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HALIFAX, FRIDAY, APRIL 13, 2007
COMMITTEE OF THE WHOLE HOUSE ON SUPPLY
10:01 A.M.
CHAIRMAN
Mr. Wayne Gaudet
MR. CHAIRMAN: Good morning. The Committee of the Whole House on Supply will now be called to order. The committee has 26 minutes left.
The honourable member for Preston.
MR. KEITH COLWELL: Mr. Chairman, I would like to continue along my line of questioning I had last evening regarding gas regulation in this province Just as a starter on this, we have heard rumours of cars being lined up in New Brunswick buying gas from Nova Scotia and Nova Scotia cars lined up at New Brunswick gas stations trying to buy gasoline. One would ask, why? I can tell you why, because as the regulation came in place in Nova Scotia and New Brunswick, if you look at the different gas prices between Halifax and Moncton, similar sized cities, you will soon realize why the cars have been lined up just across the border in New Brunswick from Nova Scotia.
It started off on July 1, 2006, with a 0.3 cent per litre difference. Of course, Nova Scotia was paying even more then. To the average family in Nova Scotia, that didn't mean a whole lot. Then on August 24, 2006, prices just about equal, but it crept up a little bit higher in Nova Scotia, at 0.4 cents per litre. That, again, wasn't too bad but in October, the trend started to change. If you look at October 5, 2006, the price went to 2.2 cents difference, that's higher in Nova Scotia than in New Brunswick. Now that didn't mean a lot but if you bought 1,000 litres of fuel, that was $22. Now $22 to a lot of people isn't a lot of money, but to some people it's a tremendous amount of money. It means they will probably have to drive a lot less for whatever period of time it takes them to consume 1,000 litres of fuel, which is not a lot of fuel.
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Then the situation got a lot worse. On February 16, 2006, the price of gas in Nova Scotia was 94.9 cents per litre and in New Brunswick, it was 90.7 cents per litre, a 4.2 cent differential. At that point, we were paying $42 per 1,000 litres more for fuel, all under regulation in both provinces. Then on December 29, 2006, you can see a trend happening here, the price went up, the differential went up to 6.4 cents per litre. Now, that's $64 per 1,000 litres and if anyone lives in a rural area and has to travel very far, you're soon consuming 1,000 litres of fuel. So that's another $64 out of your budget. Out of a senior's budget, that's a lot of money, if they consume that much fuel in a month or two months, or someone on a fixed income or low income.
Lo and behold, we hit February 23, 2007, and the price went to 11.4 cents difference in price between Nova Scotia and New Brunswick, 11.4 cents. That's $114 per 1,000 litres of fuel, $114. Now that's a significant amount of money to anybody in any income range. If you look at a business that maybe buys 4,000 litres or 5,000 litres of fuel a month, it's a huge hit to their bottom line. When you get that kind of a hit to the bottom line, that's going to eventually hurt our status in the province, our competitiveness with other provinces in other areas, and ultimately business owners are going to have to make a very difficult decision whether to reduce staff, put prices up. If they put prices up, of course, if it costs them $1 more, they have to put the price up $3 to regain the situation they had and to ensure the company is profitable. So when you look through that process, it's very expensive. So that's $114 per 1,000 litres.
So then it gets worse. On March 9, 2007, we have $117 per 1,000 litres or a differential of 11.7 cents per litre. Again, that puts the price up even more - another $3 per 1,000 litres.. An average family will probably burn 3,000 litres or 4,000 litres a year, so it's a significant amount of money, it really is significant. You look at the cost and how it affects our economy long term, it has a very negative impact on the economy. At the same time, this is just with our neighbours in New Brunswick, I'm just talking New Brunswick here. I'm not talking New England, the spread is a huge difference in New England. I think our price is around $5 a gallon and in New England it's between $2 and $3-something a gallon. So that's a huge difference. If we start going to the U.S. and competing in the U.S., it makes it very difficult for Nova Scotia companies to do that.
Well, on April 6th we got a little bit of a break this year. We went down to 99.9 cents. That's still $100, basically, per 1,000 litres. So you can see where this is going. That's why the cars are lined up in New Brunswick to buy gas and it shows that our regulated system doesn't appear to be working. I know the Leader of the NDP stated on several occasions in the paper and in the media that regulation was great for rural Nova Scotia, great for price stability and great for business in Nova Scotia. Well, it might be great for some of the small gas stations but in the meantime, if we put other businesses out of business or if we make them suffer and the people in the province suffer because of higher prices in other areas because fuel costs have gone up, we are not gaining. We are actually going backwards and it's a very negative situation that's being created here.
