Mr. F. Oberle (Prince George-Peace River) moved:
That this House regards the Government's failure to take action to encourage the development of Canada's resource industries and ensure their competitiveness in world markets as a betrayal of all Canadians whose standard of living depends upon the resource sector of Canada's economy and calls upon the Government to bring an end to the nationalization of Canadian resource industries which has discouraged investment in Canada; introduce tax incentives to restore competitive advantage and stimulate resource production and further processing in Canada; initiate a program of incentives for research and development; and incentives for marketing activities of Canadian industries.
He said: Mr. Speaker, I am certain that the House will not be surprised that we should have chosen to put aside a day in the busy life of Parliament to discuss the state of our primary resource sector, and therefore the economy in general. Naturally we would have preferred to discuss issues so vital to the well-being of our entire nation and her people in connection with any Government initiatives.
Despite our strong urgings here in the House and the danger signals which we are receiving from the industry, the unions, and the scientific community associated with it, and from the investment communities that invest in the resource sector, this Government sticks stubbornly to a deliberate policy of indifference and neglect. This Government sees our primary resources such as trees and minerals as artesian fountains of wealth which will flow uninterruptedly to be tapped and sapped at every stage without regard to the health of the resource itself or the industries that are sustained by it. It makes no difference whether we talk of our forests which could be, with reasonable care, renewable, or the minerals which we extract and refine and which are such an important part of our commerce and trade. This Government's only interest is what these industries can be made to contribute to satisfy the monstrous appetite for public revenues to support a spending spree over which no one any longer has any control.
My colleagues will, in the course of this debate, Mr. Speaker, tell you of some of the horror stories which are the result of 15 years of Liberal mismanagement. We will speak of the imminent crisis facing our resource sector. We will also point out the great opportunities that we have missed in the past and
will surely miss in the future if we fail to act responsibly and decisively to arrest the disease which has been inflicted on private sector industries in general and the resource sector in our economy in particular.
I share the view of many economists who say that Canada could hardly survive as an important and viable trading nation without its resource wealth, if for no other reason than the fact that the volume and potential for growth of one's industrial production is, in the main, limited by the size of one's markets. All of us want to expand our secondary manufacturing capacities and our markets for such products through trade with foreign countries. But it is in the resource sectors wherein lies our natural strength and advantage. It is our resource industries which provide the foundation for the economic structure which permits us to compete in a significant way in world markets. It is our resource sector which is the source of our economic well-being, our prosperity, and social contentment.
Permit me, in the few minutes that 1 have to speak on the motion standing in my name, to give a profile of just two of our more important resource industries, mining and forestry. I think I might best be able to describe the importance of those two industries by comparing our total economic structure to the trunk of a tree which supports its branches and its leaves through a network of roots through which flow its life-supporting juices.
There are now more than 350 small and not so small communities throughout our country, from the Great Lakes to the Arctic Ocean, which depend almost entirely on one or the other of these two industries I have mentioned. These communities are at the end of the root structure or network, generating wealth and nourishment which sustains the life at the end of the branch.
Fifteen per cent of our country's entire work force is either directly or indirectly engaged in the forest and mining sectors. In better times these two industries have generated directly close to $40 billion of industrial product, $25 billion of which is earned from trade in foreign markets throughout the world. The mining sector alone accounts for over 50 per cent of all our rail freight volume, with crude minerals making up 44 per cent and fabricated minerals 9 per cent of all the railways' revenue freight handled. Forty-one per cent of all goods shipped through the St. Lawrence Seaway originate from the end of one of the root canals, from a quarry, sandpit, mine smelter or refinery, a sawmill, pulpmill or logging camps some place in mid-Canada or the North.
It is the activities of the miners and the loggers which sustain some form of economic life in over 60 per cent of our
November 21, 1983
entire geography. The further the roots have been extended, the healthier and stronger our tree has become.
But something has gone terribly wrong. The engine which pumps the vital juices through the trunk is working at only 50 per cent capacity. On the mineral side, half of our mines are shut down or have drastically reduced production. The Government says that it is just another cyclical problem, the result of a world-wide recession in the economy, and is something we will just have to wait out. Of course, that is true to some extent but it would be extremely dangerous to ignore a number of trends and factors which will undoubtedly have a profound effect on the timing and rate or extent to which our mining industry can recover from this deep valley of a cyclical curve.
