Bill C-13 (Historical)

Budget Implementation Act, 2006

An Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006

Part 1 amends the Excise Tax Act to implement, effective July 1, 2006, the reduction in the Goods and Services Tax (GST) and the federal component of the Harmonized Sales Tax (HST) from 7 to 6 per cent. It also amends the Act to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the July 1, 2006, implementation date, including transitional rebates in respect of the sale of residential complexes where transfer of ownership and possession both take place on or after July 1, 2006, pursuant to a written agreement entered into on or before May 2, 2006. The Excise Act, 2001 and the Excise Act are amended to increase the excise duties on tobacco and alcohol products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is amended to ensure that rates for domestic and transborder air travel reflect the impact of the GST/HST rate reduction. Those amendments generally apply as of July 1, 2006.
Part 2 implements income tax measures proposed or referenced in Budget 2006 to
(a) reduce personal income taxes;
(b) increase the child disability benefit;
(c) increase the refundable medical expense tax credit;
(d) eliminate capital gains tax on charitable donations of publicly-listed securities and ecologically-sensitive land;
(e) reintroduce the mineral exploration tax credit for new flow-through share agreements entered into before April 2007;
(f) expand the eligibility criteria for the disability tax credit;
(g) expand the list of expenses eligible for the disability supports deduction;
(h) expand the list of expenses eligible for the medical expenses tax credit;
(i) clarify the eligibility of home renovation and construction expenses for the medical expenses tax credit;
(j) double the amount of disability-related and medical expenses that can be claimed by a caregiver;
(k) introduce a tax credit in respect of adoption expenses;
(l) introduce a tax deferral for shareholders of agricultural co-ops;
(m) reduce corporate income taxes;
(n) eliminate the federal capital tax; and
(o) extend the carry-over period for non-capital losses and investment tax credits.
Part 3 amends Schedule I to the Excise Tax Act to repeal the excise tax on clocks, items made from semi-precious stones and items commonly known as jewellery, effective May 2, 2006.
Part 4 amends the First Nations Goods and Services Tax Act to facilitate the establishment of taxation arrangements between the government of specified provinces and interested Indian Bands situated in those specified provinces. It also amends the Yukon First Nations Self-Government Act to provide transitional income tax measures consistent with negotiated agreements.
Part 5 amends the Excise Tax Act, the Excise Act, 2001, the Air Travellers Security Charge Act and the Income Tax Act to harmonize various accounting, interest, penalty and related administrative and enforcement provisions. These amendments will apply based on an implementation date that is the later of April 1, 2007, and Royal Assent. It also amends the Excise Tax Act to confirm that debt collection services that are generally provided by collection agents to financial institutions are not financial services for GST/HST purposes and are therefore taxable for GST/HST purposes.
Part 6 enacts the Universal Child Care Benefit Act to assist families by supporting their child care choices through direct financial support to a maximum of $1,200 per year in respect of each of their children who has not attained the age of six years. It also makes consequential and related amendments to the Income Tax Act, the Employment Insurance Act, the Children’s Special Allowances Act and the Old Age Security Act.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to determine the amount of the fiscal equalization payments to the provinces and the territorial formula financing payments to each of the territories for the fiscal years beginning after March 31, 2006 and to authorize the Minister of Finance to make an additional fiscal equalization payment to British Columbia and Newfoundland and Labrador, and to make an additional territorial formula financing payment to Yukon and Nunavut, for the fiscal year beginning on April 1, 2006.
Part 8 provides for a total payment of $650,000,000 to the provinces and territories for the fiscal year 2006-2007 in respect of early learning and child care. It provides for payments to the territories for the fiscal year 2006-2007.
Part 9 authorizes the Minister of Finance to enter into an agreement to provide protection to mortgagees in respect of mortgage insurance policies that are provided by a mortgage insurer that is approved by the Superintendent of Financial Institutions to sell mortgage insurance in Canada. It also fixes the maximum amount of such protection and determines how that amount can be changed.
Part 10 extends the sunset provisions of financial institutions statutes by six months from October 24, 2006 to April 24, 2007.
Part 11 amends the Canadian Forces Superannuation Act, Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act to change the existing formula by which adjustments are made to a contributor’s annuity.
Part 12 enacts the Mackenzie Gas Project Impacts Act, the purpose of which is to create the Corporation for the Mitigation of Mackenzie Gas Project Impacts. The corporation will provide contributions to regional organizations that will fund projects that mitigate the existing or anticipated socio-economic impacts on communities in the Northwest Territories arising from the Mackenzie gas project. The Part also provides that a payment of $500,000,000 may be made to the corporation and adds the name of the corporation to the schedule of certain federal Acts.
Part 13 amends the European Bank for Reconstruction and Development Agreement Act to permit the European Bank for Reconstruction and Development to carry out its purpose in Mongolia and to allow the Governor in Council to amend, by order, the schedule to that Act. It amends the Freshwater Fish Marketing Act to increase the Freshwater Fish Marketing Corporation’s legislative borrowing limit from thirty million dollars to fifty million dollars. It also amends the Public Sector Pension Investment Board Act to create share capital for the Public Sector Pension Investment Board

