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House of Commons Hansard #68 of the 39th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was finance.

Topics

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:20 p.m.

NDP

Peter Stoffer NDP Sackville—Eastern Shore, NS

Mr. Speaker, I listened to the hon. member discuss the feud between the federal Conservative Party and the Ontario Liberal Party. I must say that he is right about one thing. This fighting between the federal finance minister and the Ontario minister simply does not help anybody. We in Nova Scotia know exactly what happened with the Atlantic accord. We know what happened with Danny Williams in Newfoundland and Labrador. This type of fighting is simply not good.

I want to ask the hon. member a very simple question. He has had two weeks in his riding. I would like to know what his constituents have told him about the infighting that is happening at this level. What do the people of Ontario, especially those in his riding, think about this personal infighting?

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:20 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Mr. Speaker, the infighting is really quite amazing. One can think back to a couple of budgets ago, when the finance minister said that this “long, tiring, unproductive era” of federal-provincial bickering was at an end. The example of this virulent attack on the McGuinty government, plus the examples my hon. friend raised about Nova Scotia and Newfoundland and Labrador, suggest that the level of federal-provincial bickering or fighting or federal attacks is probably greater than at any time since at least the 1930s.

In answer to his direct question, yes, I have been in my riding for the last couple of weeks, and people are flabbergasted. They do not understand, particularly at a moment when manufacturing jobs are at risk and when people feel insecurity looking forward, why their governments are fighting like this rather than working together to do something positive and helpful for the people of Ontario.

My constituents are totally taken aback. They are totally opposed to this fighting spirit on the part of our finance minister, who does not seem to understand that investors actually listen to him and that this may cause investors not to come to Canada or Ontario.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:25 p.m.

Liberal

John McKay Liberal Scarborough—Guildwood, ON

Mr. Speaker, I agree wholeheartedly with the sentiments expressed by my colleague. The simple facts are that the finance minister left Ontario with a $5.6 billion deficit, that he is the biggest-spending finance minister in the history of Canada, that he has ramped up spending by over 14%, and that we are facing some economic turmoil, largely generated from the south. What was a $14 billion surplus is now down to something less than $2 billion. In government terms, that is just simply a rounding error.

First, I want to ask the hon. member whether he is concerned about this near deficit that the finance minister has been able to get us to. Second, I would like him to comment on the budget speech in 2007, which stated, “The actions taken in Budget 2007 will restore fiscal balance through long-term, fair and predictable transfers”.

“The long, tiring, unproductive era of bickering between provincial and federal governments is over”: does the hon. member think that is true?

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:25 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

What great questions by my colleague, Mr. Speaker.

As I said earlier in response to another member, far from this unproductive bickering being over, I would guess that it is at its highest level since the 1930s.

With respect to my colleague's first question, never in the history of Canada has a new government inherited such a huge surplus. Never in the history of Canada has a new government squandered such a surplus with such speed so as to bring this country to the edge of deficit.

We cleaned up the $42 billion Conservative deficit which Liberals inherited in 1993 and put that into surplus. We left the Conservatives a huge surplus. They squandered it in two short years.

But this is not terribly surprising. Let us ask ourselves this question. Before the current Prime Minister inherited these huge Liberal surpluses, when was the last time any Conservative prime minister of Canada actually balanced the books, even in one single year? I will give members a hint. It was not Brian Mulroney. It was not Kim Campbell. It was not John Diefenbaker. It was not even R.B. Bennett. No. We have to go back to 1912, the year the Titanic sank, when Sir Robert Borden was prime minister. That was the last time the Conservatives actually balanced the books.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:25 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Mr. Speaker, I was very interested in the comments by the previous Liberal member, who called $2 billion a rounding error. I thought that was really remarkable. I will be sure to use that in the next election campaign.

I do want to question the member. I am astounded by comments he made about how we have whittled down the surplus so that it is razor thin now. Why in the world is the Liberal Party against giving Canadians back their hard-earned tax dollars?

We have increased investment in health care. The Liberals have adequately pointed that out. We have increased investment in education. We have increased transfers to every single province. We have provided more support for families.

