Mr. Speaker, I would like to thank my colleagues.
Clearly, this issue is of particular importance to the NDP. It is a question of the inequality created by the Conservatives, and the Liberals as well.
Today, we will be dealing specifically with the plan the Conservatives presented to Canadians during the 2011 election campaign. We will talk about the concerns it raises because it is quite possible, under the current circumstances, that this plan will be implemented. We will explain exactly what the plan entails and why it is totally wrong for Canadians.
Let me start with the basics of what the Conservatives have proposed, and this goes back to a 2011 campaign promise. I suppose in the midst of a campaign, politicians, from time to time, get excited or in some cases desperate to gain power, as the Prime Minister was. In that desperation and excitement they make promises that are very bad promises with respect to a policy that they would actually want to invoke one day. That is exactly what this is.
This is a $5-billion income-splitting scheme that the Conservatives have proposed that would not help upwards of 85% of Canadians. Let us pause for a moment. It is a $5-billion scheme that 85% of Canadians would see no benefit whatsoever from. That fact is actually increasing with recent reports. We have one report out today from the Broadbent Institute, called “The Big Split”, that says the number of Canadians who will miss out on this particular program might be quite a bit higher.
It is not just from progressive think tanks; it is also from groups like C.D. Howe. It is also from very conservative economists across the country who have come out and said that the proposal as offered by the Conservatives is one that would increase income inequality in this country. It would further push the tax burden onto the middle- and working-class Canadians and away from those who are earning the most.
We know that over the last 30 to 35 years income inequality has increased dramatically in Canada. Some 90% or more of that was experienced under Liberal regimes, which is, I suppose, telling of the traditional Liberal way of campaigning, which is to campaign to the left but govern to the right. A massive amount of inequality went on under the Liberals but the Conservatives picked up that bad tradition and have continued it. We see income inequality increasing. A recent Parliamentary Budget Office report showed that of the recent tax breaks that came, those people in the 20% top-earning tax bracket took home $11 billion in benefits, fully 36% of all that was offered. The bottom 20%, those we would think they would be most interested in helping out, took home a little less than $2 billion of what was offered, so less than 6%. The top 20% get more than one-third of the benefit, and the bottom 20% get around 6% of the benefit.
That is the Conservative ideology. We understand that. We disagree with it fundamentally as New Democrats, and we see increasing disagreement about the Conservative ideology and plans because income inequality hurts the economy broadly. It does not just hurt those who are most impacted and affected.
We have also seen a second tax shift that has gone on and it is not just increasing the burden to the middle and lower incomes in Canada. We have also seen a tax shift away from corporations under the Conservatives. Just since the Conservatives' taking power, the corporate tax burden has dropped by almost $4.5 billion while personal income tax has increased by $15 billion. When they ask who is paying for all the services that Canadians rely upon, such as the police and the fire and the health and education services, all of those things, and they wonder who is picking up the tab, they see that under a Conservative world view they do not believe corporations should have any part in that. The Conservatives do not think that corporations derive any benefit, I suppose, so why should they pay for it?
Yet we know that good transportation systems, good urban transit, good health care and good education support not just those who are directly implicated but help the entire economy more broadly because healthy and smart workers make for a profitable and prosperous economy. Yet the Conservative world view says that corporations should not have to pay for any of that, that individuals should pay more and more, and we see that in the numbers.
The Conservatives are entitled to their own opinion on this issue, but they are not entitled to their own facts. The facts speak clearly and loudly that there have been increasing shifts in the burden of taxes away from the rich to the middle class and lower incomes and away from corporations to the individual. Those two shifts have been very destructive to millions of Canadian families and, I would argue, have hindered the Canadian economy writ large.
We wish that the Conservatives would at least take the Hippocratic oath and just promise to please do no harm, because they have made things bad and they now propose to make things worse. They somehow believe that the answer to income inequality is to have more income inequality. The suggestion from the current finance minister is that this type of income-splitting scheme, which is going to cost the treasury upward of $5 billion and only benefit less than 15% of Canadians, and will only benefit the 15% of Canadians who least need the help, is a good plan for Canada.
I will give the Conservatives credit for this. They have somehow managed to unify right- and left-thinking economists in this country. This is a rare feat. This is kind of hard to do, because if we put three economists in a room, we end up with five opinions, but on income splitting the Conservatives have managed to bring all the economists to one side, whether they are progressive or more conservative thinkers. As the C.D. Howe Institute said, this policy does more harm than good. It has also garnered a certain amount of attention from Canada's leading papers. Let me read a couple of quotes.
