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House of Commons Hansard #79 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was debt.

Topics

Budget Implementation Act, 1998Government Orders

11:50 a.m.

NDP

Dick Proctor NDP Palliser, SK

Madam Speaker, in view of the lack of time, I will confine my remarks to the first point raised by the hon. member concerning education.

I think it is fair to say that this party, given the opportunity, would never have introduced a scholarship millennium fund similar to the one we are debating here and now. The problem for us is that the transfer money should go back to the provinces and the territories and not in the way that it is being done here where it is being handed out in some sort of way yet to be determined for individual students.

The government has cut back significantly on post-secondary education and on the facilities. It would have been much better if the money had been put back into those facilities so that tuition fees could be reduced and programs could be enhanced. For political reasons the Liberals have chosen to go at it another way.

Budget Implementation Act, 1998Government Orders

11:50 a.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Madam Speaker, I rise in the House today to speak on Bill C-36. It has been nearly a month since the Minister of Finance marvelled to all who would listen to the upside of his balanced budget.

My message today for those who find their conscience in favour of this bill is to reflect on the tired but relevant cliche, that this budget is only as strong as its weakest link.

Let us not fool ourselves by standing here in the House and declaring this country has a cause to rejoice. Let us examine some of the weakest links of this so-called balanced budget, which even the auditor general cannot endorse.

As of this day, Canadians are still the highest taxed individuals in the G-7. While Canadians' personal disposable income decreased, the incomes of our G-7 neighbour to the south increased. The Canadian standard of living is 25% lower than that of the United States and this gap continues to expand. Youth unemployment figures are staggering yet the government continues to lack a plan to address the issue.

Just last week the CIBC reported that some 200,000 unemployed youth do not appear on the government's books. All the wonderful news of 85,000 new full time jobs being created did nothing to help young Canadians support themselves. Our current statistics show that our youth unemployment rate is twice that of the United States.

These points tell me the minister has become obsessed with this new agenda and sweeps the issues of the individual under the carpet.

What did the budget do for tax relief in this country? We see the 3% deficit surtax being slowly eliminated. Leading Canadian economists agree that tax relief is essential to job creation and prosperity. In fact, the Minister of Finance has said so on different occasions himself.

Catherine Swift from the Canadian Federation of Independent Business, who shares a key factor of the Progressive Conservative platform, stated that further tax cuts would help business create jobs, something the government should listen to: “We are still not seeing a major job creation agenda here and from a small business job creator's standpoint, that really should be the prime target”.

This government lacks transparency in the area of employment insurance. The auditor general criticized it for using employment insurance to reduce the deficit when the system was not set up for this purpose.

In the budget the government boasted of reducing all taxes by $7 billion over three years. Yet the same government is taking $6 billion annually out of taxpayer pockets. To my knowledge this is the only government to establish an unemployment plan for Canadians. It creates more unemployment, raises taxes and taxes employment insurance. That is what its policy is doing.

When the Liberals are asked to reduce contributions they say no, that does not work, it will not create real employment. Yet in the budget they are doing just that for people between the ages of 18 and 24 for two years only. When they are asked why, it is to create employment. If it works for young people aged 18 to 24, will it not work for people aged 45 to 55? Unemployment is too high in Canada? No, they believe only in minor measures and always to save face.

The minister had an opportunity to follow his own wisdom and make substantial cuts to the surplus, cuts that would have given every wage earner in the country more disposable income and therefore given businesses the cashflow essential to create jobs.

Even more shocking, if the Minister of Finance had consulted his own cabinet colleagues he would have found the industry minister agrees with the PC Party that tax cuts in Ontario have increased job creation and spurred economic growth. Instead of aiding Canadians directly with significant payroll tax relief, he elects only to respond to their needs by phasing out the 3% deficit surtax.

What Canadians do not know yet is that the Liberal government will soon be introducing the single largest tax hike in Canadian history by increasing Canada pension plan premiums. What has taken place here is that we see the 3% surtax totalling $1.6 billion phased out and replaced with a tax hike that dwarfs all its predecessors, bringing it to $2 billion.

It is as though we are at a carnival. While Canadians guess which cup the peanut is under the minister continues to shuffle and dazzle the crowd. In the last election we saw the carnival booted out of Atlantic and western Canada. Ontario and Quebec are his last stage because sooner or later people will see the costs of the minister's games.

Let us take a look at another weak link in the budget, the great Canadian brain drain. Provincial premiers made it clear they wanted from the budget a return of the billions in cuts from transfer payments that devastated health care, social programs and education programs.

For years now education has been a responsibility of the provinces. At a time when we have another potential national crisis on the horizon, the Liberal government elects to drive a wedge into interprovincial relations by creating the millennium fund. It has set aside for the fortunate class of 2000 and beyond $2.5 billion to assist some 7% of all students to further their education. In my mind it is a modern day Avro Arrow program.

