Mr. Speaker, I thank the House for the opportunity to speak to budget 2010, year two of Canada's economic action plan. This is the third straight budget that I have had the privilege of working intimately on with the Minister of Finance in my role as parliamentary secretary. I thank both the minister and the Prime Minister for that great opportunity.
Working closely on budget 2010 also meant taking part in many consultations in preparing this substantial document. I literally travelled either with or without the minister right across this great country, this in addition to hearing many witnesses in numerous hearings that I attended as part of the finance committee's prebudget consultations.
Before moving on, I would like to highlight a few of the consultations that I attended and how that feedback helped shape budget 2010.
First, I took part in a very interesting prebudget round table in beautiful British Columbia with my colleague, the member for Richmond, whom I need to applaud for being such a strong advocate for her constituents. Second, I joined the Minister of Public Works and Government Services in Edmonton for another similar round table, and likewise salute her for her efforts and hard work.
These are just a couple of examples among many of how we went out to speak directly with Canadians before preparing the budget and not just a select few special interest groups here in Ottawa. We travelled to them. As the Prime Minister said previously, consulting with Canadians outside of Ottawa is never a bad thing.
Along with my caucus colleagues we went from coast to coast to coast to hear from businesses, public interest groups, not for profit organizations and industry associations. Most important, we heard and spoke to everyday Canadians, men and women who are the backbone of this great country and who trust Parliament to spend their hard-earned tax dollars wisely after, and only after, careful consideration.
While we heard a lot of different stories from these Canadians, we heard one common theme when it came to their shared view with respect to what they wanted to see as Parliament's number one priority: the economy.
Focusing on the economy did mean different things to different Canadians across the regions. However, it all boiled down to basically staying the course on stimulus now to help protect jobs in the short term and laying the groundwork for long-term economic growth and the good high quality jobs that come with that.
That is exactly what budget 2010 seeks to accomplish. It builds on the work done in year one of Canada's economic action plan to stimulate our economy from the depths of the most severe economic recession since the Great Depression of the 1930s. At the same time it helps to ensure Canada's economic advantage into the future.
Last year we launched Canada's economic action plan. Its short-term objective was straightforward: stabilize our economy, help families, and save jobs from a then worsening global recession. It worked, and it helped to ensure our country weathered the global recession better than all other major industrialized countries to date. The plan, including provincial and territorial actions, is expected to create or maintain approximately 220,000 jobs by the end of 2010.
Some in the opposition intent on tearing down Canada's economy and its workers at every turn shamefully mock the claim that Canada's economic action plan is working. I say to them, do not take my word for it. I ask them to look at the recent Statistics Canada report that announced our economy grew 5% in the fourth quarter of 2009, the strongest quarterly rate of economic growth in about a decade.
If they do not have faith in Statistics Canada, what about independent economists, like RBC economist Patricia Croft who said, “I think in the aftermath of this crisis, Canada is emerging as a winner. Indeed, we may be owning the podium in a kind of different way”.
What about HSBC Canada economist Stewart Hall who said,“While the economy entered 2009 like a lamb, it's exiting like an Olympic champion”.
What about CIBC economist Warren Lovely who said:
Simply put, highly rated, Canada offers safe harbour in today's global debt storm … Few advanced economies boast stronger real GDP growth prospects-a view endorsed by our (CIBC's) economics department, a broad cross section of private sector banks, the Bank of Canada, the IMF and … the OECD.
I could go on. However, I think all would agree that the global recovery is not firmly established. We all share the view that too many Canadians have lost their jobs. As I mentioned previously, that is why budget 2010 looks to support the recovery and jobs while sustaining Canada's economic advantage for generations to come. It takes action in three broad areas to achieve these goals.
First, it delivers $19 billion in new federal stimulus under year two of Canada's economic action plan. It includes over $3 billion in tax cuts, $7.7 billion to modernize infrastructure and improve housing, $2.2 billion to support industries and communities, and much more.
Second, it invests in a limited number of new targeted initiatives to build jobs and growth for the economy of tomorrow, harness Canadian innovation and make Canada a destination of choice for new business investment.
Third, budget 2010 outlines a three point plan for returning to budgetary balance once the economy has recovered.
Budget 2010 is a pretty extensive document running over 400 pages and there are many good job-creating and pro-economic growth initiatives that should be highlighted. As this debate continues, I am sure my colleagues will highlight many of those. I would like to focus on a few in particular that will play an important role in positioning Canada to attract the high quality, long-term jobs of tomorrow.
Our Conservative government believes one of the best ways to build a more competitive economy is simply to create a pro-growth environment that allows the large and small private sector businesses and entrepreneurs who employ the vast majority of Canadians to succeed and expand, not an anti-growth environment that stands in the way of their success with high taxes and endless needless red tape.
How do we do that? First, unlike the opposition, we understand that a competitive economy requires competitive lower taxes, not hiking business taxes, not imposing a job-killing carbon tax. Lower taxes support businesses by providing them with the freedom to grow and invest. This creates the foundation that will over the long term bring sustained economic growth and increased employment.
Since 2006, our Conservative government has implemented bold tax reductions to create that competitive business environment, an environment that encourages new investment, growth and job creation. This is quite a significant change from the days of the old former high tax Liberal government.
In fact, due to our Conservative government's leadership, Canada will have the lowest overall tax rate on new business investment in the entire G7. Importantly, this rate will also be below the average of the OECD countries. What is more, we are also committed to become the jurisdiction with the lowest business income tax rate for the G7 by the year 2012.
