Mr. Speaker, I am grateful for the opportunity to speak today on the budget. I will be splitting my time with the member for Fleetwood—Port Kells.
Last week when the budget came down a lot of us were concerned about the way it was structured. In fact, I would almost term this budget 2008 instead of budget 2005 because so many aspects of it are back-end loaded. Given that this is a minority Parliament, I think this is a significant issue. There is a real likelihood that this government will not be here to implement the very programs that it is talking about in 2007, 2008 and 2009. That is probably a good thing in that Canadians will have an opportunity to shake things up in the near future.
To start with, for the government to bring in a five year budget is a problem for me. I would prefer to see a one year budget. I would like to see what the government intends to do in this next year. I think that is the most responsible position that a government can bring forward, because to some extent the rest of it is pie in the sky.
Even if the government were to be re-elected, there is no assurance that what it is introducing in this budget for the subsequent years will be implemented. In fact, we have seen just the opposite of that in many cases, where events overrun that five year timeframe and the government's priorities change significantly. Therefore, I think it is of little use to be projecting five years ahead.
Let us look at the budget for a moment. The budget the government did bring forward for this period of five years has been very severely back-end loaded. The government talks about changes to the income tax personal basic exemption, from $8,000 to $10,000. There is only a $100 change this year and next. The rest is all back-end loaded into the last three years of the budget.
What this really means is that the average Canadian would have a $16 tax cut as a result of this change this year. I hope Canadians do not spend it all in one place. Would that not be a major change in the economy? The fact that $16 is all that is really being talked about here is quite significant.
The same applies to the proposed corporate tax cut. It goes in the right direction, but it is not enough and it is not timely. Corporate tax rates are going from 21% to 19%.
I have been involved with both the industry committee and the finance committee. We have had a lot of different studies on this very subject of what should happen on corporate tax rates. Why have Canadians been stuck in a mould over the last 40 years where our GDP or our standard of living has been only about 85% of that of the United States? Some people say that we should not compare the two standards of living, but the United States is our major trading partner and competitor and I think it is relevant. In fact, group after group that has come to our committees over the years has said exactly that.
What does it mean when we say that our standard of living is only 85% of that of the United States? It means that the average Canadian family is taking home $24,000 Canadian less than the average American family takes home. What could Canadians do with that $24,000? They could put an extra $2,000 a month on their mortgages. That is pretty significant. That is the kind of opportunity we have given up as a result of the Liberals being in control for the last almost 12 years.
In fact, we have seen a number of other areas slip as well. We have seen Canadian investment on a constant decline. We have seen the world share of direct foreign investment in Canada decline every year for the last 30 years.
In fact, we have seen Canadians increasingly looking outside our country for opportunities, so we then have a net outflow of foreign investment. That is not good for the country. Investment in Canada brings in innovation. It brings in the newest technologies. When Canadians have an opportunity to upgrade their factories and their businesses with this new technology, they are able to compete better. We have to ask why it is that people are looking outside Canada or in other places for investment.
It comes back to the mismanagement of the economy by this Liberal government. The Liberals have a very short term vision and it is not good enough. Canadians are looking for opportunity. They are looking to realize their full potential. They are not able to do that under this administration, which is wasting billions of dollars of Canadians' money on the wrong priorities and in not getting off Canadians' backs and letting them achieve their potential.
Our standard of living is 85% of that of the United States. If we look at it structurally, what is the reason for some of this?
I would say that its genesis goes back about 30 or 40 years to the Trudeau era. Canadian unemployment rates are now consistently about 4% higher than those in the United States, even though for about 100 years preceding this we could chart the different sectors of the Canadian economy and the U.S. economy, the growth, the employment and the unemployment, and they looked very similar because we went through the same business cycles.
In the 1970s substantial changes were made to the unemployment or employment program, which structurally have factored in about a 4% difference between the U.S. and Canada, Canada being 4% higher. We have seen growth in the size of government over that same period.
Why is it that up until about 30 years ago all levels of government spending in Canada were at about 30% of the economy? In the United States it was about 30% as well. Let us look at the situation 30 years later. The United States government takes up 29.5% of the GDP of the country. Canada's has now moved to 41%. In 30 years we have increased the government's role in the economy by about 12%. If that was all constructive spending, maybe that would be good, but we see a lot of areas where it is not. We are into all kinds of areas such as subsidizing corporations and I do not think that is what Canadians want.
This budget should have addressed a number of issues that it did not. In prebudget hearings, our finance committee had a lot of input from Canadians who were saying that they are being taxed too heavily, but the government did not appear to listen on the issue of capital taxes, which were identified as a job killer. Why is it that a government would tax people on the size of their business, on the capital of their business, even though it does not make any difference if it is a profitable business or not? This has really inhibited growth and investment.
On corporate taxes, as I have said, the government is saying it will move them down from 21% to 19% over the next five years. There is nothing for the first three years. It is all factored into the last two years.
Even so, there is something called the effective corporate tax rates versus what shows up on paper, and there are a whole lot of other areas that enter into how corporate taxes are considered. These would be things like capital gains tax, capital tax and all of that, but the effective corporate tax rate difference between the United States and Canada means that Canada's corporate tax rates are roughly 31.5% right now. That is the effective rate when everything is factored in. In the United States it is 20.1%. That is a spread of more than 11%. That is not good enough when we have to compete with the very country next door that has opportunities which Canadians do not enjoy.
On the capital gains tax, we still have a 50% inclusion rate on capital gains tax. That again is described as a job killer, an investment killer.
On the capital cost allowance, there were numerous requests to change the capital cost allowance so that companies could write off certain sectors a lot faster when they make investments. For some investments in technology, for example, the technology is gone in a few years because it becomes outdated.
On unemployment or employment overcharges, we still see this government overcharging employers and employees every year.
Our personal tax rates are the highest in the OECD and there are surpluses that somehow magically are predicted to be low when the government brings down the budget but then when year-end comes they are about four times as high. The government is doing the same thing again this year.
This type of accounting is what was heavily criticized in the corporate sector, yet it is this same government and the same Prime Minister who, when he was finance minister, criticized the corporate sector for corporate malfeasance in this area, and they are in the same category year after year. For seven years the Liberals have underestimated and lowballed the surplus and they have done it again this year.
I would say that this budget, while it contains some good things, has many glaring errors in it and does not go nearly far enough.