Mr. Speaker, I rise to participate with enthusiasm in this pre-budget take note debate mainly because it deals with matters that touch on the lives and the livelihood of all Canadians.
Because it is the Christmas season, I thought I might begin by reading from the New Testament what is reputed to be the Minister of Finance's favourite part of the Christmas story, from Luke's gospel: “And it came to pass in those days that there went out a decree from Caesar Augustus that all the world should be taxed. All went to be taxed, everyone into his own city”, the classic case of a rich and powerful government imposing onerous taxes on the poor, a theme to which I would like to return in a moment.
The real issue before us is this. What should be the financial priorities of the federal government once the budget is balanced?
In response to that question, we have two fundamentally different views in this House. We have the government's position that once the budget is balanced, 50% of any surplus will be directed toward new spending. The remaining 50% is to be divided between debt reduction and tax relief. In other words, the highest priority of the government once the budget is balanced is increased spending.
In the government's Speech from the Throne, we saw this 50-50 promise. In the pages that followed there was not a single concrete proposal for debt reduction or tax relief, but there were 29 proposals for additional spending. In the Minister of Finance's economic statement made in Vancouver earlier this year, we saw the same thing, a repeat of the 50-50 promise, followed by 10 pages of spending proposals.
We see virtually the same pattern repeated in the report of the Standing Committee on Finance, entitled “In Keeping the Balance”. On page 32 we have a simplistic restatement of the 50-50 promise without any intellectual justification at all. This is then followed by 22 pages containing at least 17 specific proposals for increased spending, as well as the defence of a dozen more spending increases already provided for in the 1997-98 budget.
We then have another 30 pages of the report, and what do they contain or fail to contain? Not one word on how to achieve debt reduction targets, and we did not hear a single word on this from the chairman of the committee today. Not one word on either short-term or long-term debt management strategy. A recommendation opposing broad-based tax relief. A recommendation that certain payroll taxes not be increased. Now, there is a public relations device. Half a dozen big unqualified recommendations that certain tax relief measures be examined or studied or considered, but only when circumstances allow or when the fiscal situation permits. Half a dozen very specific measures which amount to little more than administrative tinkering on such high priority items as a tax treatment of earthquake reserves. In fact, the only tax relief measures of any substance are the recommendations on pages 59 to 60 for increasing personal and spousal income tax exemptions and developing a schedule for removing the 3% and 5% surtaxes.
Lo and behold, these proposals are lifted virtually word for word from Reform's fresh start platform in the 1997 federal election.
We appreciate the inclusion of three of our tax reform measures in the committee's report, imitation being the sincerest form of flattery, but we find it ironic that when we proposed these measures during the election they were denounced by the Liberals as tax cuts for the rich. Now that they have been resuscitated by the Liberals, they are described in this report as measures essential to building a fair tax system.
The bottom line of all this is that when it comes to spending propositions, the government's plans and the committee's recommendations are specific and urgent, but when it comes to debt reduction and tax relief, the government's proposals are non-existent, stolen, vague or distant. This is what happens when you make increased spending your number one priority, which is this government's position.
The position of the official opposition is that debt reduction and tax relief should be the highest priority of the government. I had expected that the federal debt situation would be spelled out in detail in this report. However, since the government does not appear to take the debt seriously, the official opposition must fill the vacuum.
The net federal debt stood at $583 billion at the end of the 1996-97 fiscal year. This amounts to $19,400 per person or $77,600 per family of four. If that debt were converted to $5 bills and laid end to end, it would circle the earth 1,448 times.
I do not mind saying that this debt has even changed the way doctors deliver babies. I have this on good advice from the member for Macleod as well as the member for Esquimalt—Juan de Fuca, both of whom are physicians. In the old days when they delivered a baby they would hold the baby up and give it a pat on the bottom to get it to cry and fill its lungs. Today all they do is hold the baby up and whisper in its ear “you owe us $19,400” and the baby starts to cry right away.
The federal debt currently stands at over 60% of the gross domestic product. The total public debt in Canada is almost 100% of GDP. In other words, if the total value of all the goods and services produced in the entire year by every economic enterprise and government in the entire country were converted into cash that would hardly be enough to retire our public debt.
Canadians ask once we raise this subject to whom do we owe this money. About $120 billion of this debt, or 25% of the government's market debt, is owed to non-residents, so that the interest payments flow out of the country. About one-third of the foreign held debt rests with U.S. investors, with the remainder divided mainly between European and Japanese investors.
The domestically held debt was held in roughly these proportions: by the Bank of Canada, 7%; by non-financial corporations, 4%; by all levels of government, 7%; by public and other financial institutions, 17%; by quasi-banks, 3%; by the chartered banks, 23%; by life insurance and pension funds, 26%; and by persons and unincorporated businesses, 14%.
The government also owes $3.7 billion to the Canada pension plan and $114 billion to public sector pension plans. Of total debt owed to outside parties 7% is in the form of Canada savings bonds, 28.4% is in the form of treasury bills, and 64.1% is in the form of marketable Canadian government bonds.
The annual interest payments on this massive pile of federal debt amounts to $45 billion a year or $3,210 a year for every working Canadian.
Need I say more or provide any more information as to why the official opposition wants to make debt reduction, not spending, a higher priority?
Let me turn to the tax situation. The Liberal government has increased taxes 37 times since 1993. Net personal income tax revenues were $51 billion in 1993-94. They are now on track to increase to $70 billion in 1998-99. Since 1961 the tax bill of the average Canadian family has increased by over 1,168%. After adjusting for inflation, the tax bill of the average family has still jumped by 125%.
The average Canadian family now spends more on taxes than on food, shelter and clothing combined. The personal income tax levels, both as a percentage of our gross domestic product and as a percentage of total taxation, are higher now than those of all our G-7 trading partners.
Canadian taxpayers have a heavier personal income tax burden than our taxpaying brethren in the U.S., in the United Kingdom, in Japan, in Germany, in France and in Italy.
The average Canadian family has therefore suffered a $3,000 per year drop in real inflation adjusted income since 1993, the year the Liberals took office.
Need I say more or provide any more information?
A message was delivered by the Usher of the Black Rod as follows:
Mr. Speaker, it is the desire of the Honourable Deputy to His Excellency the Governor General that this honourable House attend him immediately in the Senate chamber.
Accordingly the Speaker with the House went up to the Senate chamber.
And being returned: