Mr. Speaker, it is my pleasure to rise and address Bill C-48 today. To remind people what the bill is about, it has to do with amending the Income Tax Act to lower the corporate rate for resource sector companies from 28% to 21% over a period of years.
I want to say at the outset that my party is strongly in favour of this. This affects the oil and gas and mining industries. We have been advocating this for a number of years. In particular, my friend who is the Alliance natural resources critic, the member of Parliament for Athabasca, has done an outstanding job of championing this idea.
In fact, I have to say we are disappointed that this has not happened before now. It is something for which people have been arguing for a long time, because without these cuts until this point Canadian businesses have been put at a severe disadvantage. I will say more about that in a moment.
I will also comment for a moment on the direction I am going to take my speech. A number of people have stood up and talked about the relative advantages and disadvantages of cutting the corporate rate versus dealing with things such as depletion resource allowances and that kind of thing. I will not get into that. I will allow others to deal with those issues.
I do want to deal with the issue of cutting corporate taxes in general. I want to argue that when we delay the implementation of a reform that cuts corporate taxes, what we are really doing is delaying an improvement in the productivity in our country. We are ultimately delaying a rise in the standard of living for all Canadians. I argue that the government has been far too lackadaisical when it comes to addressing the issue of cutting the corporate tax rate for oil and gas and the mining industry in particular and for businesses in general. The government has taken too long and it has not gone far enough.
I will expand on this. First of all, over the last number of years, as people may know, the mining industry in Canada has been on the rocks, as some people like to say. It has been in big trouble. It has had a lot of challenges. One of the reasons for this is that there are many other jurisdictions out there in the world that provide much better tax treatment of revenues from mining than Canada does.
We have all kinds of regulations in place that make it very difficult sometimes for these companies to make a profit, whereas they can go to other jurisdictions such as Chile, for instance. Many of them have gone there, where they are doing their exploration, spending tremendous amounts of money and employing all kinds of people, because it makes sense for them to do that given the incentives that are in place in Chile versus in Canada. And it is not just Chile but other countries around the world. Chile is a good example, though, one that is often cited by the mining industry.
Therefore, we are very concerned that the government has not taken the issue very seriously. In fact, even now we are just going to phase in these cuts and not bring them in very quickly. We deplore that. Again, I argue that when this is done it is denying Canadians jobs. What it does is deny Canadians the ability to raise their standard of living.
I am not alone in saying this. I want to point out that there was a great article in the National Post the other day by Jack Mintz. Many people know who Jack Mintz is, of course. He is the head of the C.D. Howe Institute, a professor of economics who has written extensively on corporate taxation. He has prepared a report for the government in the past, urging the government to be aggressive in reducing corporate taxes. The government did not listen. It has been very slow in doing this. The government has not gone far enough.
When the government does not go far enough and quickly enough, it allows other countries to surpass us. As Mr. Mintz pointed out in his article the other day, that is exactly is what has happened in the world in the last number of years.
Mr. Mintz pointed out that it is not only the gap between Canada and the United States that is growing in terms of our standard of living, and it has grown a long way, but our output per capita right now is about $37,000 a year. It is $12,000 behind that of the United States. It is unbelievable. We remember that we used to have a standard of living that was higher than that of the United States a generation ago. But because of poor public policy decisions on the other side of the House, we have seen our standard of living decline and decline and, I am afraid to say, the gap continues to grow.
It is not just the United States. Some people do not like us comparing ourselves to the Americans. That is fine. We do not have to do that, because it is not just the United States that we are falling behind. Listen to the list of countries that have surpassed us in the last number of years because they have made better public policy decisions, particularly with respect to corporate taxation: Ireland, Iceland, Denmark, Norway, Sweden, Switzerland, and the Netherlands. They have all surpassed Canada in terms of standard of living because of better public policy choices. One of the biggest choices they made was to cut the corporate tax rate to make themselves more competitive.
I would like members to think about that for a moment, because a lot of those countries are countries that a lot of people would say are socialistic. Some countries even call themselves social democratic nations, countries like Sweden. But they made that decision because the evidence was so overwhelming that cutting corporate taxes and taxes that impede investment and impede productivity leads to higher standards of living. They were able to admit, and in some cases swallow their pride, I suppose, that the market does have some answers to improving quality of life for people. They dramatically cut those corporate taxes.
