Mr. Speaker, when talking about the budget and the economic statement, the important thing to do is to start with context and how we came to be where we are today.
I can recall the year 1993. It is a good place to start. I had just graduated high school at the beginning of that year. I had the idea that I would get involved in my first federal election. I decided I would get very involved. I recall the state of the economy at that point in time. I recall the then prime minister was Brian Mulroney. I think he is currently being spoken of in another room at this particular moment. One of the things I remember is what a bad place Canada was in.
At that point in time we were going into debt some $40 billion a year. That was our annual deficit. Our inflation rate was 14%. The unemployment rate was 12%. In fact, our situation was so dire that the Wall Street Journal at that time said Canada was an honorary member of the third world. Our position within the G-7 was hardly strong. In fact, it could be argued by many that we were losing any sort of relevance within the G-7. We were losing our way as an economic middle power.
In that environment, everyone can imagine, for those who were like me, who were getting ready to enter university or college, to begin a trade or to start off their careers, they were bleak times. They were times without a lot of hope or opportunity for the future of the nation.
We move forward to 2006. What a different story it was at that time. Canada had gone from having the worst debt to GDP ratio in the G-7 to having the best, from having the worst record on job creation in the G-7 to having the best, and from having record inflation that was crippling the economy to having record lows in both inflation and interest rates, allowing Canadians to buy their homes more cheaply and be able to afford their lives more easily.
We know that the economy was on fire. Instead of running huge deficits, we were running surpluses. Instead of running up more debt, we were paying our debt down. It was through sound economic policies and decisions between the period of 1993 to 2006 that were employed by the Liberal government which allowed our economy to get on its feet, to move from the bottom of the pack of the G-7 on almost every single economic indicator to the top of the pack.
With all of that prosperity, the decision is how to continue it. How do we make sure that we continue with the advances that we have made? Now that we were at the head of the G-7 how would we continue that position? We could continue the prosperity. We could ensure that Canadians continued to see an augmentation in their quality of life and we could address many of the issues that we could not address when we did not have the financial resources to do so.
Naturally, one would assume when we are in a position of such strength, when we are able to turn in the kind of revenues that we are turning in, when our economy continues to move forward in the way it does, that it is time to take action on things like poverty, on access to post-secondary education, on the climate change crisis that grips most of our attention, and on things like infrastructure. Instead what we have gotten through two consecutive budgets, mini-budgets and economic statements is gimmicks. Probably the best example of this is the cut to the GST.
Probably the best way to assess the impact of the cut to the GST is to look at a single mother struggling to get by, struggling to pay her rent and struggling to afford groceries. Conversely, we can look at a Canadian who has been blessed with a lot of wealth, somebody who is maybe fortunate enough to buy a luxury car, a luxury yacht and take luxury vacations in luxury hotels. How are those two individuals impacted by the GST cut?
The first 1% cut cost us over $5 billion and now there is another 1% cut that will cost us over another $5 billion. The single mother who is buying her groceries will not see any benefit. For the rent that she pays, there is nothing. In point of fact, the GST cut did nearly nothing to improve her lot or give her the opportunity to make a difference for her children. Conversely, the individual who is fortunate enough to afford items of luxury is enjoying a massive windfall, incredible amounts of money coming back from luxury items that he or she would have purchased with that reduction now in the GST.
Instead of getting Canadians targeted relief to those who need it the most, making a difference for people who are struggling to get by and working so hard, there is a disproportionate tax cut that most advantages those who need it the least.
I will read two quotes on this decision. One was made by Marc Lee, senior economist for the Canadian Centre of Policy Alternatives, who said, “I think”--this tax cut--“also shows they're really out of touch with the reality that most Canadians are facing”. I could not agree more. Don Drummond, chief economist at TD Bank, said, “The federal surpluses have offered a golden opportunity to move forward in a very decisive manner. The GST cuts don't move that agenda forward at all”.
Let us delve deeper into the government's approach to tax cuts. Virtually all economists, perhaps with the exception of those who are under the employ of the Prime Minister or the Conservative Party, are united against the GST cut. Even a report by the Department of Finance agreed that cutting the GST was the worst strategy for Canada in reducing income taxes or reducing taxes generally. It does nothing to improve the fairness of our tax system and the money that goes back into the pockets of Canadians is for the most part marginal, unless they are earning very large sums of money.
