Debates of Oct. 25th, 2007

Opposition Motion—The Economy

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Mr. Speaker, the minister in his very informative presentation talked a lot and focused on the importance of post-secondary education and that is important.

We see as well that often jobs change, the needs of workers change, and particularly older workers who lose their jobs late in their career. I wonder if the minister has done anything to help those older workers and in particular to help them get back into the workplace or stay in the workplace.

[Monte Solberg, Conservative, Medicine Hat, AB]

Mr. Speaker, that is a very important question. I know that many members in this House come from communities where there has been change in labour markets. Sometimes single industry communities find themselves really devastated when the local mill or the local mine closes down.

This is why we have put in place the targeted initiative for older workers. It is a program that is designed to really reach out to older workers and ensure they get the support they need, so they can move into other sectors of the economy. In fact, the program has been very successful in helping thousands of older workers do exactly that.

We have also put in place an expert panel on older workers. We are examining some of the issues that older workers face when there is the prospect of retraining to go to another job. I am looking forward to that report. We expect it in the next number of months.

We have also, as I mentioned before, put this new initiative in place, these new training programs with the provinces. The $3 billion will provide support to older workers and all workers who need that kind of help.

[Maria Minna, Liberal, Beaches—East York, ON]

Mr. Speaker, the hon. minister is talking about a booming economy and how that is helping all of us. The reality is that there is a huge wage gap that has been created in this country between the have and the have-nots because wages have not increased at the same rate as the economy has grown.

In fact, according to the Canadian Centre for Policy Alternatives, 49% of Canadians say that they are one or two missed paycheques away from financial disaster.

One of the things that again the survey shows is that 86% of Canadians would like to see the growing prosperity gap being addressed. One of the things that they want to see addressed, and that is about 80% or 85% of Canadians, is affordable quality child care. It is one of the most important things in addition to affordable housing and of course education and raising the minimum wage. Child care is one of the major programs that affects women in particular in order to participate in the labour force.

Can the minister tell us why his government cancelled the agreement in this country on child care? Why to this date do we still have no national child care program? There have been practically no child care spaces created by the government to date.

[Monte Solberg, Conservative, Medicine Hat, AB]

Mr. Speaker, one of the best ways to tackle the prosperity gap is to ensure that people have good skills. I point out that in a world when labour shortages are not only looming but are actually here. We find that in many sectors wages are rising and rising very dramatically. The key is to ensure that people who do not have adequate training or whose skills are no longer relevant get the training.

That is why we have invested as heavily as we have. We see that as being a key to growth. It is not just training. It is also post-secondary education and I have touched on the large investments we have made there.

With respect to the issue of child care, I point out to my friend that we have a different view of it. We ran in the election on a particular platform that included providing choice to parents for child care and we were elected on that platform. We have implemented the universal child care benefit, which will benefit almost two million children in the current year.

I note that the leader of the Liberal Party says he would take that away. He does not seem to believe that parents should get that funding and that speaks volumes about his own lack of faith in the ability of parents to raise their children. Therefore, I think the member has some answering to do to explain why the Liberal Party feels that way.

I also want to point out that it was the deputy leader of the Liberal Party, Sheila Copps, who said not long ago that the previous government did not create any spaces with its plan. I note that since we made our investment of $250 million, bringing the total benefit to the provinces every year to $1.1 billion, the provinces have announced the creation of thousands and thousands of new spaces. We are happy to work cooperatively with them to produce those kinds of results.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I will be splitting my time with the member for Vancouver Centre.

I have enjoyed the debate today because it does paint a picture of a government that is more interested in not governing. Since that party was elected, it has spent more time campaigning than it has in fact governing. It really is a shame because it politicizes the legislative process in a way that is not helpful to Canadians.

I want to talk about two aspects. Members have indicated very clearly the scope of the motion. There are a couple of elements that I wanted to address in my brief 10 minutes. Number one is the whole idea of access to post-secondary education.

