Bill C-28 (Historical)

Budget Implementation Act, 2006, No. 2

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

Part 1 implements the following income tax measures proposed or referenced in Budget 2006:
–       the new Canada Employment Credit;
–       the new Textbook Tax Credit;
–       the new tax credit for public transit passes;
–       the new deduction for tradespeople’s tool expenses;
–       a complete exemption for scholarship income received in connection with enrolment at an institution which qualifies the student for the education tax credit;
–       the new Children’s Fitness Tax Credit;
–       a doubling, to $2,000 from $1,000, of the amount on which the pension income credit is calculated;
–       an extension of the $500,000 lifetime capital gains exemption, and various intergenerational rollovers, to fishers;
–       the new Apprenticeship Job Creation Tax Credit;
–       a reduction of the current 12 per cent small business tax rate to 11.5 per cent for 2008 and to 11 per cent thereafter;
–       an increase, to $400,000 from $300,000, of the amount that a small business can earn at the small business tax rate, effective January 1, 2007; and
–       a reduction of the minimum tax on financial institutions.
Part 2 implements the proposal in Budget 2006 to lower the income tax rate on large corporation dividends received by Canadians.
Part 3 implements the proposal in Budget 2006 to reduce excise duties for Canadian vintners and brewers.

Budget Implementation Act, 2006, No. 2

[John McKay, Liberal, Scarborough—Guildwood, ON]

Yes, well, I guess it should not be unique, but I guess it is. Could the member tell me what the rationale was for the NDP to vote against the motion which questions the “value or wisdom of...[the] announced expenditure cuts which unfairly disadvantage the most vulnerable groups in Canadian society”?

I do not understand. I thought that regardless of pretty well anything, this is what the NDP stood for: the vulnerable groups in Canadian society. Why would the NDP vote against that motion?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I do not have time to get into a full-blown discussion. I will only say to my hon. colleague opposite, with all due respect, that when the Liberals are in opposition, we often hear from the Liberal benches a great deal of championing of the most vulnerable.

But when the Liberals were in government, let the truth be known, after the deficit had been eliminated and after we were on our way to the third straight surplus budget, that Liberal government, instead of rebuilding the programs it had devastated, gave away $100 billion in tax cuts to those who least needed them, not the vulnerable.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, It is an honour to stand in the House and speak to this important issue. One could suggest that there is no more important issue that a government brings to the House than the budget.

When I talk to constituents about the proposals that have been put forward by the government they see this budget as an opportunity missed. Quite frankly, it is an opportunity missed because when we look at the fiscal accounting presently, we see that most recently there was a surplus of $13 billion of Canadians' money that we all contributed to in the general pot.

When the government was in opposition it was very clear on its concern, which we agreed with, that before the money that is in the surplus side of the equation goes to deal with the accumulated debt, we should have a debate and Canadians should have an opportunity to suggest where those moneys would go.

We saw most recently that the government, instead of taking its own advice when it was in opposition, and instead of having a debate and talking about where the $13 billion of surplus should go, it decided, with the stroke of a pen, to make the decision for Canadians on where the money should go.

Strangely enough, the government also decided to cut a billion dollars worth of programs, programs that affect everyday people. For example, the billion dollars in cuts affected people who are working in communities, be it here in Ottawa or across the country, who volunteer their time and sweat to help out local museums. This is one of the strangest cuts I have seen in a long time.

The government cut summer employment programs. The rationale was that these were subsidies for the private sector. I am not sure if it looked at the list that most of us look at each year to look at the summer employment opportunities, but I know in my riding none of them were subsidies to private sector ventures. In fact, all of them were helping out community based, not for profit enterprises.

For example, the Vietnamese Community Association cobbled together moneys for a summer employment program and, with the help of a meagre amount of money from the federal government, it put together a summer work employment program that gave an opportunity for youth to help it with the work that it does, helping people every day.

These kinds of opportunities for students in summer employment programs not only help these community based groups, but they also give opportunities for youth to be apprentices in certain areas, to gain very valuable experience in administration and be able to contribute to their community.

At the same time as the government had the $13 billion surplus, other cuts had to do with people who are working in areas to help people who are most disadvantaged and people who are working in the area of literacy. We have heard a lot about that. Giving people an opportunity to climb out of the darkness of illiteracy is something I believe is not only something government should do, it is something the government must do.

To see people who recently were in the news who were well into their eighties speaking publicly about coming out of the darkness of illiteracy and being able to finally contribute and be a full-fledged citizen is something that not only tugs one's heart strings but, more important, it allows us to understand the importance of these programs.

