Scott Brison

[The Economy, March 15th, 2002]

Mr. Speaker, the productivity gap with the U.S. continues to widen. The Deputy Prime Minister said in the past that high taxes help productivity, so we know he is not an economist.

With his government's record of reducing the Canadian dollar by 20% against the U.S. dollar and 15% against the British pound sterling, why is he so optimistic that the Canadian dollar will reach 80 cents U.S.?

What is his government doing to get it there? Does he think he can do a better job than the finance minister at implementing policies to strengthen the Canadian dollar?

[Budget Implementation Act, 2001, March 15th, 2002]

Yes, it is the Enron government accounting practices.

In terms of the U.S. tax package, the hon. member is simply wrong. The fact is we have and, after the full implementation of our Canadian tax reduction, will still have significantly higher personal income taxes, corporate taxes and capital taxes than in the U.S. That is one of the reasons the U.S. continues to be a magnet for capital and this country under his government continues to be a repellant.

Canada has among the highest income taxes in the G-7 and the second highest corporate taxes in the OECD. This is hardly a record to boast about.

I am glad the member mentioned the previous government's record. The government in 1984 inherited a $39 billion deficit, which, as a percentage of GDP, was 9%. Over a nine year period that government reduced the deficit as a percentage of GDP from 9% to almost half of that, to around 4%. At the same time it had the courage to introduce a free trade policy and used political collateral to leap ahead of the Canadian public and actually take a political risk in the 1988 election to introduce a free trade policy. It actually took the political risk of getting rid of a manufacturers' sales tax, which was pummeling investment and hurting productivity, and replaced it with the GST which was a more rational tax. It made more sense economically. Politically, it was about as popular as a skunk at a picnic, but it was the right thing to do.

Where was his party on all those issues? His party was vociferously fighting against every single initiative of that government, not just to reduce the deficit as a percentage of GDP but also to implement the types of policies required to guide Canada through the nineties as those policies have to a period of greater prosperity and success for all Canadians. That government planted the seeds and this government picked the flowers.

[Budget Implementation Act, 2001, March 15th, 2002]

Mr. Speaker, this will be like shooting fish in a barrel. First, I thank the hon. member for his softball question.

In terms of the deficit, according to German, U.S. and U.K. accounting standards, Canada is in a deficit right now. By Canadian accounting standards, we are cruise controlling to deficit. The only way the government narrowly averted that was by deferring some corporate taxes to next year. It was not a tax break but a deferral to try to avoid that. Don Drummond, the chief economist of TD Bank, referred to it as fancy bookkeeping.

[Budget Implementation Act, 2001, March 15th, 2002]

Mr. Speaker, I thank the hon. angry young man from Elk Island for his intervention. We all have effective ways of dealing with anger and I would be willing to sit down with him for counselling any time.

The member is an extremely effective member of the House of Commons finance committee. He shares with me a concern that the committee process is becoming less and less functional as we see the executive branch of the government and the Prime Minister's Office exercise control. I would add the cabinet as well but I do not think even the cabinet has much to say about how things are going on that side of the House any more. I think the Prime Minister's Office increasingly is exercising control over members of parliament on that side. It is also trying to exercise control over committees which by their nature are more effective and functional when they operate in a more co-operative non-partisan way.

I was very disappointed that the concerns about the air security tax which were raised by every single witness who appeared before the committee were ignored. They were not really ignored by the committee. There were Liberal members of parliament, including the member for HIllsborough, who expressed concerns.

In fact the hon. member for Hillsborough had said at committee that he was not going to vote for the air security tax without amending it. He supported an opposition motion to reduce the air security tax by 50%. Of course the chairperson recognized that if a vote occurred at that particular moment, the air security tax would have been reduced by 50% by the committee. As such she recessed the committee briefly and miraculously 30 minutes later when the committee reconvened the member for Hillsborough was not there. He had disappeared. I moved at the committee that we send him a get well card.

The member came back about 20 minutes later looking like he had just lost his puppy, with a florid face after having been taken into the whip's torture chamber. He expressed that he had changed his mind, that he saw the ways of the government on this one now. He said that he had received reassurances from the Minister of Finance that this issue would be revisited in the fall and the minister would reduce the tax if it was taking in more revenue than what was required.