In my work as a member I have spent a fair bit of time looking at the implications for Canada, to the health of our country and to the knowledge based economy, of an education and what it means in terms of employment levels. The last figures that I saw, and there may be more recent, but just to give an idea of the relative dimension, indicate that among high school drop outs the unemployment rate today is somewhere around 15%. For those having a high school education, that drops to about 12%.

Among those having a post-secondary degree or equivalent, or some skills training or college training, the unemployment rate actually drops to about 3% to 4%. Depending on the nature, sometimes even down to a fraction of a per cent in certain disciplines. It is pretty clear that there is a correlation between levels of education and the ability to gain good and secure employment in the future.

The other aspect of it is the starting salary for people who have jobs at different levels of education. The difference between a high school graduate and a university or college graduate is somewhere in the range of $5,000 to $7,000 at the starting level. That in fact would grow over the life of the person's working career. The bottom line that I concluded is that our young people in Canada cannot afford not to go to post-secondary institutions.

I was delighted to meet today with representatives of the Canadian Federation of Students and one of the young people was one of my constituents. I want to give him recognition. His name is Walied Khogali. This young man is a leader in the student community at the University of Toronto, Mississauga campus. He is tremendously articulate. He has visions for his future, but he is working here on Parliament Hill along with many other students who are talking to members of Parliament about the access to post-secondary education and some of the ways in which we can do this.

I was very impressed with their understanding about the implications or how the rubber hits the road, how the dollars hit the road, whether it be from the millennium scholarship fund, the Canada health and social transfer, where there is a post-secondary component, or the Canada student loans program. They have ideas.

I was very impressed. I was encouraged and I told them right off the bat that they have my full support because I honestly believe that young people cannot afford not to go to post-secondary institutions in order to be full participants in a successful economy of Canada. We need them.

I want to move to the second item and it has to do with something that I have talked a lot about in this place. It has to do with income trusts. I think that there has been a lot of rhetoric and a lot of generalization, but I thought it would be helpful to maybe say a couple of words about what happened there.

On Halloween, October 31 of last year, the finance minister announced that there would be a 31.5% tax on income trusts at the company level.

People ask what an income trust is and how that compares to corporations. In fact, we have heard people say that every company should pay its fair share of taxes but income trusts do not pay taxes so there must be something wrong.

Let me tell members something. If I am an investor in a corporation like Microsoft, it pays dividends. Microsoft pays corporate taxes. When it pays the dividends, the recipient, the shareholder, the individual, also pays taxes on the dividend income, and they get from Canada a dividend tax credit. There are some taxes collected at the corporate level and there are some taxes collected on the dividend income they receive, at a substantially lower rate than employment income. There are two sources of income.

Income trusts, which are another form of business, are set up where under certain criteria prescribed under tax law they do not pay tax at the company level. They in fact distribute all of their profits to the holders. Those holders then include that in their income as if it were equivalent to employment income. It is paid at the highest marginal rate for them. So even though the income trust company itself does not pay tax, the individuals are paying much more than they would have if those moneys were received as dividends.

Thus, we have to talk about the revenue impacts to the Government of Canada from the company level as well as the personal. We cannot just say that this company is not paying taxes so something is wrong. That is a very silly argument.

When the finance minister put the 31.5% tax on the table and said that it was going to be effective down the road, $25 billion of the market value of those investments went down. Twenty-five billion dollars in the market value of those investments was lost.

It is interesting to note that the finance minister has said in the media, and I talked to him yesterday and reaffirmed his position, that as far as he was concerned there is no loss on that investment until it is actually sold.

I have to tell members that when I do my net worth statement, if my shares are worth so much on the market, it is the market value, and I can tell members that the implication of the 31.5% tax is that the amount of income that the income trust company has to distribute to its investors is less because it pays this 31.5% tax.

