The Acting Speaker (Mrs. Ringuette-Maltais): We will now resume from where we left off with questions and comments with regard to the speech made by the member for North Vancouver.
Mr. Paul Szabo (Mississauga South, Lib.): Madam Speaker, the member was talking about his birthplace of New Zealand and all the wonderful things that have been done there.
My recollection of the New Zealand situation after it virtually went bankrupt was that it brought in a harmonized consumption tax. I believe it was 12 per cent and was applied to all goods and services, including food and prescription drugs, absolutely everything. I am also aware that some changes were made to the income tax structure as well which amounted to massive tax reductions to high income earners in New Zealand and shifted the burden of tax down to the low and middle income earners.
I have read analyses of the impact in New Zealand. That scorch and burn approach used in New Zealand seems to be the kind of approach the Reform Party has been proposing in its budgets and in its false start program. It is the same kind of thing where the road kill of its citizens is increased poverty, poorer health care or quality of health care, poorer social services, higher suicide rates and higher family breakdown, all as a result of what the member describes as progressive government. Would the member like to reassess his position on the wonderful actions in New Zealand and maybe recant here and now?
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Mr. White (North Vancouver, Ref.): Madam Speaker, I can tell by the comments from the hon. member that he has not visited New Zealand because if he had, he would know how foolish his comments are. Unfortunately, he has been listening too much to Maude Barlow who also has not made any logical analysis of what has happened in New Zealand. I can understand why she is opposed to it; her special interests are greatly threatened by the things that have taken place in New Zealand.
In any debate on this issue I always say to people that if they can afford to go, please visit New Zealand. When they come back I know they will say to me that I was telling the truth and that those on the other side who have discredited it really were not.
The member mentions such things as a higher teenage suicide rate. It is wonderful how figures can lie and liars can figure all of that stuff. I am not applying that to the member; I am applying it to the people who have used these figures.
In one year in New Zealand a mass suicide took place in a Maori community. They were sniffing some sort of petroleum product. That bumped the suicide rate so high for one year because New Zealand has a relatively low suicide rate among youngsters. It was used as a basis for claiming that the suicide rate had gone up in New Zealand. It is a massive distortion.
In addition, there are the crime rate statistics that are used by people like Maude Barlow. If the New Zealand police are asked about it they say the reason for it is that they changed the computer system and the way crimes were reported. Everything that comes over on the phone lines is now reported rather than under the old manual system when only actual convictions were reported. It looks as if there has been a crime rate increase, but there are many other things there.
The hon. member mentioned the GST in New Zealand. It is true that when New Zealand went bankrupt a GST was introduced. That had to be done because it was an emergency situation. The International Monetary Fund was controlling things.
I have had the benefit of sitting down for an hour and a half with former prime minister David Lange who was the labour prime minister at the time New Zealand went bankrupt. He was gracious enough to give me some of his time about two years ago. I never thought that I would have deep respect for somebody who was a labour prime minister.
It was a very interesting and quite impressive discussion. He described how his philosophy took a 180 degree turn. He had to make a 180 degree turn with respect to what he had believed all of his life in terms of socialism. He came to the position that without a robust, healthy investor and private sector you cannot have social programs. What you end up doing is destroying your country. What a massive turnaround that was for him.
He told me that once they began the cuts in New Zealand the people were so solidly behind them because just like here, they had seen the government waste for so long. They could not believe the government was actually doing something. It gave such tremendous impetus that the government went faster and faster. It got the job done so very quickly that very rapidly the recovery began.
I was down in New Zealand about a month ago. Unfortunately it was not on pleasant circumstances because my mother-in-law had had a heart attack. I can assure this House that had any members been down there with me they would have been really impressed with the feeling of vibrancy, the really good feelings that are there.
People feel good about what has happened to their country. It has become competitive internationally. Certainly there was a GST introduced and it is still there today.
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What has happened is that there is a consumption tax. That GST is a consumption tax, which is very easy to do in a country that is isolated from other countries.
In terms of income tax, there have been massive reductions in income tax in New Zealand. It should be across the board because New Zealand has recognized something that these members opposite do not recognize. It is the successful people who create the jobs and create the wealth for the country. If they are taxed to the point that they leave, their country is destroyed, their jobs are destroyed along with everything they stand for.
I welcome the question. I am very pleased to have replied. Perhaps I was a little harsh on him at the beginning by saying he was foolish. That was unfair. I voluntarily retract that even though he has not asked me to.
I would invite him any time to take a trip to New Zealand, hopefully not with a committee because that really is not fair. Sometime he should pay for his own trip to New Zealand. There are some wonderful deals to go there. Take a look for himself.
As soon as he gets back, he can pick up the phone, call Maude Barlow and tell her she is completely out of line.
Mr. Art Hanger (Calgary Northeast, Ref.): Madam Speaker, I listened enthusiastically to the member's statement. I was in the lobby for part of it. Then I came into the House and listened to the rest here. It is interesting to hear the New Zealand experience. It is important to express that time and time again.
