Debates of Feb. 7th, 2008

Prebudget Consultations

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Burlington.

I will begin by thanking the groups that came forward, the individuals and the businesses in Canada that came forward and made their presentations to the finance committee for our prebudget consultation. Quite frankly, the quality of the presentations made before the finance committee this year were outstanding and that is reflected in the report that has been put forward by the Standing Committee on Finance.

I should also state that while our party, the Conservative Party, is largely supportive of the recommendations made in the prebudget consultation document, there are certain aspects of the prebudget consultation document that we did not agree with, so we did prepare a supplementary report that is also within the prebudget consultation, which clearly outlines the direction that our government sees for Canada moving forward.

When I speak about the direction of Canada moving forward, I thought it would be fitting to begin today's debate by again outlining Advantage Canada.

The government came forward with Advantage Canada in November 2006. It was presented by the hon. member for Whitby—Oshawa, the Minister of Finance. He came forward and submitted a blueprint for Canada's economy moving forward and for Canada as a whole.

It was something that has not been done before. In fact, often in days past, governments would come out with budgets and there would be an awful lot of surprises. Canadians did not know what the direction of government was and business could not count on what the future direction of government would be. With Advantage Canada, the government sought to provide a level of confidence and to provide business with a good road map to where the government was going.

Therefore, I thought that the best way to start would be to outline and to remind the members of the House what Advantage Canada spoke of.

Advantage Canada was focused on creating five Canadian advantages that would help improve the quality of life and help Canada succeed on the world stage.

There was a tax advantage, which spoke of reducing taxes for all Canadians and establishing the lowest tax rate on business in the G-7.

We also spoke of Canada's fiscal advantage and eliminating the government's total net debt in less than a generation. We spoke at the time of 2021 and I believe we are actually ahead of that target.

We spoke of the entrepreneurial advantage. We wanted to reduce regulation and red tape and lower taxes to unlock business investment and try to build a more competitive business environment so that our small businesses could succeed.

We spoke of the knowledge advantage that we wanted to build in Canada to create the best educated, most skilled and most flexible workforce. We are already seeing the results of this. A statistic released this morning said that university enrolment in Canada is up by almost 23%. In fact, it is up by 25% for women and 21% for men. These are real successes for the government.

We also spoke of the infrastructure advantage, whereby we will work to create a modern, world-class economic infrastructure that helps ensure growth and helps ensure prosperity so that Canadians can have a better life.

Then, of course, to support these advantages, we had principles, and that is very important. What were the principles that were going to guide Advantage Canada? The first principle was to focus government, and I cannot emphasize how important that is. The government remains focused on what it does best. It is responsible in spending, efficient in its operation, effective in its results and accountable to the taxpayers. This is a principle, quite frankly, that all governments should aspire to, but which our government holds very dear and very close to its heart.

We want to create new opportunities and choices for people. When we speak of that, we want government to create incentives for people to excel right here at home. We want to reduce taxes and invest in education. These are the principles that the Conservative Party holds very dear. We want to invest for sustainable growth.

When we talk about investing for sustainable growth, we are not talking about one time ad hoc payments that pick winners and losers. We are talking about fixing the fundamental flaws in the economy and setting the environment right so that all businesses can flourish and prosper, which creates more employment.

We are seeing results of this already. We know that in the month of December a record number of Canadians were employed, 17 million. That has never happened before in this country. The government has created almost 700,000 jobs in two years. That is an incredible record and Advantage Canada is the blueprint by which we have set that underway.

Following up on Advantage Canada, we had budget 2007 which made a significant number of investments that were important to Canadians. I believe the record of budget 2007 speaks for itself.

I think it would be fitting to remind Canadians what budget 2007 accomplished: $39 billion over seven years to restore the fiscal balance. I am from Ontario. The province of Ontario received $3.8 billion this year in the fiscal balance transfer, plus per capita transfers for things like post-secondary education where we increased that budget by 40%, plus provided per capita spending.

What did the Premier of Ontario have to say about budget 2007? Ontario Premier Dalton McGuinty is claiming a hat trick of significant victories. On March 21, 2007, in the aftermath of the federal budget, he stated, “Ontario has scored three significant victories when it comes to our fight for fairness. This federal budget represents real progress for Ontarians”. I am proud of that.

I came here to Ottawa to fight for real progress and fairness for Ontario and for Peterborough but also to fight for fairness right across the country because, ultimately, as federal politicians we should strive for a government that does not discriminate between regions and that views and respects all Canadians equally.

I could speak to the budget for hours but I have requested that my time be reduced to 10 minutes so I can share my time with my colleagues who are also very proud of the government's economic record.

I would also like to talk about the economic statement. Perhaps one of the most interesting things that I read following the economic statement was written by Sheila Copps, a former Liberal member, when she said:

The finance minister's decision to ignore the naysayers was brilliant politics. A cynical observer might question his timing, overshadowing....

Blah, blah, blah.

[An hon. member]

That's exactly that, blah, blah, blah.

[Dean Del Mastro, Conservative, Peterborough, ON]

I am sorry. Forget the economists, forget the professors. Most who trash the GST cuts also oppose tax deductible transit passes, notwithstanding the obesity epidemic.

The former minister, Sheila Copps, was very proud of the government's decision to reduce the GST and reduce the tax burden on Canadians. I think that is tremendous.

Jayson Myers, of the Canadian Manufacturers and Exporters, came forward and called the tax cuts in the economic and fiscal update very important. He said:

Canada is going to have a very attractive tax environment to retain and attract business investment. ...this keeps us in the game of international investment.

When we speak of manufacturing, the government has provided more than $8 billion in tax relief, $33 billion over seven years for infrastructure and $1.3 billion in annual support to the provinces to improve access to skilled labour.

We are supporting many aspects. I could go on at length about the measures that we have taken but I will defer to questions from my colleagues.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I am somewhat amused by the hon. member's speech. I wonder whether he could sort of zero in on some facts about the way his government spends money around here.