I also can tell members that the people who invest in income trusts are not people who have registered pension plans and are getting pensions. Most of them are seniors. The reason they like income trusts is that income trusts pay out the money monthly and that means they have a regular cashflow to pay their bills and to do everything that they need. The cashflow is there just as if they had a pension. It emulates a pension plan. The amount they are getting is a lot less because there is less money to distribute from the income trust.

I think it is important to know that it is not just a matter of whether or not my shares or my investment went down. The finance minister seems to think that people do not have a loss until they sell. However, I can tell members about this situation. It will be the one year anniversary of this decision on Halloween. Over the last year, the value of the stock market actually has gone up substantially, perhaps by 14% or 15%, and many of those income trusts actually are back at the same level they were the prior October.

Everybody perhaps would argue that people did not lose anything, so they are right back where they were. The problem is that everything else in the marketplace also went up 15% and they have not moved. The proof of that lies in what would happen if we repealed the 31.5% tax. There is no question about it. The value of income trusts on the stock market would go up to reflect the fact that they are not going to have that burden.

I hope there is some understanding here.

The last point I would like to make is that the government also said it is going to introduce seniors' pension income splitting for 2007. I can tell members that only 30% of seniors actually have a registered pension income from a company, et cetera. When we take out the number of those seniors who do not have a partner to split with, or whose income is less than $37,000 a year and are already in the lowest bracket, that means they get no benefit.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I note that the member talked a lot about seniors. In my latest research I have found that almost three out of every 10 Canadian families have no pension savings, which means that they have no company plan and no RRSPs. Almost two-thirds of families with incomes below $30,000 have no pension savings. Let us imagine that. In a few years' time these folks are going to be retiring and they have no pension backup plan.

Given that we have not really increased either the GIS or the OAS in a way that would lift some seniors out of poverty, what plan do we have to assist these seniors, especially when nursing care, home care, and nursing homes are so unaffordable and when a lot of that care is not high quality? It is something that we as a country have to deal with. What kind of plan do we have in front of us that would assist these families?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I certainly do agree that there are numbers of people who, for whatever reason, were not able to put away enough to provide for their retirement years, for emergencies or for very expensive chronic care assistance, et cetera. This is why it is so very important that we support our social programs.

We need to understand that there are people in our society who are unable to care for themselves, but I can tell the member that this is not the Conservative view. The Conservative view is that everybody has to fend for themselves. That is not right. It is not right to say that if someone cannot take care of themselves then that is their problem. It is not right to say that it is not our problem. We do not want a government that does not support people with a good, solid social program.

As I was indicating with regard to those income trusts, when we take out all the people who have no partner to split with and who are already at the lowest marginal rate, the total percentage of seniors that gets any benefit from income splitting is very small. It is somewhere around 4% of seniors.

What the government did with those income trusts is absolutely outrageous. In regard to the plan to eliminate the 31.5% tax, replace it with a 10% tax and make it refundable to Canadians so that only non-residents of Canada, who are the most significant beneficiaries of this plan, would be paying the tax, that is fair to Canadians. It deals with the problem the finance minister has identified. He did not have to use a 31.5% tax. A 10% tax would have done it. If we do that, I am hoping that we will be able to recover about two-thirds of the lost investment value of the hard-earned savings of seniors, savings that were lost when he imposed that tax.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I would like to commend the member for Mississauga South for his knowledge about these issues and the income trust issue and for his hard work for his constituents. He has explained the income trust issue very well.

There is another issue about which I was reading today. Every economist in this country says that bringing down the GST does not help. In fact, when the Conservative government brought in the GST cut of 1% in the last budget, people were asking where it went. It went toward increasing taxes for the lowest income tax bracket.

Could the member explain to ordinary Canadians how this is going to impact every single family?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, in the first budget the government increased the lowest tax rate from 15% to 15.5%. That cost the average Canadian $400. As for reducing the GST by 1%, a family has to spend $40,000 a year to get back to even. Who has $40,000 a year to spend?

That benefit is only for high income earners. A second cut is simply going to add to the benefit of the highest income earners in Canada, not the lowest. That is the difference between Liberals and Conservatives.

