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House of Commons Hansard #159 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was taxes.

Topics

PetitionsRoutine Proceedings

12:05 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Madam Speaker, I have presented the second petition over 150 times in the House.

The petitioners draw to the attention of the House that managing the family home and caring for preschool children is an honourable profession which has not been recognized for its value to society.

The petitioners therefore pray and call upon Parliament to pursue initiatives to assist families that choose to provide care in the home for preschool children, the chronically ill, the aged or the disabled.

Questions On The Order PaperRoutine Proceedings

April 18th, 1997 / 12:05 p.m.

Simcoe North Ontario

Liberal

Paul Devillers LiberalParliamentary Secretary to President of the Queen's Privy Council for Canada and Minister of Intergovernmental Affairs

Madam Speaker, I ask that all questions be allowed to stand.

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

Is that agreed?

Questions On The Order PaperRoutine Proceedings

12:05 p.m.

Some hon. members

Agreed.

The House resumed consideration of the motion.

Income Tax Budget Amendments Act, 1996Government Orders

12:05 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

The hon. member for Anjou-Rivière-des-Prairies has 13 minutes remaining.

Income Tax Budget Amendments Act, 1996Government Orders

12:05 p.m.

Bloc

Roger Pomerleau Bloc Anjou—Rivière-Des-Prairies, QC

Madam Speaker, I will not be taking my 13 minutes. I have been asked to be brief because a number of my colleagues wish to take part in this debate, as we know, and there is not much time left today.

I would just like to sum up what I have said. The government has had an excellent opportunity in the past two years, with the 1996 and the 1997 budgets, to completely rework the Canadian taxation system, to ensure that the rich people in this country pay their taxes, which is not now the case, as well as to reduce the gap that currently exists between the middle class and the rich.

For the past two years, the government has opted not to revise the taxation system, on which the Bloc Quebecois has already done some in-depth research. Instead, it has preferred to dump almost the entire deficit reduction effort on the sick, on welfare recipients and students and on the unemployed, by chopping $4.5 billion from transfer payments to the provinces, much of which goes to welfare,

hospitals and education, and taking $5 billion from the unemployment insurance fund.

The Prime Minister will most certainly be calling an election in the next few days, and will be wooing the votes of all those unemployed people in Canada whose benefits he has just cut drastically and who will find themselves without any benefits this fall after the election is over.

I would just like to close by wishing him good luck. In many parts of Canada and Quebec he is really going to need it.

Income Tax Budget Amendments Act, 1996Government Orders

12:10 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Madam Speaker, I was expecting the Bloc member to make a few more comments and he caught me by surprise.

This budget implementation bill is obviously important. We certainly have to take a look at the financial status of the government and what is happening in Canada today.

There has been a lot of talk that very shortly the finance minister will be announcing a much lower deficit than he projected in February of this year when he said that the budget would come in at about $19 billion.

When we analyse the latest Fiscal Monitor put out by the Department of Finance two months in arrears, we see some interesting financial information. The Department of Finance releases this document which enables everyone to see what is happening on an ongoing basis. It is a very worthwhile and useful document.

Reform researchers have analysed it and have found some interesting information. Last year the government was able to predict a deficit overshoot by extrapolating final fiscal figures from the monthly series. The presentation I make today will show a bit about how the government is able to make its projections and predictions and keep telling Canadians where it stands.

Since the Fiscal Monitor is released with an average of a two-month lag, the most recent figures are from the February issue. It covers 11 months of the previous fiscal year, from April 1, 1996 to February 1997. The deficit at the end of February stood at $7.8 billion or $15.5 billion lower than the same period in the previous year of 1995-96. The improvement comes from increased revenues of $9 billion, reduced transfers to provinces of $4 billion, reduced public debt charges of $1.7 billion and reduced departmental spending of $400 million.

The Liberals will overshoot their deficit target by about $10 billion, mostly as a result of stronger than expected revenue growth, an international trend toward lower interest rates and large reductions in health and education transfers to provinces.

If members will recall, the finance minister projected a $24 billion deficit for year ending March 31, 1997 and then it was revised recently to $19 billion. This $10 billion overshoot is from the $24 billion down to about $14 billion instead of the $19 billion that he had projected.

The finance minister's department seems unable to make accurate forecasts. That generally reduces the level of confidence with which people view any of their forecasts.

During the Mulroney years, which was referred to today in question period, the department was always wrong in that it always overstated revenue growth. Now the department errs in the other direction, constantly understating revenue growth with the implication that taxes remain high as a result of this understatement.

It is just as bad to be wrong one way as it is to be the other. If a deficit is projected at X and it is exceed because certain things happen negatively in the economy, we have an excuse. If a deficit is projected at of X and it is lower, then it depends on what program we are trying to push.

I maintain that the finance minister is trying to preserve and protect the EI fund, which has now reached $7 billion, as a surtax on his deficit. Rather than making the program spending cuts that he projected and said he would, he is using this extra revenue from UI to cover off his and his department's slow progress in making the cuts that they promised to make.

Perhaps the minister would have faced more pressure to cut taxes had the department been more accurate in its forecast. This type of poor forecasting sets a dangerous precedent and calls into question its credibility. The one thing the Department of Finance should be serious about guarding is its credibility in making forecasts.

However, one never knows what happens with the Department of Finance, the cabinet and the finance minister. Perhaps there is some political pressure. Perhaps there are instructions to shape, present the numbers, present the worst case scenario and be overly conservative on revenues so that the pressure can be kept up to make the cuts. In either case, there is a variance that is never accurate.

Nobody says the forecast has to be within a billion dollars. However, if it cannot be within 15 per cent or 20 per cent of the projected number, whether it is a deficit or a surplus-let us say that a 20 per cent variance is acceptable either over or under-if it is exceeded then the fundamentals that are being used to achieve those budgetary projections, especially given that they are revised on a quarterly basis, have to be seriously questioned.

If it actually does go from $24 billion as was forecast a year ago February down to $14 billion, some people would say that was great. This is what the Liberal government says. However, I am submitting that is bad. It is just as bad as the Conservatives when

they projected a $20 billion deficit and it ended up at $38 billion, $18 billion higher. That is more than 20 per cent the other way.

What we need is a Department of Finance that will not get brow beaten by any finance minister regardless of political party, that will present the facts as it knows them to be because it is the one constant from government to government. The officials who work in that department have a handle on the revenue stream. Unless a government decides to spend a bunch of money somewhere else, it is able, given the variance in the economy, to conservatively and within a 20 per cent variance predict the revenues. However, it is off big time.

Never before have I seen a government make so many fundamental changes in the way it does the financial statements and present the government's balance sheet. The government has moved things around. It has redefined certain types of spending. This has allowed the government basically to redefine program spending and claim that it is sticking to the percentage cuts that it predicted of 18 per cent when it is really only 8 per cent or 7 per cent. It has taken some program spending out and put it over into other areas, off balance sheet spending and it ends up claiming that it has met its targets when that was not the intent.

The government was supposed to cut $9 billion and to date it has only cut $4 billion. We are going to go into an election. Is it going to promise to do the rest a year from now? The implication of bad forecasting is just as bad if one is better than expected rather than worse than expected.

If we take a look at the difference and review the components of the deficit reduction, we see from the "Fiscal Monitor" that the revenues of the government increased by $8.964 million. The government reduced the transfers to persons by $349 million. It reduced transfers to provinces by $4 billion. Departmental spending went down by $400 million in the last 11 months and the debt charges were less than projected at $1.7 billion. That is a variable that is out of the control of the government.

