Debates of March 10th, 1998

The Budget

[Rey D. Pagtakhan, Liberal, Winnipeg North—St. Paul, MB]

Mr. Speaker, I will answer the question directly, but first let me state very clearly that the member who asked the question was not listening at all. When he said that instead of congratulating ourselves we should congratulate the people of Canada, did I not begin my speech by saying what the Prime Minister and Minister of Finance said, that the victory over the deficit is due to the hard work and sacrifice of Canadians over the past four years?

To even start a preamble to the question without recognizing what I have said in the beginning meant that this member was not listening at all. If he does not listen how can he get the right message to his question, whether in fact by reducing the debt we would be able to spend more on social programs?

We have an amount of money and we have a need at this time for health care and education. If we put all this money into the payment of the debt where will be get the money for health care and education? It is simple arithmetic.

[Jean-Paul Marchand, Bloc, Québec East, QC]

Mr. Speaker, my hon. colleague is surprised that no one is listening. That is because he is basically repeating what has been said by every other Liberal speaker these past few days. It is as if they all had the same person writing their speeches in praise of the budget. We know full well that the budget did not meet all the expectations of Canadians, especially in the area of education.

He went on and on about the great millennium scholarship program. But let me quote Professor Trent, a professor of political science at the University of Ottawa, who had this to say about the Prime Minister's millennium scholarships:

“It amounts to the rape of federalism. It is also politically egocentric, administratively inept and strategically stupid. Moreover, it is unnecessary”.

This is what John Trent wrote. Professor Trent is right, because everyone knows full well that, with this budget, the government is once again trying to encroach some more on the provincial jurisdiction over education, especially since Quebec has the most sophisticated loans and grants program in Canada. Quebec students have the smallest debt load, with an average student debt of $11,000, compared to $25,000 in Ontario.

I ask my colleague this: Does he not agree that there is duplication, that the federal government is once again encroaching on the provincial jurisdiction over education?

[Rey D. Pagtakhan, Liberal, Winnipeg North—St. Paul, MB]

Mr. Speaker, to the observation that the Liberals are repeating almost the same speech, we cannot help it. The Liberals have the same message.

We have to keep repeating the message if the opposition refuses to listen. We also know that not all expectations have been achieved. The job of this government has not been concluded yet, and that is why we have three phases in the plan for our budget.

The first phase has been completed. We are now in the second phase and we will go to the third phase. If the member will wait he will see all the beauty of our budget.

On his question about the millennium fund, I am glad to say that Quebec has a loans program as well for its students. Does it hurt for the students to get extra help from the millennium scholarship fund? Let Mr. Trent tell his message to the students and I would like the students to reply. The students will criticize Mr. Trent.

[Gerry Ritz, Reform, Battlefords—Lloydminster, SK]

Mr. Speaker, I will be splitting my time with my colleague from Nanaimo—Cowichan.

The Parliamentary Secretary to the Prime Minister said in his speech that this is a milestone. I am here to say my constituents regard this more as a stone in your shoe than a milestone budget. Millstone is another good word.

It should be a great honour to stand here today and deliver my first speech on a federal budget. I am honoured but I have serious reservations about the honour reflected in this budget.

My constituents and I certainly understand what budgets are all about, making choices. Inevitably there will be people on both sides of the debate. Some will be pleased and many will find fault no matter what you do.

I would like to sympathize with the government on that point but I cannot because what we see in this budget is that it has have made no tough choices at all.

The Liberals claim their approach is balanced but I think the more accurate term for them would be indecisive or unimaginative. What we see here is a major disappointment, a huge flop and a missed opportunity that Canadians will continue to pay for, for decades.

Canadians made it clear in our prebudget deliberations that the tax burden on them and their economy was excessive. That tax burden drags on job creation. We see that reflected in our permanent persistently high unemployment figures.

Not only has the finance minister ignored the opportunity to create real sustainable jobs, but these policies continue to penalize the unemployed. Thousands find themselves ineligible for benefits or have had their benefits cut to minimal levels while the finance minister shovels billions of dollars into an EI surplus fund. He announced nickel and dime cuts to premiums late last year but continues to operate that EI fund as a cash cow rather than the insurance program it was intended to be. I do not find much honour in that.

The minister's colleagues will quickly point out that there is money in the budget for job creation but experience with government shows these programs are at best short term fixes with excessive bureaucratic costs that still leave not thousands, not tens of thousands, but hundreds of thousands of Canadians outside the targeted groups.

This is the choice they make when they try to be the magic bullet that aims itself at narrow agenda items instead of creating broad policies that treat all Canadians equally and treat the economy not as a revenue generator for government excess but as the public trust that belongs to all its citizens and their descendants.

