Debates of Dec. 15th, 1999

Committees Of The House

[An hon. member]

No.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, in a way, I thank the hon. member for Saint-Hyacinthe—Bagot for launching this very important debate on the direction we want to give to the year 2000 budget.

I would not necessarily agree with the points he made in his opening comments and there was some digression later in terms of the clarity bill. But on the question of transfers, Canadians are clear that Quebec gets its share of the federal transfers, in fact more than 50% of the equalization payments. That is what this House is about. That is what this debate is all about. That is how democracy works.

It is my privilege and pleasure to lead off today's debate, a debate addressing what will likely be one of the most important budgets in modern Canadian history. This happy chore has been given to me by the finance minister.

The finance minister is in Berlin chairing the inaugural meeting of the G-20, a body dedicated to strengthening and stabilizing the world's financial architecture. The minister has asked me to express his thanks and appreciation to the hon. members of the finance committee for their committed efforts in what was truly a national odyssey to hear the views of Canadians and for the quality of that work in synthesizing and reporting those views.

Today's debate is another important stage in the process of prebudget consultation introduced by this government. It is a process that many today take for granted. Let us remember what a dramatic change it represents compared to earlier decades when budgets seemed to be prepared in not so splendid isolation from the public and the emphasis seemed to be on backroom bartering rather than on public discussion and debate.

Many members of the House have had prebudget consultations and town hall meetings in their ridings across Canada. I hosted a prebudget consultation in my riding of Etobicoke North on October 21. A large number of my constituents came forward to present their views on this very important budget. They told me that they wanted a balanced approach. That was the opinion of the constituents in my riding and I look forward to the debate on the budget 2000 by members in the House of Commons.

To help set the stage for this debate, I remind all hon. members of some of the important elements of our current economic and fiscal performance. It is these elements that set the context in terms of opportunities and also real limits for the 2000 budget.

As the minister reported to the committee in his fall economic and fiscal update last month, our national economy is strong with one of the best growth rates among the G-7 major industrialized nations and a number one record for creating jobs.

These results are due in great part to the fact that we were able to put our federal fiscal house in order. The time when we ended up with a deficit and an increase in our public debt year after year is over. For two years in a row now, we have had a surplus, something we had not seen since 1951-1952, almost 50 years.

The government is committed to maintaining this record of fiscal responsibility as the unyielding foundation for all policy initiatives.

Looking ahead based on the average of forecasts by a group of Canada's leading private sector economists, this record of annual fiscal surpluses should grow from $5.5 billion in 2000-01 to $23 billion in 2004-05. This is a well deserved dividend that Canadians have earned through their support of the tough fiscal choices we had to make in bringing Canada's books back into balance. Of course those are impressive numbers but we must never let them tempt us into losing sight of the need for continued financial probity and prudence.

As the minister said to our committee, we live in a volatile global economy. Offshore events can buffet us overnight, sharply reducing future revenues from today's planning basis. That is why the government is sticking with the advice of the leading economists we consulted with and using real caution in our planning projections. This includes deducting our yearly $3 billion contingency reserve and a significant prudence factor before we arrived at those surplus estimates.

While the update does offer a five year forecast for discussion and planning purposes, we should and we will continue to take budget decisions only within a rolling two year time horizon. This is something I hope hon. members will address in the debate to come.

It was through near term and real term targets that we made a reality of deficit elimination. That is how we can ensure that the government does not commit long term financial resources today for tax cuts for important national investments, popular as these may be, at the risk of a return to punishing deficits in years to come.

[Jim Peterson, Liberal, Willowdale, ON]

Never again.

[Roy Cullen, Liberal, Etobicoke North, ON]

Never again.

That being said, I am sure most hon. members will agree that there are actions that must be taken, investments that should be made to strengthen our economy and provide Canadians with the prospect of better incomes, a higher quality of life and increased security and opportunity.

The committee's report highlights some excellent suggestions, but let me note that two of the commitments that this government has already acted upon, debt relief and tax relief, are a critical part of a context for the upcoming budget and for today's debate. First, we will continue to reduce the debt load on the economy and its taxpayers. Second, we will continue to reduce taxes.

It is a fact that we have already made some headway on our national debt.

