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HALIFAX, MONDAY, APRIL 28, 2003
COMMITTEE OF THE WHOLE HOUSE ON SUPPLY
3:30 P.M.
CHAIRMAN
Mr. James DeWolfe
MR. CHAIRMAN: The honourable Government House Leader.
HON. RONALD RUSSELL: Mr. Chairman, would you please call the estimates of the Minister of Finance.
MR. CHAIRMAN: Are the minister and his staff ready?
The honourable member for Halifax Fairview. Supply will end at 4:30 p.m.
MR. GRAHAM STEELE: Mr. Chairman, I wonder if we could start by you informing me of how many minutes I have left?
MR. CHAIRMAN: You have 59 minutes.
MR. STEELE: I personally don't have 59 minutes.
MR. CHAIRMAN: Yours is 29 minutes.
MR. STEELE: Thank you very much. When we left off the other day, we were on the issue of pension valuation which in my estimation is going to be the first big, sharp shock that is going to be faced by the new Finance Minister whoever that is after the next election. Our current Minister of Finance has so far declined to give this House any information about the revised valuations of the Public Service Superannuation Fund and the Teachers' Pension Fund, both of which have a significant impact on the province's financial state.
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When we left off the other day, I had mentioned to the minister that his government this year revised the way that it was valuing pensions. I suggested to him that he had done so for sort of baldly political purposes, that it was just after the last election when they changed the method from what it was to a new system in order to make the last government look as bad as possible. In this year, when the results would have put this government in a bad light, they decided to change the method back again. So, in a rather long-winded answer that ended up the last day, the minister explained why the new system was so much superior to the old system, which of course would make anybody wonder why they had switched it back in the first place. But, the answer of course, is because at that time it had a political purpose as well, which was to make the last government look as bad as possible.
What I had asked the minister and what he had danced around was this issue of what would the valuation have been if they had not changed the pension valuation method? What impact would it have had on the books? The minister, if I can cut a long-winded, five- minute answer down to its essence, what the minister said was they would have to re-hire the actuary and do that estimate. I have to say, I don't actually quite believe the minister. What I would suggest happened is that they did a rough run of what the numbers were going to look like this year and the old method made them look so bad, they immediately decided to ditch it and adopt a new method.
So I would suggest to the minister that although he might not know exactly to the penny what the new valuation is, that he and his staff have a very good idea of the ballpark that it's in. So I'm going to give the minister a chance to answer the question again now that he's had a few days to think about it and I'm going to ask him again, roughly, what would have been the impact on this year's financial statements if the method of pension valuation had not been changed?
MR. CHAIRMAN: The honourable Minister of Finance.
HON. NEIL LEBLANC: Mr. Chairman, this question was asked on Friday. I indicated to the member opposite that we did make some changes to how we account for our pensions. I should point out as we moved into the new accounting for the province, which is Generally Accepted Accounting Principles, that we've done a lot of work in a very short period of time. A lot of the things that we endeavoured to report under the new rules was - actually quite a few issues, one of which was the valuation of our pensions. The other thing that we talked about changing was how we account for the assets that we buy, now we call them tangible capital assets whereby we buy assets. We also depreciate them over their useful life. That is a change from the previous administration.
Just for the member's edification, I think we've had quite a bit of debate on this in the last few weeks, especially from the member for Cape Breton West defending the Liberal position to do P3 schools. One of the reasons that they were doing so was the fact that under the accounting, they were making literally hundreds of millions of dollars of purchases and
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saying that these weren't capital assets, that they were leased assets. As such, they were keeping it off their statements and I guess in a sense you could say, out of sight out of mind. It allowed them to make a lot of commitments prior to the last election in many of their ridings.
I mentioned before that those are two of the major changes that we have made. The controller of our department is Kevin Malloy, he's assisted by Suzanne Wile and they've done an amazing amount of work in a very short period of time. I could say with the limited resources that we do have, that they've done wonderful work. If I keep bragging them up - they're in the gallery - they'll be looking for a raise. If you tell them up front there's no raises coming, just platitudes, other than that you're not going to get any money.
With regard to the pensions, we have made some refinements to it. As we move forward I would anticipate that oftentimes we will make adjustments in other types of accounting that we have. I should point out that under Generally Accepted Accounting Principles, the changes that we have made are permitted within that. We did take a look at how our pensions are doing and I indicated on Friday that our pensions are no different than most other provinces, that they have lost value. I guess every pension plan probably, let alone in Canada, but in North America has lost value.
The member opposite has asked for the specific amount of how much they have lost and how much of a change it would be in this income statement. I told him on Friday that for me to answer that question, we would have to go out and incur expense to do it. At that time, I told him I was not prepared to spend taxpayers' money to answer a question in the House as to what the difference would be. I also indicated at that time to him that the number would have been significant, it wasn't a small amount. However, I don't know the number and that's what I stated on Friday. Here we are on Monday, after I thought about it for a few days and I'm still giving him the same answer. Thank you.
MR. STEELE: The next time the minister decides he's not going to answer one of my questions, maybe he could just stand up and say so and then we could move on to the next topic.
One of the things that I've learned about Generally Accepted Accounting Principles is there's still a great deal of wiggle room. The pension valuation thing is a perfect example of that. There's two methods, both of which are acceptable in accounting terms, but the choices of which one you adopt is - in this context - a very political choice. Four years ago they made one choice for political reasons and today they're making another choice for political reasons and it's all within the warm embrace of GAAP.
