Finance Committee on April 16th, 2008

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Minister.

With regard to budget 2008, once again we see that you've brought forward a document on the ongoing budgetary surplus. You're continuing to pay down debt. I believe some $37 billion in total debt was paid down in just over two years. You just came back from the meetings with the other G7 nations, those being the wealthiest in the world. How many other nations in that group are currently experiencing ongoing budgetary surpluses and paying down debt?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

We're the only one.

[Dean Del Mastro, Conservative, Peterborough, ON]

Good work, Minister.

On the GST specifically, the GST cut that was brought forward in the fall economic update, we had a number of people talk about the GST reduction. They talked about it being a stimulant in an over-stimulated market. That was way back when we had proposed it in 2005. And of course, we see now that we have an economy in need of a stimulant.

I note that domestic demand for goods is increasing substantially. Specifically, we saw the demand for new cars, new electronics, and so forth in Canada up significantly, really supporting retail operations across the country. How would you view the GST reduction in light of this, and do you think it was timely in view of some of the softness that we've seen in other economies?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

As you know, we accelerated this second point in the GST to January 1, 2008. That again was entirely intentional. It was apparent to us that we needed to create a significant financial stimulus to the Canadian economy for this year. The Americans are behind us in doing that. We were ahead of the curve on that.

The confidence that consumers are showing in the Canadian economy is good. We expect it to continue. It helps when people get larger tax rebates. It helps with the GST reduction.

As you know--I think you know--the car dealers association folks were here yesterday, car dealers from across Canada, reporting good sales. January and February looked pretty good, and March apparently too. There's a revised prediction about total auto production for this year, which is pretty good. This is encouraging for the Canadian economy. Governments don't make cars, but governments can help stimulate consumer demand by letting people keep more of their own money, which we're doing.

[Dean Del Mastro, Conservative, Peterborough, ON]

Do I have time for another question?

[The Chair, Conservative, Rob Merrifield]

Yes, one quick one.

[Dean Del Mastro, Conservative, Peterborough, ON]

I want to go back to the tax-free savings account. You mentioned that the RRSPs were brought forward by the Diefenbaker government in 1958. Obviously the one big tax shelter that we, as Canadians, have is our homes. That's a tax shelter. But not all Canadians have that.

This seems to me to be a benefit for Canadians broadly, in all positions, including those who may not have a home, to actually shelter some of their after-tax dollars from the tax man. Was that something you considered in the creation of the tax-free savings account?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

When we looked at creating a savings vehicle, there was a myriad of plans, and many economists have recommended various plans over time. Many of them have now taken credit for this particular plan. You know, success has many fathers and mothers and cousins and sisters and brothers and so on.

In any event, there it is. We looked at whether there should be some restrictions on what the money could be used for, but we wanted a broad, simple plan that Canadians would want to access and that would be understood clearly. And that's what we have. Money can go in and out of the plan to buy a car, or for a young person who might want a house, a first residence, a condo. It can be used for educational purposes, although we have an RESP. It can be used for whatever someone wants to use it for.

The hope is that it will help create a stronger culture of savings in Canada.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Turner, five minutes.

[Garth Turner, Liberal, Halton, ON]

Thank you.

Welcome, Minister. I have a couple of things that I am a bit curious about.

I am curious about the provisions on immigration that are included in Bill C-50. Many people have asked whether this doesn't turn immigrants into economic commodities. Why is this included in this bill?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Certainly part of the purpose of immigration is to help improve the standard of living and quality of life of all people in Canada, including newcomers to Canada. As you know, we were left with a mess by the previous Liberal government. We were left with about 800,000 people who were entitled to be interviewed in order of the time that they applied. This is not practical and not in the best interests of the country.

We have labour shortages in virtually all parts of Canada, particularly in the west. Surely we want to look at matching skills to jobs as part of--not all of, but part of--the immigration program in Canada.

[Garth Turner, Liberal, Halton, ON]

Why was it not separate legislation?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Because it's an economic imperative. This is very important.

Mr. Turner, you know the demographic challenge we have in Canada. We're now over the peak. We're going to have widespread demand and insufficient labour in Canada.

[Garth Turner, Liberal, Halton, ON]

Thank you. Next question.

There's something, Minister, I've been curious about as well. The guy you hired to write your speech for $122,000.... You said in the House a number of times that administrative functions--

[An hon. member]

What has this got to do with the budget?

[Ted Menzies, Conservative, Macleod, AB]

I have a point of order, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

I'm going to call that question out of order. It was defeated in a motion here.

[An hon. member]

Try to catch up, Garth. It's 2008.

[The Chair, Conservative, Rob Merrifield]

We will not allow that question.

[Garth Turner, Liberal, Halton, ON]

You haven't heard the question.

[The Chair, Conservative, Rob Merrifield]

Okay, proceed with it. Be careful, though.

[Garth Turner, Liberal, Halton, ON]

You said in the House a number of times, Minister, that administrative functions were not followed. My question is pretty simple. Who didn't follow them? Were they civil servants or your office?

[The Chair, Conservative, Rob Merrifield]

I called the question out of order, but the minister can answer it any way he likes.

[Garth Turner, Liberal, Halton, ON]

Is the minister going to answer?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

No, they were not followed.

I'm actually going to the public accounts committee, I think on May 13, which has decided to look into this subject.