House of Commons Hansard #55 of the 39th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Motion No. P-32

That a humble Address be presented to Her Excellency praying that she will cause to be laid before this House a copy of the 2004 Memorandum of Agreement between the Tsawwassen Indian Band and the Vancouver Port Authority with regard to the expansion of the Roberts Bank Port.

Motions for Papers
Routine Proceedings

3:25 p.m.

Conservative

Tom Lukiwski Regina—Lumsden—Lake Centre, SK

Mr. Speaker, Notice of Motion for the Production of Papers No. P-32, in the name of the hon. member for Delta—Richmond East, is acceptable to the government and this document is tabled immediately.

Motions for Papers
Routine Proceedings

3:25 p.m.

Liberal

The Speaker Peter Milliken

Is it the pleasure of the House that Motion No. P-32 be deemed to have been adopted?

Motions for Papers
Routine Proceedings

3:25 p.m.

Some hon. members

Agreed.

Motions for Papers
Routine Proceedings

3:25 p.m.

Liberal

The Speaker Peter Milliken

(Motion agreed to)

Motions for Papers
Routine Proceedings

3:25 p.m.

Conservative

Tom Lukiwski Regina—Lumsden—Lake Centre, SK

Mr. Speaker, I ask that the other notices of motions for the production of papers be allowed to stand.

Motions for Papers
Routine Proceedings

3:25 p.m.

Liberal

The Speaker Peter Milliken

Is it agreed that the remaining notices of motions for the production of papers stand?

Motions for Papers
Routine Proceedings

3:25 p.m.

Some hon. members

Agreed.

The House resumed from February 26 consideration of the motion that this House approves in general the budgetary policy of the government.

Financial Statement of Minister of Finance
The Budget
Government Orders

3:25 p.m.

Liberal

John McCallum Markham—Unionville, ON

Mr. Speaker, I am very pleased to rise today to deliver my response to the finance minister's budget speech from yesterday.

As I have said publicly many times since he tabled it, the budget does not really contain any initiatives that should excite Canadians but, at the same time, it does not have much that should overly concern them either, at least not in the near term.

As a result, the Liberal Party will allow this budget to pass through the House. I see no reason to cause a $350 million election and send Canadians to the polls over a document that does not do much that is harmful to the country. However, I have questions on a few of the proposals, which have shown for the first time that the Conservatives are willing to listen to the demands of the opposition. It has shown that the Prime Minister is willing to listen to the leader of the official opposition.

Here are some examples: making the gas tax transfer permanent, as we committed in February 2007; providing direct support to the auto sector, as we called for in January 2008; creating jobs and improving public transit through additional investments in infrastructure, as we advocated in February 2008; and increasing the northern residents deduction, as we promised in December 2007.

Here is what CTV's Bob Fife had to say about the finance minister's budget:

Look what he's done here. He's stolen the Liberal idea on help for the auto sector. He's stolen Liberal idea on job creation through infrastructure. And he's stolen the Liberal idea of making the gas tax for municipalities permanent.

A few weeks ago the finance minister was swearing up and down that there would be no help for the auto sector. While the budget only contains a modest amount for them, at least the minister has flip-flopped on this important subject. Perhaps in the future he will consider devoting more money to help this sector overcome the challenges of a high dollar.

In a perfect world the government should not have to intervene in such a way, but this is far from a perfect world when it comes to other governments protecting their homegrown industries. Governments around the world spend billions of dollars ensuring their countries have a thriving and competitive aerospace sector. We do as well here in Canada, and that is a good thing. Without that government help, Canada would not have an aerospace industry.

However, the auto industry is no different. Our neighbours to the south have been busy giving big money to open new car plants across the states, particularly in the southern states. There is no reason that we should simply let our auto jobs flow south because we are ideologically opposed to any kind of government participation or intervention. The budget gives the first indication that maybe the finance minister is beginning to understand this fact.

I will admit there were a few surprises in this budget that caught me a little off guard. For example, in the House, I have often raised the issue of the ecoAuto feebate program, introduced in budget 2007, and the chaos it has caused among Canadian auto manufacturers. There was a mention that this program was perhaps designed with good intentions, but was so poorly designed and executed that it threw our entire auto sector into total disarray. Civil servants at both the Department of Transport and the Department of Finance vigorously opposed the program for not being cost effective and being something that would result in an increased regulatory burden, without having much effect on reducing CO2 emissions. The public servants, however, were ignored in the interests of something the government thought would be politically advantageous.

Car manufacturers were incensed with the seemingly random cut-off lines, which were perhaps picked out of a hat. Vehicle winners and losers were chosen without any consultation with the auto industry, leaving auto manufacturers completely incapable of designing cars that met the program requirements. Honda even mused publicly that the Honda Fit would qualify for the rebate if it lowered the weight of its vehicle by removing some of the additional safety features they offered such as multiple air bags. Thankfully it did not come to that. This year's budget eliminates the program, which was described by The Globe and Mail as follows:

While it is never a good idea to complicate the tax system with targeted breaks, this feebate debacle is a particularly sad indictment of...[the] instincts [the Minister of Finance] and of his bureaucrats' waning clout.

