Debates of February 10, 2006 (day 27)

Thank you, Mr. Speaker. Mr. Speaker, my questions today will be for the Minister of Industry, Tourist and Investment. This morning I received an e-mail regarding the potential dropping of the BIP, Mr. Speaker, and it appears several small businesses are concerned, in the e-mail that I received. It looks like it may be replaced by a two percent reduction, from this e-mail that I have before me. So, Mr. Speaker, my question to the Minister is, how is this idea being floated out to northern businesses about the potential dropping of the BIP and replacing it with a small two percent reduction in taxes? How is it being floated out there for their discussion? Thank you.

Thank you, Mr. Hawkins. The honourable Minister responsible for Industry, Tourism and Investment, Mr. Bell.

Return To Question 380-15(4): Status Of The Business Incentive Policy

Thank you, Mr. Speaker. This is something we've been in discussion with committee about. Governance and Economic Development committee was floated the idea first, initially, and they were at least intrigued enough with the idea to suggest that we needed to get out and talk to businesses and get their sense. The premise, Mr. Speaker, really is that the BIP, which was created a number of years ago, we think is not as useful as it once was, not as effective as it once was. It really speaks only to GNWT procurement. I think the last numbers we had, on $200 million worth of procurement, there were premiums paid to BIP registered businesses somewhere in the neighbourhood of $200,000. If you remember back to the initial impetus for this, it was about levelling the playing field for northern business as compared to southern. What I think happens, for the most part now that our market is a little more mature, is that you have BIP businesses bidding against BIP businesses and it ends up being a wash. So we felt that the administrative burden on our department, but spread right across all departments and on small business and larger business to comply and register, to have us monitor the BIP, was onerous compared to the value. So we've started this discussion. I've met with the NWT Chamber. They are putting out a survey to their membership over the next month, and we will have ongoing discussions around this.

But I want to clarify that it's not a small decrease to the small business tax rates. It's, in fact, a 50 percent reduction in small business tax rates, from four percent to two percent, that we're proposing would fill the gap. So we would, instead of having the BIP program, we would take the money and use that to provide a 50 percent tax break for small business. Thank you, Mr. Speaker.

Thank you, Mr. Bell. Supplementary, Mr. Hawkins.

Supplementary To Question 380-15(4): Status Of The Business Incentive Policy

Thank you, Mr. Speaker. Well, I'll definitely say anything that helps small business is certainly a good step. But, Mr. Speaker, there is a concern out there that this dropping of the BIP may be steamrolled and consultation may be just for formality. Mr. Speaker, I'd like to point out a couple of things. The Minister's tabled documents in this House have pointed out that Health and Social Services sole sources 77 percent of their contracts. A letter from Minister Miltenberger, which I tabled in this House, pointed out that 92 percent of their business at Stanton Territorial Hospital goes south. So, Mr. Speaker, I'd like to hear how this Minister is, yes, helping northern small business with a two percent tax reduction, but how is he going to help and protect and promote northern businesses by dropping one of our wonderful flagship programs? Thank you, Mr. Speaker.

Thank you, Mr. Hawkins. Mr. Bell.

Further Return To Question 380-15(4): Status Of The Business Incentive Policy

Thank you, Mr. Speaker. For specific procurement concerns that are taken up by departments, arm's length agencies or boards, you would have to speak to the Minister involved in that, Mr. Speaker. Of course, we run the contract registry which provides the information. We think it has added a real element of transparency. I think the Member would appreciate that. The kind of information he has at his fingertips allows us to go back and look at procurement practices. That is what we are doing.

The Canadian Federation of Independent Business, after surveying NWT businesses, came up with a list of priorities and reducing regulatory burden and red tape was near the top, Mr. Speaker. That is what we think we are doing. Another one was competitive taxation regimes and reducing taxes. We think we are doing two things here. We are reducing regulatory burden and providing a tax break. We think that is to the benefit of all small businesses, not jut the ones, I would add, that do business with the GNWT. Obviously, the non-renewable resource sector has had huge impacts. There are many businesses making their prime business in dealing with these companies. They would now benefit. All businesses across the North making income would benefit from a small tax break. Thank you, Mr. Speaker.