In Table 1 of the Department of Finance statements for September 2007, the total program spending for the Liberal governments between 1992-03 and 2005-06 was 2.3% and direct federal spending was 3.2%. That was on an average per year.

Meanwhile, in the two years that your government has been in office you've spent in total program spending at a rate of--

[The Deputy Speaker, NDP, Bill Blaikie]

The hon. member knows that he should be referring to his government. I am not aware of having a government at any time.

[John McKay, Liberal, Scarborough—Guildwood, ON]

We would all be shocked, Mr. Speaker, if in fact you were part of the government.

The government spent an average of 6.4% on total program spending per year and direct federal spending was 8.6%.

The so-called new government, the so-called fiscally responsible government, the so-called Conservative government is on a wild and crazy drunken spending spree. These are numbers that are shocking. These numbers would do credit to the NDP, for goodness sake.

Is the hon. member particularly proud of the way in which he essentially spent the cupboard bare?

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I am not exactly sure what the hon. member is speaking about. Of course, when one lives in a glass house, one does not cast stones. The Liberal government had a 14% spending increase in its final year in government. Of course, it was trying to buy votes but the voters in Canada did not fall for that.

I am particularly proud of this government because we effectively cut taxes over the next five years by $200 billion and we have made key investments. We have also addressed the fiscal balance question in Canada.

I came prepared this morning to speak to this because I was shocked by the comments of the hon. member for Markham—Unionville. When he spoke to the Minister of Finance, he proposed a shopping list of billions of dollars of new spending. He wants billions of dollars for the Kelowna press release. He wants billions of dollars to fund a failed Liberal child care plan. He wants billions of dollars for industrial sectors to pick winners and losers. What else would he like billions of dollars for?

[An hon. member]

He wants a new tax.

[Dean Del Mastro, Conservative, Peterborough, ON]

Yes, he wants a new carbon tax to really hammer businesses that have already been hit by the recession in the United States.

I would love to answer legitimate questions from the Liberal Party but, clearly, as I said, one does not throw rocks when one lives in a glass house.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I had the opportunity to work with my colleague on the committee. Many of the Bloc Québécois recommendations were included in the report. For example, there is the introduction of initiatives to help workers affected by the crisis in the manufacturing and forestry industries.

The committee members acknowledged that $1 billion was needed for the forestry industry alone and that $1.5 billion was needed for refundable contributions for manufacturing industries that wanted to invest in new equipment. They also acknowledged that the portion of gasoline tax revenues to be shared with municipalities should be increased to 5¢ a litre as soon as possible to stimulate local economies. These proposals were made by the Bloc Québécois, and I am very happy that the committee accepted them.

I have a question for my colleague.

These recommendations go further than the ones the Conservative Party refused this week in the House, when we passed a motion calling for the implementation of all the tax measures recommended by the Standing Committee on Industry, Science and Technology for the manufacturing sector. We had a vote and the House adopted the motion, but the Conservatives were opposed to it.

Since the Conservatives on the committee agreed to include this in the report, can they promise to persuade their colleagues to see this through to the end and, as they did in the case of the $1 billion trust, admit that they do not need to tie this to a vote on the budget?

Can they ensure that the entire caucus has changed its mind since yesterday and will go along with the Conservatives who make up most of the committee, in order to finally support these measures, which address the urgent needs in the manufacturing and forestry industries?

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, as the member knows, we have created the billion dollar trust fund to address some of the difficulties being faced by single industry towns. We cannot help the fact that the U.S. economy is going through a time of weakness and we see that weakness in industries that depend on the U.S. economy for exports.

The government is acting. We are making a more competitive environment for business right across the board. The member can count on the fact that our government and this budget will respond to business and make Canada a more competitive place for the economy.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, it is my pleasure this morning to address the House on the prebudget consultations that have taken place.

I want to spend a few minutes giving a bit of an overview for the Canadian public on the actual process. I will talk a little about the report, some of its recommendations and what that means to Burlington. I will wrap up with where I think we are making progress as a government from a financial point of view and where we can continue to bring value for money to Canadian taxpayers.

First, for those who do not know, the budget process has a number of facets to it. As members of the finance committee, we have the opportunity to meet Canadians from across the country to talk about what they would like to see in future budgets. This process started back in the summertime with a plan to have a more focused approach to how we deal with prebudget consultation.

We had a theme, which was what people would do to the tax system in this country to ensure our prosperity in the future. That is the theme which we asked people to present on to us. Not everybody followed that theme. Others decided to come and see us, as they have done in the past, to talk about spending they wanted for their own particular needs. However, the vast majority of presenters came to see us with that theme in mind and did an excellent job in presenting their views of how the country's tax system could be improved to help improve both our prosperity as a people and our position in the world.

We did engage the public. Hundreds of people came to see us across the country and hundreds of people came to Ottawa to talk to us about their goals and their desires for the 2008 budget.

As members of the committee, we were able to ask questions of those individuals. We saw submissions from every single group that came to see us. For those whom we were not able to satisfy by giving them their few minutes in front of us so that we could get answers to questions, we asked them to make a written submission to us. We all received copies so that all were able to read those submissions.

As members of the finance committee, we worked together with colleagues from other parties in discussing the issues and coming up with what we think is the right direction to follow.

In addition, and everybody in this House has this opportunity, individual groups and organizations came to see me as a regular member of Parliament to talk about what is important to them and what could be incorporated into a budget to help their causes and this country. As an individual member of Parliament, I had numerous people come to see me, numerous delegations, to talk about their views on how we should proceed.

The theme in terms of the tax system was overtaken a bit by the issue of the rising dollar. As the dollar was rising in the fall, we had a specific set of meetings about that, its effect on our economy and what the Government of Canada could do in that arena. I think they were very effective meetings. We had some excellent presentations on what we as a government can and cannot do in terms of interference. We heard from a variety of presenters, including representatives from the Bank of Canada.