Budget Implementation Act, 2006

[Denise Savoie, NDP, Victoria, BC]

Mr. Speaker, I also deplore the fact that many previous governments did not keep their election promises. In this regard, I have a question regarding post-secondary education. Last week, the Minister of Human Resources claimed that the Canada social transfer included, and I quote from Hansard:

—$16 billion for education—

However, only $8.5 billion are available for this transfer. These funds are for social assistance and a number of other programs, not just post-secondary education. It seems, once again, that we will have to make a leap of faith and that the government has not kept its promise in this matter. During the election campaign, the Conservatives also made a very clear promise concerning a fund exclusively for post-secondary education.

In the interest of transparency, will my colleague elaborate on the figures before this House?

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Mr. Speaker, this is a matter that deals with a social transfer. It is a massive block of money that is sent from the federal government to the provincial government, so it can choose how it wants to allocate that money in the province. The member is absolutely correct. It can go to education and other programs. That is the old way of doing business, which is to have one government passing money on to another level of government with strings attached and have governments squabble and quibble over the money.

I am proud and very happy about this budget as somebody who received a post-secondary education for eight years and had to apply for loans the whole time. As a former faculty member at a post-secondary institution in my home province, post-secondary education has been very important to me. I never got any money back or a tax credit for $10,000 worth of books that I bought, but finally, this government is putting money back in the hands of those students. I had money given to me for bursaries that was clawed back in income tax. We are addressing--

[The Acting Speaker, Royal Galipeau]

The hon. Minister of Industry is rising on a point of order.

[Maxime Bernier, Conservative, Beauce, QC]

Mr. Speaker, I simply wish to point out that in my speech I said that the amount of $400 million was allocated to three granting agencies for research and development. The actual figure is $40 million per year.

[Gary Merasty, Liberal, Desnethé—Missinippi—Churchill River, SK]

Mr. Speaker, I will be splitting my time with the member for Ottawa—Vanier.

To begin with, I must provide some context so members of the House can begin to understand how the Conservative government's budget is failing the people of Saskatchewan.

First, the population of Saskatchewan is approximately one million. Second, approximately 200,000 of the total population are aboriginal people, first nations on and off reserve and Métis. That is approximately 20% of the total population. Dr. Eric Howe, a University of Saskatchewan professor, and others have stated that by 2040 approximately 50% of Saskatchewan's population will be aboriginal. The aboriginal population is booming.

What is more, in the short and medium term the percentage of aboriginal people poised to enter the labour force will increase much more dramatically. Labour force planning in the next five to ten years will be absolutely critical, with aboriginal youth being a key ingredient in the planning.