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Now, if the price of gas was comparable within 0.5 cent per litre between provinces - and I understand it's always higher in Canada than the U.S. with exchanges and all the other things but not the huge differential it is today - you can compete, you can live with that, you can work with that. So when you look at gas prices, it's a very serious situation and, as time goes on - and we see more and more of this - the trouble with a business and with a family is, it takes a long time for these increases to catch up. So you're used to living on a certain income so something goes up maybe $20 or $30 a month, you don't really notice it for the first three or four months or the first six months, but a year later, a year and a half later, two years later it finally catches up. And when it does catch up, it can have a devastating effect, a serious devastating effect.
You can find that, well, maybe I can't make that payment that I was making on my mortgage on my home because now I just don't have enough cash to do it. Then your department gets hit with people who have to go under debtor protection, which we should not have to do. These are extreme examples I'm using but these are real examples. I often talk to seniors in my area and people on low income and fixed income who have a great deal of difficulty paying their property taxes which are really, I feel in HRM, way too high. There is nothing we can do about that here but when you add on the extra cost of fuel, we add in all the other incidental costs that go up $5 a month, $10 a month, $20 a month, all of a sudden they're in an impossible situation, absolutely impossible situation.
If this doesn't stop, if it doesn't slow a bit or if we don't come up with some other way to help people in these situations, you're going to see them lose their homes. I've seen that happen in my area, unfortunately, where their homes have been sold for property taxes. They have had to sell their homes in some cases where they just simply couldn't keep up with the mortgages and were fortunate enough to sell it before the bank forecloses, or very lucky.
This is not just in my area. I know this is happening in all different areas of the province and if you live in a rural area, the gas differential is even worse because typically you have to travel further even to pick up your groceries, to go to the doctor, do the essential things that you have to do, and those things you can't stop doing. You still have to do those things. All of a sudden, that small little increase or difference in the price of gas is serious and it's very serious for people in this province. As we go forward with that and we see how it affects everything, it's very negative.
I'm going to talk also about this HST refund on fuel which is tied in with the gasoline prices, really. Simply put, the old program that was in place that helped people with low income, it actually allowed them to buy some oil. They got a cheque, they could take that cheque and purchase oil. The new system, although it gives everybody a tax break, the people who burn the most fuel get the biggest credit.
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Now, think about that. Who burns the most fuel? Probably the person with the worst insulated house or the biggest house. You know, when you look at that, typically, who has the biggest house? The people who have the biggest income. So the people who can afford to make changes in their homes, to reduce the cost of fuel, probably a lot more than you would save on the HST and then the people, again, with the low income and with fixed income, are not benefiting from this program. They're simply not benefiting. The money they got before, they could actually take that cheque and buy fuel. That made a difference, it really made a difference. Yesterday, the minister rightfully so said that there wasn't a lot of take-up on this system. But it takes awhile for people to get used to this and understand what it's about. For people with low income, it made a huge difference.
If you see how it rolls out and it all fits together, so you have higher gasoline prices. So that has a negative impact on the cash flow in your family and your home and in your business, and businesses employ people. And I can tell you, I ran a business for a long time and everything goes to the bottom line and you have to do something to ensure that bottom line is solid and if it isn't solid, you're not in business long. And if it isn't solid, you soon have to lay off people, make changes, reduce the business that you do and all of a sudden you can't compete and when you can't compete, you put your prices too high, then you're out of business, and then what happens to all the people who work for you? That's a serious problem.
So when you tie all these things together, we're headed down a very negative road, a road that we can't be on. Unfortunately we're there and we're moving on that road and this has got to be corrected.
I can't see under regulation, it's been proven before with lots of studies that regulation typically, on the average, costs more for the consumer than non-regulation. I also want to talk about the little surcharge that was put on the gasoline in Nova Scotia to pay for the administration of the regulation - another tax to the already beleaguered taxpayer in this province. That collects quite a bit of money every year to do this regulation, money that could come off the price of gasoline. Although it's not a lot, it all adds up. Every point of a penny makes a difference - it does make a difference to the people long term. It all accumulates and people don't understand that. Once it accumulates and they see it accumulating and see what happens, they pretty soon wonder why they're in the financial situation they're in and they can't get out of it. So when you look at those things, you see what's happening.
[10:15 a.m.]
