Debates of June 10th, 2014

Opposition Motion—Income Splitting

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I thank my colleague from Bourassa for his question. I think this is the first time we have had the opportunity to talk directly to each other since his election to this institution.

Yes, I think the situation is a bone of contention, which has been widely reported in the media. The controversy did in fact start when Mr. Flaherty expressed serious reservations about whether income splitting was viable and appropriate. We then saw that the members of the Conservative caucus where very divided on it. There are some who are very much in favour of this measure. The voices supporting it are generally the ones of social Conservatives. That is because income splitting is an incentive. This measure is seen by a number of groups who are in favour of social conservatism in Canada as a measure that will encourage women to stay at home.

Take, for example, people with incomes of $100,000 or $150,000. Whether we like it or not, income disparity in our society is still considerable. There are significantly more men than women with high incomes. Clearly, if women stay at home, income splitting will be possible, whereas if women work, the gains will not be nearly as great. That might explain why the social Conservatives are in favour of these measures and why the fiscal Conservatives are against them. The fiscal Conservatives, as we see here, want the government to eventually use the surplus to pay down the debt and reinvest in important public services.

In that respect, I can indeed see a division within the Conservative caucus, and I look forward to seeing how our colleagues opposite will vote on this motion.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have so much respect for my colleague in this that I have to return to the subject.

The criticism from the other side is that targeted tax measures like income splitting, like pension income splitting, ought not to be done because they would not benefit the entire population. If we look at pension income splitting, that is true. It does not benefit people in my age group. If I look at my parents, they are both school teachers. They have pensions that are very similar. They do not benefit as much from the policy. However, there are many Canadians across this country who benefit from pension income splitting who are very positive on that.

I think it is incumbent upon the official opposition to be very clear with respect to that policy. Would it reverse the policy of pension income splitting that was put in place by this government in 2006?

Frankly, if the NDP ever forms government, I could see the member as a possible minister of finance. He is going to have to make that decision.

I think the NDP needs to be clear with Canadians as to where it stands. Does it support the pension income splitting that was put in place in 2006, and if not, would it seek to reverse that policy?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I would like to thank the hon. member for his question and for his persistence. It is an important question.

I am not here to lay out the NDP's 2015 election platform. I think he will acknowledge that, just as I would not necessarily ask him to share the Conservatives' economic platform for the next election.

However, what I spoke about—because it needed to be done—was the nuts and bolts of these measures and how they would work. What we have here is a measure that benefits primarily those with the largest pensions, and I am sure he would acknowledge this. If the government believes that tax relief should truly benefit those who need it most, this measure is not as effective as it could be. A the very least, it needs to be calibrated differently.

I used this example to warn the government. If ever it is re-elected in 2015 and decides to move forward with this measure, it should be careful. People can expect that the negative impact on Canada's economy, Canada's tax situation and all Canadian households will be far different from the promises that were made.

[Jason Kenney, Conservative, Minister of Employment and Social Development and Minister for Multiculturalism]

Mr. Speaker, I am pleased to rise to speak to the official opposition's motion.

The government is obviously against the motion. The premise of the motion is incorrect. It states:

That, in the opinion of the House, the drastic increase in income inequality under recent Liberal and Conservative governments harms Canadian society...

There is no drastic increase in income inequality. Income inequality has not increased in Canada in recent years. On the contrary, income inequality has decreased in Canada in recent years.

The problem is that the motion is based on the NDP's political ideological. It is not based on data, facts or statistics, which clearly show that income inequality has decreased in Canada.

In fact, contrary to what the motion would suggest, we have seen a reduction, not an increase, in so-called income inequality in Canada. The truth is that in the past many years, the Canadian economy, notwithstanding the impact of the largest global recession since the 1930s, has done quite well, as a rising tide has lifted all boats.

We see that Canadians are generally better off in terms of their income. Canadians overall are significantly better off in terms of their net worth and assets. The lowest-income Canadians are better off as well. In fact they are closer to the mean than they used to be.

Child poverty is at an all-time low in Canada. The number of people living below the low-income cutoff, often referred to as the poverty line, has diminished. The government has eliminated nearly one million people from the tax rolls altogether, so they do not have to pay taxes, by increasing exemptions and other progressive measures in the tax system.

The entire premise of the NDP motion is incorrect. In fact, families at all income levels had higher incomes in 2011 than prior to the recession, according to Statistics Canada. With robust income growth, the share of Canadians living in low-income families was at 8.8%, according to the most recent figures, the lowest level in three decades. Let me repeat that. The number of Canadians living below the low-income cutoff line is at its lowest level in 30 years.

That is not my opinion. That is not a figment of my imagination. That is a fact based on data from Statistics Canada. I would invite my friends from the NDP to actually contend with the facts on this matter, rather than reciting stale and misleading talking points.

That is not to say that we should be satisfied.

Of course, as a society, as a government and as parliamentarians, we must always work to improve the living conditions and economic opportunities for all our citizens, including, and particularly, those living with low incomes.

That said, we need to recognize that we have made progress and that the percentage of Canadian families living below the low-income cutoff has diminished.

Indeed, the median real income of Canadians, and this is very important, according to the recent study conducted by the Luxembourg Income Study and The New York Times, hardly a Conservative house organ, indicated that for the first time in history, Canadian median family incomes have exceeded those of the United States.