The last two years, with the debt decreasing by some $6.4 billion, we were able to save more than $300 million in interest every year.

And there is more good news. We have actually paid down debt previously borrowed in financial markets by almost $16.4 billion. These achievements in combination with sustained economic growth also contributed to the reduction of the debt to GDP ratio. This ratio assesses our debt according to the size of our economy.

In 1995-96 that ratio peaked at 71.2%. In other words, our debt was equal to nearly three-quarters of our entire yearly economic output. For 1998-99 that ratio was down to 64.4%. This marks the third consecutive annual decline in the debt to GDP ratio.

By the way, there is another important comparison that should be highlighted. If one uses comparable accounting standards, our federal fiscal turnaround, combined with the positive fiscal performance of most Canadian provinces, means that on a total government basis Canada has achieved the largest improvement in its fiscal balance of all the G-7 nations since 1992.

Let me emphasize to all hon. members and all Canadians that such fiscal improvements are not abstract accounting achievements. Combined with our commitment to low inflation, they have contributed directly to keeping interest rates down. Gone are the days when Canadian rates were axiomatically higher than U.S. rates. In fact our rates are generally equal to, if not lower than, American rates.

But Canada's financial challenges are not over. We have to stay on track and that includes getting our debt burden down further. Five years ago 36 cents out of each federal revenue dollar went to pay interest on the debt. However because of our financial progress the portion of each revenue dollar eaten up by interest charges is down to 27 cents. That is progress, but it is still too high.

This is money that could otherwise be used to cut taxes, or for health care, or for investing in knowledge and innovation. For this reason we are continuing with our debt repayment plan.

We will continue to include every year in the budget a $3 billion contingency reserve. This will ensure that the government will be in a position to fulfil its obligations toward Canadians without ending with a deficit because of some unforeseen economic hardship. If the contingency reserve is not needed it will be applied to the debt.

Paying down absolute debt is only part of our strategy. We will continue to make important investments in strengthening our economy, such as boosting our national research capability and boosting knowledge, skills and training. The dynamic at work here is clear and concrete. The combination of a shrinking debt and a growing economy work together to make the burden of debt fall faster. Just like a family with a mortgage, the more one earns and the more one pays down, the lighter the load.

It is this consistent strategy of falling debt and a growing economy that will help Canada and Canadians build a foundation for success in the 21st century.

This takes me to the second firm commitment I want to highlight. That is continued tax reduction. With the end of the era of deficits and growing debt, our government has moved to cut taxes for all Canadians. Quite simply, people have the right to expect that each year we will bring down taxes. It is not a matter of debate. Tax reduction is essential to secure strong and sustained economic growth. We may debate the means and the pace, but from the point of view of our government, reducing taxes is not a debatable item.

What is more, we have taken some actions already. The actions taken in the 1998 and 1999 federal budgets have removed 600,000 low income Canadians from the federal tax rolls. The combined actions taken in the last three budgets mean that the personal income tax relief for Canadians will total $7.5 billion in 1999-2000. That is about 10% of all personal income taxes. For families with children, total personal income tax relief provided in the last three budgets represents an average of 16% reduction in their tax burden. That is families with children.

We are going to do much more. This process continued the day of the minister's update presentation itself when we announced that for the sixth year in a row, employment insurance premiums will be reduced from $2.55 to $2.40 for each $100 of insurable earnings starting this January 1. This means that employees and employers will save a further $1.2 billion next year, bringing total savings, compared to the rate that prevailed in 1994, to $5.2 billion.

Looking beyond that, as the Speech from the Throne and the fall update both emphasized, in the 2000 budget we will spell out a multi-year plan to cut taxes further and we will explain how we intend to carry it out. This plan will be based on a number of key principles.

Our approach must be fair which means starting with those who need it most: middle and low income earners, especially families with children. We will focus initially on personal income taxes, since that is where we are most out of line. We will also have to ensure that Canada has an internationally competitive business tax system. Finally, we will not finance tax relief with borrowed money because that just means an inevitable return to higher taxes in the future.

Suggestions on how best to implement further tax reduction and by how much are important elements of the finance committee's report.

I know that the minister and his team are studying the report very closely. I congratulate the chairman and all members of the Standing Committee on Finance for such a comprehensive and detailed report.