The first one is in the Ottawa Citizen, which states:
Income splitting is a tax cut for the rich....
There are many ways in which Canada could spend [this money].... We could come up with tax policies to help low and middle-income citizens. We could cut taxes across the board, for all taxpayers, instead of using the tax system to make value judgments about which kinds of families should get tax breaks.
Let us talk about which kinds of families those are. Who would benefit is a relatively short list that one can quickly and easily define. As the Broadbent Institute calls it, it is the Mad Men family. It takes us back to the 1950s, maybe the 1960s, where there was one income earner who was earning quite a bit of money and the spouse earning very little. That is who would benefit from this.
Who would not benefit is a long list, and we should go through it. There will probably be a bunch of Conservative ads on this, if history is any teacher, and a lot of Canadians might think that they can see themselves benefiting, maybe it applies to them and will help out their families. This would not help people whose kids are over 18. It would not help people who do not have kids. Imagine that. It would not help people who are not married and with kids under 18. It would not help people who are married with kids under 18, but are in the same income bracket. All of the people I just listed would get no benefit from this scheme whatsoever. When we start to whittle it down to find out who it would actually benefit, more and more we see that it would benefit people who do not actually need it.
This is not just a question of economics; it is a question of morality.
After years of deficits, we will finally have a surplus of approximately $5 billion to $6 billion. Now the question is: how does the government want to use this money to help Canadians?
The Conservatives made a promise during the 2011 election campaign. However, all of the facts are contrary to what the Conservatives claim their intentions are. The new Minister of Finance is saying it is an excellent idea.
There is something in government that we should all adhere to that talks about evidence-based decision-making, but with Conservatives, more and more there is decision-based evidence-making. What they do is make a decision based on their ideology or some hope in the midst of an election to gain a few more votes and pull the wool over Canadians' eyes, and then they reverse themselves and try to find some evidence to support that ideology, even if it does not exist.
I understand that the Conservatives are unlikely to listen to the editorial board of the Ottawa Citizen or perhaps The Globe and Mail that says income splitting needs to be reconsidered or abandoned in favour of a better use of surpluses, that if the government wants to cut taxes, this is not the way to do it, or that the Tory proposal was ill-considered from the start.
Maybe they would listen to the C.D. Howe Institute, as they are strong supporters of it, who said:
The splitting proposal would significantly raise marginal effective tax rates for most lower-earning spouses, thus imposing barriers for working or returning to work; this would make married women more vulnerable by reducing their work experience.
And if the objective is to provide support to families in raising children, it would distribute most benefits where they are least likely to be needed.
The C.D. Howe Institute said that if this is the target for the Conservatives, if this is who they are trying to help, then this policy will not help.
There is something in the midst of that quotation that is important, another inequality that would be perpetrated by the Conservatives, that is:
...thus imposing barriers for working or returning to work; this would make married women more vulnerable by reducing their work experience.
This would put further pressure on women to not enter or re-enter the workforce. Why would the Conservatives want to do that when all we hear from economists, the banks through the progressive side, from the manufacturers association, from basically every key group in the Canadian economy, is that we need more women in the workforce, we need women who have left the workforce to come back in and to have that choice? The Conservatives knowingly would invoke a policy that would resist that and would say no to that.
We know that women on average earn 16% less than men in Canada. That is a deplorable fact, but that fact should have some bearing on the way the Conservatives design tax policy. If women are earning a significant amount less than their male counterparts on average and they are married and may even possibly benefit and fall into that rare 14% of this category, the pressure would be on them to stay home because they are earning less on average. The Conservatives know this.
They may have a Leave it to Beaver kind of world view, a throwback to Ward and June Cleaver and that all things will be good, and that is how the world ought to be oriented. I know there are some Conservatives who believe that. This is 2014. This is an idea that most right-thinking people, most progressive people, have long since left behind. The Conservatives say that maybe the only place for a woman is in the home or something. We believe a woman's place is in the House of Commons.
This policy explicitly supports the Conservative world view, which we think is wrong. They are trying to do some social engineering here, through the tax code, and we know that the Conservatives love their boutique tax credits. They like to tell Canadians how to think and shop and what programs to put their kids into and little incentives here. They love to put their hand in the market and put their hand on the scale. They like some free market but not all free market. They like to intervene on mortgage rates and all sorts of things and interfere. I often imagine what it would be like if a New Democrat finance minister phoned up the banks and asked them to change their mortgage rates.