The American dream was always considered the gold standard in terms of middle-class prosperity around the world. However, according to this recent exhaustive study of all the available data, the Canadian middle class is better off than its counterpart in any other major developed economy in the world, having exceeded that of the United States. This did not happen by coincidence or accident. It happened, of course, because of the hard work of Canadians but also because of the prudent economic policies of Canadian governments, and I would submit this government in particular, which has reduced enormously the tax burden on Canadian families. We have reduced the tax burden, through 160 separate tax relief measures, by an average of $3,400 for an average family of four per year. That is not cumulative. That is to say that year after year, the average Canadian family is paying $3,400 less in federal taxes than it did when our government came to office, and that happened because we made necessary but prudent decisions to better manage our spending and decided that taxpayers would come first.

Here is the basic problem with the motion in front of us. The NDP's view is that government should come first and that we should feed the insatiable appetite of government bureaucracies and programs by taxing people more. That is what drives policies that lead to unemployment, stagnant incomes, and fewer economic opportunities.

Fundamentally what this government believes at its core is that hard-working families know better how to spend an extra dollar than politicians or bureaucrats do. New Democrats have a different view. It is a defensible view. It is a view they sometimes obscure at election time, but their fundamental view is that they know better, as politicians, how to spend that extra dollar than working moms and dads do.

Take for example the issue of day care. The NDP and its Liberal friends on the left believe that we should raise taxes on hard-working Canadian families, so that they have to work harder and their after-tax disposable income shrinks, so that we can take that tax revenue, coercively taken from those families, and cycle it through the enormously expensive bureaucracy of the Ottawa government and then send it to the bureaucracies in the provincial governments, which will then cycle it through various programs. In the case of Manitoba, I recall the failed child care policy of the former Liberal government. What did it end up doing? It raised government union wage rates in the child care sector. It did not actually add a single child care spot.

Again, that is a defensible view. It is a view my friends on the other side will articulate. They believe that we should put more economic pressure on hard-working families, more stress, and reduce their take-home pay by increasing their taxes in order to cycle all of that money through two bureaucracies and send it back out in the form of a putative public benefit, when huge amounts of those resources have, in fact, been absorbed by administration and bureaucracy.

Our approach is different. Our approach is to leave the money in the hands of mom and dad in the first place, because we believe that they are the best experts with respect to child care, not government bureaucracies or politicians. That is why we introduced the universal child care benefit that sends a $100 cheque per child under the age of six to every family, which then gets to decide how to spend that themselves, rather than politicians and bureaucrats making that decision for them. It is very simple.

It is also why we raised, by the way, the basic personal exemption. One of the issues I am going to get to is so-called income splitting, what I call family tax fairness. Under the status quo and a Liberal unfair tax policy, it is unbelievable but true that they actually used to say that a spouse working outside the home was of greater value to our society and economy than a spouse working at home.

They reflected the perceived devaluation of dads and moms who work at home by having a lower spousal exemption in the tax code than the basic personal exemption. For a two-income family with one spouse out in the paid workforce and another at home in the unpaid workforce, guess what? The person in the paid workforce would get a higher basic personal exemption against their income taxes than the spouse at home in the unpaid workforce. What kind of weird mentality says that dads or moms who are at home taking care of their kids or their elder relatives are worth less for making what is for many of them a sacrificial decision for their families?

We believe that they are serving the common good, that such dads and moms are making a choice that is best for their families, which we should respect and not penalize. We should respect the choices families make and not penalize them for making choices that they think are best for themselves. That is why this government eliminated that one dimension of family tax unfairness when we raised the basic spousal exemption to be equivalent to the basic personal exemption.

These are some of the reasons we have seen an increase in average family income and net worth. In fact, the median net worth of Canadian families has increased by 45% in real inflation-adjusted terms since 2006. Canadian children from poor families have a higher probability of moving up the income scale than in such comparable countries as the U.S., U.K., France, or Sweden. That is to say, not only do we have fewer Canadian families and children living in poverty than before, and not only are we at a record low in child poverty in this country, but we have greater upward social mobility for those families. We actually do have the Canadian dream.

This is what The New York Times was so astonished by when this study came out last month. The so-called American dream, the notion of upward mobility for low-income families, had become much more of a dream than a reality. However, here in Canada, it is a reality. We continue to have a society characterized by such upward social mobility.

The facts are that the middle class in Canada is doing better. There are fewer poor families and fewer poor children and less income inequality, regardless of what the opposition says.

I would like to talk about the second part of the NDP's motion, which states:

...and that the House express its opposition to the Conservative income splitting proposal which will make this problem worse and provide no benefit to 86% of Canadians.

Once again, the premise of the motion is incorrect. The New Democrats are wrong. They are mistaken.

With the premise of this motion, the opposition is simply wrong.

I find it very interesting that in the political rhetoric and positioning of the NDP, those members always talk about working families. The late Jack Layton, whose memory we honour, always focused on kitchen-table economics. In the last election, he visited a lot of families around their kitchen tables. Yet the position of the NDP here today could not be clearer. It does not actually support the family as an economic unit. Those members actually think that some families should be actively discriminated against through unfair preferences in the tax code. We fundamentally disagree.

That is why, in our 2011 election platform, the Conservative Party of Canada committed that if we balanced the budget, we would, at the end of our mandate, introduce family tax fairness by allowing splitting of income between two-parent families.

As the Prime Minister has done, I am pleased to reconfirm that it is absolutely our intention to keep that commitment that we made to Canadians in the last election to introduce family tax fairness, to end the discrimination against certain families, to end the unfairness.

How do we do that? I would like to accept the rhetoric of the NDP position and turn it into policy substance. When New Democrats talk about kitchen table economics and the importance of supporting working families, we do not just do that rhetorically, we want to do that substantively. We do not want to do it as a political tactic or trick. We want to do it by amending the tax code to say that we will treat the family as an economic unit, because after all, it is an economic unit. Is that not the point? Dads and moms who arrange their affairs together as couples with kids or other dependents are making a choice to share their property, to share their income, to share the burdens of life. In so doing, they become the best social programs, the best schools, the best crime prevention programs in raising children.

