Mr. Speaker, it is with pleasure that I now conclude my remarks after question period.
Today's Globe and Mail editorial was very insightful. It was entitled “The Surprising Legacy of the Minister of Finance”. It describes the elimination of the deficit as the single accomplishment of the Minister of Finance.
It says specifically that the finance minister's triumph on the deficit is shadowed by wrongheaded policies elsewhere. Of course, we have already established, as the Economist magazine reported, that the credit for deficit reduction in Canada belongs largely to the structural reforms made by the previous government. Therefore, the finance minister cannot really claim that one-hit wonder because he did not really author that one success. Although the finance minister would like to claim being a one-hit wonder, he cannot claim even that to his credit.
Let us look at some of the policies he has implemented. While it is terrible for Liberals to shamelessly take Conservative policies, to implement those policies and then to take credit for the impact of those policies, what would be even worse would be Liberals implementing their own policies. That is what I am concerned about, because we are starting to see a few of those policies rear their ugly heads.
A year ago, the finance made his no decision on the bank mergers. What has been the impact of that decision? I described earlier the complexities and challenges of the increasingly interconnected, globally competitive environment. In that environment, since the minister's decision, Canadian banks have lost about $9 billion of shareholders' value. During the same period, American banks have increased in value by about 10%. Again, as Americans are getting richer, Canadians are getting poorer.
In making his short-sighted decision on the bank mergers, and refusing to stand up to the banks to defend the long term interests of Canadians by negotiating a better deal on behalf of Canadians in exchange for mergers on issues like jobs, services to rural communities and those types of things, and in unilaterally and arbitrarily saying no, the minister has effectively put his own short term political interests and those of his leadership aspirations ahead of the interests of the 7.5 million Canadians who own bank shares.
Yes, 7.5 million Canadians, directly or indirectly, own bank shares and are depending on the returns of those shares for their retirement funds. Again, that was the minister's decision on those issues.
The minister has failed to address some of the major crises facing Canada right now and the need for significant and broadbased tax reform and tax reduction. On the personal side, we need significant levels of tax reform. On the corporate side, we have, as I mentioned earlier, the second highest corporate tax rates of the 31 countries in the OECD. Last year Germany had the second highest and we had the third. Germany now has the third highest because it has reduced its corporate tax burden. This country continues to cling to the notion that we can tax to death our companies and our individuals and yet still enjoy some level of economic growth.
In this current environment, we should be undertaking significant levels of tax reform. We should be taking the same courage and vision in our approach to policies that the previous government took with policies, such as free trade, GST and deregulation. In our dissenting report, we discussed the need for broadbased and forward thinking tax reform both on the personal and corporate side.
The government received an excellent report on corporate taxation by the Mintz commission. It addressed many of the significant flaws in our corporate tax system. If implemented, it would address the distortionary nature of our corporate tax system, the profit and sensitive taxes that currently create significant distortions and damage productivity in Canada.
The Mintz report also identified the need to bring our corporate tax regime more in line with those of other countries. At a time when other countries are using corporate tax reform and personal tax reform as vehicles and levers for economic growth, including Ireland and the Scandinavian countries, this country continues to cling to the past.
In our minority report, we identified that tax brackets should be re-indexed. In fact, there is a consensus both on the left and the right that we should be returning to full indexation of the tax brackets. The Fraser Institute agrees with the Caledon Institute in this case. The de-indexation of tax brackets took place during a time of deficit financing in a very difficult fiscal period. In a post-deficit time now more than ever, we need to revisit and eliminate bracket creep which has unfortunately brought more Canadians onto the tax rolls than we have ever had before and we need to revisit that, eliminate bracket creep and re-index tax brackets.
We need to lower the capital gains tax rates. I was pleased to see that the finance committee report did address this to a certain extent. We would go further. We would reduce the capital gains inclusion rate to 50% from the current 75%. The fact is that we could reduce our personal capital gains tax rates to be equivalent with those of the U.S. It would cost about $240 million per year. For the dramatic unlocking of capital that would occur and for the economic growth that would ensue with that type of visionary policy, $240 million per year is a small price to pay.
Unfortunately, public policy, in particular for the Liberal government, is focused more often on perception rather than reality. There is a stubborn intransigence in areas of capital gains tax and corporate tax reform. That is why the government has shelved the Mintz report and ignored many of its recommendations.
We would like to see the government set and keep firm debt reduction targets. This is very important. Our country is now in a worse debt to GDP ratio situation than those countries of the EU. We would not qualify under the Maastricht treaty to participate in the common currency of Europe. This is comparing Canada with bastions of fiscal fortitude like France. It is not exactly a positive indicator that we have not been able to maintain the same or lower debt to GDP ratios than our cousins in Europe.
We would suggest that the foreign content limit be increased to 50% immediately, and ultimately be eliminated once we have had an opportunity to evaluate the impact of it. The finance committee is recommending some level of incremental increase over a period of time.
I would argue that at this stage, with the dramatic infusion of capital into the Canadian equity markets, with the Canada pension plan funds and the superannuation funds that we are going to be seeing, there has never been a better time than now to end this economic imprisonment that forces Canadians to accept lower returns, which have cost about $32,000 to the average RRSP over time.
During a time when the Dow Jones has appreciated 300%, the TSC has performed in many ways anemically, gaining about 100%. I referred to it earlier as fiscal or economic imprisonment. I think it is very important, in particular while the government clings to the types of tax and regulatory policies that will pummel initiatives in Canada, that it release Canadians and allow them an opportunity to invest some of their hard earned dollars to ensure that they can enjoy a relatively good quality of life in the future.
We would suggest that the government take very seriously the call for a national highway program and that it increase the proportion of gas taxes that are currently returned to the provinces for highway spending from the current 5%, which is the lowest of any industrialized country, to about 15%.
This is an area of utmost importance. While there is some need for new spending in some of the traditional areas such as health care, and the farm crisis and the highway system need to be addressed, the government should not engage in new spending programs, including the child care initiative in which some Liberal backbenchers want to engage.
At a time like this in Canada, when we have never faced more fierce global competitiveness issues, we need to take time to step back and evaluate what is happening in other countries. Other countries are dramatically using innovative tax policies to create levels of economic growth. Other countries are reducing and maintaining lower levels of government spending and lower levels of debt to create the economic environment that will ensure growth.
Other countries are taking on regulatory burden. One of our suggestions is that we have a regulatory budget to allow elected members of the House to debate the merits of individual pieces of regulation so that we do not see a continued growth of regulation by stealth.
This is my last speech of this millennium in the House. I would hope in the future, in the next millennium, that we would take more seriously the competitiveness issues facing Canadians and that we would actually lead the global environment to create a better environment, instead of simply following and playing catch-up, as the government seems want to do at this time.