Finally, I just want to mention that on October 31, a senior couple from Cornwall, Mr. and Mrs. Marshall, are coming to Ottawa to speak to members of Parliament on income trusts. I hope members will be out there to support them.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, rising to speak to this motion is an extremely important task for me, because it speaks very much to what is a vision for this country.

When we talk about economic policy and economic vision, there is more to it than decreasing taxes or bringing in tax credit programs--especially if one does not pay taxes in the first place because one does not get the benefit of that program--or reducing corporate taxes or reducing debt. These are important pieces obviously in looking at economic growth, looking at the economy, and as a basis for good economic policy, but economic policy is not only about that. One needs to invest in the things that would improve productivity and competitiveness in a nation. This is what Liberals have understood.

The Conservative government inherited an extremely sound economy from the Liberal Party which was in government for 13 years. The debt decreased. We had nine balanced budgets in a row. We went from being a second world nation to being the number one nation in the world in terms of economic growth and economic strength.

The Conservatives were handed this gift and now we know there is a huge surplus, but the question is, are they going fritter it away or are they going to use it to invest wisely in creating a vision for Canada that in a global economy actually will deal with the greatest challenge that we face? That would be the challenge of productivity and competitiveness. How do we not just sustain an economy but how do we build one in a world in which the economy is now globally driven? Given that we are competing against China, India, the European Union and the United States and we only have 31.5 million people in this country, we have to think about being smart.

In order to deal with productivity and competiveness, there are investments that need to be made in Canadians that I have not heard about from the Conservative government at all. I want to touch on three of them.

One of them has to do with the fact that in this post-industrial era, and we are in a post-industrial era. At least I hope Canada is and that Canada does not want to go back to the old industrial era and try to compete against the countries that are actually developing themselves now. If we want to deal in the post-industrial era, we need to think about it as an era of innovation and creativity, an era in which human capital is going to be one of the most important investments that we can make.

So we have to have the best and the brightest in this country. We want people to come to Canada because they know that they are going to find the workforce they want. They are going to find it here. We have to be bright. We are going to be the ones who have well-trained and well-educated people in this country. This is going to be our most important tool.

The second most important thing that we need to do is to know that one can come to a country, and that this country is going to be functioning in the era of innovation. It means that we need to invest in people, in skills, in training and in post-secondary education.

Liberals understood that. We invested. In 2005 we made labour market agreements with the provinces totalling $3.5 billion. That has disappeared under the Conservative government. It is gone. No one knows where it is. We had actually developed a 50:50 program to assist students who were getting a bachelor's degree in paying for their first year and their fourth year, paying for it, not lending it, but giving it, the first year so that the young person would be encouraged to go into post-secondary training and the final year to encourage the young person to stay until the training was over. This was a 50% reduction in the cost of post-secondary education. Again, it was about access to education, skills and training.

Statistics Canada tells us that by 2011 we will be dependent for 100% of our net labour force on immigration and on new workers. We know that the Conservatives have done little. The Conservative government has done little to deal with that issue.

The Liberal government in 2005 put in $263 million to deal with the issue of the internationally trained worker who was trained somewhere else and needed to work in this country. In 2006 we had earmarked another $290 million for that as well.

The 2005 fund of $263 million was cut by the government to $13 million over two years. The 2006 fund of $290 million was cut to $23 million over two years.

What do we do when internationally trained workers, who are underemployed and unemployed with regard to their skills and training, are unable to find credential recognition, which albeit is a provincial jurisdiction, and are unable to find first jobs? They go into the three big cities of the country. They need language training.

The first job given to me by the last prime minister was to develop a medium and long term strategy to allow for all internationally trained workers in Canada to work and find jobs commensurate with their skills.

It was a very complex issue. We had to deal with the five challenges that they faced. We had to work with provinces. We had to develop relationships between municipalities. We had to work with credentialing bodies. We set out this complex plan. With the money the we had 2005 and 2006, we started to work with the private sector and all our partners. That money has disappeared.

