Mr. Speaker, I am pleased to participate in this take note debate on the upcoming budget. It is our sincere regret that it has taken the government nearly two years, over 650 days, to prepare a full accounting of the nation's finances.
It is unheard of in any free nation today that the government would go almost two years without tabling a budget. There is no premier in Canada or mayor of any city who could get away with such a high degree of unaccountability.
I congratulate the federal Liberal spinmeisters on deflecting media attention away from this glaring record, perhaps the greatest record of the last century in terms of length of time without accountability. This is not a laughing matter. It has been one of the many reasons for the lack of confidence in the Canadian economy.
Two years without a budget is far too long.
The finance minister has totally dismissed our concerns about the economy for months. We talked about the economy slowing down, the out of control spending of the government and how we were heading toward a deficit. The lack of clear information on the government's fiscal priorities was irresponsible and disrespectful toward parliament.
They laughed at us and ignored us. It is inexcusable that it has taken the beginning of a war and the onset of a recession to cause the finance minister and the government to finally table a budget.
It has been interesting to watch so many different areas of government public policy planning over the last seven years. In virtually every area the Liberal ship of state has been adrift at sea without an anchor and compass. When the winds of adversity blow the government panics. It puts up the sails and inevitably runs aground on some rocky reef of poor public policy planning. That is inexcusable.
It has been a decade of being adrift. It is not only in the area of not having a budget or fiscal priorities but also in the area of security where there has been no forward planning. There is only panic as with the anti-terrorism legislation that drifts into areas which perhaps we should not be going into.
We now have the softwood lumber problem that has thrown tens of thousands of people out of work. We warned the government about it for years. Yet it did not react. The panic sets in when those winds of adversity hit. It is inexcusable that nothing is being done and that people are run aground. We will continue to bring it to the attention of Canadians.
On September 11, the world changed and we have to view certain realities from a fresh perspective. It has forced us to review our priorities. We hope that the government will align its priorities with those of the people it is supposed to represent.
There are three critical areas in which the government must realign its priorities: first, the whole question of a deficit of resources for our national security concerns; second, the oncoming Liberal recession; and third, the long term decline in Canada's standard of living. Factual, calibrated and measurable, these must be addressed.
In the area of security, the first and foremost responsibility of any federal government is to defend national sovereignty and to protect the safety and security of its citizens.
That is why the Canadian Alliance, and before it the Reform Party, has consistently called for adequate resources for our police, intelligence and defence services, calls that have gone unheeded. We have done this even though we are a party that believes in smaller and less costly government in almost every other area. However we believe that freedom is not something we can take for granted. Freedom comes at a price and its price is eternal vigilance.
Regrettably, despite the blizzard of rhetoric from the Liberal government, its actions suggest that national security is in fact one of its lowest priorities. We can say all the things we want but we measure people on their actions and the actions of the government suggest national security for its citizens is among one of its lowest priorities.
Over the last few years the government has routinely dismissed our calls for necessary spending to enhance national security and defence. We made those calls long before September 11. It continues to dismiss those calls.
Since 1993 defence spending has been cut by $1.6 billion, a massive 23% reduction in real terms. Any time the Minister of National Defence stands up and talks about a very recent knee-jerk reaction in spending, moving up in a small incremental way, he must account for the fact that the Liberal federal government slashed our national defence by 23%. It was one of the single greatest reductions of any department. The government cut its own preferential spending by only 7%.
I get tired of hearing the Minister of Finance stand up and talk about dealing with the deficit in this country. He neglects to say that he did it by huge cuts in two areas: our national security and our national health care system. That is how he cut the deficit and did only 7% in terms of the government's own wasteful spending. Every time the minister talks about deficit reduction he should be mentioning how he did it and whose backs were affected. That is where the cuts have come.
During this time the reduction in terms of military personnel has declined from 90,000 to 58,000. The Conference of Defence Associations, which is the major scientific and advocacy group related to military needs, resources and spending, has defined in a very recent report that there is a $1.2 billion annual deficit in terms of the needs of our military. That $1.2 billion annual deficit is just for maintenance and ongoing operations and does not even address the ongoing needs of increased national security that we now face.
They are not alone. The auditor general has estimated between now and the year 2012 a $30 billion funding shortfall in defence equipment just in those few years.
