Mr. Paul Crête (Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, BQ)
|| That, in the opinion of the House, the government should establish a plan to counteract the negative effects of repeated increases in gas prices, specifically including: a surtax on the profits of major oil companies; the creation of a petroleum monitoring agency; and the strengthening of the Competition Act.
He said: Mr. Speaker, I am very pleased to put this issue before the House today.
We all know, in our everyday lives, that the rise in gasoline prices over the past few years has had a severe impact on the manufacturing sector. Particularly hard hit were all those who drive cars, often low-income earners, who have seen their buying power dwindle, while at the same time, oil companies were raking in staggering, excessive profits. For example, Esso Imperial's after-tax profits for 2002 were $1.214 billion. They then rose to $1.701 billion in 2003, $2.052 billion in 2004, and $2.6 billion in 2005, for a grand total of $7.567 billion.
When we look at that total amount and at the rise in profits, from $1.214 billion in 2002 to $2.6 billion in 2005, we can see why there are so many losers in our economy right now, despite the fact that the economy appears to be doing very well.
The losers are consumers who are earning minimum wage and who have no choice but to drive their cars to get to work.
In my riding, in La Pocatière, a lady told me about her situation. Because of gas price increases, she was losing money by going to work. That is reality, hard reality. On the one hand, oil companies are raking in enormous profits, and on the other hand, people are between a rock and a hard place. This is true of individuals, but it is also true of groups.
At present, with the rising dollar, there is undue pressure on the manufacturing sector in Quebec and Canada. This is caused in part by this enormous increase in the price of gas. When combined with the increase in energy costs, there is upward pressure on the dollar and thus there are higher costs for our businesses. This is not merely a matter of criticizing the government, it is a fact of our daily life, and it has to be dealt with one way or another.
The Bloc introduced this motion because at present, the government’s failure to act in this regard is very bad. We do not detect any desire on the part of the federal government to face up to this problem and take proactive measures.
This week, again, the Standing Committee on Industry, Science and Technology was told that at present, economic activity in Canada was on a roll because of energy prices and raw material exports.
However, when things slow down in that respect in a few years, we will have been short-sighted and imprudent by failing to ensure that the rest of the economy is sound, and we will have a less than satisfactory outcome. It is this government that will be responsible for that outcome. I reiterate this so that it is clear in the minds of my colleagues and the public as a whole.
I will give another example: Suncor Energy. In 2002, its after-tax profits came to $749 million. And then things got better. For the period from 2002 to 2005, the total was $4.169 billion. Those rising profits are the concrete example that shows how one sector of the economy has taken the rest of the economy hostage.
People were spending part of their purchasing power on energy, on gasoline and heating oil. Their money is now inflating the profits of these companies, and nothing is being given in return to ensure that the wealth is spread around.
I would stress that there are different aspects to the Bloc motion. It talks about a plan to counteract the negative effects of repeated increases in gas prices. We must first identify the negative effects. As I said, we can all see the negative impact of price increases, particularly when there are sudden fluctuations in the price of a product that is so important to the economy.
We have to find a way of averting these sudden and unexpected increases, these yo-yo prices. We have to find ways to regulate the situation. We are not talking about price controls, but about studying the market, understanding how it works, and trying to implement measures and do things that would enable us to take the appropriate corrective action.
In terms of an action plan, the Bloc is open to suggestions, but it hopes that any plan will include a surtax on the big oil companies’ profits, in particular. In the short term, a portion of those excessive profits absolutely must go back to the people who have been the victims of these sudden increases.
We should even begin developing a long-term solution minimizing our dependence on oil. We must invest in technologies that will improve our environment and enable us to exploit new resources. It would only be fair for some of the funding for these programs to come directly from oil companies. But I doubt we will get this kind of result on a voluntary basis.
Again this morning, Yves Séguin, a well-known economist who was Quebec's Minister of Finance, said that at least one company had stated clearly that it was not increasing its refining capacity, but was selling as much as possible. The current refining capacity can yield such huge profits, and the company is cashing in as soon as possible. Even if the company fails to make appropriate investments later on, it will have netted maximum profits, as it is doing now.
It seems to us that this kind of situation could be balanced by a surtax on oil company profits.
We have also been suggesting other solutions for a while now, including the creation of petroleum monitoring agency. This idea came up two or three years ago during hearings before the Standing Committee on Industry that the Bloc Québécois had asked for. Oil company representatives testified, telling us that they themselves would agree to such an agency being established. This is not about controlling prices, but about having a tool that would enable us to use independent statistics to evaluate how the market works.
Yesterday, Natural Resources Canada held a briefing session. The statistics they provided came from a private company that specializes in that kind of information. I have nothing against the company, but it completely lacks the transparency we need in order to rely on these statistics.
So, we have proposed the creation of a petroleum monitoring agency. This way, the market could be monitored and its operation studied. For three years, recommendations would be made in this House regarding changes in the market in order to determine the measures to be put in place. I am not talking about creating a permanent bureaucracy, in fact we want it to have a time frame, but rather a watchdog that would let the petroleum industry know that the government and elected representatives were aware that something was not working in the market. The oil companies are entitled to profits, but not unreasonable profits as they are currently making, especially if they are harming the economy. So we will put relevant solutions in place.
Such an agency would help determine, for example, whether it might not be beneficial in the future to prevent the integration of products, that is, the extraction of oil, its refining, its transportation and its retailing. Might it be possible to come up with solutions similar to those tried out in certain American states? For example, it might be proposed that a company be restricted in the degree to which it is incorporative, that is, it would not be able to act at all levels this way and would have to provide many more details on profits at each stage. This is the sort of recommendation we would like a newly created petroleum monitoring agency to be able to propose.
Last fall, it will be recalled, following a second offensive by the Bloc, the Liberals agreed to assign half the mandate sought to the petroleum monitoring agency. Yesterday, during the briefing, I learned that the new Minister of Industry, who has a very market oriented approach, does not want the government to intervene in any way. According to him, things would be even better if there were no government intervention. I do not understand why he got elected in a government if he does not want government to intervene. The minister has decided to study the matter of the petroleum monitoring agency and to let its creation drag on, despite the increase in prices we have faced and continue to face. According to recent newspaper articles, another major hike is in the works. Summer is coming. With the approach of summer, people will be getting ready to travel. We will see the impact of this on the price of gasoline.
The stakeholders in this industrial sector are entitled to the same conduct as other players in other industrial sectors. However, there is one distinguishing feature: try using firewood to make your car run and see how well that works. The automotive sector, which is the foundation of our industry, offers products that run only on gas. It is the only fuel that can be used. There is no other product to compete and the oil companies are not really making an effort to find one, either. For example, they are in no hurry to move forward with products such as ethanol.
If there were a surtax on petroleum products, it could be arranged to have a portion of the revenue go towards accelerating and catalyzing the development of renewable energies and making their use more widespread. We could thus reduce our dependency on petroleum products.
We can see that many outcomes are possible, if the government assumes its responsibilities. That is the goal of this motion: first that the government assume responsibility in this area.
The other feature addressed specifically in this motion involves strengthening the Competition Act. Also, last fall, if you remember, under pressure from what the Bloc had initiated and given the urgency of the situation,we succeeded in getting hearings with the Standing Committee on Industry, Natural Resources, Science and Technology before Parliament resumed its work. The government tabled some amendments to the Competition Act to grant authority to conduct general investigations and market surveys. An enormous problem had arisen with the Competition Bureau because that agency acts as a quasi-judicial body. It must be able to supply proof of collusion.
Proof of collusion means legal proof. It requires, for example, written evidence, copies of faxes sent to service stations, to four different locations at the same time. Such documents are required. That type of thing was not found. They probably do not exist, although it is not necessary to have that.
For a number of years, the whole issue of refining has been controlled. The number of refineries in North America and around the world has been systematically reduced. As a result, today the number is down to a bare minimum. Every time a crisis occurs—a storm in Africa, a flood somewhere else, hurricane Katrina last summer—the price goes up suddenly.
If we had been smart enough to develop additional refining capacity, when hurricane Katrina struck, there would have been one or two more refineries in the northern United States, Canada or Quebec that could have augmented the capacity of existing refineries, as they are trying to do in the Lévis area. We would have had the tools we needed. But no, the refineries rake in profits and, at the same time, get huge tax cuts from the federal government.
Since 2002, the tail has been wagging the dog. We have seen the profits that the oil companies make, yet the federal government gives them tax breaks, huge tax cuts. This is clearly undesirable and inappropriate in the current situation. What we need is increased contributions from oil companies in the form of taxes or a surtax, as we are proposing.
We know that the factors contributing to the increase in the price of gas are the price of crude oil, the cost of refining, taxes and the retail profit margin. The price of crude oil is set in international negotiations. We have no day-to-day control over it, but we should certainly be concerned about it. The President of the United States has been, as have the G-7 leaders. This concern needs to grow so that fluctuations are minimized, because they have a major impact on the economy.
Then there are taxes. We know that taxes did not cause the price fluctuations. But governments need to look at what can be done about taxes. We have already talked about the excise tax on gasoline, which has been fixed for a long time. It was put in place to help reduce the deficit.
The major item that we could work on in the short term is the refining cost. Refining is the process of taking crude oil and transforming it into gasoline. At present, profits on this refining process are excessive. The additional increase of 10 or 12 cents per litre of gas hurts and is due directly to the excessive profit at that stage. In terms of cost, there is no justification for such an increase.
This week at the Standing Committee on Industry, Science and Technology, one of my Bloc colleagues indicated that, generally, when the cost of raw materials increases in an industrial sector, somewhere in the chain, a competitor usually tries to save energy and cut costs, so that at the end of the day it can remain competitive on the consumer market. The gasoline market is rather unique. When there is an increase at any stage it is passed on directly to the consumer. Everyone operates the same way and, ultimately, it is always the consumer who pays the price.
It is this type of situation that the petroleum monitoring agency could look into, examine in depth and determine if there any measures that could be implemented to correct the problem.
The retailer's margin is more a provincial responsibility and some provinces have taken action.
I think our work here in the House of Commons should be more focused on the effort to examine competition and refinery profit margins.
That is where the Bloc Québécois insists the government focus its energy, as well as agreeing to have a plan and admitting in this House that there is a specific situation in our economy that can be attributed to the increase in the price of gas. It should also admit that people and the economy are being severely punished. If we do not look at this issue in greater detail then we are in for a rude awakening in the short term, economically speaking, joining the people already going through tough times right now.
As part of the solution, we must discipline the industry and send it a clear message that the government is worried about this issue and, furthermore, it is very important that the Competition Act have some teeth.
The former competition commissioner, Konrad von Finckenstein, said that:
||—while the [Competition] Bureau's mandate includes the very important role of being an investigator and advocate for competition, the current legislation does not provide the Bureau with the authority to conduct an industry study.
The commissioner thus acknowledged that this authority did not exist in the legislation. It took two years to get the Liberal government to table amendments that responded to this requirement. They unfortunately were not voted on before the election. However, the commissioner who succeeded Mr. von Finckenstein reiterated, when the amendments were tabled, that it would be an important mandate to entrust to the competition commissioner. She added that this authority existed for other competition commissioners in developed countries throughout the world, and that it was an additional tool she would like to have.
