Debates of May 28th, 2008

Finance—Main Estimates 2008-09

[The Assistant Deputy Chair, Conservative, Andrew Scheer]

This is debate.

The hon. parliamentary secretary.

[Lynne Yelich, Conservative, Blackstrap, SK]

Mr. Chair, I want to thank the parliamentary secretary for the answer and for applauding my work. My work was not easy when we had the Liberal finance minister, who was from Saskatchewan, in power. It has been great since the Conservatives have taken over and taken power. It has been even sweeter since the NDP has been out of the province.

The finance minister has provided over $1 billion in tax relief for Canadian seniors and pensioners, including doubling the pension income credit amount to $2,000, increasing the age credit amount to $5,066 and introducing pension income splitting.

In budget 2008, he announced another important tax measure for Canadian seniors regarding life income funds for which many of my constituents have long been asking.

Could the minister, in the time remaining, please update the House on the status of these two important issues?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, in the two years or so that I have been here, this is an issue that has come up surprisingly often from members on all sides of the House.

Budget 2008 takes action in this area. We significantly enhanced the flexibility to withdraw funds from life income funds through three provisions.

First, individuals 55 or over with total holdings in federally regulated locked in funds of up to $22,450 will be able to wind up their accounts or convert them to a tax-deferred savings vehicle with no maximum withdrawal limit, effective as of May 8. I will mention the other two later.

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

Mr. Chair, I will be sharing my time with the member for Saint-Maurice—Champlain.

I would like this to be a peaceful debate. Today we learned that Quebec exports were down 6% in the first three months of 2008, compared to the first three months of 2007. The 20 groups that have gone down include newsprint, ore, iron ore concentrates, trucks, road tractors, petroleum products, coal products and wood pulp.

Could the Minister of Finance tell me what message of hope the current budget can offer when these sectors are not generating a profit and will not benefit from the tax cuts? Would it not have been better to offer refundable tax credits to enable these businesses to invest in their productivity and their equipment, and to give them a chance to retain their share of the market?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, one has reason to be optimistic about the economy of Canada and the economy of Quebec. We have the strongest economic fundamentals in the G-7. We are the only country in the G-7 that has been able to reduce taxes, run a surplus in our budgets and pay down public debt at the same time. Canada is in great shape to endure a period of economic slowness in the United States and globally, which is exactly what we are doing.

Yes, there is a time of adjustment in certain industries. I think most Canadians expect that when we have a slowdown, such as a recession in the U.S. housing industry, it is going to affect the forestry industry in Canada. A recession in the U.S. is going to affect manufacturing in Canada. It is going to affect the auto sector in Canada. The key is that we have stimulus in place to help the economy get through this and that we did it well in advance, starting in 2006, and, most important, with the fall economic statement in 2007, with dramatic business tax reductions.

The member opposite should recognize that this is a time of some economic slowness. The good news is Canada will come through it well.

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

Mr. Chair, in order to boost the economy, would it not have been much wiser to invest some of the $10 billion surplus—which was confirmed on March 31, 2008—that is, perhaps $7 billion to help the industry instead of using the entire surplus to pay down the debt, which does nothing to help businesses in need?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, the reality is we have the $1 billion fund that is being used across Canada, including in Quebec.

In terms of transfers to Quebec, we may want to talk about this program or that program, but the big picture is the increase in major federal transfers to Quebec is $4.5 billion this year. That is not $1 million or $4.5 million; it is $4.5 billion more to Quebec.

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

Mr. Chair, will the minister admit that there is no income support program for older workers? A 57 year old worker who loses his or her job and whose EI benefits run out no longer has any income security. Will the Minister of Finance admit that this Conservative Party promise was not honoured?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, there are two avenues for workers who lose their jobs, and one is retraining. We are spending a record amount for any federal government on retraining programs in Canada. It is accurate to say that any person in Canada who wishes to be retrained can get retrained and will be assisted in getting it. This is very important in a dynamic economy like Canada where there is change. For older workers there is that specific program to assist them to adjust.

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

Mr. Chair, this is the heart of the matter. Will the Minister of Finance admit that older workers cannot be retrained to work in other areas? They are unemployed and, at 57 years old, after working for a company for 30 years, they are being abandoned with no hope of receiving any income until their old age pensions.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, it is precisely for those reasons, which my hon. friend raises, that we created the fund for older workers for workers between the ages of 55 and 62.

Indeed, it was his predecessor, as finance critic for the Bloc, who advocated strongly that we do just that a couple of years ago in our discussions before the budget at that time, and we did so. I would have thought the member would have applauded that advance.

