House of Commons Hansard #8 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

The Economy
Government Orders

10:25 a.m.

Some hon. members

Oh, oh.

The Economy
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10:25 a.m.

Conservative

The Deputy Speaker Andrew Scheer

Order, please. I think that statement prompted a negative reaction from the House, so I would ask the member for Mississauga South to withdraw the word that he just used to describe the member for Cariboo—Prince George.

The Economy
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10:25 a.m.

Liberal

Paul Szabo Mississauga South, ON

I withdraw the comment, Mr. Speaker, but I do have the floor and he is still talking. It is difficult for me to respond to the question that I sat and listened to that he is not allowing me to answer. I would ask him to just listen and cool his jets.

There is one element that the member forgot to mention, which the finance minister mentioned many times in this place. The debt to GDP now is very modest compared to back when the Liberals took over the $42.5 billion deficit from Brian Mulroney. The debt to GDP made us a basket case. We were the laughing stock of the world in terms of our economic position. That is the difference.

An impossible situation requires making tough decisions. We cleaned it up and we passed on big surpluses to the Conservative government.

The Economy
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10:25 a.m.

NDP

Claude Gravelle Nickel Belt, ON

Mr. Speaker, the member talked a lot about accountability during his speech. The government should be accountable to the people of Canada but the official opposition should also be accountable to the people of Canada.

The budget will raise EI premiums. It has a transport tax and it has the HST that people in Ontario and B.C. will need to pay. The member for Markham—Unionville said that the Liberals were against these tax increases.

I would like to ask the member for Mississauga South why his party did not show up to vote against the budget. That would have nullified these tax increases. If the Liberals want the government to be accountable, how come they are not accountable?

The Economy
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10:30 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the issue here is what is in the best interests of Canadians and what is in the best interests of our economy. All of the examples that I gave in my speech go to the issue of character.

I want to quote the Leader of the Opposition in his speech yesterday to this place in response to a question asked of him. He said:

The issue that goes to character is that the Conservatives will not stand up in the House of Commons before Canadians and admit they have increased taxes. That is the issue of character. That is the issue that undermines confidence and trust in the government, and that is why we will continually oppose the Conservatives when they seek to tell Canadians things that are simply not true.

The Economy
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10:30 a.m.

Carleton—Mississippi Mills
Ontario

Conservative

Gordon O'Connor Minister of State and Chief Government Whip

Mr. Speaker, in budget 2009, we presented Canada's economic action plan to stabilize and protect our economy for the short term, while taking steps to improve Canada's long-term economic growth and prosperity. The plan was designed to boost confidence and economic growth and to support Canadians and their families during a period of severe global economic weakness. Budget 2010 builds on these goals. The measures presented in budget 2010 will contribute to Canada's recovery and sustain our economic advantage now and for the future.

Canada has weathered the global recession better than all major industrialized countries and we are returning to economic growth following the deepest economic downturn since the Great Depression of the 1930s. However, we do not yet have a firmly established recovery. As such, Canada's economic action plan will continue to provide unprecedented support for the Canadian economy through 2010 by going beyond the immediate crisis and building on strategic advantages set out in advantage Canada in order to create a more competitive economy.

Year two of the action plan delivers $19 billion in federal stimulus spending, augmented by $6 billion in stimulus from provinces, territories, municipalities and other partners, for a total of $25 billion. Over 90% of year two funding is committed and ready to be delivered. This includes $3.2 billion in personal income tax relief, more than $4 billion in actions to create and protect jobs, $7.7 billion to modernize infrastructure and improve housing across Canada, $1.9 billion to create the economy of tomorrow and $2.2 billion to support industries and communities.

The action plan gives Canadians more flexibility to improve their quality of life even when times are tough. Our plan leaves more money in their pockets. It makes permanent tax reductions that build a strong foundation for future economic growth and higher living standards for Canadians.

Reducing the tax burden on Canadians has been a key element of getting through the global recession while setting the foundation for future growth. Tax relief and the economic action plan benefit all taxpayers, especially lower and middle income Canadians. For example, Canada's low and middle income seniors are benefiting from an increase in the age credit amount. As a result of this increase, the amount of tax relief provided by the age credit for this year alone is up to $967. As well, the working income tax benefit has been enhanced so that it now provides tax relief of $1.1 billion annually to reduce thereby the welfare wall and strengthen work incentives for low income working Canadians.

Indeed, even before the introduction of Canada's economic action plan, Canadians were benefiting from the tax relief introduced by this government. A key example is the two percentage point reduction in the goods and services tax rate. This is a tax break for all Canadians, even those who do not earn enough to pay personal income tax.

