Madam Speaker, yesterday in the House of Commons during question period the Minister of Finance stated in response to a question:
What is important in a budget is the way in fact it is received by the public.
That admission by the Minister of Finance speaks volumes about his priorities. According to the minister the budget ought to be judged by polls and by public opinion. That is why the minister's budgets tend to focus on next week's polls and tend to ignore the challenges and opportunities facing Canada in the 21st century.
At a time when Canadians deserve leaders who look years, even decades ahead, this finance minister has barely looked weeks ahead. It is often said that the world changed on September 11. With the budget the government is pretending that the world began on September 11.
The budget does nothing to address some of the serious issues facing the Canadian economy prior to September 11 such as agriculture. There was an agricultural crisis before September 11. At a time when the government speaks of security, what could be more important to national security than the ability for us to produce our own food?
If only the Minister of Industry had been minister of agriculture perhaps then the Prime Minister would have stepped into the Liberal leadership sandbox and demanded $110 million for Canadian farmers.
In terms of health care Canadians, who are waiting months for MRIs and years and months for major surgery, know that there is a crisis in the health care system in every province in Canada not because of provincial governments but because of this government's callous cuts to health care and its lack of priorities.
There is a productivity crisis. Lagging productivity levels have reduced the standard of living of every Canadian. Yet in the budget we see no reduction in investment killing capital taxes and no reduction in job killing payroll taxes.
In fact in none of the minister's budgets have we seen forward thinking, courageous and visionary policy initiatives, the types of policy initiatives that were hallmarks of the previous government.
During times of global economic growth a lack of vision is easy to overlook. The Canadian economy would not have enjoyed the high level of growth throughout the nineties that it has enjoyed had it not been for the foresight, risk taking and innovative policies of the previous government.
That government took big steps. It thought big. It focused on what was good for Canadians, which did not always win votes but was certainly the best way to build a stronger country.
The government and the finance minister like to take credit for the elimination of the deficit. However the overwhelming majority of economists give full credit to the previous government. In fact the 1998 The Economist magazine world preview said that the credit for deficit reduction in Canada belonged largely to the structural changes made by the previous Conservative government. The Economist magazine went further and listed specifically free trade, the GST and deregulation, all of which were policies that the current finance minister and the current Prime Minister fought vociferously in opposition. Clearly having fought these policies in opposition they cannot take credit for the results of these policies now in government.
When asked by my leader last fall during the general election to name one accomplishment of his government during one of the leaders' debates, the Prime Minister could not after seven years in government name one accomplishment.
The question we must ask is what has the government accomplished in eight years of government. We have identified why the government and the finance minister cannot lay claim to the elimination of the Canadian deficit. The government has not initiated any visionary policies that have paved the way to a more prosperous country.
If we look at the performance of the Canadian economy under the government we see a lost decade during which Canadian productivity and growth fell behind those of our competitors.
Under the government the Canadian dollar has lost 20% compared with the U.S. dollar. The Prime Minister's answer is that a low Canadian dollar is good for exports. The logical corollary of his argument would be that reducing the Canadian dollar to zero would create the greatest export nation in the world. Clearly the Prime Minister's arguments when it comes to economic matters are seriously flawed.
Woody Allen once said that 80% of life is just showing up. For eight years the Prime Minister has just showed up, and Canadians are paying a price for a Prime Minister who just shows up and does not do very much more.
Eighty-five per cent of our trade is with the U.S. Thirty-five per cent of everything we consume is from the U.S. A 20% drop in the Canadian dollar represents a significant reduction in the standard of living of every Canadian family.
Under the government we have seen personal disposable income drop while we have seen American disposable income increase. Wealth is relative, and as Americans have been getting richer Canadians have been getting poorer. It is not just the U.S. Almost every one of our competitors in the G-7 have initiated major tax reform and major initiatives that focus on improving productivity and prosperity. Canada has been left behind by a government that watches the polls, but does not address the policy issues that could create more growth and opportunity for Canada.
The 1990s under this finance minister and this government have been a decade of lost opportunity. The global economy has undergone a greater level of change in the last 10 years than perhaps in the last 100 years and the government has done very little to address those changes.
The government has always focused on politics to the detriment of policy. Never was this more evident than in this week's budget. This is a part time budget from a part time finance minister. Good government means making tough choices. The finance minister is so conflicted by his principle role as a Liberal leadership contender that he refuses to make the types of decisions and choices that would ensure continued prosperity and growth for Canadians.
