Bill C-28 (Historical)

Budget and Economic Statement Implementation Act, 2007

An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007 and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007

Part 1 implements goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. Specifically, the Excise Tax Act is amended to
(a) increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years beginning with expenses incurred on or after March 19, 2007;
(b) increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
(c) increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
(d) implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.
Part 2 amends the non-GST portion of the Excise Tax Act to implement measures announced in the March 19, 2007 Budget. Specifically, the excise tax exemptions for renewable fuels, including ethanol and bio-diesel, are repealed, effective April 1, 2008.
Part 3 implements income tax measures proposed in the March 19, 2007 Budget but not included in the Budget Implementation Act, 2007, which received Royal Assent on June 22, 2007. In particular, it
(a) introduces a new Working Income Tax Benefit;
(b) eliminates income tax on elementary and secondary school scholarships;
(c) eliminates capital gains tax on donations of publicly-listed securities to private foundations;
(d) enhances the child fitness tax credit;
(e) expands the scope of the public transit tax credit;
(f) increases the lifetime capital gains exemption to $750,000;
(g) increases the deductible percentage of meal expenses for long-haul truck drivers;
(h) provides tax relief in respect of the 2010 Winter Olympic and Paralympic Games;
(i) allows for phased-retirement options for pension plans;
(j) extends the mineral exploration tax credit;
(k) enhances tax benefits for donations of medicine to the developing world;
(l) streamlines the process for prescribed stock exchanges;
(m) introduces an investment tax credit for child care spaces;
(n) introduces a new withholding tax exemption with respect to certain cross-border interest payments;
(o) prevents double deductions of interest expense on borrowed money used to finance foreign affiliates (the Anti-Tax-Haven Initiative);
(p) eases tax remittance and filing requirements for small business;
(q) introduces a mechanism to accommodate functional currency reporting;
(r) provides certain tobacco processors that do not manufacture tobacco products with relief from the Tobacco Manufacturers’ Surtax; and
(s) provides authority for regulations requiring the disclosure by publicly traded trusts and partnerships of information enabling investment managers to prepare the tax information slips that they are required to issue to investors on a timely basis.
Part 4 implements the disability savings measures proposed in the March 19, 2007 Budget. The measures are intended to support long-term savings through registered disability savings plans to provide for the financial security of persons with severe and prolonged impairments in physical or mental functions. Part 4 contains amendments to the Income Tax Act to allow for the creation of registered disability savings plans. It also enacts the Canada Disability Savings Act. That Act provides for the payment of Canada Disability Savings Grants in relation to contributions made to those plans. The amount of grant is increased for persons of lower and middle income. It also provides for the payment of Canada Disability Savings Bonds in respect of persons of low income.
Part 5 implements measures that provide for payments to be made to provinces as a financial incentive for them to eliminate taxes on capital under certain circumstances.
Part 6 enacts the Bank for International Settlements (Immunity) Act.
Part 7 amends the Pension Benefits Standards Act, 1985 to permit phased retirement arrangements in federally regulated pension plans by allowing an employer to simultaneously pay a partial pension to an employee and provide further pension benefit accruals to the employee. These amendments are consistent with amendments to the Income Tax Regulations to permit phased retirement.
Part 8 authorizes payments to be made out of the Consolidated Revenue Fund for the purpose of Canada’s contribution to the Advance Market Commitment.
Part 9 amends the Canada Oil and Gas Operations Act to authorize the National Energy Board to regulate traffic, tolls and tariffs in relation to oil and gas pipelines regulated under that Act.
Part 10 amends the Farm Income Protection Act to allow financial institutions to hold contributions under a net income stabilization account program.
Part 11 amends the Federal-Provincial Fiscal Arrangements Act to provide for an additional fiscal equalization payment that may be paid to Nova Scotia and Newfoundland and Labrador. This Part also specifies the time and manner in which the calculation of fiscal equalization payments will be made and it amends that Act’s regulation-making authority. In addition, this Part makes consequential amendments to other Acts.
Part 12 amends the Canada Education Savings Act to clarify the authority of the Minister of Human Resources and Social Development to collect, on behalf of the Canada Revenue Agency, any information that the Canada Revenue Agency requires for purposes of administering the registered education savings plan tax provisions.
Part 13 authorizes payments to be made out of the Consolidated Revenue Fund to an entity, designated by the Minister of Finance, to facilitate public-private partnership projects.
Part 14 implements tax measures proposed in the October 30, 2007 Economic Statement. With respect to income tax measures, it
(a) reduces the general corporate income tax rate;
(b) accelerates the tax reduction for small businesses;
(c) reduces the lowest personal income tax rate, which automatically reduces the rate used to calculate non-refundable tax credits and the alternative minimum tax; and
(d) increases the basic personal amount and the amount upon which the spouse or common-law partner and wholly dependent relative credits are calculated.
Part 14 also amends the Excise Tax Act to implement, effective January 1, 2008, the reduction in the goods and services tax (GST) and the federal component of the harmonized sales tax (HST) from 6% to 5%. That Act is amended to provide transitional rules for determining the GST/HST rate applicable to transactions that straddle the January 1, 2008, 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 January 1, 2008, pursuant to a written agreement entered into on or before October 30, 2007. The Excise Act, 2001 is also amended to increase excise duties on tobacco products to offset the impact of the GST/HST rate reduction. The Air Travellers Security Charge Act is also 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 January 1, 2008.