Here's another choice - I've tabled this document before. It's a meeting of some of the most senior people in government and it concerns the provision for doubtful accounts. It's attended by, among other people, Gordon Gillis, the deputy minister to the Premier and
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Ron L'Esperance, senior deputy minister, Vicki Harnish from Treasury and Policy Board, Moira MacLeod from Treasury and Policy Board. The minutes of the meeting indicate that all of those people at the meeting were clearly aware that the provision for the doubtful accounts item in the budget was insufficient. It did not reflect the reality on the ground. So I wonder if the minister would care to explain why, within Generally Accepted Accounting Principles, senior governmental officials knew what the truth was and that minister reported a different number in his budget?
MR. LEBLANC: Mr. Chairman, first of all, the member opposite has stated that I've reflected a different number in the budget. Each department prepares its budget. It provides for losses of valuation of their accounts in their year. One of the things that this government has tried as much as possible is to work on an industrial expansion, I guess in a sense, mostly on the performance-based types of initiatives. I can use examples for the member opposite, especially a lot of the so-called call centres that we have done, there's many examples of those - in Cape Breton, there's one announced in Truro, there's some in my county of Yarmouth and I could go on and on. I know there are some in Port Hawkesbury, some in New Glasgow and there are a lot of them in the city. The member for Dartmouth North is here, I'm sure a lot of people that live in your riding - actually, it's in your riding if I remember correctly - actually work there. There's two, he's correcting me, thank you very much for that information.
So, we've moved as much as possible to performance based. What that means, Mr. Chairman, is they don't get the money unless they perform. In the past what we've done, and there was a good example that was debated in this House last week by the member for Hants East, I think Orenda was an example of the previous Liberal Government giving, I'm not sure if it was $7 million or $9 million to a company to set up a factory to produce, I believe it's jet engines, whereby they would sell these engines and they would receive royalties on them. This wasn't even a loan, this was an equity investment in it whereby the royalties received on it would basically be accruing to the province and, as such, we would - I'm not sure what the projections were and the numbers they would produce with this type of engine, but apparently what would happen is that the royalties would be significant and, as such, the province would be making money.
Well, the fact of the matter is, Mr. Chairman, as much as that company perhaps had good intentions of getting into it, they produced almost none of these engines and the employment levels that were anticipated didn't occur. They're still there, and we hope that they will do well. The fact is, at the same time, that is not a performance-based type of incentive that we have tried to move towards. One of the reasons is that we still have many of these types of loans on our books that are being carried forward. The loan portfolio of the province is not insignificant and there are many loans we have dealt with that we inherited. There was one from the member for Richmond's riding, Scotia Rainbow, that was in that riding that we inherited that caused a loss to the taxpayers of a considerable amount of
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money. (Interruptions) Was it $4 million? I am getting a wealth of information from my right here from the former Minister of Economic Development.
At the same time, as we move toward that, we believe that our provision for doubtful accounts will continue to drop. The fact of the matter is the member opposite is quoting from a meeting that apparently took place at the Treasury Board. I wasn't in attendance at the meeting, Mr. Chairman. We have asked the departments to prepare reasonable amounts for the provisions and we've provided for them. In the past, the member can probably state, and I will agree, that we've exceeded that in the past. Our intention this year is to live within that, and we're hopeful that will occur.
MR. STEELE: Mr. Chairman, just on that subject, of course the minister's answer was nowhere close to my question, but that's okay, I'm getting used to that. The minister says, well, it's all going to change now because the government has moved to a payroll rebate system. The problem is that Nova Scotia Business Incorporated, in this year's business plan, says they want to move away from that because it provides limited benefits, it's only certain kinds of industry that benefit from payroll rebates, and other kinds of industry want other kinds of benefits. So precisely at the time when the government is trumpeting the virtues of its move to payroll rebating, their lead agency in this is saying, gee, we think we need a change of mandate because this isn't working. That's something to look at in the future.
The weekend before last I sat in the living room of a young man with a young family in my constituency and we talked about all kinds of things, but what he focused on when we talked about what's standing in the way of the success of his small business, the one that he started, was the underground economy. I looked back through newspaper clippings for the last time that this issue was mentioned by the government in any kind of formal government study and the first item that we could find was from August 1998, nearly five years ago, and even that was a report that Canadian Press had gotten through the Freedom of Information and Protection of Privacy Act and it was, in the words of Canadian Press, heavily censored.
Now this young man is running his own company. He started the company with the severance money he got when he was laid off from the public sector. It's a service industry, where he's providing a service to householders. He said the problem, what's killing his business, is the underground economy. People who are willing to do the work for cash, they don't pay their workers' compensation, they don't pay their taxes, they have no overhead, they're just charging cash. The rate that they can charge is about half of what he has to charge as the owner of a legitimate business. He says if there was a level playing field he could hire more people.
As this government likes to say, as all governments like to say, small business is the engine of growth for our economy. The problem is that very few governments actually take concrete steps to act on that conviction. So I would like to ask the minister what is the latest
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estimate that this government has of the extent of the underground economy and the amount of tax revenue that we are losing as a result of the underground economy?
[3:45 p.m.]