The future of Saskatchewan's economy is dependent on all levels of government working together to invest in the booming aboriginal population to ensure the successful transition into the labour force in Saskatchewan. All of Saskatchewan is watching and wanting to work together to ensure the future viability of that great province.

The Saskatchewan legislature, aboriginal leaders and people, and Saskatchewan businesses are upset at the federal government's lack of vision and depth of understanding regarding Saskatchewan's needs.

Let us look a little deeper into how Saskatchewan has been left out. I will begin with child care.

Last week over 100 protesters showed up at the office of the Minister of National Revenue in Saskatoon calling upon the government to respect and build child care spaces. There are 168,000 children under the age of 12 in Saskatchewan, 110,000 working moms and only 8,000 spaces. The lowest income earners have the least amount of choice when it comes to working. They often have no choice but to work and are the most in need for child care spaces.

Saskatchewan's average income is about $35,000 per year. The $1,200 per child under age six payment is taxable. The income tax hike affects the lowest income earners the most. The lowest income earners will lose their child tax benefit. When we put all of this together, the net impact is that the most vulnerable low income and hard-working families will only get 55¢ a day.

Let us look a little deeper yet. The government is proposing to utilize a tax credit system to build child care spaces. Questions immediately arise about this proposal. Which big businesses will build these spaces in Saskatchewan? With most businesses in Saskatchewan employing less than 10 people, how can they build spaces? How will spaces be built in inner city neighbourhoods? How will spaces be built in rural Saskatchewan? How will the tax credit system work on reserve? The answer is it will not.

Switching gears to the tax situation, the disappointment with the Conservative plan is also felt in the business community. At an annual meeting of the Saskatchewan Chamber of Commerce in North Battleford, the chair of the Canadian Chamber of Commerce, Russel Marcoux, CEO of Saskatoon's Yanke Group of Companies, said that income tax cuts are one of the best ways to improve the standard of living for Canadians. However, the Conservatives have taken the exact opposite approach. They threw more of Canada's poorest on to the tax rolls by lowering the basic personal exemption and hiked up taxes for workers earning up to $36,000 from 15% to 15.5%. Remember that the average full time income in Saskatchewan is $35,000. These tax hikes directly hit the Saskatchewan people like they had a big target on their backs.

Moreover, most of the government's tax measures require money to be spent on certain things and not others. For example, it offers a tax credit for sports, but what about parents who cannot afford equipment or fees to participate? What about kids interested in the arts and music, kids who want to paint, play a guitar or a piano? What about kids who want to celebrate their culture by participating in powwows or Ukrainian dancing? Are those parents and children less deserving? Why can we not build community, recreational and cultural facilities?

Moreover, why do all these tax measures require money to be spent? Why can people not just have more of their own money in their pockets?

Switching gears to forestry, it is also no secret that Saskatchewan will be hurt by the softwood agreement. The province has stated that Saskatchewan could lose up to 50% of our export market and is disappointed that the government gave up $15 million owed to the Saskatchewan forestry industry by the Americans. Not only that but the government will tax heavily the Saskatchewan forestry companies that get their refunds on the money that was illegally held by the Americans in the first place.

What is worse is that the government is not offering any help to this struggling industry. It has allotted $400 million for pine beetles, which is a serious concern, but has left Saskatchewan out in the cold, even while mills in Big River and Prince Albert are shutting down and the mill in Meadow Lake is struggling. Even worse is that the government may have cut $300,000 from research grants for the Saskatchewan Forest Centre in Prince Albert resulting in research and innovation being lost at an incredibly vulnerable time for this industry.

The lack of concern that this budget and the government show for Saskatchewan's forestry industry, communities and workers is the worst thing to happen at the worst possible time.

Switching to agriculture, it is now apparent that the government will not offer any direct immediate assistance for farmers. We have seen the massive protests but still farmers are being offered nothing this spring. This happens at a terrible time. Severe flooding in Saskatchewan's northeast grain belt is keeping farmers off the fields, or they are getting stuck in them. Farmers across Saskatchewan need help to pay creditors and high input costs, costs like high fuel prices, to which the Prime Minister has only said, “Get used to it”.

