Mr. Speaker, I always enjoy listening to the remarks of my neighbour from Palliser. He does not have to stay to listen to mine. We will not put him through that kind of agony.
I am pleased to speak to the budget implementation bill, Bill C-28. The interesting thing is that when the Minister of Finance brought down his budget in February, he was very optimistic. Things were going along pretty good. We knew there would probably be a war in the gulf, but some of the things that have happened I guess none of us could predict.
However one of the things the now finance minister did suggest about 12 months ago was that Canada was coasting in terms of its competitiveness and that we were relying solely on the weakness of the dollar to compete. He is now saying that it is fundamentally wrong and suggesting that we have to pay attention to detail because we cannot rely continually on a weak dollar to compete internationally. That is the message that we have been preaching for a number of years.
In all fairness, it is a tough message to articulate in such a way that it will be understandable and accepted by the marketplace. Given the fact that 85% of our exports go to the United States, a 62¢ dollar comes in handy from time to time.
Obviously the Minister of Finance will not comment on the dollar. An historical fact is that finance ministers seldom do. However, I think the point the finance minister, who was the minister of industry at the time, was making was that he knew we were headed for trouble with that 62¢ dollar. His argument was that if the dollar were to go up in value in relation to the American dollar that we would be in trouble because we rely solely on the weakness of the dollar to compete, that we have not addressed things like competitiveness or productivity, that we are letting productivity slide because we are again relying on a weak dollar.
He did not mention things like research and development. He paid slight attention to that. He did not mention the education or re-education of our workforce, our capital cost allowances that would allow our companies to compete on a level playing field with the Americans, and other tax treatment issues, including income tax issues.
Those words were somewhat prophetic, although the minister will not admit to that. I did put that question to the minister in his absence. It was actually answered by one of the junior ministers the other day in the House. In fact, I wanted to put that question to the finance minister today but I did not have the opportunity.
The point is that in the few short months from the February budget to today a lot of things have changed and some of those statements that the minister made a year ago are now coming back to haunt the government. An example of that was last month where we had 19,000 job losses in Canada. Now the question would be why.
We also have the SARS issue, which I guess in a sense is a budget issue as well because in dealing with that it will cost the Government of Canada and taxpayers something. However there is no question that the mishandling of that issue has cost the Canadian economy and has cost us dearly. We could argue that some of those job losses were not a result of the increased value of the Canadian dollar but were a direct result of the SARS issue, or the SARS crisis. Transportation took a heavy hit. The hospitality industry and entertainment business took a heavy hit. Therefore at the end of the day 19,000 jobs were lost. Next month's figures, May's figures, I think will tell the story as to how much of an impact this has had.
I think the dollar has also had an impact on that. As the Canadian dollar rises, our ability to ship goods to the United States diminishes because we have not addressed those productivity issues that we should have. In other words, we squandered our opportunity through those days of continued growth knowing full well that when an economy slows down we have to be prepared for the tough times. That is exactly what we are in. I think our salad days are behind us. The government has not prepared us for those tough times where we actually have to get out and compete in the marketplace on the basis of a Canadian dollar that is a little higher than 62¢.
That is something that I think the government should have addressed and did not. I would like to hear the minister's response to that when he comes back to the House.
More specifically in terms of the budget, we have to go through some of the realities that are out there today. One of the things that the government has been very good at in the 10 years that it has been in office is its management of the economy. I think the government is giving itself more credit than it deserves, because a lot of that success is based on initiatives that were taken by previous governments, which spent political capital to do what was right for the Canadian economy. One of them, of course, was the dreaded GST. I can remember when I was in the House, on the government side at the time, having the opposition accusing us of creating a cash cow. I can remember that argument very well. Of course the Minister of Finance at the time was saying that it was not going to be a cash cow but that it would noticeably increase revenue, because otherwise why would the government bring it in.
The truth is that it has been a cash cow. Some of those surpluses that have been generated simply would not be there without the GST. I guess in terms of a budgetary measure it is probably one of the best unkept promises in the history of civilization when the present Prime Minister of Canada campaigned in 1993 on a promise to rid us of that dreaded tax. The fact that he did not is probably the thing that has basically saved the government, although we will never get the Prime Minister to admit that. I think the only cabinet minister who did admit that at one particular point is no longer here with us. It was Mr. Tobin.
The other thing we spent a lot of political capital on and which has created a lot of wealth in the country is the free trade agreement. It generates about $2 billion of trade per day between Canada and the United States, and there are all the jobs that go with that.
I think those are two examples which show that when we spend political capital on issues that are controversial and obviously difficult to implement if we are doing it for the right reasons it will pay dividends down the road. They may not be political dividends, but the truth is that we will prepare the country for the future in the way it should be prepared. I think those two initiatives have worked well, better for your government, Mr. Speaker, than the one I was in. I am not going to use the word “caucus” here again which would get me into trouble with you, Mr. Speaker.
The fact is that the government has been very negligent in paying down its accumulated debt. I think it is important to recognize that the deficit has been eliminated, that is, the year to year deficit in terms of spending. In other words, the government is bringing in enough to pay the day to day bills. At the end of the day there is a surplus and the government is not adding to the accumulated debt. However, the accumulated debt that we have today is greater than what it was when the Liberal government took office in 1993.