The government has given Canada the embarrassing distinction of giving the second smallest defence commitment to NATO. These are the hard facts. Canada's commitment of 1.0% of gross domestic product is less than half of the NATO average of 2.2%. This is not something for which we can be proud. In other words, for Canada to match just the average spending in terms of the commitment that our allies share, it would require us to nearly double our defence budget from $10 billion to $21 billion. There must be an increase even beyond what the defence association says, of $1.2 billion.
I have addressed this subject many times. Our defence critic, the member for Lakeland, and other members of parliament in the Canadian Alliance have also detailed this enormous funding shortfall. We have made it very clear that it is impossible for Canada's military personnel, whom we personally believe are the most dedicated and the most courageous in the world and have proven that in the last century, to adequately meet all the commitments and requirements that are put upon them, which includes continental defence, treaty obligations, UN peacekeeping and now the war on terrorism.
We believe it is wrong to ask our military personnel, whom we believe are the best in the world, to defend this country, its assets and its interests at levels on which they are not able to do so. It is wrong for us to make promises we cannot keep. It is wrong for Canada to leave it to our allies, particularly the United States, to do all the heavy lifting on our behalf.
On September 11 Canada's free ride on national defence came to an end. The time has come for the government to make its lowest priority the nation's highest priority and that is the protection, safety and security of our citizens.
In analyzing what we believe will be the numbers in the budget, we have identified that it will require approximately $2 billion from low priority areas being moved to the Department of National Defence. That is as a down payment on additional future increases to give our military the resources it needs.
Maintaining national security is an increasingly important task of our domestic intelligence and police agencies, such as CSIS and the RCMP. Since 1993, again, the government cutting its own pet projects only by 7%, has reduced the CSIS budget by 28% in real terms at a time when we need more of that intelligence activity than at any other time.
Through the years the Canadian Alliance and our members before us have been telling the government about the concerns worldwide of bandit or rogue individuals or nations and that we would require even more resources in this area, but the government cut CSIS by 28% in real terms. That is a diminishment of our national security.
Given the enormous new demands on that agency it is only reasonable that the funding should be restored at least to the 1993 levels of $272 million. That would entail an increase of $76 million.
The RCMP is also currently in need of more personnel. Customs and immigration also require added resources, not just personnel but for major new technology acquisitions, updated passport scanners and computers, and potentially for advance biometric screening systems. They need all of this and it must be addressed.
It is interesting to hear the government talk about its concern for national sovereignty. The coast guard has seen its fleet cut by 40%.
When the government talks about national security and protecting Canadian sovereignty, it thinks that means we must respond to the minister of culture and stop watching satellite systems that come from other than Liberal approved programs. It believes that is what will keep our national sovereignty in place. Well it will not.
A 40% cut to the coast guard is irresponsible and does put national sovereignty at some risk. It requires new funding to replace aging vessels, to increase the coastal patrols and to acquire satellite tracking systems for incoming ships.
Finally, the Department of Transport will have to assume some of the cost related to airport security. Some of those costs could and should be shared by users but the Department of Transport will have to be there to share some of the costs of increased security measures. Altogether, these and other security related measures are likely to cost in the neighbourhood of a billion dollars annually. I hope the finance minister is jotting these numbers down.
Let me say again that enhancing our national security and working with our American neighbours to create a secure, common perimeter is not an option for Canada. I cannot understand the Prime Minister's paranoia when he says that building a strong continental border and working with the Americans somehow puts our national sovereignty at risk. That is a ridiculous state of paranoia.
The other night millions of Canadians gathered around their Japanese made television sets, wearing their made in China, fleece lined exercise outfits, sitting on furniture made in Sweden, watching an American baseball game played by players from all over the world including Puerto Rico, drinking Coca Cola and munching Mexican tacos. Their sovereignty was not being threatened by those actions and they did not fear their sovereignty was being threatened. However our sovereignty is being threatened when we slash the military and our security forces and say we will not work in common with Americans to develop some strong policies for North America. That is simply irresponsible thinking.
It is a necessity that we work together to increase the levels of security and the levels of safety for all of our citizens. This is all a question of priorities.
My colleague, the member for Calgary Southeast, will outline several billion dollars in wasteful and low priority spending. He, other Canadian Alliance members of parliament and the auditor general have done some good work on this. This year the auditor general pointed out hundreds of millions of dollars of waste, and he called it waste. The auditor general wanted to know who was minding the store. Well the official opposition is going to mind the store because the government does not. We will take on and have been taking on that responsibility.
