House of Commons Hansard #79 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was debt.

Topics

Government Response To Petitions
Routine Proceedings

10 a.m.

Peterborough
Ontario

Liberal

Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to eight petitions.

Energy Price Commission Act
Routine Proceedings

10 a.m.

NDP

John Solomon Regina—Lumsden—Lake Centre, SK

moved for leave to introduce Bill C-384, an act respecting the Energy Price Commission.

Mr. Speaker, it is my pleasure to introduce in the House today a bill to establish the Energy Price Commission. This bill will establish a commission to regulate the wholesale and retail price of gasoline. The purpose of price regulation is to avoid unreasonable increases which affect the cost of living and depress business activity.

The bill will facilitate reasonable consistency in prices from province to province, allowing for production and distribution costs.

The regulations will further minimize the risk of collusion in pricing and will prevent dominant suppliers from setting unreasonable prices.

The bill links the issue of price control to competition. Any investigation of an alleged offence under the Competition Act which is related to gasoline pricing will be remitted by the competition tribunal to the commission for investigation, and the commission will report to the tribunal before it makes a determination or order on the matter.

Many Canadians are looking for this bill so that gasoline and oil companies will stop the gouging of consumers, business people and farmers in Canada.

(Motions deemed adopted, bill read the first time and printed)

Petitions
Routine Proceedings

10:05 a.m.

Liberal

Gar Knutson Elgin—Middlesex—London, ON

Mr. Speaker, it gives me great pleasure to present a petition signed by 100 constituents of my riding.

The petitioners pray that Parliament act immediately to extend protection to the unborn child by amending the Criminal Code to extend the same protection enjoyed by born human beings to unborn human beings.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Peterborough
Ontario

Liberal

Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I ask that all questions be allowed to stand.

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

The Deputy Speaker

Is that agreed?

Questions On The Order Paper
Routine Proceedings

10:05 a.m.

Some hon. members

Agreed.

Budget Implementation Act, 1998
Government Orders

March 24th, 1998 / 10:05 a.m.

Richmond
B.C.

Liberal

Raymond Chan for the Minister of Finance

moved that Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998, be read the second time and referred to a committee.

Budget Implementation Act, 1998
Government Orders

10:05 a.m.

Stoney Creek
Ontario

Liberal

Tony Valeri Parliamentary Secretary to Minister of Finance

Mr. Speaker, I would like to take a few moments to speak on behalf of the government in support of Bill C-36.

The proposed legislation contains some very important provisions that will help build a strong economy and a strong society, goals which this government has pursued since coming to office in 1993.

We have pursued these goals first and foremost by getting our fiscal house in order. The federal books will be balanced this year for the first time since 1970 and we will balance the budget next year and the year after that for the first time in almost 50 years. It will be the first time in almost 50 years that Canadians will see three consecutive balanced budgets.

Our commitment to fiscal responsibility, to putting an end to credit card government, does not end there. We will reduce Canada's debt burden through a two-front strategy of stronger economic growth and a concrete debt repayment plan.

What we will do is take the same approach to the debt that we have successfully used against the deficit since 1993. We took the deficit down step by step. The same incremental approach will, year by year, steadily reduce the debt burden.

We intend to keep the debt to GDP ratio on a permanent downward slide using a two-track strategy, a strategy of supporting economic growth and reducing the actual level of the debt.

This means that we will continue to present fiscal plans based on prudent economic planning assumptions. Let me say that most budgets fail because they are based on overly optimistic assumptions. The consequence is severe. It is lost credibility.

In addition to prudent planning assumptions we will continue to build our plans on a substantial contingency reserve of $3 billion a year. This is designed to handle unexpected events and to provide greater certainty that we will meet our balanced budget targets.

However, if the contingency reserve is not needed, and in fact it has not been needed in each of the past three years, it will go directly to paying down the overall stock of debt.

Where do we expect this prudent approach to budget planning to take us?