MR. LEBLANC: Mr. Chairman, the member opposite brings up a good point. He is not alone in having people approach him about this issue. I am sure all of us, as elected members, are approached by people who are working very diligently to try to bring about a successful business whereby they do all that's required of them by government and, at the same time, are providing employment and also make a living at it. The situation is one where there is an underground economy in Nova Scotia. I don't think we're different than other provinces. I guess the question that I have, in a sense, is how we're going to approach it. We have, today, an agreement with CCRA, Canada Customs and Revenue Agency, which took the place of Revenue Canada. If I remember correctly, I believe the minister is from New Brunswick. It has slipped my mind for a second there. I apologize for that. (Interruptions) Anyway, my staff should know the answer to this and they don't.
On this issue they have a contract with us whereby they are the agent in monitoring the so-called underground economy. We have regular discussions with them. The member opposite is asking whether or not we make public utterances on this, and I will be honest, I haven't made public utterances in regard to the underground economy. The member's research is saying whether or not we have done so, and the answer to that is no. It doesn't mean we're not concerned about it. We have had discussions. I have even had discussions on a personal level with the minister the last time she was in my office along the lines of making sure that people can compete. I think people want to be treated fairly. If they're paying taxes and they're doing the dues, then other people should also.
As to what the extent of the underground economy is, that is a difficult thing to quantify. We do know there is one. That is not something that is new, in that sense. If you look, especially in the metropolitan area, at this time there is a huge increase, especially in residential construction. When that happens there sometimes is probably difficulty in finding people let alone finding people who are properly registered. There is some opportunity for that to occur. Our intention is to keep working with CCRA to keep it to a minimum. The fact of the matter is oftentimes if they are successful in prosecuting some cases, then I think it will slow down the occurrences. The same as when people speed, you don't catch every speeder, but if you catch a few of them then the other ones start thinking twice about it. Hopefully, it won't be the member opposite or me caught speeding.
MR. STEELE: I would like to thank the minister for his expressions of concern. I asked two questions and he didn't answer either one of them, so I'm going to give him a chance again, Mr. Chairman. In October 1997, the Nova Scotia Department of Finance estimated the extent of underground economic activity in residential construction, alone, at $110 million. What drives people crazy, the legitimate operators here, is that they're being
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competed against by people who aren't playing by the rules, and they're paying their share of taxes and the other people are not. We are losing tax revenue because we do not and will not take decisive steps to deal with the underground economy. That's the problem. This is a revenue generator and it will help the legitimate business operators who do pay their fair share to grow and employ more Nova Scotians.
In October 1997, the department's own figures had underground economic activity in residential construction, alone, at $110 million. So my first question, and I'm looking for a direct answer here, and if the minister doesn't know, then maybe he could just stand up and say he doesn't know and then sit down again. I'm getting tired of the two- or three-minute answers where the minister is essentially saying he doesn't know. My question is, what is the most recent estimate the Department of Finance has about the extent of underground economic activity in Nova Scotia?
MR. LEBLANC: Mr. Chairman, the member opposite may not like my answers and may say they're too long, but I have the right to answer the questions within the time limits I'm given. I am not sitting here giving 20-minute answers to short questions. The fact of the matter is, as I indicated before, CCRA has a contract to collect revenues for us. The member opposite should be very much aware that HST, which is a combination of both provincial sales tax and GST, has brought about a new relationship between the province and the federal government that was, in the past, done by both entities separately.
The fact of the matter is that back in the middle 1990s the province, perhaps because of the fact that we collected provincial sales tax at that time, would probably be in a better position to know, in a sense, what levels of the economy may be going underground than we are today. I indicated to the member opposite, if he would have listened, Mr. Chairman, that the HST is now applied by CCRA. They are the ones collecting it. As such, they have the jurisdiction to collect that, and to be perfectly candid, I am not permitted ask for information about any client, they will not forward that to me, they are the collector of it and they do so under contract with the province.
Mr. Chairman, since that time are we still concerned about the underground economy? Of course we are, but I'm also very pleased with how we're doing with our own source revenues. When we talk about that, if we want to look at how our revenues have grown over the last four or five years, there have been huge increases in personal income taxes, there have been huge increases in corporate income taxes, there have been huge increases even in HST, and it goes on and on. Our economy is doing better. Could we make sure that we always collect every penny? I would like to, because I would like for everything to be fair and even across the board. If people owe taxes, they should pay it. I pay mine and other people in this province do so also.
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The fact of the matter is, we're going to prepare to work with CCRA to see that it continues, but they have the contract to administer that. The fact is that we don't have at our disposal, because of this new agreement, all the information that we had in the past when we collected provincial sales tax directly as a province.
MR. STEELE: Mr. Chairman, I'm not sure what I'm hearing the minister saying. Is he saying the province is helpless because of this tax harmonization agreement, that they handed over the tax collection to the federal government therefore they can't do anything, they can't ask any questions, that CCRA has all the information and we just don't ask the questions anymore, we can't raise issues, we can't ask if we're getting our fair share anymore? There is nothing that drives people more crazy than the idea that they're paying their fair share of taxes and the guy next door isn't. People will pay their taxes if they're convinced that everybody is paying their fair share. One, but only one of the major reasons why people don't believe that the guy next door is paying his fair share of taxes is the underground economy.
I'm not encouraged, and I know my constituents won't be when they hear their Minister of Finance sort of verbally shrug his shoulders and say, well, what do you expect us to do, the federal government is looking after it. I asked the minister for a figure and I don't hear one, so I'm going to assume the minister doesn't know. I'm sure if there was a figure, he would tell us what it is.
