|TABLE OF CONTENTS||PAGE|
|INTRODUCTION OF BILLS:|
|No. 8, Wildlands Protection Act, Ms. Eileen O'Connell||671|
|NOTICES OF MOTION:|
|Res. 119, Sports - Hockey: Halifax Mooseheads (Season 1996-97) -|
|Salute, Dr. J. Hamm||672|
|Vote - Affirmative||672|
|Res. 120, Nat. Res. - Donkin Mine: Leases - Transfer Refuse,|
|Mr. R. Chisholm||672|
|Res. 121, DFO - Halls Harbour: Wharf Repair - Support, Mr. G. Archibald||673|
|Vote - Affirmative||673|
|Res. 122, Health - Doctors: Shortage - Address, Mr. R. Russell||674|
|Res. 123, Transport. & Pub. Wks. - Road-Work Priorities: Criteria -|
|Table, Mr. A. MacLeod||674|
|Res. 124, Fin. - Expenditure: Priorities Distorted - Condemn, Mr. J. Holm||675|
|Res. 125, Transport. & Pub. Wks. - Highways: Repairs -|
|Safety Prioritize, Mr. G. Archibald||675|
|Res. 126, Transport. & Pub. Wks. - Col.-Musquodoboit Valley: Roads -|
|Repair, Mr. B. Taylor||676|
|Res. 127, Health - Hants Commun. Hosp.: Doctors -|
|Dedication Recognize, Mr. R. Russell||677|
|Res. 128, Educ. - Funding: Inadequate - Condemn, Ms. E. O'Connell||677|
|Res. 129, Brookfield Fire Dept.: Dedication - Acknowledge, Mr. B. Taylor||678|
|Vote - Affirmative||679|
|Res. 130, Nat. Res. - Donkin Mine: Leases - Transfer Refuse,|
|Mr. R. Chisholm||679|
|Res. 131, Secretaries: Efforts - Acknowledge, Mr. D. McInnes||679|
|Vote - Affirmative||680|
|Res. 132, Environ. - Lunenburg H.S. Students: Gambia Trip -|
|Applaud, Mr. J. Leefe||680|
|Vote - Affirmative||681|
|Res. 133, Cape Breton Nova MLA - Leadership (Lib. Party [N.S.]):|
|Views - Commend, Mr. A. MacLeod||681|
|Res. 49, Estimates - Comm. of the Whole House on Supply,|
|Hon. W. Gillis||682|
|Mr. R. Russell||682|
|Mr. R. Chisholm||692|
|Referred to CWH on Supply||707|
|TABLING REPORTS, REGULATIONS AND OTHER PAPERS:|
|Supplement to the Public Accounts of the Province of Nova Scotia,|
|Fiscal Year Ended March 31, 1996, Hon. W. Gillis||707|
|PUBLIC BILLS FOR SECOND READING:|
|No. 7, Financial Measures (1997) Act||708|
|Hon. W. Gillis||708|
|Mr. R. Russell||719|
|Mr. J. Holm||730|
|Amendment moved ". . . to Public Accounts Committee . . ."||743|
|Mr. R. Russell||743|
|Ms. E. O'Connell||744|
|Mr. R. Chisholm||750|
|Vote - Negative||759|
|Dr. J. Hamm||760|
|Ms. E. O'Connell||767|
|Mr. R. Chisholm||771|
|Hon. W. Gillis||780|
|Vote - Affirmative||782|
|ADJOURNMENT, House rose to meet again on Tue., Apr. 22nd at 12:00 p.m.||782|
|NOTICE OF MOTION UNDER RULE 32(3):|
|H.O. 4, Fin. - Native Bands: Tobacco - Quotas/Sales, Mr. R. Russell||783|
MADAM SPEAKER: Order, please. We will begin the daily routine.
PRESENTING AND READING PETITIONS
PRESENTING REPORTS OF COMMITTEES
TABLING REPORTS, REGULATIONS AND OTHER PAPERS
STATEMENTS BY MINISTERS
GOVERNMENT NOTICES OF MOTION
INTRODUCTION OF BILLS
Bill No. 8 - Entitled an Act to Preserve the Integrity and Diversity of Wildlands. (Ms. E. O'Connell)
MADAM SPEAKER: Ordered that this bill be read a second time on a future day.
NOTICES OF MOTION
MADAM SPEAKER: The honourable Leader of the Opposition.
DR. JOHN HAMM: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Halifax Mooseheads gave Nova Scotians an exciting regular season and play-off run this year in the Quebec Major Junior Hockey League; and
Whereas the Mooseheads came within one victory of qualifying for the Memorial Cup tournament for the Canadian junior hockey championship; and
Whereas last night's game marked the final Mooseheads appearance for standout veterans Jean-Sebastien Giguere, Marc Chouinard, and Nova Scotians Jody Shelley and Jamie Brown;
Therefore be it resolved that members of this House salute and thank the players, staff, management and fans of the Halifax Mooseheads for an exceptional 1996-97 season.
Madam Speaker, I request waiver of notice.
MADAM SPEAKER: Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable Leader of the New Democratic Party.
MR. ROBERT CHISHOLM: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Cape Breton Development Corporation is moving to privatize the Donkin Mine for $1.00; and
Whereas such a move would place in severe jeopardy the jobs of 1,200 miners now employed by the Cape Breton Development Corporation; and
Whereas the Cape Breton Development Corporation has no power or authority to privatize the Donkin coal leases because such coal leases belong to the people of Nova Scotia and are administered on their behalf by the Minister of Natural Resources;
Therefore be it resolved that members of this House urge the Minister of Natural Resources to refuse to transfer the coal leases associated with the Donkin Mine until a full and complete review of Devcos Donkin proposal determines that such a transfer will not hurt employment in the Cape Breton coal industry.
MADAM SPEAKER: The notice is tabled.
The honourable member for Kings North.
MR. GEORGE ARCHIBALD: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the wharf at Halls Harbour was severely damaged during a January storm; and
Whereas the fishermen, the volunteer fire service and the Reserve Army from Aldershot helped by placing sandbags around the building during the storm; and
Whereas the Kings County Council has recognized the importance of Halls Harbour to the local economy;
Therefore be it resolved that this Legislature support the residents of Halls Harbour in their request to have the federal government repair the damaged wharf.
Madam Speaker, I request waiver of notice.
MADAM SPEAKER: Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable member for Hants West.
MR. RONALD RUSSELL: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Minister of Health is quoted as having told reporters Friday that the list of 12 doctors supplied by his department to doctors in Windsor have indicated their willingness to work; and
Whereas after calls were made on Friday by Windsor area doctors, it was discovered that one was in Africa, another in China, another in Montreal, and one was on vacation and another, a resident, preparing for examinations; and
Whereas one Windsor doctor described the list as a joke and took extreme exception to the fact that the Minister of Health was attempting to take credit for the continuation of 24 hour emergency service, despite the fact that minister did absolutely nothing to assist the five area doctors who agreed themselves to continue staffing the ER in Windsor until they reach a point of exhaustion;
Therefore be it resolved that the Minister of Health stop being so preoccupied with becoming the new Liberal emperor of Nova Scotia, and become more focused on his job as minister, and address the shortage of doctors for not only Windsor-West Hants, but also for all Nova Scotia instead of supplying false hope and a list of doctors who are unable to work at the present time.
MADAM SPEAKER: The notice is tabled.
The honourable member for Cape Breton West.
MR. ALFRED MACLEOD: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Minister of Economic Development and Tourism made an election promise on May 11, 1993, stating his opposition to highway paving projects prior to elections; and
Whereas as the "Liberal Transportation and Communications Policy" stated that the Liberal Government would, "develop and implement comprehensive pavement condition measurement criteria and a monitoring system from which to determine road repair priorities"; and
Whereas the Minister of Transportation and Public Works has just announced $59 million in spending to pave provincial roads, prior to an expected provincial election;
Therefore be it resolved that the Minister of Transportation and Public Works table before this House the Liberal promised "pavement condition measurement criteria" used to determine the priorities in road work now being promised by this Liberal Government.
MADAM SPEAKER: The notice is tabled.
The honourable member for Sackville-Cobequid.
MR. JOHN HOLM: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas this government has elevated spin control to a high art; and
Whereas the ranks of spin doctors continues to grow, especially in the Departments of Education, Economic Development and Tourism, and Community Services; and
Whereas threefold and fourfold increases in resources allocated to spin control is disgraceful when vital areas like education and health care continue to be underfunded;
Therefore be it resolved that this House condemns the Liberal Government for its distorted spending priorities.
MADAM SPEAKER: The notice is tabled.
The honourable member for Kings North.
MR. GEORGE ARCHIBALD: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the previous Minister of Transportation and Public Works, who is now Minister of Economic Development and Tourism, is on record in 1995 as saying the Liberal Government had no intention of twinning the Highway No. 101 between Mount Uniacke and Windsor for at least another five years; and
Whereas Highway No. 101, from Mount Uniacke to Windsor, has a daily traffic count in excess of 13,000 vehicles; and
Whereas this Liberal Government is pumping millions of dollars into other 100-Series Highway projects across Nova Scotia, with Highway No. 103 to Tantallon being the latest;
Therefore be it resolved that the Liberal Government and the present Minister of Transportation and Public Works, with his $59 million package announced over the weekend put highway safety ahead of politics, and immediately undertake the twinning of the Highway No. 101 between Mount Uniacke and Windsor.
MADAM SPEAKER: The notice is tabled.
The honourable member for Colchester-Musquodoboit Valley.
MR. BROOKE TAYLOR: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas with well established employers such as National Gypsum, Ledwidge Lumber, MacTara Lumber, Brookfield Lumber, Julimar Lumber, Sproule Lumber, Archibald Drilling and Blasting, Mosher Limestone and countless other businesses pumping millions of dollars into the Nova Scotia economy; and
Whereas Tusket Mining Ltd. is developing a gypsum mine, Scotia Mines are pursuing a lead and zinc mine in Gay's River and Kaolin Clay is being actively explored and has enormous potential for production in the Musquodoboit Valley; and
Whereas this Liberal Government has shown a complete lack of appreciation for the major contributions through job opportunities and economic benefits that these employers and their employees make by not paving or repairing a single, continuous kilometre of public highway in the constituency of Colchester-Musquodoboit Valley for the past four years;
[Therefore be it resolved that the Minister of Transportation recognize the valuable input from both the businesses and residents of Colchester-Musquodoboit Valley and surrounding area, by reinvesting some of their hard earned tax dollars back into the sorely neglected and deplorable road conditions in the area.]
MADAM SPEAKER: The notice is tabled.
The honourable member for Hants West.
MR. RONALD RUSSELL: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas despite working to exhaustion, doctors at the Hants Community Hospital recognize the catastrophic consequences that would result from the loss of 24 hour emergency services at the Hants Community Hospital; and
Whereas these dedicated doctors have agreed to continue to provide 24 hour emergency service until they are physically unable to do so; and
Whereas the response from the media-hungry Minister of Health and would-be Premier, in trying to take credit for the doctors selfless actions is despicable in light of his own ongoing indifference to their plight and the plight of the citizens of Hants County;
Therefore be it resolved that this House recognize and thank the doctors at the Hants Community Hospital whose selfless dedication to the people of Hants stands in stark contrast to the indifferent, arrogant and self-congratulatory approach of the Minister of Health and would-be Premier.
Madam Speaker, I would ask for waiver of notice.
MADAM SPEAKER: Waiver of notice has been requested.
Is it agreed?
I hear several Noes.
The notice is tabled.
The honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Minister of Education presents himself as the White Knight riding in to rescue education with gobs of new money; and
Whereas close examination indicates that most, if not all, of that new money will come through higher property taxes while the province continues to reduce its share of total education funding; and
Whereas this continual shift of responsibility for education funding to the property taxpayer is regressive and leads to inequalities across the province;
Therefore be it resolved that this House condemn the government for failing to adequately fund education in this province and for offloading more of the responsibility for such funding onto the property taxpayer.
MADAM SPEAKER: The notice is tabled.
The honourable member for Colchester-Musquodoboit Valley.
MR. BROOKE TAYLOR: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas the Brookfield Fire Department recently held their 12th Annual awards banquet; and
Whereas firefighter Lawrence Wynn was recognized for his 47 years of service to the fire department, and he is still an active member; and
Whereas firefighters Tim Wynn and Barry Deyarmond were honoured respectively as firefighter and officer of the year, while firefighter Ron Morrell was recognized for his perfect attendance;
Therefore be it resolved that members of the Legislature acknowledge the sincerity and dedication of fire departments such as Brookfield and wish them continued success in their future endeavours.
Madam Speaker, I seek waiver of notice.
MADAM SPEAKER: There has been a request for waiver of notice.
Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable Leader of the New Democratic Party.
MR. ROBERT CHISHOLM: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas it is nearly five years since 26 miners were killed by an explosion at Westray, a coal mine that was built by politics; and
Whereas despite the tragedy at Westray, the federal Liberals have chosen the eve of an election to promote a scheme to privatize the Donkin Mine for $1.00; and
Whereas the tragedy at Westray should have taught us the dangers of politically-motivated privatized coal mining schemes;
Therefore be it resolved that this House call on the government to exercise its responsibility for the safety and security of those employed in the Cape Breton coal industry and refuse the transfer of coal leases associated with the Donkin Mine.
MADAM SPEAKER: The notice is tabled.
The honourable member for Pictou West.
MR. DONALD MCINNES: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas this coming week is a chance to pay tribute to the work undertaken daily by secretaries across this province; and
Whereas secretaries are, in most cases, the backbone of the business or organization with which they are employed; and
Whereas they work hard to maintain and improve their place of employ but often are the last to receive the recognition they deserve;
Therefore be it resolved that the members of this House offer their sincere thanks to the secretaries within their offices and throughout government, not only this week but acknowledge their efforts throughout the year as well.
Madam Speaker, I ask for waiver of notice.
MADAM SPEAKER: There has been a request for waiver of notice.
Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable member for Queens.
MR. JOHN LEEFE: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas Lunenburg high school students Vanessa Marks, Calee Comstrock and Kandace Forward recently returned from a two-week visit to The Gambia; and
Whereas these hard-working Grade 11 students qualified for the visit because of their interest in environmental issues, including more than 20 hours sifting through mud near a sewage outfall in Lunenburg Harbour; and
Whereas Vanessa, Calee and Kandace represented Nova Scotia and Canada effectively by engaging in cultural exchanges and attending an environmental conference in the Gambian capital;
Therefore be it resolved that this House applaud these young Nova Scotians for their broad interest in environmental protection throughout the world and thank the organizations which sponsored the trip, namely the Nova Scotia Gambia Association, the Canadian International Development Agency and the Bluenose Atlantic Coastal Action Program.
Madam Speaker, I ask for waiver of notice.
MADAM SPEAKER: There has been a request for waiver of notice.
Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable member for Cape Breton West.
MR. ALFRED MACLEOD: Madam Speaker, I hereby give notice that on a future day I shall move the adoption of the following resolution:
Whereas in an April 8th article of the Halifax Daily News, the member for Cape Breton Nova, and Russell MacLellan leadership supporter, stated that Nova Scotians need a leader who doesn't "antagonize groups within society"; and
Whereas the member for Cape Breton Nova also stated that Nova Scotians need a leader who doesn't tell Nova Scotians, "We are the government and we're going to have our way and it doesn't matter what you think"; and
Whereas the member for Cape Breton Nova Finally stated that Nova Scotians need "new management.";
Therefore be it resolved that the member for Cape Breton Nova, ever loyal to the Liberal Party line, be commended for finally recognizing the reasons for which Nova Scotians are ready and willing to throw him and his government out of office.
MADAM SPEAKER: The notice is tabled.
ORDERS OF THE DAY
MADAM SPEAKER: The honourable Government House Leader.
HON. RICHARD MANN: Madam Speaker, will you please call the order of business, Government Motions.
MADAM SPEAKER: The honourable Government House Leader.
HON. RICHARD MANN: Madam Speaker, will you please call Resolution No. 49.
Res. No. 49, re Estimates - Comm. of the Whole House on Supply - notice given Apr. 14/97 - (Hon. W. Gillis)
The honourable member for Hants West.
MR. RONALD RUSSELL: Madam Speaker, and to take up on the business of the day, the Budget Address which was delivered last Thursday by the Minister of Finance. I would trust that everybody in the House last Thursday was listening to the minister, not only to his words but actually absorbing what he has to tell us and the people of Nova Scotia.
According to the Minister of Finance, nirvana has finally arrived at the promised land and we have nothing more to worry about. In the mind of the Minister of Finance and, I presume the ex-Minster of Finance who also shares the same view - in fact, he may well have written this book for the present Minister of Finance - I honestly believe that they believe that they have every problem in this province solved and if it isn't solved today, it will be solved in the next day or two as they fire money at all the problems that we presently have in this province.
This is an interesting document and it reminds me of shades of the 1993 campaign when the present government was running around the countryside with a red book as well, full of promises. We know what happened to those promises, they didn't last any more than about 30 days before they had broken every promise they made in that particular document.
Madam Speaker, I am going to address this document and address it from the point of view, of course, of the Opposition, but I am also going to address it from the point of view of what I believe this document is telling us. It may be a slightly different story than the one presented to this House last Thursday, but I think if the members opposite will pay attention that they too will get the drift of where this province is going.
First of all, I think we have to start talking about not only the minister's Budget Address, but we have to talk about this book which is the main Estimates of the Province of Nova Scotia.
HON. JOHN MACEACHERN: Is it good?
MR. RUSSELL: Well no, it is not good. First of all, it is a chaotic representation of expenditures and receipts for 1996-97 and 1997-98. There is a lack of transparency in this document, a lack of accountability and it demonstrates very clearly that there is a proliferation at the present time of trust funds, contingency funds and transfers from one department to another and from one fiscal year to another as well - which I will demonstrate at a later date - and the endless shuffling of departmental responsibilities from one department to another.
What this does is it makes this book virtually worthless because you come to something in a budget where it will say, see Footnote A, Footnote B, or Footnote C, and when you look at Footnotes A, B, or C, you are told that this is no longer the responsibility of that particular department and it has been shuffled off to some other department and perhaps even given a different name so it is virtually impossible in many cases to track expenditures and receipts from one fiscal year to the next. That is why I say this document lacks transparency and it certainly lacks the necessary accountability so that the public and the Opposition can do an in-depth study of the contents of the estimates.
The Minister of Finance in his first page or two goes to great extremes to explain to people why this government is showing good fiscal management. I always thought good management was you produce a budget at the beginning of a fiscal year, if you are in business of any kind at all, and after all the government is in business. You produce a budget at the beginning of the year and at the end of the year the budget that you had introduced translates into numbers that you forecast in your estimates. That is what it is all about. That is good budgeting. (Interruptions)
What do we find in this budget of 1996-97 when we look at the forecast results for fiscal 1996-97? We find that in point of fact the government picked up $150 million in additional revenue. Now, if you pick up $150 million of additional revenue in a year you would assume that at the end of that fiscal year, you have $150 million in the hip pocket of your jeans. You can take that down and put it in the bank. You can do all kinds of things with it. If you are a good fiscal manager and you say you are going to spend so much money in a year, then you look around at your departments, your department heads, who are the ministers in the front benches over here, the Ministers of the Crown, and you say listen, Minister MacEachern, in your department you have umpteen million dollars to spend and that is what you spend. (Interruptions) Oh, yes, you did. No doubt about it. You spent it. You spent it plus the $150 million they got in additional funding.
Now, any ass - thats a-s-s - with an additional $150 million surely to goodness can come out of the fiscal year with something better than whatever it was they came out with. What was it, $2 million? I think they had a surplus of (Interruptions) You came out with a surplus of approximately $2 million or $4 million.
MADAM SPEAKER: Order, please. It is turning into quite a shouting contest and I think it is very difficult to hear the speaker with the added din. So I am asking for order.
MR. RUSSELL: I agree with you, Madam Speaker, that the ministers opposite are indeed shouting and interrupting the House and I am glad you called them to order.
As I said, the fact of the matter is, their budget for 1996-97 was in error by $150 million. Not only $150 million on the revenue side, which should be good news, but they spent that $150 million. I think that shows how good their budget was in 1996-97.
Today, we have another red book and it was a red book last time and they have another bunch of numbers here that they are giving us. They say they are going to end up this year $4 million in the black. Why should we in the Opposition, why should they, the people of Nova Scotia believe one word of this document? You were not correct last year. The year before you were not correct and the year before that you were not correct. When are you guys going to start getting it right? I do not think you know.
Madam Speaker, I would just like to start going through this document, if I can. This is the address by the Minister of Finance.
MR. ROBERT CHISHOLM: Madam Speaker, on a point of privilege. I am sitting right next to the member for Hants West who is trying to present a response to the Budget Address by the Minister of Finance and I am having difficulty hearing. I know that the members of the government opposite are upset when anybody provides any criticism, but I am asking this House, Madam Speaker, through you, why they cannot hold themselves silent for a while out of some respect for another member of this House to present their view of the budget, just as we in the Opposition did when the Minister of Finance presented his address.
MADAM SPEAKER: I thank you for the point you are making. I will call the honourable members back to order. If the provocations continue, I will add to the time of the speaker who has the floor, if I am put to that point.
MR. RUSSELL: Madam Speaker, I can understand my colleague to the left from the New Democratic Party wishing to hear what I have to say because he has to follow me, so he is obviously taking notes.
Madam Speaker, when I get into the document itself - I have already covered Page 1, in which I said that the Minister of Finance was patting himself on the back as he started into the Budget Speech. On Page 2 we have another bunch of items that come under Economic Climate. We are told that "Nova Scotia is projected to lead the country in new capital investment in 1997.". (Applause) Hold your applause, please. "According to Statistics Canada, investment will increase by 18 per cent this year - almost four times higher than the Canadian average.".
Madam Speaker, what kind of a statement is that? If I made $20 this week and next week I made $40, I would have a 100 per cent increase in my salary. That figure is absolutely meaningless if I am spending $100 a week. The same thing applies to this. The reason they have such a dramatic increase percentage-wise in capital growth in this forthcoming year is simply that we haven't had any. This economy in the Province of Nova Scotia has been stagnating for the last three years and now they are getting a spurt. Well, of course, if you are starting at zero, anything is going to create a dramatic increase. So, 18 per cent increase, the number doesn't really mean anything unless you know what the base numbers are and I can tell you the base numbers are low.
That is the reason why this province has been on welfare for the last three years collecting equalization payments from the Government of Canada. Madam Speaker, I don't know if these people over there understand what equalization is. The Minister of Health probably understands what it is all about. He used to be the Minister of Finance and he used to cut the mustard in his budgets as well, utilizing equalization payments. Equalization is paid to provinces that are on the welfare line, the ones that are not paying their way. Across this country, other provinces that are doing well contribute to a fund and with that fund the federal government equalizes income to provinces to a certain extent. We got our share in spades last year, as a matter of fact, because although equalization didn't get up, we got another, I think it was, $49 million in previous years' adjustments. I haven't got the number right here, but it was a considerable amount of money. That came to us because of the fact, as I say, that this province is not doing so well.
On the next page, Madam Speaker, the minister was talking about exports climbing and that this is going to create more jobs for Nova Scotians, he says that the end result is more jobs for Nova Scotians. "On that front, we are seeing an improvement", this is the Minister of Finance speaking, "There are almost 26,000 more Nova Scotians working today than there were in 1993."
Now, Madam Speaker, somebody reading that number and reading that statement would say, well, in 1993 there were 58,000 people unemployed in the Province of Nova Scotia; 58,000. So if there is another 26,000 of them back to work, what would the unemployment numbers be? There would be 32,000; in other words, there would be 32,000 Nova Scotians presently out of work. But what did we find? The number of Nova Scotians looking for work, the number unemployed in this province is not 32,000, it is not 58,000 where it was in 1963, it is now 62,000; 62,000 Nova Scotians out there looking for work. That's some improvement in unemployment in Nova Scotia. This government's record insofar as creating employment is concerned must surely be the worst in Canada.
Now, Madam Speaker, Part III on third page of the Budget Address, at the bottom, they talk about the Fiscal Highlights and the Minister of Finance makes the statement, "Today, I am pleased to announce that Nova Scotia had a budget surplus of $4.7 million for 1996-97. That is a solid down payment on our future.". I have already covered this, I guess,
as I said before, in that I said, that wonderful event according to the Minister of Finance was caused not by fiscal management or managing within the budgetary constraints of the last budget, but simply because of additional funds that were picked up as a windfall.
There was $49.5 million - that was the figure I was looking for a moment ago - for prior years' adjustment; there was another $7 million in Canada Health and Social Transfer, above and beyond what they budgeted for; and there was a $78 million decrease in debt servicing; and that, of course, came about because of favourable interest rates, once again, not by good financial management, but simply by the fact that Canada, as a whole, is doing very well but, Nova Scotia, as a province, is not or has not, to date anyway. I think that will change after the next election.
Madam Speaker, on Page 4, it carries on and we are talking about the budgetary surplus of $4.7 million from 1996-97 and the minister said, ". . . this achievement comes after setting aside one-time, special reserves for health, education, and victims of institutional abuse. These reserves total $69 million . . . ". That's a pretty fair lump of money to have hidden out there in trust funds but, however, that's the way they have it set up. Of this we are told that there is $39 million for health and there is $15 million for victim services and $15 million for education. These are contingency funds. What is the contingency, I wonder, that is going to arise? Could it have anything to do with an election call somewhere along the way?
Anyway, the Minister of Finance at his briefing was asked about this particular item insofar as health was concerned and we were told that this was to cover hospital debts that were still in existence when regionalization took place, or hospital debts caused by regionalization. So, Madam Speaker, on Thursday I questioned the Minister of Health. I said, Mr. Minister, you now have $39 million in a contingency fund in the Department of Health and that money there is there to cover the debts incurred by regionalization of hospitals, or caused by regionalization after the fact. The minister, I don't think knew what I was talking about, but he said, yes, I guess so.
My question to him was this; Windsor Regional Hospital, Hants Community Hospital, the hospital in my area - and I presume that there are lots of community hospitals across the province in the same circumstances - they were $600,000 in deficit last year and they asked the Minister of Health if he could do something about assisting them. The Minister of Health said, yes, I can certainly look after you and what he did was this, he loaned them $300,000 in fiscal 1996-97 to be repaid in this fiscal year, 1997-98 and he took $300,000 out of the Hants Community Hospital Trust Fund, can you imagine? And he said, I have solved your problem. That is some way to solve a problem, that is like taking something out of somebody's pocket and say, here, I'm going to give you this money to solve your problem. You don't do those things but the Minister of Health did.
My question to the Minister of Health was, okay, so there is $600,000 out there that Hants Community Hospital was in debt, are you going to write it off against this contingency fund? He said, well, I don't really know. The point is if he has got $39 million stuffed away in a contingency account for that purpose, he should be treating all hospitals equally. There are a number of hospitals, for the benefit of the members for Cape Breton, for instance, I understand there are two hospitals in Cape Breton where the debts created by regionalization are about $1 million. I presume that they too will be in this line-up and I hope the Minister of Health will pay up on his promise to look after those debts.
I could talk about an item here on Page 4 where the Minister says, ". . . Mr. Speaker, we estimated that our net revenues would be almost $4.2 billion. When we ended the year . . .", this is fiscal 1996-97, " . . . we were well ahead of that estimate.". Then he goes on to say and this is just out of this world, "The increase in revenue was not because of a federal windfall. The additional revenue came from 'own-source dollars. For instance, corporate and personal income tax was $56 million more than expected. Lower costs in debt servicing and restructuring also meant more money for the province.". The point of the fact is, there was $150 million which came in a windfall of which at least $45 million came from the federal government. These are the kinds of things in this document which lead people to wonder just how accurate this document really is.
We go on to Page 6 where we are told that the budget of 1997, this 1997-98 budget, ". . . will mark Nova Scotia's second straight balanced budget. We will also have our second budget surplus in a row - estimated to be $4 million.". I sometimes wonder exactly how the Minister of Finance and his department can make a statement such as that when we know that in this current budget they have added up all the numbers from the departments and it came to a certain sum. They have added up all the revenues they are going to get in 1997-98 and it came to a certain sum. And guess what? There was a difference between revenues and expenditures. That might be natural from the point of view that the government tells us that harmonization, the BST is going to cost them approximately $120 million in revenue this year. So, you can sort of understand that they are going to be short a little money.
How do they choose to balance the budget? As you know, they have $249 million in a transition fund provided, once again, by the federal government, another chunk of welfare coming down here, which was the signing bonus, if you want, for Nova Scotia to come on board and to accept the BST.
This was a transition payment over four years. In other words, the federal government said, for four years, you are probably going to suffer a loss in revenues and we will provide $249 million as a cushion over those four years. The federal government is also coming up to an election. The budget of the federal government is pretty healthy, too, if you look at everything. They didn't want to have to put that payment over the next four years, so they
transferred to the Consolidated Revenue Fund of the Province of Nova Scotia $249 million and said, go ahead, spend it any way you want.
The government, first of all, invested that $249 million and last year they picked up something in the order of $8 million or $10 million in interest on that money, which they used in last year's budget, incidently, which contributed towards their $4 million surplus last year. These are their own numbers, I am not just dragging them out of the woodwork. This year they are taking $118,600,000 from the harmonization fund. That is almost half. In year one, they are going to spend about 50 per cent of a fund that is supposed to be spread over the next four years.
So, Madam Speaker, it is very easy for them to balance the budget because even if they run out of this money, the $118 million, they still have another $120-plus million sitting away in that account. They will take some more out of it. We may live well this year, but eventually that bank balance is going to be zero and then we start paying the real costs of this financial escapade that we are on with the blended sales tax.
