Madam Speaker. tomorrow will be the beginning of December and I note that the original budget was presented on March 4, so some nine months later we are getting around to implementing some of the provisions of the budget.
I went back and looked at the original budget and I was struck by chart 1, interestingly titled “Rapid decline in deficits”. If ever there was a creative way in which one would describe this runaway deficit, this is the way to describe it.
Generally speaking, certainly when we were in government, we put the surpluses above the line and we put the deficits below the line. It is quite interesting that the Conservatives government has everything backward, or more accurately, upside down. The return to deficit should be all below the line and the surpluses of the previous government all above the line.
In an interesting way in which things are backward around here, where left is right and left is right and up is down and down is up. The government has it entirely upside down. In chart 1, this rapid decline in deficit, the Conservatives have all the deficits above the line and all the surpluses below the line. They did not actually include the surpluses of previous government, which should have been above the line. However, that would not have worked with the chart.
The interesting thing is the Conservatives were already in deficit in the fiscal year prior to the crisis with respect to the recession. They had already blown away $3 billion or $4 billion in deficit. Actually it is greater than that. It is $5.8 billion in deficit, so they were already in the hole before they started, before we got to the fiscal crisis and before we got to the issues with respect to the difficulties that the entire world experienced in the fiscal year 2008.
It is an interesting presentation. It is an interesting way in which one tries to describe up as being down and down as being up. The deficit is above the line, therefore apparently in some respects surplus, and a surplus has been below the line and therefore in some respects being described as a deficit. Given their challenges with respect to communications, one can readily see how one blows $130 million in the Prime Minister's office just to communicate that up is down and down is up.
The significance of this chart in the budget document dated March 4 is that it pretty well blows away 13 years of very difficult work on the part of the previous Liberal government. The previous Liberal government took over from the previous Conservative government, which had run up a pretty significant deficit the last year it was in office, something over $42 billion or $43 billion. It took something in the order of four years, I think it was in 1997 when we turned the corner. It was with a lot of pain, a lot of difficulty, where we had to get control over our spending and our revenue streams.
From 1997 through to 2005-06, when the last Liberal government held office, we ran surpluses and the Canadian taxpayers received the benefit of that surplus in two respects: first, in lower taxes; and second, in reduced interest rates. At some point in the previous Liberal government we were running 9%, 10%, 11%, 12% interest rates on mortgages, which was coming out of each and every pocket. As well, we were running inflation rates of 3%, sometimes 4%, sometimes 5%, which was an illusion of increases in asset value.
Two things happened in the previous Liberal government. First, the fiscal house was put in order by Messrs. Chrétien and Martin and the current member for Wascana. The second thing that happened was the monetary policy was also put in order. A band was implemented primarily by David Dodge, but also by Gordon Thiessen before him and followed up by Mark Carney, of setting the inflation rate at somewhere between 1% and 3%. That would be the band that would be an acceptable rate of inflation.
Fortunately the Conservative government cannot touch monetary policy. As a consequence, the monetary policy put in place by the previous government has remained untouched. Therefore that part of Canada's fiscal financial situation has not been messed up. The only thing that has been really messed up at this point is the fiscal policy.
Publicly I want to commend Mark Carney for continuing on with that band of inflation and his judicious and prudent use of monetary policy to achieve the best possible outcome for Canada. It is not without criticism. I am sure some members in the House would be prepared to criticize the governor on various points, but on balance, in my judgment, the governor has achieved that level of monetary stability which stands us well.
The other thing thus far that the Conservative government has not been able to mess up completely has been our financial services sector.
I recollect that when I first came here, which was back in 1997, there was an impetus on the part of financial institutions, particularly banks, to get larger, to be bigger, to bulk up, to start to be international players. They were losing their status as international players.
The pressure was on the Liberal government at the time, and particularly on the Liberal caucus and the GTA caucus, to allow banks to merge. Frankly, that was an attractive argument to many of us. I was one of them. Being from Toronto, I thought we should allow our institutions to get world-class status. I started out with the view that it would be a good idea. However, the Liberal caucus and Minister Martin had the idea that we should at least take some evidence and think about this before we allowed banks to merge.
Over the course of those caucus hearings we did change our minds, or at least I changed my mind as did a number of members of our caucus. We could see the benefit for the banks, particularly their directors and maybe some of their shareholders, but we were not overly convinced on how the Canadian public and the consumers of bank services would benefit. At the end, we decided there would be no mergers. That turned out to be a prescient decision because the banks therefore were unable to get into the acquisition of other financial institutions.
As a result of them being unable to get into the acquisition of other financial institutions primarily, which would have been American financial institutions and maybe some foreign financial institutions, they did not make a number of the disastrous decisions that came back to haunt primarily American institutions in the last few years. It was the result of a bit of good fortune, a bit of hard work and us asking ourselves the fundamental question: What was in this for the Canadian public and consumer?
The consequence of the consequence of the consequence is that the Canadian taxpayer did not have to bail out the financial services sector. Canadian taxpayers did not have to pony up moneys for that sector and therefore that crisis was avoided.