We have been there, but we have also reduced taxes, and we brought that surplus down. We have paid down record amounts of debt. There should not be a massive surplus in Canada because it is Canadians' money. It is not Liberal money. It is not Conservative money. It is not government money. It is the money of Canadians. A multi-billion dollar surplus is not needed. It is not good for families. It is not good for business. I do not know why the member does not understand that. Perhaps he could enlighten us.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:30 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

The hon. member for Markham--Unionville will note that there is one minute left.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:30 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Mr. Speaker, with all due respect, the hon. member is spouting nonsense. When a government inherits a $13 billion surplus, it is difficult not to do some spending or make some tax cuts because that government is starting from such a wonderful vantage point.

However, the point is that if a government does too much, it brings the country to a deficit within a very short space of time. If something should go wrong somehow, this country will return to deficit. That is the risk at which the government has put Canadians. Canadians suffered much and laboured hard and long to get rid of that Conservative deficit, and now in two short years the Conservative Party, the government, is bringing Canada back to the brink of a deficit.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:30 p.m.

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, I am happy to share my time with the Minister of Finance.

Today's motion is a pretty transparent and desperate attempt by an increasingly irrelevant federal Liberal Party of Canada to involve itself in what has been, pushing aside all the expected partisan sniping, a largely substantive policy argument surrounding the question of how Canada and our provinces should react to global market volatility in order to stimulate and maintain economic growth.

Clearly there are two differing viewpoints on this substantive matter, and both are being publicly discussed and debated.

When we consider some of the more trivial matters occupying public discourse, to some degree a debate like this is quite refreshing. We should, and I will today, take this opportunity to build some substantive policy issues directly related to improving Canada's, indeed, Ontario's, economic prosperity, sales tax harmonization and the modernization of Canada's security regulatory framework.

Moreover, both of those issues are instances where cooperation between the federal and provincial government is essential to move them forward.

First, I will begin by examining the need for an improved security regulation in Canada and our government's efforts to facilitate this change. We have a strong financial services sector in Canada, a sector that has a presence throughout the country and it has increasingly become a source of new, high quality, high paying jobs for Canadians.

This is especially true and important for Ontario where, as a recent Statistics Canada survey has pointed out, these new jobs are offsetting job losses in other sectors like manufacturing. For instance, Toronto's financial service sector has seen strong annual employment growth of approximately 2.5% in recent years, a trend most would like to see continue.

In Burlington, for example, my home riding, financial services is one of the four key sectors. We have a number of organizations from banks to mutual fund companies with head offices and back offices in Burlington providing all types of financial services to Canadians. That sector, in Burlington alone, employs 4,000 Burlingtonians.

We have a capital markets regulatory system that can be improved. Canada is the only industrialized country without a common securities regulator. It relies on what most impartial observers would describe as a cumbersome and fragmented system of separate provincial and territorial regulators who lack the proper tools of enforcement.

Indeed, there are 13 securities regulators with 13 sets of laws, however harmonized under a passport system, with 13 sets of fees, a system that also lacks critical national coordination of enforcement activities.

The overwhelming majority of market participants, business and labour organizations, economists and academics, international bodies, and even a former Liberal finance minister have been clear and consistent. We must improve Canada's securities regulation framework. The following are their comments.

The Canadian Union of Public Employees says:

...Canadians have been embarrassed and frankly appalled that regulation and enforcement of securities crime in Canada is so weak....

The IMF says:

Canada is currently the only G-7 country without a common securities regulator, and Canada's investors deserve better.

The Financial Post, on August 2007, had a survey which said:

It's loud and clear that [business leaders] want [a single] securities regulator....

The Investment Industry Association of Canada said:

Virtually everyone now recognizes that the existing multiple-regulatory system is badly flawed and in need of repair.

A Montreal Gazette editorial reads:

...a single Canadian securities regulator...would be more efficient in preventing or prosecuting frauds...than today's 13 provincial and territorial financial watchdogs.

The Liberal member for Wascana, who briefly served as the federal finance minister, said:

...we need to substantially improve our [fractured regulatory] system in Canada.

...the issue is real. The issue is urgent.

The Bankers Association said:

The cost and regulatory burden of a business having to file in up to 13 jurisdictions is a disincentive for foreign investors.

Finally, a Toronto Star editorial states:

Canada needs a single...securities regulator...Corporate Canada knows it. Investors know it.

To address these concerns, our federal minister has strongly advocated the need for a common securities regulator, the benefits of which are widely recognized and acknowledged.

First, a common regulator would strengthen both regulatory and criminal enforcement by forcing accountability, improving allocation of resources and ensuring consistent sanctions and enforcement are priorities.

