Debates of Feb. 11th, 1999

Supply

[Gilles Bernier, Progressive Conservative, Tobique—Mactaquac, NB]

Mr. Speaker, the Parliamentary Secretary to the Minister of Finance talks about what poverty has to do with homelessness. To be poor means people cannot afford housing.

The member does not have to go far because he works for the minister responsible for the task force report he produced back in 1990. At that time the finance minister promised to make affordable housing accessible to all Canadians. That was part of the task force of 1990.

I do not know what the parliamentary secretary is talking about. Before he refers to me he should refer to the finance minister in that regard.

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, most of my colleagues today have talked about poverty in Canada for all Canadians. However I want to speak to the issue of poverty in the Canadian forces. It relates directly to the motion:

That, in the opinion of this House, the government should take steps to alleviate the burden of poverty in Canada—

This is a big part of poverty in Canada.

Like other members of the House I have served on the Standing Committee of National Defence and Veterans Affairs which spent the best part of last year studying the quality of life in the Canadian forces. “Moving Forward: A Strategic Plan for Quality of Life Improvements in the Canadian Forces” is a benchmark study and one that I hope the Liberal government will implement. What members of the committee heard was very sad, actually pathetic.

At one point in time there used to exist a kind of social contract between the people, their representatives, the government and the military. It existed for hundreds of years based upon a contract of unlimited liability.

The unlimited liability for those in the military profession meant that they would go off and fight and if necessary die when governments, the contractor, tells them to. In return, governments have given militaries a quality of life, their own special society and veneration when they retire or later die. There once was a quality of life, not poverty, but not with this government. To date it has broken its part of the contract.

Our soldiers, sailors and air crew go wherever they are told and do so outnumbered, ill equipped, if equipped at all, and uncared for by our government. They go without a whimper.

We must remember that this is the Liberal government that sends its soldiers to the army surplus store for boots and clothing. This is the Liberal government that sends its air crews on search and rescue missions with the Labrador helicopter or on flight training with parachutes that do not open. This is the Liberal government that says to the navy that there are no problems with the Sea Kings. Of course they are serviceable only 40% of the time and their mission systems fail at least 50% of the time.

This is the Liberal government whose Prime Minister travels all over the world offering the same Canadian military to whoever might want them, whether they have been asked formally, informally or not even asked at all, and without care or thought for their well-being. Last but not least, this is the Liberal government that sends military families to food banks and soup kitchens, poverty at its very worst.

This Liberal government has broken its portion of the contract. Shame. We hear the stories of military families going to food banks. It is heartbreaking to the hardest of hearts. We hear stories of sailors delivering pizzas at night to feed and clothe their young families. It is absolutely unacceptable. We hear stories of PMQs in such bad shape that one is afraid to go through the door.

Things just went from bad to worse when the Liberal government dispatched our military to far off places. People went from poverty with family support to abject poverty in some cases and with loved ones thousands of miles away and until recently with no support at all. Mothers are forced to shoplift for necessities. Then there are the injured from our peacekeeping operations that were abandoned. Lastly our veterans, some with benefits, some without like the merchant navy vets.

The anger and frustration the committee met on the road were incredible. I for one am changed by what I saw and heard. I would like to think that all of us were changed by it and for the better.

We came forward with a report, a blueprint to help the Liberal government deal with the problems of poverty in the Canadian forces. This was the committee's first priority and I hope it is the government's when it comes to the men and women in our Canadian forces.

We as a party want to see the quality of life study implemented but not through troop reduction or delays in much needed equipment. We can give a corporal a paycheque so he does not have to go to a food bank, but we cannot give his family his life back if he is lost in a Sea King helicopter.

The problems with poverty and the qualify of life in the Canadian forces are easy to solve. The problems are as clear as the solutions. In large measure the solutions involve something that has no monetary value, compassion. Sometimes it is important to say that we care. The solutions also involve the expenditure of money, about $700 million, but surely it must be worth it.

The committee recommends several improvements in the quality of life for military personnel, solutions that will ease poverty in a large measure if not eliminate it. There are some recommendations in the quality of life report which I think are key in fighting poverty in the Canadian forces and re-establishing a quality of life erased by the Liberal defence cuts. I want to paraphrase them quickly.

The pay levels for entry level ranks of private, second lieutenant and lieutenant must be increased by 10% no later than April 1, 1999. Reservists deserve a pension plan and deserve to be paid on time and correctly. The Department of National Defence should establish a global cost of living allowance.

The department should ensure that personnel at all bases have access to well maintained single quarters. The housing agency should provide adequate and sufficient services, including emergency repairs. The accommodation allowance should not be considered taxable income. The department should ensure that base housing remains suitable and affordable. There should be rehabilitation training for injured members of the Canadian forces prior to their release and a commitment to supporting military family support centres.

All these recommendations and the many more found in the report sound so natural, even logical, maybe a better word is expected, that people actually shake their heads in disbelief when we tell them that is not the case right now.

The men and women of the Canadian forces put it on the line for us every day, as do their families. They deserve our support and our compassion. It is time for the Liberal government to put its slash and burn policies behind it and do its part in giving the Canadian forces they require and deserve.

My party and I are also concerned about the plight of our veterans. We have veterans struggling to survive. They are living just below the poverty line and need assistance. We have all heard the horror stories of how some have been treated or their widows. It is an outrage. As Canadians I hope we do not have to start selling neckties and bow ties like the Gurkha Trust to help support our Canadian veterans. I hope it does not come to that.