There is no social program that produces stronger social outcomes than a strong family. Can we all agree on that? We should be honouring and respecting the often difficult and sacrificial choices that families make. That is what family tax fairness through income splitting seeks to do.

What does this mean? Right now, perhaps a dad in a family decides to stay at home to take care of young, pre-school children, or perhaps elderly dependent parents who are living with the family, and we will see more and more of that with the aging of our society. His wife or his spouse goes out and works and makes, let us say, $75,000 a year, which is not much above the average income level in Canada. I do not know why New Democrats are laughing. It is a lot less than they make as MPs. If the wife is the income earner making $75,000 a year and dad is at home taking care of young kids or maybe elderly parents, they end of paying 30% more in taxes, $2,000 more in taxes than a family making the same amount of revenue with both parents in the paid workforce.

What this so-called preference, what this discrimination, what this unfairness does is say that the work the dad puts in at home does not have any economic value. The government says it is worth nothing.

I am not just saying this. I will never forget being in the opposition as revenue or finance critic asking the Liberal government why they permitted this tax unfairness against such families. The then minister of state for finance, the hon. Jim Peterson, for whom I have great regard, committed the ultimate political gaffe. He accidentally told the truth. He actually said the government believed that stay-at-home parents were not working. I guess he had never met a stay-at-home dad or mom, because they work harder than most of us do every single day of the week and they deserve our recognition and our support.

That is why the Royal Commission on Taxation in 1966 recommended that the appropriate tax unit should be the family, as the income and expenditure of two individuals are not independent when they live together. That is why the Royal Commission on the Status of Women, 60 years ago, supported elective joint taxation, voluntary income splitting. It is why the U.K. and France and most other developed countries treat the family unit as an economic unit for purposes of taxation.

It is about time that we said we value families, we support the choices they make, and we will end the unfairness. Will the opposition join us in that?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, essentially the minister said that income inequality is not a problem. Let us look at the statistics from Statistics Canada. Median income from 1976 to just a couple of years ago grew by a staggering 0.2% for the middle class. In 2002, the average CEO in Canada earned 84 times what the average worker in that same company earned. Flash forward 10 years later, just a couple of years ago, that went up to 122 times the amount for the CEO as compared to the worker. In 1982, the top 1% earned 7% of all of Canada's income. Now that same group earns 12%. We have seen median wages stagnate over that same period, but the minister denies that.

Let us get to income inequality, which his colleagues ignored. Let us talk about who does not benefit from my friend's myopic vision of the world. People who make under $44,000 a year do not benefit. Would a couple who make $44,000 each but are both in the same tax bracket benefit? Absolutely not. Single parents do not benefit. People who do not have kids do not benefit. People who are divorced do not benefit. Of all Canadians, 86% do not benefit from this $5-billion tax scheme.

The Conservatives have the audacity to talk about fairness. What about the 86%? What about the idea that fairness should apply to all as opposed to this very narrow scheme that costs so much money, skews to the wealthy, and leaves out more than 85% of this country?

[Jason Kenney, Conservative, Calgary Southeast, AB]

Mr. Speaker, there we have it, the finance critic for the official opposition, for the NDP, saying that families making $50,000, $60,000, $70,000 a year are wealthy. If I were making $60,000 a year, like most public sector union members who are the core of the NDP's constituency, I would be terrified of this guy becoming the finance minister because he thinks they are wealthy. We know that means that the NDP would impose bigger taxes.

We heard the same thing from the leader of the Liberal Party. He said he would not impose taxes on the middle class. Then when he was asked to define the middle class, he said that it excludes people who have assets like seniors on fixed incomes.

The data is clear. In the past decade there has been shrinking income inequality, fewer children living under the low-income cut-off than ever in our history, and the lowest level of families under the LICO in 30 years.

I have a question for my NDP friend. If he were in government would he repeal income splitting for pensioners?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I have a question that is related to our seniors. We see this initiative that the Conservatives have now embraced as a multibillion-dollar promise to citizens. Hundreds of thousands of seniors or individuals are looking forward to being able to retire at the age of 65. The government has now increased it to age 67.

My question to the member is this. To what degree does he feel that facilitates the whole issue of income inequality, given that in future many of those seniors will not be able to retire until the age of 67 and will have to be in the workforce? I have listened to the member. The vast majority of the working class, the hard-working individuals in Winnipeg North, would love to have an annual salary of $50,000 plus. Many of my constituents are working somewhere in the $35,000 mark.

[Jason Kenney, Conservative, Calgary Southeast, AB]

Mr. Speaker, to correct the member, we have not raised the age of eligibility of OAS. We will be doing so in nearly two decades' time. It will be a gradual phase-in.

When the OAS system was designed in the 1960s there were seven retirees for every beneficiary and the average life expectancy was age 65. By the time we raise OAS eligibility to age 67, there will be one beneficiary for every working Canadian. The average age of life expectancy is now 76 and is going higher. Therefore, the Liberal Party's opposition to the modest, gradual increase in the age of eligibility for OAS is a fundamental reflection of how this is no longer the Liberal Party of Paul Martin and how this is no longer a Liberal Party of sound economic management.

Governments across the world, including social democratic governments of the left and centre-left all through Europe, in Japan, and elsewhere, have all moved to increase eligibility ages for such public entitlements analogous to old age security to reflect reality. That life expectancy has grown by well over a decade in every one of those countries and the working taxpaying population has shrunk. Rather than just demagoguing on this issue, it is incumbent on any party that aspires to be government to tell us how they would pay for the entitlements of baby boomers if we do not have an age of eligibility that reflects growing life expectancy 15 and 20 years from now.