What is even more mystifying is that the government has really no details on a strategy going forward for agriculture. I hear the environment minister talking about how her hands are tied in moving forward in accomplishing anything and about needing to take planes, trains and automobiles off the road and a made in Canada solution. I will give her a hint. If 35% of gasoline in Canada contained 10% ethanol, greenhouse gas emissions could be reduced by 1.8 million tonnes, which is the equivalent of removing more than 400,000 vehicles from the road.

Building a real biofuel strategy would be a great move forward. It would provide a real solution that would be made in Canada, right in Saskatchewan's towns, giving value added opportunities for a high quality product from our producers in Saskatchewan.

Switching gears again to aboriginal issues, rooted within the aboriginal communities is great disappointment with the government. Aboriginal leaders and premiers have slammed the government for killing the Kelowna accord, an accord which provided $5.3 billion for various initiatives on and off reserve.

The late Harold Cardinal, who wrote the book The Unjust Society, talked about how hard aboriginal Canadians worked to get the attention of the government over the years. He stated:

“Well, boys, what you have to say is good and you must be commended for the intelligence you have shown through your extremely good presentation”...“but we know your problems and what should be done, and we're certain that you will be pleased with our carefully considered decisions”.

Kelowna was the joint intelligence that all parties came up with. The government has thrown that away with its “we know what is good for you” attitude. This is very problematic to the aboriginal people. A real credibility gap has emerged where aboriginal people are very wary of the government's intentions.

By killing the accord, all of Saskatchewan is hurt by the loss of opportunity. A targeted investment in first nations Métis on and off reserve education and post-secondary skills training would have created new opportunities for an emerging youthful Saskatchewan labour force, keeping in mind the context I opened with.

Economic development funding would have leveraged millions in business activities. Aboriginal businesses are one of the fastest growing tax bases in Saskatchewan, with exceptionally high rates of returns on strategic business investments. Housing would have pumped millions into the industry and provided more training opportunities.

The budget also completely excludes the Métis people and leaves out survivors of the Ile-à-la-Crosse boarding school despite campaign commitments from the Prime Minister and the previous member of Parliament in my riding.

As I stated earlier, Saskatchewan people have worked hard to re-establish the province as a place full of promise, optimism and pride. All residents of Saskatchewan realize that by betraying the Kelowna accord and ignoring forestry, agriculture, child care and higher education and by raising taxes, our work as proud Saskatchewan people is made even tougher. The government cannot ignore us in Saskatchewan. The budget falls far short of what Saskatchewan people need.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, I listened to the comments put forward by my colleague in his presentation. I respect his understanding for the aboriginal issues and the work he has done to date. I would like him to take a moment to speak to the on ground issues regarding the actions or inactions of the government through the budget in not investing in aboriginal issues, in not supporting the Kelowna accord. We could talk in broad terms about the immense amount of dollars that have been taken from that file, but how do the actions of the government impact on people on the ground and aboriginal people across this country?

[Gary Merasty, Liberal, Desnethé—Missinippi—Churchill River, SK]

Mr. Speaker, an investment in aboriginal people is an investment from which residents in Saskatchewan and all of Canada could benefit. Success in that demographic means success for all. It is absolutely critical at least in the Saskatchewan context and by extension across the country that there be investment in post-secondary education. It is key.

A small study which was done in Saskatchewan determined that approximately 585 young people needed to be trained for transition into the workforce just to get to a 50% employment rate in northern Saskatchewan. That speaks volumes to the need for investment, an investment that begins in early childhood. Early childhood learning opportunities are absolutely essential to framing the future success of individual youth. Education is the key to addressing many other issues.

[Dave Batters, Conservative, Palliser, SK]

Mr. Speaker, I listened intently to the comments by the member for Desnethé—Missinippi—Churchill River. Being a member from Saskatchewan, I felt the need to address some of his comments.

