Ian McClelland

[Supply, May 12th, 1994]

On a point of order, Mr. Speaker. To the member opposite, I unreservedly withdraw that remark in impugning his character. I thank him for the opportunity of setting the record straight.

[Supply, May 12th, 1994]

Mr. Speaker, I listened with interest to my hon. colleague opposite. Members would know that my hon. colleague opposite has a long history in this Parliament and has been involved in the criminal justice system as far as Parliament is concerned for many, many years.

As a matter of fact as my hon. colleague mentioned he is at this time the chair of the Commons justice committee, a very important and powerful role within the Commons. I would point out that the chair of the justice committee has a particular perspective on crime as evidenced by the fact that recently the member is on record of having suggested that perhaps 15 years is the maximum that anybody should be in jail for any crime no matter what that crime might be, no matter what their age.

The member opposite will also recall that in this Parliament on October 7, 1971 as a continuation of changing the incarceration system, the jail system, a very needed change, the government of the day directed the emphasis away from the protection of society to the rehabilitation of criminals, which is just fine. The Solicitor General of the day is on record of having said: "From this day forward we will put rehabilitation ahead of the protection of society". That was October 7, 1971. This was a quantum shift in direction of the correctional service. It was a quantum shift in direction of attitude of this Parliament.

Perhaps after 23 or 24 years we might revisit this and say "Wait a minute. Let us back up. Maybe we should ensure that we have a concentration on rehabilitation because we know how important that is and we do not want people to reoffend. We also have to protect society".

At any rate, the hon. member asked: "Since we have this opportunity to present a votable motion, why would we make it so mild?". The reason we made it so mild is that it was only by having the mildest of possible motions that there was any hope at all of getting any support from the Liberals who got us into this mess in the first place. We want to move this debate incrementally down the road. We wanted to make this motion so mild that it would be virtually impossible for anyone in this House to disagree with it.

How wrong we were. If the hon. member opposite does not like this motion, would the hon. member opposite, the chair of the justice committee, tell this House and Canadians what is his number one priority? If he were going to introduce a motion today what would that motion be?

[Justice, May 9th, 1994]

Mr. Speaker, again to the Prime Minister. Across this nation from one coast to the other Canadians are sick and tired of this mollycoddling of criminals at the expense of law-abiding citizens through this Cappuccino Liberalism.

On October 7, 1971 the Government of Canada approached a fork in the road and took the wrong turn. The government chose to stress the rights of the criminal rather than the rights of the victim.

My question for the Prime Minister is this. What specific steps will the government take to ensure that the rights of victims are paramount to the rights of criminals? What specific steps?

[Justice, May 9th, 1994]

Mr. Speaker, what we are endeavouring to try to do is find out when our government policy fell off the rails and we started to put the rights of the criminal ahead of the rights of the victim. When was that particular moment?

Today, 23 years after that infamous decision, what comes first to this Liberal government? I again ask the Prime Minister, is it the protection of society or the rehabilitation of individuals?

[Justice, May 9th, 1994]

Is Canada a safer place today as a result of that Liberal government policy?

[Justice, May 9th, 1994]

Mr. Speaker, my question is for the Prime Minister.

The Prime Minister will know that on the weekend thousands of Albertans held a massive Mother's Day rally to draw attention to deficiencies in our criminal justice system.

The Prime Minister may remember being in this House on October 7, 1971 when his colleague, Jean-Pierre Goyer, the Liberal Solicitor General of the day, uttered these infamous words, and I quote: "We have decided from now on to stress the rehabilitation of individuals rather than the protection of society".

[Supply, May 5th, 1994]

Mr. Speaker, I respect my hon. colleague's opinion and I share some of the opinions he just put forward.

However there is a contradiction. I recall in my presentation saying that if there was an epiphenomenal moment in Canada where we said goodbye to high tech it was when we said goodbye to the Avro Arrow 35 years or so ago. We were world leaders and we said goodbye to it. Ever since that time we have relied on offshore industries for our high tech aircraft or high tech defence materiel. The nucleus, the germ of it comes from offshore. I agree 100 per cent.

Therefore, if I agree with that and the contention that my hon. colleague brought forward, he must also agree that if we are getting that high tech initiative offshore we cannot also be getting it onshore. We cannot depend on both. The defence industry has been a high tech driver in Canada. Of that there is no question.