If substantial tax cuts are not made to create jobs, we place graduates on graduation day in Seattle. Someone should point out to the Minister of Finance that “sleepless in Seattle” was just a figure of speech in a movie. At the present time Bill Gates at Microsoft has extended a standing offer to all Waterloo computer science graduates and the result is that over 80% of them are going to the United States.

My home province of New Brunswick, which has invested significant dollars into information technology training schools, cannot retain the graduates it produces because it is not able to compete with the U.S. market. We see the same exodus across the country. It is disturbing to think that a large portion of the $2.5 billion will benefit the U.S. economy.

Why go to the U.S. one may ask. For one the jobs are there. Wages are higher and taxes are lower. Yet other students were forgotten. What about the students of today and next year? They were simply forgotten, not to mention the 97% who will not benefit from the millennium fund in the next century. They will not forget on graduation day as they watch Canada customs in their rear view mirror.

Let us consider the comments of Sherry Cooper, chief economist at Nesbitt Burns, who said broad based tax relief was crucial to our economic future. She said:

We are pouring all this money into education and scholarships, and then the better and brighter will go straight to the United States where taxes are massively lower.

The Liberals have feed the brain drain from this country. Instead of taking measures to be at the forefront of an emerging information technology industry, they have decided to finance another country's efforts. When one steps back and examines the links in this chain, one comes to a quick realization that the government has abandoned our social policies.

Our society expects government to take care of the elderly, young people, workers and other individuals facing personal crises and in need of a helping hand. These values are not to be sacrificed. Canadians will not allow what makes the country so unique to be altered, yet they know these values come at a price.

The goal for any government is to balance values against fiscal responsibility. Some may think this is blatantly obvious, but as I read the budget I realize these fundamental principles or links in the chain were well worth repeating.

The government has ignored these concepts and values. It claims to be sympathetic, yet it threatens seniors with a hidden project it never unveiled as part of its platform.

Canadian seniors rely on three basic sources of income. The government has systematically attacked the retirement savings systems since it has taken office. It has done so in piecemeal fashion with the bottom line as its consideration. It has not addressed the fundamental questions of what kind of retirement assistance Canadians need and want or what are the best ways for government to ensure Canadians are secure in their retirement.

Some would ask why the seniors benefit is an issue. Let us state the obvious. It certainly was not an issue in the budget. In fact, the government has gone back to the drawing board because of the flaws my party exposed in the seniors benefit. The Liberals proposed to eliminate the OAS, the pension income tax credit, the age credit and the GIS. To date they have refused to provide a full and proper analysis of how these measures would affect retired Canadians in the future.

The Progressive Conservative Party of Canada is committed to forcing the government to disclose fully to Canadians the financial impact of the proposed seniors benefit. Canadians of all ages must understand its consequences. The Liberal government must not be allowed to destroy the foundation of our national pension system.

The government claims to be concerned about workers, but the budget has nothing to do with the famous Liberal election battle cry. Not so long ago a chant fell on Canadians' ears shouted by the Prime Minister proclaiming jobs, jobs and more jobs. In the budget it resembles less than a flattering wailing of a trombone.

Middle and lower income Canadians needed to hear from the budget a trumpet of hope, for hope is what keeps the disparaged committed to protecting the values of our society. When hope is lost so are our motivations, our strength and our willingness to endure.

In closing, we share with the Prime Minister of Canada and so too taxpayers that the budget was one trick pony where even the word balanced could not be endorsed by the auditor general. The minister may feel that his spread sheet's bottom line is balanced, but his trust to serve and protect the values of the people have been wrapped in chains with many weak links. Once broken they will break free and bring true balance to our economy.

My party believes that it is time for Canada to have a strong plan for growth in our economy. We need to get our foot off the brake. For us this means lowering taxes by reducing EI premiums by about one-third to create jobs and lowering taxes by increasing the basic exemption for Canadians to $10,000 to allow lower income Canadians to earn more and buy more of the essential goods they need.

This is a government which has a great opportunity to launch us on a new path, to close the chapter of deficits, and to start us on a new path. It should set a target for debt reduction so that we are able to measure our performance and to live in a political environment where we can go to our neighbours and say that together we need to limit spending to keep it under control. If we do, we will meet a specific target. When we get there we will be able to reduce taxes further.

If we create that kind of political environment we will all increase our chances of succeeding. Those should have been lessons learned in the budget. Our party firmly believes that we need a plan for economic growth. The budget is more than just about numbers. It is about values. It is about the choices we make. It is not good enough to shift numbers around.

Some parties would say they would put more money into education but then they would cut equalization. The position we have taken is that there would be more money put into education by building a new deal with provincial governments. Then there would be a health care guarantee for all Canadians and we could leave provincial governments alone.

