Scott Brison

[Financial Consumer Agency Of Canada Act, March 30th, 2001]

Madam Speaker, it is a pleasure to rise to speak to Bill C-8. The legislation will have a very important effect on the level and quality of services available to Canadians and consumers of financial services. It also has the potential for a significant impact on the competitiveness of our financial services sector globally.

We are in an increasingly competitive financial services sector that from a global perspective has become hyper competitive. The amount of change in the financial services sector in the last 10 years has been greater than the level of change that has occurred in the entire 150 years preceding that.

In this rapidly changing hyper competitive environment the government has dragged its feet since 1993. It has avoided making the necessary updates and improvements to reflect this reality and the new realities in the financial services sector. There is very little in the legislation that could not have been introduced in 1994-95. Instead, the government used every delaying mechanism at its disposal to wait as long as it possibly could to introduce the legislation, and that is unfortunate.

Further, the MacKay report of about a year and a half ago provided an extraordinarily comprehensive and well thought out long term visionary plan for the financial services sector that has been butchered by the government. It has selectively chosen based on political palatability certain elements of the MacKay task force to recommend.

It has chosen to ignore and to turn a blind eye to many of the other recommendations which may have been more politically contentious but would have contributed significantly to improved competitiveness in our financial services sector and to an improved environment to create more jobs and opportunities for Canadians in this sector.

The government has treated the MacKay task force like a buffet where it could selectively choose from the menu of public policy options. It chose the various options based on political criteria, not on economic criteria or on achieving what was best for Canadians and the financial services sector.

The government has delayed and dithered on this issue for a long period of time. It is with a pinched nose that the PC Party supports the legislation because it does not reflect the type of measures and policies that we believe would harness the power of the financial services sector in Canada. While it does have some of the elements that could help to improve the environment for the financial services sector and create greater levels of wealth and opportunity for Canadians, it does not go nearly far enough in many ways.

In 1993 Canada was ahead of the U.S. in terms of deregulating our financial services sector. Today we have fallen behind the U.S. With the last vestiges of the Glass-Steagall act gone from the U.S., American financial services, such as banks and trust companies, are better positioned to participate in the opportunities of the 21st century than their Canadian counterparts.

The government's approach to the financial services sector has forced Canadian banks to grow in the U.S. and to limit their growth here in Canada. This is unfortunate because many of the jobs and opportunities could be here in Canada. I fear that the government is driving people offshore and limiting opportunities within our borders.

There has been a significant amount of lost opportunities in the last couple of years. The last time the issue of bank mergers was pursued, the finance minister's response in December 1999 closed the door to bank mergers. There was an opportunity for dialogue between the banks and parliamentarians, and between the banks and people served by the banks about some of the issues of concern to Canadians.

Instead of the finance minister taking opportunity to address those concerns in a constructive way by sitting down with the banks and negotiating terms that would protect the interests of Canadian consumers, borrowers and small business people, he slammed the door shut for short term political reasons. He not only denied an opportunity for a more efficient financial services sector, he also denied Canadian consumers the opportunity to have better, more competitive services well into the future.

During that time, the Bank of Montreal and the Royal Bank agreed to several long term commitments which would have given improved services to consumers. These included doubling the amount of lending to small businesses and the setting up of a separate bank to do that, reducing bank service charges, protecting services to smaller communities and increasing staff in branches.

Instead of taking advantage of these opportunities on behalf of Canadians, the minister, for political reasons, made a shortsighted decision. Part of that was to appease the Liberal caucus witch hunt on banks—I am sorry—the Liberal task force on banks which constructed the most partisan, poorly written and researched, short term document ever in the history of parliament. Instead, he capitulated to the forces of evil on that side of the House with its short term, populist, pandering perspective which denied Canadians the long term opportunity of a stronger financial services sector and better levels of services to Canadians.