We project that by 1999-2000 the debt to GDP ratio, by our comprehensive Canadian measurements, will have fallen almost 10 percentage points from its peak of almost 72% of GDP in 1995-96. If we use the measurement which most other countries use, that being the debt held by the public, Canadians' market debt to GDP ratio will fall from a peak of almost 59% in 1995-96 to 48.5% by the year 1999-2000.

In fact the Organization for Economic Co-operation and Development is forecasting that between 1997 and 1999 Canada will have the largest decline in debt burden among the G-7 countries.

While we must ensure the continuing decline of the debt, we also recognize that the tax burden on Canadians is too high and has to be reduced. That is why we have introduced targeted tax relief measures in each of our previous budgets. For now these measures are modest because the so-called fiscal dividend that makes them possible is still modest. But even so, 90% of all taxpayers will get some degree of personal income tax relief from our recent budget.

Some 400,000 low income Canadians will be taken off the tax rolls entirely. As our financial resources permit we will broaden tax relief in future budgets.

Of course, some would argue that the dividends should go only to reducing debt and cutting taxes. In my view this would be shortsighted and, quite frankly, bad economics. We recognize that the private sector is the engine of job creation, but government too has a responsibility to provide leadership in the economy.

To meet that responsibility we are putting the fiscal dividend to work by increasing our investments in access to education, in skills development, in low income families with children and in health care.

For example, in last month's budget we unveiled the Canadian opportunities strategy. It is a co-ordinated set of measures to provide Canadians with enhanced access to knowledge, knowledge and skills for jobs that can deliver a better standard of living for the 21st century.

In fact, Bill C-36 implements some very important elements of this strategy. For example, it establishes the Canadian millennium scholarship foundation. This arm's length foundation with an initial endowment of $2.5 billion will award more than 100,000 scholarships each year over 10 years to full and part time students across Canada.

Scholarships will increase access to post-secondary education for low and middle income Canadians to prepare them for the jobs and knowledge based economy of the 21st century.

As the minister of finance said in the 1998 budget speech, “This investment in the future of our country is the result of our successful battle against the deficit. It is an investment that will pay for itself over and over again in the years ahead”.

The Canada millennium scholarships are, in effect, the largest single investment ever made by a federal government to support access to post-secondary education for all Canadians. They will be awarded to individuals who need help financing their studies and who demonstrate merit. For full time student scholarships will average $3,000 a year. Individuals will be able to receive up to $15,000 over a maximum of four academic years of undergraduate study.

What this means is that a student receiving a $3,000 scholarship for four years will in fact see his or her student debt load cut by $12,000, about half of what it otherwise could have been.

These scholarships are not just for young Canadians at university. Canadians of all ages studying full or part time in publicly funded universities, community colleges, vocational and technical institutes, and cégeps will be eligible. Awards will help recipients to study away from home, particularly outside their home province. They will also support limited terms of studies in other countries.

Student debt has become a heavy burden for many Canadians. In 1990 a graduate completing four years of post-secondary education faced an average student debt load of about $13,000. By next year the same graduate's average debt will almost double to $25,000. At the beginning of this decade less than 8% of student borrowers had debts larger than $15,000; now almost 40% do.

Last December federal and provincial first ministers agreed that something must be done to reduce the financial burden on students. They asked the federal government to take action in the 1998 budget and we have. Bill C-36 will put in place a number of provisions that will help individuals manage their student debt loads.

First, we are increasing the income threshold used to qualify for interest relief on Canada student loans by 9%. What that means is that more graduates will be eligible for interest relief.

Second, we are introducing graduated interest relief which will extend assistance to more graduates further up the income scale.

Third, for individuals who have used 30 months of interest relief, we will ask the lending institutions to extend the loan repayment period to 15 years.

Fourth, if after extending the repayment period to 15 years a borrower remains in financial difficulty, there will be an extended interest relief period.

Finally, for the minority of graduates who still remain in financial difficulties after taking advantage of these relief measures, we will reduce their student loan principal by as much as half.