As for our merchant veterans, we all saw those delightful old gentlemen sitting the steps of Parliament Hill fighting for what they deeply believed in, just as they had crossing the grey, unforgiving Atlantic. I hope they have not been starving themselves in vain. It is plain to every member of the House that there are veterans both recent and old living in poverty. It is a shame.

The Liberal government has a chance ahead of it to rehabilitate itself in the coming budget and give the Canadian forces and our veterans the money they need to have quality of life and to survive. This is the time for Liberals to move forward and bring in a budget that will allow the Department of National Defence to implement the quality of life study and to buy new maritime helicopters. This is the time for the Liberals to put a few dollars aside to compensate merchant navy veterans.

In conclusion the report called on the Liberal government and future governments to make a national commitment, a moral commitment to the Canadian forces. We must recognize military life is different and unique from civilian life. But just because they are trained for war does not mean they have to spend every day of their service lives and after until death in the trenches.

These measures I have talked about will ease poverty in the Canadian forces or end it. The 60,000-strong Canadian forces deserve better. I hope the Liberal frontbenches recognize that and redeem themselves in the eyes of the Canadian people at budget time.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, I again thank the Conservative Party for the motion and for bringing up the problem with our veterans and those in our military.

The member is talking about compensation for the merchant marines which I wholeheartily support. But he would also apply that compensation to our Buchenwald vets as well. I would like his comments on what he thinks Canada should do for our Buchenwald vets who have been fighting for proper compensation an awfully long time. Does he agree they should be compensated as well?

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, I thank the hon. member for the question.

We have to look at all vets who have done anything for this country. They have to be taken care of. We have put them aside for far too long.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, I am very pleased that my hon. colleague spoke about the forces and the terrible problems they are having. Back in New Brunswick we are all very much aware of that.

When we see our military men going to soup kitchens, which is what has been happening, we feel very much ashamed. I feel very much ashamed to be in the House of Commons and allowing that to happen.

In my riding of Saint John, New Brunswick, the largest city in the province of New Brunswick, we have the largest percentage of people living in poverty of any other part of the province. This has never happened before.

When we get up in the House and ask the hon. Minister of Industry to please bring in a national shipbuilding policy, he just stands up and says he is not looking at subsidies. I am not looking at subsidies. I am looking at addressing poverty, giving people back all their dignity and that can only happen if we have a lot of co-operation from across the floor.

I ask my hon. colleague what does he see. What should we be doing to correct the problem we are having with our armed forces?

[David Price, Progressive Conservative, Compton—Stanstead, QC]

Mr. Speaker, we have gone through this quality of life study. It is probably one of the best things this government has done in a long time and the interesting thing about it is that the Liberal backbenchers who were sitting on that committee agreed with it totally. We were able to put in different amendments. They even agreed with the amendments.

We have a solid document in front of us, something that will help out our armed forces. So I think we should follow through with the quality of life report.

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, I am pleased to address the opposition motion concerning poverty and the tax burden. I will be splitting my time.

They are matters of real concern for Canadians and they deserve the full attention of the House. However, I am worried about the underlying assumption of the hon. member's motion, that the government is in a position to take extreme action, to take action to dramatically bring down our national tax burden.

There is no politician, certainly not on this side of the House, who does not want to bring tax reform to Canadians, especially to help reduce poverty. But, and there is a very big but, appealing politics often does not make good public policy. The national pocketbook can simply not pay for the wish lists many of us have. If we cannot afford it, we cannot do it.

Too many governments in the past have had good intentions that have outweighed fiscal reality. As a result of two decades of deficits we had a national debt that was the second worst, the second highest among G-7 major industrial nations. It affected our growth. We lagged in growth and there were too many Canadians, despite the spending, who remained in need. That is not to deny that easing Canada's tax burden must be a priority. It is a priority for the government. Tax cuts should be focused first on those in the greatest need. That is just what we did in the last budget.

Canadians made it very clear in the last two federal elections that it is a fundamental priority for them that the government continue to give good financial management, both of the nation's resources and of government itself.

When I speak to my constituents in Kitchener Centre as well to Canadians from coast to coast, which I have had the opportunity to do being a member of the finance committee, I have not heard any voices saying that cutting taxes is more important than maintaining the gains we have made.

Canadians remember too well the price we paid for relying on deficit spending, resulting higher interest rates, lower economic growth and the jobs that have been lost. A key priority for the government is to avoid returning to the vicious cycle that was dominated by federal policy in the two previous decades.

Priorities are neither simple nor self-evident when it comes to the budget of a government. This debate attempts to focus on a single issue, an issue dealt with in isolation, and even one as compelling as poverty can make this conversation simplistic and self-serving.

Let me again emphasize that we are committed absolutely and aggressively to tax relief, especially for low income Canadians.

We will not do so through knee-jerk decisions that ignore fiscal reality, the world environment and the appropriate role for government.

The finance minister addressed this in his October economic update before the House finance committee. Our work as a government reflects that the pursuit of frugality had to become a defining feature of everything we do. This is a principle that must govern all policy making and debates such as ours here today.

Given the volatile condition in many parts of the world economy, we are in a situation that calls for great care and extreme caution. We must be realistic about the resources at our disposal.

