Diane Finley

[Excise Tax Act, June 13th, 2005]

Mr. Speaker, I am pleased to speak today in favour of Bill C-259, an act that seeks the immediate elimination of the excise tax on jewellery and watches.

It is clear from the overwhelming evidence in support for the legislation that the time has come to immediately do away with this punitive and unfair tax.

Before I proceed, I would like to take this opportunity to thank my colleague, the hon. member for Vancouver Island North, for his very hard work and dedication to doing away with this excise tax. The member's perseverance in this regard should be commended.

Increased economic development in my riding of Haldimand—Norfolk is my top priority. Conversely, anything that negatively impacts on economic development is something that worries me. This excise tax has had the effect of unfairly stifling economic development, not only for many businesses in my riding, but right across the country.

As the federal representative for these business owners who are in both retailing and manufacturing sectors, I feel that it is my duty to stand against this tax and stand in favour of this much needed and long overdue legislation. I say this because for far too long constituents in my riding and in many other rural ridings like it have felt either ignored, unfairly treated or even betrayed by the Liberal government.

The government's continued talk about the need to support cities and their increasingly crumbling infrastructure, while necessary and important, often leaves the people in my riding and other residents in rural Canada feeling like second class citizens or an afterthought of the government.

The government's recent budget and its NDP amended version are prime examples of how low a priority the government places on small town rural Canada.

The Liberal budget and the Liberal-NDP budget have nothing in them for struggling agricultural producers, not a cent for desperately needed economic development funding for Haldimand—Norfolk and not one cent of tax relief for hard-working families or for families who choose to take care of their children at home.

The budget did, however, have billions of dollars for state run day care and gas tax rebates for cities. While these may be high priorities for people in urban areas, I must say that it leaves rural residents asking what is in it for them.

The reasons that Bill C-259 merits immediate passage have been mentioned many times before but I feel that it is important to reiterate why it is so important to finally do away with this tax once and for all.

The tax was first introduced in 1918 near the end of World War I. Its main purpose was to act as a luxury tax in order to raise desperately needed funds for the government of the day. Needless to say, the tax has served its purpose and is no longer appropriate in our current context.

To quote a 2004 report by the House of Commons Standing Committee on Finance, this excise tax:

--is an anachronism that no longer serves any social-policy objectives, nor does it fulfill the qualities that should be sought in a tax: equity, efficiency, ease of administration and transparency.

Quite simply, the tax is destroying Canadian jobs.

The 2004 report of the House of Commons Standing Committee on Finance stated:

--this tax is resulting in negative consequences for employment and the viability of Canada’s jewellery industry.

Currently, manufacturers pay an excise tax of 10% on the sale price of jewellery manufactured in Canada and importers pay an excise tax of 10% on the duty paid value of imported jewellery. To highlight how unfair this tax is, if we have an item that is manufactured outside Canada and imported into Canada and it is identical to an item manufactured in Canada, we tax the made in Canada item and do not tax the item coming from beyond our borders.

Put simply, this tax imposes a tariff on Canadian made goods, ensuring that goods made right here at home cost more than goods that we import. This approach is not the way to build a strong economy for our country.

The negative consequences of this tax are numerous. Business bottom lines are negatively impacted, stifling growth and employment and discouraging investment. This excise tax increases the cost of financing inventory for retailers and wholesalers. It also encourages Canadians to purchase their jewellery in the United States or other countries at a much cheaper price. In addition, the advent of e-business transactions is encouraging greater numbers of Canadians to order jewellery on line from other countries because of the savings they get.

While many believe that this tax is justified because it is a luxury tax on the rich, the truth is that a large part of the tax is being collected from low value jewellery purchased by ordinary Canadians. According to Ernst & Young, lower and middle income households account for over 50% of jewellery and watch purchases.

In fact, Canadians are paying this luxury tax on real and imitation jewellery that costs more than three dollars. This hidden luxury tax on items that are of very little value is grossly unfair. As my hon. colleague from Vancouver Island North noted, about one-half of all the jewellery sold by value in Canada contains diamonds.

The province of Saskatchewan is poised to join the Northwest Territories as a world class diamond producer. The premiers who are involved in jurisdictions where diamond production is either present or contemplated are calling for the removal of this tax.

This punitive tax has had the effect of pre-empting local jewellery manufacturing. Furthermore, this tax is discouraging tourists from buying jewellery made in Canada because they know that they can get it cheaper at home.

