David Walker

[Borrowing Authority Act, 1995-96, March 20th, 1995]

Madam Speaker, it is for me a great pleasure to give today my support to Bill C-73, the Borrowing Authority Act, which has reached the third reading and final concurrence stage in this House.

This bill is in fact an internal economy measure which is introduced once a year to allow for the continuation of the permanent operations of the government. This does not mean that the government does not consider this measure seriously, quite the contrary.

This bill follows the presentation by the Minister of Finance last month of the most important and significant budget for the future of this country since the Post-War years.

This budget brought in-depth changes to the nature of federal spending. Its provisions were adopted because the need for a sound administration has become incompatible with a growing national debt that has a destructive impact nation-wide.

This bill provides for a borrowing authority of up to $29 billion. A large portion of this amount accounts for the appalling and unacceptable gap that has developed between projected federal expenditures and revenues.

Canadians are well aware of the situation. They understand that the cost of outrageous deficits means higher taxes and interest rates and less economic growth in the future.

These same reasons explain why the 1995 budget and its harsh measures have had so much support from the people.

In the 1994 budget, we undertook to keep the deficit under $32.7 billion in 1995-96 and to reduce it even further to 3 per cent of the GDP, that is $24.3 billion in 1996-97.

This budget contains harsh measures that will make sure we reach those goals despite higher interest rates than expected.

However, this budget goes much further than the goals set for the next two years. Our reforms will continue to be productive in the following years and will allow us to go on and hit the final target of this government, that is a balanced budget.

We will be able to claim that our mission has been achieved the day this kind of bill is no longer necessary.

To hit our deficit targets we are implementing cumulative savings over the next three years of $29 billion. This is the largest set of actions in any budget since the demobilization after World War II.

These actions mean changing the size and shape of government. By 1996-97 program spending will fall from $120 billion last year to just under $108 billion this year. The structural changes we are making will ensure significant deficit reduction continues in 1997-98 and beyond. The bottom line benefits of this will be dramatic

The deficit will fall to $32.7 billion in 1995-96 and to $24.3 billion the year after, as we promised. With the deficit in 1996 at 3 per cent of GDP, this will be the lowest level since 1974-75.

By that time our financial requirements, the new money we have to borrow from the markets, will drop to $13.7 billion. That will be just 1.7 per cent of GDP, lower than any currently forecast for any other G-7 nation. We are again backing up our prudent economic assumptions with substantial contingency reserves; $2.5 billion in 1995-96 and $3 billion the year after. This means we can still come in on target next year, even if interest rates are 1 per cent higher and growth half a per cent lower than our forecast.

Our contingency reserve can do more than protect our target. If it is not needed it will not be spent. It will go to reducing the deficit even further. This underscores another benefit our prudent planning could deliver.

If interest rates and growth do better than are forecast and just conform to the private sector averages, the 1996-97 deficit could drop below $19 billion. That is $5.5 billion less than this budget projects. That would bring our deficit down to 2.3 per cent of GDP.

Even if we do no better than our projected targets, 1996-97 will be an important milestone since the debt will no longer be growing faster than the economy. The debt to GDP ratio will have begun to decline at last. That is the key to fiscal sustainability, to put our debt ratio on a permanent downward track.

I need not go on summarizing our budget plans and the promise they carry. The House has heard days and days of budget debate. The court of public and market opinion has ruled strongly in favour of our courageous strategy.

Let me turn briefly to the thrust of Bill C-73. I again ask the House to support and speedily pass this bill.

If borrowing authority is not in place early in the new fiscal year there will be severe constraints placed on the government's financing program. Without passage it could lead to a situation in which no government bonds could be issued except to fund maturing issues. The bottom line here could be increased costs to taxpayers because it would expose the government to the additional interest rate charges and risks implied by increased short term funding.

Bill C-73 contains three basic elements: authority to cover financial requirements for 1995-96; a provision for exchange fund account profits; the renewal of a non-lapsing amount. In total we are requesting authority to borrow $28.9 billion for the 1995-96 fiscal year.