We believe in a plan for stronger economic growth. We can reallocate priorities. We can put the emphasis on education, health and guaranteed services to Canadians. It requires the political will, the vision and the foresight to make it happen. I am sorry to say this is something that was not part of the budget.

The Progressive Conservative Party of Canada and I cannot and will not support Bill C-36 because it was merely a numbers game that has left our country and our people suffering today with little hope.

One could conclude that the budget should be judged by its weakest link or by the missing links of the Minister of Finance.

Budget Implementation Act, 1998Government Orders

12:10 p.m.

Liberal

Rose-Marie Ur Liberal Lambton—Kent—Middlesex, ON

Madam Speaker, when my hon. colleague first began his speech he quoted Catherine Swift, president of CFIB, and made a statement regarding her reaction to the budget.

I would like to quote from Catherine Swift as reported on February 25 in the Ottawa Citizen :

The biggest thing in there for small business was income tax reduction. Putting more money into people's hands is good for the economy. From a political standpoint it was a good budget. There was a little something for everyone and a huge amount of wiggle room which would allow the debt to be paid down faster.

Regarding his quotation of Catherine Swift and whether she had more time to digest the good budget the hon. minister brought down, how could he say that it was negative? The day after the budget she indicated that she was quite in favour of it.

Budget Implementation Act, 1998Government Orders

12:10 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Madam Speaker, I thank the hon. member for giving me a chance to get back up to speak on this point.

One good thing about the budget is that it is balanced. Why is the budget balanced? Is it because of Liberal government procedures? I do not think so and people know that is not what it is all about.

It is about measures, sacrifices made by Canadians. We are talking about free trade, which they voted against. We are talking about GST, which was unpopular. They also voted against that. We are talking about surtaxes, where the money comes from.

I cannot say that the government has not done anything. I will be honest. I could not say that. I would be lying and I do not like to lie. I am not a liar. The government has done something. It has cut transfer payments to provinces which affect social programs, education and health care.

Nobody knows more than Canadians the effect of these slashes. People are looking for beds in hospitals throughout Canada and cannot find them. Students are trying to obtain post-secondary education to compete in the global market and are unable to finance it. This is what the government has done.

Social programs in regions in great need of social programs have been slashed. People are starving. People are suffering. To say that you have done nothing, I could not do that. There is a lot that we can do. I hope that we have the ability and the political will to do so.

Budget Implementation Act, 1998Government Orders

12:15 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

Mr. Speaker, the hon. member raised the issue of hope.

I would like to sincerely invite him to my riding of Elgin—Middlesex—London and show him a community that during the waning days of the last Tory government probably suffered through the worst recession in its history. It had an unemployment rate of well over 16% or 17%. Factories were moving out of our community en masse.

I would bring him down to the community now and show him that our unemployment rate has roughly been cut in half, if not better. We have investments from companies all over the world. If he wants to see a more hopeful, optimistic community, have him come to Elgin—Middlesex—London.

I would also like to suggest that the story in my riding is not unique. It is being repeated all across the country.

The point about Canadians having the highest income taxes in the industrialized world is something we hear from the Conservatives. It is something we hear from their kissing cousins the Reform Party. The fact of the matter is that a truer picture of tax fairness includes all taxes. The opposition repeatedly distorts the facts by focusing on selected tax measures.

Total tax revenue for all levels of governments stood at 36.1% of GDP in 1994. This puts Canada in the middle of the G-7 countries. Canada relies more than most countries on income tax and less on payroll and sales taxes which increases tax fairness.

My main point is that in October 1997 a study conducted by KPMG, an international consulting firm, concluded that Canada has lower overall business costs than the United States and Europe, including the lowest overall tax burden of the seven nations studied.

Budget Implementation Act, 1998Government Orders

12:15 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Mr. Speaker, I would like to thank you again for giving me another opportunity to get up and speak on this.

I would like to ask a question of the hon. member. What planet is he on? We all know that we are the highest taxed country in the G-7.

He also mentioned that I should visit his riding. I would like to bring to his attention my riding, the people I represent. He mentioned 19.5% or something like that. I will give him the number from my riding. How does 50% unemployment sound? It does not sound very good. I hear comments of bravo from the other side, but I would not say that to the people of New Brunswick, the people of Madawaska—Restigouche who are suffering today because of the cuts in transfer payments that the government has made.

The cuts to the EI, the reform of the Employment Insurance Act have put these people against the wall. I invite him to come to my riding and see these people, maybe consult with them. I invite the government to come to my riding and consult with these people and maybe find solutions to this chronic problem. It is not more EI. It is to find solutions.

My Reform colleagues next to me would do away with EI and do away with Atlantic Canada. That is what they would do. It would start in Ontario. We know what they think.