I did not just fall off a turnip truck. The Minister of Finance committed to scrap the GST and did not. The Minister of Finance has benefited from building a surplus on the backs of workers and small businesses with the EI fund. Are we supposed to take him seriously when he says he is going to reduce the air security tax if it takes in too much revenue? The Minister of Finance is a taxaholic. We do not expect the government or the Minister of Finance to make good on that commitment.

It is unfortunate that we are seeing an increased level of control of committees by the Liberal whip as an extension of the Prime Minister's Office and the dysfunctionality which is inherent in that. Committees need to work effectively for parliament to work effectively.

I know the hon. member for Elk Island and I will continue to go to those meetings and do our best to make the committee functional and effective but it sure does get frustrating sometimes. I know some of the Liberal members opposite are just as frustrated with it as we are.

[Budget Implementation Act, 2001, March 15th, 2002]

Mr. Speaker, I will continue the speech that I commenced two days ago in this place.

We were terribly disappointed by the way the government handled the air security issue with the budget. Clearly all Canadians are concerned about the issue of air security. No one in the House and no Canadian would argue with the importance of that issue.

The government is putting a $2.2 billion tax on Canada's most vulnerable industry, the airline industry. This is an industry that has seen a remarkable level of consolidation in the last couple of years, the disappearance of almost all competition to Air Canada, a reduction in the level of services and a commensurate increase in the price that Canadians must pay for those reduced services.

We have seen what has happened to the CanJets, the Canada 3000s and Royal Airlines. At a time when some of these entities are trying to finance a return to air spaces the government is putting a $2.2 billion tax on this industry and forcing airlines and airline passengers to bear the complete responsibility in terms of paying for the air security tax. As many members have articulated on the floor of the House and in committee the benefit of secure air travel is received by society in general. There is a collective benefit to secure air travel. That is why in the U.S. there is only a $2.50 charge per flight as opposed to the $12 charge per flight that the government is putting on air travel.

It is a competitive disadvantage from a tax perspective for Canadian businesses and individuals compared with the U.S. The long term trend of the government relative to its management of the Canadian dollar may mean that at some point in the future $2.50 U.S. would be approximately equivalent to $12 Canadian, but we ought not to wait for that form of equalization to occur.

The fact is the U.S. recognized there was a collective benefit and while user charges and fees would cover some of the cost, there was a recognition that these fees should not be used to cover all of the costs, particularly at a time of economic tumult that impacted the airline industry more so than perhaps any other industry right now.

It would be bad enough if the government was simply charging Canadian air travellers and passengers to cover the complete cost of air security, but the government is going one worse. The government is charging $1 billion more over the next five years than that which would be required to cover the basic cost of security.

Finance officials have provided their methodology for having come to the $24 round trip fee and it is based on highly specious data. It is based on data that reflects a passenger count that is considered far lower than what would be the case over the next several years. This was based on an almost immediate post-September 11 passenger count and some extrapolation of that reduction which occurred after September 11, but certainly does not reflect what most observers and analysts of the travel industry feel to be a more realistic assessment of air travel in Canada over the next several years.

The government seems to be exploiting fears around September 11 to create a $1 billion tax grab in order to pad the books to improve general revenues in other areas. Not only is this bad public policy, it is morally reprehensible that the government would take such a terrible tragedy and use it as another way or means by which to wring an increased surplus out of Canadians. It is clearly wrong.

This is like EI surplus two which was an income security package or program designed to improve labour market flexibility and help unemployed Canadians by providing a cushion during bad times. The government used that program to pad the books of general revenue. Now it is taking an air security situation that emerged out of a tremendous tragedy and is using this situation to extract more tax revenues out of Canadians for general revenue and Liberal spending in other areas.

When we think of that Liberal spending in other areas, nobody in the House would argue with increased levels of health care spending or transfers to the provinces for health care and education. Under the government we have seen a dramatic reduction in health care transfers and transfers to the provinces. In fact fiscal restraint for the government means tightening the belts of the provinces by cutting back on transfer payments. It rarely means tightening its own belt and its own program spending.