Some seem to believe we have mountains of money to spend, that we should step back and take action immediately. I suggest we need to continue with a more balanced look, a look that takes global trends into consideration.

As a government we need to continue to make hard choices. I suggest we will continue to do that.

The minister pointed out what has happened in the average forecast of economic growth by private sector experts over the past year. In January 1998 they were estimating a nominal income growth of 4.7% for that fiscal year. By the fall, it was revised downward to 3%. For 1999, a 4.9% nominal income growth was projected. By the fall, that too was down significantly, reduced to 3.5%.

What do these revisions mean in the size of the possible fiscal surpluses projected by the private sector? The answer is it would take out over $5 billion of government revenues in the coming fiscal year, 1999-2000. This is what next week's budget will address.

In our last budget many criticized us for being too prudent, too cautious in their estimation. We are hearing that same criticism in today's debate. We have been attacked for not moving quickly to slash taxes but the dramatic downward revision of private sector forecasts illustrates that as a government we must stick to a careful approach to budget planning.

We simply cannot afford the risks associated with the changing of planning assumptions so drastically month by month. This is not an academic argument or some arcane point from economic theory.

Consider the result if we followed the advice of some not long ago to take $9 billion to $10 billion of tax burden action, action they claimed we could afford.

If they were wrong, the result would push us back into deficit virtually overnight. It is easy to be wrong. Projecting government revenues and spending pressures, very large numbers, is dealt with in a matter of a mere 12 months. The fact is government revenues and spending, including interest payments on the debt, are both in the range of $150 billion.

If forecasts are off by merely 1%, an amount statistically not particularly significant, in each of these sectors, if the revenue is out 1%, it is lower and costs are up 1%, the answer is that they are out by $3 billion. That is $3 billion we do not have.

If we committed the $6 billion to $7 billion in tax cuts with little more than 1% shortfall in revenues and 1% again in costs, we would be back into the world of deficit financing. To get out we would simply have to raise taxes. Then they would be higher and we would be back into that downward spiral.

It is these risks based not on ideology but mathematics that the finance minister must consider when planning his new budget. That is why I share his concern that the fiscal dividend over the next two years must be estimated to be modest, much less than would be required to provide sufficient funding for the types of initiatives on tax reduction that today's motion calls for. Clearly careful consideration and choice in allocating that dividend will be required.

Again in the words of the finance minister, the very reason that we have met our targets, the very reason we are now able to say that despite the global economic crisis we are still on track not only to balance the books but to have a dividend, all this is anchored in the caution we have applied from the very beginning.

Some have said we should implement major personal income tax cuts, for example, an average of $600 annually per taxpayer. That comes with a price tag of about $9 billion per year. Others are demanding that employment insurance premiums be reduced to a so-called break even level. That comes with a cost of $6 billion per year. Still others are saying we should mount a larger attack on the debt. That would cost in the neighbourhood of $3 billion a year. If we add that up, our total bill would be $18 billion each and every year.

This is not a complete inventory; this is merely a highlight of some of the requests that have been made of the government. Adopting all of these principles very clearly would put the country back in a situation of serious chronic deficits. Adopting any one of these proposals could put us in financial difficulty.

Let me again emphasize, I do not intend to understate the significance that Canadians and our government put on easing taxes and reducing poverty. It is only by looking at the sum of our priorities that we will be able to give long term security to all Canadians. That is why it would be irresponsible of us to accept, as this motion does, the easy assumption that government has all kinds of money at its disposal.

[Jay Hill, Reform, Prince George—Peace River, BC]

Mr. Speaker, I cannot understand how the hon. member across the way can stand in her place and talk about this government, her government, governing by frugality. If it were not so serious, it would be laughable.

Her government took power back in 1993. The present Liberal administration has had close to one and a half mandates and it has yet to hit its budgeted target for spending. And she has the audacity to stand in her place and talk about governing with frugality.

The facts are that last year in the budget the finance minister estimated the spending to be about $104.5 billion. He is over that by an estimated $3 billion already. And he is talking about another $2.5 billion for health care that he is going to retroactively put back into last year's budget which will put him somewhere around $6 billion or $7 billion over budget. How is that governing with frugality?

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, as we travelled across Canada one of the things we heard from economists, everyday Canadians and business people was that they embraced the kind of prudent forecast the finance minister had made. In fact revenues have consistently come in over budget. It is that kind of forecasting that has led us to a balanced budget and being able to pay down the deficit.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, earlier in the debate one of the member's colleagues mentioned the child tax credit that was given to the provinces and how the provinces were clawing some of that back. He is right. The provinces are clawing some of that back but the reason is that the federal government allowed them to do it in their negotiations.

Why did the federal government allow the provinces the ability to claw back the child tax credit?

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, provinces are allowed the autonomy to do that in order that those moneys can then be redirected to that target group of people. I would also add that is one of the reasons last week was so exciting for all members of this House. With the signing of the social union we see a demand for transparency. Any money flowing from the federal government to the provinces will then go directly to the people it is targeted at.

I think we will see this government continue to refine federalism in a way that is meaningful to all Canadians in partnership with the territories and the provinces.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I would like to congratulate my colleague. She is on the finance committee and she does have a very clear view of what this government has been doing.

There is no question that in the last budget 400,000 Canadians came off the tax rolls and 90% of Canadians benefited from tax relief. There is no question that 1.5 million people have been put back to work.