The areas that we talked about were very wide-ranging. We talked about personal taxes, the tax rates that individuals pay. We talked about what we could do for the unemployed. We talked about what we could do for seniors.

Education was a theme that people came to see us about, both those who provide education from the university side of things and those who are recipients of education in the post-secondary area, including a number of student groups.

We talked about corporate taxes and what we could for corporate taxes. We talked about what we could do in terms of research and assistance for organizations that are trying to be the best they can be, to be leading edge in terms of their development and their research and product development.

We also talked about the capital cost allowance and where it should go, and about the role of manufacturing, as in the report that was supported by this House and by all parties in this House at committee.

We talked about housing and infrastructure and the federal government's involvement in infrastructure and where we should be going with that.

We also had a fairly extensive discussion on the role of charities and volunteering and giving in this country. It was very interesting. Just so members know, we had numerous presenters tell us that the change made by the finance minister to allow for stocks and bonds to be used for charity donations made a significant impact on the work that those charities are able to do. They were able to gather more money, a tremendous amount, and particularly in the case of the health care sector for our hospitals.

Our report is broken down into three areas. There is an introduction on the overall economics of what is happening in this country. There is a very good review of the testimony we heard in a summary of the individuals and organizations appearing before the committee to talk about what their issues were, how they would address those issues, what their goals and expectations were or what suggestions they had for the committee.

There is a section on recommendations. To be fair, there was to be section on what we in the committee believe should happen, but I thought it would be more appropriate to deal with what we heard and as a committee deal with the recommendations directly.

To be frank, I believe there were about 52 recommendations that came brought forward from the different parties and the organizations we heard from. They were condensed into this report and discussed by committee. In actual fact, there was quite a bit of unanimity and support from at least the majority of the parties on a number of issues. I would say that on probably 30 of the 52 issues, committee members agreed, and that went into the report. That is a significant amount.

Then it was my suggestion that in addition to the main body of the report every party have a report of the supplementary issues they would like dealt with. They are not minority reports. We often hear from opposition members that we are here to make this place work, and in this particular case I think having supplementary reports instead of minority reports is more appropriate when it comes to our prebudget consultation. We all have different approaches to the same problem. All members were able to put them forward in this report.

The report contains a number of recommendations. To be frank with members and the public, not every member in every caucus agreed. The Conservative members did not always agree. The Liberal members did not always agree. The discussion was very good and we have put a number of items forward.

At this time, I would like to highlight a couple of items that I was very keen on putting forward and that made it into the report. There are two things that I will talk about up front.

There is a discussion of the LEED program, the leadership in energy and environmental design program, for green federal buildings. I know that it does not sound like much, but I think it is important. We heard from some delegations about this program. They said that it is the role of the federal government to make sure that we do what we can for the environment in our own federal buildings. We heard that there has to be a program which will help to make sure that when new buildings are developed or redeveloped there is the ability to make them as environmentally sensitive as possible. This is a start. I look forward to seeing if the finance minister heeds our advice.

The other area I put forward was a children's health initiative. I think there is some opportunity in this country to focus on research on children's health. I put forward as one of my recommendations, which also made the report, the possibility of a fund designated for children's health. Canada is a world leader in the field of research in juvenile diabetes and it is an area that I think Canada should be pursuing.

The report contains a number of recommendations that are important to Burlington, such as improved charity donation review, post-secondary education funding for those furthering their education, and an improvement in the GIS system, where we are recommending that people should be able to earn more money before the clawback starts. There also are other recommendations.

In the 30 seconds I have left, I want to comment on one other item. The other side of spending is expenditure control. I want to be clear for the House and the people of Canada that in 2006 with Advantage Canada we started to implement the expenditure management system. Finally we are looking at programs in a four year cycle. If they are meeting their objectives, great, but if they are not, we need to review whether we are going to continue to fund them.

We are using taxpayers' money. We have to make sure that we are getting value for the dollars being spent. If we are not, we must have the ability to move those moneys to a different, more productive program or to a different program altogether. We need to have the courage to make--

[The Deputy Speaker, NDP, Bill Blaikie]

I am sorry, but the member's time has expired.

The hon. member for Jeanne-Le Ber.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I listened closely to the last two speeches by my former colleagues from when I was a member of the Standing Committee on Finance. I do not approve of most of what was said. The only thing I completely agree with in these last two speeches, was the bit about “blah, blah, blah”. That pretty much sums up what was said.

There is a lot of talk of tax cuts as a way to get our economy moving and to help out the manufacturing and forestry industries, which are experiencing difficulties. As the member who just spoke knows very well, companies that are experiencing difficulties do not pay taxes, so tax cuts do nothing to help them get through the crisis.

Similarly, the $1 billion aid plan announced by the government will help communities find other jobs, but will not help save existing jobs. Moreover, this aid plan does not target the problem areas. Quebec and Ontario are the hardest hit, but the aid will be allocated on a per capita basis, so more will be handed out in Alberta, which is not experiencing a manufacturing crisis.

I would like my colleague to take a look at the past. During the mad cow crisis, aid went primarily to beef-producing provinces. It made sense, at the time, to send aid money to the provinces where the mad cow crisis was causing difficulties. If he sees nothing wrong with that, would he not agree, then, that this is the same thing and that the aid should essentially be given to the provinces hurt by the manufacturing crisis?

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I appreciate the question from my colleague from the Bloc, who was an active member of the committee last year. We sort of miss the member from the Bloc getting his picture taken and being very excited about his travels with the finance committee across this country. He was a very proud Canadian at the time.

The issue the Bloc member brought up was whether the money basically should only go to Quebec, or that at the end of the day, that is what the Bloc would like. Of the $1 billion community reinvestment fund that we just put forward through the House and which now is getting through the Senate, hopefully, that money is being spent across the country. We make no apologies for that.

