Mr. Speaker, I will be splitting my time today with the member for Charlottetown.
It is with great pleasure that I rise today to speak in response to the throne speech. Before I begin my remarks, I would like to thank the people of Kings—Hants for electing me as their member of Parliament for the fifth time. The people of Kings—Hants have given me the honour and privilege of representing them as their voice here in the House of Commons.
In the recent election, Canadians chose a minority Parliament. As parliamentarians, we have the responsibility to work together to respect that choice and to try to make this Parliament work. It is incumbent on all of us, all parties and all leaders, to try to put partisanship aside and to try to make this Parliament work in the best interests of Canadians, particularly during difficult economic times.
It is also important that all of us be completely direct with Canadians about the challenges we face and the root causes of some of these challenges. Financial clarity is particularly important now. After 11 years of surpluses, for many Canadians it was a sad day to see the word “deficit” in the throne speech as the government prepares them for what appears increasingly to be an inevitable deficit. After years of careful planning under the previous Liberal government, in just three short years the Conservatives are poised to return Canadians and the Government of Canada to deficit financing.
Fifteen years ago, a Liberal government inherited a $42 billion deficit from the previous Conservative government. Under strong fiscal management by the Liberal governments of Mr. Chrétien and Mr. Martin, Canada turned the corner, eliminated those deficits and paid down debt.
Canadians will remember that balancing the books was not easy. It required tough decisions and many shared sacrifices. In order to maintain those hard-fought gains, a Canadian consensus emerged, a consensus that governments must take every precaution to avoid deficit financing. That is why Liberal finance minister Paul Martin implemented a contingency reserve, or a rainy day fund, permanently in Canada’s fiscal framework during those years.
As Liberals, we recognize that a government cannot always predict external economic shocks. However, a government can, and ought to, prepare for them.
Economic uncertainty was caused by 9/11, SARS, BSE and international currency crises, but Canada was able to withstand those external shocks and simultaneously avoid going into deficit. Under the Liberals, Canada not only paid down debt and cut income taxes and taxes on business and investment, but as a country we also built a fiscal and economic record that became the envy of the G8.
Just three short years ago, the Conservatives inherited the strongest economy and the strongest fiscal position that any incoming government has enjoyed in the history of Canada. We had the strongest economy in the G8. We had a $13 billion surplus, a $3 billion contingency reserve, the best job creation in 30 years and no deficit.
Since that time, the Conservatives have not only squandered the $13 billion surplus but have also eliminated the $3 billion contingency reserve, the rainy day fund. They have gutted Canada’s capacity to respond today to an economic downturn.
During the good times, the Conservatives spent the cupboard bare and put Canada in such a position that today we lack the financial and fiscal capacity to invest in vulnerable Canadians during the tough times.
It is not just dollars and cents. Canadians feel vulnerable as a result of the looming recession and the global economic situation. Canadians want governments to plan ahead, to prepare for inevitable external shocks, and to ensure that during those times their government is not only prepared to invest in Canadians and to help them through those tough times, but is also capable of doing so.
During the election, the Prime Minister misled Canadians about the existence of a potential deficit.
Today, the Conservatives are trying to mislead Canadians about the cause of the deficit.
This is important in a minority parliament, because if we are going to deal with solutions honestly, we need to deal with problems honestly. We cannot, as a parliament, come up with solutions for the future of the Canadian economy unless we are prepared to admit the truth, perhaps the inconvenient truth, about the cause of some of the problems we face right now.
The deficit was not caused by the global economic situation, but by the Conservative government. Last week Kevin Page, the Parliamentary Budget Officer, said very specifically in his report that the deficit was caused by previous policy decisions of the Conservative government. He referred to policy decisions quite specifically, including cutting the GST as opposed to making other types of tax cuts that could have created more growth and opportunity, such as cuts to income taxes. He also referred to the fact that the Conservatives have increased spending by 25% during their short time in office.
Many people saw this coming and questioned Conservative fiscal responsibility long before Mr. Page wrote his report. Last February a Globe and Mail editorial compared Liberal and Conservative records on the economy. The following is what the editorial said:
Which party took a country that was drowning in debt and instituted tough, painful savings to lift the federal accounts back into surplus, where they have remained for more than a decade? That would be the Liberals.
I continue with the Globe and Mail editorial:
And which party, by failing to heed the warning signs of an economic slowdown and by both cutting the GST and spending as if there were no tomorrow, set the country up for a lean budget on Feb. 26 that could, if the Conservatives don't watch their step, tip Canada back into deficit spending? That would be the Conservatives.
That was a Globe and Mail editorial on February 21, 2008.
Economists agree on what to do if we genuinely want to stimulate the economy. The Conservatives have said they cut the GST pre-emptively because they wanted to create stimulus, but in any of the budgets in which they cut the GST, the word “stimulus” was not used to describe why they were cutting the GST. In fact the Conservatives, and I think a lot of Canadians, know that they cut the GST more out of an interest in buying votes than in building prosperity.
If we really want to create economic stimulus, growth and prosperity, economists agree that we are better off to cut taxes on income, on investment, and on profit, not consumption taxes. In its recent report, “Tax Reform for Efficiency and Fairness in Canada”, the OECD argued that it is misguided to shift the tax base toward consumption. It said that in general, business and income tax cuts are better for economic efficiency, since “such taxes are thought to carry a high excess burden, while GST cuts not so much”.
However, Conservatives did not listen to the economists. Instead they went ahead with their wrong-headed tax measures, and now we as a country are moving ahead into deficit.
In terms of economic performance, there were trouble signs on the horizon long before the current global financial crisis. Canada's economy actually shrank during the first half of this year. We had the worst productivity numbers in 18 years. If anyone is wondering whether the Conservatives understand the economy, they have only to question the wisdom of what the Prime Minister said during the election.
On September 15 he said, “If we were going to have some kind of big crash or recession, we probably would have had it by now”.
That was on September 15. Canadians who took the Prime Minister seriously at that time, Canadians who took his investment advice and invested in the TSX, saw the TSX actually fall 33% since the Prime Minister gave that investment advice to Canadians.
On October 7, the Prime Minister said, “I suspect some good buying opportunities are opening up”. Since then the TSX has fallen 16%. We are finding out that the Prime Minister is not much better as an investment adviser than he has proven to be as an economist.
Canadians are justifiably worried. It will be critically important in the days and weeks ahead as we parliamentarians review the fiscal update on Thursday and as we debate the kinds of ideas that can move Canada forward during these difficult times.
It will be absolutely essential for the government to come clean as to the root causes of the fiscal situation we are in right now as a country. It will become absolutely essential that the government tell the truth to Canadians: that it was the government's misguided tax policies and big spending policies that put Canada into deficit. Before we as a Parliament are able to deal with solutions for the future, the Conservatives have to be honest about the causes of the problems we face today.