These areas of wasteful and low priority spending have been identified. We need to reallocate from low priorities of spending and move back to high priorities of spending on safety and security which is what Canadians want. For example, we talked about the $2 billion immediate increase in the defence budget that is required. That is roughly equivalent to what the government spends now on corporate welfare.
The $1 billion that we see in additional security measures is less than the industry minister plans to blow out the door on his Internet scheme.
We expect some intelligent prioritization to go on. When we talk about a billion dollars being blown out the door by an Internet scheme we do not expect a response from him saying that the Alliance does not care about Canadians having computers.
Canadians in the free world are among the highest users of computers and that has been done without the billion dollar plan to get higher speed chat rooms for all Canadians from the government. Canadians have moved on it aggressively themselves and they will continue to do so. Safety and security are areas of priority.
We talk about an oncoming recession. The government needs to get its priorities straight on national security but it needs to be honest with Canadians about the deteriorating state of our economy and the nation's finances. We are tired of empty accusations from the finance minister and the Prime Minister when we raise, as we have been raising for a long time, questions about the economic recession which we were in pre-September 11. We get accused of being unpatriotic. Economists, like Jeff Rubin at the CIBC, predicted over a year ago that within 18 months the dollar would be sitting at 60 cents. We hit historic lows just yesterday. Mr. Rubin had better be careful, the Liberal thought police may be coming to arrest him for being unpatriotic. The government has to become honest with Canadians about this.
Last spring we issued many well-founded warnings about a potential downturn in the economy, one which we were witnessing was taking place before our eyes. We talked about the need for the federal government to tightly control spending in order to avoid going back into a deficit. We talked about that over a year ago.
The Minister of Finance and the government dismissed our concerns and continued to whistle past the economic graveyard and go down the path of increasing our vulnerability to a bleak economic picture. The minister's budget will not be able to hide the fact that he and the government led us into a recession. A decade of economic drift, as I have already indicated, has led us into a full blown recession and all of these indicators were in place before September 11. We are getting tired of the disaster and horror of September 11 being used to cover up the government's out of control spending and poor management which was happening well before that.
The aftershocks of September 11 clearly deepened our economic trouble. That is a fact. Let there be no doubt though that Canada was headed toward a serious slowdown before that tragic day. Economic growth screeched to a halt in the second quarter of this year and it is almost certain to contract in the third and the fourth quarters, with many economists predicting that the slide could continue well into next year. We hope that will not the case but many economists are saying that it will be.
The government should not be accusing us of being unpatriotic because we are concerned about the future and economic uncertainty of Canadians.
Employment was up before September 11. Thousands of job layoffs have taken place. The dollar hit an all time low yesterday.
As the Canadian dollar plummets, it is reaching out in desperation to grab on to some twig of confidence from the government but seeing none it continues to move downward.
The finance minister has allowed spending to get out of control at a time when revenues are beginning to contract. Yesterday's surplus may soon turn into tomorrow's deficit. Many economists, Dale Ore of WEFA, Don Drummond of the TD Bank and others, had predicted these planning deficits by the year 2003. The federal Liberals have been running three year projections in terms of where their spending was taking them. We analyzed the numbers and we could see that they were headed for a deficit before the three year mark. What was their response? They quit the three year planning and they put out two year projections.
If there is a projection that comes out that says we could hit a deficit in two years, maybe all they are going to do is project one year. It is irresponsible. They need to tell Canadians what we are facing. By knowing what we are facing we can prepare for it.
The Bank of Nova Scotia, for instance, is projecting an annual federal deficit of $5 billion by next year. What will that mean? Will it mean that our next projection will be only a six month one because we want to avoid the ones that people are putting out?
If the finance minister and the Liberal government lead us back into deficit, the slowing economy will not be to blame. Out of control spending, fuelled by the undeclared Liberal leadership campaign, has put at risk the surplus that the taxpayers have paid so dearly to achieve, paid for by a reduction in spending on security, a reduction in spending on national defence and a huge reduction in spending on our health care needs.
Spending jumped last year by 7%. That was twice the level of inflation plus population. The finance minister has allowed spending to so far exceed his targets year after year and to exceed this phenomenal growth in revenues being paid by taxpayers. If spending in the current year was at the level projected by the minister in 1997, we would have had a solid surplus of approximately $25 billion if he had kept his surplus in check rather than the $8 billion that most forecasters are predicting.
Markets look for signs of restraint in government spending and accounting but they have not seen it from this government and have made a judgment according to the value of the Canadian dollar.