[LaVar Payne, Conservative, Medicine Hat, AB]

Mr. Speaker, I listened to the minister's comments very intently. I am very pleased to hear him talk about stay-at-home dads. My son was a stay-at-home dad. He helped to raise two of his children. The benefits of the universal child care system were extremely beneficial for his family. They made a choice to have my son stay at home with the kids to help make sure that his family was stable and to make sure that the family unit worked together.

I can say, without a doubt, that this has been a huge benefit to my own family.

[Jason Kenney, Conservative, Calgary Southeast, AB]

Mr. Speaker, indeed, the universal child care benefit has been massively popular for exactly that reason. It helps parents to make that choice. Admittedly, it is at the margin. It is not going to make a fundamental difference, but it helps. It helps a whole lot more than taxing families.

By the way, regarding the plans of the opposition parties to create a so-called “universal government Ottawa knows best child care scheme”, according to the advocates of this so-called child care, 1% of GDP would cost at least $18 billion. Guess what? That money is not grown on trees. It is not printed by the Bank of Canada. That money would come out of the pockets of taxpayers.

Do members know what would happen? The opposition would end up raising the GST back. It would take away the child care benefit. It would remove income splitting for seniors. It has pretty much admitted that now, since it is against income splitting. It would raise taxes on families in order to give them a punitive benefit. Who would the big winners be? The big government unions.

We will not let that happen.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, listening to the minister speak on income splitting, I was wondering which country he was looking at. When I looked at British Columbia and, specifically, Newton—North Delta, there, I would have said that a higher number than 86% would not benefit from the scheme here that would benefit, at best, the top 14% of our income.

I am talking about a province where child poverty is very high. We are talking about a country where the way our first nations communities are in some areas, we are compared to worse than third world countries.

When we really look at the real issues to be addressed to make life more affordable, is this really the best that the minister can support? Income splitting for the very, very wealthy?

[Jason Kenney, Conservative, Calgary Southeast, AB]

Mr. Speaker, there we go: “the very, very wealthy”. A constituent of hers, a family in her riding, making $50,000 would save $500 in income taxes through family tax fairness. Only the NDP could consider someone with a $50,000 family income as very wealthy, which is code for “we have to raise their taxes so that they are not very, very wealthy anymore”.

That is why NDP tax-raising policies are always against the advantage of people who actually want to be in the middle class.

Let us be clear. Family tax fairness is not about a preference for certain families or people at certain income levels. It is about eliminating discrimination. It is about fairness. It is about treating people equally. It is about treating the family as an economic unit. If the NDP says it supports kitchen table economics for working families, why will it not treat families as an economic unit in the tax code?

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Mr. Speaker, I will be sharing my time with the hon. member for Victoria.

The widening income gap, whether on a global, national or community scale, is clearly a social justice issue. However, it also poses a threat to our prosperity, our safety and even our health.

As a number of studies have shown, in a more egalitarian society, the poor as well as the rich are healthier. Equality benefits everyone.

High income inequality, globally and in Canada in particular, is a concern to many people. Yesterday, Christine Lagarde, the managing director of the IMF, addressed the issue and called it an obstacle to our country’s return to greater prosperity. It is a problem that therefore needs to be addressed, not only for the sake of social justice, but also for the sake of our collective well-being.

Unfortunately, Canada has been moving in the opposite direction for a number of years now. The gap between the rich and the poor continues to widen, as does the gap between the rich and the middle class and the gap between workers and the big bosses.

There is a tendency to place much of the blame for this state of affairs on Conservative government policies. Some of the responsibility must indeed be borne by the Conservatives, but at the same time we need to realize that they are not entirely to blame. In fact, 94% of the increase seen in income inequality over the past 35 years occurred on the Liberals' watch.

However, I get the impression that the Conservatives felt they had not done enough to widen the gap. They decided to press the issue. They have proposed income splitting for couples with children under 18 years of age. Basically, this will benefit mainly the wealthier members of our society. Under the proposal, one spouse would be able to transfer up to $50,000 in income to the other spouse for tax purposes.

To better understand the situation, consider the example of an MP with children and a spouse who does not work. I think all of us can identify in some respects with this example. This MP would be able to transfer $50,000 in income to his or her spouse. I imagine that some MPs would be delighted to be able to do that. The problem is that while this measure may be advantageous for MPs and high income earners, for the vast majority of Canadians, it will be of little or no benefit.

Let me describe to you those who would not benefit in any way whatsoever. There is no benefit for people earning less that $44,000 a year. A couple earning more than $44,000, where both spouses have relatively similar incomes, regardless of what that income might be—$100,000, $200,000 or $300,000—will not see any benefits if they are more or less in the same income bracket. Income splitting will not benefit single persons, childless couples, couples with adult children, single mothers and fathers, and divorced parents. For the vast majority of other people, the benefits will be relatively minor.

According to figures released by the C.D. Howe Institute and the Broadbent Institute, income splitting would benefit only 10% to 15% of families, and obviously the wealthier families.

I have nothing against tax cuts, but they should target the people who need them the most. If we take a closer look at the numbers, we see that this measure will actually benefit 5% of the wealthiest families, at the expense of taxpayers in general, because public funds are involved.

The measure would cost the federal government $3 billion annually to implement and, according to the Canadian Centre for Policy Alternatives, the price tag for the provinces would be about $2 billion. There are quite a few zeros in $5 billion. I wonder if this government has given any thought to what it else it could possibly do with such a large sum of money.

