Mr. Speaker, as I was saying before being so rudely interrupted, Bill C-49 seeks to give statutory effect to provisions included in the ways and means motion and announced in the budget of last December.
As my colleagues before me have said, we in the official opposition oppose the bill just as we opposed the budget and the ways and means motion. Through the bill the government fails to reflect the priorities of Canadians at a time of serious economic decline. It fails to grasp the opportunity to increase Canada's productivity, competitiveness and standard of living at a moment when we see our dollar at all time lows which reflect a decline in our standard of living.
The bill would fail to provide any stimulation for the economy at at time of job loss, increasing unemployment, and economic decline in the midst of recession. It would fail to offer any reduction in the national debt at a time when Canada continues to have the third largest debt to GDP ratio in the OECD among the major developed countries. It would fail to reallocate resources from low and falling priority areas such as corporate welfare, subsidies to bloated crown corporations like the CBC and grants and handouts to interest groups into high priority areas such as national defence and security.
The budget, its ways and means motion and Bill C-49 all represent an enormous missed opportunity for which ordinary Canadians will pay in terms of seeing our standing of living and economic prosperity continue to diminish.
Bill C-49 seeks to do specific things. First, it would create the Canadian Air Transport Security Authority. We in my party support the creation of the Canadian Air Transport Security Authority, in particular the provisions of the bill which allow for the employment of air marshals.
We in the official opposition take considerable pride in the fact that while we have no real political power in this place we have the power of ideas. Following the great tragedy of September 11 we introduced an entire suite of security related proposals which we had long advocated but which gained new relevance in the post 9/11 world.
One of the proposals was to create a corps of armed air marshals to serve as law enforcement officers on civilian aircraft. My colleague from Port Moody--Coquitlam--Port Coquitlam, the opposition transport critic, did a superb job of making the argument for letting Canadians know they would have secure enforcement of the law when they boarded an aircraft, the absence of which was a contributing factor to the tragedy of September 11 where the four hijacked aircraft were without air marshals.
There has never been a hijacking of a commercial civilian flight where an air marshal has been aboard. Terrorists throughout the world now know countries like Canada which take the matter seriously will be much less hospitable targets for hijackers and terrorists aboard aircraft given this provision of the bill.
Again, while we do not have formal political power in this place we have the power of ideas. In the debate that occurred last fall we saw Canadians respond positively to the idea of air marshals even though initially the hon. Minister of Transport dismissed the proposal as somehow “un-Canadian” or “not in the Canadian way”. I think those were his words. However at the time he suggested through the minister of defence that it would be appropriate for CF-18 fighter aircraft to patrol the skies over our major metropolitan areas ready and willing to shoot hijacked aircraft out of the sky.
It struck Canadians as being absurd and ridiculous that we were unwilling to place a trained, armed, discreet air marshal aboard a flight, yet we were willing to watch for hijacked planes with fighter aircraft. Fortunately greater common sense prevailed around the cabinet table. I commend the Minister of Transport for accepting a sound idea from the opposition which is partly implemented in the bill.
While we support the principle of a transport security authority, we do not support the means by which it will be funded in the bill. The bill provides for the notorious $24 round trip flat charge for all domestic flights, even those where there may not necessarily be an air travel security arrangement. There are many short-haul flights off the west coast, off the east coast and in the north where scheduled aircraft take a small number of travellers who do not have to go through airport screening. Yet these people in many instances will have to bear the burden of the $24 flat fee. We anticipate it will raise at least $430 million this year.
We in the opposition have asked the government to give us clear assurances that the new air security charge will not end up being used in a fashion similar to that of employment insurance premiums, namely as a slush fund for general government revenues. We are very concerned that it could run a considerable surplus above and beyond the actual costs associated with the new security measures in the air transportation authority and that the surplus could be siphoned off for general purposes in the general revenue fund, thus undermining the ostensible purpose of the charge.
The government has not provided the House with adequate assurances that this will not occur. Frankly, given the experience we have had with other taxes and charges, we are going to oppose the bill in part because we believe there is a very great likelihood the air security charge will end up providing for much more than just air security in terms of a government tax grab.
On that point, the transport minister has on occasion suggested that the $24 round trip charge on domestic flights was somehow the adoption of a recommendation by the Standing Committee on Transport and Government Operations. Nothing could be further from the truth. In fact, as my colleague from Port Moody has so frequently pointed out, the transport committee recommended a shared cost structure for new air security measures, a cost that should be borne more or less equally by the traveller, by the government, by the airlines as well as by the airport authorities themselves.
One might say that ultimately there is only one customer and the costs would filter down to the customer. Perhaps, but it would be far more rational to see the kind of blended funding of new security measures recommended by the transport committee. In fact, that is what happens in most other jurisdictions. In the United States the security charges are a fraction of what are being proposed here, which are two or three times higher than what is charged in the United States on similar flights.
This is really a very blunt instrument the government has created in terms of a $24 flat fee. One could fly from Victoria to St. John's, Newfoundland in business class at a fare of about $4,500 and pay the $24 charge. Yet one could fly from Vancouver south harbour terminal to Salt Spring Island at a $60 fare and be paying the $24 fee. This would represent a price increase of nearly 50%.
This could put many short-haul domestic air carriers out of business. WestJet, the most vibrant, competitive and successful airline in Canada, has complained bitterly about the impact the fee will have on companies such as itself which are very sensitive to price. They work very hard to produce a good product at a very low price. When a flat fee of $24 is imposed on every single ticket they sell, including $70, $80, $90 tickets between western cities for instance, this will have a very detrimental impact on their bottom line just at a time when we need to do more to create increased passenger traffic on our domestic airlines.