Second, it would cut the red tape and reduce costs for investors participating in the markets.

Third, by ensuring efficient markets it would promote investment and stimulate productivity, growth and jobs.

Fourth, it would give all provinces more influence than now exists, where Ontario is the de facto regulator of securities in Canada, regulating over 80% of all activity.

One might assume that Ontario's government would be in opposition to the common securities regulator. Nothing could be further from the truth. Ontario's Liberal government and the federal government have been strongly allied on this issue, even establishing the influential Crawford panel in 2005 that proposed a move to a common securities regulator nationally.

We are thankful that Ontario has been a strong advocate of this change. We are very appreciative of the strong support of members of the Liberal provincial government, such as Gerry Phillips, an Ontario provincial remember who has worked to convince other provinces of the benefits of a common securities regulator and who publicly expressed his support and said:

We believe it is the right thing for Canada to have a common body of securities law, a single fee structure and a common securities regulator.

In this instance, our two governments are both actively complementing each other in pursuit of a common objective. We hope that other provincial and territorial governments will join us.

To that end, we have recently established an expert panel to provide advice on how to best move forward on developing a model common securities act. The expert panel, chaired by former federal minister of state for finance and the former president of the Investment Funds Institute of Canada, the hon. Tom Hockin, will offer independent advice and recommendations to the ministers, both federally, provincially and in the territories on the most efficient and effective way to go forward.

Improved securities regulation will not only create an advantage in global capital markets, but a prosperous economy benefiting all provinces and territories.

I will briefly examine the merits of sales tax harmonization. As this House may recall, our government, as outlined in Advantage Canada, budget 2007, the fall 2007 economic statement and budget 2008, has detailed the benefits of harmonization. It has been well established that provincial retail sales taxes deter business investment and, as such, are an impediment to Canada's productivity and competitiveness. This is especially relevant in Ontario's struggling manufacturing sector.

As Perrin Beatty, president and chief executive of the Canadian Chamber of Commerce, recently indicated:

The impact if...Ontario were to harmonize with the GST would be hundreds of millions of dollars of tax competitiveness in the province at a time when the manufacturing sector in particular is so badly squeezed. This would have been a major shot in the arm for the Canadian economy.

Ian Howcroft, of the Canadian Manufacturers and Exporters of Ontario, has also noted that a harmonized tax would help manufacturers immensely by harmonizing the provincial tax on business inputs, saving production costs and hours of paperwork stemming from filing taxes twice. He said:

It would alleviate a lot of the administrative challenges and the duplication of costs. It would be a great reliever of administrative and ultimately financial burdens for manufacturers.

This is little wonder as, I am sure the House will recall, the federal finance minister publicly suggested that Ontario should take steps toward harmonizing the province's retail sales taxes with the GST or, at the very least, transition the province's retail sales tax to value added tax.

I would hope that through my remarks I have shown that while our federal Conservative government may have significant policy differences with its provincial counterparts in Ontario on certain economic matters--

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:40 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

It is with regret that I must interrupt the hon. member. We will now have questions and comments. The hon. member for Lac-Saint-Louis has the floor.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:40 p.m.

Liberal

Francis Scarpaleggia Liberal Lac-Saint-Louis, QC

Mr. Speaker, I thank the hon. member for his speech but it sounds like the speech that should have been given for the Bloc opposition day on the national securities regulator.

I understand that the government rarely takes any public initiative without significant polling and strategizing, so I would like to ask the hon. member what the goal of the finance minister's series of sorties against the Government of Ontario was.

Given the words of Michael Bliss, the great Canadian historian, who said that the finance minister's attitude toward Ontario was a marked departure from historical non-federal government involvement in provincial financial affairs, does the member believe that the finance minister will now start a policy of commenting on all provincial budgets?

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:40 p.m.

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, I would like to point out to the hon. member that I do not recall them standing, complaining or commenting when every other provincial finance minister commented previous to our budgets the last number of years about what they would like to see from the federal budget. When it came to the lead up time for us developing what we wanted to see for this country, it seemed to be fine for the provincial finance ministers to be commenting.

In my view there is no reason that the federal finance minister cannot comment on what the provinces should be doing for this country and the provinces to have a more productive economy.

The facts are that a few days after the provincial budget came out we announced the community development trust, with $358 million to Ontario; the public transit capital trust fund, with $195 million to Ontario; and, of course, the police officer recruitment fund of $156 million.