It seems odd to talk about concern for first nations people when that member is a member of the party which held government not long ago. In the waning months of the last government, a terrible tragedy unfolded at Kashechewan in Ontario. The then minister of Indian affairs went to Kashechewan and saw what was unfolding. There was E. coli in the water. He came back to Ottawa and apparently eight weeks passed without the then minister doing anything whatsoever about the problem. I remember in the last Parliament that many of my colleagues and I were in utter disbelief that one could see such a tragedy but come back and do absolutely nothing.

Could the member reflect upon what he thought about the Kashechewan tragedy? The current government has provided $450 million for improving the water supply and housing on reserve and I could go on. I would like to hear the member's comments on Kashechewan and that tragedy.

The choice in child care allowance is of real benefit to people in remote communities, in rural Saskatchewan, but definitely in northern communities which the member represents. It is not like we are going to have a lot of child care spaces at the YWCA in La Ronge. Does the member recognize that under the Liberal plan there would have been no spaces created, but under the Conservative government's plan we are going to see choice in child care?

[Gary Merasty, Liberal, Desnethé—Missinippi—Churchill River, SK]

Mr. Speaker, I do not think it is odd at all to talk about aboriginal issues. They are very critical to be addressed at any point in time in the life of this and future Parliaments.

Child care is something that we are extremely concerned about, but let me back up a bit. The current government has not promised $450 million for water. It has talked about $150 million this year, and $300 million next year for housing and for education, which we do not know anything about yet because there is no plan.

What we see is a government that has no plan on child care for aboriginals, that is building more jails, that has made no education investment and no health investment. It is an atrocity to see no government response to the TB outbreak in Garden Hill, for example.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I am pleased to speak today to Bill C-13, the budget implementation act.

I am going to tell my colleagues about a number of flaws in this bill. We have been talking about this for several days now. We talked about it during the debate on the budget itself and we will debate it today and for the rest of the time the budget implementation act is debated. It concerns various subjects, for example agriculture, the environment, post-secondary education for aboriginal people, which we have just heard about in this House, housing for homeless people and the arts. I have talked about these quite often. There is huge disappointment, when it comes to the arts, as compared to what was proposed. We were expecting that this government would honour its own commitments and the commitments made by the previous government.

There is also the child care issue. As members will recall I have spoken in the past of the problems that the government’s decision to cancel all the agreements that the previous government made with all the provinces will cause for the official language communities. The scheme proposed in the budget is not going to ensure that quality child care centres are created for the minority communities of Canada.

I mention all that before taking another direction. That is, a more philosophical approach that a country should take in a budget. I will try to move to a more macro level, a more national level, with regard to the direction a budget takes. I will begin by looking at the early 1970s.

Members will recall that in the early 1970s, Canada started to run up deficits and accumulate debt, both during that period and up to the early 1980s. In 1983, before the change in government, it had accumulated a debt of about $198 billion.

The new government of Mr. Mulroney was in power from 1984 to 1993. I will talk about the debt. I will not talk about the annual deficit. During all those years, annual deficits continued to be accumulated, year after year. By late 1993, we had reached an accumulated debt of nearly $500 billion: $498 billion. Then we started to get worried, quite rightly. The government led by Mr. Chrétien, with the member for LaSalle—Émard who was the Minister of Finance at that time, tackled that question.

For 30 years, Canada essentially had a fiscal imbalance, running up a debt year after year. After three years of major effort—it was a very difficult time, and everyone had to tighten their belts—we managed to eliminate the annual deficit in 1997-98.

After 30 years, we had finally achieved a balanced budget, although it was a fragile one. At that point, as a nation, we had an opportunity to try to redirect public funds and balance revenues and expenses. Any country naturally has to encourage some spending on social programs, the environment, defence and other programs.

The government balanced revenues and expenses, in order to manage the debt. This is always difficult. We were able to start paying down the debt, something many of us had long dreamed of doing. Canadians who have a mortgage dream of reducing it and eventually paying it off. Alberta succeeded in paying off its debt under Premier Ralph Klein. And we have to say that getting rid of its debt has been good for that province. It eliminated not only its deficits, but also its debt.

