House of Commons Hansard #49 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Questions On The Order Paper
Routine Proceedings

10:25 a.m.

Some hon. members

Agreed.

The House resumed from December 10 consideration of the motion.

Committees Of The House
Government Orders

10:25 a.m.

NDP

Alexa McDonough Halifax, NS

Mr. Speaker, I am pleased to take part in this very important debate today, prior to the presentation of the federal budget. The purpose is to see how we can promote and bring about the dreams, aspirations and objectives of Canadians.

That is really what a prebudget debate is. It is an opportunity to talk about how we should order our priorities as Canadians and how we should order our priorities for Canada's future.

In the final analysis a budget is about what the real priorities of the government are; not the soothing assurances, not the empty rhetoric and not the promises which have no substance. It is about where the government will put its money, where it will allocate its resources and, therefore, what its real priorities are.

Let me make it very clear at the outset, on behalf of my colleagues in the New Democratic Party, that it is our absolute belief that the top economic priority for the 1998 budget is to set targets to reduce unemployment by at least 1%. At an absolute minimum unemployment should be reduced by 1%. We must develop specific strategies to attain that objective.

It is hard to get your answers right when you keep focusing on the wrong problem. That is exactly what this government has done over the last four years. It has focused on the wrong problem.

It is focused exclusively on inflation, failing to set targets for jobs. In the process the government is simply writing off literally hundreds of thousands of jobs, writing off an additional 500,000 jobs that are desperately needed by Canadians. Over a five year period an additional 100,000 jobs a year could push our unemployment rate to 5%.

I know there will be some naysayers who will say “We couldn't possibly bring the unemployment level in Canada to 5%. Who has an unemployment level among industrial countries of 5%?” Let's remind ourselves, in the process of trying to stiffen our resolve to tackle this problem, that the United States of America has an unemployment level today below 5%. I think it is 4.7% at the current time. The United Kingdom has an unemployment level below 5%.

The government has to ask itself and all Canadians are asking themselves the following question. How is it less of a priority for the Government of Canada and for the people of Canada to reduce the unemployment level to 5% than it is for the people of the United States or the people of the United Kingdom?

It is the number one priority for Canadians and it remains the number one priority for Canadians. It is a priority that is absolutely attainable if the government would finally recognize it and take up the challenge. Unfortunately, instead of a commitment to generate jobs and reduce unemployment, the Liberal policy has been designed to ensure that jobless rates do not sink too far, a perversity, surely, when we look at the numbers of people who are suffering.

The biggest threat to the future is the likelihood the government will refuse to allow growth to continue and instead will choke off any real recovery in its infancy by jacking up interest rates yet again by strangling the process of economic growth that is finally beginning to glimmer on the horizon.

Canadians know that when the Minister of Finance really means business, when he makes up his mind about something, when he accepts that something is indeed a priority, he sets targets and timetables for achieving them. That is exactly what we have seen the Minister of Finance do with the deficit over the last four years. It is what he does with inflation. He makes it clear that he is serious and he sets timetables and targets. It is what he proposes now to do with the debt.

Canadians know that targets mean commitment and timetables mean results. Over the last four years the Liberal government has been absolutely single minded in its approach to deficit reduction: massive program cuts, the largest layoffs in Canadian history, the sell-off of some of the nation's most valuable assets, and the elimination of many of the programs that provide support to Canadians in need, in fact many of the programs that define our very sense of being Canadian.

The government's persistent lying throughout has been: “There is really no alternative”. It has come to be understood as the TINA syndrome: there is no alternative. The tragic irony is that there was and still is an alternative which would have allowed the government to reach its original target for deficit reduction without the painful disastrous cuts that were the supposed centrepiece of this strategy.

Testimony before the finance committee indicated that 60% of the improvement in government finances between 1995 and 1997 came from a growing economy stimulated by low interest rates. Dr. Jim Stanford's analysis presented before the finance committee showed that if the government had merely frozen spending at its 1995 levels, allowed economic growth and maintained lower interest rates, the Minister of Finance could have beaten his very own deficit reduction timetable. He could have met his targets and still have reduced Canada's deficit to the lowest level among G-7 countries.

The study also demonstrates that pursuing a sustained 4% growth strategy simply by maintaining interest rates at the early 1997 level would add an additional $70 billion to federal balance sheets over the next five years to be spent on the important programs that Canadians depend upon, that our seniors deserve, that our children desperately need and that our young people require to enter the new millennium with some sense of hope and promise. In addition it would mean sufficient resources to allow for reasonable tax cuts targeted to where they would matter most and get on with debt repayment at the same time.

