and lakes; it is much more than all of these things. A country is people working, living together and expressing themselves as a unity. Canada has a longstanding agreement with our publishing industry. That agreement is to support it within not only the North American context but also in the context of the world.

It seems to me that advertisers who earn their living by servicing the Canadian market should also be prepared to support the distribution and consumption of material within that country.

Is competition always invariably fair? The population of our southern neighbour is almost 250 million people and Canada is pushing barely 30 million. I do not have to give a lesson today on economics, but there is such a thing as economies of scale. As companies become bigger and their production lines become bigger, their costs go down. If we were simply a network of economic units, clearly all our cultural industries, indeed all our industries, should be in places where there is a higher density of population. This for us in North America would be our southern neighbour.

That is not what Canadians want. Asked that question time and time again over their history, Canadians have chosen to maintain a separate entity on the northern part of the North American continent.

I would like to put into context the broader context of the Canadian government having a place to support the Canadian magazine industry. It is relevant here to describe the importance of the Canadian magazine industry to Canadians.

Canadian periodicals are an essential medium of cultural expression for all Canadians. They serve as a channel for conveying Canadian ideas, information and values. They are an integral part of the process whereby Canadians define themselves as a nation. Magazines inform, educate and entertain. They play a vital role in the exchange of information. Canadians need Canadian magazines.

However, Canadian magazines face a unique challenge: the massive penetration of the Canadian market by imported magazines, the relatively small size of the Canadian population, the openness of Canadians to foreign cultural products, the effects of

the cover prices of imported magazines on the Canadian price structure, and the impact of overflow advertising on the potential advertising market in Canada.

The industry's total revenue in 1993-94 was approximately $800 million. Though it has flourished culturally with over 1,300 titles, its financial position is fragile, with overall pre-tax profits of less than 6 per cent. Gradual changes in the rapidity of competition with people with higher production runs could clearly wipe that 6 per cent profit margin into losses, basically wiping out the entire industry.

Because of the importance Canada places on having a means of expressing its unique identity and the difficulty and challenging environment the Canadian magazine industry faces, the need of structural measures of support for the Canadian magazine industry has long been recognized by successive Canadian governments. This policy is simply a reaffirmation of the policies government after government has taken before us in this country and it is in support of our cultural industries.

A number of policies and program instruments to help to ensure the development of the Canadian magazine industry have been put into place. I mention postal subsidies. Canadian magazines have limited access to Canadian news stands. Less than one-quarter of Canadian magazine circulation revenue is delivered from news stand sales. As a result, the industry relies on subscriptions to reach its audience.

The postal subsidy, which finances concessionary postal rates for Canadian magazines, has been an important instrument in helping the industry reach its market. By providing stability in the level of distribution cost the government has been able to assist publishers in developing and implementing viable business plans for the long term.

Two fiscal measures encourage Canadian advertisers to use Canadian magazines to reach Canadian readers. The first measure, section 19 of the Income Tax Act, has been in place since 1965. The legislation is merely an extension of that longstanding tradition of our government.

For advertisements directed at the Canadian market, section 19 limits tax deductions of advertising expenditures to advertisements placed in Canadian magazines. A Canadian magazine is defined as one that has 75 per cent Canadian ownership and control and has editorial content that is 80 per cent different from the editorial content of other periodicals. Here we basically disallow for tax deduction purposes certain advertisements placed in foreign magazines, which are basically to attract the Canadian market.

The second measure is tariff code 9958, which prohibits the physical importation into Canada of split runs or special editions of periodicals with editorial content that is substantially the same as the original edition except for the advertising, which has been purchased especially to reach the Canadian audience. This is basically why this law is before us today. Back then physical importation was considered to be the most important aspect of distribution but today it can be done electronically. We can communicate with Germany and other countries from our offices. This is simply updating that code to reflect modern times.

Until recently the tariff code dissuaded offshore magazines from soliciting advertising in Canadian markets. It has also succeeded in doing so through voluntary compliance.

Financial support is also provided to a number of cultural and scholarly publications through the Canada Council and the Social Sciences and Humanities Research Council. The Canadian industries development fund was established in 1990 with a budget allocation of $33 million. Its mandate is to provide Canadian owned and controlled firms within the cultural industries with a range of flexible financing services, which has an emphasis on investment loans.

This is another area where the Government of Canada is assisting our cultural industries and possibly resisting the importation. This does not mean that we are developing a narrow and small country. We still obviously have the ability to access foreign periodicals in Canada. However it underpins the importance of maintaining and strengthening Canada's periodical industry.

I see my time is gradually running out. I want to summarize by saying that I am happy to be part of a government that continues to support the concept of Canadian owned periodicals and the growth of the industry in Canada.