When things get really bad the government will say: "Interest rates are not really something that we can control directly. Indirectly, yes, we can, by running a prudent government". Interest rates are a factor of the global economy and how our dollar compares on an exchange rate basis with currencies of other countries. Therefore, to that degree it can have a huge variance and a huge swing and the government cannot be held accountable totally for that.

We notice that this comes to $15 billion. That is the total decline in the deficit. Of that $15 billion, the increased revenue as a percentage of these reductions is a 58 per cent component. The transfer to persons is at 2.3 per cent. The transfer to provinces is at 26 per cent. The departmental spending is only 2.6 per cent.

Wait a second, were the transfers to provinces not to be equal to the reduction in departmental spending? That is what the government said. It was going to lead by example. It was going to cut $9 billion out of program spending to justify the $7.5 billion reduction in transfers to provinces for the Canada health and social transfer. It does not seem to me that the government is on target for that. The debt charges as a percentage of the $15 billion improvement is11 per cent.

To sum up, according to our table, increases in revenue and reductions in transfers to the provinces made up a full 84 per cent of the improvement. Increased revenues through taxation, reduction in the transfers to provinces represent $13 billion out of $15 billion in improvement which is 84 per cent. Yet the government claims that 94 per cent of it is through growth in the economy.

Cuts in the federal government's own back yard make up only a 2.6 per cent paltry reduction. It is important to note that the tiny contribution of cuts to departmental spending correspond with what the Reform Party's earlier findings were, that the government has missed its cuts in departmental spending by as much as 50 per cent. We brought this out two or three weeks ago in question period, when we said that the evidence is that the government has only cut by $4.2 billion and it promised $9.5 billion.

It is important to note that the surplus in the employment insurance account is running at $6.8 billion after 11 months. Let us just round that out to $7 billion for the sake of discussion. This surplus represents a regressive form of deficit reduction tax and in question period today in quizzing the finance minister I referred to this as a deficit surtax.

The government should set EI premiums on an annual basis to match the funds required, within a tolerance level. If the government would set the premiums to match the benefits, the deficit would be $14.6 billion rather than $7.8 billion and it would be right on target.

I will give the finance minister some constructive criticism which will help to improve the economy. It will help to keep Canada competitive. It will help to keep interest rates as low as possible without outside interference. The $7 billion surplus in the EI account should come under general revenues. It should be applied against the deficit to reduce it.

If the government were to lower the premiums from the current $2.95 or $2.90 per hundred of insurable earnings up to $39,000 down to $2.20 and leave that money in the hands of the wage earner, their take home pay would increase. That would also reduce by 28 per cent what the employer has to pay. It leaves more

money for the corporations to hire people, to invest and to expand. It will help to stimulate the economy.

There is the argument that EI and CPP are not payroll taxes, that they are investments. Regardless of what they are, the money is taken away from workers and corporations by the government. The rate at which the money is taken away is set by the government. If it is compulsory it is a tax. If it is voluntary, like an RRSP, if it is an inducement to invest, it is an investment.

Nevertheless, if the taxpayer was able to keep the money, I submit that more jobs would be created. More money would be spent. More money would be invested and more money saved. That would benefit a lot of Canadians.

I am not the only person who thinks that way. I am a businessman and I have thought this way for a long time. Wherever possible, keep taxes as low as possible and set the tax rate at the level required to pay for the programs which Canadians want.

In today's Financial Post is an article written by the business economist Dale Orr. He wrote: ``What is really happening is that Ottawa is using the present annual surpluses of $5 billion or so in the EI fund as a form of deficit reduction surtax''. The only thing wrong with that statement is that it is not $5 billion, it is $7 billion. The finance minister is using $7 billion of funds which come from employed workers and corporations, the intent of which is to pay for people who are unemployed while they are looking for employment for a certain period of time.

There is a huge surplus. The excuse is that some years there is a deficit. That is true. When I ran in 1992-93 the deficit in the EI fund was $3 billion. That gives a clue why in our zero in three budget we felt it imperative to make $12 billion in cuts immediately, faster than the paltry cuts the government has made in its program spending, because we did not count on a huge surplus in the EI fund.

This is a gift to the finance minister which he has misused. He has a golden opportunity to stick to his party's platform, to stick to his party's caring, sharing, forgiving and giving government, doing it slowly, doing it properly, not punishing people unduly, and yet he will not share the $7 billion. He has a golden opportunity.

He might do something during the election campaign. Maybe that is the selective tax cut that he will justify because I agree we cannot have a broad based tax cut.

Today he misrepresented our platform when he said that the Reform Party would implement a broad based tax cut. That was not true. He told half the story. He should be spewing forth the truth when he talks that way.

He should be saying that once the budget is balanced the Reform Party would offer broad based tax cuts that would average $2,000 per family by the year 2000. That is why we say $2,000 in 2000. It takes a year or two to balance the budget. We say no tax breaks until then, no tax cuts until then.

Then we raise the personal exemptions, the spousal exemptions, to $7,900. We will get rid of the federal surtax of 5 per cent, the 3 per cent, and all the extra taxes we will not need. That will leave the money in the hands of the people who need it, in the hands of the people who know how to spend it better to look after themselves. This in turn will reduce the pressure on welfare programs, reduce the pressure on all the other social assistance programs the government has to provide, as it should to those who truly need them.

I will quote further from the Financial Post to support my argument and submission that there is an opportunity here to do something with the $7 billion in the EI fund.

A faster reduction in the premium rate would help lower business costs for employers, whose share of the premiums is proportionally more. It would boost take home pay, especially for lower income workers. The combination would contribute to higher consumer spending, profits, economic growth and jobs. Some studies put the employment potential at up to 200,000 jobs.

A potential for 200,000 jobs just be lowering the unemployment premium rates, EI rates, to $2.25 or $2.30 from the current $2.95.

These are not from the Reform Party. The finance minister takes off his glasses, waves them and says that half-baked numbers do not work. They were from a business economist. He is not the only one. I could quote many different sources and many economists who argue and maintain this point of view.

High taxes kill jobs. Payroll taxes kill jobs. Why does the finance minister not something when he can and while he can? We have a surplus. We do not need the $7 billion in the EI fund. We should keep a base of $3 billion to $4 billion, keep that surplus and reinvest $3 billion of it with the Canadian public.

Maybe I should not tell him that, because if he offers that he might come back here with a majority government again. We really do not want that. We want a fresh government later this year.

I will summarize a few more items from the Fiscal Monitor . Transfer payments in the 11 months since April 1996 to February 1997 have decreased. Transfer payments to individuals, which includes the elderly benefits and the EI benefits, net out at a decrease of $349 million. It increased the elderly benefits by $512 million and decreased EI benefits by $861 million.

Not only is what it is collecting on EI greater than what needs to be put out, but the benefits it is paying out are going down from the previous year by almost $1 billion or $861 million.

Transfers to governments have been reduced by $4 billion. Of that $4 billion, $3.685 billion is the Canada health and social transfer after 11 months. That is where it hits.

The government claims it is the fault of provincial governments because it is their responsibility to look after health care. If they close hospitals, we should not blame the Liberals. If they have to lay off nurses and pay doctors less, we should not blame them. We should blame the provincial governments, provincial health ministers, provincial premiers and provincial treasurers. How foolish is that?