My second question, which the minister didn't answer in a previous question, whatever the extent of the underground economy, what specific steps is the province taking to deal with it? What is it doing to kill the underground economy so that legitimate business operators like my constituent that I was talking to the weekend before last can make an honest living for himself and his family?
MR. LEBLANC: Mr. Chairman, I have indicated to the member opposite, and I will repeat one more time so that he is aware of it, under the agreement that we have with CCRA, Canada Customs and Revenue Agency, they are the agency that has the responsibility of collecting both the HST, which is both PST and GST combined, and also income tax. I have mentioned before that we have met with the minister in the past and we have brought up the issues of the underground economy, and we've asked them to put resources in the sectors where we feel we received the complaints. When we do receive complaints we refer the matter on to the federal government, as would be prudent for any government, to make sure that they are aware of it.
I want to point out on this matter that sometimes even as a Minister of Finance I am frustrated when someone has a problem, whether or not it is in income tax or HST. If I ask a question in regard to it, it may not be a very intrusive question, but under the contract that information is confidential and privileged by the federal government. Even though they are collecting revenues for our province, which I have the responsibility for, I am not in a
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position to receive information from them other than broad policy initiatives that they would take in order to correct it.
I will point out, Mr. Chairman, that one of the areas we have made some investments, in trying to deal with this, my colleague, the Minister of Agriculture and Fisheries, we have brought in additional staff, even in this year, to try to deal with the underground economy that exists within that industry. The fact is it's also an industry whereby there are problems, and this is not unheard of. Many of us just reading the newspapers will pick up some of the cases that are there. Our intention is to continue to ask the federal government to give the resources in the areas where they are required.
Like I said, once a year we meet with the minister. I will point out that our staff, especially in economic and fiscal planning, are bringing up issues on a more consistent basis with the staff, not at the ministerial level but at the bureaucratic level, to try to make sure that they respond in time.
MR. STEELE: Mr. Chairman, it is very important that people in Nova Scotia be convinced that everybody is paying their fair share. There is another issue I would like to raise with the minister. In the last Auditor General's Report in the Province of Ontario, the Auditor General identified an issue with the filing of corporate tax returns. The Auditor General pointed out that there were 763,000 Ontario registered companies of which only 355,000, or less than half, had filed a corporate tax return in the previous year. As a result of seeing these figures, we looked into the situation in Nova Scotia. Although, of course, we don't have the same access to information that the provincial Department of Finance does, we were able to ascertain that there are several thousand at least, and I say at least, adopting the most - if I might, excuse the expression - conservative way of counting, there are several thousand, at least, Nova Scotia registered companies that are not filing their corporate income tax returns, and there appears to be no follow-up from the provincial government. So, my question to the minister is, do we have the same problem that Ontario has? If we do, what is the Department of Finance doing about it?
MR. LEBLANC: Mr. Chairman, I can't speak in regard to the situation in Ontario, and I don't think the member opposite is asking me to do so. I will point out that in talking to staff prior to rising to answer the question that we're not aware of this being a problem in Nova Scotia. However, CCRA is the agency that deals with the corporations that are filing corporate income taxes here in Nova Scotia. I should point out that there are many who say the corporate sector doesn't pay its fair share, and I know the member's Party is one that keeps saying that corporations should pay more and, basically, oftentimes you've been accused of being anti-business. I'm not telling you anything here that you haven't heard. Some of it probably has come from this side of the House, but then again you probably have enough critics all over the map that you don't have to just depend on us to be able to say that.
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I want to say that in Nova Scotia, our growth in corporate income taxes over the last two years has been significant. In this fiscal year there is an increase of $65 million in corporate income taxes that we're going to be receiving in the Province of Nova Scotia. One of the reasons that is, Mr. Chairman, is that Nova Scotia companies have done well. Nova Scotia's economy is continuing to do well. As such, we're in a situation where we've been very fortunate. Corporate income taxes and one of the reasons that it is going up is that . . .
[4:00 p.m.]
MR. CHAIRMAN: Excuse me, your time has expired . . .
MR. LEBLANC: Well, I'd like to finish my answer. Okay. Thank you. On corporate income taxes, one of the reasons that it is increasing, I should point out that when we first came to office, there was in place a manufacturing and processing tax credit which was at a very high level - I believe it was 30 per cent, which is probably two to three times higher than the national average. We made some adjustments to that tax credit and as such, most of the companies that had qualified for it over time have used up their allocation. As such, we're into a situation that now they're paying taxes without those tax credits.
Overall, that's one of the reasons that we've seen some increases in that. The member opposite has brought up some points as to whether or not all corporations are filing taxes. It appears, even by the member's own admission, it isn't that significant. I will make some enquiries of CCRA about that as to whether there's a problem. We are not aware of one, but the member brings up a good point.
MR. CHAIRMAN: I guess we're shifting to the Liberal caucus.
The honourable member for Richmond.
MR. MICHEL SAMSON: Mr. Minister, your government indicated in its blue book that you would be providing a 10 per cent tax cut to Nova Scotians. What you've brought before this House is a tax cut for January 1st of 10 per cent, plus a cheque in the mail of $155 to Nova Scotians. Could you please indicate to this House whose idea it was to send out the $155 cheque?
