Roy Cullen

[Supply, September 30th, 1997]

Madam Speaker, congratulations to you on your appointment as Acting Speaker.

I thank the hon. member for North Vancouver for his comments. I find it somewhat ironic that the member opposite often stands in the House to talk about the very excellent public policies of New Zealand. I gather the member is originally from New Zealand. I find it somewhat ironic in the sense that in New Zealand it was a labour government which was elected a number of years ago to clean up the fiscal mess which the previous conservative government had created. It was the labour government which introduced a number of privatization measures and caused the New Zealand economy to revive and avoid the country going into bankruptcy.

I do not know what the member's affiliation was when he was living in New Zealand. It is rather irrelevant. However, I think it is ironic that he stands in the House ad nauseam to rave about the excellent public policies in New Zealand when we know that country has experienced some of its own challenges.

I want to turn to the subject of the GST. The GST was introduced by the Conservative government in the eighties. When it was introduced, my understanding is that the government consulted widely with New Zealand to learn better from the mistakes of that country particularly in terms of the rate, how the rate was set, what kind of coverage the GST had and what kind of exemptions were made. It was a Conservative government which looked very closely at the New Zealand model in order to learn from that experience.

I wonder if the member could comment on the New Zealand experience with its GST, or whatever it is called in New Zealand. He might have some wisdom to share with the House.

[Canada Business Corporations Act, September 30th, 1997]

moved for leave to introduce Bill C-221, an act to amend the Canada Business Corporations Act.

Mr. Speaker, I am pleased today to introduce my private member's bill, an act to amend the Canada Business Corporations Act.

This bill if passed will allow members of the boards of directors of Canadian corporations the defence of due diligence in the conduct and performance of their duties and responsibilities.

Too often very competent individuals decide not to become members of the boards of corporations because they fear they could be held liable for their conduct, even if they carry out their duties and responsibilities in a conscientious and reasonable way.

For example, a number of months ago we heard about the case of Canadian Airlines International and its board of directors which resigned at a time when one could argue easily that it was needed most.

This bill provides directors with the defence of due diligence and brings the Canada Business Corporations Act into line with most provincial statutes.

I am pleased to introduce this bill and I look forward to the support of my colleagues in the House on this important piece of legislation.

(Motions deemed adopted, bill read the first time and printed)

[National Textiles Week, April 21st, 1997]

Mr. Speaker, I am pleased to bring to the attention of this House that April 21 to April 27 is National Textiles Week in Canada.

The textile industry is an excellent example of a sector that has restructured and has aggressively pursued new product markets worldwide. In fact, industry exports have almost tripled since 1989.

National Textiles Week, which is organized by the Textiles Human Resources Council, is an excellent example of partnership at work. Companies, unions, suppliers and industry organizations have all come forward to sponsor this week of important events which opens with FUTUR*TEX, a major conference in Montreal. Other events during the week will feature open houses, school visits and press conferences.

All these activities will make Canadians more familiar with the textile industry and ensure it a promising future in Canada's economy.

[Excise Tax Act, March 20th, 1997]

Madam Speaker, I thank the hon. member for Esquimalt-Juan de Fuca for his very considered comments. I would like to talk to the hon. member's comments with respect to taxation and some of the myths he and his party have been promoting about the government's increasing taxes.

I would like to speak briefly on the question of skills, training, research and development and how that is so important to achieving our competitive position in the world and creating more prosperity for Canadians.

While I would not say that in R and D and training we have and are doing everything that we should as a government, we are providing some leadership in these areas. For example, I attended an award ceremony in my riding for 14 young students who had just come through an internship program.

They had been offered internship positions in companies and they were able to develop their skills on the job at Humber College. They were then in a position to go into these companies full time. The companies took the risk, gave them the chance to development their skills and now they have a job. They have some experience and they are employed. I am sure they will add value to these companies. That is the kind of thing we should be doing more of because young people today are in the dilemma of not being able to find jobs because they lack experience.

In the last budget we introduced there were 19,000 new internship positions created. This will allow young people to enter the work force and create the skill sets that are going to be needed.

I am working on a project in my riding, the telecommunications learning institute, which will create the skills that are going to be needed by the telecommunications industry in the future. These initiatives are very positive. We are doing much but we could be doing more perhaps.