Those cutbacks to transfers have resulted in a health care and education crisis in every province in Canada and a growing gap between have and have not provinces. Certainly some wealthier provinces, Alberta for instance, have the tax base to, in some cases, pick up the slack when the federal government makes such draconian cuts.

In a province like mine, Nova Scotia or, for instance, the province of British Columbia with the difficulties that province is undergoing from a budgetary perspective, we simply do not have the tax base to pick up the slack when the federal government makes such draconian and unilateral cuts.

That is why the whole issue of fiscal imbalance between the provinces and the federal government is gaining such importance and why there is so much agreement across Canada by the premiers that this has to be addressed.

There has been a growing fiscal imbalance in Canada. The provincial governments have as their ultimate responsibility the providing of health care and education. The federal government has reduced its role in terms of the funding in those areas so the provincial governments in some ways have what Mark Twain would refer to as a bad job. They have all the responsibilities but no authority. The provinces increasingly lack the ability to have tax levers to raise the type of revenue necessary to cover growing costs in education and health care.

The federal government, by pulling back, has created a situation whereby it can then re-enter national programs like the millennium scholarship program or the Canadian foundation for innovation and some of these other programs and appear like a hero. It provides the cheques with the maple leaves on them and takes credit for returning with a teaspoon some of the money it previous took out with a backhoe.

It is offensive to see this type of destructive federalism, this brinksmanship of provinces by the jurisdictional power grab of the federal government. There has been a trend by the government to again take over a lot of the traditional jurisdictional areas of the provinces by starving the provinces of the revenue necessary to deliver the services and then reappearing like some sort of fiscal super hero with giant federal cheques.

This is bad politically for a country that depends on maintaining constructive federalism on an ongoing basis. It is also bad public policy, because ultimately the provinces and municipalities, as the government levels closest to the people being served, are in many cases better able to assess the needs of those individuals and of those constituents to ultimately deliver services.

Medicare evolved out of a provincial experiment in Saskatchewan. A visionary premier saw a way to approach health care in a more egalitarian and thorough way and in a way that has come to define us as Canadians. Over a period of time and working with the federal government and with the support of parliament, medicare evolved to a national program. In some ways the provinces represent the best laboratories to experiment with and to develop social policies which ultimately will make better policies in other provinces as well as nationally.

When a province experiments with health care and is faced with significant federal cuts and is put in a position where it has to do something to maintain some reasonable level of service delivery and tries to be creative about it, the federal government brings in politics by doing public polling. Instead of working with the province to ensure that the principles and values we treasure as Canadians are met in potentially new, creative and cost effective ways, the government fights the province.This is constitutional brinkmanship at its absolute worst.

There are so many areas the government ought to have focused on in its budget. In recent days we have read statements by the Deputy Prime Minister blaming Canadian businesses for not being competitive enough. He is the same individual who as industry minister said that high taxes were good for business because they make businesses work a little harder. The only other person I can think of in the House who exemplifies economic buffoonery as much as the Deputy Prime Minister is the Prime Minister. Perhaps that is why they are getting along so well these days.

Instead of the government blaming the private sector for not doing enough, it should acknowledge its role in helping the private sector do more. May I suggest a couple of modest initiatives the government could undertake to help the private sector do more.

One initiative might be the elimination of capital taxes in Canada. We are one of the few industrialized nations that taxes companies simply for having capital, not for profit, but for capital. When capital is taxed, it pummels investment. When investment is pummeled, initiative is pummeled and this defeats and destroys productivity. That is one modest example of what the government ought to do and something I am offering constructively to members opposite.

Another initiative would be the elimination of the capital gains tax. Canada did not have a capital gains tax before 1971. There is no other tax that has a more pernicious impact on the growth of individual and family capital in order to ensure savings and growth of investment required for individuals and families, but also entrepreneurs, many of whom have their entire net worth tied up in a business. Reducing further capital gains tax with the ultimate goal of eliminating it would make a great deal of sense.

