OTTAWA – Today, Maxime Bernier announced his plan to simplify Canada’s personal taxation system as part of his campaign for Leadership of the Conservative Party of Canada.

The current system is overly complicated.  It’s estimated that Canadians spend $7 billion each year to comply with our tax laws.

Bernier’s plan has four key components:

• Raise the Basic Personal Exemption to $15,000
• Eliminate two tax brackets so that income from $15,001 to $100,000 is taxed at 15%
• Tax income over $100,001 at 25%
• Eliminate boutique tax credits that serve no public policy purpose.

These measures would put a significant amount of money back into Canadians pockets.  Whether they are working class or wealthy, the Government will not be picking winners and losers.  The vast majority of Canadians would pay a single 15% rate, while 1.5 million more of the lowest income Canadians will be taken off the tax rolls.

KEY MAXIME BERNIER QUOTES:

“When we combine federal and provincial rates, the top personal income tax rate in Canada now stands at 54%.  That makes it the 6^th highest amongst OECD industrialized countries”

“The best tax system is simple.  It’s easy to understand.  And it keeps administrative and compliance costs as low as possible.”

“Another important benefit is that ALL taxpayers would pay less taxes, not just the middle class and the wealthy who would benefit from lower marginal taxes. We will implement this reform in a responsible way, without burdening future generations.”

Good morning,

Many economists believe that advanced economies, including Canada, are in a situation where economic growth is going to be chronically slow, around 1% instead of the 4% we were used to until not long ago. 

A period of slow economic growth means that most Canadians will not have any significant wage increase for several years. Finding a job would become more difficult.

The biggest challenge of our time is to get out of this economic stagnation. The pace of growth will determine if we can continue to improve our standard of living and that of our children.

Two weeks ago, I announced a four-point plan to encourage private investment, increase productivity and boost the long-term growth potential of our economy.

Another way to put money directly into Canadians’ pockets and encourage work, savings and investment is of course to cut personal income taxes.

Our current tax regime has very high rates that make it uncompetitive compared with U.S. tax rates and those of other industrialized economies. The Liberal government’s decision to create a new tax bracket at 33% made it even worse.

When we combine federal and provincial rates, the top personal income tax rate in Canada now stands at 54 per cent. That makes it the sixth highest among the 34 OECD industrialized countries.

Meanwhile, our tax code has become an absurdly complicated mess full of holes in it. Every year, Canadians are wasting between $6 billion and $7 billion just to comply with our tax code. Every federal budget brings new tax deductions and tax credits that make it more complicated. 

Several of these boutique tax breaks are essentially politically motivated subsidies that were adopted to buy the support of some specific groups at the expense of the rest of the population.

Researchers at the Frontier Centre for Public Policy have also shown that some of these tax credits are disproportionately beneficial to the wealthy.

The best tax system is simple. It’s easy to understand. And it keeps administrative and compliance costs as low as possible.

It is also fair. It does not favour some groups at the expense of others.

Finally, it is efficient. It minimizes economic distortions, and encourages taxpayers to work, save and invest.

There is a very large consensus among economists that this is the type of reform that is needed to make our economy more productive and to stimulate growth. The last time we had such a major tax reform was three decades ago.

Prime Minister Brian Mulroney’s Conservative government cut the top marginal tax rate from 34% to 29%; reduced the number of tax brackets from ten to three; and eliminated a series of tax exemptions and deductions.

Today, I propose to implement a similar tax reform if I am elected leader of the Conservative Party of Canada and Prime Minister.

First, I propose to reduce the number of tax brackets from five to two. Today, we have income tax rates of 15%, 20.5%, 26%, 29% and 33%.

My plan is first to eliminate the new 33% bracket introduced in the Liberal budget as well as the 20.5%, 26% and 29% tax brackets.

The 15% tax bracket would be kept. It would apply on taxable incomes of up to $100,000. Above that level, a new maximum rate of 25% would apply.

I also propose to increase the basic personal amount on which nobody pays taxes from $11,474 to $15,000.

This tax reform will bring several benefits.

First, the vast majority of Canadian taxpayers would pay a single rate of 15% on their income. In other words, they would pay a 15% tax on their income from $15,000 to $100,000.

Today, Canadians move to a higher tax bracket as soon as they make $45,000. And then move to even higher brackets when they make more than $90,000.

With my plan, only a small minority of taxpayers, about 8%, would pay a 25% tax on incomes in excess of $100,000.

Another important benefit is that ALL taxpayers would pay less taxes, not just the middle class and the wealthy who would benefit from lower marginal rates.

The increase in the basic personal amount will bring a $500 tax cut for all taxpayers who make at least $15,000 in taxable income. About 1.5 million more taxpayers with a low income would not be paying any income tax anymore.

It’s easy of course to promise tax cuts. The difficult part is to implement them, and implement them responsibly.