My colleague from Port Moody--Coquitlam will be addressing these issues in greater detail later in the debate. Let me just say that this is a very wrong-headed approach the government is taking with respect to the new transportation security costs. It will end up costing Canadians jobs.
The bill also seeks to make some changes with respect to the Employment Insurance Act. In particular it extends benefits for parents of newborns who need to have extended stays in hospital. This is obviously something anyone would want to support. All parties would say the government ought to do whatever it can to assist parents who find themselves with medical difficulties with newborns. However, let me raise the question as to whether or not the employment insurance system is the right place in which to provide such assistance.
The employment insurance program, particularly after the retrograde changes made in this parliament last year, has grown far beyond its original conception as a program to provide limited insurance to people who lose employment for a short period of time while they seek new employment. That kind of program run on an actuarially sound insurance basis is sensible.
Governments for the past 25 years, and especially since the so-called reforms to employment insurance in 1972, have continued to layer upon the EI system new mandates and new programs which are not immediately related to the question of employment insurance per se. This has created an enormous program which has required enormously high premiums to finance it. In so doing consecutive governments have seen the unintended consequence of an employment insurance program which in many respects is a disincentive to employment.
The premiums themselves a payroll tax are a tax on job creation, particularly insofar as they are disproportionately borne by employers. We know there is an enormous notional surplus in the EI fund of upward of $40 billion and an annual surplus of at least $6 billion. The government is skimming several billion dollars a year in premiums above and beyond benefits paid out through the program. We are killing jobs through extraordinarily high premium levels. They are unnecessarily high. Also we create incentives for people not to work through the design of the program, particularly through some of the regional special elements of the program, through the lack of experience rating in the system.
If we as a country want to become more competitive and more productive, if we want more and better paying jobs, if we want a 90 cent dollar as opposed to a 60 cent dollar, if we want a standard of living that equals or exceeds that of our friends in the United States, one of the things we must do is to liberalize our labour markets.
One thing we at the federal level can do is reform the employment insurance system along the lines of an actuarially sound, experience rated insurance program. For people who have lost their jobs through no fault of their own, it would provide a good benefit on a short to medium term while they seek gainful employment. It would not treat people in different regions differently.
Other supplementary programs, including the maternity benefits in the bill, and important social policy objectives would be provided through other programs. They would not be loaded wrong-headedly into an employment insurance program.
Yesterday I met with members of the Canadian Restaurant and Foodservices Association. It represents an industry that employs over one million Canadians, particularly younger Canadians who are at the entry level in the labour market. They are getting their foot up on the first rung of the labour market ladder. They are people who make the minimum wage or slightly above it. That industry is very, very sensitive to payroll taxes. They told us as parliamentarians that if there were to be a significant reduction in EI premiums, this would likely result in tens of thousands, if not hundreds of thousands of new jobs, particularly for people at the entry level of the labour market.
It seems to me we should listen to sensible proposals from organizations such as CRFA. They have proposed, and the finance committee echoed their call in its prebudget report, a yearly basic exemption of I think it was $2,300 in EI premiums. An employer could hire a young person, or a new employee of any age of course, and would be exempt for the first $2,300 in EI costs. Perhaps we could come up with a lower exemption if there is not the fiscal capacity for a YPE of that size in the employment insurance system right now.
The principle they are driving at is to create incentives for entrepreneurs in industries like theirs, in service industries, to hire more people and to create more wealth and more employment in our economy. I wish the government would listen to recommendations such as theirs.
The bill also seeks to make changes to the Income Tax Act further to the October 2000 budget. This allows me to say that in this budget there actually is no net tax relief.
The government claims it is in the process of its so-called $100 billion tax cut. That is a very bogus figure. Anybody on the other side of the House who is serious about this will acknowledge that number was arrived at for strictly political purposes and has very little basis in fact.
In reality, any objective economist who can read an account or any sensible person with a pencil and a calculator who looks at the Liberal budget will realize that the tax cuts scheduled in the October 2000 budget amount to less than $50 billion. In fact, we calculate that they amount to about $43.7 billion.
A huge chunk of the so-called tax cut is taken up by a $23 billion increase in Canada pension plan premiums over the course of that budget's five year cycle. The government is also counting increases in the child tax benefit, which is a social transfer program, an entitlement program, as a tax cut, which is disingenuous. It is counting the value of reindexation of the tax code as a tax cut. In a sense the government has said that it will no longer force people into higher tax brackets as they get cost of living adjustments. In other words it will stop raising taxes, but it will count that as a tax cut, which is pretty specious.
In this particular budget the government will not be initiating a single personal income tax cut in the bill before us. There is a small two point rate cut in the corporate income tax. There is a measly five cent reduction in employment insurance premiums. However, that is quickly gobbled up by $2.08 billion in Canadian pension plan premium increases, the $430 billion air security tax to which I have referred, and by the nearly $500 billion in additional tobacco taxes.
To be on the record in this regard, we are not necessarily against raising tobacco tax prices to reduce demand among youth, but we think that it should not be a back door tax grab. Any increased revenues in that area ought to be offset by tax reductions elsewhere. This all adds up to a net tax increase this fiscal year of $1.258 billion. That is madness in the current economic context of a recession.
We had negative growth in the third quarter of 2001. We had negative growth in the fourth quarter of 2001. Those two consecutive quarters with negative growth constitute a technical recession. We are almost certainly in either negative growth or a stagnant economy right now.
Let me close by saying that we will oppose the bill on the grounds that it provides for no reallocation of resources to the critically important areas of defence and security. It does nothing for the economy. We will oppose the bill as vigorously as we did the budget.