I know the minister will be very interested in the ideas and criticisms that each and every hon. member can add in the House today. I encourage my hon. colleagues from all parties to provide their own positive, concrete suggestions.

I hope my few remarks have put some of these issues in some context, but I am sure we will not agree on everything that should go into the year 2000 budget. However, it is a process that is respected and it is very worthwhile having the debate in the House of Commons because budget 2000 will likely set the tone and thrust for Canada's continuing growth and security in the new millennium.

[The Deputy Speaker]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Lethbridge, Trade; the hon. member for Pictou—Antigonish—Guysborough, CSIS; the hon. member for Okanagan—Coquihalla, National Defence.

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

Mr. Speaker, I listened carefully to the member's speech and I am a little surprised that the Liberals do not realize that ultimately there are two priorities when it comes to the budget.

First, they must put some money back into the transfer payments to the provinces to help them deal with their responsibilities in the areas of education, health and social assistance. A survey showed that 54% of Quebecers think this is the top priority. The second choice got 17% or 18%.

Should this not be the first thing to consider when deciding how to reinvest the federal government's surpluses? Another measure urgently required is to really make the employment insurance system an income supplement so as to put a stop to the impoverishment being inflicted by the federal government on all regions with seasonal industries, particularly in Quebec. That would ensure that the income of someone who is employed 20, 22 or 23 weeks per year is not less than it was in 1994 before the Liberals came to power.

Should those two measures not be taken expeditiously by the federal government to try and correct the impoverishment the Liberals have brought about through their budget measures and decisions thereby strangling the provinces and the unemployed?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I thank the member for his question but I believe that that cuts in transfers are things of the past because the minimum amount of the CHST has now been increased to $12.5 billion, which means $1.8 billion more for Quebec over five years. Moreover, $11.5 billion have already been put into the CHST. This means $2.7 billion more for Quebec.

I could go on and on. Equalization gives Quebec $2.8 billion more over five years, and Quebec now receives about half of the money available in the equalization fund, or about $4.5 billion per year.

In last year's budget, the government injected $11.5 billion into the CHST for health care and Quebec was a recipient of that. Whether the CHST should be augmented further is a very debatable point, which is the purpose of this discussion.

With respect to the question around employment insurance, Canadians understand and appreciate that the government had to take some very decisive action on this. Would everybody in the House agree that every measure we took was perfect? Would everyone in the House agree that perhaps there are some adjustments that need to be made? Perhaps. That is why we are having this debate. However, to say that we should fundamentally go back and re-open EI as it once was, I do not think Canadians would support that.

[Michelle Dockrill, NDP, Bras D'Or, NS]

Mr. Speaker, when I listened to the member from the government side talk about how prosperous Canada is, I found myself sitting here trying to figure out if he and I both live in the same country.

If I take the member at his words with respect to how well we are doing in Canada, could he explain why we have seen a steady increase in child poverty over the last 10 years? There will be 1.5 million Canadian kids going to bed hungry tonight as we speak. We have seen thousands of protesters on the Hill with respect to the homeless. Thirty-six per cent of the people who are unemployed in the country do not qualify for unemployment. We have students carrying high debt loads by trying to access higher education. We have people on stretchers in emergency rooms.

Can he explain to me how this is happening in such a prosperous country?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, the member forgets that during the term of this government unemployment has declined. It is a generational switch. We are down to 6.9% and we will take it down further.

The member opposite talks about child poverty. The latest data shows that the incidence of children living in low income families declined from 21.1% in 1996 to 19.8% in 1997. Is that good enough? Probably not. As a result, 100,000 fewer children are living in families with low incomes.

However, a real problem remains and there is room for action. This government has acted on this with the child benefit program, with a huge commitment of approximately $7 billion annually once it is fully in place.

While the member talks about this doom and gloom scenario, we should recognize the huge progress that we have made and the progress we will make in the future. With a growing and strong economy, we will be able to devote more resources to the issues that the member is referring to. If we had not taken the measures that were needed to bring the deficit under control, we would not be having this debate today. We would still be reducing the deficit. We have achieved that and we now have to have a good debate on what to do with the surpluses.