MR. LEBLANC: It was the government's idea to do the $155 cheque. I want to point out that prior to going into estimates today, the member for Richmond indicated in the House that senior staff at the budget briefing informed him that the reason that we were sending a cheque is because we didn't have time to make the changes in order to have it start on July 1st. I've spoken with the staff who were present at that time and that is not the case. The member should stand on his feet and correct that when he comes up with a second question because if you want to have debates on this issue, we should deal with the facts.
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MR. SAMSON: Again, I ask the minister, you indicated government was responsible for this decision to mail out the cheques. Do you mean civil servants within your department or was it outside persons who were responsible for the decision to send out the cheques?
MR. LEBLANC: The Government of the Province of Nova Scotia is comprised of Cabinet and its caucus. Our Cabinet decided that we were going to make the changes in the manner prescribed and I want to say for the member opposite who comes from a Party that doesn't believe in tax reduction in this province, who was telling Nova Scotians that if they form government - Mr. Chairman, I think the probability of that is minuscule - that they're going to roll back income taxes in this province. They're saying to Nova Scotians that we don't believe in the economy. We don't believe in you receiving a tax reduction. (Interruptions)
The member for Dartmouth East says I have no shame. Mr. Chairman, I have the pride and the willingness to bring forward in this budget tax reduction. Every province in Canada, except one, over the last four years has lowered taxes. Every province in Canada, with the exception of one. I wonder which one it was? I'll inform you in case you hadn't been told already - it happens to be Nova Scotia.
We told Nova Scotians when we went to the polls in 1999 that we would bring financial stability to this province. We told Nova Scotians that we would balance the budget and we told them once we had done that, the following year we would lower taxes in this province and we would make Nova Scotia competitive. What have we done? We've done exactly that.
The Liberal Party may not agree with it, they may want to be different just to be different. If that is their choice, fine. We will stand on the words and the records that we have put in place and that is that we believe in the people and the working families of this province. If the Liberal Party doesn't do so, that's your choice.
MR. SAMSON: Obviously the Minister of Finance wasn't listening very well when the Halifax Chamber of Commerce clearly indicated to him that their membership did not support a tax cut. In fact, the Chamber of Commerce started a debt watch because of this government's actions to try to keep track of how much debt this government was adding. So, not only has the Liberal caucus said that it was irresponsible to give a tax cut when you're borrowing, the Halifax Chamber of Commerce clearly also told the Minister of Finance that this was irresponsible. Unless he's saying the Chamber of Commerce is aligned with the Liberal caucus, which allegation he is free to make, it is not only the Liberal caucus, and many other Nova Scotians are saying the same message.
Mr. Chairman, my understanding is this cheque, there was a communication between the Department of Finance in Nova Scotia with Revenue Canada to determine how much would be saved if a tax cut was given July 1st to the end of the fiscal year. A total amount was
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figured out, it was then asked as to how many Nova Scotians were paying income tax and from that the $155 amount was figured out as to what would be sent to all Nova Scotians. Could the minister indicate if that is indeed what the process was for figuring out the $155? And, will he table the documents here in this House today that show how the $155 was reached and how it was determined how many Nova Scotians will receive that cheque?
MR. LEBLANC: I'm a little bit confused. We've answered this question on numerous occasions. Obviously, the member opposite hasn't listened. The $68 million that we're going to be sending out to Nova Scotians, those who have paid income taxes, represents half a year's income tax reduction for the people of Nova Scotia. There are 438 people who qualify for it, so it's not a difficult process to divide one into the other. That is how the $155 was calculated.
AN HON. MEMBER: By 438,000 . . .
MR. SAMSON: Obviously, that $68 million figure must have come from someone. I'm asking the minister - my understanding is it came from Revenue Canada. Will the minister table the documentation from Revenue Canada showing this $68 million figure and also showing how many people paid income tax in the Province of Nova Scotia?
MR. LEBLANC: Mr. Chairman, I have no idea where the member is coming from. The government decided that half a year's income tax represents $168 million and as such, we made a conscious decision that we would put money in the hands of the working Nova Scotians in the form of a rebate cheque that would be mailed out in this year. That will help stimulate the economy in this year, keep the economy going. If the Liberal Party isn't interested in the economy, I want to tell you one thing, this caucus is. Whether or not Revenue Canada had anything to do with that, or CCRA, I'll tell you right now, this government made those decisions and we have explained them and I have explained them numerous times to the member. If he wants to ask me the question, I'll answer the same way, but I'm more than prepared to answer his questions that he puts forward.
MR. SAMSON: That's a different way of describing us. I will ask the minister again, will you table here in the House the documents that you have from your department showing the total amount of money paid in provincial income tax that allowed you to arrive at the $68 million figure and the documents which showed you how many people paid income tax in the Province of Nova Scotia?
MR. LEBLANC: Mr. Chairman, I'm listening to the member opposite, I have no idea what he's trying to refer to. He's trying to infer that somehow we haven't received the information from Ottawa which allows us to figure out how much income tax we want to refer. We told Nova Scotians four years ago that we would give them a 10 per cent income tax reduction in year four. The member opposite seems to be mesmerized by the fact of how we figured this out. I believe - check me if I'm wrong - he was there on July 27, 1999, when
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we had the last election so the members opposite are quoting from the blue book all the time. Maybe they should read it one more time and they'll see the information in there. This is not new information. It's public information and the member opposite obviously has not followed it or there's a flaw in his logic.