We had the government with this proposition in opposition, which said that when we have a surplus of Canadians' money, not the Liberal Party's money, not the Conservative Party's money, not the Bloc's money and not the NDP's money, we should be able to debate this. The Conservatives were very vigorous in opposition on this and we agreed with that.

One of the reasons we support and we propose to have someone oversee the budget spending, which we see in Bill C-2, is for this very reason. We do not just have the money holus-bolus written off because the Liberal Party, or the Conservative Party in this case, decides it should go wherever it likes. It should be opened up and there should be evaluation. We are hoping to see that when Bill C-2 comes into effect.

It did not happen with the Conservatives because it was just $13 billion and away it went with no debate. They went against what they said in opposition.

We need to look at how the process works. The billion dollar cuts, to which I referred, and the $13 billion surplus were outside of the budgetary framework and did not allow us as parliamentarians to debate it. We are bringing it up with regard to the billion dollars and will have motions brought to the House.

One with which I am sure the government will have a problem is the rebate to tourists. It obviously did not do its homework on that. It suggested only 3% of tourists take advantage of it but the government forgot that when people are in countries of origin that is when they take advantage of the GST rebate. Obviously it forgot to ask people how the program works and did not get the right statistics on it. We will probably see the government flip-flop on that. With that program the government showed the haste with which it made the cuts and it did not build it into the budget. It was in-between the budget of last year and the budget that will be coming up in the spring.

What is happening here is that the government is changing the mechanisms of how we debate as parliamentarians with regard to how citizens' money should be spent or, in this case, how their money is taken away. That is of concern because every citizen expects us to represent them and they expect that we will follow the rules and procedures of the House. To have a billion dollars worth of cuts without allowing us to have a debate on it is very problematic. Proposed cuts should come before the House for debate to ensure that everyone is fully aware of how it will affect our communities and the bottom line of the government.

This process and procedure of fiscal management should be done within the budgetary process and not the surprises that we have seen from the government, both on the surplus and the billion dollar cuts.

The final thing I will say about the billion dollar cuts is that they were clearly ideological cuts. We know the previous government booked more than the government cut when the previous prime minister came into power. In fact, he was going to cut five times as much. We know that was booked and that the government had to exact those savings. We see that now with the $2.5 billion it will try to get out of procurement.

I will take a minute to focus on procurement. The previous government went to Chicago and hired a consulting group. It was supposed to cost $1.5 million for the Chicago consulting group, A.T. Kearney, to come up with a plan on how the government could save money through reverse bid auctioning, which has been thrown out at this point. However, the price of the contract escalated all the way to $24 million.

My constituents became aware of this contract and when I became aware of it I mentioned it in the House. We had a contract, to be clear, that started off at $1.5 million and ballooned to $24 million. The icing on the cake was that the information the government got from A.T. Kearney was useless. That was what everyone in this town told the government before, that it was on the wrong track. We had to get the attention of the government to tell the government it was on the wrong track. Finally, it canned the project after we had sent $24 million to the consulting company out of Chicago. In my opinion, that is fiscal mismanagement. We thought we were done with that kind of mismanagement with the previous government.

I could go on about all the other programs that were affected and the missed opportunities here for young people, for post-secondary education, the no help for seniors and the child care plan that is a child care scam, but I will save that for another day. For reasons aforementioned, I cannot support the budget.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, the member talked about the visitor GST rebate fund that was cancelled by the government, thus affecting our tourists, especially in regions of our country such as Atlantic Canada.

However, the one thing the government did not tell us is that approximately 100 jobs will be lost at the taxation office in Summerside because of it. It is funny how the government never mentioned that when it talked about it.

In Atlantic Canada we like the idea of having full time employment. What would the hon. member tell the employees who are about to lose their jobs if this thing continues?

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, what I would tell the member is to support our party and to hold the government to account to reverse this decision, so that this does not happen and they will not lose their job. They then can continue to do the good work that they do on behalf of all Canadians.

As I said in my speech, the government did not do its homework on this particular cut. We will likely see it reversed. We will put pressure on the government to reverse this decision so they can keep doing the good work they have been doing.

[The Acting Speaker, Royal Galipeau]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

When we return to the study of Bill C-28 there will be three and a half minutes left in questions and comments for the hon. member for Ottawa Centre.

The House resumed from October 27 consideration of the motion that Bill C-28, A second Act to implement certain provisions of the budget tabled in Parliament on May 2, 2006, be read the second time and referred to a committee.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am very pleased to rise to resume our opposition to the budget bill. Earlier in the original debate, I characterized the budget as being meanspirited, dishonest and visionless. In the days that have elapsed since that original statement, those three characteristics have only increased in magnitude.