A rough estimate is that this reform would reduce the federal government’s revenues in the short term by about $30 to $35 billion.

I have already signed a pledge to reduce the federal budget to equilibrium within two years of being elected, and not running any deficit after that outside of exceptional circumstances.

My government is going to cut taxes gradually, over the course of several budgets, only as the fiscal room is found to allow it. There will be no tax cut financed by borrowed money.

How will this be achieved?

First, billions of dollars can be found by reducing the number of tax credits and exemptions. The Fraser Institute estimated in a recent study that there are at least fifty such tax expenditures, worth $20 billion, that should be considered for elimination. I propose to review them and eliminate all those that are inefficient and don’t have a compelling policy objective.

Second, I have made it clear in my campaign so far that my goal is to reduce the size of the federal government. I believe it intervenes in way too many fields and wastes billions of dollars. The current government is going to go from a balanced budget to a $30 billion deficit in only one year after ramping up spending. There is no reason to believe it is unrealistic to reduce taxes by the same amount over several years. I will put an end to that orgy of spending, stop the growth of government and return the savings to taxpayers.

And third, the $30 to $35 billion number is a static estimate. It doesn’t take into account the dynamic positive effects of tax cuts on economic growth. Just like my plan to encourage private investment is going to boost economic growth, cutting income taxes will encourage Canadians to work, save and invest more.

To give an example, government revenues increased by almost $11 billion between 2013-14 and 2014-15. Program expenses increased by only $5 billion. That allowed our government to post its first budget surplus since the recession of 2008. A government that controls spending while the economy is growing will have the fiscal room to cut taxes if it makes it a priority. I will make it my priority.

The four themes of my campaign are freedom, responsibility, fairness and respect.

My plan is to FREE our economy from the burden of heavy taxation so that it grows faster.

To RESPECT hard-working Canadian taxpayers and give them back some of their money.

To stop using our tax system for political ends and make it simpler and more FAIR.

And to implement this reform in a RESPONSIBLE way, without burdening future generations.

I’m asking members of the Conservative Party of Canada, and all Canadians, to support me in achieving this objective.

Thank you. 

Published on September 20, 2016

Maxime Bernier

Canadian Club, Toronto, September 20, 2016

Thanks for that kind introduction. I want to thank everyone for your interest in the Conservative Party of Canada leadership race. It has been described as a “big yawn fest” by some media pundits. I hope everyone is well caffeinated!

As professionals, I’m sure you are, like me, troubled by all the current talk about advanced economies, like Canada, being stuck in so-called “secular stagnation.” Many people believe we are in a situation where economic growth is going to be chronically slow, around 1% instead of the 4% we were used to until not so long ago.

According to the private sector economists, economic growth in Canada this year will only be 1.3%. That means: no new jobs and no salary increase for Canadians.

Our societies are aging fast. Great technological innovations are said to have come to an end. Business investment is down, presumably because of a lack of profitable opportunities. Productivity growth is extremely slow.

Over the past fifteen years, multifactor productivity growth in Canada has stood above 2% only one year—in 2000. It was below 1%, often negative, in ten of those fifteen years.

There is no way we can improve our standard of living without growth in productivity. Not when the number of seniors is fast increasing while the proportion of working age Canadians is shrinking. Those who are working have to become more productive if we are to sustain our prosperity.

Another major problem is that our economies seem to be trapped in a perverse monetary situation. We have had interest rates at close to zero percent for several years but this had no effect on growth. However, it’s creating more and more distortions in the economy.

Artificially low interest rates are encouraging people to borrow. We learned last week that the level of debt carried by Canadian households has reached a record level, at 168% of disposable income. If interest rates were to increase now, hundreds of thousands would suddenly have trouble paying their mortgage.

Artificially low interest rates are also hurting savers. They are causing trouble for banks and insurance companies, which are forced to invest in riskier assets. They are creating bubbles in various sectors, which is exactly the reason why there was a crash in 2007.

Everybody is now aware that this monetary situation is unsustainable. Central banks have been saying for years now that they will eventually raise interest rates, but they are afraid that doing so will provoke another major recession.

So, how are we supposed to get out of this situation of economic stagnation? The current Liberal government believes it has found the remedy: Borrow, borrow, borrow. Spend, spend, spend. In short, the old Keynesian solution.

According to this view, if consumers don’t spend enough, and businesses don’t invest enough, then the government should do it for them.

The head of the International Monetary Fund, Christine Lagarde, recently came to Canada to praise the Liberal policy. The Bank of Canada has also encouraged the government to bring more fiscal stimulus, saying there is little else it can do with monetary policy.

I don’t buy this solution of more borrowing and spending. There is just one word to accurately describe Keynesianism: Nonsense.

