House of Commons Hansard #171 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was first.

Topics

Questions On The Order Paper
Routine Proceedings

3:25 p.m.

Westmount—Ville-Marie
Québec

Liberal

Lucienne Robillard Minister of Citizenship and Immigration

A full time equivalent is not a measure used in the determination of the range for skilled workers. The determination of the number of arrivals under the skilled worker category is based on factors such as labour market or occupational demand and trends in international migration.

Questions Passed As Orders For Returns
Routine Proceedings

February 1st, 1999 / 3:25 p.m.

Peterborough
Ontario

Liberal

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

Madam Speaker, if Questions Nos. 160 and 161 could be made orders for return, these returns would be tabled immediately.

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

The Acting Speaker (Ms. Thibeault)

Is that agreed?

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

Some hon. members

Agreed. .[Text]

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

NDP

Michelle Dockrill Bras D'Or, NS

What projects in the Nova Scotia Regional Municipalities of Cape Breton, the Town of Port Hawkesbury, and the counties of Inverness, Richmond, and Victoria received assistance through the Canada—Nova Scotia Infrastructure Program?

Return tabled.

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

NDP

Michelle Dockrill Bras D'Or, NS

What groups, organizations or projects received funding and in what amount from the Enterprise Cape Breton Corporation in the period from 1993/94 to 1998/99?

Return tabled.

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

Liberal

Peter Adams Peterborough, ON

Madam Speaker, I ask that the remaining questions stand.

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

The Acting Speaker (Ms. Thibeault)

Shall the remaining questions stand?

Questions Passed As Orders For Returns
Routine Proceedings

3:25 p.m.

Some hon. members

Agreed.

The House resumed consideration of the motion.

Finance
Government Orders

3:25 p.m.

Progressive Conservative

Scott Brison Kings—Hants, NS

Madam Speaker, it is with pleasure that I rise today to speak on the prebudget report.

We are going to see in the not too distant future in the upcoming budget the clear direction of the government on the very important financial matters facing our country. Members of the opposition and all Canadians are waiting with some degree of suspense.

The world is changing at an unprecedented rate. Globalization and the forces of technology create change on a daily basis. Governments have to lead and it is going to take significantly more response from the current government than what we have been used to over the past five years.

This is a government without a real agenda, without a firm vision. It is government by cruise control. The government instead of looking well into the next century in terms of where it wants to take the country is focused solely on the next election.

The Organization for Economic Cooperation and Development recently said that current trends in Canada could lead to a substantial decline in Canada's per capita income relative to the OECD average. I repeat that there could be a substantial decline in our per capita income unless significant changes are made to the direction in which we are going as a country.

The only economic policy that this government has had has been in fighting the deficit. Our party and our members are as pleased as any party or any member with the fact that we have eliminated the deficit.

If we go back to 1979, it was the Conservative Party under the leadership of Joe Clark that introduced a budget which was the first fiscally responsible budget of a generation. At that time, had that budget been implemented, instead of being defeated for purely partisan purposes, Canadians would have been better served and the deficit quite possibly would have been eliminated far earlier than it was.

Canadians are responsible for the elimination of the deficit. Canadians have borne the brunt of deficit reduction. We have seen taxes in Canada increase from $114 billion in 1993 to $151 billion last year. That is a 23% increase. At the same time we have seen transfers to the provinces cut by 35%. Health care and education is reeling across Canada.

Our health care system is in tremendous shock, not just in my province of Nova Scotia but across Canada. Every province is reeling under the effects of the unilateral cuts to the transfers made by this government.

The government tells us to look at the fundamentals. The Minister of Finance and the Prime Minister tell us that the fundamentals are sound. We have, as part of those fundamentals, the highest personal bankruptcy rate in the history of our country. Currently we have a negative savings rate. We have the highest taxes of any of the G-7 countries.

The Liberals have cut the deficit by increasing taxes significantly, by cutting and by offloading responsibilities to the provinces. Canadians have the highest personal debt rate in the history of our country. While the government can pontificate about being in the black, Canadians are at an unprecedented rate of being in the red. The Economist magazine has published articles on the Canadian situation. At one point it reported that it was a miracle we were able to eliminate the deficit. It gave credit not to the current government but to the previous government. The Economist magazine specifically stated that the credit for deficit reduction in Canada goes to the passage of time and the successful reforms earlier this decade made by the previous government.

