Mr. Speaker, 2009 has been quite a ride. It began with all of us returning to the House after the Prime Minister had prorogued the first session of the 40th Parliament after only 10 sitting days, before the ink had even dried on the Speech from the Throne.
After the Conservatives took their six-week vacation, they returned to the House in January and admitted that the government was not in fact running a small surplus as it had claimed. No, they were running a $34 billion deficit. Then, four months later, we discovered they were actually running a $50 billion deficit this year, and for good measure they ran one last year, too.
I have to make it clear, the Liberal Party is not in the slightest opposed to fiscal stimulus. What we are opposed to is the fact of runaway Conservative spending during good times such that they ran down their inherited $13 billion surplus and they were heading into deficit before the recession even arrived.
As a consequence, today's deficit is far greater than it need be had these Conservatives managed prudently during good times. In fact, I warned them two February's ago that they were heading in this direction. I will do the unusual thing of quoting myself from two years ago, when I said:
Consider the fact that less than four months ago the Finance Minister delivered a fiscal update that projected Canada's gross domestic product would grow by 2.4% in 2008. Yesterday he downgraded that forecast to 1.7% growth. If in a few months from now it turns out the minister was once again wrong by the same amount, then that alone is enough to give the country a slight deficit this year and a bigger deficit next year.
That was two budgets ago, and they paid no attention. Look where we are today.
We have also spent a lot of time in this House and in committee warning that the government was wrong-headed in terms of the new employment insurance crown corporation, that it was not well equipped to handle a recession. On many occasions, I and many others stressed that the EI account needed to be balanced over the business cycle, not just over two years, in order to avoid massive swings in the premium rate, especially in the event of a recession. Actuaries from across the country all told them the same thing.
As usual, the government paid no attention, and last November we saw how this played out. The government had to re-seize the rate-setting mechanism from the new EI corporation and hold it steady. It did, however, increase the maximum contribution for anyone earning more than the average industrial wage. Those employees and their employers had a payroll tax hike in the middle of a recession.
The part that the Conservatives really do not like to talk about is the future EI tax increases that the finance minister has already booked into the fiscal framework beginning in 2011. Page 233 of the budget clearly says that not only has the finance minister already decided to increase these payroll taxes 18 months from now, it says he has already included the revenue from his future tax hike into the EI account's revenue stream.
So much for being a Conservative Party that does not like tax hikes. They have already built them into the budget. This morning, the Montreal Gazette said:
[S]harply higher premiums are foreseen beginning in 2011 and running until 2016.
So much being a party, the Conservative Party, that does not believe in hiking taxes. These were deliberate choices made by the Prime Minister and the finance minister, and they will have real consequences for Canadians.
Let us not dwell too long in the past, especially on this last day of Parliament. Let us instead look to the future and to the good work that will be done this summer on changes in the employment insurance system.
Currently there are 58 separate regions with varying EI qualifying rates and benefit levels. During a recession, this simply makes no sense. Employers simply are not hiring the way they were even two years ago. So those who lose their job in a region with relatively low unemployment are likely in the same boat as those who lose their job in an area of high unemployment.
Despite being in the same boat, however, the government will not treat applicants the same because of where they live. As a particular case in point, all of us have assistants in the House, and if assistants happen to live on one side of the Ottawa River they have to work far fewer hours than if they live on the other side of the Ottawa River. So all of us in the House know that it makes no sense at all. Indeed, it has been described as unfair by all the western premiers, by my premier here in Ontario, by think-tanks of the left and by think-tanks of the right of the political spectrum.
It has been a long, tough battle to get the Prime Minister to acknowledge finally that the EI system is not working right now, but we did get this acknowledgement at the final hour. As a result of the strong negotiating abilities of my leader and my colleagues and good friends from Dartmouth—Cole Harbour and from Notre-Dame-de-Grâce—Lachine, I am convinced that they will negotiate firmly with this recalcitrant, reluctant government over the summer and I am hopeful that at the end of the summer we will collectively come up with a solution that will provide major help to those Canadians who have unfortunately lost their jobs.
I would like to devote my remaining few minutes to the theme of prudence and how a finance minister ought to be exercising prudence in guiding the nation's finances. I want to give two examples, one from the past and one that will hopefully materialize in the future.
I have already referred to the Conservatives reckless spending during good times, such that we were taken from a big surplus to a deficit before the recession even began. I would say the one major act of imprudence committed by the finance minister during those days is that he got rid of the $3 billion contingency reserve, which had been an insurance policy applied over many years by previous Liberal governments to avoid deficits. He simply yanked that off the table and we can see where we are today in terms of deficits.
My second point is about the debt. The point is that we today are living in a world of historically extremely low interest rates, close to zero at the short end, up to just under 4% at the long end. Therefore, the great risk for Canadians and for future generations is that there will be a spike in interest rates. With the government having to borrow for refinancing purposes over $200 billion per year, imagine the impact on the deficit if there were a big spike in interest rates.
A prudent finance minister , at this time of historically low interest rates and major borrowing requirements, would seek to lock in more of the debt at longer terms so as to reduce this risk of a huge impact on the deficit were there to be a spike in interest rates. However, I can tell the House, so far the finance minister's record on this subject is going in the wrong direction, the imprudent direction, because the debt of this nation has been coming shorter term rather than longer term because the borrowing is concentrated at the short ends and not at the long ends.
What the finance minister for the second time is doing is engaging in imprudent behaviour. He is failing to take advantage of the historically very low interest rates to lock in a higher proportion of the national debt at the longer terms so as to reduce the risk of a huge impact on the deficit should interest rates spike in the future.
We know that the finance minister has behaved imprudently on the contingency reserve in the past. We can still hope that he will exercise a modicum of prudence and move to a longer term structure of our debt so as to reduce the risk of interest rate spikes for current and future generations. So far, the budget talks of him moving in the opposite direction. Therefore, I am concerned for the sake of our children and our grandchildren that the minister is not managing our national debt in a prudent fashion.