John Duncan

[Supply, December 9th, 2004]

Madam Speaker, the government is doing everything it can to basically downplay the unmitigated disaster that we had on the Fraser River this year. The question that we just had from the Liberal member opposite demonstrates that the government will go to any length to pre-empt any independent look at how DFO is managing this resource in British Columbia. It is crucial to so many user groups and has a value of tens of millions of dollars on an ongoing basis unless we have a catastrophe like the one in 2004. It was and is a catastrophe that will continue to affect us in 2008, in 2012, and in 2016.

It is going to take a major effort. We already have tens of thousands of volunteers in our salmon enhancement programs in the province that are treated shabbily by the government. There is a lack of priority. There should be priority spending for those kinds of publicly popular, and very essential and necessary programs.

There is an attempt by government members to deflect the issue away from what is really our concern. Our concern is that we had 1.8 million, plus or minus, sockeye disappear above the Mission counting fence. Those fish had no commercial fishery on them once they were past that fence. What eventually reached the spawning grounds was less than what was needed for conservation reasons.

The Liberal member opposite wants to just talk about pitting user groups against each other. That is not what this is all about. We did not even meet conservation goals. That is how bad it is. Yet, we have bumph coming from the minister who is setting up a post-season review and talking about the entire south coast fishery, and downplaying what is an unmitigated disaster.

It is a complete frustration because this was totally foreseeable by DFO management, right up to the minister. I do not want to implicate the employees here because the employees are quite often and usually dedicated people who are trying to do the very best for the resource and they have their hands tied behind their back.

We have had problems on the Fraser River with the way the fishery has been managed in the past. Certainly, through the nineties, we had people looking at this issue to the point where the all party standing committee in 2001 made this a major push. It was finally able to table an all party set of recommendations. If the minister and the department had pursued those recommendations, we would not be here today talking about this disaster. It is most unfortunate. We sent the committee to British Columbia again last week, but we now have the government in full cover-up mode.

This is such a sad state of affairs because the real victims here are the resource and all of the resource users. When we do not meet conservation goals, there are no resource users. They are all in the same boat from the standpoint that, until we meet our conservation goals, no one is going fishing anywhere and anyone who does, if it is authorized by the government, is being most irresponsible. This is a very big deal indeed.

The B.C. Conservative members in this place certainly recognize what happened during this unmitigated disaster of a season. Several of us held a press conference, including the member for Pitt Meadows—Maple Ridge—Mission, on October 7. We talked about what needed to happen, not just with the Fraser River but with some of our salmon enhancement programs and other projects which are getting cut back by the government.

On November 17 the B.C. Conservative caucus called for a judicial inquiry. That is unequivocal. That is what we must have if we are going to get to the bottom of this. People are reluctant to talk, particularly people who work for the department, because they know there will be consequences if they talk and they are not in a protected status.

The day after we made that call the minister announced his post-season review which completely downplays this collapse. The minister has already tipped his hand. He has pre-empted the judgment of that post-season review. In the House on October 22, in responding to the member for Pitt Meadows—Maple Ridge—Mission, he said that record water temperatures caused the high mortality.

This is the old defence. This is where the government goes. It blames the weather and it blames the counting fence. We all know that those are not the least likely, but if they are contributing factors, they are certainly not the entire picture. We cannot pre-empt where a judicial inquiry would go and what it would find out.

Every fisherman on the coast whom I have talked to, aboriginal, commercial, and recreational, has a good idea of what happened on the Fraser River. Every employee of DFO, who had anything to do with the Fraser River management this year, has a good idea of what happened. We must have a non-threatening environment and an environment where people have no option but to tell the truth.

As my colleague stated earlier, “the truth will set you free”. What is it that the government and minister are trying to hide? There should be nothing scary at all about a judicial inquiry. It is a very serious piece of business, but the collapse of the Fraser River sockeye is a very serious piece of business for British Columbia. It is an issue that will not go away.

We have a systemic problem. I come from a riding that cares immensely about fish. Just this morning I received news from a government employee of DFO, who will not allow his name to be used, who has written a long piece to the local paper about what is happening in DFO. This individual wrote, “Most large corporations start at the top to do their restructuring. DFO starts at the bottom and we constantly hear from the minister there is not cutbacks or layoffs happening at DFO. This year alone there were 55 people handed their pink slips in the Pacific region”.

That is what is happening. We need this judicial inquiry. I hope we get all-party support for it. That is what British Columbians deserve. That is what the resource deserves.