Together these new interest relief measures will help up to 100,000 more borrowers. Over 12,000 borrowers a year will benefit from the debt reduction when this measure is fully phased in.

Any long range plan to acquire knowledge and skills for the 21st century must look ahead to the students of tomorrow. The best way to help to ensure children's futures is to save for education today. We want to establish a new partnership to help parents save for their children's future.

Bill C-36 introduces the Canada education savings grant. What it does is it makes registered education savings plans even more attractive.

Beginning January 1, 1998 we will provide a grant of 20% on the first $2,000 in annual RESP contributions for children up to age 18. That is $400 of grant money per child that would go directly into an RESP program. With the introduction of this new grant, RESPs will now be among the most attractive savings vehicles available to Canadians for their children's education.

Bill C-36 also contains measures for the Canadian opportunities strategy to help address the urgent problem of youth unemployment. In this bill we propose to provide employers with an employment insurance premium holiday for hiring additional young Canadians. Canadian employers who hire young Canadians between the ages of 18 and 24 in 1999 and 2000 will be allowed to take advantage of a premium holiday in employment insurance. This will increase employment opportunities for youth and reduce payroll costs for employers by about $100 million over the next two years.

While the role of education is very important in ensuring equality of opportunity, the capacity to learn does not begin in school. It begins at home and depends on the nurturing and caring provided to the smallest infant.

That is why over the past year federal, provincial and territorial governments have begun to build a national child benefit system that will help fight child poverty so as to provide a good start in life for all Canadians. To build the system the 1997 federal budget allocated $850 million to create an enriched and simplified Canada child tax benefit. Bill C-36 implements this commitment.

The new benefit commences in July and provides $1,625 for the first child and $1,425 for all other children to all families with incomes up to $21,000. In the future legislation will be brought forward to implement the commitment in the 1998 budget to further enrich the child tax benefit by an additional $850 million. The federal government will announce details of this enrichment after discussions with provincial and territorial partners and Canadians.

The Canadian opportunities strategy and the child tax benefit provide diverse and comprehensive assistance to Canadians. These initiatives will help Canadians acquire the knowledge and skills they need for better jobs and a better life in the 21st century. By expanding access to opportunity we are building a stronger economy and a more secure society. I urge all members in this House to support Bill C-36 in moving us forward to implement key elements of our strategy.

Budget Implementation Act, 1998
Government Orders

10:20 a.m.

Reform

Monte Solberg Medicine Hat, AB

Mr. Speaker, it is a pleasure today to rise and lay out why I and the Reform Party stand in opposition to Bill C-36, the budget implementation act. I will start by giving the House an overview of the three big reasons why Reformers stand opposed to this legislation.

The first reason is that there is simply no overarching plan that really defines the roles and limits of government in this bill or in fact in any of the previous legislation we have seen from the government and which really establishes what the relationship is between government and its citizens.

The second point is that there is simply no solid plan to pay down the debt in this bill. Canadians have spoken with one voice from across the country and have said that paying down the debt is their number one priority. We see nothing that addresses that need in this legislation.

Finally there is no net tax relief in this legislation. I ask my friends across the way to note that I used the word net. While government members would have Canadians across the country believe that they are going to be better off after this budget, Canadians will pay more in taxes this year than they paid last year as a result of Liberal government tax increases.

I ask people to consider those as the reasons for our opposition to this legislation.

I want to make my point by speaking in the form of a metaphor. Taxpayers are like the goose that laid the golden egg. In fact you could say they are like the flock of geese which keep laying golden eggs. Over the last many years we have seen Ottawa run around and scoop up those golden eggs as quickly as they are laid. In some cases the government uses them to run essential programs and we are grateful for that.

People in Canada value some of the programs they get from government. They want a strong health care system. All members acknowledge that. They want a system that ensures they can get a decent education. They want a system that will provide vital essential services like national defence, foreign affairs and criminal justice. People do not begrudge for a second having to see the golden eggs that they produce go toward those types of programs.