Madam Speaker, in the document on Page 7 we go on to talk about the blended sales tax, the BST, the harmonized sales tax or whatever you want to call it. The Minister of Finance tells us in his document that, ". . . we will collect . . . $22 million less in 1997-98 because of our personal income tax cut for Nova Scotians plus, the HST and related tax rebates take $131 million from government's purse.". Now, get those numbers, folks. We are going to lose $22 million in income tax in 1997-98 and we are going to lose another $131 million because of the impact of HST. Let's just see now what the minister is talking about.
First of all, when we look at individual income tax, Madam Speaker, which is personal income tax in the jargon of the Estimates Book, we find, in point of fact, that the minister, in his Estimates Book, only shows a loss of $12 million because of income tax rebates. In other words, this year, we are getting $12 million less than we did in fiscal 1996-97. If you take the broader look at income tax, that is tax paid into the provincial government, not individual necessarily, as I say, individual income tax is down $12 million, vis-à-vis the $22 million which the minister is predicting.
However, if you look at corporation income tax, Madam Speaker, you will find that there is $1 million more in corporation income tax. There is $1 million additional in corporation capital tax and a whopping $39.4 million because of what they are doing to put a capital tax on non-financial institutions. We will be dealing with that matter in a bill later today.
In point of fact, Madam Speaker, when you add all this up you have a grand total of $39.5 million plus $2 million is $41.5 million, minus $12 million, you are actually picking up $30 million additional tax this year in corporate and personal income tax. So I don't know where we got this figure that the minister is showing us for tax.
Now he talks about losing $131 million because of HST. Well, we were told $120 million but that figure of $131 million might be right, according to the Minister of Finance's way of adding up numbers, in that he is adding into that also the $8 million that is going to low income people, et cetera.
However, let's just take a look at the HST, let's take a look at what they are actually getting from the HST. First of all, Madam Speaker, the revenues for 1997-98, the minister is forecasting that he will pick up $668,879,000, that is approximately $669 million. He will pick up $22 million on the private sales of used vehicles. That is a new tax but it is part of the HST, and he will pick up another $18 million on the transitional tax on cars and heavy equipment, another $18 million.
Now these are all additional taxes that come about because of the HST. Madam Speaker, you will find that they add up to $708 million. That is the receipts that this government will receive in 1997-98 because they brought in the HST. In other words, they are getting $708 million.
Now the obvious question is, if we didn't have the HST or the BST or whatever you want to call it, what would we have gotten from provincial sales tax? Well, let's have a look. As I said, the book is pretty hard to read because you can't find it on the same page. However, if you just duck back a little bit you can find that the forecast, the revenue for the health services tax in 1996-97 was $740 million. In point of fact, Madam Speaker, what is the difference between $708 million and $740 million? It is about $31 million.
We go back to the minister's statement and what does he say about this? Well, the minister says in his estimates speech that it is going to be $131 million, yet you add up the numbers and it is only $31 million, not $131 million. So, as I say once again, I find that the document is hard to read, it is hard to get at all the numbers you want. What I do find is that this book is going to be as wrong as the one was last year; it is going to be no better.
Now, Madam Speaker, on Page 8 - we are getting through this thing. I have lots of time, I presume, haven't I?
MADAM SPEAKER: You have until 3:06 p.m. honourable member.
MR. RUSSELL: I have only 15 minutes, oh my gosh, I am only at Page 8. I will have to write the book later, I guess. On Page 8 I would just like to point out, I guess for the benefit of the civil servants and I don't know, there may be some civil servants in this place somewhere. We are told on Page 8 that we are going to return to collective bargaining. In fact, it says, "The impact of a stronger economy will be felt by all Nova Scotians, including government employees. For example, October 31, 1997, marks an end to the wage restraint legislation. This year, collective bargaining is back on.". That is what we are told, that it is back on. "Government looks forward to sitting down with its unions and working out a fair
deal for our employees.". Well, folks, the Easter bunny is still around because you have to find the money. Now. There must be some money in here somewhere that will accommodate our civil servants. We find that under an item that is called "Restructuring Costs". It is on Page 1.4 of the large Estimates Book. We are told that restructuring costs include early retirement incentive program, provision for contract negotiations and severance packages.
Okay. How much money do we have in there? We have $31.51 million, which is a fair chunk of change. However, we are told that of that amount there is around about $25 million already allocated before we sit down to talk with the civil servants. So I would say to the civil servants that your negotiations are going to be pretty slim pickings and maybe the government is looking forward to sitting down with its unions, but I am sure that the unions are not too happy with sitting down to a government whose provision for salary increases is approximately - I do not know, around about - $6 million.
I will have to push on a little faster than I wanted to, but we go to Page 9 and they talk about cutting red tape. The Minister of Finance said, "We are now working to eliminate, combine and repackage many of the 300 government licences and permits needed by business. We are also working this year on a simplified fee structure.". It is about time. They were talking about this in 1993 in their red book and now they are finally going to get around to it after the next election. This is another piece of election promise.
They are also talking about reducing the underground economy. They say that is another way the government can level the playing fields for business. Right on. Have you finally got the message? There is an underground economy out there and you have to do something about it. Again, Madam Speaker, it is put in this budget. It is going to happen after the next election. And so on and so on. I will not belabour that point because I have too many other things to talk about.
We will skip right across, I think, to page 11. On Page 11 the title of this page is called "Investing in Communities". Well, I will tell you there are a lot of small towns in Nova Scotia that say hurray, they are finally woken up to the fact that there are small towns in this province and there are a lot of small towns that are very upset with the treatment received from this government. The Minister of Finance - what is he going to do? Well, today - this is the Minister of Finance speaking - "Today, Mr. Speaker, I am pleased to announce the Government of Nova Scotia is increasing the total upgrading grant to municipalities by 3 per cent over last year's levels.".
This amounts, in the actual supplement, if you look at it, to, I think, something in the order of about $600,000. (Interruptions) Yes, municipal grants operating are up by $600,000. Well, that is sure going to help the municipalities, that additional $600,000. When you whack to the municipalities $10 million to $12 million as the cost of the HST implementation. That is what you are ripping out from the municipalities. Where do you think the municipalities get their money from? They do not have a money tree. They do not have a printing press. They
do not even have the ability to borrow. They are getting their money from you and me and everybody else in this province who owns a piece of property or a house. Even if you rent, it means the assessment of the property that you are renting is going to go up, so your rent is going to go up too.
Madam Speaker, $600,000 is absolutely peanuts. However, the government says, don't worry, what we are going to do, and this is a wonderful shell game, right now, municipal units that have Nova Scotia Power facilities within their municipality, they get something called a grant in lieu of taxes. In other words, Nova Scotia Power does not pay taxes. What it does is it pays a grant. That grant is arrived at by negotiation between Nova Scotia Power and the municipal unit. It has no reference really to the value of the plant that is within that area.
What the Nova Scotia Government has decided to do in their estimates is this, they said, okay, you are going to lose about $10 million to $12 million because of HST, which we imposed upon you. So what we are going to do is, we are going to give you $6 million a year. However, we are going to charge that back to Nova Scotia Power because they are no longer going to pay a grant in lieu. They are going to pay some money to us, that is the Province of Nova Scotia.
How does this work? Well, this coming year, nothing changes. Next year, Nova Scotia Power pays $2 million to the provincial government and the government pays out $6 million to the municipalities. So you think, gee, that is not bad. The province is kicking in an extra $4 million. Well, yes, sort of. That continues on at $2 million a year for about three years, I think it is. Then, in the fourth year, it kicks up to $4 million and then it kicks up to $8 million and then it kicks up to $10 million.
Where does Nova Scotia Power get their money from, Madam Speaker? They get it from selling electricity. They are guaranteed a certain return on their investment. When they have to start paying money to the municipalities, their return on investment goes down because their profits go down. So they hike themselves down to the Public Utility and Review Board and they get a rate increase. This is a scam. The province is doing nothing for the municipalities. What they are doing is simply making it appear that they are going to give the money to the municipalities. They are making it appear that Nova Scotia Power is paying them. They are making it appear that Nova Scotia Power is just going to accept those payments annually and not do anything about it. What absolute nonsense. Have you ever heard of anything so crazy in your life?
AN HON. MEMBER: Some of the municipalities like it.
MR. RUSSELL: The municipalities do not like it, my friend.
AN HON. MEMBER: . . . said they did.
ANOTHER HON. MEMBER: The Liberals do.
MR. RUSSELL: Maybe the Liberals do, but some of the Liberals will believe anything, Madam Speaker. That is only item number one under this Investing in Communities. We are told that we are going to invest in rural Nova Scotia. Rural Nova Scotians are the heart of Nova Scotia, the document tells us. Well, well. "They are rich in natural resources and individual talent.", and so on. But where is the meat in this? What is going to happen? I read this through and I don't find anything that tells me that they are going to do something that is going to make the rural municipalities stronger and ensure that the rural municipalities and rural towns actually continue to exist. These guys have torn the guts out of rural Nova Scotia and they have certainly done that insofar as towns are concerned.
Madam Speaker, as I say, this is just fluff and we will get to that when we get into the estimates themselves, I guess, because I am not going to have enough time to even start getting through this stuff. On Page 13, we come to INVESTING IN NOVA SCOTIANS. We have seen Investing in Communities, Investing in a New Industry. Now we come to INVESTING IN NOVA SCOTIANS. The first item is Investing in Our Health. We are told that health care is our number one priority. "Government has listened and responded. We are investing an additional $38.8 million in health care . . . spending . . .", in Nova Scotia.
Madam Speaker, I don't know. I mean, I am a little dumb, I know, I grant you that. But I go to the good book and it is supposed to be in the book. I go to Health and I look at their budget. I have the wrong book here. I have one minute left. That is good. What are we told on Page 13.2 of this document? We are told that there are $10 million additional dollars in Health. That is good but it is not as great as $38 million. Now this book tells us $38 million and this one tells us $10 million. We are told by the Minister of Finance, that is not right, there are $47 million in here that are contingency funds, there are $39 million in contingency funds. That is the money that was in last year's budget and it is spent, it is gone. Thank you. (Applause)
MADAM SPEAKER: The honourable Leader of the New Democratic Party.
MR. ROBERT CHISHOLM: Madam Speaker, I welcome this opportunity to respond to the 1997 Provincial Budget Address. This budget is widely expected to be the last before a provincial election. I would suggest this is as close as Nova Scotians are going to get to a good news budget under this government. This may be as good as it gets under this government. Based on the budget brought down last week by the Minister of Finance, as good as it gets is not very good for the vast majority of Nova Scotians.
This budget fails Nova Scotians on many counts. It has no strategy to deal with our chronic unemployment levels; it continues to shift the tax burden from corporations and the
better off to lower income Nova Scotians; it does nothing to stop the continued deterioration of our health and education systems; it sets the wrong priorities for the expenditure of scarce public resources; and it is once again, a phoney and fragile balanced budget, one that I suggest will come unglued after the next election. Lastly, and certainly not least, this budget is a betrayal of Nova Scotians. It is a fitting culmination to four years of betrayal by this government.
This is the fifth budget that we have experienced under this government. Like the Speech from the Throne which we listened to a little over a week ago, this Budget Speech has the air of the familiar about it. Those elements of it which weren't revealed in advance as part of the Health Minister's leadership tour were already known from the 1996 budget and in the various quarterly reports issued by the Minister of Finance.
The main themes of this budget are familiar ones. For four years now we've been hearing the same thing from this government. If we can just get the books to appear balanced and lighten the tax load on business, everything will turn out fine.
Every time this government plays that theme, Nova Scotians are reminded of how the Liberals have betrayed them, on jobs, on fair taxes and on social programs. The Liberals are offering a variation of the old theme in this budget. They are saying that the tide has turned, that after all of the sacrifices things are getting better. With an election looming, we wouldn't have expected them to say otherwise.
But regardless of what they say, Nova Scotians won't be buying. The Minister of Finance and his Cabinet colleagues may want us to think the tide has turned, but in this budget, it really hasn't. This budget is like the budgets that have come before it. It doesn't turn the tide in the affairs of this province and it won't turn the tide in the fortunes of this government.
Like the Liberal budgets that have preceded it, this budget is unfair. Like the Liberal budgets that have preceded it, this budget weakens our public services. Like the budgets that preceded it, this budget sets the wrong priorities. Like the budgets that preceded it, this budget fails to deal with the problem of unemployment.
Four years ago Nova Scotians elected this Liberal Government because they believed what Liberals said during the campaign about jobs. The Tories talked about restraint and privatization. The Liberals talked about jobs. People were concerned about jobs, so they voted Liberal.
As soon as they took office, the Liberals forgot about their job creation promises. When they were running for office in the spring of 1993 the number of unemployed Nova Scotians hit 58,000. The Liberals reacted in shock and dismay. They took out full page ads
to deplore the situation. The got elected, went through their 30-60-90 routine and then they forgot all about jobs.
Today there are still 58,000 unemployed. Budget documents indicate that there will be 58,000 unemployed next year. The biggest single shortcoming of this budget is that it accepts this situation with no sense of urgency to do anything about it. This callousness is especially galling when it comes to areas outside metro Halifax, particularly Cape Breton. When this government took office, sweeping all of the seats in Cape Breton, unemployment on the Island stood at just below 25 per cent. Four years later Cape Breton unemployment is over 27 per cent. The budget response? The government can't or won't do anything. It is not our problem, they say; talk to the feds or talk to the private sector.
The government likes to ignore the unemployment figures and talk about all of the jobs that have been created since they took office back in June of 1993. This budget, like the one a year before, boasts about the creation of 26,000 jobs since June 1993. What this government's budget never mentions is that this government took office at the low point of one of the worst recessions this province has ever seen. That recession was caused in no small part by monetarist policies supported by both the federal Liberals and the federal Tories.
As the recession eased and members of this government were running about playing 30-60-90, the job numbers improved, by nearly 20,000 in 1994. This government's policies had nothing to do with that. Since 1994 the job numbers have remained pretty well static. So has unemployment, which this government was elected to do something about - 58,000 in April 1993, the same number in April 1997. Think what the numbers will be when the next recession comes along, Madam Speaker, and think, too, of the impact that unemployment has on the people of Nova Scotia, especially the young people, women and visible minorities who are hit the hardest by our high rates of unemployment.
There has been no progress on unemployment because this government has bought into the corporate mindset when it comes to jobs. The corporate mindset says that the only thing that matters is profit, the only people who count are the shareholders. They say reduce our taxes, deregulate us, let us raise our profits and jobs will be created. Then they lay off thousands.
We have our own Nova Scotia practitioners of this creed. MT&T has watched its employment numbers drop as its profits rise. Then it has teamed up with the government to attract outfits like OSP Consultants, who do the same work that MT&T other telephone companies used to but pay their employees a lot less.
All that matters is the bottom line. We see this happening all over the world; corporate capitalism reigns supreme, everybody else's interests are secondary. George Soros, a man with so much money that even members of this government may listen to him, says that capitalism has replaced communism as the principal threat to freedom in the world. Perhaps,
Madam Speaker, the outgoing Premier would get Fidel's opinion on this the next time he sees him. Here is what George Soros, the multi-billionaire, wrote in a recent article in Atlantic Monthly, "The arch enemy of an open society is no longer the Communist threat but the capitalist one. It is wrong to make 'survival of the fittest' a leading principle in a civilized society . . . laissez-faire ideology has effectively banished income or wealth distribution.".
Soros goes on to say, "I have made a fortune on international financial markets, and yet now fear the untrammelled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.".
Yes, Madam Speaker, market values have certainly spread - like some kind of virus - among the members of this Liberal Government. We have seen market values infect our health, educational and correctional systems. They have dictated this government's approach to job creation.
Members of this government told Nova Scotians during the election campaign that they were going to do something about the 58,000 unemployed in this province. Well, they did. They created more unemployed through public sector layoffs. As it turned out they didn't really mean what they said in 1993. They can't create jobs, they can only wipe them out - this government, Madam Speaker, and their counterparts in Ottawa.
Nova Scotians won't forget the contribution that the Liberals in Ottawa have made to joblessness in this province. This government won't spill the beans on their friends in Ottawa but they do tend to be more forthcoming about the job-destroying feats of their Ottawa counterparts when they speak to Toronto audiences. Here at home, the members of this government happily line up before the cameras, trying to fool Nova Scotians into thinking that the latest downpour of Dingwall dollars will bring jobs and prosperity. But it is a different story when they get in front of the power brokers who belong to the Empire Club.
In his speech just last October, the outgoing Premier told the Empire Club that Nova Scotia, which, Madam Speaker, has less than 3 per cent of Canada's population, has absorbed 16 per cent of all federal cuts since 1990. According to that speech, we have lost 5,000 federal jobs in this province during that time and the cumulative effect of federal cuts by the year 2000 will top $2.5 billion. There was no reported sighting of Dingwall at the Empire Club that day.
Does this government protest Ottawa's cut and slash policies and their devastating effect on the economy? No way. They get in on the act. Civil servants, health care workers, teachers, educational support staff, municipal workers, all have lost jobs as a result of this government's actions. The combined effect on jobs of the Liberal one-two punch is truly impressive. According to the Premier's speech to the Empire Club, between August 1995 and
August 1996, the number of public sector jobs in Nova Scotia - federal, provincial and municipal - dropped by 8,000 over that 12 month period.
So despite what they said during the 1993 election campaign, the Liberals now say they can't create jobs, they can only wipe them out. Job creation, they say, is the responsibility of the market - the very same market that lays off thousands as profits soar. The very same market that falls sharply whenever there is an improvement in the job picture.
We have nearly 58,000 officially unemployed in this province now, up nearly 3,000 from last year. When you combine that with the 30,000 to 40,000 Nova Scotians who are working part-time but would prefer full-time employment, you get the whole sad picture. Nearly 100,000 Nova Scotians who are either unemployed or underemployed at this stage of the jobless recovery.
Yet this government continues to believe that the way to create jobs is to destroy jobs. They continue in the erroneous belief that the way to create jobs is to give more and more concessions to business. That's the job creation strategy outlined in this budget. Let business get away without paying any sales tax on the goods and services they buy then hope they will create some jobs through some magical process. Give Mobil and Shell a sweetheart royalty deal and anything else they want and then wait for them to hire Nova Scotians to work on the pipeline. Give manufacturers a tax credit, cross your fingers, close your eyes and make a wish for jobs. That is this government's strategy for fighting unemployment. As the numbers in the budget document show, Madam Speaker, clearly it is not working.
We will be voting against this budget because it has no strategy for dealing with our chronic unemployment problem. We will also be voting against this budget because it continues the shift of the tax burden off the corporations and the better off onto the backs of the middle and lower income Nova Scotians.
When we look at the unfairness in this budget, it helps to remember that most of the tax provisions in this budget are simply a rehash of what was introduced last year. Last year's budget was the BST budget, the Robin Hood in reverse budget, the rob the poor to help the rich budget. The BST budget gave business a $200 million tax break and slapped consumers with an $84 million tax increase. The $20 million in low income tax relief provided in last year's budget will nowhere near compensate for the increased sales taxes that low income Nova Scotians are already paying to heat and light their homes, put gas in their cars or clothe their children.
The same will be true for low and middle income Nova Scotians when the 3.4 per cent reduction in the provincial personal income tax comes into effect on July 1st. That provision will have little or no benefit for low and middle income individuals or families. For example, someone making $29,000 a year in taxable income will save all of $98.60 a year in taxes with
this tax cut. The increased taxes on home heating fuel alone will just about wipe out this increase.
By contrast, someone with the taxable income of $75,000 will save almost $350 a year in provincial income tax. The $100,000 a year earners in the Cabinet will save $469.30 with this tax break. Of course, these are the same income tax brackets which may see some net benefit from the HST. They can afford the new $500 suit, the new car or power boat, the big ticket items that will experience a tax reduction under the BST.
HON. JOHN MACEACHERN: Madam Speaker, on a point of order. The honourable member has just stated as if it were a fact that members of Cabinet make $100,000 a year. I wish it were true, but if it is, I have been disadvantaged over here. I would suggest to the honourable member that it is a matter of record that it is not the truth. He has stated that here as if it is true and it is not true. I would like to correct the record because leaving that on the record would lead people to believe that that is the truth. (Interruptions) There is no $100,000. If the honourable member is right, I would like him to inform me so that I can speak to the right person and get it corrected.
MADAM SPEAKER: I thank you for your point of order which is a point of clarification as well. It is a dispute between two members. I will recognize the honourable Leader of the New Democratic Party.
MR. CHISHOLM: Maybe the Minister of Community Services and his colleagues can table their income tax returns and Nova Scotians will get a true sense of it. (Interruptions)
The tax changes that the government is dangling in front of the electorate are not about helping low income Nova Scotians. They are not even about helping middle income Nova Scotians. They are about helping the re-election chances of the Liberals. They are about giving a tax break to business and upper income Nova Scotians. We have been saying these things for over a year now. The government has heard it all before. Unfortunately, they are not listening. (Interruptions)
MADAM SPEAKER: Order, please.
MR. CHISHOLM: This budget adds insult to the injury inflicted by last year's document. We see another tax break for business, the investment tax credit for manufacturers and processors. The Metropolitan Area Chamber of Commerce says this is a bad idea and we are inclined to agree. We also see the sunset provision being introduced for the corporate capital tax. That particular tax was brought in to recognize the fact that big business is the major beneficiary of the BST. It was supposed to be a quid pro quo with a $200 million tax break.
I say it is irresponsible and reprehensible for this government to announce its demise before there is any evidence of the jobs that are supposed to result from the HST. Irresponsible and reprehensible, yes, but par for the course for this government. This government's policies are supportive of the growing gulf between rich and poor in this province and in this country.
This government has embraced the kind of neo-conservative policies that were pushed by Donald Cameron. Between the two of them, they have helped transform Nova Scotia from a province with one of the lowest rates of child poverty in the country to a province with one of the highest. Their policies have contributed to a 7.1 per cent drop in real family income in this province during the 1990's. They have bought into the same kind of unfair tax policies, Madam Speaker, that in 1984 saw over 80,000 Canadian corporations, with over $17 billion in profits, pay no corporate tax. Their policies are the kinds of policies that encourage big banks to pay their CEOs over $3 million a year while nearly 1.5 million children live in poverty across this country. This budget, Madam Speaker, is not about tax fairness and it is a travesty for the Minister of Finance to say that it is.
New Democrats will also vote against this budget because it does nothing to stop the continued deterioration of our health and education systems. Despite the propaganda, this budget is not about repairing the damage to health care and education, it is more about trying to paper over the cracks that have appeared as a result of this government's destructive policies. Those policies are another big part of the Liberal betrayal; just as they betrayed Nova Scotians on jobs and taxes, they betrayed their promises to protect public services. Over the past four years they have cut and slashed and downsized; they have broken contracts with their own employees; they have offloaded, downloaded and broken solemn pledges about service exchange.
Now they say they have seen the light; they say they have listened to Nova Scotians pleas to protect the health and education system. Madam Speaker, this budget provides no evidence or assurance that they will do that. When it comes to health care the budget figures do show that they are planning to spend more money, quite a bit more money, than they were planning to spend last year. Whether that will stop the deterioration of our health care system is another question altogether.
The budget propaganda makes the claim of stable funding for hospitals, after four years, which funding has been cut by $150 million, Madam Speaker, and hospital beds reduced by 30 per cent, stability would certainly be welcome, if, in fact, it happens. Unfortunately, the Supplementary Expenditure Detail shows that hospitals in three of the four regions of the province will actually get less funding next year than they received this year. So much for stability.
Home care increases again in this budget, to the sound of bugles blaring from the direction of the Health Minister. Again there is a big question around whether that will mean
better services for Nova Scotians. The cost of administering home care continues to rise but a comprehensive Home Care Program, involving services like palliative care and pediatric care, doesn't seem to be getting any closer. In the meantime, Nova Scotians are being discharged early or are not getting into hospitals at all, due to bed closures and, as a result, many of them are suffering.
Spending on emergency measure is also slated to rise. That may be positive but I say that unless increased spending addresses the deplorable state of wages and working conditions for emergency medical technicians, Madam Speaker, it is money down the drain.
The budget also proposes to make more money available for physician payments. I will have more to say on that in a few minutes. At this point, I just want to say that the onus is on the government to ensure that these additional expenditures, whatever their merits, preserve and enhance universal, one-tier health care in this province. Specifically, in return for these increased medical payments, this government must insist that physicians put an end to the practice of tray fees and other forms of extra billing.
The main criticism that we have with this budget's approach to health care is that it perpetuates the status quo. It moves us no closer to community-based health reform based on prevention, promotion and primary care. Instead, it offers the spectacle of the Minister of Health rushing around the province, throwing gobs of cash at various health care crises that he created when he was the Minister of Finance. The course the government is on will not provide us with a better health care system in the long run. We have to give the Minister of Health his due. The money may be going in many of the wrong places but at least he had enough muscle to pry some loose for the health care system.
The Minister of Education, who has been running around telling people to expect more money for schools, seems to have come up empty. The Budget Address says schools will get a provincial-municipal funding boost of $13 million. But most of that seems to be coming from the municipal taxpayer, which means more downloading and higher property taxes this fall. Of course, those higher tax bills, Madam Speaker, will most likely be coming out after the election.
The source of the education funding boost is one thing; its effect is another. Thirteen million dollars more, if that is, in fact, what it turns out to be, will do little to address the damage this government has inflicted upon the education system in this province. This budget does nothing to stop the continued deterioration of our health and education systems. Madam Speaker, this budget also sets the wrong priorities for the expenditure of scarce public resources.
This budget, I say, has its priorities wrong in big ways. The BST with its tax breaks for corporations is the wrong priority. The $8 million cut in tax on alcohol is the wrong priority, and the most distorted priority can be found in the revenue section of the budget. There we find projected revenues for gambling that exceed projected revenues from corporate income tax by $30 million. This budget has its priorities wrong in smaller ways as well. The government's penchant for spin doctors, top-heavy administration and corporate deal-making pop up throughout this document.
Let's look for a moment at the spin-doctor industry. In the Department of Community Services, the communications budget increase is almost threefold, from $78,000 to $231,000. In the Department of Economic Development and Tourism, communications spending has increased 67 per cent, from $354,700 to $595,700. Community Economic Development, which was supposed to be this government's economic development cornerstone, is again a low priority, just $1,916,000 being spent; not much more than communications.
In the same department, we see the government planning to spend $200,000 on public-private partnerships. What possible justification is there for spending that? We look forward to the minister's explanation of that, as well as his explanation for the projected fivefold increase, to $10 million, in something called an investment fund. Investing in what, Madam Speaker? Pre-election photo ops? I can imagine the sharks will be circling as the election draws near. A few more Dynateks may well be in our future.
In Education and Culture, the propaganda bug has hit in a big way. There we have a communications secretariat, no less, with a budget of $212,000, up from $42,000 this year. That is at least five teachers' salaries, Mr. Speaker. We also have a brand new expenditure in Education; educational and cultural industry marketing that will cost $100,000 next year. The Environment Department is getting into the act as well; spending on media and public relations is up there, from $115,000 to $135,000.
In the Health Department, it is good to see that the communications branch has stabilized at $637,600 for the upcoming year. The big spending section in the department now appears to be insured programs management, up nearly 50 per cent, from $10.7 million to $15.9 million. The Home Care Program seems to have been stricken with a case of administrative bloat. The Minister of Health likes to boast about how much more money is being spent on home care now than was being spent when the Liberals came to power. The problem is, it is being spent in the wrong places. Look at the central region, for example. The Supplementary Expenditure Detail shows administration more than doubled between this year and last, from just over $1 million to $2.176 million. Administration is also up significantly in the other three regions.
The same for assessment costs, Mr. Speaker. Estimates for the central region more than doubled between 1996-97 and 1997-98. Again, they've increased significantly in the other three regions. When it comes to actual nursing and home support, its actually projected
to be going down in some regions this year. Home care is growing all right but it seems to be mainly the paperwork that is growing.
In other areas, spending at Communications Nova Scotia goes up $112,000, or 6 per cent; Planning and Priorities, the Protocol Office and Executive Council are all going up as well. Meanwhile, the Office of the Provincial Auditor gets cut by $58,000 or 3.4 per cent. Public Prosecution Service gets cut by $170,000, about 2 per cent; and staff at the Advisory Council on the Status of Women is down from 11.5 per cent to 9.9 per cent.
The Technology and Science Secretariat is a big winner again this year. Over there spending in 1996-97 of $511,000 is slated to hit over $1 million. The Office of the Minister and Deputy are planning to spend $447,000, up $112,000 or a 33 per cent increase from what they spent last year.
Policy, Planning and Administration is really going up, by 220 per cent, from $166,000 to $532,000. Science and Technology must really be where its at. Unless the Gaming Control Commission is where its at. Here there will be a 33 per cent increase in administrative staff over this time last year, from 30 per cent up to 40 per cent.
In big ways and in small ways, this budget sets the wrong priorities for the expenditure of scarce public resources.
This budget is irresponsible. It is irresponsible because there is no recognition of the sacrifices that Nova Scotia public servants and Nova Scotians who rely upon public services have paid so that the Minister of Finance and the Liberal Government can boast about their balanced budget, boast about it as if it were their creation alone.
The sacrifice of the members opposite has not been great. They've hung onto their perks and they've retained the privilege of appointing their political pals to well-paid jobs. They still have the trade junkets with their business buddies. In the last few months alone we've seen minister fanning out across the globe: Italy, Cuba, Indonesia, Thailand, Morocco among other ports of call.
The people who have made the sacrifices are the public servants of this province and the people of this province whom they serve. Clerks, secretaries, health care workers, bus drivers, teachers, police officers, highway workers - these are the people who have made the sacrifices. Thousands of them have lost their jobs. Those who have held on to their jobs have lost millions, even hundreds of millions in wages.
