Thank you, Mr. Chairman. I would like to follow up on some of the comments that the Minister made in his opening remarks regarding the department's support for the value added diamond industry.
The issue I would like to follow up on is I understand that the department is working on a marketing strategy to help capitalize on the interest in so-called clean diamonds, or to take advantage of the fact that blood diamonds are not as easily marketed these days as those that come from places like Canada, which have much stricter labour laws and where the diamonds themselves are not being used to fund armed insurrections.
What I am concerned about is if we are focusing on this marketing, I think there is probably a market to go after but we are still going to face a problem with the long-term viability of the diamond manufacturing plants that we attract to the Northwest Territories. There is not enough of a premium that is now allotted to diamonds that come from places like Canada over the blood diamonds in order to justify the increased cost of doing business in the Northwest Territories. I have not seen a strategy to deal with the long-term viability of these companies and that is something that we need to start working on.
Probably one of the few areas that we could have some impact on these companies without direct subsidies, would be if we were to spend some effort getting the Canadian government to consider giving up on the 10 percent excise tax on goods manufactured. I think we should try for it in the Northwest Territories, using the argument that we need to have that kind of tax-free zone, if you will, in order to encourage the enterprises to grow in the Northwest Territories. If we cannot get that, we should be encouraging them to give up the excise tax across Canada.
I think that would do far more for these companies than anything we can do in terms of marketing. In the long run, I do not think marketing is going to have as much of an impact.
There is a 10 percent decrease in margin right now. If we give up the 10 percent tax, that would be something that would allow the diamond manufacturers to bring the cost of their goods down to compete in the world market.
I have heard that the diamonds that come out of Ekati Mine are of such quality that Ekati stones extract approximately a 10 percent premium in rough sales over what is obtained from other diamonds. If that is the case, that means that our diamond manufacturers are paying a 10 percent premium over what someone in Belgium would pay for South African diamonds or Russian diamonds. Our polishing is to the same standards, so you are winding up with a nice, fine, gem-quality stone, but you started off paying 10 percent more. You obviously do not have as much of a margin to work with, even if you can get ten percent more at retail.
That is where we are going to have a big problem with the sustainability of this business. So no matter what we do to market diamonds, I do not think we can maintain enough of a margin for these companies to make money. We would like to know if the department has examined the issue of the excise tax and if the Minister is prepared to put some time in Ottawa working at getting that excise tax taken off the products manufactured in the Northwest Territories.