It is really interesting to see how this whole business of harmonization came about. I want to put this to the member for North Vancouver to address. It is a series of defaults on the part of the Liberal government that led up to this point of harmonization.
The Liberal government was put into a corner, if you will. It started out in part by the heritage minister when she was forced to resign and seek re-election at a cost of over $500,000 to the taxpayer. It is all over this GST issue.
The second point is the finance minister publicly begged forgiveness in his statement ``we made a mistake for misleading Canadians on the Liberal GST policy''.
Then there was another row when the member for York South-Weston resigned. I should say he was banished from the Liberal caucus. Then the member for Broadview-Greenwood temporarily went into self-exile. All this happened over the GST issue.
I would like to put this forward to the member and seek his comments.
Mr. White (North Vancouver): Madam Speaker, before I make comments about the defaults on the part of the Liberal government, while my colleague was speaking a member opposite was yelling out that the Deputy Prime Minister was not forced to resign, that she did it herself.
As soon as my colleague said that it cost $500,000, the very same member yelled out: ``That was your fault. You forced her to resign''. They cannot have it both ways.
The Acting Speaker (Mrs. Ringuette-Maltais): I wish to inform the House that, because of the ministerial statement, Government Orders will be extended by 11 minutes.
Mr. Art Hanger (Calgary Northeast, Ref.): Madam Speaker, indeed it is a privilege to debate this topic on GST, specifically the harmonization aspect.
It was a very key issue in the last election, the hated GST and what was going to happen to it. Of course there were promises made by the Liberal government to scrap the GST. We heard the government's mandate as to how it would deal with it. It has built up to this point and again, looking toward the next election, it is still an issue. In fact, it is more of an issue now for some. It will directly impact the lives of people in Atlantic Canada.
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All kinds of comments have been made and studies done on this particular tax. Is it a good deal or is it a bad deal? I will take the bad deal side because it is a bad deal. I have not heard much good about it. When we consider what business has said and many of the comments made by government leaders, it is a bad deal. The resignation of Premier Savage of Nova Scotia no doubt was partially due to the harmonization fiasco. Many call it the BST or the blended sales tax. That is how it is colloquially known in many areas. It is a bad deal.
The Atlantic premiers were bribed into signing the deal with a $1 billion shot in the arm from Canadian taxpayers. The harmonized version will amount to 15 per cent as opposed to the 18 per cent which the provincial sales tax and the GST amounted to.
The tax will have a broader base. People who pay utility bills or who make any other purchases will now see the tax hit their pockets. It will cost them more. That is how it will impact on the average person. The tax will take away from their income.
We are living in an age of high taxation. In Canada there is one tax after another. The so-called harmonized tax was promoted as a tax which would alleviate problems. However, the base is so broad that it is costing taxpayers even more.
How can one justify adding another tax to the already depressed area of Atlantic Canada? The tax will not bolster its economy, it will do the opposite.
What does business say about the tax? Three major retailers in Atlantic Canada have stated that their net annual retail deficit will total $27 million once harmonization is implemented. Is that not a warning sign?
One private retailer in the Atlantic region was contemplating opening two stores in 1997 but has decided against it as a result of increased costs associated with harmonization. Instead of expanding and looking at the tax as alleviating some of the problems, that retailer is backing off.
If someone is going to invest a dollar into business, they want a return on that dollar. They want to know that the investment will yield a return. That does not seem to be happening. The message that the retailers are getting from harmonization is the opposite. They are being very cautious about expanding their operations. They are being very cautious about investing in business.
There are warning signs, but the government plods along and will impose this tax on a region which wants nothing to do with it.
Both privately owned and publicly owned, traded stores are reluctant to explain the problems they face as a result of harmonization so as not to jeopardize consumer confidence and the value of their stock.
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What does that say? It says that this discussion is not as as open and as public as they would like it to be but they fear that people will withhold, that they will not patronize them, that they will not buy their product or that they will look at the operation as struggling or as having some significant problem in their affairs. That will directly impact on their profit line. It is the profit line that we talk about because businesses are only in business to make a profit; let's face it, the bottom line.
The Retail Council of Canada submitted its findings which included this statement: ``By forcing stores to bury the new tax in prices, the harmonized tax regime will cost retailers at least $100 million a year''.
An hon. member: It is gone.
Mr. Hanger: Okay, if it is gone, it is gone. These items are very important. They show there is a concern expressed by many. Of course the retail council submitted those submissions and I agree.
An hon. member: It is happy.
Mr. Hanger: It is not totally happy, but I agree that as a result of its pressure some things have been done. That still does not take away from the fact that the tax is hitting a broad base of goods in that region. It will impact directly on the pocketbooks of the consumer.