[Jean Dubé, Progressive Conservative, Madawaska—Restigouche, NB]

Mr. Speaker, I listened carefully to the answer by the hon. member. If I clearly understood his response to the question from the opposition, the government is not ready to look at employment insurance and the effect that employment insurance has had on many Canadians in Canada. Am I clear on that?

Could the member also comment on whether the government would be in the position it is today if it was not for free trade, which has brought export up from $80 billion to $280 billion? As well, would the government be in this position if it was not for the GST, which this government said it would scrap in the last election? This year the GST brought $24 billion into the federal coffers. Does the member think that the government would be in that position today if it was not for these measures which were brought in by the Conservative government?

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, if the member checks the blues he will learn that what I actually said about EI was that no one on the government side or any member in the House would say that everything is perfect with EI.

I also said that a very strong point would have to be made to cause the government to go back to the days before we reinvented EI. To say that there are not some areas that perhaps need some fine tuning is one thing, but I do not think we really want to go back to the days when we had a situation where EI was causing some fiscal pressures and problems for the government and for all Canadians.

I acknowledge that with the international liberalization of trade, Canada as a major exporting nation has benefited from that. That is very much part of the economic success that we are now experiencing.

I will highlight some measures that this government can take some credit for, such as low interest rates, which is often forgotten in the debate. Because of the low interest rates today, the average family with a $100,000 mortgage save something like $3,000 a year.

Business investment has much improved with low interest rates. I know this from my days in the private sector where decisions were being made to invest in the United States because of the cost of capital differential. That has now been removed.

As well, the monetary policy of the Bank of Canada has created a situation where inflation is being moderated. That has also contributed to the economic success of Canada and has created a situation in the country where Canadians are feeling more confident today than they have ever been and certainly more confident than they were in the days of the Tory regime.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is a pleasure to rise and speak on what has become, with very short notice, the prebudget debate this afternoon. Having said that, I am pleased to stand and represent not only my constituents but also my party on this issue.

The first concern I have with the majority report that really reflects the position of the government members on the finance committee is that I feel that some of the recommendations in it are completely insincere. I want to expand on that.

The first point is that there were headlines after this report was leaked. Sadly, it was leaked, as it always is, and as we have seen with so many different committees over the last few years. The headlines indicated that the majority report was calling for about $46 billion in tax relief.

Representing a party that has long called for major tax relief in the country, I certainly do not object to the majority report of the finance committee calling for big tax relief. We favour that completely. We believe that one of the greatest errors the government has ever made was to continue to raise taxes. It has hurt Canadian taxpayers tremendously.

However, we doubt the sincerity of that recommendation. The reason we doubt the sincerity of the recommendation is that a few paragraphs into the report we see the government claim that it wants to continue to adhere to the 50:50 promise.

For people who do not know what the 50:50 promise is, let me explain. In the 1997 election, the government made a promise that surpluses that ran up over the next several years would be divided; about 50% to new program spending and the remaining 50% to a combination of tax relief and debt reduction.

The government laid out the numbers in the fiscal and economic update in November when the finance minister told Canadians that the total surplus, best case scenario, would be $95 billion, and that the amount we could count on to use for things like spending and tax relief would be $67 billion. In that situation, it means that the finance committee report was calling to spend $46 billion of that on tax relief, leaving very little for its huge commitment to spending increases.

This is obviously a bold attempt by the government members to have their cake and eat it too. They want to be the champions of tax relief saying “Oh, we believe in tax relief, but on the other hand, we believe in raising spending dramatically. We want to see 50% of the surplus devoted to new spending”. They also care very much about the debt. They want to see debt repayment become a huge priority as well. They cannot have all of these things at the same time, but that is exactly what this report attempts to do.

So we very much doubt the sincerity of government members when they claim that this is what they want to do. These two things are simply incompatible. They contradict one another. We think it reflects very poorly on the whole report. We think it undermines the credibility of the whole report.

Starting from that very flawed approach, we think that the report, while having some merit in some areas, is also found lacking in many others, but the most glaring area is really the one I just mentioned.

I want to expand on that for a moment. This is a pattern that we see coming forward from the Liberal government. On one hand it promises that it wants to have tax relief. It promises that will come at some point in the future, but its rhetoric and its record show something completely different.