The key question you have to ask yourself is this: “Where does the money the government spends come from?” A government cannot inject resources into the economy unless it has first extracted them from citizens through taxes, or put us further into debt by borrowing the money.

Every time the government takes an additional dollar in taxes out of someone’s pocket, or borrows it from someone, that’s a dollar that this person won’t be able to spend or invest. Government borrowing and spending goes up, private borrowing and spending goes down. There is no net wealth creation.

It’s like taking a bucket of water in the deep end of a swimming pool and emptying it in the shallow end.

I don’t believe our economy has slowed down because governments are not spending enough taxpayers’ money, or getting us enough into debt. More government borrowing and spending are not the answer to our economic challenges.

To understand why investment is down, we also have to look at the incentives businesses have to invest. Or rather, the lack of in centives.

Despite interest rates being exceptionally low, businesses are afraid to invest because of the uncertain economic future that they face. They see all the debt and distortions created by successive monetary and fiscal stimulus in Europe, Japan, and the U.S. since the Great Recession. They see governments increasing regulation and intervening more and more in the economy.

More spending on the scale offered by the Liberal government is not going to stimulate the economy and bring us prosperity. It will act as a sedative for the economy.

Prosperity does not come from government spending but rather from entrepreneurs investing. What we need is the exact opposite of more government spending. We need to encourage private investment in order to increase the economy’s productive capacity.

I have already made a series of announcements that would bring more competition in the telecommunications sector, the air transportation sector, and in agriculture, as well as to cut red tape by eliminating interprovincial trade barriers. The more open our economy, and the more competition there is, the more businesses are inclined to invest to stay competitive.

Today, I offer an ambitious tax plan to unleash Canada’s productive forces, boost private investment and bring higher sustainable long-term growth. Economic growth that will allow us to lower personal taxes, better fund the government services Canadians expect and pay down the debt.

First, I propose to abolish the capital gains tax.

The capital gains tax is a tax on investment. Everybody understands the logic: The more you tax something, the less of it you will get.

Young entrepreneurs and innovative small businesses often have difficulty finding financial backing for their projects. Abolishing the capital gains tax will

encourage everybody to save more and invest more. It will increase the supply and lower the cost of capital for these new firms.

The capital gains tax also discourages investors from selling old assets and investing in more productive new ones because that sale triggers the tax. Getting rid of it will not only bring more capital, it will increase the overall efficiency of capital.

This may sound like a radical proposal, but it’s not. There was no capital gains tax in Canada until 1972. The Fraser Institute determined in a 2014 study that Canada’s top personal capital gains tax rate is the 14th highest among the 34 OECD countries. But 11 of these countries impose no capital gains tax at all, including Switzerland, Belgium, South Korea and the Netherlands.

Today Ottawa collects only about 3 billion dollars from capital gains taxes every year, or about 1% of its total revenues. The benefits to our economy would vastly exceed this loss of revenues.

My second proposal is to make Accelerated Capital Cost Allowance a permanent feature of the Canadian tax system and extend it to all sectors.

In 2007, as part of measures adopted to deal with the financial crisis, our Conservative government introduced accelerated capital cost allowance rates for investment in machinery and equipment used in manufacturing or processing. It was extended to clean energy equipment in 2010. The program was supposed to come to an end in 2015 but was extended for ten years in our government’s last budget.

Capital expenditures are a key driver of productivity. When they invest in new machinery and equipment, manufacturers can produce more output per hour, improve quality, and increase efficiency at all levels. Workers become more productive, which is the key factor leading to higher wages.

It also contributes to a greener economy. We can use less energy and resources to produce more. Investing in productive capacity is the best way to help both our environment and our economy.

Accelerated Capital Cost Allowance has the effect of boosting investment by allowing for a faster write-off and cost recovery. For example, instead of writing off an investment over a period of 15 years, a company can deduct it from its income in only 3 years. This directly affects the company’s cash flow. The government loses corporate tax revenues in the short term, but the increased productivity and profitability brings more revenue in the longer term.

I see no reason to restrict this measure to manufacturing and clean energy equipment. To avoid distortions, there should be a level playing field. Investment should be encouraged in all sectors of our economy, and the measure should be made permanent.

It would also apply to investment in telecommunications, in oil and gas, fisheries, agriculture or any other sector that provides value-adding jobs to Canadians.

My final tax measure to boost investment in Canada is to further reduce the corporate income tax. This will increase the after-tax rate of return on investment, and thus encourage businesses to invest more.

One of our government’s major fiscal achievements was to reduce the corporate income tax from 22% in 2007 to 15% in 2012. We can do better. Canada’s combined federal-provincial corporate income tax rate is the 15th highest among 34 OECD countries. I propose to bring down the federal rate to 10%.

Reducing corporate income tax doesn’t necessarily mean that government revenues go down. A lower tax rate attracts more foreign companies and leads to the creation of more companies in Canada. More companies will become more profitable, invest more, employ more people and pay more taxes.