We are working with Ontario and with every province to make this country a better place to live and to improve the quality--

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:40 p.m.

Conservative

The Acting Speaker Conservative Royal Galipeau

Questions and comments. The hon. member for Western Arctic.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:40 p.m.

NDP

Dennis Bevington NDP Western Arctic, NT

Mr. Speaker, I thank my hon. colleague for his elucidation of the issues of regulatory process in this country. It was something that I had heard before but it was well done.

I would like to get back to the finance minister's comments in the last while about corporate taxation. In my territory, we went through a process once of cutting corporate taxes or raising corporate taxes but we found that this would attract corporations to file in the particular province or territory with the lowest tax rate. We saw that a competition developed among the provinces, a spiraling downward of the corporate tax rate, as they each bid to keep their corporations filing in their own region.

Does my colleague think it is appropriate for Ontario to continue this practice? If we see Ontario cutting the corporate taxes, what will that do to all the other provinces and territories that will need to follow suit?

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:45 p.m.

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, I am very proud of this government's $21 billion in tax cuts since 2006. I think the member makes our point. The federal finance minister told the finance minister of Ontario that other provinces were way ahead of Ontario in terms of their corporate tax rate. He told the finance minister that if he wanted to save manufacturing jobs in his province that he should look at the corporate tax rate. He asked him to at least stay on the same playing field as his other provincial counterparts who have taken the lead and have actually done something for their manufacturing sector. I think it was only appropriate and the right thing for our finance minister to point that out before that budget was presented.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:45 p.m.

Whitby—Oshawa Ontario

Conservative

Jim Flaherty ConservativeMinister of Finance

Mr. Speaker, the poet Robert Louis Stevenson once wrote that, “We are all travelers in the wilderness of the world, and the best that we can find in our travels is an honest friend”.

An honest friend does not tell us what we want to hear, but what we need to hear. The truth is that Ontario is facing some major challenges.

The combined forces of global economic volatility, a U.S. economy showing ever-increasing strains, a weakening U.S. dollar, a dramatically higher Canadian dollar, along with fierce competition from emerging markets like China and India, and high energy prices are hurting important sectors of Ontario's economy.

Even as Canada's overall economic fundamentals remain solid, our national economic engine is in danger of stalling.

While Canada experiences the second longest period of economic expansion in our history, Ontario's share of the national nominal GDP has actually fallen from 41.4% in 2002 to 38.6% in 2006.

While Canadian business investment has expanded for 12 consecutive years, Ontario's economic growth has fallen below the national average recently due to weaker growth in exports and business investment.

While Canada's national unemployment rate is at its lowest level in 33 years with more Canadians working than ever before, for the first time ever Ontario's unemployment rate was above the national average in 2007.

While Canada is on the best fiscal footing of the major western industrialized countries and is the only member of the G-7 with both ongoing budget surpluses and a falling debt burden, Ontario struggles ranking 15th out of 16 in GDP per capita growth when compared to the most populous provinces and U.S. states in North America.

The facts are clear. Ontario's economy is losing ground to the rest of Canada. As Ontario's economy loses ground, the province moves closer and closer to falling below the equalization standard that determines have and have not provinces in Confederation.

This trend is troubling. In 2005-06, Ontario was around $400 above the standard. In 2006-07, $300 above. In 2007-08, $250 above. In 2008-09, only $85 above the standard. If this decline continues, Ontario will, for the first time in the history of the program, receive equalization payments.

Economists such as Don Drummond of TD Bank Financial and Dale Orr of Global Insight are now suggesting this is a distinct possibility. Should that occur it would have serious ramifications for all of Canada and its equalization framework. But the real concerns are the faces behind all of these facts and figures, the people who own Ontario's businesses, and the workers and families that they employ.

We know what prolonged economic weakness may mean to them. It may mean that businesses will not need as many employees, cutting a shift or laying off some employees, or even worse, it may mean businesses closing altogether. Ensuring the province's long term prosperity is what has motivated our concern about Ontario's economic vitality.

As Canada's finance minister, when Ontario's economy lags, I am compelled to react, not simply because of the possible ramifications on the federal equalization system but because the province is simply too important to Canada's economy.

While we cannot do anything about the rising price of oil or the weak U.S. dollar, action can be taken to create a business climate where innovators, entrepreneurs and risk takers can flourish. Ontario can no longer rely on a low Canadian dollar to give our industry a discount over international markets.