I can think of many things it could do. For instance, it could help every single family, not just the wealthiest, find housing. In one part of my riding, 25% of households with children live in one-bedroom or studio apartments. Yes, in Canada. I am deeply shocked.

Could the government not earmark the tidy sum of $1 billion to help people in this situation? Could it not set aside a little more money for seniors' pensions or for infrastructure that is in need of repair? Is there not some way to help all families, not just a few?

Unfortunately, this government would rather focus on a small number of Canadians who are already among the wealthiest citizens. This government is Robin Hood in reverse. It continues to raise taxes and cut services to the middle class. It chips away at EI, raises the retirement age and delivers a fatal blow to Canada Post, all for the sake of providing some tax breaks to the wealthiest members of our society.

Indeed, I would call this government “Dooh Nibor”, which is Robin Hood backwards. It continues to take from middle-income citizens who have trouble making ends meet, through taxes and cuts to services, to give to the wealthiest.

This bill has even more harmful effects because it might discourage women from joining the workforce. I am not the only one to say so. The rather well-known C.D. Howe Institute also says so.

It says that income splitting would significantly increase the marginal effective tax rate for most spouses with a lower income, which would create an obstacle to employment or a return to work. This would reduce the work experience of married women, who unfortunately often have a lower income, which would make them more vulnerable. The Institute is of the opinion that income splitting would not achieve its self-proclaimed objective of equality if the objective is to support families with children and that this measure could actually benefit families with no children.

Among the harmful effects of this measures is a geographic imbalance, in that some provinces would benefit from it more than others. One of the provinces that would benefit less is Quebec, which this government has completely abandoned.

It was minister Flaherty who said, and rightly so, that this was not really a good idea. For all these reasons, I will stand with my NDP colleagues and strongly oppose this bill.

[Jason Kenney, Conservative, Minister of Employment and Social Development and Minister for Multiculturalism]

Mr. Speaker, I have two simple and direct questions for the hon. member.

First, does she agree that a family is an economic unit?

Does the member agree that the family constitutes an economic unit and should be treated as such in the tax code? Second, would an NDP government repeal the policy of income splitting for pensioners?

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Mr. Speaker, I agree that families are crucial to our society and, clearly, to our very survival. Families play very important economic and social roles. It goes without saying that families need our help, but every family needs help. This government’s approach is to help but a few families, and only the wealthiest families at that.

When it comes to pension income splitting, we said at the time that the program structure was all wrong. The way the program was designed was such that it benefited only a small segment of pensioners, as opposed to every pensioner.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, I know the minister across the way wants to ask questions of me as the finance critic that the NDP would not in fact reverse income splitting for pensioners. I think he can put that conspiracy to the side.

To my friend across the way, I rarely do this, but for this debate it is important to have illustrations and make things personal at times. The way that the Conservatives have constructed this scheme, many families, what we sometimes call traditional families—father, mother and kids—would not benefit from an income splitting scheme, if they happen to be in the same tax bracket, if the kids are too old. There are all of these exemptions. There are more exemptions than inclusions.

However, those who will benefit are those Canadians where one of the couple is making a great deal of money and the other is making much less. That is the way that this is set up. For me as a member of Parliament, we are well compensated, on average $160,000 or so; ministers make more, et cetera. In my circumstance, the way that this is described, I and my family could benefit by as much as $5,000 or $6,000. However, those families that the minister and the Conservatives seem to care about, who are earning $50,000 or $40,000, who may even apply for this and be compensated, would earn a couple of hundred dollars.

Why would families in the very highest tax brackets get as much as $5,000 or $6,000 of benefit from a program, when they arguably do not need it, where the middle-income families, whom the Conservatives seem to care about suddenly, would receive almost nothing? What is the equity in that? How is that going to fix the income disparity that we see in this country?

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Mr. Speaker, my colleague is quite right. I am struck by that all the time. Indeed, among the major beneficiaries of this new policy are several persons seated here in this House.

At the same time, I think of my piano teacher, who, with her spouse, runs a small piano school. They have a child, and things are tough for them. They are trying to get established. They have about the same income. For them, there is nothing to be gained from this measure. I think of my brother, my sister-in-law and their three sons. There is no benefit to them, either. To some degree or another, the benefits are kept out of reach of the vast majority of Canadians, and the worst thing is that those who need this the most will not benefit from it. We are talking about billions of dollars.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I am very pleased to rise today and speak, in the strongest possible terms, in support of the motion by my colleague, the hon. member for Skeena—Bulkley Valley. It is a twofold motion; it would do two things. It would first signal the drastic increase in inequality in our country, and second, more specifically, it would address the Conservatives' proposed policy of income splitting. I would like to address both of those in the short time available to me.

I am pleased to learn today that the Liberal Party is going to be in support of this initiative. The Conservatives are obviously deeply divided on this. Today we got an Orwellian rebranding of the income splitting proposal. I understand we are now to term it the “family tax fairness initiative”, which has a very nice ring to it.

Let me be personal for just a moment. When I was running for election a year and a half ago to represent the people of Victoria, I ran into a retired schoolteacher on a doorstep in Oak Bay. She asked, “Do you feel it?” I asked what. She asked if I felt how Canada is changing; if I felt how we are no longer glued together as a community as we were; if I felt the increasing gap between the rich and poor. She asked if that is the kind of community we want our children to grow up in. I said no. That is one of the reasons I am so proudly speaking in support of my colleague.

This retired schoolteacher got it right. We can literally feel the change, and I do not want my kids to grow up in that kind of country. I want the kind of country I benefited from when I grew up in a lower middle class family where all opportunities were available, rather than creating a permanent underclass of the poor, and a few very rich people. That is the kind of economy I fear we are going to experience in the future.