The previous Liberal administration had 13 years of difficult financial and fiscal decisions to make. I can criticize some of them, but, on balance, when Liberals left office, the financial and fiscal houses were in order. There was surplus in the accounts. Indeed, the first year of surplus for the Conservative government was largely a surplus created by the previous Liberal administration. Then there came one or two years of surplus and we started with the deficit. We now have a deficit picture that I previously described as upside down.
Now the government tells us that we should continue to trust its fiscal management, having run up a deficit in one year of something of the order of $54 billion, a cumulative deficit over the course of the next number of years of something like $165 billion. Then in kind of an interesting way, the Parliamentary Budget Officer said that there was virtually no chance the government would return to balance or surplus in the next five years, notwithstanding the protestations to the contrary by the government.
We are going to have deficits for as far as we can see. Generally speaking, we can give a reasonable prediction for two years. Heading out to five years is a bit on the remote side and there are a lot of things that can go wrong between now and then.
The Parliamentary Budget Office has described this stuff as fantasy and I tend to agree with him. The likelihood of the government ever returning to a balance or surplus is virtually non-existent.
There are two major reasons why there is no chance the government will actually return to balance or surplus. The first reason is it has destroyed the revenue bases. It is all wonderful to talk about how much fun we are having cutting taxes. The trouble is if one is to cut taxes, one also has to cut services.
There is not a corollary commitment on the part of the government to be fiscally responsible in terms of the cutting of services. It seems to want to have it both ways. It wants to run up the cost of government without any meaningful way in which to approach the reining in of costs. Simultaneously it wants to cut various revenue streams, giving ill-advised tax cuts, particularly corporate tax cuts, the result of which is deficits.
It is simple. No one can run a household or a business that way. There have to be revenues to offset expenses. If one is going to cut revenues, then one has to cut expenses. The government has not done it and continues not to do it.
Then we see the absolutely outrageous examples of how to blow money in very short order, the most significant of which was the fun and games at the G8-G20, which blew through something in the order of $1.2 billion or $1.3 billion on a weekend.
I am from Toronto and have the great honour to represent a riding in the east end of Toronto, in Scarborough, which residents there like to say is the centre of the universe. Not many people know that, but I am here to inform the House of that fact. Downtown Toronto is seen as a suburb of Scarborough.
We in the centre of the universe watched with horror, not only the spending but the image that was projected of Toronto around the world. The central image of the G8-G20 spending was burning police cars in the middle of intersections in downtown Toronto.
If ever there was some illusion that somehow or other this was going to project a good image of Toronto and all of the good things that go on in Toronto those burning police cars, those rioting people, the police in riot gear, the smashed windows of businesses and the whole ugly image that was presented was completely counterproductive to the $1.2 billion or $1.3 billion that was spent.
It does not seem to matter to the government that the government was advised well in advance by the then mayor, David Miller, and by the police chief, Bill Blair, that maintaining security, keeping security and giving security in downtown Toronto was going to be virtually impossible, that this would be an extraordinarily difficult task and it would cost literally thousands and thousands of man hours and literally hundreds of millions of dollars.
Now the bills are arriving. We got a bill in excess of half a billion dollars from the RCMP. We got a bill of $125 million from the city of Toronto police, and we have a current bill something in excess of $60 million from the Ontario Provincial Police.
Those are some significant bills and it was not as if the government was not told in advance that this would be costly and virtually impossible to do. What did it do? It essentially trashed the image of Toronto by doing something that it was advised it should not do at this location.
It is not as if it was not suggested to the government to put it in some other location. It could have put it in another secure location. It could have put it on, for instance, a military location where it could have already had security, it could have people coming and going, it could have had all the meetings that it needed to have and at the end of the day the infrastructure money would have been spent on upgrading a particular military base. I do not see what was so difficult about that.
The other thing that is really more curious than anything else is for the G8 spending the good folks in Muskoka for their time and trouble received $50 million in extras. These extras I am sure were welcomed by the folks in Muskoka. However, the same good folks in Toronto, somewhere in the order of five million people, got absolutely nothing. They got little or nothing.
Why is it that $50 million should end up in Muskoka and nothing ends up in Toronto? Toronto has the burning police car. Toronto has the smashed businesses. Toronto has the smashed windows, and Muskoka gets the gazebos. It does not seem to add up and it is a classic example of misspending and it is in some respects a typical story of why the government is in such a mess.
It has jacked up the deficit to $165 billion. That is your money, Madam Speaker, and that is my money. It has made very ill-advised decisions. It has run roughshod over the local mayor and the police chief and said, “You're going to have this conference, you're going to have it in downtown Toronto and we don't really care about your problems”. However, now the bills are starting to arrive home: $500 million plus for the RCMP, $60 million plus for the OPP, $125 million plus for the city of Toronto police, and that is not all. It is the city of Toronto taxpayers who are getting stuck with paying for the burning police car, the smashed businesses and the smashed windows.
It is an outrage the way in which the government runs roughshod over everyone. It destroys its revenue base and cannot seem to control its own spending.