MR. SAMSON: I don't want to be too picky, but first of all the minister stands up and when he said how many Nova Scotians should get this cheque, he said 437. Well, it's 437,000. Then when we asked him how much it would be, he said $168 million, it's supposed to be $68 million. So, rather than the minister again showing his usual style of answers, he may actually want to reflect on some of the answers he's providing here.
Again, will the minister table here - not from Ottawa, from your own department if that's where you're saying you got it - the figures which show how much provincial income tax was paid over the last number of years, the total amount, and how many people have paid provincial income tax? I'm simply asking if you will table the numbers from your own department which allowed you to make the decisions which you're claiming you've made today.
MR. LEBLANC: First of all, the member opposite said that I referred to $168 million - my staff said that is correct, I misspoke on that, it is $68 million, and the other thing is you said 437,000 Nova Scotians, and it's actually 438,000, just to get the numbers both right.
With regard to asking for information from Ottawa, we did ask for information from Ottawa on certain issues because we had to. If we wanted to give a rebate based on the number of taxpayers who had paid income tax in the year 2001 and also 2002, that is for information that we would require from CCRA, which is the federal agency that would have that information whereby we could make some decisions within government. We did ask information from Ottawa because they are the people who basically administer income tax for the Province of Nova Scotia under a contract that we have with them. I go back to the point with regard to how the $155 was arranged - was this based on a federal decision? The answer is no. As Cabinet, we made a conscious decision to give income tax relief this year in two different forms, one of which is the taxpayers' rebate the member opposite has just referred to, which we really believe will help stimulate the economy.
The second one, which is a formal change to the Income Tax Act and the rates which will take effect on January 1, 2004. Of course, that is the one that the Liberal Party Leader, Mr. Graham, is telling Nova Scotians that he will roll back and he will introduce a bill in this House if he becomes Premier and he will rescind the tax reduction and he will actually raise people's taxes if he becomes Premier.
MR. MANNING MACDONALD: That's not true and you know it. That's not true.
[Page 580]
MR. LEBLANC: The member for Cape Breton South is saying that isn't true. Mr. Chairman, there is no way that the Liberal Party Leader can stand up in this House and say that if he becomes Premier of this province, that he will not (Interruptions) Mr. Chairman, if . . .
MR. CHAIRMAN: Order, please. I have to ask for order. Order, please. I have to advise honourable members that whether an honourable member has the floor or not, if it comes to the attention of the Chair or Speaker, we are required to inform members that unparliamentary language isn't acceptable, whether you have the microphone on or off. The honourable Minister of Finance has the floor and I would ask all members to respect that fact. They will have an opportunity as the proceedings advance.
MR. LEBLANC: The members opposite can stand up and correct me if I'm wrong. The Liberal Leader has told Nova Scotians that if he becomes Premier of this province - which is a very small probability - he will come to this House and he will introduce a bill which raises income taxes. Now I dare the Liberal Party to stand up in the House and refute anything that I just said. If they can correct me, I'll be more than willing to take my seat and they can stand up and tell me exactly what he said. He may have changed his mind again - maybe that's what's going on, maybe, I don't know. He changed his mind on the matter from when they had their annual meeting until today, so if he has changed his mind, let him stand up and correct it.
With regard to the 10 per cent of the income taxes, the 10 per cent that we talk about is $141 million overall on an annual basis. That is the number that we used in our calculations for preparing this budget. (Interruptions)
MR. CHAIRMAN: Order, please. Order. My goodness, order please. There's a terrible racket in here, it's very hard . . .
AN HON. MEMBER: That was Neil.
MR. CHAIRMAN: Order, please. We only have approximately 50 minutes left in Supply. We will have completed our 40 hours, so please, honourable members, provide some indulgence here. The honourable Minister of Finance - has he concluded at this time?
[4:15 p.m.]
MR. LEBLANC: Yes, when I answered I asked the Liberal Party to refute anything that I said, and I'd be really interested in hearing their answer.
[Page 581]
MR. SAMSON: Mr. Chairman, I'm curious. It's amusing to hear the Minister of Finance talking about changing decisions and making different statements. He may want to look over to his colleague, the Minister of Health, about her position on SARS; he may want to ask the Premier about his position on Sunday shopping, which appears to change by the day; or he may want to check with the Premier on the issue of debt - so people who live in glass houses should be very careful as to what they're throwing.
The legislated income tax cut of 10 per cent will take effect in January 1, 2004. The message clearly was that will be rescinded, the bill to change that. For the minister to stand here and claim that is increasing taxes, knowing this is the same minister who is responsible for allowing bracket creep to happen in this province, where he's already admitted to the media that he increased taxes under his tenure - again, people who live in glass houses.
What I have clearly asked today is more than reasonable, asking the minister to table the numbers used that show the overall amount of tax revenue that came in, where they got the numbers showing how many Nova Scotians pay taxes. I think it is more than reasonable to ask the minister if he got information from Ottawa or from his own departments or from whatever political spin doctor he got it. Asking him to table that, I don't think is an unreasonable request.
One of the interesting questions I did want to ask the minister, it is my understanding that you have a new Deputy Minister of Finance, but it's also my understanding that your former deputy is still on the payroll of the Province of Nova Scotia, so I'm wondering could you indicate to us exactly what Mr. Hogg is working on right now on behalf of the people of Nova Scotia?