I have heard the government claim that our capital gains tax is lower than that of the U.S. This is a patently false statement. The fact is the inclusion rate and the ultimate effective capital gains tax is still significantly higher than that of the U.S. It would be an affordable area of taxation. We could not only equalize our level of taxation with the U.S., but for once we could be ahead of the U.S. if the government chose to eliminate personal capital gains tax in Canada.

I suspect that very little in the way of revenue is collected from personal capital gains tax given the tumult in the capital markets over the last year. Even during the bull markets the year before last, only about $3 billion was collected in capital gains tax.

The government can send $500 million worth of cheques to dead people, rich people, prisoners and students who do not heat homes with heating oil. If it can blow $500 million in a pre-election spending spree designed not at heating homes of Canadians but at trying to heat up Liberal prospects in ridings across Canada, I would suggest it could go a little further. It could give Canadian investors, Canadian families, Canadian individuals and Canadian entrepreneurs an advantage over the U.S. by eliminating the capital gains tax.

There is one other statistic with which I suspect most members may not be familiar. Over 60% of personal capital gains tax in Canada are paid by individuals who make less than $50,000 per year. The degree to which individuals in Canada from a wide range of income levels and socioeconomic areas now participate in the capital markets has never been as great. Part of this is mutual funds as a vehicle through which to ensure diversification with fairly small levels of investment, but the long term trend is that more Canadians than ever before from a wider range of income levels than ever before are investing. Canadians are making these types of investments. It would make a great deal of sense to assist Canadians a little more. A further capital gains tax reduction would make a great deal of sense.

When we hear the discussion of productivity, clearly it is not just tax levers and tax reform that are required. It is not just tax reduction that is required. I would argue that we need significant broad based tax reform in Canada focused on productivity. We also need regulatory reform. We need to work with the provinces across Canada on a national agenda addressing productivity issues in our tax system and in our regulatory system.

Beyond that we need to address issues of government spending. Clearly when taxpayers' money is spent on items that do not necessarily reflect the values of Canadians, the needs of Canadians or the long term best interests of Canadians, that money being wasted as such can actually have the perverse impact of reducing productivity. It encourages individuals to pursue activities that may not only not be in their best interests, but also may actually foster worse productivity.

I mentioned earlier the issue of fiscal imbalance. We have to readdress the issue of equalization in Canada. Equalization is an extraordinarily important social program. It is the only constitutionally enshrined social program in Canada. As it is now, our equalization system is broken.

The original goals of equalization in 1958 were to provide approximately equal levels of taxation and services across Canada. Clearly with the growing disparity between provinces both in services and in tax levels, that needs to be addressed. We should address it by reconsidering our economic development strategy as well. We should develop more effective tax based levers as other countries have utilized to develop more effective economic development strategies which would ultimately address some of the fiscal imbalance issues.

I have tried to cover a fairly wide range of issues, those which the government covered in the wrong way, but also those that the government ought to have covered but failed to cover. I hope that during questions and comments members of parliament will ask questions that will allow us to discuss some of the other issues we may share an interest in but which are difficult to cover in such a short period of time.

[Supply, March 14th, 2002]

Mr. Speaker, my first question for the hon. member is whether he feels the government's clumsiness in dealing with free trade issues comes from the fact that the party opposite fought so vociferously against free trade in opposition that it has taken nine years to completely swallow itself whole, to the extent that it is only beginning to realize how to actually exercise levers of free trade in a legitimate way. I would appreciate his comments on that. Hypocrisy being only half a mortal sin, perhaps the government is over that.

Second, he mentioned trade missions. Is he aware of the fact that without exception in the year after almost every team Canada mission the level of trade we have in the countries in which the missions occurred actually declines? Is he aware of the fact that team Canada missions seem to actually reduce the level of trade we do with some of the countries which are visited by the Prime Minister? I would appreciate his comments on that.

[The Economy, March 14th, 2002]

Mr. Speaker, this is not the first time the Deputy Prime Minister has failed economics 101. He tripped over the blue line with his bungled NHL bailout plan. He was on even thinner ice when he once said that high taxes were good for productivity.

Does he honestly believe that by keeping Canadian corporate and capital taxes among the highest in the world that the government is doing its part to improve Canadian productivity?