In its first budget it said that we all must sacrifice. I support the government in reducing the Canada health and social transfer by $7.5 billion. That is not my criticism.

The Liberals said that we had to share, sacrifice and make do with the same or less money. They were to show leadership by example. They were to cut federal government program spending outside the Canada health and social transfer, outside the transfer to provinces. They were to reduce the rest of the spending of government by a greater amount than the $7.5 billion. They were to reduce it by $9.5 billion. To date, after 3.5 years and projected to the end of four years, the government will not be there. The Liberals will have only made $4 billion with those cuts. That is from their own information.

This is not being made up by the Reform Party. I respect the Liberal member opposite who said politicians should represent more of the facts rather than distort or give their interpretation of them. That is what I am trying to do. The government has fallen far short.

Other transfers and subsidies add up to $128 million. Total program spending has decreased by $4.778 million. If the government were truly trying to show leadership by example, after four years of governance the government should be closer to 50:50 in program spending even in the past year. In fact the number should be higher than $4.7 million. The $3.6 billion reduction in Canada health and social transfer is fine. That was projected. It was to be phased in over a period of time, two or three years, which is the right way of doing it.

Cuts in program spending should have matched. Rather than $4.7 million, the real embarrassment to the finance minister is that the number should be $7.2 million. He has failed to pressure, to push, to keep the other cabinet ministers in line, and to force cabinet ministers, deputy ministers and assistant deputy ministers to clean house, to shape up. This is what the Canadian public wants.

Those are the direct words and orders from the finance minister and the President of the Treasury Board. They set the target and they are missing it big time. That is the embarrassment in the Fiscal Monitor .

That is what it revealed. That is the failure of the finance minister. He is actually $4 billion behind the cuts he promised to make when he asked all Canadians to sacrifice and all levels of government below this one to figure out ways to provide the same level of service with less money. The federal government cannot do it.

The President of the Treasury Board rose today in question period with a set up answer from the former minister of defence. He talked about infrastructure and whether municipalities would be guaranteed the money would go to the programs they want. Then he lambasted the finance minister from Ontario. He quoted him by name. He took after the premier of the province. Those two gentlemen are in provincial politics. They are not even in the Chamber. They are not here to ask a question or to defend themselves. That is shameless. It is an embarrassment to have a member of the government do that. It was cheap, political partisanship against a level of government that is not even here.

He should hang his head in shame. He should write a letter of apology saying that he is sorry and that he got carried away. He should indicate there is an election coming and the former minister of defence asked him to embarrass the local government in Toronto so that he can boost his chances of getting re-elected.

That is crap. They believe in infrastructure but I do not. I criticize all levels of government for going forward on short term jobs. There is only one taxpayer. It is an admission by all levels of government that they have let infrastructure deteriorate, if that is where it is truly going.

The first responsibility of a municipal government is infrastructure: bigger projects, provincial and bigger than that, federal. Where have these guys been for 10 years if all of a sudden we have to spent $6 billion or $9 billion on infrastructure?

To pick on people in another level of government who are not in the House and cannot defend themselves is a new level of cheap political partisanship I have not seen before. The government has made its deficit reduction mainly by cutting the transfers to provinces. Some 77 per cent of this year's deficit reduction has been through the Canada health and social transfer. It is undeniable. The facts are here. I am quoting the government's own statistics.

We have proof that an overwhelming majority of the improvement in government program spending comes from cuts to the CHST. I have already said what the percentage. When we include other transfers to provinces, reductions in transfers accounted for a

full 84 per cent. Eighty-four per cent of government spending was by way of downloading. The provinces were given less. They were told to handle it, and the government said it cut spending. The government says it has done its part and now it is the provinces' turn. What a way to do it.

It promised to cut program spending by 18.8 per cent and then only reached 9 per cent and changed the definition of program spending. It took from here and there and suddenly $4.5 billion because 18 per cent again. How does $4.5 billion become 18 per cent? Once again it is perception.

I will speak later on Bill C-95, the anti-gang legislation. The Prime Minister in his autobiography said that in politics perception was everything. What a shame. It is too bad that in politics reality and facts cannot be everything. It is too bad those in the traditional parties who were here before us believed in that perception. Why not deal in truth and facts? Why not represent reality and assess what is really happening and then propose legislation to solve the problem?

In a 1995 speech to a symposium on budget deficits sponsored by the Federal Reserve Bank of Kansas City, the Minister of Finance stated:

We were nevertheless determined not to cut back our support to the provinces by any greater percentage than we were hitting programs in our own backyard.

If he wants to refer to our zero in three, which I will touch on that a little later, I will refer to what he said in 1995.

Cuts to provincial transfers made up 84 per cent of the total spending cuts to date this year. Departmental reductions have made up 8.4 per cent of the spending cuts. The reduction in transfers to the provinces represents a 16.2 per cent cut over 11 months. The $400 million in departmental spending represents 1 per cent.

In the second budget he told us what he was to do with the CHST. He made the promise worldwide so it must be something he believed in and something he told cabinet he would do. He was determined-I would assume cabinet and the rest of the Liberal caucus were determined-not to cut back support to the provinces by any greater percentage than they were hitting programs in their own backyard. All they have cut in their own backyard to date is $4.5 billion. What they have cut by downloading to provinces in other areas amounts to $8 billion.

How about that for promises? That party is good at breaking promises made in its election platforms. The Liberals got elected on renegotiating NAFTA but did not do it. They got elected on not having a third runway in Toronto. They got elected on saving taxpayers money on Pearson airport but did not do it. It will cost us close to $600 million. They got elected on getting rid of the GST but did not do it. In fact they entrenched it.

Talking about flip-flops, when the finance minister was on this side of the House he said that if a provincial sales tax is ever combined with a goods and services tax the GST is entrenched forever. What has he done as finance minister? There is a GST and a BST in the three Atlantic provinces that were signed on by three Liberal premiers, one of whom quit because he saw the writing on the wall. I am looking forward to the provincial elections to be held in another year or so when the effect of the harmonized sales tax works through the system. He has entrenched this GST, a terrible thing which is against his own principles. There are two examples right there.

The government is skimming more and more of the economy's weak recovery in the form of higher tax revenues. In April through February 1996, the government collected $3.5 billion more in personal income tax alone. Part of this increase was due to technical factors which affected the timing of income tax payments while the remainder was due to the effects of inflation in an unindexed graduated rate system with frozen basic exemptions.

Today I asked the finance minister, if everything is so good, why is the after tax disposable income per family down by $3,000? If the minister has not raised personal income taxes over the past three years, why has personal income tax revenue in this past year alone been $4 billion more? And why has personal income tax revenue overall been between $10 billion and $12 billion? In response to my questions, the finance minister cited two or three things and then he stopped. The rest of the truth he failed to spew out was that he had tinkered with the personal income tax system, that he had removed some personal exemptions and basic deductions and that he had closed a few tax loopholes. He failed to say the one big thing he did, which represented a lot of revenue and which he would not talk about.

There is a law that unless inflation increases by 3 per cent in the economy the personal exemption will stay frozen. In other words, an individual gets $6,500, the spousal deduction is $5,900 and it will not be touched until inflation hits 3 per cent. It is 2.5 per cent. It has averaged about 2 per cent in the past five years which adds up to 10 per cent. Those people who have seen their incomes go up by 10 per cent because of inflation are in a higher tax bracket. They still get the same low personal deduction of $6,500 and therefore they are paying more in taxes. And he says: "I have not raised personal income taxes". Well, yes he has.

