Madam Speaker, this is a great day for the New Democratic Party in the House today. We are in the final stages of the approval of Bill C-43, the budget implementation act, which has been changed, altered and fundamentally transformed into a document that Canadians appreciate and welcome. We are talking about a budget bill that has had the benefit of input from a cooperative approach in this minority Parliament.
We have had input from the Bloc and the Conservatives. I want to add my astonishment at the members of the Bloc who today oppose Bill C-43 yet again. They have stood in this House time and time again, joining with us in calling for a reduction in corporate tax breaks.
The Bloc is a party that has been tireless in working with New Democrats in committee, in the House, raising questions and concerns about tax havens. In fact, tomorrow we will discuss a motion brought before to the committee by the Bloc on how we deal with the money that leaves Canada because of lucrative loopholes and the permission granted corporations in moving money outside the country.
It is with a great deal of shock and astonishment to hear, yet again, that the Bloc is not prepared to support a most progressive budget that has been fundamentally altered. The New Democrats chose to ensure it was more reflective of Canadian needs. The budget guarantees we can invest in projects and areas that would reap benefits for Canadians over many years to come. That is one extremely difficult situation to assess this evening.
On the other hand, for days on end we have heard the Conservatives say that the budget, with its changes with respect to corporate tax reductions and the elimination of yet another benefit for corporations, will bring the country to rack and ruin, It will cause the country to go bankrupt and jobs will be lost, It will cause huge problems with the dollar and inflation will spiral out of control.
We have heard those arguments time and time again without any basis in fact and without any statistical evidence to support such conclusions. Yet, lo and behold, Conservatives supported the NDP amendments to Bill C-43. Conservatives in the House joined with us to call for the elimination of corporate tax reductions. We cannot believe it. Did anyone ever think that we would get to this day?
We know other issues are at stake here in terms of the Conservatives. They have flip-flopped so many times on the budget bill that it is hard to keep track. They were for it five minutes after the budget bill was introduced. Then they were against it a little while later. They then were for it, then against it, now for it. It is hard to keep track.
I am sure it must be very difficult for the Conservatives to sit in this chamber tonight and have to support a bill that has been fundamentally altered by the NDP. I think they had a hard enough time agreeing with their leader on February 23, when he walked out of the chamber and supported the Liberal's budget bill without even a cursory glance at it, never mind the fact that they have to support the bill now that it has been fundamentally altered by the NDP. However, we are glad for their support.
I do not know if they have seen the light of day. I do not know if they have changed their minds in terms of the benefits of investing strategically in our country and not continually supporting corporate giveaways. I do not know if they have had a complete transformation.
At this point we will not question their motives. We will accept their support. We will work with them to help them see the light of day in completing this better balanced budget project and have them come around to our view and support Bill C-48. That legislation takes the money we save by eliminating the corporate tax breaks and puts it into areas that create jobs, improve programs for Canadians and enhance the quality of life in the country
Perhaps there is hope. Before the end of this process, maybe will convince the Conservatives that this was an important contribution for Canadians and one that makes sense in terms of the future of the country.
The concerns of the Conservatives over the budget were certainly heard from their buddies in the corporate sector. We heard from the C.D. Howe Institute, the Canadian Taxpayers Federation and the Chamber of Commerce. They spoke the Conservative line. They spoke with one voice, suggesting that this little change in the corporate tax rate would create disastrous consequence for the country. They did not tell the whole story to Canadians. They did not acknowledge the fact we were talking about 1.15% of total federal spending. That is the amount of money we are taking away from the corporate sector, which continues to benefit to the tune of $9 billion every year to the year 2010.
Therefore, let us remember to keep this in context. Canadians need to hear the whole story. They need to know that we are talking about a very small adjustment in terms of the corporate sector. That is 1.15% of total federal spending. We are talking about a project that amounts to 0.02% of GDP. We are talking about $2.3 billion this year and next year. That is $2.3 billion of a GDP of $1.14 trillion.
Let us please have the Conservatives apply some logic to this debate. Stop the Mickey Mouse mathematics. They should start to understand that we are speaking about project that will enhance jobs, create investment opportunities and improve competitiveness. At the same time it will bring some necessary relief for Canadians who are trying to find the money to send their kids to university, or trying to find safe secure affordable housing for their families or trying to ensure that there is less smog and less pollution so their kids suffering from asthma have a chance to breath and to lead normal lives.
We are talking about something that is relatively small. As New Democrats, we would have liked to have seen a better budget than the one we achieved, but we did make a step in the right direction. We have improved the federal Liberal budget, as announced on February 23, in significant ways that will enhance the quality of life for many Canadians and help bring some hope to Canadians who have suffer through some very difficult situations.
Budgets should be about growing the economy. They should be about taking care of the needs of Canadians. However, the budget the Liberals introduced on February 23 did not do that. It did not address those pressing needs of Canadians. It did not ensure investments in strategic areas where the economy would grow at the same time the needs of Canadians would be addressed. Its flaws and shortcomings clearly outweighed its advantages.
We understood that almost immediately upon assessing the federal budget and made plans to try to change it, unlike the Conservatives who accepted it, walked out of the chamber and said “We'll go with it”.
The Conservatives are yelling that they abstained on it. We do not know what the Conservatives are doing these days. One minute they are voting for it, the next minute they are abstaining, the next minute they are opposed, the next minute they are voting with the NDP.
It is a strange world in this place. As I said on many occasions, the Conservatives are suffering from a case of sour grapes and NDP envy. They would have liked to have been in the driver's seat like we were. All but their leader would have liked to have been in a position of trying to influence the federal budget, instead of abdicating responsibility for change. They walked out of this chamber and accepted it as it was. We did not accept it. We worked to change it. Canadians sent us a message to try to make the minority Parliament work and to do the best we could for Canadians. That is what we have tried to do.