Budget and Economic Statement Implementation Act, 2007

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I thank my colleague for raising a number of important issues, one being the forestry sector crisis. My riding of Nanaimo—Cowichan is a forestry riding and we are seeing a number of our sawmills close. One of the pulp and paper mills is now in bankruptcy protection. The Conservatives in their economic statement acknowledged the fact that our manufacturing and forestry sectors were in difficulty and yet did nothing to address the issue in the economic statement.

A couple of weeks back, the Bloc proposed a motion that, if all members of the House had supported it, would have seen support going to the manufacturing and forestry sectors. I wonder if the member could comment on the fact that the Liberals chose not to support that important motion that would have seen some money going into our forestry communities, if he thinks forestry is an important industry in this country.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Mr. Speaker, I appreciate the concern raised by the member opposite. It is an important issue. In my role and capacity as international trade critic, I have had the opportunity to meet with many people in the industry and to listen firsthand to the crisis that is currently looming with the job losses and the tremendous pressures they are facing just trying to maintain their operations.

When we were in government, we put forth a very comprehensive $1.5 billion forestry industry competitive plan that was announced in November 2005. This plan included funding and support for our transformative technologies, incentives for bioenergy expansion, assistance to respond to innovation opportunities, support for market expansion and a national forest community adjustment fund.

Those initiatives were all part of that $1.5 billion package to create a partnership with our industry in recognition of the fact that jobs and communities were important and that Canadian families needed the federal government to play a substantive role.

Instead, unfortunately, the Conservative government came into power and not only did it not follow through with this $1.5 billion commitment, but it signed a flawed softwood lumber agreement that effectively placed quotas in the system, that effectively raised tariffs and that effectively prevented the government from providing any type of incentive or initiative or any type of ability to work with the forestry sector.

What we see today is an absence of federal leadership on that front. The provincial governments are now forced to play a role and, unfortunately, any time they take any action they will be sued by the United States because of this flawed softwood lumber agreement.

We understand the concern and we were the ones who put forth a $1.5 billion initiative in November 2005.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, I am pleased to rise in the House today to speak to the amendment proposed by the member for Ottawa Centre to delete a portion of part 17 specifically dealing with corporate taxes.

In the recent economic statement and the throne speech, and in view of the substantial surpluses it has, the Conservative government had an opportunity to correct the direction it has been taking. Instead, it has continued in the wrong direction. It has continued to ignore the very serious prosperity gap that is growing in Canada for many of our working and middle class families. The government has failed to target tax relief to people that it would help the most.

The Canadian Labour Congress made a submission to the House of Commons finance committee during its prebudget consultations. The paper is dated August 2007 and contains an analysis on corporate income tax. It talks about the fact that despite increasing cuts to corporate income tax, what we have seen is an unprecedented lack of investment in companies, in the bricks and mortar, in training and re-education within companies, things that would actually make a difference to working and middle class families. The following is a quote from that paper:

Pre-tax profits have soared to record heights and after-tax profits have grown even faster. There has been no comparable increase in corporate investment. Simply adding $15 billion to the 2000 investment level would have increased total investment to nearly 13% of GDP in 2006.

Further on it states:

Business leaders are using this huge surplus to become net lenders to households, stockpile liquid assets, acquire other enterprises, and buy back stock. While these actions may be viable business strategies, it is not clear why the public should subsidize them through further corporate-tax cuts.

That is a very good analysis in terms of why we would support business decisions on where they are going to put their profits.

I mentioned in a question to a Liberal member that in the economic statement the Conservative government acknowledged the difficult times that manufacturing and forestry are in for a number of reasons, yet it simply failed to follow up on what it acknowledged is a very serious problem.

In the riding of Nanaimo—Cowichan, sawmills are laying off shifts of workers. A pulp and paper mill has filed for bankruptcy protection. There simply is not the national leadership around the forestry sector.