The Liberals opposite are convenient free marketeers. It is focus group economics on the other side of the House. It is whatever is popular this particular week, or month or year. There was a time when those members opposite campaigned vociferously against free trade until of course they were elected. At that point they saw the benefits of free trade and embraced it. Some would say the government claimed the invention of free trade in the same way that the former vice president of the U.S., Al Gore, claimed invention of the Internet. We also saw that with the GST.

It must be great to be able to go through life unburdened by the yoke of principle and consistency. Fortunately we on this side of the House are burdened with the yoke of consistency, principle and values that may not always be popular but are consistently well thought out and based on sound values.

This piece of legislation would give the Canadian government a greater level of intrusion and regulation of the financial services sector than any other sector or industry in the country. The government will say that this growth of regulations is good for consumers, but I would argue this would in the long term cost Canadian consumers more in the following ways.

First, Canadian bank service charges are competitive globally. None of us like to pay service charges but the fact is our bank service charges are competitive. In fact they are lower than those of American banks. Sometimes it does make sense for us in this place to deal with reality and not simply perceptions when we are voting public policy.

Second, this growth of regulation is going to cost a great deal for financial services players to participate in and to comply with. Ultimately those costs will be borne by someone. Will they be borne by shareholders? Perhaps they will in part. I would argue that ultimately those costs will be borne by consumers, the very people who the government is claiming to be trying to protect. Consumers will be paying higher service charges in order for the financial services institutions to comply with the government's egregious, oppressive levels of regulations in this particular area.

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, I thank the hon. member for his question. No, I certainly do not support a single North American currency.

We are not looking for a short term, band-aid solution for the dollar but a long term strengthening of our currency through fiscal policy levers. I would certainly not present fiscal policy as an immediate overnight solution to strengthening the dollar, but in the long term it can have a significant impact.

There are only two levers we can use to strengthen our dollar in the long or short term: monetary policy, which is in the hands of the Bank of Canada, or fiscal policy whether in tax and debt reduction policies or spending policies.

Those are the policies that in the long term will require vision and commitment. If we are to strengthen Canada in a comparative sense, particularly with regard to tax policy, we must cut not only taxes which are politically unpalatable but those which have the most deleterious impact on long term growth.

Also, reducing our debt over the long term, not simply as a percentage of GDP but in real terms, would have a significant impact on strengthening the Canadian dollar.

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, I thank the parliamentary secretary for his question. He is quite right. The Canadian dollar is doing very well compared to the ruble. That being the case, I suggest to the hon. member that there are other measures we should use. One might be the U.S. dollar, given the degree to which our trade relationship with the U.S. exceeds our trade relationship with Russia.

For our dollar to be strong relative to the ruble, as my grandfather used to say, is like peeing oneself in a dark suit. It gives one a nice, warm feeling, but nobody knows. It does not make any difference. That is not why, I am sure, the hon. member is wearing a dark suit.

He also said I had neglected to mention a few points. The reason I neglected to mention that taxes are lower in Canada than in the U.S. was because they are not. There is a reason we neglect to mention things we know are absolutely, completely and utterly false. Because I understand the differences between tax levels in Canada and those in the U.S., I neglected to mention some of the mistruths he introduced in the House today. I am certain those mistruths were unintentional.

Our capital gains taxes, regardless of income level, are still considerably higher than those in the U.S. Our corporate tax burden is still the third highest of the 31 OECD countries, and after five years of tax reduction it will still be about the third highest.

We still have some of the highest marginal tax rates for successful Canadians. If we look at basic levels of income, Canada's cutoff point for taxing low income earners is about $3,000 lower than in the U.S. In Canadian dollars the difference is closer to $4,000. The hon. member would like to think, I am certain, that we are a kinder and gentler nation, but Canada taxes low income earners far more harshly than does the U.S.

While he crows about the baby steps his government has taken in the right direction, I suggest he should remember that a tortoise moving in the right direction on the autobahn is still roadkill.

[Income Tax Amendments Act, 2000, March 27th, 2001]

Mr. Speaker, it is with pleasure that I rise today to speak on Bill C-22.

