Mr. Speaker, I will be sharing my time today with my colleague and friend, the member for Markham—Unionville.
In these difficult and uncertain times, we have to recognize that first of all, even before the plummeting oil prices, growth in Canada had stalled. We had stagnant growth and a soft jobs market prior to plummeting oil prices. In fact, if we look at the numbers even a year ago, well before falling oil prices, we had 200,000 fewer jobs for young Canadians than before the financial crisis in 2008. Long-term unemployment, people unemployed for over a year, had actually doubled in Canada.
The Economist magazine did an article on the Canadian economy called “Canada’s economy: Maple, resting on laurels”, which said: “The post-crisis glow is fading.” That was written last spring. The Economist was comparing Canada's growth numbers with those of the U.K., Australia. and of course, our neighbour to the south, the U.S.
The reason I am saying that is that it is important to realize that we needed a real plan for jobs and growth prior to plummeting oil prices, and we need a plan even more so today. That is why it is important that the government come forward and present a budget that actually contains a plan to create jobs and growth but also to help the struggling middle-class families in Canada who are having trouble making ends meet, who are falling further behind, who are taking on higher levels of personal debt, and who are concerned about the future of their children and grandchildren.
This brings me to today's motion and its three components: extending the accelerated capital cost allowance for manufacturing, the innovation tax credit, and cutting the small-business income tax rate.
The accelerated capital cost allowance for manufacturing has existed now for about eight years. During the period of time this measure has existed, we have lost 400,000 manufacturing jobs. The proposal being made by the NDP is to extend it by two years. I would argue that this is a status quo measure and that it will not really move the needle in terms of helping manufacturing.
The Canadian Manufacturers & Exporters are calling for five years, which would provide more certainty in terms of manufacturing investment. A two-year extension is not a bold new policy that is really going to move the needle in terms of manufacturing competitiveness.
In terms of the innovation tax credit, the government has diluted and pulled back the SR and ED tax credit. It has made changes that we are told by smaller companies that are involved in research and development and commercialization, and we are told by larger manufacturers as well, that the changes to SR and ED made by the government have been negative for their capacity to research, develop, and commercialize new technologies and to create value.
What the NDP has proposed is a small measure. We would agree that trying to create more incentives to actually encourage and support commercialization is important for creating wealth and prosperity for Canadians and jobs and growth. We are concerned that this is a very small measure. I believe that it is $40 million per year. Again, when I talk to people involved in venture capital, IT, biotech, or cleantech, they do not believe that this is going to make a big difference.
This leads me to the third measure, and that is cutting the small-business income tax rate. The NDP has proposed a two-point cut, which would cost about $1.2 billion per year.
Jack Mintz, director of the University of Calgary's School of Public Policy, opines frequently on tax policy in Canada. This is what it says in an article about the NDP plan.
An NDP plan to give tax relief to small businesses will actually end up giving wealthy Canadians a tax cut. “[It’s] something to make the rich richer,” Jack Mintz....
But Mintz and some fellow economists argue that the tax break will go overwhelmingly to Canadians who need it least and may not result in job growth at all.
“We find that 60 per cent of the small business deduction goes to households with more than $150,000 in income,” Mintz said....
“The worst part [of the NDP plan],” Mintz added, “is that it doesn’t have good economic impacts because small business deductions contribute to a wall of taxation, so if they grow, they lose some of their benefits and get hit with higher taxes…. It tends to keep small businesses smaller.”
What he is saying is that it is a disincentive to growth.
He also refers to the tax vehicles that exist for a lot of wealthier Canadians. Canadian-controlled private corporations, known as CCPCs, are used by high-income Canadians and high-income households as a form of income splitting, with dividend distribution shared between spouses. If people talk to a tax planner, accountant, or private banker, they will say that these are frequently used by people with a lot of money, families with a lot of private wealth.
Mintz says this about the NDP plan: “...it’s also a good income splitting method that the NDP are recommending”.
The coalition that has emerged between the Conservatives and the NDP around income splitting to benefit Canada's wealthiest families is something the Liberals are watching with amazement. I am not going to suggest that discussions about a coalition or anything like that are occurring behind the scenes, and I do not actually think the NDP has intentionally done this. I think this has been poorly researched.
In fact, Armine Yalnizyan, who is with the Canadian Centre for Policy Alternatives, a very progressive think tank, had this to say on CBC when she was asked about the NDP's proposal. She was asked a specific question by the CBC journalist, as follows:
This criticism [by Jack Mintz] of the NDP's proposal sounds bang on to you or totally wrong?
This is what the economist with the Canadian Centre for Policy Alternatives said:
Absolutely bang on. We have got new research in the last year or so that Dr. Mintz is talking about. So you'd think that the NDP would have known about this research. It's a little bit weird to say that we are looking at a way of benefiting small businesses when...[we are benefiting] tax shelters. If you want to do the things that they're saying, [they] could actually target your tax cut to incentivize the growth or only give tax cuts when the behaviour you are looking for takes place....
What she is referring to are direct incentives for businesses that create jobs, that invest to create jobs and hire more people. Again, there is a startling and perhaps troubling trend here of NDP policy looking like Conservative policy.
A few months ago, we were critical, the NDP included, of a Conservative hiring credit that would do nothing to really create jobs. It would be expensive. In fact, we were told by the Parliamentary Budget Officer that it would cost $700,000 for every job created and would not provide an incentive to hire. In fact, it would be a disincentive for hiring and growth. Now the NDP is proposing a policy with a similar disincentive to growth, which would do nothing to actually create jobs, and similar to Conservative income splitting, would disproportionately benefit the wealthy.
If we really want to focus on creating jobs and growth, we should look at the policy proposed by the Liberal Party at that time, which was a hiring credit that would provide a tax benefit to employers who actually hired new workers and expanded their employment. That policy was embraced and supported by the CFIB, the Canadian Manufacturers & Exporters, and Restaurants Canada.
More broadly, the Liberal plan we will be presenting to Canadians and engaging Canadians in will be one that helps the middle class and creates jobs and growth by investing in infrastructure, people, and innovation.
In terms of infrastructure, whether it is a small business, a big business, or a family, 100% of Canadian families and businesses benefit from investments in infrastructure. There has not been a better time in our lifetimes to invest and fix Canada's infrastructure. We have historically low bond yields, soft employment numbers, stagnant economic growth, and an historic opportunity to take the advice of David Dodge, the IMF, Mark Carney, and others and invest in infrastructure.
That is the kind of vision that Canadian small businesses and Canadian middle-class families would benefit from, not a poorly thought out approach from the NDP that would disproportionately benefit the wealthiest Canadians families who need the help the least.