The Halifax Chamber of Commerce had meetings with the committee. It made predictions. One of its predictions was that the tax would push up new house prices by 5.5 per cent as well as force municipalities to raise property taxes. If the chamber is saying that in Halifax obviously that view will be shared by other regions of Atlantic Canada. It will impact directly on housing costs and lead to increased taxes which will be imposed on the consumer.
As this effort continues to impact on the consumer, where is that going to put him? Is it going to create more jobs if housing goes down? Is it going to encourage those who have finances to go and spend? No, it is not. He will have less money to spend in the first place because his taxes are going up and house prices will definitely impact in that same region.
The Canadian Real Estate Association says that harmonization will increase the cost of a new house by $4,000 in Nova Scotia and in Newfoundland to the tune of $3,374, and in New Brunswick. As any family would desire in terms of its own comfort to have a house, the opportunities will be slim because $4,000 is a lot. It will impact on the down payment. Regardless of how low interest rates are the cost of this is impacting right at the consumer level. It is just as I mentioned earlier. When you pay your utilities you will see that extra hit right there, a broad based tax that did not exist before.
The GST harmonization is responsible for the closure of five Greenberg stores and the loss of 79 jobs in approximately five different locations. There are closures. This will not be the only hit in that region but it is one. Woolworth Canada also estimates that because of the tax inclusive pricing it might consider closing 126 stores in the Atlantic region, which means a loss of approximately 300 jobs.
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Another smaller but just as significant retail business, Carleton Cards, predicts that it will close 19 of its 37 stores in the region, throwing approximately 116 people out of work.
It is government's business not to create jobs in the sense that they have to be government jobs. It should certainly create jobs by creating an atmosphere so business in turn can create jobs. The small businessman is the job creator and the engine in society that should be creating the jobs. I do not think this is the mandate of the government. The harmonization aspect of this tax is yielding other concerns. It will certainly impact directly on the whole job market.
Management of Carleton Cards also indicates that there is a 50:50 chance of further store closures and a loss of 71 jobs in eight different cities across Atlantic Canada.
I have a question for the Liberal government. Why have these concerns not been addressed directly? Why have the fears of the
business community not been put at ease by the government saying this is not happening and the information is to the opposite effect?
The bottom line is that consumers will pay more for funeral services. They will pay more for children's clothing. They will pay more for books, auto repairs, electricity, gasoline, home heating fuel, haircuts and myriad other things.
In closing, this tax will certainly impact directly on the consumer. We are now looking at unemployment rates that are unacceptable. They will be a lot higher.
Mr. Julian Reed (Halton-Peel, Lib.): Madam Speaker, I want to point out one small matter and ask my friend a question as well.
The debate over burying the tax in the shelf price or not is by no means unanimous. In the riding I serve a large number of retailers have begged us to proceed with harmonization. They actually want the tax buried in the sticker price and shown on the cash register receipt. The member should be aware that this is not unanimous.
If a harmonized sales tax is such a bad deal, why are chambers of commerce coming to me asking why it is not in Ontario, when it is coming and who is holding it up? I have to explain to them the offer is open to Ontario to harmonize at any time. The provincial governments held harmonization in great favour before the were elected have since reversed themselves and are not proceeding with the harmonization the business community really wants.
If the business community wants it, why is it such a bad deal?
Mr. Hanger: Madam Speaker, there may be some that seek it in the business community. I have heard that reflected from my colleagues during the debate. The bottom line is whether consumers want the harmonized tax and how it will impact on them. That is the important issue. The big retailers certainly do not want it.
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The member keeps speaking about Ontario businessmen running to him wanting to know when it is coming into Ontario. Alberta, Ontario and British Columbia are not even willing to discuss this federal proposal. They know they will have to pay the shot for the provinces that cannot make up the difference like Saskatchewan, Manitoba and Prince Edward Island. They know they will bear the brunt of the difference when it comes to supporting weaker provinces.
The Acting Speaker (Mrs. Ringuette-Maltais): Is the House ready for the question?
Some hon. members: Question.
The Acting Speaker (Mrs. Ringuette-Maltais): The question is on the amendment. Is it the pleasure of the House to adopt the amendment?
Some hon. members: Agreed.
Some hon. members: No.
The Acting Speaker (Mrs. Ringuette-Maltais): All those in favour of the amendment will please say yea.
Some hon. members: Yea.
The Acting Speaker (Mrs. Ringuette-Maltais): All those opposed will please say nay.
Some hon. members: Nay.
The Acting Speaker (Mrs. Ringuette-Maltais): In my opinion the nays have it.
And more than five members having risen:
The Acting Speaker (Mrs. Ringuette-Maltais): Call in the members.
[Translation]
The Acting Speaker (Mrs. Ringuette-Maltais): The recorded division stands deferred until 5 p.m. this afternoon.
[English]
The Acting Speaker (Mrs. Ringuette-Maltais): Is it agreed?
Some hon. members: Agreed.
(The sitting of the House was suspended at 1.56 p.m.)