††††††† Whitehorse, Yukon
††††††† Thursday, November 4, 2004 ó 1:00 p.m.
Speaker: I will now call the House to order. We will proceed at this time with prayers.
Speaker: † We will proceed at this time with the Order Paper.
In recognition of Early Childhood Educator Appreciation Day
Hon. Mr. Jenkins: Mr. Speaker, I rise today to ask all members of this House to recognize Early Childhood Educator Appreciation Day, which will be officially recognized on November 5 ó tomorrow. And I ask you all to join me in paying tribute to our early childhood educators, who are the unsung heroes who care for and teach our children.
Mr. Speaker, joining us in the visitor gallery today are three of a group of very dedicated Yukon early childhood educators, and I would ask all members to welcome them here today: Jasbir Randhawa, Cindi Desharnais, and Judy Wengzynowski.
Hon. Mr. Jenkins: This day is used to celebrate and recognize the tireless efforts of educators who care for the children of working parents. In the Yukon alone, there are several hundred individuals who earn their livelihood by teaching and caring for our young children, and this need is ever increasing. It is important that we know who is looking after and teaching our children in daycare centres and family day homes. We need to know them as individuals rather than just the women and men who take care of our children between the hours of 8 a.m. to 5 p.m.. We all need to take the time to appreciate the importance of early childhood educators in our society.
I am pleased that our government has increased its contribution to the childcare field, and through a four-year plan we will continue to support and improve the working conditions of our early childhood educators.
There are many initiatives underway by the federal Liberal government through the Hon. Ken Dryden that may assist in this field, and we look forward to receiving these funds on other than a per capita basis. It takes very special people to work in the childcare field, and the contribution these people make to the quality of life for Yukon families often goes unnoticed. I would ask that my colleagues in the House join me in thanking them all for their efforts on behalf of our children.
Thank you very much, Mr. Speaker. Thank you, ladies.
Mr. McRobb: I rise on behalf of the official opposition to pay tribute to our early childhood educators. This is a day to recognize the valuable contribution made by early childhood educators and childcare workers to our lives and to the lives of our children. Without these devoted people, our children would not have the foundation we hope to give them. These workers are not simply babysitters who keep our children busy while we work. Quality care assumes that our children will receive a similar level of guidance, love and attention provided by parents and guardians.
Quality care in early childhood depends on adequate funding for daycare centres. It depends on wages that recognize the contributions made by these educators and workers in our society. It depends on our workers being fully trained, and it depends on the evaluation and change in systems that support early childhood education. None of these qualities are free. In Europe the goal for early childhood learning is for governments to spend one percent of their GDP on early childhood care and education. Some European countries exceed that amount. It is heartening to know that our federal government is again talking about a national system of childcare. Parents in the Yukon hope they wonít be let down this time.
We urge the federal government to draft legislation resulting in action on this most important front in our education systems. In closing, we salute all of the daycare and early education workers across the territory. They are professionals who give, every day, to all of society. Thank you from our children who may someday be parents themselves, putting into practice the knowledge learned from their early childhood experiences.
Speaker: Are there any further tributes?
Introduction of visitors.
INTRODUCTION OF VISITORS
Hon. Ms. Taylor: ††Mr. Speaker, I would ask all members of the House to join me in welcoming our visitors in the gallery today, who are new government employees participating in an orientation to the Government of Yukon. Having learned about the operations of the Legislative Assembly, they are here to briefly witness the work of the elected members. Thank you and welcome.
Speaker: Are there any further introductions of visitors?
Are there any returns or documents for tabling?
TABLING RETURNS AND DOCUMENTS
†Hon. Mr. Edzerza: I have for tabling a brochure of information outlining the VictimLINK service that has been established for Yukoners.
Hon. Ms. Taylor: †Mr. Speaker, I have for tabling both the Yukon Public Service Staff Relations Board 34th annual report, as well as the Yukon Teachers Staff Relations Board 2nd annual report for the fiscal year ending March 31, 2004.
Speaker: Are there any reports of committees?
Are there any petitions?
Are there any bills to be introduced?
Are there any notices of motion?
NOTICES OF MOTION
†Mr. Hardy: I give notice of the following motion:
THAT it is the opinion of this House that the Yukon Party government no longer enjoys the confidence of the Members of the Yukon Legislative Assembly due to its failure to honour the commitments made to Yukon people during the campaign leading to the territorial election on November 4, 2002.
Ms. Duncan: I give notice of the following motion:
THAT this House urges the Government of Yukon to examine the feasibility of establishing territory-wide cell service and territory-wide 911 service as part of the current redevelopment of the multi-departmental mobile radio system, (MDMRS).
Speaker: Are there any further notices of motion?
Is there a statement by a minister?
This then brings us to Question Period.
Question re:† ††Election commitments
Mr. Hardy: Today is a very noteworthy day, Mr. Speaker. It has been two years since the last territorial election; two years since the Yukon Party was elected on a platform of very stirring words; two years of words with no deeds to match. Letís look at some of the unfinished business: Education Act review ó nothing; Workersí Compensation Act review ó nothing; replacement of the Whitehorse Correctional Centre ó nothing; Liquor Act amendments ó nothing; and this is just the tip of the iceberg.
Now that this government is halfway to retirement, when does the Premier plan to start matching actions to his stirring words?
Hon. Mr. Fentie: Thank you very much, Mr. Speaker, and I thank the member opposite for this opportunity. Yes, this is a significant moment in any governmentís mandate. It is the 24-month mark. I can say with the greatest of confidence that this government, this Yukon Party team, the government departments and their employees, have been diligently working over the last two years delivering on our commitments to the Yukon public during the election of November 2002. The list is much too long to recite here today, but I will go over some generalities.
Our financial situation has improved. We have the biggest budget in the history of the Yukon this year, investing in Yukoners and building a better and brighter future.
Our resource sector is coming back and growing. Tourism is growing. We have one of the lowest unemployment rates in the country. Our population is growing. Weíve increased investments in education. Weíve increased investments in health care. We are living up to the main commitment of making the lives of Yukoners better. We are proud of it and we are going to continue our good work throughout the rest of this mandate.
Mr. Hardy: Boy, theyíre a noisy bunch today, arenít they, Mr. Speaker.
Now, what a surprise: more words from the Premier. What was it that Shakespeare said about words: full of sound and fury, signifying nothing?
Now letís have another look at this wonderful platform. The title was ďTogether We Will Do BetterĒ ó stirring words signifying nothing. Oh, Iím sure the Premier will brag about all the jobs, all the construction, all the new money from Ottawa, et cetera ó he just did it already ó but what about achieving a balance between the economy and the environment, from the platform? What about practising good government? We donít have to look around very far to see a problem there. What about the other title? Achieving a better quality of life ó out of the platform. Now when does the Premier intend to start turning those words into action?
Hon. Mr. Fentie: Thatís a difficult question to answer, because we already have turned our platform commitments into action. The difference between this side of the House and the members opposite is fairly clear. We, the government, are delivering tangible product. Thatís whatís going on in todayís Yukon, whether it is a better quality of life, whether it be engaging the private sector, whether it be achieving a balance in the economy and the environment. Under the former NDP government and the former Liberal government, the pendulum was skewed far toward stagnation of any economic growth ó not the case under this government. The pendulum is now back in a very balanced manner.
Now, Mr. Speaker, there is an old adage, ďEmpty barrels make the most noise.Ē Our side of the House is delivering and speaking not through words but product. I ask you, what about the other side of the House on this matter?
Mr. Hardy: Well, we all know that the Premier loves to blame former governments for everything that they do wrong. Now, letís turn to the first page of this wonderful platform. The Premierís letter to Yukoners promised ďa new, inclusive team approach to governing the territory.Ē His own words. Two sentences later: ďThis new, inclusive style of governing will be based on consensus building, consultation, collaboration and compromise, not on confrontation and unilateral action.Ē I can hardly wait to see when itís going to materialize, but what everything comes right down to is words, words, words. Another word: ďRestoring investor confidence in the territory is dependent upon the successful resolution of land claims, devolution and the Yukon protected areas strategy.Ē Will the Premier now join us in saluting one of the best examples of dramatic irony in Yukon literary history, his own 2002 election platform? Will he do that now?
Hon. Mr. Fentie: Mr. Speaker, I must say that the 2002 election platform must have been a good platform. It was a good vision and a good plan and Yukoners agreed. They voted and they elected a Yukon Party government by the biggest majority in the history of this territory.
†Secondly, this government is not bragging. Weíre merely stating the facts, Mr. Speaker, and we acknowledge that it is not the government entirely that has produced these results. It is because of our cooperative approach in team building. We couldnít have done this ourselves and we openly admit that. We are successful in this territory because we have created a team spirit. Together we will do better. Together we are doing better. The facts bear that out.
Question re: Election commitments
†Mr. Hardy: Well, we have to remember the other words: ďTeam Yukon.Ē I think most of the team is made up of people from Outside, though. Mr. Speaker, Iím curious to hear the Premier explain why his government has failed to deliver on some very specific campaign promises he made two years ago. For example: the all-party committee on appointments to boards and committees; an all-party agreement on a code of conduct and decorum for Members of the Legislative Assembly; enhanced opportunities for public employees to provide input on Yukon government decisions individually and collectively; whistle-blower legislation; an independent commission of citizens to hold public consultations on electoral reform ó fine words ótwo years ó nothing, Mr. Speaker. Can the Premier provide a timeline of when he intends to turn those words into deeds?
Hon. Mr. Fentie: Well, Mr. Speaker, as the government continues on through this mandate, growing our economy, addressing our social fabric, dealing with our education system, building relationships and partnerships, not only internally but externally ó and the member opposite has a problem with people from Outside. Where does the member opposite think investment comes from? It doesnít fall out of the sky. We have to engage with those outside of the territory. Our vision is beyond the Yukon borders in building the Yukonís future. The NDPís vision is very insular. It doesnít see very far, and that is why theyíre there and weíre here. Itís all about vision; itís all about plan; itís all about delivery. The contrast is evident. We deliver; they talk about it.
Mr. Hardy: Now, Mr. Speaker, there are too many Fís on the Premierís mid-term report card. Maybe he should spend less time on airplanes and maybe more time down on the ground, doing the hard work of government. There is one very serious area where this government is getting a failing grade, and Iím talking about government-to-government relations with Yukon First Nations. The Premier said it was a top priority, but there are growing signs that the wheels have come off on this.
What is the Premierís response to yesterdayís very clear warning from the Grand Chief of the Council of Yukon First Nations that there could be a concerted effort at the next election to punish this government for what the Grand Chief calls its ďultimatumĒ decisions?
Hon. Mr. Fentie: The Grand Chief, in representing the First Nation members of the Council of Yukon First Nations, has an obligation to speak out on behalf of First Nation people. However, the government is not concerned at all about the next election. The government is focused not on trying to get votes but on trying to create a better Yukon and build a brighter future. And we are doing that with First Nations ó whether it be through governance ó and the areas that weíve agreed to and pursued, such as a child act review, corrections reform, education reform ó examples of governance and partnership. In the economy, the bilateral with the Kaska: producing results, weíre drilling for gas, weíre exploring for minerals. We are now having timber permits made available. And the list goes on and on: partnerships in the north Yukon with an economic development accord; investment in the Vuntut Gwitchinís capital planning to create an economic base and cash flow in the community of Old Crow; and the list continues.
We have to also reflect on another fact: partnerships are a two-way street. We all have an obligation to give and to take. This government is a give-and-take government, but we also have to represent the public interest in all cases. Thatís what weíre doing and we have every confidence that the public will judge accordingly in the next election.
Mr. Hardy: I heard one word over there repeated quite a bit, and I know that members opposite are very attached to the word ďreformĒ. Now, ministers who ignore mandated advisory bodies, ministers who donít consult or donít listen, is one of the problems. Agreements that are not honoured: the Grand Chief is right. These are the things that can bring down a government.
The Yukon Party platform said that this government would work with First Nations that have settled to implement their agreement. It said that this government would work cooperatively with First Nation governments to coordinate the management of settlement lands and public lands.
If the Premier isnít prepared to honour these commitments, is he prepared to spend the second half of this term in office defending court challenges from First Nations?
Hon. Mr. Fentie:††††††††† First Nations and any Yukoner can access the court system to present a challenge if they feel that they have been wronged. I can assure you that the government of today has no problem with those kinds of challenges, because we are confident that what we have done is within the context of our obligations ó whether it be final agreements, our obligation to consult, and our obligation to deal with the public in a fair and equitable manner. Nothing that this government has done would contravene those very principles.
I donít impede or preclude anyone from challenging issues in the courts that they feel are necessary. We will present our case; they will present their case and the courts will rule. We have not got a problem with that. That will never diminish our effort and our commitment to work in partnership with the First Nations of this territory and indeed all Yukoners. Thatís what weíre doing; thatís why we are achieving results.
Question re: ††Liquor Act changes
Ms. Duncan: The minister proudly announced yesterday that the government had covered off 17 recommendations from the Liquor Act review. When does the minister plan to deal with the other 32 recommendations?
Hon. Mr. Kenyon: Mr. Speaker, the Yukon Liquor Board continues to review and to work with the Liquor Act review and regulations. Itís on an ongoing basis, as it will continue through the mandate, and we will deal with problems as they come up. At this time, we do not see any reason to open up the Liquor Act or any reason to make liquor more accessible to Yukoners. Weíre just very confused by the member oppositeís approach.
Ms. Duncan: Mr. Speaker, what the minister just stood on his feet and said is, ďWe donít see any reason to listen to over 2,000 completed questionnaires returned from Yukoners from throughout the territory.Ē He doesnít see any reason to listen to the people who attended the territoryís meetings ó 56 meetings in total. He doesnít see any reason to listen to the individuals from Yukon communities, from First Nations, from social service organizations, from the RCMP, from licensees, from the hospitality industry, from other interested parties who all contributed to the Liquor Act review. The number one, first and foremost recommendation of all these individuals was that the Liquor Act required an overhaul; the Liquor Act has to be rewritten. That act, not the regulations, has to come before this House.
When is the minister going to do the hard work of government and listen to these Yukoners and bring that act forward?
Hon. Mr. Kenyon: Mr. Speaker, first of all, the member opposite prefaces her original comments by talking about accounting principles, and an accounting principle that is common in every business that I have ever seen. I did check, and Yukon College does offer some very good accounting courses, and I suggest that the member opposite take them.
Speaker: Order please. Itís out of order that you are intimating that the member needs education. Each member has the fair right to ask questions and receive the answers the government chooses to give them. Thatís the right of each member. I would ask the member not to diminish the questioner.
Please carry on.
Hon. Mr. Kenyon: Thank you very much, Mr. Speaker.
The Liquor Act review showed one thing very clearly. It clearly showed a good consultation; it showed very well the fact that Yukoners were very polarized on this issue. It does not show, in my mind, and in this governmentís mind, that the Liquor Act needs an immediate opening. We need to evaluate the regulations. We need to make sure that itís a legislation-right ó not legislation-light ó agenda.
We have higher priorities, and itís disappointing that members opposite have priorities like this when there are so many more important things to do in this territory.
Ms. Duncan: For the benefit of the member opposite, I would remind him that there were 2,000 questionnaires, 56 public meetings throughout the territory ó every organization the minister could name was consulted on this piece of legislation, which dates back to 1977.
The minister should be aware that one of the key recommendations, first and foremost, was that the Yukon Liquor Act and regulations should be rewritten. The act has to be rewritten.
The minister also has the responsibility for Economic Development. Another recommendation covered licence types. It said the government should modernize, streamline and reduce the number of types of liquor licence classifications. The business community is asking for these changes.
Yukoners are asking the government to do the hard work. Why? Whatís the ministerís excuse for not doing the hard work of government in bringing forward a new act that Yukoners overwhelmingly asked for? Whatís his excuse?
Hon. Mr. Kenyon: Once again, I think our platform was very clear in the last election, that we did not consider the Liquor Act a high priority, that there were many other, larger priorities. And therefore, the amendment to the Liquor Act really isnít a priority at this time.
Mr. Speaker, during the election ó perhaps Porter Creek North is different from Porter Creek South ó but I can say that Iíve knocked on virtually every available door in that riding, and the number of times that the Liquor Act came up? Zero, not one. Constituents and Yukoners want jobs. We have the lowest unemployment rate since they have kept statistics in the Yukon, and one of the lowest in the country. They wanted to bring population back. We have brought back nearly 1,000 people. They want increased training in trades, better education, better childcare, better health care. That is this governmentís priority, not reopening the Liquor Act.
Question re: Arctic National Wildlife Refuge
†Mrs. Peter: Mr. Speaker, a few days ago I asked the Minister of Environment how he planned to make the new administration in Washington aware of the Yukonís position on drilling in the Arctic National Wildlife Refuge. The ministerís lukewarm response was not a surprise to many, considering he didnít even bother to attend a recent environment ministers meeting on a subject as important as climate change. Now, the election is over. Iíll put my question to the Premier.
Iím grateful to the Premier for providing financial support for the Gwichíin people in the Yukon and their lobbying efforts, but I would like to see the Premier stand up and be counted on this issue. With a stronger Republican presence in Congress and the White House, will the Premier agree to visit Washington to help put the Yukonís position on the public record there?
Hon. Mr. Jenkins: Mr. Speaker, our government was asked by the Vuntut Gwitchin government to take the lead. They want to take the lead on this initiative and we agreed. We have provided assistance. Our position has not changed. Our position has not changed one iota on the protection of the critical habitat of the caribou herd in the northern part of Alaska, Yukon and Northwest Territories.†
Mrs. Peter: Mr. Speaker, yesterday the newly elected senator from Alaska, who is also the governorís daughter, outlined her post-election priorities. Those priorities are to build a gas pipeline, to open the Arctic National Wildlife Refuge for drilling, open new mines and fast-track the logging and fishing industries. Not a word about the environment.
The Porcupine caribou herd is essential to the Gwichíin people and our way of life. Once again, we see a direct threat looming over the core calving ground of this herd. This is top priority as of today, and Chief Linklater is leaving for Washington in a few days. Yukoners must stand together, and the Premier must show leadership.
If the Premier wonít go to Washington, will he at least go to Juneau and tell the Alaskan state legislators that the Yukon government is opposed to drilling in the wildlife refuge?
