David Walker

[Supply, February 14th, 1995]

Mr. Speaker, if my hearing is bad, perhaps his eyesight is also bad. Did he see the 5,000 people in Montreal who were worried about their futures?

[Supply, February 14th, 1995]

Mr. Speaker, it is difficult to know where to begin. It is obvious that the rough edges of his speech were left for the comments period and not for his actual speech. In his speech he kept himself on track and was quite reasonable, but when he stood on comments he began to get a bit sidetracked as to what the budget process was all about.

The committee very carefully listened to witnesses. We were very careful in our own presentation to reflect the interest of Canadians. We can talk about majorities and what the majority said, but we also have in this country a respect for the minority. Groups that appeared before us were very concerned about the programs that were being presented. They asked us to protect the programs.

The job of a government is not only to get on the high horse of a protest movement. It is also very much to bring into focus what a government should be doing in these very difficult times.

I would argue that the approach taken by the majority report was a reasonable approach. We asked the finance minister to go further than he was originally intending to go. Then in January there were increased interest rates and difficulty with the dollar. I believe it is now accepted that actions will have to be as dramatic as they can possibly be.

The opposition critic vacillates between two important points in this debate: between Canadians they are encouraging to fight against a tax increase and international markets that want to be reassured we have our house in order.

If we ask somebody in New York who is concerned about the Canadian budget whether there should be any tax increases, he would argue that we should do anything to get to our target. He would say: "If you are really concerned about what I think, do what you have to do. If it means tax increases, do it and get to your target". Then the Reformers go back to Calgary and say: "Tell them not to raise taxes". The whole strategy is made vulnerable because they are playing a double game and they know they are playing a double game. Somebody on the floor of the House of Commons should call them on that.

[Supply, February 14th, 1995]

Mr. Speaker, I welcome this opportunity to remind the House of the fiscal commitment and philosophy that will frame our government's upcoming budget. I believe this debate should also include some plan and some plain, positive talk about the Canadian economy and outlook.

This Reform motion cites "the demand by Canadians to cut spending and hold the line on taxes to eliminate the deficit and produce a smaller federal government". Our government does not need this grandstanding motion or any of the stage managed events of a publicity starved party to be deeply aware of what Canadians want.

Starting last October, we put in place the most extensive and most public consultation process in budget history. In my view, these consultations prove that Canadians have a more profound and positive understanding of the budget challenge than the simplistic slash and trash approach of the Reform Party.

In fact, Canadians have identified priorities that are realistic and require a great deal of effort. They want a strategy for phase two, based on last year's budget, to get Canada out of this vicious circle of deficit and debt.

However, the vast majority of Canadians also want the budget measures to meet other essential criteria. They have made it clear that they agree with the principles set forth last fall by the Minister of Finance.

First of all, deficit reduction must be an essential part of a strategy to create jobs through economic growth. Second, fairness is paramount, to ensure that the most vulnerable in our society are not left behind. Third, deficit reduction measures must be based on reasoned choices and reflect clear-cut priorities. Fourth, we must use taxpayers' money wisely. And finally, budgetary actions should focus on reductions in expenditures, as opposed to raising revenues.

The Canadians I have heard from want a lean government but not a mean government. They want a budget that builds market confidence but not one that abandons basic social responsibility. This budget will meet that dynamic challenge.

There is no contradiction here. Our budget will, because we know it must, take the tough action needed to meet the deficit goals we set out last year. As the Prime Minister said in Quebec City last fall, the time to reduce deficits is when the economy is growing. Therefore, now is the time. The economy is growing which is good news for all Canadians.

Let me give members some examples. Canada's growth rate last year was 4.25 per cent, the highest in the G-7. The OECD predicts that Canada will continue to lead the industrial world for the next two years. In the past 12 months, real exports surged over 20 per cent and we continued to set all time records for our country.

A survey by the Conference Board found that 81 per cent of firms planned to maintain or boost investment over the next six months, another record high for our country. That investment means jobs. Since January 1994 the economy has created over 400,000 jobs. All of these are full-time jobs. The unemployment rate is down to single digits for the first time in four years.