[Sable Island, December 8th, 2004]

Mr. Speaker, the federal government assumed responsibility from Nova Scotia for managing Sable Island in 1867.

In 2000, federal cost cutting led to Sable Island Preservation Trust taking over responsibility for operating the station. The trust has now given notice to terminate activities next April due to further federal funding reductions.

The annual cost to run the station is about $1.2 million. This maintains five people on staff and they are important as the only human presence on this fragile island.

Recently the government set up a multi-departmental group to make recommendations about the federal future role on Sable Island. The working group has now recommended that the station remain open and the federal government once again assume full responsibility.

I urge the government to adopt the recommendations of the working group.

[Federal-Provincial Fiscal Arrangements Act, November 29th, 2004]

Madam Speaker, I can say with some clarity that I did not learn anything I did not already know from what the parliamentary secretary just reiterated in the House.

It would be nice to elicit some new information. Basically, right now we are in this period under NAFTA where we have an extraordinary challenge. The industry wants nothing to do with any negotiations prior to the extraordinary challenge being exhausted. It is fine and dandy to talk about negotiations, but why not say it the way it is?

I think some principles to guide the government, and to let the public and our trading partners know where we are coming from, are useful from time to time and we are not hearing that. The parliamentary secretary said nothing about the Byrd amendment and what we are going to do about that. That is an integral part of the whole dispute so I am still waiting for clarification.

[Federal-Provincial Fiscal Arrangements Act, November 29th, 2004]

Madam Speaker, I am here to talk about the question I asked the Minister of International Trade with regard to the softwood dispute.

When I was scheduled to speak tonight on the adjournment proceedings in relation to my question about Canada-U.S. relations and the concern I had about our $3 billion in softwood cash deposits being at risk because of the government's behaviour and the posture of the trade minister, I had no idea I was agreeing to schedule this the day before the visit by the U.S. President. That makes it slightly more foretelling.

At the time I asked the question, the minister's posture was basically that there was a window of opportunity to negotiate between November 3 and December 15, after the U.S. election and prior to the end of the year. I have been involved in the softwood file longer than any minister on the government side and longer than most. I could not find anybody who could figure out why the minister was coming up with the idea that there was this window of opportunity to negotiate. As a matter of fact, it sounded like a dumb idea.

We all know that after every election in the U.S., there is a change of administration, whether the president changes or not. That is exactly what has happened. We now have a President in his second term. The secretary of the department of commerce will change. The secretary of trade will change. This is not a very good window of opportunity for us because everything is in flux. Indeed, things really will not settle down until next year.

The gist of my question really dealt with why the minister was making these kinds of statements, when the real question was when would he get all the stakeholders together on the Canadian side and come up with a consensus position because he had not done so. Besides all that, the government has bungled Canada-U.S. relations. Let us get our act together. Rather than put our cash deposits at risk, which are now over $3 billion, let us get our act together and call a stakeholders meeting.

I understand that there finally was a stakeholders meeting just last week. We have a major concern now with the rising Canadian dollar against U.S. currency. Many in the industry now will be looking at very bad results in the first quarter of next year. I want to know where the government is headed with this whole file.

[Excise Tax Act, November 26th, 2004]

Yes, one step at a time.

[Excise Tax Act, November 26th, 2004]

Mr. Speaker, my colleague's comments allow me to say a couple of things I forgot to say. My colleague from Durham, who seconded this motion, talked about a jeweller family, Hooper's Jewellery, which has been operating for 60 years and for the last two generations, the owners have wanted this excise tax removed. This tax has been there for 86 years. I know in the case of my own community, Preston Jewellers has been fighting this tax and I continue to receive letters concerning this issue.

People have made such good cases in the last 10 years on several occasions before the finance committee and with their own independently commissioned reports and submissions to the finance department. They felt the case was so strong and the promises were so strong, that when there was no delivery at budget time, they have actually given up.

This private member's bill has reawakened some real optimism and they are thinking that this time it might really happen. It is rather inconceivable that members from all parties in the House of Commons are going to reject this notion. The tax is an anachronism.

In terms of the north and the provinces, the Premier of the Northwest Territories has stated publicly his real concern on several occasions. There is a burgeoning diamond industry and the Northwest Territories is getting about 4% return on the royalties. It is the same argument for the east coast offshore oil and gas.