Still, these three measures do imply that government revenues will go down at least temporarily. I’m against deficits. I’m against increasing personal taxes. There is one ideal way to recoup the revenue loss: Put business subsidies on the chopping block!

The federal government is spending billions of dollars every year to help businesses. It directly puts money in new investments, bails out failing companies, and offers dozens of different incentives, tax credit and tax deductions for all kinds of reasons. A recent study by the School of Public Policy at the University of Calgary found $16 billion in various types of direct and indirect subsidies to businesses in 2013.

Several of these measures may be worth keeping. But many others are just inefficient ways for the government to choose winners, bail out unprofitable ventures, promote some bureaucratic fad, or buy political support with taxpayers’ money.

They also create unfair distortions in the economy, by favouring some sectors at the expense of others. Abolishing them will force companies to compete for funds in the capital market instead of wasting resources filling in questionnaires and lobbying the government.

I think axing inefficient subsidy programs is not just good for the economy; it is also crucial to demonstrate to Canadians that pro-growth measures such as tax cuts are not the same as pro-business measures. The ultimate aim of pro- growth measures is to benefit Canadian consumers and workers; not businesses. By putting an end to crony capitalism and corporate welfare, I believe it will actually be easier to convince Canadians to accept our pro- growth policies.

It’s time to stop taking billions of dollars out of the private sector, just to redistribute them through subsidies. A rational economic policy will instead lower taxes for all businesses.

This is an ambitious plan. It will end corporate welfare and bring a real and sustainable stimulus to our economy. It will turn Canada into a haven for investors and entrepreneurs. It will lead to more job creation, higher wages, and overall economic activity. And it will achieve this in a responsible way, without burdening future generations.

Thank you.

MAXIME BERNIER ANNOUNCES AN AMBITIOUS PLAN TO UNLEASH CANADA’S PRODUCTIVE FORCES

September 20, 2016

For Immediate Release

TORONTO – Maxime Bernier, Leadership Candidate for the Conservative Party of Canada, announced his plan to increase Canada’s productivity and prosperity.

Contrary to the opinion of the Liberal government, Canada is not perpetually destined to an anemic growth rate of less than 1.5%.  Canada can return to much higher annual growth with a simple solution:

Get the government out of the way.

Bernier announced a four point taxation plan to do exactly that.

First, the capital gains tax will be abolished. Second, the accelerated capital cost allowance will be made permanent, and extended to all sectors of the economy, not just manufacturing, clean energy and processing. Third, the corporate income tax rate will be further lowered to 10%. Fourth, corporate welfare will be ended.

Key Quotes from Maxime Bernier:

“I don’t believe our economy has slowed down because governments are not spending enough taxpayers’ money, or getting us enough into debt.”

“Every time the government takes an additional dollar in taxes out of someone’s pocket, or borrows it from someone, that’s a dollar that this person will not be able to spend or invest. Government borrowing and spending goes up, private borrowing and spending goes down. There is no wealth creation. It’s like taking a bucket of water out of the shallow end of a swimming pool and emptying it in the deep end, nothing happen.”

“I want to offer an ambitious tax plan to unleash Canada’s productive forces, boost private investment, increase productivity, create jobs and have higher wages for Canadians.”

“It’s time to stop taking billions of dollars out of the private sector, just to redistribute them through subsidies. A rational economic policy will instead lower taxes for all businesses. It will leave more of this money into the hands of entrepreneurs and investors, and let them decide how to spend it and invest it.”

Click here to read the full speech.

Published on September 06, 2016

Maxime Bernier commits to maple syrup free trade: inside Canada and outside

September 6, 2016 For Immediate Release

Ottawa – Maxime Bernier, candidate for the leadership of the Conservative Party of Canada today called upon the Trudeau government to repeal the Quebec Maple Sap and Maple Syrup Order. If elected Conservative leader and Prime Minister, Bernier has pledged to fight to allow all Canadian maple syrup producers to export their syrup to other provinces and international markets freely. 

Bernier was accompanied by Angèle Grenier, a maple syrup producer from Beauce, Quebec. Ms. Grenier wants to bring before the Supreme Court of Canada a dispute with the Federation of Quebec Maple Syrup Producers (FPAQ).

In Quebec, a monopolistic system of compulsory membership marketing allows the FPAQ to act as the cartel of maple syrup. A recent report commissioned by the Quebec Minister of Agriculture, Fisheries and Food described the Federation as « the OPEC of maple syrup. » FPAQ operates in a similar fashion to the old Canadian Wheat Board and the current Supply Management system for dairy, egg, and poultry products.

Article 121 of the Canadian Constitution guarantees free trade between provinces. Bernier believes the Canadian Government should protect the Constitution and ensure that all Canadians can trade freely across provincial borders.