Last week the auditor general, in her scathing report, identified 16 government departments with out of control spending. She identified $16 billion of spending that could have been controlled better by the government and areas where a reduction in the spending of taxpayer money by the government would not have reduced significantly the quality of life of Canadians.
The report went on to identify chronic problems the Liberal government had with controlling its grants and contribution spending. She indicated that the HRDC jobs grant fiasco now echoed throughout every federal department with the mismanagement of projects being systemic.
Perhaps most importantly, in the first line of her first report, the auditor general cited “the erosion of parliamentary control over how government raises money and spends it”. The finance minister's response to her criticism that under the Liberal government there has been an erosion of parliament in its ability to control the raising and spending of money was to introduce a budget in the last week the House of Commons was sitting before the holidays, with only four days of debate before the House rises. However that was not good enough for the Liberals. They have been trying to reduce that to two days so that they would not have to come in to work the morning after their Christmas party.
The minister does not want debate. He does not respect parliament. His government does not respect parliament. He supports what the auditor general has called his government's erosion of parliament. If the minister had taken the auditor general seriously or if he had any respect for parliament, he would have led the charge for his government to reform parliament and bring the estimates back to the floor of the House of Commons where they belonged, where ministers would be required to defend their estimates in parliament.
That minister would not dream of doing that. Why would he? Even though it would be good for parliament and democracy, it would not win him many votes in the Liberal leadership race. The minister knows that his prospects as a candidate for the Liberal leadership race would not benefit from clamping down on the out of control spending of the ministers and lack of accountability to parliament.
To pay for some of the new security imperatives, which represent the priorities of Canadians, the minister had choices. He had choices in terms of how the government could pay for these increased priorities. Clearly when faced with tough choices, Canadian families, individuals and households target wasteful spending and priorize to afford those things that are most important.
Security and defence reinvestment are top priorities for Canadians. Airline security was of particular importance for Canadians and for the Canadian economy. The fact is that improved airline security could be paid for by the finance minister if he were to listen to the auditor general and target wasteful spending by Liberal ministers on their pet projects within their departments. Instead airline travellers in Canada will be paying $24 in a new security tax to the government for every round trip domestic flight and $48 for every round trip international flight.
Comparatively, U.S. travellers will be paying $5 for every round trip. That is three and a half or perhaps even seven times more expensive for Canadian travellers than for U.S. travellers. It is the same security but it is three and a half to seven times more expensive in Canada because this is another Liberal government tax grab by a finance minister who refuses to tackle wasteful Liberal spending in departments that are pursuing their own pet projects. Instead he is willing to lay a $2.2 billion tax on what is perhaps Canada's most vulnerable industry, the airline industry.
If the finance minister's low dollar does not keep Canadians here in Canada over the holidays, his new tax certainly will. A family of four would pay up to $200 in new security taxes just to fly to Florida and back over the holidays to see relatives.
Instead of paying for improved security by giving his department a liposuction to remove some of the fat from his bloated government, the finance minister has decided that ordinary Canadians ought to pay more and that this Liberal tax and spend government should once again introduce more taxation and attack Canada's most vulnerable industry.
Why did he make that choice? He did it again because he is internally conflicted between what he ought to as finance minister and what he knows he should do to shore up support for the Liberal leadership.
In fact, his quick release following his budget address of a comprehensive list of backbench Liberal MPs who could claim to have received something in the budget reflects that true agenda. The auditor general speaks of waste, while the finance minister speaks of pet projects and which pet projects his backbench Liberal MPs can brag about funding.
This is not the first time that the finance minister has put his politics ahead of the prosperity of the Canadian people. In his pre-election mini budget in October 2000, a $1.4 billion home heating oil lottery resulted in only $240 million actually reaching families and individuals who were deserved of that program. Over $1 billion was misdirected, in some cases to prisoners, in some cases to people living outside Canada, in some cases to students who were living in university residences and in 7,500 cases to dead people.
If the government had not blown that over $1 billion on this initiative, that money could have been contributed to the cost of improved airline security. Good government is about making good choices and about protecting the taxpayer money, not wasting it.