I will remind members opposite of those structural changes in the Canadian economy. Quite possibly they are wallowing in their own hypocrisy today because they fought these changes vociferously during election campaigns. The changes were: free trade, the GST, and the deregulation of financial services, transportation and energy. These were the tough visionary policies that were required then to provide benefits to Canadians today. I would posit that those are the types of tough visionary decisions that are required today to lead us into the 21st century.

Unfortunately, this government, a government of caretakership and cruise control, refuses to provide the type of visionary leadership that Canadians need.

The Minister of Finance and the Prime Minister keep saying that the fundamentals are strong. These are some of those fundamentals. We have an unemployment rate that is twice that of the U.S. The dollar hit record lows throughout the summer. Our productivity is lagging our G-7 partners. Our percentage of global foreign direct investment has dropped from 8.9% to 4% in recent years. The IMF and the OECD are both saying that taxes are too high. Our comparative tax burden in Canada relative to the U.S. continues to pummel initiative, productivity and success for Canadians.

Canadian families making $30,000 a year are paying out a marginal tax rate of approximately 40% in combined federal and provincial taxes. In nine of our ten provinces our top marginal tax rate is more than 50%.

We hit that top marginal rate at approximately $60,000. In the U.S. the top rate, federal and state combined, is in the mid to upper 40% range. Americans do not hit that marginal tax rate until they have an income of $271,000 U.S. or $410,000 Canadian. This type of disparity, this type of spread between our tax rates and the tax rates of our largest trading partner, is simply not sustainable. It is one of the reasons that an unprecedented number of our brightest and best young people are going to the U.S., what is frequently referred to as the brain drain.

Since 1973 productivity in this country has been lagging behind our competitors. We have seen a secular decline in the Canadian dollar, which is closely linked with productivity. The Prime Minister's erudite response this summer was that somehow the dollar was not such a big problem and that it would help tourism. The finance minister, the Prime Minister and other members opposite seem to believe that Canada can devalue its way to prosperity.

In fact it is quite the opposite. The contrary is true. If these low dollar and low productivity policies continue we will have a self-fulfilling prophecy in that many Canadian manufacturers and employers will put off investing in the types of capital investments and productivity enhancement infrastructure they need to become better, more productive and more competitive in a global environment. This will happen for two reasons. First, many of these productivity enhancement items, such as equipment or software, are imported and are more expensive because of the low dollar. Second, the companies feel that they do not have to become more productive and more competitive because they are hiding behind a non-tariff trade barrier, also known as a low dollar policy. When that changes it is going to be a significantly difficult time for Canadian employers and employees as we see the effects of current government policies and inactivity in addressing the issues of productivity.

The issues the government should be dealing with are lowering taxes, reducing the regulatory burden, working with the provinces to eliminate interprovincial trade barriers and working to address labour market flexibility. Those are the types of issues that need to be addressed. But the government has focused on one thing and one thing only. It has forgotten the fundamentals of building a strong economy and making the types of investments required to lead Canadians effectively in a very competitive environment.

We are hoping that in the upcoming budget we do not see more Liberal focus group economics. We are looking for leadership, not politics. In the last budget, when there was a vague whiff of a surplus, the Liberals brought forward a millennium scholarship program which will only benefit about 5% of students seeking higher education. Even then, it will only kick in in 2000. It is a scholarship program which is not even available to students pursuing education in private career colleges.

There is a global trend toward private post-secondary education. It is part of the labour market flexibility that will be very important if we are going to compete. But this new scholarship program does not recognize a global trend in education. In the last budget debate we suggested an amendment that students attending career colleges and private colleges, which are the wave of the future, could receive benefits from the millennium scholarship fund. Instead the Liberals did what was politically expedient and not what was sound from a public policy perspective.

We are concerned with a government that would spend $2.5 billion before it knew the degree of the surplus. There is nothing like the smell of hard currency around the snouts of Liberal backbenchers to incite a feeding frenzy.

The Liberals know a great deal about spending. It was the Liberal Party in the late 1960s which was able to take a zero deficit to $38 billion by 1984. The Liberals deserve some credit for having developed a certain proficiency in spending. However, we hope they do not revert to their old ways.

There is a concern on this side of the House and certainly in our party that the Liberals are practising the politics of signalling right and then turning left. We know in their own heart of hearts that they have had to pinch their noses and pursue policies of the previous government, which they knew were right, over the last several years. We are somewhat happy that they have done that. The only thing worse than the Liberals stealing Conservative policies would be for them to implement their own, which would be far more deleterious to Canadians in the end.