Canadians deserve praise for their ability to persevere during this global recession. The economic situation has taken a toll on workers and their families, and Canadians need to have faith that their government is there to assist them. Through Canada's economic action plan, the government is giving Canadians the security and support they require.

The budget is helping workers and their families by strengthening benefits and enhancing the availability of training while the economy moves into recovery. Under the action plan, $1.6 billion will be available to strengthen benefits for Canadian workers in 2010-11, including up to five extra weeks of EI regular benefits, to a maximum of 50 weeks, for all eligible claimants.

The economic action plan is also providing an additional $1 billion in 2010-11 to enhance training opportunities for Canadian workers. These measures will not only assist workers in need now, but will also give them the opportunity to have more meaningful jobs in the future. Canada's economic action plan includes provincial and territorial actions, and is expected to create or maintain approximately 220,000 jobs by the end of 2010.

Traditional industries, including the forest sector and manufacturing industries, have been hit hard by declining sales in the slowing economy. The communities where these industries are located need assistance as they adjust to cyclical and structural changes in the economy.

To promote clean energy generation in the forest industry, budget 2010 creates the next generation renewable power initiative, with $100 million over the next four years to support the introduction of advanced clean energy technologies in the forest sector.

Budget 2010 also provides $135 million in funding over two years for the National Research Council's technology cluster initiatives. The clusters accelerate regional innovation by fostering research collaboration among governments, businesses and academic institutions and by promoting the development of knowledge-intensive companies in key areas.

During this time of continuing global economic uncertainty, Canadians can be assured that our government will never stand by and allow communities in Canada to suffer from threats beyond their borders. Canada's economic action plan accelerated and expanded federal investments in infrastructure. The immediate actions we took have helped Canada come out of the economic crisis with more modern and greener infrastructure. Moreover, for the 2009-10 construction seasons, the government has committed close to $5.5 billion in stimulus funding to over 7,000 projects. Of that amount, almost $4 billion is expected to be spent in 2010.

Investments have moved quickly. We have shortened the time needed to provide federal approval for major projects. We have partnered with the provinces, territories and municipalities, not only to identify ready to go projects but also to leverage their funding contributions. For example, the economic action plan included $500 million over two years for the recreational infrastructure Canada initiative. The initiative is being delivered by the regional development agencies in their respective areas to promote the construction of new community recreational facilities and to upgrade existing facilities across Canada. Investments in infrastructure are paving roads, fixing sewers, repairing bridges and creating jobs.

Provinces and territories should also be assured that they will be able to continue to count on long-term, growing support from this government. In 2010-2011, major federal transfers to provinces and territories will total an all time high of nearly $53.6 billion, an increase of $2.1 billion over 2009-10. In 2010-11, the support includes an addition $1.4 billion in the Canada health transfer, $321 million in the Canada social transfer, $187 million in equalization and $166 million in territorial formula financing. In addition, $525 million will be provided through one time payments to ensure that provinces are protected from any decline in their total transfers in 2010-11, in recognition of the short-term challenges being faced by provinces as we emerge from the global recession.

We are ensuring that all provinces receive at least as much support through major transfers this year as they did last year. The government's role in building a more competitive economy includes creating an environment that enables its visionaries to excel and that does not stand in the way of their success. Any competitive economy requires competitive taxes, and tax relief supports businesses and jobs in the short term by providing up-front stimulus, which helps businesses weather challenging economic times while creating a long-term advantage for sustained economic and employment growth.

Since 2006 the government has implemented bold tax reductions and tax changes to provide businesses with a competitive business environment that encourages new investment, growth and job creation in Canada. Canada's economic action plan introduced temporary measures to make computers, as well as machinery and equipment for manufacturing and processing, more affordable for Canadian businesses. Our economic action plan also included a permanent increase in the amount of small business income eligible for the reduced federal income tax rate.

This year, as a result of federal and provincial business tax changes since 2006, Canada will have the lowest overall tax rate on new business investment in the G7 and below the average of the OECD. By 2012, Canada will also have the lowest statutory corporate income tax rate in the G7.

The tax relief actions our government has taken are positioning Canadian businesses to emerge stronger and better equipped to compete globally as the economy recovers. These measures to reduce the tax burden on Canadian businesses are complemented by the elimination of remaining tariffs on machinery and equipment and inputs. This will lower operating costs for Canadian manufacturers and encourage innovation. This means that Canadian manufacturers will be able to import goods for further production in Canada without the burden of tariffs and the cost of complying with certain customs rules such as rules of origin.