More than ever, we need to upgrade our manufacturing plants, equipment and public infrastructure as we work to close our productivity gap with the United States.

Our Conservative government is taking action in response through our long term economic plan “Advantage Canada”. We are making a historic $33 billion investment in infrastructure along with significant investments in education and research.

We are supporting communities affected by major economic downturns through a $1 billion community development trust, a $250 million automotive innovation fund, and an accelerated capital cost allowance for the manufacturing and processing sector.

We are providing historic tax relief. We are cutting taxes in every way the federal government collects them: personal, consumption, business and excise taxes. We have reduced the overall tax burden to its lowest level in nearly 50 years. Since coming to office we have reduced the overall tax burden by nearly $200 billion.

In anticipation of increased economic volatility, we took decisive and aggressive action in our fall 2007 economic statement by providing $60 billion in broad-based tax relief to stimulate the Canadian economy.

Indeed, the actions this Conservative government has taken since 2006 will provide $21 billion in incremental tax relief, which is equivalent to 1.4% of Canada's economy, to Canadians and Canadian businesses this year.

Our low business taxes will be a powerful brand for Canada globally. That is why our government has cut business taxes deeper and faster than ever contemplated before, including reducing corporate taxes to 15% by 2012, eliminating the federal capital tax, eliminating the corporate surtax in 2008, providing tax relief to our manufacturing sector, and providing incentives to the provinces to eliminate their capital taxes.

As a result of our actions Canada's corporate taxes will become among the lowest in major industrialized economies.

As an international KPMG study release last week indicated, these business tax reductions have been instrumental in helping Canadian industry adjust to the rise in the Canadian dollar. But we cannot do it alone. We need the provincial governments to step up to the plate and follow suit.

As the Canadian Council of Chief Executives has recently stated:

The federal government clearly has done everything it can to reduce tax rates within the boundaries of prudent fiscal management. The next major steps in forging a more competitive corporate tax system must come at the provincial level.

This is especially true of Ontario. A growing chorus of voices have been calling for the province to lower its excessively high business taxes. Business taxes in Ontario are currently the highest in Canada. If no action is taken, Ontario's marginal effective tax rate, the overall tax rate on new business investment, will be 30.7% in 2012 compared to only 18.8% in Quebec.

We are not the only ones saying this. This is being echoed by leading economists in Canada. In fact, it is echoed by the Ontario government's own task force on competitiveness which said:

Ontario’s tax regime is one of the least conducive to business investment in the developed world.

We are asking all provinces, not only Ontario, to recognize the long term benefits of tax relief. We cut taxes to attract investment, to create jobs, and to help sharpens Canada's competitive edge internationally.

Even the federal leader of the Liberal Party understands that saying, “A lower corporate tax rate is a powerful weapon...to generate more investment, higher living standards and better jobs”.

We applaud the governments of Manitoba, British Columbia, Quebec, Saskatchewan and New Brunswick for their recent efforts to lower taxes.

We set out three requests to the Government of Ontario: lower the business taxes overall, move toward harmonization of PST and GST, and eliminate the capital taxes with respect to which we provided an incentive.

I applaud Ontario for taking advantage of the incentive with respect to capital taxes which is a step forward that will fully eliminate the provincial capital taxes in Ontario in 2010, but there is much more to be done on the overall business tax rate in Ontario and particularly with respect to the harmonization issue for the benefit of businesses, small, medium and large, in Ontario.

Again, we stand ready and willing, in the spirit of open federalism, to work with Ontario and all provinces and territories to build a more efficient, more prosperous and wealthier economic union for all Canadians.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:55 p.m.

Liberal

Alan Tonks Liberal York South—Weston, ON

Mr. Speaker, I was rather amused that the finance minister quoted Robert Louis Stevenson, who came to the conclusion that what one needed in life was an honest friend.

I am not sure whether the finance minister is aware that he came to that conclusion on the basis of questions that he was asking himself: where he had been; where he was; and where he would like to go? He went to a book that was written by a priest in the sixteenth century who underwent the same sense of where do we go and how do we do it, and had chosen to walk across Spain with a donkey. He came to the conclusion that the honest friend was a donkey.

I know the finance minister in the House shares a huge respect for donkeys because they have a great sense of direction and a great spirit.

The minister will be aware that the former finance minister of Ontario, Mr. Sobara, had indicated that he felt that the province of Ontario was paying greater portion on equalization.