There is no reason the current federal government could not go ahead and table such a motion.
I hope the Liberal Party of Canada will support our motion, which resumes in part the amendments to the Competition Act that we suggested to them and that they agreed, as a government, to advance during the last increases in summer 2005. We also need to have the other mandate for the petroleum monitoring agency because there are matters to be looked at from that angle that are not related to competition but deserve our attention.
I would like to conclude on an important point. A fair society is important to our fellow citizens. They see the gifts given to the oil companies over the last few years. They might have been able to understand this in hard times when these gifts might have helped the companies turn a profit. But in the current situation, for example, corporate income tax is being reduced to 19% by 2010. Faster repeal of the capital tax has been suggested, and a reduction in income taxes for the shareholders of large corporations. All these measures are being discussed of course. It is not a matter in economics of focusing in order to change the balance of our entire tax system, but in view of the situation created by all this, that is to say a fabulous increase in profits, our motion contains concrete action, namely the imposition of a surtax on oil company profits.
This would be a way for the government to show all the people of Quebec and Canada that we are assuming our responsibility to distribute the wealth, that we are not just a company board of directors but a Parliament and a government that is concerned about these things. We hope very much that the federal government will take this kind of action.
I hope that we will ultimately find a long-term solution that makes us less dependent on the oil industry and able to use renewable resources. Most of all I hope that today's debate will show people that there are some members who have a sense of fairness, a sense of responsibility, and who are aware of the severe negative effects that rising gas prices are having these days in our society. I also hope that this desire, as expressed by the Bloc Québécois, will tonight become the House’s desire and that the government will act as quickly as possible. If not, it will have to answer for what it does in the next election. This is the kind of decision, actually, that will have an effect on the economy—which seems to be doing well today—not just next week but in six months, in a year and in two years from now. The people will remember who defended them.
Hon. Gary Lunn (Minister of Natural Resources, CPC):
Mr. Speaker, I am very pleased to rise today to address the motion by the Bloc Québécois.
The motion reads as follows:
|| That, in the opinion of the House, the government should establish a plan to counteract the negative effects of repeated increases in gas prices, specifically including: a surtax on the profits of major oil companies, the creation of a petroleum monitoring agency, and the strengthening of the Competition Act.
Let me start by saying that I believe the motion represents a pretty negative view. What the motion is suggesting is that the market systems are failing us and that it is time that we want to regulate or put surtaxes on one of the most productive sectors of our economy.
I would respectfully submit that the member wants command and control. Or does he believe in market driven forces? Does he believe the markets are going to find out where this should settle? Do we promote success or do we want to penalize it?
I listened to the hon. member and I am not quite sure where the motivation for the Bloc motion is coming from. There were comments in his recent answers to questions that we do not want Parliament to become just a board of directors for oil companies or that possibly we could help through this motion to distribute the equalization of wealth. That is something I fundamentally disagree with. If the members want to have that debate, we could have that debate on another day.
I am trying to square the circle on how the Bloc has come up with this motion. I think it is fraught with problems. That said, we have seen the price of crude oil go from about $47 U.S. a barrel just over a year ago to $70 U.S. a barrel in the last few weeks. This amounts to roughly a 50% increase. Depending on which side of the equation one is on, obviously it presents challenges, but it also presents opportunities. I think there is an optimistic side to this. It is creating opportunities here in Canada. As the international community has challenges in ensuring an adequate energy supply that is secure, we can look at the environmental challenges and also at prosperity as well, and Canada has an opportunity to play a leading role.
The overall high commodity prices are generally good for Canada. The Canadian dollar is now sitting at 90¢ due to the strength of the Canadian economy, particularly the resource sector. Energy is one component of that. If we look at where we are benefiting from the oil and gas sector in Canada right now, we can see that it is creating literally hundreds of thousands of jobs. Tens of billions of dollars are being invested in Canada.
In Alberta alone, in the oil sands it is expected that $100 billion will be invested in the next 10 years. That is very good for the economy. It promotes research and innovation. We are making enormous gains in technology. This has been very good for the economy.
I think the hon. member's motion that suggests putting a surtax on profits is fundamentally the wrong way to go. The party opposite wants to start raising taxes, but the Conservative Party believes in reducing taxes. As members know, in the most recent budget we brought in 26 separate tax reductions for the Canadian people, from the GST reduction to a reduction in personal income taxes. We reduced taxes right across the board, including those for small businesses. We have also helped Canadians in their investments, as we have seen, for various pension funds, portfolios and investments. This has been good news for them as well.
There is no question that the oil and gas sector is in a very strong position right now. The price of crude oil is very strong. There are a lot of very positive aspects, but the motion suggests creating a surtax when the sector is doing so well. I am not sure what is driving this motion. If it is to try to distribute wealth, if that is what the Bloc believes, so more money will go into the federal government and there will be more money in the federal coffers, again I think that is fundamentally the wrong approach. One has to believe in either a market driven system or in command and control, in the government regulating and controlling everything. Again, I think that is fundamentally wrong.
I know the motion has been made as a result of higher prices of gasoline at the pumps. There are things this government is doing. I am very proud to be part of this government and the announcement in recent weeks that we want to see a 5% biofuel content by 2010. That is a way to have a positive impact on the prices at the pumps and on the environment. It also provides benefits for the farming industry across Canada, which is looking for new opportunities. It was a very positive meeting.
Again, I think there are other ways to address these higher fuel costs. I do not think we can just look at the price at the pump and say that the price of gasoline is high. I want to see stable lower prices as much as every other member does, but the issue is much larger than that. It is about the price of energy. That is why our government is investing in looking at other areas. We are working with industry to promote science and technology. We are looking at ways to become more efficient. Those are ways in which the government can ensure that we have a secure energy supply. We want to ensure that the energy is affordable.
There is no question that the people this hits the hardest are the poorest in our economy, the ones who struggle, but again, I do not see how squaring the circle through putting a surtax on the oil companies is going to solve any of that. It is something that we in the new Conservative government fundamentally disagree with.
Let us talk about the specific matter of gasoline prices. There are four principal components that make up the pump price. Of course, one of those components is crude oil, the raw material. As we have seen, the price of crude is at record levels, but that accounts for about 42% of the retail price.
The next components are the taxes, federal, provincial and municipal, which average about 32%.
The third component is the refining margin, which is the oil companies' cost of refining the crude into the product that we see at the pumps, which is about 20%.
The final component is the retail or the marketer margin, which is, in essence, the difference between the wholesale price and the retail price of the gasoline which has typically been around 5¢ per litre for the last three years. Since around 70% of the retailers in Canada are independent they have total discretion to set the price at the pumps and therefore the price does fluctuate.
I hear members opposite from the Liberal Party engaging in this discussion while I have the floor. I do not know whether they want to go back to a national energy program that was implemented by Pierre Trudeau, whether they think we should overly regulate or maybe they want us to come down with this big club. We have been there before and it was an unmitigated disaster. Those things simply do not work.
The government's approach is to work with the oil and gas sector, with which I have had some very productive meetings, to work with our provincial counterparts and invest in research, science and technology. We are encouraging the industry, as it is in a very strong market, to have greater participation in the research so technology can move forward, we can see greater efficiencies and we can do far better on the environmental side.
While we are in this strong market, the opportunities to make significant gains in this area are enormous. Let me give one example on CO2 capture and storage, an area in which we are making significant progress. Both the government and the industry are participating in this research. We now have the ability to capture 100% of CO2 emissions from the large final emitters in the oil and gas sector and pump that back down into the ground. I believe that is where we should be pushing the industry to make major investments. I believe there is a lot of room for improvement there through technology which would have enormous benefits for the environment.
Those are some of the things the government believes in and where we want to go.
One of the issues raised in the original motion was whether there was any kind of collusion for the major oil companies--
An hon. member: Price-fixing.
Hon. Gary Lunn: Price-fixing, as the member yelled out. I think we should look at the facts on this.
They talked about the creation of a petroleum monitoring agency. The facts are that the Competition Bureau has investigated this six separate times since 1990 alone. Each and every time it found no collusion and no price fixing. The Conference Board of Canada recently investigated whether there was price fixing at the pumps or collusion and each and every time it found that there was none. Both of those agencies are independent.
Members from all sides of the House and from every party who sat on the House of Commons Standing Committee on Industry investigated this, not once but twice, and they found no price fixing and no collusion.
If the members opposite or anyone else in Canada want to bring forward a complaint they should bring forward evidence where they believe there is collusion or price-fixing and the Competition Bureau will investigate it because that is its job. Creating another level of bureaucracy, another monitoring agency, would only result in spending millions of dollars more of taxpayer money. How is that efficient?
I would remind members that all these investigations happened when the Liberal government was in power. It was under the Liberals' regime when there was no collusion. It was not a biased or partisan investigation.
There is no question that as consumers we will face challenges as the demand for gasoline and energy around the world increases but with those demands also come opportunities. Canada exports an enormous amount of energy and crude oil. The tax benefits that the government derives from this sector are what allow us to deliver our social programs and to have a strong economy.
Alberta alone exports something in the magnitude of $71 billion a year in energy. Most people do not realize that more tax dollars from the oil sands in Alberta, which is an important part of our economy right now, come to Ottawa than go to Edmonton. Those are facts and every Canadian right across Canada benefits from that.
What can we do as a government? We will do everything we can to try to stabilize it but at the end of the day the price of crude oil will be driven by global market forces. We either believe in free enterprise and a market-driven system or we do not. If the members opposite want to go back to a Pierre Trudeau national energy program because they think that would be good for the country, we fundamentally disagree. That is not where this government is going.
Other forces, which we do not have control over, also have an impact on the price at the pumps. We all saw it last year when Hurricane Katrina, a natural disaster, had a significant impact on the refinery capacity. The market fluctuates but Canada also had opportunities to pick up the diminished capacity. Those are the forces we must deal with.
We believe that putting a surtax on major oil companies is fundamentally the wrong way to go. We do not move toward command and control. We believe in the market-driven system. We want to work with industry and with our provincial counterparts to invest in these sectors with technology to ensure all Canadians can benefit.
Hon. Dan McTeague (Pickering—Scarborough East, Lib.):
Mr. Speaker, first of all, I want to thank the members who have participated in this debate and no doubt it is an important one. This issue is an ongoing theme of concern. It is probably the biggest and most important bone of contention for Canadians as we head into the summer. Already brokerage houses and those who are whetting the appetites of shareholders across the country are suggesting that this year's hurricane season will probably see gasoline prices in the vicinity of $1.30. That kind of speculation well in advance of any real facts is a demonstration of just how perverse the industry has become and how detrimental it is to the lives of ordinary Canadians.
We heard the hon. Minister of Natural Resources refer to the fact that he is looking for options for Canadians to conserve and to better equip themselves, yet he is the minister who cancelled the EnerGuide program, notwithstanding the fact that only 23 weeks ago, before the election and while the Conservative Party was in opposition, that party unanimously supported Bill C-66. That bill propositioned by members on this side gave rebates to people who needed to find ways to offset the cost of heating during a very difficult time during the winter. The minister cancelled the EnerGuide program. That affected thousands, if not hundreds of thousands, of Canadians across the country.
