Debates of May 25th, 2015

Finance—Main Estimates 2015-16

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order. The hon. member for Thunder Bay—Rainy River.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, in fact, I guess he does not know the answer, but 5.8 million Canadians will see a drop in their standard of living at retirement. This is according to CIBC.

The CPP pays an average of less than $640 per month. Does the minister believe that this is sufficient to live on in retirement?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we have three pillars. We have the CPP, we have the OAS, and we have private pensions. According to McKinsey, 83% of Canadians are on track for a comfortable retirement under our government's low-tax plan.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, it is interesting that he talks about OAS. Because of Conservative cuts to OAS, Canadian seniors will lose $13,000 each, so I am asking the minister, what is the total size of the Conservative cut?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, the hon. member is misstating the facts. Canada has one of the strongest retirement income systems in the world, of which the old age security program is only one pillar. Since taking office, our government has taken many steps to expand savings options for Canadians and to ensure that seniors are secure in their retirement, and we are gradually increasing the age of eligibility for old age security—

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

The hon. member for Thunder Bay—Rainy River.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, in fact, the answer to that question is that the total size of the Conservative cut will be $11 billion.

Can the minister tell us what he thinks about the overwhelming support from Canadians and from the provinces to boost CPP benefits, and why have the Conservatives blocked all of these efforts?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, just to finish the answer to the last question, the government is gradually increasing the age of eligibility for old age security benefits to ensure the sustainability of the program, in light of changing demographics. Changes to the program will be phased in starting in April 2023, with full implementation by January 2029, to ensure that Canadians have significant advance notification to plan for retirement.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, I wonder if the minister could tell us who has given him that advice that the CPP is unsustainable. In fact, its assets are in excess of one-quarter of a trillion dollars. I just wonder how the minister can square that.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we have taken the advice of actuaries and other experts. Our CPP is now sustainable for well over 70 years, but Canadians do not want to pay higher payroll taxes. That is why we lowered taxes and brought forward new initiatives for Canadians to save for retirement, including pension income splitting, improved registered pension plans, tax-free savings accounts, and reducing the mandatory minimum of RRIFs. Despite--

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

The hon. member for Thunder Bay—Rainy River.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, does the minister believe that workers' pensions are adequately protected in the event that their employers go bankrupt?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

As I have said, Mr. Chair, we have a three-tier system. It is providing, according to McKinsey, a secure retirement for over 80% of Canadians, and we have added to that, of course, through our pension income splitting, the pooled registered plans, the TFSA, and modifications to the RRIFs. Despite the opposition's reckless high-tax plans, we will continue to take action to put more money back—

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order. The hon. member for Thunder Bay—Rainy River.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, I wonder if the minister could comment on this next question.

Former Stelco president Bob Milbourne just revealed that U.S. Steel is playing shell games to recover its Stelco acquisition costs in order to shortchange the pension plan. I am wondering what the Minister of Finance is going to do to stop this.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we, of course, are always concerned if people lose their jobs or pensioners lose their pensions, so we are providing the support that is appropriate for particular industries. We are encouraging job creation, and we have a whole array of programs, which I have outlined, which will help retired persons in Canada throughout the country.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, I would like to ask the minister what financial impact the minister thinks it would have for the federal government to elevate the creditor status of pension plans during bankruptcy proceedings.

If he did not understand the question, I can ask it again.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I understood the question.

In cases of bankruptcy, there are complex legal issues that provide priorities, and where people go into credit arrangements, they have a certain expectation of how they will be created. We, of course, continue to examine the tax system to make sure that it is fair for workers and for pensioners.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, I would like to let the minister know that elevating the creditor status of pension plans during bankruptcy proceedings in fact would cost the government zero. It would not cost it anything, and it would ensure that workers receive what they are owed.

It is a very simple question to the finance minister. Why does the government oppose this, and why is it not in the budget?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, the answer to the question, as I gave it before, is not whether it costs the government money; it is whether a structure can be built that is fair and predictable for all participants. We will continue to monitor these issues to make sure workers and pensioners and other creditors are treated in a fair way in bankruptcy proceedings.

[Andrew Saxton, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Chair, I am thankful for this opportunity to appear before this committee. In my time today, I would like to focus on the importance of balancing the budget.