On the other hand, if real growth is stalled by the central bank's obsessively low inflation policy, the fiscal dividend may disappear altogether. That would be a tragedy.

Canadians need to consider this question. Are we willing to spend $70 billion over the next five years to keep inflation at a zero level, to keep wringing jobs out of the economy, to keep eliminating important social programs, in order to battle an imaginary mythical phantom of high inflation? Or, do we have other priorities like fighting unemployment, rebuilding our health care system, and ensuring our young people access to education and decent jobs?

The Liberals have been positioning themselves as a party of balance on economic issues. The title of the finance committee's report “Keeping the Balance” is another attempt to embellish that image. The point is that it bears no relationship or resemblance to what the Liberal government has actually being doing. The reality is that Canada has eliminated its fiscal deficit by creating a massive social deficit for which Canadians will be paying for a very long time to come.

Canada's real wealth is declining as we supposedly grow richer. The stock market is soaring. The GDP is climbing. However somehow there is not enough money to pull our kids out of poverty, to give young people the education they need to get decent jobs, to pay working men and women a living wage, or to maintain one of the best health care systems in the world in which Canadians have invested and which has become the envy of the world.

For the government it has been an official policy of forget about jobs, toss in the towel on jobs. We are told repeatedly that governments cannot create jobs and why should they really try. The essence of the Liberal solution is to make its problem someone else's problem by downloading debt and offloading responsibility to the provinces, municipalities, ordinary people, the charitable sector, the non-governmental sector and, most callously and most unforgivably, the backs of the poor. As a result the federal books may be in balance but the economy is very much out of kilter.

The headline in the local newspaper in my riding said it all the day that the finance minister appeared on the west coast before the finance committee. The headline read “Federal books doing well but the question is are Canadians doing well?” For far too many Canadians the answer to that question is no, they are not doing well at all.

Internationally we may be the first to balance the budget. This is something the federal finance minister constantly crows about, constantly congratulates himself about. While citizens in other industrialized nations saw their GDP per capita grow at an average rate of 9.1%, Canada alone saw its standard of living decline. That is not something about which the government should be congratulating itself.

As a result we now have the second highest incidence of child poverty among major industrialize countries, the second highest inequality index and the second highest incident of low pay for full time workers in the industrialized world. The finance minister may claim that Canada is leading the G-7 and is on the verge of a new economic era, but social and economic indicators reveal that Canada is marching backward into the millennium.

Since 1989 average family incomes have fallen by roughly 5%. In this country 538,000 more children are living in poverty. The number of food banks has tripled as the proportion of the population forced to rely on food banks has more than doubled. The number of Canadians filing for personal bankruptcy has gone through the roof. This does not point to a balanced economy or to a leading edge economy but to an economy that is running in reverse.

The real test of a balanced economy surely is not whether the government can balance its books at the expense of its citizens but rather whether it can provide the economic environment in which Canadians and families can balance their own books. We have been losing ground in that regard.

A stronger economy is key to the long term health of federal balance sheets. Our approach would be to build a high employment, growing economy which could generate a significant fiscal dividend and could provide an ongoing revenue stream to address the growing social deficit. Social investment that creates jobs and addresses the needs of children, youth and families must surely come first.

Let me be very clear about what the NDP priorities are for the coming year. We will be pushing for those priorities to be expressed in the forthcoming federal budget.

The first is to make full employment the primary goal of government with targets to cut rates by a minimum of 1% per year. The Bank of Canada should be instructed that employment growth is the central priority.

The second is to set targets for the elimination of child poverty and a timetable for implementation of that commitment.

In 1989 the country set for itself a millennium project. The House of Commons resolved unanimously an all-party resolution to ensure that we eliminated child poverty by the year 2000. Before we go looking for a lot of new millennium projects, let us follow through on the commitment adopted by the House, by all members on all sides of the House in 1989, and make the real millennium project the elimination of poverty.

What could have a greater long lasting benefit? What could be more enduring? What could more captivate the people of a nation than pulling together and working together to eliminate poverty so that we make a real investment in the future of all Canadians and the future of the nation?

