With Canada’s federal election around the corner, The Northern Miner asked the leaders of the country’s five major political parties some pointed questions about mining and its future. Each leader, with the exception of the Bloc Qubcois’ Gilles Duceppe, responded.
At the beginning of Canada’s federal election campaign, The Northern Miner invited all five party leaders to respond to a number of issues of concern to the mining industry. Each party leader was asked the same five questions, prepared by Northern Miner staff. Liberal Prime Minister Paul Martin, Conservative Party of Canada leader Stephen Harper, New Democratic Party leader Jack Layton, and the Green Party’s Jim Harris all responded. Gilles Duceppe, leader of the Bloc Qubcois, declined to participate.
1. Last spring, Canada’s auditor- general warned that the next generation of diamond mines and other resource opportunities in the northern territories could be at risk if the federal government does not take steps to improve the territories’ “uncertain investment climate.” Specifically, auditor general Sheila Fraser noted that many permitting boards and agencies overseen by Indian and Northern Affairs Canada do not have sufficient resources to help them carry out their duties in an effective manner. What steps would your party take to improve the investment climate for environmentally responsible resource development in Canada’s North?
Martin — The Liberal Party is committed to resource development in Canada’s North that respects environmental targets and maximizes development. Budget 2005 provided $120 million for the territorial governments to help meet the goals of the Northern Strategy, a joint initiative between the Government of Canada and territorial governments aimed at improving the quality of life for Northerners. This built on the $90 million over five years provided in Budget 2004 for Northern economic development.
The New Territorial Financing framework (TFF) provides a $1.9-billion funding floor for TFF in 2004-05 and a $2-billion funding level in 2005-06, which will grow in future years at 3.5% per year. Over the next 10 years, and, subject to a review in 2009-10, the new framework will provide $4.7 billion more in TFF payments to territories, relative to Budget 2004 estimates. Building on the $108 million provided over the past three years, Budget 2005 provided $150 million to increase federal and regional capacity to respond efficiently and effectively to environmental assessment and regulatory applications associated with oil and gas development in the North. Budget 2004 provided $3.5 billion towards the clean up of federal contaminated sites, over 6% of which is expected to occur in the North — contributing to an improved environment as well as economic development and employment opportunities.
Harper — A Conservative government is philosophically disposed to reducing bureaucracy and making government regulation more efficient and less intrusive on the valuable time of businesses. We will work hard to ensure this occurs. At the same time, we are conscious of the need for effective regulation to ensure the safety of Canadians as they use or consume products, and the need for effective regulation of matters affecting our commitment to clean air, safe water and proper attention to measures that will ensure the sustainability of a healthy environment.
Ensuring that Canadian business operates in a competitive tax environment is also a priority for a Conservative government. Our actions since Budget 2005 demonstrate our consistent efforts to get the Liberal government to introduce corporate tax reductions.
Because we believe that small and medium-sized businesses are critical to our success as a country, we will reduce the small business tax rate to 11.5% in 2006 and to 11% in 2009. Also, we will increase the threshold at which this rate applies to $400,000 of taxable income in 2006. These measures are especially important for business growth and investment in the North.
We will implement the large corporation tax reductions that are in Budget 2005, including the 2006 elimination of the capital tax and the upcoming elimination of the corporate surtax. By 2010, the general business tax rate will fall to 19% from 21%, and the business surtax will be eliminated on Jan. 1, 2008. We will also follow through on the elimination of the federal capital tax on Jan. 1, 2006. Under a Conservative government, tax relief will be delivered to companies that create jobs.
We intend to ensure that Canada has a competitive tax structure that will enhance job creation and promote international trade and investment. This is especially important to business investment in the North where most companies are relatively small.
Layton — Environmentally responsible resource development is a key economic driver for Canada’s North. Two key elements to a successful development strategy are a combination of timely and adequate government resources and guidance as well as community and stakeholder involvement in resource development planning. New Democrats are committed to both elements.
Harris — Green Party MPs would work with provinces, territories and industry to ensure that all mining operations are insured for environmental liabilities and have an adequate pre-funded plan for remediation once a mine closes. The Green Party would also strengthen mandatory regulations to promote life-cycle product stewardship of metals to ensure that once mined, they remain in economic service for generations.
2. The Canadian securities industry is regulated at the provincial and territorial level, creating obstacles for Canadian businesses active in multiple jurisdictions. Two years ago, a “Wise Person’s Committee” established by the federal minister of finance recommended that the provincial, territorial and federal governments co-operate to establish a single securities regulator in Canada. There has been little movement since. Will your party work towards creating a single securities regulator in Canada, or at least a single regulator outside Quebec?