When we talk about self-reliance, what the member is suggesting and I would like her to comment on is the fact that the government has a clear plan. We cannot do everything. We are criticized by the opposition when we do not spend money, and when we do spend money they criticize. When we give tax cuts they say it is not enough. Clearly it is a lot easier to talk than it is to act.

This government is acting. This government has a clear plan of what it is doing. It is taking a step by step approach. Not everything is done in one year. Governments are elected for a maximum of five years. I would like the hon. member to comment on that type of approach.

[Karen Redman, Liberal, Kitchener Centre, ON]

Mr. Speaker, consistently as we crossed Canada last year and this year, we heard a call for a strategic plan for targeted investment by this government and for programs that can be sustained as opposed to throwing money at quick fixes to problems. This is exactly the kind of thing my colleague points out. This government is here for the long haul, for strategic investment and to continue a balanced approach for governing Canada.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I am certainly happy to participate in this very important debate on the issue not only of child poverty but of our income tax system.

Once again I think the member for Shefford has brought to the floor of the House her concerns and indeed the concerns of many people in this country to deal with the issue of child poverty.

First I would like to talk about the issue of bracket creep, and issue which has been thrown around the House. I do not think a lot of people fully understand what bracket creep means. Back in 1984 when inflation was something like 10% the then government in its wisdom decided that it would only index the taxation system to the extent that it exceeded three percentage points. At the time that meant a 7% address to the inflationary factor. In those days it did not seem like a big problem.

Of course it is the stated policy today of the Bank of Canada to keep our inflation rate within a very specific band of between 1% and 2%. Consequently the entire inflation that is occurring within the Canadian economy is not being recognized in the income tax system.

It is an insidious growth because of course we think of 3% as not being a lot of money in any one particular year, but obviously over a 10-year period it is a very significant amount. As years have gone by and the issue of bracket creep has constantly impacted on the system this disparity has become greater and greater.

I looked at some of these numbers and the total cost of doing away with the problem in income brackets that it affected. I was struck with how the peaks of this tax had gone from little bumps on the graph to significantly huge amounts, and it continues to do so. These brackets and tax escalation occur around the income tax brackets themselves in a change of income of $30,000 and at $65,000. The total money that our taxation authority gleans from the process is about $840 million. So that is an answer to the Conservatives who refuse to answer the question on how much would it cost to solve this problem.

The real issue is, is that money an entitlement of our tax collection system? Quite frankly it is not. It is taxation on increases in income that never in fact occurred. People's income rose, if they were so fortunate to have it do so in keeping up with inflation and many people were not, but their tax brackets did not. At the same time so did the consumer price index. They have had a constant squeeze on their disposable income and we keep taxing them. There are some tremendous examples of where people whose income rose $900 in a year actually saw their tax burden increase $1,400. That is an overview of the problem.

Quite frankly, I do not think if anybody is honest about it they will think that is not a systemic problem within the taxation system.

The next question is how do we solve it? Those of us who are bold enough and do not have any responsibility for the system itself will say fix it and will pay the $850 million or almost $1 billion.

The reality of government finances is that we cannot fix it all at once. I am very hopeful that we will fix it slowly over a period of time. It has taken since 1984 for it to get embedded in our system. It may take two or three years to get it back out of our system. I think the government's intentions are well founded to try and do that. The members on this side have been veracious in trying to move some of those amendments.

The issue of child poverty is something that bothers all of us. I have heard people in this House asking what the definition is and how do we define it. It gets very difficult. Various people mentioned the United Nations declaration of income levels and said it is very hard to hold the government's feet to the fire because there is no real definition, and we talk about low income cutoffs. That is the problem we in government see reported across Canada.

The reality is that $20,000 can buy more goods in one part of the country than somewhere else. A $20,000 income to somebody living in downtown Toronto no question is poverty. I have had farm clients over the years who made $20,000 and have lived quite well, but of course they are eating their own produce and so forth. When we talk about using low income levels to define poverty there are discrepancies.

There is another thing that has always bothered me about this issue. When people talk about child poverty, I think what they are really talking about is child neglect or child nutritional problems. There must be another way to measure the nutrition of our youth. That is really the problem.

I have talked to nurses and teachers in my riding. I have discovered that it is not necessarily low income people, although there would be a high quotient related to income levels, but there are also people in the so-called middle income bracket whose kids are not getting the proper nutrition. It is a bigger problem than just setting out low income levels.

I would like to get us off this stereotype debate with the New Democratic Party saying to just redistribute all the income and the problem will go away. The issue has changed tremendously over the years between this business about rich and poor, between a knowledge based society and a lack of knowledge society.

When people phone me and say they cannot get a job, that they are living in poverty and so forth, invariably the first question is what is their educational background, how much investment have they personally put into their human capital. If they are in what we think is the high risk area, because we are responsible for the employment insurance system, ages 17 to 24, invariably they have very little education.

What obligations do governments have to solve this so-called disparity between rich and poor? We have to encourage people even at a very young age. Of course, they have to be properly fed for their brains to absorb knowledge, but we have to instil at a very young age and a consistent age a greater celebration of the importance of getting a better education.

I do not have to tell the members here that this is a provincial jurisdiction. This is the problem in this issue. When it comes to our problem, adults are standing outside our doors complaining to us that the provincial education system may well have failed them in the past. How do we as legislators do a quick fix of that? There is no real quick fix. The scholarship millennium fund was hotly debated in this House.