Not only has this budget failed to reduce wasteful spending, it has increased spending in many non-core, non-priority areas at a time when Canadian agriculture needs increased levels of funding. In the face of crisis, Canadian farmers could have used the $160 million that the government provided to filmmaking for the heritage minister. The $110 million that went to the industry minister for his broadband project could have benefited Canadian farmers and probably done more for rural Canada than that minister's leadership-based broadband project.
In terms of defence, the auditor general cited the need for $2.6 billion just over the next two years for operations and maintenance, and that was before September 11. The government is providing $600 million over five years. The government that has taken over $10 billion out of the Canadian military wants to be congratulated for putting $600 million back in. The government has taken money out of the military with buckets and is putting it back in with teaspoons. It is not even keeping up with the demands of the military prior to September 11. Certainly this anemic infusion of capital at this time does nothing to prepare Canadians for a new reality after September 11.
Perhaps the biggest disappointment in the finance minister's latest, most disappointing budget was that prior to the budget we had economists, including private sector economists, including Don Drummond, former associate deputy minister of the Department of Finance and currently the chief economist for the TD Bank, projecting that Canada would be in deficit next year. Warren Jestin, the Bank of Nova Scotia chief economist, projected perhaps a deficit this year. The finance minister knew that Canada was looking at a deficit position, if not this year clearly potentially next year.
After the budget, Ted Carmichael, chief economist at JP Morgan, said that the government would in all likelihood be in a deficit. In fact, he said that we would be in a deficit the current fiscal year.
When the finance minister was faced with that stark reality that Canada was facing deficits again, what did he do? Did he cut wasteful Liberal spending? No. Even prior to the budget we saw government spending, excluding defence and excluding transfers to provincial governments and individuals, increased by 13% this year.
Instead of slapping ministerial fingers for an overrun of spending by $2 billion last year, this minister actually found more money for non-core spending this year and ignored the fact that we were cruise controlling toward a deficit position, if we are not there already.
For the first time in six years, this year the Canadian government will have to borrow to cover its costs. The government is going to private capital markets to raise $1.9 billion this year and $1 billion next year. That is based on accounting practices used in the U.S., Japan and Germany. Based on those accounting practices, Canada would be in a deficit right now.
The Minister of Finance would indicate that he does not support those accounting practices, but in 1997, when those accounting practices made his numbers look better than they actually were, he supported those and spoke publicly about how his numbers looked good based on those accounting practices. Now today he will deny that.
The TD Bank economists are accusing the finance minister of “fancy accounting footwork” to avoid the appearance of deficit next year. Instead of addressing the issue in this budget and cutting back on some of the non-core wasteful spending that does not reflect the priorities of Canadians, the minister has failed his first test of leadership in leading a government directly back into a deficit position.
Through no fault of his own, the government was able, with the support of Canadians, to find its way out of deficit. Now under the leadership of the finance minister and Liberal leadership candidate, Canadians are facing the spectre of a deficit in a very short period of time.
We have already established that this budget was a failure from a substantive perspective. We should take a look for a moment at how the budget did in terms of the minister's criteria for a successful budget. I will quote the minister again from yesterday when he said “What is important in a budget is the way in fact it is received by the public”.
Clive Addy, a retired general, said that he found the budget very frustrating.
Lewis MacKenzie, a retired major-general, said:
It's really disappointing... Any time the military gets anything they're happy, but the fact is it's been taken away over the last several budgets.
He went on to say:
We're about $2 billion more in the hole in two years ago than we are now, so we're in serious trouble.
In terms of agriculture, Darrin Qualman from the National Farmers Union said:
The news here isn't just that there's nothing new-- like no new money, no cash injection--it's actually [a] dramatically reduced amount of spending on agriculture.
Bob Friesen from the Canadian Federation of Agriculture said:
There's probably more words in this budget than there has been for a while. (But) there are no numbers.
Jamie Muir, the health minister of Nova Scotia said that he was disappointed. He said that the budget did not send more health dollars to the province. He said “We're really in a worse position than we were last year”.
Marc Lévesque, senior economist at the Toronto-Dominion Bank referred to the travel tax and said that if was regrettable that the new travel tax was implemented because one would have expected that the government could have shuffled around spending priorities to find money to accomplish security.
Cliff Mackay, president of the Air Transport Association of Canada, said that what the government decided to do was load another $2 billion of costs on to the Canadian travelling public. It is really going to hurt the market.
Clearly, the finance minister has not just failed Canadians with the budget. I would argue that the finance minister has failed his long term political aspirations to ascend to the leadership of the country.