Mr. Speaker, at the outset I want to note that I will be sharing my time with the member for Simcoe North who is obviously working extremely hard on behalf of his constituents and is one of the brightest and best of the new members we have here in the House of Commons. I am proud to be sharing my time with him.
I find it interesting, listening to the speech and responses to questions from the member for Richmond Hill, when he speaks about accountability, finance and his concerns around the province of Ontario and about the financial affairs of the country, when in fact today he stood in his place along with his Liberal colleagues and could not have cheered more loudly to welcome the member for Toronto Centre, the former premier of the province of Ontario.
The very issue we are talking about today he brought in year after year after year the highest deficits that the province of Ontario faced in its history. So the member stood today and gave a speech and tried to lecture members on this side. There are a few members on his side of the House, including the former finance minister of the Liberal Party, who can listen a little bit to the words of encouragement he was giving because they certainly apply most emphatically to the former NDP premier of the province of Ontario.
We have in front of us a motion moved by the member for Markham—Unionville which talks about working with the province of Ontario. I did a bit of research on that and I want to bring a few things to light.
Ingenuity and an industrious mindset allowed the province of Ontario to remain the engine of the Canadian economy. Ontario is a land of opportunity with a promise of prosperity so alluring that it has drawn, and continues to draw, people from every corner of our globe.
The province's vitality is not defined by its politicians, whether provincial, federal or municipal, but by the determination of its residents to build an ever more prosperous community. It is a community that includes global leaders in science, technology, research, development, manufacturing and processing, culture and finance. Quite frankly, the list goes on.
Those leaders are backed by the most hard-working, innovative and creative workforce in the industrialized world. Make no mistake, this government and this finance minister have absolute confidence in Ontario's ability to succeed, not just here in our country but in the world. But we cannot ignore the reality that Ontario's economy faces challenges.
The global economic volatility threatens to install Canada's economic engine. Ontario has been severely challenged by a weakening U.S. economy, soaring energy prices, increased competition from emerging markets like China and India, and a strong Canadian dollar. Its situation stands in sharp contrast to a Canadian economy which has remained largely healthy.
In the midst of the second longest period of economic expansion in Canadian history, Ontario's share of the national nominal GDP has dropped from 41.4% in 2002 to 38.6% in 2006. Nationally, business investment has been on the rise for more than a decade and Ontario has fallen below the national average.
The national unemployment rate is at its lowest in 33 years, but for the first time ever in 2007 Ontario's unemployment rate rose above the national average. Private sector economists have echoed these concerns noting that the Ontario standard of living may fall below the Canadian average and make it a have not province.
Jack Mintz has stated, “Ontario is facing a major challenge...its per-capita GDP has already tracked down to be close to the national average”. Don Drummond warns that Ontario's falling GDP growth “does suggest that it is getting closer to being an equalization recipient”.
While factors outside the control of governments are significant contributors to Ontario's woes, there are partial solutions available to them.
For instance, our government is cutting business taxes deeper and faster than ever before. We are reducing corporate taxes to 15% by 2012. We have eliminated the federal capital tax. We are eliminating the corporate surtax in this fiscal year, 2008. We are providing targeted tax relief to the manufacturing sector through an accelerate writeoff for new equipment, not 8 or 10 or 15 years, but 2 or 3 years. We are providing provincial incentives to eliminate its capital tax.
As a result of our actions, Canada's corporate taxes will soon be among the lowest of the major industrialized economies.
We believe these tax reductions will provide long term, broad based support for employers. We believe this support will attract investment, create jobs and make Canadian businesses more competitive. We have called on our provinces to follow that lead. As the Canadian Council of Chief Executives recently declared:
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.
In that spirit, the federal government has been working with the provinces to brand Canada as a low-tax jurisdiction to help attract investment and jobs. We are happy to report that some provinces are responding.
We have applauded governments of all political stripes, whether they be in Manitoba, British Columbia, Quebec, Saskatchewan or New Brunswick, for their recent efforts to lower taxes. We have called on Ontario, and we will continue to call on Ontario, to follow in that path. That low-tax message must be heard there more than anywhere.
As the Ontario government's own task force on competitiveness, productivity and economic progress has found, Ontario has the highest taxation on new business investment among developed economies. If no action is taken by 2012, Ontario's marginal effective tax rate will be over 30%, one of the highest in country and well above Quebec's rate of under 19%. That high tax burden is putting additional pressures on Ontario businesses as they try to compete with businesses in provinces and in other countries.
If the member for Markham—Unionville doubts such claims as mere partisan rhetoric, I will quote verbatim from a report released by the Royal Bank of Canada earlier this year. I remind the House that the member once served as that institution's chief economist.
The RBC report stated:
Despite laudable recent initiatives by the federal government to reduce the overall rate, our corporate taxes remain high relative to other Organization for Economic Cooperation and Development (OECD) countries. This is particularly true in Ontario and newer industries (like communications and other services) relative to more traditional ones (forestry and manufacturing)....
Ontario will continue to pay the price for prohibitively high tax rates, whether it is in the form of an ongoing reduction in living standards or weaker performance in manufacturing relative to other provinces such as Quebec or a declining investment trend in the province itself....
More aggressive action is needed on reducing statutory rates to continue to move the overall tax burden down--particularly in Ontario.
The federal government has appealed to Ontario's government to take action. We ask that it begin by reducing the provincial business income tax rate with a goal of meeting a combined 25% business tax rate in this country by 2012.
We would like and we ask Ontario to make a commitment to fully eliminate capital taxes for businesses in each and every sector. We have asked Ontario to take steps toward harmonizing its retail sales tax with the ever-lowering GST or, at the very least, transitioning Ontario's retail sales tax into a value added tax.
We applaud the Ontario government's elimination of capital taxes for business. There is no question that when the province makes a right move we are going to acknowledge it and congratulate the province on it, but we simply encourage further action. By lowering the province's high business taxes, we believe Ontario's economy will be strengthened to the benefit of its businesses, its individuals and, most important, its families.
This would be especially helpful for Ontario's hard-hit manufacturing sector. As indicated by a recent survey of Ontario manufacturers conducted by the provincial Chamber of Commerce, “(R)educing corporate income taxes was identified as the most effective measure the Ontario government can undertake to improve the competitiveness of manufacturers”.
There is no question about it. The province I represent and the city that I am elected to represent, St. Catharines, both know the feeling of needing to move forward and make sure that manufacturers and industries in our community have a chance to move forward.
I simply ask that the Liberal Party of Canada join with us in recognizing that this issue is about strengthening Ontario's economy and, by extension, our Canadian economy.
It is all about the future of individuals and families who call Ontario home, a future that even the Liberal leader knows would be made brighter and more prosperous through lower business taxation.