MR. LEBLANC: Mr. Bill Hogg, who is the former Deputy Minister of Finance, is working for the province and, for the member's edification, today is his last day.
MR. SAMSON: Since his retirement - well, his first announced retirement - I wonder could the minister indicate what specific duties Mr. Hogg was working on for the people of Nova Scotia?
MR. LEBLANC: Actually, Mr. Hogg's retirement only took effect the end of February, so he hasn't really been working that long for us, but he has been working on some special projects - one of which is that there is a reorganization going on in the debt and pension management division of our department. Mr. Doug Stratton, who headed that department, has taken a new position with the Province of Alberta and so we're looking at how we want to restructure that.
[Page 582]
The other thing that Mr. Hogg also worked on was the capital transportation commission - I believe that is their proper name - where we were working with the HRM as to what the long-term transportation issues are in HRM; indeed, not only in the downtown area, we have to look broader than that. I think all members of this House agree that this city is growing by leaps and bounds, and I know even the levels on the bridges have increased over the last two or three years to the degree that we had not expected. Those are some of the issues that we worked on. There's also some of the accounting - PSAB - Mr. Hogg was a representative of the Province of Nova Scotia with regard to that committee. He is a chartered accountant and his opinion is valued, not only here in Nova Scotia, but beyond.
Since I am on my feet, the member opposite talked about the fact that we had not addressed bracket creep. I thought that was a very poignant point because the Liberal Party was saying we should not be giving income tax relief today in any way, shape, or form, because if you give income tax relief, you give income tax relief whether you do it by reducing rates, whether or not you move it by brackets, or whether you increase tax credits. All those things are a lowering of tax, no matter how it happens. So if the Liberal Party is saying today that we shouldn't be giving tax relief because we can't afford it - which is what they're saying - it's like the ostrich with his head in the sand, they're saying that the economy isn't important.
I just want to read something here, and it has been read in the House before, but I just want to read it again for the edification of the member for Clare. This is a copy of Hansard from Monday, April 30, 2001, and I can also get a few more from the previous Finance Critic, the member for Lunenburg West, Don Downe. The member for Clare said, "After bracket creep, we looked at the failure of the government to pass on the corresponding federal tax cut. Each and every year, prior to the last year, provincial income taxes went up. Every time that the federal government raised taxes, taxes went up for two decades. What happened last year? Last year, the federal Liberal Government reduced taxes, but there was no corresponding reduction provincially. I am sure people throughout this province are asking why . . . What did our government do? They essentially raised provincial taxes . . ."
If you want to follow this, what this is saying, that the member for Clare was saying, we should have reduced provincial income taxes when the federal government lowered theirs, the Liberal Party was saying we should be giving a tax cut. They were saying we should be reducing taxes, and I'm sure if I look throughout Hansard for many of those people in the House of Assembly on the Liberal caucus, they will be on record saying that we should be reducing taxes. It's funny, when Danny-come-lately shows up in the House, all of a sudden they're saying we shouldn't be lowering taxes. As a matter of fact they're actually going to be introducing a bill, if they form government, and table it in this House saying they're going to be raising taxes. The fact of the matter is, that is the truth, and I defy anybody on the Liberal side to explain to me how they're planning to rescind a tax cut by not introducing a bill in the House and raising taxes. That I would like to hear and I'm sure the
[Page 583]
member for Sackville-Cobequid who has been in this House for a long time would find that very interesting.
With regard to the questions asked by the member, I believe I've answered them.
MR. SAMSON: You see, Mr. Chairman, we had a Minister of Finance in a government that said, first page of the blue book, that we will live within our means, we will not mortgage the future of our children. That's what they said. The Minister of Finance said I'm going to balance the budget and that will be the solution to everything. I don't need to keep borrowing money.
AN HON. MEMBER: Did he say that?
MR. SAMSON: That's what he said. At the time, when the issue of bracket creep came up, this was the same minister who said I will live within my means, and I will not borrow money, which was very natural to say if that is the case, and if we are to believe what you are saying, Mr. Minister, then you should be passing along the benefits that the federal government is passing on to Canadians throughout the entire country. Yet what the minister is now saying no, I didn't pass bracket creep because I couldn't live within my means. I had to keep borrowing money, and I'm still going to be borrowing money, yet he wants to turn it around and say, oh, the bad Liberals.
Four long years this minister has had: four years to try to make amends for his time as a minister in the Buchanan Government; four years to say I've learned the error of my ways; four years to say I will not repeat the practice of what I learned under John Buchanan, I will not continue to mortgage Nova Scotians' future, and I will not leave a legacy where our children and grandchildren have to ask, why is $1 billion of my tax money going to banks?
Why? Because, instead, the minister had a clear choice. He had a choice and instead of living within his means, instead of saying I've learned from my days under Buchanan. (Interruptions) I hear the member for Dartmouth South and he was very active there in the Buchanan days, so I'm sure he is supportive of what his Minister of Finance has said. (Interruptions)
When you hear the Minister of Finance . . .
MR. CHAIRMAN: Order, please. Order, please. Order. Honourable members, there's far too much racket in the Chamber, and decorum is sadly lacking. There's only six minutes or so left, so please everybody try to indulge. The member for Richmond does have the floor.