Let us look at a country like Finland, a country that like Canada is at the very northern part of a hemisphere. Some people would ask what particular advantages a country like that would have when it comes to attracting investment. There really are no natural advantages; the advantage they had was to make the right public policy choices. When they cut their corporate taxes they attracted tremendous amounts of investment. Companies like Nokia and Erickson have sprung up in Finland and in other Nordic countries that have made the same public policy choices.
What has the result been? Sweden was almost ruined when it went through a terrible financial crisis, but it finally smartened up and recognized that by making smart public policy choices one can dramatically improve the standard of living of the people one represents. That seems to be lost on this government and that really is a great shame. It is a great shame because not only does it mean depriving all kinds of Canadians of a higher standard of living, but it is a great shame because we are uniquely positioned in the world to take advantage of that massive market directly below us, the biggest economy ever in the history of the world, the United States.
Some people worry about us becoming overwhelmed by the United States. I see it differently. I see it as a great opportunity to mine the United States and to utilize its market for the advantage of Canadians. We are not doing that because we do not have the right public policy in place.
Unfortunately our government thinks it is wise to go slow in reducing corporate taxes and to only do it to a point, to where it would be 21%. By the way, Ireland just dramatically turned around its economy, and when it first cut corporate taxes it cut them to 10%. That attracted just unbelievable amounts of investment to the point where Ireland, with 1% of all the population in Europe, was attracting 20% of all the new investment in Europe. It was getting 20% because it was enlightened about how businesses make decisions about where they want to invest. Ireland of course has undergone an amazing transformation. In fact, Ireland is an inspiration to me about what can be done to help people if the right public policy choices are made.
I know I have given this speech about Ireland many times before in this place, and members are probably bored with it, but I always get excited when I talk about it. Just to remind people, Ireland in the mid-1980s was a basket case in many respects. It had terrible unemployment, big deficits and all kinds of problems. It finally decided though, after years of doing it the wrong way, that it would do a few important things. It would control its spending, get its continual labour problems in hand and it would finally cut taxes to attract investment.
Ireland tried for a long to do it the other way, where it thought it could build big government and look after people without worrying about whether anyone wanted to invest there, but it found that it did not work. In fact, it worked the opposite way. Things became worse for people.
Ireland had an amazing transformation. Ireland for 150 years, as we all know, had exported people. Its population went down and down. We all know about the Irish coming to America, Canada, Australia and going all over the world because they could not find jobs in Ireland. However when Ireland made those changes people started to come back. Today Ireland is a magnet for people who want to be successful, to start businesses and find jobs. People from all over the world are going back to Ireland.
I have a friend who lived in the little community in which I live, in Alberta, for a while. He was born in Canada. David Sarutawri is his name and he married an Irish girl. He was an accountant. He and his wife decided to go back to Ireland to pursue the great opportunities there because they were enlightened about public policy in Ireland.
People are going back there in droves. Today Ireland is a tremendous success. It is running massive surpluses. It is able to invest the money back from its surpluses to the point where Ireland now provides free university education for everyone.
That is what a country can do if it builds its tax base big enough.
Now that Ireland has its corporate taxes down, its personal income taxes down and has cut its capital gains taxes, people want to invest there. It is very exciting, but it is not just there. It is all those other countries. The Netherlands is a great success story, again, because it made the same kinds of changes.
We have to do the same sort of thing here in Canada. I mentioned a minute ago that we are uniquely positioned. I think we are. Canada has not only massive natural resources, which are almost the envy of the world with the exception of possibly Russia, but we probably have more natural resources than any country in the world. There are massive oil and gas deposits in my friend's riding, in Athabasca. My riding has a tremendous amount of natural gas. People might not be surprised to hear that when they hear me speak and say that there is a lot of gas there.
However we have tremendous amounts of gas in Alberta and in my riding. We have massive forests. We have all kinds of mineral deposits. I would argue that we have hardly even touched the surface when it comes to finding these resources. We have a tremendous resource when it comes to our people. Our people are well educated.
