Mr. Speaker, it is my pleasure to rise and address Bill C-33, the budget implementation act for 2004.
First, I want to wish all members a very merry Christmas and a happy new year. It will be my last chance to do that before we adjourn.
Let me get to the matter at hand, which is the bill that is part of the March 2004 budget. There are a number of initiatives in it that are very supportable. In fact I spent a fair bit of time with finance officials talking about some of these things. I generally agree with many of the measures in it. Some of them are certainly overdue and they are very welcome.
My problem is not that the government is doing these things; my problem is that the government is not doing enough. If we look at some of the things that are being proposed, the government is basically talking about small ways in which it wants to reduce the tax burden that people have to carry, in small ways to help out. That is fine as far as it goes, but put in context set against the situation Canada is in today, it is just not good enough.
When the parliamentary secretary spoke earlier today on a different bill, on a tax treaty, I said to him that there was nothing wrong with the bill, but my point was that we should be introducing bills in this place where we are actually bringing about substantial tax relief. That is not what is happening in this bill or in any other bill that has been brought forward by the government. That is very disappointing.
I want to talk about that in the context of the parliamentary secretary's speech. He talked about how the government recognizes the importance of small business for instance. He mentioned that in his speech. I thought, I just do not believe that; I just do not believe that the government recognizes the contribution of business.
The reason I say that, and the parliamentary secretary knows this, is that before the finance committee this year, dozens of people came forward and said, “Do you not recognize that we are in the middle of what amounts to a productivity crisis in Canada?” Over and over again witnesses would come to us and say, “You have got to do more. You have got to be aggressive when it comes to addressing this productivity problem that we have”.
My colleague from Peace River mentioned it. I thought he said it well. He said that we are sleepwalking toward mediocrity in Canada. I agree with him. That is a very good way of putting it. What we mean by that is in Canada today our standard of living is stuck at about 85% of that of our largest trading partner. The reason is that we have not taken the public policy decisions that would allow our economy to operate at full capacity, to create more jobs, to create better paying jobs, to raise the standard of living, to provide government with more and more revenues to deal with some of the big social problems that we have today and other ones that will be coming at us down the road when we hit that demographic wall in about 10 or 15 years.
We heard this I do not know how many dozen times at the finance committee. However we just do not see it reflected in any of the government legislation.
We are very disappointed that Bill C-33 does not really acknowledge the situation that we are in today in Canada with respect to improving the business climate. I just do not believe that the government takes the problems that face small business seriously. That was the claim of the parliamentary secretary but I just do not buy it.
The government often claims that it stands up for the little guy. I do not know how many times I have heard that over the years, many times. If the government were here to stand up for the little guy, it would not ignore the testimony of dozens of people who face these productivity challenges every day.
There are 1.2 million unemployed people in Canada today. I would argue that if for no other reason we must start to address the productivity problem so that we can start to help those people. What does a productivity problem mean to the average person? It means that if the economy is not moving at capacity, if the government is not taking the steps necessary to unfetter business and entrepreneurs so that they can go about making more money for their businesses, expanding their businesses which leads to hiring more people and leads to rising incomes, if we cannot take that problem seriously, then the government should pack it in. It should give up.
That is fundamental to what a government is supposed to do. A government is supposed to make public policy decisions that address the biggest problems that face the country today. One of the biggest problems we have is 1.2 million unemployed people.
In many regions of the country that is a big number. It is in some ways so big that it masks the problem at a local level. In some regions of the country, Atlantic Canada, the northern regions and various rural areas, unemployment is through the roof. When unemployment is through the roof, there are all kinds of social ills that follow.
Unemployment is also a serious problem in parts of the country, such as Atlantic Canada. In some areas of Newfoundland there is 20% to 25% unemployment. We have to be aggressive in addressing these problems.
As my colleague from Peace River said the other day, the government is sleepwalking toward mediocrity, and that is what we are doing in Canada today by failing to address this.
The parliamentary secretary in his speech today said that the government has been running surpluses and that it is a great thing. Yes, it is a great thing but the problem is that the government is not managing the surpluses in the proper way. I want to give an example of what I am talking about.
Since we started to run in the black the government has spent an inordinate amount of money on all kinds of things that do not produce a more productive economy. Witnesses who appeared before the finance committee talked about this. I have forgotten which witness it was, it might have been Dale Orr, but one of the witnesses said that about 25% of all the spending the government has done since we have gotten into the black has been on things that are productivity enhancing. In other words, 75% has not been. Now some of these things we have to spend money on, even though it does not necessarily strengthen the economy or cause more jobs to be created and those kinds of things, but to see that kind of a skew tells me something, which is that the government's spending is way out of balance.
The situation that arises when so much of that spending goes toward things that do not cause the economy to be more productive, create more jobs and generate more revenues for the government, is that eventually the surpluses get smaller and smaller because businesses are not getting the breaks that allow them to compete so that they can create the jobs that create more revenues ultimately for the government. The problem with that is that as we move toward that demographic wall that we will hit in a few years when baby boomers start to retire, we will put a huge strain on our social programs.
We had all kinds of witnesses come before the finance committee and talk about that and about the need to deal with this problem now. If we do not start to manage the size of the surpluses now and broaden the tax base so that we have more income coming in down the road, then we will not be able to deal with it at that time. In other words, we cannot address it when it happens. We have to start addressing it 10 years ahead so that our surpluses are big enough to fund those social programs down the road.
