Mr. Speaker, I am pleased to speak to Motion No. 518 as brought forward by the member for Calgary Centre.
I would like to address the first part of the motion. I believe every member of the House recognizes the importance of strengthened competitiveness, the importance in terms of stimulating economic growth and of creating both the jobs of today and the jobs of tomorrow. This debate is not on whether we should work toward greater competitiveness for the Canadian economy, but rather how best this can be achieved during a time of fiscal restraint and deficit.
Motion No. 518 proposes that the Government of Canada continue to lower corporate tax rates and to diversify and expand Canada's trading relations.
First, I take issue with the notion that the government, “continue to diversify and expand markets for Canadian goods and services”. My contention is with the word “continue”. If we look at the Conservative record of government, we see that Canadian trade has become less diversified since the election of the government and the Prime Minister. They have steered Canada into trade deficits for the first time in 30 years. This is not a record we want to continue in any way. I will have more on that later.
The desire for lower corporate tax rates and more diversified trade relations is a desire that, in general, the Liberal Party of Canada supports. In fact, the Liberal Party has a proud record of both lowering corporate tax rates and diversifying, expanding, and deepening Canadian trade relations with some of the fastest growing economies in the world. We implemented the largest reduction of Canadian corporate tax rates in history, reducing the corporate tax rate from 28% to 21%.
The difference between now and then was we were in a surplus. It was not on borrowed money. Today we are in deficit and we contend that this creates a very different calculation economically. The Liberal Party supported, believed in and implemented corporate tax cuts when in surplus. We do not believe that right now it makes sense to increase the federal deficit and deepen the federal debt to provide corporate tax cuts on borrowed money.
I will provide some context by contrasting the Liberal record, one of a thoughtful and prudent economic approach, with the record of reckless measures that have been put forward by this borrow and spend Conservative government.
As I mentioned before, the previous Liberal government implemented the largest corporate tax rate cuts in Canadian history, when we reduced the corporate tax rate from 28% to 21%. We did this while providing Canadians with 10 consecutive balanced budgets. We did this by maintaining prudent fiscal measures, including the $3 billion annual contingency reserve.
In fact, the Conservatives inherited a $13 billion surplus from the Liberal government, but by pursuing reckless fiscal policies, gutting our contingency measures and increasing spending by 18% in the first three years of its government, the Conservative government actually put Canada into deficit even before the economic downturn.
This is the biggest borrowing, biggest spending finance minister in Canadian history. He has missed every fiscal projection he has ever set. Now with the $56 billion deficit, he has given Canada its largest deficit in our history. To suggest that Canada should continue with this kind of reckless policy and stay in deficit, in fact, deepen our deficit by cutting corporate tax cuts on borrowed money right now, is misguided at best. The fact is we need to return to balanced budgets.
Canadians get it when they look at their family budget. They know they are struggling to make ends meet. They want help with the rising cost of home care and education. They are worried about how they will save for retirement. They wonder what they will get for this record $56 billion deficit.
Canadians see these borrow and spend Conservatives wasting their tax dollars with $1.3 billion for a 72-hour G20 photo op and on $10 billion to $13 billion on American-style mega prisons to lock up unreported criminals as the crime rate actually declines.
They are concerned about spending $16 billion on a bad deal and an untendered deal for stealth fighters. They are worried about a record $130 million spent by the Conservatives on shameless self-promoting advertising for the Conservative government. They are worried about billions of dollars more for corporate tax cuts that we cannot afford right now.
Canadians want this reckless management and waste to stop. They deserve a government that will act responsibly with their hard-earned tax dollars.
These borrow and spend Conservatives must stop trying to delude themselves into believing that corporate tax cuts on borrowed money will somehow make Canada more competitive in the long run. Canadians get it. They know the difference between cutting corporate taxes while in surplus, which is defendable, versus cutting corporate taxes on borrowed money leading to deeper deficit and deeper debt, which is economically untenable right now.
Deficits are simply deferred taxes with interest. So by providing a corporate tax cut today on borrowed money, we will be forcing corporations and citizens in the future to pay higher taxes. That is morally and economically questionable.
The proposed corporate tax cuts do not come for free. We will be paying for them down the line as Canadians pay higher taxes. With Canadian debt levels dangerously high, we need to focus on eliminating the deficit and paying down the debt once again.
When we consider total government debt in Canada, our debt to GDP ratio is not the best in the G7, as the government likes to pretend. In fact when we consider the debt of all levels of government and compare it internationally, our debt to GDP ratio in 2009 was 81.6%. That is actually worse than Germany, France and the U.K. Now is not the time to be reckless and continue with billions of dollars of tax cuts we simply cannot afford right now.
On the issue of international trade, the Conservative record has been troubling. Last year the Conservatives oversaw a trade deficit of $4.5 billion. That was the largest trade deficit in Canadian history and Canada's first annual trade deficit since 1975. This is an ominous sign for a country like Canada, a small open economy that depends disproportionately on exports to create jobs and prosperity.
So far in 2010 Canada has a trade deficit of $4.9 billion. That puts us on pace for an even larger trade deficit than the record trade deficit we saw last year. Not only are we seeing trade deficits but our trade is actually growing less diverse. We are becoming in fact more dependent on the U.S. economy, and we know the dangers of that, given what has happened the last couple of years with the U.S. economy and the decline of the U.S. economy and the rise of protectionism in the U.S. These are dangerous and ominous trends for Canada.
The fact is that the government spent its first three years with the Prime Minister being churlish with China and ignorant of India. The government has had four trade ministers in four years, denying any of them any opportunity to really build important sustainable relations with other ministers in other countries, trade relations, foreign relations or simply relations between people. Changing trade ministers almost every year is not good policy for defending Canadian interests abroad.
The fact is that a Liberal government would take a different approach. We would focus on global network strategy. A Liberal government would work in partnership with business, universities, civil society and private citizens in order to better leverage Canadian relations with the world.
We would harness our multicultural communities as natural bridges to the fastest growing economies in the world. We would return to the very successful team Canada missions focused on sectoral areas where we have a comparative advantage, like education and including clean technology and clean energy technology.
A Liberal government would clean up the fiscal mess that these borrow and spend Conservatives are going to leave. We would, once again, reduce corporate tax rates once the books are balanced and once we can afford it, but we have to balance our books first and get Canada into the black before we do that.