After 1997-98, the government struck a balance between paying down the debt using the surplus and reducing taxes using government revenues. The government knew that Canadians wanted a gradual reduction in tax rates and increased spending in certain essential areas such as health, post-secondary education and research. That is the direction it took.

The current government seems to be deviating from this course, and may even have abandoned it entirely. I find this a bit worrisome.

According to the government's proposal, they will reduce the debt by a maximum of $3 billion per year, except for this year, because the budget surplus is about $8 billion. Starting next year, they will reduce the debt by only $3 billion per year.

If I may, I would like to tell a little story. I am honoured and pleased to be a grandfather. My granddaughter was born the year Canada stopped accumulating debt, that is, the year we balanced the budget and stopped running a deficit.

Since then, the Government of Canada has paid back $60 billion of its debt. If I understand correctly, we will pay back another $8 billion this year. All told, we will have paid back $68 billion of our debt since she was born.

However, at $3 billion per year, she will have to live to be more than 150 before her country becomes debt-free.

I believe it is not right that we who have benefited from this enormous debt all our lives should bequeath it to our children and grandchildren. We must deal with our debt more aggressively.

All in all, I find that the government's decision to reduce the debt by only $3 billion per year could one day place us in a very unstable situation. That is why I am urging the government to reconsider.

The situation Canada is enjoying now, vis-à-vis our neighbours to the south, is quite telling in terms of the way we have managed to successfully reduce our debt burden. According to the graph provided to us by the government in the budget, between 1995 and 2005 only two countries in the G-7 have actually decreased the debt burden as a percentage of their GDP, Canada and the U.S. They are the two best performing countries right now.

However, over the last two years, in particular, Canada reduced its debt, not by a lot, but last year by $1.6 billion and the year before substantially more. This year we reduced it by $8 billion. Whereas in the United States, which are the numbers presented to us in the budget, the debt last year increased in the neighbourhood of $500 billion or 4% of GDP. If we do not account for the social security numbers, this year it is in the neighbourhood of $600 billion or 4.6% of GDP.

In comparison to Canada's situation, the United States' fiscal situation is deteriorating and at some point that will come home to roost in the United States. What the Americans do then may seriously affect us and our standard of living. In anticipation of the day that the United States of America cannot carry on accumulating debt at the rate it is doing, we had better prepare ourselves by continuing to reduce our own debt at a faster clip than what is proposed in the current budget.

That is in essence the approach that I would encourage the government to seriously consider. To let the debt remain as it is and only pay off $3 billion would lead to a very interesting situation, which the Minister of Finance confirmed in his projections that, for the first time in a long time, our debt service and costs will increase. They were $34.1 billion last year. They are projected to be $33.7 billion this year but they will go back up next year to $34.8 billion.

This is the impact that the non-reduction of our debt at a faster clip engenders. This is where we are making a collective mistake in that while we can afford to reduce our debt at a faster clip we should. Instead of taking the $4 billion buffer that we have and reducing it to $3 billion, we should go back to a $4 billion or even a $5 billion annual increment so we can reduce the debt and be more responsible toward our future generations.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, a great deal of my colleague's presentation was focused on the responsibility taken by the previous government in paying down debt. One aspect of debt repayment that stands out in my mind was when the previous government honoured the offshore accords and issued upfront payments to both the province of Newfoundland and Labrador and to my home province of Nova Scotia for offshore royalties.

Approximately $800 million was put forward to the province of Nova Scotia and it very wisely applied the money to its debt. Prior to that, the province of Nova Scotia had the worst per capita debt in all of Canada. Paying down the provincial debt has had a significant impact. The issuance of that cheque to the province of Nova Scotia and its application on the debt has loosened up approximately $40 million annually that may be used for roads, hospitals and education.