In the area of innovation the hon. member graciously acknowledges the $800 million the government has put into the Canadian foundation for innovation. This is a hugely beneficial initiative that will help to build our technology infrastructure and allow us to be very competitive.

With respect to taxes there is a lot one could get into but without the time I will not do that. I have not looked at the statistics lately but it is my understanding that direct foreign investment into Canada is still very strong and positive. If the tax burdens in Canada were so bad for business why would they not stay away? I find it mischievous to say the least that the hon. member and his party talk about the government's increasing taxes. I do not know how many times I have seen our finance minister stand up with his budget and say the words no new taxes. I did not see the parties opposite challenge him then.

I think they are playing on words with respect to indexing of deductions and personal exemptions which are effectively in their jargon or in their political rhetoric. We have increased taxes to the banks. We have closed loopholes and we have a much larger tax base because of a much stronger economy.

[Excise Tax Act, March 20th, 1997]

Madam Speaker, I thank the member for Esquimalt-Juan de Fuca for his comments.

I believe firmly that exports are a key to Canada's growth. Our government has done an incredible job in this area. Our exports to the United States have reached record highs.

To accomplish that we have travelled abroad with Team Canada, which resulted in the landing of a huge number of business deals.

In addition, in terms of trade barriers the government has been very active in breaking down trade barriers around the world and in forming regional trading agreements with NAFTA, Chile and Israel. There are more on the way.

The member mentioned a number of points including the CPP. The government is investing in the Canada pension plan to make it actuarially viable in the future. It is not unlike the pension plans of many corporations that are out of date with respect to the age mix and the demographics. The population is getting older.

As a government we are not doing anything different from what many corporations are doing. We see on their balance sheets that their pension plan is actuarially underfunded and they will build up the fund over a number of years. This is the responsible course to take.

With regard to transfer payments, our transfer payments to the provinces after considerable warning have been coming down at the rate of 4 per cent to 5 per cent per year while we have been cutting our own programs by 8 per cent or 9 per cent.

If we look at federal transfers in Ontario they comprise 2 per cent to 3 per cent of total government revenues. If Ontario is having some difficulties in funding health and education, it has nothing to do with federal transfers. It has everything to do with the Conservative government's provincial tax cut. It has made those choices and has set those priorities.

I agree with the member that we need to bring interprovincial trade barriers down but not in the high handed manner proposed by the Progressive Conservative Party. We have to be assertive but we have to work co-operatively with the provinces.

[Excise Tax Act, March 20th, 1997]

Madam Speaker, I am pleased to rise today to speak in support of Bill C-70. Passage of this bill will be a major step forward in our efforts to reform the goods and services tax.

As of April 1, 1997 the harmonized tax will replace the GST and provincial sales taxes in the provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador. This new system will benefit both consumers and businesses in these provinces for the following reasons:

Consumers will have lower tax rates and on many goods will pay lower taxes. Businesses will have to deal with only one tax, one rate, one base, one set of forms and one administration. Businesses will not have to pay taxes on goods which they export from their province. That means more exports and more exports means more jobs. Businesses in the three Atlantic provinces will be able to compete on an equal footing with businesses elsewhere in Canada thanks to a national approach to interprovincial sales.

The detailed agreement between Canada and these provinces means more efficient and less costly government. It will eliminate existing duplication and overlap in the administration of sales taxes in Nova Scotia, New Brunswick and Newfoundland and Labrador.

Let me now outline what harmonization means for consumers. Consumers in the Atlantic provinces who have endorsed this agreement have to pay provincial and federal sales taxes, but the existing system is very cumbersome, costly and complicated. The new harmonized system will be simpler, cheaper and more clear. The detailed agreements announced by the federal government and the governments of the three participating provinces will benefit consumers in a number of different ways.

First, it will mean a lower combined tax rate. To be specific, in Nova Scotia and New Brunswick the new combined rate of 15 per cent-7 per cent federal and 8 per cent provincial-will effectively be four percentage points lower than it is now. In Newfoundland and Labrador the combined rate will effectively be five percentage points lower.

The new system will mean lower prices on most goods not only because the combined rate will be lower, but because hidden provincial sales taxes will be eliminated. Under today's provincial retail sales tax system, businesses are taxed on items they buy to make their products, deliver their services and keep their businesses going. That will no longer be the case as of next month.