I am not just saying that from a fearmongering perspective. On April 3, a Globe and Mail headline was “Canada’s 86 wealthiest have as much as the 11.4 million poorest”. That is shocking. It is shocking that 0.002% of the total population is getting richer and now has as much wealth accumulated as 11.4 million Canadians. The top 20% have half the income, but what is more telling is that the top 20% now have 70% of the wealth of our country. Most Canadians understand that the current government has abandoned the middle class and the poor, with little job security and high debt, and so many of our fellow citizens are living paycheque to paycheque.

Statistics Canada also showed wealth gravitating to the top. While median income rose almost 80% since 1999 to $243,800 per family unit, the top 40% possessed 88.9% of total net worth, leaving the bottom 60% with a mere 11.1% of the pie. The poorest 20% of family units had more debts than assets.

The author of a report by the Canadian Centre for Policy Alternatives concludes, “If one Canadian makes $100,000 a year selling a company (or shares) while another makes $100,000 a year working at a job, the worker will pay twice the tax of the business seller”. We are in desperate need of Carter 2 in this country for a review of our tax system, which is only contributing to this increasing inequity, which that schoolteacher told me she felt so tangibly and which we all know is going on around us.

However, what about the new income splitting proposal, which has so divided the Conservatives, which is now to be called the “family tax fairness project”. It amounts to a tax break for the most wealthy. It would cost the federal government $3 billion a year without providing benefits to a staggering 86% of our families. My colleague from Skeena—Bulkley Valley got it right when he said that the Conservatives are clinging to a bad idea due to “hubris and pride”, as he termed it. I just wish they would do what the famous former premier of British Columbia, W.A.C. Bennett, said: take a sober second look.

[The Acting Speaker, Conservative, Barry Devolin]

Just for the hon. member for Victoria, the clock was incorrect. The hon. member actually has several minutes remaining. I apologize for giving him the one-minute warning. He has five more minutes, if he would like to continue with his speech.

[Murray Rankin, NDP, Victoria, BC]

I feel as though I have a second wind, thanks to you, Mr. Speaker. I did think that I did not need to be speaking quite so quickly. Thank you for the reprieve, if I can call it that.

It really is quite shocking. If I may go on, today's National Post, that left-wing propaganda machine, had another study about this income splitting or—what is it to be called now?—family tax fairness initiative. It says:

It turns out that among the target group [for this policy]—families with minor-aged children—the biggest winners by far reside in Alberta, where the average annual tax saving would be $1,359....

Second is Saskatchewan, with $1,070.The article says:

These two provinces, which have a combined 42 federal ridings, sent 40 Conservative MPs to Ottawa in the 2011 election.

Whereas, at the other extreme:

Families in Prince Edward Island will get an average benefit at $488, followed by Quebec families with children, which would average $510 in benefits. Those two provinces were among the least productive for the Conservatives....

One wonders, and the National Post appears to be wondering, whether there might be politics behind this initiative.

I am sure that is not true. I am sure it is good public policy. However, it does raise some rather interesting questions.

If people do not have kids under 18, it is no good for them. If people are single parents, it does not matter to them. If people are divorced, it is irrelevant to them. If people happen to earn what their spouses earn, it does not matter to them.

We understand the finance department had a report that was done, which appears to have been the basis of the late Mr. Flaherty's antipathy and growing concern about this policy: the need for greater analysis, as he pointed out. We cannot get that report. We would love to see what the finance department says about it.

However, in the words of that Canadian Press article that I cited, “This policy is an inequality generating machine”.

Inequality is what we are here, in part, to talk about today, because it has been spiralling out of control. The top 1% of incomes are surging. The typical Canadian family has seen its income fall for the last 35 years. The gap is getting bigger and bigger. We all know that. We all feel that.

Billions of dollars have been cut to social transfers by successive Liberal and Conservative governments, which has made things worse by reducing access to social programs for low income families.

When we cut transfer payments to the provinces, they get deficits. They get debt, but the federal government gets to brag about a balanced budget. The province passes it on to aboriginal governments and to municipal governments. To some degree, they can have that kind of debt, that kind of imbalance. They cannot run deficits.

So, this trickle-down theory is of great concern, certainly in British Columbia, where I hear about it all the time.

Robin Boadway is the David Chadwick Smith Chair in Economics at Queen's University. He was an excellent witness at the finance committee, where we studied income inequality. That report has been alluded to earlier today. He talked of the significant changes in the tax system, such as changes in the tax treatment of capital income, changes in the structure of labour markets and unemployment, and the effect of changes, as I just said, in federal-provincial transfers on provincial social protection programs. He says:

All of these have reduced the automatic responsiveness of the tax transfer system to income shocks, and this has been particularly noticeable at the top and bottom of the income distribution.

His analysis concludes that government is fundamentally responsible for the surge in income inequality.

To wrap up, I strongly speak in support of a motion that would get the government to do the right thing and take that sober second look that W.A.C. Bennett talked about, about a policy for income splitting promised in the heat of an election campaign. It does little good for so many of us and only makes it worse for so many. We must take more specific and directed measures at income inequality. I urge the government to please get on board.

[Jason Kenney, Conservative, Minister of Employment and Social Development and Minister for Multiculturalism]

Mr. Speaker, first, would the hon. member admit that the percentage of Canadian families living below the low-income cutoff line, typically referred to as the “poverty line”, is the lowest level ever?

Would he admit that the percentage of Canadian children living below that so-called poverty line is at its lowest level ever?

Would he indicate whether he has read the Luxembourg Income Study in The New York Times indicating that Canada now has the highest median family income of any developed country in the world?