We have seen programs across the political spectrum that reflect the choices the Liberals have made to be always the party of the special interest groups as opposed to being the party of the whole Canadian community. We see them choose to base their programs on race, language, gender or regionalism rather than on creating equal opportunity for everybody.

A government must create an environment where people are not set at each other's throats in a competition for rights and benefits that excludes their neighbours. We on this side of the House know there are localized or specific problems that must be addressed by directing programs but too often these directions are given by the special interest and lobby groups with agendas that do not reflect the values held by the majority of Canadians.

The finance minister said that the time has passed when a government could be all things to all people. By having so many priorities it in fact has none. The finance minister was trying to paint the budget as a point in the nation's history when we would turn from the irresponsible, misdirected, wasteful spending of the past and open a new chapter where every tax dollar would be spent in such a way that it would always reflect focus and balance. I am not saying these buzzwords are meaningless, but I am saying that the actions of the government drain them of any real meaning.

The finance minister rejected the notion that the treasury could afford broad based tax relief. He rejected the advice of many finance committee witnesses who said that decisive debt reduction was not only prudent but would pay large dividends almost immediately for all Canadians and their descendants. Instead he made the choice to be many things to many people. In the process he rejected the values of Canadians by ignoring the polls that said people wanted debt reduction and tax relief most of all.

The minister left many important things out of the budget. There is no mention of the crisis in agriculture or transportation on the prairies, no mention of crisis in the east and west coast fisheries, no mention of the tax burden carried by our small business owners who are the real job creators in the economy. He says to them that they will have to wait, but can they afford to wait for this tax relief?

We can afford $600 million for an office of official languages. We apparently cannot afford to attack the debt, but we can afford to subsidize our own heritage to the tune of $440 million per year. I am not saying that there are not worthy causes in there somewhere but these expenditures are never questioned. Would Canadians abandon their own culture or a second language if these things were not subsidized? I think the evidence would point to the contrary. The evidence suggests that the majority of Canadians being compassionate and reasonable will do many things on their own without being bribed with their own money.

What are the Liberals afraid of? The budget shows what they are afraid of. They are afraid that if they give Canadians the freedom to make their own choices they will choose to support common values; they will strengthen their families, contribute to their communities and naturally gather into a strong country with a shared vision of our future.

By failing to make any courageous choices, the government has not changed anything from the previous three decades of its irresponsible predecessors. Canadians will continue to finance massive programs. They will continue to spend 30 cents of every dollar on nothing more than interest on the national debt. They will continue to hear from Ottawa that bureaucrats know better than they do how to run their own lives. I see nothing honourable in that.

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, I would like to take this opportunity to ask the member opposite for some clarification of his comments.

He talked about having an exclusionary budget and then he went on to talk about regional initiatives. I see those two things as cross purposes. I would like to hear his response as to the lifting of the surtax and the benefit that is to all Canadians.

How could he possibly speak against an initiative such as that, as well as the contingency fund which when it is not needed will go toward paying down the debt? That is exactly what Canadians asked for and this government delivered.

[Gerry Ritz, Reform, Battlefords—Lloydminster, SK]

Mr. Speaker, I thank the member for her question. She is also a member of the finance committee so she knows what we heard on the road from people talking about debt and tax relief.

Many regional programs that we have seen governments direct are always mistargeted. The cost of bureaucracy is excessively high and never create the long term sustainable jobs we would like to see.

She talks about a reduction in the surtax. We think that is great. It should apply to everybody. It is great that they started off and targeted a few people, but the complexity that they have added into the system with this budget takes a tax accountant and a Philadelphia lawyer to figure out the idiosyncrasies of this system, which certainly is at cross purposes to pandering to the poorest sectors of society that are not able to afford an accountant to begin with.

In addition, that complexity flies in the face of the target they are trying to make. When they take the huge CPP increases, which certainly affect Canada's working poor, and balance them off with the nickels and dimes we see tossed their way in the budget, the end result over the three year program shows the working poor as being worse off than they are now. I do not see that as helping that sector of society.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, during the member's speech he said something that caught my attention. It is quite unfortunate that he used these words, but he said that the government was pandering in the budget to special interests and was somehow providing special attention based on race, language, gender and region rather than equal opportunity.

I do not know what part of the millennium scholarship fund falls into the special interest envelope he painted. I do not know what part the tax relief to low and middle income Canadians falls into the special interest envelope he painted. I do not see where the caregiver tax credit for those who provide care in the home to the elderly and the infirm falls into this special interest envelope the member painted.

The member stated very clearly in the House that the budget somehow pandered to special interests, in his words, specifically on the basis of race, language, gender or region rather than equal opportunity. I would like the member to stand in his place this instant to tell the House one example where race, language, gender or region is the basis of the budget.