These amendments to the Income Tax Act represent a collection of baby steps, some of which are in the right direction. Some represent a significant further complication of an already far too complicated tax code. Most represent politics and the triumph of politics over public policy.

If we look at the general direction of these tax measures, we will find that there is no general direction to the these measures. In fact, they resulted from a flimsily put together pre-election document, sometimes referred to as a mini budget. It is referred to as a mini budget but I suggest it reflects the government's mini vision of Canada.

The fact is these baby steps, these tinkerings, these policies do not reflect what Canadians need and are particularly not what the tax code needs. We need a significant level of tax reform in Canada. Tax reform can be used as a vehicle for economic growth. Instead of making tax tinkering part of its pre-election policy, Canadians would be better served if the government was to utilize tax reform as a vehicle for long term economic growth. That would benefit all Canadians and improve our competitiveness globally. These tax measures do not do much to provide for greater long term competitiveness for the Canadian economy.

If we look at the government's record since the election in 1993 relative to international confidence in Canada's economy, the most damning reflection or gauge by which to judge the government is our falling dollar and the fact that under this government our dollar has lost over 11 cents of value. That is the dollar reflects the share value of Canada Inc. Under this government we have seen an 11 cent decline in our country's dollar.

Every time there is a loss in the value of the Canadian dollar in comparison to the U.S. that leads to a pay cut for every Canadian. We depend greatly on the goods and services we consume from our neighbours to the south. A loss in the dollar represents a direct loss in our standard of living and ultimately in our quality of life in Canada.

The tax policy and fiscal policy provide a very important key to providing long term strengthening of the dollar. The government refuses to discuss the falling Canadian dollar under the guise of deferring to the Governor of the Bank of Canada and his responsibility over monitoring policy. Fiscal policy levers in the long term are as important as monetary policy levers in providing long term strength to the Canadian dollar. The importance of fiscal policy, that is tax and debt policies and strategic spending policies to the long term strengthening of the Canadian economy, is where the government's record has been a less than impressive one.

Some of the types of tax reform measures that we would like to see and that would make a great deal of sense are those that address some of the most pernicious and uncompetitive natures of our Canadian tax burden. One is our capital gains tax.

Even after there was some tinkering in this economic statement and some reduction of capital gains taxes, we still have a higher tax burden in capital gains than the U.S. For the government to eliminate personal capital gains tax would cost the federal treasury about $4 billion a year. This would put us ahead of the U.S. in a very important area of taxation, particularly in areas of new economy, biotechnology and in some of these other areas that are emerging.

In terms of encouraging new economy venture investments, particularly during a time when market conditions are so turbulent and we need to try to provide whatever incentives we can to maintain early investors' interest in these areas, the elimination of personal capital gains tax would provide a great incentive for Canadians to invest and help continue to grow the economy.

It would be even more important now than it was a few months ago as we see the economic downturn that we are experiencing in Canada, in the U.S. and indeed globally at this point. It becomes even more important in some areas. I have referred in a specific sense to capital gains taxation. It is even more important now that we try, for once, to be ahead of the U.S. as opposed to constantly trying to keep up and in fact always being a couple of steps behind. That is one area where we would have liked to have seen a more dramatic and visionary step as opposed to the tinkering the government has done.

The fact is that most of these tax measures occur over a five year period. If hon. members look at the degree to which these tax reductions will impact Canadians in the short term, it is actually much less than what the government would like Canadians to believe, particularly when combined with the payroll tax hikes that became effective recently with the CPP payroll tax hikes. It is clear that the net tax benefit or the net benefit to Canadians in a take home pay context is minimal or in fact none if members again take into account payroll taxes.

Whatever way the government would like Canadians to view these measures, it will become painfully obvious to Canadian taxpayers when they are receiving their cheques and with their tax deductions that these measures have been half measures and have not really addressed the fundamental issues of high taxes in Canada. Canadians have the highest income taxes in the G-7 and the second highest corporate taxes in the OECD. Even after full implementation of these tax measures over a five year period, we would still end up having about the third highest corporate taxes in the OECD. That is assuming that none of the other countries reduce their tax burdens, and we already are aware that at least seven of them are entertaining and moving toward lower taxes.