As the Canadian Council of Chief Executives pointed out yesterday:
--these tax changes, combined with responsible fiscal policies and unwavering support for open markets and trade liberalization, send an important signal to the rest of the world … as the economy improves, the renewed commitment to fiscal discipline promised in (Budget 2010) will enable Canada to position itself as a leading global destination for business investment and talented individuals.
Indeed our Conservative government fully recognizes that competitive taxation not only protects jobs now, but attracts investors to create new jobs for Canadians today and tomorrow.
When Tim Hortons reorganized itself as a Canadian company after decades as an American one, a National Post editorial declared:
This is good news. Tim's is as Canadian as maple syrup...we take even greater satisfaction in the “why” of Tim's return. Canadian corporate taxes are falling so significantly...that Canada has once again become attractive as a site for corporate headquarters and plants.
Without a doubt, the tax relief our Conservative government has advanced is positioning Canadian businesses to emerge stronger and better than ever before. In budget 2010, we build on that record with the groundbreaking elimination of 1,541 tariffs on productivity-improving machinery, equipment and other manufacturing inputs. This makes Canada a tariff-free zone for manufacturing.
I am proud to say that Canada will be the first country among our G7 and G20 partners to be able to make this claim. This means that Canadian manufacturers will be able to import goods for further production in Canada by Canadian workers without the red tape and paperwork of tariffs, and the costs of complying with discouraging customs rules. This will give our manufacturers from across this country a competitive advantage in the global marketplace by lowering production costs, increasing competitiveness and enhancing innovation and productivity.
The House will recall that last fall we launched an open and public consultation process when we sought input on such a proposed measure. During that consultation, we heard loud and clear that eliminating tariffs would help Canadian manufacturers. They told us this action would assist them to maintain and increase production and employment while expanding their exports. Moreover, using standard economic modelling, it has been suggested that 12,000 jobs could be created over time by this one action alone.
Another key benefit for this pro-growth action is that it also assists in diversifying Canada's trading patterns, complementing our efforts to provide new trade advantages to Canadian business, which include the negotiations with the European Union, exploratory talks with India, and the implementation of recently concluded free trade agreements with Colombia, Panama and Jordan.
Even though the tariff-free zone for manufacturing initiative was only unveiled less than 24 hours ago in budget 2010, the reaction has been overwhelmingly positive. Here is only a small sampling of what we have heard from industry associations, business leaders and economic commentators. First, the Canadian Manufacturers & Exporters said:
We worked with the government directly to reduce tariffs for manufacturing and I believe this is an important cost-savings mechanism for companies...it is a bottom-line boost to cash flow for manufacturers at a time when it is needed the most.
The Sarnia Lambton Chamber of Commerce said:
--certainly manufacturing has scored there. It's really a jobs and growth budget.
The Belleville and District Chamber of Commerce said:
[It] is a positive step...to allow manufacturers to be competitive. Our local manufacturers work on global competitiveness. They have to be competitive and this will allow that to happen.
The Royal Bank's chief economist Craig Wright called the initiative the “real gem” of the budget, and said that it builds on the country’s attempt to attract foreign investment.
The list goes on. The Atlantic Provinces Economic Council noted:
This will mean reducing manufacturers' input costs and therefore improve their productivity and competitiveness because they either improve their profits or they can lower their final price.
Finally, I implore all members to listen to the words of Finn Poschmann at the C.D. Howe Institute. He said:
Eliminating all tariffs on inputs is an absolutely brilliant move. Tariffs are just plain dumb in imposing costs on businesses. It certainly it inhibits productivity growth and the ability to compete. And it is a superb message…in terms of attracting investors but also in taking a leadership role in establishing an agenda aimed at trade liberalization and broad-based economic growth.
Again, that was only a small sampling of early positive feedback to this groundbreaking job-creating initiative.
In budget 2010 we also built on that record with another move that will help attract investment in Canada and fuel new, good quality employment. The ability of new businesses to access capital to finance their growth and to invest in innovation is critical to their success. Venture capital is a vital and necessary tool for providing new startup firms with the tools to introduce new products or services or technologies, invest in new capacity and most importantly create new jobs.
Budget 2010 took a major step in reviving Canada's venture capital market by proposing to modernize the definition of taxable Canadian property thus eliminating the job-killing red tape tax reporting under section 116 of the Income Tax Act for many investments. This will enhance the ability of Canadian businesses, including innovative high-growth companies that contribute to job creation and economic growth, to attract venture capital.
Again, even though this announcement was only made less than 24 hours ago, we have seen a huge, positive reaction. Here is a quick sample. Noted technology entrepreneur Terence Matthews heralded it this way:
At a minimal cost to the government, this amendment will have an immediate, positive and direct impact on Canada's ability to grow a robust Canadian technology industry. By sending a clear message to international investors that Canada is “open for business”, the government will make Canadian companies more attractive to foreign investors overnight.
Canada's Venture Capital and Private Equity Association stated:
The CVCA has long requested the elimination of Section 116 as it pertains to the venture capital and private equity industry and we wish to congratulate the federal government for taking action…Its removal provides an important signal to foreign investors that Canada welcomes their contributions to growing companies and employment.
Eliminating tariffs to support manufacturers and improving Canada's venture capital market are only two of the many positive pro-growth and job-creating measures in budget 2010. There are many more similar items in the budget to improve Canada's economy over the long-term that I had to omit due to time constraints, items that I know my colleagues will highlight in this debate. I hope to speak to some of these in later debate on the upcoming budget implementation bill.
I strongly recommend to all members of the House, especially the opposition, to read the budget document and recognize that staying on course for year two of Canada's economic plan is key to our success as a country. Thanks to the leadership of this Prime Minister and this finance minister, we are on the right track.