The third priority we will be insisting upon is to make strategic investments to rebuild our failing public infrastructure. Our health care system, education and training systems and networks, environmental and cultural industries, social housing, child care and elder care, highway and other important transportation links that make this a real nation.

Fourth is to maintain a balanced budget over the next five years aiming for continuing GDP growth of 4% per year and some easing of the inflation target band. When this country continues to be totally obsessed with inflation, it absolutely fails to recognize that countries, including the United States to our south and the U.K., have recognized that yes inflation is a problem and yes inflation has to be kept in check, but they have understood that we have to be prepared to make jobs and economic growth our real priorities. That requires easing up a little bit on the inflation target band.

They have allowed inflation to go up in the 3% range. As long as Canada continues to insist on wringing inflation absolutely out of the economy, reducing it to the 1% range, then we are going to continue to choke off those 500,000 jobs that we desperately need.

Fifth, our priority is going to be maintaining overall tax levels in the short term but rebalancing the system to achieve greater fairness and to advance broader social policy goals such as the elimination of poverty, a fairer share of the tax burden and assistance for students and the disabled.

Wrapping up, my final priority that I want to advance as we head into this budgetary process is direct tax relief measures to the neediest through refundable tax credits such as the GST and exempting essentials from the federal sales tax rather than enriching subsidies for those earning over $75,000 a year. If circumstances permit, we want to reduce the overall GST rate by two points to promote job creation and give hard pressed consumers a break.

These are the measures that NDP members will be advancing. Already to date in this fall parliamentary session, if the proposals the NDP had been putting forward, the concrete and specific proposals for job creation, had been implemented by this government, we would have created over 175,000 jobs. This would have reduced unemployment to 7.9%.

We look forward to participating in the continuing debate in the run up to the budget. Most importantly, we look forward to seeing this government finally get its priorities right and invest in a real future for Canada.

Business Of The House
Government Orders

10:45 a.m.

Glengarry—Prescott—Russell
Ontario

Liberal

Don Boudria Leader of the Government in the House of Commons

Mr. Speaker, I rise on a point of order. I wish to seek unanimous consent to put the following motion without debate. I move:

That the House shall not sit on December 12, 1997, provided that, for the purposes of Standing Order 28, it shall be deemed to have sat and adjourned on that day.

Business Of The House
Government Orders

10:45 a.m.

The Deputy Speaker

Does the hon. government House leader have the unanimous consent of the House to propose the motion?

Business Of The House
Government Orders

10:45 a.m.

Some hon. members

Agreed.

Business Of The House
Government Orders

10:45 a.m.

The Deputy Speaker

Is it the pleasure of the House to adopt the motion?

Business Of The House
Government Orders

10:45 a.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of the motion.

Committees Of The House
Government Orders

December 11th, 1997 / 10:45 a.m.

Liberal

Mac Harb Ottawa Centre, ON

Mr. Speaker, I listened with great interest to my colleague from the NDP while she was speaking about having a full employment strategy. The first thing that came to my mind is that government in general does not really create jobs. It in itself does not go out and hire everyone to work on the government payrolls. However the government creates a proper environment for job creation because the real engine of job creation is the private sector.

Frankly my head somehow was boiling and spinning at the same time. The member wants the government to stop fighting the mythical phantom of high inflation and to stop being obsessed with inflation. She thought that the government should have a full employment policy.

Suppose that inflation went above 3% or 4% and there was a downturn in the economy in two or three years and we begin to have the same problems we had in the 1980s of a high deficit, high debt loads, high inflation and high interest rates, is the member proposing that the government should hire all those people and put them on the public payroll?

I also want to say to my colleague that it is extremely important to put things into perspective. All of the economic indicators she is talking about are fair game. However, there are certain indicators that I as a member of Parliament totally disagree with.

For example, here in Canada we had a deficit. I want to congratulate the government for winning the war on the deficit. We used criteria that are very much different from the criteria being used by OECD members around the world.

When we talk about assets in Canada and somebody from the auditor general's office says that we have $50 billion in assets, in my view, Canadian assets are really in excess of $150 billion taking into consideration crown corporations and everything else the government owns in Canada.

We have to put things into perspective when we talk about shrinking wealth and economic indicators when comparing them with other countries around the world.

If the private sector does not really create the jobs she is asking for and the private sector is not meeting the target she is setting, is the member proposing that the government hire all those people who were not hired by the private sector?

Committees Of The House
Government Orders

10:50 a.m.