Let's look at the record since this government took office and discovered the obvious, that the Tories had moved this province to the verge of insolvency. On October 14, 1993 this government brought in the unpaid leave Act, amounting to a $42.5 million one-time-only contribution by public employees in Nova Scotia to the battle against the deficit.
Then on April 28, 1994 those heroic deficit battlers on the other side brought in the 3 per cent wage roll-back. By the government's own - no doubt - conservative figures, that roll-back amounts to over $50 million a year. But it's the gift that keeps on giving, $52 million in 1994-95, also 1995-96 and 1996-97. Public servants have contributed well over $200 million in wage roll-backs to the fight against the deficit and that doesn't begin to take into account the erosion of purchasing power that results when wages are frozen or rolled back and the cost of living just keeps marching along.
The public servants in this province will probably never recapture the income they have lost as a result of this Liberal Government's heroic fight again the deficit. They probably don't expect to. But will there be some reward for their sacrifice when the freeze comes off public sector contract negotiations which re-open in the months ahead? There should be and I think most fair-minded Nova Scotians would agree that there should be. If indeed the tide has turned, then it should turn for everyone.
The Health Minister, the man who would be Premier, the Godfather of this budget, he certainly seems to agree that some people who are paid out of the public purse should get a raise.The physicians got a raise last year, as soon as the Minister of Finance was transformed into the Minister of Health and discovered the mess that the Minister of Finance had created in the health care sector.
The budget for doctors went up from $246 million to $262 million last summer, an increase of 6.5 per cent. This year, according to the budget, payments to physicians will go up another 4.5 per cent, even though the Medical Society may have other ideas.
Using the budget figures, the increase for doctors amounts to 11 per cent overall. Since the number of doctors is dropping, the increase per physician is even larger. Are payments to physicians a benchmark? The Minster of Health suggests that they are.
Here is what the Minister of Health, the man that would be Premier, said on the question of payments to physicians and the sacrifices of other public servants back on January 17th of this year, according to the Chronicle-Herald, the Minister of Health said, "In fairness, in equity, we cant release one group of public servants from the participation in the wage restraint over the last two years. It would betray the sacrifice made by all of those nurses, firemen, policemen who contributed to the first balanced budget in 25 years.".
On the question of fairness and equity, I agree with the Minister of Health. You cannot spare physicians from the sacrifices that have been made by nurses, firefighters, police officers and others. You cannot give what amounts to more than 11 per cent raise for doctors who, according to the Health Minister, "probably receive the most from taxpayers' resources,", without creating the expectation that something similar is planned for nurses, firefighters, police officers and other hard-working and valuable public servants.
Where is the money to respond to those expectations in this budget? This budget contains a $12 million increase for physicians. In the interests of sound accounting practices, the Health Department has identified $39 million in a variety of deficits and has put that in a special reserve.
Similarly, this budget and the previous one has recognized the province's liability for compensating the victims of institutional abuse and set up a special reserve for that. A development, by the way, which accounted for your balanced budget in the year just past.
Where is the special reserve for another responsibility which this budget should surely recognize, money that should be going to pay back the hard-working public servants in this province, for some of the sacrifices that they have been making since the beginning of this decade? Where is the special reserve to satisfy the expectations that the Premier-in-waiting has created among public servants with his talk of fairness and equity and 11 per cent raises for doctors?
The Minister of Finance has said, it is in there somewhere. He just can't tell us where. Except for doctors who seem to get special consideration, that information is for the bargaining table, the Minister of Finance tells us.
This government, I would suggest, wants to avoid the bargaining table like the plague until after the election or after November 1st, whichever comes first.
What this budget tells us, though, Mr. Speaker, is that when public servants arrive at the bargaining table the message is this, the cupboard is bare, there is no money. What this budget tells us is that there is no money available to restore the lost wages and purchasing power of public sector workers in this province, let alone put more teachers back into the classroom, more nurses in the emergency departments, more police officers on the beat.
This budget makes clear that there is no money for that purpose. On Page 7 of the Budget Address, it explains why there is no money there, Mr. Speaker. It is not there because of Paul Martin's CHST.
Some $466 million over 4 years is not coming to this province because the federal Liberals have decided to abandon the principle of equality of health, education and social services for all Canadians. Nearly $120 million a year out of our social program and this government utters not a murmur of protest. This government stays quiet. The present Minister of Finance and the previous Minister of Finance and the present Minister of Health say nothing as their friends in Ottawa dismantle national Medicare, post-secondary education and the Canada Assistance Plan. Eleven Liberal MPs from Nova Scotia who were sent up to Ottawa to protect our interests are just as silent. Now, one of the silent ones, decides it is time to come back and take over the leadership of the province. I suppose, Mr. Speaker, that he cannot do any worse than the competition.
Page 7 of the budget tells us another reason why there is no money for a special reserve to acknowledge the responsibility this government has to treat all of their employees fairly. It is not there because this government puts a higher priority on keeping its federal Liberal friends in Ottawa happy than it does on protecting the interests of Nova Scotians. It is not there, Mr. Speaker, because the government puts a higher priority on tax breaks to corporations through the BST than it puts on the maintenance of health and education services.
It is not there because, desperate for some good news, this government has brought in across-the-board income tax cuts that benefit mainly the well-off in our society. It is not there because this government puts a higher priority on pre-election propaganda than it does on putting the financial affairs of this province on sound footing.
This budget tries to paper over some very serious structural problems. These problems start right at the top in Ottawa where we have a government that insists on fighting debt and deficit on the backs of ordinary people, while letting the banks and corporations get away without paying their fair share. This budget puts a fresh coat of paint on a rotting hull. The Liberals clearly hope that they can pilot the sinking ship into port for another term.
If they succeed, Mr. Speaker, then we will see a familiar story played out. The Liberals will use their balanced budget legislation to deny economic fairness for public servants. There will be more cuts to health, education and other public services. The quality of life in this province will continue to deteriorate. I will not dwell on this scenario. The people of Nova Scotia will not fall for this government's balanced budget trickery. They have been betrayed once by this crew and they will not let it happen again. Once burned, twice shy.
Mr. Speaker, the deficiencies in this budget are not separate and discrete, they are tied together by the fact that the Liberal's distorted view of the world. They keep putting their faith in something called the market, as the solution to our problems. They continue to insist, against all odds, that lower corporate tax rates will create jobs. I say, if that were the case, this country and this province would be booming, but it isn't. Nova Scotia has the lowest corporate tax rate in this country and is looking at one of the lowest economic growth rates in the country for the coming year.
Across this country, governments have been handing huge tax breaks to corporations for the last 20 years. Over those same 20 years, unemployment has become chronic and the economy has been virtually in a permanent recession. But still they cling to their dogma. Just one more tax break they say. Just one more cut to the public sector and everything will be fine. They say shrink the public sector workforce and the overall workforce will grow. Despite clear evidence to the contrary, this government and many others in the world cling
to the view that the way to cure the debt and the deficit is to cut spending on education and social services, while handing tax breaks to business.
Mr. Speaker, education and social services did not cause the debt and deficit. The debt and deficit were caused by tax breaks for the rich and corporations, and by high interest rates. They have been aggravated by the loss of tax revenue brought about by the unemployment that has resulted from those high interest rates.
If this government and the one in Ottawa would recognize what has and has not caused the deficit, they could, perhaps, move towards a solution. Part of that solution is at the federal level. Job creation, not job destruction being practised by this government, is the real key to fighting debt and deficit, while preserving and enhancing our health, education and social services. You get people working and you reduce social programs costs and you increase government revenues. You give people a sense of security, of well-being and of hope for the future.
Nova Scotians know that job creation is what is needed. That is why they listened to the Liberal Party back in 1993 when they talked about jobs. That is why so many Nova Scotians are angry at this government today, because this government has forgotten its promises about job creation.
In 1993 this Liberal Party talked about jobs; in 1997 in this budget this government is smug, despite a stagnant workforce and growing unemployment. The unemployed will always be with us, you can almost hear the government say. Toss a few crumbs to ordinary Nova Scotians and genuflect to the market.
Mr. Speaker, I am proud to say that a Budget Speech from a New Democratic Government would be much different from this one. The main difference would be in its philosophy. A Budget Speech from a New Democratic Government would not tell people to expect less from government; it would not advise people to wait patiently for the market to work its magic. It would say to people that your government is one of the best tools you have to build a better future for yourself and your community. We would have tried to give Nova Scotians a sense of hope and a sense that through their government they can bring about positive changes in their lives.
Specifically, a New Democratic Party budget would have announced the end of the BST and the establishment of a fair tax commission. The commission would have been mandated to use the 18 month period that must be observed under the BST deal to investigate real tax reform in this province. The goal would be a fairer tax regime, one that emphasized ability to pay, rather than regressive consumption taxes, one that shifts more of the tax burden to those corporations and individuals with the ability to pay.
A New Democratic Party Government budget would have recognized that we need to guarantee the viability of our health care system. It would have acknowledged that as a province we must provide the resources to ensure that our health care system is universal, accessible, comprehensive, affordable and publicly administered. It would also have announced steps to bring all aspects of home care, as well as prescription drugs, into Medicare. A budget presented by this Party, Mr. Speaker, would have ensured that new spending was directed specifically to those goals, not to the leadership campaign of the Minister of Health.
A New Democratic Party budget would have recognized that starving our universities and public schools jeopardizes our future. We would not have applied a few band-aids to the system and then forced property taxpayers to foot the bill.
A budget from the New Democratic Party would not have cut liquor taxes by $8 million; it would have put forward a student assistance program that fostered universal access to post-secondary education without students having to incur huge debts.
A budget from the New Democratic Party would not have contemplated raising $30 million more revenue from gaming than from corporate income tax. A New Democratic budget would not have involved more offloading onto universities, school boards, community organizations and the poor. It would not have indulged in the celebration of a bogus balanced budget while ignoring those who have borne the costs of that achievement.
Our budget, Mr. Speaker, instead of downloading restraint onto others, would have put an end to spiralling administration and costly propaganda arms. It would have curtailed contracting out, public-private partnering and expensive business handouts to firms that don't need the money.
Our budget would have removed the special tax breaks that have been handed out to lawyers, doctors, dentists and accountants. It would have announced measures to extend employment benefits, such as medical and pension benefits, to part-time workers. Instead of balanced budget legislation, Mr. Speaker, we would have brought forward legislation that would force the government to set and stick to job creation targets.
A New Democratic Party budget would in fact be quite different from this one. It would recognize the need to invest in our future; it would recognize the need to restore adequate funding for our children's education; it would invest in healthy individuals and healthy communities; and it would assist the most vulnerable in a way that would enable them to contribute to their community.
We believe that our infrastructure, our education and our health services are an investment in our future. If we want to have a society that we are all proud of, that is what we need to focus on.
The private sector is important to the fulfilment of our goals, but so too is the public sector. Only by working together are we going to be able to build the kind of society that Nova Scotians need in the future.
Mr. Speaker, on behalf of my colleagues, I indicate that we will be debating vigorously the Act that brings into force this budget, this Throne Speech, on behalf of those hundreds of thousands of Nova Scotians who are being further disadvantaged by the actions, by the policies, by the betrayal of this Liberal Government.
MR. SPEAKER: That concludes the debate. Is the House now ready for the question?
The honourable member for Hants West.
MR. RONALD RUSSELL: The motion I do not believe has been made as yet to refer them to the committee.
AN HON. MEMBER: I certainly wouldnt make that motion.
MR. SPEAKER: The honourable Government House Leader.
HON. RICHARD MANN: The resolution by the minister was made in his Budget Address. That is, the motion to refer. (Interruptions) Yes, and the response by each Finance Critic and I believe, I am not even sure if a vote is required. I think the estimates are referred to the Committee on Supply, Mr. Speaker, I am not even sure if a vote is required, I believe they are just automatically referred to the Committee on Supply.
MR. SPEAKER: You are correct. I will now so order that the Estimates be referred to the Committee of the Whole House on Supply.
The honourable Government House Leader.
HON. RICHARD MANN: Mr. Speaker, would you please call Tabling Reports, Regulations and Other Papers.
TABLING REPORTS, REGULATIONS AND OTHER PAPERS
MR. SPEAKER: The honourable Minister of Finance.
HON. WILLIAM GILLIS: Mr. Speaker, I beg leave to table the Supplement to the Public Accounts of the Province of Nova Scotia for the fiscal year ended March 31, 1996.
MR. SPEAKER: The report is tabled.
The honourable Government House Leader.
HON. RICHARD MANN: Mr. Speaker, would you please call Public Bills for Second Reading.
PUBLIC BILLS FOR SECOND READING
MR. SPEAKER: The honourable Government House Leader.
HON. RICHARD MANN: Mr. Speaker, would you please call Bill No. 7.
Bill No. 7 - The Financial Measures (1997) Act
MR. SPEAKER: The honourable Minister of Finance.
HON. WILLIAM GILLIS: What I would like to do this afternoon is to speak for a little while on Bill No. 7 - An Act Respecting Certain Financial Measures; in other words, the budget legislation. What my intention to do is similar to what I have done on some other legislation I have had in the House over the past several years. I will try to go through clause by clause to give some explanation that would help honourable members; at least to give a perspective on it. There obviously will be other perspectives on the same clauses, but I will give you my take on it and we will go on from there.
I want to move, in starting, that Bill No. 7 now be read a second time. This bill that is before us serves to give, in my opinion, our taxpayers a badly needed shot in the arm. For example, for individuals, the provincial income tax rate, the deductions on paycheques will be going down 3.4 per cent of the provincial portion of the deduction on a person's paycheque starting July 1st. So I think this is something that means some extra money in the consumer's pocket and I think that is good news for Nova Scotia.
For our manufacturers and processors, our new investment tax credit is already causing firms to look again at modernization and expansion plans. Projects that were several years off are being brought forward. With this comes economic growth and jobs. In the last couple of days I became aware of a particular firm that is going to get on with a project they have been studying for a while and it is going to create a number of jobs. Apocryphal stories have probably - maybe not apocryphal but anecdotal stories aren't probably worth much and I think we had better wait and see. I think there are companies that will increase production and increase their hiring, putting paycheques in people's pockets and this is crucial for the people of Nova Scotia. There is no better thing for Nova Scotia.
What I want to do is review clause by clause and that is what I intend to do and hopefully that is of some help. Starting with Clause 2 and Clause 3, these amendments as members would know extend the equity tax credit to the year 2001, four years. This tax credit is finding increasing support within the business community. It allows a business to encourage investors to take an equity position. It allows businesses to build up a cushion and set the stage for other kinds of financing to enable them to invest and grow. Since the equity tax credit was established in 1994, more than 100 businesses have taken advantage of this program. These are the smaller to medium-sized businesses and not the giant corporations. I think these are the businesses that creates so much activity and might not develop otherwise, so I commend that clause.
Clause 4 is a technical amendment that makes the rules for calculating a deficit explicit. It maintains our commitment to have our revenues and expenditures come in on target. We still must have legislative approval in order to exceed spending by more that 1 per cent each year. Because we exceeded the spending in 1996-97 by more than 1 per cent, I will be presenting a resolution in the House in the near future on that which will be debated by all honourable members. That still exists but there were some mistakes I would guess you could say in the drafting last year and that is what I am bringing forward.
There were some difficulties in the original wording and these difficulties legally serve to make the formula for calculating surpluses and deficits inoperative. The difficulty was in the way the terms were define. I tried to explain this a bit so it is a little more clear. This is a glaring oversight, for instance, given the present bill, the bill we are amending.
On the expenditure side, the net debt servicing costs were omitted in the original version so that is quite a gap. In other words, the formula was wrong. Therefore, technically, the government under the old legislation that exists now can overspend by up to the amount of the net debt servicing cost which in 1996-97 amounts to $700 million. That is some kind of loophole. So unless we change it, this makes a mockery of the whole Act. On the revenue side, the original wording did not take into account expenditures approved by a resolution of the House when defining year-end spending. The wording was unclear and contradicted other parts of the Act so obviously, we needed it cleared up.
The problems were discovered by the department. These difficulties were discussed with the Office of the Auditor General this past winter. Obviously the Auditor General was concerned and a commitment was made at that time to redress the issue at the earliest possible moment. As a result, when we are amending the budget, the Financial Measures Act is obviously the appropriate time to make this change.
The next part of the bill is Part III, Financial Measures Act and Part IV, Income Tax Act. I am talking here now about Clause 5 and Clause 7. These amendments are technical amendments to put in effect the reduction in income taxes for the balance of 1997, commencing July 1st. For the purpose of a persons payroll calculations, there is no difference
between the original wording a year ago and the new wording. The tax collected starting July 1, 1997 will be at the annual rate of 57.5 per cent. The tax paid on the provincial portion will be 3.4 per cent lower. As I said, it all starts on July 1, next.
I will try to explain the reasons we are doing it this way. For technical purposes, Revenue Canada requires statutory authority for a slightly different wording. The way Revenue Canada goes about it, they require a single rate for the entire taxation year, the entire calendar year. Our intention was and is to have the tax cuts start half way through the year. The technical requirements mean that we must word the amendment so that there is a one point reduction for the whole year.
As all honourable members know, two points for half a year is the same as one point for the year. Since the wording could not be changed until this session, Revenue Canada could not come up with revised payroll deductions in January. So the fact remains that the take-home pay, the original intention, the take home paycheques for most employees are going to decrease on July 1, 1997. As my predecessor said, the tax will be applied at the lower 57.5 per cent of provincial tax. The bottom line is that Nova Scotia personal income tax, instead of being 59.5 per cent of the federal tax, as of July 1, 1997, will be 57.5 per cent of the federal tax as of that date. That is to do this because Revenue Canada I guess doesn't operate on half-year basis. As far as I know, Mr. Speaker, the technicalities, spread over 1 per cent for the year, which works out to 2 per cent for a half-year, but, next year, two base points.
I would be interested in comments and help before this goes on to the Law Amendments Committee or afterwards.
Part IV, deals with the capital tax on large corporations. I am talking here about Clause 6 and Clause 8. The amendments in Clause 8 put into effect the commitments made in Nova Scotia's 1996-97 budget to tax the capital of large corporations. Since financial institutions already pay a capital tax, the new tax does not apply to these corporations. The legislation puts into effect the policy decision to phase in the tax on corporations with $5 million to $10 million in eligible capital. The phase-in happens by way of deduction.
I will give you a couple of examples with numbers, which may make it a little clearer. For instance, a business with capital of less than $10 million but more than $5 million will pay the tax at the rate of 0.5 per cent, but with a deductible of $5 million, however, the tax is only applied to the difference. In other words, a firm with a capital of $10 million or more pays a 0.25 per cent rate, and that is on the entire capital and no deductible, whereas there is a deductible for the firm between $5 million and $10 million.
I have a couple of examples and this might help clarify it. For example, a firm with $9 million in capital pays the tax on $4 million. In other words, it is the $9 million, less the $5 million deduction, which is $4 million, times 0.5, which comes out to $20,000. It is at that
rate. This way, you have a gradual trend from the company that comes in at $5 million and comes up to $10 million, it is a smooth transition. This is the way they have to do it. I will give you another example, one at $11 million will show you how it works. A business with $11 million in capital pays the tax on the full $11 million which is at a rate of 0.25 per cent and the tax on that company is $27,500. So, a firm with $9 million in capital pays $20,000 and a firm with $11 million in capital pays $27,500. So, it is a scale that starts with anything over $5 million and goes gradually up and goes gradually into past $10 million and on upwards. Those under $5 million pay nothing.
MR. RONALD RUSSELL: A question, Mr. Speaker. The firm that has $11 million, as you say, goes on a gradual scale from $5 million to $10 million but then for the portion above $10 million it drops back to a 0.25 per cent, is that correct?
MR. GILLIS: The Minister of Community Services is the mathematics and there are probably some better ones across the way, for all I know. The way it works, below $5 million there is no tax on capital at all. Between $5 million and $10 million you have the $5 million deduction and you charge 0.5 per cent rate and then when you get over 10 per cent, it is 0.25 per cent, but there is no deduction. It works out as a smooth transition, so I am sure at the Committee on Law Amendments, if it gets that far, there will be people there that can give a fuller explanation than I am giving.
The definition of taxable capital matches the federal definition for purposes of the federal Large Corporations Tax. It consists primarily of a corporation's retained earnings, plus its paid up shares, plus its long-term debt. Corporations will be taxed on that part of the capital that is allocated to Nova Scotia under federal income tax allocation rules. I guess this is companies who work, just not in Nova Scotia, you have allocation rules. It will be a deductible expense for corporate income tax purposes. It is my understanding that in Nova Scotia the corporate capital tax will affect somewhere between 1,000 and 1,400 large corporations.
Before concluding this section, I want to make two important points. Firstly, Nova Scotia will have one of the lowest rates of capital tax in Canada. That is important in the competitive sense, we do not want to get too high because companies might reject coming here and not create some jobs that might otherwise have been created. I think that is a good thing, nobody likes the tax. Remember, the principal reason this tax is being imposed, as announced last year, is to help provide money for the income tax cut, both general and for those on low income, as well as the direct assistance program. Secondly, the other feature of the bill, this bill contains a sunset clause. The tax disappears as of April 1, 2002. In other words, it will be in effect for only five years.
As you might guess, we have been reluctant to impose a tax that does not relate to profitability. For example, a company could be in a battle for its existence and losing money, notwithstanding the foregoing, such a company would still be required to pay capital taxes
to the government. We would have preferred to avoid this. The general business benefits from the HST, however, give businesses some flexibility. In the early years of HST, it also helps redress the balance between business benefits and consumer benefits. I think it is only fair that corporations pay a share of the challenges brought forward by the HST. We hope there are advantages in job creation and in putting people to work and growing our economy, but there are consumers who are concerned, so businesses must carry part of the burden and we estimate that it will be a $45 million burden on the full taxation year and full fiscal year.
As time goes on and the flow of business savings goes more towards consumers, the balance will correct itself, we think, and that is our hope. When that occurs and down the road in maybe five years time, it is our hope that we will have a balancing off, more people working and a better economy and at that time the tax will automatically come off. Future governments may want to assess that, but we are writing it into the bill now.
The other clause that is covered in this particular part of the bill, Clause 6, as I understand it, the consequential change is necessary because of the change we just talked about in Clause 8.
I want to move further on. In Part IV of the bill I want to talk about the investment tax credit for manufacturing and processing. Under Clause 9 we are proud to offer this incentive for manufacturers and processors to modernize and expand. It allows for an investment tax credit of 30 per cent of eligible new expenditures in Nova Scotia, based on federal definitions of manufacturing and processing. It is a credit against the provincial corporate income tax.
As a result, and I think this is important, Mr. Speaker, it will only be of use to successful, profitable companies. No more coming in and getting some grants and then grab and run. This way the investment tax credit, to have a benefit from it you must succeed, you must be in business, you must have people employed and making a profit. At that time they will get a credit, not just to get a grant to come and then to leave.
This tax credit allows new firms time to start up and begin making profits because the credit can be carried forward for seven years. So, in the early going, if a company doesn't make profits in the first year or two, they can carry the profits forward and it is an incentive for companies to invest.
For companies expanding or modernizing their production processes, the credit can also be carried back three years but not back beyond 1997. In other words, somebody can't go back beyond the present three years and pick up investment tax credit. But if they don't establish their company until the year 1999, they can go back to 1997 or if in the year 2000, they can go back three years. For profitable firms, Mr. Speaker, this means an immediate
benefit. I want to mention that claims may not be made for investments prior to the 1997 tax year, so it doesn't go back in time in that sense.
This is a commitment of the Government of Nova Scotia to help keep our manufacturing and processing businesses modern, competitive and well-poised to take advantage of new markets. It acts as an immediate incentive because the credit requires investments to be made within the next five years. In other words, we expect action under this; you can't go on deferring it because you will get no benefit. If you don't make your investment within five years, you are not eligible. In other words, the investments must be incurred not later than December 31, 2002.
MR. RONALD RUSSELL: I wonder if the minister would take a question with regard to going back. As I understand this particular clause, is it purchases in this calendar year, not this fiscal year that we are using and, if that is so, is it January 1st of this year that the intent to purchase is made? If, for instance, an intent to purchase was made back in, we will say January 1, 1996 but physically the equipment did not arrive until January 1st, 2nd or 3rd of this year, would it still be eligible under this program?
MR. GILLIS: I will endeavour to get that information. It is getting fairly technical when you start looking into the rules and regulations as to whether the equipment is actually put in place or on order or whatever the case may be. The generality is that it doesn't go back beyond 1997. My understanding is that claims cannot be made for investments that were made before January 1st, or maybe April 1st. Anyway, I had better leave it and I will check on that. I will endeavour to get an answer on that as to when it starts.
Mr. Speaker, with the HST removing the sales tax from the cost of new buildings and this investment tax credit in place because the sales tax will be removed, Nova Scotian manufacturers will see their costs of making new investment in their plants drop by more than 35 per cent because you will have the investment tax credit, plus up to 8 per cent that companies with input tax credits will no longer have to bear in any equipment that they might buy if it was not covered previously under manufacturing credits. It certainly makes us more competitive. Some may have already been covered and some may simply be the 30 per cent investment tax credit. There are others who may not have been considered manufacturers for the provincial sales tax, or exporters, and they would be paying provincial tax; in other words, the benefit could be more than 30 per cent. I think that is very significant.
All members would know by now, I am sure, Mr. Speaker, that for this year Statistics Canada - I mentioned this in the Budget Speech - predicts that Nova Scotia will have the best growth rate in Canada for new capital investment. I know you can look at that any way you want. I do not know if we were on top of the league last year; I suppose it depends on where you are coming from but, notwithstanding that, I think it is a good achievement for this year and hopefully we will build on it for the next. We think that what is being done in this bill will help maintain and strengthen the trend of increasing capital investment in Nova Scotia.
The link between new investment and employment is firm and substantial. If a business does not invest in order to keep up to date, as all honourable members would know, and to keep competitive, its viability will disappear. New investment is vital if we are to protect the jobs we have now. We need more and we need to protect what we have.
Investment can also be the sign of new jobs. New plants, machinery and equipment often are the sign of expansion. Helping business to increase production in order to take advantage of new processes or new markets means more jobs. Investment is the true engine of economic growth. This measure will help make sure that we continue to build on a growing reputation as a good place to build for the future. We are also making responsible investments. Profitable firms may be able to afford some new investments or re-investments. In many cases, they have a choice where to put that money. This measure will help the businesses to make that decision to expand or build here; in other words, we are helping successful companies choose Nova Scotia.
This measure is also of great benefit to our communities from one end of the province to the other, from Sydney to Yarmouth, from Canso to Amherst, and all points in between. Much of our manufacturing and processing base is outside the metro area, as we know. There are great concentrations of government services and medical services and other in the metropolitan area, but manufacturing tends to be outside the metro area. Successful firms such as Tri-Star in Yarmouth, Sarsfields in the Valley and Bartletts Plastics in Debert may make use of this provision if they have taxes to pay and are ready to expand again. Large and small, these local firms will have a terrific incentive to stay here, expand here and to help our economy grow.
I want to turn to Part V, the NS Power Privatization Act, and it is Clause 10. This section gives effect to our new arrangements with the municipalities. It allows us to advance money to the municipal units immediately, but still phase in the cost to Nova Scotia Power. Over eight years we will recover the $50 million we advanced to the municipalities. Once that recovery is completed, the units will be getting a full $10 million more than they did before April 1st of this year.
This funding should cover the net increase in the HST costs to municipalities. At present, we estimate the current extra HST costs to be approximately $6 million a year. To be fair, on the other hand the Union of Nova Scotia Municipalities estimates that the net cost is in the order of $8.4 million a year. So, these seem to be the ranges. I know others have used other figures. We had a good deal of discussion between Housing and Municipal Affairs and Finance, the two departments together with the UNSM and we have a general agreement, but that is the approximate cost outside of the 57.14 per cent rebate, which the units get anyway. An important addition to the agreement is the government is committed and it is part of the legislation to review the issue of actual HST costs of municipalities within three years, and that is written into the legislation, to look at what those costs actually are. I think that is
important. Also, I might mention, in terms of cost, we have independent studies which have given certain comfort to us that we are in the right ballpark now.
MR. RONALD RUSSELL: A question, Mr. Speaker, the legislation is not clear, but I assume that the grants in lieu are paid in fiscal 1997-98 and then the grants in lieu disappear. Is that the way it works or do the grants in lieu continue?
MR. GILLIS: The way the system works is that there is an increase in grants in lieu by Nova Scotia Power. These grants in lieu do not actually start until April 1, 1998 because we did not want to give a shock to Nova Scotia Power which might trigger a sudden need to look at power rates. They said, given time, starting at a contribution, an extra $2 million by Nova Scotia Power in grants in lieu on April 1, 1998 and then $4 million a year later and escalating up to $10 million through time. That is how it is done. The province is borrowing the money and financing the cost starting April 1, 1997. The province will receive no money from Nova Scotia Power in the fiscal year 1997-98. We will borrow that money and one year later they will start to pay it and then, through time, we will recruit from Nova Scotia Power the total amount that we advanced, which is $50 million over the time. It goes on beyond that and the money then goes to the units. It may come through our hands, but we are not involved. Basically, it is $10 million to the municipalities. That is essentially it.
MR. RUSSELL: Mr. Speaker, I apologize for perhaps not putting the question succinctly, but do the grants in lieu that are presently paid by Nova Scotia Power cease as of the next fiscal year?