Let me begin by saying how proud I am that our government has fulfilled our promise to Canadians. We have balanced the budget in 2015. We have done it while giving benefits directly to families and by reducing taxes on the middle class. However, the Liberals and the NDP want to take those benefits away and raise taxes on the middle class.

Thanks to the strong fiscal prudence and economic stewardship under our Prime Minister, the deficit has been reduced from $55.6 billion at the height of the global economic crisis to a projected surplus this year of $1.4 billion, and $1.7 billion the year after. That is a solid foundation upon which to build a more sustainable public finance.

On this strong foundation, we are building a brighter future, but we must stay the course with our low-tax plan. Canadians know what to expect from our government. Our budget prudently accounts for changes to the global economy, eliminates the deficit, and continues to deliver low taxes, economic growth, and long-term prosperity.

Contrast our low-tax plan with the Liberal one, according to the current Liberal finance critic:

It is unacceptable, frankly, that the [previous Liberal government] balanced the budget on the backs of ordinary Canadians and [refused] to provide any benefits back to the ordinary Canadian taxpayer.

That is the Liberal plan. In contrast, our government will continue our low-tax plan for jobs, growth, and security, and while balancing the budget as well.

There is a path to prosperity, and then there is a path to spending hikes, tax hikes, and unaffordable debt. We must choose the right course, the course that will create jobs and growth, not stifle the Canadian economy and hurt families. That is what Canadians expect of their government. Unlike the Liberals, our government does not believe that we can nor should tax our way to prosperity.

Let me remind members that it was the Liberal leader who said “Canadians could be convinced to accept a tax hike if it means a better economic plan”.

This type of ideology of tax and spend is not surprising, given the last time that Canada saw a Trudeau in government. Federal spending tripled, prompted by temporary highs in commodity prices, and this type of reckless spending was not in response to economic crisis. As a result, under Pierre Elliott Trudeau's mandate, Canada experienced some of the worst federal budget deficits in peacetime history. We are still paying for it today.

In common Liberal fashion, Jean Chrétien balanced the budget by hiking taxes, cutting vital programs, and slashing billions in transfer payments. Such actions put Canada's health care and education at risk. Everything we have learned from the post-recession history proves that Liberal policies would be devastating for the economy.

Unlike the Liberal leader who thinks budgets balance themselves, our government has brought Canada back to balance this year. Canadians understand the importance of living within their means and expect their government to do the same. Balanced budgets keep taxes low and ensure that government services are sustained over the long run. More importantly perhaps, they ensure that future generations like our children and grandchildren are not saddled with huge debts.

However, if given the chance, the opposition would raise taxes and drive Canada into dangerous levels of deficit and debt. The Liberal finance critic said it himself: “Liberals believe Canadians will not be bothered by being taxed more and more..”. Again, that is an example of the Liberal's tax and spend policies.

This is not a formula for success, nor what Canadians need or want. Canadian families sit around their kitchen table to talk about their budgets and how to stretch every dollar. They cannot afford to pay more taxes. Such Liberal schemes will not help them balance their budgets; in fact, it would do the opposite.

Our government is not only setting an example by balancing our budget, but we are helping families balance theirs as well, by giving money directly into the pockets of every hard-working Canadian family. Again, this is in stark contrast to the Liberal leader, who said, “benefiting every single family is not what is fair”. I believe that contrasts with the very definition of fairness.

Our Conservative government believes it is fair to benefit every single Canadian family and provide opportunities for all Canadians. We will make no apologies for helping all Canadian families. We understand that benefiting every single family is indeed our definition of fair.

Given the ongoing uncertain global economic environment, it is not the time for risky plans or reckless spending as proposed by both the Liberal and NDP leaders. Instead, it is crucial for the government to continue to pursue the objectives that have underpinned the economic action plan since its inception in 2009.

That is why we have introduced balanced budget legislation. It will ensure that the hard-won gains achieved by our government will remain in place for future generations. It will also ensure that the only acceptable deficit will be one that responds to a recession or an extraordinary circumstance, such as war or natural disaster.

It is not uncommon for a government to run deficits to respond to a severe downturn in the economy, but deficits outside of a recession or an extraordinary circumstance are unacceptable, and the need to return to balanced budgets is immediate.