We also know that much of what taxpayers produce in the form of revenue or golden eggs for the government is used for things that are simply not essential. The best example of that is the interest we have to pay on our debt today as a result of previous governments that have lived far too high on the hog.

Taxpayers are producing these golden eggs to the tune of about $45 billion a year just to pay the interest on the debt. The way it works out is that the average taxpayer in Canada today pays over $21,000 in federal taxes. Roughly a third of that, $6,000, goes to pay the interest on the debt.

My point is that these geese are laying a lot of golden eggs currently and Ottawa is scooping up the huge majority of them. Ottawa scoops up at least half of all the income of the average Canadian today. That is a tremendous amount.

As a result we think that these geese who are laying these golden eggs are feeling more than a little bit abused. They do not mind seeing the government take its fair share of these golden eggs, but they get a little incensed when they see the government eyeing their golden nest egg. That is exactly what is happening today in Canada.

As a matter of fact members should know that according to the Fraser Institute, since this government came to power in 1993 we have seen disposable incomes fall by $3,000 for the average family of four. We know that in Canada today we have virtually a negative savings rate. In other words people are having to dip into their savings to pay their taxes so that the government can spend more money on all kinds of inane things. Sadly that has been the case for a long, long time. When those sorts of things happen, there are real consequences.

What has happened is that we see these Canadian taxpayers, these geese who are laying these golden eggs, looking to the south. They are starting to say “We are Canadian geese. We do not want to go south, but unfortunately we are being forced to consider that option because we have mouths to feed”. They have all these goslings that have to be looked after. They have to feed the people they are responsible for. They are starting to cast about for other alternatives.

We point to the Nesbitt Burns study which came out not long ago. It showed that many professionals are fleeing this country for better opportunities south of the border and in other parts of the world. That study points out that although there are a few engineers coming in from other parts of the world, there are a whole lot more engineers disappearing from this country and going to places like the United States where they have a far better tax environment and more opportunity as well. Taxes are lower and there are more jobs in their field.

We see the same thing happening with people with skills in the high tech industries, computer scientists for instance. We also see the same thing with respect to the medical profession with both doctors and nurses. They are fleeing in droves. I know that my friends in the House, especially those from smaller centres, will acknowledge that there is not a doctor in the country who does not regularly get offers from American hospitals. Many of them ultimately end up going. As a result this country has a shortage of physicians.

As a consequence the situation today is people are being educated in Canadian universities at a tremendous cost to the Canadian taxpayers. Then we see them quickly leave to go to other jurisdictions around the world because there just is not the opportunity here.

The best example is British Columbia. British Columbia today has the highest taxes in all of North America. We can thank the provincial NDP government for that, but all of the blame does not lie there. We also have to point a finger at the federal government.

In Canada today we have the highest personal income taxes of any country in the G-7, not by a little but by over 50%. Our income taxes are 56% higher than the G-7 average. Is it any wonder that British Columbia today is entering a recession? It has gone from being the fastest growing economy in Canada to being 10th out of 10 provinces and 2 territories. It is unbelievable.

My friends across the way still continue to fire this tired rhetoric about the need to invest. That is fine. We understand the need to invest. However, if one is investing in education only to see the people who benefit from that education flee the country in terror at the prospect of having to pay taxes that are staggering compared to anywhere else in the world, does it make any sense?

The government talks about a balanced approach. Let us have a balanced approach but let it be an approach where we see taxes starting to fall in a meaningful way so that we can remain competitive with people in the United States, the U.K, Japan and other countries around the world.

Yesterday I pointed out to the House that we have members in this place who have seen family members leave for other countries to make a living. When I talk about this I should also point out that it is not necessarily just for lower taxes that they leave. An added incentive is that lower taxes create more jobs and better paying jobs.

Today the United States which has 4.8% unemployment does not have to worry about three people chasing every one job. Three jobs are chasing every one person. It is the complete reverse to Canada. As a result, wages are much higher, so people can go down to the United States and essentially command whatever price they wish.