[Gerry Ritz, Reform, Battlefords—Lloydminster, SK]

Mr. Speaker, we covered quite a bit in that and I am sure I do not have time to cover it all.

One thing that pops to mind for race right off the bat is that a short time ago the department of Indian and northern affairs announced $350 million to address the abuse suffered by natives at the hands of aboriginal schools years ago. Even the aboriginal community was not consulted in that. I know the chief of the grand council is having a terrible time trying to sell it to his people. It is a day late and a dollar short in their estimation. Maybe he should have consulted with them a little more than he did.

The member talked about the millennium scholarship fund. In reality that fund addresses 6% to 7% of students in Canada. What do the other 93% or 94% of students do? Do they sit and wait? This does not kick in until the year 2000. Students in our universities are in a crisis now. They need some help today, not two years down the road. That is a little too late.

He talked about the caregiver tax credit of $400. Fantastic. My elderly inlaws are living with us and $400 do not even cover the cost of putting in a bathroom rail so they can get in and out of the tub. At an $11,500 income that tax credit disappears. It just does not go far enough.

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, it is with a great deal of pleasure that I take part in my very first budget debate since having been elected by the voters in Nanaimo—Cowichan this past spring.

One might have hoped that it would be under much better circumstances. However, having seen what the finance minister has brought down, I can only draw one conclusion. Canadian taxpayers have been robbed of debt and tax relief and the Liberals are going on a spending spree once again. It is a shame. In fact the budget is not just a shame. It is a sham.

I could not believe my ears when the finance minister stood in the House to declare that in effect the deficit battle had been won by his government. I know they go to great pains to disclaim that but that was said.

Nothing could have been further from the truth. It is incumbent upon us as opposition members of Parliament to keep pointing out that the government was able to hopefully balance that budget only on the backs of working men and women. They are the ones who have been paying an extra $33 billion in taxes since the Liberal government took office in 1993.

What is the reward for the sacrifices Canadians have made? What are taxpayers getting now that the books are supposedly balanced and the government expects to start running surpluses? One short word, nothing. What they should be getting is broad based meaningful tax relief. They deserve nothing less. They are telling me as their representative when I go back to the riding that they are disappointed in the budget because they did not got that relief.

In 1993 Canadian taxpayers paid $107 billion in income tax. This year we will pay close to $140 billion in taxes to fund the big red tax and spend Liberal machine. The chequebooks are out again.

In order to be in a situation where the government could even contemplate a balanced budget, let alone a surplus, program spending for 1998-99 came in at about $103.5 billion. Just as taxpayers have eliminated this deficit the government is resorting to the same tax and spend policies that got us into this mess in the first place.

This year the Liberals will spend $161 billion. In fiscal year 1999-2000 they will spend $167 billion. Finally, projected spending for 2000-01 will be about $173 billion. Most of the money being spent over 1997 levels is money that could go toward paying down the debt or providing Canadians with real meaningful tax relief.

The Liberal government does not seem to get it. Canadians are being squeezed and they desperately need tax relief. Is it any wonder that come tax time each year more and more of us feel like we are taking one step forward and two back?

Take, for instance, my son in Calgary who has a wife, a little girl and another on the way. As a construction worker at the low end of the wage scale he has had trouble making ends meet even in boom town Calgary which knows something about eliminating debts and deficits and having the lowest taxes in Canada. Why? It is mostly because the federal government still takes so much out of his paycheque that he does not have anything left over.

The deficit battle is won on the backs of people like my son and other Canadian taxpayers who have endured 33 tax increases by the government since 1993. The budget holds hardly any hope for any change.

The most insidious tax of them all is the bracket creep. It was a present from the Tories and one which the Liberals have enjoyed using against Canadians as well. By keeping the Tory bracket creep tax, the Liberals have turned a blind eye to preprogrammed tax increases. Why could they have not done something about that?

Bracket creep, since the Liberals have taken office, has taken an accumulative $13.4 billion in new and higher taxes out of our pockets. That is not acceptable. Indexing for inflation in 1997 would have prevented an automatic $860 million personal income tax increase. This represents an increase totalling $4.3 billion over the next five years. This tax just keeps on taking and taking out of the pockets of Canadians.

Statistics Canada reports that between 1989 and 1995 real after tax family incomes fell by $3,461 from $41,084 to $37,623.

Here is another graphic example of bracket creep. An individual taxpayer earning $30,000 a year in 1993 whose income increases just at the rate of inflation will end up paying $1,581 more in federal income, CPP and EI taxes after he files his return this year.

We have to see that there are social consequences to this budget as well. By not providing tax relief and by failing to pay down the debt, the government jeopardizes the social programs that we have in this country. After adjusting for the government's liquid assets the net public debt will stand at around $583 billion by the end of fiscal 1997-98.