First, it must be obvious by now to even the most casual observer that there is a fundamental shift of resource-based industrial production toward the developing world. Industrial countries in Europe and Japan, even ourselves and the Americans, are making massive investments in the resource sectors of many developing countries. We see it as our contribution or form of development aid or assistance. But in the case of our industrial competitors from Europe and Japan, it also has the purpose of adding to the supply of raw materials to achieve greater and more diversified access to natural resources and, through it all, to create keener price competition. As well, the World Bank is very active in this field. While all this activity may produce significant benefits to the target countries and the industrial countries which make the investments, it spells bad news for Canada.
A second, equally important factor is the substitution in the manufacturing process of certain base minerals for new materials and a general impact of a new technological revolution of which we are becoming the beneficiaries, or perhaps the victims, at an extremely rapid pace. For instance, the same tonne of coal that it used to take to produce 90 miles of copper wire now turns out 80,000 miles of fibre cable capable of delivering 100 times more impulses. Or an automobile which used to weigh 5,000 pounds ten years ago now weighs only
3,000 pounds. As you can see, Mr. Speaker, it would take unprecedented growth in world markets to generate the kind of demand for our base metals needed to restore our mining sector to its original health.
Finally, there is another factor more of a home made kind which will undoubtedly delay the recovery of our industry and therefore the economy generally. That has to do with the unreasonably heavy and crushing tax burden and economic rent structure which all levels of government have loaded on the shoulders of the resource sectors in recent years, a burden out of all proportion to any return the industry has achieved from its investment.
There have been unconscionable increases of certain so called non-profit taxes, such as property tax, fuel taxes and so on. In some cases these charges have increased by over 100 per cent in one year, diminishing the efforts the industry has been making in cutting costs and increasing productivity.
The Mining Association of Canada in its submission to this year's conference of resource ministers gave a number of examples to illustrate this point. Let me quote:
In British Columbia and in the period 1980-1982, costs to the industry have increased by $118.5 million in direct payments arising from a very large number of actions by Government, both federal and provincial, on several fronts. This represents a 105 per cent increase in only two years. For 1983 it is anticipated that further substantial increases have occurred. More specifically, we have evidence to show that in the past 12 years, two large mining operations in British Columbia have seen their property, fuel, water, provincial and municipal taxes escalate from $4 million to $35 million.
In Quebec, salary and fringe benefits, which in 1980 represented 32.2 per cent of the average value per tonne of ore, increased in 1982 to 38.8 per cent of this average value, representing a 20.5 per cent increase. On the other hand, the cost of social policies, indirect taxes and electrical power, which in 1980 represented 9.67 per cent of the average value per tonne of ore, reached a percentage of 15.62 in 1982, i.e., an increase of 61 per cent during the period. So together, the cost of all these items measured, on the average value per tonne of ore, went from 41.9 per cent in 1980 to 54.3 per cent in 1982.
In Alberta, over the past Five years mining companies have experienced percentage increases of over 100 per cent for fuels, 80 per cent for electric power, 75 per cent for freight costs, 60 per cent for property taxes, 85 per cent for provincial health care premiums, 62 per cent for unemployment insurance, and 41 per cent for pension contributions.
Very similar increases could be documented in every province or territory across Canada where mining is carried on. To add to all that, we keep inventing ever more stringent rules with respect to environmental safeguards, health, safety and standards of social amenities in the mining and logging communities.
Now, Sir, you will find me among the very last to suggest that some of the standards which we have all worked hard to achieve should be sacrificed to assure the future health of the resource sector. But it is now painfully obvious to everyone that the industries alone are no longer able to bear all the costs related to these laudable social objectives. We have simply strapped the industry too tight. We are depriving it of its competitive edge and rendering ourselves extremely vulnerable and unprepared to meet the new challenges and forces which have distorted the conventional rules of trade in market places of the world.
