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Crucial Fact

  • His favourite word was billion.

Last in Parliament April 1997, as Reform MP for Capilano—Howe Sound (B.C.)

Won his last election, in 1993, with 42% of the vote.

Statements in the House

Member For Capilano-Howe Sound April 15th, 1997

Mr. Speaker, as this is my last member's statement let me give thanks to my constituents for their trust; thanks to my effective riding association directors, especially President Brice Macdougall, Keith Bower and Bob Drummond; thanks to Lynda MacKay and Anita Brent who ran my offices with great efficiency and to Greg Haymes, my able researcher; thanks to all my caucus colleagues who put up with me and taught me a lot; thanks to the chair and members of the finance committee who made hearings an almost enjoyable job; thanks to all elected members who have remained civil during the political battles; and thanks to my wife Helene for her support and love through all the trials of the last three years.

I say thanks to them all. It has been a great privilege and learning experience.

The Budget March 18th, 1997

Mr. Speaker, I have in front of me a document issued by the Employment Insurance of Canada that has been financed by the budget. It has in it a program called the self-employment assistance program. Under that program people will be subsidized who have current

claims on EI or who have had their claims exhausted in the last three to five years. They will get up to 45 weeks of support, 90 hours of formal business training, development of a business plan, adviser consultations and other goodies.

Would the member support a budget that does the following? Candidates must belong to one of the five federally designated equity groups: women, men 45 years and older, visible minorities, aboriginals and people with disabilities.

Is a budget which allows an employment insurance program to be available to everyone except men under 45 who are not visible minorities, aboriginals or disabled good for Canada? Should we support a budget that allows this kind of discrimination in the free country of Canada?

The Budget March 18th, 1997

Mr. Speaker, I am not sure I can live up to this advanced billing, but I would make a remark about payroll taxes.

Economists look at payroll taxes in the following way. Workers are hired at a wage rate of $10. That is what a small businessman can afford to pay. The technology chosen, whether to use computers and what kind of computers to use, are predicated on the fact that the wage cost is $10. A bargain is struck and everybody is happy.

Then the government decides that as of tomorrow the hourly cost of the worker will not be $10 but will be $11. Under those circumstances a multitude of companies and employers in Canada that could afford to hire someone at $10 can no longer afford to hire them at $11.

A large number of companies will say that at $10 it is not worth introducing an automated machine to take the place of the workers, but at $11 some will automate more. The workers will lose their jobs or will not be hired if the company expands. That is what is taught in Economics 101 in university as being the effect of government legislated increases in payroll taxes.

I do not care whether the increase from $10 to $11 in the cost of hiring a worker goes to the worker's pension or not. It does not. It is interesting what happens in the long run. Studies have shown that increases from $10 to $11 mean that those who remain hired will not get any more pay increases. In the long run it is the worker who is paying for the government legislated increase.

Could the hon. member tell me where he got the information that for 10 million people in Ontario there are 11 million care cards outstanding? Could he quickly summarize for me how this came about? It is an unbelievable statistic.

An Act To Amend Certain Laws Relating To Financial Institutions March 17th, 1997

Madam Speaker, that is correct. If I may repeat those numbers, of the $36 billion improvement, $28 billion came from increased taxes through bracket creep.

An Act To Amend Certain Laws Relating To Financial Institutions March 17th, 1997

Madam Speaker, if I may read from an article from the Financial Post , dated March 15-17, authored by John Geddes, it states that according to figures published last month by Treasury Board, with the government's main spending estimates: ``The government projects that its departments will spend about $50 billion in fiscal 1997-98 beginning April 1, compared with the target of just under $42 billion set out in Martin's landmark 1995 budget''. This budget said the spending cut would be 19 per cent. In fact, it will be only 9 per cent. This is a true scandal.

The only department which has met its 1995 target is the defence department. Even the department headed by one of the most effective managers in the government, namely the department of transport, has fallen by a steep 38 per cent, but that still does not equal the 51 per cent cut which was targeted in 1995.

I urge anyone who is interested in this to have a look at this table. It raises serious questions about the integrity of the government. It keeps on talking about how far it has exceeded that one-inch target it set for itself. What really counts is smaller government. What really counts is doing what is right but is politically hard, namely to undertake the cuts in departmental spending.

Why has that not taken place? What is going on? How much more is missing from the 1997 budget as we go into an election?