The member for Burlington has indicated that he is prepared to look at the harmonization of PST and GST. Is the minister serious when he talked about looking at equalization in terms of fairness and equity, and where does he propose to go--

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:55 p.m.

Conservative

The Acting Speaker Conservative Andrew Scheer

The hon. Minister of Finance.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:55 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

Mr. Speaker, it is true that there have been some fairly sharp exchanges between the premier of Ontario and myself in the past several weeks concerning fiscal and business policy, but I have restrained from calling the premier of Ontario a donkey, unlike the member for York South—Weston.

In terms of fiscal planning and equalization in Canada, it is important that Ontario, as Canada's primary manufacturing economic engine, maintains a GDP per capita that reflects the underlying strength of the Ontario economy.

However, fiscal planning makes a difference, and this is certainly one of the points that we have been trying to advance with the current government of the province of Ontario, which after all is at the beginning of a mandate. High business taxes deter investment. They discourage investment. This is particularly so when provinces that are in competition with Ontario have gone ahead and moved toward lower taxes.

Again, we are encouraging Ontario to strive to remain an economic engine in Canada.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

12:55 p.m.

NDP

Peter Stoffer NDP Sackville—Eastern Shore, NS

Mr. Speaker, I am always surprised when Conservatives pop up and tell us how fiscally accountable they are.

Just over the past week in Nova Scotia and Prince Edward Island the government gave $44,000 to an ATV club. Then it went to a private golf course on Cape Breton, run by a fellow who moved here, a private champion golf course for people with millions of dollars, and we have many golf courses already in Nova Scotia. The government said, “Here is $750,000 of taxpayers' money. Enjoy”. I remember when Conservatives used to frown upon that.

However, the reality is that we have many veterans. A report came out today indicating the number of veterans and their families who are suffering because of a lack of funds and resources available to DND and VAC to help them.

How can the finance minister stand in his place and try to be in any way responsible for taxpayers' money when he sprinkles pixie dust like this around without being responsible for where the money should be going--

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1 p.m.

Conservative

The Acting Speaker Conservative Andrew Scheer

The hon. Minister of Finance.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1 p.m.

Conservative

Jim Flaherty Conservative Whitby—Oshawa, ON

Mr. Speaker, I hear the hon. member's statements. I note also that this is the same hon. member who has voted against every bill in favour of veterans and every bill in favour of defence on which he has had the opportunity to vote on as a member of this place.

I gather now that he will be voting against any allocations for ACOA to provide help for the needs and certainly the infrastructure needs of Atlantic Canada as an important part of Canada's economic future.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1 p.m.

Bloc

Paule Brunelle Bloc Trois-Rivières, QC

Mr. Speaker, I am pleased to speak today to this Liberal Party motion. I will focus on the second part of the motion, which reads:

That this House...calls upon the Government of Canada to work cooperatively with the governments of all provinces and territories to assure that the prosperity and well-being of Canadians is maintained and enhanced.

That is the big problem: this government pays very little attention to prosperity and, in an economic context where clouds are forming on the horizon, this government refuses to do anything about it. Laissez-faire is this government's leitmotif.

We have just gone through two budgets: one in Ottawa and one in Quebec City. In Quebec City, the finance minister had difficulty maintaining a balanced budget. In Ottawa, the Minister of Finance had to expand his coffers to accommodate all his budgetary surpluses. These two budgets illustrate once again the striking contrast between the situations of the two governments: the money is still in Ottawa. Nonetheless, the difficult economic situation we have been facing for the past few years forces all governments to act and react and, in short, to be visionaries.

We are dealing with a major crisis in the forestry and manufacturing industries. The spike in the dollar, which did not leave the companies with enough time to adjust, the price of oil, which increases the cost of production, and the financial crisis in the United States are other factors that should call the government to action. Unfortunately, we are dealing with an outdated Conservative government.

As Alain Dubuc wrote in a column on the budget, “this lack of vision can be explained by the conservative philosophy of the Harper government, which does not believe in the role of the state and avoids economic intervention like the plague. It is an outdated conservatism—

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1 p.m.

Conservative

The Acting Speaker Conservative Andrew Scheer

Order, please. I remind the member that we do not refer to other members by their given names, but by their title or riding. I heard the Prime Minister's name. I would ask the member to refrain from doing so.

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1 p.m.