We have a responsibility to all Canadians. We have to study what has been going on in different parts of the country. It is not just to throw money at the regions with the highest levels of unemployment. It is to find solutions.

I invite the hon. member to my riding as well.

Budget Implementation Act, 1998Government Orders

12:15 p.m.

Edmonton Southeast Alberta

Liberal

David Kilgour LiberalSecretary of State (Latin America and Africa)

Mr. Speaker, I wonder if the hon. member would tell us how he would allocate the fiscal dividend. On $100, how much would he put to the debt, how much to investments in education and health and how much to tax reduction?

Budget Implementation Act, 1998Government Orders

12:20 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Mr. Speaker, I agree that we have to attack the debt. We have said this all along. We need to have a balance. We need to balance debt reduction with our social responsibilities. If we can do that, we will find a way to please all Canadians, including those in central Canada and all the people in need. There is a balance to be found and we should look for it.

Budget Implementation Act, 1998Government Orders

12:20 p.m.

Bloc

Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, I listened carefully to the remarks made by the hon. member for Madawaska—Restigouche, the riding next to mine in New Brunswick. I agree with him that we would indeed have expected a bill like this one to put back a much more substantial amount into transfer payments so that the provinces will have enough money to provide health care.

The Liberal government and its supporters claim, on the one hand, that health should be a priority and at the same time drastically cut transfer payments, starving the provinces as the result, and on the other hand, they say “We are going to develop a home care system”. Imagine the federal government involved in home care.

Does the hon. member agree with the Parliamentary Secretary to the Minister of Human Resources Development, who stated this morning that the whole employment insurance issue was not an urgent matter? He said that we could take our time, that there was no rush to take action on this issue.

Will the hon. member for Madawaska—Restigouche, whose riding, like mine, is struggling with high unemployment and the problems associated with seasonal industries, comment on this position, which should have been reflected in the bill before us? Does this not go to show how insensitive the Liberals can be not only for eastern Quebec but also for all the maritime provinces?

Budget Implementation Act, 1998Government Orders

12:20 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Mr. Speaker, I thank my colleague for his question. I agree with him entirely.

As he knows, at my first committee meeting, I moved that we study the impact of the employment insurance reform, because I come from a region that is hard hit by unemployment.

I am disappointed by the committee's decision this morning, because this matter warrants study urgently, in fact more than study, because the employment insurance reforms have already been studied. The study did not reveal much. What needs to be done is for us to visit the regions, like those of my colleague and myself, to see what the employment insurance reforms have meant for the people. That would be much better for everyone. order

Business Of The HouseGovernment Orders

March 24th, 1998 / 12:20 p.m.

Liberal

Bob Kilger Liberal Stormont—Dundas, ON

Mr. Speaker, discussions have been held among the members of all the parties and primarily the member for Shefford on the division scheduled for Thursday, March 26, 1998 on Motion M-198. You will find unanimous consent for the following motion:

That, at the conclusion of the debate Thursday, March 26, 1998, on Motion M-198 under the name of the Member for Shefford, all questions necessary to dispose of the said motion shall be deemed put, a recorded division deemed requested and deferred until Tuesday, March 31, 1998, at the expiry of the time provided for Private Members' Business.

Business Of The HouseGovernment Orders

12:20 p.m.

Bloc

Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, I want to address the government whip's point of order, on clarification.

I moved an amendment to the motion in question. Will the vote on the amendment be deferred the same way as the vote on the main motion? If so, we would support the government whip's motion.

Business Of The HouseGovernment Orders

12:25 p.m.

Liberal

Bob Kilger Liberal Stormont—Dundas, ON

Mr. Speaker, I am sorry, and I apologize to the member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques for failing to discuss with him, because we need approval from him and the members involved. It is certainly our intention to have the vote on the amendment the same evening, on Tuesday.

Business Of The HouseGovernment Orders

12:25 p.m.

The Deputy Speaker

Is it the pleasure of the House to adopt the motion?

Business Of The HouseGovernment Orders

12:25 p.m.

Some hon. members

Agreed.

(Motion agreed to)

The House resumed consideration of Bill C-36, an act to implement certain provisions of the budget tabled in Parliament on February 24, 1998; and of the amendment.

Budget Implementation Act, 1998Government Orders

12:25 p.m.

Liberal

Rose-Marie Ur Liberal Lambton—Kent—Middlesex, ON

Mr. Speaker, I will be sharing my time with my hon. colleague from Elgin—Middlesex—London.

I am proud to speak in full and complete support of the government's budgetary measures. On behalf of my constituents I am also pleased to express their points of view on the budget. I have heard from many local residents in the month since the budget was first delivered on February 24 by the hon. Minister of Finance.

To me, families in rural Canada are the biggest winners in this budget, with $7 billion in tax cuts, $13 billion in debt reduction already this year and appropriate investments in health care and education. These are some of the items that my constituents have mentioned to me. I believe we are on the right track and must continue this course.