This mountain of accumulated federal debt requires interest payments. Interest payments on the Liberal and Tory mortgage amount to $46 billion for this fiscal year. Canadian taxpayers will pay approximately the same next year to service the debt.

Think in terms of social spending what $46 billion represents. It represents the entire annual budget for the four western provinces. It represents the entire annual budgets of Quebec, P.E.I. and Newfoundland. It represents enough to pay for all Canadian hospitals, physicians and drug costs for an entire year.

We have to do something about the interest payments on this debt. It represents enough to provide every poor child in Canada with a $30,000 a year endowment. Do you see how important this is? As I said at the outset, this budget is both a shame and a sham because it fails Canadians.

Until we pay down the debt, we cannot free up that money which is being used to pay interest on the $583 billion debt. Surely the lost opportunity that these interest payments represent should be reason enough to commit 50% of any surplus to debt reduction.

I urge my colleagues across the way to think of what this means to Canadian taxpayers. Those of us over here are intent on finding out what our constituents feel about this. I asked for people to write to me and let me know how they would spend the surplus, if there ever was a surplus in this country. I would like to read a letter.

Dear Sir:

I would like to give you some input from some taxpayers in your riding on the issue of what to do with any government surplus (if in fact one ever occurs). In short, think deficit reduction. Yes we feel heavily taxed and yes we feel some services have been cut a little too far and our take home pay buys less than it used to, but the $600 billion national debt is a disgrace and a millstone around the necks of all Canadians. It will be even worse for future generations if we don't face reality and deal with this debt.

That is from Bruce and Deborah Maher in my riding.

Public debt charges will eat up 33 cents of every revenue dollar in the current fiscal year or 69 cents out of every personal income tax paid by Canadians.

In 1997 the average Canadian taxpayer will pay about $3,285 a year in taxes just to pay interest on the debt. Large debt burdens also force interest rates higher. This increases the cost of mortgages, automobile loans and household items like washing machines and refrigerators, and carrying credit card balances.

Debt reduction frees up a fiscal dividend for reinvestment in the Canadian economy. This can be done in the form of strengthened social programs, lower taxes or a combination of both.

Cutting the debt in half would put about $1,600 back into the pockets of every average taxpayer in this country. Or the government could even give a mix of tax relief. Anything would be better than what we have.

The government could provide an 8% reduction in personal income taxes, or something it promised a long time ago, the total elimination of the GST. The Liberals could finally honour their 1993 election promise to scrap that hated tax. This could only be done if the Liberals reduced the accumulated federal debt by half. Given the most recent offering by the Prime Minister, I do not think this is likely to occur at any given time.

Sadly this budget does nothing to help ordinary taxpaying Canadians. If anything it impoverishes them further by increasing the tax burden. If that fact is not now readily apparent to taxpayers, when we all sit down and start filing our income tax in the next month or so, then reality will hit us once again.

I cannot support this budget.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I want to deal with a couple of the errors, or misconceptions maybe, that the member has indicated in his speech.

First of all he left the impression that since the tax revenue of the government is going to increase from $107 billion to $140 billion that somehow, and members opposite use the phrase over and over again, this is being done on the backs of Canadians. The hon. member is using a little bit of smoke and mirrors.

There are a million more people working in Canada than there were in the prior year or since the mandate of this government commenced. That means there are more taxpayers working, more taxpayers paying their taxes and there is more revenue for the government. It is absolutely erroneous to suggest that somehow this is a greater tax burden on the individual Canadian.

The member also talks a lot about bracket creep. He had a lot of fluff in there about all the editorial commentary. The member should probably well know, and I think Canadians should well know that this bracket creep issue has to do with the indexation of the basic personal amount as an example, which is $6,456 and an inflation rate exceeding 3%. Given what the inflation rate was for instance last year and taking the federal rate, what we are talking about is approximately $12.46 for an ordinary taxpayer in terms of the federal coffers.

The member goes on and on about 33 tax increases since this government took its mandate. We are talking about small items. We are not talking about the substantive items.

I want to ask him a question about tax relief. Tax relief in the amount of $7 billion was provided to Canadians in this budget. It included items like increasing the provisions under the basic personal amount. It included a number of measures, but it accumulated to some $7 billion. That is included in the determination of a balanced budget. The member may suggest that the tax relief is nominal, but it was $7 billion.

If the member is going to make the argument, can he stand up and explain to the House exactly how or what he is going to change in this budget? What item is he going to change specifically to provide which tax benefit? I want him to say exactly what tax benefit he is going to provide to Canadians. How much is it going to cost? And is he still going to be able to deliver the balanced budget that Canadians have asked for?

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, the most important person to consult in this whole thing is the Canadian taxpayer.