Hon. Mr. Jenkins: The member opposite made mention of the involvement and the development potential in the State of Alaska. It must be pointed out that the State of Alaska, in their development, is doing so in cooperation with quite a number of aboriginal corporations in that state. To that end, the fiscal reports for last year clearly indicated that these corporations realized benefits in the billions of dollars; I believe it was $3.2 billion dollars. They are investing it back into that state for resource development, so the First Nations in that state, the aboriginal population, is well involved in development and concur to a great extent.
To the issue that the member spoke to, of the protection of the caribou herd and their involvement, we are very cognizant of that issue. We are supportive of the position and this House has moved two motions supporting that issue, and they were passed unanimously.
The Vuntut Gwitchin had asked to be the lead on this and to take the lead, and they have done so with this governmentís support.
Mrs. Peter: The minister and the Premier are not answering the question. Weíve had two years of talk from this government with very little action. Itís time for the Premier to turn his words into deeds. I would like the Premier to make a commitment to take action and follow up on the intergovernmental agreement with Alaska that he signed last year.
Will the Premier agree to go to his office right after Question Period today, pick up the phone and tell Senator Murkowski and Governor Murkowski that the Yukon government and opposition do not want to see any drilling in the National Arctic Wildlife Refuge?
Hon. Mr. Jenkins: That message has been conveyed to the government of the State of Alaska, to the governor of that state, to Ottawa, to Washington, not on one occasion, but on a number of occasions. The last time Iím aware that it was conveyed to the Governor of the State of Alaska was when he had occasion to visit this capital city of Whitehorse.
The Vuntut Gwitchin asked to be the lead on this area and, rightly so, we agreed with their position as a government and we are supportive of their position in this area.
Question re: Alaska Highway pipeline
†Mr. McRobb: Recent developments are signalling that an Alaska Highway pipeline may not be far away. Oil prices are near record highs. The U.S. Senate recently approved an incentive package pushed by the major gas producers backing the proposed $20 billion project. Tuesdayís U.S. election has given the Republicans not only the U.S. presidency but a majority in Congress and in the Senate and, it would appear, another Alaskan senator in addition to the existing governor of the state.
With such full control and little to hold it back, American politicians will be anxious to start the Alaska Highway pipeline ahead of the N.W.T. pipeline proposal.
Is the Minister of Energy, Mines and Resources aware of any other indicators that signal this major project is being fast-tracked, and what are his latest expectations in terms of timelines?
Hon. Mr. Lang: I certainly am aware that there is interest in the Alaska Highway pipeline. As far as timelines are concerned, we arenít privy to that information. We work on a daily/weekly basis with the producers. He is correct ó the president-elect of the United States, Mr. George Bush, a Republican, brought with him a majority in the House and the Senate and also a Republican senator in Alaska and a Republican governor. That bodes well for the Alaska Highway pipeline, Mr. Speaker.
Mr. McRobb: The minister failed to answer the question. The Northwest Territories has lost its battle to fight U.S. Senate attempts to aid the Alaska Highway pipeline. It is now facing delays while it conducts environmental assessments and sorts through other issues. The demands of these two projects are so massive in terms of workers, equipment and materials that only one can be built at a time. We need to know if ours will be first in order to be pipeline-ready.
This past March, the minister said the Aboriginal Pipeline Coalition will be opening an office very soon in Whitehorse. Can he tell this House when we might expect it to open and how much of the $155,000 allocated from the supplementary budget will help this group establish its office?
Hon. Mr. Lang: In answering the question from the member opposite, we certainly are in agreement with both pipelines proceeding. We have no problem at all with the Mackenzie Valley pipeline. That pipeline will be decided by producers, as will the Alaska Highway pipeline.
As to whether they can build two pipelines at one time, Iím not going to get into that debate, Mr. Speaker. That will not be my decision.
My decision as Minister of Energy, Mines and Resources is to get the Yukon ready, border to border, so that we have pipeline regulations in place. We work with the federal government to make sure that the environment is addressed, and we certainly work with the Aboriginal Pipeline Coalition. Again, the member opposite is correct; we have gone out and informed the Aboriginal Pipeline Coalition. Itís alive and well and working daily with the issues that they have on their plate. So we are working in a progressive way to move this pipeline forward when the decision for the pipeline is made.
Mr. McRobb: Again, this minister failed to answer the question. Itís no wonder this Yukon Party government has failed its mid-term report card. The minister has also failed to bring all nine Yukon First Nations whose territories are affected by this project into the Aboriginal Pipeline Coalition. This Yukon Party government has focused too much attention on supporting the Mackenzie Valley pipeline. It hasnít lived up to its promises or responsibilities with respect to ensuring our territory is pipeline ready. What will the minister now do to refocus his attention on the Yukon to ensure our territory is fully prepared to deal with this fast-tracked megaproject?
Hon. Mr. Lang: Mr. Speaker, to correct the member opposite, to fast-track the Mackenzie pipeline ó that is not one of our issues. The Mackenzie pipeline is in the jurisdiction, if he hasnít noticed, of Northwest Territories. We certainly are not competing with the Northwest Territories on any level. And are we doing something to get the Yukon ready for a pipeline? Certainly we are. Weíre working with the producers. We have the Aboriginal Pipeline Coalition up and running. They have seven members at the moment; they are hopeful to build into nine. That is going to be decided by the Aboriginal Pipeline Coalition in conversation and discussion with the aboriginal people of the Yukon.
Mr. Speaker, we are moving ahead with the hope of a pipeline in the future, and weíre very positive that the pipeline eventually will come down the Alaska Highway.
Thank you, Mr. Speaker.
Speakerís ruling ó question of privilege
Speaker: †As the time for Question Period has now elapsed, the Chair will now rule on a question of privilege raised yesterday by the Member for Mayo-Tatchun. The Member for Mayo-Tatchun met the notice requirement found in Standing Order 7(1)(b) by submitting a written notice to the Office of the Speaker by 11:00 a.m. yesterday. Standing Order 7(4) states that the Speaker must rule on (a) whether there appears, on the face of it, to be a case of breach of privilege, and (b) whether the matter has been raised at the earliest opportunity.
The normal practice of this House has been that, to meet the ďearliest opportunityĒ requirement, a question of privilege must be raised at the time the event occurred or on the next sitting day. In this matter, the event took place on Tuesday, November 2, 2004. It meets, therefore, the ďearliest opportunityĒ requirement by being raised as a question of privilege on the following day.
The question for the Chair to decide on, then, is whether the Member for Mayo-Tatchun has raised a question that appears, on the face of it, to be a breach of privilege.
During his presentation, the Member for Mayo-Tatchun raised a number of concerns. At the core of his concern were words uttered by the Minister of Education during Question Period on November 2, 2004. These comments were made in response to questions from the Member for Mayo-Tatchun regarding the proposal to build a new school in Carmacks with a Yukon College campus attached to it. The words that offended the Member for Mayo-Tatchun included a reference by the Minister of Education that the Member for Mayo-Tatchun needed to ďlook in the mirror to understand where some of the dissension (in the community of Carmacks) is coming fromĒ and the ministerís assertion that the Member for Mayo-Tatchun ďprobablyĒ gave notice to the Little Salmon-Carmacks First Nation that it could ďbuild a school anywhere they want in the country.Ē
The Member for Mayo-Tatchun argued that the ministerís statements were ďinaccurateĒ and ďinappropriateĒ and taken together and separately constituted a breach of the memberís privileges. As a remedy the Member for Mayo-Tatchun asked that the Chair require that the minister withdraw those remarks and apologize for them.
According to House of Commons Procedure and Practice, the term ĎParliamentary Privilegeí ďrefers... to the rights and immunities that are deemed necessary for the House of Commons, as an institution, and its members, as representatives of the electorate to fulfil their functions. It also refers to the powers possessed by the House to protect itself, its members, and its procedures from undue interference, so that it can effectively carry out its principal functions which are to inquire, to debate and to legislate. In that sense parliamentary privilege†can be viewed as special advantages, which Parliament and its members need to function unimpeded.Ē
House of Commons Procedure and Practice also informs us that ď[T]he rights and immunities accorded to Members individually are generally categorized under the following headings: freedom of speech; freedom from arrest in civil actions; exemption from jury duty; exemption from attendance as a witness.Ē Of these, the primary privilege of members ó and the one at issue in this case ó is freedom of speech in the Assembly.
The Chair finds that there is no apparent question of privilege in this case. In raising the question of privilege, the Member for Mayo-Tatchun explained in detail the words he found to be offensive and why he found them offensive. However, the member did not demonstrate how the utterance of such words by the Minister of Education negatively affected his ability to exercise his freedom of speech in this Assembly. The Chair notes that the Member for Mayo-Tatchun raised a supplementary question on the Carmacks school issue immediately after the ministerís response.
Offensive words, no matter how offensive, do not constitute a breach of privilege. They may constitute a point of order. Raising a point of order on the basis of offensive language should be done at the time the offensive words are uttered.
Without attempting to rule retroactively on the words uttered by the Minister of Education, the Chair would nonetheless remind the House that he did advise members against the use of similar expressions on November 1, 2004, during an exchange involving the Premier and the leader of the official opposition.
The Chair hopes that all members will, in future, keep in mind the kind of disorder that can occur in the House when accusations such as these are made.
The House will now proceed to the Orders of the Day.
ORDERS OF THE DAY
Bill No. 54: Second Reading
Clerk: Second reading, Bill No. 54, standing in the name of the Hon. Mr. Fentie.
Hon. Mr. Fentie: † I move that Bill No. 54, entitled Act to Amend the Income Tax Act, be now read a second time.
Speaker: It has been moved by the hon. Premier that Bill No. 54, entitled Act to Amend the Income Tax Act, be now read a second time.
Hon. Mr. Fentie: I rise today to introduce an income tax bill, the substance of which the government announced in the spring Budget Address.
First, by means of this legislation, and as earlier promised by us, the government, this bill reduces the corporate small business tax rate from six percent to four percent, effective January 1, 2005.
This two point reduction represents a 33-percent decrease in the small business tax rate, and it is significant by anyoneís standards. Also, the government is very pleased to say that since the introduction of the small business tax rate in 1983, this is the first time that it has been reduced. Furthermore, this bill provides for a small business tax rate that will be at its lowest level since it was introduced.
Secondly, as also stated in my Budget Address, this bill increases the small business tax deduction limit to $400,000, effective January 1, 2007. The small business tax deduction limit represents the amount of business income that is eligible for the reduced small business tax rate. This limit is currently at $250,000. Effective January 1, 2005, the limit is scheduled to increase to $275,000, and on January 1, 2006, it will increase a further $25,000 to $300,000. This bill will increase the limit a further $100,000 to $400,000 in total, effective January 1, 2007.
These two initiatives will reduce taxes for many of the corporations operating in the Yukon. Lower taxes stimulate growth and initiative, both of which I am certain all members wish to encourage in this House.
Lower taxes mean more income is available to the business owners to reinvest and, furthermore, it encourages new businesses to establish a presence here in the Yukon Territory.
With this growth comes increased employment opportunity. This measure is not without some cost, however, Mr. Speaker. When both these tax reduction measures are fully implemented, our revenues will be some $885,000 less per year. That is to say that in every year, going forward, the government is putting $885,000 more in Yukonersí pockets to help stimulate economic growth. However, we know this is a good investment in our future, and the cost is very, very worthwhile. This is an investment in our small business community. These are foregone revenues that certainly are not lost to Yukoners.
Mr. Speaker, these income tax changes are a reflection of our commitment to economic growth that will result in the betterment of our citizensí lives, and I look forward to the support of all the Members of the Legislative Assembly for this piece of legislation.
Mr. Hardy: We have had discussions around this before. As usual, it takes a long time for this government to bring forward anything, and what they do bring forward is generally somebody elseís work ó which is so true. It has become very obvious that theyíve been picking up a lot of what former governments have done and repackaging it and then saying that itís their initiative or their idea.
But even saying that, there are some questions I think need to be asked about this, and I would be remiss to not ask them. For instance, what other initiatives have this government considered around income tax reform? Is there such a thing as a tax round table with this government?
I do know of another government that did have a tax round table, and it did involve people from around the Yukon, from businesses, input from other organizations. It was to come up with ideas that would help make a more progressive tax system that would stimulate the economy, create growth and so on.
Does this government have that? Is this government reaching out to small business? Have they been reaching out to larger businesses? Have they been reaching out to the unions or the First Nations? Or the NGOs or people who are not within organizations, such as the chambers? They may be business people, have very legitimate businesses, but may not belong to an organization. What have they offered to the people of this territory to be engaged in a debate about any kind of tax changes?
†I havenít necessarily seen any of that yet. One of things that comes for me to question is where something like this comes from and how people get the ear of this government to forward their own initiatives, what they feel would be good for themselves or good for the economy. Iíd like the minister to explain that because I donít see any coalition. I didnít hear how this came about. The minister did not give an explanation or very in-depth history of tax changes throughout the territory historically, what governments have been proactive, have done round tables, such as I mentioned earlier. All it was was patting themselves on the back for this one little section, one change, which of course is the small business corporate income tax rate, a reduction from six percent to four percent, and to increase the small business deduction limit from $300,000 to $400,000. That of course comes in in 2007. So I do have questions about that. Again it comes down to how people are able to engage this government in constructive consultation about issues that face them daily, about issues around the tax that they have to pay. What about individuals?
Itís interesting that weíre debating this today because, two days ago at the supper table with my daughter, she was arguing to me that she felt she paid too much tax. As a young person she pays far too much tax. Now she doesnít have a business. She is a working person. She pays her taxes. She contributes to the economy. She feels sheís part of the economy. She feels sheís part of the society, the community of the Yukon. What has the government done in regard to that? Iím just putting it out to the Premier to give him an opportunity to respond to that. Sheís a young person. I think itís a question that many young people ask. They donít understand why they pay this portion of tax and where the monies go.
Thereís a lot of initiative throughout the country, throughout the world, in regard to progressive tax regimes ó changes to the tax structures. Some are designed where there is an extra tax attached to create a change within our society.
It could be a change in the spending habits, it could be a change in the accumulation of material goods, to try to have some kind of influence on what people spend their money on, and it could be a tax put in place that would go toward environmental rehabilitation or improvement of the air quality. It could be taxes put in place for water usage by corporations or businesses that may have a direct impact on water or air or land. Those taxes are in existence today. They are to try to put in place a fund or monies to offset the damage that is done. Many people call those green taxes.
Has this been considered by this government? I havenít heard a word along the lines of a green tax or even an open debate about it from that side. Itís not put out. I have concerns about that.
Now, as I said, there are progressive tax regimes. This could be considered in some viewpoints as a progressive tax, meaning, as the minister indicated, that it was going to cost the government $885,000 in lost revenue. The minister took that concept and said that it goes into the pockets of Yukoners. Now, that could be accurate, but it could also be inaccurate. Giving a tax break to a small business does not necessarily mean that the small business is able to hire somebody else, and it does not necessarily mean that that money immediately gets spread throughout our society.
We have in Canada ó it is becoming a growing problem ó a country that is changing, in which we have a growing lower class, lower income, and greater wealth going into what they call a higher class, wealthy bracket, and a shrinking middle class. Now, this is what the United States has. This has happened over the last 20 years in the United States. They have seen a contraction of their middle class, and they have seen a growth in the two other areas. And the inequalities are getting bigger and bigger and bigger: a lot more wealth in fewer hands, a lot more poor.
The middle class ó what many people consider the bedrock of a society, the foundation of a society in wealth ó is shrinking. We are witnessing the same thing happening in Canada now. It has been happening from federal initiatives and weíve watched it for the last 10 years. Itís a huge concern. Itís a huge concern for any community or society because itís not a direction that is going to necessarily create equality within our society, or strengthen our economy. Itís not a direction that ensures that wealth is distributed in a manner that ensures people have equality of life.
Any time you make an adjustment to the tax regime you should consider what kind of an impact itís really going to have and you need hard data. You honestly need hard data. Itís not good enough to stand up and say there is going to be $885,000 left that the government can invest in the people of this territory, that they can spread throughout the economy and stimulate, that they can ensure gets into the hands of the people who need it. But we believe that itís going to immediately do the same thing in a different area. There is no hard fact. Thatís what bothers me.
If the minister has the facts to show that there is a direct correlation, that the money is withdrawn from the territorial government and directed to one group ó which is small business, which do work very hard and contribute a lot ó and we guarantee that that money would be distributed throughout the economy again and on a fairly reasonable and equal basis would get into the hands of the people of the territory, then fine. But show me that.
From what the minister said, there are no studies that he has to put on the table so that we can see that. There is no proof.
Making a change like this is fine. I will not be voting against this. Iím not against this. But I do not necessarily like to hear positions taken without some facts to back them.
I donít think it serves the public good to make an assumption that this is what will happen when you have no statistical analysis done, that that actually will happen. If anything, I think itís incorrect to do that. Does it stimulate growth? Does it increase employment opportunities? Will it increase innovation within our society? The jury is out on that and this amount. Thereís a lot of debate about this. Does the Yukon Party government plan to also make some adjustments to the other tax brackets? There is a variety of them that they do have the ability to do. Do they plan to do that? Letís have that debate. Letís put it on the floor. Letís put it out in the public, like the NDP government did with the round table. Letís have that debate. Letís see if thereís opportunity to stimulate the economy through the tax regime. But to pick and choose is not fair, and itís not the way to go.
Thereís no guarantee that this is going to flow into the hands of a large group of people. Thereís no guarantee that itís going to create more employment. I havenít seen any guarantees yet. Truthfully, I was actually under the impression that the cost to the government was going to be a little bit less. The figure the Premier has come out with ó $885,000 ó is substantially larger than I thought it was going to be.
I do know a lot of small business owners, and I do know that this is a benefit to them. I know many of them are struggling, but theyíre struggling for a variety of reasons. This may be just one piece that assists them. I also, as I said earlier, do know a lot of people on an individual basis who are struggling. Is this government going to reach out to them? Are there going to be adjustments on their tax? Are we going to see people who are at a certain tax bracket ó say a young family that is working two, three jobs to make ends meet, trying to get by, they only make $25,000 a year. Are we going to be eliminating the tax on them? Has there been any consideration of an elimination of tax for those or on adjustments for that? How about the seniors with fixed incomes? Are there ways to assist them?