In terms of meanspiritedness, at the time I referred to cuts to the most vulnerable in Canadian society, such as the cut to the Kelowna agreement, the cuts to the child care agreements, the abandonment and elimination of some of the most productive programs in natural resources, in energy efficiency, such as EnerGuide, and the increase in income tax applied to the lowest income Canadians. All of this is meanspirited.

Since that time, the meanspiritedness has gone up a notch, if that is possible, with the announcement of all the cuts a few weeks ago by the Minister of Finance and the President of the Treasury Board, cuts that are difficult to exceed in terms of the degree to which they impact the most vulnerable in our society. These include cuts to literacy programs, to museums and to the Status of Women. The original contention that this was a meanspirited budget has simply escalated in the intervening days and weeks.

It is no less the case today than it was before that it is also a dishonest budget in the sense that, while it purports to cut income tax, it in fact raises income tax. Relative to what Canadians were actually paying in 2005, the income tax rate has gone from 15% to 15.5%. In addition, rather than taking Canadians off the tax rolls, as the budget purports to do, it does the reverse. It adds Canadians to the tax roll by reducing the basic personal amount that Canadians are allowed to deduct at tax time.

Therefore, it is a meanspirited budget and it is a dishonest budget.

However, what I really want to focus on today is that it is a visionless budget. It is visionless in terms of the central challenge facing any government of our country, and that is our long term prosperity, competitiveness and productivity. The government does not seem to understand that the world does not owe Canada a living, therefore, it has to be the central responsibility of any finance minister to prepare our country for the competitive world that we face in coming years. The budget does absolutely nothing to that end. In fact, it is counterproductive.

If we look at the four largest spending items in the budget, none of them has anything to do with productivity or competitiveness. The four include a big increase in defence spending, GST cuts, narrowly based tax credits, scattered all over the place, and the child benefit of $100 per child. We can debate the merits of these four items and in some cases there may well be merits, but not one of them has anything to do with improving the prosperity, the competitiveness, the productivity of our country as we enter a period of challenges vis-à-vis the emergence of China and India as global economic powers and the aging population.

A responsible government has to take concrete actions to deal with this economic challenge to our country. The government in its budget did nothing. Worse, we know the finance minister will have his November economic update and he will talk about productivity and competitiveness. The problem is that the fiscal cupboard is bare. He has spent the vast majority of the money in this budget in unproductive ways, on GST cuts, universal child benefits, defence and narrowly based tax credits, none of which have anything to do with productivity. Now having spent the money, the horse having left the stable, he is going to try to tell us that he really cares about productivity and competitiveness, having devoted his funding to things that have nothing to do with this.

It is worse again because he still has two liabilities out there on which he has not yet spent money, neither of which has anything to do with productivity, but which will claim large amounts of future budgets. I refer, first, to the second GST cut of $5 billion or $6 billion a year, depending on when he does it. I refer also to the fiscal imbalance where the Prime Minister made commitments in the election to fix it. He has not given any money yet to the provinces. In fact, he has taken money away.

Those two fiscal items of fixing the fiscal imbalance and cutting the GST will weigh heavily on future budgets. Neither of those two items have anything whatsoever to do with productivity.

The notion that GST cuts, which are cuts to consumption tax, do nothing for productivity, every economist in the world, with the exception of the Prime Minister, agrees, whether it is the OECD, the IMF, or recently Dale Orr, the chief economist for Global Insight who said:

Some in the business community and some in the media are quick to identify a productivity/economic growth agenda with tax reductions.

This is a bad mistake.

It is a bad mistake to think that GST cuts have anything whatsoever to do with improving the productivity and the competitiveness of our country.

I would also add that we recently had two weeks of hearings of the finance committee across the country. I asked this question and I did polls of our witnesses, one in Vancouver and one on the opposite coast, in St. John's. In each case there were about eight witnesses, with widely disparate interests and priorities. I asked them if they thought it was a good idea to do the second GST cut that would crowd out so many other possible initiatives which would cost approximately $6 billion in additional funding per year. All the witnesses in Vancouver and St. John's were unanimous in saying that the government should not do the second GST cut because there were so many other much more important things that could be done with those funds.

A recent survey of leading Canadian business executives asked about priorities for income tax cuts, which we the Liberals wanted to do, versus a GST cut. Support for GST cuts has plummeted in recent months among the chief executives surveyed, while support for income tax cuts has gone in the other direction.

