Mr. Speaker, it is an honour to speak on this very important topic. Over the next two or three months there will be much debate. The directions we take will likely be debated frequently over the next couple of years.
The results of the finance committee hearings show this Titanic government has decided to chart a course that steers every Canadian right into the iceberg. The short sighting of the tip of the iceberg that resembles the deficit completely misses the massive danger of the submerged problem of the debt that is just waiting to sink the economy. As history sometimes ends up repeating itself, everyone will go down with the sinking ship. What is worse is that shuffling the chairs on the deck will not buy Canadians any more time.
This government does not understand that high taxes kill jobs. This government does not understand that “high taxes equal high revenue” is just recycled money that is borrowed and is not new. This government does not understand that everyone knows the bloated employment insurance premium is a tax on the backs of the working class.
This government does not understand that we are losing the battle with the U.S. regarding the brain drain. This government does not understand that Canada should not only end interprovincial trade barriers but that the Canada-U.S. economy is actually one big market made up of 330 million people. This government does not understand that Canada must be a global leader as we enter the next millennium.
This government does not understand that small business drives the economy and still faces unbearable payroll taxes and extreme bankruptcy statistics. This government does not understand the impact that part of the consultation process means actually listening to Canadians and rightfully respecting their interests and their recommendations. The captain of this government does not show any desire to scope the dangers of this massive debt, the ticking time bomb of the economy.
Rather, the finance minister is too involved scoping the Prime Minister's job. Let us face it, working families have been crippled with the burden of creating such a so-called fiscal dividend. They have been taxed, taxed and overtaxed. In the event of the upcoming surplus, this government should feel obligated to return what is rightfully theirs. This means cutting taxes. All Canadians have paid long enough for the misconduct of the EI fund.
Canadians are no longer prepared to sit back and let this government set strategies without seriously implementing the suggestions provided during consultation. Canadians shared their frustrations and proposed solutions. This government did not listen. Why did we travel across Canada and hear from over 400 witnesses if we are not going to put their ideas to work?
The suggestion is clear. This government is not serious about creating the environment to reduce employment. It is not serious about cutting taxes. It is not serious about facilitating growth. This government did not listen. The report from the finance committee does not represent Canada's interests. It is merely a supporting document of the Minister of Finance.
Canadians are being held hostage by Liberal Party politics. The deathwatch on the Prime Minister has begun and the captain is the Minister of Finance. He is not willing to give anything of substance to Canadians until he is running for or is Prime Minister. It is a sad but true fact. One only has to look at his own cabinet colleagues to know this is what is happening. In the meantime working Canadians get poorer, unemployment remains a national tragedy and Canadians become less competitive.
In Jeff Rubin's 1997 Monthly Indicator named the “The Federal Fiscal Dividend: Who gets to spend it?”, Mr. Rubin discussed how personal income taxes as a share of GDP rank Canada the highest among the G-7 countries. Not only is Canada's personal income tax rate not internationally competitive but it has now saddled households with the largest tax burden in Canadian history.
Even a $13 billion personal income tax cut over the next four years would leave the income tax to GDP ratio well above its 1989 level. After some seven years of declining after tax real income per capita in Canada, a personal tax decrease could at least begin the process of restoring domestic purchasing power in the economy.
The Canadian Federation of Independent Business told us that “One very important priority which is the cornerstone to building a better life for Canadians is meaningful job creation”. The CFIB said it and we have said it too.
Priorities should be placed on debt and tax reduction, not on new program spending. A recent survey revealed that 85% of small business favours restrained spending. The plan to allocate 50% of the so-called fiscal dividend to new spending and the other 50% to debt and tax reduction is wrong. It is the wrong blend. This mix will only create fiscal problems in the future.
Small business has called for the emphasis to be on strategies that lead to private sector job creation which will provide a solid foundation for the future of the Canadian economy, debt reduction, which will decrease the servicing costs of the debt, and reduced taxes.
