Archive for March, 2005

The following represents a speech that I had the privilege to offer in the House of Commons on behalf of my Saskatoon-Humboldt Constituency and Saskatchewan in general. It was an honor to give this speech and I want to offer the text of this speech for those in my constituency who would be interested in finding out more about equalization and the inequality that exists for Saskatchewan.

Please note: At the start of Brad’s speech, he says that he will split his time with his good friend, the Member of Parliament for Saskatoon-Wanuskewin, Maurice Vellacott. During Brad’s speech, fellow Conservative MP Pierre Poilievre (from the Ontario riding of Nepean-Carleton) makes a comment in support.

Mr. Bradley Trost (Saskatoon—Humboldt, CPC): Mr. Speaker, I will be splitting my time with the member for Saskatoon–Wanuskewin, my good friend.

Today we rise to talk about a question dealing with equalization. At the root of the question of equalization, is the question of history and the question of fairness, of the history of what has been done to the province of Saskatchewan and fairness for the future in the province of Saskatchewan.

Let me start first with my personal history of why I am so passionately interested in this question, which in many ways is a technical question but has practical applications for many people in Saskatchewan.

I, like many in Saskatchewan, am the descendant of early settlers. For four generations my family has farmed a farm in the Willowbrook and Springside area, a piece of property which ironically was owned by the former premier of Saskatchewan, Mr. Charles Dunning. My family has always been proud to be from Saskatchewan, but we have not always been proud of the treatment our province has received at the hands of the federal government, particularly federal governments that have been run by the Liberal Party.

This year we in Saskatchewan are celebrating our centennial, a hundred years of proud history. There were the great depression and the struggles, but we are celebrating the strengths that we have come through. We are celebrating the ups and downs of the agricultural and natural resource economies which are so crucial to our history. Part of that history is the deprivation of natural resources from the province of Saskatchewan, the deprivation of the benefit of natural resources.

When we first became a province in 1905, the federal government did not permit Saskatchewan to control and enjoy the benefits of its own resources. The territorial premier at that time, Frederick Haultain, argued emphatically against it. We were being discriminated against, we were being treated differently than the provinces in eastern Canada. It was pure, blatant discrimination. Not until 1930, the era of the Conservative Prime Minister R.B. Bennett, did the natural resources agreement get signed and incorporated into the Constitution Act of 1930, giving Saskatchewan and Alberta full and complete control over their natural resources. It is not a new thing for the province of Saskatchewan to be deprived of the benefit of its own natural resources.

What is equalization? Equalization is the distribution across the country of payments by the federal government so all provinces may be able to provide reasonable services at reasonable levels of taxation. However, reasonableness in the eyes of political masters and of governments can often be seen by the beholder and be very subjective. It has been a very unfair system to Saskatchewan as the rules have changed over the years.

It has been noted that Saskatchewan, which incredibly has been listed as a have province, has a personal disposable income of only $19,685 per person compared to Manitoba’s $24,267 per person. While this discrepancy would clearly point out that the province of Saskatchewan is poor, we receive on a per capita basis roughly $1,000 less per person in equalization, $1 billion a year. All of this is for one simple reason: because of the way that natural resources are accounted for in the equalization formula.

There is no logic behind the counting of natural resources in equalization. It is only an arbitrary and subjective judgment with no real value as to the long term wealth or the tax base of the province of Saskatchewan for a few reasons, and let me name quickly a couple of these as my time moves on.

First, when natural resources are included in the accounting for equalization, it causes a double taxation, a double counting in the formula. It has been long noted that housing prices, wages, et cetera in the province of Alberta tend to track their oil and gas prices fairly clearly. The wealth of our natural resource is already accounted for in our provincial gross domestic product. When we count it once in the tax bases for income taxes and sales taxes and count it again in the formulas for royalties, we are really counting twice against the provinces that are heavily involved with their economies in natural resources. It is simply and clearly unfair. It should not be counted twice against the province of Saskatchewan.
The second reason that natural resources should be removed from equalization is because they are most probably unconstitutional. Everyone will remember earlier in my speech I noted that Saskatchewan fought from 1905 to 1930 for the full benefit of controlling its natural resources. What equalization has effectively done is taken away the benefits of natural resources from the province of Saskatchewan. It has done this by clawing back at a rate sometimes greater than the payment of equalization.

When the province receives $1 extra from higher royalties to the wealth created due to higher oil prices, uranium or potash, and I realize potash is a slightly unique situation, the clawback in equalization can be in some cases up to $1.25. The numbers vary depending on the category of natural resource included.

What this means is that the province of Saskatchewan receives no benefit from the price rises of its natural resources. All of the benefit is accrued by the federal government, which effectively means the federal government has complete control and benefits solely from Saskatchewan’s natural resources, thus of course discouraging the development and wise growth of these resources in the province.

Mr. Pierre Poilievre: Violating the Constitution.

Mr. Bradley Trost: Violating the Constitution in a very clever and systematic way. With this violation of the Constitution and double counting, it discourages economic growth in Saskatchewan. Why should a provincial finance minister try for cuts in the tax rates if it will all be clawed back? Why should be there a push made to increase the wealth generated by natural resources if there is no benefit to it? It is a disincentive to the whole national economy and must be removed.

I will note that we on this side of the House have recognized this problem and have pushed for change. In the last election the Conservatives in the province of Saskatchewan were proud to campaign on our party’s platform, which called for the removal of natural resources from the formula. It would have given the province of Saskatchewan the freedom to enjoy its own wealth and resources. All we are asking for is the same fairness, the same deal that the provinces of Nova Scotia and Newfoundland and Labrador have received.