It is true that the new system will mean that consumers will pay tax on a broader range of goods and services. At the same time, spreading the tax burden in that way makes it possible to keep the HST rate at a reasonable level. Taxpayers will have the assurance

that their federal and provincial governments are working more effectively by eliminating needless and costly duplication.

What does harmonization mean for business? The new sales tax system will be simpler, less costly and more efficient. It means one tax, one rate, one base and one administration.

A harmonized system will be particularly advantageous for small business which bears disproportionately higher costs today, the costs of dealing on a daily basis with two separate sales tax systems. For example, under the new system small businesses with less than $30,000 in taxable sales will no longer have to register for either the federal or the provincial sales tax.

For all businesses there will be no separate requirement to register for the new harmonized tax. Businesses registered for the GST will automatically be registered for the harmonized tax. In addition, there will be no requirement to report separately tax collected and remitted at the 15 per cent rate or input tax credits claimed at the 15 per cent rate. Tax remittances will be made on the existing GST return.

The new sales tax system will help to make businesses in Nova Scotia, New Brunswick and Newfoundland and Labrador more competitive. That is because exports from these provinces will be free of existing provincial retail sales tax on business inputs. Furthermore, they will be free of that tax when they compete with imported goods.

Because of the amendments proposed by the other House, we will have to postpone tax included pricing until such time as more provinces have harmonized their sales taxes. This delay is very regrettable because Canadians have told us in no uncertain terms that they prefer tax included pricing. However, the more important objective at this time is to implement the harmonized sales tax on April 1 so that the Atlantic provinces can begin to reap the benefits of this new sales tax system.

I should point out that this legislation we are debating today incorporates a vast number of technical amendments to the Excise Tax Act that will benefit all Canadians. It is important to proceed without delay for this reason also.

As I said earlier, businesses will be able to claim back all the sales taxes paid on the goods and services they purchase. Currently they can only get credit for the GST they have paid, not the provincial sales taxes they have paid.

We can be sure that the premiers of the Atlantic provinces understand very well that the harmonized sales tax will allow businesses in those provinces to have a competitive advantage over businesses in those provinces that have not harmonized.

Notwithstanding the comments of my colleague from Esquimalt-Juan de Fuca, sometime ago the premier of Ontario recognized that harmonizing the sales tax in Ontario was the direction Ontario should take. He is on record as having endorsed harmonization. He may have flip-flopped later but we are getting used to that. Frankly, I am not sure what the delay is. By delaying harmonization in Ontario, the province is depriving consumers and businesses in Ontario of the benefits of harmonization.

In terms of construction, some in the construction industry would like to see the GST eliminated. To do that we would have to raise taxes or we would not be able to deal with the deficit. The reason the construction industry is working so hard today and business is up in absolute terms an incredible amount is because of the fiscal policy of this government and the fact that we have been able to reduce interest rates to 40 year lows. To say that the construction industry is not in favour of this tax is really stretching the point.

Businesses in Ontario now pay $2.8 billion in hidden taxes to the Ontario government. Exporters in Ontario will also gain with a harmonized tax because goods produced in Ontario will no longer have these hidden taxes embedded in their price when they are shipped abroad. It is the export sector that has been creating most of the jobs in Ontario over the past few years. In fact, international exports now account for 44.5 per cent of Ontario's economy. That is why it is vitally important to make our exports as competitive as possible: exports create jobs.

Although exports are non-taxable, it is estimated that the value of Ontario exports includes about $825 million a year of embedded provincial sales tax. We better believe that Mr. McKenna in New Brunswick understands that very well.

With these delays, businesses in Ontario, in particular small businesses, are unable to simplify their tax reporting procedures. Independent studies have suggested that Ontario businesses, again notwithstanding the comments earlier of my hon. colleague from Esquimalt-Juan de Fuca, could save between $200 million and $300 million as a result. These are independent studies; this is not the Ontario government speaking. In addition, the Canadian Institute of Chartered Accountants estimates that it costs the Ontario government about $40 million a year to run the provincial sales tax system.