I want to commend the government on the cap issue for the assessments, because this is all tied in as well. Before, with the 15 per cent, 15 per cent and 10 per cent cap on assessments, however you want to put it, basically your assessment doubled, almost tripled, over less than a 10-year period, regardless, providing your assessment went up, if you had
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the cap on. This new consumer price index will at least give people some stability, as long as they apply. I encourage everyone to apply for that assessment cap, it will give them some stability. But even if you have a 2 per cent increase in your tax rate here, in HRM, which I'm most familiar with, it's still a substantial increase in your taxes. I mean, if you're paying $2,000, $3,000, $4,000 a year in property taxes - which is real, it's very real here in this municipality - and all of a sudden you get a 2 per cent increase, you have a reasonably good-size increase. That accumulates over time.
As all these costs go up - and again, I get back to the family that's on a fixed income - your taxes go up, your property taxes go up. All these things are driven by government one way or another. The gasoline price is higher here than in New Brunswick and if you look at the HST refund, it's really helping the people the most who burn the most fuel, the people with the biggest homes. It's not really helping the people who are in the low-income areas or fixed income or on a pension. And I would bet that over time the people on the lower income hadn't really realized very much of a tax break with the 1 per cent off the HST - really insignificant as compared to the $200-some program that I feel was a very good program the government had put forward before to help people contend with the actual high cost of heating their homes.
You know, if you're faced with a choice of buying a prescription, eating, or heating your home, or paying your taxes, or going to a doctor's appointment, because the fuel cost is too high, which are you going to pay - if you could pick two of those five things, what are you going to pay? It depends on the day; it depends on how sick you feel; it depends how cold you are; and it depends on how hungry you are. If you make that choice that day, that may affect everything you do that month, all that month. So you may be cold all that month. You may not be able to eat every day - and I know this is happening because we have food banks in our area with hard-working volunteers and we're getting more and more and more people coming to these food banks as all these negative impacts are hitting them.
The minister got up yesterday and I quoted some statistics through the employment records that the number of people actually working in Nova Scotia has gone down - and I can get those numbers for the minister - we have a lower unemployment rate because the employment rate is only calculated on the number of people looking for work. That doesn't count the people who have given up looking for work; it doesn't count the people who have retired and no longer want to work - just the people who are looking for work.
So when you look at the statistics, they look good on the surface, but they're not good. The population in the province is shrinking slightly; the number of jobs is shrinking; we've got fewer qualified people here to do the jobs - and this is not positive for our province. As we move this forward and we see the results of these, the results of these things may not be evident to everybody in the province for two years, five years, 10 years, but it's coming. It is coming and we're going to feel the bite when it does come.
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We've got a higher debt than we've ever had in this province - and if anyone on the other side wants to have a discussion about the debt in this province with me, I would love to have it on this floor because I was here in 1993 when the province was basically bankrupt with a huge debt, and unaccounted for debt in places like the Workers' Compensation Board that wasn't even on the books. So when they get up and they talk about the debt that was generated after that, I've got the numbers - I know exactly what the numbers are and I know the whole history from day one. It was burned in my memory as we struggled to bring this horrendous situation, that we inherited from the Buchanan Government, under control.
As we look at all these things, hopefully we're not going down the same road and I realize the present government has had better financial control than the Buchanan Government did, and I appreciate that. They did, however, change the bookkeeping system in the province to balance the books, and when I did ask the Auditor General at the Public Accounts Committee, on the record, if the books would have been balanced if we used the old bookkeeping system, he thought for a moment and he said, no, they wouldn't have been, but last year, which was a year ago, they probably were.
That afternoon I got an e-mail from him that said he was mistaken, there hasn't been a time since this new bookkeeping system was put in place that the books have actually been balanced in this Province of Nova Scotia compared to the old bookkeeping system that was in place prior to that. That's a horrible thing to realize. So just by changing your bookkeeping system, you balance the books every year - that's a play with numbers and that's not appropriate.
So we've added to the debt and it continues, but the higher our taxes get the higher the user fees get, the higher our differential in gas pricing is, the poorer break we have on fuel for home heating, the worse the situation will get and it will creep up on everybody. I remember years ago we talked about taxing and the effects of taxing. You can only go so far with taxing - once you tax people beyond a certain point, it goes to a negative. So you actually get less tax in because people find ways to get around the tax - they stop buying things, they stop building things, and they stop doing things because they can no longer afford to do them.
I'm not talking about people in our province who are on a fixed income, who will suffer the most from all these things, but also people who run businesses and do things in the province who finally just give up. We see a huge exodus of young people, and not only young people but a lot of people to Alberta to work, higher paid jobs, lower taxes, and the scenario goes on, a trend we have to stop - and I have not seen anything from this government to indicate that this is happening. This gas price and this regulation on gas is one of those things that hasn't helped us, and won't help us under the present circumstances - and it's actually adding a little bit of cost to the fuel costs in this province.