This budget is a balance between new spending and tax or debt reduction. The Minister of Finance has clearly accomplished that. For example, the elimination of the 3% income surtax for people earning under $50,000 and increasing the basic personal exemption are two measures that will reduce taxes for 90% of Canadians, especially low and middle income earners who form the vast majority of constituents in my riding of Lambton—Kent—Middlesex.

My riding is an assortment of small towns, villages and hamlets, with the two largest centres having populations of approximately 12,000. I was delighted to declare that rural and small town families are getting relief.

With the first balanced budget in 28 years and two more predicted to the year 2000, the Liberal government has targeted its efforts on the economic and social priorities that are important in my riding. These are items such as support for families with children, support for looking after ailing family members, increased access to knowledge and skills with more money for rural Internet access, help for small business owners to hire young people, and to enable them to deduct their own dental and health insurance.

As the Minister of Finance and the Prime Minister have stated, Canada has cut up its credit card. The era of overspending is behind us forever. I know that my constituents are breathing a sigh of relief. They want their hard-earned tax dollars to be spent wisely and prudently. People should expect nothing less from their government. We are delivering and will continue to do so.

As well, our goal is to put the horrendous national debt on a permanent downward track. Last year it dropped for the first time in a generation with more reductions to come to preserve our financial future as a country.

More help for families came in the form of an enriched child tax benefit. The 1997 budget allocated $850 million to the benefit. This year we will increase that by another $850 million over the next few years.

To help working Canadians with children, we will increase the child care deduction limit from $5,000 to $7,000 for children under the age of seven, and from $3,000 to $4,000 for children between the ages of seven and sixteen. This will assist about 65,000 Canadian families with children. It is yet another piece of good news from the budget.

Small business is the backbone of my riding. Entrepreneurs, service providers, corner stores, farm implements dealers and the farmers are all involved in our communities and make a positive economic impact.

If a small business hires someone between the ages of 18 and 24 in 1999 or 2000, their employment insurance premiums will be reduced to zero for those new hires. This will reduce payroll costs for the employers by $100 million a year. This is on top of the EI rate reductions announced in January. Both these actions could reduce payroll costs by $1.4 billion.

To improve equity in the tax treatment of self-employed Canadians, all owner operators of businesses will be able to deduct premiums for health and dental insurance against their business incomes. This is certainly an excellent step forward. In addition, the federal government will benefit the nearly 500 volunteer firefighters in Lambton county and the many more in Kent and Middlesex which are in my riding.

The tax free allowance has been doubled from $500 to $1,000. Mr. Don Crocker, Moore township's fire chief and Lambton county's fire co-ordinator, says: “It is a big deal for them, a big impact for the volunteers, manning the county's 20 primary rural Lambton stations. It is a big plus for volunteers. They are spending an awful lot of time and getting very little for it. I think it is wonderful”.

There are nearly 22,000 volunteer firefighters in the province of Ontario, so we can plainly see this budget is positive for rural Canada.

Camalachie fire chief Gerry Dochstader can attest to the low wages paid to volunteers. Some are paid on a points system, others get compensation from their municipality. The extra tax deduction will help, he says, in a February 26 article in the Sarnia Observer : “It is like compensation for the wear and tear of your car, tearing down to the fire station at 3 o'clock in the morning, whipping out on Sunday calls while still in your good clothes. For what we ask the rural firefighters they are given very, very little in return”.

The tax allowance covers the cost of clothes damaged in fires, special equipment, steel toed boots and other expenses they incur as volunteer emergency workers.

Many of Canada's important industries such as agriculture are based in rural communities. These primary industries account for almost half of Canada's exports. My riding includes some of the best dairy farmers in Ontario. Kent County is the number one corn growing region in the country and Middlesex is home to chicken, egg, beef and pork producers. Agriculture is the lifeblood of my riding and of southwestern Ontario.

The 1998 budget confirms the four year $20 million Canadian rural partnership initiative. This will support innovative programs to help rural Canadians find community solutions to challenges such as maintaining good soil and water and charting a successful course in a rapidly changing economy.

In addition, $30 million over three years has been provided to an expanded community access program. This excellent program will provide an Internet connection for virtually every community with 400 or more residents by the end of the year 2000.

I was pleased to recently announce on behalf of the Minister of Industry up to $15,000 in Internet funding for several libraries in my riding. I am confident that all of them will be hooked up to the information highway very soon.

Children and adults alike are using the services provided and I have heard nothing but great reviews.

Rural communities will also benefit from the $50 million capital injection in the Farm Credit Corporation announced in the 1997 budget. These additional funds will be used to encourage economic growth and diversification.

With fiscal discipline, targeted tax reductions and strategic investments, the 1998 budget is working for rural Canadians and all Canadians.