The reality is that is one way in which the federal government can be proactive in looking at people who for some reason whether economic or otherwise cannot get a better education. The government can step in and say we realize we have a basic obligation to you to get you a good education and to ensure that you and your children will be able to plug yourselves into the basic economy and earn a living from it.

We cannot keep thinking about this debate as just a matter of money. It is a matter of human capital. As legislators we should spend a little more time trying to find programs to increase the nutrition of our young people and to ensure they have the skills to make sure this is a problem that will eventually go away.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Madam Speaker, I agree that we should be talking about finances and issues of taxation, exactly what the hon. member spoke about for the first eight minutes of his speech. He talked about the NDP wanting to redistribute the wealth. I remind him that we have not said that. We have said that it is better to redistribute allocation of resources.

An example is our fishing communities on the east and west coasts. DFO's practices and policies have allocated that common property resource to fewer and fewer hands, which is the corporate sector. That sector gets richer and richer while thousands of people lose their livelihoods to partake in the economy he talked about. Would the member not agree that a better allocation of resources, which would enable people to work in their coastal communities, would be a better way to end child poverty in those communities?

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, according to my reading of the coastal fisheries issue no matter what coast you are on in Canada there are no more fish. We can talk about it being a terrible thing that the fishery is in decline but the bottom line is there are no more fish.

We really need aggressive policies to ensure there are different resources available so we can restructure and diversify these economies. That is happening but it may be happening a little slower than it should be. The Nova Scotia Technical College is a great resource for the people of Nova Scotia to glean that knowledge.

The regional disparity in Canada in this age of the information highway is ridiculous. It does not really matter where you live in this country, everybody should have equal access to those skills that will sustain them over a good number of years.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I appreciated the comments of the hon. member for Durham. I know that in his professional life he worked a lot in financial situations and accounting and that he is well respected in that field.

I particularly appreciated his comments on the impacts of bracket creep. I was reminded as he was speaking about a recent report from the C.D. Howe Institute that talks about how Canada's personal income tax system has not been adjusted properly for inflation since 1985. As a result more taxpayer income has become effectively subject to tax. For Canadian families this means higher taxes on the average of about $1,000 per family due to bracket creep. I certainly concur with his comments. Now that we are moving into the days of surplus, is it the member's priority that we address this with the surplus money?

We may be saying there are no tax increases but in effect with bracket creep real tax increases are taking place.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, it is an issue the government has recognized as a problem. We are moving in a direction to eradicate it. I do not think it will disappear overnight. It will take time.

I have another observation which is often given by the real opponents to fixing the system, to index the taxation system may well lead to inflation, in other words what creates inflationary pressures. I remember the days when everybody's labour contracts were specifically tied to the consumer price index. When the consumer price index went up 7% their wages went up 7%. Wages went up 7% and the products they bought in the store went up 7%. We got into an inflationary spiral. There is an argument within the taxation system that said we are trying to control things at zero or break even inflationary rate, so why should we index the taxation system which may well lead to a cascading effect? I am not a strong believer in that argument but it is an argument that we have to take into account.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I will be sharing my time with the hon. member for Souris—Moose Mountain.

We appreciate the good intentions of the motion to address the indexing of the child tax benefit and the increase of the threshold on when people begin to pay taxes.

Part of my concern is that a motion like this couched in the terms of addressing poverty is perhaps not comprehensive enough. To take a small part of the issue, a piecemeal approach, probably does not serve all Canadians well. That is part of the reason why Reform has done such a diligent job in our budget alternative package we presented to the House, to various members and to people across the country.

It is prudent for us to pause for a moment to reflect back as we are in the throes of this debate on poverty and ask what we can do in the tax system to address it. In Canada over the last 15 or 20 years we have incurred a $600 billion debt, the highest debt ever, massive tax increases combined with that. There has been lots of money drawn from the taxpayer and also borrowed and yet we are in a country where we talk about one in every five children is supposedly in some state of poverty.

When we think about that it does not seem like getting more money both through borrowing and through taxation into the hands of government has really done much to address poverty if it is true that one in five is in a state of poverty as some would claim. We had a debate on poverty.

It is time to review quickly some of our own points that are more comprehensive. I do not have time today to go through our complete budget submission but there are some things I want to highlight to show it is more than just the components that are in this motion before us today that would address some of the challenges of the less fortunate in Canada.

Certainly our budget submission calls for very substantial tax reduction with the surpluses that are available. As well we call for a very substantial reduction of the debt which is really borrowing on the future of our youngest Canadians. The core programs that are so important to Canadians must be strengthened.

One of the speakers today quoted from the recent Vanier Institute study. The study states that in 1996 family incomes were only $600 above their 1980 level, 16 years. Family incomes on an after tax basis declined by over 5% in real terms from 1989 to 1996.

Taxing is impacting families. We are talking about poverty today and it is within that context I would like to talk on the impacts of taxation on the financial future of Canadian families. I want to quote from another study in 1998 by the National Foundation of Family Research and Education talking about bracket creep which we just heard some comments on. It says bracket creep and the clawing back of tax credits from families with incomes as low as $20,000 per year means that families earning between $20,000 and $40,000 per year are now paying the highest marginal tax rates in the country.