The government must get its priorities straight. On the economic and fiscal front that means keeping a balanced budget while reallocating resources from low priority, unproductive spending to areas of high priority, including areas of continuing the stimulus effect of tax reductions in very necessary areas.
To stimulate and create jobs and create investment, the government must continue to implement the tax changes it announced last fall. It also has to proceed with other areas of taxing business and individuals in terms of high input costs, EI premiums being one alone where we have far in excess of what we need, even with the oncoming recession, in terms of the insurance fund being there. The government takes those hard-earned dollars, taxing individuals and businesses for employment insurances, and launches the money into all kinds of spending that has nothing to do with employment insurance.
The government should sit down and consider including a yearly basic exemption, as suggested by various industry groups, when it comes to EI. We must also look at eliminating or bringing down the very destructive capital tax. As recently as yesterday the finance minister pointed to capital going to the United States. Why does capital flee? It looks for quality and certainty. The government has provided neither. We have to start doing that and we can within our various systems.
These measures in the areas of input cost reductions and tax reductions can be accommodated within the existing budget. People across the way say that we should spend, spend, spend. Yes, we should spend on priorities but we should reduce on discretionary and wasteful spending.
Only if the government puts a freeze on all future discretionary spending and controls spending in the low priority areas can we do these things, but they can be done. Let us not respond in panic and fear to the accusations that they cannot be done. It is a matter of discipline. These are critical if the government is going to leverage the fiscal policy to join the Bank of Canada's efforts to fight this Liberal recession.
I served as a finance minister in a time when commodity and oil and gas prices were going down. Even in a down time of plummeting commodity prices and with the Asian crisis, we had the discipline and foresight to continue tax reductions to send the signal of confidence to the economy, an economy which continued to be confident because it was being stimulated; investment staying instead of fleeing. That is what has to happen here.
When the finance minister tells us there is no room for additional relief in these areas, I have to question him. Where did he find the extra $6 billion for the ministries of industry and human resources development, those great stewards of the public purse, to spend on those pet projects? Then he says there is no room to allow Canadians to keep their hard earned money in their pockets.
Canadians know that an extra dollar left in the hands of a hard-working citizen or innovative entrepreneur will do a lot more to create jobs and wealth than a dollar in the hands of a federal Liberal politician. Canadians continue to suffer. Every time the finance minister gets up and does his arm waving he never addresses these facts.
We have the highest income taxes in the industrialized world. That is a fact. I want to see the arm waving today when he gets up and starts talking about the great things he is doing for Canadians.
The government needs to get its economic priorities straight by spending less on interventionist pet schemes that do not work and putting more on priorities for Canadians by allowing them to keep more of their hard earned money in their pockets.
The upcoming federal budget represents an enormous missed opportunity by failing to take more decisive action in all the areas I mentioned: proper spending, tax reduction and paying down debt. We will watch for the arm waving today. Any way we shake it out, even though there have been payments on the debt, and the official opposition has acknowledged those payments, they have not been what they could have been. It is another hallmark of the era of lost opportunity and the federal debt today stands higher, at $557, billion than it was in 1993. That is the plain basic fact.
Yes, when the surplus has been splashing over in its economic bucket, the government has allowed some of that to go to the debt but not as aggressively as it should have. It has not legislated the down payment of debt.
These are the signals the market needs to see so that investment will stay here and not run southward where it will be taxed at a less punitive rate.
Canada is headed into a recession exposed by some fundamental economic weaknesses. We continue to carry one of the largest debt burdens in the industrialized world. It costs taxpayers over $40 billion a year just to carry that debt. It costs $100 million a day to reduce a debt that should have been reduced far more aggressively and should have had a law behind it saying that a bigger chunk of the surplus would go to its reduction.
Our dollar has lost 25% of its value against U.S. currency since 1993. We want to see Liberals stand and applaud today when the finance minister gets up to address this. We want to see how loud the applause is when he says that it is true that our dollar has lost 25% of its value since those people took office in 1993. That makes all Canadians poorer relative to our American friends.
There is a 22% gap between the Canadian and U.S. standard of living, which amounts to a difference of $29,000 for an average family. We want to see the cheering on that today when the finance minister stands and does his usual rant. We want to see the pompoms go up in the air.
U.S. productivity has grown at a 50% faster rate than in Canada over the past decade. I want to see the finance minister go after the Chamber of Commerce for being unpatriotic because it has said the nineties will stand out as the poorest decade relative to growth since the 1930s.