MR. SAMSON: I heard the Minister of Finance before, in answering questions from the member for Halifax Fairview, talking about a company that the previous government had invested in, hoping that it could provide long-term jobs, and mocking that and saying what
[Page 584]
a waste of government money. Well maybe that minister will want to stand during his days in the Buchanan Government and tell us about electronic toilet seats, or maybe he might want to tell us about the value-for-dollar lease we got for Founder's Square from Mr. Ben McCrea that just this year we had to pay out millions of dollars to get out of - maybe he wants to tell us the value-for-dollar lease that he got when he was a member of the Buchanan Government.
This is clearly a minister who was trained in the Buchanan era to say I'm not going to pay today, I'll leave it for someone else to pay tomorrow. That is not how we were raised by our parents, we were not raised to say I'm going to leave you guys when I pass on with a legacy of debt because you're in much better shape to take care of it than I was. I couldn't live within my means. I'm sorry. We never heard that from our parents, and why should we expect it from a Minister of Finance? A Minister of Finance who stands in this House and says I stand by this budget and I'll defend it, but yet where is he going? He won't be here to defend it. Nova Scotians won't have their opportunity to hold him accountable for decisions that are made in this budget. Another $118 million - half a billion dollars is the legacy that this minister is leaving this province.
With the announcement today of the civic centre in Port Hawkesbury, I believe now we're well over the $700 million mark of commitments made by this government. If you look in the budget, $700 million in commitments, where do I see it in the budget? It's not there. Ask the Minister of Tourism where it is in the budget, the money for the civic centre, it's not there. Ask the Minister of Education where the money is for the schools he's going to announce on the eve of an election, it's not in the budget. Ask them to tell you where the money for Stora that they came down to announce - they told Stora we want to rush down there and announce this money - ask them where the money is in the budget for Stora, it's not there.
It's $700 million and counting, and this is the Premier who said in the last campaign that he would respect voters, that he would respect the intelligence of voters. He condemned the previous government saying they've made $200 million in pre-election promises. If that's the case, we were mere amateurs when it comes to this Finance Minister - $700 million and counting. As the election approaches, expect more, more is to come. If you look in the budget and ask where the money is in the budget for this, it's not there.
Why is this Minister of Finance happy to make these commitments?
MR. MANNING MACDONALD: He's getting out of Dodge.
MR. SAMSON: He's getting out of Dodge, as my colleague would say. He's not going to be around here, he's leaving. So the member for Dartmouth South and the rest of them who planned on maybe coming back here, they're the ones who will be responsible to answer for this. One cannot tell, one doesn't know as to what side of this House they may be
[Page 585]
sitting on if they actually make it back here, but they will be the ones. So today they back up the Minister of Finance, but tomorrow they'll be made to answer for the Minister of Finance's decisions.
We have seen a government that has had $1 billion in additional revenue. Who from? It's from increased taxes on home heating oil, increased revenue on registry of vehicles, increased revenue on insurance. Yet when it comes to giving money back to Nova Scotians, the minister says I'm only going to give it to people who pay provincial income tax, whereas everyone else who may have contributed to the economy is not part of it.
Nova Scotians will have a clear choice in the next election. They will pass judgment on this Minister of Finance and the $0.5 billion debt and the wasted opportunity that he has left to Nova Scotians as he walks out of this place. Rather than saying I have learned from the error of my ways as a minister under John Buchanan - he had the opportunity to clearly say I will set a different course for this province, I will be fiscally prudent, I will not allow the debt of this province to grow, I will get control of that - instead, $1 billion in revenue later, we see a minister who sits there and laughs today.
AN HON. MEMBER: Lets our children down.
MR. SAMSON: He laughs at Nova Scotians, he laughs at our children, he laughs at our grandchildren, saying you will pay tomorrow for what I have left you here today. I'll continue to make announcements, leave it for someone else to take care of. I can walk out of here with a big smile on my face. As the member for Cape Breton South said, as he's getting out of Dodge, he'll be laughing at all of us in Nova Scotia.
Nova Scotians will not be laughing. They will pass judgment at the polls next time, and it's unfortunate that they will not have the opportunity to pass judgment on the Minister of Finance in Argyle for the legacy that he has left here in this province as far as our finances are concerned.
[4:30 p.m.]
MR. CHAIRMAN: By virtue of the time, that concludes Supply unto Her Majesty in the Chamber. (Applause)
Resolution E7 - Resolved, that a sum not exceeding $13,235,000 be granted to the Lieutenant Governor to defray expenses in respect of the Department of Finance, pursuant to the Estimate and the business plans of the Nova Scotia Government Fund Limited and the Nova Scotia Power Finance Corporation be approved.
Resolution E41 - Resolved, that the business plan of Nova Scotia Resources Ltd. be approved.
[Page 586]
MR. CHAIRMAN: As I have indicated, that does conclude Supply and I would like to recognize the Chairman of the Subcommittee on Supply, the honourable member for Preston for his report.
MR. DAVID HENDSBEE: Mr. Chairman, on behalf of the Subcommittee on Supply, I am pleased to announce from Monday, April 7th until Friday, April 25th, the Subcommittee on Supply met for 10 days and delivered for 40 hours the estimates that were referred to us and passed and carried. Thank you.
MR. CHAIRMAN: Shall all remaining resolutions carry?
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
The honourable Government House Leader.
HON. RONALD RUSSELL: Mr. Chairman, I move that your committee do now rise and report the completion of the estimates for 2003-04.
[4:31 p.m. The committee rose.]