NDP

Alexa McDonough Halifax, NS

Mr. Speaker, I have to say in all honesty, and I intend no disrespect to the member opposite, but that is an absurd suggestion and a distortion of the position the New Democratic Party has put forward today in specific, concrete terms. It makes it impossible to even engage in a reasonable, sensible debate about fiscal policy, inflation, interest rates and setting targets and timetables for jobs.

I do not need a lecture from the member opposite on how important the private sector is in the creation of jobs. I will be going back to my office to meet with representatives from the chamber of commerce. They have come to Ottawa today because they understand what an important partnership there must be between government and the private sector.

Those representatives from the chamber of commerce want to talk to me and my colleagues from Nova Scotia about the completely irresponsible withdrawal of the federal government from providing and ensuring that the kind of infrastructure is in place which would allow the private sector to do its job to generate jobs and grow the economy.

The private sector is understandably concerned about the fact that the Government of Canada has gone pell-mell into the privatization of our ports without understanding that there must be a commitment from the government in the investment of the ports and make sure the infrastructure is there.

It is very concerned that the government will not make a commitment to ensure that our Halifax regional airport which serves as an international airport and is a very important part of our infrastucture, is in good shape. The government has been pulling back from its investment with the result that the entire business community in Nova Scotia is very concerned that our Halifax international airport is not getting the kind of support from government that it needs, deserves and absolutely requires if the private sector is going to be able to do its part to contribute to the generation of jobs.

In response to the question, if it was the view of the government that the federal government cannot do anything about jobs, then why in the name of heaven did the Liberal Party of Canada not tell the Canadian people the truth? It told Canadians that it intended to make jobs the number one priority, but that is not what the government did.

It is such a ridiculous question. That is exactly what engenders disrespect for government, engenders disrespect for Parliament. It is just a completely absurd notion. The member knows that when he stands on his feet and says, “Would you let inflation go up 3% or 4%”, he clearly was not listening when I said that allowing inflation to rise to 3% does not seem to be such a disastrous policy when that is what the United States has done and unemployment is below 5%. That is what the U.K. has done and their unemployment is 5%. Canadians deserve no less.

It is a very good illustration of why this government will not put its money where its mouth is and actually commit itself to making jobs the number one priority, and it went to the Canadian people instead in 1993 and again in 1997.

Committees Of The House
Government Orders

10:55 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, briefly I want to commend the leader of the NDP for spending so much time on the subject of child poverty. It is certainly a subject matter on which all hon. members share her concern.

In my view child poverty is a political term which is intended to evoke sympathy. The real issue here is family poverty. The member articulated her reasons why she felt there were economic factors which contributed to this serious problem.

I would ask the member whether or not she would concede or maybe recognize that 42% of all children living in poverty come from lone parent families and that the rising level of breakdown of the Canadian family is a very significant contributing factor. Would the member care to comment on her party's position with regard to issues of strengthening the family outside of economic considerations?

Committees Of The House
Government Orders

10:55 a.m.

NDP

Alexa McDonough Halifax, NS

Mr. Speaker, what the issue of poverty is all about is the failure of government to put in place policies that will strengthen the family.

Nothing weakens a family more, whether there is one child or five children, whether there is one parent or two parents, than having a parent who simply cannot put food on the table, who cannot ensure that their kids get the best possible start in life.

To repeat, I think that should be our millennium project. It is the project that would matter the most to the future of this nation, to make sure that our kids do get a start in life.

It requires a comprehensive, co-ordinated strategy, an all out assault on the problem of poverty which has many faces. I completely agree and I commend the member for making the point that the issue is poverty, period. It is not child poverty as if it is completely separate and apart.

Let us be clear about where this decision came from, the one to somehow segment off child poverty as if it is not part of the failed economic system. That essentially has been this government's decision, to not face up to the fact that at the root of poverty are the kind of economic policies that have been pursued for a decade and a half by right wing governments, both federal and provincial.

Committees Of The House
Government Orders

11 a.m.

Progressive Conservative

Jim Jones Markham, ON

Mr. Speaker, it is an honour to speak on this very important topic. Over the next two or three months there will be much debate. The directions we take will likely be debated frequently over the next couple of years.