Our new competitors, as you know, Mr. Speaker, may not play by the same rules or by what we would consider conventional rules. They are in the main state-owned enterprises, their prime objective, understandably perhaps, being foreign exchange earnings and jobs. Their plants will be heavily subsidized from funds to which we ourselves are contributing. It is as if we are all too eager to finance our own demise.
Well, Sir, one might ask how is the Government on the other side of the House reacting to these worrisome trends? Sureiy it must have the same information we have. To some of us it appears as if its answer to our dilemma is to succumb to the rule changes and attempt to compete on an equal basis with the new players in the developing world and the not so new players in the socialist world. It appears as if it sees states ownership, or at least a very advanced form of state control, in our own country's economy as the only way to survive this onslaught.
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In a sense we have advanced some way toward that goal. The justification for Petro-Canada, for instance, was to provide us with a window on the world and permit us to trade with countries that refused to deal with the private sector. Our tax laws are designed to permit our companies barely to cover their costs of capital and operation and leave no room for modernization and technological innovation.
"Not to worry," says the Government, "after all have we not given you grants to modernize or subsidies for labour costs when that became your problem?" That may be true, but do you believe, Sir, that this is the kind of climate to which either our own or foreign investors feel attracted? That must be a worry, unless we either believe the Government can create money out of thin air or we assume that after necessary adjustments to our economy have been perfected we might ourselves become eligible some day for loans and gifts from the International Monetary Fund and the World Bank.
What happens if one falls out of favour with the Government on which one has to rely for grants when things get tough, or what happens if it is too late before the bureaucrats in Ottawa get around to a particular problem? The forest industry is a case in point. It is suffering not only from all the pains of the recession and the fact that we have not permitted the industry to build and maintain its own capital resources to ride out the storm, but because we have also neglected to assure that our forests are replenished to provide our mills in the future with the necessary feedstock on the basis of a sustained yield. All of a sudden we have come to realize that we have been mining our forests for the last 200 years instead of farming them and that nature alone is no longer able to replenish itself in sufficient time to meet our demand.
For some mills and towns in mid-Canada, coming to grips with this realization is too late. No matter how many grants the Government might make to bail out a troubled company, we will shortly experience timber shortages in most areas and regions of the country, causing lay-offs and shutdowns not only of mills but of whole towns and regions, because it takes 60 years to grow a tree and sometimes much longer, depending upon the climate and other factors.
1 have little doubt that had it been the responsibility of the private sector to manage the resource, either through direct ownership or long-term tenure, we would not find ourselves in this fix today. The United States, where 60 per cent of the forest land is privately owned and managed, provides us with an interesting model for comparison.
To sum up, we see difficult times ahead for our resource industries and therefore for our economic wellbeing. Any prospects for recovery and new growth are admittedly, as 1 pointed out, influenced by factors and trends over which we have little control. However, much of the pain we must suffer during the recovery period is self-afflicted and can be cured only by ourselves, even though some of the larger corporations and their sector organizations still refuse to speak out in defence of the system from which they have grown, I suppose for fear that the Government might not think kindly of them
at their time of need. Some do speak out and, more important, the average Canadian has become weary of the dream of a just society which our centrally-structured and planned economy was to deliver, a dream which for some has turned into a nightmare. Canadians now understand that state planners are not very good in creating new wealth and that Government cannot distribute wealth which has not first been created by someone.
It is true that we have built for ourselves a very sophisticated socio-economic structure, one which is still the envy of most of the world and indeed one which can feed on itself for a short period of time. However, like the maple tree that has been tapped too deeply, it will eventually die, and like any tree that has been cut off from its roots, it will rot and decay.
We draw our confidence for not only bright but exciting future prospects for economic growth and prosperity from the confidence Canadians are expressing in my Party's ability to recapture the promise which inspired earlier generations of Canadians, the promise of a just reward for individual effort and free enterprise. Most assuredly if we should manage once again to set this spirit free, we shall have no trouble meeting and beating whatever our new competition will throw at us in world markets.
I thank the House for giving us this day to state the case and for preparing Canadians for the challenge ahead.
Subtopic: BUSINESS OF SUPPLY
Sub-subtopic: ALLOTTED DAY, S.O. 62-RESOURCE INDUSTRIES