All these figures point to Canada's greatest economic challenge, to stop the slide in our standard of living and eventually, as we stop the slide and put in place the proper policies that stimulate confidence, I believe that on the race track of economic growth we can sprint ahead of the American economy. We do not have to lag behind. Every time the dollar drops and debt increases or some other economic measure hits us, the finance minister stands and says that it is the Americans.
Canadians can outpace them. We are a little upset that this year the Mexican peso is outpacing the Canadian dollar relative to the U.S. dollar. We congratulate President Fox. We offer no congratulations to this finance minister for allowing that to happen. We want to hear those cheers today when he stands up and addresses these factors.
We have a vision of our economy being strong and focused, a government that is disciplined and our business, our people, our hard workers literally being able to sprint past the Americans when it comes to productivity and growth. It is possible as long as we have a government that can recognize that.
The United States congress is in the process of passing an economic stimulation package that includes $100 billion in immediate tax relief on top of the $1.3 trillion tax cut that was passed earlier this year.
Canada cannot afford to stand still. The flight of capital and people is happening. There are 98,000 highly educated, highly skilled Canadians moving south this year alone. We have to get our economic priorities straight. That does not mean just more stimulative tax relief but tax reform that is designed to reduce and eliminate the disincentive that Canadians face right now when it comes to work, savings and investing.
The Alliance proposal is to eventually eliminate the marginal income tax rates. That would be a clear step in the right direction. The federal government should also explore ways to move Canada away from its huge overreliance on income taxes. It has to continue to look at reforming taxation, especially corporate taxation, relative to the recommendations brought forward by the Mintz commission.
If we are to close this gap in the standard of living, we must also implement some structural reforms, especially related to inefficient programs. The government took a big step backward in this regard, with Bill C-2, by rolling back its own very modest employment insurance reforms out of political fear and nothing else. Instead, we would pursue experience, rating and other reforms designed to modernize Canada's labour markets.
We should reform equalization to stop penalizing provinces that are starting to get ahead, especially those provinces having the ability to move ahead thanks to their non-renewable resources. Possibly for the first time since Confederation, Atlantic Canada has the opportunity to realize the promise of Confederation. However the federal government will continue to clawback its hard earned efforts at moving ahead. That is unacceptable.
The federal government has to drop its dogmatic approach to health care. Health care costs continue to skyrocket through the roof. The government's response has been to not restore health care to its 1995 levels. This is an economic situation as much as it is a health care and security situation. The government must begin to allow provinces to be innovative with internal market mechanisms within the public system, if we are going to preserve our provincial economies and help them to weather the storm that was set loose upon them when the government slashed their health care transfers by almost 35%.
We have to pursue serious reform of some of our entitlement programs to ensure that they are sustainable, making sure that maximum return to those people, especially on fixed income, is achieved. There are many ways in which that can be done. This federal government refuses to look at those possibilities.
The government should exercise real leadership in terms of striking down provincial trade barriers. It has not done that. It should be pulling the provinces together in many areas where those barriers still exist and get the type of reduction in those provincial trade barriers that is necessary.
Federal regulations need to be analyzed in a way that the costs are looked at carefully as to what regulations are effective and needed and which are ineffective, outdated and unneeded. That is a huge cost to business and a drag on our economy.
Rather than taking any of these bold steps to strengthen our economy and to secure our future, the finance minister, along with the rest of the government, continues to be adrift. The government ship of state is adrift at sea, tossed about on the waves of circumstance without an anchor when needed, without a compass when needed. For every serious challenge we face, the recession, the falling loonie, our slide in productivity, the finance minister blames some external forces.
We can be masters of our own destiny but we have to take charge. In difficult times like these Canadians want and deserve tough decisions, not familiar excuses from their national government.
The Canadian Alliance will continue to do everything in its power to ensure that the government gets its priorities straight. These include providing adequate resources for our national security; fighting the Liberal recession, while maintaining a balanced budget; and reversing the current downward trend in our standard of living.
I move an amendment to government Motion No. 17 as follows:
That the motion be amended by adding:
“and in particular, the need to increase spending on national defence and public security by reducing waste and spending in low and falling priority areas, such as the proposed new Industry Canada-HRDC strategy paper, preserve and accelerate scheduled tax reductions, restore confidence in the Canadian dollar, and avoid falling back into a fiscal deficit.