This good news does not mean that Canadian economic renewal is permanently secured. We know that. The government knows that cohesive, co-ordinated action is needed on all fronts. We understand that the spearhead for this action agenda must be to restore a healthy fiscal climate.

We all know the price we have to pay today for having let deficits and the debt rise to new heights during the past decades. That price is higher taxes and interest rates, factors that slow down growth.

This government, however, believes that in order to meet the debt challenge successfully, we must first set realistic and credible targets. This means maintaining the deficit reduction momentum we have set in motion, in other words, bringing the deficit down to 3 per cent of GDP in three years. That is exactly what we intend to do, and as the Minister of Finance said, there are no excuses.

The last time we had a deficit level of 3 per cent was in 1974-75. Since then, the deficit has increased steadily and is now close to 6 per cent of GDP.

It should also be said that setting firm deficit reduction objectives is a considerable departure from past policy.

Canadians and markets lost confidence because they have suffered too many years of rosy, long term promises that became nothing but short term fertilizer.

Instead, we have set out realistic targets and will take the action to deliver bottom line results. Our success here will strengthen credibility for our long term objective, which is eliminating the deficit completely. This strategy is based on fundamental political and public reality.

We believe it is best to set short term targets, concrete milestones and hit them. With short term targets there is no excuse for delay, no acceptable grounds for not taking tough action to address the problem. When unrealistic long term goals are set, reasons can always be found to avoid tough action today and tomorrow and tomorrow after that.

That was the Tory record, the first cousins of today's Reformers, a legacy we refuse to accept. Let me remind the House that we did more than stake out a deficit goal last year. We backed that goal with real bottom line action.

The 1994 budget set out measures to deliver $20 billion in deficit reduction over three years. For every $1 of revenue action there were $5 of spending cuts. No budget in a decade moved so strongly to cut spending. The fact is we have always recognized the need for continued fiscal action. The 1995 budget process started the minute we introduced the 1994 plan.

That is why we combined immediate action with a sweeping series of program reviews of government operations, defence and social security reform. These have set concrete foundations for this year's budget and the tough decisions needed.

We all understand that we have a long way to go but I think we have made a strong start. I am certain that 1995 budget will show all Canadians and markets around the world that the fiscal commitments made by the government are the fiscal commitments kept by the government.

Before concluding my remarks let me comment directly on the so-called demand that today's motion cites for no net tax increases in the upcoming budget. Nobody likes higher taxes. Only a foolhardy politician would think otherwise. That is why cuts in government spending must and will be our priority in reducing the deficit. We proved that last year when we cut spending by $5 for every $1 in revenue measures.

Most Canadians know that to ever bring taxes down and more immediately to ease the pressure on interest rates and the dollar we have to get the debt under control. That can only start by meeting our deficit targets. Given this challenge, I cannot promise that the budget will not include revenue action. If we take it, the focus will be on improving the fairness of the tax system.

Let me challenge those who argue against any tax action. Do they really believe that the tax system right now is completely fair? Do they really believe that there are no loopholes or no unjustified preferences, especially given our fiscal situation? That type of Pollyanna politicking is not what Canadians demand or need at this time.

In concluding, I would like to point out that the motion before the House today refers basically to decisive spending cuts, a refusal to tolerate tax increases, initiatives to reduce the size of government, and all those measures that are part of an effective deficit reduction strategy. In other words, we have here the entire substance of what our government has said it would do. Unfortunately, the opposition in this House has shown once again it is better at spouting clichés than at making proposals of any substance.

We welcome the opportunity to debate tax issues before the budget, but we wish the opposition would bring some reality to the dilemma facing Canadians and hope that we hear more constructive propositions during this debate.

[Income Tax Act, February 13th, 1995]

Mr. Speaker, I would like to address the amendment put forward by the official opposition.

It is correct that Bill C-59 will subject the age credit to an income test. Canada's debt and the burden of high taxes and interest rates it imposes on all Canadians, including seniors, demands that government spending be both fair and effective.