The results of the finance committee hearings show this Titanic government has decided to chart a course that steers every Canadian right into the iceberg. The short sighting of the tip of the iceberg that resembles the deficit completely misses the massive danger of the submerged problem of the debt that is just waiting to sink the economy. As history sometimes ends up repeating itself, everyone will go down with the sinking ship. What is worse is that shuffling the chairs on the deck will not buy Canadians any more time.

This government does not understand that high taxes kill jobs. This government does not understand that “high taxes equal high revenue” is just recycled money that is borrowed and is not new. This government does not understand that everyone knows the bloated employment insurance premium is a tax on the backs of the working class.

This government does not understand that we are losing the battle with the U.S. regarding the brain drain. This government does not understand that Canada should not only end interprovincial trade barriers but that the Canada-U.S. economy is actually one big market made up of 330 million people. This government does not understand that Canada must be a global leader as we enter the next millennium.

This government does not understand that small business drives the economy and still faces unbearable payroll taxes and extreme bankruptcy statistics. This government does not understand the impact that part of the consultation process means actually listening to Canadians and rightfully respecting their interests and their recommendations. The captain of this government does not show any desire to scope the dangers of this massive debt, the ticking time bomb of the economy.

Rather, the finance minister is too involved scoping the Prime Minister's job. Let us face it, working families have been crippled with the burden of creating such a so-called fiscal dividend. They have been taxed, taxed and overtaxed. In the event of the upcoming surplus, this government should feel obligated to return what is rightfully theirs. This means cutting taxes. All Canadians have paid long enough for the misconduct of the EI fund.

Canadians are no longer prepared to sit back and let this government set strategies without seriously implementing the suggestions provided during consultation. Canadians shared their frustrations and proposed solutions. This government did not listen. Why did we travel across Canada and hear from over 400 witnesses if we are not going to put their ideas to work?

The suggestion is clear. This government is not serious about creating the environment to reduce employment. It is not serious about cutting taxes. It is not serious about facilitating growth. This government did not listen. The report from the finance committee does not represent Canada's interests. It is merely a supporting document of the Minister of Finance.

Canadians are being held hostage by Liberal Party politics. The deathwatch on the Prime Minister has begun and the captain is the Minister of Finance. He is not willing to give anything of substance to Canadians until he is running for or is Prime Minister. It is a sad but true fact. One only has to look at his own cabinet colleagues to know this is what is happening. In the meantime working Canadians get poorer, unemployment remains a national tragedy and Canadians become less competitive.

In Jeff Rubin's 1997 Monthly Indicator named the “The Federal Fiscal Dividend: Who gets to spend it?”, Mr. Rubin discussed how personal income taxes as a share of GDP rank Canada the highest among the G-7 countries. Not only is Canada's personal income tax rate not internationally competitive but it has now saddled households with the largest tax burden in Canadian history.

Even a $13 billion personal income tax cut over the next four years would leave the income tax to GDP ratio well above its 1989 level. After some seven years of declining after tax real income per capita in Canada, a personal tax decrease could at least begin the process of restoring domestic purchasing power in the economy.

The Canadian Federation of Independent Business told us that “One very important priority which is the cornerstone to building a better life for Canadians is meaningful job creation”. The CFIB said it and we have said it too.

Priorities should be placed on debt and tax reduction, not on new program spending. A recent survey revealed that 85% of small business favours restrained spending. The plan to allocate 50% of the so-called fiscal dividend to new spending and the other 50% to debt and tax reduction is wrong. It is the wrong blend. This mix will only create fiscal problems in the future.

Small business has called for the emphasis to be on strategies that lead to private sector job creation which will provide a solid foundation for the future of the Canadian economy, debt reduction, which will decrease the servicing costs of the debt, and reduced taxes.

We support these initiatives for the good of Canadian small business. No longer can we let the government make the wrong decisions for Canadians. Who suffers? Canadians.

We have a government collecting higher employment insurance premiums than necessary to fund the account for a rainy day. We know, of course, that the EI surplus is being used as a deficit reduction tax. Seventy-four per cent of small businesses polled said that the EI fund should be managed separately. The CP fund was privatized; why not the EI fund too?

Small business and the PC Party believe that a top priority is to substantially lower EI premiums for 1998. That will make a difference in the pockets of Canadians. Canadians have over-contributed in good faith to this fund.

It is time for this to stop. Working Canadians deserve to have their hard earned money back. The CFIB calls for a refund to Canadians and so do we. The increase set for 1998 of 66¢ per $100 in CPP premiums must be offset by at least this amount, if not more, in EI premiums. This is an achievable objective. After all, the EI fund has a surplus of close to $12 billion.

