Mr. Speaker, with regard the budget implementation act, I would like to talk about the climate around investment these days.
It is important to understand that while the government can create jobs, programs, and a number of different things, it is ultimately entrepreneurs who create the work, the employment, and the wealth in our country. I say that because one of the things the government fails to understand, or one of the challenges it has had over the last little while, is the uncertainty that small businesses face.
There is a number of issues and a number of things the Liberals are trying to do in stimulating the country, such as universal child benefit and other that obviously will make families better off. We do not have a problem with that. The challenge we have is the instability of what entrepreneurs face. Let me give an example.
While we were in government, we did a number of things to try to encourage entrepreneurs to start businesses. I used the acronym called “TIRE” because it was a multi-pronged approach. We lowered corporate taxes to one of the lowest in the G7, down to 25%. We can say okay, it was great that we lowered corporate taxes, but what did that do? That was just one thing in a number of things we did, but it was important to create certainty for entrepreneurs to flourish.
Let me talk about the acronym of TIRE and what it stands for. The “T” stands for taxes and trade. One of the things we did was lowered taxes for corporations because we wanted to increase investment in Canada and we wanted to create a favourable environment to encourage other crown corporations and individuals to invest here.
The second thing we did was trade. We worked on the CETA deal, which we pretty much got to the finish line. It was nice to see the Liberals complete it. However, we were there. We negotiated it over the four years we were in government.
The second one was TPP, another agreement we worked on and had actually signed it but were waiting for ratification on it. This is important because Canada has about 35 million people and they cannot possibly sell all their goods to each other. We are definitely a trading nation. These are important things. We count very heavily on the U.S. That number used to be 85% to 90%. I realize now it is down to 75%. However, we need to create other opportunities. This was one of the reasons why we worked on trade along with taxes.
The “I” in TIRE, is infrastructure, investments, and immigration reform. We worked on these things. We spent major amounts of money in infrastructure across the country, and we got it out in record time. The Liberal government has also promised infrastructure money, but we have not seen a whole lot in the first two years. There is always some concern with a half billion dollars going to the Asia Infrastructure Bank, but the budget officer has said that almost $2 billion have been unspent at this point in time.
The “R” stands for research and development, and red tape reduction. If we look at the R and D, the government continues to spend money on it and continues to commit money to it. These are good things, but sometimes it misses the mark. We have talked about superclusters being important. My challenge is that as a small business person, it is very hard to access those things. Most businesses in the country are small businesses. While there is probably nothing wrong with the concept of superclusters, the challenge is that money needs to go to entrepreneurs and small businesses.
Entrepreneurs tell us all the time that it is always difficult to raise capital. If we look at some of these things, this always seems to be the number one issue. When we look at places like San Francisco, silicon valley, Boston, Israel, and a number of other places around the world, there is great entrepreneurship. A lot of times Canadian companies have to go south of the border to raise money for second rounds, third rounds, VC rounds, and those kinds of things. These are some of the things with which we are challenged. When we look at R and D, absolutely important is the number of programs. The government has programs such as SR&ED a few others that are effective and helpful.
I sat on the red tape reduction committee. We travelled the country, and red tape was another thing that frustrated entrepreneurs to no end. We have to find ways to continue. One of the things we implemented was the one for one rule. When a new regulation was introduced, we would reduce a regulation.
One of the challenges is this. The federal government regulates a number of areas. However, then there are provincial and municipal jurisdictions and each of these add a layer and make it difficult for entrepreneurs to get started.
The last thing, the “E” in TIRE, is entrepreneurship and the economy. One of the things I always tell people when I talk to them about business is that there is a whole suite of things that we need to do in order to encourage entrepreneurship in this country. Right now, there are obviously a number of incubators and accelerators. Members are obviously familiar with Communitech in Waterloo, which does an amazing job. There are a number of other incubators and accelerators across this country. I always wonder if it would not make sense, as we move forward, to encourage colleges and universities to look at making that part of their mandate. I realize that is not always possible, but I think if we are going to teach entrepreneurship, if we are going to talk to people about starting businesses, then we also have to give them a place to actually help hone their craft.
Some of the things that are helpful for incubators are, obviously, that there is access to capital and money, that there are mentors, and that there is an environment where there is a chance to work and feed off what is going on with other individuals. As I visited a number of incubators in Silicon Valley, one of the things that was amazing was this whole issue of like-mindedness. People could come together, share their ideas, have access to capital, and all those other things.
However, one of the things we struggle with in this country is that we do not have a culture of entrepreneurship. I talk to students taking business programs all the time and ask them what they think they are going to do. They tell me that once they get their MBA, they want to work for a big company. Now, there is nothing wrong with working for a big company, but one of the challenges we have in this country is that we do not have enough people willing to start businesses and be entrepreneurial.
As I look at these things that we worked on as a government, I use TIRE, where the “T” is for taxes and trade; the “I” is for infrastructure, investments, and immigration reform, which is trying to help businesses bring in the people they need; the “R” is for R and D, and red tape reduction; and, of course, the “E” is for entrepreneurship and economy.
One of the things that has been a challenge with the latest implementation, or the thought process of taxes and taxation, has been the uncertainty for small businesses. I have literally had all kinds of phone calls coming into my office. People were saying that they were not happy and were not sure what they were going to do.
I co-hosted a round table here on Parliament Hill as the co-chair of the entrepreneur caucus with my colleagues. We had the CFIB and a number of individuals. We had a high-net-worth accountant, who represents a lot of money. He said that since this has happened, over $1 billion has gone south of the border. Now, we are never going to see a press release sent out on who was going to invest in Canada but will not now. Money is fluid, and it can move in different directions. Quite frankly, when there is uncertainty, it makes it a challenge.
I also want to talk about the unintended consequences of some of the proposed tax changes. Remember, in previous years, it took the Carter commission four years to look at tax changes and another six years to implement them, which is over a decade. However, this was done in less than 75 days in the middle of the summer.
Doctors are a segment of people who were singled out as not paying their fair share of taxes. I have an individual in my office who lives in my riding but has a practice in Welland. She is a dermatologist, and her husband is an orthopaedic surgeon. She feels totally vilified with what is going on here. She and her husband have over $400,000 in debt, with another $100,000 for her to set up her practice in Welland. She said that if things do not change that, in two years when her lease runs out, she will be moving south of the border. I am not saying that every doctor is leaving, but there are certainly individuals out there who do not feel like the hard work and time they put in is going to be rewarded.
As I look at some of the budget implementation act, I see large deficits, which are for a time when the economy is not doing that well. Right now, the economy has been doing relatively well. What happens if we continue to spend all of this money that is for a rainy day? Our growth is better than average, and maybe better than expected, but I believe that on the horizon we will see less than 2% growth, or 1% and change, over the next couple of years.
If we stack up some of things that are going on here, such as the uncertainty with the tax proposals, the fact remains that it is still hard for entrepreneurs to access money. When we look at taxing passive income, it makes it very discouraging for people trying to grow the economy, create jobs, and, quite frankly, trying to help Canada grow as a nation.
I would encourage my friends on the other side of the House to reconsider what they are looking at, where they are going with these tax changes, and the deficit, because there will be lasting and long-term results.