We look at the satellites and Canadarm and those kinds of things. They could be considered defence and defence oriented, but those things are not going to come to an end. We are still going to have satellites going up. We should all say a prayer for Anik E2 up there somewhere. God knows what it is doing. However, the whole high tech industry is not going to dry up and go away.

We need the vision of the people who are the shareholders of those companies that were in that business. That is what their job is. The job of the directors of those companies is to anticipate, to see where they should be putting their energies in the future. Perhaps it is in the environment. Perhaps it is in extracting minerals from difficult places.

My point is that it is not the role of government to decide what that initiative should be. It should be the role of industry and the owners of industry. They will do a far better job than we will. When we went through our orientation, no one said all of a

sudden when we passed through these doors that we would become venture capitalists with the ability to pick winners and losers in the marketplace. It did not happen.

[Supply, May 5th, 1994]

Mr. Speaker, if I may have the indulgence of my hon. colleagues in the House, I would like to read the opposition motion. For those watching on TV who might have just joined us, it might be interesting for them to know exactly what we are discussing.

In the affairs of this House the opposition parties from time to time have the opportunity to bring forth subjects of debate. We get relatively short notice. I think it is quite interesting that we get relatively short notice, perhaps as much as a day in some instances, and we then debate the issue brought forward by the opposition.

Today the Bloc has brought forward this opposition motion which is being debated in the House:

That this House condemn the government for its unacceptable delays in developing and implementing a genuine strategy for the conversion of defence industries to civilian production, which would save and create new jobs in high technology sectors.

I do not know if I want to condemn the government for not doing this. There are many, many things we could condemn the government for, but I do not think this is one of them.

It is my opinion the government should keep its fingers out of business and out of the marketplace. It should let the marketplace decide who will be the winners, who will be the losers, who will be successful and who will not. It is survival of the fittest.

Why was it such a big shock to the defence industries that they were going to have to change? Was it because it happened overnight? Did we have this incredible industrial military complex that drove the economy and the country? No, it did not; and no, we have not.

Canada has never had a particularly large military industrial complex. Most of our sophisticated military equipment was purchased offshore. Many members would know, as would those watching, that one of the blackest days in the history of our country, at least in my opinion, was the cancellation of the Avro Arrow. By and large that put Canada right out of the high tech aerospace industry. Ever since that time we have been trying to force feed industry into areas of the country that may or may not need it, that may or may not get the industry because of political connections, political power, or power of the voter.

I submit that our country can no longer afford to artificially pick winners and losers. The fact of the matter is that if our world has changed and our country's defence posture has changed to the extent that the defence industries in a particular part of Canada, whether it is in Ontario or Quebec, are harmed because things change, then so be it.

It is up to those industries to convert or to find another use for their capital, for their people, for their industries. If they do not, they have every right to go out of business just like anybody else. Were this not the defence industry, if this were an industry of garment makers in Winnipeg, would we be having a debate in this House today that this House would condemn the government for not supporting garment workers in Winnipeg? I think we would not.

I want to acknowledge the help given by the Canadian Defence Preparedness Association in preparing the background paper I am using in my debate. It is interesting to note that Canada's defence industry, like most industry in Canada, is concentrated in Ontario and Quebec. For example, western Canada and Atlantic Canada each contain about 15 per cent of the total defence industry, whereas 70 per cent is in Ontario and Quebec, with 40 per cent in Ontario and 30 per cent in Quebec.

It is generally a high tech industry which is research and development intensive. That is particularly and precisely the kind of industry we want. However research and development in high tech industry is industry that depends upon the people who are part of that industry to stay alive. It is a fast moving industry. What is unique and innovative today could be tomorrow's hash browns.

We cannot have the government deciding where the high tech industry is going to be. The marketplace has to decide where the high tech industry will be and who will be the winners and losers.

It is also very interesting to note that according to this paper 70 per cent of the output of the manufacturing of the so-called defence industry in Canada is for the commercial or the civil market. At the same time, 70 per cent of this defence market we have in Canada supplies 70 per cent of the requirements for the Canadian defence department. That tells me that our defence industries in Canada by and large are already fairly diverse. They are not, as they are for example in many places in the United States, entirely dependent on the manufacture of one item, such as an aircraft. For instance, in Canada we have seen nothing like the decimation of the aircraft industry in San Diego. It was highly dependent on military contracts for all of the research and development. The defence budget in the United States as compared to ours is just absolutely enormous.