What we are creating with this heavy level of taxation is a type of a working poor scenario. That is of real concern to me as it is to many Canadians and I know many members House share that concern.

It is interesting also from the Vanier report that in 1980 financial stress on families was relatively low. In the 1990s this most current report states that most measures under financial stress are reaching record highs.

Families in Canada are under financial stress and I think it is incumbent on members of the House to find ways to relieve that stress and tax reduction is certainly one of the most obvious and straightforward ones that I know we could find a lot of agreement on in the House.

I want to talk a bit about some of the specific proposals in Reform's budget alternative better way budget. One of them has to do with reducing or at least considering and investigating the impacts of the current tax legislation on marriage. One submission states that single income families may pay considerably higher amounts of federal tax than two income families with the same level of family income.

Take a family earning $30,000 annually. While a dual income family splits the income 50:50, the single income family will generally pay about $4,317 a year in federal and provincial income taxes, whereas the dual income family pays a combined $3,492 a year. So it is 24% more in tax for a single income family. These are the kinds of inequities that I think should be investigated to bring some greater fairness and equity into the way families are treated and taxation is applied.

As a specific step we could take in this direction, we are suggesting that one of the easiest and most straightforward things to do is to increase the married credit by setting it equal to the basic personal credit at $1,098 from its current maximum of $915. The proposal provides for a tax reduction when coupled with the increase to the basic personal credit that we advocate of $675 for single income families across Canada. This is an important proposal for a couple of reasons. It is important because why should the spouse who is in the home and maybe not employed in the private sector have some type of exemption that is less than the basic exemption? We are advocating that it should at least be equal.

Another important point we call for to address some of the taxation impacts on family is that the current system allows for deductions of $7,000 for children under seven and $4,000 for children aged seven to sixteen. That is the current situation. We propose to replace this system with one where all families with children become eligible to receive a refundable child care expense credit of 17% of $7,000 or effectively $1,190 for all children up to seven years of age. Further, a credit of 17% on $4,000, or $680 in hard cash return, will be made available for parents of children seven to twelve years of age. The credit would be available to all families with children whether they are earning income or not and provide benefits for each child under the age of seven and for children seven to twelve.

There are costs I could provide on that. We have quantified that. We have examined the impact of that recommendation to make sure that it is consistent with our overall budget proposal.

Another area I would like to address is directly related to the impacts of capital gains taxes in Canada. Let me quickly touch on a reduction of capital gains and how that could help us strengthen opportunities for the less fortunate. The increase in economic activity which would result in a reduction of capital gains taxes would lead to greater employment and thus higher income tax revenues. In other words, the economic benefits of a reduction in the capital gains rate far outweigh the short run costs of them. There are a number of studies I could quote if I had the time to do so.

To sum up, the thrust of the motion today is to alleviate the burden of poverty and calls for two specifics on tax policy. We must meet the needs of those who are not able to help themselves and are facing harder times. However higher taxation and increasing debt are not working.

[Roy H. Bailey, Reform, Souris—Moose Mountain, SK]

Madam Speaker, I am pleased to join in the debate. I congratulate the Conservative Party for putting the motion forward. It is a very timely motion.

I will not deal with the taxation part of the motion so much as I will deal with some terms used in the motion such as burden of poverty. I doubt if any member of the House has more firsthand knowledge of poverty than I have. It did not really affect me too much, but I was born in a period of time in southern Saskatchewan known as the dirty thirties. That period of time had a great commonality: everybody was poor. In our house we were so poor we did not even have mice. That may be a joke, I say it in fun, but I know what poverty is all about.

As I travel across the country it bothers me to come face to face with poverty, particularly young children suffering from poverty. That to me is the most horrendous sight. It is bad enough to see it on television in third world countries, but when it is face to face it shakes me up because I have been there.

I do not know if I was ever hungry. I do not know if I ever had too much cake or pie. I do know that my mother could make beautiful loaves of bread, fry some sour dough and we could afford a bit of syrup.

Today the burden of poverty should not exist. I encourage the House to listen to the words in the Progressive Conservatives supply day motion where it says “encouraging self-sufficiency”. That begins in the home.

Because of my background we grow a huge garden every year. My wife and I have taught our children to do the same. What is the reason for it? I grow a huge garden to give it away. Before I was elected I set a goal to grow a tonne of vegetables. With the modern black squash which they call zucchini, I did not have to wait very long to get 300 or 400 pounds of those. We would give them away. I would pick out families I knew in a huge area to come and get vegetables mainly because they had children. There are ways in which to encourage self-sufficiency not only from an individual level but from the level of the provincial government and the level of the federal government.

It bothers me that we declare to society what the poverty line is and we have a mother and a father with two children living below the poverty line and Revenue Canada is still extracting taxes. Let us think about that.

In the words of the motion, self-efficiency is destroyed. People ask themselves what is the use. Dad is out working. Mother is out working. Grandma may be looking after the children. They have to pay income tax when they are many thousand of dollars below the declared poverty line.

What about self-reliance, in the words of the motion? Self-reliance brings to the individual a sense of pride in what can be accomplished. It broke my heart less than three weeks ago to have somebody come into my office to say: “Thank you for getting me a job but I am only $5 a week better off with a job than I was before”.

How by government's means do we create and encourage a sense of self-sufficiency and self-reliance when we fall prey to heavy taxation? I want to give a couple of examples.