Let me quote my departed friend because I think the voice of Mr. Flaherty, God rest his soul, is important in this debate. Before he left the finance minister's office Mr. Flaherty had some strong opinions about this particular policy we are talking about today, about income splitting. If nothing else, if none of the facts give any of my Conservative colleagues pause or none of the opinions held by the leading economists in this country about how bad this policy is, maybe the words of Mr. Flaherty might.
It benefits some parts of the Canadian population a lot. And other parts of the Canadian population...not at all.
What he was talking about is that 86% number, the fact that this policy is so directed at so few as to not be worth the $5-billion price tag.
I know the Conservatives feel like they somehow are entitled to their position in government and that the next election, within a year, cannot come too soon. We see this with governments. Governments age very badly, the current government being a great example. The arrogance and entitlement seems to be something that almost inherently is affected in this place. The fact that the Conservatives would go into that election saying that they are going to wed themselves to this particular policy, as bad as it is, as unequal as it is, as ineffective as it is at helping Canadians but simply out of hubris and pride, shows just how far they have fallen away from their roots of responsible and accountable government.
If the government has some sort of assessment of what this program would do for Canadians, that is much more than the 14% or 15% of Canadian households that would benefit by the income splitting scheme or that it has not been skewed to the most wealthy of Canadians, then I look forward to the debate today. I know my colleagues, the New Democrats, look forward to hearing the evidence as to why this is such a great scheme and why spending $5 billion at the federal and provincial levels is a great idea.
It is remarkable that so many Canadians would be excluded. When Conservatives are on the doorsteps in the next election telling people that they have a plan for them, if they are talking to a person who is not married, then I guess they will have to move on to the next door. If they come to a door where the household has children older than 18 who have moved on, then they have to move on to the next doorstep. If at the next door there is a single parent, and I was raised singly by my mom, that parent will not benefit from this.
I would think that if we were to spend this kind of money to try to target and help families, which is what the Conservatives are claiming to do with this policy, then we would try to help those families that are struggling to make ends meet. We would try to help those families that, for more than 30 years, have suffered through growing inequality and that, under the Conservatives, have seen so much less of the benefits.
I have listed the statistics before, but I will do it again. Out of the Conservative tax breaks, the bottom 20% got around 6% of the benefit, and the top 20% got 36% of the benefit. Maybe that is another golf membership or jacuzzi in the backyard for some, but for those families struggling to pay the bills, it is offensive that the Conservative government keeps ignoring the basic needs of families trying to get their kids to school and offer their children better hope.
For the first time in many generations in our country, all the evidence is pointing to the generation following having a lower quality of life than what we are experiencing right now. If there is any wish parents have for their children, it is that they will have equal or better opportunities than the parent did. However, the opportunity gap grows with the income gap. The gap in opportunity that is afforded to middle-class and working-class Canadians and their children is growing. The gap in accessing better education and training, to that first job, to get that first business loan to start that new enterprise, is growing.
As was once said by an American politician, it becomes a society of the haves and the have mores. Under this policy, that is something the government is going to promote.
The government will say that those who already have great resources, who have benefited greatly by living in this society and prospering through their own hard work or through some endowment are going to get more under the Conservatives because they feel they deserve more for just being who they are. However, those in the middle and lower incomes will get less. They will access less and their services will be cut because we know what the Conservative government has been doing. It is lowering expectations, lowering services, reducing health transfers and gutting environmental policies. It is doing all of this in some nefarious scheme to say to Canadians that they should not expect much from government, particularly if one is so unlucky to have been born into the middle or lower classes.
One of the concerns that economists are expressing to us is what they call a “stratification” of the economy. Canada, for many generations, has enjoyed the possibility that, regardless of where or at what income level one was born, there was a possibility that one could improve one's lot through hard work and dedication. To take that hope away from people is more than discouraging; it is despicable.
This is something that no government should promote. However, we hear it time and again from across the political spectrum, from economists to the C.D. Howe Institute to the Broadbent Institute to the Canadian Centre for Policy Alternatives to Conservative economists and left-wing economists. They agree that this program, this $5 billion income splitting scheme will offer benefit to very few people.
The New Democrats oppose this proposal because it disproportionately helps those who do not need it and hurts those who need a hand. As New Democrats, there is nothing more fundamental for us, it goes to our DNA, we believe the role of government is the thing that we do when we come together to accomplish that which we cannot accomplish alone.
We look to help our neighbours. We look to care for our neighbour's children, not cast them aside. We do not invoke policies based on pure ideology to gain a couple of points in an election poll, rather than design government as it should be, based on sound evidence.
A progressive government, in perhaps a year or even a little less, will have the opportunity to offer Canadians just that.