[The Economy, March 14th, 2002]

Mr. Speaker, yesterday the Deputy Prime Minister blamed Canadian business for low productivity rates.

Does the Deputy Prime Minister honestly believe that insulting Canadian businesses by describing them as being uncompetitive will help strengthen Canadian productivity and will help strengthen the Canadian dollar?

[Budget Implementation Act, 2001, March 13th, 2002]

Madam Speaker, I want to thank my colleague from the New Democratic Party for her compelling presentation in the House today. She, like other members on both sides of the House, is very concerned about this new air security tax.

This poll driven, focus group economics government does not build public policy around what Canadians need but rather builds public policy around the fears driving the polls today. It is such a focus group, poll driven government that everything is focused on what it believes will quell public opinion in the short term, but very clearly ignores the long term needs of Canadians.

The air security tax is based on fear. The government is trying to raise a $1 billion surplus to what is actually needed to provide the security Canadians require. The air security tax would raise an additional $1 billion which is like EI fund 2 or Liberal gouge 2, the sequel to the EI fund. The finance department has underestimated air traffic over the next several years in such a way that this tax is inflated to create a $1 billion surplus over the next several years. How unconscionable can the government behave when we see it use September 11 as a vehicle through which to raise $1 billion for other spending activities?

At a time of economic tumult the government has put a $2.2 billion tax on Canada's most vulnerable industry, the airline industry. It carried out no impact analysis on the regions of the country, on smaller struggling airports that are having difficulty making ends meet or on competition in Canadian air space which we have already seen with the loss of Canadian, Canada 3000, Royal and CanJet under the government's stewardship.

[Budget Implementation Act, 2001, March 11th, 2002]

Mr. Speaker, there are so many areas in which to criticize the government in terms of general fiscal direction at this time. I do not have to remind anyone in the House of the decline of the Canadian dollar by 20% under the government's stewardship as a result of its failure to adapt and develop policies in Canada that reflect the needs of the 21st century, particularly in terms of what has happened in other countries. As other countries have focused on productivity and on the type of tax and regulatory reform to vault their economies proudly forward, the government has dilly-dallied, dithered and focused on short term focus group economics and on next week's polls as opposed to the challenges and opportunities in the next century.

I will not focus on the lack of vision. Canadians are aware of that. Canadians are aware that the government has done nothing for nine years except basically live off the proceeds of the previous government's policies, including free trade, the GST and deregulation of financial services, transportation and energy, which were all the very policies that party opposed in opposition and then swallowed themselves whole in government to accept, to embrace and to live off the proceeds of.

However, I will not be pithy and partisan today in the House of Commons. Instead, I will focus on some of the specific shortcomings of the current piece of legislation at hand.

First, the government has imposed a $2.2 billion tax. It is not just a fee, as even the Minister of Finance in the House of Commons is referring to it. It is a tax on Canada's most vulnerable industry, the airline industry, during a period of time when we see the great and tremendous need for competition in Canadian airspace, which is so sadly lacking. It is a tax aimed disproportionately at discount and short haul carriers, the very type of competition we need across Canada, particularly in regions like Atlantic Canada and British Columbia at a time when those regions depend on affordable access for air travellers.

There has been absolutely no impact analysis by the government, either by the Department of Finance or by the Department of Transport, on what the impact of this new $2.2 billion tax will be on competition in Canadian airspace, on the regions of Canada and on the struggling airports. In and of itself it is dismaying that the government would not do any type of study of what the impact of such a major policy would be.

Further, we have learned this week that the Department of Finance actually based the $2.2 billion tax figure, the $12 per flight or $24 per round trip, on specious data. The bureaucrats in the finance minister's department actually developed their estimate of what that fee ought to be on information that was categorically wrong, on estimates that actually reduced what the realistic number of air travellers would be, in an effort to inflate revenue over the next several years. The government has now created, through this new air security tax, a $1 billion surplus for itself which will go into general revenue.

The Minister of Finance is saying “we will revisit this”. The government is saying “we will revisit this in the future and if it is too high, we will cut it back”. Why should we believe the government when it is the same party that promised to scrap the GST when in opposition and then after forming the government embraced the GST? Now the Prime Minister brags about the GST and takes credit for it during foreign travels.