We recently read in the newspapers the story of Waterloo university. A third of the graduating class disappeared to the United States because Microsoft made them an offer they could not refuse. I was talking to a gentleman who is on the board of directors of Waterloo university. He raised this issue with me as a serious consideration. The budget has done nothing to address that problem.

I know my friends across the way will talk about the tax relief in the budget. In fact, an hon. member at the beginning of my speech yelled across the way what about the tax relief in the budget. It is fair he raised that, but I think it is also fair for me to point out that Canadians have come out behind as a result of the government's actions since the beginning of the year.

Let me explain. It is true that the government will lay out about $7 billion in tax reductions over the next three years. However, what my friend across the way would have us forget is that on January 1 the government produced the biggest tax hike in Canadian history, a tax hike that will see CPP premiums rise by 73%.

What my friend across the way would also have us forget is that every year as a result of deindexation of the income tax system we now have an automatic tax increase called bracket creep that pushes different people in different income groups into higher tax brackets as a result of the impact of inflation.

Therefore, in this current year alone the impact of bracket creep will bring in just over $1 billion in new revenues for the government, wiping out the $880 million the government is to give people in tax relief. People are behind. My friends may call that progress but it is a perverted view of progress. We are going backward.

It is no wonder we have colleagues in this place who have children fleeing Canada as economic refugees and going to other parts of the world. Yesterday I referred to the member for Red Deer who has three children all living in different parts of the world because they went where the opportunities were best. What can they do? Are they to work in some minimum wage job simply so they can remain in Canada? They cannot do that. They need to pursue opportunity wherever it is.

My friend from Red Deer has a son who is now teaching at Princeton. He is a Rhodes scholar but he could not get a position at a Canadian university so he is teaching at Princeton. What is going on with this country? He has two daughters. One is in Norway and one is in the Netherlands. They had to leave to pursue opportunity. I point to my colleague from Calgary Southeast who has family members spread out all over the world because that is the only place they could find jobs to meet their skill levels. We have a problem.

It is fine for the finance minister to focus on education and for the parliamentary secretary to wax eloquent about what the government is doing for education. On the other hand they do not talk about what people do after they get that education. The millennium scholarship fund will end up being a subsidy to Microsoft. It will end up being a subsidy to big American corporations that scoop up those people who then go to the United States and other countries around the world. What about the balanced approach? Why has the government not addressed this problem?

I was talking a minute ago about British Columbia and I want to continue down that same path. As I mentioned, British Columbia is now in a recession. The government was patting itself on the back during the Liberal convention on the weekend, just about dislocating its shoulders. It was patting itself on the backs for the wonderful job it has done with the economy.

The Liberals forget that big chunks of the country are in serious trouble. Atlantic Canada is certainly in trouble with double digit unemployment. The fishery is dead. In many parts of the country there are no prospects.

In British Columbia both the NDP government at the provincial level and the federal government did what they could to kill the economy of one of the shining lights of the country. I point to a specific example of how that impacts on people. I could point to a number of examples from B.C. but I want to point to a recent example.

I just received a fax that was actually sent to another member of Parliament, the member for Edmonton North, by a lady from Port Moody, B.C. Members may have heard that a byelection is being held in Port Moody—Coquitlam, so it is interesting we would get this fax.

This lady is complaining about the amount of tax she has to pay. She enclosed photocopies of two cheques she sent to the Receiver General for Canada. At the bottom of the fax it says “taxes paid in instalments during the year, $46,000, which represented 23% of a $200,000 profit. The above two cheques are for profit exceeding the small business tax credit of $200,000, i.e. these amounts represent 55% of the profit”.

The total amount of these cheques would be somewhere in the range of $98,000 which they have had to pay in taxes to the federal government. That is a staggering amount of money.