In point of fact, the finance minister once called cutting the GST a “relatively useless measure”, because it only advances spending “that would happen in any event”. The finance minister said he preferred cutting personal income taxes because it provides a “direct stimulus”. It seems that the finance minister once had the wisdom of trying to apply the Liberal vision of how tax cuts should be implemented. When he was the finance minister of Ontario, in fact, he was quoted as saying that he agrees with the member for LaSalle—Émard. He went on to say, “With respect to reducing the GST federally and the RST provincially, I also agree with the federal minister, and we've talked about this. All you get is a short-term hit, quite frankly”. And this is my favourite part, “It has no long-term gain for the economy”. That is from the Ontario legislature Hansard of November 5, 2001.
The finance minister himself felt that a cut to the GST had no long term gain for the Canadian economy, but he chose to cut this tax, which has cost the government billions and yet gives Canadians nothing.
It would seem to me that this money should have, logically, gone to a couple of different areas. To continue on tax cuts, it should have gone where it would have made a real difference, such as helping Canadians who are struggling to get by and those who are in the middle class to reduce their burden, but instead of reducing income taxes in the last budget, the government increased them from 15% to 15.5%. To go back to the example of a single mother or someone earning a marginal income, that individual actually saw, on a net basis, his or her income tax burden rise. It is an utterly shameful thing, but it is the truth.
Now the government has said that it has reduced income taxes. The reality is it has simply brought them back to where they were in the beginning. We have seen the government raise the income tax rate from 15% to 15.5% and now, in a much heralded fashion, the government has reduced it back to 15% again. The bottom line is the government has not done anything in that area that would make the biggest difference to Canadians, the biggest difference on a real basis of allowing people to have more money in their pockets to improve their quality of life.
We in the Liberal Party believe that income tax cuts need to be targeted, that they need to focus first on those who need the help the most. We also believe firmly that a plan to reduce income taxes must include a reduction in the corporate income tax rate. When the Liberal government came to power, corporate income taxes were at 28%. There was legislation passed that took that down to 19% and would be implemented for the year 2010. The Conservatives, again in a much heralded way and with a lot of spin, announced that they were taking it down to 18.5% for the year 2011, a difference of .5%. That is it.
I know some in the NDP caucus would fight and rail against a reduction in income taxes saying that it is part of a right-wing agenda. The reality is it is part of an intelligent, middle of the road approach that has worked very successfully for other nations.
We can take a look, for example, at Ireland or Sweden which have made large reductions in their corporate income tax rates and at the same time have seen much progress on social issues and on social programs. They recognized that as smaller nations they could have lower corporate tax rates, attract businesses to their jurisdictions, create more economic activity and that larger jurisdictions like the United States or other large European countries could not match those reductions simply because their scale was so much larger. The net result of it was more money and more resources to be able to move forward on progressive programs on social issues. Clearly, our position is that the .5% reduction, which is hardly a very visionary or meaningful reduction, is something that needs to be looked at further, and that further cuts are still desired.
When we take a look at some of the gimmicks that have been put in place and the rather backward strategy that is nearly impossible to find any economist to agree with, it will not be very hard to understand why or where this came from. I also happened to be a municipal councillor during the period of time that Ontario had a Conservative government provincially and the provincial finance minister then is the federal finance minister today.
What we do know is that Ontario was left with a deficit of $5 billion. There were decisions like the selling off of highway 407, an impact that has had major ramifications in my own riding where the 407 ends at Brock Road. We look at that decision which in the very short term may have rounded the figures and made it look as though the deficit was not as bad as it was. What it has done in the long term is given a foreign company a massive amount of annual revenue and left taxpayers with an extremely expensive route when almost no options are available to get in and out of the city. People are forced to pay extremely high prices, the profit of which is not going back to improving infrastructure or making lives better or more accessible, but instead it is leaving Canada in profits to a foreign company.
Then too we saw tax cuts that most benefited those who needed it the least. When we talk to the average Ontarian about the difference those tax cuts made, it was marginal at best. At the same time, if we ask them how they noticed reductions in service levels, how they noticed the difference when they walked into a hospital or when their son or daughter went to school, those differences were big. They saw massive reductions in services. They saw big increases in property taxes because there was a downloading from the province onto the municipalities, but in terms of money in their pockets and increased quality of life, at the end of the day it simply was not there.
I am going to continue on the theme of municipalities. As I mentioned, I was fortunate enough to serve for nearly seven years as a councillor for the city of Pickering in the region of Durham before I came to this place. I witnessed how some of these strategies that are employed by the now finance minister impacted our municipality at that point in time.