Even as we see a slight narrowing of the gap between Canada and the U.S. in terms of tax burden in the short term, we see the U.S. now introducing the largest tax cut in its history. The tax cut is being negotiated currently and is making progress through congress. We are still behind. The mini budget introduced prior to the last election did not do much to get us caught up to the U.S. economy in the current context and yet we are now going to see, under President Bush, a leapfrogging further ahead. Again, Canada will be further behind.

A recent report from the Fraser Institute drew, in a convincing way, a direct linkage between Canada's low dollar and Canada's systemically high levels of taxation on all fronts. We have yet to see a firm commitment from the government, not just on tax reform as a vehicle for long term strengthening of the Canadian economy, but also for debt reduction. Debt reduction, when we have approximately four times the per capita debt of the U.S., should be a much higher priority than the government has made it.

In fact, many of these tax reduction measures are simply spending measures in the form of targeted tax cuts. Rewarding a particular kind of behaviour is nothing more than spending. It is another way to encourage people to do something that they may not do otherwise. People end up making decisions based on tax policy as opposed to what makes sense from a business policy, from an investment policy or from a personal perspective.

The fact is, this mini budget, this pre-election document, was far from what Canadians needed in the most turbulent February we have seen in the last seven years. In the last seven years there has not been a worse February for the government to avoid having a budget in than this last February, when the government ducked the issue and decided arbitrarily not to have a budget.

The fact is, Canadians, particularly with the difference in the economic conditions between the time when the mini budget was introduced and today, need a budget more than ever. Whether it is the decline in the global capital markets or the dramatic declines in the TSE, the NASDAQ and the New York stock exchange, Canadian investors and individual Canadians have seen their retirement savings diminish sharply in recent weeks. At the same time, they are seeing their standard of living decline because of a weakening dollar. There is a significant and reasonable concern among Canadians which should be addressed, not through an economic statement in the spring and not through a state of the union address which the finance minister has talked about providing, but through a full budget.

It is also offensive from a democratic accountability perspective, because this parliament, with its new members in some cases, has not actually been asked to approve a budget introduced after the last election. There are a number of new members of parliament in the House and government spending and government estimates ultimately should be accountable to this place, to parliament. For the government to determine that it is not important to engage parliamentarians in the approval of government spending and tax policy through the support of a ratification of a budget in the House is really and truly offensive.

There are a number of reasons why we have concerns with the government's policies, with its tax policies and general fiscal policies. However, these concerns are not just our concerns. These are concerns shared by many Canadians, particularly by some of Canada's top economists. We are seeing a unified front from Canada's economists relative to the lackadaisical approach of the government on specific tax policies. In the words of Terence Corcoran, a journalist, “If weak currency created growth, Canada would be a world leader”.

The Prime Minister once said that a weak dollar is actually good for tourism. I think this indicates his economic naiveté but also his genuine belief that a country can devalue its way to prosperity. The fact is, a weak dollar is no way to guarantee long term growth and an increase in the standard of living of a people. In fact, it is quite the contrary. If the Prime Minister's argument is correct, that somehow reducing the dollar can improve tourism, let us think about this. The logical corollary of his argument is that if we would reduce the dollar to zero ultimately we could become the largest exporting nation and the most successful exporting nation in the world. Of course we would be giving away our products.

The finance minister said in 1990, I believe at the time when he was running for the Liberal leadership the first time, that he would, if given the opportunity, manage the dollar's decline down to its natural level of about 78 cents to 80 cents. He has done so well that he has managed the dollar's decline down to the 63 cent range.

