Mr. Speaker, I must confess that I approached the debate this morning with some trepidation because I saw the words mining incentives in the motion of the hon. member for Timiskaming-French River.
My immediate thought was he wants some lollipops for the mining industry. However, having heard the hon. member speak and explain that what he is really seeking is a more sensible and sane regime of mining taxation, a more reasonable regulatory regime both federally and provincially, I support the hon. member's motion and I am pleased to do so.
I would draw the attention of the House to the fact that the natural resources committee held extensive hearings last fall on this very question and came up with nine recommendations that were endorsed by all parties in the committee. Of course the government chose to ignore all the work that was done and all the witnesses we heard in that committee. Perhaps we have learned to accept that. That is the way Parliament works.
Maybe we can revisit some of these things. On the federal side, I would particularly like to see a revisitation of recommendations 4, 5, and 9, all of which deal with taxation and which would not cost the government a great deal of money in terms of revenue forgone but would send a message to the mining industry to indicate that we are in business here to do mining and the mining companies are welcome.
On recommendation 4, which deals with the way flow-through funds are spent, under existing regulations if one raises money through a flow-through issue the schedule of spending is tied to the taxation year. The result of that is that if a company gets its underwriting complete and gets its money right near the end of the taxation year, they then have to rush out and spend it madly before the taxation year has ended. This causes all sorts of grief for the people in the field and it causes huge amounts of money to be wasted.
I have had personal experience with this on several occasions. We must get away from that and allow companies, as was recommended by the committee, the possibility of having a full year to spend the funds once they are raised. This is extremely important, and it would cost the government nothing. It only means a small change in the way the regulations are enforced.
I would urge that we look again at the current taxation system of applying the large corporations tax to mining companies that have no income. There are quite a few of them out there, and if they are doing exploration work and have no income they are obviously either raising more money in the capital market or they are going into debt. This is not recognized when you make them pay a tax on their assets. This does not make sense. It is not good for the companies and it is not good for the country.
The final one that I would like to see brought in, and I hope it will be brought in next year, is our recommendation for changes to the Income Tax Act with regard to the deferring of taxation on income generated in mine reclamation trusts.
If a company is obliged to put money into a trust in order to satisfy future obligations for mine reclamation, surely to heavens they should not be taxed for the income on the money that they do not have, which is what we have now. Let those things be treated like an RRSP, which is what the committee recommended. Again, it would cost the government very little, but it could get us a few new mines and it certainly would encourage the mining industry.
Getting on to some more general matters, away from taxation, we all know that we are witnessing and have been witnessing a progressive decline in investment, employment, and mining exploration over the last five years. On an average, we are losing 6,000 employees per year in the industry and have been for the past five years. Part of it is due to taxation, but most of it unfortunately is due to land use policies, regulatory policies, and the lack of security of tenure. I would put a great big exclamation mark beside that lack of security of tenure.
It is no fun to go out and spend many millions of dollars developing a mining property and then find that because the rules have changed you are not going to be allowed to develop it. The classic example, of course, was the Tatsenshini case in northern
British Columbia, the Windy Craggy deposit, where it was almost absent-mindedly decided by the Government of British Columbia to abandon the traditional Canadian principle of multiple land use and to tell a company that had spent huge amounts of money developing what would have been a mine that would have contributed billions of dollars of economic activity to Canada: "No, you cannot put that into production. It is gone. It is going to be inside of a vast park. We are going to forgo all this potential economic activity and take away your property rights to provide a playground for a few well-heeled tourists". This is economic madness.
Of course the federal government also is not without guilt in regulatory nonsense. When the Kluane Park in the Yukon was set up some 20 years ago, they were advised by their own Geological Survey of Canada that the area had considerable mineral potential and that some of it should be left out for future development. And the government said no, we are going to have it all reserve. First it was turned into a land reserve and it has since been turned into a park. There are potential mineral deposits there, and they are locked away from beneficial use for Canada for untold years to come.
Federal regulations also impinge on a minor scale, which can been very irritating. I can cite a personal experience I had a few years ago in northwestern Ontario. I had to build a bridge across a creek in order to move a drill rig onto a property. I got all the necessary permits from the forestry department and the environmental people. I was ready to go when someone said, "Oh, by the way, you have to have a permit from the coast guard". I thought they were joking, but they were not. This was a little creek about 50 feet wide and about 12 inches deep and I was told that the coast guard had jurisdiction because this was navigable water. I said they were mad. Yes, it is navigable. You can paddle a canoe up that creek; therefore it is navigable water so you need a permit from the coast guard to build your bridge. Surely we can have some changes to that type of regulation to make this a more attractive country to work in.
I could on with this sort of anecdotal material probably for the next couple of hours, but I think members are getting my general message. I do support the hon. member for Timiskaming-French River in his initiative and I do hope the House will ultimately give approval to his motion.