To that end, this legislation proposes that should Canada again enter into deficit, the finance minister would be required to testify before the House of Commons committee on finance within 30 days and present a plan, with concrete timelines, to return to balanced budgets. Moreover, should the deficit be due to a recession or other extraordinary circumstance, operating spending would be frozen, as would the salaries of ministers and deputy ministers government-wide, once the recovery begins. If, on the other hand, the deficit is due to mismanagement, operating budgets would be frozen automatically, and the salaries of ministers and deputy ministers alike would be reduced by 5%.

This approach would ensure that any increase in spending to respond to a recession, war, or natural disaster would be temporary, targeted, and timely. By balancing the budget, we are raising Canada's economic potential and creating stable, well-paying jobs.

By staying the course and sticking to our proven economic action plan, Canada remains on track to a better future for all Canadians. That is what Canadians want and deserve. They cannot afford a tax and spend government, something the opposition is much too eager to do. Canadians know that it is our government that will keep taxes low, help foster jobs, and create long-term prosperity so that our children and grandchildren have a bright future.

In closing, I would like to ask a question to the Minister of Finance. I would like to ask him why balanced budgets matter.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I would be pleased to answer the question about why balanced budgets matter.

A balanced budget matters because it allows the government to cut taxes even more for hard-working Canadians, creating jobs, growth, and long-term prosperity. It means less debt for future generations, ensures that taxpayer dollars go toward important social programs like education and health care rather than debt repayment, and it gives the government more flexibility to respond to a crisis like a recession or war or natural disaster. It preserves our triple-A credit rating, the top credit rating that a country can have, allows for international shocks, and it prevents passing on more debt to our children.

What is also important is how the budget is balanced. In our case, it came from strict fiscal discipline. Unlike the Liberals, we will not raise taxes or slash transfers to people, provinces, and territories. Our government has cut taxes every year since taking office. Over 180 tax relief measures have been undertaken since 2006. What is the result? The result is that Canadians now benefit from the lowest overall federal tax burden in more than half a century.

These benefits of balancing the budget are so important that we are proposing a law with pay cuts to ministers and top bureaucrats if the government falls into deficit in normal economic times. We believe that Ottawa is capable of doing what families have to do every day. That means setting priorities and making choices. We will propose that if a government posts a deficit outside of extraordinary circumstances, an automatic operating freeze would go into effect and there would be a cut in salaries for ministers and deputy ministers by 5%.

Our government will balance the budget and continue to ensure that hard-working Canadian families have more money in their pockets when they need it most. Our government has paid down $37 billion in debt since 2006, prior to the great recession that rocked the world economy. That forward thinking helped Canada to achieve the lowest total government net debt to GDP ratio in the G7, and made it affordable to boost growth through federal spending without compromising our top-notch credit rating.

Responsible fiscal management and firm control over direct program spending put Canada on a predictable path back to a balanced budget by 2015, providing consumers and businesses with the confidence to invest and grow the economy. As the The New York Times recently reported, after-tax income for middle-class Canadians, substantially behind in 2000, now appears to be higher than in the United States. In fact, the Canadian middle class is among the richest in the developed world. Bloomberg has ranked Canada as the second-most attractive place in the world to do business.

Our approach is working. Since the depths of the recession, over 1.2 million net new jobs have been created, overwhelmingly full-time, well-paying, and in the private sector.

However, these are tough economic times around the world. It is not time for risky, high-tax, high-spend Liberal initiatives. In a fragile global economy, we must continue taking action to create jobs, growth, and long-term prosperity. Our government plan would do exactly do that by fulfilling our long-standing commitment to balancing the federal budget.

[Annick Papillon, NDP, Québec, QC]

Mr. Chair, I will be sharing my time with the member for Davenport.

Canadian retailers have to pay credit card transaction fees that are among the highest in the world.

Can the minister give us an idea of the annual cost of credit card transaction fees for Canadian businesses?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we have heard the concerns of businesspeople and consumers alike.

Last fall, the government accepted voluntary commitments by Visa Canada and MasterCard Canada to reduce credit card fees to an average effective rate of 1.5% for the next five years.

[Annick Papillon, NDP, Québec, QC]

Mr. Chair, the minister is not answering the question. According to the Retail Council of Canada, the annual cost is $6 billion.

Does the minister intend to allow Canadian retailers to add a surcharge for credit card transactions?