If we are going to be proactive in this country, if we are going to be successful in the 21st century, I would hope that the finance minister would spend a significant amount of time reviewing the prebudget report, and particularly the Progressive Conservative dissenting report within which he will find some very sound and forward thinking policy initiatives, such as the reduction of EI premiums.

Payroll taxes are one of the single biggest impediments to job growth in our country. The Minister of Finance has said in the past that payroll taxes kill jobs. Now we are asking that he actually live up to his rhetoric, reduce payroll taxes and put the money back into the hands of employers and employees. Employers can create jobs if we give them the tools. One of the things we are putting in the way are payroll taxes which are unnecessarily high.

Any Liberal opposite who would argue that high payroll taxes do not kill jobs would have to prove to me that the law of supply and demand is no longer relevant. When the cost of input is increased, whether it is for labour or anything else, the demand for that input is reduced.

Unless the Liberals are proposing that we repeal the law of supply and demand, I would suggest that we need to reduce EI premiums. We are proposing that EI premiums be reduced to $2 per $100 of insurable earnings.

We are calling for a full indexation of income tax brackets. Now is the time, particularly in a post-deficit period, to eliminate the bracket creep and reverse the trend. There have been 1.4 million low income Canadians who have been pushed onto the tax rolls and another 2.5 million Canadians who have been moved into higher tax brackets due to partial indexing. We are calling for full indexation of the tax brackets and we are hoping that the minister will provide this in the upcoming budget.

We are calling for an increase in the basic personal exemption to $10,000. In the U.S. a low income American does not begin to pay taxes until reaching an income equivalent to $11,000 Canadian. In Canada, supposedly a kinder and gentler nation, we start taxing Canadians at $7,000.

In the last federal budget the Liberals said that they provided tax relief for low income Canadians. In fact somebody making $10,000 per year received a tax benefit of approximately $78 per year in the last federal budget. That is about one coffee per week at Tim Horton's. If they go to Starbucks it is one per month. That was the pittance, the insult, that the Liberals threw at low income Canadians in the last budget.

We are calling for an increase in the capital gains exemption. Throughout Canada we are seeing growth in high tech industries and in small businesses, particularly in the area of technology. The current amount of $500,000 simply does not reflect the values of these businesses. We must keep in mind that for many small business owners, really their complete life, their entire capital accumulation is within their small business. If we are to encourage small business people and create an environment within which Canadians want to grow and succeed in entrepreneurial ventures, increasing the capital gains tax exemption makes sense and makes sense now.

We are calling for an increase in the health and social transfers to the provinces. The Liberals have cut significantly since 1993, some 35%, in their transfers to the provinces. What is interesting is on the health care issue now the Liberals, after having unilaterally cut the health care system across Canada, forcing Canadians to face significant losses in the quality of our health care system, they are saying they want to reinvest but they want to ensure they can protect Canadians against the provinces.

They are saying they want to make sure they can have some control because they do not want the provinces making the wrong decisions. It was not the provinces' fault what happened since 1993, it was the federal government's fault. The provinces did not reduce their transfers from the federal government. It was the federal government that reduced those transfers that set the provinces and our health care system reeling across Canada. Now we have the patriarchal big brother approach by the federal government and the unbridled hypocrisy of federal government members when they say they want increased accountability from the provinces when in fact when given the opportunity to be responsible with health care they blew it since 1993.

We are calling for indexing the child tax benefit. There was a private member's bill by one of our members which was passed by the House. We are calling for the government to follow up and index the child tax benefit to ensure that inflation, even at a very low rate, does not reduce and eliminate this benefit for low income Canadians.

We are calling for real and measurable debt reduction targets. It is very important for our international markets to see that the commitments Canada is making or is willing to make to debt reduction are not simply going to disappear amidst new Liberal spending. We need to see firm debt reduction targets with the goal of reducing our debt to GDP ratio to the G-7 average of 55% over the next five years.

We are calling for an increase in the RRSP foreign content limit to 50%. It is inconsistent with asking Canadians to invest to protect their future, invest and save for their own future, and then denying them the opportunity to achieve geographic diversification in their portfolios. The Canadians equities market represents only about 1% to 1.5% of global equities markets, yet we are forcing Canadians to invest in one small equities market. That is simply not consistent with maximization of the returns.