When we first saw the budget on February 23, we were quite shocked at the fact that there was another $4.6 billion set aside for corporate tax cuts. We did not expect to see that. As I have said on many occasions, the Prime Minister promised in the last election not to pursue any more tax cuts until program funding had been restored to some level close to that which was the operational amount before the cuts began in 1995.
Canadians woke up after February 23 in utter disbelief. The budget contained $4.6 billion in corporate tax cuts, yet their household income had decreased by 38% since 1989. Food bank use had increased by 8.5% in the previous year. The gap was still growing between the upper and lower rungs of the income ladder. They saw youth unemployment at over 13%, but no federal action to relieve high tuition across the country. There was a housing shortage, but not a penny for affordable housing. There was no sign of a comprehensive housing strategy.
They knew Canada had signed on to Kyoto. At the same time they knew that pollution had risen 20% instead of dropping. A watershed health care accord had been signed, but the drug costs and out of pocket payments were still rising. The Bank of Canada governor said that the economy was at capacity, but unemployment was still hovering around 7% and 40% of the jobless could not access benefits.
Something had to be done. We could not just continue to pursue the same course of action with more tax cuts for the corporations and the wealthy without seeing no results. We saw little investment in the economy and very few jobs were created. When profits were booming, reinvestment was disproportionately low. Between 2001 and 2004 the percentage of available cash flow reinvested in capital assets dropped from nearly 100% to only 66%.
Investment spending as a percentage of GDP dropped from 13% in 1998 to less than 11% in 2004. Many economists commented on this situation. Many have said that the lower corporate taxes fall in Canada, the less business invests in new capital. Even the Minister of Finance hinted at that in his speech in Halifax to the chamber of commerce this past week. He suggested that despite all these tax breaks over the last number of years and despite record level profits, investment had declined. It had not kept pace with the kind of benefit the Canadian government had expected.
It was time to try another way and that is what we proposed. Take that small amount of money, which reduced the corporate tax break from 21% to 19%, and invest in education to ensure accessibility for Canadians to higher education, invest it in housing, ensuring some measure of decent, affordable housing, invest it in the environment, ensuring some measure of clean air and public transit to help bring down greenhouse gas emissions, and invest it in some assistance to meet our international obligations for poverty on a worldwide basis.
Many economists have suggested that we will achieve much more by investing strategically in those areas than simply giving another tax break to the corporations.
I know the Conservatives, despite their vote, are still preoccupied with the notion of giving more tax breaks to corporations in spite of record level profits. I cannot believe their tune does not change despite the most recent statistics. Today's business report shows corporate profit surging 21% in the first quarter. Statistics Canada reports show that corporate profits continued to rise in the first quarter of 2005 with operating profits rising 3.4% to $51.5 billion.
I cannot believe the Conservatives continue to stick to their narrow focus of the economy when the TD Financial Group issued a report entitled “Canadian Corporations are Riding the Profit Surge”. It also said that with few exceptions, corporate Canada is flush with cash.
In that context, knowing that the corporations are flush with cash, that profits are surging and Canadians are suffering, surely it makes sense to try to do what we can as parliamentarians to give Canadians a chance, to give Canadians a break and an increase in their wages. Surely it makes sense when we know that investing in affordable housing not only meets a social need but actually creates thousands of jobs. In fact, the estimates for the $1.6 billion promoted by the NDP in the budget process would produce 26,000 jobs, if not more.
Does it not make sense, when looking at the economy, to invest in areas where young people will have access to higher education and be able to use their talents to develop our economy? Does it not make sense to invest in public transit, which ensures jobs, provides accessible transportation for citizens and helps us bring down greenhouse gas emissions?
Why would we not do what makes the most sense in terms of all of our needs as a society? Why would we not look at those areas where we can get the biggest bang for the buck?
It is time we actually put to rest the myths perpetrated by the Conservative Party with the support of its cheerleaders, the Chamber of Commerce, the taxation federation and the C.D. Howe Institute. I am not sure if they are the cheerleaders of the Conservatives or if the Conservatives are the cheerleaders of those right wing organizations, but together they represent a very small voice on the Canadian political scene. The vast majority of businesses, economists and Canadians know that when we invest in areas that create jobs and build a future for Canadians, then that truly is the most efficient and cost effective way to go.
It is important to note many of the studies. The Canadian Centre for Policy Alternatives show that over the next five years revenue coming from corporate income taxes will drop as a percentage of total revenue from 15% to 11%. We should put that in perspective. I hope the Conservatives are listening to this. This is Statistics Canada information. This is not coming from the NDP or some policy organization. This is Statistics Canada information showing that corporate tax as a percentage of total revenue is dropping significantly while personal income tax is rising from 45% to 65%.
Finally, I should point out that we seldom hear about the flip side of corporate tax holidays, which is the cost to individual Canadians. For example, it would cost every Canadian about $400 a year more to maintain public services at roughly the same level as they were five years ago. Even without adjusting fully to make up for the 9% cut in corporate tax rates between 2000 and 2010, plus the elimination of the surtax and capital tax, it would be a total of $12.6 billion in 2010.
We have found a better way. It is a first step. It is the combination of Bill C-43, which would eliminate these corporate tax cuts, together with Bill C-48, which would invest that money in housing, education, the environment and international aid. Together it is a package that produces a better balanced budget for which Canadians can be proud. I hope the House will get on with it and support both so Canadians can reap the benefits of this progressive agenda.