The largest element is the provision for $24.9 billion of borrowing to meet the net financial requirements as set out in the budget. There is a provision to cover $1 billion of exchange fund account earnings, earnings which would make necessary additional Canadian dollar borrowing requirements. These earnings, although reported as budgetary revenues, are retained in the exchange fund account. They are not available to finance ongoing operations of the government.

There is the well established, over the last seven years, $3 billion non-lapsing amount. This sum can either be used during the course of the year to manage contingencies such as the unexpected foreign exchange requirements or it can be carried forward into the next fiscal year.

There are some technical provisions in Bill C-73 that more clearly link fiscal year borrowing authority with fiscal year borrowing requirements.

For example, one provision provides that the 1995-96 borrowing authority may only be used after the new fiscal year begins. Another provision stipulates that for the purpose of calculating borrowing authority usage the effective date is April 1.

Until the bill is passed the government may continue to use the $3 billion non-lapsing amount provided for in last year's Borrowing Authority Act. Any portion of this non-lapsing amount used will be deducted from the basic amount of borrowing authority being sought today. This prevents the non-lapsing amount from effectively adding to the borrowing authority next year. Once it is passed, this bill will also cancel all borrowing authority remaining from fiscal 1994-95.

This bill is a regular feature of each year's legislative agenda. It contains no remarkable or unexpected provisions. Its supporting background was fully documented in the budget, the main estimates and related documents.

However, what is remarkable in both senses of the term is the clear, courageous and concrete action the Minister of Finance set out to set the federal deficit on the fast track. By doing so, our government is laying the foundations for continued national economic renewal and restored national unity.

I therefore encourage the House to approve Bill C-73 post haste so the new borrowing authority will be in place at the beginning of the new fiscal year, 11 days from now.

[Firearms Act, March 13th, 1995]

Mr. Speaker, several banks reported record profits in 1994. This has led observers to wonder whether the banks are paying their fair share of taxes.

Banks pay a considerable amount of taxes. They pay income tax and are subject to two federal capital taxes, including the large corporation tax which applies to all corporations with more than $10 million in capital, and the capital tax for large financial institutions which acts as a minimum tax.

During the period 1991-93, the six largest banks and their mortgage loan affiliates paid nearly $1 billion annually in federal income tax and capital tax. The banks also pay income tax, capital tax, property tax and other types of taxes to provinces and municipalities.

Members are probably aware of measures that were introduced in the last two budgets to ensure that banks, and financial institutions generally, continue to pay their fair share of taxes. This year's budget introduced a special tax on the capital of large deposit institutions, including banks.

[Income Tax Act, March 3rd, 1995]

Mr. Speaker, I thank the hon. member for Calgary Centre for the opportunity to present the views of the government on this issue. I appreciate the time being set aside during private members' hour to give him, his colleagues and other interested people the perspectives that I, as parliamentary secretary, can bring to bear on this issue.

Members will recall that the Reform Party's alternative budget presented last week called for massive spending reductions, including $15 billion on social programs.

It is surprising, therefore, that Bill C-247, tabled by the Reform Party member for Calgary Centre, proposes action that would increase federal and provincial tax revenue costs by a whopping $6.5 billion annually. That is right, an extra $6.5 billion a year at a time when all Canadian governments are striving to reduce both their deficits, and Canadians' tax bills. Maybe the The Taxpayers' Budget should have been entitled Out of The Taxpayers' Pockets.

Bill C-247 is also surprising given that Reform's budget says that government must "build on the Canadian tradition of self-reliance-and make assistance available only to those who are genuinely incapable of providing for themselves". However, Bill C-247 does not limit assistance to those who need it. Rather, it would allow fixed child care expense deductions of $5,000 or $3,000 for all, regardless of the income of the parents or the amount of child care expenses, if any, actually incurred.

In effect, Bill C-247 would actually create a new child tax benefit. And sadly, because it would depend on a taxpayer's marginal tax rate, the benefits would actually be greater for those in high income brackets than for those in lower brackets.

Unlike the measures proposed in Bill C-247, the current child tax benefit targets substantial assistance to low and middle income families with children.

Delivered monthly and tax free, it provides a basic annual credit of $1,020 per child, plus $75 for the third and each additional child.