What we have heard from the Conservative side, from that minister, is an inability to understand and appreciate the dimensions of what he is talking about and he is doing it in a way that is extremely detrimental to Canadians as they try to make ends meet. This is a nation that has been blessed with resources and for which taxes over the years have gone not only to build an infrastructure in the east, north and the west but also to ensure that Canadians would have self-sufficiency.
I understand the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup who proposed the motion. I have worked with him on a number of things. Like him, and like the minister, we might actually agree that we want a market solution, but the market solution is now different because we have to understand what the market is actually doing today.
The market right now is highly concentrated. I do not just say that. The minister's own department knows it. The market right now sees the example of where at about 4 o'clock every day in every major city across the country, wholesale prices are going to be adjusted to identical wholesale prices. If the taxes are the same, the wholesale price for gasoline is the same and we hear reports about what crude prices are going to be on a 15 minute basis on every radio and television station that has a business report, the answer as to what the price of gas ought to be is very predictable, yet the government refuses to understand the information of passing that on to Canadians. A simple price monitoring agency, not to repeal or to have some kind of power of telling the business what to do, but to let Canadians know on a daily basis would be helpful.
For this reason, I have to say that the Bloc member's remarks are important and necessary. This is why the Liberal government supported the creation of such an agency in October 2005. It was to meet the needs and standards of Canadians and to monitor price changes.
Not only did we establish the agency, but we also focused on a transparent process, initiated in an objective manner.
Unfortunately, we learn now that this government did not set the agency in motion. There may be a few people working there, but from what I learned yesterday, their information comes from a firm that works for the oil companies.
I know that the company that Natural Resources Canada and others rely on is a very good one. I have met Michael Ervin. He is a great fellow and his company is very honourable.
However, when the government talks a great deal about accountability and transparency, it cannot just stop on the political side. It has to do it in this industry in particular, because Canadians want the truth. They want objective information. If the price of gasoline tomorrow jumps 2.6¢ a litre in a given region, we need to know why.
Above all, if the hon. member's proposal were put in place it would help to explain to Canadians accurately here and now why it is that on any given day the wholesale price in Toronto, Montreal, or Vancouver is anywhere from 4¢ to 6¢ a litre above the wholesale prices in the United States.
The hon. minister may tell us to look at the reference prices. As we heard from Natural Resources Canada yesterday in a briefing, we are comparing Toronto, a market of five million people, to Buffalo, a market of 400,000 which does not even have a refinery and for which the standards of gas are completely different. That is the doublespeak that is going on in the department. It is time that the department were reined in and understood and provided for itself and for Canadians some of the information out there to make its comments more objective.
For that reason, I support the hon. member's initiative when it comes to the creation of what he calls the petroleum monitoring agency, which we, as Liberals, were putting together. Unfortunately, we were defeated by all the parties in a motion on petroleum pricing information.
Where are we today with respect to Canada's standing in the world as it relates to gasoline prices? We have seen, and this is proven, a tremendous decline in the number of refineries in Canada. This is not just something that we, as Liberals, found out was troublesome in 1998. The Progressive Conservatives in Ontario under former premier Mike Harris came to that conclusion. There is a tremendous decline that will hurt the marketplace.
When there are one or two players who do not compete against each other in a local or regional market, the price can be anything they want. Independents, as we have heard from the minister, have no play. All they have is a 4¢ a litre margin, except in the province of Quebec. That margin of 4¢ to 5¢ a litre within a few hours, which it takes for independent gasoline retailers to turn on their pumps, is completely gone.
Is it any wonder that we have seen a tremendous decline in the true number of independents, branded or otherwise. They are simply price takers. We know full well that independents are selling gasoline with that 4¢ margin above the wholesale price that is given to them and they have to pay cash and do all these wonderful things. They are selling gasoline today in Ottawa for 92¢ a litre. The company that sold to them, PetroCan, Shell, Imperial, whatever the case may be, is selling it for 92¢ a litre, but the take home price is 96¢. How can they meet the price of the wholesaler when the wholesaler is selling gasoline at a retail level below the independents' wholesale cost?
There has not been an objective spotlight put on the practices of this industry. I do not just point this industry out as different from any other industry. We have seen concentration in the grocery industry. We have seen concentration in the drug industry.
All of those things took place, not because of what the hon. member talked about, a national energy program 26 years ago, but because we have a Competition Act that was created in 1986. Peter C. Newman put it quite well. The Competition Act was written by the very people that it was meant to police. Lawyers representing the largest companies in this country, particularly the oil companies, had an uneven hand in creating the Competition Act.
Why was the Minister of Natural Resources talking a little earlier about seven or eight investigations by the Competition Bureau, saying that it has come up with no evidence of any kind of conspiracy or collusion? Simply put, and why we needed an amendment to the Competition Act is that the test to determine something to be conspiratorial, the test to determine something to be price fixing, is that not only must one prove it has happened, but one must also prove intent. One must also prove there has been a substantial lessening of competition and that it was done on an even further test, unduly.
We do not need conspiracy and collusion when there are three or four players who do not compete against each other at the wholesale level. As I said earlier, that price is set on any given day. Members should come talk to me at 4 o'clock in the afternoon and I will tell them exactly what the wholesale price is here in the Ottawa region or any place across the country. That is what the government could do.
In the meantime, to say that the Competition Bureau has found no evidence of any wrongdoing is a little strange and it must be put in its proper perspective. Under Bill C-19, proposed by the Liberal government and opposed by Conservative members, the Competition Bureau and onlookers agreed that we needed to look at criminal provisions dealing with price discrimination, predatory pricing, discriminatory promotional allowances, geographic price discrimination and that they be turned into civil remedies.
I do not want to throw these people in jail, but the law was created in such a way that the test would be so high to find an error or a malpractice within the industry that it would be impossible to prove. It may happen on a prima facie basis, but what we as Liberals called for and what the industry committee called for in 2002 was to amend those particular instruments.
In 1996-97 one of the first bills I presented in the House created an uproar, but the idea was to ensure that if I had a small business I could challenge those fat 14¢, 15¢, 16¢ a litre wholesale prices and drop them down 2¢ or 3¢ and compete against the refiners. What would be the outcome of that? The fact is there is no protection under the law for an aggressive, young, new mom and pop entrants to come in and hammer those refinery margins down.
We have seen a tremendous decline in the number of refiners in Canada to the point where the price is what we see today. One litre in every province or region sets the price at a certain point at four o'clock in the afternoon and the others simply follow. Why? Not because it is collusion or conspiracy but because they share a product.
Not only do they share a product, but in my city of Toronto taxpayers pay millions of dollars for energy self-sufficiency to run crude from Alberta all the way back to Montreal, and members will remember the Ottawa Valley agreement of the 1950s. Everyone's parents and seniors have been cut off the EnerGuide program by the callous government. These people cannot make ends meet.
That infrastructure was created by the Government of Canada to help the private sector, to help the west and other areas of the country create a made at home industry. We did not disagree with that back then. It was important to ensure that the pipeline would bring crude from the west to the east, but that has now been reversed.
We have no refineries left in Toronto. From an environmental point of view, I am sure some are saying that is a good thing. However, as a result of that the price difference before tax from Montreal to Toronto is 2.1¢ a litre and 5¢ a litre above the United States price. My constituents are being hosed, but they are not being hosed by the oil industry. They are being hosed by a complicit Competition Bureau and its advocates, and defenders who will not allow new small entrants into this business either as independents at the retail level or at the wholesale level. When is the last time we saw that happen?
The hon. minister is from British Columbia where four years ago ARCO came in and said it did not matter what the price of gasoline was, it was going to drop it well below wholesale. How many people can stay in business when the price at which they buy wholesale is higher than the price from their own wholesaler who just sold them the gasoline? No one is going to stay in business. That is exactly what happened. By all intents and purposes, that is predatory pricing. Unfortunately, the test for proving predatory pricing is a criminal one and impossible to prove.
In 1998 one of the things that came back to us from the Competition Bureau then was that it had a few convictions on predatory pricing. I thought that was great, maybe we would hear about a large company it went after and charged, but no, it was a driving school in Quebec which had put its prices at a different level and basically gave up, threw up its hands and said “okay, you got me, that's fine”.
It is one thing to have effective laws in this country to promote competition, to promote small business, and to promote the enrichment of Canadians based on our resources. We can do that from a private sector perspective. We do not need to go down the road of bringing all sorts of regulation intrusion.
I do not believe in regulation because over time people tend to pay more for that and in addition, it is within a provincial jurisdiction. Where the federal government has a role or has a responsibility and where it has the ability to respond to the concerns of hard pressed Canadians is addressed in the Competition Act. I also agree with the member who proposed this motion on that front.
I would be remiss, however, if I were not to point out that some of us are trying to cash in on the tax issue. Taxes are an important part of the structure of gasoline. So it comes to me as a bit disheartening. For many years I pointed this out. I wrote a report in 1998 saying that the federal government should not be putting a tax on tax. This came from the report that my colleagues, 51 of us, did back in 1997-98. The member for Mississauga South was the vice-chair of that committee.
It comes as a bit of a shock and a disappointment when those who talk about reducing taxes, and therefore motorists will be better off for it, suddenly change their mind and say they will not go ahead with their plan, as the Prime Minister did, of reducing the GST to zero after the price of gasoline goes beyond 85¢. There is good reason for that. At $1.10 it is a 2¢ a litre decrease. The proposal they have in terms of dropping the GST comes to about 1¢, so there is a significant difference for many people when they are buying 50 to 100 litres of gasoline at any given time.
The Prime Minister knows that when he did that, he did that will the full cooperation of the Canadian Taxpayers' Federation. It has never been a fan of mine and I appreciate the fact that it has copied some of my thoughts with respect to the tax on tax and removing the 1.5¢ a litre which is what I suggested at the time. It was because we could not give it back to the oil industry and let it administer the tax cut.
New Brunswick learned that. Conservative and Liberal MPs in New Brunswick on a select committee on gasoline pricing concluded in 1996 that the 2¢ a litre gasoline price drop or tax cut they gave was simply absorbed by the industry. The consumer never saw the benefit.
Therefore, what we proposed was to use that to help Canadians by investing in public transit and new technologies, particularly the Ballard fuel cell. We have used it also to ensure that we could leverage a better response from a green perspective that Canadians would receive this, particularly those who are hard pressed. Not once but twice was this party responsible for getting rebates to Canadians who needed it the most.
While there were errors in terms of how we administered this, the intent and the purpose was to ensure that Canadians would receive the benefits due to higher appreciated costs for energy that went into government for which the government had no business collecting.
That is why it is kind of strange to hear the natural resources minister talk so much about how he cares about the poor and how he cares about the environment in the private sector, and yet, he cut the most significant program which he agreed with only 22 weeks ago. It was actually helping Canadians make ends meet, upgrade their homes, and ensure that Canadians understood that we all have a responsibility. It is not just because it is a question of how taxpayers' money is spent. The hon. member talked about the fact that 50% was going to some kind of organization for audits.
Not only is that number of 50% false, it is more like 12%. I find it passing strange, given what I recall the hon. member for St. John's East saying that we need to have such a system in place to ensure it was accountable and demanded that the government of the day in 2003, with respect to EnerGuide, should put that in place. Now the hon. minister is looking for excuses and he is flush with cash. He has plenty of money coming out not just in terms of energy resources. Therefore, I understand the frustration of the hon. member who has proposed the motion in terms of the surtax and I will discuss it in a moment, but I think he is going about it in the wrong way.