Key Bernier Quotes:

“Just as supply management in dairy, egg, poultry products be abolished, just as the old Canadian Wheat Board was wisely abolished, the maple syrup cartel must also be abolished. It is the opposite of a free market.”

“Ms. Grenier merely wants her constitutional rights respected to sell her maple syrup to whom she wishes freely. As I said two weeks ago, the Constitution is clear: We have a right to free trade between provinces. I call upon the Trudeau government to uphold the Constitution.”

“The Canadian Government should be the protector of the Canadian Constitution by respecting and fighting for the constitutional rights of Canadians to trade without barriers within Canada. We must bring back the freedom to produce and trade maple syrup.” 

ublished on August 22, 2016

LET’S RESPECT THE CONSTITUTION

Maxime Bernier Announces Plan for Free Trade within Canada

August 22, 2016

For Immediate Release

OTTAWA – Maxime Bernier, Leadership Candidate for the Conservative Party of Canada, today announced his plan to break down needless trade barriers between Canadian provinces.

As Prime Minister, Bernier would adopt the radical notion of respecting Article 121 of the Canadian Constitution, which says:

“All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”

The first concrete step to respect the Constitution will be the introduction of legislation to establish the Canadian Charter of Economic Rights. This Charter will lay out the rights of Canadians to pursue their own economic prosperity, without needless red tape getting in their way.

The second step will be to establish the Economic Freedom Commission. This Commission will have the power to investigate breaches of the Charter by the provinces, to recommend arbitration, to help citizens and businesses take court action or to take legal action on Canada’s behalf.

According to a recent report from the Standing Senate Committee on Banking, Trade and Commerce, breaking down internal trade barriers could add as much as $130 billion to the Canadian economy each year.

Key Quotes from Maxime Bernier

“The problem of interprovincial trade barriers would not exist if we respected our Constitution.”

“Freeing our economy from internal trade barriers will help Canadian families and businesses. It will create jobs. It will increase government revenues. And it will make our country more united.”

“If I am elected Leader of the Conservative Party of Canada, and then Prime Minister of Canada, I will take the necessary steps to force provinces to respect our Constitution, and to give back to Canadians the economic freedom that is their birthright.”

Published on August 22, 2016

Let’s respect our Constitution and have free trade within Canada

Maxime Bernier, MP for Beauce and candidate for the leadership of the CPC

Ottawa, August 22, 2016

Last April, New Brunswick provincial court Judge Ronald LeBlanc finally dismissed a charge against Gerard Comeau. Mr. Comeau had been fined four years ago for bringing back 14 cases of beer and three bottles of alcohol from Quebec, which was a violation of New Brunswick’s Liquor Control Act.

How can this happen? This single event is proof that there is something utterly wrong in how our federation works. It negates the very notion of living in one united country.

As you know, the four themes of my campaign for the leadership of the Conservative Party of Canada are freedom, responsibility, fairness and respect. Interprovincial trade barriers are contradicting all four of these fundamental principles.

Fairness

It is totally unfair for Mr. Comeau, and for millions of Canadian consumers, to be forced to buy more expensive goods and services in order to allow provincial governments to maintain their monopoly control over sectors like the sale of alcohol.

It is unfair for nurses, dentists or accountants to have problems finding work in another province because their skills are not being automatically recognized.

It is unfair to have strict provincial quotas in the dairy, poultry and egg sectors that make farms smaller and less efficient, and discourage investment in new food processing capacity.

It is unfair to prevent the growth of businesses because they are not allowed to gain access to other provincial markets unless they submit to unnecessary and costly regulation.

These are only some among hundreds of examples of how provinces have erected barriers to the free movement of goods, services, and workers within our country.

Freedom

Apart from lobbies that want to be protected at the expense of everyone else, freedom of exchange benefits everyone. Free trade increases choice for consumers. It forces businesses to compete to attract customers with better and cheaper products.

This is why we have trade agreements concluded with 51 countries today. In some cases, it is easier for a Canadian company to sell its product in another country than in another province.

The recent Report of the Standing Senate Committee on Banking, Trade and Commerce, Chaired by Senator David Tkachuk, estimates that interprovincial barriers cost Canada’s economy as much as $50 billion to $130 billion each year.

Freeing our economy from these barriers would help Canadian families and businesses, it would create jobs. It would increase government revenues. And it would make our country more united.

Respect

A hundred and fifty years ago, the Fathers of Confederation knew about these advantages. That is why they inserted into our Constitution Article 121, which states that: « All articles of the growth, produce or manufacture of any of the provinces shall, from and after the Union, be admitted free into each of the other provinces. »

The problem of interprovincial trade barriers would not exist if we respected our Constitution. Unfortunately, this article was mostly ignored throughout our history. And the federal government, which has exclusive jurisdiction over the regulation of trade and commerce, did nothing to enforce it.