The issues in terms of manufacturing and some communities that are suffering due to the economic issues they are facing is not an issue just in certain parts of this country. It is happening across the country. To be fair to all parts of the country, to all Canadians and to all communities, we believe that the $1 billion community trust fund that we have set out should be shared equally by all Canadians because all Canadians are paying for that fund.

That money will be disbursed to the provinces that have those issues. They will gear the money to the locations that are suffering most, whether it is in manufacturing or forestry, but it is not just a Quebec issue. It is a Canadian issue and that is why our $1 billion dollar trust fund is designed to help all Canadians.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Mr. Speaker, at noon today in Toronto an important prebudget submission will be made by folks who are members of the Housing Not War coalition in Toronto. It consists of 147 anti-poverty organizations, peace groups, labour unions, women's groups, faith groups, scientists, environmentalists, ethnic communities, artists, academics and social agencies, students and health practitioners.

The demonstration will take place at the corner of King and University Avenue, calling on the government to bring the Canadian troops home from Afghanistan and redirecting the billions of dollars spent on that war and putting them toward important social goals. Primarily, they are advocating for an additional 1% of the federal budget to go into housing.

We know there is a desperate need for housing in Canada. We know of the high homeless rates in Canada. We know too many Canadians pay more on rent than they should. We know affordable housing is in short supply in most communities across the country.

I suspect some people from Burlington will take part in making that submission today. Will the member for Burlington support a national housing program that is sustainable, durable, continues from year to year and on which people can depend, a program that will build affordable housing in Canada and that will help end the homelessness crisis in Canada?

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, it is a very timely question about the housing issue. Housing advocates did come to see us. We have put money into public housing. We are not the providers of public housing as a federal government. That is clear. The money goes to the provinces and they, through their agencies, work on public housing.

Let us get the facts laid out today. Our government will invest more in affordable housing this year than any federal government in history. In Ontario alone, we have committed more than $1 billion to build and renovate affordable housing. We recognize the issue. We are investing in the issue. We are making a difference in the issue.

If the hon. member wants to ensure that his British Columbia government spends the money it gets from the federal coffers for housing, I challenge him to take up that responsibility.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I would like to begin by thanking all Canadians who have taken the time to make presentations during committee meetings here in Ottawa and in various cities across the country. I would also like to thank those who made written submissions, as well as the clerk and her assistants for their excellent work.

I even thank fellow MPs from opposition parties for what was generally a cooperative effort, even though we did not agree on every point, as was evident from our various minority reports.

When the Conservatives came to power two years ago, they inherited the strongest fiscal position, the strongest employment growth of any G-7 country. Therefore, it was really up to them. They had the opportunity, based on very large surpluses, to make wise investments, smart tax cuts so as to better position our country in terms of productivity and in being prepared to face the times of greater economic uncertainty, in which we now find ourselves.

The burden of my remarks is that they have failed to make these wise investments and these intelligent tax cuts. Now when we are at a time of great economic uncertainty, potentially in recession, we find our fiscal cupboard is bare. We find ourselves much less able to face the future with confidence than had the government managed our economy in an effective and efficient way.

Let me just say a few words about the overall economic situation in which we find ourselves. Clearly, the major global problems have begun in the United States, which is truly in the eye of the storm, but Canada is not immune. We see this from the fact that the Bank of Canada has substantially reduced its growth forecast for this year, indeed to less than 1% for the first quarter of this year. Jobs actually dropped significantly in the month of December.

Therefore, government's claim that employment is at an all time high is simply wrong arithmetically. Jobs came down last month by 51,000 in terms of the private sector and some 17,000 total jobs. Some sectors have been particularly hard hit. Manufacturing has lost more than 130,000 jobs in the last year. According to one of our witnesses at the finance committee, Jim Stanford, he expects that if the dollar stays at or near parity, we could face another 300,000 job losses in manufacturing over the next two to four years.

To put it in a nutshell, one of Canada's better respected economists has summed up by saying that the odds of a recession in the United States and Ontario are approximately fifty-fifty. The odds of a recession in Canada as a whole are approximately one in four.

That underlines the really tight connection between Ontario and the United States, with 90% or so of Ontario exports destined to the U.S. Therefore, the uncertainties in which the whole country finds itself are concentrated here in the province of Ontario.

Let me begin with the question of spending. Perhaps uncharacteristically the Conservative government has been the biggest spending government in living memory. This is not just myself saying this. Take normally small-c conservative individuals like Andrew Coyne, who writes for the National Post and John Williamson, head of the Canadian Taxpayers Federation. Both these gentlemen have taken the government to task for going on a big spending spree.

This comes through if we look at the numbers. If we compare total program spending over the two years of the Conservative government versus the whole Liberal time in government, or just the Liberal time in government since we balanced the budget, we find the rate of growth of spending substantially higher in the last two years than in the Liberal years.

This is particularly the case if we limit our consideration to money spent by the federal government itself rather than monies transferred to individuals or other levels of government. The federal government's own spending in the two years of government has been up by an almost unbelievable 18%, which is an average of 8.6% per year. This is very substantially higher than spending increases during the Liberal period.

As confirmed by Andrew Coyne and by John Williamson and as confirmed by the statistics, this has been a big spending government when times were good. Its first two years in government, until recently, were periods of strong economic growth globally and inherited from the previous government. It spent like drunken sailors during good times, leaving the cupboard largely bare now that we are entering uncertain times. I submit, from the point of view of basic economic management, this is an incompetent way to run a fiscal policy and a government.

The other side of the ledger is tax. The Conservatives spent like crazy during good times, now we have taxes on the other side. Essentially they have undertaken four tax measures, one with which we agree. Indeed, the Leader of the Liberal Party, before the Conservative economic statement, called for deeper corporate tax cuts to increase the productivity and competitiveness of the Canadian economic and partly to offset the fact that Canada no longer had an competitive advantage to a weak currency. We needed to create a new Canadian advantage through a corporate tax rate substantially lower than the United States. The government has followed our suggestion, so we do not really have any complaints in that domain. However, that is where our agreement ends.