Canadians are rightfully upset about taxes, whether they are caused by too much government debt or spending. It is time Canadians had a say in their economic future. We are going to fight to give Canadians that freedom.

Clearly one of the greatest problems facing this country is the high level of unemployment. Is there really any doubt that high taxation in this country is the number one cause of this horrific problem? I think not.

For example, as we know, the province with the lowest tax rate, Alberta, has the lowest unemployment rate. Clearly the Alberta government has committed to a strategy and stuck to it. Why can the federal government not do this?

The U.S. unemployment rate is the lowest it has been for 50 years. This is not luck. It is the result of lower taxes, which means more money in the hands of the people.

We believe the debate on what to do with any surplus has focused too much on the traditional idea of “What should government do now?” This is an unacceptable starting point. Yet again we witness a responsive, knee-jerk reaction to a critical upcoming opportunity. What this government should be focusing on is the question of “What can Canadians do now?”

After all, it is income taken from working families which has led to the fiscal dividend. Canadians have caught on. No longer will we stand by and let unfairness happen. We demand that the government act responsibly with our money. Let us make the decisions on how to spend our money.

The projected fiscal dividend is an opportunity for government to redefine itself, its size and its role to the Canadian people. Canadians have earned the right to spend their own money. They have endured long enough. They have sacrificed to help eliminate the deficit. They have earned the right to spend their own money.

Any tax increase is wrong. Taxes must be cut. Again and again we hear the cry from working families and small businesses. Recent increases in CPP premiums were not offset by substantial reductions in other areas.

In Ontario, our provincial government has kept its promise. Personal income taxes have been cut and government revenues have grown substantially. In the last eight months Ontario has created 216,000 jobs in the private sector, which is roughly 70% of all the jobs which have been created in the country. Clearly there is a lesson to be learned here: high taxes cost jobs.

The federal government cut the CHST payments to the provinces by $6.8 billion in the mid-nineties. The message we have heard from provincial finance ministers and the public is clear. Extra dollars must be transferred back to the provinces so they can restore health, education and social programs.

The suffering has gone on long enough. These transfer cuts meant hospital lineups in the emergency rooms, hospital closings, lack of resources in schools, inadequate home care for the elderly and the mentally ill face closed community homes.

We are losing our future to the United States. Every day Canadian talent is drained to our southern neighbours, all because of high taxation levels and a lack of employment prospects in Canada. We are not willing to sit idle on this. In Canada we face a chronic unemployment problem at 9% unemployment compared to 4.5% in the U.S. This is totally unacceptable.

We know that taxes are also lower in the U.S. Employment opportunities in the U.S. are attracting our people south because of the jobs that they are creating. That is what it is all about. Canadians want to work. Young people want to put their skills and education to use. If this government does not facilitate the setting for job creation now, our talents will continue to turn elsewhere.

Just how do we expect to be competitive with the U.S. when our tax rates are so much higher? Think about it. In the U.S. if you make over $250,000, the tax rate is 36%. In Canada, if you only make $55,000 to $60,000 or over that, you are quickly at the top level of 54%. It does not take a rocket scientist to see where you would get the most money for your salary.

I have a real problem with this government overtaxing Canadians for the purpose of claiming a so-called fiscal dividend. I think it is important to note that the fiscal dividend is by no means a forgone conclusion. If we did not have the $7 billion surplus in the employment insurance fund, the arrival of the dividend would be much later claimed by the Minister of Finance.

Let's get one thing straight. The Minister has factored the EI surplus into the fiscal dividend, a purpose for which EI contributions were never intended. In my opinion, this is totally unethical. We urgently need an amendment to the Employment Insurance Act to outlaw this kind of misuse of the EI surplus.

Just recently this government took $2.5 billion from the employee pension fund to service the deficit. This practice must stop. We must stop the government from continuing to treat this fund as a cash cow. Recently we privatized the CPP fund. Why not consider creating a separate fund for employee pension fund moneys?

We know Canadians want to reduce the debt, yet this government is planning to spend without a clear agenda. A return to uncontrolled spending is another fundamental problem and counter to Canadian culture. The failure to deliver on fiscal reductions promised in the past is becoming a recurring theme of this government. The spending reductions that the government promised in 1995 for the current fiscal year missed the target by roughly 43%, or $5 billion. The government's much vaunted program review exercise lost its effectiveness. It seems to have not followed through with this plan and lost sight of the long term gains this initiative holds.