That assistance is reduced by 5 per cent-2.5 per cent for one-child families-of family net income over $25,921. Also included is a work income supplement of up to $500 per family with net family income under $25,921. This helps to meet the extra costs associated with participating in the work force.

A supplement is provided for parents who choose to remain in the home to raise their pre-school-aged children. This year, the supplement is $213 for each child 6 years old or younger. Assistance for families is also provided through the child care expense deduction.

It recognizes for tax purposes the child care expenses that taxpayers must incur in order to earn income, to attend a recognized educational institution full time or to take a vocational training course.

The deduction acknowledges that these taxpayers have less of a capacity to pay taxes than other taxpayers with an identical income, but who do not have child care expenses. As a result, up to a limit, income used to pay for child care expenses is not taxable.

The deduction is applied to earned income in order to ensure that tax assistance is provided for child care expenses incurred to earn that income.

This reflects the general view that parents not employed outside the home are expected, and indeed have a responsibility, to look after their children.

Bill C-247 would completely change the nature of the current deduction. It would also be prohibitively expensive at a time of fiscal consolidation. As such, we can neither afford, nor should we even entertain, the amendments proposed by the member for Calgary Centre. I therefore urge this House to deny passage of this bill.

[The Budget, March 3rd, 1995]

Mr. Speaker, I welcome the opportunity the question from the hon. member for York-Simcoe gives me to tell the House that the economy is coming along quite well.

Statistics Canada said this week that the economy has improved and that we have had the fastest growth rate in five years. It was 4.5 per cent throughout the year. For the first time in 40 years we are now competitive with the United States on every measure. That is why our exports are driving the economy.

Most important-and all members of the House will appreciate this-finally consumer confidence is growing. With a 7 per cent increase in retail sales I believe every Canadian feels he or she is participating in the renewal.

[The Budget, March 3rd, 1995]

Mr. Speaker, a number of actions were taken on the agricultural front dealing with both the WGTA and the dairy subsidy. I remind hon. members these are two different agricultural sectors. We had a question from the Reform Party yesterday from a different perspective.

We are working with each of these communities to make sure that we do things properly. The dairy subsidy is being approached in an entirely different way than the grain transportation subsidy. As we work our way through the communities we will continue making announcements to make sure these subsidies are both reduced and properly looked after.

[The Budget, March 3rd, 1995]

Mr. Speaker, no further cuts will be introduced due to the failure of the budget because the budget is not a failure.

The Minister of Finance and the Prime Minister have indicated that as one goes about reviewing an organization as large as the Government of Canada, naturally one will continually come across better ways of doing things. We will continue to do things better.

[The Budget, March 3rd, 1995]

Mr. Speaker, it is just the opposite. We all remain very concerned about the debt. That is why we took the dramatic actions we did on Monday. I want to remind the member that Standard and Poor's addressed itself to the 3 per cent foreign currency debt. On the other 97 per cent it gave a AAA.

[The Budget, March 3rd, 1995]

Mr. Speaker, if the opposition member would care to read through both the financial press and the general public press and look at the opinion polls such as Angus Reid presented this week, he will see that the budget has been accepted widely by Canadians as well as by financial experts. In fact, only yesterday Standard and Poor's reaffirmed our AAA rating. We are very proud of the reception we are getting.

[The Budget, March 3rd, 1995]

Mr. Speaker, one of the prime reasons we have extended the infrastructure program and pushed $200 million of work into the future is the very sensitive issue of environmental assessment. I am sure there is no member in the House of Commons who would wish us to ignore environmental assessments and to push projects through without their being properly evaluated. As these projects are properly evaluated, they will come onstream as originally planned.

[The Budget, March 3rd, 1995]

Mr. Speaker, again the opposition has misinterpreted the budget. We announced measures starting last year with the infrastructure program.

We have been very aggressive in creating jobs. With the better climate we have provided in Canada over 443,000 jobs have been created. I am sure the hon. member would like to read the red book more carefully than he has in the past. On page 16 and again on page 19 we emphasized the double track our new government had to take. That is to say, we had to create jobs and reaffirm our commitment to Canadians and at the same time we had to begin the deficit reduction program.