MR. GILLIS: I am glad to clarify that. There are certain grants that are made at present. They continue on and this is added on top of those grants that Nova Scotia Power pays now. They are not discontinued. They are continued. This is an additional grant in lieu and we have been assured by Nova Scotia Power that in and of itself - and I may refer to that - it will not trigger power rate increases because energy price rises or other things that happen in the market can be much more of an influence on that. So, no. The regular grants, which are not huge now, will continue and this will be an add-on starting next April of $2 million in the first year and then $4 million and so on.
As I have said, they have told us, unequivocally, that they can absorb this phased-in increase. The company has stated that, on their own, these costs would not trigger an application for a rate increase. However, over the next few years, no doubt the company has some challenges and opportunities. As a result, there may be other reasons why Nova Scotia Power may apply for a rate increase down the road. So I am not here today to tell you that because this is happening and we have their assurances, doesn't mean there are not going to be rate increases. That would be foolhardy to say that. To repeat, this measure, in itself, will not start that process.
The next section is Part VI, Provincial Finance Act, Accountability, Clause 11. This is another major improvement in this government's commitment to fiscal accountability. In this regard, as all honourable members know, we have a track record that we think is extraordinary. In 1996, we were able to table the provinces financial statements early in August. In other words, for the year that ended March 31, 1996, by August we had tabled the financial statements. That was a record time, Mr. Speaker, for any government in Nova Scotia, as well as most provinces in Canada.
Timely disclosure means that people can make timely judgments. Information revealed months and even years after the fact becomes cold, stale and meaningless. Timely information means good evaluations can be made and governments held to meaningful account. For the 1995-96 fiscal years, we were able to table the Public Accounts, the detailed financial statements before the end of March 1997. As members would know, today we have the Supplement but the Public Accounts themselves were tabled before the end of March of this year which was less than the end of the fiscal year. Certainly this again would no doubt be in record time because sometimes the Public Accounts were tabled normally later than that.
It is our intention, given the legislation, to table the Public Accounts in the same calendar year as the financial statements. In other words, for the fiscal year ended March 31, 1997, not only will we have the financial statements released in the summer or early fall of 1997, we will also have the details made public not by March 31, 1998 but by December 31, 1997. We have more time with disclosure of the information. I know the Auditor General and the Public Accounts Committee of which we have members here today, this has been advocated - more timely disclosure.
The next clause I want to touch on is Part VI, Sable Gas Royalties and Clause 12 is the section in question. There is no point in counting your chickens before they hatch but prudent government planning requires us to look at what could happen if they do hatch. In this case we are making a major commitment to our children and grandchildren. We promise to use at least 50 per cent of net Sable gas royalty revenues as repayments on the public debt.
This commitment makes sense for many reasons. First of all, the gas royalties that may come to the province are temporary. No government should build a plan around them as a significant and ongoing source of revenue for government programs. The amount will fluctuate depending upon world petroleum prices; the amount will fluctuate depending upon how successful we are in exploiting the full reserves. This uncertainty makes it prudent to count on less than one-half of the royalty revenue for general program spending.
Secondly, a commitment of temporary royalty revenues to debt repayment makes for permanent cost reductions. It makes for a permanent increase in the amount of money available for programs. The reason one might ask? Reduced debt means lower debt charges,
less money put out on interest payments. It makes sense, it is like your own mortgage. If your mortgage is $50,000 and you win a small lotto of $5,000 and you pay off $5,000 against it, then given the same interest rates your monthly payment is going to go down.
I would like to give an example with regard to royalties. If we are fortunate enough to have $10 million in net royalty payments in one year, $5 million in debt payback means a saving of about 7.25 per cent on the interest rate on that $5 million. So you are talking $350 million to $360 million and as I said, it works like a mortgage payment. The saving that you get on say a $5 million decrease in our very large debt means that forever, every year, we will save the interest on that and in this case almost $400,000 and that adds up through time and you can use it then for programs like health, education, community services, housing, roads and all of the rest.
This debt pay-down dividend is an important part of our long-term plan to provide affordable services to all Nova Scotians, now and in the future.
I want to turn to the Public Service Superannuation Act and we needed the clarification here and it is not our intention to have pensions based on anything other than someone's full normal salary. This amendment makes it clear that acting pay is not included when calculating pension contributions and service. There seemed to be a gap there and we are just straightening that out.
I want to talk next about out-of-province, private transactions. We are not talking about a lot of transactions, we are talking 50 a year. So we are not talking about a big volume, when you think of all the transactions that occur of tangible, personal property. In particular we are talking - well, mainly it would be automobiles or airplanes or boats and things like that. When it comes to the payment of the province's sales tax on private transactions, the present Act doesn't recognize the impact of a trade-in when a purchase is made out-of-province. So if you knew of someone selling a car in Fredericton, or presumably Ontario, and you bought it privately and you traded up, you had some other vehicle, you wouldn't get the credit for the trade in Nova Scotia when it registered. It ignores the trade-in when the tax liability is calculated. So as part of tax simplicity, we want to see that the treatment of the trade-ins is also harmonized. This is a benefit to the consumer in this case.
With regard to out-of-province purchases, this means the provincial tax on the private sale, for example, of a used vehicle or a boat or an airplane will now be calculated, as I said, on the value minus any trade-in. The same rules will now apply to the transition tax. The transition tax will apply on the net value, not the full value. So the trade-in is considered in that and it is a benefit to the consumer. (Interruption) I don't think so, no. You still pay the transition tax but it is the trade-in - say if you trade it here or if you trade it away, it comes out the same.
It is consistent with the rules of the HST when a purchase is made by a consumer and it means a lower tax payment when the trade-in is used. As I said, we are talking about 50 transactions a year. When you think about the number of, just take vehicle transactions, I would hate to guess how many there are, I am sure they are in the tens or hundreds of thousands of transactions, certainly in the tens of thousands per year.
I have a couple more sections and then I will take my place and turn the debate over to others. Clauses 16 and 17, the Revenue Act, Selling Price of Cigars and Tobacco Taxes. This is a legal requirement to implement the tobacco changes we announced last month. We announced that in concert with discussions with other provinces, there would be no impact as harmonization came in. If our prices decrease under harmonization, we have the danger of increased smuggling one way or the other because the other provinces would be sensitive to that. So we are trying to keep the taxes similar. It doesn't rule out future tax increases obviously in tobacco but we have sort of a common front within eastern Canada so that any changes that are made are made by everybody pretty well in concert, so that there is not a big incentive. If somebody's prices go up much higher than in another province, there is a tendency or a fact that smuggling occurs.
The final matter is on the audit, Mr. Speaker, and just to explain that now that the provincial sales tax has largely disappeared, the provinces will be winding down the audit section of the Department of Business and Consumer Services. Although a much-reduced audit section will remain in order to look after the collection of private sales taxes, as well as look after the transition tax, in most cases we have worked out a good arrangement with Revenue Canada to administer - they are administering the HST - and a number of our auditors are being transferred to Revenue Canada, which protects their jobs.
I think it was well received by Mr. Peters and the Nova Scotia Government Employees Union. We worked cooperatively; some people took early retirement and so on. Quite a number of people will be transferring to Revenue Canada to do a similar type of work there. However, we are retaining some auditors and during the winding-down period it will be necessary to make audits, in order to make certain that the PST was collected properly prior to April 1st of this year. This amendment makes sure that we can go back four years while the tax was being collected. In the absence of such an amendment, as time went by we would find ourselves limited in what we could audit.
So, Madam Speaker, in drawing my remarks to a close, I want to mention what this means to the future of Nova Scotia, and I take the whole package. We cannot depend on the old economy forever. We must adapt to the new realities or fall by the wayside. We must make it less expensive for businesses to modernize and to reinvest. We must make it less expensive for our manufacturers to develop their products so that they can sell them around the world so that our businesses, small business, medium-sized businesses and large business can put people to work and create jobs in all parts of Nova Scotia, which is the most important feature of this bill.
Madam Speaker, this concludes my review of Bill No. 7. I recommend the bill for second reading by the House and for the consideration of the Law Amendments Committee, because there may be some matters, too, that come up there.
MADAM SPEAKER: The honourable member for Hants West.
MR. RONALD RUSSELL: Madam Speaker, in rising to speak on Bill No 7, An Act Respecting Certain Financial Measures, I must mention to the minister that I am pleased that he did provide a comprehensive clause-by-clause overview of this bill because, while the majority of the bill is pretty straightforward, there are some areas here that are, indeed, quite complicated. In fact, I tried to get a couple of answers before we got into this bill and I was, quite truthfully, unable to get them, because this particular legislation refers to some federal legislation and unless you have the federal legislation to read along with, you can very rapidly get lost.
Madam Speaker, what I would like to do, I recognize the fact that clause by clause comes at a later date on this bill when we get into Committee of the Whole House on Bills, but, however, I think the only way you could really tackle this is almost clause by clause because there are, I think, six or seven parts to this bill and each one actually deals with a different aspect of taxation. So it is almost impossible to take the bill as a whole and speak on the principle of the bill, because the principle of the bill varies as you go through the various Acts.
Madam Speaker, if I stray too much into clause by clause, please tell me, but, however, I warn you in advance, I am going to stay pretty well the way the minister did in that I am going to be looking at it section by section and, in some cases, do have to look at the bill almost clause by clause.
Part I, Madam Speaker, I wish that every part of the bill was as simple as Part I, because Part I deals with the equity tax credit and is simply an extension of that existing legislation to the year 2001. As the minister indicated, there are over 100 businesses that have taken advantage of this particular Act since the Equity Tax Credit Act was introduced in 1995. Certainly, it is one that we as an Opposition would encourage the continuation on and, probably, when we get to the year 2001, we will be talking a look at extending it again. So, so much for Equity Tax Credit Act.
The next part of the bill, Madam Speaker, refers to the Expenditure Control Act, a different Act again. As the minister explained, this is to tighten up some of the loopholes that were in the previous Act and ones that I presume we, as Opposition and they as government, should have seen when they first introduced the particular piece of legislation.
Madam Speaker, just as a for instance, if you go to the bill itself and Clause 4, Section 12(1) and read that through, in essence, it reads exactly the same as the Act that is being amended with the exception that net debt servicing is included as a part of the program expenditures. In other words, what you spend on programs is a part of the expenditures that are displayed in the budget, but however, on top of that, there is an ongoing amount that has to be paid every year to accommodate the debt of the province, the debt servicing charge. So that what you could do, if the net debt servicing costs are not included in the expenditures that are controlled in a fiscal year, you could simply take whatever it is and it could be as high as $750 million, maybe even $1 billion on some occasions, and increase your expenditures by that amount, equal to your net debt servicing costs. You would still be in conformity with the requirements of the Expenditure Control Act. Obviously, that was not the intent of the Act. The intent of the Act was to control expenditures within a certain limit.
That is what this amendment to the Expenditure Control Act does. It simply says that you cannot exceed the expenditure detailed in the Estimates Book, including the net debt servicing costs. It goes on and it talks about the 1 per cent having to go back to the Legislature to get approval of the Legislature if that is indeed done. In the subsequent year that that amount must be recovered. That is all pretty straightforward, I think. I assume, in fact I think I heard the minister mention during his remarks on the bill, that he will be coming forward with a - I presume it is a resolution - resolution very shortly that we will have for debate in the House, which will cover the excess expenditures for the 1996-97 fiscal year.
As I said in my remarks a little while ago, it is a real dilly. It is $150 million, actually, of additional expenditure in fiscal 1996-97, which is a real whack of money. However, that debate is for a future day when that resolution comes into the House. So, we are moving right along. I have got through Part II and I certainly have no difficulty with those changes.
The next one, Part III, is the Financial Measures (1996) Act and we are repealing that. So we are repealing it. Why are we repealing it? Well, Part IV deals with the reason we are repealing the Financial Measures Act.
What the minister was telling us and I am going to put it in different words from the way he explained this change. It is really simple. I think there is a simple explanation. The government is reducing the provincial income tax by 2 per cent beginning July 1st of this year. You have to remember that a financial year - a fiscal year - and a calendar year are two different cats. They are entirely different.
When you deal with income tax, you are talking about a calendar year, starting January 1st and finishing December 31st. I think we all recognize that that is a year, insofar as income tax is concerned. However, the minister is also talking about financial years when certain things occur and certain changes must be made to his budget.
He put forward in the Financial Measures (1996) Act a piece of legislation that effective July 1, 1997, for the remainder of that calendar year, people would pay 2 per cent less income tax. If you look at 2 per cent less income tax for six months of this calendar year, it translates into 1 per cent overall during the calendar year from January 1, 1996 to December 31, 1996. Actually, in year one of this income tax change that the minister brought before the House in 1996, is a transition year, if you will, and during that transition year to get the 2 per cent for six months, the change must be 1 per cent for a full year.
We can work provincially that way talking about a change in the middle of the year but the federal government in their Income Tax Act, the federal revenue Act, it specified annual income tax rates. So what the minister has had to do to accommodate the federal revenue Act is simply to make an amendment exclusively for January 1, 1997 to December 31, 1997 of a change of just 1 per cent and then effective January 1, 1998 then the full 2 per cent comes into being. As I said, it is fairly simple but it is perhaps a little convoluted when you start to explain it. However, that is what Part IV is about until we come to a part of Part IV, Part 1A which is, Tax on Large Corporations.
I must confess I got completely lost in this particular section of the bill because if I may read just a couple of clauses in this particular section of the amendment. In Clause 8, Section 32B of Part 1A, the bill states, "Subsections 181(3) and (4) of the Federal Act apply for the purpose of this Part.". And from then on through this particular section we start talking about the federal Act. Unfortunately, it doesn't tell us what federal Act it is. I mistakenly assumed that it was the Corporation Capital Tax Act which is the provincial Act but I was wrong. I went to see some learned people who didn't know either but eventually I found out that we are talking about the federal Income Tax Act.
When you get to the federal Income Tax Act it makes a little more sense than it does in reading this because we can get some definitions and a few other things that we need to make this particular section a little more readable, a little more understandable. I still have something in the way of a question about Clause 8, Section 32C(1) where it says, "Every corporation that has a permanent establishment in the Province in a taxation year . . ." and I am not too sure what a permanent establishment means. Is it as long as they have a corporate address in the province in a taxation calendar year or does it mean they must be up and running as a corporation within the province? I mean, what constitutes a permanent establishment in the province? I was unable to find an answer to that but however . . .
HON. WILLIAM GILLIS: I will answer that in my closing remarks.
MR. RUSSELL: Okay, thank you. In Clause 8, Section 32C(1)(a) we are told that, "where the aggregate of the corporation's taxable capital employed in Canada, as determined under subsection (4), and the taxable capital of all associated corporations, as determined under subsection (2), is less than ten million dollars, . . .", the tax is 0.5 per cent. Section 32C(1)(b) of that same section says, "where the aggregate of the corporation's taxable capital
employed in Canada, as determined under subsection (4) , and the taxable capital of all associated corporations, as determined under subsection (2), is ten million dollars or more, 0.25% of that capital.".
Then we go over to Page 4 in the amendment under Section 32D(1)(a) and it says, "where the corporation's taxable capital employed in Canada for the year, as determined under subsection 32C(4), . . ." that is the other one I just read, " . . . is less than ten million dollars, five million dollars unless the corporation was related to another corporation in the year, in which case, subject to subsection (4), its capital deduction for the year is nil;". As I understand this and I may be entirely wrong, if the capital of a corporation is less than $5 million, it is zero, nothing applies. If it is from $5 million to $10 million, it is 0.5 per cent. You pay only on that amount that is over $5 million dollars, but does not exceed $10 million. I hope I have that straight, and that is at 0.5 per cent.
Once the capital of the corporation is over $10 million, then you pay the tax on the whole works. In other words, if it was $14 million, as the paid-up capital of the company or the corporation, then you would pay the tax on the whole $14 million at the rate of 0.25 per cent. I have that straight. Thank you very much. I understand it and I appreciate the fact that I do understand it and I appreciate that the minister has helped me along.
This is a fairly substantial whack of money. The minister, I think, said something around about $40 million.
HON. WILLIAM GILLIS: Its $40 to $45 million.
MR. RUSSELL: Well, your figure is higher than mine. (Interruption) That would explain it. It is for less than a calendar year; okay, we are working on a calendar year. That, in fact, is $39.5 million, I think that is the number I got from the Estimates Book.
We are knocking off an additional $40 million roughly, per annum, from the larger corporations and I really do not have too much difficulty with that, except we have to remember one thing, that when you increase taxes on corporations, the corporations have a policy that filters that down so that the consumer of whatever it is they are providing, whether it be a product or a service, starts paying more. You cannot just say you are going to take another million dollars a year off them in tax and expect them to swallow that without passing on some of those tax increases to the consumer. This could be inflationary and it could, indeed, affect the consumers of this province.
This applies to non-financial type corporations; I have that part. This tax, the minister states, although this portion of the amendment carries a sunset clause which says that come April 1, 2002, five years hence, that this piece of legislation disappears and so taxation on corporations also disappears. I like the part about a sunset clause. I think all bills, particularly taxation bills should have a sunset clause so that periodically the government has to come
back into the legislation, or even to the House of Commons for that matter, and defend the tax increases that they have made; so I like that.
The next section of the same part, that is Part IV, deals with manufacturing and processing investment tax credit. This applies to a corporation that is going to apply to a company that is purchasing additional machinery or processing equipment. I do not think the minister said it applied to buildings, but I would assume that if a building had to be built to house a certain piece of machinery, then that building would also be included as part of the investment that would be eligible for a tax credit. The tax credit, as the bill very clearly states, is 30 per cent of the total of all amounts, which is the capital cost incurred by the corporation.
It is very important, I think, to remember that this credit can only be claimed if, indeed the corporation is making a profit. In other words, a corporation cannot have a loss and then claim a tax credit and receive that credit from the province; as there is a safeguard on that.
However, I have some reservations about this. Number one, I should also mention that I notice that the chamber of commerce also has some reservations about it. The Metropolitan Chamber of Commerce just today came out with a policy update, Madam Speaker. They are speaking about the provincial budget. They talk about the 30 per cent investment tax credit and they say it will be a benefit for manufacturing and processing industries in the province, so the minister has to cheer about that, I guess, but the chamber questions the needs for such a program and the decision to target specific industries for government's credit. Bill Black said, we believe this money could be better spent in other ways, such as creating a better overall tax environment in the province or accelerating repayment of the debt. We don't favour handouts for business and that is what the chamber of commerce has to say about this particular section.
As I say, Madam Speaker, I, too, have some questions. For instance, we know that one of the stars in the eyes of the Minister of Economic Development and Tourism is the investment by Stora in Port Hawkesbury. They are going to put in an investment there of $600 million. Now that $600 million that Stora is investing is a very large investment, an incredibly sized investment. As we are led to believe, and I presume that is true, there is no government money actually directly into that investment. But that $600 million that is being spent by Stora, as I understand it, the majority is machinery and equipment, because they are putting in, as I understand it, a new paper line up at Port Hawkesbury. So almost all of that $600 million is going to be machinery. Stora announced their intention to expend that money, but I don't think that the actual machinery is in place as yet. It is coming along this year sometime. (Interruption)
You mean the new line? Well, maybe a lot of it, but there is a lot of machinery still to come, as I understand it and I don't know when the minister was touring. Maybe it was after
January 1st, because this piece of legislation deals with, once again we are going back to calendar years - January 1, 1997. So the government, in reality, is giving a pretty fair handout, and I am not picking on Stora, by any means, I think they are a tremendous company, to be quite honest and made a lot of investments in this province, and, as the Minister of Labour would know, the environment for their workers is one of the best in the province. I am not knocking Stora, but I am knocking what the minister is doing to a certain extent. I don't know if he is adding much encouragement to the much smaller businesses because most of those are struggling along just to make ends meet. I don't think they are going to have the profits to be able to claim that 30 per cent tax incentive.
He was talking, for instance, about Sarsfield down in Coldbrook. It is a great company. They make great pies. They expanded. Now, I don't know if they expanded in 1997 or 1996. I have got a feeling that the Minister of Economic Renewal, in those days, was down there actually in 1997 to open the new pie line down there. Do they qualify? I don't know. Sarsfield is certainly profitable. (Interruption) Yes, but that is fine. We are talking about the future. I am talking about monies that firms have decided to spend back in 1996-97 that were going to help the economic recovery of this province.
Now, 30 per cent write-off or a tax credit is a pretty hefty chunk of change and we don't know exactly what the cost is of this particular program to the province because . . .
AN HON. MEMBER: It is sort of a benefit after the fact.
MR. RUSSELL: It is a benefit after the fact, yes, things that would happen regardless of what changes the minister makes. But one of the big ones, Madam Speaker, that I hope the minister listens to, that I would like him to get an answer for me: oil rigs, drilling rigs, gas production platforms. We are talking about a $3 billion investment in those kinds of infrastructure for the gas industry. Now do they come under this particular regime? I don't know. For instance, we will take a firm like Mobil that is going to bring in a rig. Mobil makes a lot of money in Canada, not all of it out here in Nova Scotia but they are going to bring a rig in here and rent offshore. Now does that qualify them, under this particular part of the legislation? I don't know the answer to that but I would sure like the minister to find out and let me know.
I can see that some of these large organizations that are committed to doing certain things that the minister is banking on for all this money to come flowing in, are going to get a 30 per cent tax credit. So, as I say, Madam Speaker, I have reservations about this particular part of the bill and I am pleased that the Halifax Chamber of Commerce agrees with what I say. They say almost exactly the same thing, In fact, what they are saying is, if you want to get business on the road, make it a level playing field and give the same tax break to every business in the province, whether they are making lots of money or not a lot of money or whether or not they are investing in capital equipment.
I will leave that for the moment and carry on and we come to Part V, Nova Scotia Power Privatization Act. Now, Madam Speaker, I must confess that I misread this because the material in the bill is quite short and the minister, in his press conference, didn't really deal with the matter in great depth. What bothered me was the fact that Nova Scotia Power was going to stop paying the present system of grants in lieu of taxes, instead of which was going to start paying to the Minister of Municipal Affairs and then the Minister of Municipal Affairs would be giving out money to the municipalities. Okay.
Now, why have we got this piece of legislation here? We have it here because of the harmonized sales tax, Madam Speaker, that horrendous piece of legislation that was imposed upon this province and, in particular, upon the consumers of this province. The minister realized that it was going to place a burden on the municipalities. The municipalities say the implication of the HST is going to cost them about $12 million per annum.
Now this government says, well, you know, we can't afford to take them off and grant them immunity from the harmonized sales tax. What we can do is we can get Nova Scotia Power to pay to the provincial government so that we, the provincial government, can pay to the municipal councils the difference between what they had in the past, at least what they paid in the past with regard to sales tax, and what they are going to pay now with the harmonized sales tax. That was the plan.
However, they disputed the $12 million figure and said okay, we will give them $6 million per year. They are going to do that, Madam Speaker, the Department of Municipal Affairs, is going to pay to the municipal units between now and March 31st of the year 2000, $6 million a year. In fact, it may even go to the year 2005 but there is going to be a review of the program in the year 2000.
In the meantime, Nova Scotia Power is going to pay $2 million in 1998, $4 million in 1999, $6 million in 2000, $8 million in 2001, $10 million in 2002 and then, in perpetuity, they will be paying $10 million a year.
Now Nova Scotia Power is not run by the government, its a private company. Its controlled through the Utility and Review Board and they set the power rates in this province. In other words, if Nova Scotia Power wants to increase their rates by 5 per cent, they have to trundle off down to the Utility and Review Board to make their case to get that 5 per cent increase. But the trick is this, Nova Scotia Power is entitled to a certain return on their investment and that is fixed by the Utility and Review Board. If their costs go up then the Utility and Review Board has to adjust their rate to allow for their return on their investment. Therefore, if their costs in the Province of Nova Scotia are going to be $2 million more in 1998, $4 million in 1999, and $6 million in 2000 and so on and up to $10 million, somebody is going to pay. Guess who is going to pay?
Nova Scotia Power isn't going to sit back and say we will just absorb that as a loss and the shareholders will say gee, that is fine because we are here just to do good in the Province of Nova Scotia for the people of this province. No way, they are a utility and are entitled to a return on investment, and they are going to get it; they are guaranteed it by the Utility and Review Board, so you cannot fail. The minister says this is going to have no effect on power rates. What rubbish; what nonsense. The minister knows better, surely. If the costs of Nova Scotia Power go up - and this is part of their operational costs - then the rates are going to go up.
The taxpayers right now have just been hammered with a increase of 5 per cent in their bills. This piece of legislation is going to incur another 5 per cent on their rates. The minister is smiling and he can smile, I shouldnt say this minister, but his predecessor, now the Minister of Health was the guy that jacked it up by 5 per cent when they brought the HST in, and he smiled at that, too. It is costing every person in Nova Scotia, because everybody uses electricity for something and nobody gets electricity for nothing.
I think this is a scam to be quite honest. It is just a way of taking the money from Nova Scotia Power, bringing it through the provincial government back to the municipalities to keep the property taxes down, which you might say is a good thing and it would be a good thing except for the fact they are going to pay another way; they are going to pay because the rates for electricity are going to increase. As I said, I think it is a scam.
If the government genuinely wants to help the municipalities it should say we will exempt you from the HST, that is what they should be saying. Not this kind of a grandiose scheme that is going to be so convoluted and complicated that nobody will be able to figure it out and, on top of that, it will impinge upon the rates paid by the public of the province.
The next piece deals with tabling the Public Accounts before December 31st in any calendar year. I agree with that, no problem.
The next clause deals with the 50 per cent of the royalties from gas. We would all like to hope that we get a lot of money in gas royalties, but the point is we don't even know what we are getting. We do not have access to the agreement signed by the minister with the oil companies to determine how much we get. What do we get? Maybe we only get 10 per cent of nothing. I don't know, nobody has told us. Do we get royalties based on the end price of the gas when it is sold in the Boston market? Do we get it on the number of cubic feet that come ashore from the rig out there by Sable Island? (Interruption)
You better believe it. I cannot address this because maybe what we are paying off the debt under this is absolutely zero, maybe it is absolutely nothing. Who knows? Obviously, it is not very much or else the government would have been around the province trumpeting
how much they were going to make in gas royalties. However, not knowing the formula, we cannot even guess at it. No, I am not shocked and appalled. (Interruption) How much time do I have left, Madam Speaker?
MADAM SPEAKER: You commenced at 4:40 p.m. You have until 5:40 p.m.
MR. RUSSELL: Oh, I have lots of time. That is good. (Interruption) You mean I can go longer. The Minister of Economic Development and Tourism says that I do not have to use the hour. The trouble is that this is a fairly important bill, I would suggest, because this bill costs everybody in this province something sooner or later.
The Public Service Superannuation Act is Part VII of this Act and it simply says that, "Clause 2(j) of Chapter 377 of the Revised Statutes, 1989, the Public Service Superannuation Act, is amended by adding 'acting pay and immediately after, 'include the third line.". By itself, that does not tell you very much, but when we go across to the notes, it tells us that, "Clause 13 . . .", which is the clause I just read, ". . . excludes acting pay from the definition of 'salary.". Why in Heavens name would you do that? Why would you do that? Why would you take some civil servant who is in the Civil Service and somebody goes away on maternity leave, the longest maternity leave you can take, and they step in and they occupy that particular position. They are entitled to acting pay and acting pay is 10 per cent of existing salary; that is the maximum you can get for acting salary. In other words, if I am making $30,000 a year and I step into an acting position where the pay level is $35,000, the maximum I can draw is $33,000. In other words, $3,000 more - everybody follows that? I see the Minister of Finance making notes there, good.
This person moves into that job and the person is there for eight or nine months and the person who is out on maternity leave decides, I am not going to go back to work. That person stays on in the acting capacity, they may be in an acting capacity for a couple of years, for Heavens sakes. Why on earth could they not include that remuneration received in an acting capacity as part of their superannuation? Why not? They pay into it, they pay the premium on the increase in salary. Why shouldn't they be able to genuinely collect at the end of their service in the Public Service the pay scale for that particular position. It makes a difference because, as you know, when a person retires from the Civil Service that the last, I forget whether it is three or five years, I think it is the last five years, I guess it is, of service is the salary that is counted to make up whatever the pension amount is. In other words, they take the average salary from that five years translated into a year's salary and that is what forms the basis of their superannuation benefit.
As I say, if, for argument sake, they spend two years of that last five years in an acting position, drawing an increased salary, why in Heavens name should they be deprived of counting that in with their total salary over five years to determine their benefit. It would give them a small boost, it would not be all that much and surely the cost of this is not great.
Surely, it is not going to run the superannuation fund into the ground. In fact, we are told that the superannuation fund, I think, is funded 108 per cent at the moment. It is well up there.
For the small amount that this would cost, I think that this is not good and, certainly, it will be our intention when we get into clause by clause in Committee of the Whole House to attempt to amend that particular clause. As I say, it is not fair and it is not justified. It is simply not justified by the cost. If, indeed, this government wants to get with it, perhaps they could say that if a person serves more than six months in an acting position, that that shall be their future classification. That would probably be fine because then it would count and we have no problem. But no, they will keep people in acting positions and as I say, impinge upon the right of the individual to collect that added portion when that person retires.
Part VIII deals with the Revenue Act. Again, I appreciate the fact that the minister gave a fairly complete explanation on what we are talking about here. I had, I must confess again, from the briefing that we received at the bill briefing a couple of days ago, I assumed that it only dealt with those trades, those transactions, that took place within a harmonized province. Evidently, I was wrong and it applies to any transaction anywhere in Canada.
I think, as the minister explained, and I will just go through it very briefly as to what I understand is the case. If I buy a used vehicle in Nova Scotia, and I have a very used vehicle that I am going to trade in, and the person to whom I am trading in my vehicle gives me $2,000 for this vehicle and the cost of the second hand vehicle that I am purchasing is $5,000, I would pay tax on the $3,000. That is the way it works. You pay on the difference between the trade-in and the final item that you buy.