The second item of taxation done by the Conservatives was this. Within a few months of coming to office, they raised personal income tax rates on the lowest income Canadians. They raised it from 15% to 15.5%. Then, in a great sweep of victory, they brought it back to 15% from 15.5% and claimed huge credit for cutting taxes, whereas in reality they raised the tax for one year to 15.5% and then brought it down to 15%. We do not object to them bringing it back to 15%, but we do criticize them for raising that tax for one year a year earlier.

The third thing the Conservatives did was spend a huge amount of money to lower the GST by two points. There is hardly an economist on the planet who would agree that was the wisest way to cut taxes. I will simply quote former Conservative cabinet minister, Perrin Beatty, now the president of the Chamber of Commerce, who said:

Knocking another point off the GST may be politically attractive but it does not provide the same incentive for improving our sustained economic performance.

We Liberals believe in cutting taxes. We are committed to not raising any taxes, including the GST, but we certainly believe it would have been far wiser had the government used that same amount of money for broad based personal income tax cuts rather than for cutting the GST.

The fourth element of the Conservative tax policy is what I would call narrow, politically motivated boutique tax cuts. In other words, if the Conservatives have money available to cut taxes, instead of cutting the taxes of all Canadians, they direct those to narrowly targeted groups like students getting credits for buying text books or young Canadians playing hockey, et cetera.

I have nothing against those groups. In fact I am in favour of them. However, why is it up to government to decide that young hockey players deserve a tax break and young piano players or violin players do not? This is an intrusive kind of tax policy that substitutes government decision making where family decision making is appropriate. We would prefer to have broad based tax cuts rather than narrow, politically directed, intrusive boutique tax cuts.

If we combine the spending spree during good times with the tax cuts, which are largely incompetent in the sense that at least most economists and I believe most business leaders and most Canadians would have benefited far more from a different pattern of tax cuts, the net effect is that the government's fiscal cupboard is bare just at the moment when the Canadian economy is likely to need a boost.

Let me end by mentioning the sectors where the Canadian economy definitely does need a boost . Manufacturing, as I said earlier, is at risk of losing hundreds of thousands more jobs. Forestry is on life support. The livestock branch of agriculture is in deep trouble. Tourism is in trouble. All of these sectors are in trouble for a combination of reasons, but principally the very high value of the Canada dollar is hammering them. In addition, a slowing U.S. economy and rising energy costs are creating this perfect storm in which several of Canada's most important sectors are being battered as we speak.

The government is not prepared to do anything for those sectors. Yes, it has this communities fund, and we on the Liberal side have said we would replicate that, but that does not help protect the jobs in those sectors. That only comes into play after those jobs have been lost. The Conservatives have nothing to directly support the manufacturing industry and those other sectors in their time of need. Whereas we on the Liberal side are not only going to replicate the communities fund, but we also have an additional $1 billion fund dedicated to supporting investment in the manufacturing sector.

I suggest that the government is neglecting these critical sectors of the Canadian economy at their moment of greatest need, partly because the Conservatives have overspent in the past. They spent wildly during good times, leaving the fiscal cupboard bare. But there are also their narrow ideological reasons. They adhere to free market principles. The government will not get involved in the manufacturing sector, as the finance minister called it a shell game; this, even though the biggest players, the United States and the European Union, have given massive subsidies to their agricultural and aerospace sectors. The southern state governors are giving massive subsidies to car companies to locate there.

It is a kind of boy scout, narrow ideology, naive point of view that Canada alone can adhere to these market principles while all the players around us are doing otherwise. It is a recipe for job losses, a recipe for not supporting key sectors of the Canadian economy.

To conclude, the government has demonstrated great incompetence in its economic management. I have not had time to mention two of the most incompetent episodes involving income trusts and interest deductibility. Both of those will go down in infamy in terms of incompetence, and in the case of income trusts dishonest economic management, but at the macro level in terms of excessive spending in good times, in terms of an unwise structure of tax cuts.

Just as Canada enters this period of economic uncertainty, the government which inherited the most bountiful fiscal surplus two years ago has left the fiscal cupboard virtually bare. It has left the Canadian economy ill-prepared for the economic storms which may lie ahead of us.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I want to remind the member for Markham—Unionville that on January 23, 2006, the Canadian public demonstrated that the previous government was completely incompetent and replaced it. That is where the real incompetence lies.

The member talked about tax cuts and that he sort of likes them but does not like them. They were his but we did them and now he does not like them. He did not make much sense.

We promised to reduce the GST by two points. That is something we committed to in the election and we actually did it. I know the previous government had promised back in the early 1990s that it was going to get rid of the GST completely and of course it failed at doing that, as it failed at most things that it had committed to do but never ever accomplished.

My question is twofold. First, he talked about what he calls the boutique tax cuts. Would he remove them all or keep them all if he had the opportunity to do so?

Second, he talked about spending. I am not going to get into the numbers. I have numbers which show that under the Liberals spending rose 8.2% annually and in 2004-05 spending growth was increasing by 14.4%. We have implemented an expenditure management system which will report in this budget on 17 different departments. Programs that do not meet our objectives we are going to ask to be removed. Will the Liberal Party be supporting the programs that do not meet their objectives?

If we bring them forward as needing to be replaced in terms of the cash flow they absorb, will his party be supporting the expenditure management system that we have implemented to make sure that the programs are value for taxpayers' dollars and meet the objectives that were set out? Our very first opportunity to do that will be during the budget of 2008. Will he be supporting it and will he be getting rid of those boutique taxes?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I think I said in my speech, and if I did not I will say it now, the Liberal Party is committed to not raising any taxes, unlike the Conservative Party, which raised income tax upon assuming office.