I have argued in this House previously and I will reiterate that forestry in British Columbia is not a sunset industry. It is a viable part of who we are as a province. We have the resources. We need to demonstrate national leadership around reinvestment in the industry, retooling where necessary and providing education and training for workers who need to transition into other jobs within the forestry sector.

The government had an opportunity in the economic statement and Bill C-28 to demonstrate that, but the government failed to do it.

There is a crisis in British Columbia caused by pine beetles. Although some money has been allocated, where is the long term, strategic planning for what will happen to those communities in five to ten years when all of the dead wood has been cut? Those communities are facing serious transitions and yet the government is failing to demonstrate the leadership that is required to make sure that those communities maintain their viability.

In addition to the challenges in our forestry and manufacturing sectors, we also are seeing the growing prosperity gap. Working and middle class families continue to struggle to make ends meet.

Many of us have been activists in our communities for a number of years. When food banks opened well over 20 years ago, many of us thought they were a temporary measure and that as our economy recovered, the food banks would close because they would no longer be needed. It is a very sad fact that there are more food banks rather than fewer.

In “HungerCount 2007” put out by the Canadian Association of Food Banks, there are a couple of startling figures. It says that the number of people assisted by a food bank in March 2007 was 720,231. There have been changes in food bank use. There is 91% more usage of food banks since 1989. There are 673 food banks in Canada with 2,867 affiliated agencies. The number of provinces and territories without a food bank is zero. It has been 26 years since Canada's first food bank opened in Edmonton. Seventy-three per cent of Canadians believe that hunger is a problem in Canada. Fifty-seven per cent believe that the government should take responsibility for solving the problems.

There are some very stark figures in that report which speak to the fact that there are men, women and children in this country who simply do not have enough to eat. I want to end the part on the food banks by saying that of the food bank clients, 38.7% are children. The percentage of households containing at least one child was 50.6% . It has been 18 years since the federal government promised to eliminate child poverty.

That leads me to the Campaign 2000 report that just came out entitled, “It Takes a Nation to Raise a Generation: Time for a National Poverty Reduction Strategy”. In 1989 the House unanimously passed Ed Broadbent's motion to end child poverty by the year 2000. Here we are in 2007 and it has not happened. Still there are children and their families, because of course there are no poor children without poor families, who continue to be the poorest of the poor in this country. The child poverty rate of 11.7% is exactly the same as it was in 1989. Forty-one per cent of children living in poverty live in families with at least one income earner working full time all year.

In my own province, despite a growing economy, British Columbia continues to report the highest provincial child poverty rate, which is 15.2%. In aboriginal and immigrant communities, the story is even worse. In aboriginal communities one in four children is poor, which means their families are poor. Aboriginal children and their families are living in substandard housing unable to access adequate drinking water, unable to access adequate medical care.

I recently put forward a private member's bill called Jordan's principle which talks about putting children first. It is a very good example that children on reserve often do not have access to adequate medical care. In Jordan's case his family had to surrender him to the province, put him in foster care in order for him to get the care he needed. Consequently, the federal and provincial governments fought over which one should pay for his care. The child ended up in hospital for four years. In the last two years of his life he could have been in a special foster home, but neither the federal government nor the provincial government would step up to the plate and pay for his care. He died in hospital instead of going to a foster home. That is a stain on Canada's reputation as being a caring and compassionate country.

Lest we only talk about problems, I want to talk about solutions because there are solutions. The winter 2007 report of the National Council of Welfare states that there are some real things that can be done. The report talks about childhood development care, access to education and training for adults so that they can better participate in the labour market, better jobs, income, social security for people who are not in the labour force, access to health care and other services, and affordable housing. The report states that in the absence of any leadership from the Conservative government on a national anti-poverty strategy, some of the provinces are taking some leadership around that, notably Newfoundland and Labrador and Quebec. Those provinces are developing action plans. In Newfoundland and Labrador there is a cross-ministry initiative to develop an action plan with some real meaningful targets.

In this wealthy country of ours, the surplus was an opportunity to invest in Canadians. People talk about the rising tide lifting all boats, but it is not happening. We should have taken this opportunity to invest in child education, housing and other initiatives that would make a difference to families and which would close the very serious prosperity gap.

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, I would like to take this opportunity to point out during the debate on Bill C-28 some of the failings of the budget, failings that were not corrected in the fall financial update. Given the tone of the throne speech, I do not see that there is much intention to correct those failings going forward.

Ultimately, the general overarching problem that I have with the direction of the government in this regard is that, having been given the opportunity to significantly affect a variety of areas and challenges that face Canada, it has chosen instead to basically withdraw. The government is talking about withdrawing in its relationship with provincial governments, withdrawing in its relationship with municipalities.