I went back to my riding last week and held town hall meetings all across my riding. I sat down with Canadian taxpayers to whom I give a lot of credit and who have the intelligence to look at this budget and say whether it is really helping them. All I can say in answer to the member's question is that those people have told me that the ordinary average Canadian on the whole feels they are not getting enough tax relief out of this budget. For 27 years they have been paying for these deficit budgets by Liberal and Tory governments and they feel it is time that the government finally rewarded them.

[Paul Szabo, Liberal, Mississauga South, ON]

How much?

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

I cannot tell the hon. member how much, but I can say that they felt that it would certainly have been a whole lot more if this government had been listening to Canadians.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I just heard the Liberal member comment on the tiny impact of bracket creep. Actually it is about over $1 billion a year that it takes from taxpayers' pockets. But I point out to my friend that the government's tax reduction strategy next year will only be $880 million. In other words, bracket creep completely eliminates the tax relief the government is so proud of.

Will my friend from Nanaimo—Cowichan comment on this? Will he also comment on the huge impact that CPP tax increases will have on the pocketbooks of average Canadian taxpayers?

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Mr. Speaker, my hon. colleague has hit the nail right on the head. This government is taking money out of Canadian taxpayers' pockets, whether it is giving minimal tax relief or not. It is taking money out through things like the CPP. I suspect this government will find other more innovative ways to take more money out of the pockets of Canadian taxpayers through user fees. Things which we used to get basically free from government we will now be charged for. The government will find other ways to do this so it can continue on its big spending spree.

How could the government do it otherwise? It would not be able to do it. It has to have more money coming in to pay for the money that is going out. It will do it somehow.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I will be sharing my time with the hon. member for Miramichi.

I welcome the opportunity to participate in today's budget debate and to congratulate the Prime Minister and the Minister of Finance for leading us and all Canadians into the era of balanced budgets.

To me it is not the applause of economists and accountants that makes our first balanced budget so historic. It is the fact that our fiscal progress allows us to begin an equally crucial journey and that is to relieve the heavy tax burden which Canadians must shoulder. The residents of Waterloo—Wellington are grateful for the very steady course which has been taken by the government.

I am also very proud of the way the budget has launched this journey with reasonable prudent steps. The increase in the basic exemption and the elimination of the general surtax for Canadians earning under $50,000 a year will benefit 14 million citizens. They also ensure that our hard won fiscal progress is not put at jeopardy.

Of course we have already heard the squawks and the screeching that our tax initiatives should have gone further. As opposition parties it is always easy to advocate broader based tax relief, but this government has come too far in the fiscal battle to let that type of political grandstanding jeopardize the progress we have made to date and for which Canadians have worked so hard.

The challenge we must continue to meet and master is clear. We can only begin moving to even larger tax cuts when the attack on the fiscal mess left by the previous governments is truly over. That means not just continuing to run balanced budgets but also ensuring that the debt itself is set on a real downward course.

I am confident that most Canadians know that wider tax relief today would have been paid for in one of two ways: either by pushing us back into a deficit, or by cutting back on our investments in vital social programs. The increased funding we are providing to the provinces under the Canada health and social transfer as an example, or our funding for the Canadian opportunities strategy as another example would have been cut.

What about that funding, especially the Canada millennium scholarship fund? I know it is tempting for critics to look at this $2.5 billion endowment and suggest that it might better go toward augmenting our $1.6 billion personal revenue tax relief for low and middle income people. However, the fact is that the scholarship fund is a one time investment. Its payouts will be spread across the 10 years in which we will be providing the scholarships. The general tax relief announced by the minister is much more permanent.

As a result of the two measures, the increase in the basic exemption and the elimination of the surtax, single people earning $30,000 a year will see their tax burden reduced by 3%. For single people earning $50,000 a year, they will see a 2.4% reduction. For families this is an important measure. Taxes will fall by 3.3% at $50,000. This means that a family with an income of $30,000 will receive a 31% reduction in taxes, with its total federal income taxes falling to about $300 or 1% of income.

Let us look at the saving to the total number of taxpayers. The combination of the increase in the basic exemption and the elimination of the general surtax will deliver $880 million in savings in the first year. As the economy and incomes grow, that saving will increase to almost $1.7 billion by the year 2000-01. In fact in over just three years the bottom line saving to taxpayers will exceed $4 billion. It will continue to grow year after year.

That is the fair and honest comparison which critics should make: our scholarship endowment with its one time $2.5 billion cost, equal to $250 million a year; and our tax relief, saving consumers $1.7 billion year after year.

To me this reflects the fair and balanced strategy which has become our hallmark since coming to office. We are not the party which tries to play Canadians off against each other. Our philosophy centres on acting where the need is greatest and where the government can do the most good. Surely taxpayers and students meet those criteria.