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

Mr. Chair, my predecessor and I have always said that an income security program was needed. One of the minister's colleagues said he is 58 years old and he does not have such a problem. But he has a pension fund waiting for him, and so do I. The minister is leaving these people with nothing to look forward to.

I would like to come back to another promise the minister did not keep. In December 2005, the Prime Minister promised to introduce a bill on the federal spending power. Will he introduce such a bill in this House before the summer recess? That is an official promise made by the Prime Minister in December 2005.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, the issue mentioned by my hon. friend was referred to in the Speech from the Throne. That is the comment on behalf of the government relating to the spending power.

I should clarify that I do not have a pension, and I thank the hon. member for wishing me one. In fact, I was one of the persons in the Ontario Legislature who voted to abolish that gold plated pension back in the 1990s. I have no intention of losing my seat, however, so I hope to one day be entitled to a reasonable pension in this place.

The good news is that someone who does not need a pension, Sidney Crosby, has scored again, and I am told it is 2:0 Penguins.

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

Mr. Chair, this is no laughing matter. When a 57 year old worker who spent 30 years working in the forestry industry or the manufacturing sector loses his job, there is no retirement fund available to him today and no security other than employment insurance. Could we not at least, in all fairness, use the federal government's surplus to ensure that these people have an income supplement to allow them a decent life while waiting for their pensions?

Will the Conservative government finally keep its promise and show these former workers a bit of respect?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, we may have some disagreement, but my understanding is the program that we brought in with respect to older workers accomplishes that goal. However, if the hon. member has other approaches and ideas that he wants to bring forward as we work toward the fall economic statement and the budget for 2009, then I am more than happy to consider them.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Chair, I would like to talk about this.

Speaking of the federal government's spending power, I have a question for the Minister of Finance. For a year now, the federal government—the Conservative government—has been bragging about resolving the fiscal imbalance. I would like the minister to tell us whether he has read—

[An hon. member]

Oh, oh!

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I would also like not to be interrupted by those seated next to the Minister of Finance when I am asking questions.

I would like to know whether the Minister of Finance has read the Séguin report on what we call the fiscal imbalance.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Yes.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Minister, if you have read it, I would like to you to talk about the three elements that, according to the report, have to be put forward and resolved together before we can say the fiscal imbalance has been resolved.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, as the member knows, ultimately our government decided to follow the recommendations of the O'Brien committee. They were not totally in line with the recommendations of the Séguin report and some would advocate that the Séguin report ought to have been followed. We chose to follow the recommendations of the O'Brien committee, which in fact had been appointed by the previous Liberal government.

It came forward with a principle based equalization program that we were able to implement.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Chair, the minister says that he read the Séguin report but decided not to follow its recommendations, so how can he claim that the fiscal imbalance has been resolved for Quebec? We know that there are three primary courses of action: equalization payment reform that takes into account the revenues of all provinces; elimination of the federal spending power in areas under provincial jurisdiction; and replacing cash transfers with equivalent sales tax and income tax points.

How can he tell whether there is consensus in Quebec on these three points? To this day, the government has ignored them. How can he tell Quebec that the fiscal imbalance has been resolved?

Also, Mr. Chair, I would like you to call the member sitting next to the Minister of Finance to order because he has been goofing around for some time now.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, if I may, I will put things in a factual context. I am looking at page 224 of the budget document for this year, in 2007-08, the last fiscal year, cash transfers are at an all time high and have grown to almost 19% of total federal spending, their highest level in almost 30 years.

I must say that after we moved forward with the efforts we were making toward creating fiscal balance, the steps we took based on the O'Brien report were welcomed by the Government of Quebec and resulted in $8 billion through equalization, an increase of over 67% from 2005-06; $5.5 billion through the Canada health transfer, $2.5 billion through the Canada social transfer, as I say, an increase of $4.5 billion since the Liberal government of 2005-06.

The resolution of this issue has been accepted and welcomed in Quebec, no doubt because it benefits Quebec substantially.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Mr. Chair, the minister told us that in its throne speech last fall, the government committed to introducing a bill to regulate federal spending power. Nothing has been done about that yet.

Just now, my colleague asked him if he planned to introduce a bill by the end of the current session. In mid-May, the Minister of Labour, also a member of the Conservative government, said on the subject of a possible bill that nobody is expected to do the impossible. Does that mean that Conservative government ministers, including the Minister of Finance, all feel that it would not be possible to introduce such a bill?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Chair, in the budget this year, budget 2008, at page 70 there is a reference to this subject, which is as follows:

Budget 2008 reaffirms the Government's Speech from the Throne commitment to introduce legislation to place formal limits on the use of the federal spending power for new shared-cost programs in areas of exclusive provincial jurisdiction.