Is it any wonder the job creating engine of the economy, small business, is staggering to create the jobs that are necessary? We still have an unemployment rate of 8.6%. I know my friends across the way think that is good, but it is almost double the unemployment rate in the United States. We are nowhere near our job creating potential. I encourage my friends across the way to consider that small businesses, the real creators of employment in Canada, are staggering with the tax levels.

My friends across the way have received visits from members of the Canadian Federation of Independent Business, one of my favourite organizations. These people stand up for small business owners. They stand up for people who are doing all the things that annoy Liberals. They are hardworking, honest and pay their taxes. They are complaining bitterly about high taxes.

When will the government understand that $7 billion in tax relief against probably a $15 billion tax increase means people are coming out behind? We cannot continue down this road. It is killing jobs. It is killing opportunity and is driving people from the country. This has to come to an end.

I will conclude by asking my friends to look up to the relief on the wall just above the gallery. They will see a word carved on the top of it. The word is “tax” carved in stone. How appropriate that in the House of Commons in Canada we have a shrine to taxes, but that is indeed the case.

Under the word “tax” we see a family sitting on a bench. It looks as though it is a very gloomy looking family. There is a mother, a father and a child. They are sitting on the bench probably in the ante-room of the minister of finance or perhaps in Revenue Canada, waiting to find out the verdict after they have submitted their income tax for the year. I guarantee they will be sorely disappointed. We know in Canada today they would find out they owe half their income to government.

The symbolism of having that relief on the wall is interesting. It is the only tax relief we have in Canada today. There it sits almost directly over the head of the finance minister and almost in direct alignment with the finance minister. That symbolism speaks volumes. It speaks more eloquently to our situation than I ever could.

There are a couple of interesting symbols just below that family. One of them very appropriately is a serpent, a snake. Somehow to me that symbolizes the government's approach to dealing with taxpayers. At the very bottom we see a whale. I think we should take that to represent government which has become huge and consumes about 46% of the wealth of the economy every year. The final figure is the man with the briefcase just on the right hand side.

Budget Implementation Act, 1998
Government Orders

10:40 a.m.

Reform

Charlie Penson Peace River, AB

The taxman.

Budget Implementation Act, 1998
Government Orders

10:40 a.m.

Reform

Monte Solberg Medicine Hat, AB

The taxman. The member for Peace River has correctly identified the taxman. We see his briefcase bulging with proceeds he has taken from individual taxpayers across the country.

I encourage people to reflect upon this tax relief, the only tax relief we have, sitting above the head of the finance minister, and to consider the symbolism of that piece of work above the public gallery. It speaks volumes about where the country is and perhaps even speaks to a perversity the government has in honouring taxes that I do not think should be honoured.

I conclude with the following amendment. I move:

That all the words after the word “that” be deleted and the following substituted therefor:

this House declines to give second reading to Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998, since the principle of the bill, while charging the consolidated revenue fund to establish and fund the Canadian millennium scholarship foundation, fails to guarantee that appropriate and objective accounting standards will be followed as advocated by the auditor general.

Budget Implementation Act, 1998
Government Orders

10:40 a.m.

The Deputy Speaker

There seems to be a hue and cry for questions and comments. I should advise the House that on 40 minute speeches, as this one was, there are no questions or comments. I know it was shorter than 40 minutes but the rule is the rule.

In the opinion of the Chair the amendment moved by the hon. member for Medicine Hat is in order and therefore I put it to the House.

Budget Implementation Act, 1998
Government Orders

10:45 a.m.

Reform

Ken Epp Elk Island, AB

Mr. Speaker, I rise on a point of order. Since there was some expression of interest in interrogating and cross-examining the member for Medicine Hat, I would ask that you seek unanimous consent to extend his time by 10 minutes so that debate can take place.

Budget Implementation Act, 1998
Government Orders

10:45 a.m.

The Deputy Speaker

Does the House wish to give unanimous consent for a question or comment period consequent on the speech of the hon. member for Medicine Hat?

Budget Implementation Act, 1998
Government Orders

10:45 a.m.

An hon. member

No.