What are the consequences if businesses are not competitive? If businesses in Ontario are not as competitive as companies in the Atlantic provinces and Quebec-because Quebec has harmonized, much to its credit-then over time this will translate into fewer jobs for Ontarians.

The efficiencies that would result from a harmonized sales tax in Ontario could mean that a combined tax could be implemented at a rate of 14 per cent, not a 15 per cent combined rate. This effectively means that the GST could be reduced by a full percentage point right now in Ontario. If the political will existed at Queen's Park,

that could happen. As I said earlier, harmonizing the sales tax in Ontario would provide the opportunity to reduce the GST by one point right now through increased efficiencies.

A number of organizations in Ontario have endorsed harmonization. I will not refer to them all, but some of them are the Canadian Health Care Association, the Association of Universities and Colleges of Canada, the Canadian School Boards Association, the Canadian Institute of Chartered Accountants, the Canadian Manufacturers' Association and a range of other ones. For these reasons I urge members to support the bill.

I would like to turn briefly to general tax reductions because some political parties in Canada are advocating general tax cuts. The government is saying that it would like to move to tax reduction at some time. It has already made some targeted tax cuts for those in need and in important strategic areas.

It would be irresponsible to make general tax cuts now. At the very least we have to wait until the deficit is under control and we have invested in our social programs to the extent needed.

I urge all members to vote in favour of Bill C-70.

[Youth Internship Program, March 13th, 1997]

Mr. Speaker, I recently had the pleasure of attending a ceremony in my riding to congratulate 14 graduates of a youth internship program in tool and die making.

This youth internship program is funded by Human Resources Development Canada. The program is a result of a partnership of Humber College, 14 corporations, and George Webber and Associates. It provides entry level training to young people between the ages of 15 and 24. The training is given in high growth sectors and occupations in demand and involves on the job and in class training in combination with job specific and basic employability skills.

At a time when youth unemployment is unacceptably high I take this opportunity to congratulate all those who have helped create this very important bridge into the workforce for our young people. Often young people starting off in their careers get caught in the trap of not being able to find a job because they do not have the experience and of not being able to develop the experience because they cannot find a job.

I would like to offer a special recognition to Humber College for-

[Employment, February 12th, 1997]

Mr. Speaker, in communities across Canada there are a large number of young people, university graduates, who cannot find jobs and who are seriously underemployed. At the same time, companies in my riding cannot fill job openings because the right skills or the right trades are not available.

My question is directed to the Minister of Human Resources Development.

While recognizing and respecting provincial jurisdiction over education, can the minister tell the House how the federal government can get involved to find a solution to this thorny issue, and what it intends to do in this regard?

[Excise Tax Act, February 10th, 1997]

Exactly. His Reform friends are influencing that deliberation.

I am pleased the member for Calgary Centre acknowledged that he got some material from someone who has to be respected. Unfortunately we often hear a lot of rhetoric from the other opposition party. We wonder if it would be attributed to the Fraser Institute or to Newt Gingrich or if they would make the same kind of attribution that the hon. member so rightly did.

I want to discuss tax included pricing. The opposition parties are creating a lot of confusion and debate around this point about which I will provide some clarification. At the time the GST was first promulgated under the Conservative government, I thought if they were going to bring it in they should have it out front and centre so that people could see it. That was a reasonably honourable thing to do.

However, if people opposite were frank with themselves they would acknowledge what we are now hearing from Canadians, myself included on this point. When Canadians go to the cash register they are continually surprised when tax is added on to their items. A $100 item becomes $115 dollars. Canadians are fed up with that.

Contrary to what the member opposite says, the HST will not be hidden. It will be on the receipt. If you travel to Europe or other places you will see the taxes are included on the bill and also on the sticker price. We are moving to what many other countries have moved to, and the tax will be there and visible for all eyes to see.

In Atlantic Canada we are reducing the GST component of the HST so why would we want to hide it? Why would we want to hide a tax we are reducing? It makes no sense. It argues the point quite well that we are not really trying to hide a tax; we are trying to respond to what Canadians are asking for from sea to sea.

I would like to comment briefly on the origins of the HST. When the GST was brought in, the manufacturers' sales tax was eliminated. Many Canadians, myself included, did not factor that in very heavily at the time. Independent surveys showed that the manufacturers' sales tax on white goods and big appliances in most cases was passed on to the consumer. We have lost the benefits of the manufacturers' sales tax.