What would the $68 billion that has been applied to the debt over the years equate to in a free balance on the budget each year? Where should Canadians have expected that amount of money to have been invested?

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, the $68 billion that was paid back saved the Canadian taxpayer and, I would imagine, the Crown, somewhere between $3 billion and $4.5 billion annually.

The $8 billion projected that would be paid off in the fiscal year that ended at the end of March 2006 should generate, if a 5% rate of return is taken, about $400 billion in savings on servicing our debt as early as next year. That is the virtuous circle that our party has managed to create in this country in paying off debt, as opposed to the vicious cycle we were in where debt was accumulating faster than the government could handle it.

My colleague opposite should be very careful when he shouts things out because he comes from a government in Ontario that did exactly opposite of what should have been done. Instead, it reduced revenues and increased debt, which we will now have to pay for the rest of our lives.

I was trying to avoid partisanship in saying that the country has a responsibility for the next generation. Whether it be a Conservative government or a Liberal government, we have a responsibility toward our children and our grandchildren. I am saying that we have to be careful in taking a direction of not reducing our debt as fast as we can in a balanced approach. I am saying that the government is veering away from the approach that we had and which the country adopted of paying off debt, reducing taxes and at the same time increasing spending toward more reduction of taxes and more spending and less paying off debt.

We had a tripod balance there that worked. We had best be careful because if we do not reduce debt, the next time we have a recession it may hit us very hard and then we would be back into the vicious cycle of scenarios that we had for about 30 years until 1997-98.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I would like to hear what my Liberal colleague has to say about the fact that there is nothing in the budget for employment insurance.

Can my colleague say what amendments he would like to see made regarding employment insurance?

We are well aware than in various regions of Quebec, and particularly in the region I represent, this is an extremely important issue. I would like to hear him on this subject, and hear what he is asking for.

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, I will be pleased to sit down with my colleague and discuss this.

My remarks today essentially relate to the entire question of an overall balance in terms of what relationship there may be between a government’s revenue and expenditures and management of the debt for the future and the direction that a country should take when it comes to tax policy.

I am perfectly aware that some places in Canada need more assistance than others when it comes to the employment situation and seasonal jobs. I entirely agree that our programs should accommodate the needs of every region of Canada to the extent possible.

[Jim Flaherty, Conservative, Minister of Finance]

Mr. Speaker, I am delighted to have this opportunity to speak about our new government's first budget. I will be splitting my time with the hon. member for Brandon—Souris.

Public life is about reflecting the essence of the objective, economic and daily realities in the lives of our fellow citizens, the way we work, the way we live, the way we care for those we love and the way we strive for better lives and a better Canada.

Our government’s first budget is guided by these realities and by important principles. Those principles are clear and specific.

First, government has no absolute right to more and more of the hard-earned money of working Canadians. When government is too large, taxes are too high and surpluses are endemic.

Second, there is only one taxpayer who carries the provincial, federal and municipal load, not three separate taxpayers unrelated to each other.

Third, government must be respectful of the dollars it spends. Taxpayers expect and demand that spending be focused, transparent and accountable. We must ensure Canadians receive good value for the money they send and the money we spend. Our budget honours these principles.

Our budget reduces the tax burden on individual Canadians by $20 billion, more than the last four federal budgets put together.

The budget delivers more than twice as much tax relief as new spending. For every new tax dollar we spend, our government is returning $2 to hard-working Canadians through initiatives such as the 1% GST tax reduction, the new Canada employment credit, a permanent reduction in the lowest income tax rate as of July 1 and increases in the basic tax exemption for all Canadians.

These tax cuts are broad, are evenly directed and help millions of Canadians from coast to coast. The budget delivers tax relief people can see, tax relief that makes a difference, tax relief on which Canadians can count.

Our tax relief plan will exempt 655,000 low-income Canadians from federal income tax.

