Mr. Speaker, a few months ago I asked a question of the finance minister and was answered by the parliamentary secretary. My question pertained to income trusts and the losses that CPP had incurred by investing in income trusts. Of course we all know the story about income trusts because the government reversed itself and devalued $35 billion out of the market, the consequence of which was the CPP lost a significant sum of money and therefore, we all lost a significant sum of money.
In response, the parliamentary secretary put forward this rather rosy picture of the status of our economy. Since then the Governor of the Bank of Canada has released a not quite so rosy picture of the state of our economy. This has significant implications for us all.
Clearly Ontario and Quebec are suffering from the worst of this. The manufacturing sector has been significantly impacted and we cannot continue to expect that the oil in Alberta and Saskatchewan will carry the rest of us over this economic downturn. Even the financial sector based basically in Toronto has been impacted by this near recession at this point.
Why is this of significance? Why is the parliamentary secretary and his rather rosy and optimistic views on the economy so poorly timed and poorly placed?
Every 1% of GDP reduction is basically $3.3 billion off the estimates of government revenue. Because the government has been spending like crazy and reducing revenues on the other side with foolishly implemented tax relief, it has brought itself down to a squeeze. The Conservatives have eliminated the $3 billion contingency fund, which they promised not to do in their platform, but they have already eliminated it. What their projections were on their rosiness was a $2.3 billion projected surplus when in fact a 1% meltdown on GDP will put the them into deficit. We may actually be in deficit; we just have not found out from the Minister of Finance yet.
Why is this of any great significance? Like really, who cares about a deficit. It really is something of a significant financial accomplishment to go from a $13 billion surplus to near zero deficit in less than two years.
Derek Holt at Scotia Capital said, “There is a material risk that we do not slip back into the deficit scenario”. Don Drummond said, “It wouldn't take too much to put them back into deficit”. The Dominion Bond Rating Service said, “It's likely that the government would run its first budgetary deficit in over a decade”.
This is what is called Conservative management of the economy. Here are three eminently respected people who are quoted frequently by the government and they are saying that we are at, or near, or in a deficit situation. Yet the government says that things are wonderful, we are all happy, employment is up and all of that sort of stuff. As I say, how did the Conservatives get here?
John Williamson, who is hardly a friend of the Liberal Party of Canada and has been a very vigorous advocate of tax relief, has said, “They've increased their spending 14.8% in two short years. Under the Minister of Finance the size of the federal government has grown by an astounding 14.8%--