When we campaigned in 1993 we said that we would do everything we could to replace the GST because it was not a popular tax. We looked at a whole range of options. The red book said that we would harmonize the GST and make it simpler and more equitable. The HST will do that.

An aspect which is sometimes forgotten is the notion of the embedded PST. That is a term which deserves an explanation. When Atlantic Canada moves to the HST, the whole tax collection and remittance system will become a value added type tax.

Those Canadians who have small businesses, medium sized businesses or who work in the accounting offices of big companies know how the GST works. They take all the GST they have paid on the goods they have purchased, deduct that from the GST they have charged to customers and remit the net. Essentially it is a value added tax.

When the tax is harmonized in Atlantic Canada, the provincial sales tax which is currently in the cost of goods that businesses buy will be relieved. Therefore, the cost of the goods which are produced by those companies will be reduced. The result will be that the companies in those provinces will be more competitive.

Some of the Atlantic premiers, such as Frank McKenna of New Brunswick, are very aggressive when it comes to developing and attracting business. They know that the harmonized sales tax will position their provinces very well. In fact, Quebec has moved along a similar avenue.

In Ontario the Harris government is doing nothing because it likes to play politics. We have run into that on a whole range of issues, such as CPP reform, but that is an issue for another day.

If we faced reality in Ontario, the taxes could be harmonized. Instead of a 15 per cent tax there would be a 14 per cent tax. Perhaps in the future it could be reduced even more. In doing so, businesses would be more competitive. Things would be simpler for businesses. Right now they fill in the GST forms and then they fill in the PST forms. It is very complicated. People spend their time filling in forms when they should be focusing on expanding markets or developing new opportunities. When the tax is harmonized there will be one form to complete and one cheque to remit. With the new tax commission things will be simplified even further.

Some Canadians might say: "What does that do for me?" If businesses in Ontario and the other provinces are more competitive, it is good for all of us. Their businesses will grow and they will be able to hire more people. They will be able to expand their markets. Some of those benefits will flow to consumers. We have independent research which shows that happened after the GST was implemented a number of years ago.

If we had the perfect solution we would eliminate all taxes. This debate has gone on and on and we are left with looking at what are the practical alternatives. The HST is a practical alternative. In addition, it will create some real benefits for people in Atlantic Canada. If other provinces would follow suit they would realize the same benefits.

We all know that if the tax is harmonized in Ontario there will be some difficulty because consumers will now have to pay this harmonized tax on services at a higher rate than they paid before. That is the reality.

What do we do? Do we go dig a hole and lose ourselves in some of those facts? Or do we say that it will to be better for industry. Businesses will be more competitive. They will be able to compete better with Atlantic Canada and Quebec in world markets.

Exports are what it is all about. Growth in the economy has come through exports. If businesses are not competitive, even within our own provinces, then we are going to have some difficulties. I think Ontario should take the lead of Atlantic Canada and Quebec and harmonize the tax.

The member for Calgary Centre talked about the fact that people who do not comply with this law would be sent to jail, debtor's prison and all this sort of rhetoric. I do not think the hon. member was around for the debate subsequent to that announcement. There was some legitimate confusion among Canadians about people being thrown in jail and the way in which people would be charged under summary convictions or under various areas of the Criminal Code. The fact is that people will not be thrown in jail.

I find it ironic that Reform Party members, who stand up and talk about law and order and crime and punishment and who go on and on about the underground economy, the minute the government stands up and says: "Look, if you are start fiddling around with your HST, we are not going to throw you in jail but, yes, we are going to take it very seriously. We are going to treat that as a pretty serious-

[Excise Tax Act, February 10th, 1997]

Mr. Speaker, I am very pleased to speak again on Bill C-70 because I believe it is good policy and good legislation. In the world of politics and government we have to deal with the art of the possible. We often are not fortunate enough to have perfect solutions to everything but I believe the HST comes very close to that.

I would like to correct the member for Calgary Centre on one point. The premier of Ontario is quoted as saying-I do not have it in front of me now-that the harmonized sales tax would be the best thing Ontario could ever do. It is on the record. However, in the interim he has been involved in the politics of this issue and he does not want to move on it. We are finding that with so many issues.