Given the magnitude of the surplus, the opportunity was presented to the government to deal with universities. The reality is that since 1993 as soon as the fiscal situation was improved, the first thing the former Liberal government did as a national government was to invest heavily in research. The research chairs program, the Canadian Foundation for Innovation and the indirect costs program, all of these things were investments by the Government of Canada in Canada, in Canadians to generate prosperity, because prosperity going forward is going to find its way where there is investment in knowledge.

That is just one example of the opportunity that was squandered by the Conservative government as it has chosen rather to simply make itself smaller, driven by an ideological agenda that simply does not believe that government can be an instrument for good. I do not hold that view.

Having said that, I also wish to say that I was very disappointed in the spring and most recently that the government still has not honoured the vote that it cast in favour of a motion calling for a national autism strategy, including a financial component. The government had the opportunity to do that and it did not.

Today what I would like to bring to the attention of the House and to Canadians is the nature of the change in the formula as it relates to transfers to the provinces for post-secondary education, social services and health.

In the 1960s and early 1970s the provinces were lobbying the national government, quite justifiably I think, for the government to adjust the taxation system because the provinces were carrying much of the costs of the most recent cost drivers, such as, education, health and social services. The tax system reflected an earlier time when most of these costs were federal.

In 1977 the Government of Canada responded to that request by offering the provinces 13.5% of personal income tax and 1% of corporate tax. It was attempting to do the right thing, but the problem with that remedy is that 1% of personal income tax per capita is not the same across the provinces. The problem is that in a rich province 1% of personal income tax per capita is worth significantly more than 1% of personal income tax per capita in a poorer province.

In an effort at the time by the Government of Canada to mitigate the fact that it was about to make a decision that would bring less equity to the country, which certainly was not in anyone's interest, it included a cash component in the transfer, which was worth at the time $2.7 billion. Last year it was worth $20.5 billion, so it is no small amount of money.

At the time the federal government then introduced a cash component that it would transfer to the provinces. Inside the cash component was an equity seeking provision which allowed that there would be mitigation for the damage that was done to the equilibrium in the country when it used taxes as a way of giving more money to the provinces. In other words, if the tax changes benefited Alberta significantly more than Newfoundland and Labrador, which they did, then the amount that would go to cash would reflect that and Newfoundland and Labrador would get more.

That was the way the decision was taken in 1977. This remedy, to a structural problem in Canada, which everybody recognized, would not hurt the smaller, poorer provinces. In one fell swoop, with that 1977 decision to mitigate the inequality, perpetrated on Canada by the Government of Canada, was eliminated.

As a result, from this year to next, the post-secondary education and social services transfer will increase in Alberta by $102 a person, in Ontario by $40 a person and in my province of New Brunswick by $7 a person. That will have incredible impacts on the provinces receiving equalization. I think it was a decision that was taken by the government without a clear understanding. The way it was referenced was equalization through the back door. Nothing could be further from the truth.

The reality is it was not done to equalize Canada. It was done to ensure that the tax point transfer did not make Canada less equal. That was the purpose. It was recognized as such. Members can go back to Hansard and read the debates in the seventies and eighties around this.

The truth is the effect of this decision has impacted the smaller provinces in the areas of post-secondary education and social services, areas where we are struggling constantly to keep up. I accept that we receive equalization in our provinces. However, if we do not invest in universities, in knowledge and in research, and the provincial governments will have a hard time doing this given how much less money the small provinces have relative to the rich provinces as a result of this decision, then consequently the future holds more equalization.

In our province Premier Graham has boldly set out on self-sufficiency agenda so we will not find ourselves at the whim of these kinds of decisions. I have not decided whether I think that this was done deliberately or just unknowingly, but the bottom line is this. Try to explain to me and to Canadians where the justice is in increasing the amount of money available to the province of Alberta for post-secondary education and social services by $102 a person and the amount of money available in Newfoundland and Labrador or New Brunswick to $7 a person. How can that be just?

If that is not bad enough, by 2014, when the health accord expires because it is a 10 year agreement that was reached in September 2004, they will apply exactly the same forward to that. All the transfers that come to our provinces, the provinces that would suffer from this decision, all those provinces will be in a lesser position to provide those fundamental services in the area of health, in this case, and social services, but also the kinds of investments that would allow us to be more self-sufficient, to use Premier Graham's term. It will make it very difficult. It makes it all the more imperative to do this.

At the end of the day it is obvious, when we are as dependent on these transfers as we are, that we are at the whim of political decisions, whether taken out of malice or simply lack of forethought, and the effect on our province and our entire region will be disastrous.