I hope that the other House in its committee work will make sure that if there are other skeletons in this closet they will be dug out and the government will be held accountable for not carrying through with the grandiose plans it had. We will not be diverted by spin doctors from what is going on in government.

An Act To Amend Certain Laws Relating To Financial Institutions March 17th, 1997

Madam Speaker, this is spin doctoring at its best. However, as I have great respect for the hon. member, I do not think this is the cause of his problem.

There is a difference between program spending and departmental spending. I am not talking about program spending. Sure, the downloading went ahead as expected. The problem I have is with something that is called departmental spending which is part of program spending.

Since this was not stated in the budget, I can only rely on the graph that has been provided here. For example, government services were supposed to have gone from about $6 billion to $4 billion in the 1997-98 fiscal year. Where is it? It is still at $6 billion. This goes on and on. The only department that hit its target is the Department of National Defence.

I would be happy to learn from the hon. parliamentary secretary if he has in his briefing notes a page dealing with this issue. His comments concerned program spending, which I have no problem with. However, the issue that is being discussed this week in the Senate committee deals with departmental spending. I would love to hear why this article is wrong. I would love to be able to tell my people in the next election that the government is really on track but these numbers suggest it is not. I wonder what went wrong.

An Act To Amend Certain Laws Relating To Financial Institutions March 17th, 1997

Madam Speaker, I would like to take this opportunity to congratulate my colleague, John Chant, for having been named the director of research for the task force on financial services which was appointed in response to Bill C-82 and some of the difficulties that were raised in that context.

Professor Chan is a trained economist who was for a long time the chairman of the department of economics at Simon Fraser University. I have spent many hours with him in seminars, tenure committees and various other official functions. I am very pleased that the government has appointed him to this position.

As a result of my acquaintance with him, I am sure that the report which will come out will be superb. All the research papers will be of the highest quality. What the government does with it is another question.

The white paper on financial services was tabled in June 1996. The first draft of Bill C-82 was discussed in the finance committee. We heard from many witnesses. My special interest was on the restraints to be put on foreign banks because I had written and done research in that field. It was of great interest to me to see what innovation would take place.

There is a lot of scepticism about what committee hearings do, whether or not they are a waste of time, and in the end the government does what it wants to do anyway.

After this experience I must say I am very encouraged. At the same time I am also somewhat concerned about how it was possible the white paper of June 1996 could do what it did. What did this paper do? What did we find out was wrong in Bill C-82 with respect to foreign banks?

It turns out that foreign banks in Canada are now required to operate at all times as subsidiaries of their foreign parents. That imposes a huge cost on the operation of foreign banks in Canada. It has prevented the establishment of a lot of banks. In recent years it has driven out a large number of them. The owner is required to have capital of at least $10 million, to have a board of directors, and to issue every six months very large and onerous reports.

We were told in the finance committee hearings that this was a serious detriment to the expansion of further foreign competition in the country, which almost everybody agrees would be to the benefit of consumers.

That is not all. I was even more disturbed when I heard witnesses telling us that they had been providing services of extreme importance to Canadians. For example, a company told us that it was about to introduce a new credit card system under which it would be possible to charge an interest rate of about half the current normal charge under bank cards issued at the moment.

The company has developed a computer program which allows it to investigate the credit worthiness of large blocks of people. As a result of that and the experience of operating in the United States, it is able to break even and make a normal profit on a much lower interest rate. It would be a great innovation if such a system were introduced in Canada. It would put downward pressures on all interest charges on credit cards. At any rate if Canadians do not want it they do not have to go to that company.

Bill C-82 suggested in its first draft that the company wanting to introduce the new credit card would have to incorporate itself, spend $10 million on a capital base, have a board of directors and have all kinds of onerous reporting requirements.

Similarly there has been a company in Canada for many years specifically aimed at making loans to people who have been turned down by conventional banks, people who cannot get credit anywhere. This is often the last recourse for certain borrowers.

The company happens to be owned by an American company. The first draft of Bill C-82 suggested that this organization would have to incorporate with a minimum of $10 million. We were told that if the company had been forced into doing that it would simply have left Canada, to the detriment of the Canadian public.

I find very disturbing how these ideas got into the first draft of Bill C-82. I asked very pointed questions of the witnesses, especially people, namely the representatives of the big banks who argued that those rules were in the interest of Canada.

The answers received from the representatives of the big banks were not very good. They did not look very good when they tried to answer my questions in a rhetorical fashion without going into details on why it was taking place.

