Mr. Speaker, I would like to split my speech into two parts.
First, there are certain elements of this bill that we do not agree with, but I would also like to say that this budget is no longer adequate, it is no longer sufficient. What was perhaps sufficient 10 months ago is no longer sufficient because of the global economic crisis. As John Maynard Keynes said, “When the facts change, I change my mind. What do you do, sir?” What he said makes sense. When the facts change, a rational response would be to change the action plan. And the facts have changed dramatically, as I will explain in a few minutes.
On the first aspect of things, there are five elements of the bill that we take some exception to. The first is the same issue that I mentioned in my question to the minister, that is to say that the tax credits are all non-refundable. What that means is that the benefits from these tax credits are specifically not given to lower income Canadians. Therefore, we have a tax credit for art, but if people are low income Canadians they cannot get any money for that.
We have a tax credit for home caregivers. If they have low incomes or they quit their jobs and do not have an income to look after an aging parent, they do not get any money. The same applies to low income volunteer firefighters.
We on this side of the House feel that it is unconscionable to have benefits where that explicitly and deliberately excluded those who need it the most, those with the lowest income, those who are most vulnerable. For that reason alone, the Liberal Party will vote against the bill. There are other things we do not like, but that is so unconscionable and so unacceptable that that alone is sufficient reason to oppose the bill.
The second point has to do with softwood lumber. The budget bill would increase export duties on softwood lumber in both Ontario and in Quebec. It would damage this industry. The government, in negotiating an agreement with the United States, actually gave a billion dollars to our forestry competitors, perhaps thinking that that would solve the problem. However, it did not solve the problem. The U.S. has come back and has won a legal decision. Therefore, it seems that this is yet another example of the Conservatives making Canadian forestry producers pay for their mismanagement of the softwood lumber file.
The third point is the hiring credit for small businesses. The government has grossly exaggerated the importance of this. First, it gives with one hand and takes back with another. The thousand dollars is taxable. It never told us that. Also, the size of the business has to be so small that 600,000 small businesses will not qualify. This is a trivial little thing. It is not a bad thing, it is just tiny, and it is dwarfed by the increase of 5.6% in employment insurance premiums, which the government will be imposing as of January 1 of next year.
A fourth point, and the second to last one, is the gas tax transfer. As was previously stated, it would l be made permanent at $2 billion but it is not indexed. I spoke with many mayors on this subject and if it is not indexed, with population growth and inflation, the real value of the money will go down steadily over time. I think it would have been much better if the government had indexed the fund to inflation or to GDP growth, or something of that nature.
Finally, there is the phasing out of the voting subsidies. We do acknowledge that the Conservatives ran the election with this as a part of their platform and they won, so we are not making a fight about them introducing it. However, I do think it is important to remember the history of this. The former prime minister, Jean Chrétien, removed the ability of large corporations to give money and, in return, he instituted this public subsidy. This is a system that I think is practised in much of the western world, so I do not think there is anything wrong with it. All I would suggest is that, in light of the removal of the subsidy, the government might give some consideration to increasing the maximum amount that individuals are allowed to contribute.
Those are five reasons.
Those are five reasons why we take some exception to this bill. But there is also the fact that the world has changed.
I ask members to think back 10 months to when this budget was presented. What was the state of the Canadian and the world economy? The stock market was going up nicely. It has now slumped to a bear market. Nobody was thinking about a European banking crisis. Nobody was thinking about Greece defaulting on its debt. Things seemed to be going quite fine in Europe.
Now we have this huge crisis in Europe, a crisis involving the risk of default in a number of countries as well as risk to major European banks.
The U.S. was recovering nicely, as I recall, 10 months ago, and now the U.S. economy has clearly stalled. Now we have seen the dysfunctional politics in the U.S. Congress over the debt ceiling issue. We may have a half-decent plan from President Obama, but the chances of the politicians south of the border agreeing to do anything seem remote. Our Canadian economy actually had negative growth in the second quarter, and, with all of these events around the world, it is at risk of stalling as well.
For these reasons, it makes eminently good sense to change policy when the circumstances change. That is what Keynes said, as I quoted earlier.
Let me quote from three people or institutions that are normally fiscally conservative but that agree with what I just said.
First of all, let us hear the new head of the IMF. Her central proposal to countries was to focus on balancing the books and reducing debt in the medium run, but in the short run to take measures to support jobs and the economy. That is the IMF talking--the IMF, which traditionally has a slash-and-burn attitude to countries in fiscal difficulties.
The second example is from Sherry Cooper, chief economist of the Bank of Montreal. Chief economists are normally fairly fiscally conservative. She blasted the government for taking action to cut the economy at a time of global crisis and economic weakness. She likened the government to Herbert Hoover, who in the 1930s made the Depression even more depressed by taking fiscally austere measures.
The third example is The Economist magazine, a bastion of the free market and fiscal prudence. It said something similar to the IMF, that countries should take actions in the short term to support the economy and jobs while dealing with the balanced budget with a credible medium-term plan.
These three—the IMF, the chief economist of the Bank of Montreal and The Economist—are normally fiscally conservative. But they all agree that now is not the right time for budget cuts and increases in employment insurance premiums. I think this government should be listening.
What I am saying is that now is not the time to go forward with these increases in employment insurance that the government is proposing to take. A 5.6% increase in employment insurance is not an appropriate policy at a time like this. These are job-killing tax hikes. Yes, at some moment in the future we may have to increase employment insurance premiums, but now is not the time.
Similarly, the government is proposing $4 billion of cuts through its strategic review.
We are not opposed in principle to finding savings in government. We did that. I was the chair of something we called the expenditure review committee in 2005. We found $11 billion of savings in government, but those were good economic times. We did not find savings of $11 billion at a time when the economy was very weak and at a time when the world was in economic crisis.
Timing is everything. I am saying that now is not the time to increase employment insurance premiums. Now is not the time to proceed with this $4 billion per year of cuts.
I might say, while on the subject of the strategic review and the cuts, that I think the government is making a fundamental mistake because it is not applying what I would call a regional lens. Canada has one of the most centralized bureaucracies in the western world, with a huge concentration in the national capital region. I know from experience that cuts of jobs in the regions are sometimes even more damaging, both in terms of the jobs and in terms of the services provided, than cuts in the national capital region.
I know as well that if the system here in Ottawa has to do cuts, it prefers to cut in the regions and not in Ottawa. I will give one example. I was recently in Prince Edward Island, which was about to lose 60 jobs in an employment insurance processing operation run by Services Canada. This was devastating not only to the small community, which would lose 60 jobs, but also to those applying for employment insurance, because no longer would they have real people nearby to whom they could speak. They would have to call some 1-800 number, and I was told many would have to wait for literally hours on the phone before anyone answered.
It is okay to do expenditure review to improve the efficiency of government. It is a good thing to do, but only under certain conditions.
First, we do not do it when the economy is super weak and already at risk of going into recession, as is the case today.
Second, when we do it, we do it sensitively. We apply a regional lens and we do not make cuts that hurt the most vulnerable in our society, which is what the Conservatives have tended to do.
To conclude, there are a number of reasons why we take exception to this bill. The Liberals will be voting against it.
The world has changed dramatically since the budget was introduced, and what was appropriate six months ago is no longer appropriate because of the economic crisis.