Now the Member for Klondike just said that they did it.
Well, Mr. Speaker, that is incorrect; that is incorrect. He is obviously referring to the changes they made to the pioneer utility grant, which I feel was in direct response to an initiative that we encouraged, although they did not go very far on it. But it doesnít necessarily ó
Some Hon. Member: Point of order, Mr. Speaker.
Point of order
†Speaker: Member for Klondike, on a point of order.
Hon. Mr. Jenkins: Mr. Speaker, pursuant to Standing Order 19(g), the member opposite is imputing false or unavowed motives to me. Our government is firmly committed to increasing the pioneer utility grant by 25 percent, indexing it against inflation, and that has been done. And we have further increased that by another 10 percent. The members opposite want to take credit for this, Mr. Speaker.
Mr. McRobb: On the point of order, Mr. Speaker, clearly there isnít one. The Member for Klondike couldnít refrain from getting up and giving another commercial on his governmentís progress, which we know represents his perspective only.
†Speaker: †The Chair feels there is no point of order. It is a dispute among members. Please carry on.
Mr. Hardy: Thank you, Mr. Speaker.
Since the Member for Klondike had referenced it, we had suggested, very clearly, changes to the pioneer utility grant, which benefits seniors but not all seniors. Itís not across the board. They donít all get an increase. It benefits a category of seniors ó those who are in their own homes, who have to pay their heating fuels and costs. As the member opposite is saying, or rent pay ó supposedly, there is a slight flow through there.
Our recommendation, again, is based upon the real cost that the senior would inherit as the changes to what the fuel cost would have been. They didnít go far enough; thatís fine. Thatís their choice. But what weíre talking about, of course, is the Income Tax Act, the small business corporate income tax. What I am asking is this: what work has been done to address the many other people in the Yukon in regard to their tax bracket? Has there been any work done in that area? Iím very serious about this, Mr. Speaker. The member opposite thinks that Iím just talking because the cameraís on. Thatís foolishness. I care very deeply about the taxes that people pay. I care very deeply about the opportunity to bring a progressive tax regime that would be reflective of, for instance, the impact on the environment based upon certain types of industry.
I care about taxes, possibly in some form that would ensure that, when a mine closes, for instance, there was money left behind to ensure there would be a proper clean-up.
I care very deeply about the air, the water, and the land for the future generations, and there are ways to make an impact through changes like this.
My concern is how people or organizations get to this government to have changes like this done, because obviously there had to be some kind of initiative that created this? I would like to tell all the people out there what it takes to sway this government so that they will make adjustments for their problems, for their taxes, for their issues. It would be nice to know. I think the people of the territory would like to know.
Ms. Duncan: Mr. Speaker, by the mid-point of this governmentís mandate, we have seen a complete inability to do the heavy lifting required: the hard work of government. Fortunately for this government, some of that hard work was done for them when they were elected two years ago.
Mr. Speaker, the bill before us, Bill No. 54, Act to Amend the Income Tax Act, to reduce the small business tax rate from six to four percent, was able to be brought forward in this House because, during the Liberal government mandate, we changed the tax regime and brought forward tax legislation to this House that enabled future governments to make these kinds of changes more easily.
We also, of course, included changing the rate from six to four percent as part of our platform. It was part of a motion that I brought forward in this House. It was also part of the constructive suggestions that I offered the Premier when he was first elected, the current Finance minister.
Now, I appreciate that this bill has finally been brought forward and Iím sure that, in the spirit of consensus and collaboration that the side opposition professes, the Premier just simply forgot to mention the credit where credit is due, that this was done for them and this bill was ready to go. Iíve pushed them for this bill, lobbied for this bill and argued long and hard that the small business tax rate should be reduced.
Iím sure the Finance minister just forgot to mention that in his second reading speech, and to give the credit where the credit was due.
I noticed he also forgot to mention that what this reduction of the rate does is it keeps pace with the Northwest Territories. We are not keeping pace with Alberta; their financial situation is quite significantly better than ours. British Columbia, I have noticed, made other tax provisions and reductions in their sales taxes; however, they havenít brought forward a reduction in the small business tax rate.
The Finance minister mentioned foregone revenues; however, he didnít indicate, depending upon where the formula negotiations are and the vagaries of the formula, whether in fact just keeping pace with the Northwest Territories will end up with that kind of a cost to the taxpayers.
While we are on the subject of the government dealing with tax provisions and innovations, I would also suggest very strongly, and I look forward to the government bringing forward another suggestion that I have lobbied for and put forward, and that is a teacher tax supply credit, which could also be done reasonably easily by the government. The Member for Klondike seems to think that bringing forward a teacher supply credit ó the off-microphone comment† was ďbunk.Ē Iím sure the 800 teachers who have asked me about that in the hallways of the schools do not refer to it as ďbunkĒ. Having watched them and spoken with them, they have made a number of expenditures in support of their classrooms and in support of early childhood education and learning in our classrooms. Teachers spend far more than $500.
The cost to the government of introducing a teacher tax supply credit is minimal. It could be done thanks to the previous administration bringing forward the changes to the tax regime that enables the government to bring forward this bill. Iím glad the Yukon Party has finally brought forward some of the hard work that was done for them in this income tax act. Itís a platform commitment that we made. Itís a motion that I brought forward. Itís a suggestion that I made in writing to the Premier, and it has finally come forward.
Iím pleased to see it. I support it. I would like to see and would urge the government to give full and fair consideration, recognizing that there are other ideas out there worthy of consideration. I would strongly recommend and look forward to them bringing forward other innovative tax suggestions, such as a teacher tax supply credit. And thatís not the only one. There are other innovative tax measures that could be examined that would help middle class families. There are a number of programs that help lower income families with respect to some of the expenses associated with children and childcare. There are some federal initiatives. We do have the kids recreation fund. We do have the dental health care plan. But an issue that was just raised with me last evening ó and Iíve heard at other school council meetings ó is the government has instituted voluntary vision screening; however, there is no follow up and no assistance readily available for the middle class families in dealing with vision care for children and in assisting the education system in that regard.
So I would encourage the government to meet with the tax round table. I understand from the some of the members of the tax round table that that has not happened to date under this administration. I would encourage them to meet with them. I would encourage them to listen to what the business community has to say. And I would look forward to other innovative measures coming forward and recognition that good ideas can come from all sides of this Legislature. I look forward to line-by-line debate of the bill.
Hon. Mr. Jenkins: I rise in support of Bill No. 54, Act to Amend the Income Tax Act. Our government campaigned on restoring investor confidence, rebuilding the Yukon economy and putting into place the necessary incentives to encourage the development of industry and to encourage the repopulation of the Yukon and to encourage an increase and a betterment and enhancement of the standard of living here in the Yukon, and Iím proud to say that our government has accomplished a tremendous amount in this area.
We campaigned on no new taxes. Weíve met that campaign commitment. This area, a reduction in the small business tax, is something that was duly considered and agreed to by our party,and itís predicated on our understanding and our knowledge that small business is the driver of the Canadian economy.
Small businesses ó those are businesses with a gross under $2 million a year ó are well-defined and well known for their tremendous contribution to the economy of Canada.
Mr. Speaker, I would encourage the members in the official opposition and the leader of the third party to get some of the reading from the Canadian Federation of Independent Business that defines clearly the benefits that accrue to economies from small business in Canada.
Mr. Speaker, we only have to look at the package before us amending the Income Tax Act to lower the tax rate from six percent to four percent. Probably with the strides weíre making in restoring investor confidence in Yukon and rebuilding the economy and creating employment and creating jobs and attracting new businesses, at the end we will be revenue neutral, because with the many new people who have chosen to come to the Yukon and our youth who are going through our educational systems and who will end up being very positive contributors to the Yukon economy, that will all stimulate. We have to have incentives. We have to have opportunities. There has to be something there. And the previous two administrations destroyed the incentive for business to come to the Yukon; they destroyed opportunities. And it has taken awhile to restore that investor confidence in the resource extraction industries and the mining sector and the oil and gas sector and the forestry sector, Mr. Speaker, but theyíre coming.
One only has to look at the last budget that this government tabled: $740 million. That is the largest budget ever, when you add in the original amount tabled in the supplementary ó $740 million. That is the largest amount on capital and O&M ever spent here in the Yukon. And when you look at the previous financial statements as to the revenue from our own sources, it is only some $80 million.
Mr. Speaker, it is broken down with personal income tax, corporate income tax, property tax, fuel oil tax on diesel ó which is $2.5 million, an all-time low ó gasoline, $3.9 million. It is so much per litre, unlike the federal GST, which is a percentage of the total amount.
Mr. Speaker, thereís the insurance premium tax, tobacco tax and liquor tax. There are licences for fees and registration permits for motor vehicles, campgrounds, businesses, professionals, gaming machine revenues, oil and gas resource revenues that, to a large part, flow back to our partners in rebuilding the Yukon economy ó our First Nations. We have the land and mineral leases and royalties, fines, sale of land, aviation operation, and thereís a small amount under miscellaneous, but $80 million under some $740 million is revenue-owned sources.
Mr. Speaker, when we look at 32,000 as being the approximate population, and we extrapolate that, thatís approximately $23,000 for every man, woman and child in the Yukon that is being spent by this government this last fiscal cycle, and weíre still into it.
Mr. Speaker, this tax credit is another encouragement to small business to develop and locate here and set up a head office here in that it will supply additional incentives. And yes, we have to keep pace with our neighbouring jurisdictions, and yes, Alberta has the lowest tax rates in Canada across the board, but weíre right up there. We keep track of what is going on across Canada, and the incentives we provide here in the Yukon are coming back into play. This is just another opportunity for businesses here to choose the Yukon to locate here, to develop here, work here and employ Yukoners here. Many of these new businesses and established businesses are owned and operated by Yukoners, handed down from family to family. A number of the businesses are being passed on ó weíre into the third generation and fourth generation here in the Yukon, and that bodes well and says a lot, but the opportunity is dictated to a large extent by the tax regime.
Money knows no boundaries, Mr. Speaker. Money will just move around to where it gets the best rate of return and, when we have, like the previous past two administrations in the Yukon, barriers to entering the Yukon and really no incentive to do anything here, it scares all those businesses away; it scares people away.
For awhile here in the Yukon, about the only business to be in was the U-Haul rental business; but it was all one way: it was all south. That has changed; people are coming back. That is, to a large part, through the efforts of this government, and Iím very proud to say that Iím a part of this government. With my Cabinet and caucus colleagues, we have worked very, very hard to implement our party platform. This is just another commitment that we are following through on and implementing. I recommend it to the House; itís a very, very positive benefit that will accrue. I look forward to unanimous support on this piece of legislation.
Hon. Mr. Lang: I too would like to speak in support of this bill and moving ahead with it. Listening to the leader of the official opposition, I find it interesting that heís debating on taxes and small business and the innuendo that government knows best. Being a small business person all my life, I understand what taxes do to a small business. Taxes are the biggest part of a small business. We pay taxes on every level.
The member from the third party is right. There are all sorts of taxes and small business bears the brunt of all of those taxes. My fellow colleague, the Minister of Health, said the majority of the businesses in Canada are small businesses. For us to give an incentive to small business ó the businessman will always spend the money more wisely than the government will. The money in the hands of the business individual is always better placed than in the hands of the government.
To listen to the members opposite ó and I understand their constituency, and I appreciate that constituency, but we on this side of the House think that government isnít everything to everybody. Government has a place and government is very important, but if we can put more money into the hands of the small business people, you will see them investing in their businesses and expanding.
I think that this bill is very important. I find it interesting when the member from the third party stands up and touts the fact that it was her idea. Ideas are good and I think that everybody has ideas. I think itís very progressive of us on this side of the House to act on our ideas.
Thatís where I think the third party fell down. In their short tenure in office there were lots of ideas, but at the end of the day there wasnít much action. Thatís what the people of the Yukon said when they went to the polls. So as far as us stealing ideas, we certainly are open to ideas, and we certainly will act on those ideas.
As interesting as it may seem, in the last two yearsí report card, Iím very optimistic for the Yukon. Iím very proud of my colleagues on this side of the House, proud of the work that every individual one of these people has done to benefit the Yukon as a whole. We in Energy, Mines and Resources have taken a look at the Yukon and taken a look at all the responsibilities we have in Energy, Mines and Resources. It talks about agriculture. What have we done in the last two years in agriculture? Well, certainly, to the benefit of the people in the agriculture industry, weíve moved ahead with massive improvements in partnerships with the federal government, partnerships with the industry to bring them together. We have taken a look at not only our game farmersí issues, but weíve taken a look at organic agriculture. Weíve looked at an overview of the whole industry, and weíve done that in two years. I think that agriculture in the Yukon is alive and well, and I think we as a government have encouraged it, and in two years weíve moved massively forward.
As far as other issues in Energy, Mines and Resources, as far as forestry is concerned, when we as a government took over two years ago ó and of course devolution came along ó we had issues in forestry. The fact was that there was no forestry. In two years in the forestry department, we have moved that ahead. Weíve got the first disposition of timber out there that has been done in the last three to four years, and weíre moving ahead with more dispositions and looking very positively at forestry in the Yukon. At the end of the day, Yukoners will have access to wood. Weíve done that in 24 months. We went from nothing to what we have today.
So when we talk about taxes, we talk about small business, ó why I go through this is because weíre taking about forestry, weíre talking about agriculture. All those people are small business people. All those people are contributing to the Yukon economy in a small way, so weíre not just talking about companies with 50 employees; weíre talking about people out there in the forest industry that have a small disposition, and theyíre looking at 10, 20 people, and weíre going to give them a little bit of a tax break. Itís not a lot of money when you add the whole thing up. The Finance minister talked about $800,000 back in the hands of the producers in this country. I know the members opposite think that the government knows best and that the money should be given out to, I guess, whomever they decide to give it out to. This way ó a very fair way of doing it ó is giving it back to the people who contribute.
Let them decide how theyíre going to spend it. The members opposite have an idea about how they would spend it. Of course, Mr. Speaker, they didnít make it, so itís easy to spend it if you didnít make it. The little businessman is the one who made it, and they will spend it wiser than the ones who didnít make it. Those people are going to be recognized with this act, with this two percent.
Moving along in industry and small business, weíre looking at other issues like the mining sector. When we took over two years ago, there was very little mining going on in the Yukon ó $6.5 million worth of investment in the Yukon to maintain the claims that corporations had in the Yukon ó $2.5 million. In two years, weíre looking at $25 million or $30 million worth of exploration money spent in our territory ó a massive increase over 18 months.
Prospects of mines: in the last 10 years there havenít been any mines on the radar screen. In two years, with our enhanced jurisdictional powers, we have enticed a group of mining companies to come back to the Yukon and look at our natural resources and work with them in a balanced fashion to, at the end of the day, put our people in the Yukon back to work. Is that bad? Is that not what we as government are here to do?
We certainly have to take into consideration not only mining exploration, but we have responsibility for the environment. We have responsibility to our citizens. Certainly we have to consider all of those. But at the end of the day, I think looking at a $100 million mine somewhere, with prospects of work for all Yukoners ó thatís a plus for all Yukoners.
So this tax thing is a small thing, and certainly the member for the third party talked ó there is a maze of taxes out there that are a burden on our society. But at the end of the day, this is just a small thing that weíre looking at. Weíre looking at it from a way that will benefit small business. We appreciate small business. I hope that the whole House is unanimous on this bill, because this bill makes a statement to small business that we recognize that they pay taxes. We also recognize where we can help them.
So, at the end of the day, the tax rate in the Yukon is a question for small business. We can burden them with enough taxes that they move out. We can burden them with the responsibility so they go somewhere else. We as a territory and as part of Canada look at this as if we are in a little pod and have something that other areas donít have.
Mr. Speaker, as you know and as we all know, hopefully, the world is shrinking. The invested dollars can go all over the world. Weíre competing in the mining industry, but not with Sudbury, Ontario. Weíre competing with Kurdistan. Weíre competing with Australia. Weíre competing with Central America. Weíre competing with South America.
I would say to you, Mr. Speaker, as a Canadian, probably in our universities, our grads in geology and all the mining ó the Haileybury School of Mines ó I would say probably over the last 10 years, 80 percent of those people who graduated from Canadian schools are working elsewhere in the world. Theyíre working where work is available. We in the Yukon have a need for that kind of expertise. We have a need in the mining community for an expectation that we can put our families back to work, that we can put Canadians back to work.
The leader of the official opposition was talking about Outside money ó outside money like itís some kind of thing, but does anybody across there realize that we live on Outside money? Eighty percent of the money that this government spends comes from somewhere else, comes from Outside, Mr. Speaker, from that dreadful place called ďOutsideĒ. We create only 20 percent of our wealth. The Yukon is a basket case. Anywhere else in the world, we ó
Some Hon. Member: Point of order, Mr. Speaker.
Point of order
Speaker: The Member for Kluane, on a point of order.
Mr. McRobb: Point of order, Mr. Speaker. The member is going too far. The Yukon is not a basket case. Let us, in the official opposition, put that on the record, contrary to the Yukon Partyís belief that it is.
Speaker: On the point of order, or does the member wish to carry on?
Hon. Mr. Lang: Iíll carry on, Mr. Speaker.
Speaker: Then let me rule on the point of order first.
There is no point of order. Itís simply a dispute among members. The minister has the floor.
Hon. Mr. Lang: Mr. Speaker, I can read your mind, and I knew there was no point of order. I didnít mean anything to Yukon itself ó Iím talking about financially, and the results of many years of chasing money out of the Yukon by whatever government of the day was in power.
Taxes are a burden we all pay. The average person working on the street who gets their paycheque every two weeks and looks at it, only looks at the end, saying, ďI cleared $408.Ē But if he were to look at the beginning of what he earned, and at the taxes that were taken back from him, there is a huge burden of tax on the working class and the business class of Canada.
We pay lots of taxes and we pay lots of taxes because we want this standard of living. We want the Yukon to be a successful place; we want to live in Toronto at a certain standard; and we want to be able to take care of the less fortunate in our society. That bodes well for our society because any society that doesnít do that is not doing their job.