It is important to note that the Mining Association of Canada said in May of 2004:

In less than a decade, Canada has emerged as a diamond powerhouse...By providing the right mix of fiscal and regulatory policies, governments have the opportunity to maximize the contribution of Canada's diamond industry to the benefit of all Canadians.

Eliminating the federal excise tax on jewellery will help Canada become one of the world's leaders in diamond manufacturing.

I recognize that the government has announced a planned phase-out of this tax in the recent budget. While I am happy that the Liberals have finally come to realize the importance of doing away with this punitive tax, I find it unfortunate that they wish to further stifle job creation, economic development and increased investment by allowing this punitive tax to continue for the next four years.

I know that old habits die hard, but I would encourage the government to give up its tax collection addiction and consider disposing of this tax immediately.

Reducing taxes encourages jobs, investment and a vibrant economy. According to a 2003 study, the jewellery industry has relatively high job creation potential. Jewellery manufacturing creates 40% more jobs per dollar than home electronics or the auto parts industry. The jewellery industry has the potential to create cottage industry jobs in remote areas and in rural areas like mine in Haldimand--Norfolk.

Bill C-259 has had widespread support from all parties in this House. It has widespread support from the jewellery and mining industries. The bill follows up on recommendations made by the House of Commons finance committee and reports by the Auditor General of Canada.

The time for this tax to be completely eliminated is now. That is why I am encouraging all members of this House to support Bill C-259.

[Supply Management, June 7th, 2005]

Madam Chair, I understand the hon. member is supporting the supply management system, just as we do. I would just have one question to put to him.

Would the hon. member recommend that the minister leave the negotiating table if the supply management system were threatened?

[Supply Management, June 7th, 2005]

Mr. Chair, I am not quite sure where to begin with all of that, because first of all there is an issue of credibility when the critic for agriculture for the New Democratic Party describes the Wheat Board as supply management. That is not the way it is. There are three colours to supply management and the Wheat Board ain't it.

Having started with that, let us establish where we are. First, the Wheat Board is not supply management. I would encourage the member opposite to understand that. Second, in terms of our international trade critic's credentials, let us remember one thing, that is, not all farmers in Canada are supply managed. Some 90% are not. Of our farmers in Canada, 90% are export oriented and international trade is very important to them.

In that critic's office is one of the greatest proponents of supply management in this country. It makes for a nice balance along with me; I am of the opinion that absolutely no sector of our Canadian agricultural groups wants to profit at the expense of another. We must take a balanced approach. We must not sacrifice one agricultural sector for another in any negotiations or in any progress.

Finally, just to clarify one thing, the leader of this party has been on record many times as saying that he supports supply management. He has signed the Dairy Farmers of Canada pledge, just as the leader of the fourth party did, so the fact is that he does support it. He has said so many times. He has met with them one on one many times. They understand his commitment even if the member opposite does not.

[Supply Management, June 7th, 2005]

Mr. Chair, I would like to thank my colleague for setting the record straight on the reality of what happened in Montreal.

It is interesting that we hear a lot of talk these days, as we have since September or longer, about the government's stated priority of increasing slaughter capacity for our cattle in this country. The Liberals said they would make it a priority for the CFIA to expedite the opening of additional capacity when in fact there was a facility in Salmon Arm, B.C., which was slated to be open in July of last year.

Interestingly enough, when the CFIA went in to give the final approval, the operators were told that they needed to fix just a couple of things and if they fixed them the CFIA would be back the next week. The next week the CFIA went back and, oops, there were a few more things that had not been noticed the first time. This went on for months. This is not how we expedite opening up the capacity.

In fact, our party raised the issue in the House in the fall, five months into the process, and that was when, 48 hours after that discussion, finally the slaughterhouse magically was granted its operational permit and was open for running. If that is the government's idea of opening, encouraging and expediting slaughterhouse capacity, I would hate to see what it would do if it was trying to drag its heels.

Any increase in slaughter capacity is desperately needed in this country. We have been pushing for it, with real progress, but instead, any increase that has come has been in spite of and certainly not because of any government programs.

The loan loss reserve program for all intents and purposes does not exist. The forms are not available. Finally, after the five banks would not sign on, the government talked its own agency, the FCC, into coming on board with this. There was a great announcement about it, except that two weeks later when I spoke to my local FCC rep, he told me he had never heard of the program. If he has not heard of it, how can he do any good with it?

