Mr. Speaker, I am pleased to speak on Bill C-36, the budget implementation act.
The budget of 1998 represented a major shift in the fiscal fortunes of the Government of Canada. It has taken 15 years of fiscal planning to achieve this balanced budget as the Leader of the Opposition mentioned previously in the House. Policies including free trade, the GST, deregulation of financial services, transportation and energy, all implemented by the previous government, were necessary and appropriate. They provided the framework and the basis upon which this government was able to balance the budget.
Let us make it clear. The real heroes today are not politicians, or certainly not the members on the government side. The real heroes are ordinary taxpaying Canadians who have had the budget balanced on their backs and who endure the highest taxes in the G-7 countries.
With this budget the Liberals have gone from being a tax and cut government to now being a tax and spend government. This should not be surprising because this was the government that led us down the path of debts and deficits beginning with former Prime Minister Trudeau in the early 1970s.
The biggest single spending initiative in this budget is the millennium scholarship fund. Canadian taxpayers are contributing $2.5 billion of their money to a bursary fund that will not be delivered to students for three years. Even then it will only benefit 7% of students.
What seems to be lost on the government is who in fact is making the program possible. It is ordinary taxpayers. It is not the Prime Minister. It is not the finance minister. It is ordinary Canadians who as I have said have paid the highest taxes of any of the G-7 countries. They have seen their income taxes as a percentage of GDP rise from 13% in 1993 to 14% now. Keep in mind that the previous government reduced income taxes as a percentage of GDP from 14% to 13% between 1989 and 1993.
Now the Minister of Finance is retroactively allocating $2.5 billion from last year's budget to this program, an act that the auditor general has spoken against. The Minister of Finance has taken responsibilities away from the auditor general, the watchdog of the Canadian taxpayers in this House and provided them to the board.
When I recently asked the Minister of Finance in question period to provide the auditor general with access to the fund's books, he responded that if the auditor general would like to have access to those books, it will be arranged. The auditor general does want access to those books, yet nowhere in this legislation is their a clause giving the auditor general the access he needs to oversee the taxpayers' money. The departmental officials I met with last week confirmed that despite the minister's reassurances to the contrary in this House, the auditor general in fact will not have access to the fund's books.
This represents the second time in two years that the Minister of Finance has set up an at arm's length foundation with a significant amount of taxpayers' money and appointed a separate auditor. The last time was the innovation fund, $800 million to be allocated to medical centres, universities and research laboratories. Now $2.5 billion will be administered without a clear and transparent auditing practice.
In the legislation the board for the millennium scholarship fund will appoint its own auditor. This is contrary to common business practices where the shareholders appoint an auditor, not simply the management. In this case the shareholders are ordinary Canadians who are represented by this government. That is why this departure and this lack of accountability in practice is very dangerous. It is also why the auditor general should be involved in overseeing such a huge allocation of Canadian taxpayers' funds.
Why does the government or the minister not appoint an auditor themselves? Instead it is going to be the board that appoints its own auditor. It may be an arm's length corporation but I would suggest that the arms are very short when the government is going to be appointing a significant number of the members of the board. The accountability is certainly not provided to ordinary Canadians who are footing the bill.
If we look at the millennium foundation in this legislation there is a significant lack of clarity surrounding the criteria of need and merit. It is stated very nebulously that the criteria is based on need and merit. No further direction has been given to the board on this criteria. Depending on the make-up of the board, the need or merit criteria could vacillate from one end of the spectrum to the other.
I remind the House that there are many young Canadians who need a higher education. The need component for the millennium scholarship fund may be more appropriate than simply the merit component. There needs to be some type of guarantee that young Canadians who do not have the financial means to achieve a higher education are provided with a higher education. Keep in mind that 7% of Canadians seeking higher education will benefit. Only 7%. To have it nebulously stated as it is, is inappropriate.
Frankly students who demonstrate the merit frequently earn scholarships to higher education institutions. They can participate in a higher education without the need for some gigantic memorial fund to the Prime Minister.
It should be remembered that the Canadians taxpayers who are footing the bill for this deserve and have now lost the ability to oversee the funds with this government's reticence to use the auditor general.
A second point of Bill C-36 which is worth noting today is the changes to the RESP program. Investor's Digest recently ran an article stating that the changes to the RESP policies will simply serve to complicate the current program. I quote “The problem with the RESPs is that they are already too complicated for most investors. The new grants will create more confusion”.
I do town hall meetings in my riding. Often we talk about tax policy. I have not had one constituent ask me to complicate the tax code. I have heard a lot of them say that the Canadian tax code is not user friendly and that it is inappropriate that citizens have to hire accountants to deal with their own governments.
What does the government do to address a crisis in higher education funding? It complicates the tax code. This proposal serves to complicate a tax code that is already far too complicated.
To give one example of the potential for abuse, there is a 20% top-up for individuals investing in an RESP, a matching where the government will effectively provide grants to those who invest in RESPs. It is a worthy intention to help provide and augment Canadians' savings for the higher education of their children. However we must always be wary of the first law of public policy, which is the law of unintended consequences.
I met with departmental officials last week. Nobody has explained to me why this 20% top-up will provide Canadians with a 20% grant if they invest in an RESP. If, 20, 18 or 15 years down the road, the beneficiary of the program chooses not to go to university or to pursue a higher education for whatever reason, the government will at that point be getting that grant back. The money earned on that grant over that period of time will be left with the individual, the contributor, the Canadian investor. This creates a direct incentive to invest in RESPs.
Recognizing that there is only a limited pool of funds out there for Canadians to invest with, it creates a direct disincentive to invest in RRSPs. The government is effectively providing a 20% top-up for Canadians to invest in one investment vehicle and a similar disincentive to invest in the other, the RRSPs.
By creating a policy like this, we will create a policy that will ultimately create financial insecurity for Canadians in terms of their retirement accounts. It will create a crisis down the road.
No attempt will be made to recover the earnings from the 20% top-up. The fact is it would be almost impossible logistically to do this. Again this is going to create a decrease in the incentive to invest in RRSPs.
Let us look at another example of this government's propensity to tinker with economics as opposed to providing broad based tax relief, which was the appropriate measure that should have been taken at this juncture. Let us look at the EI fund and the employment insurance holiday for employers hiring young Canadians.
Our party has repeatedly called for the government to reduce EI premiums to $2 from the current rate of $2.70. We outlined our position in our plan for growth, which was our prebudget submission.
The finance minister has stated categorically time and time again that EI premium reductions will not create jobs, will not lead to increased job creation in Canada. I heard the minister speak recently to the board of trade in Halifax. He stated that reducing EI premiums would not lead to greater job growth. Today the minister's agenda has obviously changed. Why would he eliminate EI premiums for young people if he did not feel that the reduction or the elimination of those EI premiums would lead to increased job creation for young people?
Everybody wants young people to have greater opportunities to seek employment in Canada. But we want all Canadians to benefit from reduced payroll taxes.
We have established that the minister cannot have it both ways. Effectively he is articulating that reducing payroll taxes will not have an impact on employment growth. Yet he is implementing policies where effectively that is what he is doing for that intent. Effectively he is playing one group against another. Certainly young Canadians between the ages of 18 to 33 need a break. But through this employment eugenics policy or this Pavlovian economics policy, he is creating a direct disincentive for Canadian businesses to hire other Canadians.
Again, it is an example of a government that prefers to make decisions for Canadians as opposed to ordinary Canadians, who deserved broad based tax relief in this budget, to make their own decisions as to what to do with their fiscal dividend.
While this government now brags about being in the black, many Canadians are still in the red because of its reticence to change fiscal policy for the better.