There are risks that can derail this government from achieving a surplus. They include uncontrolled government spending, failure to deliver on fiscal reduction promises in the past and the dependence of recovering on low interest rates and a low dollar. These are the items that demand immediate attention. Ignorance of these issues will only set our economy back further.

With respect to this upcoming surplus, we have an immediate need for a balanced budget legislation. Committing to balanced budget legislation not only proves to Canadians that this government is serious about its role, but fosters growth in investment for the future. Clear and defined debt reduction targets and debt reduction legislation must be put in place. This would prove that this government is serious about its commitments to reduce the size of the debt.

The government's 50-50 formula is so loose it is almost meaningless, especially if it starts spending it and never has a dividend to split 50-50.

This government must stop acting paternalistically. Canadians have earned the right to choose. The Progressive Conservative Party comes at this debate differently. Our view is simple and effective. Lower taxes means lower government spending. Lower government spending means greater freedom for people to solve problems in the manner they see fit. This means working families are taking responsibility for their spending, their savings, their investments in the future. Informed, autonomous, independent Canadians foster a responsible society. We know what we would do.

This government has to create an environment so that jobs can be created for Canadians, lower their personal taxes and allow our talent to be competitive with the U.S. The government has refused to establish clear and measurable targets for debt reduction and debt-to-GDP ratio.

This is a weak kneed and short sighted response that ignores the calls the committee heard for urgent action on the debt. It also flies directly in the face of public opinion.

Recently the Angus Reid poll found that 84% of Canadians want the federal government to focus on reducing the accumulated debt and high taxes. We believe that one-third of the surplus should be devoted to debt reduction and that action to reduce the debt should start now. The government must reduce our debt to GDP ratio to 60% by the end of this mandate and to 50% by the year 2005.

Taxation levels in Canada remain too high. They penalize initiative. They depress investment that creates jobs. They force investment elsewhere. They encourage highly skilled entrepreneurial Canadians to seek their futures in more hospitable countries.

Despite the many calls for tax cuts heard by the committee, it is clear the government has no intention of responding to this need in the near future. We believe that tax cuts cannot wait until later in the government's current mandate. The next federal budget must send a clear signal that one-third of the fiscal dividend will be used to reduce the tax burden on Canadians.

The role of government must change. Before any decisions are made about the fiscal dividend, the federal government needs to answer some questions that are much more fundamental. What things should the federal government not be doing any longer? What things should the federal government be doing completely differently? What things should the federal government be doing that it is not doing now?

The severity of these issues will not go away. The government has not proven itself in its pre-budget document. We will continue to push for lower taxes, balanced budget legislation and debt reduction targets to be included in the February budget and see if we can get it right then.

Committees Of The House
Government Orders

11:15 a.m.

Liberal

Marlene Catterall Ottawa West—Nepean, ON

Mr. Speaker, I am absolutely astounded to hear a Conservative accuse the government of failing to deliver on its promises.

I had the experience, which the member did not, of sitting through five Conservative budgets. They had to cut this and they had to cut that so they could reduce the deficit. I saw a Conservative government consistently increase the deficit and fail to deliver on a single one of the promises it made.

On the other hand I have sat through four Liberal budgets. I have seen them not only deliver but overdeliver on their promise to cut the deficit and in less than five years reach a balanced budget.

I heard the member talk about employment insurance premiums. He may not be aware of it, but he represents a party that increased employment insurance premiums consistently when it was in power because it failed to provide for a time when unemployment would rise, as it did to over 11% under a Conservative government. How dare he criticize a government that has consistently reduced employment insurance premiums and reduced the burden on both workers and employers.

Before the member comes into the House as a representative of the Conservative Party, perhaps he might want to check the history of his own party and of his own leader on the issues about which he talks. I suggest he might want to deal in his speech honestly with how the government has delivered on its commitments to Canadians on deficit reduction, on reducing EI premiums and on reaching a balanced budget. It is well ahead of target and is putting the economy on a sound footing which it has not been on.

He talked about reducing taxes. Is the member aware that when the party he represents was in government it was responsible for increasing taxes over 33 times? One of them was the 3% surtax on income, which I note the finance committee is suggesting we should be reducing and getting rid of eventually.