Together, these will give Canadian manufacturers a competitive advantage in the global marketplace by lowering production costs, increasing competitiveness and enhancing innovation and productivity. Manufacturers have stated during consultations that such a measure will help them maintain and increase production and employment in Canada and expand their exports. Budget 2010 delivers.

A competitive advantage also requires support for the pursuit of knowledge. Our government recognizes that research and development is an important driver of long-term economic growth and that discoveries stemming from research help improve the quality of life of Canadians. Canada ranks first among the G7 countries in terms of expenditures on research and development in the higher education sector as a share of the economy.

Building on this leadership position, the economic action plan includes an unprecedented $4 billion in additional funding for research infrastructure, knowledge and commercialization. Budget 2010 continues this momentum by providing additional funding to support world class research and researchers, including $32 million per year to the federal research granting councils to sustain their overall support for researchers at Canadian universities, colleges and hospitals and to strengthen commercialization.

Budget 2010 also doubles the budget of the college and community innovation program, providing an additional $15 million per year to promote research collaboration between colleges and companies in all parts of Canada. In addition, the budget announced a new small and medium size enterprise innovation commercialization program, with $40 million over two years for federal departments and agencies to demonstrate the use of innovative prototype products and technologies developed by small and medium size businesses.

The government's plan is to ensure that our country will emerge from the recession with a stronger economic advantage than ever before. There is no question that our country has come through the global economic storm in an enviable position. As Canadians we should be proud of what we have accomplished during a time when other nations were struggling with far greater economic challenges.

That Canada endured recent global turbulence with such resilience is a testament to our economic action plan. It was one of the most comprehensive stimulus packages in the industrialized world, an approach endorsed by the G20 and the G7. As I indicated earlier, the impact of the recession on Canada's economy has been less severe than it has been on virtually all other major industrialized economies, and Canada is expected to have the strongest recovery in the G7 in 2010.

The world can learn a lot from Canada. As Paul Krugman, the Nobel Prize winner in economics, recently said:

the quiet success stories deserve at least as much attention as the spectacular failures. We need to learn from those countries that evidently did it right. And leading that list is our neighbor to the north. Right now, Canada is a very important role model.

As host of this summer's G20 summit, Canada can serve as an example of how to prepare for and prevent a crisis, and an example of the global contributions that must be made to overcome it. While we are seeing some signs of recovery from the serious global recession, the situation remains fragile. Thanks to our strong economic and fiscal foundation, as well as the timely implementation of our economic action plan, Canada is in relatively good shape compared with other advanced economies.

Based on this position of strength, I can assure members that our country will be a vital part of the long-term solutions, as well as a meeting place for a number of key international events this year that will help transform a world in crisis into one of unparalleled long-term stability.

The Economy
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10:45 a.m.

Liberal

Wayne Easter Malpeque, PE

Mr. Speaker, I listened to what the hon. member said.

I know there are quite a number of urban people in the government's caucus, and there are also quite a number of rural people. One of the sad points in terms of the budget is that there is a glaring neglect in the agricultural arena.

The hon. member talked about jobs and the economy, and manufacturing and exports. The problem is that Canada, in terms of its exports in the agricultural sector, is losing its own market share in Canada because of American farm policy. It is not that our farmers cannot be competitive. Our farmers are competitive, but what they lack is competitive policy.

With the livestock industry, the hog and beef industries in terrible financial trouble, there is not one new dime in the budget for primary producers. There is a little bit of recalculation on agri-flex, but not a new dime in the budget.

I ask the hon. member, seeing as he is a member of the total caucus, what happens over there? Do farmers just not rate? Does the government just not care about the farm community in terms of its prosperity?

The Economy
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10:45 a.m.

Conservative

Gordon O'Connor Carleton—Mississippi Mills, ON

Mr. Speaker, I would like to point out that of our 145 members, about 100 have rural constituencies, but the hon. member's party is essentially a Toronto-Vancouver-Montreal party. It has very few agricultural members. That is because our policies have been very solid as we look toward the agricultural community.

If the hon. member would check the records, he would find that we have spent more on agriculture than the previous Liberal governments did. We will continue to support the agricultural community, which we consider vital to our economy.

The Economy
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10:45 a.m.

NDP

Carol Hughes Algoma—Manitoulin—Kapuskasing, ON

Mr. Speaker, I find it quite interesting that we are talking about the economy and jobs. I come from a riding that has seen a phenomenal number of jobs lost in the riding, especially in regard to our resource industry.

I want to ask the hon. member about corporate tax cuts. The fact is that the former Liberal government believed that corporate tax cuts were the answer and the Conservative government has followed in its footsteps. The Liberal government started reducing the rate from 28% to 21%, and then under the Conservative government it went from 21% to 18%, and now it is going to 15%. Across the board, provincially and federally, we have seen a 36% reduction in corporate tax cuts, and yet business productivity has not increased.