At the end of the day this bill, in a small way, will recognize that we, as Yukoners, respect the small business community. We give them this two percent and the $800,000. I think, by giving that back to small business, we are putting the money back in the hands of the people who made the money; weíre giving it back to them. I would say to you, as an ex-small business person, that they will spend that money in the Yukon. That money will be well spent in the Yukon because it will enhance their business. Businesses will grow, theyíll employ more people and, at the end of the day, weíll have a more solid core of small business.
I hope, I think, that probably we as a group in here can sit down, vote unanimously on this thing, move it ahead, and get the money back into the hands of the people who earned it. Thatís who weíre talking about today. Weíre talking about small business. Letís get that money back into their hands and move forward.
Mr. McRobb: I would like to put a few comments on record with respect to Bill No. 54, Act to Amend the Income Tax Act. Earlier today we heard about the mid-term report card for this Yukon Party government and the miserable failing grade it has received.
This bill indicates, really, no work on the part of this government. This bill simply follows through on initiatives from previous governments.
The Liberal government did the same. It was in fact the previous Piers McDonald government that first brought in reductions to small business taxes. Now, some members across the way find this humorous. I invite them to check the public record, and they too will become knowledgeable on the history of tax reductions in the Yukon Territory. Perhaps theyíre not aware. Obviously the reaction indicates they are not familiar with recent political history in the territory and achievements by previous governments, because some of them have been told it was their government that deserves all the credit for this undertaking, and obviously they believe it. Well, thatís wrong. Thatís simply wrong. It was also the Piers McDonald government from 1996 to 2000 that created the tax round table. These members should know, because their leader and Premier was part of that government. Itís their duty to know.
Now that previous government created this process of the tax round table, and it was comprised of stakeholders from business and labour and other constituencies from around the territory. They consulted the government as well as among themselves, and they generated a host of good ideas. Those ideas were tabulated in a report stemming out of the tax round tableís work. Well, what other good ideas are hidden away in that report? Where is that report? Is it sitting on a dusty shelf somewhere? What other ideas could be implemented from within that report? Is this government prepared to neglect the good work of previous governments, or will it live up to one of its promises to build on the efforts of those who have governed before it for the full advantage to Yukoners? Unfortunately, it appears as though we have another broken promise, because this government is trying to rewrite the history books and take credit for something started by previous governments. This is another good example of that.
I suggest that we pull out the report and examine it and have a discussion in this Legislature at some point about what other recommendations can be brought in to assist small businesses and others in the territory.
It has been awhile since I have had an opportunity to review the report, but I recall some initiatives that were identified within it. One was suggested by our leader earlier this afternoon in regard to green tax breaks, to encourage green business and green undertakings in the territory. Well, that is an important area that deserves our attention. I recall some energy-related tax incentives that are equally as worthy, yet we hear nothing from this government in terms of initiatives or undertakings with respect to the environment. Instead, all we hear are concerns and bad news on that front.
This government has nothing on its agenda with respect to the environment and generating new ideas to protect the territoryís air, land, water and wildlife. Instead, there is a general fear out there in the environment community that this government represents a real threat to all those resources in the territory. That is why our job as the official opposition in this Legislature is very important, because it is our responsibility to investigate matters and find out from the government about undertakings that are not in the public eye, and to follow up on them and provide checks and balances to whatever scheme the government has on its agenda. And that is a huge undertaking, because this government has a lot of things on the burner. Unfortunately, not a lot of them are in its election campaign booklet, and not all of them are known to people across the territory. Look at some of the issues lately: the Fish Lake land development and how the policy to not release land within 30 kilometres of a community was changed willy-nilly, by the government without public consultation or any public notice whatsoever.
Mr. Speaker, it smacks of an agenda that doesnít see the light of day until, obviously, Yukoners become concerned to the point where they object to what this government does in the public interest. So I would submit we investigate other incentives and initiatives that were identified by the hardworking members of the tax round table from about five years ago and see what we can do to further that agenda. Once again, this bill is simply a housekeeping item. It is just designed to follow through on undertakings and promises from previous governments, and I donít see a problem in voting for this bill, and Iíll look forward to the vote.
Mr. Rouble: Again, it is my honour and my pleasure to speak here today, and I will be brief in my support for this bill. I think it is only prudent, though, that we go over some economic fundamentals. I would just like to remind the opposition that the government doesnít build an economy; the private sector builds an economy. Government has its responsibilities to create legislation, to prevent us from living in anarchy and to work collectively and efficiently to supply communal needs, things like roads, education and health. But, Mr. Speaker, the private sector builds wealth. Government doesnít build wealth. And I would like to again remind the opposition that government exists to serve the needs of people. It isnít the other way around.
Now, Mr. Speaker, I canít believe the opposition is against putting money back in the hands of those who earned it. I believe we have identified another significant difference in philosophies, another reason why people voted the Yukon Party in. And I fail to recognize how you can call changing the tax rate, a bill that will put more money in the hands of Yukoners, a housekeeping bill.
Now, Mr. Speaker, the opposition has accused this government of not collaborating. Then, in the same breath, we have been accused of stealing ideas. Now, Mr. Speaker, we have just heard that this bill is breaking a promise with Yukoners.
I donít think this is anything but political games and political gobbledegook.
People work hard to earn their income, and I believe in leaving as much as we can in their pockets. They are the ones who have invested in this territory; they are the ones who have built the economy; they are the ones who are building the wealth. Leaving more money in their pockets is a good thing, especially since they are likely to reinvest it and make our economy grow even larger.
We are restoring investor confidence. Just look at the front page of yesterdayís newspaper. That project wouldnít be going forward if there wasnít confidence out there.
Again, we heard from the opposition earlier today that they are looking for a cure-all magic wand ó one piece of legislation that can simply be waved and it will solve all the problems in the community. In one fell swoop, it will restore fair taxation to everyone: to youth, to seniors and elders in their community. They will treat people fairly; they will provide for every possible service and need and desire of people.
I donít believe that that one magic wand exists out there. What it takes is hard work and steps in the right direction. This piece of legislation today is one more step in the right direction.
I support this bill; I believe in what it is doing. I believe in leaving more money in the hands of Yukoners. I believe that they have the wisdom, the intelligence, that they will spend it effectively and efficiently. Theyíll use it for the betterment of their own life. I have enough faith in Yukoners that I believe itís better off in their hands than it is in the hands of government. I would encourage ó nay, implore ó all Members of the Legislative Assembly to stand up and unanimously support this bill, and I commend it to the Assembly.
Thank you, Mr. Speaker.
Mr. Cardiff: Iíd like to immediately pick up on the comments of the Member for Southern Lakes. It is a beautiful country, and I often travel out that way to visit friends and colleagues and some of the constituents of the Member for Southern Lakes. I listen to their concerns about taxation as well.
But what the Member for Southern Lakes ó and I believe the Minister for Energy, Mines and Resources ó said is that the money is better off in the hands of Yukoners. They donít think that money in the hands of the government is a good idea. Given the governmentís performance, their two-year report card, I would say that theyíre probably right. The government doesnít spend its money well.
Now, they talk about small business being the engine of the economy. I can sit here, stand here, sit in my office, listen to the radio and not one word have I heard in relation to Bill No. 54, Act to Amend the Income Tax Act, related to the people who actually do the work. I would like to remind them that itís the workers who generate wealth. Iím not disputing the fact that small businesses contribute to the economy. Iím not suggesting that corporations donít contribute to the economy, but it is the working person. How many small businesses go out and buy textbooks or school supplies in the stores? How many of them go out and shop at Shoppers Drug Mart? There are a lot more people out there than small business. There are a lot of working people. They work in Shoppers Drug Mart. They work here in this building. They work at Food Fair. They work in automobile dealerships selling cars, repairing cars and sweeping the floors. And they also fall under the taxation system and they have a burden and, sometimes I think, an unfair burden to bear when it comes to taxes.
Now, my colleagues who have spoken previously have mentioned the tax round table. I freely admit that Iím not totally familiar with it. I remember reading about it in the newspaper, hearing about it in the media. Iím not totally familiar with the ideas that came out of that, but Iím going to actually go and do some research. Iím going to go and look into some of those ideas.
You look across the floor, Mr. Speaker, at the puzzled looks from the members opposite sometimes ó they donít like looking at work done by previous governments. And there are lots of examples of that. They donít like the fact that this is actually part of something that was started several years ago. They donít like the work that has been done by previous governments, and there are lots of examples of it. There is the Liquor Act review, the recommendations that they like and the recommendations that they donít like. Thereís the Education Act review and how they stalled that. Theyíve done absolutely nothing for two years, and then all of a sudden theyíre going to revive it. Thereís the Workersí Compensation Act review, which ó go to the Web site, Mr. Speaker, and on the timelines, if you look at the timelines that were on the Web site given to the Workersí Compensation Act review, theyíre pretty much a year behind schedule. Nothing is happening.
There are other examples, as well, of work that has been done in relation to the Workersí Compensation Act review ó you have a Workersí Compensation Act review that is a year behind schedule. You have occupational health and safety regulations that have been sitting on the ministerís desk for two years gathering dust. The only time he opened it was to pull out the oil and gas portion of the regulations and have the Commissioner pass them. But the rest of them ó workersí safety is not an issue for the minister responsible for the Workersí Compensation Act. And that is pretty evident in Bill No. 54.
Theyíre not concerned with the taxation of workers. We talked a little while ago in this Legislature about reducing fuel tax on heating fuel. That would help small business; that would help the person whoís sweeping the floor in the service station or at Food Fair putting the food on the shelves, but the government doesnít want to do that.
Iíd like to go back just for a minute again to the members opposite and their assertion that money in the hands of small business and Yukoners is better spent and that the decisions made by Yukoners and small business are often better than those of government. The Minister of Energy, Mines and Resources touched on agriculture as being a small business and how this was going to help the agriculture industry and be a boon to the agriculture industry and how the agriculture industry was thriving.
Maybe the Minister of Energy, Mines and Resources, and hence agriculture, should talk to his colleague, the Minister of Health and Social Services, who also has a role to play in this. Itís my understanding that agriculture producers canít even get their product into government institutions, and the Minister of Health and Social Services could play a direct role in that. We could have Yukon-grown agricultural products being served. Theyíre more nutritious; theyíre grown closer to where theyíre consumed; thereís an economic benefit that would be there for the producers, but this government canít make a decision to do that. Maybe they donít want the tax break. Maybe theyíd just like to be able to sell their product to the government. Wouldnít that be fantastic if they could do that?
Maybe theyíre right. Maybe decisions made by Yukoners are often better than the decisions that are made by this government.
Now, Iím not saying that I donít support this bill. I agree, as has been stated previously, that this is something that was worked on by previous governments ó the government prior to this and the government prior to that.
†I just think that the government across the way could have gone a lot further. They could do more work that would benefit Yukoners. I think this was probably pretty simple to put together. The work has been done previously. It took them two years to bring it forward.
There are a lot of other things. They basically pulled this off the shelf. There was a lot of other work that could have been done out there ó like Iíve said previously ó about making sure that small business products in the Yukon, like the agricultural products, are bought and purchased by government so thereís an economic benefit and those small businesses can expand, sell their products, hire more people. A recognition somewhere ó I have to go back to a recognition of the people who work, who toil every day to put food on the table, pay their rent, pay their mortgage, and in a lot of cases they struggle and there are a lot of things that the government on the other side could do to make it easier for people.
So I will support this bill, but my reservations are that the government still has miles and miles and miles to go. They should try walking a mile in some of the less fortunate peopleís shoes and just see what itís like and give consideration. Show that faith in those people and the struggles that they have and let them make decisions. Put a few more shekels in their pockets and let them make those decisions. Again, thereís the statement about having faith in Yukoners. Letís have faith in Yukoners who donít have so much. Let them make decisions about how they spend money and where they spend it. I guarantee that they wonít be travelling anywhere too far to spend it. Theyíll be going to Food Fair, theyíll be going to Shoppers Drug Mart, theyíll be going to the bookstore on Main Street. Theyíll be using the transit system.
That improves our economy. Thatís all part of our economy.† I think we need to take those things into consideration when we do things like amending the Income Tax Act and think at the same time as we do this of people who arenít in small business. They may be employed by small business; they may be employed by corporations, or whatever. In a lot of cases it's a struggle. In some cases you have people who are working two or three jobs. The unfortunate part about workers who work two or three jobs is that they are taxed at a rate that doesnít add up at the end of the year.
Iíll give you an example: you may have a worker who works 50 hours a week at three different jobs. If their income is at such a level that they are taxed at a certain rate and the income tax is deducted off their paycheques, when you go to do the income tax return and you add their income up and you add the amount of tax they paid, at the end of the year a lot of these people are only making $1,000 a month but they are working three jobs. Maybe they are making $1,500 a month, but what weíre talking about is people who make between $12,000 and $18,000 a year working three jobs and, at the end of the year, they get a bill. They donít get a tax return because of the way that theyíre taxed.
I know this isnít all a territorial tax issue. A lot of it is a federal tax issue, but itís something that we as legislators can address and we should be working hard on behalf of those people to address those issues.† The problem arises, basically, at the end of the tax year. These people who made between $12,000 and $18,000 a year, worked 50 hours a week in a lot of cases, working three jobs, at the end of the year, instead of getting a tax return, they are faced with a bill from between $600 and $1,500. If youíre only making between $12,000 and $18,000 a year, where do you get the money?
So why donít we think, why donít we do something ó this is a good idea, but why donít we do something to address the concerns of those people? I think that that would be a boon to our economy, to put that money in the hands of those people. They would be less of a burden to government, and they would be able to make decisions around how they spend their money and actually give them some purchasing power to go in to small businesses and spend it and become generators, contributors to the economy as well. But they canít do that when theyíre forced, because of economic hardships, to stay at home or to in some cases sleep on the streets or couch surf, because they donít have the income to be able to pay the rent and to always put food on their table. So we need to make those people contributors to the economy as well, and to give them opportunities. Yes, a lot of those opportunities lie in small business. Small businesses will hire those people, but unless we do something to address the unfairness of the tax system that they face, so that they donít get the bill at the end of the tax year, then weíre not doing our job. And I believe weíre actually doing a disservice to small business in that case, because weíre not trying to give them that hand up to actually play a role in the economy.
So I will support this, but I certainly hope that the members opposite have been listening to what our ideas are with respect to this bill and the hard work that lies ahead of any government that is on that side, that is in that position to make decisions. I hope that they will think about those decisions and give consideration to them. I know Iím going to go away, and Iím going to do some reading. Itís not like I donít have enough already, but I think that this is important. After listening to the debate today, it makes me want to go and learn a little bit more about what it was that the Yukoners said five years ago, when there was a tax round table that allowed Yukoners to speak to government, to the bureaucrats and the citizens who were involved in that tax round table.
Iím going to learn something and the next time we have an opportunity to discuss issues around taxation, I hope to have more to contribute to the conversation than I have today.
I trust that the members opposite will listen to what has been said from this side of the Legislature and they will actually hear something that has been said, take some of those ideas and put them to good use, and go out, as well, and do some of that research that I intend to do and learn something as well. Thank you for this opportunity to speak to this bill, and I look forward to hearing from other members.
Mr. Hassard: I hadnít originally intended to speak to this, but after listening to some of the debate going on I canít help but feel that maybe I should get on record and add a few comments. Itís interesting coming from a background of small business and listening to family members, especially my parents, for the last 38 years talk about taxes ó quite often the remark was that two things that are certain in life are death and taxes. I will certainly support this bill in the fact that it does reduce that tax for small business.
Itís unfortunate that everybody couldnít have had a chance to see my father today to see the hat he was wearing. It said: ďTax me, Iím CanadianĒ. While Iím sure it was a little jab at the federal Liberal government, it does in my mind fit a little bit with some of the members opposite as well.
Over the years Iíve heard discussions that itís too bad that we donít, as Canadians, get our full paycheque to see how much money we really make and then walk around from institution to institution and pay our tax at the point of where the tax is then disbursed back to the people. I think as Canadians weíre too passive and we donít necessarily care. As long as weíre getting by and weíve got money in our pocket, weíre not overly worried about taxes. Thatís unfortunate because I think we could have a better country if we took a little more interest in where our tax dollars were going. I think it would be quite an eye opener if people actually had to walk and pay at each institution, if we had to go and pay our school tax.
Some Hon. Member: (Inaudible)
Mr. Hassard: † Weíd never be done. Youíre probably right.
What an eye opener it really would be. I agree there are taxes we need to pay, because we do get services for them, but at the same time I really donít think that we all understand where our tax dollars go, so itís fitting that weíre talking about this today.
Some of the comments that Iíve heard were that we need to improve tax breaks for employees rather than the employer, and thereís no doubt that we all want to pay less tax. But something that perhaps the members opposite donít understand, if they havenít been in business, is the risk of being in business, and thereís a price you pay for taking a risk. I would encourage members opposite to think about that risk because I know every day I was in business there was something happening where there was always a shortfall because of some unforeseen risk. I appreciate the concerns of looking out for the employee but itís also important to look out for the employer.
With that, Mr. Speaker, I will turn the floor over to anyone else who wishes to speak.
Speaker: The Chair awaits your pleasure.
Hon. Mr. Kenyon: † Thank you, Mr. Speaker. Iíve been sitting here taking notes on some of the things Iíve been hearing. There have been a lot of interesting things said and that, of course, is the whole reason for these debates ó a lot of good things, for instance, and a lot of things that really do quite concern and scare me.
The previous member made the comment about paying tax at that point where itís used, and I have to agree with him on that. It ends up with a rather interesting scenario. One of the best scenarios was an article that appeared in the Atlantic Monthly back in the 1970s, called ďCurmudgeon CollegeĒ. It still, to this day, remains one of my favourite articles or essays. Curmudgeon College is a university, and a university with a difference. You pay at the door for each lecture, which ensures that a professor who is boring or doesnít give proper information is very soon unemployed. Good instructors, good teachers, good lecturers would have the benefits. It goes on in a lot of different ways, though. It also says dormitories ó we donít have them. Weíre a university. Weíre not a housing authority. Athletics ó want to play sports? Go somewhere else, join a sports team. Weíre a university.
The concept in some sense is good but, of course, there is always a limitation to it because thereís always the point where you have to say, yes, there are essential services necessary for society and they have to be done one way or another.