However, at the present time, if I went across to New Brunswick and I went up to Mr. Smith's house who lives in downtown Fredericton and he has an ad in the paper saying he has a used Cadillac for sale. It is a 1996 model and I am selling it for $10,000 and I drove over there in an old Ford and he said I will give you $3,000 for your old Ford so you pay me the difference of $7,000. When I come back to Nova Scotia and I go to the Registry of Motor Vehicles and I tell them all about this transaction up in New Brunswick, they would say, we are sorry, Mr. Russell, but you are going to have to pay the HST on the full $10,000 cost of the vehicle. In other words, the transaction of a trade-in is not recognized outside of this province.
What this bill does, it says that those kinds of transactions anywhere in Canada are now valid. In other words, if I take my beat up 1973 Chrysler down to Toronto and I trade it in on a $20,000 Chrysler and they allow me $5,000 for mine, the $15,000 is the difference, it is the $15,000 that I will pay the tax on in the future when this bill passes. At the present time, I would have to pay it on the full $20,000. So I hope everybody recognizes that this is a step in the right direction.
However, the surprising thing is, as the minister says anyway, there is only about 50 transactions a year that actually fall into that bracket. In other words, most people who have vehicles to trade, I guess trade them within the province. That is good for the local motor vehicle dealers.
I would like to branch off and talk about the HST and the 2 per cent surtax, but I will not. We must remember that the surtax also applies to those sales and purchases made outside this province. In other words, if you buy a vehicle in Ontario, you not only have to pay the HST on the trade, you will still have to pay the surtax. All is not well with the motor vehicle sales regime that we have.
Now we are still with the Revenue Act and we come to subclause 32(f)(I) of Chapter 17 which is repealed and there is a new subclause which deals with tobacco items, other than cigarettes. It deals with cigars, smokeless tobacco, pipe tobacco and all of those kinds of things, those wonderful Cuban cigars, et cetera. What this clause simply does is it makes the HST mutual insofar as purchases of those particular items.
If a box of Coronas cost you $25 before April 1st, after that it will still cost you $25 but the tax regime in the middle has changed. However, as far as the consumer is concerned there is no change. In other words the HST is tax neutral insofar as those products are concerned. The next one, Clause 17 deals also with tobacco but primarily cigarettes.
I have a question for the minister because as I understand this particular clause and as I understand the HST bill, in the HST legislation we are in lock step with other HST provinces. In other words, we cannot change our level of taxation without the concurrence of New Brunswick and the Province of Newfoundland. If we want to decrease it we also have to get the federal government on side as well. What does this mean as far as tobacco is concerned? The question is simply this, have we lost control over the tax that we charge on tobacco? In other words, do we now have a common tobacco tax right across the HST provinces? I see the Minister of Community Services is shaking his head because he obviously knows just about everything, he is the minister of everything. If we had a bill in here on deep-sea diving, I am sure he would be an expert on that as well.
It appears to me at first blush, and I would sure like the minister to answer this question are we locked in insofar as tobacco products are concerned? To me that is wrong. We should have the ability, I would believe, to either increase or decrease the cost of tobacco.
HON. JOHN MACEACHERN: We can do that.
MR. RUSSELL: Well, the minister says we can do that. I would rather take it from the Minister of Finance. Now if the minister was there shaking his head I would have a lot more faith. The minister has come back in. Mr. Minister, my question simply was this, because we are locked into the HST regime and because tobacco products are locked into the
HST regime does that mean that we cannot as a province ourselves, alone, change the tax regime on cigarettes or other tobacco products? (Interruption) Okay good, that is fine.
The last item in the amendment deals with the Department of Finance. As you know the Department of Finance has inspectors and a portion of those inspectors are assigned to audits of what we call the provincial sales tax. With the coming into being of the harmonized sales tax, the audit capabilities have moved to the federal Department of Revenue, it is their bailiwick now and the people that are employed doing tax audits are people employed by the federal Department of Revenue. So that leaves a void in that if there are any cases under investigation, for instance, before March 31, 1997, that there is under the Health Services Tax nobody empowered to be able to carry out those orders.
What this particular piece of legislation says is that between now and the year 2001, the Minister of Finance and his department are empowered to do audits for the four year period before April 1, 1997; in other words, from April 1, 1993, to April 1, 1997, those firms who were collecting provincial sales tax will still be liable for audit. They lose that power on March 31, 2001, which is four years hence.
So, Mr. Speaker, I appreciate the opportunity to go through this bill. As I said, it is a little convoluted in that we are changing a number of pieces of bills that refer to taxation in this province. I look forward to getting this bill into Law Amendments Committee and finding out what the public think about it and, even more so, getting it into committee because, as I say, there are a couple of things in here that I think we will be coming forward with amendments to, a couple of clauses, while it is in the Committee of the Whole House on Bills. Thank you, Mr. Speaker.
MR. SPEAKER: The honourable member for Sackville-Cobequid.
MR. JOHN HOLM: I very much welcome the opportunity to address a few remarks through you, Mr. Speaker, to the minister and to the members of the House about the bill before us, An Act Respecting Certain Financial Measures.
Now, Mr. Speaker, as I begin my remarks, and I advise you, I listened as carefully as I could to the Minister of Finance when he introduced the bill and trying to give the explanation to the various clauses. I very much appreciate the efforts of the minister, when he introduced the bill, to explain what the government saw as the rationale behind what it was doing and trying to explain what each of the individual clauses and so on did.
You know, as an experienced parliamentarian, Mr. Speaker, that what we have before us, really this particular piece of legislation, contains a whole number of different principles
and aspects to it which the minister kindly went through section by section. I will get to that in a few minutes.
I have to say at the very outset that in terms of fundamental principles and fundamental philosophies, I have a great deal of difficulty with a number of the premises that the minister put forward. When I take a look at the bill before us, what the bill is, and there are a number of different clauses to the bill, but what the bill does really and what the government is saying is that somehow, if we increase the profitability of businesses, if we reduce their costs and tax burdens, then somehow we are automatically going to have a lot more jobs created in the Province of Nova Scotia. That seems to be the premise that the government is making.
Mr. Speaker, if that was, in fact, what happened, if that was what automatically follows, then we should not have 58,000 unemployed in the Province of Nova Scotia at the present time. In reality, if we look at it now, and this is not an NDP propaganda document, this is a document that was produced, actually, it has the Investment Dealers Association of Canada printed on it and it was dated January, 1997. It was taking a look at the comparative tax rates in the last year, 1996, across Canada. At that time Nova Scotia had the second lowest combined federal-provincial top marginal tax rate, the second lowest. In terms of the general corporate tax rate, Nova Scotia was the second lowest. In terms of the small business tax rate Nova Scotia was tied for the lowest and, in terms of the non-financial corporation capital tax, Nova Scotia yet again was tied for the lowest, at that time being zero.
HON. WILLIAM GILLIS: A question, Mr. Speaker. I would just ask the member, when he is finished using that particular document, would he table a copy for my benefit and the benefit of other members of the House?
MR. SPEAKER: Is the honourable member prepared to table that report?
MR. HOLM: Sure, Mr. Speaker. I didn't read from it directly in terms of numbers, but I have no hesitation. I will ask a Page to go and have two copies photocopied immediately and give a copy to the minister and one that I will place on the table. No problem whatsoever.
Mr. Speaker, the point that I am getting at, and so much of what this government is doing and what they are saying, is that somehow if we reduce the tax rate then, automatically increased employment will follow as well. In this legislation, businesses, corporations, particularly large corporations, are going to be benefiting in several areas. One, of course, is going to be the investment tax credit of up to 30 per cent. The government has just given them their 8 per cent rebate for the BST input, the provincial share of that 15 per cent tax and, of course, the equity tax credit is going to continue. So there are all kinds of breaks; there are all kinds of additional tax breaks for corporations.
We know, Mr. Speaker - and I don't have a document here, so I won't be able to table this for the minister, but I am going from my recollection here and I believe that I am within a few dollars of being accurate in this particular amount - in Canada, what are called, and the Minister of Finance will understand this term far better than I and I am not a learned person, I don't claim to be in terms of high finance and so on . . .
AN HON. MEMBER: You are.
MR. HOLM: He says I am and I thank the minister for that compliment. But there are, Mr. Speaker, what are called tax expenditures. Tax expenditures are things like the government is giving here. Those are tax investment credits; they are equity credits; they are deferrals; they are write-offs. Even things like free lunches, buying a box in the Olympic dome - whatever - so that you can go in and watch the ball games, all these things come under tax expenditures. The total value of the tax expenditures in Canada is $90 billion a year. Now, certainly, there is no question that a lot of those tax expenditures are important, that they do, many of them, assist in not only maintaining, but also they can assist in helping to create employment, if they are used wisely.
You know, if just 10 per cent of that $90 billion in terms of tax expenditure was actually collected, or another $9 billion in revenue came in, then the cuts across this country that came about as a result of the federal cutbacks under the CHST to health and education, that $7 billion cut would, in fact, be restored and there would be additional dollars there as well. So just 10 per cent of it. What we have happening here in Nova Scotia right now, by the minister, and I am afraid that I am not convinced that what the minister believes and the Liberals believe will happen will automatically happen; in other words, I am not convinced that by giving more tax expenditures, more tax breaks to the corporations will necessarily lead to increased employment because, if they did, we should have zero unemployment in this country and zero unemployment in Nova Scotia when you compare our tax rates to those in other parts of the country.
We are giving these tax breaks on the assumption - the government is - that that will create employment but, Mr. Speaker, surely to heavens, a corporation, if they are going to be receiving tax breaks from the citizens of Nova Scotia, that corporation must meet a social objective, in addition to maximizing their profits because, in fact, some of these investment tax credits can actually lead to loss of employment as companies may decide, well, it is only slightly marginal; if we increase or change some of our equipment, any cost-benefits or savings are marginal compared to what we will save by laying off additional staff. The government is saying that we will give them this 30 per cent investment tax credit, so all of a sudden now it may become more profitable for that corporation to say, well, we will lay off 2, 5, 10, 50 people because we can get a tax credit for that new investment in capital equipment and therefore increase our profitability, therefore also having the downside effect of putting people out of work.
I say to the Minister of Finance in all sincerity that I am not just taking a philosophical view here that I am totally opposed to any kind of tax breaks or assistance to corporations, but if they are to receive an investment tax credit or whatever of these kinds of things, surely in return for them receiving that, they should have to meet a measurable social objective like creating a certain number of jobs. If, for example, in return for receiving that tax investment credit they are going to be saving themselves, let's say, $100,000 in taxes that would be owed, what is wrong with saying, then you create, if you are going to do that, five jobs for Nova Scotians?
If we are going to be giving them the equity credits, what is wrong with saying, in return for doing that, we are not only interested in you increasing your profits for your shareholders - who, chances are, are not even primarily residents here in Nova Scotia. Surely it makes sense to insist that a tax system that is going to be giving breaks to those businesses that are already some of the lowest taxed in the country, if we are going to give them even more, surely it makes some sense - if not, I would really like the minister to explain why not because I think it does - that in return for what they are getting, they must commit and be able to demonstrate that they are actually creating jobs here. That would be using the tax system in a progressive way, I think, in a fair way.
What we have, Mr. Speaker, in this legislation and in the tax measures that are made is more profitability for a lot of corporations. Even the BST changes - I will come back to this again a little bit later on in my remarks - you take a look at who is going to be benefiting from that. The government has said that with the BST and with the cut in the income tax, people are going to be benefiting from that. They are going to benefit as a result of a reduced rate through the income tax.
If you have a taxable income of $20,000 - get this - give or take a dollar or two, as a result of that so-called wonderful 3.4 per cent reduction in provincial income tax, which is very misleading because you aren't getting that in the way of the total pie, on a $20,000 taxable income your income tax for the year will drop by approximately $46. That is what Nova Scotians from one end of the province to the other, as a result of this government's so-called grand, first-ever income tax reduction, the person or the family where they have a $20,000 taxable income - that is not total income, that is taxable income - there is a saving of $46. Those who make and have a $20,000 taxable income, they cannot afford to go out and buy those big ticket items. Those people who have a $20,000 a year taxable income do not go out and buy new cars very often, if ever. They do not go out and buy major appliances or fur coats or big yachts. Those people with a modest income save $46. Those people with $100,000 taxable income save about $470 a year as a result of the income tax reductions announced by the government. In other words, over ten times as much.
If you have $100,000 of taxable income, you are going to save $470 approximately and that $470 will undoubtedly cover the increased cost that you will have to pay in terms of BST for your children's school supplies. It will probably pay the increased costs that you will have to pay for gasoline, which has gone up by 8 per cent and that one item alone may also pay your heating and other cost increases, courtesy of the BST. If you have a taxable income of $20,000, you have $46 in income tax savings. Thank you very much and I am sure everyone would welcome it, $46. The member from Sackville-Beaverbank says it is more than that - go check, get out the books.
If you save $46 and you happen to drive a vehicle to get back and forth to work, as many people have to, people from my community cannot all take the transit buses because of where they run and so on. You fill your gas tank up and if it costs you $30 a week and let's say you didn't even do that much, let's say you only filled it up every two weeks and it only cost you $30 every two weeks, that means that in two weeks your $30 bill would have gone up by $2.40, 8 per cent of $30 is $2.40. If you are going to fill up and pay $2.40 more every two weeks times 26, already you are paying about $60 more. The government is saying what you receive in income tax reduction is going to offset the increased cost to consumers of the BST.
Well, there is a lot of baloney in that sales talk. That baloney sales tax, in terms of what the government is saying there, because in truth, one item alone, will eat up more. In terms of the income tax talk, they talk about here how the income tax is supposedly going to work and would be 3.4 per cent less. What it really is and the minister spells it out quite clearly, is that the income tax, the provincial portion, will go from 59.5 per cent down to 57.5 per cent in a period of a year.
If you take that and you consider the provincial income tax and take what you pay of the federal income tax, we pay 100 per cent, because provincial is based on federal, if you pay 100 per cent of your federal income tax and you add your 59.5 per cent on top, that means Nova Scotians are paying 159.5 per cent of the federal tax rate. If you reduce that by 2 points, what we will end up paying is in reality 157.5 per cent. If you take a look at that another way, in terms of your total tax bill, your federal and provincial combined, Nova Scotians' tax rate will drop by approximately 1.2 per cent. In another way, if you paid income tax last year of $10,000, if you are in a bracket where you pay $10,000 in income tax, you will save $120 a year or $10 a month.
People think isn't that wonderful. I would like to save $10 a month. I would love to. Most people, if not everybody, in my constituency of Sackville-Cobequid would love to have their taxes reduced by $10 a month. But you know, that $10 a month that I am going to be saving, if that is what I paid in income tax, that will not begin to pay the increased cost of the electricity, the increased cost of gasoline, the increased cost for home heating fuel, the
increased cost for clothing, the increased cost for school supplies, the increased cost for even funerals. (Interruptions)
The Minister of Transportation and Public Works, like the government, is saying, why don't I be a little bit fairer about this? So, Mr. Speaker, I look forward to the minister who is in charge of paving to stand up a little later on in the debate today maybe, and to give us a whole bunch of asides. Maybe the crystal ball has been glossed up a little bit, shined up, and it will be even more accurate than it was when we heard about theatre prices and these other things the advertisement said were going to drop in price, but somehow did not.
I think there was a bit of a haze or a glow over that crystal ball. Again, they are saying here, take it on faith that what we are doing in terms of increased tax breaks to the corporations will mean 58,000 unemployed Nova Scotians - bang - are back at work. I say to that minister and to all other ministers on the Treasury benches, go back, please, in the interests of Nova Scotians and think about how or what strings you will tie to the tax credits. Do not just say we will give you more breaks. Tie that to something like maintaining and/or creating a certain number of jobs. Create employment. Surely that is what we all want. (Interruptions)
I am pleased to see at least that the members across are awake, but one of the problems with the system as it operates sometimes now is that it is automatically just seen as confrontational. If something is said by one side in a suggestion to the other side, it is automatically discounted, rather than being able or willing to try to listen and to see if there is some merit in some of the things that are being suggested.
I said earlier that tax breaks to corporations can often be very important and very valuable in helping to create and to maintain jobs. I said that before and I will say it again in case some of the people did not have their headsets off when I was speaking before.
I say, however, that if we are, as we already are, in the situation where we have the lowest or the second lowest tax rates in the country at the present time, if what the government said was true that just simply by making companies more profitable, that we would have jobs being created, we would have full employment in this province.
Mr. Speaker, I am saying let's do some tying, let's tie some of those tax breaks to a social responsibility to create jobs here in Nova Scotia, for Nova Scotians. That might connect them back to reality.
Part I of the bill, of course, as the minister talked about, talks about the Equity Tax Credit Act. I am pretty sure it was this particular section, I was listening to the news the other day as I was driving in, just after the budget, and business leaders like the President of the Metro Area Chamber of Commerce were commenting about it and pointing out that this really is not the kind of measure that they thought was overly effective, in terms of creating
employment, and that there are better ways of creating employment. They didn't think that that feature was all that (Interruptions)
Mr. Speaker, this was a government, of course, you know I think it would be a very progressive step if they were to do it. This was the political Party that a few years ago had a few good ideas. One of them was that they said they were going to create a fair tax commission. I don't think I am dreaming that, am I? That's not a figment of my imagination. I seem to remember that the Liberal Party, when they were seeking office, were promising that they were going to have a fair tax commission that would look at the tax structure in Nova Scotia, to try to determine what is not only the current situation but what are the strengths, what are the weaknesses, what is and what is not fair in that tax structure, and try to devise and come up with ways to devise a new tax structure for Nova Scotians that would be fair and equitable and which would meet both the business and the consumer and individual needs here in this province.
On the way in this morning I was following a car and on it there was a bumper sticker that read; Born free, taxed to death. You know as I looked at this particular item in this particular bill - and that was on a modest car, it wasn't on a Lincoln, Mr. Speaker - I had to conclude that I was in agreement with the sentiments expressed on that because courtesy of the BST, even funeral costs went up by 8 per cent. Here we have a situation again without any analysis being done, certainly nothing being presented to us, and no strings attached. I go back to that because I think personally that is crucially important. We are giving more tax breaks, the BST gave businesses major tax concessions, tax breaks. The minister acknowledged that in his remarks and I appreciate him being that upfront with that, but it is costing the consumers $80 million more, conservatively.
Mr. Speaker, I believe there is an imbalance that needs to be addressed, especially since the tax expenditure route that has been followed by provincial and federal Liberal and Conservative Governments over the years really have not failed. I don't know if the Minister of Finance disagrees fundamentally with the principles that I am advocating there but that, to me, would be a more progressive approach in a tax system and it is something that I honestly do believe needs to be looked at. I believe it is something that a fair tax commission would have had the opportunity, and I am not going to pre-judge, as I have said before, I am not a financial wizard, I am not an expert in the high finances of government. I deal with a very simple little calculator and I deal with very simple principles and I don't pretend to know all of the intricacies and all the fancy lingo and language that goes on with tax law, but the simple principle, I understand, and I believe most Nova Scotians do. I think most Canadians do.
The reality is, there has been an ever-increasing shift in terms of the taxation burden in this province and in this country from those who have the most to those who have the least. That tax burden has been shifting. Mr. Speaker, we in this province and our tax structure and if you look at the numbers of dollars that have been collected in terms of corporate taxes versus personal income tax and consumption taxes in this province over the last number of years, you will see that that trend is very evident here. That needs to be looked at.
I am down now, really, Mr. Speaker, to Clause 7. Since I have really already in my earlier remarks about the amount of income tax and so on that is going to be saved really to the average family, $20,000 versus $100,000, I won't really spend much more time on that. But the one point I will make is that unless I am totally misreading it, and that is possible, the amount of tax savings for this year as a percentage of the whole amount of the tax, since it is only a 1 per cent provincial income tax saving in terms of the amount for 1997 that we will save, going from 59.5 per cent to 58.5 per cent of the federal rate, that really works out that this year, Nova Scotians will really see a reduction of just a little over one-half of 1 per cent in their total income tax pay envelope for this year. Next year, that will go up by an equal amount so that the benefits that they receive are not overly great.
I want to touch, as well, on the taxes on the corporations. When we had the legislation introduced about the BST, Nova Scotians who saw that the businesses were going to be receiving this - I am trying to remember - was it $100 million in tax savings or $120 million? I can't remember. I can't remember the exact figure, but over $100 million in tax savings because of the changes to the tax act under the BST, corporations are going to be saving that much. But, we were told that in fairness, we are going to and the minister said today, you know they should have to pay since they are going to receive so much in the way of benefits in terms of the investment tax credits, the equity credits and the savings under the BST, that they should shoulder some of the increased costs that Nova Scotians will bear by having a capital tax, that there will be a tax on their capital equipment and so on, 0.5 per cent on their equipment between, let's say, $5 million worth and $10 million, and above the $10 million it would be 0.75 per cent.
So this tax structure was imposed and that was to raise $45 million. This Act has a sunset clause in it. So that capital tax for the corporations has a life expectancy of five years. The BST, the consumers in this province are going to be paying the highest cost, doesn't have a sunset clause in it. You and I, our constituents, our children, our children's children, our friends, our family, everybody, Mr. Speaker, in Nova Scotia who goes to the store and has to pay that extra 8 per cent on items that they didn't before, that is not for one year or two years or three years or four years or five years. There is no sunset clause in that.
Those corporations that are now going to receive even more tax breaks without an evaluation of the system, without any requirement that they create employment or even
maintain employment and that maintaining is often as important or more important than creating new jobs, they have a five year life expectancy on that tax but everybody else who is supposed to be paying the higher costs, no life expectancy on that at all. In fact, the Government of Nova Scotia gave up authority over that and we can't even adjust the rates unless we get the other provinces to agree. Somehow it just doesn't seem to be level or fair. Maybe I am all wrong.
AN HON. MEMBER: You are wrong.
MR. HOLM: I hear from a wise backbencher from the other side saying you are. (Interruption) Well, the member for Hants East said all the backbenchers are wise.
HON. WILLIAM GILLIS: A question, Mr. Speaker. I am hearing his point about a sunset clause on the capital tax but no sunset clause on the HST. The honourable member did talk about the investment tax credit and he raised some points. But one of the points there that I am sure he is aware of but did I miss something or did you mention that that too has a sunset clause? That benefit to business on the other side does have a sunset clause just as this one does in five years. I just wanted to make sure the member was aware of that.
MR. HOLM: Mr. Speaker, I was and I am not going to say categorically but I believe I said when I was talking about the Equity Tax Credit Act that it was a five year extension.
MR. GILLIS: I am talking about the investment tax credit. I know you think you did quite right on the equity tax but I am talking about the investment tax credit. I know you made other points about whether this is the best way or whether you should tie it but I just wanted to make sure that the members are aware that that too has a sunset, that benefit which is a benefit to industry.
MR. HOLM: Mr. Speaker, yes indeed I am aware of that and I was going to be talking a little bit more about that when I get to Clause 9. I am still on Clause 8 because Clause 9 deals with (Interruption) I did and some of the broad comments, yes I did indeed. That is a fair question to raise because yes indeed the investment tax credit does have a period of life expectancy under that of five years. With that, maybe I will turn the page and go over to the Investment Tax Credit Act. I want to talk about that a little bit as well.
One aspect of this that I do quite agree with that, if in fact it is going to be done at all is that the companies have to be a profitable corporation, that they cannot get these investment credits and claim those against non-profits. So you have to be in the situation where the company would have to be paying taxes before they would really be qualifying for anything here and it also is for a period of five years. The minister was good enough to explain to us in his remarks that they could go back to claim for a period of three years.
I want to touch on this though; 30 per cent is a pretty sizable chunk of change and 30 per cent of their investment can qualify for a tax credit. I want to tie this in and maybe I can tie it in and cover the two aspects at the same time by jumping ahead of the whole section of revenues dealing with the Sable offshore revenues.
If a company is going to be establishing in Nova Scotia and investing, whether it be Mobil, whether it be Shell, whether it be one of the two companies, whichever one may happen to win a bid. Of course nothing has yet been approved; we don't know if the Sable gas project is going to go ahead at all. We don't know that because the joint panel has not yet filed their recommendations. Of course the government is going under the obvious conclusion that it is and maybe, Mr. Speaker, they are right. (Interruption)
The Minister of Transportation and Public Works says, where does it say that? I am saying to the Minister of Transportation and Public Works, in his helpful interjection, through you, Mr. Speaker, it says that in the actions and the comments of this government.
Now, Mr. Speaker, those companies coming in to take our resources, Nova Scotia's resources, our gas, will maybe some day, in the next century, start to pay Nova Scotians a little bit of royalty, I don't know how much. I know that the way the agreement seems to be set up, from what little we can garner from the government, it is going to basically be when they become profitable. (Interruption) Well, we are getting more. We are being told now by the minister, maybe, and it will be very helpful for us all, sometimes across-the-floor interjections can, in fact, be helpful because the Minister of Transportation and Public Works is providing me with some little interjections about when the royalties will flow - not how much they will be, not what rate and so on. Maybe, as former Minister of Natural Resources, the minister will provide us with a detailed breakdown as to what rate of royalties will be charged as soon as that gas comes out of the ground.
You know as I recollect hearing, a lot of that is going to be depending on how profitable that corporation is, in terms of its operation and the bills that have been paid. If those companies can then turn around and write off an investment credit, and if that includes equipment and so on that they are using that is rented here brought in, then, Mr. Speaker, that reduces, that can be applied against their profit and, therefore, our royalties whenever they may occur, will be reduced.
I would like to know from the Minister of Finance, if he doesn't have the details now, and I don't claim to be, as I have said on several occasions, the expert on all the intricacies of financial Acts or the federal legislation that this applies to, but I would really like to know if those companies - and I am more concerned about the multinationals who are coming in here to use our resource - I want to know if those companies that are virtually paying no tax, as it is right now because of the kind of tax breaks that they get on the national basis and the way that they can move things around, I want to know if this can be used against us by them,
to reduce their profitability and, therefore, not only reduce the taxes that they would pay normally but also to reduce the amount of royalties they will pay to Nova Scotia, eventually.
I think that is a very important, pertinent question. If we are to be voting on this, I think it is crucially important that we know who can qualify and how one can affect the other.
In terms of the royalties and you know when we are talking here, for example, about the business of the royalties, that 50 per cent of . . .
HON. WILLIAM GILLIS: I wonder, would the member permit me to ask a brief question. Mr. Speaker, this matter came up earlier and I may have missed the total point of the last question but, to help clarify, that the question the honourable member is raising is the eligibility of the Sable gas project for example to get the manufacturing investment tax credit. The answer is, according to the Federal Income Tax Act - I had this checked since it came up, and you may be touching on this and I want to try to help; you mentioned you want to know what we are voting on - manufacturing does not include operating an oil and gas well, extracting petroleum or natural gas of natural accumulation thereof, or processing heavy crude oil recovered from a natural reservoir in Canada to a stage where it is not beyond the crude stage or its equivalent.
That means, as far as I can tell, that the extraction process, the offshore does not qualify for the investment tax credit as . . .
AN HON. MEMBER: How about the rig itself, though?
MR. GILLIS: That is not a manufacturing process. I am quite sure it would not qualify, but I will double-check. It would appear that it does not qualify.
MR. HOLM: I very much appreciate the minister getting up on that one. That was a matter, too, that had been raised by a previous speaker. That is in fact what I was getting to. So, presumably, it would only be at the - and maybe the minister in terms of trying to be helpful which he almost always is, going back and getting some further clarification - from what the minister was saying, to me it sounds as if the only thing that really would qualify would be possibly the service businesses, service companies that are manufacturing or producing things to provide to the offshore, or possibly petrochemical industries that would be taking the gas and/or the liquid concentrates and reprocessing those into something else. If that is the case, then that clarifies it quite a bit in my mind.
The other thing, another point that possibly the minister can also clarify because - and I am not claiming originality in raising this item here today, the member for Hants West also raised questions about Stora - there are many other businesses that announced quite some
time ago that they are going to be involved in expansions and changing of equipment and so on; some of them have undoubtedly even gotten government grants. I will come to that point in a moment as well, because another thought just occurred to me.
I would like to know how much the Department of Finance calculates that we will be giving up through this investment tax credit to those businesses that are already in the process of doing an expansion, and who were expanding regardless of whether this came forward or not because they would not have known; certainly, there would not have been a Cabinet leak. They would not have known that this was coming forward, so I would like to know what kind of dollars we are talking about here?
I would also like to know from the minister what kind of total dollars is it anticipated that the province will be losing in the way of lost revenue through these investment tax credits and through the equity ones as well? These are, of course, dollars that, if were lost, are an expenditure because if that money was coming in, that money could be used for increased or improved health care in the Province of Nova Scotia and it could be used in the overcrowded classrooms across this province. In other words, it is money that is being expended on tax breaks to businesses that could have been spent on other priorities like health and education in the Province of Nova Scotia.
I would like to know how many dollars, in total, the government projects - and they would have had to do some projections - how many dollars they are anticipating that they will be forgoing as a consequence of these tax measures? I will not bother going back over the point that I was making before, because they may be valid if tied to job creation measurable targets, where the government was agreeing to be producing x number of jobs.
The section dealing with Nova Scotia Power Privatization Act. This is about the only amendment, of course, which this government has brought forward so far in its four years of office on the Nova Scotia Power Privatization Act. It was a piece of legislation that Liberal members fought as vigorously as members of the New Democratic Party did when that privatization Act was introduced by the former Conservative Government.