While I was in Estevan, Saskatchewan, which is part of my constituency, a young fellow came to my office and told me about his dilemma. His EI had been cut off. He was employed by a construction firm that often lays its people off but he was on call. They had to get the machinery ready to remove the snow from that small city. He got in three days of work and bingo. He would have been better off if he had not got that work. We do strange things to destroy pride in the individual. He did not have very much money. I went down to his boss and got his boss to get him a loan to spare him until he got back on EI.

Let us take a look at some very serious problems. Let us start teaching people. Let us start seeing an attitudinal change and looking at the things we can accomplish. I picked up the list of boo-boos that governments make in spending. I think of how that money could be used through proper channels. We could certainly alleviate a whole lot of poverty.

What would happen if this became an issue not only at the federal level but at the provincial and municipal levels? We should somehow get the politics out of it, from what I am hearing today back and forth. Do we think that five and six years old who do not have enough to eat at home know what a Liberal, a PC, an NDP or anyone else is? Do we think they care? We care when it comes to wanting to provide all the help and dignity we can to elevate the self-sufficiency, pride and self-reliance of these people. Too often we go about it the wrong way.

In closing I will use an illustration. There is an idea in government that all it needs to do to cure a problem is to dump more money into it. I could spend from now until midnight talking about programs the government has dumped money into which have not solved the problem.

A World War I veteran lived eight miles up the road from me. During the thirties when I was a boy he decided to raise sheep. It was not too profitable, but he shipped three carloads of sheep to the Burns slaughterhouse in Winnipeg. Mr. Kimmerly got a letter back reminding him that the sale of the sheep did not cover the cost of freight and asking him to kindly remit $3.78. He wrote a letter back saying very nicely that he did not have any money but he could send some more sheep.

Money is not always the answer. We should look at the question of poverty in the light of becoming involved not from the political viewpoint but from the human viewpoint.

[Gilles Bernier, Progressive Conservative, Tobique—Mactaquac, NB]

Madam Speaker, I respect my colleague from the Reform Party and thank him for his nice comments. I had hoped to hear some of the same comments from his other colleagues this morning.

We are talking about poverty. I am a person who knows about poverty. I understand my colleague was born and raised in the thirties during the great depression. I was born and raised in later years. I was born in 1955. Today we have been talking about how we differ, how to establish where poverty starts and ends. When I was first married I had to go on welfare. I know what it is like to be on welfare and to be on EI. I also know how it feels to have small kids and not have enough money to buy a loaf of bread or a quart of milk. I went through that. That is poverty. One Reform member mentioned those starving to death in Sudan. I would give my shirt to somebody who needed it because I was one of them before.

Last summer we in the House of Commons gave ourselves a salary increase. I took my salary increase and gave it to charity. Is the hon. member willing to do the same?

[Roy H. Bailey, Reform, Souris—Moose Mountain, SK]

Madam Speaker, I do not want to use this opportunity to talk about charity.

I am assuming the hon. member has heard of the term tithing or one-tenth. Since my children are raised and finished university I have more than exceeded that every year. I am very proud to do so. In order for me to do that, I doubt if anyone in the House lives in an older house than the one in which I live.

[Myron Thompson, Reform, Wild Rose, AB]

Madam Speaker, I have a quick comment and question to remind people in television land just how ridiculous some things are.

I have gone across the country and seen the poverty that exists in the cities and on the streets. I know what we are talking about. First it was a million children in 1993 and now we are up to a million and a half. This leads me to understand that we are not doing a very good job.

I know what living in squalor is like on reserves. I have personally been in their homes and have talked with native people who are suffering. They provided great hospitality with what little they had. I have reviewed the public accounts that come out every year. We also have a member who puts out a waste report.

The hon. member is probably a couple of years older than I am but not much more. Three years ago the government—and it is just one small example of millions of dollars—put together a committee which according to public accounts cost $116,000 to study seniors and sexually. I wonder if the old fellow, like this old fellow, feels a whole lot better that this wonderful Liberal government is spending big money to study us old guys and our sexuality. How does he feel about that?

[Roy H. Bailey, Reform, Souris—Moose Mountain, SK]

Madam Speaker, I was not aware of that particular study. I might say, as well, that I am glad I was not a candidate for the study. But I do appreciate the member's point.

I have noticed a difference. We have these soup kitchens in our community. I phoned a soup kitchen last summer because I had almost 300 pounds of potatoes to give away. The response I received was: “Could you bring them up when they are cleaned?” Can they not even clean the potatoes they are given?

This goes back to my original point of self-sufficiency and having some pride.

I turned the TV on that night and saw: “Wanted: people to help serve”. Why not serve the people and have those people who have eaten serve the others? The process should be about self-sufficiency and self-reliance. I really believe that could do a lot.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, the issue before the House today is probably one of the most important challenges facing our country.

Poverty is a complex problem and for every complex problem there is a simple solution, but this one is wrong. Today we have had a suggestion that we can deal with poverty by giving tax breaks to the poor. Not only do the poor not pay tax, the poor do not have income. In fact the poor are those in our society who are unable to help themselves. They are the ones who are on welfare and social assistance. They are the ones who need Canadians to re-establish their value system so we ensure that all Canadians can live in dignity.

A parliamentarian once said in this place that when dignity is lost, everything is lost. We should never forget that.