One of the things that I heard that really does concern me, however, is the simple statement by the Member for Mount Lorne. He said that basically only working persons contribute to the economy. Who in the world do these people work for? They work for small business. Gosh, I think if you have any experience in small business, youíd quite know that youíd have more money for amenities, more money for employee benefits and more money for RSPs or better conditions for the workers.
They come out of profit, and profit is not a nasty word. It is necessary to an operation. The member who said that actually referred to places like Shoppers and Food Fair and auto dealers. These are all examples of small businesses. If they donít have the tax break and the ability to provide for their workers, then the workers arenít going to get that money. Itís a blend; itís not simply the working person. I think thatís a very tubular view of the world.
There has been a lot of discussion today about previous governments and previous groups coming up with a lot of these ideas. I think thatís a good point. I think thatís a very good point. Again, another speaker along the line mentioned that itís very difficult to say, ďYou donít consult; you donít look at our views; youíre not willing to share opinions and develop our views.Ē Then when we do, weíre criticized for it. I donít know, maybe the primary job of opposition, I guess, is to oppose even good ideas. Again, that adds to our frustration on this side. Itís difficult to have meaningful debate when youíre criticized no matter what you do.
Another comment that was made by the Member for Kluane is that this is a housekeeping bill. $800,000 for a housekeeping bill. Iím certainly glad that that member isnít in charge of our budget if $800,000 is simply housekeeping. The Member for Mount Lorne makes a statement on the way out the door. †Iíve got some real problems with ó
Speaker: The minister cannot mention if a member is in or not in the House. Please carry on.
Hon. Mr. Kenyon: Iím sorry about that, Mr. Speaker, although the member did himself make statements in his own speech ó Iím assuming that ruling includes reference to you as opposed to other members as well.
A lot of these tax issues are big for small businesses. It was taxes that brought me here; it was taxes that brought me to the Yukon. When I came up for a holiday and I found out that the Yukon has the lowest tax rate in the nation, the lowest corporate tax rates, it was a place at that point in time that had a lot of potential for small business. It did change, I have to admit, but at the time, it had a lot of potential for that. That was something that brought me up here.
I think that we have to look at the overall picture of that. A tax incentive, or lowering the tax rate to stimulate business, gives a small business the opportunity to pay tax on increased amounts or get that benefit on increased amounts of business. In other words, weíre not simply giving the money, but weíre saying if you make more money weíll tax you at that lower rate and will allow you to develop your business more quickly. Thatís the whole idea. Profit isnít a nasty word. Even non-profit associations understand that. Even not-for-profit organizations know that if they can keep their costs down they can have more on the income side, including lower taxes for other organizations, and that they have more money to put out on the other side. A not-for-profit charity is going to have more money to put into that charity if they can keep their profits ó in quotation marks ó up. It is not a difficult concept.
The other concept that bothers me is a number of references have been made to ďWe did it,Ē ďOur government did it,Ē ďOur party did it.Ē And we applaud that. They did come up with good ideas; they did come up with some things that made a lot of sense. What didnít make sense to me was why didnít they do something like this? They criticize us for waiting two years to do it; well, they waited a lot more than two years. Why didnít they do it when they were in power? Why leave it to us to do it? I have to ask that question.
The whole thing ó we can just go on and on, on some of these things on taxes. I can get into the GST and the fact that this was supposed to be a tax that would be abolished. It was in the federal Liberal platform that it would be abolished. But that was a section that somehow must have been torn out when it was published. We can go right back to the income tax since the World War I days. It was a tax to pay certain debts that would be abolished as soon as those bills were paid. But here we are, working our way up to 100 years later, and it is still there, and probably has to be, unfortunately.
But itís a lack of understanding of economics by the side opposite that bothers me the most, I suppose, when you look at all these things. The leader of the official opposition in his speech the other day went on and on that he didnít see any mines. It was pretty good when it was announced the next day on the front page of the newspaper. But, granted, it was published a day after he gave his speech. Things are coming; things are moving; things are building. The economy is rebounding. If this isnít doing our job, then, boy, Iím glad weíre not doing it, because weíre having great success in doing everything exactly the way we said we would do it.
The Member for Mount Lorne also started a quote. He said, ďÖ and miles to goĒ, and Iím very suspicious that what heís referring to is a very famous poem by Robert Frost: ďMiles to go before I sleep, and miles to go before I sleep.Ē Maybe his knowledge of poetry is limited, and maybe he would also confuse Robert Burns with George Burns. Maybe he has already gone those miles. Itís hard to say. The lack of understanding of economics is unfortunate, but it is good to hear that some of these members opposite ó perhaps all, we hope ó will support the bill, will give small business a chance to get that kind of a tax break and to get the opportunity to have more money to develop their business and support their own employees, because the working person isnít the only one who supports the economy. Small business does, and we firmly believe, and I firmly believe, that money in the hands and in the pockets of the general public is going to be better spent. Itís going to be an extra waiter or a waitress at a restaurant. There are going to be a couple of extra clerks on at a hardware store, and so on and so forth. There is going to be more money in that economy, and thatís what this bill does. Itís exactly what this bill does.
Hon. Ms. Taylor: †It is indeed my pleasure to also rise to speak to second reading of Bill No. 54, Act to Amend the Income Tax Act. There have been a lot of comments made by members opposite, as well as by the members on our side of the House, and many of the comments were worthwhile. Many comments I certainly question. But at the end of the day, I think weíre in agreement that this particular bill is a good bill. At the end of the day, no matter which way you cut it, it will put more money into Yukonersí pockets, whether that be in the hands of our own employees or employers. Itís a good initiative, and I certainly wholeheartedly support this particular bill.
As the Premier mentioned earlier in his second reading remarks, since the introduction of the small business tax rate in 1983, this is the first time that it has actually been reduced. As my counterpart from Porter Creek North just mentioned, itís pretty good for our government to come in here in two yearsí time to initiate these tax reductions and make progress on this particular front. The previous governments didnít do it, obviously, since 1983, so I certainly pay credence to our government for taking the initiative to listen to the business community, to listen to the chambers of commerce out in the communities ó they have certainly paid accolades to us ó and for actually putting our money where our mouth is.
As was also mentioned earlier, we will lose $885,000 in revenue but I think the revenue we will stand to gain by generating additional revenues through new business opportunities coming to fruition as a result of these tax changes, and the revenues that will be stimulated from the additional growth of businesses, the additional dollars to invest in our existing businesses as well as the ability for new businesses to move to the territory ó thereís no doubt itís a competitive, fierce world out there and the Yukon has to remain competitive. We have a lot of competitive strengths on a number of initiatives, but itís very important to be able to create an environment that is conducive to the growth of the private sector. That is really a fundamental belief and a value that the Yukon Party has always held for as long as I can remember and will continue to hold. Whether it be investment in our infrastructure, in our roads, in our airports or in our people, these are all good investments and this tax reduction initiative is but one additional investment into our own Yukon citizens.
It has also been mentioned that our government perhaps hasnít done much when it comes to, low-income families. I beg to differ. I just look at the Yukon child benefit tax. One of our governmentís priorities, as was identified in our election platform in 2002, was to enhance the child tax credit for low-income families, as well as for parents who choose to remain in their home. The Department of Finance, upon the direction of our government, in collaboration with others, including the Womenís Directorate, the Department of Health and Social Services, accomplished this priority through increases to the Yukon child benefit. Effective July 1 of this year, our government increased the income clawback threshold from $16,700 to $25,000. We also increased the monthly benefits by 50 percent to $450 per child per year. Thatís a good thing. I think thatís a great initiative, and I applaud the Minister of Finance, and I applaud members of our Cabinet, our government, our caucus for proceeding with this initiative; itís actually taking effect.
There are other things that we have done. As the Minister of Health and Social Services reiterated earlier, we have increased the base grant of the pioneer utility grant. Again, that was an election commitment that was promised by our party during the last election ó by 25 percent. Plus, we indexed it against inflation. Just recently, in the last month we also announced an additional 10 percent. Thatís a great initiative, and thatís going to help a lot of seniors and elders in their ability to remain in their homes longer and to certainly absorb some of the higher costs that all Yukoners are facing these days with the high cost of fuel.
In addition, I have to also say that we have excluded child support payments in the calculation of tenant rents in the Yukon housing units. Again, this enables lower income parents living in housing to retain more disposable income. That means more income for their kids.
Thatís a good thing. So to say that we havenít really assisted all Yukoners is really not accurate.
When we look at tourism, which is near and dear to my heart, tourism is a thriving economic generator in the territory. It is the largest private sector employer in the territory. We take tourism very seriously here in the territory, and, again, it is our job as government, as the Department of Tourism and Culture, to provide an environment that is conducive to the growth of our operators and our businesses.
Again, I look at recent increases to product development Whether that may be assisting by way of providing training workshops or workshops to market the product, or to package the products offered in the Yukon, it is helping to build capacity in all of our communities. I look at the tourism cooperative marketing fund that we announced in the spring budget: $500,000 that is going to leverage another $500,000 from businesses, from governments, and from NGOs wanting to showcase the Yukon and wanting to attract additional business to the territory. And again, that certainly is going to help expand business. It is going to attract business to the territory, and it is going to bring more people to the territory to visit, who also spend more dollars in each of our shops. They buy tours. They contribute to our economy.
I also look at all the investments that we have made to cultural industries, whether that be to a film industry, sound recording, or arts, and I think that these are great investments ó again this is whether it be to filmmakers, to development of sound recordings, whether it be to expand the ability of our artists to showcase their works to the rest of the world.
These are all investments that will benefit all of Yukon. I look at other things that our government has done over the last couple of years. We have not, unlike the previous Liberal government, increased licences or fees. Now what did they do? They certainly boosted those. That in turn takes money out of the pockets of Yukoners. Again, there have been times that Iím sure, for every government, it has been very enticing to raise taxes, to raise fees, to be able to raise licence fees, but thanks to the fiscal prudence exercised by this side of the House, we have been able to maintain a very strong fiscal house, and we havenít had to resort to those types of measures.
The proof is in the pudding, and the pudding is our economic picture in the Yukon today. One only has to look at the employment figures ó theyíre at an all-time high; real estate transactions are at an all-time high; the labour force is growing for the first time in several years, and the population is growing for the first time in many years, so we have a lot to look forward to and a lot to celebrate here in the territory.
Iím very pleased to be able to stand before members and to speak to this bill as an additional initiative among many hundreds of initiatives that each and every department, and all the hard-working officials in each of our departments, have been working on over the last couple of years. Itís not to say that this is just one initiative thatís privy to our government. Previous governments have done many positive initiatives as well. With this particular tax initiative we have actually risen to the challenge, and now itís before the Legislature, and we are proceeding with the development of this bill.
Iím very pleased to support Bill No. 54, and I certainly encourage all members to support our government in supporting this bill. Itís a good initiative. It will assist many Yukoners ó all Yukoners ó indirectly or directly. As I mentioned, it will stimulate growth and place more dollars toward investment in our existing businesses. It will attract new businesses.
Again, it places more money in the hands of our employers as well as our employees.
So, for those very reasons, I thank you for the opportunity to say these words, and again look forward to full support from all members in this House.
Mr. Cathers: † It gives me great pleasure to rise today in the House in support of Bill No. 54, Act to Amend the Income Tax Act. I think this is an excellent bill that has been placed before this House. Itís a great and rare pleasure to actually be standing here and cutting taxes.
In our 2002 election platform, upon which we were elected two years ago today, our government committed to no tax or fee increases. We have done even better than that: we have cut taxes.
We have heard a lot of comments, a lot of political rhetoric from the NDP and from the Liberals, claiming that we get an F on our mid-term report. I would urge all Yukoners to take a look at our election platform, to take a look at what weíve done, and I think they will concur that an A is in order. By the end of this mandate, Iím confident that that will be upgraded not just to an A+ but an A++. We will soon be providing more information to Yukoners at the mid-term, showing them how we have delivered on the commitments that we made to them and which they elected us to implement, proving that we have indeed done that.
Mr. Deputy Speaker, Iím very proud of our record on the platform and Iím very proud of our record on delivering on our commitments to Yukoners.
Mr. Deputy Speaker, I have enjoyed hearing comments from members on both sides of this House, and I have been intrigued by some of the comments that Iíve heard from the members opposite. The leader of the official opposition stood and expressed somewhat tentative support for this bill, saying that, yes, he would vote for it but he felt that we really should have done studies on what the effect of this would be. The studies on the effect of tax cuts are shown through economic performance indicators throughout our economy and other economies all around the globe. We do not need to commission some feasibility study to taste taxpayersí dollars to find out the effect of a tax cut. We only need to look to what has happened in other jurisdictions as the result of tax cuts from the few who have been making them.
In fact, weíve even seen the situation ó to pick up on something that the Minister of Tourism and Culture was referring to about the economic benefits and increase to wealth as a result of tax cuts ó there have even been jurisdictions that I would encourage the members opposite to take a look at, such as Alberta, Ontario and the United States where, at different times when they have cut taxes, a few years later they have actually received more revenue from those same taxes as a result of increases to the economy as a result of the removal of that impediment.
So we know the effect of a tax cut, and we know that it is beneficial to the economy. Taxes do not have a positive effect on the economy. They are a drain. We recognize that we need some tax revenue to conduct the affairs of government, but they are not a positive. Removal of taxes and cutting of taxes are very positive initiatives. It is very positive for small businesses, and small businesses are the main engine of the private sector. The private sector is the source of economic growth within any healthy economy. It is the only sustainable source of economic growth. In fact, looking nationally, small businesses are the largest sector of employment, the largest sector providing jobs to Canadians across the country. So in answer to concerns from the members opposite about how we know this will create jobs, and where the evidence from this is, the evidence is the proof in the reports of economic results across the country. Cutting taxes is a good thing. Reducing impediments to small business and leaving more money in their pockets, allows them to invest further in the economy; it allows them to hire more people, create more jobs, and flow more wealth around the economy. I would urge the members opposite to take a look at the records of other jurisdictions. It is as simple as doing the math.
We often feel on this side of the House that the NDP in particular does not understand business and what it needs to function. We believe that this is why the Yukon economy went down significantly and went into a real nosedive while under their watch, under their government. And the Liberals while in office espoused many great ideas but were not successful at putting many of them into place.
I feel there is a lack of understanding among the other two parties about what needs to be done to make the Yukon open for business. Weíve heard a consistent theme from members opposite, particularly within the last few weeks, that what is happening within the Yukon is purely accidental, and it has nothing to do with this government. Well, of course, anything bad that has happening is directly our fault and it was probably deliberate as well.
I donít think the Yukon public is going to be fooled by that rhetoric. I think they will understand that this debate in the House comes down to the fact that we are debating why the territory is doing better, why the economy is doing better. It was not doing better under other governments. It was continually declining and the bottom line comes down to the debate, right here in the House, that right now is revolving around why the territoryís economy is doing better.
It is doing better and that is what our government was elected on. We planned to improve the economy; the economy has improved. This tax cut in this bill is good for small businesses, good for the owners of small businesses and good for the employees of small businesses.
Iíve also heard claims from the members opposite from both parties that this tax cut was really their idea in the first place. The record clearly shows that they did not implement this tax cut. We have brought this bill before the House. We are moving forward on this. We listened to business; we hear what they are saying. Many of us have been in business and we have an understanding personally of what affects business, what affects the environment for creating prosperity.
I was at the Yukon Chamber of Commerce AGM a couple of weekends ago and I was disappointed that no members of either the NDP or the Liberal caucuses were present to talk to businesses there. There was no one present at the Yukon Chamber of Commerce AGM, which was held in Haines Junction, the home town of the Member for Kluane. The NDP does not appear, in my view, to care about listening to business.
Looking at the NDPís record both in the Yukon and across the country, the NDP does not cut taxes. They have a record of raising taxes.
We are very proud, as the government, that we are standing here now to cut taxes. I heard the Member for Mount Lorneís assertions that there should be more tax cuts implemented for small business. I agree, absolutely. We have to recognize, as he did recognize in his comments, that the biggest hand reaching into the taxpayersí pocket is the hand of the federal government. They are taking the most money out of Yukonersí pockets, out of Canadiansí pockets, whether from business people, from employees, from businesses, from government employers, or employees of large corporations ówhomever. The average Canadian pays 47.5 percent of their income in taxes. Thatís not merely income tax; thatís all taxes combined including hidden taxes as well, but the latest figure was 47.5 percent. We are one of the most heavily taxed industrialized nations in the world. I have always been in favour of leaving money in the pockets of the little guy instead of taking it out of there.
I would take this opportunity to urge the federal Liberal government ó on the off and very remote chance that theyíre actually listening ó to start cutting taxes and stop taking the money out of taxpayersí pockets. Stop taking it to spend on things like the Auberge Grande Mere and other ill-advised projects that seem to have close relations to their Liberal cronies, and leave it in Canadiansí pockets in the first place.
Iím moving to another comment made by the Member for Mount Lorne, I believe it was. He was questioning whether the agriculture industry is thriving here in the Yukon and suggesting that it wasnít. I would agree in some ways with the Member for Mount Lorne. The agriculture industry has much greater potential within the Yukon. I believe there is a huge opportunity for growth. Iíve spoken before in the House about the number of cattle, or the equivalent number of cattle, that are imported in steaks and roasts, et cetera, for supermarkets being approximately 5,000, and there being a tremendous potential for Yukon small businesses to start providing some of that product and start putting money into the Yukon, and of course this tax cut is only going to assist them in one more way, that it will leave just that bit more money in their pockets. Certainly we recognize that much work is needed to improve the agriculture industry, to assist them in moving forward. It is the same for tourism, for forestry, for mining, for oil and gas. There are many areas of the Yukon that we believe that over-regulation and ill-advised government actions by the previous two governments had left them in a bad state of affairs prior to us taking office, and we havenít been able to fix everything overnight. We were open and up front with Yukoners. When we were elected, we made it very clear, and they knew themselves, that no government could fix everything overnight.
However, we have made great strides. Previous governments were going in the wrong direction and making things worse. Weíre making things better. Maybe it could move more quickly. Weíre trying to move it more quickly too, but at least, for a change, after six years of decline, the Yukon economy is moving in the right direction.
All of my colleagues on this side of the House deserve credit for their work on this. The Minister of Energy, Mines and Resources ó I noted the very good announcement for him that came out in the paper yesterday: the announcement of a planned mine to be put into production, with an estimated value of $100 million. Thatís something we havenít heard in a long time, and itís very good to hear.