The Reform Party recognizes that. We also recognize the need to ensure there is sufficient revenue so that programs can be paid for, health care and education spending can be increased by $4 billion and we can work toward a balanced and surplus budget. Then the first thing we would do is raise the exemption level, both personal and spousal to $7,900. We recognize that stay at home parents are

being taken advantage of and to help the family decide on its lifestyle and not force both individuals in a marriage to work outside the home. We recognize that what anybody does when they stay at home is just as valuable as when they go out to work. That is why we would make that exemption the same. That is my story and analysis of the "Fiscal Monitor".

Let me get back to the Liberals' favourite tax. The GST and the HST are entrenched forever in our lives. This goes against the very words of the finance minister when he was in opposition. I could not do that and I would not do that. That is not why I would be here. I would consider myself a hypocrite if I did that.

Everybody in the country ranted and raved against the Conservatives on the GST. Eighty-three per cent of Canadians did not want the GST and the fools still put it in because they said they knew what was best for us. "Leadership isn't about popularity", said the former Prime Minister, "it is about doing what is right for the people, and we know what is right". How the heck can 83 per cent of Canadians be wrong?

The Liberals rightly attacked it and attacked it. I am not sure what the NDP did but I know the Liberals attacked it. I have quotations from the Minister of Transport, the Minister of Finance, the Prime Minister, everybody attacked it. They said that it was a big issue. They had a big pre-election meeting in Toronto at which they decided to abolish the GST: "We're going to kill it, we're going to scratch it, we're going to get rid of it". They got elected partly on making that promise door to door. That promise was probably a huge factor in their election.

I hope the Canadian taxpayer remembers what this Liberal government did to get itself elected. Liberals promised jobs, jobs, jobs. That was their big slogan. There were 1.6 million people unemployed. Today there are between 1.4 and 1.5 million unemployed and just as many if not more underemployed. Did the Liberals keep their promise? Did they create the jobs? Decide.

Then we have the GST. Their promise went from abolishing it, killing it, scrapping it, to replacing it, harmonizing it. After two years they went from killing to replacing to harmonizing. If we read the promise in the red book, it states that they would harmonize with a system that was revenue neutral. This is not revenue neutral. It cost the Canadian government $961 million to pay the Atlantic provinces for their loss of revenue from lowering their provincial rate. They call that paying Canadians. I call that a cost.

When the Liberals say they have solved the problem and have kept their promise, it is only in three provinces. Surely to goodness a promise to harmonize would include all of Canada, would include at least Ontario where they have 98 out of 99 seats. They even failed to impress Ontario with their big harmonized sales tax scheme. Do members know why? It is because the Ontario government is smart enough to recognize how much it will hurt consumers in the long run.

After all, a goods and services tax, no matter how it is sliced, no matter what the arguments are-that it helps businesses to keep the cost of the product low, that it simplifies the system and that they would have lower overhead-which are all true, but the one thing they stop short of saying is that no matter what the rate is, whether it is 1 per cent, 7 per cent or 15 per cent, guess who pays. The consumer pays. They pay pre-tax. They pay tax on their income. They have after tax dollars and they have to pay tax on that.

What everyone ends up doing in this country, if they work nine to five, is work half a day for the government and receive half their pay.

How much time do I have left, Madam Speaker?

Income Tax Budget Amendments Act, 1996Government Orders

12:50 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

You are out of time.

Income Tax Budget Amendments Act, 1996Government Orders

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Reform

Jim Silye Reform Calgary Centre, AB

Have I had my 40-minute intervention?

Income Tax Budget Amendments Act, 1996Government Orders

12:50 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

Yes.

Income Tax Budget Amendments Act, 1996Government Orders

12:50 p.m.

Reform

Jim Silye Reform Calgary Centre, AB

Really, I was just getting warmed up.

Income Tax Budget Amendments Act, 1996Government Orders

12:50 p.m.

NDP

Simon de Jong NDP Regina—Qu'Appelle, SK

Madam Speaker, my intervention will not be 40 minutes but I wish to put a few things on the record.

It is of course always a concern for New Democrats, particularly a New Democrat from Saskatchewan, to make certain that the books are balanced. I know many people have accused the New Democratic Party of being the party of tax and spend and running up high deficits. However, the background and history of the leadership of both the CCF and New Democratic governments in Saskatchewan has shown that historically we want to maintain a balanced budget.

The Regina manifesto put it so well: "No CCF government will run its public finances to help feed the parasitic interest receiving classes".

Having said that, it is worth noting that the attempts by the present Liberal government to balance its books have basically been done on the backs of working Canadians, the poor, the elderly, the young and the sick.

As the previous speaker from the Reform Party so aptly put it, most of the money saved by this government has been because of the cutbacks to the Canadian health and social transfer payments. Huge sums of money that should have gone to the provinces to help pay for medicare, post-secondary education and the increased number of people on social assistance rolls because of the lack of job opportunities, are the people who are paying for the deficit reduction of this government.

As well, major hunks of surpluses of the employment insurance fund are going to general revenues to help further reduce the deficit. Yet let us not forget that it is not the poor and not the unemployed and it is not our social programs that have created the debt in the first place. A Statistics Canada study in the early nineties determined that 50 per cent of the debt was due to high interest payments. Some 44 per cent of it was due to loss of revenues. Only 6 per cent was due to increases in government expenditures of which I believe only 4 per cent was due to increases in government expenditures on social programs.

It was not the increase in social programs that created the debt in the first place. It was the reaction to the runaway inflation of the seventies that created the high interest payments going to 18, 19, 20 some per cent that catapulted the deficits into huge debts. Then it was the loss of jobs, plus the tax loopholes that mainly the Liberal government introduced in the 1970s that created a loss of revenue which in turn also accounted for 44 per cent of the debt.

Only 6 per cent of the debt is because of increases in government programs and only 4 per cent of that is due to increases in social expenditures. Yet who are the people who paid for the reduction of the deficit? It mainly comes on the backs of working people, the young, the sick, the unemployed and the poor.

A few years back Jesse Jackson in the United States coined a phrase that "it wasn't us poor people who sat and indulged ourselves at the banquets but we're the ones who are stuck with the bill". That is as true for people in Canada as it is in the United States.

The wild government expenditures of the 1970s that created runaway inflation, that saw the horrendous growth of assets, stocks, bonds and real estate, both in Canada and in the United States, those are the people who benefited. Yet they are not the ones who are paying for it. Their effective tax rates have actually declined while the taxes for working and middle class Canadians, even for poor pensioners, have increased while their benefits have decreased.

This system is wrong. It is morally wrong. It is economically wrong. It is a bankrupt system that does not bode well for the economic health and well-being of our country. The mismanagement and the wrong economic policies of this government and the previous Tory government have led us to a position where we have this huge mountain of debt that will take I do not know how many generations to pay off.

One of the items also included as a tax item in this bill that we are debating, Bill C-92, is a change that resulted from the Supreme Court decision on what is called the Thibaudeau case. It was determined that rather than having the higher income earner paying child support and family support payments being able to deduct those payments from his or her income tax, it should be the recipient of the payment who actually had to pay for those costs.