The budget marks a significant accomplishment for Canada. Tough fiscal control has gotten us this far, and we are not about to let up. Spending must continue to be constrained and federal spending has dropped to its lowest level in 50 years relative to the GDP. For the first time in half a century the Minister of Finance will be produce three consecutive balanced budgets, a remarkable symbol of financial stability on the world markets.

I am proud to be a part of the building of Canada and Lambton—Kent—Middlesex for the 21st century. We will lead all industrialized nations in economic growth this year and next. We can finally look forward to the future with renewed hope and optimism.

Budget Implementation Act, 1998Government Orders

12:30 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

Mr. Speaker, I want to applaud the hon. member for her speech and ask her to comment on the following.

The budget set out a number of issues but the one I was most pleased with was tax relief for low and middle income Canadians. Beginning July 1, 1998 the basic personal exemption will increase, meaning 400,000 low income Canadians will no longer pay any federal income tax.

Beginning July 1 the 3% general surtax will be eliminated for Canadians with incomes up to about $50,000 and reduced for those with incomes up to $65,000. These two measures alone will yield close to $1.4 billion in tax relief for 14 million low and middle income Canadians by 1999 and the year 2000 90% of all taxpayers.

I ask the hon. member whether this focused targeted tax relief for those who need it most is being well received in her riding or perhaps she could give what comments on the tax relief she is getting in her own community.

Budget Implementation Act, 1998Government Orders

12:35 p.m.

Liberal

Rose-Marie Ur Liberal Lambton—Kent—Middlesex, ON

Mr. Speaker, I thank my hon. colleague from Elgin—Middlesex—London for the question. I can certainly attest as to the calls that have been coming into my riding office. With the budgets that this government has produced over the last four plus years we have never really had many negative calls.

They were always positive, that the finance minister was certainly addressing the deficit. Many of the calls I received complimented the minister for exceeding his targets, which has not happened in several years.

The positive element within my community is the same for this budget as it has been in previous budgets the minister has delivered.

Budget Implementation Act, 1998Government Orders

12:35 p.m.

Bloc

Jean-Guy Chrétien Bloc Frontenac—Mégantic, QC

Mr. Speaker, I too represent and was born in a rural riding. I do not know what planet my distinguished colleague from the government party comes from. In my riding, however, I have heard but one piece of praise for the February 24 budget, and that was for the two years of employment insurance premium exemptions for employers hiring workers between the ages of 18 and 24.

I have, however, heard plenty of criticism about the lack of anything to do with job creation. Nothing has been done to reduce the poverty rate in Canada and to close the widening gap between rich and poor. Dr. Wagner of St. Hyacinthe even asked the leader of the Liberal Party to backtrack on the cuts, particularly those to health.

I would like to ask my hon. colleague from the government side a question. Is there in her riding anything like the AFEAS of Thetford, which is in my riding, a group of women who have flooded their MP with letters asking him or her to call upon the government, more specifically the minister of finance, to backtrack on the issue of calculating family income when women begin to collect the old age pension at 65?

It is common knowledge that women are, unfortunately, the ones who will be penalized when the time comes for them to collect their old age pensions.

Budget Implementation Act, 1998Government Orders

12:35 p.m.

Liberal

Rose-Marie Ur Liberal Lambton—Kent—Middlesex, ON

Mr. Speaker, I thank my hon. colleague for his question. I am pleased to say that I am on the same planet he is in this wonderfully great country called Canada.

I appreciate his question. I have not received any negative comments from any women's groups or old age pensioners. The old age pensioners in the riding of Lambton—Kent—Middlesex are fully aware of the fact that the minister is reviewing the old age pension, the GIS and so on. There has not been any indication in this budget regarding that.

On health care, which is brought up continuously in this House, the federal government's cutting transfer payments to the provinces, I will relate specifically to my province of Ontario. When Mr. Harris ran in the last election he promised a $4.5 billion tax cut. Unfortunately the federal government has allocated dollars now and the provinces choose to divide it up. Wherever provinces decide to divide it, it is up to each province to decide whether to put it in health care or social programs. Unfortunately it is reaping a negative impact in Ontario under the circumstances with the massive tax cuts the premier wishes to do.

Budget Implementation Act, 1998Government Orders

12:40 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

Mr. Speaker, it is my pleasure to speak on the implementation bill and add my comments to the budget debate.

As many members have stated, this budget is very historic. I think all our Liberal budgets have been somewhat historic but this budget is historic because it can bring in renewed optimism and renewed hope. We are now embarking on an age when we will no longer say that with reliance on federal government support things are going to get worse. We can now begin to say that we have reached the bottom and things can get better.

More needs to be done. Many people in this country are hurting and many people are not sharing in the prosperity that is generally around the land. I will return to that point toward the end of my speech. Let me highlight what I think are the major accomplishments in the budget.