Let me emphasize, as the minister did in his budget speech, that this government's goal continues to be lower taxes and lower taxes even further. That is a pledge that Canadians can trust as our track record clearly shows and makes clear.

Remember, from our first days in office we have understood the economy and the social problems that are caused as a result of Canada's high taxation levels. That is why we did not increase personal taxes in any of our budgets.

You would probably have to go back a long time to find any comparable period when personal tax rates stayed unchanged, much less dropped as with this budget.

From the start, where we could afford it and where it could do the most good, we have implemented targeted tax cuts. These are cuts that this budget also builds on.

For example, it is our government that in 1998 lowered the employment insurance premium rate for employees from $2.70 per $100 of insurable earnings from the previous $2.90 rate. For workers, this means paying up to $78 less in premiums in 1998 than in 1997. For employers, it means paying up to $109 less per employee.

In fact, the 1998 premium rate reduction is the second largest drop in EI premiums since the 1970s. It will reduce premiums paid by employers and employees by an estimated $1.4 billion.

It was our government that in the 1997 budget proposed a two-step enrichment for the current $5.1 billion child tax benefit to create a new $6 billion Canada child tax benefit by July 1998.

Overall, more than 1.4 million Canadian families with 2.5 million children will see an increase in federal child benefit payments as of this July.

Also, it was this government that took concrete actions through the tax system to assist Canadians with disabilities. For example, a list of expenses eligible for the medical expense tax credit has been significantly broadened and the customs tariff amended to provide duty free entry for all goods designed to use for persons with disabilities.

It was this government that acted through the tax system to enhance initiatives for charitable giving. These are already before this House in Bill C-28.

Once passed, this legislation will reduce the income inclusion rate on capital gains arising from charitable donations from 75% to 37.5%. This puts Canadian charities on an equal footing with those in the United States.

Let me highlight just a few more tax reduction measures we have implemented over the last four years to help Canadians and sectors most at risk or in need.

We have eliminated the seven-year limit on unused RRSP room so that Canadians who face short term economic problems do not have to feel that their retirement saving is in jeopardy.

We have raised the annual limit on the transfer of the tuition fee and education amounts to those who support students from $4,000 to $5,000. We have increased the annual limit on contributions to registered education savings plans from $1,500 to $2,000 and the lifetime limit from $31,500 to $42,000. Through Bill C-28, we are increasing the annual limit another $2,000.

We have broadened the eligibility for the child care expense deduction to assist parents who undertake education or retraining. We allowed most charitable and public organizations to raise funds without collecting and remitting GST on sales. We have provided a 100% GST rebate on books purchased by public libraries, educational institutions and other specific bodies.

We still have no illusions that these measures are more than very small steps in addressing a very large problem but they are real steps, steps designed to do the most good with the resources we have available. Most important, most of them are steps that reflect our national values, providing mutual support for Canadians in need or who face real disadvantage.

That is why our 1998 budget keeps our red book II promise to further enrich the Canada child tax benefit. This enrichment will be made in two steps, an increase of $425 million annually beginning in July 1999 and a second increase of $425 million annually commencing in July 2000.

Next, as the Minister of Finance told us to help working Canadians with children, the 1998 budget proposes to increase the limit on the child care expense deduction.

Beginning in 1998, the limits for the child care expense deduction will increase from $5,000 to $7,000 for children under age seven and from $3,000 to $4,000 for children between the ages of seven and sixteen. This measure will benefit some 65,000 Canadian families with children.

We have also been a government that recognizes the challenge of the aging population. We have had to address this in connection with the Canada pension plan. We will be addressing it further with the seniors benefit, but this budget takes it a further step.

There are other tax measures in this budget that I could highlight and other examples of actions in previous budgets that we can be proud of but I think my point is clear. Our performance on behalf of the average taxpayer is concrete, credible and consistent. I look forward to our future budgets as our fiscal strength expands, when this government will further broaden and deepen the tax relief that Canadians not only deserve but also desire.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, my friend across the way just put the best possible face on the budget, which I had expected. However, in fairness, the official opposition has to put things in perspective here.

My friend did not mention that Canadians face the highest taxes in the G-7 today, 56% higher than the G-7 average. He did not mention that in the last 15 years, between 1980 and 1995, we saw taxes in this country increase relative to GDP by 29% while they went down in the U.S., Japan, the U.K. and Germany. Our taxes have gone absolutely through the roof.

What my friend did not point out is that it is people at the low end of the income scale who pay the highest price because of this huge rise in taxes.

My question to my friend across the way is, given that the government has introduced targeted tax relief but also introduced broad based tax increases with the net effect of raising taxes by close to $7 billion over the next three years, notwithstanding its tiny $7 billion in tax relief, the net effect is still a $7 billion increase, how does that help Canadians and in particular how does it help low income Canadians?