Canadians are asking a legitimate question. They want to know why the finance minister is not doing more to strengthen the intrinsic value of the Canadian dollar as opposed to accepting its decline. Is it that the Liberal government has accepted that currencies such as Canada's will in the long term be marginalized and that the best way to get rid of the independent Canadian dollar is to simply euthanize it, to let it wither on the vine and let it decline to such a level that Canadians will say, as they have already started to say, they would be better off with a common North American currency?

I do not believe we would be better off with a common North American currency. To give up our monetary policy levers would be a mistake. If we give up our floating currency with the U.S., there needs to be another operative mechanism to reflect things. For instance, the commodity crisis that occurred about two years ago in Asia would have manifested itself not in a reduced Canadian dollar at that point, but in higher levels of unemployment. Without the floating Canadian dollar, I would argue that the operative mechanism that would reflect differing levels of productivity or commodity price valuations would be unemployment rates. I am concerned about the notion of losing that very important tenet of economic sovereignty that is the independent monetary policy and the Canadian dollar.

Why would the government watch over the decline of the Canadian dollar and not defend it? If we in this place do not take steps to strengthen the Canadian dollar in the long term through more aggressive and innovative tax and debt reduction policies and more innovative tax reform packages, and if we do not deal with this in a more forward thinking and visionary way, we and certainly the government will have to accept the blame for the Canadian dollar withering on the vine.

At some point, and I am not sure when it will be, if we continue to see the cyclical decline of the Canadian dollar, Canadians are going to ask why we have an independent currency. I do not want to see us get to that stage and I am concerned that we are precariously close to that position right now.

With a government that has seen the Canadian dollar drop by over 11 cents under its seven year term, it is important to remind the government that under the previous Mulroney government the dollar lost only one cent during the same period of time. If the value of a country's currency reflects global investor confidence in that country, I would suggest that investors do not have a great deal of long term confidence in the government.

[Financial Consumer Agency Of Canada Act, March 27th, 2001]

Madam Speaker, it is with pleasure that I rise to speak on these specific amendments in Group No. 2.

First, with regard to Motion No. 2 and the stiffer penalties for violations of the rules relative to consumer protection, while I understand the hon. member's notion of making the punishment even more onerous, the fact is that the legislation would give a greater amount of intrusion and regulation of the financial services sector than any other sector or industry in Canada. I understand the hon. member's philosophical foundation for the amendment but I disagree fundamentally with his intention.

On Motion No. 9, I generally agree with the notion that we need to improve and increase levels of flexibility for the Canadian financial services sector players which include the banks, credit unions et cetera. The greater level of flexibility in ownership rules for small banks makes a great deal of sense if we are serious about increased levels of competition. I would not agree with Motion No. 9 in general because I think it is contrary to the principles of the MacKay report and to the general direction that I believe is sound in terms of moving toward greater levels of flexibility in the financial services sector to increase the level of competition and ultimately services to consumers.

Motion No. 10 is very well placed. While I may disagree with it, it is important that the hon. member presented it. It points out the hypocrisy on the part of the Liberals. It was Liberal policy to have a $3 basic account. Now the Liberals are lining up opposed to it.

Are we prepared to have these kinds of rules for every industry? For instance there is the food distribution business. Clearly food is a necessity since we cannot live without food and we also cannot live without shelter, unless we were to pass laws that would require grocery stores and distribution companies or real estate developers to provide a basic level of service to people at very low levels of cost or perhaps even free. It is incorrect and not logical for us to impose these same levels of onerous restrictions and over regulation on the financial services sector.

If I disagree with some elements of the legislation, they are the parts that would lead to a greater level of intrusion and over regulation of the financial services sector than any other industry in Canada. The motion in some ways would make it even worse, more onerous and unfair.

Probably it is good politics to present motions that are anti-bank but it may also be very bad public policy if in fact our interests are consistent with the long term interests of Canadians. In general, greater levels of regulation can also lead to greater levels of cost of compliance and ultimately higher levels of services charges for consumers and/or lower returns for bank shareholders. The bank shareholders include about seven million Canadians indirectly or directly who are counting on their long term returns from their investments, particularly for retirement income.