We are also calling for parliamentary control—

Finance
Government Orders

3:45 p.m.

The Acting Speaker (Ms. Thibeault)

I am afraid the hon. member's time has expired.

Finance
Government Orders

3:45 p.m.

Liberal

Paul Szabo Mississauga South, ON

Madam Speaker, the member referred in a number of instances to the effective tax rates in Canada. He was talking about someone making $30,000 a year as an example. I think he is mistaken and I would like to set the record straight.

If a taxpayer has $30,000 of taxable income they are just at the first, lowest effective rate federally, which is 17%. Provinces have a variety of rates but they are roughly equivalent to about 50% of the federal taxes. So that someone in Ontario, for instance on $30,000, would pay 50% of the federal rate overall. That means an effective rate of 25%.

What the member failed to include in his calculation was that all Canadians get a non-refundable basic personal amount of about $6,500 which reduces the taxes otherwise payable. Therefore the real tax out of pocket of a single person making $30,000 is only 19.6%, not the numbers the member was giving.

The second matter the member spent some time on was with regard to the comparative brackets between Canada and the U.S. Clearly there are some differences there. If all the member wants to do is have a comparable bracket for someone in the $250,000 range to be equivalent to the U.S., I suggest we establish a rate of 29.01% which is the highest federal rate plus .01% more and set it at $.5 million and then we will be better than them. It is really a frivolous argument.

The question I want to ask the member is on the CHST issue. As the member knows, there is a lot of misinformation concerning that. In Ontario the actual cuts in CHST were less than $1 billion and yet at the same time Ontario had tax cuts of $4.3 billion. It is clear that although there was an equitable reduction across the country with regard to the transfers related to health, the provincial governments themselves have to make decisions. One of the decisions the province of Ontario made was to reduce taxes and to cut health services at the same time. These choices are provincial choices. They are not federal choices.

I ask the member whether he had the same situation in his province.

Finance
Government Orders

3:50 p.m.

Progressive Conservative

Scott Brison Kings—Hants, NS

Mr. Speaker, I thank the hon. member for his question.

The member calls it a frivolous argument that the top marginal tax rate in the U.S. does not kick in until the threshold of $271,000. In Canada it kicks in at approximately $60,000. He calls it frivolous that we actually tax at a higher rate at the top marginal tax rate and we start at $60,000 and in the U.S. it does not start until the equivalent of $410,000. How can the member justify his assertion that this is frivolous?

In last year's prebudget debate the hon. member opposite when I was speaking about the brain drain said that Canadians should not want to leave this country because of our great health care system and because of all the social niceties. He listed various reasons why Canadians would not want to leave the country.

My response is that perhaps his time would be better spent standing at the border explaining to Canadians who are voting with their feet and choosing to go to the lower tax, higher opportunity environment why they should not leave, because they are leaving. They are leaving because the government continues to tax at all levels of income far too high.

The hon. member still obviously does not understand the impediment to economic growth that high taxes are. When he mentions Ontario he forgets to mention that Ontario actually increased its investment in health care. While the federal government cut its investments in health care, the province of Ontario and many other provinces increased their investments in health care.

The member is right to identify there was a tax cut in Ontario. This tax cut led to one of the strongest levels of economic growth in our country. It led to one of the strongest levels of job growth in our country. Perhaps the member should learn from the evidence and the example of Ontario that tax cuts can create economic growth and that governments can make the right choices and cut taxes and invest more in health care.

Finance
Government Orders

3:50 p.m.

Reform

Jason Kenney Calgary Southeast, AB

Madam Speaker, the comments from the member for Mississauga South indicate once more that Liberal accountants may know how to count beans but they do not understand how to grow the economy.

The hon. member opposite said that it really is not consequential whether we have the highest marginal rate kick in at $60,000 or a quarter of a million or a half a million dollars. This really does suggest he does not understand the disincentives to work, save and invest among the most productive segment of the economy. I am offended when I hear a member from Ontario, who stood in this place and voted to cut billions of dollars in health transfers from his own people and his own province, turn around and blame the Ontario government for cutting taxes. Yes, the Ontario government cut taxes but its income tax revenues went up by $5 billion because more people are working, saving and investing, something a Liberal could not possible understand as a rational response to tax relief.

Does the member for Kings—Hants agree with me that the member opposite does not understand the supply side dynamic that tax relief provides as demonstrated in the crucible of Ontario in the past three years?