It has not had a lot of attention. Members can check. It is on page 369 in the budget document and it is very clear. The increase in Alberta will be $102 a person. The increase in New Brunswick will be $7 a person. How can that be fair? How can that be just? How can we expect to build the Atlantic region when we are treated in a way that simply will not allow us to make the same kinds of investments that are made in provinces that have more of their own resources to invest?

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, I have a question for the member opposite. I know he has done a lot of work and supported disability issues in the past. He says that he cannot support Bill C-28.

I want to ensure that the member is aware of the registered disability savings plan in Bill C-28. It is a new plan. It will allow funds to be invested tax free until withdrawal. It is intended to help parents and others to save for the long term financial security of a child with a disability.

The plan's structure is similar to a registered education savings plan. Contributions to it will be eligible for the new Canada disability savings grant and there is also a new Canada disability savings bond for individuals with lower family net incomes.

There are all these things for the disability plan, but we have also had some very positive quotes from people who work in the industry. The Canadian Association for Community Living:

—congratulates the Government of Canada on introducing a Registered Disability Savings Plan...to provide families greater opportunity to save for the future financial security of a child with a severe disability.

The Vancouver Province in an editorial said:

—the [finance] minister is to be congratulated for adopting a plan that is comparatively uncomplicated and...accessible at all income levels....the great good it will do is beyond calculation in mere dollars and cents.

Given the fact that the member opposite has done so much great work in the past on this issue, how can he not support Bill C-28?

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, I thank the member for her acknowledgement of the work I have done on disabilities. I am very familiar with the programs she mentioned. I helped draft them and that is why they were in our platform in the last election.

The budget and the update are large documents and they contain a large number of things. There are many worthy things in the documents and that would be one of them. I commend the government for that.

At the same time, the damage that will be done to my province as a result of the changes in the transfer on social services will do so much more damage to those very programs that the province has to deliver around social services. In no way could there be compensation in those things that are positive.

If the government had not changed the social transfer, it would be a different story, but it has. As a consequence, my province will be unable to deliver programs in my community. It has nothing to do with equalization. Nor has it anything to do with the structural inequality. This is an inequality that was created by a decision of the national government in 1977. It protected itself against a cash transfer that had an equalization element inside it to simply mitigate the inequality that was in the tax transfer. It has been eliminated and the results for the smaller provinces are disastrous.

Consequently, with all due respect to the good pieces of this legislation, it cannot trump the damage that will be done by this one single decision.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I thank my colleague from the Maritimes for his comments. I have a very quick question for him.

The amendment I put forward is an amendment around clause 1(a)(1), which has to do with corporate taxes. Where does he stand on this amendment and where does his party stand ultimately on this bill? Are they for or against the it?

[Andy Scott, Liberal, Fredericton, NB]

Mr. Speaker, the hon. member would have more credibility if he went after all the tax measures. We have mentioned them. We had the courage to mention them. The NDP members have not. They are cherry-picking in terms of those which they can politically play better.

The reality is there is no credibility at that end of the House.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, an interesting occurrence happened about an hour ago. I made a call to a friend in Hamilton and he asked me why my party was literally hammering the Conservatives on this budget update. He had not been watching the headlines closely, but he had seen from time to time various members of the NDP caucus on their feet, particularly from Hamilton and today from Ottawa, who talked about our major concerns with the economic update.

Simply put, and as I expressed to my friend, the update is taking us in the wrong direction. It is not balanced. We have an unprecedented opportunity to make some changes for the good of our country.

As we know, we have a manufacturing crisis. More people are living in poverty than ever before. As a result of that, looking at the update statement, Bill C-28, it is abundantly clear that there is nothing for ordinary, hard-working Canadians, nothing at all.

The Conservatives have been following a well set pattern, a pattern set by the Liberal Party, of corporate welfare giveaways. We all know that in 2005 the leader of the NDP Party, the member for Toronto—Danforth, was able to get the Liberal Party to set aside some corporate tax cuts, but we are still in a position where there is almost a fond reverence for offering tax cuts to corporations by both sides in this place. These breaks will reduce our budget by over $12 billion, and those are moneys crucial to Canada.

In fact, I want to thank the member for Ottawa Centre for the amendment he has proposed today, which would completely remove clause 181 from the agreement. We hear from Canadians across our country. They are very concerned with the loss of fiscal capacity contained in the budgets brought forward with huge corporate tax breaks in quick succession.

Different members in the House have on many occasions expressed there concerns about the huge infrastructure problems facing Canada. Representatives of the Canadian Federation of Municipalities were in town recently. The report they released, which has been referred to repeatedly here, and justifiably so, tells us there is a shortfall of $123 billion, putting our fiscal capacity at risk. They have said that those moneys need to be invested now and if they are not, then the situation will clearly worsen.

