What has he done? Frankly, he has demolished his own reputation with the business communities, small and large, across this country. He is committing to spending five to ten years down the road when he used to commit to two year budgetary projections. He is signing deals at midnight in his office, going from premier to premier across the country. It is just an ad hoc budgetary process that is frankly embarrassing.
I want to touch upon two reasons in particular why we should oppose this budget. First, this new budget does nothing whatsoever to address our competitiveness, our productivity gap with the United States and other emerging nations like Brazil, India and China. It does nothing to help our companies or our industries. Second, it does nothing to address what Don Drummond pointed out in his report months ago, which was the fact that the disposable income of average Canadians has not gone up over a 15 year period.
These two very serious things need to be addressed. I will address the competitiveness issue first. The Canadian Manufacturers & Exporters, the Canadian Council of Chief Executives, the Canadian Federation of Independent Business and small businesses have all talked about the need to improve our competitiveness.
What could the government have done to do that? It could have done things in terms of addressing capital depreciation rates. I thought the government was going to do that. The Parliamentary Secretary to the Minister of Finance knows that the Liberals did not do this in this budget.
The capital depreciation rates are 20 years in Canada and they are eight years in the United States. It is a very abstract thing, but it allows companies to write off their equipment faster. It makes companies more efficient and more productive so that they are better able to compete in a global economy. Also, it allows them to turn over their equipment at a quicker pace which is better for the environment, which should fulfill the goal of this nation in terms of being more environmentally friendly. That is one thing the Liberals could have done.
The second is to actually implement the capital tax reductions. I see members across gawping at this. This has actually been suggested and recommended by finance committee report after finance committee report, apparently agreed to by Liberals and Conservatives alike. This should have been done a long time ago. Instead it is delayed and the ad hoc deal is done with the leader of the NDP.
We have waited years for the government to act on its own External Advisory Committee on Smart Regulation so industries such as the auto industry can actually compete on an international level across the border. They need this type of regulatory change, regulatory harmonization to ensure that they can compete as well as they do.
There are issues such as the infrastructure challenges. Look at how many billions of dollars of trade go across the Windsor border each year. Government members keep saying they are addressing that. The Liberals have been in power since 1993. The back-up is still as bad, in fact it is even worse than it ever was. Members such as the member for Windsor West and the member from Essex have brought this up. This should have been addressed in this budget. Infrastructure needs should have been addressed. In fact it is not being addressed in the budget and the members across the way know that.
Let me address the issue of disposable income. I want to quote the Toronto-Dominion report that was done by Don Drummond whom members of the House know. He is a very well-respected economist. He worked for the finance department under the Prime Minister when he was the finance minister. He found that for the past 15 years average Canadians received little or no increase in their take home pay.
On page 2 of his report he said, “The inflation adjusted GDP after tax incomes on a per worker basis real GDP per worker rose by 22% while real after tax incomes per worker squeaked out a cumulative 3.6% gain over the entire 15 year period. That is completely unacceptable and needs to be addressed”.
Members across the way may not understand this but average Canadians work very hard and pour their life energy into their work. The fact is that 15 years later, the Liberal government having been in office since 1993, the average take home pay of teachers and nurses and so on has not increased, and the government stands proudly and does not think that is a shame. It is a shame that for average people in this country their take home pay has not increased in 15 years. The government should admit that and take steps to address it. It should start to reduce its surpluses and actually leave more money in people's hands.
The other issue that needs to be addressed is the whole issue of actually creating jobs and creating wealth. Government members love to talk about redistributing wealth because it is all they can do. They do not actually reward the people who, through their risk and entrepreneurship, actually create jobs in this country.
A C.D. Howe Institute report found that corporate taxes were actually destructive to the long term growth of Canada and that productivity needed to be addressed. We can read the headlines, in fact productivity between us and our major trading partners has increased. Recently I met with members of the forestry sector. They talked about the nations that stepped ahead of us in terms of the competitiveness index. They are all Nordic nations: Iceland, Switzerland, Norway and Ireland. They have stepped ahead of us because they have invested in human capital prudently but they have also reduced their tax rates. They have also realized that it does not pay in the long term to punish those who create the jobs, who create the wealth. The wealth has to be created in the first place if it is going to be redistributed.
The fact is that individuals and businesses alike have suffered under the government's inability to address these major economic issues such as high personal and corporate income tax rates. Individuals and corporations have been struggling under the Liberal government.
I want to look again at personal income tax rates of average Canadians. Again I want to refer to the Don Drummond report which I encourage members opposite to actually read. He says:
The tax burden on individuals must also be reduced. The top marginal federal-provincial personal income tax rate is over 45% which is nearly equivalent to sending half of a worker's income to the government, not to mention that it kicks in at relatively modest income levels--
At this point I want to make the point that one of the problems in Canada is that our marginal tax rates kick in at a level that is much too low. We tax Canadians at a level that is too low. The marginal tax rates should be pushed up so that lower or middle income Canadians who are struggling to make a living have the ability to improve their own lives and improve the lives of their families before they have a bigger tax clawback.
I want to further quote from Don Drummond's report:
And, more modest income levels get hit with a combination of taxes and clawbacks in benefit payments that can raise the effective marginal tax rate to 80%. It simply does not create sufficient incentives to work, save and invest.
That is very well said. The fact is we need to reduce personal income taxes. We would hope that the government would actually do that. Canadians should be able to put something away, for instance pay $5,000, pay the tax up front in a prepaid tax plan, put it away and let it grow into a nest egg for them.