I ask members, what kind of effectiveness is that? It does not make it happen. There is a lot of talk, but it is A for announcements and D for delivery.

[Supply Management, June 7th, 2005]

Mr. Chair, I beg to correct the members opposite. It was virtually unanimous, the support for this particular position at our convention. If those members would bother to take the time to read through the results of that convention and all of our policies, which, let us face it, are very strong--we have a much more broadly based and a much more comprehensive agriculture policy than the Liberal Party has ever developed--then they would see that this is a party that truly understands and respects agriculture and is prepared to act for it, not in spite of it.

[Supply Management, June 7th, 2005]

Mr. Chair, I find it interesting that the member opposite disqualifies any of us who live in Ontario from having a viable opinion on this, because I was with the Canadian Alliance, I supported our policy and I have been taking a very strong lead role in developing the current policy, a policy which, I should point out, was almost unanimously endorsed by the over 3,000 members of our party and delegates who were at our convention.

[Supply Management, June 7th, 2005]

Mr. Chair, I rise in the House today to address supply managed agricultural production.

Canada's dairy, chicken, turkey and egg producers work hard to provide Canadians with safe and reliable food products. The supply management system is a domestic policy choice made by Canadian dairy and poultry producers. These industries are producer led and do not require government subsidies, but the government does have a very significant role to play in determining the future of these industries.

Outside of the farmer led production and marketing systems, producers are in need of competitive tax regimes, reduced red tape and representation of their interests at trade negotiations. This is the job of the federal government. It is up to the government to ensure that these industries can continue operating in the way that producers want and need them to.

Instead though, what the Liberal government has done is to pay lip service to supply management. Its policies say one thing but its actions say something entirely different. Conversely, the Conservative Party has an inherent respect for agriculture. Most important, we recognize that Canadian agriculture is diverse and that different sectors of the industry have different needs. We deem this so important that we have now enshrined this view in our agriculture policy.

At this point I would like to talk briefly about avian influenza and its effect on the poultry industry. I have spoken about this before in the House, but I want to make it absolutely clear that what happened in the Fraser Valley will not soon be forgotten. While CFIA officials were scrambling to contain the disease without a predetermined plan, marketing boards were at work ensuring that there would be very little market disruption in Canada's poultry supply and therefore market prices.

The supply management system has been credited for the effective market flow of poultry products during this crisis, but it must be remembered that it was the producer led structure of the industry that prevented market disruption and limited the effect of the crisis on the consumer.

Another issue that has affected supply management recently, and which is far from over of course, is BSE. When the U.S. border closed to Canadian cattle, dairy producers watched the market collapse for their veal calves, replacement heifers and cull cows. There has since been price recovery for some of these animals, but the problem of what to do with cull cows continues to plague dairy farmers. Over 30 month cattle are a real challenge because most of these animals were processed in the U.S. and meat production from these animals has very little foreign market access.

Prices for steers and heifers have rebounded from the lows of 2003, but prices for cull cows have remained depressed. The fact that a U.S. border opening for live cattle will not include over 30 month animals further reinforces the need to assist owners of these animals until increased capacity comes on line.

The Conservative Party of Canada has been calling on the government for a year and a half now to do something about the surplus of older animals in Canada. We have developed and communicated practical solutions to the government but our solutions to deal with BSE continue to be ignored.

As the livestock industry teetered on the edge of collapse, the Liberal Party chased its tail trying to find someone to blame for the BSE crisis. I know that international diplomacy is not a strong Liberal point, but instead of focusing on getting the border open, the government implemented poorly designed aid programs that failed to address concerns brought forward by producers that would be viable in the long run.

The 2003 cull animal program is a case in point. An obvious flaw in the program was the determination of cull rates. The cull animal program did not compensate producers on these full cull rates, rather program cull rates were determined by taking 60% of those values. This resulted in much criticism from all cattle producers, but particularly the dairy industry.

The average dairy cull rate of 25% is essential to the operating nature of supply management. The last program only allowed compensation of 16% of mature dairy animals.

Our suggestion to the government has been a cull cow program to compensate producers for all cull cows that have become a burden due to the lack of market access. A reduction of the national herd with compensation to farmers would serve three purposes. It would provide immediate direct cash to farmers. It would relieve farmers of the burden of feeding cattle. It would reduce the national herd size so that market prices could be maintained.