On his second question about expenditure review, I was the chair of the expenditure review committee when the Liberals were in government and we found $11 billion of savings over a period of five years. I am philosophically very much in favour of the idea that it is the responsibility of government to continuously shift expenditures out of low priority areas and into high priority areas.

The trouble with the Conservative government is that when it did an expenditure review or cut exercise several months ago, it did not look for efficiencies in administration the way we did. The Conservatives made cuts directed at the most vulnerable in Canadian society. They cut women's groups. They cut literacy. They cut museums. They cut not that much money compared with the $11 billion, but there was an outcry because these were politically motivated cuts to the most vulnerable in Canadian society, such as the court challenges program which the Conservative Party regarded as their political enemies.

If the Conservative Party comes back with sensible administrative savings of the kind the Liberals discovered, I would be inclined to support them. If they come back with more ideological cuts to the most vulnerable in Canadian society, then I would oppose them with great vigour.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, it was very interesting to see the following recommendation from all members of the committee in the report. This was one of the recommendations the whole committee accepted. I will now read recommendation 13:

The federal government develop a concrete policy to assist the manufacturing and forestry sectors. This policy should include implementation of the fiscal recommendations contained in the February 2007 report of the House of Commons Standing Committee on Industry, Science and Technology.

This is exactly what the Conservatives voted against the day before yesterday. This House adopted the Standing Committee on Finance's report with the support of the Liberals and the New Democrats. Only the Conservatives opposed it. Now that it has turned up in the common section of the report, we know that the Conservative members of the committee bought into this part.

Will my colleague stand with me on this to persuade the Conservative members of the committee to make the Conservative government change its mind on this and move forward? That would make it possible to implement the fiscal recommendations as quickly as possible because the crisis in the manufacturing and forestry sectors is happening now.

It is hard to understand why the Conservative government voted against this recommendation on Tuesday, but is supporting it today because it is part of the newly released report. Conservative members went against their government and supported the recommendation. I think they have finally come around to the right position on this issue. Does this mean that we will finally get something done about this?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I certainly agree with my hon. colleague, in principle, but I do not necessarily agree with all the details concerning exactly how the government should spend this money. Nevertheless, I fully recognize that the government should take concrete measures to help the manufacturing and forestry sectors.

In fact, our party leader, the Leader of the Opposition, proposed specific measures for this. I agree with him: the Conservative members who sit on the committee should support our position.

However, I must admit I am not very optimistic about this government itself, given its very strong ideology, but I can at least hope that the Conservative members who sit on the committee will be on our side on this.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, the hon. member for Markham—Unionville and I are from the same province, the province of Ontario. I dare say that he and I have seen this movie before. In Ontario the name of the movie was “Harris and the now member for Whitby—Oshawa”; in the federal government, it was “Mulroney, Chrétien”; and in the United states it was “Reagan, Clinton, Bush”. It is the same movie every time; that is, the so-called Conservative government goes crazy on spending, drops its revenue base precipitously, ends up in deficit and then leaves it to the so-called Liberal government to clean it up.

I wonder whether the hon. member, given the comments by the member for Burlington, would anticipate that were the Liberals to form the government, we would again have one major mess to clean up?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, my colleague has made some wise comments. Let me respond very briefly, first in terms of history and then in terms of the future.

The historical record is utterly clear. Whether one is talking about Ontario, and Eves plus the current minister of finance, or Mulroney in Canada, or Ronald Reagan or George W. Bush, the lesson from history is that it is always the Conservatives or the Republicans who create the big, fat deficits and it is always the Liberals or the Democrats who are left to clean up the ugly Conservative mess. That is history and I do not think that can be disputed.

The future is a bit harder to predict than the past. Given that the Conservatives inherited such huge surpluses, it would be premature to say that a deficit is imminent, but they are certainly skating closer to the edge than we ever would have. If the economy does weaken, not hugely but a bit more, we could be seeing a Conservative deficit. That would certainly be consistent with history and that would quite likely mean another Conservative deficit left for Liberals to clean up.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, it is interesting to participate in today's debate on the prebudget consultations. First of all, I would like to thank my colleagues from the Standing Committee on Finance, as well as the entire staff that helped us in our work on this. Naturally, dialogue and debate can be intense, since we all have different opinions. In my case, the hon. members for Jeanne-Le Ber and Saint-Maurice—Champlain support me in my committee work as the Bloc Québécois representative. We try to work as a team as much as possible.

In my first year as finance critic, I addressed the question of budget consultations by first initiating very broad consultations in my riding in August and September 2007. I organized six two-hour public meetings in six different municipalities. I sent a flyer to all households in my riding, urging them to share their opinion with me. We then proceeded with a Quebec-wide consultation.

We tried to respect these recommendations as much as possible in this report. There are some things that were not supported. Nevertheless, there are other things that the committee agreed to include in the report that I think are very important. I hope the government will also accept them.

Let us recall our six budget priorities.

First, we wanted an aid package to support workers and businesses affected by the manufacturing and forestry crisis—a package worth more than the $1 billion announced, which is clearly not enough.

We also wanted measures to give seniors back their dignity. These measures would make the guaranteed income supplement retroactive and increase it, which would allow seniors at least to live at the poverty line.

We also wanted the reinstatement of education and social transfers to 1994–95 levels. Financially, that is where the fiscal imbalance continues to hurt: the problem has not been resolved at all.

We wanted increased funding for social housing and a reversal of the ideological cuts made by the Conservative government, particularly with regard to women's groups.

We also wanted to see increased funding for culture. We recommended about $400 million.

We wanted to see a 180-degree turn on the environment, where we really need an approach tied to energy savings and sustainable development. This remains an important objective.

I will now examine each of these objectives. One of the Bloc Québécois' recommendations found in the report was to provide $1 billion for just the forestry sector and not for both the forestry and manufacturing sectors. This week, as we had requested, the government agreed to provide that amount without tying it to the budget. It finally accepted our position. It did an about-face and that is just as well because the money will be available more quickly.