Historically and technically, offshore resources were owned by the federal government, not even placed as they were directly under the control of the provincial governments. Maybe it was more of a technicality than anything, but that unfairness was corrected, wisely slow. Even if the Prime Minister had to be dragged kicking, screaming and hollering and forced to keep his word, it was the right thing to do. It has been done, maybe only for eight years, but hopefully in perpetuity for the provinces of Nova Scotia and Newfoundland and Labrador. It is the right of the people of every province to own and control their own resources.

It is also heartening to see the near unanimity of political leaders in Saskatchewan. It has been said that politics in Saskatchewan is a blood sport. We are fiercely divided and often very aggressive in debating back and forth. In Saskatchewan today 13 out of 14 members of Parliament support this resolution and are arguing for it. The finance minister, the man who is in charge, is the only one opposing it.

The Liberal leader of the province of Saskatchewan supports this, joined by the New Democrats and the Saskatchewan Party. Socialists and Conservatives in Saskatchewan get along about almost nothing. This is in itself near miraculous. With all that unanimity and political support from the province, if we could only convince one we would do what is right for the province of Saskatchewan.

This is very clearly an abstract debate to most people. What it really boils to is very simple: fairness for the province of Saskatchewan, control of their own property, the ability to profit from its own resources so the people of Saskatchewan may be able to enjoy better health care, better roads, have money returned to them and put into their pockets. This will provide real dollars to the people in Saskatchewan, roughly the equivalent of $3,000 to $4,000 per family, which is real money to working people, struggling farmers and the people of Saskatchewan.

I ask for the full support of the House. I hope we will receive it.

Equalization. It’s a big word. It’s a word that you may hear bandied about by politicians, journalists and other talking heads on radio and TV . But what does it mean to you and me? What does it mean to the average citizen in Saskatchewan? How is it relevant to people in their day to day life?

Simply put, equalization is the money that the national government gives to the poorer provinces to help pay for services like hospitals, schools, agriculture programs etc. Ottawa gives money to the poorer provinces so that people all across the country can have similar levels of government services for their tax dollar.

It sounds simple enough, but how do you figure out which province is the poorest? What do you do to measure the wealth of the provinces? Since equalization is calculated by politicians, you might wonder if funny math is used in the calculations. Could some provinces get cheated by this system?

Consider our home province. In Saskatchewan, per capita income is roughly $25,000/person. The national average is roughly $30,000/person. Well, you might think Saskatchewan must be getting a fair bit of money through equalization. We are definitely poorer than other provinces.

The government in Ottawa says No, Saskatchewan is rich. The feds say that Saskatchewan has oil and gas, potash and uranium–and the money from these natural resources makes the provinces rich. The federal government forgets that these resources are already counted once in our per capita income of $25,000/person. Ottawa is using funny math: They are counting our natural resources twice. Saskatchewan is getting short changed.

As your Member of Parliament, it’s my job to stand up for you and to stand up for Saskatchewan. That is why, in the last election, I committed to have this double counting stopped. Saskatchewan must receive a fair deal. Recently, Newfoundland and Nova Scotia struck a deal with Ottawa to end the double counting of their natural resources. Saskatchewan only wants what these two provinces have received.

This issue has united Saskatchewan politicians. Recently the 13 Saskatchewan Conservative MPs invited Premier Calvert to support us on this issue at a meeting in Regina. We were joined by Sask. Party Leader Brad Wall and provincial Liberal Leader David Karwacki, forming a united front to stand up for Saskatchewan. We all put Saskatchewan first. We all promised to work to change Ottawa’s unfairness towards Saskatchewan.

I’m Brad Trost, your member of Parliament, and I welcome your feedback. Write or call my offices.

As I write this column, it is uncertain whether or not the U.S. border will open to live cattle exports on March 7th. The injunction placed by a Montana judge may stand, or by the time you read this another judge may have overturned the injunction. Either way, I think it is important for Canadians in general (and elected representatives in particular) to look at the policies and decisions that got the cattle industry in this mess in the first place–so that we never put agriculture in this crisis again.

The problem of BSE was well known to the federal government well before the first case hit Canada. We had all seen the problem that Europe had with BSE–millions of cattle were destroyed. The number of cattle that had BSE in the United Kingdom was infinitely greater than the handful of cases in Canada. With this in mind, I have to ask: Why didn’t the Canadian government work out trade agreements with the U.S. to cover BSE?

Canada and the U.S. knew that it was likely that a case of BSE would arise in North America. We didn’t know which country would be hit first, but we should have worked out a deal where both countries would set out explicit terms for trade if BSE hit North America. Such an agreement could have avoided all the politics of protectionism. It would have been based on science and not politics. This could have served as a basis for deals with other countries like Japan and South Korea. If Ottawa had been forward-looking, we would have avoided most of the grief over the border closure.

Why wasn’t this done? Canadians will never know for sure, but I suspect it has to do with rural Canada not being a priority. The Liberals are a “big city” political party. They don’t know and don’t care where their food comes from. Let me give an example.

The federal government moved very quickly to protect and subsidize Bombardier, the Montreal aircraft company, against Brazilian competitors. Brazil’s beef industry was also attacked over the issue of BSE. Did they care that what we did to Brazil would later be used against Canada’s cattle industry? Did the government think that Canada’s actions would be cited as precedent to shut down our cattle exports? The answer is a clear no. They were only interested in aerospace jobs in Montreal.

We need a change in our government, and not just at the elected level. We need to have people in government and–especially the bureaucracy at Agriculture Canada–who come from the farm and understand the challenges of rural life. Only then will we be properly represented.

I’m Brad Trost, your Member of Parliament. I welcome your feedback. Write or call my offices.