This may be counterintuitive for some people but for me it makes sense that one of the most important ways to do that is to cut taxes. People will say that if we were to cut taxes that would mean a lot less revenue would be coming in. I have heard that argument from members on the government side but even the government has had to acknowledge in the last couple of years that when it brought in its tax cuts, which were very tepid in my opinion, revenues went up.
We saw that in the annual financial report this year where we had finance officials expressing surprise that corporate taxes were going up and had gone up dramatically even though corporate taxes had been cut. That is not counterintuitive to me. That makes sense because all of a sudden these businesses have the capital that allows them to expand which then helps them to generate more profits. It also means that they hire more people because those people go out and gather more business for them or produce more for them and ultimately make them a profit, and of course those people who were hired pay more taxes too.
Ultimately we get the virtuous circle that the member spoke of. I would like to argue though that the government often confuses a virtuous circle with wandering in circles, which I think is what it does a lot of the time. My point is that one of the ways the government can deal with this looming demographic crunch is to begin reducing taxes in a strategic way so that the economy becomes more productive.
I have used the word productive many times today, but this is not about working more hours every week. This is about ensuring that businesses have the capacity to buy state of the art equipment that will allow them to produce more and do more. In doing that it will allow them to compete with the Americans, the Japanese, the British and the French, all of the people we have to do battle with every day in the world of business. We need to have the capacity to buy that equipment, buy that knowledge in some cases, and buy services from people in order to compete.
As I said, this is not about working more hours. Canadians work very hard. We work as hard as anybody else. It is just that bad public policy decisions have deprived us of the ability to buy the equipment and obtain the knowledge and the skills that are necessary to compete.
Without that, it means that our standard of living will remain about 15% lower than that in the United States. It never used to be that way. We never used to have a big gap in unemployment either. We never used to have a big productivity gap. We used to be on a par with the United States. We saw that reflected in our currency a generation ago. However that has all changed, notwithstanding the rise and now the sinking of the dollar. My point is simply that we must start to reduce taxes.
The parliamentary secretary talked a bit about taxes so I started to make a list of the taxes that people in Canada pay. Sometimes we forget how many different taxes we pay. In Canada today we pay personal income tax, corporate tax, goods and services tax, capital gains tax, capital tax and excise tax. In fact we pay the GST on excise tax on fuel. We pay surtax, property tax, sales tax and payroll tax. We also have to pay various sundry fees and levies of all kinds. For example, to get a passport we have to pay for it. We have hundreds of user fees in Canada on top of all that.
What this boils down to is that 49% of the income of a family earning the average income in Canada today goes toward taxes according to the Fraser Institute. If we set aside the productivity argument for a moment, and think about what that does to a family that is trying to save money to send their kids off to university, or save money for their retirement, or to buy a home, how do they do it when half of their income is eaten up by taxes? The problem is getting worse.
The Fraser Institute produces a study every year which determines when tax freedom day will occur in Canada, which is the day in the year after which people start working for themselves and before which every cent they earn goes toward government. We have to work more days in a year now to pay taxes when it should be going the other way.
We have a serious problem, not just on the productivity front but we have a serious problem when it comes to ensuring that people have enough income to look after their own needs. It is at the point now where people pay more in taxes than they do for food, shelter and clothing. That is absolutely crazy.
I am not going to suggest the government does not need some revenues for important programs. We think it does. We think there should be some smart spending, such as some spending on defence for instance. However we also argue that the government has let spending get out of control.
Since 1997 we have seen spending on programs go from $106 billion to $150 billion now. Spending in the last number of years has gone up an average of 5.7% a year. That is simply unsustainable. Revenues have gone up a fraction of that. Revenues have not gone up nearly as quickly as spending has gone up.
We will run into a problem down the road when we start dealing with the demographic crunch and trying to find ways to ensure we can look after people when they hit those retirement years.
I appreciate the parliamentary secretary making his case for the bill. I do not want to argue on the bill, but I do think the government could have done so much better. It could take this problem seriously.
We have had many witnesses allude to the problems that we have in Canada today because we do not address this issue. That concerns me. It tells me that the government is guilty of what it has been accused of, which is that it dithers. It does not grapple with problems in a serious way. I want to argue that it is time for Canadians to think about another option, which of course is to look across the aisle at the Conservative Party. I want to argue that it is time for a new approach, an approach that takes this problem seriously.
We believe personal and corporate taxes should be cut and that we should get rid of the capital tax and take a look at capital gains. Capital tax is destructive and it has to go. We think this is a way to begin dealing with the many problems that I have talked about.
We need to unleash the potential of the Canadian economy and give people hope, people who, in many cases, have lost hope after years of not being able to find a job or who live in a region that is chronically in the doldrums or in places where industry will no longer locate. We need to turn that around.
The only way to do those things is to make those public policy decisions that allow businesses to compete, entrepreneurs to start businesses and individual Canadians to begin fulfilling their dreams. Canadians need to find jobs in order to look after their families, save some money and buy a house. Those are very common dreams that people have and they should be attainable in a country such as Canada, but for too many they are not, which is regrettable.
For that reason I hope that the government will heed our words on this side with respect to these issues that I have raised. We also hope that Canadians will heed this as well and put pressure on their government and also consider their options when we get to that next election. We know that is probably not very far away.
Again, in the Christmas spirit, I want to wish my colleagues a merry Christmas and a happy new year. We look forward to seeing all hon. members in the new year.