Thank you, Mr. Bell. Supplementary, Mr. Hawkins.

Supplementary To Question 380-15(4): Status Of The Business Incentive Policy

Thank you, Mr. Speaker. Mr. Speaker, while reducing the taxes to small business, again I say, a darn good thing, but, Mr. Speaker, we have to make a solid point on this. You have to be getting contracts in order to have something to deduct in order to make that two percent reduction worth anything.

Mr. Speaker, I don’t have to go through the statistics I said the other day, as well as just earlier, that the Minister does monitor through the registry of the sole sourcing and the sourcing that goes south at 92 percent for Stanton. Would the Minister consider options such as maybe replacing the BIP, or modifying it so any business that is a northern business that files their taxes in the Northwest Territories are the only ones who qualify for BIP? At least that would squeeze out big corporations such as Wal-Mart or large box stores from competing with small businesspeople who are trying to make a living and promote our North. Thank you, Mr. Speaker.

Thank you, Mr. Hawkins. Mr. Bell.

Further Return To Question 380-15(4): Status Of The Business Incentive Policy

Mr. Speaker, we have been down this road a number of times. I think past governments’ experience would tell you that tinkering with the BIP is not the answer. Let’s either be done with it and recognize that it is not relevant anymore, and we will consult businesses to find out if, in fact, that is their feeling, or let’s leave it as is. But if we start to make changes to this, we can undertake a great deal of consultation. I can assure the Member there are ways businesses want to be creative and find a way, if they are motivated, to work around the regulations. You are going to have southern businesses able to register a storefront in the North and comply. Wal-Mart is just an example. It is well within the regulations and the policies that we have in place and does qualify as a BIP registered business. They are registered to be able to provide a whole range of products.

Mr. Speaker, I would suggest to you that the real answer here is about levelling the playing field for all northern businesses, making sure we reduce our regulatory burden and our tax burden. The issue of sole sourcing of contracts, really BIP becomes irrelevant. It is sole sourced. It doesn’t matter. It wouldn’t matter if the BIP is in place or not in place. If there is a sole source that takes place, that is exactly what is going to happen. Thank you, Mr. Speaker.

Thank you, Mr. Bell. Final supplementary, Mr. Hawkins.

Supplementary To Question 380-15(4): Status Of The Business Incentive Policy

Thank you, Mr. Speaker. I respectfully think that the Minister missed the point on the sole sourcing, because what I am saying is 92 percent of the business in Stanton Territorial Hospital went south. That took away any opportunity that these northern businesses had to tender or the opportunity to tender, I should say, on those contracts. That just flew right over them, Mr. Speaker. That is why I drew that comparison. Yes, BIP doesn’t apply to that, but BIP is about establishing solid grounds where northern businesses can be competitive. Mr. Speaker, I still go back to what I said on the third question which I just never got the answer. So I will ask it maybe this way, Mr. Speaker. Would the Minister look at re-evaluating the BIP? I know he doesn’t want to tinker with it, but would he look at re-evaluating the BIP that it only applies to companies and businesses that file their taxes only in the Northwest Territories, not these multi-nationals that partner? Thank you, Mr. Speaker.

Thank you, Mr. Hawkins. Mr. Bell.

Further Return To Question 380-15(4): Status Of The Business Incentive Policy

Mr. Speaker, no. What the Member is asking me to do is to put in place some sort of change to the BIP that would require immense auditing, policing, would add to the regulatory burden. What we would be asking small businesses to do is essentially share private tax filing information with us. I am not even sure we have the ability to do that. I could consult with the Minister of Finance, but you are adding layers of complexity, bureaucratic red tape, and I can assure the Member that is not what small business wants. What we have to do is find a way to help small business be more competitive. It is not about coming up with onerous protection schemes. It is about reducing regulatory burden and reducing the tax burden for northern businesses. That is what we are going to do. We are going to get out of the way so that businesses can do what they do, which is make money, employ people and create economic development. Thank you, Mr. Speaker.

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