We support these initiatives for the good of Canadian small business. No longer can we let the government make the wrong decisions for Canadians. Who suffers? Canadians.
We have a government collecting higher employment insurance premiums than necessary to fund the account for a rainy day. We know, of course, that the EI surplus is being used as a deficit reduction tax. Seventy-four per cent of small businesses polled said that the EI fund should be managed separately. The CP fund was privatized; why not the EI fund too?
Small business and the PC Party believe that a top priority is to substantially lower EI premiums for 1998. That will make a difference in the pockets of Canadians. Canadians have over-contributed in good faith to this fund.
It is time for this to stop. Working Canadians deserve to have their hard earned money back. The CFIB calls for a refund to Canadians and so do we. The increase set for 1998 of 66¢ per $100 in CPP premiums must be offset by at least this amount, if not more, in EI premiums. This is an achievable objective. After all, the EI fund has a surplus of close to $12 billion.
Canadians are rightfully upset about taxes, whether they are caused by too much government debt or spending. It is time Canadians had a say in their economic future. We are going to fight to give Canadians that freedom.
Clearly one of the greatest problems facing this country is the high level of unemployment. Is there really any doubt that high taxation in this country is the number one cause of this horrific problem? I think not.
For example, as we know, the province with the lowest tax rate, Alberta, has the lowest unemployment rate. Clearly the Alberta government has committed to a strategy and stuck to it. Why can the federal government not do this?
The U.S. unemployment rate is the lowest it has been for 50 years. This is not luck. It is the result of lower taxes, which means more money in the hands of the people.
We believe the debate on what to do with any surplus has focused too much on the traditional idea of “What should government do now?” This is an unacceptable starting point. Yet again we witness a responsive, knee-jerk reaction to a critical upcoming opportunity. What this government should be focusing on is the question of “What can Canadians do now?”
After all, it is income taken from working families which has led to the fiscal dividend. Canadians have caught on. No longer will we stand by and let unfairness happen. We demand that the government act responsibly with our money. Let us make the decisions on how to spend our money.
The projected fiscal dividend is an opportunity for government to redefine itself, its size and its role to the Canadian people. Canadians have earned the right to spend their own money. They have endured long enough. They have sacrificed to help eliminate the deficit. They have earned the right to spend their own money.
Any tax increase is wrong. Taxes must be cut. Again and again we hear the cry from working families and small businesses. Recent increases in CPP premiums were not offset by substantial reductions in other areas.
In Ontario, our provincial government has kept its promise. Personal income taxes have been cut and government revenues have grown substantially. In the last eight months Ontario has created 216,000 jobs in the private sector, which is roughly 70% of all the jobs which have been created in the country. Clearly there is a lesson to be learned here: high taxes cost jobs.
The federal government cut the CHST payments to the provinces by $6.8 billion in the mid-nineties. The message we have heard from provincial finance ministers and the public is clear. Extra dollars must be transferred back to the provinces so they can restore health, education and social programs.
The suffering has gone on long enough. These transfer cuts meant hospital lineups in the emergency rooms, hospital closings, lack of resources in schools, inadequate home care for the elderly and the mentally ill face closed community homes.
We are losing our future to the United States. Every day Canadian talent is drained to our southern neighbours, all because of high taxation levels and a lack of employment prospects in Canada. We are not willing to sit idle on this. In Canada we face a chronic unemployment problem at 9% unemployment compared to 4.5% in the U.S. This is totally unacceptable.
We know that taxes are also lower in the U.S. Employment opportunities in the U.S. are attracting our people south because of the jobs that they are creating. That is what it is all about. Canadians want to work. Young people want to put their skills and education to use. If this government does not facilitate the setting for job creation now, our talents will continue to turn elsewhere.
Just how do we expect to be competitive with the U.S. when our tax rates are so much higher? Think about it. In the U.S. if you make over $250,000, the tax rate is 36%. In Canada, if you only make $55,000 to $60,000 or over that, you are quickly at the top level of 54%. It does not take a rocket scientist to see where you would get the most money for your salary.