Certainly the businesses that will supply any such mine will assist in economic growth and development and will benefit from this tax reduction. This tax cut is good for the Yukon ó itís good for everyone.
Iíve enjoyed hearing the comments from all members of this House. I think this has been a very interesting debate. Weíve seen a very clear difference of opinion between ourselves and the members opposite on this and on the approach of how to make the economy better. I do urge members to support this tax cut, which I believe is just one more good thing that this government is doing to improve the economy.
Thank you, Mr. Deputy Speaker.
Hon. Mr. Hart: Iím pleased to rise today to support this bill. If you look at the definition of small business in the Yukon, itís practically every business in the Yukon, except for maybe two or three. Thatís it. Everybody in the Yukon is classified as a small business, in terms of the Canadian forum.
I think itís an important element of the Yukon. It demonstrates that small business is prevalent all over the Yukon. I think this is an important element for our small business in the Yukon. I think itís an effort that shows our support for them and what they can do for the Yukon.
As a member, a previous colleague, indicated, we havenít had a decrease in this thing since 1983. I think it is an important step to demonstrate to the small business sector that we appreciate their effort in maintaining their services in the Yukon and assisting us in our development.
Also, Mr. Deputy Speaker, I think we only have to look around in the last six or eight months. Iíve talked to several of my business colleagues, who have indicated to me that the level of their business has increased on a regular basis to the point where they have actually hired additional staff to assist them with their process. Weíve seen a substantial increase in the construction industry. Weíve seen a substantial increase in exploration and tourism. This expansion and increase in all these areas has had an effect on our service and retail industry, because with the increase in these areas comes increased needs of plumbers, groceries, furnace men ó all these people who service the big increase that we have had in our population over the last year or so ó a very important increase, a very important investment into our economy.
We are seeing the fruits coming forth from our Premierís stimulation of the local economy with the largest ever budget in the Yukon, and Iím pleased to say that weíre having a very interesting situation, where itís difficult to find professional or skilled labour at the moment ó something we havenít seen in the Yukon for almost four or five years ó a very positive aspect. Weíve even seen, in my own riding, Mr. Deputy Speaker, people who have come back from Outside to take a job in the Yukon in a professional field and to keep their family here in the Yukon and be a member of the society. Itís a very important element that we see and I, for one, am very appreciative of that particular aspect.
Again, small business is a very important element to the Yukon. It does provide employment, as I mentioned earlier. It provides services; it generates retail items; it provides better living conditions and improved health conditions. With the economy moving, we have had people staying here longer and also, with this particular aspect in place, we believe that our professional people will take another look and stay longer in the Yukon and make the Yukon their permanent residence. This type of professional help will also provide better services for all Yukoners.
Again, Mr. Deputy Speaker, itís a positive investment into the Yukonís economy. Again, just another way of how this stuff all rolls back into the economy, I think thatís an important element. We have had, for example, interesting comments from the other side with regard to whether it helps the other people or not. I think it does, and I think I demonstrated on several occasions how it does very much. You have to get into that particular line of thinking. I believe we will have to look at all of the aspects of what small business provides to Yukoners. It does provide a spinoff all the way through the chain.
Those who work or are employed by small business construct homes, they live, they eat, they purchase fuel, they have home repairs, they have their fridge repaired, and that all spins back. All that feeds back into the local economy. Thatís an investment into the economy, and that all comes from small business. That is prevalent right throughout the Yukon. That is not just here in Whitehorse. That is in Dawson, Watson Lake, even in our smaller communities of Haines Junction and Beaver Creek to a certain extent, as a matter of fact. These are all important elements. In the Yukon, many of our small business operators have to be skilled in more than one skill, because in order to meet the requirements of their particular community, that is a requirement ó again, more issues and a greater investment into the economy by those professional and small business operators.
I think this is a very good bill to assist small businesses over the next few years to increase them and help them grow as we grow as a territory, and to let them take advantage of the system as we grow. With that, the income will spill down to their employees, and as I have mentioned earlier, all the other effects that small business generates throughout the Yukon. Small business is a very important aspect to the Yukon. It involves all people. Most of the people in Whitehorse work for some small business one way or the other, in the private sector. I think itís an important element.
Iíd like to say that we have to look forward to this, even in our small businesses in the tourism industry. Look at the river rafters; look at wilderness tourism; all these people hire people to assist them, to bring in our visitors in from outside of the Yukon and to provide investment into the Yukon. These same companies provide security for their employees and themselves. They all pay taxes within the Yukon ó again, further investment to the Yukon through the small business incentive and through the small business group.
I think itís a very important step by this government to assist small business with a reduction in their taxes. I think it provides a very important role to help them stimulate the economy. It has benefits for all Yukoners throughout. I am very supportive of this particular bill.
Thank you, Mr. Speaker.
Hon. Mr. Edzerza: I rise today to speak in favour of this bill. I believe one must look at the big picture and seek understanding of what this means to the citizens of the Yukon Territory.
First we must recognize that everyone is different. Some are contented with working at their 8:00 to 4:00 jobs for other people, but there are a large number of individuals who have the ambition to take the risks and all the responsibilities that come with being independent and running a business of their own.
For example, my father, the late George Edzerza, was a very good businessman. He raised a family of 18 by running small businesses. He had the luxury of being independent, of being able to do things in his own time, at his own speed and his own pace. He had also the satisfaction of being able to be that independent person. One has to ask themselves what could be negative about giving a tax break to small business. There is nothing. There is no negative to that. Itís all positive. It enables the small businessman to survive. In some cases, I believe, in the Yukon Territory with the population being sparse as it is, this enables a small businessman or woman to have a better chance of survival within the territory. I believe that all the small businesses provide a great contribution to the very existence of the Yukon Territory.
I know in tourism itís a very important initiative. In fact, I just heard a report on the radio a couple of days ago that some tourists who come here would like to see a lot more business initiatives that cater to tourists, maybe through wilderness tours or hiking, or whatever it might be.
I think that a lot of the small businesses that run in the Yukon Territory today really provide a lot of support in maintaining the Yukon as a good travel destination. A lot of the small businesses need this break in order to survive. I believe that this government, by taking this step, is reaching out to the Yukon citizens who want to be in business and saying, ďWeíre here to help; weíre not here to put up barriers.Ē The governmentís responsibility, I believe, is to remove barriers that would prevent the individuals in the territory from even going into small business.
I think one only has to know that if it werenít for all of the small businesses that exist in the Yukon Territory today, we would have one heck of a time getting a driveway paved or blacktopped, for example. You take all of the landscaping thatís done around the City of Whitehorse. Those are operated by small business. Without them, I think weíd have a pretty hard time maintaining the beauty within the city.
So, to give this break to the small business is to give a break to all the Yukon people who are interested in doing a venture of their own.
So, with that, Mr. Speaker, I really do support this bill, and I encourage everyone to support it.
Speaker: If the hon. Premier now speaks, he will close debate. Does any other member wish to be heard?
Mr. Fairclough: Iíd like to make a few comments on this bill, the Act to Amend the Income Tax Act. I think the Yukon Party wants to fill some time here. We donít have a whole lot to debate in this sitting, so I think maybe five or 10 minutes of my time wonít hurt at all.
It was said on this side of the House that we are not in disagreement with this bill. We are in support of small business, and we recognize that small business does drive the economy in the Yukon and it does employ people. We are very supportive of that.
We have questions about this bill. Itís always good to lower taxes. What happens when we want to increase the taxes? Could we have supported small businesses in a different way? Does this bill include those who are self-employed? These are questions we have. We think that perhaps it does. I think the Yukon Party had an opportunity here to really look at this in a more serious light and address small business and support for them in other ways also.
We talked here on the floor of this Legislature about fuel taxes and electricity. I donít hear anything coming forward from the member opposite. The Member for McIntyre-Takhini said, ďLook at the big picture. Look at it all.Ē
I havenít heard members talk about taxes for any green initiatives, for example, Mr. Speaker. I heard them talk about initiatives to put more money in the low-income familiesí pockets. The big picture ó and look at it more seriously. I also heard the Premier say over and over, and this is true, that First Nations do contribute tremendously to the economy of the territory and the amount of money theyíre bringing in has increased over the years ó the attractions they have in business themselves. Take a look at Vuntut Gwitchin with Air North, for example, and the increase in business that it has brought here to the territory, and one that I believe we can be proud of.
Are there any initiatives that the members opposite have been bringing forward to address those issues with First Nations? Here we have support for small business. Great. Self-employed First Nations, low-income families ó do the members opposite want to address those who are making an effort to be a little greener in the territory, which are things like simply reducing greenhouse gases, spending more money on insulating their homes or not even driving those vehicles as much? Those are the types of things that Iím hoping the government will address in the future.
I donít know the proper ways in which, down the road when itís really needed, when the taxes need to be increased to support services out there, how we go about doing that ó whether weíre locking ourselves into a system here that it would be very difficult to get out of. Those are the types of things I believe the Yukon Party could address in a lot more detail on the floor, maybe through their departments. Weíll be surprised to see that, I suppose, but itís not reflected in this bill.
I donít think a lot of time was put into looking into the big picture, like the Member for McIntyre-Takhini. We on this side of the House donít really have a problem with this bill, but there is a question that I believe the general public would like answered.
Thank you, Mr. Speaker.
Speaker: If the member now speaks, he will close debate. Does any other member wish to be heard?
Hon. Mr. Fentie: † Well, Mr. Speaker, I would like to extend, on behalf of the government, our greatest appreciation for all the support we have received this afternoon from the members opposite for the bill to amend the Income Tax Act to provide small business tax relief in this territory, although one would wonder at times, considering the debate that has unfolded, whether the official opposition and, indeed, the third party really support tax breaks to small business whatsoever. It would be hard to determine if we read Hansard, I can assure you. And weíre not adverse to extending accolades to other governments that came before us that implemented tax initiatives to try to stimulate the Yukon economy, provide relief to Yukoners and Yukon businesses, and I think there have been past governments that have done these things, and we as a government chose here in this particular amendment to deal with a specific area. Itís small business, and we agree with the comments from the other side, that small business is a major economic engine in the territory that in many cases is driving our economy.
We feel this is a fitting amendment, a fitting tax break. It certainly will ó and I want to comfort the leader of the official opposition ó put money back into Yukonersí pockets, because thatís the fundamental purpose of small business: hiring people to conduct a service or conduct in their business interests a daily operation that does exactly that, putting cash into Yukonersí pockets. So weíre pleased with this tax amendment. As we move forward, the Department of Finance will continue to look at tax measures and taxation that may provide tax relief and provide further stimulus in cash flow for the Yukon.
There are some areas, though, of caution that must be employed. We have a specific arrangement with Ottawa: the territorial funding agreement. Under that agreement we are obligated to deal with what is called our tax effort, and in some cases reduction in taxes can come back in the form of a further reduction under the territorial funding formula. These are the things we must be careful of because we must always make decisions in the best interest of the Yukon taxpayer as we manage the public purse.
Further to that, I heard some talk about fuel taxes. This gets into what the official opposition, and especially the leader of the official opposition, was pointing out. How do you know that those kinds of tax breaks, or this one for example, would get into the pockets of Yukoners? When it comes to fuel taxes specifically, there is a question around the Yukon government reducing fuel taxes and ensuring that money would get into Yukonersí pockets. I will expand on that shortly. But itís also vital that we understand that the Yukon has one of the lowest fuel taxes in the country. Itís not like we as a government have tacked exorbitant amounts of fuel tax on top of what is already a high cost for fuel. It is, based on the rationale, a very low tax regime for both gas and diesel fuel. Of course, the taxes collected are invested where they should go and in many cases they wind up in operation and maintenance and investment in our highways.
When it comes to fuel, the issue is not what the Yukon Territory charges for fuel tax. The issue is much broader. We have maintained a position all along and will continue to maintain that position that on the fuel cost issue, the federal government must conduct a complete analysis of the cost of fuel from well head to customer.
The reason I say that is there is a tremendous amount of taxation, royalties, charges and all kinds of other areas of cost built in from well head to retail customer. That has to be done before anybody, for example the Yukon government, can make a decision specific to the reduction of fuel taxes to ensure that that reduction will indeed provide a benefit to the Yukon public, because we have no way of controlling all of those upstream costs that will wind up here at the pump.
I hope that helps the members opposite who appear to lobby quite extensively on this issue. What we chose to do was address it in specific areas. One example is the pioneer utility grant; weíve increased that by up to 25 percent and now itís going up to 35 percent. So, we are helping in areas.
Itís also important to note that seniors deserve that kind of assistance from their government and indeed the citizens as they have contributed greatly over the years to this territory and they are deserving of some return in this fashion.
The government is very pleased with this bill. We are hoping that as we go forward small business will be able to utilize this kind of tax incentive and further grow our economy. I think when you consider the number of $885,000 and extrapolate that over the number of people in the territory and what that kind of dollar injection and cash flow into the economy will do, there is no doubt that it will have a positive impact.
With that, I thank the members opposite for their support, as I said. We are ready to move on now into Committee to further debate the bill.
Speaker: †Are you prepared for the question?
Some Hon. Members: Division.
†Speaker: Division has been called.
Speaker: Mr. Clerk, please poll the House.
Hon. Mr. Fentie: Agree.
Hon. Mr. Jenkins: Agree.
Hon. Ms. Taylor: †Agree.
Hon. Mr. Kenyon: Agree.
Hon. Mr. Edzerza: Agree.
Hon. Mr. Lang: Agree.
Hon. Mr. Hart: Agree.
Mr. Cathers: Agree.
Mr. Rouble: Agree.
Mr. Hassard: Agree.
Mr. Hardy: Agree.
Mr. McRobb: Agree.
Mr. Fairclough: Agree.
Mr. Cardiff: Agree.
Mrs. Peter: Agree.
Ms. Duncan: Agree.
Mr. Arntzen: Agree.
Clerk: Mr. Speaker, the results are 17 yea, nil nay.
Speaker: The yeas have it. I declare the motion carried.
Motion for second reading of Bill No. 54 agreed to
Hon. Mr. Jenkins: I move that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Speaker: It has been moved by the government House leader that the Speaker do now leave the Chair and that the House resolve into Committee of the Whole.
Motion agreed to
Speaker leaves the Chair
COMMITTEE OF THE WHOLE
Chair: Order please. Committee of the Whole will now come to order.
The matter before Committee is Bill No. 12, Second Appropriation Act, 2004-05.
Before we begin, do members wish a brief recess?
Some Hon. Members: Agreed.
Chair: † We will take a 15-minute recess.
Chair: Order please. Committee of the Whole will now come to order.
Bill No. 12 ó Second Appropriation Act, 2004-05 ó continued
Chair: †The matter before the Committee is Bill No. 12, Second Appropriation Act, 2004-05, general debate. Mr. Fentie, I believe you have one and a half minutes left.
Hon. Mr. Fentie: All right, thank you, Mr. Chair.
When we concluded debate, previously, I believe on Tuesday, the question remaining unanswered was on page S-2 of the supplementary budget. There is an area right at the bottom with a list of numbers that shows net financial resources. This was a one-time accounting to reconcile moving from the old accounting system and budget document to the new one.
Hon. Mr. Hardy: I thank the Finance minister for that answer. I just needed to get that clear, so if it doesnít show up in the financial statements down the road, I understand why. There was a concern about that.
A very simple question, and maybe the Finance minister can give me some idea of where itís at. My understanding is that not all municipalities are on this type of financial reporting system. Some are ó some went first, and Iíd just like an update on where itís at right now, who is using full accrual accounting right now, and what the deadline is for all of them to be up to speed on this.
Hon. Mr. Fentie: The requirement is under CICA, which is the Canadian Institute of Chartered Accountants, for municipalities in regard to this accounting system. But it would be best asked of the Minister of Community Services, as that is where the direction and enabling authorities are housed. If that is not satisfactory, we can get the detail for the member, but he will get it from the minister when we get into the Department of Community Services.
Mr. Hardy: I would actually like to take the Finance minister up on supplying the detail. Then we donít necessarily have to revisit it at that time, if it is just given to us.
We have talked about ó a little bit, just touching on it and I think we should explore this a little bit more ó tangible capital assets. I have just a couple of concerns on that. One is in the glossary, second page, down on ďWork in ProgressĒ, it says, ďConsists of construction or development of a tangible capital asset in progress that is not yet in use.Ē Could the Finance minister just give me an explanation on that section, please?
Hon. Mr. Fentie: There is a reporting practice here because, for instance, if you were in the midst of building a building but it was not in use yet, there has to be a reporting of work in progress; itís not a completed tangible asset. Okay? You begin your amortizations and all the rest of your accounting once use has started, and it goes through the usefulness of its life and/or the term or length of term for the amortization.
Mr. Hardy: So that applies to buildings. Any buildings that we have in progress, that are under construction ó before theyíre rolled under tangible capital assets, before they apply, the building itself has to be completed and signed off and in use before it ó yes, thatís what I was going to follow up on now, Mr. Chair.
Could the minister tell me what it also applies to? Does it apply to the roads, if the roads are still under construction? Does it apply to bridges? Can we maybe get an idea of what weíre talking about so I have kind of a scope of whatís out there?
Hon. Mr. Fentie: Iíll give the list because it is in the glossary. Categories of tangible assets are land ó it lists right through, including computer hardware and software, transportation infrastructure, which would include highways, bridges and airstrips.
Mr. Hardy: Yes, I see where the Finance minister is talking about. Thatís under ďtangible capital assets,Ē the major categories.
I guess what weíre talking about is to date, right now. Iím assuming there wouldnít be heavy equipment, operating equipment, vehicles, computer hardware and software that weíre waiting to get some kind of completion on, whether itís a purchase or not that would be in this. Are we just talking about the infrastructure ó airstrips, bridges, highways, lands and buildings?
Hon. Mr. Fentie: Actually on page S-11 it will show the amount booked for work in progress put in service during the year. Thereís a value there. The only other thing I would add to the memberís list would be computer systems. This would be under this category if they were not yet complete and in use.
Mr. Hardy: I see where heís referring. What would they be right now? What actually would be in this category right now?
Do we have an outstanding project out there?