It was interesting that the agriculture minister's press secretary was quoted in the Medicine Hat News this past weekend regarding a possible total closure of the U.S. border to Canadian beef. Her comments sounded an awful lot like what Conservative Party people have been saying for over a year, and I quote her, “The Canadian cattle industry will look at a number of options, including a culling of older animals”. It is nice to see that the agriculture minister is finally coming around to see that the Conservative Party has been right all along.

Obviously the biggest challenge that supply management faces is the international pressure to reduce tariffs on all agricultural commodities. Without tariffs, Canada's supply managed industries are not able to predict the amount of imports and the whole system is disturbed.

During this round of talks at the WTO, the Prime Minister and his Liberals are once again promising to protect supply management, but based on the Liberals' record and their complete lack of accountability as demonstrated by the sponsorship scandal, I wonder if Canadian dairy, poultry and egg producers can really trust them.

The last time around, the Liberals sold out Canada's farmers by signing away article XI, which protected the industry with quantitative import restrictions. These were replaced with tariffs which have proven to be a failure at protecting Canadian producers from international competition. A case in point: we are witnessing substitute products designed to get around the tariffs displacing Canadian dairy products in the production of ice cream.

The Liberals' utter failure to do something about the importation of butter-oil-sugar blends is just another example of the government's negligence in addressing issues that impact Canada's dairy farmers.

The Conservative Party of Canada recognizes the challenges facing the dairy industry as it pertains to the use of modified milk ingredients. We understand that dairy producers are concerned with the use of non-dairy substitutes in the production of products which are similar to ice cream and cheese but not actually processed with authentic dairy products.

We recognize that this is a complex trade issue that affects supply management producers on one side and food processors on the other. To this effect, the Conservative Party supports the comments of Peter Gould, general manager of the Dairy Farmers of Ontario, who just today expressed the need for dairy farmers and processors to get together and hash out possible solutions that can mutually benefit both dairy producers and the processors.

Another partial solution that the Conservative Party is considering supporting is truth in labelling legislation that would ensure that dairy terms referring to milk and milk products are used accurately in the description and presentation of food.

This truth in labelling legislation would allow consumers the freedom to make informed decisions as to what food products they wish to purchase and consume. I encourage the supply management industries to work with other representatives of Canadian agriculture, including the export dependent sectors, to develop solutions that will meet the needs of all Canadian agriculture and which will be accepted by our international trading partners.

I would like to assure Canadian dairy, poultry and egg producers that their next government, a Conservative government, will not bargain their domestic interests away. Rather than be part of the problem like the Liberals, we will continue to be part of the solutions.

[Supply Management, June 7th, 2005]

Mr. Chair, if over quota tariffs are lowered at the WTO negotiations, then one of the three pillars of supply management will be compromised. What are the minister's plans for the supply management industry should that happen?

[Canada Post, May 31st, 2005]

Mr. Speaker, in 1994 the Liberal minister responsible for Canada Post claimed that, “As long as this Government is in power, no rural or small town post office will close”.

In spite of this Liberal promise, countless rural post offices have been closed or are facing closure.

In my riding of Haldimand—Norfolk, residents of Lowbanks have seen their post office closed and the towns of Clear Creek and York may be next on the list. These post offices have provided a valuable service to my constituents for decades.

Since 1997, Canada Post has recorded profits and dividends of almost $1 billion. Despite these profits and promises, the Liberal government continues to close rural post offices. Our rural communities deserve better.

In the words of my constituents, “hindering and interrupting an important service such as this is just not acceptable”.

[Agriculture, May 20th, 2005]

Sadly, Mr. Speaker, today marks the second anniversary of the U.S. border closing to Canadian cattle, beef and other ruminant products. Throughout this time, producers and those with whom they do business have endured untold personal and financial suffering.

They have suffered greatly at the hands of free trading mercenaries south of the border. They have suffered at the hands of protectionist politicians. They have suffered at the hands of the Liberal government, which has mismanaged this agricultural crisis, one of the worst in Canadian history.

I would like to take this opportunity to commend all cattle and other ruminant producers for their resilience during these trying times. Their concerns have not gone unheard. They can rest assured that my colleagues and I in the official opposition are committed to continuing our work to find constructive solutions to help reposition this industry.