Mr. Speaker, the member wants to dispute this, but all she has to do is read Hansard.
I have given the Liberals credit before by saying that, when they were in government, they turned down the big five banks' attempt to merge, I believe on more than one occasion. However, while all this was happening, where were the Conservatives? In those days, they were the Reform Party and they would have been pushing the Liberal government of the day to move forward, to deregulate even faster and allow the banks to merge.
The point is that it is really the Liberal government of the day that held firm and stopped this deregulation from happening, which is to the benefit of the Conservative government today. Internationally the Prime Minister walks around and says Canada is in great shape because we do not have the banking institution structures that they have in the United States, but he does not say that if he had had his way, Canada would have had the same type of banking institutions that exist in the States and would have been in a mess as big as or bigger than the one the Americans are in right now.
The reason the banking institutions are in the shape they are in right now has nothing to do with the Conservative government and everything to do with the government and opposition that were here before, which worked to make sure the regulations stayed where they were. It is proper for the government to recognize that it is in a very successful position not because of something it did but because of what it inherited. That is what the member for Western Arctic was talking about in his question.
In dealing with Bill C-9today, I want to talk about the issue of corporate tax cuts. Conservative governments literally around the world since Ronald Reagan's days, the 1980s, have been promoting tax cuts as a way to attract companies to their jurisdictions, to have these companies expand and create jobs. Essentially, what we have seen over the years has been a race to the bottom in corporation taxes, especially when some Nordic countries tax even today at rates of 50%.
When no less a person than George Bush, who became president of the United States, was running against Ronald Reagan in 1980 for the Republican nomination, he used the phrase “voodoo economics”. Everybody here has certainly heard the term voodoo economics used before. It was George H.W. Bush who called Ronald Reagan's program voodoo economics and said it would not work.
Then, when he lost the Republican nomination and Ronald Reagan became the successful nominee, Ronald Reagan chose him as his vice-president. So, George H.W. Bush, for eight years as the vice-president of the United States, had to live down his very insightful comments about his boss's economic policy. But yet he continued to follow that policy of Reagan and of Margaret Thatcher in England, to basically embark upon a whole system of deregulation.
Certainly, the financial deregulations that came about throughout that period have resulted in the past recession in the United States, and maybe even the one before, a recession so serious that it is not going to be resolved any time soon.
So, let us look at the whole issue of corporate taxes and what is the proper rate of corporate tax. I think all of us here could agree that we would not want our corporate taxes to be higher by much more than what the neighbouring jurisdictions would be.
I sat in a provincial legislature for 23 years and we were the government for significant parts of that time. I have to tell members opposite, and they know this, that the Government of Manitoba in the last 10 years did reduce corporate taxes. We did that, but we did that knowing that we had to do it because of our competitors.
Who are our competitors? They were the Government of Saskatchewan, the Government of Ontario. And of course, Saskatchewan had the deal with the province of Alberta. So when a competitor, the province of Alberta, reduces its corporate tax, then the Government of Saskatchewan is under pressure to follow suit. And being next to Saskatchewan, we were under pressure too.
We recognize that on a provincial basis our corporate taxes have to be competitive, at least with our neighbours, maybe not with maritime provinces that are half a continent away, but certainly with our neighbouring provinces in the west.
Having said that, the Canadian government is in a different league. Its competitor is the United States. So, when we are looking at corporate taxes of, say, 40% back a dozen or so years ago and the Americans were in the same range, maybe a little bit less, it made sense to lower our corporate tax rates.
But where we are going with this is that we are going to find that after the next reductions, which will be taking us down to 15% in 2012, we are going to bring it down roughly 12% lower than the corporate tax rate in the United States. That does not make sense to me.
If somebody can show me some study that says we have to be 12 points lower, then I might believe it. But that is certainly not the indication that I get. I would think that we would want to track the Americans. If the Americans decide they want to reduce their corporate income tax and they move down a couple of points, then it perhaps makes some sense for us to do the same. However, when we do that, we have to determine what sort of value we are getting out of that corporate tax reduction.
Let us look at what some people have said about corporate tax reductions. Statistics Canada and Finance Canada have said:
Despite a 36% drop in corporate taxes, both provincial and federal, in the last decade and record profits for much of this time, business spending on machinery and equipment has declined as a share of the GDP--
Well, that should not happen when one lowers these tax rates.
--and total business investment spending has declined as a percentage of corporate cashflow.
So, there we have evidence that this reduction is not producing the type of activity that we want to have.
The intensity of IT use by Canadian businesses is only half of that of the United States. In 2007 Canadian business spending on R and D was about 1% of the GDP and ranked 14th in the OECD, well below the average of 1.6% and only one-third that of Sweden, Finland and Korea. Despite Canadian corporate tax rates well below those of the United States, business sector productivity growth was actually worse in the last decade.
One would expect that, if the government goes to the effort to reduce corporate income taxes, we would be able to get positive responses and positive activity. We would be able to say that we have reduced corporate income taxes, that we have gained so many more companies and jobs and that, while we reduced the rate of taxation, we actually gained more absolute taxes at the end of the day.
What has happened over the last 20 years? I seem to recall a number of years ago that the taxation that was paid, collected by ordinary Canadians, was roughly equal to the amount of taxes collected by the corporate sector in this country. I am guessing that was 20 years ago. I think Canadians were reasonably happy with that.
Over the years, because of this race to the bottom in the corporate taxation field by the Liberals initially and now the Conservatives, we are finding that ordinary Canadians are paying four times the amount in personal income tax than that collected from corporations. How could it possibly be fair to the working people of this country to see their contribution to this country's taxation regime at a level of four times the amount of the corporate sector?
Let us look at some of those corporations. The biggest, best and most obvious sector I would prefer to take a quick look at would be those big banks that wanted to become too big to fail. They wanted to amalgamate in the last 10 years and compete with those American banks.
In the last year Canada's big five banks had profits of $15.9 billion. That does not sound like a sector that needs further corporate tax reductions.
I can see the argument being made that a certain group or sector of the economy would come forward and say that it is dying and suffering and that it needs corporate taxes reduced because it is marginally profitable at the moment. However, Canada's big five banks have a profit of $15.9 billion and we are telling them that they have done a nice job. We are giving them an even bigger benefit by reducing the corporate tax rate another three points to 15% by 2012.
Let us look at the salaries and benefits of the CEOs of these corporations and big banks. While 800,000 Canadians are drawing unemployment insurance, that unemployment insurance is certainly going to be running out. It has already in some cases, but 800,000 workers are on EI and their benefits are running out. There are no jobs for the people to go to. The government says that the economy is growing by 2.6%, yet the unemployment rate has increased from 8.2% to 8.5%.
There is a glimmer of hope. The minister talks about seeing some good results in the last two or three months and I applaud the government for that. We certainly want to be positive about improving results in the country, especially if the number of jobs increased, but we have a very high unemployment rate and we have a long way to go to get out of that.
While all of this is happening in the country, when it is going through a recession, we have the CIBC president earning $6.2 million. Now who in this country needs $6.2 million a year to pay their bills and live? The Toronto Dominion Bank's CEO was granted about $10.4 million. This is not the United States; this is Canada. We are in Canada and we are paying CEOs $10.4 million.
The Royal Bank of Canada president makes around $10.4 million as well. The Bank of Nova Scotia CEO was awarded the biggest increase of 29%, followed by the Bank of Montreal president at 25%. The first president was $9.7 million in 2009 and the second president was--