As I have described, there are several things in this budget with which I can agree. Another example is the pre-tax paid savings plan, which is not a bad idea, although lower income Canadians will have a difficult time taking advantage of it. However, if this savings plan is intended to honour the government's promise on capital gains during the last election, then it must be judged an abject failure.

The government promised to eliminate any capital gains tax incurred by a Canadian, so long as the profits of that sale were reinvested within a six month time frame. Most experts pointed out that this was almost a de facto elimination of the capital gains tax and that the Conservatives' costing of the initiative was grossly underestimated. I pointed out at the time that the complexity of following investment dollars through potentially dozens of investments over several decades would be a nightmare for the Canada Revenue Agency, and others suggested it was impossible.

Yesterday, when the finance minister tabled his third budget, it became more than evident that the capital gains pledge had sufficiently joined the ranks of other broken campaign promises, such as the promise never to tax income trusts.

There are, however, some other things for which I must take the government to task. Critical areas mainly involving social justice or support for disadvantaged Canadians are largely or totally absent. Among other areas, I refer to support for aboriginal Canadians, social housing, early learning and child care, the homeless, as well as a meaningful attack on poverty.

While all these areas are important to Liberals, our single most important commitment is that we will never again return to deficit. The speed with which a Liberal government would implement any or all of these commitments would depend on the state of the government's finances and our commitment to stay in the black and pay down debt.

The promise to create a crown corporation to manage the EI fund has potentially far-reaching consequences and the implications of the proposal remain unclear.

As our leader has indicated, the Liberals would have paid down $3 billion of debt this year, rather than $10 billion, and we would have committed the remaining $7 billion as a down payment on Canada's massive infrastructure deficit, our crumbling bridges, roads filled with potholes, inadequate public transit, border infrastructure and Atlantic and Pacific gateways. This would have represented a major investment in future generations, every bit as important as paying down the debt. The budget instead devotes a paltry $0.5 billion dollars rather than $7 billion to infrastructure.

One could find another broken promise on page 17 of the last Conservative election platform in which the Conservatives promised to pay down a minimum of $3 billion of debt every year. Yet we have a budget that pledges to pay down only $2.2 billion of debt this year and $1.3 billion of debt next year. As the Canadian Taxpayers Federation pointed out yesterday, “Gone is the promise to pay down debt by $3-billion a year”. This broken promise should worry Canadians even more than the first because it shows how close to deficit this government is willing to skate.

When the previous government was in power, it maintained a $3 billion contingency fund that was budgeted to deal with unforeseen events over the course of the year. Whether that was a natural disaster, or a dramatic slow down in the economy, an ice storm, SARS crisis, or 9/11, the previous government was always prepared to deal with whatever was thrown its way, without returning to deficit. With this budget, however, there is no contingency reserve and the government finds itself perilously close to deficit for the first time in more than a decade.

Just how close are we? Consider the fact that less than four months ago the Finance Minister delivered a fiscal update that projected Canada's gross domestic product would grow by 2.4% in 2008. Yesterday he downgraded that forecast to 1.7% growth. If in a few months from now it turns out the minister was once again wrong by the same amount, then that alone is enough to give the country a slight deficit this year and a bigger deficit next year.

That is not my prediction, this is simply a matter of running the Finance Minister's own numbers through the formula he has provided in his budget under the headline, “Sensitivity of the Budget Balance to Economic Shocks”. Essentially Canada is now a SARS crisis away from deficit, or a mild American recession away from going back into deficit.

How did we get to this point? A brief look at Canada's recent fiscal history is in order.

When the previous government came to power in 1993, the Wall Street Journal was boldly predicting that Canada was on the verge of becoming a third world economic basket case because, despite having promised to do so, Brian Mulroney's Conservative government had failed to make a dent in the federal deficit. Luckily for Canadians, the Liberal Party, Canada's true party of fiscal prudence, came to power in 1993 and by 1997 Jean Chrétien and his finance minister, the right hon. member for LaSalle—Émard, had eliminated a $42 billion annual deficit.

On both sides of the border, history has shown that it is the Conservatives and the Republicans that run huge deficits, leaving the Liberals and Democrats to clean up the mess.

In the United States, Ronald Reagan's supply side economics led to record deficits in the 1980s, while Bill Clinton managed to generate an uninterrupted series of surpluses in the 1990s. Under Republican George W. Bush, the United States is again running up huge deficits and it will be up to the next president and Congress to clean up the mess.