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I would ask the hon. member to look at the budget and read it very carefully so that he understands fully that low and middle income Canadians have in fact benefited from the kind of progress that we as a government are making. The member should consider the evidence. We have some of the lowest interest rates in historical perspective. We have generated an incredible amount of activity which has created the kind of climate that Canadians not only want but deserve.

The member makes reference to the G-7. We are leading the G-7 in terms of the kind of economic activity that we are doing. We have selectively noted that there will be tax reductions for low and middle income Canadians which is a good move and one that is very much deserved. We will see more of that. As time progresses there will be an opportunity for those kinds of initiatives to kick in. I look forward to that because it is important that we as a government move on that front.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I congratulate the member on his speech concerning this very historic budget.

One of the important elements of this budget, after we consider the impact of balancing it, is the theme of education as it relates to preparing our youth for their place in the workforce as they move through their lives.

The member well knows that under the Canadian opportunities strategy, the Canadian millennium scholarship foundation is the centrepiece. In addition to that, the tax relief on interest payments on student loans, the tax free RRSP withdrawals for lifelong learning and an education credit and child care expense deduction for part time students are certainly some of the others.

I thought I would just ask the member if he would like to comment a little bit on the issue of education, maybe from the perspective of his own riding, concerning the reception that Canadians have been giving to the investment that we are making in our youth.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, as a former educator, I can say that I was absolutely elated in terms of the kinds of initiatives that we see for our young people especially, for our youth who deservedly need that kind of assistance.

The reception not only in my riding but in Ontario and across Canada has been overwhelming in terms of the kind of reception people, and especially our young people, have given. They know full well this was an important historic budget that will sustain them into the year 2000 and the 21st century. It is very important that we give our young people those all important first chances and opportunities to enable them to carve out the kind of thing they require in terms of their lives and futures. I am proud to be part of a government that has been able to do that.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, I was moved by the member's comments about the benefit this budget provides for young people. My wife and I have raised four young people. My son Spencer has worked for a low paying income that most young people are forced into or it may be just a matter of growing up. He made $14,613.32 in the last fiscal year. He paid $393.16 in UI, $1,572.45 in income tax and $296.83 in Canada pension plan for a total of $2,262.44.

Could my hon. friend across the way tell me if this is being fair to the young people of this country?

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I thank the hon. member for his question. This government has created the kind of climate for the economy that will enable all our young people to excel and proceed into their futures with not only confidence but also knowing full well they will have an opportunity we used to take for granted and now they should too.

We have been able to do that in a way that is commensurate with the kinds of dreams young people have. It is important that we proceed accordingly and carve out that kind of opportunity for all Canadians and especially our young people.

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Speaker, it is certainly a privilege today to speak on behalf of all the good citizens of Miramichi riding. I congratulate the Minister of Finance and our Prime Minister for a budget that finally addresses the terrible problem of the annual deficit in Canada.

As I listened to the members opposite, I heard concerns being expressed that it was not the Minister of Finance but rather the Canadian people who balanced this budget. I assure them that it was the Canadian people who balanced this budget, but the Canadian people did this after receiving strong leadership, direction and a commitment to make sure the finances of this country were brought under control.

Fifty-two months ago when our party took control of the government, we were faced with a terrible situation in terms of our country almost being on the verge of bankruptcy. The annual deficits were in the vicinity of $40 billion to $50 billion each year. The international bankers were almost on our doorsteps.

It is interesting to note that members opposite do not seem to recognize the necessity of saying to our Minister of Finance that he has done a very good job in bringing our deficit under control.

In 1993-94 the government recognized that a comprehensive strategy was needed in order that our government and our country could be brought back to a fresh new direction. It had to bring confidence back into our economy. It had to bring forward programs that would eliminate waste, that would develop new markets, that would attract new investment and above all that would restore some hope and confidence for our Canadian people.

This budget in 1998 is a continuation of the plan that was set forward in 1994. On February 24, for the first time in 30 years, the Minister of Finance brought forward a budget that was balanced in terms of our Canadian nation. That is an outstanding accomplishment.

All Canadians can take pride in the fact that we now have brought our economy and our government spending under control. We are facing an opportunity now to enter the 21st century with a sound economic and fiscal approach to our government and to our country.

This ever improving financial situation for Canada has helped drive down interest rates. Those wanting to invest in our country today have some of the best interest rates that they have had in the last 30 years.

We have heard today about employment and unemployment. Being from the Miramichi I have to be continually concerned with the need for our people to seek employment. We have had difficulties in the Miramichi. In 1996 we saw the closure of base Chatham. We saw a lot of people lose their jobs. That along with the difficulties that we have in Atlantic Canada was a major concern for us and the province of New Brunswick.