Motion No. 11 deals with prohibition of bank closures for any reasons but non-profitability. It is very intrusive and difficult to determine. Frankly this gets into issues of bookkeeping and cost allocation. It would be almost impossible to implement the principle of the motion.

Again, there is a greater level of transparency and there is a process put in place for branch closures in the legislation which goes quite a long way further than we have seen in the past.

I do agree with the hon. member in terms of the notion that the credit unions should be engaged more actively when there are going to be branch closures in order to ensure that every possible avenue has been identified and pursued to ensure continued services to communities, particularly smaller communities. I think the Bank of Montreal and the credit union movement have created a very positive example of how that level of co-operation can benefit consumers and citizens in smaller communities.

I think it was about a year ago when a number of Bank of Montreal branches closed in the western provinces, but instead of waiting for public backlash the Bank of Montreal pre-emptively negotiated with and announced a deal with the credit unions, which resulted in only a minimal disruption of services to consumers in those communities. I support that kind of initiative.

In terms of Motion No. 14, again I am supportive. It is consistent with the underpinnings of the co-operative movement, the credit union movement and the distinct democratic culture of the credit union and co-operative movements. If we are serious about enabling the credit unions to compete more effectively with banks, the amendment in fact makes a great deal of sense, because it enables them to compete and at the same time remain consistent with the democratic underpinnings of their movement.

As a result, I think this is a positive amendment and it is regrettable that the government does not support it. On the one hand the government is saying it wants to create greater levels of competition from the credit union movement, and on the other hand it is not providing the legislative vehicle through which to ensure that the credit union movement can also take advantage of this greater level of competition. I support Motion No. 14.

[Federal-Provincial Fiscal Arrangements Act, March 22nd, 2001]

But they know him.

[Federal-Provincial Fiscal Arrangements Act, March 22nd, 2001]

Mr. Speaker, I appreciate the question from the parliamentary secretary.

The notion was that ACOA, or funding for regional economic development programs like ACOA, could be used to address issues like corporate taxes which are an impediment to economic growth. The idea deserves further debate and discussion. That is the type of thing we should be doing at the finance committee, frankly. We should be taking a hard look at our economic development strategies.

That is not to say everything ACOA does is wrong. Some of ACOA's involvement has been successful. However I believe aggressive tax strategies could achieve more than direct government investment in businesses.

The Atlantic innovation fund has not yet, to my knowledge, made an investment in Atlantic Canada, although some of its $700 million has been announced three or four times in various forms. The program was announced in a great flurry of media activity in Halifax last summer in a pre-election move, after the Liberals were once again able to find Atlantic Canada on a map. With media and spin doctors present, they presented the oft-announced plan from a Brink's truck in front of the World Trade and Convention Centre in Halifax. The plan has yet to congeal.

In Atlantic Canada no one yet knows how the program will work or how the funding will be delivered. The Canadian Foundation for Innovation continues to invest in other parts of the country but is holding off to a significant degree in Atlantic Canada until the new growth or innovation fund is put together. It is not achieving its goals.

In terms of the clawback, there is a precedent from which Alberta benefited. The member said if that were the case Alberta would still receive equalization. That is not true at all. His argument is wrong because Alberta was able to achieve a level of self-sufficiency which prevented it from being able to receive equalization.

That is what we want to achieve in Nova Scotia. However in the interim we do not want to lose, in Nova Scotia, Newfoundland, New Brunswick or any recipient province, 81% or 81 cents of every dollar on clawbacks. That would prevent provinces like Nova Scotia and New Brunswick from reducing their corporate tax burden and debt burden and from effectively embracing the opportunities of the new economy.

[Federal-Provincial Fiscal Arrangements Act, March 22nd, 2001]

Mr. Speaker, it is with pleasure that I rise today to speak on such an important topic as equalization. I will be splitting my time with the hon. member for St. John's West today.