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As we move this forward, over time and again I'm going to stress, March 9, 2007, $117 per thousand litres of fuel - now, think about that. Think about that, $117 even in today's dollars is a lot of money. If you clear, on a pension, $1,000 a month and you burn 1,000 litres a month on fuel - now, hopefully someone on a fixed income wouldn't have to travel that much but if they were sick, had to travel back and forth to the hospital every day and pay for the parking there as well, they are soon going to chew up this extra $117 that they simply don't have. It you look at it from that standpoint, this is a very, very negative situation and it doesn't need to be. It needs to have some really aggressive moves from the province to ensure that we're competitive with New Brunswick and Prince Edward Island, our nearest neighbours, so Nova Scotia companies can go there and service them and bring some outside money into the province.
What does outside money mean to the province? If you have a company that exports - and one time I think it was 7 to 1 the dollar was worth, and if you sold a product outside Nova Scotia, and more so outside the country, every dollar that you sold had an economic impact in this province of $7 - every dollar, 7 to 1. If our companies can't compete and they can't sell our product outside the province because their costs are too high, and we've already seen that with TrentonWorks with all kinds of problems they had, shutting those jobs down, that's income we're not going to have in this province.
Now it doesn't only affect Trenton, which is hit directly and immediately, but it hits all of Nova Scotia, because those people who were making good money in Trenton were also buying homes, buying vehicles, services that they will no longer be able to afford to buy, and the people who were supplying those services are going to be hurt. As you see these things close and you see businesses become less and less competitive, it has a devastating effect, long term.
It's like the tax changes that were just announced in the HRM. They received a 10 per cent increase in assessment - and that was an average one, some people went up as much as 100 per cent or more in assessment. You've seen in some areas the addition of supplementary funding which should not be in place, it should be funded properly by the provincial government for education put in place. So what happens?
Think about this - you get your assessment notice and you have no idea what your assessment was the previous year so you assume it hasn't changed much, unless you keep track of that very well and a lot of people are too busy or just don't understand how the system works, so that comes in and you say, that's not too bad. You get your first interim tax bill, that's not too bad, that's half of last year's, my taxes must be going to be exactly the same as they were last year and then, whack, in the Fall you get your final tax bill. That shows all your assessment increases, any increases that the municipality - wherever the municipality is going to be - has put on and instead of having a second bill of $500, which would have been double what your first tax one was, it may be $1,000. So, all of a sudden,
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you have to come up with more money that you didn't realize you had to, so these thing have to change.
We have to let people know what their assessments were in the past. We have to try to encourage people to fill out the CAP forms which I think personally should have been automatic and then people would have had to - with heavy fines for someone who didn't live in the province or other penalties that we could put on someone in the province if they misled or falsified documentation that indicated they indeed didn't live in the province and it was a home they had from outside the province.
When you look at all of these things, I feel that this government hasn't done the things they need to do to really stimulate the economy, and I think it's a shame. It's a shame for all of us as Nova Scotians and we're all going to lose, long term. It's time these things were changed and it doesn't take much of a change to help a family. When you help a family, it helps our province, and it helps us all. It doesn't take much of a change to help a small business - not give them grants, but make them competitive so they can actually do the things they need to do to employ Nova Scotians and work with Nova Scotians to ensure that they build a strong economy and help all of us.
MR. CHAIRMAN: Order, please. Shall Resolution E31 stand?
Resolution E31 stands.
The time allotted for debate in Committee of the Whole House on Supply has now expired. I will recognize the Chairman of the Subcommittee on Supply to report on the deliberations of the subcommittee.
The honourable member for Cape Breton West.
MR. ALFRED MACLEOD: The Subcommittee of the Whole House on Supply has met and completed its maximum of 40 hours allowed for consideration of the estimates by the Subcommittee on Supply.
MR. CHAIRMAN: The report is tabled.
As 40 hours have expired, the rule requires that the question be now put. Shall all remaining resolutions carry?
Is it agreed?
It is agreed.
Would all those in favour of the motion please say Aye. Contrary minded, Nay.
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The motion is carried.
Order, please. The honourable Minister of Service Nova Scotia and Municipal Relations.
HON. JAMES MUIR: Mr. Chairman, I don't know if this is appropriate or not, but yesterday, during Supply, I was asked for some information by the honourable member for Preston, which I want to table.
MR. CHAIRMAN: That is in order. We will accept that.
The information is tabled. Thank you, honourable minister.
[The committee adjourned at 10:28 a.m.]