At the time it was recognized that this would mean less money to families for child care and that it would mean an increase in government revenues. In fact the budget papers for 1996 suggested that as a result of the Thibaudeau court case the government will get a windfall of $120 million in the third year in increased tax revenues and more in subsequent years.

That is $120 million extra which is being taken away from families. In most cases the male makes child support payments. They cannot deduct those payments from their income tax. The low income earner is not able to deduct child care expenses and the government is ending up with more money.

While we support it in principle, it is of concern to us that $120 million is being taken away from families. That money should be going to support children.

I would like to place the position of the New Democratic Party on the record today. We would want this section of Bill C-92 to be reviewed on a yearly basis to determine what impact it is having on child care and the families raising children.

Our concern is the impact this will have on children, particularly those children living below the poverty line. We are concerned that in the end it will mean some $120 million being taken away from the needs of those children. On behalf of the New Democratic Party I would like to put on record our concern and our wish that this section be reviewed on a yearly basis.

The tax system is essential for a government to raise the revenues it needs to do the things which government should be doing and as well to effect a redistribution of wealth in the country. Our position has always been that such a system must be fair and equal to all Canadians. That is why we initially supported the suggestions and reports which recommended that a dollar earned, whether from profits, commissions, dividends, increases in capital gains or by the sweat of one's brow, should all be taxed equally, as the Carter commission proposed. We have never come close to achieving that ideal. What Carter said was that a dollar is a dollar and that the tax on that dollar should be equal.

Corporations should be paying their fair share. We have seen during Liberal and Conservative regimes more tax loopholes being given to the rich and the powerful. While small and medium size businesses are struggling to keep their heads above water, creating jobs for Canadians, the very large transcontinental corporations are able to get by without paying any or very few taxes.

It is a crime that one family should be able to move $1 billion offshore and not pay a cent on the capital gains earned on that money. It is a shame that would be allowed when poor pensioners earning a little over $1,000 a month have to pay tax.

The tax system is unfair. That creates cynicism and encourages average Canadians to cheat. The average Canadian will say "why should I pay this amount of money when the rich and the powerful, those who have the connections to the Minister of Finance and the Department of Finance, are able to get special rules and omissions so they do not have to pay their fair share of the taxes?"

This unfairness must be corrected. We will continue to fight for a fair and equal tax system so that all Canadians will be taxed fairly and equally.

I find it interesting that Bill C-92 should be debated in what is presumed to be the end of this Parliament with an election being called soon.

Taxation is what Bill C-92 is all about; who has the power, how it gets exercised, who benefits from the power. As long as there are political parties in power that are financed by the banks, international traders and the wheeler and the dealers, by the mighty, the powerful and the wealthy, there will never be true democracy, true equality and a true and just society. It will be the poor and the working people who will pay the price for deficit reductions, as we have seen under both the Liberal and Tory governments. It will be the poor and ordinary working middle class Canadians who will pay the price.

The struggle will go on and in the coming election we will make certain this becomes a major issue.

Income Tax Budget Amendments Act, 1996Government Orders

1:05 p.m.

Reform

Deborah Grey Reform Beaver River, AB

Madam Speaker, it is good to have a look at some of the amendments to the Income Tax Act that the government is proposing.

Canadians are probably saying we need do not to amend the Income Tax Act; we need to totally eliminate it, rip it down to nothing and start again from scratch. The Income Tax Act is absolutely enormous. There are volumes and volumes to it. It does not seem that regular Canadians are able to fill out their income tax returns anymore because it has become so complex.

It seems there are so many rules to follow and so many loopholes that people can slip through, it is almost impossible for anyone to obey the Income Tax Act or make any sense of it.

When Bill C-92, an act to amend the Income Tax Act, the Income Tax Application Rules and another act related to the Income Tax Act came forward, most people would wonder what in the world it means. In either official language it does not seem to make sense.

However, I would like to look at some of the specifics and talk about tax credits for individuals. It enriches the education tax credit, the tuition fee tax credit and credit for infirmed dependants. I guess there is some merit in trying to help students, but I am not sure this is the right way to go about it. I am sure that members on both sides of the House know that students want a good, solid education and a real job at the end. The government is tinkering with the Income Tax Act and offering them some token help, and it probably is a start. However, I think they would want more substantive reforms to make sure that when their formal education process is finished they will be able to get a job.

It says that the education tax credit is increased from $80 a month for those attending school to $100 a month. For a student in school for eight months a year, the average university or college year, the increase means the education credit goes from $109 to $136, a $27 increase.

Going out for supper could easily cost $27. This is not a tremendous amount of cash, no real encouragement to a serious student. Students are not looking for a $27 or $30 change but substantive changes from a government that is continuing to spend billions and billions more every year than it is bringing in.

I know many students are fiscally responsible. Some may be living on a student loan. They have resource limitations in terms of part time jobs. However, they see their government spending money hand over fist, $60 million to $70 million a day more than it is bringing in. I do not know how they handle their frustrations when they see people who are running the country, the role models they are supposed to look up to, spending $60 million to $70 million a day more than is being brought in and then saying to students "sorry, we have made some tremendous cutbacks in your areas but we will be kind and generous with this $27 increase". That is pretty pathetic.

On the government's huge cuts to provincial transfers with respect to education, $7.5 billion cut to the Canada health and social transfer has meant huge tuition fee hikes on Canadian students. Twenty-seven dollars will produce very little assistance in this.

It is incredibly incongruous it is for people to say "we are concerned about your welfare, we really want to make sure you get a quality education, we care but we just chopped $7.5 billion". They may want to blame it on the Tories.

In two Parliaments we had the Tories blaming the Liberals when they were in opposition and now we see the Liberals blaming the Tories when they are in opposition. This place is just a vicious circle that goes round and round. I do not think the Canadian public really cares who started it or who is to blame, I think it wants it

ended and right now. This kind of legislation certainly is not going to do it.

When Liberals say they are the great defenders of medicare and post-secondary education it is unfortunate they do not live up to the commitment. When the Liberals were in power in 1965 they gave the commitment when medicare came in that they were going to pay 50 per cent of the funding of medicare. With this latest budget they are now down to 16 per cent. What do you expect the provinces to do?

Now that post-secondary education is included in the Canada health and social transfer I can understand why students are upset. And yet the government says it is the defender of post-secondary education. I think it is a pretty weak defence and if it is going to offer $27 it is more of a slap in the face than what it is intended to do.

A $7 billion cut. For those who attack my party and say we will rip medicare apart and we will not help students, do not forget that, as the myth goes, which we hear in question period here every day, we will take grocery money from old ladies and will dismantle pensions. That is not true.

The Liberals looked after the MP pensions very well in this Parliament, tightening their belts, austerity measures. Instead of $6 to one employer-employee contribution, they have really sucked in their belts and they are giving $4 to one employee-employee contribution. That is not sitting very well across the country.

We understand the frustration students feel. The guarantee was made that the Liberals are the great defenders of health and education. Then they regularly, every day in fact, shriek about the fact that the Reformers are going to dismantle pensions and health care. That is not true.

Reformers have committed to balance the budget and then reinvest $4 billion into health care with these kind of dollars in the late 90s, because wherever you go across the country and ask people their priorities, they say health and education.

If those are the priorities, we respect that, but something else has to go. If we have a federal government with such a voracious appetite that it is spending billions of dollars a year more than it is bringing in, then something has to go.