The principle of equalization and the notion that we should have approximately equal levels of taxation and equal levels of services across the country is a sound one. If there is a policy that Canadians are united around and support in principle, I think the policy of equalization, as a cornerstone of Canadian social and economic policy, is one where there is still a considerable level of support across our very diverse country. In fact, it is the only constitutionally enshrined spending program.

That being the case, if we look to the beginning of equalization, it has played a very important and, by and large, positive role in ensuring equality of opportunity across Canada.

If we look at the basic principles of equalization, that is the generally equal levels of taxation and equal levels of services across the country, and look at the reality of what exists today across Canada, we will see that there are significant problems in equalization in the current context, particularly if we look at the disparate levels of taxation across the country. Provinces that are in a position to do so are aggressively pursuing tax reduction policies that are positive from an economic growth perspective within their own jurisdictions.

That being the case, we do have an increasingly ghettoized tax environment across the country. Some provinces are having great difficulties in addressing and reducing taxes and debt in their own provinces, while other provinces are in a much stronger fiscal position. As a result, if we recognize the important role that tax policy plays in shaping economic growth and economic development policies, we will see that there are some significant disadvantages in some provinces that may not have been recognized a few years ago based on higher tax levels and that sort of thing.

Equalization, where it should put ladders in front of provinces to enable them to succeed, move forward and bootstrap themselves into success, in many ways puts barriers in front of provinces. There has been a tectonic shift in economic theory over the last 10, 15, 20 years in terms of the recognition that tax policy plays as a lever of economic growth. Even social democrat parties in most parts of the world recognize that one of the infrastructure requirements in any pro growth environment, particularly in the new economy, is competitive tax breaks. Equalization has not been reformed to reflect that evolution of economic thought.

If we look over the last 10 to 12 years, Ireland represents a tremendous example of a country that has effectively embraced some of the evolution of economic thought in this area and did in fact adapt successfully in that realization. Some people compare Ireland to Canada and say that what has been done in Ireland could be done in Canada.

Comparing Ireland to Canada is actually not a very good comparison because Ireland did benefit from EU transfers in order to facilitate the reductions in taxes and the increase in education spending which were so pivotal in enabling Ireland to achieve a 97% growth in GDP per capita over a 10 year period. Canada achieved a paltry 5% growth in GDP per capita during the same period. So Ireland outstripped our growth rate by almost 20 times during that period.

However, if we compare the Ireland example to Atlantic Canada, we see some striking comparisons. There is a beacon of opportunity for Atlantic Canada and for any recipient provinces of equalization. If we were to become more creative, we could address equalization as a lever for economic growth and not as a lever to perpetuate a cycle of dependency. In the same way that Ireland used transfers from the EU to facilitate investment in education and to reduce taxes, equalization could be used similarly.

One of the flaws we have in the current equalization system is that as provinces diversify their economies and try to find ways to increase revenues and achieve greater levels of growth, whether it is through the development of offshore resources, which is the case in Newfoundland and Nova Scotia, my home province, or in the case of a province like Quebec which is pursuing a very aggressive biotech strategy, or whether it is through revenues from IT, biotech or from offshore, the current structure of equalization will eventually result in an overwhelming clawback of almost all those revenues, which actually perpetuates the cycle of dependency.

As a province finds itself in a position, because of economic development decisions or economic growth in a particular area, to pull ahead and actually reduce their level of dependency, the federal government actually claws back the lion's share of revenue. In some ways it is the same welfare trap that some of our social programs put individuals on social assistance in and when they actually get a job they make less money or do not see any economic benefit for their initiatives or successes.

If we want to be serious about equalization, not as a tool to create dependency, not as a political bargaining chip to be waved around at election time by the Liberals in provinces like Newfoundland, Nova Scotia and Atlantic Canada, but as an actual lever to create greater levels of economic growth and opportunity, we have to recognize that the equalization reform must occur in lockstep with economic development policy reform.