However, we were looking for $1 billion for the forestry sector alone. We wanted the government to allocate $1.5 billion in reimbursable contributions to allow companies to purchase new equipment. That was also accepted by the committee.

Next, we wanted to move up to 2008 the transfer of 5¢ of the gasoline tax to municipalities, rather than waiting until 2010 as planned by the government. The objective is to stimulate the economy in this period of economic slowdown where we can sense that the Americans are on the verge of a recession and the Canadian economy is attempting to avoid it. However, it is uncertain whether we will do so given the strong pull of the United States, particularly in the construction sector, which has a significant impact on our manufacturing and forestry industries.

The majority of the committee recommended injecting $3.5 billion in economic renewal. That is what we called on the federal government to do last fall and to use this year's surplus to do so. The Conservative members from Quebec said that made no sense and that the Bloc Québécois was being irresponsible.

The Bloc Québécois was being irresponsible? Now they should say that the Standing Committee on Finance is being irresponsible, since it is recommending exactly the same thing. The members from Quebec need to understand that and what better way than to join the Standing Committee on Finance. It would be interesting to see them there and to see whether they have anything interesting to say. The Standing Committee on Finance has accepted a constructive Bloc Québécois proposal.

What is more, the committee is recommending creating an independent employment insurance fund and to implement an older worker adjustment program. We will have to make sure that it is indeed an income security program when the government implements it. Let us not forget that today's debate is on the prebudget consultations of the Standing Committee on Finance. The government's position may differ. We still need to get the government to make commitments in the budget. However, having the majority of the Standing Committee on Finance recommend a Bloc proposal is already a big step.

I hope the government will follow through on this report. We would like to see it move forward.

We find it regrettable, however, that the committee rejected the Bloc Québécois proposal to use the surplus from the independent fund to enhance the system. We know that our seasonal workers are currently subject to four or five pilot projects under a section of the Employment Insurance Act. These projects are still not enshrined in the legislation and they expire after six months or two years. They constantly have to be renewed, which is very complicated and causes insecurity among our seasonal workers and our seasonal industries. We wanted to see this situation corrected immediately, but it is not in the report and we will continue to fight for it. Although the Committee supported the Bloc Québécois’ demand to create an independent Employment Insurance fund to end government pillaging, it refused to enhance the program, as I have just explained.

They also refused to put $500 million back into Technology Partnerships Canada, telling us that after that program was eliminated, money was injected into the aeronautics industry. That is fine, but there are industries other than aeronautics that also benefited from that program. For example, in my riding, there is a company that has, on three occasions, received substantial amounts of money that it used to create hundreds of jobs.

Technology Partnerships Canada was condemned by the Conservatives. There may have been a few small problems, but they threw the baby out with the bathwater. It was a worthwhile program, and it would be appropriate to use it during these times when companies must innovate and invest in research and development and our regions must be strengthened. It is a useful and effective tool. It would have been appropriate to continue making it available, but it was not approved by a majority of the committee. The Bloc is not satisfied. We express our displeasure and will continue to fight for this.

There is another very important recommendation by the Bloc in the report. It relates to retroactive payment of the guaranteed income supplement, in an amount estimated at $3 billion. At present, in the legislation, when someone becomes eligible for the guaranteed income supplement and realizes that he or she should have been receiving it in the past, the person is given a maximum of 11 months of retroactive payments. Often, however, these are older people who have very little income and who should have been eligible for it for three, four or six years.

The typical case is usually someone whose spouse handled the money and who has been widowed and did not start the process to get the payments. Guaranteed income supplement payments did not start automatically and people had to take some action in order to get it. It was determined that over 200,000 Canadians and 70,000 Quebeckers were in this situation. Marcel Gagnon, a Bloc MP, led a campaign that resulted in some of those people being identified. But the government still refused to make payments retroactive. The Standing Committee on Finance has now agreed to act on that recommendation. We hope that the government will adopt it .

Along the same line, we would have thought that the committee would agree to recommend that the government increase GIS benefits to reach the poverty line. The committee is preventing the most vulnerable members of our society from getting out of poverty. The guaranteed income supplement is about $110 a month below what is needed for a senior citizen to have the bare necessities. In our budget consultations, we realized that this is an important issue.

Throughout eastern Quebec, in regional county municipalities where there are the most senior citizens receiving the guaranteed income supplement, that is, in the poorest regional municipalities, only 79% of those people are receiving it. Even in the wealthier regional municipalities, only 52% of senior citizens are receiving it. That means that a lot of people need that income. They cannot make ends meet and so they need support. We would have liked the committee to go that far, but it did not. We will continue to fight for this.

Ultimately, I hope that the government will fix this situation completely by giving retroactive payments, as the committee recommended, and by providing the maximum that people are entitled to in order to provide them with this minimum of financial security.

When it comes to the fiscal imbalance and funding for post-secondary education, the Bloc Québécois hit a wall. None of the other parties thought that funding for post-secondary education should be restored to the 1994-95 levels. That was about $3.5 billion for all of Canada and a bit more than $800 million for Quebec.

We say now in our society that we should invest in innovation, that people should be able to go to school, and that our universities should contribute to research and development. But our universities say they are underfunded. This government measure could have been very helpful. If the federal government is going to claim that its approach is different from that of the former Liberal government, it should follow through and completely eliminate the fiscal imbalance. But it will not do that. The federal government simply will not provide adequate funding for post-secondary education.

So there is a major omission here. This was one of the Bloc’s main conditions and it still seems very pertinent to us. We hope that the current requests from all the universities in Quebec and in Canada, and from the industrial sector as well will bear fruit. Indirectly, adequate funding for our universities helps with the development of new products. This can be done under the heading of business assistance according to our international agreements and is something that is needed.