I am happy to report today on the outcome. Great efforts have been put forward by our former premier Frank McKenna, by members of the legislative assembly of the province of New Brunswick and by our community leaders in the Miramichi. All of us have worked together to enhance our economy and to provide more job opportunities for our people.

The member opposite alluded to youth. In our country we have to be continuously concerned that our youth are provided with opportunities where they can obtain successful and rewarding employment.

In the last few years we have seen the unemployment rate in this country drop from 11.2% to approximately 9%. This has certainly been an achievement. Our government must work diligently to make sure that unacceptable levels of unemployment especially among young Canadians remains a very great concern.

Recently we announced the internship program. Some 3,000 people will be offered an opportunity to take part in internship with governments and private industry.

We also see in this budget that employers who hire young people between the ages of 18 and 24 will be given an employment insurance benefit holiday for the youth they hire in the years 1999 and 2000. Every member of Parliament has to make sure that our young people, our most enthusiastic workers in many cases, are given opportunities to get gainful employment.

We talked about the great national debt which approaches some $600 billion, a legacy of overspending particularly by the governments before us. This debt is affecting the lives of all Canadians. Some 28.3 cents of every tax dollar are committed toward paying the interest on that debt. All of us on all sides of the House must make sure that we continually approach the concept that reducing that debt will be in the best interests of all Canadians.

The debt has to have a rigorous program to make sure that it is maintained and kept under control and above all, eventually brought down to a minimum. We hear people casting stones about the debt. All Canadians have some degree of debt, whether it be a mortgage, a car loan or some personal loan. As Canadians, even though we have to look at the debt in different ways, we must assume that the debt generally has been used to pay for some worthwhile assets that our country now has.

We find that more than 14 million Canadians will only get a minor break in tax relief, but it is a start. It is a beginning. We have the $500 increase in the amount of dollars people can claim on a non-taxable basis. This will benefit most Canadians, especially those in the lower and middle income groups.

We also have to recognize that money is being put into the child tax benefit program by which Canadians of lower incomes, below $20,921, can receive $1,625 for the first child and $1,425 for each additional one.

I am also happy to see the great attention being placed on education in this budget. We have certain breaks now for those who are having difficulty with their student loans. We have the concept of Canadians being able to invest in their children's education. The Canada education savings grant program will mean the government too will contribute toward the annual amount that each taxpayer can contribute into an RESP.

I see my time is running out and I have to shorten my speech. Overall I would say that most young people in this country, most university students, most of our youth see this budget as a very favourable beginning.

University programs have been good. We also see the concept of money being offered in terms of tax breaks to those who volunteer as firefighters and members of local fire departments.

In general even though we may hear criticisms from the other side of the floor, I think this is only part of our governmental process. We on this side of course are doing our best to make sure that the programs are well explained. On the other side, and I see some members nodding, it is their duty to point out what is difficult in the budget.

I would like to see more positive solutions instead of negative criticisms which really add very little to our debate. Hopefully before the vote is held tonight, we will hear some more positive remarks from those members who are sitting opposite.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I want to thank my friend opposite for his speech. I want to point to a statement he made when he praised the finance minister for his leadership, as he phrased it, in battling the deficit.

I want to point out to my friend that in 1995 when the finance minister brought in his budget he did make a commitment to reduce spending by $5 for every dollar in new revenue that he brought in. Imagine the surprise of Canadians when three years later they found out what actually happened was that the government brought in $2.10 in new revenue for every dollar it cut. In fact the government actually reversed completely the promise it made in 1995.

I think that is a betrayal. I think Canadians believe in a small limited government, a government that lives within its means and understands its limitations, understands that it can only do a certain amount of things.

It was taxpayers through revenues who really beat this deficit down. If we look at the numbers, we will find that 69.1% of the improvement in the government's fiscal position was due to new revenues. A very, very minor portion, about .6% of the improvement in the government's fiscal position was due to departmental spending cuts and the rest was cuts in transfers to the provinces.

Would my friend agree that the rewards of the surplus should be distributed to people on the basis of that formula? In other words, two-thirds of the surplus should go to taxpayers, .6% back to bureaucrats for increases in government spending and the remainder back to the provinces to fix the health care and higher education that this government helped destroy.

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Speaker, it is always good to hear my hon. friend because I think he has almost as many facts as the computer that sits near my desk and we have to judge them accordingly.

We have to recognize that some 700,000 or more new jobs have been created and that we have a great number of new taxpayers. That is what this government is all about. We are out there trying to get more Canadians employed. I mentioned that some 9% today are unemployed. I would like to see that figure at 5%. With that, our revenues would increase accordingly. We would be able to restore more people working in terms of our economy, building a greater confidence in their ability to invest and to purchase goods. We would have a tremendous economy. The hope is there as we approach the 21st century.