Finance Committee on May 10th, 2006

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

With respect to this somewhat interesting controversy about Ontario, there was an agreement made with Ontario, I believe, to address their fiscal imbalance to the tune of $5.8 billion. Is that agreement being kept?

[Barbara Anderson]

Yes. As it says on page 159 of the budget, the government will honour the commitment made in the Canada-Ontario agreement. That agreement, you will remember, was to address some concerns of the Province of Ontario with specific inequities and some concerns with long-term spending in certain areas. So yes, it will be honoured.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

All right. That's good to know. I'm sure Ontarians will be happy to know that.

[Garth Turner, Conservative, Halton, ON]

I'm happy with that.

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

Extremely happy.

[Garth Turner, Conservative, Halton, ON]

We're happy.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

There's much happiness here. This is good.

You've said that the personal income tax reductions in the 2005 Liberal budget were only proposals until approved, so my question is, if these estimates before us today are not approved, then those proposed reductions in the Liberal 2005 budgets are null and void. Is that basically what happens? Perhaps you can explain.

[Serge Nadeau]

Are you talking about the proposals in the November 2005 update, or in the budget 2005?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I'm talking about the personal income tax levels having been 16% and then proposed to be 15%.

[Serge Nadeau]

I will again ask Lawrence, who is a legislative specialist, to comment and answer your question.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Good. You have lots of experts here. That's good.

[Lawrence Purdy]

Thank you.

Mr. Chairman, I'm not sure I can add a great deal to what I said before.

The status of legislative proposal as it moves through Parliament includes, of course, introduction as a notice of ways and means motion, but the notice of ways and means motion itself is not an enactment of Parliament and it doesn't have the power of an act of Parliament. So a proposal that has reached the stage of a notice of ways and means motion but has not proceeded to enactment does not have legal effect.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

So it's important that these estimates are passed in order to give it effect. Is that correct?

[Lawrence Purdy]

The proposals in the 2006 budget will only become law once they are enacted, once they form part of an act of Parliament, yes.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I'm talking about the proposals in the 2005 budget, which are in the estimates before us today.

[Lawrence Purdy]

Oh, I'm sorry. I'm actually not certain of that. I must admit I don't know much about the relationship between the tax legislation and the estimates themselves.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Perhaps you could find out, because that's kind of an interesting wrinkle. We should probably know the answer to that.

With respect now to the money going on to Ontario, once the 2006 budget is passed, then more moneys will flow to Ontario. Is that correct?

[Barbara Anderson]

That's correct.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

And how much more would that be?

[Barbara Anderson]

On page 159 it is laid out what they will get in respect to 2006-07 and 2007-08.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

This has been an interesting question for me because the 2005 Liberal budget is spread out over five years. The budget 2006--the new Conservative budget--is spread out over only two years, so we're kind of comparing apples and oranges here. I wonder what the significance is of a shift from a five-year to a two-year planning horizon.

[Paul-Henri Lapointe]

Well, I don't know if you're referring to the Canada-Ontario agreement again or more generally, but with respect to the Canada-Ontario agreement, what the budget does is show very explicitly how the agreement will be met over these two years, and it makes a general statement about the five-year agreement overall, which would be honoured.

The budget does not provide year-by-year, detailed numbers beyond 2007 and 2008, because we are on a two-year budget horizon.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Now, with the five-year horizon, the figures I see in the tables, for example, table 5.8, are heavily back-end loaded. In other words, hardly any of the tax relief promised over the five years takes place in the first two or three years. The promise is that most of it will take place in the last two or three years. And it seems to me if I were a Canadian I would want to see the promise kept right away, because who knows what could happen five years down the road? Anything can happen. There could be a change of government. There could be some kind of fiscal change of heart on the part of the government that made these promises.

[The Chair, Conservative, Brian Pallister]

You're out of time, Madam.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Why would there be a need to have promises made that aren't going to be kept till two or three or four years from now? How is that good financial planning?