Against the backdrop of unemployment dropping very rapidly in my own community, as I mentioned in one of my comments earlier, since 1993 or thereabouts the unemployment rate has dropped probably from around 16% to about 8%. We are seeing a gradual but steady month over month decline of the unemployment rate which is fundamentally the most important statistic that we can talk about. It is more important than the balanced budget. It is more important than tax relief. Jobs are the real issue in this country. When people have the dignity of work they are more hopeful for their existence and more hopeful as a community.

Having said that, however, we cannot underestimate how important balancing the budget is. Not until we balance the budget can we start to deal with the major issue of the debt. By balancing the budget we know that as the economy grows both in real terms and in inflationary terms and as we pay down the debt the proportion of the debt as a percentage of our economy is going to get smaller very quickly.

If we have approximately 2% growth on an annual basis combined with approximately 2% inflation we can expect that the debt as a percentage of the economy will be cut in half in merely 10 years or thereabouts. That is a tremendous achievement. It is all based on having a balanced budget.

In promising a balanced budget this year, next year and the year after, the finance minister has put us on the road to solid recovery.

When I look at how things have changed in my own community since we took office in 1993, I see a change from a community which suffered a terrible recession in the late 1980s and early 1990s to one where the prosperity level is very high. I see examples of this where the Magna automobile corporation is making a huge investment in my riding. Approximately 1,000 jobs will be created in a new plant Magna is putting in. Freightliner is making a major investment to build highway trucks in my riding.

The unemployment rate has been cut in half over the past five years. Farm incomes are up. By and large things are clearly better off now than they were in 1993. People expect them to be even better over the next five years. The message of this budget really is that things are going to get better.

The highlight of this budget is balance. Not only is it balanced this year, it will be balanced for the next two years.

Members of the opposition like to talk about how many times the government raises tax and they bring out numbers, 37 times. Why do they not congratulate us for the tax relief in this budget? It is not enough. We need to lower taxes even more. It is a step in the right direction. I believe quite firmly it is a trend. Because of the changes announced in the budget, 400,000 Canadians will no longer be paying any federal tax at all. That represents approximately 1,200 people in my own community.

The budget sets priorities, investing in education with the millennium scholarship fund, investing in children with the announcement of a second $850 million for the child tax benefit of which I am very proud.

Let me talk about what opposition members said previously and ask them why they are not applauding the budget. The Reform Party stated in its campaign that a Reform government would balance the federal budget by March 31, 1999. The leader of the Reform Party promised that in 1996 in Fresh Start. Lo and behold we balanced the budget a full year earlier than the Leader of the Opposition promised to do.

The Leader of the Opposition also said in Fresh Start that after a Reform government balanced the budget annual surpluses would be used to reinvest in the Canadian economy through lower taxes, to increase spending on health and education, and begin to reduce the debt. That sounds very much like Liberal policy. Perhaps the Leader of the Opposition is really a Liberal, but I do not think so.

Reform's suggestion for tax relief calls for measures found in the 1998 budget. The basic personal amount would be increased from $6,456 to $7,900. At least we went one-third of the way, albeit means tested. The 3% and 5% surtaxes of the Tories would be eliminated. We went part of the way and I am hopeful we will go the rest of the way. Students would be allowed to claim a tax deduction for interest payments on student loans. Lo and behold the Liberal government adopted just such a policy. Do we hear the Reform Party applauding us? No. Job killing payroll taxes paid by employers would be reduced. We reduced the EI premiums again, effective in 1998.

I will turn my attention to the Bloc for a moment. The BQ urged the federal government to use the $3 billion it saves annually as a result of this review to encourage small and medium size business as well as very small businesses to create jobs. This reduction in tax burden for businesses could take the form of tax holidays linked to business performance with respect to creating jobs and helping youth enter the job market.

The 1998 budget delivers. To encourage employers to hire young Canadians, the budget proposes to give employers an EI holiday per additional young Canadian between the ages of 18 and 24 hired between 1999 and 2000. Should the Bloc Quebecois not be applauding us for this measure?

As with the new hires program in operation in 1997 and 1998, employers will be allowed to stop paying premiums when they reach the 1998 level of payroll or they can claim a rebate when filing their tax forms. This will reduce payroll costs for employers by about $100 million a year for 1999 and 2000. Is that enough? Do EI premiums need to come down even more? They certainly do but at least it is the start of a trend.

The New Democratic Party called for an increase in capital and research funding to restore and renew post-secondary facilities. The Liberal budget increases funding to research granting councils. Our budget of last year provided $800 million to create the Canada Foundation for Innovation. Should the NDP not be applauding these measures?

The NDP also asked for investment in families with measures such as access to high quality child care and support for parents. Our budget increased the child care deduction by $2,000 per child. I have three children who attend day care. That will amount to $6,000, a significant amount, and the government should be applauded for that.