I have a real problem with this government overtaxing Canadians for the purpose of claiming a so-called fiscal dividend. I think it is important to note that the fiscal dividend is by no means a forgone conclusion. If we did not have the $7 billion surplus in the employment insurance fund, the arrival of the dividend would be much later claimed by the Minister of Finance.
Let's get one thing straight. The Minister has factored the EI surplus into the fiscal dividend, a purpose for which EI contributions were never intended. In my opinion, this is totally unethical. We urgently need an amendment to the Employment Insurance Act to outlaw this kind of misuse of the EI surplus.
Just recently this government took $2.5 billion from the employee pension fund to service the deficit. This practice must stop. We must stop the government from continuing to treat this fund as a cash cow. Recently we privatized the CPP fund. Why not consider creating a separate fund for employee pension fund moneys?
We know Canadians want to reduce the debt, yet this government is planning to spend without a clear agenda. A return to uncontrolled spending is another fundamental problem and counter to Canadian culture. The failure to deliver on fiscal reductions promised in the past is becoming a recurring theme of this government. The spending reductions that the government promised in 1995 for the current fiscal year missed the target by roughly 43%, or $5 billion. The government's much vaunted program review exercise lost its effectiveness. It seems to have not followed through with this plan and lost sight of the long term gains this initiative holds.
There are risks that can derail this government from achieving a surplus. They include uncontrolled government spending, failure to deliver on fiscal reduction promises in the past and the dependence of recovering on low interest rates and a low dollar. These are the items that demand immediate attention. Ignorance of these issues will only set our economy back further.
With respect to this upcoming surplus, we have an immediate need for a balanced budget legislation. Committing to balanced budget legislation not only proves to Canadians that this government is serious about its role, but fosters growth in investment for the future. Clear and defined debt reduction targets and debt reduction legislation must be put in place. This would prove that this government is serious about its commitments to reduce the size of the debt.
The government's 50-50 formula is so loose it is almost meaningless, especially if it starts spending it and never has a dividend to split 50-50.
This government must stop acting paternalistically. Canadians have earned the right to choose. The Progressive Conservative Party comes at this debate differently. Our view is simple and effective. Lower taxes means lower government spending. Lower government spending means greater freedom for people to solve problems in the manner they see fit. This means working families are taking responsibility for their spending, their savings, their investments in the future. Informed, autonomous, independent Canadians foster a responsible society. We know what we would do.
This government has to create an environment so that jobs can be created for Canadians, lower their personal taxes and allow our talent to be competitive with the U.S. The government has refused to establish clear and measurable targets for debt reduction and debt-to-GDP ratio.
This is a weak kneed and short sighted response that ignores the calls the committee heard for urgent action on the debt. It also flies directly in the face of public opinion.
Recently the Angus Reid poll found that 84% of Canadians want the federal government to focus on reducing the accumulated debt and high taxes. We believe that one-third of the surplus should be devoted to debt reduction and that action to reduce the debt should start now. The government must reduce our debt to GDP ratio to 60% by the end of this mandate and to 50% by the year 2005.
Taxation levels in Canada remain too high. They penalize initiative. They depress investment that creates jobs. They force investment elsewhere. They encourage highly skilled entrepreneurial Canadians to seek their futures in more hospitable countries.
Despite the many calls for tax cuts heard by the committee, it is clear the government has no intention of responding to this need in the near future. We believe that tax cuts cannot wait until later in the government's current mandate. The next federal budget must send a clear signal that one-third of the fiscal dividend will be used to reduce the tax burden on Canadians.
The role of government must change. Before any decisions are made about the fiscal dividend, the federal government needs to answer some questions that are much more fundamental. What things should the federal government not be doing any longer? What things should the federal government be doing completely differently? What things should the federal government be doing that it is not doing now?
The severity of these issues will not go away. The government has not proven itself in its pre-budget document. We will continue to push for lower taxes, balanced budget legislation and debt reduction targets to be included in the February budget and see if we can get it right then.