Instead we’ve relied on provinces trying to agree to lower barriers. In 1994, they signed an Accord on Internal Trade. It was never efficient at bringing down barriers. I was responsible for the internal trade file as Industry minister ten years ago and I could see that it was going nowhere.

The premiers were committed to sign an agreement on a new and improved internal trade regime by March 2016. The deadline passed without anything happening.

An agreement in principle was reached by the 13 premiers in July, but with very little details. We don’t know what sectors will be exempted. We don’t know what procedure will be used to solve disputes. There are already disputes about opening procurement contracts.

I do not believe that anything concrete will come out of this. It’s illogical to expect that governments responsible for the problem, will solve the problem. It’s no surprise that the government of New Brunswick is appealing the Comeau ruling.

The solution is not to hold more federal-provincial conferences of ministers and bureaucrats to negotiate tiny advances. What we need is a long-term solution, based on respecting our Constitution, to eliminate existing barriers and stop new barriers from being erected. 

Responsibility

In theory, everyone is in favour of getting rid of interprovincial trade barriers. The current Liberal government is in favour. My colleagues in the leadership race are in favour. But in practice, nobody is willing to do what it takes to solve the problem.

Among all the studies that have been written on the topic, I have found only one that I believe offers a workable and realistic solution. It was set out in a paper titled “Citizen of One, Citizen of the Whole” published by the Macdonald-Laurier Institute six years ago. The title comes from a declaration by one of Canada’s founders, George Brown, when he said that the goal of Confederation was to “throw down all barriers between the provinces – to make a citizen of one, citizen of the whole.”

One of the paper’s coauthors was the late Robert Knox, who was executive director of the Internal Trade secretariat when the Accord on Internal Trade was negotiated in 1993-94. Mr. Knox changed his mind after seeing how pointless the Accord’s dispute resolution mechanism was.

Their proposal is simple: It is Ottawa’s responsibility to ensure that Article 121 of our Constitution is respected. The federal government cannot of course change provincial laws and regulations directly. But it can help challenge them in court.

That’s what Mr. Comeau did in New Brunswick. But very few people are willing to get into this kind of costly and stressful court fight. And what we need is not just one challenge of one regulation. But a systematic challenge of hundreds of laws and regulations.

If I am elected Leader of the Conservative Party of Canada and ultimately Prime Minister of Canada, I will first bring forward legislation to adopt a Charter of Economic Rights. This will establish the case for Ottawa’s intervention to give back Canadians their freedom to trade and to work everywhere in the country.

Second, I will establish an Economic Freedom Commission with the power to investigate breaches of the act by the provinces, to recommend arbitration, to help citizens and businesses prosecute their case or to initiate legal action on its own.

This Commission should have the appropriate staff and budget to do its job in an efficient and swift manner, given the billions of dollars of benefit to the Canadian economy that we can expect. A jurisprudence would quickly be established, and it can be expected that cases would be solved more quickly as time goes by.

I am usually not in favour of establishing new government bureaucracies. But in this case, when the goal is to fight bureaucratic excesses, to apply the wisdom of our Constitution, and to unleash the free market for the benefit of Canadians, I think it is totally justified.

It’s time to stop pretending that we are concerned with this issue, and to take the appropriate means to solve it. If I am elected leader of the Conservative Party of Canada, and then Prime Minister of Canada, I will take the necessary means to force provinces to respect our Constitution, and to give back to Canadians the economic freedom that is their birthright.

Published on August 06, 2016

This is a reply to a column by Stephen Gordon that appeared in the National Post:

In a recent column (“Conservatives are dismantling their credibility in economics by campaigning against carbon pricing,” August 1), Stephen Gordon accuses Conservatives of “frittering away the remnants of their intellectual capital in economics” by opposing a federal carbon tax or cap-and-trade system. A market-friendly party should, in his view, instead promote these “market-based policies.” I beg to differ.

First of all, there is a huge confusion about the meaning of words here. It is true that putting a price on something and then letting market participants adapt to the change in the way they see fit is a more flexible and less intrusive way of intervening in markets than intrusive regulation that tells them exactly what to do and how to do it. But that doesn’t make it a “market-based policy.” No more than imposing a minimum wage is a market-based policy simply because the government lets businesses decide how many people to fire or hire at the new wage level instead of imposing quotas.

A cap-and-trade system is a hugely complicated artificial market whose basic features are all determined by government intervention. When the quantity of something is arbitrarily determined by bureaucrats, or when you can lobby the government to get an exception or a better deal for your industry, we’re very far from a market.

In the same way, when the “pricing” mechanism is a tax, it should be more than obvious that we’re not talking about a real pricing mechanism based on private property and free markets, but about a government measure. Almost everything about a carbon tax is determined by the government, from its arbitrary level which can change in ways unrelated to supply and demand, to what it applies to and what to do with the revenues it generates.