Finally, in his constituency, Victoria, I know there is a disproportionately large number of seniors, pensioners, some of them with relatively high incomes, above the average. Will he maintain our policy of income splitting for those seniors, including the high income ones in his constituency? Or will his class warfare apply to the high income seniors who are benefiting from pension splitting, under the current government?

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I can categorically say that I will not contribute to class warfare, and I really do not believe that citing articles from The Globe and Mail, Professor Robin Boadway of Queen's University, and other notable experts in this matter would suggest there is any kind of class warfare in making common sense observations about things that most of us see every day in our constituencies, the phenomenon of living from paycheque to paycheque.

Has Canada made progress with seniors' poverty? Absolutely, and I am proud of that, but we have so much more to do. I have not read the particular report from The New York Times that was referred to by my hon. friend the minister, but I have read the report on income inequality, which expressed great concern about income equality as recently as this year. The majority of the members who prepared that report were Conservatives. Obviously as Canadians, we know there is much to be done.

On pension splitting, what NDP members would do when we form government is a matter we can talk about after we have the opportunity to review the books and see the secret reports the government is withholding.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, income inequality has always been an important issue for the Liberal Party. A couple of years ago, the Liberal Party critic introduced a private member's motion that was ultimately passed by the House of Commons.

With regard to the motion that has been brought forward today, I take some exception to the NDP aiming all of the criticism to the Conservatives and the Liberals. The NDP needs to recognize that there is federal-provincial joint responsibility with regard to taxation issues. A third party should be included in terms of what is being asserted here. For example, from 1991 to 2001 the NDP was in power in B.C. That government took B.C.'s level of income inequality from fourth place across Canada to the worst in Canada.

Would the member not at the very least acknowledge that it is not just one or two political parties that need to improve? Would he not include his own party? If we want to get ahead on this issue of income inequality, we need to deal with its core issue and how we could best enhance that. Our motion that passed in the House two years ago was an attempt to do that. A committee would have discussed the issue and come up with recommendations and ideas that would have had a tangible impact.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, the member for Kings—Hants had it right, that this ought not to be simply a partisan exercise.

Nevertheless, we do need to acknowledge where we came from. Governments in this place were never NDP governments. They were Liberal and Conservative governments over succeeding decades and they pushed the debt down to the provinces. The NDP has never formed government, to my knowledge, in the House of Commons, so I do not know why provinces would be included in a motion trying to direct our federal government to take responsibility for income inequality.

[Scott Armstrong, Conservative, Parliamentary Secretary to the Minister of Employment and Social Development]

Mr. Speaker, I want to take a moment to acknowledge the memorial ceremony for the RCMP officers who were laid to rest today in Moncton very close to my riding. We always need to recognize and remember the sacrifice that our law enforcement officers are prepared to make each and every day to protect the greater society.

I am so pleased to be able to participate in this debate today. It gives me the opportunity to provide the House with clear facts regarding our government's record, which has raised the income of the middle class and reduced the tax burden on low and middle-income Canadians. That is why our government's top priorities remain creating jobs, economic growth and long-term prosperity, and we will not be supporting this NDP motion.

Conservatives know that the best way to raise the income of Canadians and their families is through a strong and growing economy. This means ensuring that Canadians have the skills they need to fill well-paying jobs that a strong economy will generate.

We believe the private sector creates jobs, not governments. This is why the government has put in place appropriate policies to maximize the growth in job creation and reduce inequality by reducing taxes, increasing support for hard-working Canadian families, promoting trade investment, supporting key economic sectors, making education accessible and affordable, reducing barriers to labour market participation and being responsible fiscal managers of the Canadian economy.

The proof is in the numbers. Since the depths of the global recession, Canada has demonstrated the strongest labour market performance of all G7 countries, with over one million net new jobs created since the pith of the economic recession in July 2009.

Indeed, because of this strong economy, the Canadian standard of living is one of the highest in the world. Canada's low-income rate has been dropping. In fact, it is at the lowest it has ever been. This is something the NDP like to ignore, but it is a fact.

Since the beginning of 2006, the take-home income of Canadian families across the board, and that is in all income groups, has increased by 10% or more. According to a recent Statistics Canada study, the median net worth of Canadian families is almost 80% more than the 1999 median and when adjusted for inflation, it is up 44.5% from 2005. Our government has helped the average Canadian family of four save close to $3,400 per year by cutting taxes over 160 times.

It is clear that our plan has been working and Canadians of low and middle incomes have seen real tangible improvements in their bank accounts.

It is not just Statistics Canada studies that are validating this approach. The Parliamentary Budget Officer in a recently released report entitled “Revenue and Distribution Analysis of Federal Tax Changes: 2005-2013”, identifies that middle and low-income earners have accrued the greatest financial benefit, specifically those in the 20 and 30 percentile of income earners, or those earning between $12,000 and $23,000. This group of households has accrued an average increase of 2.5% in after-tax income resulting from the major personal income changes since 2005.

This is because we understand how important it is to create the right environment for businesses to grow and create jobs. We recognize how vital it is to ensure that all Canadians have an equal opportunity to share in the benefits of a strong economy.

Through our jobs, growth and long-term prosperity approach, our government has effectively taken action that has improved the lives of Canadians at all income levels. This is why I find the NDP's motion so puzzling. The facts and studies validate our approach to creating the conditions for jobs and growth. I would think even the NDP would look at the hard facts and come to the conclusion that many Canadians have, which is that Canadians are better off today than they were in 2005.

The growing wealth of Canadians ought to be something that all parties can agree on, because each and every member wants to see less poverty and more Canadians with employment.