I will give an example of some of the economic development issues that need to be addressed in lockstep with equalization reform. The policies for regional economic development agencies, ACOA, the Atlantic Canada Opportunities Agency, being one of them, need to be reformed. In Nova Scotia. for example, I think the ACOA budget is around $120 million per year. The total federal corporate income tax paid in Nova Scotia is approximately around the same amount. I think it is around $130 million or maybe $140 million.

We could actually use the ACOA budget to eliminate federal corporate taxes from Atlantic Canada. This is just one idea of something we could do that might create even greater levels of growth than perhaps ACOA has created. We recognize that ACOA has had some successes in the past but it has also had significant failures. In some ways, perhaps the ACOA model was a more successful model in the old economy than it would be in the new economy.

We need to have a very important debate about equalization reform and economic development reform. The campaign for fairness that Premier John Hamm of Nova Scotia has engaged in and is travelling throughout the country speaking on with opinion leaders and public policy makers, is a very important campaign. He is pointing out the flaw in equalization that is taking the clawback that is resulting in an 81% loss of offshore revenue.

Every dollar that goes into Nova Scotia from new offshore revenue is clawed back by the federal government. New Brunswick may be in the same position in the future, not necessarily through offshore revenues but perhaps through some other revenues, such as IT development or some other means. This speaks to a larger issue, which is the need for reform.

It is important to recognize that there is a precedent to Premier Hamm's argument that the current equalization system is flawed in that regard.

Equalization payments began in 1958. Alberta was receiving revenues from petroleum at that time and continued to receive those revenues until 1965, at which time it had achieved a level of economic dependence, which, of course, brought it out of the recipient province status and into a contributing province status. During that period of time, between when equalization started as a program and when Alberta was able to achieve self-sufficiency through the growth in petroleum revenues, Alberta continued to receive 100% of equalization revenue. I think that was an important precedent. That is why Alberta Premier Ralph Klein has been supportive of Nova Scotia Premier John Hamm's initiative.

It is important that we recognize in the House that before Albertans had the wisdom, foresight and vision to put oil in the ground, it was a have not province. We and recipient provinces are simply looking for the same opportunity to utilize our revenues in order to end the cycle of dependency.

I believe that in 10 years provinces will be looking back at a time when they were recipient provinces. I also believe there will be a significant possibility, if we work collectively and the provincial and federal governments share in the vision of economic self-sufficiency and opportunity, that we will see many of the provinces, which are currently recipient provinces, achieve the economic self-sufficiency and opportunity. Saskatchewan is another province that has that level of potential. However, it will not happen unless we change equalization and adapt the formula to reflect the realities of modern economic theory, which is to lower taxes and debt and create policies that enable provinces or other jurisdictions to achieve those very important infrastructure items. Unless provinces are in a position to do that, we will not see the light at the end of the tunnel and economic dependency will be something that we will continue to accept in Canada as opposed to the notion of economic opportunity in every region.

In closing, I would hope that we would change our approach to equalization to recognize that equalization should not just stand for the notion of approximately equal levels of services and taxes across the country, but that, in a more general sense, we should recognize it as an opportunity for provinces and individuals across Canada to achieve full equality of opportunity and success in the 21st century.

[Finance, March 19th, 2001]

Mr. Speaker, this unreformed finance critic believes that the minister is again passing the buck on the very important issue of the Canadian dollar.

Editorial writers this weekend were referring to the Canadian dollar as the Canadian peso. The chief economist at Nesbitt Burns suggested that many Canadians will be asking themselves why we would even have an independent dollar at all.

Is the finance minister's hidden agenda to manage the dollar out of existence, to devalue it to a point that it could be replaced by a common North American currency?

[Finance, March 19th, 2001]

Mr. Speaker, in 1990 the current finance minister said that he would “manage the decline of the Canadian dollar so that it settles at its true value of between 78 cents and 81 cents U.S.” Since 1993 the finance minister has managed the decline of the Canadian dollar to 63 cents.

Does the finance minister still believe that the dollar's true value should be in the 80 cent range? If so, what is he doing to get it there?