Within that document, there were $40 billion for communities and recreation. Being the sports critic, I have a particular awareness of that part of the report. Communities like Hamilton, where I am from and am pleased to represent, have been forced year after year to turn to the province of Ontario for assistance with their municipal budgets. They usually face a shortfall in the area of $20 million and that is just to contend with day to day operations.

A lot of that came about in the 1990s when the Liberal government of the day started offloading responsibilities to the provinces, along with tax collection. Under Mike Harris, the who does what committee, if I recall the name appropriately, said that his government should keep social services and leave education funding within the mandate of municipalities. What did it do? It reversed that.

Education is predictable and allows us to plan ahead. We know how many children are born and when they are born. When it comes to social concerns and downturns, we do not know how many people will lose their jobs. In fact, 11,000 jobs were lost last year in Hamilton. Everyone will hear me say that later. Because of that unpredictability, it made those moves to protect itself at the provincial level.

There was another more insidious thing at work, which was offloading from income, where people could afford to pay property taxes and many on fixed incomes could not afford the adjustments necessary to deal with such things. The province of Ontario has also made it clear to Hamilton that it cannot sustain the $20 million transfer and it will have to go back to the province regularly.

I also expect, from what I am hearing, that many major cities across the country have significant infrastructure problems similar to Hamilton.

Hamilton has to renew its sewer system soon. This is one of the older cities in Canada and every year a significant number of water mains break and other failures of infrastructure are very evident. We have unique challenges in Hamilton.

As the House knows new immigrants who come to this country travel to Vancouver first, or Toronto or Montreal. They find, after being there a short period of time, that they are unable to afford the cost of living. Many of them choose Hamilton as their second destination, but federal dollars go to those first communities where the immigrants arrive. So, there is a particular burden that befalls our city and I am sure other ones across Canada as well as a result of the fact that federal dollars are not spread as evenly as they could be.

Clearly, much could have been done by the Conservative government in its update before cutting taxes. I spoke in the House about the fact that Canadians are a people with a lot of common sense. I have also advised the House of the significant concerns I am hearing back in my riding of Hamilton East—Stoney Creek.

My constituents are quick to point out to me their surprise that a government with the massive surplus in the tens of billions of dollars does not seem, in their eyes anyway, to be approaching its fiscal management with the same common sense that ordinary Canadians apply in their day to day living.

Canadians are quick to say that they know when one is doing well, it is time to invest. They will invest their money in repairs and upgrades to their homes. Canada needs to repair its home, its infrastructure.

Canadians will also put a little money aside for an eventual downturn which we well know follows in quick succession. I would argue that is happening at the present time and if we have surplus monies this is the time to address those needs.

Also, when ordinary Canadians do have good times, they do not head off to the bank to pay off their mortgage. They would not do that because they understand that keeping a reasonable debt is fiscally responsible in order to sustain their cashflow.

Canadians know that if their house foundation is rotten, that soon that house will fall. The foundations of Canadian cities are literally rotting across this country.

The other evening when I spoke about this fiscal update, I pointed to the fact that in conversations with my constituents at our local Timmy's, and that is our gathering point, there is a lot of sage advice given in those places.

I also found in the last couple of visits that the seniors who were there were very angry. They have come to know that due to an error by the federal government that they were underpaid some $500 a year in their old age security. They are patiently waiting for the taxman to send them their money. I should add their patience is wearing thin.

I strongly advise the Conservative government to get on with the job and send Canadians the monies that they are owed.

The seniors are busily swapping opinions on the matter and most are quick to point to their personal experience. They have had experiences with the taxman over the years where they have owed some money and guess what, the letter comes with the demand for money or at times there might even be someone knocking on their door.

The House has heard from Hamilton members over and over of the terrible situation in our manufacturing sector. That is another area where we have to have a strategic plan. We have to invest. It is not just corporate taxes and not just a trickle down that is going to fix that problem.

The House has heard from the Hamilton members as well as the rest of our caucus that Hamilton is one of the hardest hit in the manufacturing crisis that is happening. I use that word “crisis” very clearly.

As I have said before repeatedly, 11,000 of my friends and neighbours have lost their jobs in Hamilton in the last year. Those taxpayers who have lost their jobs should rightfully expect changes to EI to help them adjust to their loss.

Turning to a damaged EI system, gutted by the former Liberal government, is not going to be that helpful when in fact the national average for accessing EI is only 40% and in urban areas 22% to 30%, which would include Hamilton.

In the eyes of many Canadians the EI fund, instead of being an insurance against job layoffs, has become nothing but a pool for the government. I would say to the government that it should choose Canadians over corporate Canada. It has chosen corporate Canada over Canadians in crisis. That is something that we all regret.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, I would like to ask a question of my friend from Hamilton who certainly gave a great dissertation about the philosophies of his party. I have here quotes from a couple of former NDP MPs who stated some things drastically different.