All of this is within our government's ironclad commitment to balance the federal budget. We are doing all of this while investing more in health care, child care, defence and national security, policing, safe communities and protected borders and more for farmers across Canada who deserve and merit transitional support during these challenging and unbalanced global commodity pricing periods. We can do all this because we will reduce waste, redundancy, overlap and unchecked growth in the federal government's spending.

I will speak about spending for a moment. Over the past five years, total program spending has grown by an average of 8.2% annually. In one year, 2004-05, growth in spending increased by 14.4% under the previous government. These are simply not sustainable or desirable levels of growth in spending. Our budget brings that down to 5.4% for this year and 4.1% for next year.

Our government is taking a targeted approach, and is determined.

We are reining in spending and looking inward to ensure that we as a government have our own house in order. We will review all programs and departments to ensure compliance with a few basic principles: first, that government programs are focused on results and value for money; second, that programs are consistent with federal responsibilities; and third, that when programs no longer serve the purpose for which they were created, they are ended. We will identify $1 billion in savings over this year and next and report by the fall.

Our government will be transparent and open with Canadians concerning the country’s public finances.

The days of surprise surpluses are over. The tax system does not exist to fund large federal surpluses that give licence to spend the people's hard-earned money as if it belonged to the Government of Canada. Government works for the people, not the other way around.

The budget our government delivered on May 2 embraces that kind of relationship between a government and the taxpayers to whom the government is accountable. This is a budget that demonstrates strong support for Canadians and their families. The budget provides Canadian families with children under six a $1,200 a year universal child care benefit so they can make their own choices on child care. It helps apprentices in the trades. It encourages young Canadians to participate in physical fitness and sports programs. It helps students with university education deductions. It reduces the tax burden on small business.

It is on the farm, in the classroom, on the factory floor, in research labs, small businesses on construction sites, community centres and church basements of all denominations where Canadians move the country forward every day. That is where we should be removing the burdens of excess taxation and encouraging independence, initiative and hard work because they are at the very core of what drives and enriches Canadian lives.

Government should help in areas that cannot be faced alone by hard-working Canadians in those areas where a framework of equality and opportunity surely reflects our values as caring citizens, neighbours and human beings, very much in the Canadian tradition, in education and health care, in securing safe communities and public health and supporting persons with disabilities, in defence and in removing the capital gains tax from donations to cultural, social and health charities. The government has a role to play and we have embraced that role in the new budget.

As the finance minister and minister responsible for the Greater Toronto Area, I am honoured to be part of a new government that embraces the kind of shift from the old paradigm of Ottawa overspending and Ottawa knowing best. Instead, we are focussing now on priorities that produce results for people in their daily lives. Infrastructure is for example.

Our budget provides more than $16 billion over the next four years for infrastructure.

This is a long term investment that will mean better roads, more efficient borders and modern public transit through increased capital funding and tax incentives for transit riders. The ultimate goal of these investments is to get people and goods moving in order to keep Canada competitive. An essential part of our first budget is about making Canada more competitive and more productive. In fact, there are 23 specific initiatives in the budget designed to move us forward on this front.

Productivity and competitiveness are about innovation, fair and reasonable tax rates, education, research and development and enhanced workplace productivity. We are embracing a new beginning, a beginning where the taxpayer is respected as opposed to being overburdened, a beginning where the federal, provincial and territorial governments can work together, like we did on softwood lumber, to restore a fiscal balance to the federation and a beginning where we support families, reward initiative and foster productivity in all regions of Canada.

With the budget, we have turned a new leaf. We have turned a new leaf away from excessive taxation and wasteful federal spending. We have turned a new leaf away from condescension to the provinces and feigned and unnecessary hostility toward our greatest ally and trading partner to the south. We have turned a new leaf away from government that puts being big ahead of every other value or attribute.

Our government is focussed, deliberate and fiscally responsible. Our government is managing a few priorities at a time. We will not over-promise and we will not overspend. Our government knows its place and respects its core accountability to the taxpayers of Canada. We are keeping our promises to Canada. They entrusted us to focus on priorities and deliver results.