Martin — Over the past year, a number of important steps have been taken to improve the operation of the existing structure of regulation in Canada. While the Liberal Party is encouraged by the progress being made towards increased harmonization of securities rules, all parties involved must go further and move faster to attain the best possible securities regulatory system for Canada. The Liberal Party is firmly committed to improving the efficiency and effectiveness of Canada’s capital markets. To this end, the Party will work with the provinces until such time as a mutually agreeable arrangement, and a single securities regulator at the national level, can be established.
Harper— We are aware of the issues surrounding the creation of a national securities regulator. This is a matter we will review and we look forward to studying the report of the “Wise Person’s Committee.”
Layton — After Nortel and other corporate accounting scandals over the past few years, Canadians began to see an emerging problem in corporate accountability in Canada. As a result of these scandals, NDP Finance Critic Judy Wasylycia-Leis urged the federal government to take immediate steps to improve protection for Canadian investors and establish a single securities regulator. We recognize that many of the components of a single securities regulator for Canada are within provincial jurisdiction, but the federal government should work with the provinces to set up a national regulator to oversee the investment arena to better protect all Canadians.
Harris — While the Green Party does not have a policy position on this specific question, the party is aware that, in many sectors of our economy, the lack of adequate antitrust laws over the past decade has led to the concentration of decision-making at the top of the la
dder. This trend has served to stifle innovation, job creation, Canadian competitiveness and productivity while increasing the health and environmental risks associated with pollution and industrial waste. To get Canada back on track, the Green Party advocates measures to shift our fiscal priorities towards sustainable choices, improve corporate accountability and encourage direct local action so that citizens may take a more active role in building a healthy economy.
3. In late 2004, an arm of the Chinese government, an authoritarian regime with one of the world’s worst human rights records, made a bid for Canada’s largest mining company, Noranda. While this controversial deal would have been the largest takeover in Canadian mining history, the federal parties were noticeably silent during this period. What would be your party’s response to future deals of this type and magnitude?
Martin — Foreign direct investment is an important part of the Canadian economy and it helps Canadians participate in the global economy. Canada faces intense international competition to attract foreign direct investment because of the advantages that it brings. It is our job to ensure we create and maintain a positive environment that gives the message to the rest of the world that Canada is a great place to do business. In the Investment Canada Act, Canada has a mechanism in place to review significant acquisitions of Canadian enterprises by foreign companies. In order to obtain approval from the minister of industry, an acquisition by a foreign enterprise must demonstrate a net benefit to Canada. The Act lists the factors considered in the determination of net benefit. These include: the effect of the investment on the economy, productivity, industrial efficiency, product innovation and competition, participation by Canadians, compatibility with economic and cultural policies, and contribution to Canada’s ability to compete in world markets. This is not just a simple yes or no decision. Under the Investment Canada Act, we have the power to demand enforceable undertakings from the investor to shape the final deal so that it provides net benefit to Canada.
Every application that comes to Canada will be closely observed and monitored by the Government of Canada. As part of the review process, the minister consults with other federal government departments, the provinces, Canadian businesses and all those who are affected.
Where a foreign investor fails to live up to the commitments under the Investment Canada Act, the minister has the power to demand compliance and commitment. There is no question that our government makes certain that investment coming into Canada is allowed but the government also ensures that it will protect Canadians and Canadian companies where it needs to.
Harper — We will consider these issues on a case-by-case basis. In principle, we will not intervene in the purchase or sale of corporate entities unless such intervention is clearly in the national interest. We want to ensure that any takeover does not have an adverse effect on Canadian security.
Layton — The NDP was not silent on this issue. On Oct. 19, 2004, The NDP Caucus made a statement on a number of serious concerns about the proposed sale of Noranda to Chinese government-owned
The MPs (Charlie Angus, Ed Broadbent, Nathan Cullen, Yvon Godin and Peter Julian) called specifically for:
– the creation of a sub-committee (of the Industry committee) to examine issues of foreign investment, increasing globalization and its effects on the Canadian people;
– the immediate review of the proposed sale of Noranda to be conducted by Investment Canada, with a report to be tabled in the House of Commons by the minister of industry. The NDP asked that the minister review the acquisition through the lens of human rights, workers’ rights and regional economic stability.
The current rules for foreign investment in Canada are governed by the Canada Investment Act. Under this Act, since 1985, a total of 10,928 foreign acquisitions were reviewed. Stunningly, 87% acquisitions were automatically approved without review and the remaining 13% were reviewed and approved. No proposals brought forward by foreign investors have been rejected.