While there is this disturbing aspect about how this could have been put into the bill in the first place, it raises questions about the power of banks and their influence.

The people of Canada should feel confident that the second reading of the bill has eliminated this onerous requirement for foreign bank subsidiaries. Now they can operate as branches. Those companies that provide a limited range of financial services even if they are owned by a foreign banks will not have to incorporate.

This is a great victory for the parliamentary system and the functioning of the finance committee. To anybody wishing to read the blues or the reports of the finance committee on what went on I will take a little credit for complaining about how bad this part of the bill was. It was removed in 18 months.

The task force will report. I hope and trust, knowing John Chant and knowing the quality of the people on the task force, we will get more competition from foreign banks or from other financial intermediaries. That is the only way to make sure there is no concentration of power in the banks or in the financial system.

This ends my discussion of Bill C-82. I welcome the changes. However I would now like to turn to an issue raised by John Geddes in The Financial Post last weekend. The story has the potential of hurting the credibility of the government on an issue on which it invested a great deal of credibility going into the next election.

When the 1997 budget document came out there were tables, summaries of transactions, what money was coming into the government over the next two years, what was going out and where it was being spent.

In 1995-96 in that same document there were tables outlining the size of departmental spending. It was broken down separately. These numbers are almost impossible to obtain except if one goes through the onerous job of looking at the estimates.

In the past departmental spending in 1993, 1994 and 1995 was always there. There was a lot of bragging in the document of two years ago about how the program review undertaken by the head of the Treasury Board would reduce departmental spending from $51 billion to $42 billion or by 19 per cent. I wondered why that was not there this year.

In previous documents the yearly target for each department was clearly outlined. The yearly obligated spending cuts in the departments of defence, transport, native affairs, natural resources, heritage and culture were outlined, but for this year they were not there. I did not think through why the information was not there. I asked someone who said it just was not done this year.

This week the Senate finance committee is holding a hearing in which it will ask the government precisely what happened and why. The government is supposed to be cutting 19 per cent of departmental spending and is not on target. It is way off target at only 9 per cent. Less than half the proposed cuts have been undertaken.

The article goes on to discuss how the people in the Treasury Board are trying to spin this scandal. The scandal is not just that they did not meet the target. In the eyes of the Liberals there was a certain fairness in the way in which they distributed the burden of fiscal restraint. They claimed they would download a certain percentage on the provinces because everybody has to share 24 per cent. They said that was okay because they cut their program spending by 19 per cent. They did not and they will not. Let us see how they will fix it up over the next two years. If they do not fix it in this year's budget, when will they do it?

I remind the people of Canada that the government came in with a deficit of $42 billion. By 1998-99 there will still be a $6 billion deficit, which means that the Liberals have projected to eliminate $36 billion from the deficit. I ask viewers to test themselves as they listen to this debate. What percentage of the $36 billion total came from cuts to government spending? I have what is alleged to be $9 billion from departmental spending. Now we find out that is not true. Instead of $9 billion it will only be $4 billion.

How did government members break the back of the fiscal crisis? It was by increased revenue. They say that it was the gross dividend but nevertheless it is higher taxes. Some $28 billion worth of higher taxes is the main instrument used by the government to eliminate the deficit. It was supposed to have cut $9 billion in departmental spending. Now it turns out the government is way off target by $4 billion.

Let us look at that in the context of what the government asked the provinces to absorb. It has reduced transfers to the provinces by $7.5 billion. The government was supposed to have cut its departmental spending by now and it is not even delivering on this. I believe this is really a major scandal. This raises major questions about the ability, the seriousness and the integrity of the government on its highly touted fiscal plans.

It is true that the Minister of Finance has set hurdles about one inch high, jumped over them, cleared them by a large margin and then bragged that he is hitting his targets, that he is doing better than his targets. I must congratulate him on the ability of his spin doctors to so fool the people of Canada into thinking that he is doing the right thing, that all of the attention in the aftermath of the

budget release was focused on hitting the targets, exceeding the targets.

That to a very large extent was due to circumstances over which the minister had no control. One of them was lower interest rates. We know there were lower interest rates, not just in Canada but throughout the world. It was the world interest rates which came down.