Bloc

Paule Brunelle Bloc Trois-Rivières, QC

I apologize, Mr. Speaker. I was quoting an article that mentioned the Prime Minister's name. I withdraw my comments.

As I was saying, “It is an outdated conservatism that is not found anywhere else in the west.” That is well stated and it is true. When the economy hits a wall due to circumstances that are short-term and structural, it is the responsibility of the governments to intervene.

Two weeks ago, an organization that is known for its restrictive policies, the International Monetary Fund, encouraged countries to increase spending. We agree.

The government has a duty to intervene, which the Conservatives are not doing. Their industrial policy is nothing but magical thinking. For example, they have not announced a program to help companies modernize, nor have they announced an industrial research support program. Even worse, they cut Technology Partnerships Canada, the main industrial research program. For the aeronautics industry, the new program is more generous than before this government came into power. As for the other leading-edge sectors, such as pharmaceuticals, expanding environmental technologies, new materials or production technologies, they have been left to their own devices.

When an industrial sector is in danger of collapsing because of an increase in imports, Ottawa systematically refuses to establish safeguards to give the industry time to adapt. And when the government makes purchases, it does so without any thought of the economic impact. Every time the Conservatives are criticized for their inaction, they invariably point out that they have lowered taxes. But, in 2006 the manufacturing sector in Quebec made zero profit, and a business that makes no profit pays no taxes. So much for a business support measure.

In the February 2007 report on the manufacturing industry, the members of the Standing Committee on Industry, Science and Technology were unanimous when they said we need to act. All of the members, including the Conservative members, recognized that the manufacturing sector is in crisis, that all sectors of the industry have been affected, that the government's inaction is not a response and that industry needs to be much better supported through tax measures, budget measures, trade actions and structural investments.

It is more than a year later, and the government has yet to hear the cry for help. Of the 22 unanimous recommendations made by the Standing Committee on Industry, Science and Technology, the government has implemented only one—a tax reduction for businesses who invest in the form of an accelerated capital cost allowance. This is another tax reduction.

We believe that in order to achieve prosperity, for example, which is at the core of this motion, we must focus on research and development, which require support from all levels of government.

The Quebec government did so in the past, under Bernard Landry and what he called the technological conversion or shift. While Quebec was going through a very serious economic crisis, Landry's team established a new economic policy focused on building Quebec. Partnership with the private sector is the guiding principle that will allow the government to promote the development of new technologies.

Quebec's current technological edge compared to other western economies suggests that interventionism, in partnership with the private sector, creates wealth and knowledge. All that is working. Thus, it is crucial that the risks be shared by the government and knowledge-based businesses in order to develop a modern, diversified economy. The countries that are most successful in this area know this.

The federal government, however, continues to adopt a laissez-faire attitude that is counterproductive for Quebec. Until Quebec is equipped with every economic lever, the Bloc Québécois will defend in this House Quebec's decision to provide an environment that is competitive and advantageous for its businesses.

The federal government, however, guided by its right-wing ideology, does not want to become involved in economic development. The laissez-faire attitude is the Conservatives' solution to all economic problems, and we see this again with the recent Minister of Industry. However, the knowledge-based economy needs support from the government to develop, evolve, break into new markets and deal with competition from countries that do support their industry.

Many governments have understood that. The Conservatives rely on the free market when the true reality of the market is that our competitors are benefiting from government assistance. Doing nothing might work for the cities of Edmonton and Calgary, but for Montreal it puts the brakes on development. Just because the rest of Canada is becoming wealthier from oil production does not mean that Quebec should pay the price.

The federal government is not a reliable partner for Quebec when it comes to funding research and development. The federal government's share of research and development funding has dropped in the past 30 years. In 1971, the federal government covered 45% of research and development spending in Canada. In 2003, it covered just 18.7%. Without Quebec, Canada would be devoting just 1.4% of its GDP to research and development, which is slightly more than the Czech Republic. Canada ranks 13th in OECD countries and fifth out of the seven G-7 countries. As a sovereign country, Quebec would be above average and rank fifth among the 30 OECD member countries. Only Sweden, Finland, Japan and Iceland make a greater effort.

Ottawa is not a reliable partner for Quebec. High-tech industries are experiencing great uncertainty and Quebec's economy is suffering the consequences far more than Canada's economy. To prosper, we must build on our strengths. The aerospace industry is one of our strengths. The Conservative government does not really have an aerospace policy and it has no intention of developing one. The striking example of this dogmatic laissez-faire attitude is the lack of respect toward Quebec in federal contracts awarded to an American company, Boeing, for military transport aircraft. What is more, the Conservatives have made it clear they would do the same thing in the future.