So, proponents of carbon pricing should stop pretending that these policies are necessarily congenial to a free-market conservative approach and call a spade a spade. Instead of market-based policies, let’s talk about various government-imposed measures to deal with carbon emissions, some of which may be more intrusive and others more flexible.

Now, there is no way of establishing property rights on the world’s atmosphere, and a real market-based way of pricing the externalities that constitute carbon emissions will thus never arise. A government-imposed measure is probably the only way to deal with carbon emissions, just as we dealt for example with acid rain and ozone depletion. But that doesn’t mean that adopting such a measure at the federal level is the best way to go.

Let me give Mr. Gordon a few reasons why a market-friendly Conservative would not want that to happen.

The first and most important is that to really have a substantial impact on people’s behaviour and ultimately on Canadian carbon emissions—which would still have barely any effect at the planetary level, given that Canada is responsible for only 1.6% of global emissions—a carbon tax should be a lot higher than 20$ or $30 a tonne. And if it is significantly higher, it will very negatively impact Canada’s economy and Canadians’ standard of living.

That alternative between inefficiency and disastrous economic consequences is something proponents of carbon pricing never openly recognize when they give us this rosy picture of a market-friendly measure. It’s just supposed to help us reach emission reduction targets without being too costly and while necessitating only a modest adaptation to our way of life. I frankly find this stance hypocritical.

Our prosperity is, and will remain for decades to come, dependent on fossil fuels to a large extent. Apart from extremist green activists, very few Canadians want to see their standard of living significantly reduced to contribute in a negligible way to the global fight against climate change. And it’s perfectly logical to want to grow our economy as much as possible to better deal with the consequences of climate change rather than hurt our economy now and jeopardize our ability to adapt in the future.

A second reason is that provinces are already experimenting with various ways to reduce emissions. Some have a carbon tax, others have a cap-and-trade regime, still, others are focusing on carbon capture or direct regulation. Several also have programs to subsidize electric cars or renewable energy that only seem to waste money and drive up costs to businesses and consumers.

We’ll see over time what model is most effective in reducing emissions and least detrimental to the economy. But there is no reason for Ottawa to impose another layer of government intervention on an already complex and costly series of measures whose effectiveness has yet to be demonstrated.

A third reason is that the transition to other sources of energy is already taking place, as companies respond to consumer demand for more environment-friendly products. The federal government should help it along by reducing taxes, barriers to innovation and competition, and ineffective and costly regulation. This is a real market-based policy that Conservatives should support.

– Maxime Bernier

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Published on August 03, 2016

MAXIME BERNIER ANNOUNCES PLAN FOR FAIRNESS IN AIR TRAVEL SERVICE AND PRICES

August 3, 2016

For Immediate Release

OTTAWA – Maxime Bernier, Leadership Candidate for the Conservative Party of Canada, today announced his plan for fairness in air travel prices.

As Prime Minister, Bernier would take a four-step approach to increase service and reduce needless and hidden costs that are passed along to consumers.

First, airports would be privatized and treated like any other business. One quarter of the price differential between Canadian and American airports is accounted for by excessive airport fees.

Second, foreign ownership limits will be abolished for airlines that operate domestic services. Foreign investors will be welcomed to compete in the Canadian air travel market, in particular to connect regional airports that are currently underserved.

Third, the unjustified Liberal decision to ban jets from flying out of Toronto’s Billy Bishop airport will be overturned.

Fourth, more bilateral agreements will be negotiated to allow for more flights between Canadian cities and foreign destinations. Instead of focusing on protecting Canadian airlines from competition, consumers’ interests would drive Canada’s policy.

Mr. Bernier’s proposals are in line with the resolution to “introduce and actively promote a new framework for increased domestic & foreign airline competition in Canada” proposed by the Vancouver Centre Conservative Association and adopted at the party’s convention last May.

Key Quotes from Maxime Bernier

“Many Canadians do not fly, or rarely do, because they find it too expensive. Many others cross the border and fly from an American airport because it’s cheaper there. To tolerate such a situation is to show disrespect to Canadian consumers.”

“If I am elected Leader of the Conservative Party of Canada and ultimately Prime Minister of Canada, I will remove the burden of excess taxes and regulation, open the sector to more competition, and encourage more investment.”

“These reforms are straightforward ways to free the Canadian air transport industry; to be fair to Canadian travellers who live in currently underserved areas; and to show respect for Canadian consumers forced by bad policies to pay much higher prices than necessary.” 

Let’s Make Air Transport More Competitive and Cheaper for Canadian Travellers

Maxime Bernier, Leadership Candidate for the Conservative Party of Canada
Ottawa, August 3, 2016

Canada is the world’s second largest country. Its cities and communities are dispersed far and wide. Some of them, in the North, can only be reached by plane. Air transport plays a crucial role in bringing us together and bringing the world to us.