I will turn last to the Progressive Conservatives. The leader of the Tory party promised a balanced budget by the year 2000. That was in its 1997 election platform, “Let the Future Begin”. Only two years later we delivered a zero deficit. Should the Tories not be saying the Liberals brought in a balanced budget two full years before they could do it?

The leader of the Tories said repeatedly that we must reduce EI taxes when over their nine years in office the Tories increased EI premiums four times from $2 to $3. The Liberal government has reduced EI premium rates each year since 1994 from $3.07 that year to $2.70 this year, and hopefully they will go down even further.

The Tory's 1997 platform promised to start a $100 million Canadian merit scholarship program. Our 1998 budget introduced a $2.5 billion millennium scholarship fund. Surely the Tories can applaud us for investing in higher education. The Tories promised to make CPP self-financing, which we did with Bill C-2, and called for the cash floor of the CHST to be raised to $12.5 billion. Lo and behold we have done just that and I would expect the Conservatives to applaud.

The Tory plan for growth asked for the basic exemption to rise. It asked for the 3% surtax, the Tory gift to the taxpayers, to end and for a tax credit for interest on student loans. All these measures are in our 1998 budget.

I ask all members of the House to support our budget because it is not only balanced from a fiscal point of view. It is balanced in terms of providing tax relief, debt reduction and much needed reinvestment in social programs.

Budget Implementation Act, 1998Government Orders

12:50 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, the member across the way cites a number of positive highlights from the budget. One of the things he concentrated on and pointed out was the fact that reducing EI premiums and the payroll burden would stimulate jobs, put people back to work and have long term benefits.

Given the huge surplus that the EI program shows and the fact that less than 40% of unemployed workers now qualify for EI, I would suggest energy should have been directed toward increasing the eligibility or lowering the bar for eligibility so more unemployed workers qualify. This would put more money into the system and have more unemployed people actually spending and thereby stimulating the economy.

What empirical evidence could the member cite to illustrate that dropping the payroll burden by 20 cents per $100 from $2.90 per hundred to $2.70 would result in stimulating job growth or showing a lasting benefit, given the flip side of the coin? With a $750 million per month surplus, we should be allowing more unemployed people to collect benefits rather than be cut off due to the stringent eligibility rules.

Budget Implementation Act, 1998Government Orders

12:50 p.m.

Liberal

Gar Knutson Liberal Elgin—Middlesex—London, ON

Mr. Speaker, let me address the preamble to the question. I agree with the hon. member. I think an unemployment system that covers only 42% is a real problem. The government and all members of the House need to turn our attention in a creative way to making constructive suggestions on how to change the EI system so that it covers more Canadians.

However, I think we should learn from the lessons of the past. Perhaps writing someone a cheque on a biweekly basis may or may not make them more job ready for the economy that is coming as we move into the next century. We have to find ways to use the EI fund in a more creative manner. We have to find ways to use it so that it supports appropriate training or retraining in the adult workforce and people can find meaningful long term jobs.

By using the surplus in valid legitimate ways which will help people find lifelong jobs that pay decent wages is something we need to turn our minds to. I agree with the hon. member on that.

The argument about whether to lower premiums or increase benefits to unemployed people is somewhat a phoney debate. We can afford to do both. Certainly we do not want to lower premiums to the point where we have to raise them again if the economy goes into a recession. We have to be mindful that this is the worst time to be raising premiums.

They ask for empirical evidence to show that when premiums are lowered jobs are increased. We must remember that we compete at the level of the firm, a starting point in economics. When the cost to firms of doing business is lowered it gives them the opportunity to make investments, to expand their production and to hire people.

Budget Implementation Act, 1998Government Orders

12:50 p.m.

Bloc

Jean-Guy Chrétien Bloc Frontenac—Mégantic, QC

Mr. Speaker, it is a well known fact that the Minister of Finance is a cautious person. He underestimates his revenues and overestimates his expenditures, with the result that he has a margin of somewhere between 8% and 12%.

The minister is also applying a questionable budgeting technique by including in the current budget the $2.5 billion that will be used only in two or three years for the millennium scholarship fund. This, in my opinion, is a questionable technique.

When I was the mayor of my village, people would have been upset at me if I had told them “I am collecting twice the amount of taxes this year, so that we will have a cushion in two years”. The principle is, of course, to make taxpayers pay for the services to which they are entitled, but they should pay in the year that the expenditures are made, or in the year that it is decided to make such expenditures.

The Minister of Finance will end up with a budget surplus in two years, since the $2.5 billion that he will then spend will have already been taken into account in this year's budget.

I wonder if the hon. member for Elgin—Middlesex—London could give us his point of view, if he has a sense of how budgets work, on how the country called Canada should be administered.