Debates of May 14th, 2014

Finance—Main Estimates 2014-15

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, there should be some adjustment for time.

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

We are in fact doing that.

The hon. member for Kings—Hants has the floor.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, does the minister agree with the following quote from Finance Canada's briefing materials?

In the long run, expanding the CPP would bring economic benefits. Higher savings will lead to higher income in the future and higher consumption possibilities for seniors.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, Canadians simply cannot afford to pay higher CPP payroll taxes, especially during a fragile economic recovery. That is why we have brought forward pension income splitting, pooled registered retirement plans, and tax-free savings accounts and launched extensive consultations on a new target benefit retirement plan.

The result of all of this is that poor seniors represent a smaller proportion of the population than poor Canadians overall.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, why is it okay for the minister to pad his books with higher EI premiums to create a phony surplus on the eve of an election, but it is not okay to gradually increase CPP premiums to help Canadians have a better retirement?

Why are higher payroll premiums okay for Conservative politics but not okay for Canadian pensioners?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we understand that small business is a cornerstone of our economy, creating jobs that support families in all our communities.

That is why we introduced a three-year freeze on EI rates. That will leave $660 million in the pockets of job creators and workers this year alone.

What is more, beginning in 2017, premiums will be set according to a seven-year break-even rate. This will ensure that premium revenues are no higher than the actual costs of the EI program.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, the minister is freezing EI premiums at a higher rate until after the election.

[Ralph Goodale, Liberal, Wascana, SK]

It is two years after.

[Scott Brison, Liberal, Kings—Hants, NS]

I should say two years after the election.

Mr. Chair, 57% of Canadians believe the next generation will be worse off than they are today. Why does the minister believe that is the case? Why do Canadians believe that?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I am happy to report that Canadians are better off by over 10%, and poorer Canadians by 14% than in the previous 10-year period.

Canadians have enjoyed the strongest income growth in the G7. Canada is the only G7 country to have fully recovered business investment lost during the recession.

From an intergenerational perspective, mobility for Canadians is greater than in many of the other countries that we compare ourselves to. Canada, with half the debt-to-GDP ratio of the major industrial countries, is in a very strong position to do better for Canadians.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, let me help the minister. He seems out of touch with the realities faced by young Canadians and their parents.

The reality is that the Canadian economy has lost about 260,000 jobs for young Canadians since 2008. That is one of the reasons why Canadian parents are worried about their children's future.

TD Bank estimates it is a $22-billion cost to the Canadian economy, the sustained youth underemployment and unemployment. CIBC economics is using the term “lost generation” of Canadian youth.

Does the minister recognize that some economists are linking the growth in the number of low-skilled temporary foreign workers under the Conservatives with higher youth unemployment in Canada and wage suppression for Canadian youth?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, the government invests over $300 million annually to address youth employment challenges through the youth employment strategy, which provides skill development and work experience for youth at risk, summer students, and recent post-secondary graduates.

Our economic action plan announced that the government will review the youth employment strategy to better align it with the evolving realities of the job market, and ensure Canadian investments provide young Canadians with real life experience.

Canada will continue to have one of the lowest youth unemployment rates in the G7. We have helped 2.1 million youth obtain skills, jobs, and training. We recognize more has to be done, and that is why we are helping young Canadians get the skills they need, helping young entrepreneurs start more businesses, and supporting more paid internships for graduates.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, last summer we saw some of the worst summer job numbers for Canadian youth in 40 years.

At the same time, in fact about a year ago, the government was running economic action plan ads during the playoffs that cost about $100,000 for a 30-second ad to advertise a program that did not even exist, the job skills program.

Does the minister feel that it makes sense to spend $100,000 advertising a program that does not exist, or would it make more sense to create 32 summer jobs for students who are desperately in need of them?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, as I said, we have initiated significant programs for youth. We announced that funding would be reallocated from within the youth employment strategy to support 3,000 internships in high-demand fields and 1,000 internships in small and medium-sized enterprises.

These initiatives complement recent and ongoing investments to provide better and timely labour information to inform young people about fields of study for in-demand occupations. To help students make better choices about their education, it is important for them to have that information.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, does the minister feel it was good public policy for his government to tighten mortgage rules, shorten mortgage amortization limits, and eliminate 40-year mortgages with no down payment?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, as I said earlier, the government is moving to reduce the exposure of Canadian taxpayers to the mortgage market and to reduce consumer indebtedness. The reduction of the amortization period from 40 years to 35 years to 30 years to 25 years is consistent with that.