I want to turn now to another of the Bloc’s priorities: social housing. At our initiative, the Standing Committee on Finance recommended that the government use the surplus that Canada Mortgage and Housing Corporation is running to invest in social housing. CMHC has a huge surplus of about a billion dollars. The committee did not put an exact figure on it, but we wanted $1 billion a year to be invested in social housing out of the CMHC surplus in order to create decent, affordable housing and increase the supply.

If we made this investment, we would be killing two birds with one stone, or even three. We would increase the amount of social housing available, we would help cushion the economic slowdown by boosting construction, and we would reduce such phenomena as homelessness. All in all, we would make a major contribution to the fight against poverty. In our view, the Standing Committee on Finance was headed in the right direction in this regard and $1 billion is about the right amount.

We were unable in committee, however, to reverse the ideologically motivated cuts to the court challenges program and Status of Women Canada. These cuts are widely condemned by women and progressive people all across Canada.

There is still a lot of work to be done. Groups must be provided with the tools they need. When confronting the machinery of government, it is very difficult to move a case through the system without the kind of funding and support provided by tools like the court challenges program. These are not huge sums of money, but the tool should be reinstated. The Conservatives should do what they did with the income trust issue: recognize that they made a bad call, change their minds and go back to their previous position so that we can get this program back.

Another of the six conditions is funding for cultural activities. We are very disappointed that not one initiative to provide funding to cultural activities was included in the prebudget consultation report even though we know that a dollar invested in the cultural sector will provide one of the best possible returns because more jobs are being created in this sector than in just about any other.

We find the federal government's indifference to be somewhat worrisome. Numerous cuts to funding programs for museums, the elimination of the public diplomacy program that financed international cultural tours, and the lack of funding for film and television speak volumes about the fact that this government does not really seem to care about culture as a way of promoting Quebec and Canada not only abroad, but also here at home. The government does not recognize the importance of culture to a society like ours.

In this report, we are asking the government to change course, reinstate programs to help museums and the public diplomacy program and reinvest in the Canada Council for the Arts' feature film fund and the Canadian television fund. This would cost about $398 million.

Another of the Bloc Québécois' six conditions has to do with the environment. The Standing Committee on Finance recommended that the government institute a cap-and-trade system for greenhouse gas emission credits. That is interesting. The committee also recommended that the government set up various tax incentives to promote the acquisition of energy efficient transport trucks and adjust the accelerated capital cost allowance on rail equipment to encourage investment.

All these measures are interesting, and we hope that the government will implement them. However, we would have liked to see the government adopt our proposal for the establishment of regional, absolute greenhouse gas emission reduction targets, to bring emissions down to 1990 levels, and development of a framework for a carbon exchange mechanism in Montreal.

We will have to explain things again to the Conservative government. If only there were strict rules. In fact, investing in the environment sector is becoming more and more profitable. When the rules are confusing, businesses do not benefit. If this recommendation were supported, if the government decided to implement it, there would be a significant impact on the economy.

Think about it. There is the whole issue of refundable tax credits for research and development, but there would also be an environmental advantage. Businesses would be more productive if they used less energy, and at the same time, they would be helping to decrease greenhouse gases. There would be an added incentive. I urge the government to move forward on this.

It is particularly interesting that the Standing Committee on Finance accepted all of these recommendations: $1 billion for the forestry sector alone; $1.5 billion in aid for the industry; and $3 billion for the guaranteed income supplement. These are all measures that have been criticized by the Conservative Quebec members, who called it overspending. Now, it is the position of the Conservative government and the Standing Committee on Finance, which adopted these motions. This means that our figures were not so far-fetched, since they have now been adopted by the Standing Committee on Finance and recommended to the Minister of Finance.

That shows that there is a great deal of interest in the work we did and the consultations we held in communities across Quebec and Canada. The bottom line is that the current level of financial assistance for the manufacturing and forestry industries is not enough. The figures prove this. The Standing Committee on Finance has made a practical, positive recommendation in this regard. It is no longer just the position of the Bloc, the NDP, the Liberals or the Conservatives; it is the position of the entire Standing Committee on Finance.

We hope that the Minister of Finance will incorporate these recommendations directly. He can even act on them without delay. Canada has a $10 billion surplus. On March 31, 2008, if this surplus has not been allocated, it will all go to pay down the debt. That would mean that even though the Standing Committee on Finance recognizes that $1 billion is needed for the forestry industry, $1.5 billion for the manufacturing industry and $3.5 billion for the guaranteed income supplement, the government would turn a blind eye and allocate the surplus to the debt and would not address these problems.

But we can address them now, before March 31, as we did for the trust. That would enable us to deal with a lot of irritants and emergencies, as the leader of the Bloc Québécois said, in terms of the economy, assistance for workers affected by the economic slowdown and the crises, and equity for seniors who have not received their retroactive guaranteed income supplement payments.

There are a number of interesting recommendations in the report. Our six conditions have not been met, but we will keep working on that. We would like the government to take real action soon and move forward. This is the perfect opportunity: the Prime Minister is due to meet with the Premier of Quebec shortly. He and the Bloc Québécois, as representatives of the coalition or consensus in Quebec, said that money was needed immediately. The government decided to do an about-face, accept the recommendation and hold a vote on it immediately.

But the Premier of Quebec, the Bloc Québécois, the people of Quebec, the labour congresses, the forestry sector and industries are saying that more money is needed. This is what remains to be done. More money must be allocated in the coming days, out of this year's surplus.

I will close there. There many other measures in the budget and, overall, a good number of recommendations by the Bloc Québécois were included. However, some are still missing. We will continue the debate and fight for our proposals. We hope that at budget time, the budget will reflect the consultations that we held with Quebeckers. If the budget does not include what it should, we will vote against it. We are prepared to go to the polls if need be. We have presented what Quebec would like. We now have proof that our numbers have the blessing of the Standing Committee on Finance, which flies in the face of the irresponsible comments made by the Conservative members from Quebec.