I have no hesitation for one nanosecond, and neither does the official opposition, to oppose the budget. It was meanspirited on the day it was given. The degree of meanspiritedness has been ratcheted up by these cuts to literacy and other programs, affecting the most vulnerable Canadians. It is dishonest because it purports to cut income tax when it raises income tax.

Perhaps most important and fundamental for the future of our country is it is a visionless budget which does nothing for our productivity and future prosperity. It does not acknowledge that the world does not owe Canada a living and it spends the money in unproductive ways with future huge liabilities for fiscal imbalance in the second GST cut, leaving very little money left for the Minister of Finance's economic update. Given that he has spent the money and given these liabilities still have to be paid, the statement will be words, but they will be hollow words because he has spent the money in unproductive ways.

For all these reasons, we on this side of the House will oppose the budget.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I listened with interest to my hon. colleague's remarks. I must first note that calling other members and their motions “meanspirited and dishonest” lowers the decorum of this place. I would exhort my hon. friend to use less controversial language so the decorum of this place may be improved.

My question for the hon. member is on the point that he continually criticizes these things. We are in a minority government. There may be another election next spring.

I have two basic questions.

First, by some miracle, if the hon. member's party happened to form the government again, would he guarantee to reverse the cut to the GST and bring it back up? Would the hon. member guarantee that the Liberals would reverse the tax credits?

Second, if in the next budget the government presents next spring, there were across the board income tax cuts, broad categories, raising the basic deduction, would the hon. member then commit to supporting that? This seems to be the thrust of his objections to the current budget.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, with regard to decorum in the House, I was simply stating the facts. I think members on that side of the House, with their canine references, are not really well placed to provide lessons to us on that subject.

How can we reverse a tax cut when it was not a tax cut; it was a tax increase? I do not know how many times we have to repeat this point before it sinks in to the opposition. The opposition raised income tax.

The choice before us, were we to form a government, which I think we have a very good chance of doing, would be whether we reverse the income tax hike imposed by the Conservative government. One cannot say for sure right now, but we would certainly wish very much to reverse that income tax hike imposed on the lowest income Canadians and at least reduce the income tax rate from the 15.5% where it stands today, after the budget, back to 15% where it was before the budget was enacted.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I listened to the hon. member's speech quite carefully and agree with every word that he said. He and I went across the country together as part of the finance committee. He did in fact conduct these mini polls and they were overwhelming in their consistency.

I want to pick up on this mishmash of tax credits, GST, child benefits and things of that nature, regardless of their political merits. I want the hon. member for Markham—Unionville to comment on why this is mishmash and myriad of tax credits, which adds to the confusion of tax filers, is actually worse than doing nothing.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the hon. member will remember that we had a very good presentation by the head of the chamber of commerce for Kitchener who explicitly criticized the government for this mishmash of a tax credit here for textbooks and a tax credit there for transit, things which were ineffective. For instance, in the case of transit, the studies show that some 95% of the recipients would use those services anyway. The least effective way of helping students is some sort of tax credit on textbooks and does not help access one little bit.

However, the point that this chamber of commerce representative made is that we want simplicity in our tax system. If we have a myriad of tax credits requiring a mounting bureaucracy to administer and to make judgments, for example, is dance eligible, is horseback riding eligible, is soccer eligible, all of these unproductive activities detract from a productive tax system and this witness, and many other witnesses as well, made strong cases for broad-based tax relief.

Let the government get out of the decision making process of families, of soccer versus horseback riding, versus music, versus dance. Let the government not be such a social engineer. Let families make their own decision and let the government administer broad-based tax relief. That was always the philosophy of our government. That was the philosophy of the witnesses who spoke to us. That is the way to ensure greater productivity, and a streamlining and a simplification of the tax system rather than a complicating, bureaucracy-enhancing level of more and more silly little tax credits.

[The Acting Speaker, Royal Galipeau]

The hon. member for St. Catharines, for a very short question.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I must rise to pay little homage to the review or the so-called poll that my good friend on the finance committee, the member for Markham—Unionville, actually held. He only held it in very specific spots of the country. He asked if those who wanted to abstain could abstain. Province after province and, quite frankly, chamber of commerce after chamber of commerce in provinces across the country supported the cut.

Why, if the cut did not work, according to the member, in 2006, would it have worked in 1993 when the Liberal Party of the day promised to get rid of the GST and not just reduce it?

[The Acting Speaker, Royal Galipeau]

The hon. member for Markham—Unionville for an even shorter answer, please.