This issue has been before the House for a very long time. I hear from many in my own constituency who say “After railing against this for so many years, why do you keep doing it?” Before Bill C-19 was proposed in 2004, there were seven years of fighting everyone, including corporate Canada, and including many of those who were the defenders in the various papers across the country. I do not need to mention names, but Matthew Ingram and Terence Corcoran to name just a few come to mind.
We have proven that there is a need and that there is evidence that within the structure of the gasoline industry there remains a very dangerous, near monopoly situation that does not help Canadians and the proof is evident. We have higher prices and added taxes for gasoline that are well over the United States for similar gasoline, and of course we now see the evidence within microseconds of companies that simply follow the wholesale price because there is such a concentration in many areas. We understand this.
However, what we cannot do and what I hope we will not do is go down the road of taxing so-called profits for one particular industry. I have never agreed with that. Colleagues in my party may think it has some validity, but I think we have to be very careful.
Whatever we tax this industry with will only come back to hurt consumers in the long run. The tax can be better applied if for instance the hon. member were to look at an amendment that might consider different exchanges on royalties in terms of how much we would take and not just at the crude level. Obviously the hon. member does not distinguish that, but I think he is trying to do something at the refinery level as well.
I have spoken to many of the independent gas retailers, the few that are left, not the 70% exaggeration that we heard from the Minister of Natural Resources. He is not here to respond to that and I hope perhaps he will be. It is important for us to really understand that the Competition Act, as everyone agrees, needs to be amended in a number of substantial ways. It cannot simply be left because someone turns around and says that we are bringing back the shibboleth of the national energy program.
My party agrees with the principles that have been established by the member who has proposed this motion.
I can tell the hon. member that notwithstanding the fact that I tried to put forward a tiny amendment to bring back Bill C-19 that we all tend to agree with, with some exceptions, the one thing that is impossible for the Liberal Party to accept is a surtax on the industry because we think it will boomerang and hurt consumers in the long run.
If the member can somehow work that out, I believe an agreement could be reached. It pains me to say this because there are many aspects of this motion that I do agree with. I agree with two out of three of his proposals, but the third proposal that he has made is not acceptable and for that reason the Liberal Party will not be supporting this motion.
Let me be perfectly clear to every Canadian that this industry is sick, but it is not sick because of its practices. It is sick because of the behaviour that is allowed under the Competition Act, which needs to be amended. It was written by the very people it was meant to police and Canadians deserve better. We should not be receiving protection as consumers vicariously because of what happens in other jurisdictions around the world. We do not want to fight region to region.
When I was in Alberta and talked about problems at the refinery level, Albertans agreed. They know that when small businesses are not allowed an opportunity to flourish, as we see with independent retailers of gasoline, that is wrong. The government has an obligation to work with everybody here to ensure we fix the problem with respect to the Competition Act and restore the price monitoring agency.
Mr. Brian Masse (Windsor West, NDP):
Mr. Speaker, I am pleased to be sharing my time today with the member for Skeena—Bulkley Valley. I appreciate the opportunity to engage in this debate.
I will begin by reading the motion proposed by the Bloc:
|| That, in the opinion of the House, the government should establish a plan to counteract the negative effects of repeated increases in gas prices, specifically including: a surtax on the profits of major oil companies, the creation of a petroleum monitoring agency, and the strengthening of the Competition Act.
I agree with the majority of those initiatives.
I want to begin my speech by addressing a theme that has always been pushed back against those who have questioned this industry, and that is we want the free market to determine the path and the course of prices set out for consumers.
I do not know where that fantasyland exists, but it is certainly not in this market. We have everything from speculators in Chicago, New York and Toronto who determine hedge funds, as well as the splitting of stocks which can affect the price of a barrel of oil on a regular basis. In fact, more paper barrels trade per day than actual barrels pulled out of the ground.
Plenty of different examples of interventions happen in the market, not only in North America but across the world. We know that Russia recently intervened in its market. Russia is one of the biggest exporters as well as having domestic production.
There are situations for example in South America where Venezuela has begun to re-nationalize or at least put some additional accountability on its resources that are being exported and also used in Venezuela. In fact, what is interesting is the Hugo Chavez government is now providing gasoline products to the United States in different depressed areas where consumers are being hosed at the pumps.
We are talking about having a sense of balance in everything. There is nothing wrong with the oil and gas industries making profits. The reality is they are becoming increasingly obscene. One of the most explicit examples of this largesse, which is unbelievably unfair to ordinary purchasing consumers, is the example of Lee Raymond, the retired CEO of Exxon. He recently received $400 million in compensation for his retirement. This is unacceptable. It plays on the market and affects the price of the product because the revenues have to come from somewhere. Therefore, they come from the ordinary people in countries such as Canada and the United States, who have to pay extraordinary prices.
Again, going back to market intervention, it is interesting to note that Canada and the United States have different provincial or state governments that have taken some action on this issue. For example, Hawaii has been outspoken and critical. It has been threatened by the oil cartels about its supply, which it sees as unfair intervention. Hawaii has spoken out against that.
I know the governor of Michigan expressed concern about the recent fleecing of Americans, which occurred during hurricane Katrina. This has led to an investigation in the United States. We know this from testimony at the industry committee. Industry itself admitted that its profit margin from Katrina was spectacular. That was the terminology it used to explain its profit margin off the backs of individuals who suffered during a tragic situation.
We know these situations take place on a regular basis in terms of the market. We have heard everything in the past before, from cold weather in the northeastern United States to disruptions in Venezuela and Nigeria, a whole series of different excuses, some of which do not even take place at the end of the day. All these drum up the price of the product and we see the repercussions to consumers. The government allows a system to stay in place that does not do anything.
It is important to note that significant things are happening out there that affect this product and its price, and there is market intervention. I would argue one of the most obvious ones is the fact that the U.S. has strategic petroleum reserve. The price of crude oil and gasoline and Canadian exports are under this act and are influenced by it. The act was put in place in 1975. It allows the President of the United States to use market intervention by releasing reserves. The U.S. has barrels of oil ready to go on the market. Recently it did the same thing related to the increase in price. It has specific mandates when the oil can be released, including price.
I would like to read for members elements from the act about when the U.S. can actually use drawdowns. Once again, this allows the president of the United States to intervene in the free market. All those who have the free market mentality need to understand that those interventions are available.
First, an intervention can occur when “an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration”. Second, an intervention can occur if “a severe increase in the price of petroleum products has resulted from such emergency situations”. Third, it can occur when “such price increase is likely to cause a major adverse impact on the national economy”.
The United States recently drew down from these reserves again. It is obvious that the United States federal government position is that the president of the United States directly can intervene in the market, on what we export to the U.S.
Interestingly enough, as we became part of NAFTA, much of the information I have received by way of reports and through questioning is that many countries have dual pricing. Some are OPEC countries and some are South American countries. They use dual pricing as an economic incentive to attract investment. A lot of developing nations do this as well when their resources are exploited. As an incentive, they lower the prices on their domestic market to attract manufacturing and development. China is another example of this.
What is happening here is that Canada is locked into a system. Under NAFTA we have been told that we need to restrict supply for ourselves before we restrict the supply to the United States or another market. Other countries with the dual pricing system have had questions about it raised by the WTO, but they are actually progressing with this. A discussion is going to be held sometime in the future about a subsidy. The reality is that many nations are doing this right now.
My point is that market intervention is actually happening. That is why we believe there has to be greater accountability in this matter. I think that is why some provinces have addressed this issue as well. They have systems in place for checks and balances on pricing, on the east coast in particular, with agencies that have involvement in the pricing of petroleum and gasoline in their communities. I believe New Brunswick is the latest province to do this. The Conservative government in New Brunswick has created a system whereby they have market intervention because the cost of the commodity has become so difficult for people to deal with.
I come from the province of Ontario, a manufacturing province. We recently heard from the Canadian Federation of Independent Business that the price of gasoline and other oil products is the number one factor that is causing them to struggle. Businesses are concerned about this. Once again, this does not take away from the fact that the industry can make some profit and be very prosperous, but at the same time, outright exploitation is unacceptable.
We can go back to the argument with regard to free market analysis. The House of Commons industry committee held hearings after hurricane Katrina. We asked why prices varied in Toronto, Vancouver, Sudbury and Windsor, Ontario, a slew of different places. The interesting testimony that came forward was that the reason for the price difference was supply and demand. If one area has a lot of supply, then a lot will be sold and the price will decrease a bit. At the same time, we heard other testimony which indicated that this would actually create a shortage and therefore the prices would increase. They argued from the same page.
It is important that the Competition Bureau be given teeth and be provided with the proper mandate to deal with this problem. All of the studies of the past do not get to the real root of the problem. It is not collusion when there is no competition, and that is the problem with this industry.
Mr. Nathan Cullen (Skeena—Bulkley Valley, NDP):
Mr. Speaker, I am pleased to have this opportunity to speak to my Bloc colleague's motion. This is one of those issues that is a true intersection of government and business. It speaks directly to the interests of many Canadians in their day to day lives. Many times in the House we absorb ourselves in debates about which Canadians may find themselves confused and searching for relevance, but this one clearly speaks directly to the interests of Canadians.
I would like to take the debate in a direction that is slightly different from much of what has gone on here this morning. It feels to me that this is a representation of intent and purpose in what vision the government may or may not have, both for Canadian consumers and the environment in particular.
We see a striking inequity taking place when we look to the oil and gas sector and Canadians hear of record profits. There is a responsibility that governments hold. There is a responsibility that the business community holds. Sometimes they are in alignment, but sometimes they are at cross purposes.
The business community of course is meant to represent the interests of their shareholders and to maximize profits for those who have invested in companies. I do not begrudge them that and I expect them to pursue that effort at all times. The effort might take place over a 20 year period or through the next quarter or the next shareholders' meeting, but the maximization of those profits is what shareholders demand and what they expect of their boards of directors, if the companies are constituted that way.
The responsibility of government at times is in line with this to allow for competitiveness and a strong economy, although I have heard comments about a multiplier effect of the tar sands jobs of one to 300 or more. In my experience in this place and having run businesses before, I have never heard of such a multiplier effect. It seems absolutely astronomical. I would be very much interested in the source of such job creation. It seems incredible.
I speak to Canadians about this issue. We see companies achieving extraordinary profits, by their own terminology. We saw that in the wake of Katrina companies came forward to acknowledge that the profits had been beyond anything they had seen before, setting record after record after record. So be it. In order to achieve that, part of what was created was a regulatory environment, a taxation environment, that in part allowed them to pursue their interests of profit maximization. I say congratulations.
At the same time, we have a government making choices year in and year out to take taxpayer dollars that Canadians earn every day in order to allow the government to follow through on its intentions. Taxpayers' dollars worth $1.5 billion or more are arriving in direct subsidies to the tar sands at a time when those companies seem least in need of such subsidies.
One can understand this if an industry is in great distress or is at the formation stage of a new development and the market needs signals from the government of the day that it will encourage the marketplace and wishes to pursue greater profitability. But to have this continue to go on year in and year out while at the same time companies are making so much money seems, at the very basis, an inequity to Canadians. How can there be any sense of justice or fairness?