What we do not want to see is a real estate bubble. There are a number of measures the government has taken in that regard, in addition to the amortization. Requiring a minimum down payment of 5% for new government-backed insurance mortgages, progressively lowering the maximum amount Canadians can borrow, and--

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order, please.

The hon. member for Kings—Hants.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, the minister agrees with reducing the amortization from 40 years and getting rid of 40-year mortgages with no down payment, which must mean that he disagreed with his government's decision to actually introduce 40-year mortgages with no down payment in budget 2006, which created, by the first half of 2008, half the mortgages issued in Canada being 40-year mortgages.

Speaking of housing bubbles, we really need good data. CIBC's deputy chief economist, Ben Tal, issued a report recently saying that we need better data on the Canadian housing market and that we need to increase funding for Statistics Canada to get that type of data for Canadian consumers and investors.

Does the minister agree that we need better information communicated to Canadian investors and homeowners?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I find it a bit puzzling that the hon. member seems to be favouring an increase in the amortization rate from the current 25 years to 40 years. I am not sure what he thinks the economic consequence of that would be, but it is certainly not the direction we feel it would be prudent to go at this time.

Economic circumstances change, and interest rates change. It is appropriate, therefore, for amortization to change as well when the economic data warrants it.

The IMF has recently noted that the macroprudential measures introduced in Canada over the past few years have been effective in moderating the pace of household debt accumulation, cooling the housing market.

We believe that the initiatives taken by the government since 2008 indicate our concern that the housing sector be well regulated, because it is an important source of strength in the economy. While conditions in the housing market remain firm, housing market activity has moderated, and this partly reflects a series of proactive measures taken by the government.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Chair, the minister continues to attack his predecessor's and his government's decisions to loosen mortgage rules in Canada. They introduced, for the first time ever, 40-year mortgages, with no down payment.

We as Liberals are actually quite happy that he has gone back to a Liberal policy of 25-year amortizations after realizing that what they did was reckless and has created, potentially, a housing bubble in Canada, if we look at what The Economist magazine and Paul Krugman and others are saying about the Canadian housing market.

Does the minister agree with The Economist magazine's recent assessment of Canada when it cites the IMF projecting that growth will be 2.3% this year, behind Britain and the United States? Our employment rate is still below pre-crisis levels. We rank fifth in the G7 for job creation since 2008, only ahead of Italy and the U.S. The Economist is saying that Canada's post-crisis glow is dimming.

Does the minister not realize that, in fact, the status quo is not working? A lot of Canadians are falling behind, and we are falling behind our peers in the G7.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we are very comfortable that Canada will continue to grow at a strong rate and we are very comfortable that our policies will result in a budgetary surplus next year. We have posted one of the strongest performances among the G7 over the recovery and the recession, both in terms of output growth and job growth. Data recently released by the OECD show that Canada's employment rate, the percentage of people 15 to 64 who are employed, is the second highest in the G7. Moreover, Canada has had one of the strongest job creation performances in the G7 over the recovery.

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

That will complete that round.

Now we will move to the hon. member for Tobique—Mactaquac.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Chair, I appreciate the opportunity to be here this evening with the minister. I would like the opportunity to discuss our government's commitment to opening new markets for Canadian exports.

Over the next several minutes, I am going to provide an overview of our government's actions that have opened new markets for Canadian businesses, allowing them to thrive and compete in the global economy, much like the Montreal Canadiens did tonight as they opened a new market called the “conference championship”, so it is good to see that.

Through Canada's economic action plan, our government has delivered remarkable economic results for Canadians following the deepest global economic recession since the 1930s. We have provided a balance between stimulating our economy for the short term, balancing the budget in the medium term, and building our capacity in the long term.

Contrary to what the opposition leaders may believe, our country remains in a very enviable position. Since the depth of the recession, over one million net new jobs have been created, most of them in high-wage industries. There are now over 600,000 more jobs than at the pre-recession peak, which is among the strongest job-growth records among G7 countries over the course of the recovery. Almost 90% of all jobs created since July 2009 have been full-time positions, with close to 85% of those coming from the private sector. It is clear that Canada's economic action plan has established a solid foundation that has allowed Canadian businesses to create jobs and drive economic growth.