One stated that the NDP priorities are to direct tax relief measures to those most in need. A reduction in the overall GST rate by two points would promote job creation and give hard-pressed consumers a break. That is what Nelson Riis said when he was here as an NDP member.

Lorne Nystrom, when he was here also as an NDP MP, said that the NDP had been saying all along to roll back the GST. He kept asking when the finance minister would finally catch up with the Canadian people and roll back the GST, the most regressive tax in the history of the country?

I am not certain I am hearing the NDP talk about how great the roll-back in the GST is, which is part of this bill also.

I might ask him, has the NDP changed direction? Does it wish to continue to carry on with the most regressive tax ever or to hold on to a tax that if removed would help promote job creation? Has his party changed its mind?

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I find it interesting to hear the member going back into the past and drawing on the comments of previous NDP members. I guess maybe I should go back and draw on a few from Brian Mulroney and see where we end up with that one.

The reality is that this party opposed the implementation of the GST in the first place because a consumer tax hurts the poorest people in our country the worst. The reality is that those with disposable income have the opportunity to have a lot more money to set aside once they have paid their GST.

Now, as far as policies are concerned, our policy is quite direct. It calls for targeted tax reduction, and by “targeted”, we certainly do not mean corporate welfare.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I want to thank my colleague from Hamilton for bringing some common sense to this debate.

The amendment I have brought forward would essentially put the human face back on government policy. We do not see right now any problem in attracting investment to this country, but there is a problem in terms of where the investments are being made. It seems to me that what my friend from Hamilton is saying is not only logical but it is what is needed; that is, to invest in our seniors and our human resources.

The fact of the matter is that clause 181 is simply a gift to corporate welfare, to those who may invest in Canada but might not; it might go to excess profits.

I would like my colleague from Hamilton to tell me what should happen in his community in terms of the investment in human infrastructure, in other words, the services that are required for everyday people because clause 181 clearly gives the nod to corporate Canada.

I heard comments, from the government bench earlier in this debate, to the effect that corporations are the ones that create jobs. Last time I checked, I thought it was people and small businesses. I would like the member's comments on that.

[The Acting Speaker, Royal Galipeau]

The hon. member for Hamilton East—Stoney Creek has one minute to respond.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, one of the things we hear repeatedly in this House is about 13 years of mismanagement. I am going to start using the term 15 years of mismanagement because it is still happening today. There are people in my community who are in desperate straits.

However, as the member for Ottawa Centre just said, if we are going to target tax reduction, there are a lot of small and medium businesses that need it far more than corporate Canada, and that is part of what we talk about. We have sustaining programs for new immigrants and for seniors that need to be funded. I spoke in this House about the National Anti-Racism Council that needs funding as well.

There are a number of areas if we had the opportunity, but one minute does not allow that.

[Bryon Wilfert, Liberal, Richmond Hill, ON]

Mr. Speaker, I am pleased to participate in this debate and I want to first of all say that government members often like to say that in 13 years the Liberals did not do this and did not do that which of course is utter nonsense, but the one thing that the government never says is that in 13 years we left them the strongest economic policies of any government in the history of Canada.

We inherited a $42.5 billion deficit in 1993. One-third of all of the money spent at that time by the Government of Canada was borrowed money. It was the strong economic policies of the Liberal government that created jobs that translated into an economic performance which was the wonder of the world.

I remember in 1995 it was suggested in the Economist that we were going to be the sort of basket case of the G-8 and that we might even have to go out and get a loan from the international development bank.

What happened? The Liberals came in. We re-organized and did the kind of things that needed to be done in those 13 years. When the election occurred and the current government came in, it inherited so much money it did not know what to do with it. So, it just spent it, but it has not invested it.

Look at its policies, the ones dealing with the GST. Any economists worth their salt would tell us the GST, which in this amendment I notice is missing and the NDP seems to cherry pick when it comes to dealing only with corporate taxes, costs the national treasury $5 billion to $6 billion a year. Think of the kind of money that we could be investing in terms of social programs and post-secondary education. The Conservatives are silent on that.

The fact is that they simply see the role of government being one of shrinking itself. It is not to be an agent of positive change in supporting people or giving them a hand up, not a handout as some of our friends in the corner might do.

The Liberal Party has a strong fiscal record. Let us look at the record of the current government. When it comes to universities, we have massive, growing debt for university students who come out after four years. We need to have a national conference and look at getting the provinces, the federal government and university organizations together, and look at how we can really tackle the issue of debt and investing.