We do not have the same critical mass in the defence industry to start with and our defence industry, although concentrated primarily in Ontario and Quebec, is fairly balanced between these two provinces. It is not totally 100 per cent dependent on military manufacturing to stay in business according to this paper. That seems to me to be a fairly solid and a fairly good way to run a business.

Historically as a nation there are some areas where we have decided we were going to pay a premium in order to maintain an industry of our own. One is ammunition manufacturing. I think there is a place in Toronto that manufactures ammunition. Ammunition could be purchased offshore but we buy our ammunition at home.

I wonder whether free trade and the relationship we have under the GATT, but particularly under NAFTA, would allow for this kind of protectionism anyway.

I would also point out to my hon. friends that one of the reasons that people in other parts of Canada who do not directly benefit from the manufacturing heartland of central Canada, being Ontario and Quebec, just go crazy is the fact that it always seems to be necessary to protect the manufacturing base in central Canada. We have this insane situation even as I speak that we have to negotiate to break down interprovincial trade barriers.

We have 11 governments at the table trying to negotiate the decimation of these insane trade barriers. Think about it. That is more people at the table negotiating the removal of trade barriers within Canada than were sitting at the table to negotiate the removal of the trade barriers between the United States, Mexico and Canada. There were only three parties at that table and we have 11 in Canada.

We are debating a motion on whether our government, our taxpayers, people earning 10 bucks an hour, paying two or three bucks an hour taxes, should come to the federal government so it can decide who will be the winners and who will be the losers and we find ourselves subsidizing an industry for which there is no need.

We have to break down the trade barriers within Canada so we can be competitive within Canada. If we cannot be competitive within our own borders how on earth can we presume to be competitive in the world environment?

Let us put the horse before the cart. Let us get rid of internal trade barriers. Let us get our construction, our manufacturing, our capital resources, our people working together, and let us let the marketplace pick the winners and then compete world-wide. I submit that if we take that kind of approach we will be winners the world over because we can compete without government help, without government subsidy in any market in the world.

[Supply, May 3rd, 1994]

Madam Speaker, I thank the hon. member for the question and the opportunity to expand on a couple of aspects of this single tax.

I think the hon. member's point about changes is that we have not been changing the tax system; we have been tinkering with it. There is a saying in the manufacturing industry that we have lost the handle. That means when you have tinkered with something so often and so much you do not know where you started and you lose the handle.

We have lost the handle with our tax system. All the tinkering in the world is not going to change it. We have to go back to ground zero and reinvent it. We have to keep in mind the kiss principle: keep it simple stupid. It must be kept simple and direct. If a book three inches thick is needed to define the tax law and you have to be a Philadelphia lawyer to figure out how you are going to pay the taxes, then obviously people feel there are loopholes for some and not for others.

As far as equity in a single tax is concerned, who is going to get nailed? Obviously you are only going to nail the middle class. That is where the money is.

To presume the high income earners in our country are paying a fair portion now is to presume there are not such things as a capital gains exemption, that there are not all kinds of tax incentives to help people at the higher end of the income level. These are not available to people at the lower income level.

To presume that things are fair and equitable in the tax system now, I just do not concur with the hon. member's premise. I think it is not fair now and it needs to be fair. The tax system is only able to get resources from people who have them. We have to understand that.

[Supply, May 3rd, 1994]

Madam Speaker, I am particularly pleased to rise today to speak to the motion. It is near and dear to all our hearts, particularly at this time of the year when we have just gone to the well to pay our taxes.

The underlying consideration that must be part of a tax structure is the element of fairness. Members will know that all of us as Canadians do not mind doing our share, but we want to know with absolute certainty that we are doing our fair share and that there are no privileged persons and corporations in our society doing nothing and living off the sweat of others who contribute.

I will spend a few moments speaking to the issue of the corporate tax structure in Canada, particularly with a view to small and medium sized businesses. The question is: Does it do the job? Does our tax structure do what we want it to do or does it not?

Members will know many different types of taxes affect business in Canada. There are income tax, payroll tax, capital tax, sales tax and property taxes. Each of these affects business differently according to the firm's sector of activities and its size. The elemental question is: Is it fair and does it work? Does it do the job?