When we heard the fiscal and economic update from the finance minister at the beginning of November he talked ad nauseam about why we need to have lower taxes in Canada today. However we find out through the government's actions that it is raising taxes.

The best example is the millennium tax hike which will occur just two short weeks from today on January 1. Canadians will wake up from the big millennium party with a big tax headache because on January 1 in the new millennium, the year 2000, they will see all kinds of tax increases.

Let me recount some of them for the House. We will see Canada pension plan taxes go up as part of the largest tax increase in Canadian history. It is a double burden for the self-employed because they have to pay both halves of that huge 73% hike in Canada pension plan taxes. The government is saying that taxes are going down and that it wants taxes to go down, but at every opportunity it raises taxes.

The second example is how it is increasing personal income taxes. The government never misses an opportunity to say that it would never raise the tax rate. The government is being completely honest when it says that, but it is being somewhat deceptive when it alludes to only the tax rate because the overall tax burden will go up because of bracket creep.

Ever since 1986 when we deindexed the tax system in Canada under the previous Conservative government we have seen taxes increased automatically for hundreds of thousands of Canadians every year, without having a vote in this place to decide whether or not we should have an increase in taxes. It is an automatic tax increase. The government benefits from that because it brings in about $1 billion a year in new revenue.

I want to touch for a moment on the rhetoric of the government when it comes to how concerned it is about people on the low end of the income scale. Interestingly enough, people on the government side have made a career of telling the public how much they care about people who are struggling to get by, the people who have fallen through the cracks. Yet those people who have fallen through the cracks, the people on the low end of the income scale, are hurt more than anybody else in the tax system because of bracket creep.

It is interesting to note that every year 85,000 new taxpayers join the tax rolls because of bracket creep. They do not have any more purchasing power. They do not necessarily get a raise but they are dragged on to the tax rolls for the first time.

Why is that? It is because with every passing year not only are the tax brackets not indexed but also because the exemptions are not indexed. People end up losing the value of the exemptions which become less and less with every passing year due to inflation, due to the increase in the cost of living. These people are dragged unwillingly and unwittingly on to the tax rolls and start to pay taxes for the first time.

As the Liberals have been in power for the last six years they have increased revenue from people on the low end of the income scale, and indeed from all Canadians, by billions and billions and billions of dollars. This is a big tax increase that the Liberal government has pushed through and presides over. We never discuss it and never have a vote on it in the House of Commons, but nevertheless Canadians are much the poorer for it. That is one way in which the government continues to raise taxes.

On January 1 there will be another tax increase. This is another way that the government raises more revenue and people are less better off, without having a vote in the House of Commons.

Let me give one more example, for instance, the small business exemption. Small businesses in Canada have an exemption of $200,000 below which they pay one rate of tax and above which they pay another rate of tax. That will also be eroded by inflation this year, so small businesses will see their taxes rise again through the big hike in Canada pension plan taxes and through the erosion of the exemption for small business. That is another way.

There are other examples which I could go into. My point is simply that the government on one hand says it is concerned about taxes and it is cutting taxes, but at every opportunity it raises taxes. That is what we will see on January 1. Its say one thing but does something completely different whenever it has a chance.

How does this hurt Canadian families, Canadian entrepreneurs and Canadian investors? There are different ways in which it has hurt them. The best way to bring that home, as we have tried to do over the last several weeks, is to recount the stories of many Canadians who sent us their paystubs to illustrate to the finance minister and to the government in the clearest possible way what happens to people's incomes when taxes are as high as they are.

Let me remind members of an issue I brought to the floor of the House a few weeks ago. I had a teacher from my riding send her paystub which showed that she had received a $1,000 raise, but by the time the taxman got done with it, $81 of the $83 a month raise was gobbled up.

I know it sounds incredible, Mr. Speaker, and you look incredulous, but I can tell you we saw the paystub. We shared it with the media. We had Annalora Horch, the teacher from Medicine Hat, go to the bookkeeper of the school board and ask what was happening. The bookkeeper said that it simply reflected the tax tables for Alberta issued by Revenue Canada as of July 1, 1999. They were following exactly what the government told them they had to do. The result is that a $1,000 raise becomes a $24 raise, thanks to the tax increases of the government. We think that is terrible.