This measure meets that test by ensuring that assistance goes to seniors who need it but not to those with annual incomes hitting $50,000. Under the current tax system, all Canadians 65 and older are eligible for the age credit. It delivers a combined federal-provincial tax reduction of about $950 a year.

Under the proposed legislation, individuals with net incomes below $25,921 will retain their full credit. For people with net incomes above the threshold, the credit will be reduced at a rate of 15 per cent of their net incomes exceeding $25,981. The threshold will be indexed.

I would like to make it very clear that 75 per cent of all seniors, 2.6 million people, will not be affected. In addition, most of the people who are affected will continue to receive partial benefits. In fact, only six per cent of all seniors, those whose income is over the $49,134 threshold, will stop receiving benefits altogether.

It is also important to note that the reduction will be staggered over a period of more than 12 years. In 1994, the reduction would reach half of the figure that otherwise would have been set. In addition, people will still be able to transfer the age tax credit to a spouse.

Let me assure the House that we do not take this measure lightly. It is today's senior citizens who built this country into what is considered by many the best place in the world. Our government will never forget the obligation it has to helping seniors and why.

We also must remember the obligation we owe to all Canadians to restore the fiscal responsibility that makes possible lower taxes, easing in interest rates and more jobs.

The Toronto Star in an editorial this morning made the point that as it scrambles to cut spending Ottawa can achieve fairness only if it allocates its limited resources on the basis of real need. By itself the age of 65 is not a measure of need.

That is why Bill C-59 moves to sustain aid to those seniors who do need it but not for those with significant incomes.

[Communications Security Establishment, December 13th, 1994]

Mr. Speaker, over the past few weeks six major banks have reported their profits for the year ending October 31, 1994. The six largest banks reported profits of over $4.2 billion, a 47 per cent increase over last year. This has prompted some

observers to ask whether the banks are paying their fair share of tax.

Banks do pay considerable amounts of tax. Banks pay income taxes and are subject to two federal capital taxes, the large corporations tax which applies to all corporations with more than $10 million of capital, and the financial institutions capital tax. This latter tax is paid annually at an average rate of 1.25 per cent of capital. This tax is designed as a minimum tax for banks and other large financial institutions.

Over the past five years the six largest banks and their mortgage subsidiaries paid on average $850 million per year in federal income and capital taxes. In 1991 and 1992 they paid around $1 billion per year in federal income and capital taxes.

Banks also paid income, capital, property and other taxes to provincial and municipal governments.

The hon. member is no doubt aware that further measures were introduced in the 1994 budget to ensure that banks and other financial institutions continue to pay their fair share of tax. These changes will improve the measurement of income on securities and loans held as part of their ordinary course of business.

[Petitions, December 9th, 1994]

Mr. Speaker, it deals with the decriminalization of assisted suicide or legalizing euthanasia and asks that Parliament continue to reject euthanasia and physician assisted suicide in Canada.

[Petitions, December 9th, 1994]

Mr. Speaker, on behalf of citizens of Winnipeg North Centre and elsewhere in Winnipeg I wish to present the following petition.

We the undersigned citizens of Canada draw the attention of the House to the following-

[Taxation, December 8th, 1994]

Mr. Speaker, if the member is a great fan of Stats Canada he should be quoting the tremendous rate of economic growth in this country under the leadership of this government.

The member will know full well that everyone is concerned about the high level of taxation for Canadian families, just as we are with the integrity of all of our programs.

[Taxation, December 8th, 1994]

Mr. Speaker, the hon. member knows as he participated in many of these meetings that we heard a variety of opinions from Canadians concerned about the government, taxes and about the integrity of our programs. The Minister of Finance will take these into account as he makes up his mind.

[Income Tax, December 8th, 1994]

Mr. Speaker, the opposition knows full well that under the leadership of the Minister of Human Resources Development that the process of consulting with Canadians continues. The government will make a decision in the coming year as to how to deal with each of the items in the budget.