During the east coast offshore oil and gas debate I empathized with Premier Handley's position because eventually the provinces, the territories and industry will find other alternatives or these ventures will not proceed simply because they are not the beneficiary. It is too indirect when the moneys go to the federal authority and then the federal authority transfers them back on a different basis and reduces or increases them on a one to one basis based on the royalties.

It is not a happy situation and needs to change. My bill does not address the bigger question. It only addresses abolishing this tax.

[Excise Tax Act, November 26th, 2004]

moved that Bill C-259, an act to amend the Excise Tax Act (elimination of excise tax on jewellery), be read the second time and referred to a committee.

Mr. Speaker, Bill C-259 is an act to eliminate the excise tax on jewellery. I think it is instructive to read the brief preamble and the actual legislative change in the bill, but before doing so I would like to say that I have had the bill in the hopper for a number of years. It is finally coming before the House largely as a result of the fact that we have changed the the way we draw bills. I was fortunate enough to win the lottery from the standpoint that my bill was picked sixth in this Parliament for private members' business. I feel quite blessed in that regard.

Bill C-259 is now a timely bill. When I first put it forward, we were dealing with a circumstance where this change had been promoted by the jewellery industry for decades, if not generations.

Now what has really changed is that we have everyone involved, right from the mining industry through to the retailer who has anything to do with diamonds and/or jewellery of all kinds, including costume jewellery. They are all now involved in this. Any item deemed to be jewellery that is sold at retail for more than $3 is subject to this tax.

Since I first introduced the bill in the House two Parliaments ago, Canada has become a diamond powerhouse, so the urgency of removing this anachronism of a tax is greater than it has ever been.

The preamble of the bill states:

Whereas manufacturers currently pay an excise tax of ten per cent on the sale price of jewellery manufactured in Canada and importers currently pay an excise tax of ten per cent on the duty-paid value of imported jewellery;

Whereas this tax was introduced in 1918 in respect of several types of goods considered to be luxury goods but today is the only luxury tax in Canada;

Whereas Canada is the only industrialized nation and the only diamond-producing nation that continues to have a luxury tax on jewellery;

And Whereas, as a result of this tax, diamonds mined in Canada cost more in Canada than anywhere else in the world;

Now, Therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. Paragraph 5(c) of Schedule I to the Excise Tax Act is repealed.

That is pretty simple. The preamble actually says a lot.

Here is what Canada is currently doing. If we have an item manufactured outside of 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 outside. This is obviously killing jobs. The excise tax on jewellery is a 10% levy paid by manufacturers on the sale price of items manufactured in Canada and by importers on the duty paid value of imports.

The House of Commons finance committee reported in 1996 that the tax was an anachronism and concluded that it should be abolished. It said the same thing in 2004. The revenue collected from the tax in 2003 was $87 million.

As a result of the growth in the diamond industry, it is now producing government revenues at current rates of about $500 million a year. Canada is currently the third largest manufacturer of diamonds in the world. By the year 2012, Canada is going to be the number one producer in the world. Government revenues from this burgeoning industry are far more than the much smaller revenues that are coming in as a consequence of this unfair and discriminatory tax.

The average Canadian household spends about $170 per year on taxable jewellery, so the average Canadian is affected by this tax.

The threshold for defining taxable jewellery is items that cost more than $3. Therefore, on every jewellery imitation at a Kmart or a Zellers or a Wal-Mart, the tax applies in Canada, but of course that tax does not apply in those same stores in the U.S. We are penalizing ourselves and driving business across the border, where even expensive jewellery can avoid the taxation because people bring it back under the $750 tax exemption for returning residents.

Steven Parker appeared before the finance committee. He is a small business jewellery manufacturer based in Vancouver, whose company employs about 20 full time people making wedding rings, family rings, earrings and necklaces. He had these observations about the tax. He is at a tax disadvantage compared to imported products because the 10% tax applies to all his costs, including marketing, distribution, manufacturing and payroll costs. He can import and have a lower cost base that he applies the 10% tax to; it would be based on landed value only.

Steven Parker and others would manufacture more jewellery in Canada. Two large Canadian jewellery manufacturers relocated outside the country since the 1998 investigation by the finance committee simply because they got tired of waiting for the government to remove this excise tax. They concluded it was not going to happen. The companies were tired of being undercut by manufacturers outside of Canada, so they relocated. This tax is demonstrably killing jobs.

