Mr. Speaker, at the outset I would like to inform the House that I will be splitting my time with the member for Niagara West—Glanbrook.
I am not sure what the purpose of today's motion is other than some belated political theatre from the member for Markham—Unionville, something he is starting to familiarize himself with in his role of opposition finance critic, a job, I might add, that he seems to enjoy and which we on this side of the House hope he has for years to come.
To call into question as this motion does the confidence of the House in the economic vitality of the country's industrial heartland illustrates the extent of the challenges facing not only Ontario but all of Canada during this period of global economic volatility.
These challenges are significant, somewhat unprecedented and due largely to variables outside the control of government: the rapid weakening of the U.S. dollar; the softening in the U.S. economy; high energy prices; and increasing competition from emerging economies such as those of China and India.
Fortunately, Canada has resilient and innovative entrepreneurs along with an industrious workforce that has the capacity to overcome such challenges. Complemented by a Conservative government that is committed to creating a business climate where Canadians can succeed and prosper, we are confident that the challenges of today will prove merely to be the path of the opportunities of tomorrow.
To achieve such, our Conservative government is committed to working cooperatively with all provinces and territories. This is in stark contrast to the federal Liberal opposition, whose time in government was largely marred by unparalleled acrimonious relations with the provinces. From that record of unprecedented cuts to federal transfer payments to the near loss of the 1995 Quebec referendum, to the lowering of Canadian flags and the appalling and repeated denial of a fiscal imbalance, this Conservative government has absolutely nothing to learn from the official opposition when it comes to federal-provincial relations.
Our record of strong support is in deeds, not in words or empty rhetoric. I would like to take a moment to look at these deeds for the benefit of the opposition.
First, this Conservative government has brought total transfers to all provinces and territories to historic highs following the unprecedented transfer reductions introduced by the former Liberal government.
Second, budget 2007 restored fiscal balance and did so in a manner that is fair to all provinces and territories--what the Liberal leader still arrogantly dismisses as a myth. The budget strengthened federal support to the provinces by over $39 billion for shared priorities, including equalization, post-secondary education, social programs, support for children, labour market training, infrastructure, and the environment.
Provinces have also benefited from the 2007 budget's new equalization system, which returns the system to a fair and principled basis and helps ensure that all provinces have the resources to provide reasonably comparable programs and services at reasonably comparable levels of taxation.
Third, to complement these increases to equalization, we also moved to ensure that the Canada social transfer and the Canada health transfer treat all Canadians fairly by moving to equal per capita cash support, eliminating the past situation under the previous government whereby Ontario got a proportionately less than per capita transfer, something known as back door equalization.
Ontario's Liberal premier called on the former Liberal government to remedy this situation. It did not. Its solution? Deny it existed and send out the member for Markham—Unionville, the very sponsor of today's motion, to claim its provincial Liberal cousins were aiding and abetting Quebec separatists for even daring to raise the issue in 2005. It was scandalous.
In sharp contrast, this Conservative government acted in the best interests of fairness, and we resolved Ontario's concerns.
Our new equalization system responds to other concerns raised by Ontario by guaranteeing that equalization transfers are capped at the level of the lowest non-receiving province, which is Ontario. This means, in effect, that Ontario taxpayers will not be subsidizing provinces with a higher fiscal capacity than theirs. All provinces and territories are benefiting from this significantly increased, more equitable and more principles-based transfer support.
As a result of restoring fiscal balance in Ontario, Ontario will receive $13.9 billion in 2008-09, an increase of $1.4 billion from just last year, and more than $2.7 billion since 2005-06, the last year of the Liberal administration.
That does not mean our work is done.
We believe that to secure Canada's and Ontario's economic future we must become one of the most competitive business tax regimes in the world. This Conservative government has made enormous strides in this regard.
Anticipating current economic volatility, we took aggressive action in the fall of 2007 to stimulate and bolster the economy with more than $60 billion in tax cuts. We cut corporate income taxes. We cut personal income taxes. And we cut the GST, just as we promised.
Combined with prior measures, the total actions taken by this government to date are approaching $200 billion in tax cuts over this and the next five years. These actions will bring Canada's federal taxes to their lowest level in nearly half a century. In the coming year alone, we will have provided $21 billion in tax relief, roughly 1.4% of Canada's total economy.
Observers have been widespread in their praise for our Conservative government's pre-emptive action, such as BMO economic Doug Porter, who stated of the fall economic statement that:
It was brilliantly timed. Just as the economy was running into serious heavy weather...we had some serious financial stimulus.
The Institute for Policy Analysis said:
Helping offset the weakness [in Canada] will be the “fortuitous” injection of stimulus from the tax cuts and spending increases announced in the [fall economic statement].
The Conference Board of Canada said:
The Canadian economy will weather the storm of uncertainty...recent changes, such as tax reductions announced by the federal government...will maintain the momentum.
TD economist Don Drummond said that “the federal government I think has already done what it can do...it did do an awful lot of financial stimulus in its” fall economic statement, “including the one point off the GST”.
Key to our objectives for a strong business environment is the reduction of federal corporate taxes to 15% by 2012. This will make Canada's corporate income tax rate the lowest among the world's major developed economies and give Canada a substantial tax advantage over the United States.
Along with a reduction in the corporate income tax, we have also eliminated the corporate surtax for all corporations. We have eliminated the federal capital tax two years ahead of schedule. We have provided an incentive to encourage provinces to eliminate their capital taxes, which Ontario did in its most recent budget. We have reduced the small business tax rate to 11% ahead of schedule. We have increased the small business tax limit from $300,000 to $400,000. This is job-creating stuff.
This competitive tax regime will be a powerful brand for Canada globally, but we cannot do it alone. We need the provinces to follow suit, especially Ontario, the province most out of line compared with other provinces in areas that matter most.
For example, in 2012, Ontario's marginal effective tax rate will be 30.7%, one of the highest in the country and well above Quebec's marginal effective tax rate of 18.8% in 2012. That is substantial. The federal tax system accounts for only one-third of Ontario's marginal effective tax rate, with Ontario's taxes responsible for two-thirds.
For those who would question the words of a Conservative politician on this matter, I ask them to consider the words of the Province of Ontario's very own task force on competitiveness, which in 2007 reported the following:
Combining a relatively high provincial corporate income tax, a capital tax, and a sales tax on capital goods, Ontario has the highest tax rate on new business investment among the provinces...Ontario's tax regime is one of the least conducive to business investment in the developed world.
I want to repeat that. These are the words of is the province's own task force: “Ontario's tax regime is one of the least conducive to business investment in the developed world”. That is what the finance minister has been talking about.
While we want to applaud Ontario's plan to take advantage of our incentive to eliminate its capital taxes by 2010, clearly more can be done if we are to secure Ontario's competitive future.
In the spirit of open federalism, this Conservative government will work with Ontario, along with all provinces and territories, to build a more prosperous home for all. We want to build a safer, better, stronger Canada. That includes Ontario.