I can understand the government's reasons. We heard the Minister of Natural Resources this morning decrying any suggestion of, heaven forbid, having oversight of what happens with prices at the pump in particular. I can understand that from an ideological basis, and the boardrooms in Calgary are singing those praises, but at the same time, the government must always maintain its central principle, which is to defend the rights and interests of those they represent. Those are both social and economic rights.
In this case it is around the competitiveness of our own market, outside, if for a moment we can take a gander beyond the oil sands and the big oil companies in this country. I represent an area that does not have any such production, as do the majority of MPs in this place. The small business operators in my area of northwestern British Columbia, in particular the logging truck drivers, are almost donating their time when they work these days, because the prices they pay have risen so dramatically and the industry has been restructured to such a point that the drivers are themselves picking up any cost overruns.
At this point the government must look at what is happening to what has become an essential commodity for Canadian businesses. It must ask if we are doing right by these small and medium business owners in our country. I would suggest that we are not.
It is incredible, and humorous if it were not so sad, to hear the environment minister day after day in this place talk about the environmental efficiencies and energy efficiencies called for under the Kyoto protocol and climate change protocols around the world. She said that to increase and improve the efficiency of our energy sector and our energy economy would be the equivalent of taking every plane out of the sky and every car off the road. Such hyperbole would be laughable if it were not sad. To suggest that cutting a program that helps Canadians reduce their dependence on oil, gas and electricity like the EnerGuide program did, is somehow intelligent and efficient for the Canadian economy and for taxpayers is irresponsibility at its most fundamental level.
The minister stood in this House and suggested the reason for its cancellation was that half of the program dollars were going to bureaucrats. The next day the deputy minister, who obviously is somewhat familiar with the file, mentioned the figure of 12¢ on the dollar. We still have not heard an apology from the minister for that incorrect assertion.
If the government is going to cut a program such as that one, it seems to be irresponsible not to put forward a vision for its replacement. If the government is not going to follow the Kyoto protocol, then it should put forward a replacement and encourage the competitiveness of this economy on a global scale.
When I drive around my riding in northwestern British Columbia, which admittedly is very large, within 400 kilometres and three to four hours, the price of gas can change by as much as 15¢ a litre. This is somehow held up as a competitive market.
I can recall a very interesting moment just as hurricane Katrina was hitting. In southwestern Ontario one of the marketers made a mistake at the pump and set the price at $1.70 a litre. He had incorrectly interpreted a fax that had come through his office. What was the response of the local market? They immediately drove all their prices up to $1.70 a litre, and when asked, they said that clearly it was because of Katrina.
We have to have an independent arm's length organization in this country that defends not the rights of the boardrooms of Calgary, but the rights of consumers on a day to day basis.
We must look toward the future and what this country must become. George Bush in the United States has said that Americans must break their addiction to oil, which is quite a striking and difficult thing for an oil man from Texas to say. Yet in this country, one of the first acts the Minister of Natural Resources did upon entering cabinet was to suggest that we need to drill for offshore oil and gas in the most environmentally contentious place in this country, off the west coast of British Columbia. He knows full well there is rampant and strong opposition to such an act. His energy vision for the future is to get that offshore oil and gas, which the vast majority of people who live in that area do not want us to do.
In order for this country to truly enter into this millennium, which I do not think it has in terms of the policies of the current government or the previous government when it comes to energy, it will require a fundamental shift. For years we have heard the auditor of this country say, and I will repeat the phrase because it is an important and fundamental one, that ecological fiscal reform allows the use of the taxation system to promote those values and ideas that we actually want to see: energy efficiency and greener energy production.
This makes sense for the very same reasons that we were able to create the tar sands and the oil sands production in the first place. The government lined up the taxation system, its policy regime and its clear intention to the marketplace in order to create what has become a boon for the tax coffers and private industry and that is what enabled the tar sands to exist in the first place. It would not have been created if government had not taken any kind of a lead.
If the government took a green and progressive approach to energy use in this country with the same energy and initiative that was taken into the tar sands, imagine what this country truly could become. We could stand on the international stage with pride rather than embarrassment and address the world as a progressive player on the energy file.
Mrs. Carole Lavallée (Saint-Bruno—Saint-Hubert, BQ):
Mr. Speaker, first I would like to inform you that I will be splitting my time with my colleague from Abitibi—Baie-James—Nunavik—Eeyou.
Next, I want to congratulate my colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup for the motion he has piloted within the Bloc Québécois and tabled here on this opposition day. This motion says that the government should establish an action plan to counteract the negative effects of repeated increases in gas prices.
He is entirely right. He provides a few examples. Notably he suggests a surtax on the profits of major oil companies, to which I will return later, the creation of a petroleum monitoring agency, and the strengthening of the Competition Act.
If we look at the results of the hike in oil prices, we can see that there has been a misappropriation of wealth. A misappropriation of wealth on the part of the oil companies, which are making staggering profits to the disadvantage of consumers, consumers like you, me, truck drivers and taxi drivers. As a result we have to pay more for our gas, while the oil companies rake in huge profits.
We should therefore respond to this misappropriation by a re-appropriation, of which I will speak again later. This government will have to create new wealth—from the nest egg accumulated by the oil companies—which should then be shared out.
Also, if I have time, I would like to speak about our program for reducing our dependence on petroleum and its by-products. First of all, as you know, the petroleum industry must be made to contribute. We are currently witnessing an unprecedented transfer of wealth, to the benefit of the oil companies and to the detriment of the population and the federal government. This has to stop.
The first measure proposed by the Bloc Québécois is to impose a surtax on oil company profits. Whatever the reasons for oil crises, one thing is certain: it is the oil companies that profit from them.
According to Statistics Canada, American firms control 44% of the assets and 53% of the operating revenue declared by subsidiaries extracting petroleum, gas and coal. That means that the majority of profits of big oil companies goes to the United States.
What is more, the oil industry has been responsible for almost all the new greenhouse gas emissions in Canada since 1990. The oil industry, which as I said earlier is posting record profits, is the main source of growth of greenhouse gas emissions, and a good share of its profits goes directly to the United States. There is nothing to justify government support for this industry. Allow me to repeat: there is nothing to justify government support for this industry. Yet that is what the current Conservative government is doing. The federal government should be doing exactly the opposite, and imposing a surtax on the excessive profits of the oil companies. That will have the advantage of taxing the population—sorry, an understandable slip, which some might term Freudian—I meant to say taxing the pollution generated by this industry.
The Canadian tax system is very advantageous for the oil companies. According to the Finance Canada, it is even better than the one in Texas.
Since we know the oil companies are doing good business, the Bloc is proposing an increase in the present surtax applicable to corporate income tax. This surtax would apply only to oil companies and would enable the federal government to collect close to $500 million a year. The surtax would rise from 4% to 25.5% for the large oil companies. The tax rate on their profits would therefore rise from 29.12% to 32.9%, or still less than in Texas, where it is 35%. This measure would bring in about $500 million annually.
We should also take back the gifts that are so blithely handed out to the oil companies. The 2006 budget does not put an end to their tax gifts. In fact, even if none of the tax measures announced in the budget apply specifically to the oil companies, they will find many of the measures of particular interest to them. I will name just three: the 2% drop in corporate income tax, making it 19% by 2010; the quicker repeal of the capital tax; and the decrease in income tax for shareholders in large corporations.
We have to look for solutions that will not only create new wealth for this government from a surtax on the oil corporations, but also provide ways of sharing the wealth.
There are of course several groups, such as taxi drivers and truck drivers, who definitely need a tax credit or some support to counteract rising petroleum prices.
There is also a compensatory measure, however, that should be targeted better, particularly for households. Households whose income is below $30,000 should be compensated for the increase in energy costs. This would be better than the cheques for a few dollars that the last Liberal government handed out last January in the middle of the election campaign. This money was not always distributed very judiciously.
This tax credit was included, moreover, in the action plan developed by the Bloc Québécois and made public last August during the oil price crisis. In my opinion, it is time to look at this again so that a refundable tax credit can be introduced to help attenuate the effects of the rise in oil prices for those who need it most.
This tax credit would help households balance their budgets—households that have seen the price of oil increase and especially the price of a food basket because of the increase in transportation costs and heating costs.
Nearly 1,530,000 households in Canada use fuel oil as their main heat source, including more than 500,000 in Quebec. We just have to give these households a break, regardless of the energy source they use. The action plan proposed by the Bloc last August provided that households would receive a refundable tax credit for the 2005 fiscal year. Unfortunately, this is not possible now, but it should be done in the future.
There is also another way of looking at things. In the longer term, we could reduce our dependence on oil. All of us, all the Quebeckers and Canadians who are listening to us, should find their own individual approaches to the collective challenge of rising greenhouse gas levels. That is the real solution, but it will take a lot more time. Oil is a non-renewable resource. It will become increasingly scarce and unfortunately will be ever more expensive. I point this out because the oil companies are abusing it more and more.
The excessive use of oil and its derivatives as an energy source is one of the causes of climate change, which will prove very costly both economically and on the human level.
For all these reasons, it is more costly to do nothing than to take action. The solution is self-evident: we have to reduce our oil bill while at the same time reducing our dependence on a product that Quebec has to import. Luckily, Quebec is on the right track because, along with Norway, it is the only society in which oil is not the leading energy source.
We should encourage the purchase of vehicles that consume less energy. In view of the soaring price of gas, it is becoming even more imperative for the federal government to do what the Bloc Québécois has long been requesting, that is to say, abolish the sales tax on purchases of environment-friendly vehicles. An environment-friendly vehicle could be defined, for example, as any vehicle that uses less than 5 litres per 100 kilometres. This would cost the federal government approximately $90 million a year.
We should also encourage the manufacture of vehicles that consume less energy. We should invest in wind power too, and finally, encourage the use of public transit.
Mr. Yvon Lévesque (Abitibi—Baie-James—Nunavik—Eeyou, BQ):
Mr. Speaker, I thank my colleague for sharing her time with me. I am pleased to be back in touch with the people.
As early as 2003, the Bloc Québécois reacted to the regular increases in the price of petroleum products, which usually occurred without good reason or on some trivial pretext.
In response to a February 2003 Bloc Québécois motion that received unanimous support, the Standing Committee on Industry, Sciences and Technology, which had examined the issue, reported in November of the same year that there was a need for a petroleum monitoring agency.
The previous government, which enjoyed a huge majority at the time, rejected that recommendation, even though the committee, which included government caucus members, was unanimously in favour of the idea.
As soon as he became leader of the Liberal Party, the former prime minister—and current member for LaSalle—Émard—granted the oil companies an irresponsible 6% cut in taxes on their profits. A few months later, his finance minister, not wanting to be outdone, gave the oil companies an additional $1 billion to reduce their emissions. And as if that was not enough, the oil sector received $900 million more in assistance in the wake of the government's negotiations with the NDP to obtain their support for the budget.
A person does not have to be a wise economist or an accountant to see all the benefits the oil industry received. Clearly, it only made them more profit-hungry, as excessive as those profits were.
Environmental assistance alone amounted to $2 billion. To that must be added $1 billion in additional net revenue just for the first quarter of 2004. If we add profits from increasing the margin at the refining stage, it becomes indecent.