Why is it that the Conservative government continues to go down the road of corporate tax cuts and increases the taxes on workers? The Conservatives are going to tell us that they are not increasing taxes on workers and families, but they are. The HST is coming in, and there will be tax increases on workers with regard to the EI increases starting in 2011, some $19 billion.

Instead of all of these big corporate tax cuts, does the hon. member not think that the government should be investing in people in general?

The Economy
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10:50 a.m.

Conservative

Gordon O'Connor Carleton—Mississippi Mills, ON

Mr. Speaker, if I can keep track, our government has cut about $200 billion in taxes, both for individuals and corporations. We believe that the source of wealth in the economy is in the private sector.

We live in a time when economic stimulus is required by federal, provincial, and territorial governments to help the economy recover, and that causes the economy to grow because of government infusions. We are now at the transition point. We want the private economy to take over and drive this economy. We believe the best way to do that is to reduce barriers to business and reduce taxes so that more people can be employed.

The Economy
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10:50 a.m.

Liberal

Paul Szabo Mississauga South, ON

Mr. Speaker, the finance minister's speech included the statement that balancing the nation's books will not come at the expense of pensioners or by raising taxes on hard-working Canadians, but that is simply not true. There will be a 9% increase in employment insurance premiums in the first year. There is the imposition of a 31.5% punitive tax on income trust distribution, which incidentally wiped out $35 billion of the retirement nest eggs of Canadians. The Conservatives are also imposing a new air traveller's tax, notwithstanding that the Minister of Transport said just two days ago that cutting taxes creates jobs, more hope and more opportunity. It seems to be a contradiction. It goes to character. That is the issue.

How could the member stand in his place and say the Conservatives are not raising taxes when in fact they are? It undermines the confidence and trust in the government. It is a matter of accountability and integrity. Why are the Conservatives not prepared to admit that they are raising income taxes and other taxes?

The Economy
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10:50 a.m.

Conservative

Gordon O'Connor Carleton—Mississippi Mills, ON

Mr. Speaker, as a philosophy we believe that users should pay the costs for the service. That is why when costs go up, for instance in the airline industry, we believe that people who use the airlines should pay the costs. That is not a tax; it is the cost of operating.

Also with employment insurance, that fund is supposed to remain balanced. At the moment we are putting an extra $4 billion or $5 billion into that fund to keep it afloat. There is a board in charge of that fund which sets the rates. We have frozen the rate for two years which means we have subsidized $5 billion and then $4 billion. Into the future as the economy recovers, we believe that the EI fund can take care of itself. That is not a tax; that is how the EI fund operates.

The Economy
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10:50 a.m.

NDP

Jim Maloway Elmwood—Transcona, MB

Mr. Speaker, experts say that corporate tax reductions have not had the desired effect the government thinks they should have. For example, Statistics Canada indicates that business spending on machinery and equipment has declined as a share of GDP and total business investment spending has declined as a percentage of corporate cashflow. This is the opposite of what the government is trying to achieve.

IT use by Canadian business is only half of that of the United States. That comment is attributed to Kevin Lynch, former clerk of the Privy Council. In 2007, Canadian business spending on R and D, about 1% of GDP, ranked 14th in the OECD, well below the average 1.6% and only one-third of that of Sweden, Finland and Korea. In addition, productivity growth was actually worse in the last decade.

There is a lot of evidence out there that the government's agenda of reducing corporate taxes is not having the desired effect. Why do the Conservatives insist upon doing things that do not work?

The Economy
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10:50 a.m.

Conservative

Gordon O'Connor Carleton—Mississippi Mills, ON

Mr. Speaker, in the last two budgets we have brought in a number of initiatives to improve productivity but at the same time the world recession hit. It affected all the commercial enterprises in this country. They had to retrench. They are now starting to recover and there are signs now that this economy is coming back. With the initiatives in place and the lower taxes, we expect the productivity of this country to increase dramatically in the future.

The Economy
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10:50 a.m.

Peterborough
Ontario

Conservative

Dean Del Mastro Parliamentary Secretary to the Minister of Canadian Heritage

Mr. Speaker, that was an important question that was just asked regarding corporate tax cuts and whether or not they are working. Our government's overall low tax policy has created a tax freedom day for Canadians which now comes almost three weeks earlier.

Has the hon. member heard today's jobs report? If he has, is he encouraged by this jobs report? Does he not see this as evidence that our economic action plan in fact is working and that we are witnessing a recovery taking place in Canada?