It is offensive that the government is trying to profit on the back of Canada's most vulnerable industry, the airline industry, and in fact in many ways is exploiting the genuine sympathies of Canadians in a post-September 11 environment to actually create another cash cow for Liberal spending in other areas. That is obviously wrong.

I was disappointed that the government did not move more aggressively on one specific area of policy, one further area: to eliminate the capital gains tax on gifts of listed securities. In the legislation, the government does make permanent the 1997 reduction of capital gains tax on gifts of listed securities to 50%. That is a baby step in the right direction, but the fact is, in the U.S. or the U.K., universities, hospital foundations and general charities all benefit from government policy whereby there is absolutely no capital gains tax on gifts of listed securities. This means that our Canadian universities, our Canadian hospital foundations and our charities, ranging from the big charities like the United Way in Toronto to the smaller charities across our country, operate at a competitive disadvantage with charitable foundations, organizations and philanthropic interests in the U.S. and the U.K.

Clearly this is bad public policy. At a time when the government has so dramatically cut social spending and transfers to the provinces we need to engage our volunteer and philanthropic sectors more fully. At the finance committee we asked representatives of these sectors what we ought to do to increase levels of donation and participation to meet the needs of Canadian communities. Every one of the witnesses before the committee said we should eliminate the capital gains tax from gifts of listed securities.

The government has failed to do this. The previous reduction of the capital gains tax on gifts of listed securities has resulted in over a billion dollars going from private hands to charities in Canada over the last four years. Completely eliminating the capital gains tax on gifts of listed securities would have an amazing impact on the growth of charitable contributions in Canada at a time when social needs across the country have expanded and governments are playing smaller and smaller roles. We need to do everything we can to ensure the volunteer sector has every possible advantage and tool at its disposal to succeed.

The cost to the government today of completely eliminating the capital gains tax on gifts of listed securities would be about the same as the tax revenue loss in 1997 when the government reduced the capital gains tax by 50% on gifts of listed securities. However the impact would be far greater. The United Way of Greater Toronto has received gifts of shares exceeding $10 million since 1997. In every province across Canada, from universities in Nova Scotia to hospital foundations in Toronto and British Columbia, there are examples of charities and community based foundations that have benefited as a result of the policy.

This would have been a simple way for the government to demonstrate that it cares for community based organizations which are trying to meet the needs governments have become less able to meet in recent years. The government has failed to move more aggressively. There were members of the Liberal government on the finance committee who supported a PC/DR motion to amend Bill C-49 to completely eliminate the capital gains tax on gifts of listed securities. The motion exists in the group today because we were successful at the finance committee. The government must now reintroduce a motion to reinstate the previous policy.

We will be voting in favour of making permanent the 50% reduction in capital gains tax. We support it as a baby step in the right direction. However we are profoundly disappointed that the government did not take advantage of an important opportunity to eliminate the capital gains tax from gifts of listed securities. The government ought to move to a broad based policy of eliminating the capital gains tax permanently in any case.

We did not have a capital gains tax in Canada until 1971. No tax has a more pernicious and negative impact on the growth of capital, investment, productivity and jobs across Canada than the capital gains tax. It acts in many ways as a cancer on the types of investment that would lead to the productivity and growth the Canadian economy so sorely needs. Our low Canadian dollar reflects the very opposite of such growth. One of the reasons we have a low dollar is that productivity rates have lagged since 1993 relative to our trading partners, particularly the U.S.

There are many areas of weakness in the government's general fiscal direction. The lack of enough vision to see the need for broad based tax reform focused on productivity, growth and opportunity is probably the biggest leadership deficit Canadians face. The government may be in surplus but there is a leadership deficit across the way.

Canadians are paying a big price for the government's failure to grasp opportunities and challenges. Our low dollar is probably the price tag we have paid for a government that has been on cruise control for eight years. I am afraid this great country of ours will cruise control into a ditch unless the government starts seizing opportunities as opposed to dodging the challenges facing the country at this critical time.