Given the additional astronomical cost passed on to forestry operators, combined with the softwood lumber crisis and the fact that these operators have to go further and further away to find the resource, every region in Quebec and many regions in Canada have endured countless industry closures and consumer price hikes that could have been avoided.
On February 11, 2005, I personally tabled in this House, on behalf of the Bloc Québécois, a motion that read as follows:
|| That, in the opinion of the House, the government should take action with regard to gasoline prices by: (a) setting up a petroleum monitoring agency responsible for preparing an annual report on all aspects of the industry, including how prices are set and competition issues, whose director would be independent and appointed for a three-year term after consultation with sector representatives and the Standing Committee on Industry, Natural Resources, Science and Technology, and that the Committee be tasked with considering the report; and (b) by bringing forward amendments to strengthen the Competition Act, including measures to ensure that the Competition Commissioner has the power to launch investigations, summon witnesses and ensure confidentiality.
To the great misfortune of Quebec and Canadian taxpayers, this motion was defeated by just a few votes. Accordingly, the prices peaked during the most active time of the year and the tourist industry hung in the balance. Businesses continue to close because they are no longer competitive internationally and the price of transport has been the main cause of inflation for the past two years.
This lack of leadership has put entire populations in very tough situations since incomes are not indexed to the cost of living. Average workers for example and people earning minimum wage have no choice but to quit their jobs, which deprives many companies of the only employees they can afford. Moreover this becomes an extremely heavy burden on the provincial governments, whose social responsibilities are increasing.
Whatever the Minister of the Environment might present, she would be well served to remove her blinders to see that beyond her home turf there are a great deal of communities where public transit simply does not exist and where the distances are great. These costs cannot be predicted by the worker or the company, which puts all economic sectors in serious difficulty.
Most importantly, let us not forget people where oil products can be shipped only during certain times of year—times when the oil companies choose to inflate their profits and their shareholders’ dividends. Those people have lived with these prices since last summer, and they will certainly be living with them again until the ice melts. I did not understand why the member for Nunavut failed to give her support last summer, but I hope that she will support this motion, which affects her community more than many others.
In fact, in this case, with all the profits being raked in by the oil companies, those companies could certainly afford to cover the cost of shipping to those communities. That would be a much appreciated humanitarian gesture, regardless of the price at the pump in accessible locations. Those communities also have contributed to the economic success of the oil companies.
Who has offered aid to Nunavik, who has offered aid to Nunavut or the Northwest Territories? The government closes its eyes to these entirely inappropriate practices, the oil companies are completely irresponsible and ignore their corporate duties—no one is concerned about the price of a litre of gas, which ranges from $1.49 a litre in places that are not accessible by road, like James Bay, to $1.71 a litre in Nunavik and probably also in Nunavut, which uses the same shipping method.
I was in Nunavik again last week, and since there are no restaurants, we bought the food we needed to cook for ourselves. Do you know that in Ivujivik, for a meal of two sirloin steaks, very ordinary side dishes and a head of lettuce that we were able to salvage two leaves from, we had to spend $189? The lettuce was $6.79. What we threw out was not edible. We did not waste anything.
Like any other resource, gas should be available to the public at a price that would allow the industry to make reasonable profits. It is a resource for which the exploration and development costs have been financed, in large part, by the taxes paid by all Quebecers and Canadians on their incomes and the goods and services they buy, for the benefit of the public and of businesses in Quebec and Canada.
We need only look at the prices charged by Hydro-Québec for exports. They are very low compared to oil. And yet Quebecers have paid for the research and development put into that energy by themselves. It is this model of cooperation that probably, with due respect to all parties, could have cemented Canadian confederation.
Oil prices have a huge impact on administrative costs for the public at large, for small and large businesses, for agencies that provide services on a profit-making or non-profit basis, for governments from municipal to federal, for taxi, truck, ship and airline operators. So a responsible government must, therefore, first ensure that competition exists and then ensure it is fair and gives consideration to all intervenors, as it is a natural resource, part of the country's heritage.
Odd as it may seem, all sectors supplied by ship are also supplied with electricity by generators and all the buildings are heated with oil, which is over 70¢ a litre at the moment. This does not include transportation costs. They could drive the cost up to 80¢ a litre at destination.
The Bloc Québécois is of the opinion that part, at least, of the cost of gasoline and other petroleum products can be monitored, by, for example, ensuring that no intermediary takes advantage of its position or circumstances. At such a price, many more families, people living on their own whether young or old, will not be able to heat their homes properly next winter.
For these reasons, in all simplicity, I invite the members of this Parliament to establish a monitoring agency do a fair, impartial and equitable verification with all the powers it needs to fulfill its mandate, as recommended by this motion.
Mr. Colin Carrie (Parliamentary Secretary to the Minister of Industry, CPC):
Mr. Speaker, I will be sharing my time with the member for Calgary East.
Every hon. member knows that rising energy prices have impacts on Canadian consumers and our entire economy. We have all heard the same feedback from our constituents and we are all concerned. For all the easy comments from the opposition in the House that say otherwise and despite the motion that has been brought forward by the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, it is clear that the government is paying close attention to this issue.
The government addresses rising energy prices and the effects they are having on Canadian consumers in ways that makes sense, ways that are practical and that respect the laws of supply and demand. We want to take actions that will produce results that will matter and not be lost in the normal ebb and flow of prices. We need to get this right.
There should be no confusion as to whether the government recognizes that this is a serious issue. We hear the concerns of individual consumers, consumer groups and business groups. Organizations such as the Consumers' Association of Canada and Option consommateurs have been very clear in pointing out the range of ways that rising energy costs affect consumers.
Gasoline and diesel fuel prices for transportation have risen dramatically. So has oil and natural gas that heats the homes of most Canadians. Higher costs are being worked into other prices such as food that has to be shipped long distances or electricity generated from natural gas powered systems.
Rising energy costs translate into impacts that people cannot just shrug off and pay, not if they live in rural or remote areas or need to drive considerable distances for daily needs, not if they live on a low or fixed income and cannot cover added costs, and not if they are truckers or farmers who must face higher energy costs to make a living.
We have all heard many stories, but we can rely on more than anecdotes to get a sense of what consumers in Canada face. In fact, Statistics Canada has a lot of hard data that is worth drawing on and most usefully Industry Canada's Office of Consumer Affairs has added to our understanding with its Consumer Trends Report.
This information is important because it is the kind of evidence that will help governments to make decisions that take into account the consumer point of view. This data tells us first and foremost that consumers need help in making wise choices in the marketplace in a period of high energy prices.
This government is listening. It is giving Canadian consumers the tools they need to cope effectively in an often confusing energy marketplace. For example, the Competition Bureau has issued a very useful consumer fact sheet on gasoline prices. The Office of Petroleum Price Information allows consumers access to currently weekly consumer prices for gas in 60 Canadian cities, plus the average Canada pump price.
Natural Resources Canada Office of Energy Efficiency has a program called the personal vehicles initiative which provides Canadian motorists with helpful tips on buying, driving and maintaining their vehicles to reduce fuel consumption and greenhouse gas emissions. Reducing fuel consumption means saving money and more, it means helping the environment. All of this great information, for and about consumers, is available over the Internet.
Moreover, the government knows that it is not sufficient in itself to simply help consumers to manage the marketplace's current high prices. Demand seems to be on a more or less continuous upward curve. According to the National Post, Ontario has just experienced the hottest May 30th on record, an event that sparked record energy demand. According to Environment Canada, as reported on CBC Radio, we can expect a more than ordinarily hot and humid summer this year and if this prediction comes to pass energy demand will certainly increase.
These are all factors behind the government's determination to take effective action to address energy issues. This government is aggressively supporting the use of ethanol from crops such as corn, straw and other forms of cellulose. Ethanol produced in this way and added to gasoline makes a practical contribution to reducing our dependence on conventional petroleum reserves, the cost of which can rise in the future. As the hon. Minister of the Environment announced, the government has committed to implementing a 5% biofuel content standard as a national strategy for Canada by 2010.
From an overall policy framework, the government is making a very significant investment in cleaner public transportation. We have made investments in transit passes to ensure people get out of their cars and into public transportation. For those people who need to drive cars, we want to ensure that they are burning cleaner gasoline so that they themselves reduce emissions.
The government is addressing the needs of consumers by giving them the tools to help them adapt in a marketplace where prices are rising and by encouraging the private sector to help reduce our dependence on evermore costly sources of energy derived from petroleum.
What is the opposition solution? The motion before the House states that we should increase taxes on oil companies, create a petroleum monitoring agency and “strengthen the Competition Act”. Easy solutions, are they not? Let us take a closer look at a couple of them.
As one hon. member has said, taxing the oil companies and adding to their costs will have little or no effect on the price at the pump. As for the price of gasoline, I would maintain that the best guarantee of the lowest prices possible is an efficient and competitive marketplace driven by the laws of supply and demand.
As for strengthening the Competition Act, this is yet another red herring. The Competition Bureau has, as of now, conducted six investigations of gasoline pricing, including one carried out in the aftermath of hurricane Katrina and called for by the previous government. None found any evidence of conspiracy to fix gasoline prices.
According to the Competition Bureau, gasoline prices in Canada and American markets are highly correlated and reflect the integrated nature of the world's petroleum market. Remember that high prices and profits are not contrary to the Competition Act. That is very important. When there is a problem, the Competition Bureau strictly enforces the law, as it has done eight times since 1972.
Rather than adopt a hastily and ill-considered motion before us, the more sensible approach is to help consumers use less fuel, in the short term by assisting them in finding more efficient ways to use energy, and in the medium term by developing alternatives that will allow consumers to become less dependent on an energy resource whose cost is only going to increase in the coming years.
The motion before the House would advance none of these goals. The government stands for a sensible approach to energy issues, a forward looking approach that will bring real and long lasting benefits to consumers by dealing realistically with a problem that will be with us for many years to come.
Mr. Deepak Obhrai (Parliamentary Secretary to the Minister of Foreign Affairs, CPC):
Mr. Speaker, it is indeed an honour for me to rise to speak to the motion put forward by the Bloc in reference to oil prices and specifically, oil companies.
As I come from Alberta, it is quite important to me as to what happens to this industry. As I read the motion, I was quite surprised to find that it seemed to be playing to the fears of Canadians, a fear that high oil prices and pump prices would have a major impact. There is no question in anybody's mind that high gasoline and oil prices do have impacts on other sectors of the economy.
The former speaker from the Bloc talked about being in the construction industry and the impacts it would have on other industries. There absolutely will be impacts on other industries. Why would there not be? It is not only with oil prices, but any commodity prices that increase have impacts on other sectors of the economy. However, this is a band-aid solution to the situation. Applying it will hurt the economy in the longer term more than help it.
When we look at these things, as a responsible government, we want to look at long term solutions, not just the fact that because the rising economies of Asia and other emerging markets are demanding oil, the price of crude oil has gone up and therefore it reflects on the market and on the pumps. To propose a band-aid solution to this will not work.
The government has come up with a lot of approaches in the budget to address the whole economy of the country, such as lower taxes for businesses and individuals, which will put more money back into the pockets of Canadians.