Mr. Speaker, if that business, that corporation, had been run as an efficient business instead of all the politics that had been played with it over the years, instead of it having run a deficit, it would have been making millions of dollars worth of profits per year. Those millions of dollars worth of profits would have been able to pay off its debt and resulted in reduced power rates for the people of this province. In fact, the Liberal Government promised that they were going to be making amendments and re-regulating and increasing regulations and control over Nova Scotia Power. Somehow on that day in May 1993, when the Liberals came to power, that commitment, like so many others, just seemed to vanish into thin air. But here now we are going to have the government collecting additional dollars and paying those to the municipalities.
There are two points I guess that I would like to make, one of them, I would like to get some clarification about how this money is actually going to be distributed. Because in the first section of that, "The Minister shall distribute the amounts . . .", that are received and they are going to be distributed, ". . . in the manner determined by the Minister.". Where is the collaboration with municipalities in determining where the greatest amount should be going? Mr. Speaker, mark my words, if Nova Scotia Power is going to be increasing its costs because of this, Nova Scotians, in one way or another, will be making up that cost.
Municipalities directly are going to be receiving this money if Nova Scotia Power does increase their prices to meet their shareholder guaranteed profits of about 12 per cent, guaranteed through the URB. Not a bad rate of return. If the power rates go up, municipalities, school boards and all other public services are going to be paying more, for your street lights, for your office buildings, et cetera. Individuals are going to be paying more and businesses will be paying more for that to guarantee the profits of those shareholders, the vast majority of whom do not live, in terms of the greatest number of shares that are owned, even within Nova Scotia.
Maybe, Mr. Speaker, you could indicate to me approximately how much time I have left?
MR. SPEAKER: You have approximately eight minutes.
MR. HOLM: Time is flying. I had better speed up a little bit then, Mr. Speaker. Of the next section, Clause 12, it requires that the Government of Nova Scotia must pay at least one-half of the net gas royalties received from the offshore into the public debt retirement fund. It is a noble cause and it sounds great, especially in the year before an election. I remind you that what we are dealing with right now is a piece of legislation, An Act Respecting Certain Financial Measures, a piece of legislation which is introduced each and every year following the introduction of the budget.
Mr. Speaker, as you run up to an election and as you have these images of sugarplum fairies dancing through your head and loonies and toonies just pouring into the coffers of the Treasury of Nova Scotia, it sounds good in an election year because Nova Scotians are concerned about the debt, to say that at least half of that has to go into the debt retirement fund. The reality is that all members of this House know, as well as I do, that each and every year a piece of legislation comes in like this that includes all kinds of the different items and on any one occasion, any occasion between now and whenever in the next century, some dollars start to flow into the Treasury, all any government has to do is simply make a modest amendment to this. Say a one-quarter change - you would not even have to put the whole clause in, you would just simply say change the word half to quarter and you have cut the amount. You would do an amendment in an omnibus bill like this down the road and the figures can change.
What will make any difference and the only thing that makes a difference is realties, actions, not so-called commitments of statement of purpose for five or 10 years down the road, Mr. Speaker, especially when you are considering that this is an election year.
Mr. Speaker, the clause dealing with the acting pay as defined in salary to exclude that from the definition of salary, I am not totally sure what to make of that. One of the things I am wondering is that possibly that might provide a bit of an incentive for the government to hire replacement workers, not just to be using acting people all the time. That is one possibility. I don't know if that is a stated objective for that. I would like to hear the minister indicate to us if he consulted with the Nova Scotia Government Employees Union about this amendment before it was introduced.
There are a number of other things. Certainly I have no objections to the efforts to keep the taxes and costs of tobacco products higher, Mr. Speaker, because anything we can do to stop people from getting into that habit, I am going to welcome. Certainly it is much easier not to start than it is to quit. We do know that price is one of the major determining factors in the amount somebody will smoke and also in those who will move forward.
However, Mr. Speaker, there are a few things that I can support and a number of things that I can't. One of the fundamental problems I have is that again there don't seem to be any ties between any social measurable benefits in terms of job creations as a result of the increased tax breaks being given to the corporations, at the expenses of the individual consumers. Those kinds of things should have been and could have been, if it was done properly, assessed as part of a fair tax commission that the government promised to introduce.
Therefore, Mr. Speaker, I feel compelled to move an amendment to the bill before us. With your permission, if one of the Pages can provide a copy of this to yourself, I will read it because the photocopies didn't come out in the extra ones.
I move that the words after 'that' be deleted and the following be substituted therefor: 'the subject matter of Bill No. 7 be referred to the Standing Committee on Public Accounts to entertain submissions re - fair taxes.'".
MR. SPEAKER: The amendment proposed by the honourable member for Sackville-Cobequid is in order.
The honourable member for Hants West.
MR. RONALD RUSSELL: Mr. Speaker, I will take just a moment, if I may, to read it. Okay, the bill is being referred to the Committee on Public Accounts, so it is a referral.
Mr. Speaker, speaking on behalf of the caucus to which I belong, may I say first of all that we have some reservations about this bill. There are some areas of the bill and it is a bill that covers, I was going to say a multitude of sins, but let's simply say a multitude of areas within the tax framework of this province. While there are some areas that we disagree with there are some areas perhaps we don't fully understand and there are some areas to which we intend to offer amendments in the Committee of the Whole House on Bills, during that phase of the bill.
Essentially, we can see no reason why this bill should really be referred to the Committee on Public Accounts. We believe that the bill going on, particularly this bill, going on to the Law Amendments Committee will give adequate opportunity for all those sectors that are affected by this bill and there are sectors ranging from the Public Service to multi-million dollar corporations that are affected by this bill. I would think that at that particular stage, we can certainly get the information that we want. We hope that within the Law Amendments Committee that some changes can be made to make this a better bill and perhaps one that will be clearer to those who have to use this bill as a reference for their particular operation.
I don't want to go back through the bill again but I will just say that the areas in which we are primarily interested in finding out a little more about is the manufacturing and processing investment tax credit and the Nova Scotia Power Privatization Act, the amendments of that Act to funnel dollars to the municipality to compensate for HST. Also, the Public Service Superannuation Act, we certainly would like to hear what the Nova Scotia Government Employees Union, the Nova Scotia Teachers Union and other unions have to say on that particular change. I think that is about it essentially, so I will not be supporting this amendment and I will be supporting the main motion to have this bill moved on to the Law Amendments Committee.
MR. SPEAKER: The honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Mr. Speaker, I rise to speak in favour of the amendment and I wouldn't mind if I could clarify it for myself because I don't have a proper copy of it. I wonder whether, Mr. Speaker, you could just simply read it to me? I have part of it but I don't have the whole thing.
MR. SPEAKER: The amendment reads, "That the words after 'that be deleted and the following be substituted therefor: 'the subject matter of Bill No. 7 be referred to the Standing Committee on Public Accounts to entertain submissions re - fair taxes.".
MS. O'CONNELL: Thank you, Mr. Speaker.
HON. WILLIAM GILLIS: Mr. Speaker, on a point of order. I have a different amendment. There is no mention of fair taxes in the amendment that was distributed to me. I think we have a little bit of difficulty here. I think we better know what we are debating.
MR. SPEAKER: With regard to the point of order. Once the honourable member for Sackville-Cobequid brought the amendment to the floor of the House, he did indicate that he only had one copy of the amendment that he brought to the floor. We are now asking the Pages to have the amendment that was brought to the Chair photocopied and delivered to all members of the House. I don't know what was delivered to them.
The honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Mr. Speaker, I can clarify that on behalf of the honourable member for Sackville-Cobequid. He did send the amendment out for copying and when it came back, the handwritten words were missing from the Xeroxed copy. We do apologize for that, Mr. Speaker.
MR. SPEAKER: Thank you.
MS. O'CONNELL: That is why I, too, did not have the wording, because my copy had the words missing.
MR. SPEAKER: The honourable Minister of Finance.
HON. WILLIAM GILLIS: We should take 30 seconds or a minute to get copies for the members. I have an amendment that does not mention anything about fair taxes. I think we should get the amendments before us. Otherwise, it makes no sense to debate.
MR. SPEAKER: The honourable member for Sackville-Cobequid.
MR. JOHN HOLM: All the copies that came back have a scribble down them. Don't ask me why. The original copy I provided to you, that is why I sent that one up rather than having them sent around immediately, maybe, Mr. Speaker, because you have the one with the exact wording the way it was passed in, you could have that re-photocopied for members.
MR. SPEAKER: We will recess for two minutes until we can provide all members with a copy of the proposed amendment by the honourable member for Sackville-Cobequid.
[6:37 p.m. The House recessed.]
[6:40 p.m. The House reconvened.]
MR. SPEAKER: Order, please. The honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Thank you very much, Mr. Speaker.
MR. RONALD RUSSELL: On a point of order, Mr. Speaker. I spoke to an amendment after the amendment was distributed which, obviously was not complete and that was nobody's fault. The point was, the amendment that I spoke to terminated with, to the Standing Committee on Public Accounts and I went on and I am not going to repeat myself that in essence, I did not agree with that. I also, when I look at the rest of this amendment, now that it is added, ". . . to entertain submissions re - fair taxes.", I do not think that amendment really is in order. However, that is for you to decide, not for me, but I will not be speaking further on the amendment. My position has not changed.
MR. SPEAKER: The Chair will now recognize the honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Mr. Speaker, I do apologize on behalf of my colleagues, even though those missing words were not our fault, it certainly was not intentional to cause the House any delay or confusion.
I rise to speak to the amendment and to speak in favour of it and the amendments really has two suggestions put together. One is to refer, "the subject matter of Bill No. 7 . . . to the Standing Committee on Public Accounts . . . ", and it refers with a task for that committee and the task this amendment requires of that committee is that some kind of input, submissions regarding fair taxes. We have risen in this House before on a number of occasions to speak about fair taxes, what we perceived to be wrong with the tax system as it is constituted and as it evolves at the hands of this government.
I would like to say it again, it has not been heard and Bill No. 7 makes it clear that our voices are, perhaps not loud enough in this regard. I would like to talk a little bit about some of the questions that I have and the concerns that we have as a Party about tax fairness and other aspects of the bill which could be resolved by the opening up of the process so that there can be much more engagement from the public and from others regarding whether or not Bill No. 7 constitutes a fair tax regime or additions to a fair tax regime or fair additions to an existing tax regime.
I want, first of all, to thank the minister for his going through the bill, I do appreciate it greatly. Many of us are not mathematicians here and neither are we lawyers, some of us. Sometimes these kinds of bills, at least for me, still take on the colour of those horrible word problems that we used to have to do in math class. Although I conquered my mathematics in school, it was a very long time ago and I still do not have a good grip on those problems that
involve trains leaving two stations at two different times and going two different speeds. I am very happy and I do thank the minister for going through the bill and explaining a number of things that were very helpful to me. His explanations do raise some questions, as well.
I jotted down what the minister said at the very beginning and I hope I am quoting him correctly, I certainly do not mean to misquote him. I did write down, I think he said that we cannot depend on the old reality, and I hope that is an accurate quotation. I am not sure that the minister can hear me, perhaps I can speak up. I think the minister said, we cannot depend on the old reality and also I think he said that this bill makes it less expensive and the quotes only begin at less - less expensive for business . . .
MADAM SPEAKER: Order, please. It is difficult for the minister to be able to hear this debate and I would ask for order, please.
MS. O'CONNELL: That is makes it, "less expensive for business" and I think nearby, though perhaps not directly connected with it, was the phrase, "so it can create jobs". That is a common enough currency over the last seven or eight years in Canada, that somehow, if you simply make business profitable that business will create jobs. That is one of the issues that could be further explored with submissions to the Public Accounts Committee. The whole question of whether or not that tax regime does create jobs has been proven over the last number of years to be extremely questionable.
We know, based upon what has happened globally over the last few years, that profits do not create jobs, or have not, at least. They could, but they certainly have not overall in the current economy. What they have done is create massive profits for speculators and for speculative investment in what is called the new economy. I think that one of the things that we would have to ask the Public Accounts Committee to look at or we would hope the Public Accounts Committee would invite submissions on, is the whole question of whether or not these tax measures actually create jobs and therefore create a larger tax base in order to finance the economy.
As I said, I took notes when the minister was going through it and I was definitely assisted by his comments but it raised a few more questions that might indeed be addressed in another forum, were we to refer this bill to the Public Account Committee. One of the things that interested me was in Part II, the Expenditure Control Act, Clause 4, Section 12(4). That particular clause talks about what we do with surplus revenue at the end of the fiscal year. I looked back into the previous Act and this does not appear to be a change from the previous Act. It does raise a question for me.
The bill says, "Where the amount of revenue received or to be received . . . exceeds the amount appropriated by the Legislature for net program expenditures and the net debt
servicing costs for that year, the resulting surplus shall . . . be used to reduce the public debt of the Province or reduce taxes, or both.". This may be a dumb question. Maybe this is a question that everybody knows the answer to but me but I do not understand why the surplus could not be used at that point for enhancing programs. I certainly know that we passed a bill in the fall granting more money to health care. I guess that is one of the questions that might be helpful to be answered for me in that forum.
The other thing on that very same clause that puzzled me was that if you go back to the Expenditure Control Act of 1993, it specifically mentions the inclusion of capital costs in the calculation of the total revenues at the end of the year. They seem to have been removed in this case. This is something else that I do not understand at all. I feel it would be helpful to clarify for a great many people whether or not capital costs are included in that calculation, come the end of the fiscal year.
The point of the referral is tax fairness, to explore tax fairness and to look at ways of providing the public, the taxpayer, with the kind of tax regime that exhibits fairness to all taxpayers. Of course, Madam Speaker, what we are talking about is progressive, not regressive taxes, taxes which tax people who make less, earn less, have less, tax them less and to tax those who have more, more and to tax those who have much more, much more in order to provide some kind of minimal equity in society so that people can live in some comfort and dignity.
My colleague, the member for Sackville-Cobequid, pointed out, and he is quite right, and I think he tabled a document to indicate it, the shrinking burden on corporations over the course of the last 27 years. He has indicated, so I will not repeat it, that in fact in the long range, over the long term, there seems to have been a clear trend towards removal of the tax burden from corporations and the increase in tax burdens to the individuals who make less money and who are less able to pay.
That brings us, Madam Speaker, to the whole question of the provincial tax break for low income Nova Scotians, or, for everyone. When the math is done, and the member for Sackville-Cobequid did talk about this, we know that this is an extremely small tax benefit, which is quickly offset by new tax expenses for those less able to pay. For example, a family making $20,000 a year has a fairly low income, gets no support in terms of compensation for paying the HST and yet it pays increased consumer taxes, which are regressive taxes, and its tax bill goes up. The cut in personal income tax will not come close to eliminating the tax burden of those people. In fact, they will be paying more, regardless, because of the HST.
So the question of fairness comes up again and again. We have no shame about that and we will keep bringing it up again and again. We would like it brought up at the Public Accounts Committee and we would like people to come in and talk about it so that this government and the Opposition can experience first-hand the views of a great many people
who have experienced the tax regimes that currently are in order and which they can help the government and the Opposition to understand.
Madam Speaker, I have said already that I am not a mathematician and I have to look at general tendencies. But my sense is that this bill lessens tax revenue. Now if I am correct about that, and if that is so, and I am glad to say this because there is a perception around that my Party is not fiscally responsible and we are somehow the last of the big spenders when, in fact, you look at this bill, you get the clear sense that we are decreasing government revenues just at the time when we have some hope of having a debt to pay and that doesn't make a whole lot of sense to me.
Madam Speaker, the minister is not in his seat, but I do want to record my appreciation . . .
MADAM SPEAKER: Honourable member, I just will remind you that we don't normally call attention to the presence or absence of members in the House, just so you will be up on that.
MS. O'CONNELL: Madam Speaker, I did not know that. I would like to thank the minister, though, for his clarification of the whole question of the Sable gas regime. When I first read this bill I was not able to tell whether there was some kind of link between the processing and manufacturing tax and the revenues from the offshore gas production and distribution.
Madam Speaker, the minister did clarify for me and for others that processing and manufacturing do not apply to the removal of the gas and the pumping of the gas through the pipeline, that is my recollection. However, it would apply to the value added petrochemical industries that might be created through the drawing of the gas from the Sable gas field and its being brought ashore into Nova Scotia and further. So I presume, and I guess I am speaking neutrally or perhaps positively on that point because if, in fact, it does not provide for repression of the Sable gas profits and does, in fact, provide an impulse for the development of the petrochemical industry, it would be pretty hard to argue with it.
However, all that being said, Madam Speaker, there is no question that the general tendency of this bill, and this is why we have moved this amendment, is to exacerbate a trend that has been going on for a long time. It is a trend away from conceptualizing and understanding and taking responsibility for the larger public good and towards individualism. A good example of that is the tax credit, the small reduction in personal income tax. That is a good example of what happens when we have the mindset whereby we give a few dollars back to people and we say to them, figure it out for yourself, it is not our problem.
Over and over again we have seen governments act in this way. They seem to be saying frequently, and the general tenor of what they seem to be saying is, you know we might be the government but we really wouldn't mind if we didn't have to do anything; you people just go off and figure this all out for yourselves, everybody for himself, every person for herself and we will just kind of sit back here and see whether you sink or swim.
The whole question of the fairness of taxes, as I have said, we have said it before in here and we will say it again and we will keep on saying it and we will certainly say it at the Public Accounts Committee, should this amendment carry, and we will be urging over and over again, as often as we can, whenever we can, that we discuss openly and with great frankness and fairness the whole question of fair taxes, Madam Speaker.
There are a couple of things in the bill which I think are perfectly reasonable in that light. Of course, one of them seems to be the adjustment to purchases of, I think it is, used vehicles, in order to make a level buying field, if you like, for people who buy out-of-province vehicles.
Madam Speaker, I have never seen a Financial Measures Act before and it seems to be a bit of this and a bit of that, it seems to be something that comes together to make something else happen, so it is a really good bill to have a referral and a discussion on tax fairness because it covers a number of things which are connected to each other and some things which are simply part of a tax regime.
So, I think that it should be referred. I would support a referral, particularly with the qualification that submissions be entertained with regard to fair taxes and so, Madam Speaker, I support the amendment and would urge that others do so. Thank you.
MADAM SPEAKER: The honourable Leader of the New Democratic Party.
MR. ROBERT CHISHOLM: Madam Speaker, I am pleased to rise on the amendment introduced by my colleague, the member for Sackville-Cobequid. The point here, as I understand the member's amendment, the subject matter of Bill No. 7, the impact of it is of such a nature that it should properly be reviewed by the Public Accounts Committee, because we perhaps could have suggested that it be referred to a fair tax commission, but we don't have a fair tax commission.
The point is that this government, when they were running for government back in 1993, talked to Nova Scotians about the need for fair tax reform. They have talked, as we have, about the need to introduce some fairness and equity into the tax system, both the income tax system and the sales tax. That is being done because increasingly, low- and middle-income Nova Scotians are finding themselves paying a bigger and bigger share of the
burden of taxes in this province and in this country, and what they see and what we see from these changes contained in Bill No. 7 is that that shift, in fact, will continue.
We have not really adequately addressed the true impact of the changes which took place on April 1st. Those changes I speak of are, of course, those imposed by the blended sales tax. Now, the blended sales tax affected low- and middle-income consumers, in fact all consumers in Nova Scotia, to the tune of $84 million-plus annually that they will have to pay in addition for, in particular, family essentials, home heating fuel, gasoline for their motor vehicle, children's clothing, clothes under $100 and school supplies and on and on it goes. Prior, they had to pay the GST only, which was 7 per cent and now they will have to pay a total of 15 per cent; in other words, an additional 8 per cent on all of those items.
What that means for those people is they will have to pay out of their pockets an increased amount. It is the whole business about a regressive tax. A sales tax by its very nature is a regressive tax for what it means is that you pay a greater proportion of your income in this tax the lower your income is; in other words, the higher it goes the less percentage you pay. That is in contrast to an income tax system which is intended to be a progressive tax regime which is based on the principle that the more you earn, the more you pay; the greater your ability to pay, the more you in turn will pay and make a contribution.
The changes that have taken place in the income tax system in this country over the past 20 years have resulted, whether through exemptions, loopholes, deferments, tax credits or other changes, what the impact has been is that much of the progress of the income tax system has been lost as a result of those particular changes. It has had a drastic impact on the revenues of this - I don't know, Madam Speaker, if it is the air in here or whether I am getting tired or not but I am having difficulty seeing you, so I am going to put my glasses on . . .
MADAM SPEAKER: Just as long as you are not about to pass out, that is all.
MR. CHISHOLM: No, I am just putting my glasses on, so I can have more focus perhaps not only in my sight but also in my speech. Under normal circumstances I probably wouldn't have started wearing glasses for distance for another five or six years, but in this business you get worn down at a lot faster rate. Look at the member for Kings North. There is an example. He is actually 27.
Anyway, my point here is that the tax system has undergone a number of changes. Not only in terms of personal income tax in that the progressivity of the tax system has been lost as a result of many changes. In other words, increasingly instead of paying more than higher your income, depending on the level and other circumstances, of course, with exemptions and deferments and credits and other loopholes, what ends up happening is that the greater your income, the less income tax you pay. Things have become quite distorted.
On top of that, what you have seen over the past two decades is an increasing change in the percentage of income tax that is paid for by corporations. The impact on that has been extremely significant. You have heard many of us from this caucus talk about many hundreds, if not thousands, of profitable corporations in this country avoiding paying taxes whatsoever on those profits, which has caused its own group of problems. I am just looking here for my reference which shows how in fact there has been such a significant shift from corporations to individuals so that individual taxpayers are paying a much greater share of the overall tax burden than our corporations. I will find it here at some point in order to be able to (Interruptions) Well, I should have it. The member is absolutely right. I should have it at my fingertips and it is undoubtedly here somewhere and I will find it.
You understand my point. If you have the personal income tax system losing its progressive nature, so in other words the principle of the more you earn, the more you pay, has increasingly diminished. If you have profitable corporations in this country increasingly paying less income tax, if any, and even those that are obliged to pay are deferring them to a point where they are saving considerable monies, governments that pay for our services, whether that be health care, education, roads, health and safety inspectors, to keep this building up and running, have less and less revenue or increasingly less revenue in order to maintain those commitments. That is a problem. Some of the figures. Uncollected corporate taxes in 1994 were nearly $40 billion. Some truly incredible statistics. Corporate taxes in Canada below the U.S. and OECD averages. This is from the Canadian Centre on Policy Alternatives. It says, if I may, just for a second, "Canada's corporate taxes, as a share of both total taxation and GDP, fell below both the OECD average and that of the United States in the early 1990s. Among 11 major OECD countries, Canada's corporate tax ranking dropped from first place in 1975 to eighth place in 1993 as a share of GDP, and from second to eighth as a share of total taxes. In 1975 . . ." - this is the point I was making earlier - ". . . corporate taxes accounted for 4.4% of GDP, but by 1993 the amount had fallen to just 2% of GDP. Similarly, corporate taxes in Canada accounted for 14.9% of total taxation in 1965, but had dropped by nearly two-thirds to 5.7% by 1993.".
That has been happening at the same time we have had small 'c' conservative governments at the federal level, both Liberal and Conservative who have said that this is the way to go. This is the answer. We relieve the burden on corporations. They do not have to pay as much tax. They have greater profits, therefore they will re-invest that in their businesses, produce more and create more jobs.
That hasn't happened; increasingly, in this country, the total wealth of this country has increased at a phenomenal rate. The amount of taxes that corporations pay has gone down and so too has the number of jobs. There are figures, Madam Speaker, of corporations, MT&T is one, right here in Nova Scotia, that as their profits climb, the number of employees working for them also declines. So there has been no evidence.
You look, for example, over the 1990's when the manufacturing sales tax was lifted off major manufacturers; there was a huge shift. In the Atlantic Provinces, it represented an additional $3 billion on consumer's backs and that was a shift from the revenues that were paid by major manufacturers in Ontario and Quebec. There was a huge shift there from manufacturers to consumers, but did we see either of the two things that were used to support the GST coming in? One of them was that prices would go down, and you talk to any Nova Scotian or any Canadian and they will tell you that the prices for goods and services in this country did not go down as a result of the GST. The second thing was, what about jobs? Did they GST help in creating jobs in this country? No, absolutely not.
We continue to have an unacceptably high, 2.5 million unemployed Canadians, Madam Speaker, not unlike the figures that have existed throughout the 1990's. Not acceptable, neither is the 58,000 unemployed Nova Scotians that continue to exist in this province. The point is that this track we are on, continually taking off, removing any commitment from corporations to pay their fair share of taxes and in return they are going to create jobs somewhat magically, is erroneous at best. It does not exist. We, as a result, are one of the lowest in the industrialized world in terms of our level of corporate taxes and, increasingly, we are going to be in a position where we are unable to meet our commitment for many of our important social programs, in this country.
Even conservative economists acknowledge now, Madam Speaker, even the Conservatives acknowledge - I say big "C" - that it has not been spending on social programs which has caused the debt and the deficit. It is a combination of two things: it is high interest rates; and it has been deferred and exempted taxes by corporation and wealthy individuals. Those are the main reasons why we are in such a difficult step and have been in such difficult circumstances in this country and in this province. It is because of the fact that we continue to let corporations off the hook in terms of making an appropriate commitment to their community and the province in which they are fortunate enough to be allowed to make a profit and the result of that combined with a monetary policy which has kept interest rates high has resulted in staggering levels of unemployment and staggering levels of debt.
Even though this government has done something about the deficit in this province, not the debt, mind you, let us recognize the fact that the budget, in fact, the debt servicing charges are increasing over the next several years and the debt, in fact, will not be any lower after the next two years than it is now. My concern is that because we have a continued high level of unemployment in this province, because we are continuing to release corporations and wealthy individuals from paying their share of taxes, we are not going to have the ability to meet the kind of commitments that we need to meet for a civil society. If you put that together with the realities that are coming home to roost of the 16 per cent reduction of federal transfers over the past four years, if you consider that the estimate of the reduction of federal transfers by the year 2000 is going to add up to $2.5 billion, if you add to that, the
fact that as a result of the BST and once the bribe money is gone, we are going to be $100 million, minimum; that is just the BST, $100 million-short annually. How are we going to pay for our services . . .
HON. WILLIAM GILLIS: On a point of order, Madam Speaker. Consider the use of the compensation money for HST and using the word bribe money, in the world in which I live, bribes is an illegal criminal activity and I think the honourable member should reconsider his use of that word.
MADAM SPEAKER: I think your point is very well made, honourable minister. The Leader of the New Democratic Party has agreed?
MR. CHISHOLM: I certainly would not want to offend the Minister of Finance. I generally, as a rule, have in the past suggested that some have considered it a bribe because of the way, in fact, it was introduced. For example, the interest, the $8 million interest on that $250 million was applied to this budget, was applied to the 1996-97 budget in order to make sure it balances. If the government did not agree to go ahead, that is why some people have reached the conclusion that it has acted like a bribe, in that, it has been an enticement for the provincial government to sign on the dotted line on that harmonized sales tax deal. Agree or disagree, there are some, I think, not inconsiderable merits to that particular theory.
The Minister of Community Services is the minister responsible for people who are unable to help themselves; people who are the consequences of these kinds of policies that have inflicted so much harm and so much hardship on Nova Scotians; people who are disabled, who have seen their access to employment decrease, they have seen their access to technical aids decrease or certainly not increase. Many people, through no fault of their own, are unemployed and have seen their benefits from the Province of Nova Scotia reduced for shelter allowance, as an example. Other people are, in fact seeing themselves being completed refused services through the General Assistance Program in the Province of Nova Scotia.
He, above all other ministers, should recognize the kind of damage that is being inflicted on the population out there and the impact that it is going to have down the road in our capacity to compete locally, nationally and globally, to the costs of health care and to the increasing costs of violence and social costs, policing and so on. Those are all costs that result from poverty and poverty is one of the stark realities of the kinds of policies that we are seeing followed by this government and their conservative allies, be they Tory or Liberal, in Ottawa.
That, you see, is what I think we need to examine before we go any farther down this road. We recognize that this government has been patting itself on the back for a balanced budget. Yet, we look at what is predicated in that 1997-98 budget. We are talking $118 million from the BST money that the federal government set aside for four years to compensate for four years of loss of revenues. A good chunk of it is going to be used up in
the first year. Is that sound? Does that make sense? There was a commentator the other day in the Daily News Business Section. I forget who the economist was. He suggested that this year's surplus amounts to, I think he said, a bookkeeping error and that much of the foundation upon which this balanced budget is based is very shaky indeed, and then if in fact the interest rates go up, if the exchange rate is affected by the value of the Canadian dollar not strengthening as is expected, then we could be in real trouble.
What does that mean? If the interest rates go up and we begin to take it on the chin, what does that mean? We are going to receive less money from the feds. We are going to continue to have 58,000 unemployed in this province. The government has made a prediction of 2 per cent growth. If you look at the growth prediction they made for last year, it was 1.6 per cent. They came in at 0.9 per cent. It was 2 per cent this year, let's say they come in at 1 per cent, what does that mean? What is going to happen then? Is the health care system in this province in any kind of shape that it can suffer another $150 million out of hospitals?
What about our education system? The government is talking about and we are still trying to get our head around where it is coming from, this $13 million for the classroom. You look at the Halifax Regional School Board, for example, that is $8 million short just to meet the minimum standards. So you wonder what is going to happen. They are going to have to further cut their budgets. That is going to have an impact on the classroom. Then, if we are short next year, if the economy continues along in the sluggish fashion it has, interest rates go up, the value of the dollar goes down, what is that going to mean for the ability of this province to continue to deliver services, let alone maintain the level of services that we expect as Nova Scotians, Madam Speaker? I think that is something that all Nova Scotians have to ask themselves. I think that is something that has to be done.