As Minister of State for Tourism for four years, I was very much aware of the importance of air travel for our tourism industry. I also know how important it is for Canadian families to get the best deals possible when they visit their family in another province, or when they vacation in another country. 

In 2014, the air transport industry served 125 million passengers. It directly employs more than 140,000 Canadians.

Canada has a relatively strong air transportation industry and good infrastructure. But like many other sectors of our economy, such as telecommunications and supply management in agriculture, it suffers from a lack of competition and from prices that are too high.

In terms of cost competitiveness, Canada is at the bottom of the World Economic Forum ranking, 124^th out of 141 countries. Toronto’s Pearson airport is the fourth most expensive airport in the world to land in.

Many Canadians do not fly, or rarely do, because they find it too expensive. Many others cross the border and fly from an American airport because it’s cheaper there. To tolerate such a situation is to show disrespect to Canadian consumers.

My campaign is based on the four themes of freedom, responsibility, fairness and respect. If I am elected Leader of the Conservative Party of Canada and ultimately Prime Minister of Canada, I will remove the burden of excess taxes and regulation, open the sector to more competition, and encourage more investment.

In other words, I will let entrepreneurs and free markets play their role fully in order to bring more options, better services and lower prices for consumers.

There are several areas of reform that need to be acted on to bring about these changes.

First, the major reason why tickets prices are so high in Canada is that the federal government continues to treat airports as cash cows that should be milked as much as possible.

In the 1990s, Ottawa transferred the management of 26 airports to non-profit airport authorities. But it retained ownership of land and assets, and has been charging excessive airport rent since then.

According to the Canada Transportation Act Review Report, submitted last February by the honourable David Emerson, Ottawa has collected about $5 billion in airport rent since 1992. This is well in excess of the value of the assets transferred, even though Ottawa is not investing any money in those airports. These rents can represent up to 30 percent of airport operating budgets, costs that are of course passed on to travelers.

Moreover, security charges of up to $25 per passenger have exceeded the cost of security screening by an average of 18 percent every year for several years. Again, instead of paying for a service, travelers are penalized by an unjustified tax.

This is why I would abolish the rents, privatize the airports, and treat them instead like other businesses, which would reduce costs and encourage investments.

Privatization of airports is the model that predominates elsewhere in the world. This is just a common sense solution to stop penalizing air travel and put money back into one of our most important industries and into consumers’ wallets.

A second reform that would considerably help the industry and travelers is to raise the foreign ownership limit in airlines. With its current 25% limit, Canada is among the developed countries least friendly to foreign investors. And we are also the only major market in the world not served by ultra-low-cost airlines, because they cannot get the necessary funding in Canada.

Two new ultra-low-cost carriers backed by European and American investors, Enerjet and Jetlines, have asked the Transport Minister to raise the foreign ownership limit to 49%. They want to connect smaller airports such as Hamilton, Quebec City, Halifax, or Edmonton, that are underserved and where there is very little competition. The Minister has yet to respond. This situation is unfair to Canadians who live in these cities and regions.  

This is why I would eliminate the 25% foreign ownership limit. But why stop at 49%? Australia and New Zealand allow 100% foreign ownership for airlines that operate domestic services. If foreign investors have enough confidence in our economy to establish a new airline service, we should fully welcome them and the competition they bring.

A third way to help consumers is to allow Porter Airlines to fly jets from Billy Bishop Airport in Toronto. The Liberal Transport Minister announced last November that he would not allow it. This was a reckless and unjustified decision.

Porter had planned to offer new destinations such as Vancouver, California and the Caribbean using CSeries jets, which have a longer range than the turboprops in its existing fleet. I would allow Porter to go ahead with its plan because it would increase competition and lower prices for everyone flying to and from Toronto.

A fourth important initiative would be for Canada to pursue more open skies bilateral agreements with other countries so as to increase the number of flights between Canadian cities and foreign destinations.

As the Emerson report notes, Canada’s policy until now has been focused on protecting Air Canada and WestJet from too much competition on international routes. Because of this, Canadians have fewer options when traveling abroad. This contrasts with the policies of most other developed countries, where consumer interests have been given a more prominent role. I would advance a real open skies agenda. It’s time to put consumers’ interest first.

These reforms are straightforward ways to free the Canadian air transport industry; to be fair to Canadian travellers who live in currently underserved areas; and to show respect for Canadian consumers forced by bad policies to pay much higher prices than necessary. 

If I become leader of the Conservative Party and prime minister, I will implement these reforms. They are in line with the resolution to “introduce and actively promote a new framework for increased domestic & foreign airline competition in Canada” proposed by the Vancouver Centre Conservative Association and adopted at the party’s convention last May.

Thank you.