Child poverty is a convenient political synonym for family poverty. We should talk about family poverty in Canada. Nobody but nobody could ever argue against dealing with child poverty. It tugs at the heartstrings. However, by dealing with the issue of child poverty we ignore the reality that family poverty is the real issue and that the root causes of poverty rest with the conditions of the Canadian family.

Canada does not have an established poverty line. Statistics Canada has announced on many occasions that we do not have a defined poverty line. We do have, however, the low income cut-off, which is a measure of income levels which provide a certain amount for the basic necessities of life plus an additional amount for all other good things necessary for general Canadian life in terms of the lifestyle that Canadians would seek to enjoy.

Those kinds of calculations tend to generate high numbers. In 1989 when the Canadian Council on Social Development announced its numbers of so-called children living in poverty, it said the number was one million children, one out of six children in Canada. Ten years later the same agency reported that 1.5 million children are living in poverty, which is one out of five children.

The calculation used to determine poverty in 1989 had to do with the ability to provide food, clothing and shelter. Today the definition includes much more than that. What we have done is allowed the definition to float in a way which tends to increase the numbers to levels which nobody but nobody believes.

I believe that Canadians have actually become desensitized to what poverty really is in Canada. It has become so inflated that we have lost our focus on what real poverty is. StatsCanada and the LICO are talking about relative poverty, not real poverty.

It is about time that we understood what the level of real poverty in Canada is so that we can focus our attention and make sure that our limited resources are focused on those who are really living in poverty, and there are many people in Canada who are living in real poverty.

In 1989 the House unanimously passed a resolution to seek to achieve the objective of eliminating child poverty in Canada. “Seek to achieve” basically means to do something, to try. It does not mean to eliminate child poverty.

Members will be interested to know that that particular event was not as momentous as they would think. The motion of that day was made by Ed Broadbent on the very last day that he served as a member of parliament in the House of Commons. It was a Friday. There were four hours of debate only and most of that debate concentrated on tributes to Ed Broadbent. There was very little actually said about the real issue of poverty, except about references to the third world and children starving to death.

The discussion and the debate then, if members would check Hansard , was clearly not the discussion of poverty that we think it was. In fact, with 10 minutes to go in the debate before the House adjourned, the then secretary of state for youth, Jean Charest, entered the House huffing and puffing and said “Mr. Speaker, considering the exceptional circumstances today”, referring to Mr. Broadbent's resignation from the House, “and pursuant to discussions that we had before the debate, I move that the motion be passed unanimously”. Hansard then recorded some hon. members saying yes and the House adjourned. That was it.

The House did not actually have a serious debate about poverty, except for one speaker, to whom I want to give credit, and that was Perrin Beatty, the current chair of the CBC. Perrin Beatty spoke very eloquently in the House about the changing nature of the family and the reasons that was contributing to this whole problem of child poverty.

Poverty in our case today is somehow determined to be a measure of income. It is not just a measure of income, it is a measure of resources. That means income and assets, plus the value of social benefits and services that are available to Canadians so they are able to live in dignity, to have food, clothing, shelter and the basic necessities of life. Those are the things we should be measuring.

If we look at the root causes of people living in poverty in Canada we will see that a lot of seniors are on that list. A lot of seniors are on that list because they did not have the opportunity to provide adequately for their retirement income. Their income levels on their tax returns show them to be below some artificial low income cut-off.

There are immigration problems. Many immigrants, in particular the refugees who come to Canada, are unable to assimilate and to care for themselves as well as they should. They are also on this list.

Then there are the mentally and the physically disabled, those who are unable to care for themselves.

This is not something which we can simply pass a resolution on and then eliminate. It is a fact of life, which means that the social values of Canadians should be: How are we going to protect and care for the physically and the mentally disabled, those who are not able to care for themselves? That is a separate issue in the whole complex dynamic of poverty.

How about the youth? There are tens of thousand of youth floating around this country. If we look at the condition of today's Canadian youth we have to ask ourselves: Why is it that about 25% of Canadian youth drop out of high school? How is it possible for a high school dropout to even think of fully participating in the opportunities of Canada? To opt out of high school is to sit on the curb and watch the parade go by. This is an important aspect of poverty.

Again though, as members will notice, that falls under provincial jurisdiction. Federal issues are involved, municipal issues are involved, and there are also Canadian issues. If we are going to deal with poverty, we have to get Canadians on side as well. There has to be a minimal expectation that all Canadians will act in good faith and will work hard to get themselves out of the situation. Those are the things that we have to do.

Drug and alcohol abuse and addiction are very significant contributors to poverty in Canada. There are people who have illnesses and we are not providing services to help them.

That is part of the situation. It is mostly a provincial issue, but we as a federal government have to support serving Canadians with those health care needs. That is why we have a social union agreement. That is part of the agenda.

The single largest contributor to child poverty in Canada has to do with the breakdown of the Canadian family. Twelve per cent of all Canadian families are lone-parent families. They account for 46% of all children living in poverty. Almost half of the poverty situation we are talking about today has to do with the breakdown of the family.

Why does the family break down? It is a very complex area. It has to do with domestic violence. It has to do with substance abuse. It has to do with the lack of a job. It has to do with adultery. It has to do with a lot of things.

Let us not deal with poverty as a linear problem that has linear solutions. We have to deal with poverty as a complex problem, requiring a multiplicity of solutions that we can all support at all levels of government and embrace all Canadians to be part of the solution, not part of the problem.