I can recall vividly things like housing stock, where we were downloaded all kinds of housing responsibilities from the province. We were told that we had to bring those up to code, that we had to do all kinds of work to make sure that the housing stock was up to speed and yet we were given no resources to do it. We were left with no recourse but to either increase taxes or cut services to handle the downloading that had been given to us.
Ambulance services were handed down to us and again we were given no resources, no money. Yet we were told that we had to increase service, that we had to decrease response time. Again we were left with no choice but to either pass tax increases or to cut services. This is part of the shell game that is played. Announcements are made, proclamations, big cheques, a lot of spin but underneath it all, it is just things being moved around, no substance, just gimmicks.
What we are left with in the municipalities is a government that is showing nothing but contempt. Municipalities and mayors are saying that they need money to fight critical issues like infrastructure, to deal with things like housing within their boundaries. What the Conservatives are saying to them is, “Be quiet. Stop whining. Go back and figure it out yourselves. It is not our problem”.
In terms of the amount Canada gives to municipalities, in terms of the relationship of the federal government to the municipalities, it is one of the most backward anywhere in the modern world. The problems that are being faced by municipalities only started to be dealt with under the last government in a new deal for cities and communities in a recognition that municipalities needed to be treated as equals, in recognition of the fact that often municipalities are the engines of our economy.
They are the places that make the biggest difference in things like quality of life and often can make a huge difference in terms of the quality of our economy by making sure that they have the conditions right to hold, retain and allow businesses to grow.
Today, in a riding like mine, we face massive infrastructure challenges. Individuals who want to go to work in the morning, and I have a large population of people who commute, are faced with incredible gridlock. Options on transit are nearly non-existent.
Some of the measures brought in by the government, like this tax measure where people would get a bit of money back at tax time if they bought a transit pass, are utterly meaningless. Why would people buy a transit pass that does not take them anywhere?
If I were to leave from my house in Pickering and try to get to the GO station, that unto itself would be about a 30-minute or a 40-minute exercise. By the time I do get to the GO train, it is then another 40 minutes or 45 minutes to get into the city. It would take people almost an hour and a half when by car that same ride would only take perhaps 30 or 40 minutes, and that is if they are lucky enough to be working in downtown Toronto.
If people work in Scarborough or in Markham, transit can take two or three hours to get there. So, who is going to buy a bus pass that does not really take them anywhere? It does not make any sense. What we should be doing is investing in the infrastructure required to make transit meaningful and real as an option for individuals who want it.
Municipalities today are struggling under the crippling responsibility of aging infrastructure, but they are also fighting a real battle that we need to be seized with here; that is, sustainable development.
We can talk about the environment, but how communities are structured, how they are built, what resources they have available to them, things like transit, how dense a core they have and what kind of cultural and recreational infrastructure they have within their boundaries so people can actually spend a day or an afternoon within their own municipality, becomes very relevant as well.
However, in the fight against climate change, municipalities have to be partners, not somebody we scold and boss around and pretend is not there but partners, people we invest in, people we work with on things like sustainable development. That is why the money that was flowed through, through the new deal, said that those projects had to go to improve sustainable development.
So, too, should money that flows to the municipalities as we assist them, whether it is in addressing the payment in lieu of property tax problem that leaves so many municipalities shortchanged or whether or it is as an additional revenue. This should go to say that that money that flows to the municipalities should result in meaningful changes, such as reducing the consumption of carbon-based fuels and reducing greenhouse gases, so that municipalities are making a contribution to reducing greenhouse gases and climate change emitting products.
On the environment, more broadly, what we have seen from this government is complete contempt for the issue of the environment and climate change. In fact, last January, almost a year ago, the Prime Minister was calling greenhouse gases “so-called greenhouse gases”. The government websites systematically, after the last election, eradicated any reference to climate change. It deleted them. It got rid of them.
We were getting calls from teachers who were using government websites to help teach their students how they could reduce their emissions and how they could make a difference to the planet. They were asking what happened to these aids on the Internet that they were using to help teach students how to create reductions. They were completely deleted.
We saw more than $5 billion in cuts to climate change programs and instead replaced with only $2 billion later with much fanfare when the Conservatives were pretending to do something.
We are the only member of the Commonwealth standing in the way of ensuring that we are a major partner in fighting climate change. We are blocking the rest of our Commonwealth partners, as example, at the conference that just happened, from joining together as a unit, setting mandatory targets and leading the world.
In short, what we are seeing in this and in so many other areas is a government that is focused on spin and gimmicks, and nothing on substance, that is so focused and preoccupied with trying to get to 41% or 42% that it is doing nothing on the real issues.