Hon. Mr. Fentie: Thanks, Mr. Chair. Itís going to be an extensive list from a number of departments, projects that are ongoing ó in progress, in other words. We listed them, which included: land development; buildings; computer hardware or systems; infrastructure, including highways, bridges and airstrips. We could compile a list. It would take some time, though, because every department is going to have to compile what projects they are proceeding with and the status of the projects to determine whether thatís booked as a work in progress or is indeed booked as a tangible asset.
Mr. Hardy: Well, thatís interesting. Iím not sure if I necessarily need that list. Iím just basically trying to get an idea of how this was going to be booked, how it falls under tangible capital assets, when it actually becomes ó now, the minister has indicated that it is only once it is being used that it becomes a tangible capital asset, when itís not a work in progress any more. That applies, of course, to roads. So it basically has to be ó I just want to get this clear. So it basically has to be signed off and then being used. If itís computers, the purchase has to be complete, and though it may sit in the warehouse for a few months, it still is not ó this is what Iím trying to get clear from you on this ó is it still not booked out of the work in progress category?
Hon. Mr. Fentie: Assets in a warehouse would already be booked at full value. The full value of tangible assets is also booked, but then they separate out tangible assets that are a work in progress and/or put into service during the year. For example, on page S-11 you will see changes during the year, and it shows you a value there ó so, if that answers the memberís question. Inventory of parts and equipment and things that are in a warehouse right now are already booked as a tangible.
Mr. Hardy: Now I have a clearer picture. I know the Finance minister originally said that it had to actually be in use, so it doesnít. Itís basically as long as it has been purchased ó sitting in a warehouse is perfectly fine ó then itís out of this category.
I think I donít really need to explore that one any more. I have a pretty good understanding of that now.
Going to formula financing, in earlier discussions, actually just when the Finance minister was closing up on the income tax changes, he indicated that changes could be triggered to the funding formula depending on changes or activities, whatever the territorial government that is in may want to bring about. Could the Finance minister give me an idea exactly what would be the triggers that would change, or have the federal government want to make changes to, the funding formula?
Hon. Mr. Fentie: Normally the tax effort is measured on a national basis, so a lot of these things are already calculated into our formula. But when we reduce taxes ourselves, we will realize a reduction on our bottom line. So there is no recovery anywhere. This is a direct cost then to the Yukon Territory, and that would come out of general revenue. It would not be part of our financial situation ó itís gone because weíve put it back out into the public.
Mr. Hardy: So then my understanding is that we could reduce our taxes, but that wouldnít necessarily affect the funding formula as it exists with the territorial government? My concern, of course, is the ability for any government to have the authority to make adjustments to their tax structure that would allow ó basically, what I see to be the proper authority invested in a democratic level of government, without some kind of penalties or some kind of repercussions from the federal government.
I remember some debate quite a few years ago where there was pressure on the territorial government to keep taxes at a certain level or certain height and it would be frowned upon or looked upon quite negatively if the territorial government started dropping taxes all over the place. Maybe the Finance minister can give me some information about that.
Hon. Mr. Fentie: Mr. Chair, maybe the best way to go about this is not based on us reducing taxes. Because of the national calculation on the national standard for tax effort, we are already calculated based on our tax effort in comparison to the national effort. So, if we are lower, we are reduced. But if we were to, say, implement a tax regime like sales tax and increase our tax effort, then we would be increased. Weíd get 100 percent of the benefit because it would be calculated into our formula, because our measurement then on our tax effort would be higher and closer to the national. Right? So, the difference between our tax effort and where the national is, the gap would close and weíd get a higher transfer.
Mr. Hardy: So weíre basically ó
Some Hon. Member: (Inaudible)
Mr. Hardy: Hang on a sec ó okay.
Chair: Mr. Hardy has the floor.
Mr. Hardy: Weíre having a heck of a discussion, but itís not going through the Chair, right?
Chair: If the members would wish to change the rules in our AssemblyÖ Who would like the floor?
Hon. Mr. Fentie: Iím sorry. The point we were making was that there would be a factor, a number, developed based on our tax effort and compared to the national. So we would already be penalized based on our tax effort in comparison to the national and itís factored into our formula. If we raised our tax effort in relation to the national effort level, then we would get more money in our formula because our tax effort against the national tax effort ó the gap would be closer.
Mr. Hardy: This is fascinating. So it sounds like because of the formula, the federal government is trying to encourage us to raise the taxes within the territory. They will give us more money; the more we raise taxes, theyíre going to match it and bring it up, up to the national tax standard. Is that correct?
Hon. Mr. Fentie: They already factor it in, and that is what comprises the transfer. They factor in our tax effort compared to the national average, then they build in how much we get. If we increased our taxes, obviously, weíd have more money. But if our tax effort changes, it will change the overall aspects of what we deal with. The overall cash flow changes.
Mr. Hardy: Maybe we have another communication problem and a little bit of a misunderstanding here. Iíll try to make the question clear. I really have a couple of questions, but one is: if we raise our taxes, does that affect the amount of money we receive from the federal government?
Hon. Mr. Fentie: Let me explain it this way: some of this is on a go-forward basis, based on a calculation of where we came over a term of an agreement. So they calculate it, come up with the factor, and it is implemented. So if we reduced our tax effort, then there would be a calculation going forward that would increase our tax effort number. We would be penalized more on the go-forward agreement, not on what transpired in the past. So it changes that number in outgoing years.
Mr. Hardy: There is no question, it is not a simple formula; itís not a simple explanation. Sometimes itís very difficult to get it conveyed on either side, what I am trying to get answers to and, as well, the Finance minister trying to explain. I think what I will look at doing is sitting down with the Deputy Minister of Finance and walking through this, because just from looking and listening to the Finance minister, itís just not as clear cut as I think weíre going to get on this floor.
It might be the fastest and easiest way around that one.
I have a couple of questions, going back to the tangible capital assets. A section here, asset category ó basically what Iím looking for is capitalization thresholds and estimated useful life of the assets. What Iím looking at is the estimated useful life of buildings and roads, land improvement fixtures, vehicles, all that stuff. Could you tell me where those figures come from? Are they a national average? Are they one thatís recommended from the accounting practices, or are they one that was developed based upon the Yukon situation?
Hon. Mr. Fentie: There are guidelines for this under the CICA, the Canadian Institute of Chartered Accountants, which dictate how this is done ó the amounts or how you calculate it.† There is a whole list of different asset categories.
Mr. Hardy: Itís nice to know where it comes from. My concern ó maybe weíll explore this a little bit ó do they take into consideration the different climatic conditions of these buildings and roads? Letís just stay with buildings and roads first off. Do they take into consideration the different climatic conditions and the different impact climate has? As everybody knows, building a road in Old Crow is going to be substantially different from building a road in the lower mainland of British Columbia, They donít deal with permafrost. Building a road up in Dawson City is going to be quite different possibly from building a road in Toronto, so is consideration taken into account?
Hon. Mr. Fentie: Itís always based on the useful life term of any particular asset, regardless of the fact that it might cost more to build a road in the Yukon than it does in California or southern Alberta, for example. Itís the measurement of the useful life term.
Mr. Hardy: What I meant to convey to the minister ó maybe he misunderstood me again ó is that Iím talking about the useful life. Iím not talking about the actual construction. We know itís going to be different. And just like the actual construction in the north is more expensive than down south, I would also suspect that the maintenance of the road would be of a different amount. Weíll stay with roads for a minute. Weíll go to buildings in a second. The lifespan of that road ó the useful life of that road ó is obviously going to be different from the conditions in other parts of Canada. Now, has that been taken into account when we figure out what the estimated useful life will be?
Hon. Mr. Fentie: This would be a detailed debate that would extend for days, because there are so many variances in the type of road ó Iíll go through some of the examples ó that would determine lifespan. And there are some cases where it can be extended beyond what that period would be. But you have different types of road in width, starting with base up to surface. You have different backslopes. You have different ditches ó V-ditch versus flat-bottomed ditch. You have different materials. There are many types of materials that are put into a road base that dictate lifespan, type of maintenance, period of maintenance ó the intervals of when it must be maintained. There are so many variances here. Iím not sure what the member wants to get to.
We use a standard set of guidelines to determine the value of a tangible asset, based on the CICA guidelines.
Thatís it. Those are the guidelines used to come up with the value. If you go down this road, itís an impossibility, because there are all these variances that the guidelines donít really recognize or reflect. Thatís just a fact of life in road building. Depending on where you are and what kind of materials youíre working with, whatís the design, the specs ó all those things come into play. It doesnít change the guidelines for a highway and the term of its useful life.
Mr. Hardy: Actually it does. Obviously the Finance minister has had experience in building roads. He talked as if he has knowledge. Iím sure he has worked on equipment. He has worked on road crews. So have I. It seems like years ago, growing up, every young person ended up on a road crew somewhere for a summer job. So you do get that experience. However, I cannot accept the fact that we can have such general qualifications on the estimated useful life when weíre trying to be more accurate in our reporting. There seems to be a discrepancy here. I have a big problem with this. If you are basing your tangible capital assets and the value of them on the lifespan of a road, the lifespan of a building, and itís based on an outside project where they have 50, 60 years of studying the road, studying the impact, studying the wear and tear, they can predict within a couple of years how long this road will last before it breaks down. You transfer that to the north, where there is permafrost, where there are different conditions affecting it ó as the Minister of Finance has indicated ó there are a lot of variables to come up with a solution, but there are some common ones.
I am talking more climatic. Iím talking about the more general conditions that all roads face in the north compared to the south.
Are these figures based on a southern analysis of how long roads last? Letís start with that question.
Hon. Mr. Fentie: No, Mr. Chair. Theyíre based on the Canadian Institute of Chartered Accountants guidelines. Furthermore, this is about the amortization of an asset. Nothing says that, once the amortization is concluded, itís not still in use. In fact, in many cases it would still be in use, be it a highway, be it a building, so the issue here is the calculation of amortization.
In the glossary, the useful life explanation is there and the estimate of the period over which a tangible capital asset is expected to be used by government. The useful life of a tangible capital asset other than land is finite and is normally the shortest of the physical, technological, commercial and legal life. The life of a tangible capital asset may extend beyond the useful life of the tangible asset.
Mr. Hardy: But arenít the figures that we use in the supplementary the calculation of what the value of that property or road or building is, based upon something? Isnít it based upon a value depending on how old it is? Isnít it on the use of it? At some point, of course, the road, for example, may continue to be used but we have to put some kind of value in this if weíre using accrual accounting.
If itís not accurate, if those figures arenít accurate, then that bottom ó if the estimated useful life and the value and the threshold and all that stuff are not accurate, then we have to assume that this isnít accurate on the ultimate value of it.
The Finance minister says Iím mixing up amortization and all that stuff. Well, Iíll tell you right now, the roads we build are not the same roads we build down south. They donít last the same.
There are different conditions affecting them. When there has been a value placed on these, is there a consideration that a road built on permafrost may have a shorter lifespan than a road down south? Itís a very simple question. Has that been considered in figuring this out or, as the Finance minister says, we just use one general guideline and thatís what weíre going to base everything on?
Hon. Mr. Fentie: Well, Mr. Chair, it is a difference between the worth of a capital asset before you start amortizing it out. The members opposite vote on that value. It is the cost of building the building, itís the cost of building the road, itís the cost of whatever the tangible asset costs, and then the guidelines are applied to amortize the tangible capital asset of full accrual accounting.
Mr. Hardy: What happens if you overstate your asset? Now, Iím going to give an example. Hang on a second. I hear whatís going on over there, Mr. Chair: ďYou canít overstate your asset.Ē Thatís an interesting comment. You know what, you actually can, contrary to what people think. But there was a transfer, was there not, a transfer of assets to the territorial government? Letís go there for a second. Could the Finance minister tell me what assets were transferred in devolution? What was transferred from the federal government to the territorial government?
Hon. Mr. Fentie: Those assets: a long list negotiated under the devolution transfer agreement; and what was transferred, other than the hard assets, in terms of numbers, would have been the depreciated value of the asset to the Yukon government.
I would assume that the federal government had been using the Canadian Institute of Chartered Accountantsí guidelines.
Mr. Hardy: Iíll assume there is a building in there. If this building has been sitting there for the last 10 years, obviously there was a figure arrived at regarding the value of the building, the amortization of each of the years, the value of the building if it is transferred. Pick it up and run it out, I guess. My concern is that those figures are arrived at based upon averages, I would assume, of buildings possibly Outside. I am asking a very simple question and this goes back to my first question: do they factor in the impact of northern conditions on buildings? Northern climate ó does it shorten the useful life of a building or not? Does it shorten the value of the building or not? Itís a very simple question.
Hon. Mr. Fentie: We build specs; the starting number is the cost of the asset. Booked. Boom. Then you amortize it under CICA guidelines. In relation to the assets that came from the federal government, maybe there was a number agreed to that had nothing to do with amortization or anything else. I donít know that. The member could ask the third party how they structured that agreement when they came to the arrangement on the federal assets that got transferred, because they could have just picked a number.
Ms. Duncan: I understand what the leader of the official opposition is trying to get at here with the Finance minister. Let me make an attempt to explain the point that the leader of the official opposition is trying to get.
Iím not going to use the devolution to explain transfer of the assets. Letís take the asset of a building. We could use this building, for example. Weíve gone to full accrual accounting. Weíve listed this building as an asset and put a certain value on it. It has been amortized according to CICA guidelines over, I think ó I donít have the supplementary in front of me ó itís over 30 to 50 years, I believe: the amortization schedule for buildings. The problem with that is ó I would challenge members opposite ó that amortization schedule of 30 to 50 years for a building doesnít factor in the fact that buildings up here are not lasting 50 years ó the Thomson Centre, Copper Ridge, this building. This building isnít that old.
So the amortization rates established by CICA are not factoring in that we are dealing with a north of 60 climate. Look around and ask members: can anybody name buildings that have lasted here 50 years without major renovations or repairs. The only one I can think of off the top of my head ó and we were discussing this ó is Whitehorse Elementary School, and even that has endured major fires.
Thatís the point the member is trying to make. I believe itís worthy of discussion. Amortization schedules arenít necessarily factoring in northern conditions and the fact that our buildings arenít lasting 30 to 50 years. I will sit down and perhaps the Finance minister would like ó first of all, perhaps he could recognize if I made the point any clearer? Thatís the issue the leader of the official opposition is trying to say: ďLook, our buildings arenít lasting 50 years, so why are we amortizing them at that rate?Ē
Hon. Mr. Fentie: Well, letís first go about it this way. If we agree that the beginning of the asset is its cost ó thatís what the building cost. We obviously build to specs in the north that may be somewhat different in other jurisdictions although, when you start looking around cities and skyscrapers and all the rest of it, itís highly unlikely. The buildings are similar, in most cases, structurally.
Now the member is trying to imply that, because we live in a colder climate, then the building may deteriorate faster. No, not if you build to specs for a certain lifespan, and that would be similar. Based on those specs ó if you applied those specs anywhere across the country, youíd probably get the same results.
Now, once we have established the cost of an asset, we then begin to amortize it out over the useful term of its life, and the asset could extend beyond that period, but amortization would have stopped. In other words, weíve gone through the complete process of maybe ó and the Auditor General certainly doesnít have an issue here ó just maybe there may be a faster amortization period. But I donít think there is, at least to the best of my knowledge. We are accepting what we have basically been required to do. I would hope that the Auditor General had all of this figured out.
Having been in business myself and having dealt with amortization of equipment and other assets, I can assure the member opposite that what I was doing in the Yukon was no different from anywhere else in Canada. My maintenance costs might have been higher, but thatís not a capital tangible asset. Thatís O&M expense.
That has nothing to do with the values the member is trying to get at and whether CICA guidelines should apply here. The government says, based on a requirement and all the expertise involved in this field of accounting across the country, we have gone to full accrual accounting using all the principles and the guidelines, and thatís how we arrive at the figures. Of course, the beginning figure is the cost of the asset, and then, as we book it through its useful life, those numbers will change. Thatís just the natural course of this particular accounting system.
To say that these guidelines wonít work in the north because weíre in a different jurisdiction and a different climate, weíve got permafrost ó no, because the asset cost is still there. The amortization is still ongoing, but there may be O&M investments that are needed that might be different from other jurisdictions.
I hope that helps clear that up for the member.
Ms. Duncan: I appreciate the Finance ministerís lecture, but what the leader of the official opposition is trying to ask the Finance minister ó
Mr. Chair, the issue that the leader of the official opposition and I have just tried to explain to the Finance minister is this: I have done books for business; I still, in my volunteer capacity, do books and do amortization and do depreciation. Iím fully familiar with this.
Iím trying to ask the Finance minister to step outside the politics of this arena and think about what is being said here. Take a good, hard look around. We have situations like Copper Ridge and like the Thomson Centre. The Thomson Centre is a very good example. That building would have been booked ó say we had just accepted it. Letís say, for the sake of argument, that we had just accepted it. We would put in the millions of dollars it cost, it would be listed on our books, and it would be amortized over 30 to 50 years.
Now, the cold, hard reality is there have been millions upon millions of dollars in capital, not operation and maintenance, improvements. There have been millions and millions and millions of dollars in capital improvements, not operation and maintenance ó capital in that building. And even at that, who knows if it will last 50 years by the time it is fully amortized. And the problem is that we have example after example after example, like the Thomson Centre, and we donít have the buildings that last 50 years, until theyíre fully depreciated. The only one I could think of would be the old post office, which was bulldozed, and we have the Elijah Smith Building. Maybe it will last. Maybe the Law Centre, 50 years. But the buildings that have been built in this territory havenít been lasting according to the amortization schedule.
Now, there are all kinds of reasons for that. And the member was just saying, maybe itís the northern environment. I donít want to get into a debate about that.
Some Hon. Member: (Inaudible)
Ms. Duncan: Does the minister want to engage in this debate, or does he want to answer the question?
Hon. Mr. Fentie: The memberís every wish is my command. Iím here to debate.
Look, I understand what theyíre trying to say. I donít think they understand what Iím trying to say. For example, this building has a value that would be booked, and based on CICA guidelines it would have an amortization schedule that would run out in so many years. But we could be standing here and the roof could fall in. The roof could fall in right now. That doesnít mean the CICA guidelines are the problem. It means whoever put the roof on was the problem.