That said, our government is under no illusions that our work here is finished. We have some major challenges ahead. The global economy remains fragile, with growth in advanced economies slower than expected. Canada is at risk from the financial instability beyond our shores. Indeed, the head of the IMF recently noted that the great recession is not yet completely over for many countries, noting specifically:

...that does not mean that the crisis is over and our mission accomplished.

She argued that the crisis will not be over until the flow of credit from banks in southern Europe is repaired, adding:

In addition, the permanently low inflation brings additional risks.

Given this environment, our government understands that Canadians' standard of living and future prosperity depend on growing trade and investment. That is why Canada's economic action plan actively pursues new trade and investment opportunities, particularly with large, dynamic, and fast-growing economies. I was particularly encouraged to hear our Minister of International Trade speak today in question period about his upcoming trade missions to China and to Africa, as the hard-working minister continues to develop our trade markets around the world.

Our government has pursued the most ambitious trade agenda in Canadian history. Since 2006, our government has increased the number of free trade arrangements Canada has from five countries to an astounding 43 countries.

Looking forward, the Canada–European Union comprehensive economic and trade agreement would eliminate an additional $750 million in annual tariffs on imports from the EU. The Canada–European Union comprehensive economic and trade agreement is by far Canada's most ambitious trade initiative, deeper in ambition and broader in scope than the historic North American free trade agreement, which we all refer to as NAFTA. In fact, the comprehensive economic and trade agreement would add more than 80,000 new jobs to the Canadian economy.

John Manley, president and CEO of the Canadian Council of Chief Executives, had this to say:

A strong and ambitious trade agenda continues to be at the core of this government's strategy for jobs and economic growth.... On both sides of the Atlantic, the CETA will create jobs, spur investment and promote economic growth.

Indeed, this historic agreement will produce substantial gains for many of Canada's key sectors, generating significant benefits for businesses, workers, and workers' families. Almost 94% of E.U. agricultural tariff lines will be duty free when CETA comes into effect.

I would be remiss if I did not talk a bit about the impact this would have in New Brunswick as well. When we look at some of our major sectors in New Brunswick, we see that just in the service sector, approximately 75% of the provincial GDP in New Brunswick comes from the service sector, and it employs over 277,000 people.

Access to the European service economy, which is valued at $12.1 trillion, opens up a significant market to auditing, architecture, engineering, finance, investments, software development, health and life sciences, and aerospace development and defence.

I should also indicate that between the exports of fish and seafood products, as well as value-added forestry, and New Brunswick's world-class agriculture and agri-food products, we are talking somewhere in the order of about 30,000 direct jobs just in those three sectors in the New Brunswick economy. I have probably one of the largest per capita potato-producing regions in the country, with two large McCain Foods plants. The tariffs on frozen potato products going to the EU is currently 17.6%. This trade agreement is significant for New Brunswick. It is significant for those major industries. When we look at the value-added wood products again, plywood, veneer products, there is a 10% duty. This means significant benefit to New Brunswick, not just in sectors but clear across the country.

Our government has successfully negotiated an outcome that allows Canadian exporters to benefit from tariff-free access, as I have indicated, making Canadian products cheaper and more competitive, and providing our exporters a significant advantage over their competitors. In this deal we are ahead of the U.S. in getting entry into that market.

In addition to opening new markets in Europe for Canadian exporters, we are also concentrating our sights on the lucrative and fast-growing Asian market. For example, we recently reached a landmark agreement with South Korea. This is Canada's first trade agreement in this Asia-Pacific region and will provide new access for Canadian businesses and workers to the world's fifteenth largest economy and the fourth largest in Asia. South Korea is not only a major economic player in its own right and a key market for Canada, it also serves as a gateway for Canadian businesses and workers into the dynamic Asia-Pacific region as a whole. The agreement will eliminate an additional $176 million in annual tariffs on imports from Korea.

Canada is also actively engaged in the trans-Pacific partnership negotiations that will open new markets and deepen our ties with several Asian economies, including Japan. Canada was built on trade and now more than ever before we are looking to diversify and deepen our trade relationships. Unlike the opposition, our government understands that pursuit of free trade is key to our growth agenda. Too often, as we often hear in this House, growth policy is characterized by only fiscal stimulus. Growth policy is dictated by trade and a low-tax environment for our businesses.