Depending on the year, Quebec's aerospace industry represents 55% or 60% of Canada's aerospace industry. It would only be normal for Quebec to get its fair share of the spinoffs from the federal aerospace contracts. In our opinion, Quebec's fair share is somewhere between 55% and 60%. The total amount of spinoffs from the military aerospace contracts is $9.2 billion. Unfortunately, because Ottawa lets American companies decide the fate of the aerospace industry, Quebec will not be getting its fair share.

Nevertheless, Quebec is the aerospace leader in Canada with $11 billion in deliveries, the majority of which, or 89%, are exports. I would like to point out again that Quebec is the leader in this industry in Canada. Calling on the federal government to recognize this Quebec economic reality is not asking for charity.

We feel that this is an attempt to weaken the foundation of the Quebec economy at a very critical time. Overly dependent on pumping their revenue from the ground, the Conservatives can see no other way of creating wealth. For the Conservatives, finding oil in Quebec is the way to make it wealthy. However, in Quebec, we believe that wealth is the product of creativity and competence. Quebec's economy is different from that of Canada and the government should recognize this fact.

We believe that contributing to Quebec's wealth requires that the federal government change its bad procurement policies, that it stop abandoning the aerospace industry and that it put in place a true aerospace policy. If the federal government does not understand the interests of the Quebec economy, then it should hand over the money to the Government of Quebec. It would thus be saying, loud and clear, that Quebec is a nation and its actions would support this statement.

Another means of increasing prosperity is to invest in education. We believe it is very urgent that transfer payments for post-secondary education be increased. Some believe that there is no longer a fiscal imbalance because federal transfers have increased a great deal. However, the reality is that, in comparison to federal revenue, transfers are lower than they were in 1995. For every dollar of federal revenue, 7.3¢ were transferred in 1995 compared to only 6.2¢ in 2007. This is especially true for education transfers, which need $3.5 billion to return to 1995 levels, or $817 million for Quebec.

All Quebeckers agree that there is a need for increased transfers for post-secondary education. Everyone in Quebec—employers and unions, people on both the left and the right—is aware that education must be a national priority. The National Assembly is unanimous about the need to increase federal transfers. The only elected members who disagree or are indifferent are the federal members of the Canadian parties from Quebec. There are 200 elected members from Quebec: 125 in the National Assembly and 75 in the House of Commons. The 125 members of the National Assembly plus the 48 Bloc members make 173 elected members calling for an increase in education transfers. Only 27 members are opposed or indifferent.

We need to find $817 million for post-secondary education for Quebec. This is crucial for Quebec. We have many universities, ENAP, the École de technologie supérieure, university hospitals and CEGEPs. We know that the future lies in post-secondary education. We know that the future of our companies and the success of our economy depend on qualified personnel.

These transfers must be injected into the economy every year. For us, investment in education is a long-term investment.

Another key to prosperity is to bank on the environment. Everyone—the National Assembly, employers, unions, environmentalists and ordinary citizens—wants the Kyoto protocol to be implemented. For years, we have been saying that Quebec needs to reduce its dependence on oil. All societies will have to come to this point sooner or later, because oil is a non-renewable resource. One day there will be no more oil. So why not take the lead and give ourselves a huge strategic advantage for the future? Because, unfortunately, we are dealing with a Conservative government that is a servant of the oil industry.

The plan the Minister of the Environment introduced a few weeks ago goes completely against Quebec's economic interests. Not only does it not recognize Quebec's past efforts, but it saddles us with a burden that should be borne by the oil and gas industry. The Harper government's plan means that Quebec is paying for others' pollution. It is the antithesis of the Kyoto protocol. Allow me to explain. The goal of the Kyoto protocol is to reduce greenhouse gas emissions. The goal of the Harper government is to let the oil companies increase emissions, but with greater intensity, which means that if the oil companies increase their emissions—

Opposition Motion—The EconomyBusiness of SupplyGovernment Orders

1:15 p.m.

Conservative

The Acting Speaker Conservative Andrew Scheer

Order, please. I heard the Prime Minister's name again. I would remind the hon. member for Trois-Rivières to use the name of the riding or the member's title, and not the member's name.