Just look, for example, at what is going to happen come November 1, 1997. I raised this in my speech earlier today in response to the Budget Address. The government has set aside contingent liabilities for debts in hospitals that have been taken over by regional health boards, $39 million I think it was. They set aside another contingent liability for the victims of institutional abuse, something that was also in last year's budget. Those are contingent liabilities. In other words, the government knows they are going to be responsible for them so they allow for that and they set the money aside in the budget, so we all know, so they know, it is put aside and they are going to have to deal with it.
What I can't find in here, and the Minister of Finance made some reference to it, is what about come November 1st, those public sector workers who have had over $200 million taken from them, over $200 million has been taken from public sector workers in this province over the past three years. What is this government prepared to do to meet up with that? The Minister of Finance (Interruption)
AN HON. MEMBER: Is this on the amendment or are you debating the bill.
MR. CHISHOLM: No, what I am trying to do, if the member is interested - Madam Speaker is paying attention, she knows what I am saying. It is a question of the arguments that need to be dealt with at Public Accounts Committee and regardless of the suggestions.
You see, this is really the crux of the problem, isn't it? This government is so dead set on setting its sight on re-election that it is simply (Interruption) It's not a bad goal, of course it is not. But if you sell Nova Scotians down the road, then it is a bad goal.
MADAM SPEAKER: Honourable member, now you are well of the amendment to refer to the Public Accounts Committee. I would like you to draw the debate back in, if you would be so kind.
MR. CHISHOLM: I am sorry, Madam Speaker, I got a little distracted there by the Minister of Finance. When I suggested that the government was playing politics with the financial stability of this province, he mocked me by saying, isn't playing politics a good idea? I am raising a very serious concern here about the financial viability of this province in the future, not about a balanced budget this year or a balanced budget next year, I am raising serious questions about whether or not the suggestion that this government is going to be able to maintain a balanced budget next year is actually real. If it is not real, then we had better examine it right here and now because the impact on this province, the impact on health care and education and social services is extremely significant.
It is bad enough right now, with the way that people who are unemployed, that is what is so crazy about what is going on in this country, there has been a very clear decision made to keep unemployment high because if you keep it high, it keeps inflation down and it keeps wages down. That has been the push, that has been the drive, Madam Speaker, by neo-Conservatives, like the Minister of Community Services, who are concerned only about the return on investment, only about the whole question of profit and what the shareholders want and they forget about the flotsam and jetsam that is created as these policies thunder their way through the economy and as we find people thrown off on the junk heap of life, as this government runs itself from one budget to another or from one election to another and without consideration of the short, let alone the long-term impact on people.
Madam Speaker, that is why I believe it is extremely important and essential that the Public Accounts Committee be given the opportunity to sit and review. The Public Accounts Committee has a good chairman, the member for Queens. They can sit and review with the assistance of the Auditor General, an independent arbiter who worked for the Legislature, for members of this House, to be able to examine many of the questions that have been raised here today and consider whether, in fact, the goals set out by this government in its budget and included in Bill No. 7 are, in fact, reasonable or are, as I have suggested, somewhat fanciful and perhaps even worse, extremely cynical in terms of the impact they will have.
I don't know if you remember but this afternoon I referred to a gentleman, a multi-billionaire, George Soros, a person who admittedly made his money on the international financial markets. As I indicated this afternoon, he might be somebody - he has enough money, he certainly is one whom we might call powerful and privileged - that this government might want to listen to. I repeat what I said earlier this afternoon because I believe it is germane to this issue that the Public Accounts Committee examine the principles upon which this bill is based. "The arch enemy of an open society is no longer the Communist threat but the capitalist one. It is wrong to make 'survival of the fittest a leading principle in a civilized society . . . laissez-faire ideology has effectively banished income or wealth distribution.".
The point he is making is a good point. He says, "I have made a fortune on international financial markets, and yet now fear the untrammelled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society.". That is the issue, whether there should be a separation between the public and the private. According to this government and according to neo-conservatives around the world, no way. You get rid of the public and it is all private.
What is interesting, of course, is that in that whole equation they still want the public to maintain and pay for all the public highways and pay them an extra stipend to come and build them for them so that they can transport their goods and services along those routes. That is the quandary that we are in. The point is, and the point that this government can't seem to recognize, the fact that those policies aren't working. The budget document, in fact, makes that very clear. (Interruption)
Mr. Speaker, I believe it is time to wrap up because the member for Kings North is now awake, so my task has been accomplished.
What concerns me most about this philosophy, this idea that you shift the responsibility onto the individual consumer, that you reduce income taxes so that people pay less into the pot - it is kind of like the government says to people look, we can't do anything about what is going on here. We can't deliver these services, we can't protect your interests, it just isn't working. The way the Liberals and Tories have run in this man's government, in this province and in this country, it is just not working. People see that and are beginning to say, at least the people that have got money, are beginning to say yes, you are right. That is why you have the demand among the well-heeled in this country increasingly saying look, governments you can't do anything so get out of the way, give us back our money, and then we will provide our own health care and education. You know what that does? That breaks down the whole collective, the sense of being part of a collective, the whole sense of community, the whole part of responsibility for our neighbours, responsibility for our brothers and our sisters.
The idea that Medicare was predicated on was that people should not become destitute just simply because they become ill or infirm and that it is the responsibility in a humane and civil society for people to help their neighbours. That is what people have done in this country historically. They have thrown a couple of bucks into the pot to try to be as a community because they know that if they all chip in, then we will be able to afford greater services and we will be able to build the kind of society that we have become proud of in this country, where we do, in fact, look after each other, whether it be as a result of our health care system, our education system, social services, our roads, our transportation networks, our judicial system and so on, Mr. Speaker.
The way this government is going with this bill, the only people who are going to be able to look after themselves are the people who have money. People who don't have money, tough luck, they're out of luck. We go back to the Elizabethan poor laws where people get poor and they are punished or they are thrown in a poor house in order to do work on behalf of the state. Their crime is being poor. That is what we are getting to now, Mr. Speaker, and I believe that is where we are heading with these kinds of strategies, these kinds of policies.
We cannot afford an income tax reduction for the most wealthy in our society. We cannot afford that, not when our health care system is crumbling, not when we cannot provide enough money to the public education system in this province and in this country. We cannot afford that. If there is going to be any kind of income tax reduction, then it should be to low and middle income earners, especially those people who as a result of this BST craziness are being expected to pay a greater share, Mr. Speaker.
I say that what this represents, this attack on the public sector, this move to shift more of the burden from corporations to individuals, from higher to lower income individuals, Mr. Speaker, is again very much of that breaking down of the collective, breaking down of the sense of community, breaking down of the spirit that by working together we can make this a better community, we can make this a better country. What this government is doing is feeding into that mean-spiritedness; that, you know, it's not going well enough, give me back my money and I am going to go out and provide the services for myself and for my family. That's great for people who have sufficient incomes but even for those people, I suggest, it is going to be a slippery slope and services will deteriorate to the point where everyone will suffer and not just the poor and middle income Nova Scotians.
Those are the issues that have to be considered by the Public Accounts Committee. Will this idea of lessening the burden on corporations create jobs? What has changed in the past six months that would make things any different than they were and have been over the past 15 years? Nothing has changed, you see. That is the thing, that is the sad thing about what this government is doing. Nothing has changed but they have given up. They have washed their hands of it. They lied to Nova Scotians when they said that we are going to put you to work. We are going to put 63,000 Nova Scotians to work and now they have said
there is nothing we can do about it. They are wiping their hands of it and saying talk to your federal cousins or talk to the private sector. Those are the only people who can do it.
HON. DONALD DOWNE: Mr. Speaker, on a point of order, the member opposite certainly made it very clear in his statement that we lied. In other words, we on the government benches and members of this government are liars. I would ask him to retract that statement and to apologize for making that statement in this House and apologize to members of this House on the government benches and all members of this House in regard to the comments that we are liars.
MR. SPEAKER: That point of order is in order. I will ask the honourable member certainly to withdraw that last comment.
MR. CHISHOLM: I certainly would be happy to. I do not want to offend the sensibilities of that member or any other member of this House. Unfortunately, when things happen the way they did, where promises were made during the election, that ads were in the paper and on TV and then the government turned around and turned their backs basically on those commitments, that has led some people to make those suggestions.
I apologize to the honourable Minister of Transportation and Public Works and other members of this House that I did in fact use those words to relate that particular message. I certainly will make a point of using different language, language that hopefully will not offend that members or any other member's sensibilities.
I will certainly wrap up my intervention at this particular time on this amendment. I just urge all members, regardless, that there are many principles contained within this bill that I think are clearly wrong-headed. The impact of this bill will be significant. I am really significantly concerned about what we might be faced with come next spring. I urge the minister and I urge the members of this House to reconsider the direction we are heading in to at least allow time to consider the merits or lack thereof in discussion at the Public Accounts Committee in consultation with the Auditor General.
MR. SPEAKER: Are there further speakers on the amendment?
Is the House ready for the question? Would all those in favour of the amendment please say Aye. Contrary minded, Nay.
The motion is carried in the negative.
We now return to the main motion.
The honourable Leader of the Opposition.
DR. JOHN HAMM: Mr. Speaker, I rise to speak rather briefly on Bill No. 7, an Act Respecting Certain Financial Measures.
The bill really does a lot of housekeeping in terms of the financial direction in which the government plans to take the province over the next short while. It is one of those bills where there are portions of the bill with which I am totally in accord.
We start off with Part I, the Equity Tax Credit. A 30 per cent tax credit that is available to certain businesses in the province. My understanding is that information has come forward from the minister that perhaps some 100 businesses have taken advantage of that program since 1994. I am personally aware of some small businesses that have used the credit. In fact, it is a process that works very well and does, on occasion, do what it was intended to do; that is, to be a stimulus for small business around the province. I welcome the government's decision to extend that program. I think that is very worthwhile and certainly the right thing to do.
Then we go on in Part II to a bit of housekeeping. It simply requires in the Expenditure Control Act that in terms of the spending of the province, that in calculating whether or not we have a balanced budget that we fully include the cost of debt servicing.
You know it is interesting that the Expenditure Control Act and the variations thereof are appearing across the country, and other jurisdictions are doing the same thing as governments right across this country attempt to do what this government is doing, that is to come in with a balanced budget. I understand that in Manitoba they have a variation of this that is quite interesting in that if a government minister fails to do what the budget suggests in the budget estimates that he do, that he is penalized part of his salary. I think it is a very interesting suggestion and one that I think perhaps would receive a lot of enthusiasm on the street. I believe it is 20 per cent. So if you fail to meet your budget estimates, a Cabinet Minister is penalized. I think that is not a bad initiative on behalf of government. I would certainly think it would strengthen the hand of the Minister of Finance when he is trying to get his Cabinet colleagues to do what he wants them to do, and that is really to run their department with the amount of money he is making available.
Putting in performance requirements is not a bad idea. This Expenditure Control Act, while it doesn't go that far, I think it is a useful piece of legislation and one that certainly was alluded to by the former Premier of this province. I remember very clearly at that point when he made the statement that if he wasn't successful in balancing the province's books in three years that he would resign; so he was certainly prepared to put it on the line back in 1993. Really, this is just a piece of housekeeping and, again, I think sometimes in our haste or when government is bringing in legislation, we do miss things and little glitches get through. I think that particularly becomes an issue when the government simply turns off its ears and doesn't
listen to perhaps the suggestions of the Opposition, suggestions at the Law Amendments Committee, or even suggestions of those who write in. There is no piece of legislation that can't be improved and we must not lose sight of that.
Then we come to Part IV, the Income Tax Act. In reality we are going to have, this year, a 1 per cent decrease in provincial income tax, to be followed in the next fiscal year, 1998-99, by a 2 per cent decrease. One of the difficulties that I think we are having when the government talks about a package of tax benefits, the difficulty is the attempt of the government to sell this part of its package as being equivalent to the market increase in consumer taxes that Nova Scotians are starting to live with since April 1st. I think it bears repeating that the average Nova Scotian will pay more on increased consumer taxes than that Nova Scotian will benefit from the lowering of provincial income tax.
If you look at the government's own figures, as a matter of fact any family that makes less than $80,000 in income pays more in increased consumer taxes than it saves in the decrease in personal income tax that this particular part of the bill identifies and quantifies. So, in other words, this package, this lowering of the income tax, will benefit only a few Nova Scotians.
I believe, and the Minister of Finance may have the figure, but I believe only about 5 per cent of our families make in excess of $80,000, perhaps less than 5 per cent, maybe closer to 4 per cent. In other words, 4 per cent of Nova Scotians will actually benefit in a positive way from the tax manipulation and the remainder of us will, in fact, end up paying more. The amount that we will pay more will be determined, I think, in the weeks and months to come. My calculation is it is even more than the government's figures would indicate and that the $84 million of increased taxes that the blended sales tax provides us is a low ball figure. I am willing to wager that it is going to end up being a lot more than $84 million.
I will be able to refer back to Hansard one year from now when the estimates come in and I will be able to determine if I am right and, as well, I would like to put on the record that it would seem to me that the Minister of Community Services is suggesting that I am suggesting something will not come to pass. Now that I am putting it on the record, I am saying that it will be more than $84 million and one year from now, I am going to be able to perhaps write or phone the Minister of Community Services because I don't think he will be here, and I am going to say to him, I was right and he was wrong.
MR. SPEAKER: Order, please.
HON. DONALD DOWNE: On a clarification, Mr. Speaker. I was just wondering if the Leader of the Official Opposition was really admitting early, before an election, that one year from now he will still be Leader of the Opposition? (Interruption)
DR. HAMM: Mr. Speaker, if the Minister of Transportation and Communications was listening carefully, I had indicated to him that I would be contacting the now Minister of Community Services, either by phone or by writing. He will probably be off on some other endeavour by that time. (Interruptions)
The tax on large corporations, the way this works is through the corporate financial tax and if a company has taxable corporate wealth or capital from $5 million to $10 million, the amount over $5 million is taxed at 0.5 per cent, up to $10 million. Any company that has over $10 million of taxable capital, the entire amount will be taxed at 0.25 per cent. This will generate, I understand, something in the order of $39 million. I think the comment would be that it is a tax that, at its current level, has not generated a lot opposition from the companies in the province, but, certainly, it is an issue that if in fact they were to generate too much income by increasing this too much, it will be a reason for corporations to leave the province. So, again, it is a bit of a balancing act.
It is interesting. The manufacturing and processing investment tax credit is going to be 30 per cent of the total of all amounts, each of which is the capital costs to the corporation of a qualified property acquired. I think it is a bit of movement in the right direction. I have had the opportunity to visit some fish plants around the province and goodness knows, they are making big investments, and they are in your area Mr. Speaker, in processing equipment.
There would be those of us that perhaps would create the impression that our fishing industry around the province has been totally devastated and in fact, the ground fishery has. However, there are many sectors of our fishing industry and our processing that are thriving and that industry is still providing a very solid portion of our economy but they have had to adapt.
I have had the opportunity to go to fish processing plants that once were entirely dependent on the local fishery for their product and today don't get a single ounce of fish that is caught in Nova Scotia waters. They have been able to adapt by importing huge amounts of groundfish from Russia, the North Sea and other parts of the world and are processing it and are providing jobs here in Nova Scotia because they know how to process fish, they know the market and they know how to sell the fish. It is interesting how adaptable they have proven to be. I notice the member for Guysborough-Port Hawkesbury nodding in agreement because a lot of that has gone in his area.
It was interesting whether or not this particular benefit will be available to the offshore. I believe the Minister of Finance has indicated that he is going to undertake to provide that information to the House as to whether or not, for example, the manufacturing that goes on in supplying the offshore, will that qualify for the credit? The way it is written, I would suggest that a lot of it would but it would be interesting to see what the minister hears from his department.
The chamber of commerce weren't entirely satisfied or complimentary and they felt, for example, and I am quoting from their policy update, "While the 30 per cent investment tax credit will be of benefit for manufacturing and processing industries in the province, the Chamber questions the need for such a program and the decision to target specific industries for government credit.". I think that opens up as to what the best way is of providing some kind of a tax stimulus to industry. I would suggest very strongly to the government the input tax credit might not be the effective generator of new jobs that they are suggesting. I believe they are suggesting some 3,000 new jobs as a result of what is going to happen and the benefits that are going to occur in Nova Scotia businesses.
I remember very clearly when we had presentations about the blended sales tax to the Law Amendments Committee. There were a number of presenters who were involved in exporting and that sector of our business economy and industry economy will benefit the most. In other words, those that are producing something to ship out of the province. I remember very clearly when they were asked this specific question, will this help your business? The answer was usually yes. Will it cause you to create new jobs? Unfortunately, the answer was no, they didn't see this benefit of the magnitude, this input tax credit, that they will now qualify for with the new tax arrangement with Ottawa, that it would not create the kind of new employment that government estimates were suggesting were going to occur with this tax change.
I think we have to look at the incentives for creating new jobs and allowing businesses to grow very carefully. You can't make assumptions that simply because an advantage is there through the tax system that it is necessarily the best one or it is going to work. I only bring that up because there is considerable doubt as to whether or not input tax credit will come even within a country mile, will result in the kind of job creation that government is suggesting. One thing, however that the policy update of the chamber indicates very clearly that they do not favour handouts for business and the government is going to be tempted, I think, in the weeks and perhaps a few months to come to open the floodgates with direct handouts to business, in fact, a few have occurred in recent weeks. In reality, I think this has to be controlled and is contrary to what the government was saying when it was elected that there were not going to be any more handouts to business and already it is starting and I guess, perhaps, it is election year.
Part V of this bill deserves a little comment and that is the Nova Scotia Power Privatization Act. This was a very novel solution and as members of the House are most aware, the grants in lieu of taxes that were provided by Nova Scotia Power and distributed to those municipalities that had significant investment in them by Nova Scotia Power did not come close to what would have been realized by those same municipalities had, in fact, Nova Scotia Power been treated as any other private corporation.
The government has come up with a plan to try to at least partially reimburse municipalities for the loss that they will have with blended sales taxes. Unlike before when they were excluded from paying the provincial sales tax, now with the blended tax they are only going to have a rebate of some 57 per cent. The municipalities themselves have estimated that that will cost across this province $12 million. What is going to happen is Nova Scotia Power, as well as its grant in lieu is going to provide $2 million in June 1998, $4 million in June 1999 and $6 million in June 2000 and it is going to go to the minister and the minister will distribute that among all of the municipalities, I believe, in much the same way as the so-called equalization grant. Eventually, that money - and I believe the year is commencing June 1, 2005 - will be paid by the company to the municipalities in the manner determined by the minister. I would be very interested if the minister would have any comment as to how he plans to distribute those funds because the bill itself is entirely without clarity on that particular point and opens the door to any manner of interpretations.
The point to be made, I think, with this, however, is, it does make the province's books look better, but in reality it does not help the taxpayer because it is the taxpayer that is going to eventually pay higher power bills when Nova Scotia Power in order to access this new expense from its customers will apply for a rate increase. In reality, this makes the provinces books look better, but it is of no help to the taxpayer, certainly, any taxpayer that is forced to buy electricity and that covers a good number of us here in Nova Scotia.
This is simply a juggling act by government to make its books look better and in reality there is no bottom line benefit for the Nova Scotia taxpayer because they are going to end up paying Nova Scotia Power an increased power rate so they can retrieve their funding.
I think it is rather strange, Clause 12 of this legislation indicates that the minister shall pay into the public debt retirement fund no less than one-half of the net gas royalties received in a fiscal year. I just find it passing strange that the government would sort of cherry-pick this particular piece of revenue and say, well we are going to put half of it towards the debt and start retiring the debt. My suggestion is that this is simply just a piece of window dressing because in fact the minister really could have picked out any revenue and said, well, look, we are going to put half of it or a quarter of it or an eighth of it towards the debt. I just find the whole thing strange, particularly strange when I do not think there is a single item on the revenues of the province that is more difficult to predict than the revenues from our offshore gas.
You just have to look at what kind of agreement we have with them. It starts off in a relatively predictable way in that we are going to get a percentage of production. In other words, you take 1,000 cubic feet or 1,000 Btus out from under the sea and we will get 1 per cent of the value of that, whatever the value of the day of gas is. You can kind of get your hands around that, you can get your teeth into it. I really have some difficulty because once we get down to where the really significant royalties should occur, then it gets very clouded as to what we are really going to get. What we are going to get is a percentage of net profits.
I do not for a minute think that we are particularly dealing with huge international corporations with the ability to provide a balance sheet that will give you a profit picture which can be really predetermined by the accountants that we will ever be in a position that we will be taking significant revenues from our offshore gas. Not that that is the only benefit.
I would suggest very strongly that we missed the boat in terms of the royalty arrangement we have made with the Sable Offshore Energy Project. We will be ruing the day that we signed this kind of royalty agreement. The guaranteed profit based on production is the kind of a royalty arrangement that we should have arranged. Are we going to subsidize them for a poor gas market? Are we going to subsidize them for being an ineffective manager of the whole project? Well, certainly we are with this kind of arrangement.
It is strange. We look at the other kinds of royalties we have. Certainly our coal royalty is based on production. Our other mineral royalties are based on production. It seems strange that the oil companies were able to have their way with us and provide a royalty structure where really we become risk takers in the production and delivery of our gas from our offshore resources.
I think the offshore energy project is exciting. I had a very interesting observation. I was travelling actually in the Guysborough area and I (Interruptions) Yes, the member for Guysborough-Port Hawkesbury says a good area and I totally agree. It is an area with which I am very familiar, not living too far from that area. It was interesting. I was talking to some elected municipal officials in Guysborough County and they made a very important point. They were talking about their revenues from taxation of the infrastructure that is going to be put in the Guysborough-Port Hawkesbury area. Those revenues are going to be significant, particularly significant because that particular county has, in relative terms, a low annual operating budget.
If you take what they are going to get in increased revenue from taxing the pipe and the separation facility and whoever will get to tax the liquid product facility, they were saying, this is the biggest advantage that has come to Guysborough County since they announced the Guysborough Railroad and the Guysborough Railroad was cancelled in 1929. So it has been a long time since there has been an advantage in Guysborough County and this is their stepping stone into what I feel will be a much more advantageous future for the people of Guysborough County. So I think it is very important that this project goes forward and does all the things that it can do.
Another interesting thing in this bill is the adjustment of the customs and excise tax on tobacco to make sure that with the changes in the cost of the sale of tobacco brought about by the HST that, in fact, the cost of tobacco remains the same. But the question I ask, and maybe the minister will answer it, does this mean, Madam Speaker, that we have no further control over the tobacco tax? Can we or can we not then adjust our tobacco tax without the agreement of our sister provinces in the agreement and Ottawa or, in fact, would
the Minister of Finance, for example, be able, in his next budget, to alter those taxes or are we tied in with the other provinces the way that this blended sales tax agreement ties us in with the other provinces, relative to our provincial sales tax?
I think that allows me to make the comment, Madam Speaker, that I will never ever be able to understand why we have gotten ourselves into a taxation agreement that has taken away our ability to control our own provincial sales tax. We are now in a position that we have to go hat in hand to Newfoundland, to New Brunswick and to Ottawa if, in fact, we want to change some particular part of our provincial taxation system. Governments have traditionally looked at areas of our taxation system, our provincial sales tax, that would deserve special attention. We did not, in this province, have a tax on low price clothing, clothing under $94. We didn't have to pay that. Now, all of a sudden, we have to pay it. That includes a lot of children's clothing.
Governments made a conscious decision that that is not where we should be getting our tax money. Have we given up control over our tobacco tax with this particular piece of the legislation, the same way we gave up control over other aspects of our provincial sales tax, the tax on fuel, the tax on gasoline, the tax on clothing, the tax on electricity? Perhaps the minister would be in a position to answer that because that becomes relevant to my last comment on this bill in that we will be doing audits. Well, you know, now that we have relinquished control of our provincial sales tax through the blended sales tax arrangement, our tax auditors will not have a lot to do. Those who were traditionally doing the tax audits of business who would be remitting provincial sales tax to Halifax and now, of course, they are going to be doing some back auditing. I think that is good. I think it will result in some additional revenue for the province, as back taxes, in fact, are brought into the Treasury. But, again, I think it is a condemnation of the government, a government that did see fit to relinquish control over the provincial sales tax.
This whole arrangement of relinquishing taxation control really ties the hands of government in providing a taxation system that is fair to Nova Scotians. What may be deemed to be fair in Ottawa won't necessarily be appreciated as fair here. What is fair in Newfoundland might not be fair in Nova Scotia or what is fair in New Brunswick might not be fair in this province and we have got to look at that.
We have given up much of our autonomy in our taxation system by signing the blended sales tax arrangement. The day will come that we will regret this. The kind of fine-tuning that should go on in the taxation system all of the time, much of that fine-tuning now is not available to us. I still fail to understand why we got into that kind of an arrangement, why we allowed the federal government to have their way with us, politically, because they needed a political excuse. We didn't need a political excuse, what we needed was fair taxation.
That concludes my remarks on Bill No. 7 and the bill in reality is simply an enabling document that fulfils some of the tax commitments of the current government and it contains things that are good and are totally supportable. But I have made remarks as to what I feel are the directions that this takes us that are inappropriate. Thank you.
MADAM SPEAKER: The honourable member for Halifax Fairview.
MS. EILEEN O'CONNELL: Madam Speaker, I rise to speak against Bill No. 7. I speak against it on both general and specific grounds. I was really pleased to hear my colleague for Halifax Atlantic talk about the article by George Soros that we both read in the Atlantic Monthly. It is an article that is surprising because of its source. It is fascinating because of its source and it is well reasoned by a man who has made a great deal of money in the marketplace. I think my colleague said George Soros was a multi-millionaire or a . . .
MR. ROBERT CHISHOLM: A multi-billionaire.
MS. O'CONNELL: A multi-billionaire. And George Soros takes the reader of this article in the Atlantic Monthly through an argument which demonstrates quite clearly that what has happened to the world today is that we have gone so far in the direction of the worship, if you like, of money, the competitive individualism of money markets and profit-making, that we are in danger of committing philosophical and worse error in that we are becoming in this world as single-minded in pursuit of money as other ideologies have perhaps been in pursuit of other icons and gods in the past.
I am very proud that my Party, among other groups in society, will speak about this and speak with concern about the lack of productivity generated by money in the world today. There are other groups who are proud to speak, along with other concerned groups in society, about that and to speak on behalf of what we have called and continue to call the collective over the individual.
There is a civility in Canada that is being lost and that civility was partly at least, greatly founded upon the firm conviction that we shared certain responsibilities, one for another, in our society. That would include we share the concern for health and for illness and we shared the responsibility of making people well, if that was possible, and caring for them when they are ill in this society.
Madam Speaker, we have shared for a long time in this society the value of public education and other values which suggest that the whole is more than the sum of its parts. Now after years of seeing what corporate individualism can do, and that is not to fault business, business is about making money. The problem is not that business should not be about making money, one of the problems is that left to itself business will do what it does best, which is try to make money, and all the other values that should temper the profit motive and the corporate mentality and the business mentality, all the values that should be weighted
and considered, get lost. They particularly get lost when governments aid and abet the obsession with corporate individualism and we get into a kind of lifeboat mentality where people must survive on their own.
Ironically, Madam Speaker, one of the results of that mentality, and we see it particularly in education right now, is that if you can't survive in this economic climate and if we are all individuals and responsible for ourselves, then there must be something wrong with the person who has not survived. That is an insidious and dangerous value that has crept further into our culture, where we blame the victims of misfortune and we blame the strugglers in school and their families and we blame the individual for failing in some kind of a competitive environment.
This is a world that has been coming on for quite some time. It is not a world that I admire particularly or that my colleagues admire. So when we come to look at the Financial Measures Bill and we see that this tendency continues and we see that we have corporate tax breaks and we have a small, mitigated cut in personal income tax, the details of which are not entirely clear from the bill, we have to ask, Madam Speaker, whether or not we are perpetuating endlessly on and on again this discredited notion that somehow we will all survive and we don't really need to worry; just worry about business, just worry that business will thrive.
Now as I have said, we have nothing against business, Madam Speaker. In fact we want business to flourish but we want business to flourish for a reason that is not evident in this bill. We partly want business to flourish so that business will create more jobs for the people in Nova Scotia. I think it is fairly clear from recent history and perhaps from history long ago as well, that to simply give tax breaks to businesses and corporations and to give them free reign along with that, is to deny their responsibility and the responsibility that government can exercise for making them create jobs. Our culture has become a kind of jobless society.
I remember one of my favourite oxymorons was the jobless recovery. To my way of thinking, Madam Speaker, it is absolutely impossible in this world to have a jobless recovery. The jobless recovery meant that corporations were making loads of money, they were upping their profits by that other fancy word, downsizing their workers, and instead of using the money that was saved to increase productivity, to increase the products they made and to sell them and to add something productive to the economy, what companies did was they took their profits and ran. In this highly speculative environment where everybody plays the stock market or, if they don't, they feel somehow deficient, then we have the kind of climate where this disparity widens between the rich and the poor, and the money that is made is not put back into our own province and our own country and we have what seems to be a permanently high rate of unemployment.
Madam Speaker, I don't see why this government couldn't say to corporations and to business, yes, we will give you this break, we will help you. We will set it up so that you can prosper here and we will help you to develop and we will give you the tools that any good government would give but, in return for that, we demand the following things from you, that a condition of this, a term of this would be to create jobs, because it can be done.
We have talked so much in this House, and outside of it, about the horrendously high unemployment rate in Cape Breton; I think it is 27.5 per cent. We have areas of this province where unemployment is endemic and long term and, surely, we could ask corporations and businesses which come from somewhere else and who are in danger of taking their profits elsewhere when they get them, that they, at the very least, before they hit the road and cross into New Brunswick, provide and create permanent, long-term, stable jobs for Nova Scotians. I think we have to address the tax breaks and how we can make them work for Nova Scotians.