When I see this government talking about budgets, finances and what a wonderful job it has done in terms of getting the deficit under control, it is by tax increases and revenue increases, not by cutting spending. This is seen in the public accounts where it says it has increased revenues and taxation by $25 billion a year. I think the Canadian public would say shame. I think students in terms of the tax credits for individuals are not going to be blinded by that.

What a pathetic day it is when we say to our young people that we are looking after them but then we turn around and slice and slash and then blame other political parties. Any political party will do for a scapegoat. "Your more terrible than we are", they say. Let us just fix the problem. That would be a far wiser thing to do.

If we look at the tax codes and some of the changes that are being made in the bill, we realize that the government has maintained its policy of adding to the complexity of the tax code, not by adding to the simplicity of the tax code.

People want things simpler when it comes to income taxes and the Income Tax Act, but the government has adjusted the rules for various interest groups. I am not surprised by that. For years-whether it was the Liberals or Tories really does not matter-millions of dollars have gone to special interest groups that have one function and one reason only, that is to come to Ottawa to lobby for more funds. Governments give money to interest groups that come back to Ottawa to ask for more money, and it goes around and around. I call it the royal flush.

The government has also removed legitimate reductions so that overall Canadians have faced an increase in taxation. Earlier today in question period the finance minister said that Canadians were far better off. Canadians will be doing their taxes this week because April 30 is the deadline. I do not think there would be very many who would be supportive and say they feel better in terms of their disposable income or a whole lot better thinking they have more cash in their pockets. That is not true. They can ask their family and friends. They all pay taxes.

I do not think anyone is jumping up and down, whether in the province of New Brunswick where I just came back from this morning or on the west coast. People are not feeling really cheery that they are paying less taxes. They know they are paying more. They have stubs and are sending in their income tax forms this week. They know perfectly well what is happening.

Government members can talk and blather all it wants in the House of Commons but it is irrelevant. People are paying more money in taxes. They have less disposable income. The main point is that people are frustrated with a system that keeps saying it is okay, it is looking after them and it has their best interest at heart. Meanwhile the government is winking one eye and has a hand on their wallets.

A certain trust factor is missing between the Canadian public who is filling out its income tax forms right now and the people who are saying: "Trust us. We are from the government. We are here to help you".

Taxes have increased since 1993. Again today the finance minister was trying hard to make us believe that it was under the Conservative government that taxes increased. We have had a few

budgets now from this government and that is simply not true. By fiscal 1998-99, next year, the government will collect $30.4 billion more in tax revenues than it collected its first year in office.

It would be difficult to blame the Conservatives for that. The Liberals have been in office since 1993. They say it is the fault of the Tories, that they are responsible. However, since 1993 they received $30.4 billion more in tax revenues than they collected in their first year in office.

Then there are tax hikes. I have heard for 3.5 years in Parliament that the lousy Tories raised taxes time and time again. The Liberals were to be better at it. What do you think? The Liberals have hiked taxes at least 36 times, not including the multi-billion dollar hikes to federal user fees over the same period. There is more money going from an individual's pocket to government as a tax.

The finance minister can call it an investment. He could call it increased revenues for the new, beautiful harmonized sales tax down in Atlantic Canada. They are not really happy about it in New Brunswick. They voted in a Liberal government because it was going to scrap, kill and abolish the GST. It has been entrenched further. It is thicker and deeper in Atlantic Canada with this new blended sales tax.

"We are from the government and we are here to help you". The people in New Brunswick did not feel that way this morning. Government members know it and I know it. They have increased taxes.

Canada pension plan premiums were increased by 73 per cent. The government says that is an investment and not a tax hike. I am not so sure I want the kind of investment the finance minister is trying to offer people of my generation and people who are coming along behind. We are going to pay 10 per cent of our income into a Canada pension plan premium rate so that when we are 65 years old we will get a maximum of 8,800 bucks. That will be nowhere near $1,000 a month for people in their early twenties when they reach 65 years of age. It will be an $8,800 a year maximum payout for CPP. That is not good enough. People will not be able to live on that in the year 2040 or whatever it is they retire.

Is it a tax? It is more money going from the taxpayers' pocket to a government they do not trust because for the last 25 years governments have spent far more money than they have brought in.

In 1996-97, not a Tory year but a Liberal year, Canadian individuals and companies will have paid $3.1 billion more in taxes than they would have paid had the Liberals left the tax system as is upon leaving office. Why the time, why the paper, why the energy, why the cost in Bill C-92? Why would we bother with it? Even if the Liberals had just left things alone and kept their mitts off it, the country would have been better off. It will go up to $3.1 billion more in taxes for Canadian individuals and companies. It is pretty scary.

The finance minister likes to quote from our taxpayers' budget and go back to 1993 dollars when we were referring to Econometric figures and role models and were making estimates on the dollars being spent in 1993 and 1994. He is always interested in comparing the dollars of yesteryear. Let us measure it in real 1996 dollars. The Liberals will collect $11.4 billion more in income taxes in 1998-99 than in 1993-94.

When the Tories came in and gave their great budget predictions for 1996 everything was to be absolutely terrific. However, if we look ahead to 1998-99 there will be $11.4 billion more in income taxes.

The finance minister has now delivered four budgets. I could have sworn when first elected he said there would be no new income taxes. He would have a hard time convincing Canadian citizens today sitting around their tables trying to fill out their tax returns that there have been no new income taxes. They would think his nose was growing.

What is the bottom line? It is that Canadians are shipping more of their hard earned money down to Revenue Canada. I do not think they are happy about it. Whether they support Liberals, Reformers or the Bloc, I do not think they are happy about it. They see less return for more money they are sending to the taxman. I guess that is what we have to look at.

I do not think Canadian citizens deny that they should pay taxes. If we want government services, if we want roads, airports and other infrastructure, obviously there will be tax revenues. I have never met anyone yet who is not upset about paying some form of taxes.

What bugs them, whether they are Liberal or Reform supporters, is that the people they send the taxes to are spending the money irresponsibly. They are just tossing it around. It is called deficit financing. They are spending tens of billions more every year than they are bringing in.

It becomes a trust factor with politicians. People ask why they should trust the government with the money they send and why they should send more when it does not spend what they have already sent in a responsible manner. That is the crux of this matter. If the government could be trusted more to do what it says it will do, people would not mind sending tax money. Taxpayers get pretty upset when the government spends more and more and more and they are given less and less and less in return. There is something wrong with that system.

Heaven help the politicians who go out of here, probably next Sunday when the writ is dropped, and make foolish, unwise promises to get re-elected. If I can leave members in this place with some advice, it would be that when they go out on the campaign

trail they should not to try to buy their way into office or make a promise they cannot keep. If they ask Canadians to vote for them and promise to give them more, they should remember that it is taxpayers' money.

I read an article today in a Saint John, New Brunswick, newspaper about a government program to give seed money for hotels and new armouries to be bought. We should not think for a minute that people believe it for a minute. It is taxpayers' money which they want the government to spend responsibly and not waste.

Income Tax Budget Amendments Act, 1996Government Orders

1:25 p.m.

Reform

Jay Hill Reform Prince George—Peace River, BC

Madam Speaker, it is a pleasure for me this afternoon to join in the debate on third reading of Bill C-92, an act to amend the Income Tax Act, the income tax application rules and another act related to the Income Tax Act.