I want to point out that I really applaud the provinces for doing a wonderful job of educating Canadian young people. As the House may know, I think it was the OECD that just pointed out that Canada has done extraordinarily well versus the rest of the world when it comes to educating young people. I want to point out that is a provincial responsibility, just to remind people that the provinces do a lot of things very well and they should take a bow. We are recognized around the world for our ability to educate our young people.
Obviously there are problems in some provinces and that kind of thing but, by and large, we do a very good job. Therefore we have a well educated workforce. They go on to university. We have a great resource in our well educated people.
Finally, we have a great resource in the sense that we have access to the massive market in the United States. We have a free trade agreement with the United States, which is so important. I want to remind the House that it was the government that campaigned against that free trade agreement in 1993 and fought against it in 1988, but we will set that aside for the moment and just say that we have access to the United States today.
We cannot blow that access because one of the advantages we have in Canada is if companies want to set up business and have access to the North American market very often in the last number of years they would come to Canada because we had a lower cost of doing business. The economy in the United States was so hot that it drove up the cost of doing business there, so people would come to Canada and set up. They would do that because then they could access the markets in the United States because we had that open border. It was very simple.
However after 9/11 the border began to close down. It has become more difficult to move goods and services back and forth across the border. We need an extra advantage to attract businesses to Canada. I want to argue that this extra advantage is lower corporate taxes, or at least it is one of the things we can do and a very important thing to do. If we were more aggressive in cutting that, all that investment would come to Canada. With that investment comes all kinds of jobs and with all those jobs comes incomes to provide for families and, ultimately, the government of course exacts its pound of flesh and gets it back in the form of higher and higher revenues.
The NDP seem to think that if corporations are doing well that is a bad thing. I want to dissuade people from thinking that way. What are corporations in the end? Corporations are people. Is it wrong for people to do well? When a corporation does well and employs tens of thousands of people, then tens of thousands of people do well. That is not a bad thing. It is a very good thing.
People want to know about all the owners who are getting wealthy. Who are the owners of businesses? They are people who own mutual funds. People who have RRSPs invested in mutual funds, they own a bunch of big companies and we want them to do well. We want that money for retirement. In the end the government gets the money back. When we redeem our RRSPs the government gets a chunk through taxes.
What we want is to make the economy bigger and bigger where everyone benefits. Do members know who else benefits? It is not just the shareholders, the workers and consumers who have more choices in the products that are provided. Third world countries also do better because these companies purchase goods and services from third world countries. How about Africa which needs all the help we can give it? These companies can then go and purchase goods and services from places like Africa and help those people.
There are many advantages to pursuing this but I am afraid the government has, to some degree, bought into the rhetoric of class warfare that somehow suggests that if a company does well--and “company” is always an ambiguous term and people always imagine the guy from Monopoly with the monocle and the top hat, Daddy Warbucks, the guy driving the Rolls-Royce--then somehow everyone else does less well. If he gets money, then it must come out of my pocket.
However that is not how modern economies work. It is not a set pie. The pie gets bigger and bigger and therefore every piece of the pie gets bigger and bigger, including the pie for workers, for shareholders, for everyone, government included.
Finally, if I have not been persuasive to this point let me make this final argument. When an economy underperforms, who suffers the most? Is it the guy with all the skills and talent, the guy who comes from the wealthy family? No. It is the people who live in remote regions of the country, people who do not have an education, people who have been left behind for whatever reason. They are the ones who cannot get a job, so we have a moral obligation to make sure the economy runs at capacity. However the government has not put the public policy in place to make sure that happens.
The member for LaSalle—Émard, who will be the prime minister, has failed to provide any kind of vision along those lines that will ensure that people at the low end of the income scale will be able to get jobs down the road. He had 10 years as the finance minister to provide that vision but failed to do it. I want to caution people to be skeptical when they consider whether or not the man who will be the new prime minister has the right vision for the economy in this country.
In closing, I have made my case that this country needs to be more aggressive when it comes to getting those corporate taxes down. I hope the Liberals will listen to that and we will see it in the next budget.