We now have an information kiosk. People who are internationally trained and cannot find work can go to this kiosk to get information. They do not need information. They need assistance in learning the language, in doing their exams and in finding jobs. Businesses need assistance and infrastructure money to help to pay for them to come into their businesses as apprentices. A number of initiatives need to be done. There is nothing is there.

We do not understand. If we do not have a trained population, we will not make it. All they are doing is treading water for the next two or three years by just making tax cuts.

The second thing that I wanted to talk about was the era of innovation and creativity. We are now hearing from places in the United States, from Harvard, MIT and Stanford University. They are incorporating in their business schools arts and culture. They are beginning to realize that innovation, science and technology, business and arts and culture are now all merging, in this new era of information and of innovation and creativity, to become the bulwark of a 21st century economy that is going to be competitive.

Nothing in the Speech from the Throne spoke of investments in arts and culture. It is seen as a warm fuzzy, whereas the Liberals began by investing in innovation when we came into government. In 1997 Canada was at the bottom of the barrel in the world in terms of investment in innovation and in research and development. Since then, we have invested over $13 billion, which in turn has generated equivalent amounts of money from the private sector to create what is today one of the top five countries in the world from which people believe Nobel Prize laureates will come.

Eighteen hundred brains had left Canada to go somewhere else. They returned, bringing with them the brains from other countries. Canada is now seen as a country where innovation, creativity, research and development is happening. We are on the cusp of new discoveries all the time.

In arts and culture, we have just discovered something very important that has huge value to the world. I do not know how many members saw the film 300, but that whole film was made on a green screen. Everyone thinks there were millions of people running around and doing things in the background. Yet it is a piece of technology developed by Canada that will change the film industry in the world.

That is money in our bank. That is creativity. That is innovation. There is nothing here about investing in that.

Finally, there is infrastructure. We have to help people to get an education. We need innovation and creativity. Finally, we need the physical and the digital infrastructure in the country to make it move.

We started by working with the municipalities. Municipalities today have a $100 billion deficit. If we to be a trading nation and move on trade with Asia-Pacific and the rest of the world, we need the physical railroads, bridges and infrastructure. The Liberals started a Pacific gateway infrastructure. We began to build it. By now we would have finished it. Yet it was lengthened and expanded to 2013 by the Conservative government. By the time we get to Asia-Pacific, everyone else will have come and gone.

There is no vision. Nothing in the Speech from the Throne speaks about a future for this country or that will make us competitive and productive and really strengthen our economic future.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Speaker, I have a very simple question for the hon. member. She has attacked the throne speech and said nothing positive about it. Her colleague from Yukon listed, I believe, at least six things that he approved of in the throne speech. He was honest.

Since the hon. member criticized everything in the throne speech, why did she sit on her duff and not vote against it when she had the chance yesterday?

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, I suppose I expected a substantive question and this is what I get but there we are. I will answer it.

There is very little in the throne speech to vote for. It is a bland, pabulum like speech that just said nothing. It said all the wonderful retail politics, in all its words. I am trying to offer constructive criticism, ways in which the government, if it were willing to listen and learn from the successful government before them, could implement programs if it were interested.

[The Acting Speaker, Royal Galipeau]

It being 6:15 p.m., pursuant to order made earlier today, all questions necessary to dispose of the opposition motion are deemed put and a recorded division deemed requested and deferred until Tuesday, October 30, at the expiry of the time provided for government orders.

If there is a member who would like to propose that we see the clock at 6:30 p.m., I am sure the House would consider such a motion. I recognize the hon. member for Malpeque.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I would propose that we see the clock at 6:30 p.m.

[The Acting Speaker, Royal Galipeau]

Is there unanimous consent?

[Some hon. members]

Agreed.

[The Acting Speaker, Royal Galipeau]

It being 6:30 p.m., the House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6:15 p.m.)