We cannot discuss the bill without talking about Canada's crippling public debt, which currently stands at over $600 billion and is still rising steadily. It is expected that our national debt will reach at least $619 billion by 1998. The Mulroney Tories added $300 billion in just nine years. People are well aware of the legacy of Brian Mulroney. Thanks to Liberal overspending, Canada's public debt has increased by a further $111 billion since they came to power in the fall of 1993. The interest payments on the national debt are expected to be a staggering $45 billion to $46 billion per year over the next three years.

Who pays for all this? There is only one Canadian taxpayer and that is who is paying. Of the $10,200 the average taxpayer sends to the federal government each year, about $3,400 of it will go to service the huge public debt.

Then we come to the deficit. It was projected at the time of the budget at $19 billion for this fiscal year. It is hardly a figure to brag about, but that is exactly what the Liberals have been doing. After learning about this figure Alberta provincial treasurer, Jim Dinning, said that if he were the one turning in that figure he would expect a kick in the butt. He would deserve it.

We know that the burden of deficit reduction has been shouldered by Canadian taxpayers as the Liberal government waits for tax revenues to catch up to its spending. There are rumours that the deficit could come in substantially lower. We are quite likely to see figures of $14 billion, $13 billion or perhaps down around $10 billion in deficit projections at some point during the election campaign.

British Columbians will be very suspicious of that type of rhetoric during an election campaign. They well remember Glen Clark of the NDP that is still in power in British Columbia and some of the projections about deficits, balanced budgets and that type of nonsense during the last provincial election. Regardless of the deficit number, the point has to made and Canadians have to understand that the hole is still getting deeper. We might be digging a little slower but it is still getting deeper every year and we are still passing on more and more debt to the next generation.

How has the Liberal government made the gains it has in the battle with the deficit? A number of my colleagues referred to this during their presentations over the last hour. It is a fact there has been a $24 billion a year increase in taxation revenue.

It is a fact that as we go into an election campaign, whether it is this spring, next fall or next year, the Liberal government has to run on the record that it is collecting $24 billion more this year in taxation revenue from Canadians than it did in 1993 when it came to power.

It has to run on the record that it has cut roughly $7.5 billion from the Canada health and social transfer. It cannot deny, despite its red book claims of being the great defender of medicare, of being concerned about the next generation and education for our young people, that it is the one that has made that huge cut of $7.5 billion to the CHST.

The Liberals cannot deny that a week before this year's budget they slipped in a 73 per cent increase in the CPP premiums. The facts speak for themselves. They cannot deny that they have been very fortunate to have their administration operating at a time when our nation has enjoyed the lowest interest rates in four decades. That is the real reason that some gains have been made on the deficit.

What have we seen in the area of spending? We have seen a total lack of priorities. From the time the Reform movement was born in 1987, we recognized that the way to get government spending under control was to reduce the size of government by prioritizing spending on the things Canadians desire most. The simple fact is that we cannot continue to do business as usual. That is what the Liberals are attempting to do. They have made some cuts but in reality they still cling desperately to this old philosophy of big government, of we know what is best for all people.

The arrogance of past prime ministers was very clear during Brian Mulroney's presentation to the Canadian Club in Toronto the other day. We are seeing that same type of we know what is best from the Liberal government across the way.

Nothing provides a more apt example of why we find ourselves in the position of needing to borrow $10.8 billion this year than Canada's regional development agencies. They provide a perfect example of the Liberal philosophy: throw money at it and the problem will go away. Through agencies such as the Atlantic Canada Opportunities Agency, Western Economic Diversification and the Federal Office of Regional Development for Quebec, this government is subsidizing private businesses and adding to our

staggering national debt which will be paid off by the long suffering Canadian taxpayers and by future taxpayers.

By doing so the government is interfering with natural market forces. It is using low interest, no interest or in some cases what the Liberals would like to call non-repayable loans-whatever they are-to give some businesses an edge over their competitors that are not fortunate enough to be chosen as the objects of the Liberal government's pork-barrelling patronage.

In November 1996 the Atlantic Institute for Market Studies conducted a study which was aptly titled "Looking the Gift Horse in the Mouth: The impact of federal transfers on Atlantic Canada". The authors of that study found that if the federal government had invested all regional subsidies to Atlantic Canada in three month United States treasury bills it would have built up a nest egg of about $700 billion U.S. since 1971. That is about $1 trillion Canadian if the federal government had invested that money.

To put this into perspective, that is almost twice the size of our national debt. The House will remember what I said earlier about priority spending. It would translate into a surplus over the debt, no more punishing debt service charges and ultimately into much reduced taxes for Canadians.

In his 1995 budget the finance minister promised to undertake what he called a program review. Part of the program review involved a commitment to refocus the regional development agencies and to decrease spending in this area by 50 per cent, from $1.1 billion in 1994-95 to $576 million in 1997-98. What do we see now? We see a very different picture from what was promised by the government in 1995.

When we look very closely we see that regional development agencies will actually have total expenditures of $1.2 billion in 1997-98. However, we do not see the increases in the budget numbers. The increases have been hidden, as have other spending increases. For example, the 1997 budget did not even provide a breakdown of what the regional development agencies will spend in the upcoming fiscal year, even though such breakdowns have usually been provided in past budgets. If a breakdown of spending had been provided, what taxpayers would see is not the 50 per cent decrease that the finance minister promised in 1995, but an increase.

Instead, when funding to extend the infrastructure works program is included, what we really see is a 7 per cent increase in total expenditures for regional development agencies from the last fiscal year. Funding for infrastructure is included in this calculation because the Liberal government originally intended it to be included.

In their 1995 budget projections for regional development spending the government noted that the figures were to include infrastructure expenditures. This makes sense, considering that infrastructure programs are a form of regional economic development based on a formula that includes regional unemployment levels.

However, what we see now is the Liberal government trying to exclude money for infrastructure works from the regional development figures in an attempt to make it seem as though spending in this area has actually decreased. It is smoke and mirrors. This is creative accounting at its worst.

When funding to extend the infrastructure works program is included, what we see is this:

First, Atlantic Canada Opportunities Agency spending will increase 2 per cent from the last fiscal year to this year, to $347 million in 1997-98. Spending by the Federal Office of Regional Development for Quebec will increase by 11 per cent, to $408 million. Spending for the western economic diversification program will increase by 10 per cent, to $380 million.

Where is the money for regional economic development agencies going? A look at the public accounts for 1995-96, released in October 1996, gives us some telling examples.

For example, in that year $211,500 from the Atlantic Canada Opportunities Agency went to the Society for Canoe Championships in Dartmouth, Nova Scotia, and $310,071 from the western economic diversification program went to the Abbotsford air show. Those are probably worthwhile organizations, but is it right to invest taxpayers' money in such a way?

In January 1997 an interest free loan of $723,000 was granted by the western economic diversification program to Alberta potters, jewellers, weavers and other craft artists belonging to the Alberta Craft Council for Business, Training, Marketing and Network Development.

When we look at the 1997-98 estimates respecting spending by the Federal Office of Regional Development for Quebec, we see that from last year to this year total grants under this program, or as the Liberals have been fond of calling them, non-repayable loans, have increased from $300,000 to $1,055,975. Why? Because once again the Liberal government has chosen to subsidize small business rather than introduce meaningful tax cuts which would encourage economic growth and assist all small business.

The increase is attributable to grants made under IDEA, the innovation development entrepreneurship and access program for small and medium sized businesses.