The member for Edmonton North raised the issue of Doreen, a worker from Winnipeg. Doreen sent us her paystub, her statutory holiday paystub. She had received statutory holiday pay of $53, which is a small amount, but she was really concerned that $30 or 60% of that $53 went to pay taxes. I think that is ridiculous. I remember at the time the finance minister sort of mocked this. It is a small amount of money, I will agree, but every dollar is precious to people who are hard pressed and paying the highest taxes they have ever paid in Canadian history.

It is ridiculous that on the one hand we have the government saying it wants to reduce taxes but on the other hand we see taxes mounting ever upward.

I want to raise the instance of Andy. Andy is a mechanic in my riding. He works at Evergreen Implements in Brooks. He works in the town where I live. He has been a mechanic there for 27 years. He sent us his Christmas bonus paystub which showed that out of his bonus the finance minister got 42%.

Andy, Doreen and Annalora are the ones who are putting in the extra hours. They are the ones who are working their hearts and guts out for their families. They take all the risks. They do all the work, but who gets half the bonus? Who gets half the statutory holiday pay? Who gets half the Christmas pay? It is the finance minister.

If that is not the biggest destroyer of incentive I have ever seen, I do not know what is. It is ridiculous that to burden our people the way they are in Canada. They should be rewarded for hard work, productivity and entrepreneurship but sadly they are punished.

We must remember that taxing something effectively means that we get less of it. A tax is a price. When a tax is placed on something we get less of it. The higher jobs are taxed, the fewer jobs we get. We see that with every passing year as Canada pension plan taxes go up, or when employment insurance premiums do not go down nearly as much as they should.

I remind the House that the government is still raiding or confiscating $7 billion a year of employer and employee premiums that do not go to pay more benefits and therefore should come back to employers and employees in the form of lower premiums. The government continues to raid that and as a result we see the taxes on jobs being far too high.

When we have high income taxes we have a high price placed on productivity and work. There is no incentive to work overtime any more. We wonder why we languish when it comes to productivity. The reason is that we pay a very high penalty when we work hard in Canada today.

What about entrepreneurship? There are myriad ways that the government punishes entrepreneurs. I have recounted some but I will go into that in a bit more detail. Before 1971 in Canada we did not have a tax on capital gains. Since that time we have an extraordinarily high tax on capital gains. The result is that we put a high price, a penalty really, on the great crime of investing in our economy.

One thing that has distinguished Canadians over the years is that people have been risk takers. We have been individualists to some degree. That may shock some people in the Chamber, but we have been rugged individualists. We have said that we wanted to create businesses, to start something that we could run ourselves and be our own bosses. As a result of the high capital capital gains taxes in Canada today, it is very difficult to accumulate capital to the point where we can start a business. The result is that many people leave the country.

The best example is what is going on right now in the high tech industry where we see all kinds of people who are trying to start businesses moving to the United States and other countries around the world. That is shameful.

Not only is it a shame to lose these people because of the economic impact, but we see families splitting up, families leaving the great country of Canada to go elsewhere. That is disgraceful. It is very disappointing to see the government be so sanguine about it, especially the Prime Minister who says “If you don't like our high taxes then just go to the United States”. I think that is ridiculous.

We see it in other ways, even in consumption. The more consumption is taxed, the less consumption we have. That is rather obvious. For retailers in Canada that is a serious issue. Not long ago I spoke to Peter Woolford, head of the Retail Council of Canada. Mr. Woolford pointed out in testimony to a Reform Party committee that the domestic economy in Canada had never really recovered from the recession of the early 1990s. One reason for that is the high taxes on consumption. We see this at the provincial level and at the federal level. Part of the reason is that people have less disposable income and therefore cannot purchase in the first place.

Whenever we have these taxes we have what economists call a tax wedge, a difference between what consumers are willing to pay and what the seller is willing to sell for. The tax often serves as the wedge so no deal is struck between the two. The result is that a sale is not made. We need to make sales. We need to keep the economy moving for the economy to grow, to create wealth, prosperity, jobs, opportunity and hope, something for which Canada was known during the first 100 years of its existence but too often is no longer known for.