About one-half of the jewellery sold by value in Canada contains diamonds. Saskatchewan will soon be joining the Northwest Territories as a world class diamond producer. Any of the premiers who are involved in jurisdictions where diamond production is either present or about to be are calling for the removal of this tax. It is pre-empting local jewellery manufacture. It is pre-empting tourists buying jewellery made in Canada because they know they can get it cheaper elsewhere.

The Mining Association of Canada said this in May of this year:

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.

One of the key recommendations is “eliminating the federal excise tax on jewellery”. There is virtual unanimity on this subject.

Finally, the application of this tax is an art, not a science. It is applied unevenly. This is very threatening to businesses that are looking for predictability on their taxation.

The finance committee this year heard from Mo Charania of Ottawa, a third generation jeweller with five stores. In 1999 he had an excise audit covering the previous three years. He was assessed over $800,000 in excise tax and was prepared to wrap up his business because that was a bill he could not pay.

Upon investigation of discrepancies and other ways to interpret the tax, especially in terms of how a manufacturer is defined, in his case, because of these discrepancies and differences they were able to reduce his tax bill to $340,000, which meant having to sell only a couple of the five stores in order to pay the bill. I say “only” rather satirically.

Upon further investigation, it became apparent that other companies were not being assessed by the Canada Customs and Revenue Agency because of an administrative policy created outside of the legislation which allows the excise to be paid at a discounted value for multiple items of the same article produced for retail. By application of this formula, it was not an $800,000 bill, nor was it a $340,000 bill. In fact, Mr. Charania would receive a credit.

This tax is incredibly complicated and very subjective in its application. On the part of the business owner, it often requires manual tracking rather than computerized tracking because of these characteristics. Also, it is subject to different opinions of and rulings by different auditors and people within CCRA. That is why CCRA has created a guide on how to apply it that is outside of the legislation. Only some of the businesses to whom this tax is being applied are even aware this guide exists. Obviously not all of the auditors, even with that interpretive document, operate the same way.

It is fairly easy to summarize many of the reasons why we should axe this tax. Consumers are paying a hidden luxury tax for non-luxury items. We can hardly describe a $3 item of costume jewellery as a luxury item.

Canadian jewellery retailers and manufacturers are discriminated against. Canadian jobs are lost. Canada will soon be the largest producer of diamonds in the world and our diamonds will cost more in Canada than anywhere else.

The finance committee has recommended that the tax be abolished.

First nations want the tax abolished; they are important participants in the diamond industry at the mining level and also increasingly in the value added participation.

A really important aspect is that retaining this tax is driving the jewellery industry in Canada underground. The volume of illegal evasion and legal avoidance of the tax is estimated to be in the range of 50% of recorded sales or larger. In 1990 recorded sales were $2.3 billion, just to give a benchmark of what kind of numbers we are talking about. When we get that kind of avoidance or evasion, the GST is also completely avoided, which means that in all likelihood this tax is actually revenue negative for the government and an incredible burden for the business community.

It is time to axe this tax. I have a letter from the member from Oak Ridges completely agreeing with my statement. That is dated January 30 of this year. I have a letter from the chair of the Manitoba caucus completely agreeing with my position. That is dated February 6 of this year. I have a letter from the minister of resources for the Northwest Territories that says the same thing.

My time is up, Mr. Speaker.

[West Coast Light Stations, November 22nd, 2004]

Mr. Speaker, the government has silenced 17 foghorns on the west coast. The last three were silenced in September but after a storm of protest, they have been reconnected. Government members of Parliament are beating their chests as if restoring these three has resolved the issue. It has not.

The minister, who so brilliantly dismissed west coast fog as not a problem, now says he will restore these three foghorns, at least temporarily. He does not want to talk about the other 14 and hopes the issue will go away. This will allow his bureaucrats to continue to dismantle west coast light stations piece by piece.

Coastal British Columbians know the DFO game of slowly making the light stations non-functional and they are not impressed. When will the minister stop dismantling the lights?

[Supply, November 4th, 2004]

Mr. Speaker, I think most members of Parliament would know the answer, which is the governing party would prefer to take with one hand and give with the other, so it retains control of the agenda. The government is doing that through clawbacks and other formulas that are not nearly as beneficial to allowing unilateral action by the provinces to benefit themselves with their own initiatives.

[Supply, November 4th, 2004]

Mr. Speaker, we all know the government has been playing with the numbers and trying to find different ways that Newfoundland and Labrador, for example, would never be given the opportunity to become a have province. The province would always be restricted to be less than or equivalent to the revenues of Ontario. That is most inappropriate. That is one example.