In Ontario, the Eves government, including three ministers in the current federal government, campaigned on a balanced budget in 2003. However, when Dalton McGuinty won the election and brought in the auditors, he found that his Conservative predecessor had instead left him with a deficit of $5.6 billion.

Financial Statement of Minister of Finance
The Budget
Government Orders

3:35 p.m.

An hon. member

No.

Financial Statement of Minister of Finance
The Budget
Government Orders

3:35 p.m.

An hon. member

Who was it?

Financial Statement of Minister of Finance
The Budget
Government Orders

3:35 p.m.

Liberal

John McCallum Markham—Unionville, ON

I am not allowed to name him, but he is a well known member in this House who is currently the Minister of Finance.

Many Canadians will no doubt be surprised to learn that it is the Prime Minister's Conservatives, and not the Liberals, who are the biggest spenders.

Since the Conservatives came to power two years ago, federal program spending by the Prime Minister's government has increased by 6.4% compared to only 2.3% during the 13 years of Liberal reign. If we exclude years when there was a deficit, and tabulate only the eight years between 1997 and 2005, we arrive at an increase in program spending of 5.5% per year under the Liberals.

As Andrew Coyne of the National Post said when speaking of the Minister of Finance—and Andrew Coyne is not a Liberal to the best of my knowledge:

He [the Minister of Finance] has become the biggest spending finance minister in the history of Canada. It is an unfortunate but deserved reputation because Canada's new government has grown by 14% after two [name of the minister of finance] budgets .

While the Conservatives have generally spent more, this has not prevented them from making some foolish cuts, such as those in sectors that help Canada's competitiveness—for example, funding for universities—in sectors facing serious difficulties—for example, the Liberal forestry program—and, even worse, those affecting vulnerable populations—for example, programs targeting women and literacy programs.

We in the Liberal Party do not think this is a good budget. Nor do we think it is an egregiously bad budget. Therefore, we do not propose to bring down the government on this budget and to cause an election at this time, which, in our view, Canadians would not see as justified by a big expenditure over such a little budget.

What I find most disturbing in the budget is the fact that the government inherited the largest surplus in Canadian history a short two years ago. Now, through reckless overspending and economic management, which could only be described as in the style of the New Democratic Party, it has found itself with a fiscal cupboard that is largely bare and only a relatively mild SARS crisis or modest U.S. recession away from once more taking our country into deficit.

We are not voting on that issue. We do not think the budget is worthy of an election. However, I can assure members that we in the Liberal Party will be closely monitoring the fiscal management carried out by the government during these uncertain economic times.

I therefore move, seconded by the member for Hull—Aylmer:

That the motion be amended by deleting all of the words after the word “That” and by substituting the following therefor:

this House recognizes that this Budget contains some initiatives that attempt to mirror sound and intelligent Liberal policy proposals, but regrets that the government has made significant economic policy mistakes over the past two years and shown an NDP-like lack of fiscal prudence that prevent it from dealing with a downturn in the Canadian economy.

Financial Statement of Minister of Finance
The Budget
Government Orders

3:40 p.m.

Conservative

The Acting Speaker Andrew Scheer

The amendment is in order.

On questions and comments, the hon. Parliamentary Secretary to the Minister of Canadian Heritage.

Financial Statement of Minister of Finance
The Budget
Government Orders

3:40 p.m.

Kootenay—Columbia
B.C.

Conservative

Jim Abbott Parliamentary Secretary for Canadian Heritage

Mr. Speaker, I have a big smile on my face with that rather cute amendment the Liberals have proposed, because of course they have put the poison pill into it so that the NDP, presumably, will not be voting for it, although I happen to agree that the NDP members would not know a good financial statement if they saw one.

Nonetheless, that poison pill will reach that point. As my friend from Kings—Hants has noted, I am being somewhat cynical. I am sorry that I am being cynical, but clearly that is the poison pill, which was put in there intentionally.

However, I do have some good quotes. Carole Taylor, British Columbia's finance minister, said, “We were pleased with the tax cuts as announced in the fall so we are pleased to see them in the budget”. The minister, she said, “is continuing his agenda of trying to be a low-tax country”.

Brad Wall, Saskatchewan's premier, said, “This is a good federal budget in terms of first steps toward achieving a new partnership with the...government to achieve those goals provincially”.

Manitoba's premier, who is a New Democrat, of course, said, “We're pleased that the capital depreciation for manufacturing equipment has been extended”. He has other very positive comments, as do many people in the manufacturing and accounting sectors.

Therefore, speaking of cynical, I find the comments of the speaker to be very cynical in that he is attempting to position the Liberals as actually having a position. Theirs is a lukewarm position. It is a lukewarm party that we face on the other side of the House. There is an injunction that seems to be a fairly common injunction among most human beings: when they get a mouthful of lukewarm water, they have a tendency to spit it out.