These are all prices that are placed on very productive behaviour. Now we in Canada bear the fruit of that in the form of a brain drain and an unemployment rate that is still far too high. The unemployment rate is about 60% higher than it is in the United States. It is certainly 60% higher or perhaps higher in relation to the historical level of employment in Canada. That is a huge concern. Government members take some comfort in an unemployment rate of about 7%, but to the unemployed it is not very much fun at all.

There are other ways in which the government punishes people through the tax system. In 1995 when the finance minister undertook a number of changes he asked that Revenue Canada hire a whole bunch of new auditors. The impact has been terrifying for people who are in the sad position of having these people visit their businesses. Let me cite an example.

One accountant in my hometown, Hugh Bevan, writes to me often about something that is so bizarre, but it makes sense because it is about government. If a farmer or a rancher buys a half-tonne truck or a three-quarter tonne truck with an extended cab, a log has to be kept indicating everywhere the truck travels. The reason is because somebody might be in the back of the truck who is not actually travelling on official business. This results in farmers and ranchers being forced to keep a log. With all of these compliance costs, people try to cheat the system and get around these things in various and sundry ways.

This is not productive. Instead of trying to wring every cent out of Canadians' pockets, when will the government make a solid commitment to cutting taxes, not some airy-fairy commitment that is contradicted in the document itself, such as we see in this finance committee report?

Canadians want lower taxes. Fairness and justice demands it. It is time the government quit talking about lowering taxes and started doing it instead of giving us tax increases like we will see on January 1.

Let us end this Liberal rhetoric. We want to see lower taxes in Canada starting today. Therefore, I would move that the motion be amended by deleting all the words after “That” and substituting the following therefor: “the first report of the Standing Committee on Finance, presented on Friday, December 10, 1999, be now concurred in, but that it be recommitted to the Standing Committee on Finance with instruction that they amend the same, so as to recommend that the government re-index the income tax system to inflation by immediately eliminating bracket creep”.

[The Deputy Speaker]

The Chair had grave reservations when the hon. member read his motion. He left out a word that I see is in the printed version, and that is that the report be “not” now concurred in. The member said “concurred in”. Had that been his motion, it would have been out of order. But I see “not” in the printed version and I assume that he adopts that as what he intended to read.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I rise on a point of order. I feel certain that the member's heart was telling him that he wanted to concur in this report.

[The Deputy Speaker]

We are not going to get into that debate. If the hon. member says the word “not” is in his motion, I will put the motion to the House:

That the motion be amended by deleting all the words after “That” and substituting the following therefor: “the first report of the Standing Committee on Finance, presented on Friday, December 10, 1999, be not now concurred in, but that it be recommitted to the Standing Committee on Finance with instruction that they amend the same, so as to recommend that the government re-index the income tax system to inflation by immediately eliminating bracket creep”.

The question therefore is on the amendment.

[Maurizio Bevilacqua, Liberal, Vaughan—King—Aurora, ON]

Mr. Speaker, I would like to publicly thank the member for Medicine Hat for his work as a member of the finance committee. As the chair of that committee I certainly appreciate his efforts.

On the issue of tax relief, I draw to the attention of the House that the minority report tabled by the Reform Party states: “Outside of partnership and ideological differences, the need for tax relief and tax reform is very real. The official opposition has called for major tax relief. We will outline the size of our proposed tax relief in our January report”.

I draw to the attention of the House the tax package that the House of Commons committee tabled. It is very important to understand its major components. I cite the fact that the finance committee would like the government to adopt the following plan over the next five years. First, to increase the basic and spousal amounts by 15%, which would mean that the basic personal amounts for individuals would rise to $8,200. This measure would take 500,000 Canadians off the tax rolls. It would lower the number of people on welfare and increase attachment to the workforce.

Second, we want to reduce the middle tax rate by three percentage points to 23%. This is in large part because hard-working, middle class Canadians worked so hard to defeat the deficit and give the Canadian government a surplus that they need to be rewarded.

Mr. Speaker, I will not cite the entire passage because you are signalling me to stop.

I want the hon. member for Medicine Hat to tell Canadians whether the figure in the Reform package will be over the $46 billion in tax cuts announced by the finance committee.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I appreciate my friend's comments. We think the finance committee report is a modest start toward tax relief. My friend does not have to convince me of the need for tax relief. Reformers have championed the idea for many years. We have been standing alone for tax relief for several years.