This year I bought a new car. The first thing I looked at was what kind of gas mileage I would get from the car. I did not look at what the gas prices were at the time. I looked into the future to ensure that the car I bought reflected the oil prices because it would reflect on my pocket. The responsibility of taking these kinds of actions is mine, as it is for every consumer. It is not like we can play around with the market and create a situation which has devastating impacts.
I remember when the national energy policy was introduced by the Liberal government in Alberta. I was in Calgary and heard what the economy of the oil companies was. It was devastating. A person could walk in and buy a house for a dollar. People were dumping their houses. Their life savings were wiped out.
We cannot just come out say that we should put a surtax on oil companies. As the Parliamentary Secretary for the Minister of Industry said, what does a surtax on an oil company have to do with the oil prices? Bloc members say they want to tax the profits. There has to be a coalition over there.
Let us for a minute think about what is happening in Venezuela. The new president is playing with its oil heritage. He has the lowest prices of gasoline in the world. He says it is other resources and so he wants it at cheap prices. Guess what? He is playing with the money of future generations to benefit today's generation. That is the criticism. He is not benefiting from world prices that will help build the economy. The country is not only built on oil prices. There has to be investment in education, health and infrastructure to create a competitive environment that is beneficial to everybody, not just to one sector.
To do that, we create a business environment. We tax the oil companies as is necessary and we ensure they are in a competitive sector. The revenue derived by the government is what it reinvests into the infrastructure and everything else to create that economy.
I am very pleased that this is what has happened in Alberta. The revenues that come in benefit everyone in Canada, including Quebec, because Alberta then pays into the equalization formula. We talk about fiscal imbalance. We need to ensure there is a level standard of living throughout Canada. If one sector is doing well temporarily, that is fine. However, again I want to remind the House what happened in 1981 in Alberta because of high oil prices. Albertans, including myself, lost our life savings because of irresponsible government economic policy. We want to ensure that does not happen today.
The government has said that we will create an environment that is beneficial to all Canadians. The budget talked about tax cuts for individuals and businesses, including small businesses, as well as a reduction of GST.
About a month ago a report came out. According to the report, there was a slight dip in consumption of oil in the North American market. That is exactly what we need to do. We do not need to put a heavy emphasis on the oil sector alone. As the Minister of the Environment has indicated, we are looking at other sources. We need to reduce the demand on oil. That is the right approach. This is what we should do as part of our educational issues.
Is there going to be an immediate change in the price of oil? No. As I said, the Asian economy is now rising. Today we see both China and India in the market looking to buy resources, including oil companies, to feed their growing economies. This puts pressure on the commodity market.
It is quite interesting that with China's rising need for resources, it is buying its resources from Canada. Canada being the richest resource country in the world, naturally our economy is doing well. They will not talk about those sectors because that is the sector that benefits only them.
We need to get out of the situation of looking at what only benefits one province. What benefits Canada as a whole is the approach members of the House of Commons should take.
Therefore, the motion is quite contradictory and it will, from my point of view, create a situation where its long term damage would be quite devastating.
The motion talks about the Competition Act. The Liberals were in power for almost 13 years. Now Liberals get up and talk about the Competition Act. Where were they? Why did they not bring anything forward, if they felt the Competition Act required strengthening? It is obvious that they did not have any desire to do it, and one would wonder why.
From my point of view, the motion is playing to the fears of Canadians, but that is not the right approach to take. The government has indicated, with its priorities and budget, the right way to go to ensure that Canada remains the number one country in the world.
Ms. Louise Thibault (Rimouski-Neigette—Témiscouata—Les Basques, BQ):
Mr. Speaker, I would first like to inform you that I will be splitting the time allotted to me with my colleague from Shefford.
On this Bloc Québécois opposition day on the subject of the price of gas, I wanted to speak on behalf of the people I represent. I know that this subject is of enormous importance to them and a matter of great concern to them, that they are expecting tangible action to be taken to counteract the negative and pernicious effects of repeated increases in the price of gas.
These negative effects are obviously felt by all members of the public. Nonetheless, I want to point out, more particularly, the impact that they have in the regions. As I often say and I will never stop saying, everything that has an impact on the important issue of land occupation is crucial to our regions and the people who live there.
The perverse effects of repeated and often staggering increases in the price of gas are felt by individuals, working people, farmers, people who work in the forestry industry, truck drivers, shipping companies and businesses, and, because we in the regions often depend on the tourism industry, this affects tourism. Let us look at these aspects one by one.
In the regions, individuals feel the effects of the increases directly, because they very often depend on oil as a source of energy and they have no choice but to travel by car, because they do not have access to public transit. They use their cars for all of what we call local travel, essential travel. They have to drive long distances to get to work, to go about their business, to look after their families. It is very important to keep this in mind.
I might even add, as an ironic aside, that they often have to travel 15 or 20 minutes by car, in rural areas, to buy a stamp or mail a letter, now that Canada Post has closed its points of service. I have no desire to be ironic, however; the subject is too serious.
Working men and women who already have more than their share of insecurity are losing a significant percentage of their purchasing power, of their incomes, very often coming from the benefits they receive in lieu of income, because of the costs that they are unable to avoid: the cost of gas and the cost of energy derived from oil.
Farmers, and everyone who works in the forestry industry, depend on gas for their farm machinery and their infrastructure, as well as for their equipment; their expenses are climbing, and so their already slim profits are declining before their eyes.
And what about taxi drivers, truck drivers and shipping companies, who have to either pass the cost on to their customers or watch as their profit margins evaporate into thin air?
When it comes to tourism, we know that a number of regions, including the Lower St. Lawrence and my riding in particular, depend on this economic niche for a substantial segment of their economy. Tourists, whether from Canada, Quebec or the United States, travel mainly by car to get where they are going or to drive across our countryside, as pleasant as it is enormous to discover and rediscover.
What I have described in these few words are common and well-known facts of life. They call on us to give serious consideration to measures that can be taken, to a plan, to a strategy to counteract the negative effects of gas prices and repeated increases in those prices.
With the summer season about to start, some people are rightly concerned and anxious about the next gas price hikes. They know, because they have seen it happen over and over in the past, what the consequences of this scenario are, and they are afraid that the desired and desirable economic benefits will be wiped out.
Now, during the time I have left, let us look at what the Bloc Québécois is asking the Conservative government to do. We are asking for an increase in the current surtax on the corporate tax on major oil company profits only, the creation of a petroleum monitoring agency and the strengthening of the Competition Act.
The surtax on major company profits will generate roughly $500 million in additional revenue for the government, which can be reinvested in programs to help reduce Canadians' dependence on oil.
We do not want to do this for no reason, we want to do it with a vision. That is what we are asking the current government. For example, we want to promote the manufacture and purchase of more energy-efficient vehicles. We must not forget that the five big oil companies in Canada—Imperial Oil, Shell Canada, Husky Energy, Petro-Canada and Suncor Energy—had net profits of $9.65 billion last year. As I mentioned earlier, this represents an increase of $2.45 billion over 2004 and $3.08 billion over 2003. We are talking about a profit 46.9% higher than in 2003. The numbers speak for themselves.
Better still, the current government does not seem to feel that the poor oil companies have enough because it plans to give them other tax gifts. The Canadian Association of Petroleum Producers has projected the value of all these gifts over three years. The result is a 54% tax cut between 2005 and 2008. What could be better?
Another portion of the revenue from this surtax could subsidize renewable energy producers. Think of wind energy, for example. Quebec has huge potential as a producer of wind energy, which is extremely cost-effective and very clean and uses a resource—wind—that is renewable and costs nothing.
Let us be clear: the revenue from increasing the current surtax must be reinvested immediately and not simply added to the current or expected surplus.
With respect to the creation of a real petroleum monitoring agency, this agency would be responsible for overseeing the industry by collecting and disseminating price data on refined petroleum products, among other things, for all relevant North American markets, and reporting on the competitive aspects.
This agency would have the power to summon witnesses, protect their confidentiality, examine every aspect of the oil industry and offer solutions.
In connection with the establishment of that agency, even the president of the Canadian Petroleum Products Institute, which represents 80% of Canada's refining capacity, made the following statement on May 7, 2004:
|| The members of the petroleum industry support the Committee's assertion that an independent monitoring agency could help resolve public confusion and misconceptions on gasoline pricing issues.
The Bloc's third request concerns the Competition Act. The commissioner still has no power to initiate inquiries into suspicious fluctuations. It should be noted that this shortcoming has already been denounced by a former competition commissioner. This must be corrected immediately, so that the powers of the commissioner are strengthened.
In its report on the Competition Act, the Standing Committee on Industry, Science and Technology recommended a reversal of the burden of the proof to deal with agreements among competitors and to determine whether there is a conspiracy.
To conclude, these requests by the Bloc Québécois have the advantage of being as realistic as they are easy to implement quickly. It is a matter of really wanting to act. The Conservatives' motto is change. Here is a change for the Conservative government to implement, if it is serious about wanting to be fair and acting on its so-called concern for the public, because this affects the interest of our fellow citizens. Taking the public interest into consideration means showing genuine concern for the future, which inexorably involves showing concern for the environment.
Mr. Robert Vincent (Shefford, BQ):
Mr. Speaker, it is a pleasure for me to rise today on the subject of the price of gasoline. In my riding and probably all around Quebec, people are starting to feel fed up and even disgusted when they see the price of gas going up to $1.08 or $1.18 a litre. That is unthinkable for working people and young families earning the minimum wage. It has become a luxury just to drive to the service station and fill up. When it costs $50, $60 or $70 to fill the gas tank and a person’s gross wages are $200, it takes almost half his earnings. It is crazy.
If my colleagues are not hearing that in their ridings, there must be a slight problem. The same problem exists in industry, which is facing serious difficulties. Most industries heat with fuel oil, which has risen 10¢ a litre. In industry, that ends up making a difference in the profits. When there is a difference in the profits, two groups of people are likely to suffer, and it sure is not the industry itself. Either the problem is shifted onto the workers, whose wages are cut to help the company deal with the price of oil, or else the consumer pays. In both cases, we are the losers, and it is because of the increase in the price of oil.
There is no desire on the part of the members of this House, especially the Conservatives, to counteract this increase. With competition, there should be some ideas for a solution. We heard some all morning long. They are the best, because no one in this House, with the exception of the Bloc Québécois, had any ideas for counteracting the increase in gas prices. Competition is one thing, but if the government supports the world price of crude, we are also colluding because we support this price.
In the Alberta oil sands, the price is now about $13 a barrel. Albertans rely on the world price. It pays. By selling a barrel at the world price of $73, they can make about a $60 profit on every barrel. That is why no one is revolting against the oil companies: they are making money.
There should be a tax, a surtax for these oil companies, since they make so much money on top of all the presents we give them. Two hundred and fifty million dollars is no trifle. That is what every oil company got last year.
Has the government thought about the young families who find out the government has granted a tax rebate of $250 million? It makes no sense. The people in my riding are incensed about paying $1.08 to $1.18 a litre, when the oil companies are making billions of dollars in profits and when, on top of that, the oil companies each get a little gift of $250 million. They claim these gifts are necessary and that the oil companies will reinvest the money in Canada. That is not how it works. The oil companies are quite capable of doing development where they come from, and they do not need us to do it. With their $10 billion, $15 billion or $20 billion, I do not think they need another $250 million from us.