On the subject of the miniscule personal income tax break for Nova Scotians, we know that people who make $15,000 or less are not subject to income tax and there is a miniscule program that purports to assist them - although it excludes a great number of people, including students and recipients of social assistance - but if you do the numbers on it, if you take a family making $20,000, which is not really a family with any income to spare, probably not a penny to spare, this tax break will save, by our calculations, all of $46.06 a year in taxes with this tax cut. In contrast, Madam Speaker, someone with a taxable income of $100,000 will save $469.30 with this tax break. So we are talking again about regressive taxes and we continue to create more and more regressive taxes. Any consumption tax, the GST is regressive and now the BST further compounds the problem and, as has been pointed out, not only compounds the problem but takes away from Nova Scotia the power to determine its own tax rate, should it see the light at any time in the future and decide to be more responsible and more fair in its tax regime.
Now, Madam Speaker, on the question of revenues, we are not about to say in this Party that this province doesn't need revenues; it certainly does. Revenues are down and at a time when we are looking at a budget that barely gives back an inch of the mile that it took over the last number of years. We are looking at revenues being down at a time when with $52.5 million hoicked out of education in the last three to four years, we now have this government putting $7 million back in. It is a drop in the bucket. The notion that we have to tighten our belts in education and not give that money to education at the same time that we are letting revenues go down is a terrible thing. The belts are in the last hole and the situation in education is what you might call anorexic.
We have the same problem in health care where in spite of the government recently putting some money back into health care, in this province we still are missing $100 million
to $120 million that have not been put back into a system that is still struggling to survive, like some of the patients within it. You can take all the money out of it and what you get is a system with less money and a less effective system.
At the very time when this province desperately needs revenues we are giving these breaks to corporations. It concerns me that we are doing that. It concerns me that as we put little drops back in the bucket that used to be full, that we will not be able to restore to the major departments, the major public good of this province, such as health and education, that we will not restore them to any semblance of functionality or adequacy or fairness or accessibility. Those are the collective virtues that I began to talk about.
I want to talk for a minute about the reference to the Sable gas. Again, this is a government that did not have time this session to talk about something, to bring in legislation about something that is a major concern to many Nova Scotians all over this province from end to end.
MADAM SPEAKER: Honourable member, we have another piece of legislation dealing with the natural gas as opposed to this Financial Measures Act. I would ask you to bring the debate now back into the principle of the second reading on this bill.
MS. O'CONNELL: Thank you, Madam Speaker. I had intended to point out, however, that my comments relate to the prematurity of bringing this portion of the bill in at all. I did intend to relate them.
My point is, we have one bill that I am not going to talk about that was passed in this House. We now have another one that talks about the Sable gas. It is all totally premature. I wonder what sense of order and priority is operating here when there is legislation that ought to be, in our strong view, before this House and this is why we have tabled it. Here we are again, as part of this Financial Measures Act, putting in place the last bolt, the last spike, if you like, for a royalty agreement regarding the offshore.
That concerns me. It concerns me that we are depleting our coffers. Our priorities seem to be out of kilter. Our collective values seem to be wobbling again. There is a sense here that what we need is to right ourselves a little bit and all of us get back onto some kind of a track. I do not believe for a minute that there is anyone in this House who does not value those very things that I have spoken about, the things that put us together, bring us together, make us share what it is we believe in and which help us to function, not as individuals floating around in a sea in a leaky boat and having to throw some of us overboard in order to survive.
So, Madam Speaker, I speak against this bill on principle, on philosophy, also on some particulars and I urge members to vote against it when the time comes to do so. Thank you.
MADAM SPEAKER: The honourable Leader of the New Democratic Party.
MR. ROBERT CHISHOLM: Madam Speaker, I am pleased to rise and speak this evening on Bill No. 7, An Act Respecting Certain Financial Measures. There is one thing about this bill that I want to start off with and that is that the Financial Measures Act 1996 was brought in last year. One of the things that I found particularly odious about that particular piece of legislation was the section, Part II, Expenditure Control Act, Clause 4, Section 12(4). It reads as follows: "Where the amount of revenue received or to be received by the Minister in a fiscal year exceeds the amount appropriated by the Legislature for net program expenditures and the net debt servicing costs for that year, the resulting surplus shall, after accounting for any recoveries required pursuant to subsection (3) and any additional expenditures referred to in subsection (2) or Section 13, be used to reduce the public debt of the Province or reduce taxes, or both.".
I wanted to start there because what I am really concerned about when I look at this budget and what is planned for next year, and I look at the forecast of economic growth, when I look at the forecast of jobs, or lack thereof, when I look at the fact that we are reducing income tax revenue, we are going to be receiving $100 million less at least, through the BST, from corporations. I am becoming increasingly concerned about our ability to meet financial requirements of the services that we deliver to Nova Scotia. I am particularly concerned because of this provision in the bill that provides that if in the event there is any - and you see the point is, and we made this last year - surplus anywhere that that money cannot be put into programs.
In other words, if we continue to see a deterioration in our health care and education and social services to the point where what I think is going to happen really begins to rear its ugly head, and that is that we begin to see, within the period of maybe a year or maybe two, just how dramatic the cuts have affected some segments of the population, some communities, whether that be through education or social services or health, and if in the event there is any kind of windfall through whatever magic, we, according to this, cannot put any of that surplus towards programs in order to develop or to expand or to try to repair some of the damage that has been done. I talked for some time on this last year when it first came in, because I was really concerned about it, Madam Speaker, and I continue to be particularly concerned about it.
I said earlier today in my response to the Budget Address that I am concerned on a number of levels about this budget and about Bill No. 7, An Act Respecting Certain Financial Measures. I said that as far as I am concerned the budget and this accompanying document fail Nova Scotians because there is no strategy to deal with our chronic unemployment. The idea of shifting the tax burden from corporations is not a job creation strategy that works.
Again, it continues to shift the tax burden from corporations and the better off to lower income Nova Scotians. The fact that we are, through the BST, asking Nova Scotian consumers to pick up an extra $84-plus million at the same time we are giving a tax exemption or a tax credit to businesses to the tune of $200-plus million is wrong. It simply does not make any sense at a time when Nova Scotian consumers are - one of the problems with the economy in this province is the depressed consumer demand. Why is it depressed? Because consumers do not have the money, because people are concerned about job insecurity. People do not have the disposable income, their wages have not increased. In fact, as I indicated, over the 1990's, the average family income in Nova Scotia, has reduced 7.1 per cent. People do not have the confidence, they do not have the disposable income.
If you go back and look at the budget you will see that the estimates for this year show a continued decrease in terms of retail activity. Yet, here we are asking the Nova Scotian consumers - it is going to affect in particular those low and middle income consumers that spend a greater proportion of their income on family essentials. Home heating fuel, gasoline to power their car, school supplies, clothing for their children and grandchildren, clothes under $100 all are going to be at greater cost. Private home care services, home support provided through private agencies that somehow does not meet a definition of the Department of Finance, will increase from 7 per cent to 15 per cent, and on and on it goes.
The point is that many low and middle income people will be paying a greater proportion of their incomes on those kinds of taxes. There will be a group of people, higher income earners, who will realize some savings, no question. They will, too, have to pay those family essentials, but they, of course, are a smaller proportion of their budgets and they may recognize some of the savings and they may be able to balance off some of those costs with the savings when they go out and buy a new yacht or a new car or a fur coat or a washing machine or other major appliances. Those items are going to be less, from 18 per cent down to 15 per cent, so those people will, but the low and middle income earners will pay more.
How is that supposed to increase economic activity through consumer demand and consumer spending in the economy? I cannot quite fathom how that is going to result, but anyway. Of course, the compensating move by this government was announced in last year's budget. It was that come July 1, 1997, they would bring in this income tax reduction of 3.4 per cent, a two point reduction in the income tax rate from 59 per cent to 57 per cent approximately. That is supposed to offset the cost of the BST for many.
The problem is that it is the same problem with the BST; it affects low and middle income earners by asking them to pay a greater percentage of their disposable income, or of their income, on taxes. The income tax reductions will benefit them less than it will benefit higher income earners. For example, someone making $20,000 a year in taxable income will save approximately $46 a year in taxes. Somebody earning $100,000 a year will save $469.
Somebody earning $75,000 will save almost $350. The point is that for someone earning $29,000 the income will be all of $98.60 and we expect - and that has been confirmed by many sources - that that alone will be wiped out as a result of increased heating costs in the home.
Again, the point is that maybe there will be some benefit for those people in the $100,000 tax bracket, those people that can realize the savings when they go out and buy a new car, a power boat or those big ticket items that will experience a tax reduction under the BST. The point is that that particular tax change one again is impacting negatively for low income and middle income Nova Scotians.
Let me finish the income tax line here. You have got the corporate capital tax that Nova Scotia is introducing for the first time on profitable corporations at the tune of 0.25 per cent. The idea when this was originally introduced last year, this idea of a corporate capital tax, was that it was to offset the savings or the reduction in revenue from corporations as a result of the $200 million that they are going to save as a result of the BST. The idea was and I wish I could find it because it was quite an interesting quote by the then Minister of Finance, the Minister of Health, the soon to be maybe Premier of the Province. Anyway, I can't find it but the idea was that this corporate capital tax was to raise between $40 million and $45 million which was to somehow offset a reduction in $200 million from the BST.
It is interesting why we wouldn't have gone maybe closer to some of the other provinces that are upwards of say 0.5 per cent or maybe even higher to raise more money to offset that savings but then again the whole idea is to give those corporations a big treat by allowing them that $200 million and that is what the government was intent to do.
Do you know what they have introduced this year? They didn't talk about it last year but I guess some of the movers and the shakers got to the Finance Minister and his colleagues and they put a sunset clause in the corporate capital tax. They didn't put a sunset clause on the BST, they have not said to low income earners we are going to give you a credit for the amount you spent in BST on home heating fuel or on gasoline to fuel your car or on shelter, no, no, but they put a sunset clause in for corporations with respect to the corporate capital tax.
So what is going to happen in five years? In five years we are going to give up another $40 million to the corporate sector. I don't know, maybe they are going to just create so many jobs that there is going to be so much revenue from consumers buying and all this increased demand. But remember that this same government has estimated there is going to continue to be 58,000 unemployed in the Province of Nova Scotia next year. They have continued to estimate that the economic activity in this province will continue to trail the rest of the country. So I am very concerned again about this whole question of fairness in the government. It is like last year's budget, Robin Hood in reverse; they rob the poor to help the rich. It is that same idea.
I know they herald these tax breaks or the tax relief for low income Nova Scotians but, Mr. Speaker, the estimates of that, for example, are that it represents a saving of $110 per head per year, for people who don't earn enough money to pay taxes. I think that what we expect and what economists expect, what most Nova Scotians expect is that the extra costs they will be paying in the GST, the BST, will certainly be wiped out as a result of that.
So again I guess I go back to what I said this afternoon, that this whole idea of the corporate capital tax being a quid pro quo for the $200 million tax break and the fact that they would put in a sunset provision is perhaps another example of how irresponsible and reprehensible this government is to announce that and to show us, in light of that, that there is absolutely no evidence of continuing or any growth in job creation in this province. Again, this is another example, these are very clear policies which will cement the continuing, the growing gulf between the rich and poor in this province.
As a result of the policies we have seen throughout the 1990's and before in this country and in this province, Nova Scotia, as I indicated earlier, has been transformed from a province with one of the lowest rates of child poverty in the country to one of the highest. Those are tangible examples of what these kinds of policies are doing. More tax breaks for corporations, at a time when we know that in 1994 over 80,000 Canadian corporations, with over $17 billion in profits, pay no corporate tax, Mr. Speaker. These are the kinds of policies that encourage big banks to pay their CEOs over $3 million a year while nearly 1.5 million children live in poverty across this country. That is the issue I raised earlier today and I want to raise again that this budget is in no way about tax fairness; it is about further shifting the burden onto individual Nova Scotians and on low and middle income Nova Scotians.
What about our ability to meet our commitments and to provide the kind of services that Nova Scotians want, Mr. Speaker? What about that opportunity? What are we going to do after that money from Ottawa, the $250 million, is gone? What are we going to do about the fact that in 1997-98 the balanced budget is predicated on the Minister of Finance using almost one-half of that money which was designed, apparently, by the architects of this tragic deal to, in fact, cover a four year period, a reduction in tax revenues over those four years?
Now imagine if you will (Interruption) Yes, the Minister of Community Services knows what he is doing all right and I know what he is doing and Nova Scotians know what he is doing. They are turning their backs on ordinary Nova Scotians. They have turned themselves to the altar of the market. They are bowing before the market, Mr. Speaker, and they have thrown up their hands and said, there is not a thing that we can do, we don't know what to do and we are going to just turn it all over. Maybe they will go to the odd community and apologize for the kind of poverty and despair that is being created.
It is like what the Minister of Health has done in dealing with rural health care. We have seen with the Hants Community Hospital situation in Windsor that he would go in there and throw $8 million at doctors and suggest that there are all these people available. They are
not available. It is, again, that kind of top-down, irresponsible, throw-money-at-the-crisis type of management that we have seen from this government and we have seen from governments for far too long in this country. Not even a commitment did they get from the Medical Society or from physicians. I don't know who they negotiated with; supposedly the Medical Society, yet the next day we find out that the Medical Society had never heard of this deal, this $8 million for physicians to service rural communities.
You know the issue is, had they been negotiating, then maybe the minister could have paid some attention to an issue that we raised with him and his predecessor some time ago, back in the summer, when he announced that they were going to put another several million dollars - what was it?- almost $20 million, from $246 million to $262 million, into doctors. We said to him, look, we've got a problem in this province with physicians charging tray fees and other forms of extra billing, user fees for pap smears and prostate examinations. We said, instead of just handing money out to physicians, why don't you say to them, here is the deal; we are going to remove the cap or we are going to bounce up what it is that you receive under MSI and in return you will stop this practice.
I am not going to talk to you about the merits of why the doctors feel that they need to pay this other than the fact that it is wrong. When it comes to pap smears and prostate examinations, clearly these kinds of tests have been proven to be helpful in the prevention of cervical cancer. Early detection is part of the issue. When people are charged, when there is an extra billing, when there is a user fee, it is documented that that is a deterrent so we should get rid of it. That is why the Minister of Health, if he had been more focused in actually resolving this problem with the help of the Medical Society, instead of just grandstanding as part of his leadership campaign, maybe he would have understood the need to actually get something in return for doctors. Maybe there would have been more of a full debate about how, in fact, to solve the problem of the provision of health services in rural communities and the supply of doctors to those particular communities.
As soon as they found out about the package, the rural physicians said that is not good enough. It is not a question of more money, it is a question of having doctors available to fill in, to plan around and so on. But no, that wasn't done. The idea of the government putting more money on emergency medicine again, if we don't focus some attention to the human services that are delivering emergency medical care, then we can have as many of those fancy ambulances as money can buy, it won't make any difference. You have got to do something about making the working conditions of those emergency medical technicians not only bearable but reasonable and pay wages that are commensurate with the significant responsibility that those people have.
There are a lot of issues here in this budget with respect to not only fairness but how do we get this efficient revenue to be able to deliver the services we need? If you look at the
whole question of pharmaceuticals, our Pharmacare Program and the cost of drugs not only to the province but to seniors is increasing.
The Department of Health officials spoke to us a few months ago and said they are unable to control the cost of pharmaceuticals. We have got an opportunity, there is a bill before Parliament Bill No. C-91, the drug patent legislation which is up for review. The Mulroney Government brought it in and the Liberals when they were in Opposition railed against it both here in Halifax and in Ottawa. They railed about the idea that the Tories were simply giving this 20 year protection and it was funnelling money into multinational corporate executives pockets, they railed against it. They said how could you? How dare you put that kind of burden on the health care system and on individuals and seniors across this country?
Yet, here we are three years later and this Liberal Government right here in Nova Scotia, as well as the one in Ottawa, have an opportunity to deal with that issue. What do we see? We are seeing them back off, we are not hearing anything. I have not heard anything from this government with respect to standing up with Nova Scotians to try to ensure that this part of the health care system, the burgeoning health care costs are controlled in some reasonable and fair-minded way.
The National Forum on Health Care recommended that we develop a national Pharmacare Program for all Canadians, all Nova Scotians and that we include a drug plan within Medicare. They said home care should likewise be extended. How are we going to do that? How are we going to be able to manage to do that if, in fact, we are not going to have the revenues, if we are going to continue to let thousands of profitable corporations get away without paying their fair share, if we are going to continue to allow the loopholes and the credits and the exemptions for wealthy individuals to get away without paying their fair share of taxes?
Mr. Speaker, we are just talking very simply about a question of fairness, about a question of people paying their share, about everybody anteing up and throwing their money in the hat so that we can afford to look after our sisters and brothers and people in our communities, so we can ensure that we are able, as a society, to compete on the local and regional and national and global market, in terms of skills. I mean if our children are going to school hungry, if our children are sick and not able to be cared for in the health care system, if our children are in classrooms of 40 and 50 people, if our children are not able to get the kind of assistance and guidance that they require in our public education systems, if our young people are unable to afford to go to university, then how are we going to develop that skill level, that skill base that will allow us to be able to compete locally in the community, in the province and across the country?
Well, the member for Kings North may not think this is important but let me tell you and let me tell him, Mr. Speaker, let me just say here . . .
MR. GEORGE ARCHIBALD: Mr. Speaker, I have to rise on a point of order when the honourable member for Halifax Atlantic indicates, I may not think this is important. I do, indeed, think this is very important. My question was, was his talk relative at all to the bill before the House? I think if the honourable member would put his glasses on again and re-read the bill, he may be able to be more relevant than he has been for the last 10 minutes. Thank you. (Applause)
MR. CHISHOLM: Mr. Speaker, I am, as always, appreciative of the interventions of the member for Kings North. Let me say that we are again seeing an example of the true coalition that exists here in the Legislature of Nova Scotia between the Liberals and the Conservatives. Let me also add that the relevance of my interventions here this evening are much more germane than perhaps the member's interventions with respect to carrying gas down to New England in brown paper bags. Regardless, I do appreciate the contribution from a fellow Valley boy.
Anyway, where was I? The cries come up from members of this House on both sides, Mr. Speaker, when we talk about issues of tax fairness and asking corporations and wealthy individuals to pay their fair share. That is one reason why the New Democratic Party is in this House and that is why we will continue to be in this House in increasing numbers, because Nova Scotians are recognizing the kind of damage being created, the havoc being wreaked throughout this province as a result of the policies of both the Liberals and the Conservatives over the past number of years. That is increasingly evident to Nova Scotians and the reason why Nova Scotians are sending New Democrats to this House and will send them in increasing numbers. I, for one, do not attempt to presuppose what Nova Scotians are going to do at any given time. I would not be that presumptuous, as members of the government benches might be. I would suggest that members opposite perhaps have reason to be a little more cautious in their bravado with respect to what is going to happen after the next election.
Again, Nova Scotians will decide that. If Nova Scotians decide to send this gang in these kinds of numbers again, I think we will increasingly need to make sure that health services are provided to those Nova Scotians.
Let me continue, if I may. One of the things that we talked about in this bill and one of the inadequacies as far as I am concerned is the lack of recognition and, I do not know what is going to happen to this particular bill and the whole area of recognizing the contribution the public sector workers have made. I talked earlier today about how the government had recognized contingent liabilities in areas of health, through debts that exist in different hospitals that have been taken over by regional health boards. They have recognized those contingent liabilities by indicating a line item, to the tune of $39 million under restructuring costs. There is a line item to deal with the Early Departure Incentive Program and there is also a contingent liability in there.
Again this year, recognizing the government's responsibility for the abuse victims or those involved in the Institutional Abuse Program, what about those nearly 50 or more? A thousand public sector workers, the policemen, the firefighters, the nurses that the former Minister of Finance, now the Minister of Health talked about. Those people who contributed to the first balanced budget in 25 years, the sacrifice that they made. That was certainly his comment. He said that you cannot give what amounts to more than an 11 per cent raise for doctors who, according to the Minister of Health, probably received the most from taxpayers resources, without creating the expectation that something similar is planned for nurses, firefighters, police officers and other hard-working and valuable public servants.
That is my question and my concern. Where is the money in this budget? If it is not in the budget, how are we going to allow for it, given the conditions of the Expenditure Control Program?
I mentioned before how public sector workers in this province have contributed over $200 million in wages to the fight against the deficit. They feel very strongly about this set of negotiations - November 1, 1997 - if in fact this government is doing more than blowing smoke with that phrase "the tide has finally turned", they are in line for some payback. The benchmark that appears to be set now is the 11 per cent that has been paid out to doctors; that is what public sector workers are going to be looking for. A return, a payback for the sacrifices, the contributions that they have made, contributions of over $200 million, and if the tide has turned, say those public sector workers, then it should turn for everyone.
I am concerned, as I know they are, and as I know a lot of other people are, that the impact of the CHST, the $466 million over four years, the additional reduction in revenue as a result of the BST and now, of course, the income tax reductions, Mr. Speaker, are going to mean that when the public sector workers in this province go to the table, the cupboard is going to be bare. I believe that. That is why this government is going to avoid that November 1st deadline like the plague. What they want to ensure happens is that there is an election before that time comes and they are going to stay away from public sector workers, from their unions, before that time comes. Because this government recognizes that there isn't any money in there. There isn't any money left. They have given it all away and, as a result, in order to maintain the balanced budget projections, the phoney baloney balanced budget that someone suggested, the cupboard will, in fact, be bare for those people.
The point here is that this is an unfair budget and it is an unreasonable bill that is here in front of us and that is why for that and many other reasons that members of this caucus will, in fact, be voting against it. We have tried to argue against that, in fairness. We have tried to argue that the government is tying its hands and tying the hands of future governments by provisions in this bill. We, perhaps, in contradiction to members opposite and to the Official Opposition, believe that these kinds of policies are taking us down the wrong
track. They have already created so much damage to the economy of this province that it will take many years for us to recover and that the last thing we need to do is to build on that damage, Mr. Speaker, by furthering this fiasco that we call economic development by this government.
I want to say, in conclusion, that I am opposed to the unfairness of this budget. I am opposed to the unfairness of this bill, An Act Respecting Certain Financial Measures. An example of the haste in which this government brought in their announcement back in April 1996, that they were going to reduce tax rates by two points, July 1997, was the fact that they did not even get that right. The fact that they somehow didn't realize that, in fact, the feds would not make those kinds of changes halfway through the year. Now, in this bill, we are going to go back. We are going to come with the same outcome, but why wasn't that in the bill last year? Why did this government not understand that they could not bring about those kinds of income tax changes halfway through the tax year, Mr. Speaker. Now, of course, we are going back with 1 per cent to January 1, 1997. We are going to take the other point January 1, 1998.
The point, simply, is that this is an example of the government travelling with some considerable haste to make announcements about these changes that they want to make and the improvements that they think they will make in the economy and they are doing it without enough foresight. Also, I am arguing and my colleagues have argued against the continued shift from corporations, Mr. Speaker, to individuals that we have seen taking place over the past 25 years. If you look at the share over the past number of years of the tax burden from corporations to individuals, the shift has been striking. It has been irresponsible. Have we seen any jobs? Have we seen a change in the chronic unemployment that we have in this country? The more tax breaks that we give profitable corporations in this country, the more people they lay off. I mean, if you look at the most profitable corporations in this country, you see the profits going up and you see the number of jobs, the number of people employed, going down. What is it going to take for this government to wake up and see what is going on here? Corporations continue to shed jobs as they strive to make the balance sheet even prettier for their shareholders than it already is.
What we said all along is that we have nothing against corporations making a profit, but at the same time they have a commitment to this community, this province and this country and that we have to demand that in return for favourable tax measures or other changes for favourable attention at the very least they have to meet certain job creation and job maintenance goals. At the very least that is what happens because the crazy thing about this downward spiral is that the more people that are unemployed, the more we ratchet down the wages and working conditions of ordinary working people, the less money is in the community to spread around for small business. Bankruptcies continue to be at record levels in this country and in this province over the 1990's. Why do you think that is? Why do you think consumer demand continues to be in the toilet? Because people do not have any money.
Because increasingly people that spend money in the community, ordinary hardworking Nova Scotians, have less and less disposable income, have less money.
That is the point that this government and the government before them, the Tories, seem to forget. You cannot continue to beat the living daylights out of ordinary working Nova Scotians in terms of their disposable income and expect the economy somehow magically to continue to percolate. It just is not going to happen. We continue down that road and we are going to pay for it as a society as we are unable to provide the kind of health care, education and social services, the roads and the supports for those small and medium size businesses in those coastal communities that are on the edge right now as a result of changes in the resource sector in the Province of Nova Scotia.
Again, as my colleagues have indicated, I will be voting against Bill No. 7. I look forward to some interventions during the Committee on Law Amendments, but nonetheless, I am opposed to the provisions contained within this budget, I am opposed to the principles that it represents. I think it is wrong-headed, I think it is short-sighted and I think in the long run this government and this province and the economy of this province are going to suffer. I ask this minister to reconsider the direction which he is following and the direction that this government is going and to bring some sanity back into the governing of this province and recognize that we are not going to have an economy, we are not going to have a vibrant society if we cannot get people back to work.
That, Mr. Speaker, should be the ultimate goal. Instead of trying to fatten some corporation's bottom line, what we should be trying to do is to increase the number of jobs, the number of people that are working. If you put people back to work, you lower the burden on the social assistance system, you lessen the burden on the health care system, you lessen the burden on the justice system and everybody has a better sense of themselves, a better sense of community, a better sense of making a contribution if, in fact, they can work and put bread on the table for themselves and for their families.
Mr. Speaker, I will be voting against Bill No. 7 at this stage and every other stage and urge this government to reconsider this direction.
MR. SPEAKER: If I recognize the honourable minister it will be to close the debate.
The honourable Minister of Finance.
HON. WILLIAM GILLIS: I will not detain the House, but I want to make an effort to answer a few of the questions. Others of them that may still be left can be answered, hopefully, either at the Committee on Law Amendments or the Committee of the Whole House on Bills.
On the equity investment tax credit there were several questions and I will do my best to answer those. One on that matter was plant and equipment. Of course, if there is a building involved with an expansion for a company, that investment is made as well as machinery and equipment, that would be covered. If it is something that doesn't have anything to do with a plant, something like separate office space, that would not be covered to the best of my knowledge. But a building to house the equipment is covered, plant and equipment. I think that was one of the things that was asked of me.
Further to information on the offshore, it is my understanding after checking that the investment tax credit does not apply to anything to do with a drilling rig so if you are bringing a rig in, it is not plant or equipment, it is not covered by the investment tax credit.
A permanent establishment came up. In simple terms it means any place of business, bricks, mortar, office, ranch and so forth, where there is an agent or employee, that is what we mean by a permanent establishment. It implies an agent or an employee and I might add there are special rules for insurance companies. In a province where they are licensed they are considered to have a permanent establishment but I am sure that can be clarified at the Law Amendments Committee. That is the general drift there.
In terms of the eligible time, it is my understanding that investments have to be made or the property has to be acquired, I guess to put it another way, after December 31, 1996 or from January 1st on. So if something is acquired before that, it is not covered by the investment tax credit but if it is acquired from January 1, 1997 on it would be covered. So that is my understanding of the investment tax credit.
Another question that came up was the matter of the tobacco tax and the answer is although there are changes as it relates to the harmonized sales tax, we are certainly free to vary the rate of the tobacco tax. Of course, we work with the other provinces to see that we don't get out of line with them so that somebody will get an advantage in terms of the illegal trade. It is in our jurisdiction to do that so that is the answer there.
The only other thing that I wanted to say before I take my place so the bill can move on and have opportunities for hearing at the Law Amendments Committee is that we had members quoting from a press release by other organizations on the budget and the measures in this bill. One release I would like to quote from is the Alliance of Manufacturers & Exporters. (Interruption) Well, because some honourable members, including the Third Party over in the corner, quoted the Halifax and Metro Area Chamber of Commerce as being against the investment tax credit. I didn't say you did but some members did including, I think, a member in that corner. The Alliance of Manufacturers and Exporters said, "The Alliance is very encouraged by the new 30% investment tax credit because it demonstrates that this Government recognizes that this is a good way of stimulating investment and hence job creation. The Alliance agrees with the Government that this will help Nova Scotia businesses increase competitiveness and grow the export business.".
Mr. Speaker, I move second reading of Bill No. 7.
MR. SPEAKER: The motion is for second reading of Bill No. 7. Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Ordered that this bill be referred to the Committee on Law Amendments.
The honourable Deputy Government House Leader.
MR. RAYMOND WHITE: Mr. Speaker, for tomorrow's business after the Question Period the Committee of the Whole House on Supply will meet in the Chamber. We will be discussing Education and in the Subcommittee, Agriculture. Following that we will be doing Public Bills for Second Reading.
I move that the House do now rise and sit on Tuesday from 12:00 noon until 8:00 p.m.
MR. SPEAKER: The motion for adjournment has been made. The House will now rise to sit again tomorrow at 12:00 noon.
The House is adjourned.
[The House rose at 9:30 p.m.]
By: Mr. Ronald Russell (Hants West)
I hereby give notice that on a future day I shall move that an order of this House do issue for a return showing, with respect to the Department of Finance:
(1) Number of native bands registered with the Nova Scotia Tax Commission, number of residents of each native band and the quota of tobacco products available to each individual band; and
(2) Total volume of tobacco sales in the province for the fiscal years 1994-95, 1995-96 and 1996-97.