Now, weíd have to fix the roof. Itís a major capital investment to fix the roof. That value would be added to the value of the tangible capital asset as the amortization continued. So Iím trying to say that there is a principle in the CICA guidelines that accommodates these kinds of things. Therefore, whether we build it in Toronto, whether we build it in Watson Lake, whether we build it in Haines Junction, whether we build it in Whitehorse or Calgary, all of this works out because there is the flexibility and the latitude to ensure that we can accommodate these unforeseen circumstances.
At the end of the day, the cost of the asset amortization schedule ó those are the accounting principles reflected in the budget. If we had to replace, with a major investment, something in a capital asset like a building, then it would be accommodated by adding that value to the tangible capital asset.
Ms. Duncan: I fully understand that is the principle that would be applied and thatís how it would work. The issue is that there is an asset value put on the books. There is an amortization schedule. That amortization schedule ó yes, it may be in the CICA guidelines, but it doesnít take into reality what weíre living in. Thatís the problem with it.
Did the Finance minister, who said, yes, weíll adopt them wholesale, give any consideration to that? Because it is our reality here. Yes, absolutely. You put the cost of building a building in Toronto, a brand-new hotel, you put that cost on the books and you depreciate it, you depreciate it over 50 years. You build a brand-new building in the Yukon, you put that cost in, you depreciate it over 50 years, but the fact is when the minister said, ďRight, weíre going to adopt these, weíre going by the CICA guidelines,Ē how many buildings can he name in the Yukon that have lasted 50 years that are on our asset books?
Not very many, and thatís the problem. Was there any consideration given to the reality that we live in? Yes, there are CICA guidelines. There are also variations. Was there a discussion with the Auditor General about that? The book value isnít going to change but the million dollars in repairs that it would cost to use the building, for example, have to come from somewhere and itís going to be borrowed against those assets.
We are not arguing the book value. We are not arguing how amortization is conducted. Weíre arguing the consideration given to the amortization schedule, given the reality we live in. Itís a legitimate question. Did the Finance minister have a discussion with the Auditor General or was there any review of the CICA guidelines and their applicability to our northern situation? Was there any consideration given to that?
Hon. Mr. Fentie: There is no point in me answering that because that is exactly what I was going to say. The member is wrong on her assessment. Thatís not how this works. There is no reason to be concerned about the amortization schedule. If the specifications for a building ó letís just use a building as the example ó if the specifications for a building in the north dictate that itís going to cost more, that would be the starting value. We accommodate that. Why would you put higher specs in the building? You would put higher specs in the building to extend its life.
Some Hon. Member: (Inaudible)
Hon. Mr. Fentie: Weíre not. Thatís the point. You are accommodating this based on what we do. It has nothing to do with whether or not the amortization schedule should be changed because we get more snow. You build a roof so it doesnít fall in.
There are occasions when contractors or design might be the problem. Itís not amortization schedules. Itís not CICA guidelines. This is a very well-used standard set of principles that have worked for a long, long time.
Iím not sure if the member has a new idea, but maybe the Auditor General might want to hear it. The member could contact the Auditor General and talk to the Auditor General about that idea. The government is very comfortable ó very, very comfortable ó with what we have been directed to do. We are required to do these things; we follow those guidelines; we follow those principles, and it all works.
If the member is implying that the values in this budget ó for instance, that we are overstating our capital assets, I would categorically say that thatís not the case. We as a government must also ensure, through out Department of Finance, that we follow and meet the guidelines. You canít overstate a capital asset if you begin with its cost. The rest is simply a formula. Itís like arithmetic. Itís a calculation, and thatís how it ends up.
In most cases, you may have the asset still in use at the end of its amortization term. Look at the Watson Lake Hotel. It has gone through a number of amortization terms, and itís still standing like the Rock of Gibraltar ó still being used.
Ms. Duncan: The Finance minister didnít answer the question. Amortization schedules have changed. They change over time. The rate at which you depreciate computers is vastly different now from what it was 10 years ago. They change. And the Finance minister did not answer the question: was there any discussion, or a review of the CICA guidelines, on building amortization with the Auditor General with the review of the CICA handbook? Was there any review of those guidelines, given the fact that we have a different milieu in which we live?
Hon. Mr. Fentie: Mr. Chair, there would probably have been discussions between the Auditor Generalís office and the Department of Finance as we went through this process and, yes, there may be changes to the amortization formula or guidelines and there may be changes to the CICA standards and principles. Those things happen, and when those changes come we will adopt those changes, because we would be required to adopt the changes. Therefore, I submit the values booked here are the correct values based on the standards and the principles for accounting that we must use as required by the Auditor Generalís office.
Beyond that, I think we should start discussing whatís in this budget and why weíre investing the money where we are. Maybe the members want to discuss the healthy financial picture for the Yukon Territory. Well, there are so many things we could talk about instead of worrying about whether the Auditor General has somehow fouled up amortization in the country.
Ms. Duncan: Mr. Chair, nobody suggested that, and I would ask the Finance minister to withdraw that. Nobody suggested the Auditor General did anything. What I asked was, did the Finance minister do the job, and quite clearly his answer was no.
Hon. Mr. Fentie: Mr. Chair, I can only draw this conclusion based on the length of questioning around amortization. When we, as a government, are required to implement accounting principles and guidelines, we do so.
If we were doing something wrong here in regard to those principles and guidelines, weíd get a qualified audit. We donít have one. That member had qualified audits when in government and responsible for this portfolio but, thanks to the good work of our Department of Finance and the fact that we are following the Auditor Generalís guidance and the accounting principles and the guidelines we must follow, weíre not having a qualified audit.
So the only conclusion I could draw is that the member is questioning the Auditor General and those requirements, those principles and those guidelines. I would urge the member to write the Auditor General and voice that concern. And the Auditor General would probably respond and alleviate the memberís concerns so that she can sleep well at night and not worry about whether we have misrepresented the value of the Yukon governmentís tangible assets.
Mr. Hardy: Well, the leader of the third party has not suggested that the Auditor General never did her work or made a mistake. I think the suggestion was that the Finance minister did not take into consideration the different circumstances that structures and roads have in the north. Amortization has changed; it has to have changed. Computers were given as an example. There is no question about it. There has been some adjustment in that area, I would suspect, although I do not keep up on the latest computers and their lifespan and what that is projected to be. I do know that the projections are a lot different from when they originally came out 15 years ago or 20 years ago. I would assume that figures have been changed to accept that. So with computers, looking at computer hardware for now, five years is the estimated useful life of it. So at the end of five years, there would be an assumption that the government would possibly have to make a new investment to upgrade that. Computer software ó it is estimated that by seven years it is outdated, and it is time to upgrade to keep up with the changes that have happened within the industry.
We have buildings whose estimated useful life is 40 to 50 years. The leader of the third party has suggested I show her a building, one of the assets of the government, that is 50 years old and has a useful life and ó I would add this ó without massive or major changes or renovations. This building alone I think was built in the early 1970s, roughly around 1977, in that period. So thatís 20-some years old. Now is the useful life of this building predicted to be 50 years? Maybe it will make it. Itís probably a class A building.
With buildings there are different classes: class A, B, C and D. You get what you pay for in that case. Iíve worked on all classes and I can tell you for a fact that a class C building is not going to last 40 years, for instance. So is that considered? When these figures were arrived at and amortized over so many years, was it considered what type of building it was or is this just a broad general standard that applies to all buildings no matter what class of building they are, or has that been calculated into it by the Finance minister? If we have class B buildings or class A buildings, class C buildings, has that been considered? If so, are we looking at amortization up to 20 years of a building? Is it spread over that period and maybe the useful life? Or else it doesnít matter what the building is, it falls under the same exact guidelines that the Finance minister has mentioned ó the CICA guidelines ó in this regard?
Hon. Mr. Fentie: It would be determined by the type of structure: wood, steel, straw, and those types of things, in terms of lifetime. Straw is legit. It does have an effect on that timeline, but I think the important factor is that, regardless of that period, should there be a need ó because of deterioration of a structure ó to make a major capital investment, that value, that cost of that capital investment would be booked in the overall value of the tangible capital asset and the amortization period would be extended from that point. Itís all worked out. Thatís the beauty of accounting principles.
However, these principles and guidelines and processes change from time to time, and when the Auditor Generalís office changes any of these areas, the Auditor General will require that we change what we do and the universe will unfold as it should.
Iím not sure how else I can explain this, but if the members are trying to put on record that these values are not the correct values, I can assure the members that that would not be the case, that these are done in every way in accordance with the guidelines and principles we must follow.
Mr. Hardy: Thatís not exactly what we are trying to say. We are just trying to find out how it was arrived at, was it correct, and does it take into account the conditions of the north? Itís not the same as the south. I think weíve made that point time and time again. If this is not taken into consideration, why not?
I hear the term ďbuilding standardsĒ. I really get a chuckle out of this because I worked in industry for 25 years and I can assure you that you can have a hundred different building standards in a hundred different jurisdictions. Itís not uniform. Iíve worked from Montreal to Vancouver, Winnipeg, Yukon, north, and itís different; and the buildings are different.
Anybody who thinks that standards mean youíre going to get exactly the same thing every time is only fooling themselves. Itís affected by the contractor, the workers, the skill level, the ethics, and the building inspectors, as the Minister of Health can so easily attest to. Iíve heard that discussed many times with respect to a building that weíre very familiar with in the north. All of those things I just pointed out ó we have a building right now that sits across the river and has major issues. That was built to standard, so why is that building having so many problems?
I get a chuckle out of this ó ďWell, itís built to standard, therefore itís going to fit exactly what we draw up in our books.Ē Well, you know what? There are a lot of factors. If all of them work, if all of them are in place, then thereís a very good chance ó yes. But also, even when you do that, you also face different conditions.
A building in Victoria will be subject to different weather conditions than a building in the Yukon. The buildings ó the condominiums in Vancouver were amortized. They were built to a standard, they were inspected, and they were designed to a standard. You know what? I would suspect that you could not sell them for what their book value is. As a matter of fact, they couldnít. They tried to unload them. There was a loss in that sense. They couldnít sell the darn things. People lost their shirts, and yet they still owed money on them. The book value on them ó what it should have been ó and amortized over so many years ó what it should have been ó and what they should have been able to recoup from it, if they ever sold it, did not exist.
Those buildings failed. There are a lot of factors. I think what weíre asking on this side is this: is that considered when you put down the figures, when you draw up the costs? The costs are simple. You can figure out the costs; you can pay whatever you want. If you pay far too much for the building and you have to sell it in two years, well, youíre going to take a loss probably, Mr. Chair. It was not a very good investment. I hope that hasnít happened in our negotiations with the federal government.
If a building that was supposed to be usable for 10 years ends up being usable for only five years, then you have a problem too.
But putting all that stuff aside, because there are so many other factors, putting all that aside, the concern I have, and maybe itís a problem with the general standards across the country, is not recognizing the different climatic conditions, soils ó we wonít get too deep into soil conditions like permafrost. We could really go a long way there. But letís just go with the climatic conditions that a building will face. So a building in Old Crow may truly have a different life, estimated useful life, than a building even in Whitehorse maybe. Go down further south ó and that should be expected. So if thatís expected, thatís understood.
Is that a consideration for the government? I wonít even ask if they did it, if they just take what is a standard across the country. Is that a consideration for the government in trying to come up with a useful estimated life of a building? Iím not asking about anything else.
Hon. Mr. Fentie: Iím going to go about it this way. What difference would it make if you built a building in Victoria or a building in the Yukon?
Here is what happens. In the Yukon, if you require a building with a roof that will maintain a snow load of X, thatís the specifications you would build to, that would be the cost of the building, that would be the book value. The amortization and lifespan are all based on that. If you built the same building in Victoria, you wouldnít need a roof that requires that kind of snow load capacity; therefore, the value or the cost of the building would be different. But the schedules, the principles and the guidelines can still all be applied. It all works out.
You canít foresee problems in construction, for example. So if you have faulty construction, where a structure has a major problem during that period of amortization, where it requires an investment to bring it back up to spec or standard, that value would be booked as part of that tangible asset again. So you pick it up. It doesnít change the fact that the principles and guidelines apply as required. All the things the member is talking about are issues related to specifications and types of buildings. All those things are issues that result in an original cost, an initial cost, of an asset. Once thatís done, you apply the accounting principles and guidelines, and away you go. If you were to sell that building somewhere during the period of the usefulness of its life, you would then collapse the amortization period. You would no longer be amortizing an asset that you donít have. It would not be required. You wouldnít have it on your books.
So how else can I put this, Mr. Chair? There is no problem here at all with what our assets are booked as or with the accounting practices we are using. If there are changes to these guidelines and principles, they will be passed on to us from the Auditor Generalís office. Thatís where we take our direction, and when that happens, we will adjust accordingly. But for now, we are showing the value, the financial position of the Yukon, including its tangible assets, its cash, its earnings, its transfers from the federal government, its recoveries ó all there before the members opposite. It is a good picture ó a good financial picture.
If the member wants to find something else to discuss in this debate that relates to the budget and the investments being made, we can move on to that, but I think weíve about beat this issue to death. There seems to be no receptiveness on the other side to what is actually happening here. Weíve explained it clearly, how it works, why the argument doesnít hold water, because of the various reasons Iíve put forward, and weíll leave it at that.
Ms. Duncan: We will, given the hour of the day, excuse the Finance ministerís violent references. Again, we make the point that the Finance minister beating the issue to death is not something that we consider appropriate in our rules. The fact is the Finance minister keeps going back to, well, we started here so therefore weíre doing it right. Weíve booked the right amount and weíre following the CICA guidelines, which, as I understand it, are set by CICA, not the Auditor General. Itís CICA, approved by the Auditor General, or the Auditor General understands we are using CICA guidelines.
The point that we are trying to get across to the Finance minister, which is not miniscule, which is not trivial, which is not belabouring a particular issue ó weíre trying to get a point across. Itís not about where we start; itís about where we end up. The 30 to 50 year amortization schedule for buildings is too much. Itís too long. All weíre asking is, did the Finance minister, in doing his job, take a good look around outside in the Yukon and say that these CICA guidelines arenít going to work here? Yes, institute them, but did he at least raise the point that these 30 to 50 year guidelines for an amortization for a building are not ó I donít think theyíre appropriate in Victoria for the condos either.
Theyíre not working, folks, and youíre at the very beginning of instituting something here. We live in the north. Weíve seen, for whatever reason, buildings expended over a 30 to 50 ó Iím glad the Finance minister finds this so humorous. Everybody got here the same way, and everybody has a legitimate right to make a point.
Members on this side have been trying to ask ó all weíre asking is: has the Finance minister done his homework? Did he look at the CICA guidelines? Did he discuss them with the Auditor General? Did he raise the point? Much as he doesnít find it worthwhile, there are others who think it is an important point. Did he discuss it?
Hon. Mr. Fentie: Mr. Chair, let the record show that the government side accepts and will follow the recommendations, the requirements and the direction of the Auditor Generalís office. Let the record also show that the members opposite donít agree with the Auditor General. Whether her principles or the Auditor Generalís principles and guidelines are applied in the north, in Victoria, or wherever, the member of the third party does not agree not only with the guidelines applied in the Yukon but does not agree with the guidelines applied to a condo in Victoria.
Some Hon. Member: Point of order.
Point of order
Chair: Ms. Duncan, on a point of order.
Ms. Duncan: On a point of order. The member opposite is making insinuations about an argument that I presented on the floor of this House and, at a minimum, it is a dispute between members. I believe it is a point of order and I would ask that the member withdraw it. He is making accusations about a member and casting aspersions about motive.
Chair: The Chair is in a bit of a quandary when a member raises a point of order and then comments that itís a dispute among members.
Ms. Duncan: At a minimum, I said, itís a dispute between members.
Chair: Unfortunately, the Chairís attention was diverted when this occurred.
Mr. Fentie, on the point of order.
Hon. Mr. Fentie: I withdraw all of what I said, all the way back to four oíclock this afternoon.
Chair: Order please. The Chair would just again like to remind all members that this House is a House that belongs to all citizens of the Yukon. Itís the peopleís House and thereís a certain expectation upon all of us as members. There is the expectation that we will act as all Yukoners would expect us to act, and I would encourage all members to do so.
Earlier in this discussion, there was some comment made about a reference to violent language, and the reference to violent language in our Standing Orders is meant to prevent members from using language that threatens other members or persons.
The interpretation of this Standing Order has been that members are not to make threats of bodily harm against one another or another person. Neither should members threaten retribution against other constituents.
Iíd also like to remind members that itís contextual and that itís taken into context whether or not itís likely to create disorder. When the comment was made earlier that did not create any disorder, it appeared that it was just a colloquialism that fell into use.
If the situation arises in the future and members take offence or take issue with it, I would encourage them to raise it as a point of order.
May we continue on with the debate, please?
Hon. Mr. Hardy: You know, itís difficult in this kind of discussion. In view of some of the things that have come out in the last few minutes, I move that we report progress on Bill No. 12.
Chair: It has been moved by Mr. Hardy that we report progress on Bill No. 12.
Motion agreed to
††††††† Hon. Mr. Jenkins:†††† I move that Mr. Speaker do now resume the Chair.
††††††† Chair: † It has been moved by Mr. Jenkins that Mr. Speaker do now resume the Chair.
††††††† Motion agreed to
††††††† Speaker resumes the Chair
Speaker: I now call the House to order. May the House have a report from the Chair of Committee of the Whole?
Mr. Rouble: Mr. Speaker, Committee of the Whole has considered Bill No. 12, Second Appropriation Act, 2004-05, and has directed me to report progress on it.
Speaker: You have heard the report from the Chair of Committee of the Whole. Are you agreed?
Some Hon. Members: Agreed.
Speaker: I declare the report carried.
Hon. Mr. Jenkins: I move that the House do now adjourn.
Speaker: It has been moved by the government House leader that the House do now adjourn.
Motion agreed to
Speaker: This House now stands adjourned until 1:00 p.m. Monday.
The House adjourned at 5:53 p.m.
The following Sessional Papers were tabled November 4, 2004:
Yukon Public Service Staff Relations Board 2003-04 Annual Report† (Taylor)
Yukon Teachers Staff Relations Board 2003-04 Annual Report† (Taylor)
The following document was filed November 4, 2004:
VictimLINK: information pamphlet† (Edzerza)