If there is still too much money, if there are billions of dollars extra, we know where to invest that $250 million. We proposed solutions all morning.
This money could be invested in EnerGuide, a program taken away from the public. We must suppose that the government did not think it was all that good. Still, we think it is good. In fact, this program can be a good deal for people who take advantage of it and save money.
I am going to tell you how much you can save with EnerGuide. The Conservatives forgot about that. EnerGuide makes it possible to save a lot of energy. Owners taking part in the program reduce their energy bills by about 30%. That is not negligible, it amounts to $750, or about $18,750 over a period of 25 years.
EnerGuide is also an effective means of reducing greenhouse gas emissions at a cost of less than $100 a tonne. We know what the consequences of pollution are. And we know that the oil companies are the biggest polluters in Canada.
But the government does not take that into account. Albertans are so nice. They have oil. They make profits. All that time, the government does nothing and just watches the boat go by. It says it wants to try and find a plan to reduce greenhouse gases, but I think the greater part of this plan already exists.
The oil companies are the biggest polluters that exist in Canada. What is the government doing for the people in the rest of Canada against these polluters? Absolutely nothing. It leaves them alone, saying that the industry must be left to develop.
The industry must not develop in just any old way or at any cost. If public health is harmed, the situation is not much better, the problem is diverted. And then, we hear there is a pollution problem that has to be dealt with. We have a double standard.
I understand that the government is in a spot. I understand that it wants to do nothing. I understand that it does not want people to steal oil. We do not want oil. We have electricity. That is clean energy. That is what it should be considering: how to go about getting renewable energy and clean energy. I do not think that it has considered this. Its only thought is to help out the oil companies. How wonderful. A few gifts here, a few gifts there, and there you go. But the lowly consumer gets no gifts and no benefits.
The modest worker gets no tax cuts. I am not sure that the little income tax cut and the little 1% GST cut will permit small families to buy a car. I heard the government exulting: with a 1% reduction, taxpayers will be able to buy themselves a car! Does it really believe that? If you are buying a $20,000 car, this 1% reduction amounts to $200. Does the government really believe that a family with an average income of $40,000 will be buying a $20,000 to $25,000 vehicle tomorrow morning thanks to a 1% cut in the GST? Come on! That is absurd.
The price of gas is nothing to laugh at. Today the price of a barrel, as I was saying earlier, is hovering around $73. At the pump, that means an average increase of about 37¢ per litre between 2002 and today. If we had pay raises equivalent to the increases in the price of oil, everyone would be happy. There would not be a single worker complaining.
It goes so fast. Here, all that we have for workers are wage freezes, wage cuts to be able to compete with other countries. And when the government has the chance to help the people, it lets it go by.
The best example is this one.
The government had a golden opportunity to introduce a surtax on the import of these bikes. But this is not a surtax. I am told its purpose is to help out consumers. We would have had this for only three years, not for a lifetime. It was a temporary three-year measure. After that, retailers would have been free to do as they wished.
Mr. Sukh Dhaliwal (Newton—North Delta, Lib.):
Mr. Speaker, I will be splitting my time with the hon. member for Etobicoke North.
As a member of Parliament coming from British Columbia, no region of this country is more concerned about the fluctuation of gas prices than our region. Last week there was more than a 20¢ price difference in a litre of gas in British Columbia than a litre in Ontario.
People involved in the trucking industry, the taxi industry, in a small business, such as a plumber, electrician or tradesperson, or in a business that relies on the imports and exports along the Pacific Rim trading corridor, as many in my riding do, gas prices are a huge issue for them and an issue that we should look into with some real diligence.
We need to look behind the rhetoric approach of the Bloc and the NDP about big government solutions which they know will not work. We need to know why they would rather get into bed with the do nothing government time and again than provide a real pragmatic solution for all Canadians.
The big problem with this motion is the surtax. I must say that it is a huge surprise coming from the Bloc because, if any party should know, the Bloc should know that the regulating of gas prices comes under provincial jurisdictions. I would simply say that the opposition cannot have it both ways. Members cannot jump up and down and then accuse the federal government of meddling in issues of provincial concern but then look to Ottawa to solve the problems when the province is clearly doing nothing.
For a province that is not exactly dependent on oil revenues, it is easy to ask for surtaxes on the gas companies, but how do we ensure the surtax is not passed on to the consumer, which would only make the problem worse? We cannot. It is a solution that attempts to punish the marketplace when the oil companies are already paying huge taxes and investing in future exploration, an investment that has meant a great deal for this country.
It is a big government solution, one that my friends in the NDP are excited about as well. I have one question for both parties and it requires a bit of historical reflection, which is never a good idea for either of them. When has any attempt to control gas prices at the provincial level ever worked? No matter whether it was the government in Ontario or the government in British Columbia, it has never worked. It has been proven time and time again. I would suggest that if they really want answers they should call the Conservative government to account on its campaign promises.
The Conservatives said that they would cut gas taxes by capping the GST on gas prices above 85¢ a litre. They have done nothing. The hon. member might giggle here but he is well aware that the government has done nothing. It said that it would exclude the GST from the excise tax and yet it has done nothing. I wonder whether it kind of wilfully forgets or whether it has decided to show the same contempt it showed Canadians about delivering real accountable government and that no one will notice.
The Conservatives assume we will not look under the hood of those campaign promises, probably the hood of one of those new black SUVs the PMO is fond of, those gas guzzlers for which the taxpayer pays the high gas prices. They assume we will not call them on empty campaign promises.
A surtax will simply make the problem worse. The cost will surely be passed on to consumers.
If the hon. member for the Bloc Québécois wants to do something, he should be looking at a real solution. The real solution is to help consumers with some kind of direct tax benefit.
The Conservative members should be talking about their duty as a government. As the government, those members should have a solution. The only solution they have to this problem is their campaign promise to cut the GST on gas prices over 85¢ and to cut the tax on the tax. That is what I would like to hear and I am sure all consumers would like to hear that as well.
Hon. Roy Cullen (Etobicoke North, Lib.):
Mr. Speaker, I am pleased to participate in the discussion on the motion by the Bloc Québécois. I find the motion to be strangely ironic for a party that is always very sensitive around provincial and federal jurisdiction. Those members know full well that it is within the jurisdiction of the province to regulate prices at the pumps. In fact there are a couple of provinces that have tried that, not with very much success. If the Parti Québécois in Quebec City wants to deal with gas prices and regulate the price at the pump, it is a matter within provincial jurisdiction.
The part that is in the federal jurisdiction has to do with the competition policy and the Competition Bureau. The bureau monitors the activities within the retail gasoline sector. There have been many investigations. The industry is an oligopoly. There are a small number of participants. Clearly they do not sit around at Tim Hortons and decide what the price of gasoline is going to be every morning. It is fair to say there is some regional pricing that is set through price leading and price following.
Our caucus, under the leadership of my colleague from Pickering--Scarborough East, did a major review of gasoline pricing some years ago. One of the things we had suggested was to change the burden of proof under the Competition Act from a standard of criminal performance test to one of civil, so if there was any collusion or price fixing, then the burden of proof would be somewhat less onerous as a civil test rather than a criminal test. That legislation was tabled by our government. I am hoping that the Conservative Party will follow through on that.
The other thing I find strangely ironic is that the Conservative Party, when it was in opposition, was making this fine distinction between what was in the last platform and the platform before, and what was said four years ago versus what was said three years ago. It is a fine point that does not really resonate with me and I do not think it really resonates with Canadians. The reality is that the Conservative Party said it would cap the GST on prices above 85¢ and it has not done that. I have not seen any legislation to launch that initiative.
The Conservatives have also said in the past that they would eliminate the 1.5¢ a litre that was brought in by our government to deal with the deficit. Of course we know that the deficit has been eliminated because of the good financial management of the Liberal government. There is an argument to eliminate the 1.5¢ a litre that was brought in to eliminate the deficit, but I have not seen any proposals from the Conservative Party to do that, even though in opposition the Conservatives thought this was a very good idea.
We in our party, on the other hand, thought that a 1.5¢ reduction would be gobbled up at the pumps in one afternoon by the oil companies. We were not convinced by any stretch of the imagination that the 1.5¢ would go back to the gasoline buying public. In lieu of that, we brought in an energy rebate that dealt with all energy products. It provided rebates to Canadians, especially low income and middle income Canadians. We know they benefited from that. As I said, we were convinced that a 1.5¢ reduction at the pumps would be gobbled up in one afternoon.
The other thing the Conservative Party has proposed is to eliminate the tax on the tax, the GST on the GST. Unless I have missed something, I have not seen any proposals in the House along those lines either. That is something for which the Conservatives argued very strenuously in opposition.
What I am saying is that the Conservative Party has ways to respond to this motion. The Bloc Québécois is proposing solutions when the solutions actually lie right within the government in Quebec City. The Liberal government right now could do this under pressure from the Parti Québécois; it actually regulates gas prices. Personally I do not think it is a viable alternative but I have not heard in any of the Bloc members' remarks that they have looked at this in any detail.
Certainly the question of a surtax on the oil companies is misguided. We often hear profit numbers from the oil industry, but to be reasonable, we have to equate profits to investment and we know that the oil industry in Canada is highly capital intensive. Huge amounts of capital have been invested. The companies are right to have a return, as are their shareholders. Before implementing any surtax on oil companies, I think we need to do a little more homework on what the profits are in relation to the assets deployed. It takes a huge amount of capital to invest in refineries, to invest in exploration activities and to invest in oil extraction operations.
I think this surtax is somewhat misguided as well, so certainly I will be voting against the motion, but I believe that what we need to be doing is facing reality. While I can empathize with people paying these higher gasoline prices at the pump--and I am one of them--we need to understand that the days of low energy prices are over, regrettably. We have to look at the situation in Canada as well. We have to realize and appreciate that gasoline prices in Canada do not even come close to what one would pay at the pumps in Europe. We are blessed in that sense.
Of course the pricing is highly volatile, and I think that is what makes Canadians angry. They see the volatility and the pricing change over the long weekends. That is a function of supply and demand. Of course we know that over the long weekends there is going to be more demand for gasoline. The supply constraint is there, so prices go up. It is not exactly rocket science. It is economics 101.
We should be looking at alternative energy and alternative fuels. The government announced something with respect to methanol, biodiesel and biofuels, which is a start, but it was announced in the context of reducing greenhouse gases, and we know that the contribution to greenhouse gas reduction from biofuels is very minimal. It is true that the output from a car or a truck that uses ethanol is cleaner, but with all the technology today in cars and trucks it really is a marginal improvement in the noxious emissions. Biofuels are good in terms of agricultural policy, but in terms of greenhouse gases I think the benefit is minimal. In terms of clean air, I think the benefits are minimal as well.
We should be looking at alternative energy like hybrid fuels. I hope the government brings in an incentive to bridge the gap between the price of a hybrid vehicle and the price of a conventional vehicle. We know there is quite a spread in the prices. For many Canadian citizens it is hard to come up with $8,000 or $10,000 more to get a cleaner fuel in their vehicle. That is where I think the federal government could play a role in providing either a bridging grant or a tax credit to help Canadians move to hybrids. There are many other technologies.
I see that my time is up temporarily, until after question period, and I will continue after that.