The Liberals paid scant attention to paying down our accumulated debt. As long as that debt is there, it is taking more than money than need be out of our pockets and every Canadian paycheque to simply pay the interest on that accumulated debt, which is $507 billion as we speak. The government has paid little attention to that.
In fact, the little bit of bookkeeping magic that the Liberals have been able to generate is the huge surplus that has been accumulated in the employment insurance fund, which is approximately $45 billion. That is $45 billion that they have taken out of the hind pockets of Canadians, more than was necessary to sustain the fund. Where did that money go? It is hard to say where it went, but certainly none of it went to paying down the debt.
Let us talk about some of the areas the government has completely mismanaged. One of them is the long gun registry. The government has now spent over $1 billion on a failed registry. That would be $1,000 million. I listened to someone speak about that the other evening back in my home province of New Brunswick. He pointed out that $1,000 million divided by 10 provinces would generate $100 million in each of those 10 provinces for things like health care and education, which of course are two areas that the present government has ignored over the last number of years. In fact, when it went about balancing its books, it did it at the expense of the provinces. It was better to download on the provinces than take a look at some of its own expenditures; the government has failed to do that over the years.
I do not want to sit down without talking about defence. I just want to put some of the defence budget into perspective in terms of how much attention or lack of attention the government has devoted to this issue in terms of dollars. The defence budget in 1993-94 was $12 billion. In 1998-99 it was down to $9.4 billion. That was a reduction of 22% in five years. The current budget is 1.1% of GDP. It is the third worst in NATO, better only than Luxembourg and Iceland. The committee wanted 1.6% of GDP and a one time investment of $4 billion. It got far less than that. The money that is in the budget simply would not pay for the equipment that is needed, for example, air lift equipment and sea lift equipment. The government simply has not addressed that in its 10 years in office.
On Canadian Forces strength, let us take a look at the number of people in the military. In 1991 we had 87,600 persons. In the year 2003, that is down to 57,000. The defence committee wanted manpower up to around 60,000. The Conference of Defence Associations thought it should be up somewhere around 75,000. With the navy it is the same situation. Specifically on the navy, there are 9,000 regular forces and 4,000 reserve forces. There are 16 destroyers and 12 coastal vessels. Of those submarines that were delivered, I believe only two are serviceable. The problems are so serious with the other two that it looks like a complete waste of money by the Government of Canada.
The story goes on with other examples of mismanagement by the government and issues it did not address. One of the things the government is good at is taxing the poor. The government taxes the poor and then gives the money back to them as tax credits.
I will give an example of what we might do. We propose to stop taxing the first $12,000 for Canadians and to stop taxing the first $24,000 earned by single income families. We do not believe in taxing the poor. The fact is that a family of two earning $24,000 is not exactly rich.
These are specifically some of the things that could have been in the budget but were not, and here is a clawback example of how the government is capable of taking back money that people earn. I will step through this very specifically.
A Nova Scotia widow has four children and an income of $33,500. She works overtime, as an example, to earn an extra $1,000, for whatever reason, let us say for graduation for her son or daughter. She faces the following clawbacks in taxes; this is what would come out of that extra $1,000 this person would earn in overtime. Federal income taxes would chew up $220 of it. The clawback of the GST credit would take an extra $50 from her. The clawback of the national child benefit would be $321. The clawback of the Canada child tax benefit would be $50. The CPP and EI, net of tax credits, would be $52, and Nova Scotia tax would come in there as well, because that is a percentage of federal, in all fairness. Then there would be the clawback of the low income tax credit in Nova Scotia as well. In total, after earning $1,000 in overtime this particular person in Nova Scotia would pay back $892, with $108 to be netted by this individual. This is an example of the unfair tax treatment of individuals across the country.
I have the same example with a family of three in Manitoba with an annual income of $29,000. Again, if they worked overtime and earned an extra $1,000, after all the various taxes, some of them provincial there as well, the total of all the taxes in Manitoba would be $702. Out of that, the federal government would take $160 in federal tax. The family also would lose on the tax credit of $50 and the national child benefit clawback of $321 for a total of $702 in taxes.
When we are talking about tax reform in this place and addressing those real issues, I think there is more that the Government of Canada can do and I think it has an obligation to do that. There has to be an incentive to work. When the Government of Canada takes too much money out of our hind pockets, it simply kills that initiative. There is no reason for people to get out of bed and do it for themselves. We do reach a point where we are overtaxed and I think we have reached that point in this country. The government has had 10 years to do something about it and it has not.
One of the things we do support is the federal government's infrastructure program, which I think has been very successful in many parts of the country. In fact, we have a couple of projects in my hometowns--I am using the plural--St. Stephen and St. Andrews, about $9 million in two projects, water works and sewage projects, which are very important. We completely support them, with the help of one-third from the federal government, one-third from the provinces and one-third from those local communities.
That was an initiative by the federal government which we support, but we are not supportive of the Liberal government's past record and ability to deviate from that funding core in terms of infrastructure, where it winds up spending money on projects that have basically no merit at all. I am talking about some of what we call boutique infrastructure projects, like the famous monkey pavilions, canoe museums and NHL hockey arenas. That is just another example of how sometimes the government loses sight of why these programs are implemented in the first place.
The government has had 10 years to do it. It has had some success but the fact is there is more it can do. It is time it started to at least listen to some of the arguments that we put up on this side of the House and maybe consider some of those in its future planning.