In the limited time remaining, I will sum up by saying that over the last 3.5 years we have seen a lack of commitment to spending priorities. Reformers suspected before we became members of Parliament and it has been borne out over the last 3.5 years that the government is committed to the philosophy of big government, big spending, big taxes. The cuts it brags about and which it is taking into the election campaign are in reality just smoke and mirrors. It has not happened.

Income Tax Budget Amendments Act, 1996Government Orders

1:40 p.m.

Reform

Dale Johnston Reform Wetaskiwin, AB

It is Liberal math.

Income Tax Budget Amendments Act, 1996Government Orders

1:40 p.m.

Reform

Jay Hill Reform Prince George—Peace River, BC

That is quite correct. Coming to light are the canoe museums, armouries and hotels being built in Shawinigan. It reminds me of a comment our deputy leader made to me earlier today about the movie Sleepless in Seattle . It was a huge hit. The spending in Shawinigan reminds us that the Liberal sequel may be Shameless in Shawinigan.

Income Tax Budget Amendments Act, 1996Government Orders

1:40 p.m.

Reform

Dale Johnston Reform Wetaskiwin, AB

Coming to a theatre near you.

Income Tax Budget Amendments Act, 1996Government Orders

1:40 p.m.

Reform

Jay Hill Reform Prince George—Peace River, BC

Perhaps not to a theatre. Coming to a voting booth near you.

I am sure that when Canadians take the time to look at the record of the Liberal government which added over $100 billion to the debt in 3.5 years, drove the country deeper and deeper into debt, burdening the already over-burdened citizens and taxpayers of the future, and when they go to the voting booths and think of this Liberal sequel, Shameless in Shawinigan, they will be turfed out. Canadians understand it is Liberal, Tory, same old story. The Liberals believe in big government, big spending, big taxes. It has been tried for over 130 years and it is time for a fresh start with Reform.

Income Tax Budget Amendments Act, 1996Government Orders

1:40 p.m.

Ottawa South Ontario

Liberal

John Manley LiberalMinister of Industry

Madam Speaker, it very interesting to hear the hon. member and his description of various aspects of work that we have been undertaking over the last several years which have been directed toward the creation of opportunities for jobs and growth in the Canadian economy.

It has been very interesting to begin to speculate, based on what we heard him say, what exactly the Reform Party platform might mean for jobs and growth in the Canadian economy. I have managed to deduce a few things from his comments.

The first would be this. Despite all of the efforts that governments around the world put into building a vibrant tourism industry in their countries, and despite the fact that the tourism sector is projected to be one of the largest growing economic and employment sectors in the world over the next 20 years as increasing numbers of the world's population become economically capable of engaging in tourism and travel strictly for pleasure, the Reform Party does not believe that the Government of Canada should direct its efforts toward improving the tourism product or attracting tourism to Canada. Many of the things he has criticized are ones that go directly to support the travel and tourism business.

Let me pick one example, the Abbotsford air show. He puts that down and he picks on that one. Out in the heartland of British Columbia, it is now the premier air show in North America. It is the point to which all of the major aircraft suppliers and manufacturers come, Abbotsford, British Columbia. It is an important contributor to the economic development of that region. It is a destination creator for Abbotsford as well as being important to the western Canada aerospace sector, and he would cut it out.

There is no air show in the world, whether in Paris or the UK, that continues to attract the level of participation necessary to have a major air show without government support, and the Reform Party would end that.

He talked of western economic diversification and its role. He has a little trouble with the numbers because he cannot quite figure out how the infrastructure funds fit into the estimates. He is a little out of date. He thinks they are still providing direct assistance to individual enterprises. He is wrong. Listening to the last two speakers from the Reform Party I am reminded of some of my other duties with respect to technology. I think we need a new V-chip for the parliamentary channel that can bleep out some of the misleading things that occasionally come out of the mouths over there.

Let me talk about western economic diversification. Not in years have they been giving direct assistance to individual enterprises. What would they shutdown when they close western economic diversification across western Canada? They would close down 91 points of service for small businesses throughout that region. They would close down all the community future development corporations, those little organizations grounded in western Canada where they develop the priorities for the economy of their region, where they sort out what their potential is and how they can build jobs and growth.

That is not some kind of political slush fund. It is the lawyers, the accountants and the small business people of communities across western Canada who participate as volunteers in finding the keys to economic growth and diversification in their communities. That is what western economic diversification is supporting.

It is women's enterprise centres, the sources of information for women to find out how they can start businesses, how they can build careers that not only help themselves but provide opportunities for others to work. That is what they would shut down. That is what western economic diversification is now doing. Their criticism is directed at the dinosaurs that are gone, and not inappropriately.

We hear from Reformers repeatedly that in order to create jobs they would slash the government and they would cut taxes. Then they make a list. They say the Minister of Finance has raised taxes and I think they recite a number. They include of course the number of tax increases they blame the Minister of Finance for, increase in taxes on the banks. They blame him for shutting down loopholes. They count those as tax increases.

The Minister of Finance has targeted tax reductions, over $2 billion in the last year in areas where it makes the most difference. We help the people who need the help most. They would substitute across the board tax cuts in order to benefit whom? The highest paid, the best income people in the country. That is the Reform Party platform. Is that going to create jobs? It may well do that because some of those high income people are going to have more spend on their vacations outside Canada.

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1:45 p.m.

Reform

Deborah Grey Reform Beaver River, AB

There are suntans over there.

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1:45 p.m.

Liberal

John Manley Liberal Ottawa South, ON

There is someone speaking who does not like to listen. She does not listen very often, I have noticed, around here.

What we see repeatedly from Reformers is nothing but a bunch of economic bunk. There is no economic analysis or study that they can provide to anybody that would show that across the board tax cuts can provide direct economic benefits and job creation in this country.

In fact, they are like the kids before Christmas who want to open their presents on December 20. They are not even ready to get the deficit down to zero before they start to open the presents and cut the taxes. That is the kind of economic analysis and argumentation they put forward-

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1:50 p.m.

Reform

Jay Hill Reform Prince George—Peace River, BC

Madam Speaker, on a point of order, perhaps you could enlighten the House. Is this a 20 minute rambling speech or is this questions and comments?

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1:50 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

This is questions and comments for 10 minutes. There are 3 minutes and 12 seconds left.

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1:50 p.m.

Liberal

John Manley Liberal Ottawa South, ON

Madam Speaker, I did not see any point in putting a question because I did not think the hon. member would have an answer. However, I do see the point in making comments.

We have listened to speaker after speaker from the Reform Party spouting this kind of economic nonsense. I have had a great privilege as a minister of the crown over the last 3.5 years to travel the world and hear from others exactly what it happening and how Canada is viewed.

When we had to present the budgets in 1994 and 1995 and take ourselves to the financial capitals of the world, it was impossible at that point to be accepted as credibly managing the finances of our country because of the years of the Mulroney government when the Government of Canada had failed to meet its deficit reduction targets.

We have achieved in exceeding the targets year after year, in bringing the deficit from the sixth worst in the G7 to the best in the G7, in setting the course toward reducing our overall indebtedness as a nation, in reducing a $30 billion a year current account deficit to a surplus last year, in reducing the tourism account deficit from $6 billion to $2 billion. We have rebuilt this country's credibility. It is on that basis that we will rebuild the jobs and economic growth that this country so deeply wants.