Mr. Speaker, I greatly appreciate the opportunity to speak to Bill C-52, the budget implementation act.
As I stand here today to represent the concerns of my constituents of Mississauga—Brampton South with respect to the 2007 federal budget, my comments and remarks will focus on three areas: economic competitiveness; social issues and the lack of social investment; and how the budget has damaged our reputation abroad.
I am glad to hear today that the Minister of Finance has withdrawn a major part of a controversial budget measure. I believe it is widely accepted that this has been the worst policy to come out of Ottawa in over 35 years. He understands now that he should allow interest deductibility to ensure Canadian companies can be more competitive abroad. The Minister of Finance also mentioned in his remarks this morning that he would put forth a panel of experts to review Canada's international tax system. More work needs to be done in this area and he has a great deal of explaining to do.
As I indicated, my remarks on the budget will focus on the economic aspect of the budget. It is so important at the federal level that the government show leadership with respect to how to improve competitiveness in our country.
One area, as I have indicated, is the reversal of the Finance Minister on interest deductibility. I will outline the concerns we had raised in the past and why this decision was made by the Minister of Finance. It was through the hard work of our finance critic and our leader of the official opposition that really put forth a clear cut message to the Canadian public of how poorly thought out and poorly conceived this measure was.
The proposal in the 2007 budget eliminated deductibility of interest accrued to finance foreign assets. The Conservatives are forcing Canadian companies to compete with one hand tied behind their backs. Competing businesses in the U.S., Japan and Europe all have this tool at their disposal. The Conservative government at least was planning to take this away.
Companies in the U.S. Japan and Europe are all able to write off interest on loans taken out to finance foreign assets. Canadian firms have also been able to that for more than 30 years. This is a very important tool to promote competitiveness.
At a time when the entire world is headed forward, the Conservative government is making it increasingly difficult for Canadian companies to compete globally.
I raise this question in the House because I do not understand why the Finance Minister has difficulty with foreign companies acquiring Canadian companies, but he does seem to have a fundamental problem with the ability of Canadian companies to compete abroad. Removal of the interest deductibility would compromise the competitiveness. Again, I am thrilled the minister has made this reversal. There are probably many measures that I will discuss, which I hope he gets to re-evaluate and reconsider and maybe change the direction of the budget.
Not only is it something about which the Liberals and many Canadians have expressed concerns, but also in the business community as well. The president of the Canadian Chamber of Commerce said this with respect to the budget:
We don't see any broad-based tax relief either for taxpayers or businesses.
The government promised in November that they were going to make Canada more competitive and control spending and I think they broke that promise today.
I will also highlight a theme of broken promises in the budget as well. One area where I believe the Conservative government really misled Canadians was with respect to tax fairness, as it stated. The Conservatives cut the GST, but they increased personal income taxes.
We all know that to improve productivity, it is absolutely vital we have more disposable income for our Canadian public. To improve disposable incomes and to help build greater productivity, the first target for a tax reduction should always be income taxes, not consumption taxes.
In the previous government we lowered the tax rates for low and middle income Canadians in order for them to make greater investment in the economy and save more money. The Liberal government brought forth a comprehensive package to eliminate billions of dollars in taxes for low and middle income Canadians. When the government cut the GST rather than implement our personal income tax, the Finance Minister really constrained his government's fiscal capacity.
A study released on March 29, 2006, by the independent non-partisan research institution, the Canadian Centre for Policy Alternatives, found that the 5% of families earning over $150,000 a year would receive nearly 30% of the benefits of the Conservatives tax cuts, an average of $2,000 roughly savings in each year. Therefore, 5% would receive 30% of the benefit of the tax cut. However, almost over half of Canadians families earning less than $40,000 would only receive 20% of the benefits of the Conservative tax cuts, an average of $163. Their tax fairness policy is about broken promises and appeasing the more affluent in society.
Another issue that again highlights the government's inability to improve productivity and competitiveness and focuses on its trend of broken promises is income trusts. The income trusts reversal hurt Canadian investors, particularly seniors. The decision to cut income trusts wiped out more than $25 billion in savings overnight and reversed a key Conservative campaign promise, a promise on which many people relied. They took their hard-earned savings and invested it in income trusts. Seniors whom I have met at the town hall meetings I have had over the past month have clearly shown their frustration with the government. They are completely appalled with the government for breaking such an important promise and they do not understand the rationale behind it. The government swiped billions of dollars from seniors through income trusts savings as well.
We have already seen not only in income trusts a broken promise, but now we are beginning to see a trend in foreign acquisitions. We have already seen great Canadian companies such as Inco, Molson's, Defasco and Hudson's Bay Company taken over by foreign entities, and Alcoa may be next.
The Conservatives took this initiative with the income trusts by crippling it and using the non-refundable 31.5% instead of the Liberal plan. We put a plan forth of a 10% tax rate which would be refundable to all Canadians, creating an opportunity for Canadians who have invested in income trusts.
Tom d'Aquino, president of the Canadian Council of Chief Executives, has said that the decision with respect to income trusts:
—may seriously undermine the competitiveness of Canada's homegrown champions—the companies that are most active and most successful in building global businesses from head offices in Canadian communities.
It is clear, if we look at the government's agenda when it comes to economic policy, it has crippled our ability to remain productive and has hurt our competitiveness. It has shown the government has continuously broken promises that it made to the Canadian public.
However, it does not end there. Another area in which my constituents have expressed a great deal of concern is with respect to social justice issues and social policy. There was absolutely no mention in the budget of homelessness or affordable housing, an issue that resonates in my constituency, across Ontario and across the country as well.
Constituents of Mississauga—Brampton South understand how important this is. The government has cut money from Status of Women, youth programs and the list goes on and on, and again, no investment in these initiatives.
My last is with respect to international trade. This is an area where I believe the government truly had an opportunity to put Canada on the map. It had an opportunity to showcase Canada to the world.
When we were in power, as the Liberal government, we put forth the Can-trade $485 million initiative, which invested in branding Canada. The Conservatives completely wiped that out to replace it with a measly $60 million over two years. It has closed consulate offices and cut funding. The Auditor General's report clearly demonstrates a lack of strategic planning, low morale and the department as well. Therefore, the government has a lot of explaining to do when it comes to the budget.
I am very fortunate that I represent a constituency which is very diverse and has a population of about 130,000 people. It is a hub of economic activity. I have an airport there, looking to the government to show leadership in reducing airport rents. I have major highways and we are looking for funding for infrastructure. Many head offices are looking to expand their businesses abroad and build strong Canadian brands outside of Canada. My residents want to enjoy a high quality of life, but they are very disappointed with the government's poor economic policies, a lack of compassion in investment in the most vulnerable in our society. The government is hurting our reputation abroad.
We are taking steps backwards and we need to provide good public policy, not bad public policy. I think the Canadian public is very impressed that through its hard work and sound management we are in a strong position to create a better and prosperous future for our children. Canadians looked forward to the government to continue to reverse some of its policies. In the meantime, I and the Liberal Party will not support the budget.