Harris — Green Party MPs would work to reform the World Trade Organization, the International Monetary Fund and the World Bank, placing these institutions under the authority of the United Nations general assembly. They would also aim to shift the direction of international trade away from “free trade” to “fair trade,” focusing on the global protection of human rights, labour standards, cultural diversity, and ecosystems. The Green Party understands that Canadian mining companies often do not employ Canadian environmental and human rights standards abroad. Therefore, the Green Party would introduce and regulate the mining industry under an International Corporate Social Responsibility Act and work towards associated global industry standards.
4. The Canadian dollar has appreciated from US65 at the end of 2002 to more than US86 today. A strong dollar has significant benefits in renewing capital equipment bought outside the country, or in pursuing overseas projects, but it also increases domestic operating costs. Would a government headed by your party leave the question of exchange rates to the Bank of Canada, or is there a point at which the minister of finance has to step in and instruct the governor to intervene? If there is, what is that point?
Martin — Monetary policy must be kept independent of the political process at all times to ensure stable currency markets. Exchange rates are not set by the central bank, but by international market forces. Canada’s flexible exchange rate permits us to pursue an independent monetary policy suited to the needs of our economy and acts as a “shock absorber.” Our independent monetary policy grants the power to indirectly affect interest rates and monetary conditions, but this power will remain in the purview of the central bank, and will not be passed on to elected officials.
Several factors influence the supply of, and demand for, Canadian dollars. If interest rates are higher in Canada than in other countries, investors may choose to invest in Canada, increasing demand for the dollar, provided that the expected rate of inflation is not higher in Canada than among our trading partners. If our inflation rate is higher, investors are less likely to prefer Canada — even with higher interest rates — because of the expectation that the value of the dollar will be eroded by inflation.
The Bank of Canada influences the exchange rate only indirectly. This can happen when the Bank changes its target for the overnight rate, which affects short-term interest rates. As of September 1998, the Bank no longer intervenes in foreign exchange markets to ensure an orderly market, but rather reserves such actions for times of major international crisis or a clear loss of confidence in the currency or in Canadian dollar-denominated securities.
Harper — The Bank of Canada must be left to administer monetary policy in Canada without political interference. The independence of the Bank of Canada is a central factor in ensuring prosperity for Canada and we would not change this tradition.
The Bank does not, nor should it have, a target value for the Canadian dollar. The currency rises and falls in value because of many factors, which vary in influence over tim
e. The most recent reason for its strength is the rise in prices of raw materials which has been driven by world demand.
The Bank’s primary focus should remain ensuring that the rate of inflation remains within its officially targeted band of 1% to 3%. A Conservative government would retain this policy goal.
Layton — New Democrats are aware of the paradoxes facing businesses with the appreciation of the Canadian dollar. Our approach to how the federal government deals with this issue will be based on how best to make Canada prosperous and to protect the public purse.
Harris — While the Green Party does not have a formal policy regarding exchange rates, it is an area of primary concern given the hardships facing domestic producers. In fact, the Green Party would end Canada’s notoriety among investors as a petro-dollar economy by shifting taxes from income and employment to natural resources, which have an appreciating effect on the Canadian dollar. Green Party MPs would therefore help Canada avoid a monetary crisis and improve long-term economic and energy security without direct intervention.
5. Canada’s mining industry sends people all over the world. There have been a number of instances where Canadian citizens have found themselves with inadequate consular protection. What steps would a government headed by your party take to make Canadians safer overseas?
Martin — The Consular Affairs Bureau of Foreign Affairs Canada is committed to providing effective and efficient services throughout the world to all Canadians. It is recommended that Canadians working abroad register at the nearest Canadian government office. Canadian government offices abroad are ready to help citizens in case of an emergency.
Harper — We are conscious of the responsibilities of the Canadian government for the safety of its citizens and will take whatever steps are necessary to carry out these responsibilities.
Layton — The NDP is concerned about the safety of all Canadians here and abroad. Safety and the application of due process should be of paramount concern for all Canadian consular officials across the globe. New Democrats will ensure that consular officials have all resources possible to ensure that Canadians at risk are treated fairly.
Harris — The Green Party believes that we can seek new interdependent relationships with emerging countries by creating fair economic relationships and by promoting human rights and sustainability. This would mean taking a much more comprehensive approach to external affairs that would see the creation of an International Affairs and Comprehensive Security Agency to co-ordinate activities between Foreign Affairs, National Defence and Canadian International Development Agency (CIDA). These measures would make host countries safer places to conduct business and promote the kinds of products and services Canadians can be proud of.
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