When it came to the millennium, instead of building some monument, we decided on this side of the House to invest in the millennium scholarships. That was and continues to be one of the most positive programs for students across the country. We invested and created 500 chairs of excellence in universities across the country.

We kept and we brought back the best and the brightest. We do not hear those kinds of visions from the government across the aisle. That is a shame because we need to make sure that our students have the right equipment, that they are ready to compete not only at home but abroad.

In the area of corporate taxes, we were the government that reduced them from 28% to 19% and the Conservatives took a bold step of reducing them to 18.5% from 19% by 2011.

Our leader made it very clear that we need to continue to deal with the issue of corporate taxes because lower costs obviously help Canadian companies invest. We think that is very important, particularly now when the economy is starting to show some bumps on the road. We still have not heard about a national manufacturing strategy or forestry strategy from across the aisle. We certainly need to see that.

We see that unemployment is back up to 5.9% which is the latest statistic. We never hear government members talking about investing in our cities. I certainly have talked about that over the past. They say what a wonderful job they have done on cities. I guess FCM said that it was extremely unhappy about the fact that the government was recycling half of the so-called $33 billion from the building Canada fund and that in reality the mayors and councillors should be happy. We know that because the government told them to stop whining.

The federal government said it does not deal with potholes. I have not heard that kind of comment in over a decade. As a former councillor and former president of the FCM, I thought this was back to the future. I could not believe that we were hearing that kind of rhetoric.

Obviously, cities need to be vibrant. We need to invest in roads, bridges and sewers and deal with waste management and those kinds of things, but we also need to invest in those post-secondary institutions in our major cities. We need to make sure that we have an innovation agenda. Under the previous government, we had a very strong innovation agenda. We do not hear innovation from across the aisle.

We have an amendment before the House that deals with only one aspect of taxes. We know about dealing with taxes because we brought in the largest tax cut in Canadian history in 2000, the five-year $100 million tax cut.

There is no question that we need to attract investment in this country. We need to have a vision and say to the world that we are open for business and prepared to welcome those companies that are on the leading edge. That is why corporate taxes are important.

I certainly believe in foreign investment. There is a difference, of course, between foreign investment and foreign ownership.

Sometimes across the aisle the Conservatives talk about the GST, the terrible tax. The reality is that consumption taxes, as any economist will tell them, are not the way to go. Even the Fraser Institute told them that. The CAW told them that, but they know better. When my constituents are buying a pair of blue jeans, I am sure they are delighted to get a 1% reduction, but not too many people are buying yachts or luxury vehicles, which is where they would actually save money.

Again, the government talks about economic vision. We have a Minister of Finance who brought Ontario to its knees with a $6 billion deficit when he was the minister of finance there. It is not surprising that we do not have the kind of vision that we really need when it comes to dealing with the economy and with real issues.

We have heard before about health care. We have heard about the lack of progress on wait times. Again, there is a failure to lead. The Conservatives talk about 13 years, but in the almost two years that they have been in office there has been a failure to lead and a failure to provide a vision to Canadians.

The Conservatives said that we would have peace in our time with the provinces, but now what do we have? They had more provinces angry with them after the budget than they did when they went in. Clearly, they do not understand.

It is a small government. It is a government that believes in reducing the role of the national government instead of saying that we can be leaders, not only at home but abroad, and work with our partners. The provinces are out there are saying they need to deal with these issues in a collaborative way, but for them it is the highway or no way. That seems to be what the Conservatives like to put forward.

The Conservatives spend all this money and yet they fail to invest. Canadians are not bribed: they know that these people do not have the ability to deal with crumbling infrastructure, nor do they have the ability to deal with the issues on innovation. Therefore, this is of grave concern.

When the next election occurs, whenever that occurs, we are going to see a very pronounced difference between this side of the House and that side of the House when it comes to leadership, when it comes to investment, and when it comes to understanding our cities, our communities and our rural areas. Again, there is a failure to lead.

Immigration is another issue. More and more of our workers will come from abroad, yet again there is a failure to lead on that issue. There is a failure to create that kind of collaborative role with provinces and municipal governments in order to integrate foreign workers. Again, it is a failure.

One simple example of just not being prepared is the passport issue. We saw tremendous lineups. Why? Because the government failed to prepare. The Conservatives knew they would need to have extra people to be online and to support the thousands of applications, yet again it was a failure to lead.

I get tired of hearing that side of the House saying that we did not do this or that. The reality is that we did a heck of a lot. The Conservatives need to look in the mirror. They need to look at what they have not done and at what they have not delivered. They continue to talk about the past. They are in government. They need to start leading, but maybe that is too much to ask of a government which really believes that we should be smaller and less involved in trying to promote this country, both at home and abroad.