We are not saying that we are done. It is quite the opposite. We are saying that we are just getting started.

Canada currently has one of the lowest poverty rates among seniors in the world. It is lower now than it was under the Liberals, at 5.2% in 2011. The number of Canadians living below the low income cut-off is now at its lowest level ever. There are nearly 1.4 million fewer Canadians living in poverty under our Conservative government than under the Liberals.

Our government has removed one million Canadians from the tax rolls, including 380,000 seniors. Since we took office, there are 250,000 fewer children in poverty than under the previous government.

However, we are not satisfied. As the Minister of Employment and Social Development has pointed out, over and over again, there are still far too many people without jobs in Canada and far too many jobs in Canada without Canadians to fill them.

Our government believes more can be done with the training dollars we spend to lead to guaranteed jobs, which will improve the lives of Canadians and reduce overall inequality. We also believe that the best way out of poverty is a well-paying job. We believe the best way to reduce inequality is to create more jobs, and this can be done by improving and transforming our skills training system.

Let me outline some of the measures to transform the skills training system that will help Canadians get these available jobs and help Canada create more and better jobs.

As the economy has recovered, these skills mismatches along with labour and skill shortages have emerged in certain regions in certain sectors, highlighting the need to transform training and give employers a role in deciding where training dollars will go. This is why our government introduced the Canada job grant. The Canada job grant will encourage employers to invest more in skills and training and be involved in decisions to ensure that training leads to a guaranteed job at the end of that training.

The minister has reached agreements with all provinces to deliver the Canada job grant through the Canada job fund. The government is also committed to improving other labour market transfers to ensure that funds are being used to help Canadians obtain the skills they need for jobs in high-demand fields.

To this end, the government is renegotiating the labour market development agreements with provinces and territories. These are over $2 billion training funds that come directly from the EI account. Currently the human resources committee has been studying the renegotiation of these agreements, and as a member of that committee, I look forward to being able to recommend to the minister some ways that we could improve these agreements to better train unemployed Canadians for guaranteed jobs at the end of that training.

Our government is also investing $11.8 million over two years and $3.3 million per year ongoing from that to launch an enhanced job-matching service. This will provide job seekers with modern and reliable tools to find jobs that match their skills, and to provide employers with better tools to look for qualified Canadians to fill available jobs.

Through a secure, authenticated process, registered job seekers and employers will automatically be matched on the basis of skills, knowledge and experience. This proposed enhanced job-matching service will build on the launch of a modernized and easy-to-use consolidated national job bank.

Our government has also taken steps to reduce barriers to labour mobility across provinces and territories by helping regulated occupations develop nationally accepted standards.

To reduce non-financial barriers to completing apprenticeship training and obtaining certification, budget 2014 introduced a flexibility and innovation in apprenticeship technical training pilot project, which will expand the use of innovative approaches to apprentice technical training.

In addition, budget 2013 allocated $4 million over three years to continue to work with provinces and territories to harmonize the requirements for apprentices, as well as examine the use of practical tests as a method of assessment in targeted skill trades. Apprenticeship training is an important part of the post-secondary education system, and is a key provider for the skills and knowledge necessary for jobs and growth.

To further assist Canadians with training for a career in the skilled trades, budget 2014 announced the Canada apprenticeship loan, which would expand the Canada student loan program to provide apprentices registered in the Red Seal trades with access to over $100 million in interest-free loans each year.

This action builds on the existing government initiatives to apprentices and employers to encourage apprenticeship training and stimulate employment in the skilled trades. The apprenticeship grants are designed to encourage more Canadians to pursue and complete apprenticeship programs in the Red Seal trades.

In budget 2014, the government committed to take steps to ensure that apprentices would be aware of the existing financial supports available to them, while they were on technical training programs through the EI fund.

These are all measures that the government is taking to ensure taxpayers are well served by the federal training dollars.

Our government recognizes that there are often challenges for under-represented groups, such as youth, people with disabilities, aboriginal people and newcomers to Canada, in obtaining the support they require for jobs and growth. Encouraging the participation of under-represented groups in the job market continues to be an important priority for all of us.

Our government provides over $6.4 billion to the provinces to support skills development and higher education.

I have already touched on two of the transfers, the labour market development agreements and the Canada job fund. There are other transfers, such as the $3.75 billion for post-secondary education that comes from the Canada social transfer, or the labour market agreements for persons with disabilities, which provides $222 million to the provinces for the targeted initiative for older workers.

In addition to the money that we transfer to the provinces to help under-represented groups, the federal government directly spends almost $1 billion on skills development and higher education. There is a youth employment strategy which invests $300 million to provide training, internships, work experience and education for young people. There is the apprenticeship incentive grant and the apprenticeship completion grant, which provide over $110 million to help apprentices.

There is a skills and partnership fund, which partners with employers to provide training for guaranteed jobs mainly in the resource extraction industry. There is the aboriginal skills and employment training strategy, which provides $336 million to support aboriginal labour market participation. There is the opportunities fund for persons with disabilities, which is providing real job experience for Canadians with disabilities.

It is very clear from what I have just outlined that our approach is working and we have been raising the incomes of Canadians and their families. We have targeted initiatives for many different Canadians, for many different jobs and much different training to ensure we provide fairness across the board. We are continuing to equip Canadians with the skills required to obtain and keep the well-paying jobs available today and in the future. We are continuing to make smart investments in programs that are having real results for under-represented groups.

The Conservative government will continue to focus on jobs, growth and long-term prosperity and put in place the appropriate policies to reduce inequality. That is why I will not be supporting this motion. I would encourage my colleagues opposite to look at the facts and reject the motion.