We know the tax structure is different for small and large firms. Why is it different? It is different because payroll and property taxes account for a larger part of the small business tax burden than they do for large firms. These taxes that small business bears are independent of profit. It does not matter how much profit a company makes. It has to pay payroll taxes, the municipal taxes, the taxes on water and sewer and all those sorts of things. These taxes weigh more heavily on a small business than they do on a large business.

Over the years governments have shifted the tax burden from corporate income tax to payroll and property taxes. All governments favour these forms of taxation because they provide a more stable revenue stream than income taxes which rely on profit.

The negative impact on the development of the economy, the fairness of the tax system and the structure of the tax system should be a cause for concern as we go away from corporate taxes which are a result of profit and payroll and other taxes which are not profit oriented.

For example, taxes related to profits account for a significant portion of the overall tax burden: about $36.5 billion in 1992 representing 73 per cent of the $50 billion of direct corporate taxes paid in 1992. Therefore 73 per cent of the corporate taxes paid in 1992 had nothing to do with income.

At this point I wish to acknowledge the source of much of my comments today. It is "Growing Small Business", a budget document presented by the Minister of Industry. Most of what I will speak to today is in the government's budget documents. I thank the Canadian Federation of Independent Business for also providing me with some information.

There is also indirect taxation of business inputs that are not related to profits. These taxes are levied by federal and provincial governments and are paid by businesses when they purchase goods and services. Examples of this type of tax are the excise tax on fuel and provincial retail sales taxes. About one-third of

provincial retail sales taxes is collected on business input. Input tax credits under the GST reduces this on a federal level.

The current tax scheme in Canada is a burden on existing small and medium sized business. Just as important, it is a disincentive for those who wish to start their own businesses. Therefore if the government is to realize its goal of creating more and more jobs, it makes sense that the government would also reduce the tax burden and subsequently reduce the tax disincentive for people to be entrepreneurs, to get into business and create their own jobs.

Although the government realizes that unfair taxation is a problem for business and this realization is acknowledged in the budget documents, it is reluctant to do anything to rectify the situation.

The government as a matter of fact went so far as to announce in the February budget that it is unable at this time to offer any tax assistance to small and medium sized business. Instead it has put the pressure on banks to allow easier access to loans.

I submit that the problem is not exclusively access to loans. The problem is to be able to retain cash in a small or medium sized business to employ more people, to expand the business, to get involved in other businesses. The government must realize that all the start-up capital in the world will not assist small business unless businesses are profitable and are able to retain cash in the business.

The problems facing businesses go deeper than just taxes. It is the result of a flawed philosophical approach to business. It is proven that small business creates up to 80 per cent of the jobs in Canada. Yet all governments continually put impediments in place that take away from business the ability to grow and prosper.

Government after government has used small and medium sized business as a cash cow to balance the books. The current Liberal government must become the exception to the rule if it is to realize on its promise to create jobs. Claiming to want to create jobs yet not making changes in the tax environment for small and medium sized business just will not wash.

Small and medium sized business must be allowed to retain capital for reinvestment in the business to create the jobs that are so desperately required in our economy. Capital from small businesses should not be taxed until it is taken out of the business.

I would like to spend just a few moments if I may to speak to the equity position of taxation in business, small business versus large business or multinational business.

I have a list of many businesses in Canada that have from $26 million to $111 million in pre-tax profits which in the year 1992 paid no taxes whatsoever. A member of this very House some years ago coined the phrase "corporate welfare bums". Ladies and gentlemen, that phrase was apropos then and it is apropos now.

Canadians would be absolutely horrified to know of the tentacles large business has in this very House in Ottawa which is nothing but a siphon for business to get money from the government to promote whatever business has the tentacles and the ability to get into the House. I submit that individual Canadian taxpayers earning $7, $8, $10 an hour should not be subsidizing any corporations. If a business does not have the ability to compete on its own, it should not be in business.

As this debate unfolds and as we move along we have to understand that the basic element of fairness has to be part of our tax system. As the day progresses we will be speaking to the notion of a single tax or a flat tax. The premise behind this is so that everyone understands that the system is fair, that nobody gets away with anything, that we all contribute equally according to our means.