My friend does not have to convince us, but he certainly has to convince his friends in the Liberal Party that they need to get onboard and advocate tax relief. If he did that, they would not retain that commitment to the 50:50 spending promise, which can only mean billions upon billions of dollars in new spending, which is completely at odds with what he himself advocates in the form of tax relief.

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

Mr. Speaker, I listened with interest to the member's speech and particularly to his motion in amendment. I have a short question for him.

He mentioned the have nots? Is the worst failure of the Liberal government, which has been in power since 1994, not to have contributed to the systematic impoverishment of the people who are already hurting in our society because of the employment insurance program and the cuts in the transfer payments?

The economy is doing well and that the unemployment rate is declining, yet we see increasing poverty, largely because of the government.

Is the federal government not to be blamed for this terrible situation where a country whose collective wealth is sizeable cannot distribute it in a way that would benefit everybody?

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I thank my friend for his question. The Liberal government has contributed to the impoverishment of Canadians, but by a different means than my friend suggests. High taxes have caused many people to be in a situation where they cannot hire the number of people they would like to hire and therefore people without skills, traditionally people who are at the bottom of the socioeconomic scale, cannot benefit.

We see it through bracket creep, where people at the lowest end of the income scale are the ones who are punished the most by this insidious tax that passes every year without a vote in the House of Commons. We see it also through the homeless situation, where because of high taxes and excessive regulation the stock of rental housing has not increased. That hurts the homeless people immeasurably.

There are many ways that the Liberal government has hurt people on the low end of the income scale and I have recounted them.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I congratulate my colleague from Medicine Hat for his excellent speech in the prebudget debate.

If he had more time for his speech he would have taken very great care to point out the examples of the provinces of Ontario and Alberta, which recognize the stimulation to the economy that tax relief brings, which has resulted in booming economies in both of those provinces.

Could my colleague enlighten particularly the Liberals, who obviously do not understand the real economic benefits of reducing taxes?

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I appreciate that very thoughtful question from my friend.

What has happened in Alberta and Ontario since those governments have taken charge is that we have seen a reduction in taxes, a reduction in debt and ultimately a huge increase in the number of people working in those provinces. What that has meant, under the governments of Mike Harris and Ralph Klein, is that hundreds of thousands of people are being brought into the workforce, some of them for the first time. They are given skills, experience, contacts and ultimately a wage. As a result of all those people working more money pours into the coffers.

What has happened as a result of that? More money is going into health care in both Alberta and Ontario than has ever gone into health care in those provinces, thanks to the provincial governments. On the other hand, we have the Liberal federal government, the supposed defender of medicare, cutting the life out of medicare, cutting ultimately $21 billion out of medicare.

We can thank Mike Harris and Ralph Klein for helping health care recover at the provincial level. Thank goodness for them, voices of sanity in this country.

[The Deputy Speaker]

The hon. member for Bruce—Grey on a brief question.

[Ovid Jackson, Liberal, Bruce—Grey, ON]

Mr. Speaker, my colleague from Medicine Hat speaks a lot of rhetoric. Members of the opposition are telling us to spend a lot of money. They keep comparing us to the United States.

In global trade the United States has 47% of the market share, the Japanese 17%, the Europeans 27% and we have about 20%. The American budget represents trillions of dollars. We have $106 billion to spend. This government has done a great job with the budget. When it came in there was a $42 billion deficit.

I wish Reform members would tell their constituents, Hugh, Andrew and Dorothy, that we have the best country in the world in which to live.

Since the government has come into power it has cut taxes over the last number years, and they have gone beyond bracket creep. The tax cuts provided over the last—

[The Deputy Speaker]

Order, please. I indicated to the hon. member that his comment and question would have to be very brief. I want him to draw his remarks to a quick conclusion because I have to give the hon. member for Medicine Hat time to respond.

[Ovid Jackson, Liberal, Bruce—Grey, ON]

Where would the member find the money he is asking for farmers and the money he is asking for the RCMP? We have a great country with a great social program. That is why we are the best in the world. Where would he find all this money? Would he cut jobs?