I am prepared to admit that there were also some reductions in the gap between the U.S. and Canadian interest rates which should be attributed to the deficit reduction progress made. I do not deny this. Nevertheless, the attention on this low barrier that the minister set for himself, and was exceeded and was very easily exceeded, was due, first, to the lower interest rates created outside of Canada. Second, it was created by economic growth which resulted in bracket creep and higher tax take. That is how the government came to the position of being able to brag as it did.

Because of this excellent, superb spin doctoring by the minister and his department, nobody noticed until the Senate finally got around to it that the government is away off target on the spending for which it is directly responsible, namely what is known as departmental spending. It is supposed to be $9 billion when it is only $4 billion. I say shame.

Excise Tax Act March 17th, 1997

Mr. Spea-ker, I just wanted to make one quick comment.

In the finance committee report on the harmonized sales tax, I had the privilege of drafting, and later getting approved by my colleagues, the idea that perhaps the tax in pricing should be suspended for the provinces. If the government had followed my recommendation, then it would have saved itself all this embarrassment.

I agree that tax in pricing at this stage is a good thing to do. Because of the fear that the Conservatives had over the ability of the government simply to raise taxes by one little percentage point on the harmonized sales tax and get away with it because people would not notice it is just not true. In western Europe we have seen that when the German government tried to do that it had a major tax revolt on its hands. The Conservative argument in the light of those experiences is not valid.

In the hearings of the finance committee the member and I heard from 1,000 witnesses the suggestion that we still have a real bad monster on our hands, a value added tax which has in it exemptions, zero rating and all kinds of complications which are an

accountants' nightmare. Witnesses suggested getting rid of this, put the same rate on everything at a much lower percentage than it is right now. If there are good causes-magazines and poor people who need subsidies-write them cheques. Give them explicit subsidies. It will be open and everyone will know about it.

I would like to ask the hon. member's position on this suggestion. Does he see any hope that a reform of this sort will be carried through in the future?

Canada Labour Code March 11th, 1997

Mr. Speaker, I remind my colleague to look at an article that appeared in the Globe and Mail a couple of weekends ago wherein the issue was discussed. There is a wide diversion of opinion but basically unemployment is not caused by technological change or union action. I come down on that side. It is caused by the existence of generous welfare programs. That is a widely accepted view among a large portion of economists.

Canada Labour Code March 11th, 1997

Mr. Speaker, I thank the hon. member for his question. One would expect it from someone representing a union.

The question to me is what is fair or give an operational definition of fair. I do not know what it is, but I do know that if we provide conditions where there are no deep pockets we can let the unions fight it out.

I am not against unions. I am against, as in the case of the wheat transportation agency, a monopoly protection being granted to an industry, to a bunch of workers who then take the power given to them by the state and exploit others.

There is always the belief that wages would not increase if it were not for unions. I sat next to a gentleman on a flight to Vancouver last week. He was being sent by his Canadian company to Singapore. He was telling me about the business they had there. One of its biggest problems was that every year it had a turnover of 30 per cent to 40 per cent of its workers. He said they get their training from his company and then go to better jobs. I said there was a solution and he agreed that the company would have to pay higher wages.

This is how in a free and competitive economy the wages of workers rise. If a company cannot get the quality of workers it wants to stay remain with the company, it has to pay higher wages. If the company lags behind and does not pay enough it will not get them. It is as simple as that.

I do not know whether the company was unionized, but it costs the employer to train the workers. It has to make a very careful calculation between the extra cost of training people who then leave and paying higher wages and having fewer leave. There is a very nice calculation which at some point indicates it is worth the company's while to have higher wages and less turnover.

That is how in a free society the average living standards of workers rise without any government help. It is just a natural process without, I might say, interminable wrangling over the definition of what is fair. What is a fair wage? Something that might be fair to one member may not be fair to another. How do we know?

By all means the answer is unions. Let them be allowed to organize but remove as much as we possibly can the monopoly powers granted to them and their employers through government. In my judgment that is the way to stop the deplorable situation of our transportation system being periodically paralysed by strikes.

If workers knew of an alternative way of moving the goods they would be very much more reluctant. Either they would drive the company out of business or it would be diverted so that the business would continue to operate at a much lower level. All the workers would be laid off and would put pressure on the union to be reasonable.

I have used a somewhat different approach to solving a problem that has plagued the House. In my training as an economist and having thought about the issues for a long time, I believe it is best solution possible for all of us.

Whether government is doing it in this session or the next one I predict herewith that this will be the trend around the world to make unions serve both their members and the interest of society as a whole.