In our view, a diverse and balanced growth agenda includes structural reforms, including trade liberalization, that allow for Canadian businesses and their workers to compete more effectively in global markets. With one of the most successful economies in the world today, Canada offers many advantages as an investment destination and partner for global business. Canada's competitiveness, excellence, depth of talent, innovation, and creativity offer a great environment to potential investors from around the globe.

Our government remains firmly committed to supporting Canadian jobs and fostering long-term prosperity for Canadians and their families. The low-tax approach I just mentioned in Canada's economic action plan continues to be a beacon to other nations around the world in a time of global economic uncertainty.

In 2007, prior to the global crisis, Canada passed a bold tax reduction plan designed to brand Canada as a low-tax destination for business investment and we have since been recognized the world over for just that.

The KPMG publication “Competitive Alternatives 2012” rigorously analyzed the impact of federal, state, provincial, and municipal taxes on business operations. KPMG concluded that Canada's total business tax costs are more than 40% lower than those in the United States, and confirmed that Canada has the lowest business tax costs in the G7.

Ernst & Young has noted that Canada has become one of the top five destinations in the world to start a business, saying:

Canada has emerged as a real leader in fostering an entrepreneurial culture.

[We offer] a supportive tax and regulatory environment for entrepreneurs.

Canada's government has been highly supportive of entrepreneurs, providing regulatory and tax regimes that have enabled start-ups and growing companies to flourish.

We have also been recognized by Bloomberg as the second best country in the world to do business.

Along with our support for free and open trade, the government continues to support the low tax environment that is required to create jobs and economic growth in any condition. That being said, we support low taxes; we do not support higher taxes in the form of any kind of carbon tax.

Our Conservative government understands that Canada's competitive tax system plays a crucial role in supporting economic growth. These tax reductions leave more money for the private sector to reinvest in machinery, equipment, information technology and other physical capital that will further boost the recent productivity gains we have seen in businesses across Canada, including the Forest Products Association of Canada, which has experienced a 2.5% productivity growth.

That said, could the Minister of Finance please tell us how Canadians will benefit from various trade agreements that are part of the government's economic action plan?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, Canada's economic action plan includes measures to open new markets to Canadian exports, which will create jobs, economic growth and long-term prosperity for Canadians. These measures benefit not only Canadian businesses, which create jobs and keep our economy strong, but they also benefit Canadian consumers and families.

Our government is focused on creating jobs and opportunities for hard-working Canadians in every region of the country. Providing businesses, especially the crucial small and medium-size enterprises, or SMEs, which employ so many Canadians, with new and improved market access so they can expand and compete globally is a key part of our government's pro trade plan, the most ambitious in our nation's history.

Through CETA, our government is creating new and historic opportunities in Europe for agricultural exporters from across Canada. Indeed, Canadian workers in every region, including the Atlantic provinces, in such sectors as fish and seafood, chemicals and plastics, forest products, advanced manufacturing, ICT, metals and minerals, and agriculture and agri-foods, to name just a few, will benefit from increased access to the lucrative EU market.

Another agreement in Canada's pro trade plan is the Canada-India comprehensive economic partnership agreement, CEPA, which remains a key priority. There has been good progress in all areas under negotiation and Canada seeks to conclude negotiations with India as soon as possible. A trade agreement with India would eliminate or reduce tariffs on goods and liberalize trade and services. When it is in place, CEPA will play an important role in boosting trade and investment, creating more jobs and increasing prosperity for Canadians.

More recently, one of our major accomplishments with respect to our trade agenda has been the new free trade agreement reached with South Korea, Canada's first in the fast-growing Asia Pacific region. The Canada-Korea free trade agreement will provide Canadian businesses and workers with unprecedented access to South Korea, directly benefiting Canada's SMEs.

Specific measures that will help SMEs to access the South Korean market include: eliminating tariffs, locking in fair and predictable conditions for businesses and ensuring non-discriminatory treatment; that is that each country treats the other companies and goods the same way as it treats its own. The agreement will result in increased trade opportunities through tariff elimination in a broad range of sectors, such as industrial goods, for example, aerospace, information communication technology, metals and minerals, chemicals, plastics, pharmaceuticals, industrial machinery, cosmetics, agri products, forestry and value added products. The agreement will provide Canadians with access to new markets.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Mr. Chair, in addition to creating the wealth and wealth for citizens working in these businesses, could he share with us briefly what the government has done to help consumers in Canada?